Although the infamous Simandou iron ore project in Guinea remains the largest integrated iron ore mine and infrastructure project in Africa should it ever be developed, this now seems more unlikely than ever.
A non-binding heads of agreement, originally signed on 28 October 2016, for Chinalco to acquire Rio Tinto’s entire interest in the Simandou iron ore project has lapsed.
Rio Tinto and Chinalco, who respectively own 45.05% and 39.95% of Simandou, will continue to work with the government of Guinea to explore other options to realise value from the world-class Simandou iron ore deposit. The government owns a 15% stake in the project.
The original agreement from 2016 set out proposed principal terms of the sale.
Rio Tinto was to receive payments of $1.1-1.3 billion - based on the timing of the development of the project. The initial payment for shares was meant to take place when first commercial production starts, on a per ton basis.
It has been 21 years (1997) since Rio Tinto first started exploring and evaluating Simandou’s iron ore potential and 12 years (2006) since the Guinean government granted it the mining concession to advance the project further.
Simandou has a 2.5 Bt resource.