Rio Tinto and Chinalco have signed a non-binding agreement whereby Rio Tinto will sell its stake in the Simandou project in Guinea to Chinalco.

The agreement sets out the proposed principal terms of the sale and includes the aim of signing a binding agreement within six months.

Rio Tinto will receive payments of $1.1-1.3 billion – based on the timing of the development of the project. The initial payment for shares will take place when first commercial production starts, on a per ton basis.

The iron ore price could be attributed to Rio Tinto’s decision, as well as the difficulty of developing a mine in Guinea.

Just two years ago in 2014 Rio Tinto committed itself to developing Simandou.

Rio Tinto’s diamonds and minerals chief executive Alan Davies solidified the company’s commitment to building the billion dollar Guinea-based Simandou iron ore project at the 2014 Mining Indaba.

It has been 17 years (1997) since Rio Tinto first started exploring and evaluating Simandou’s iron ore potential and eight years (2006) since the Guinean government granted it the mining concession to advance the project further. Simandou has a 2.5 Bt resource, which Rio Tinto announced that same year.

The project is set to become the largest integrated iron ore mine and infrastructure project developed in Africa, which Rio Tinto has been stating for years. No potential prospect or project has come along since to rival the project’s status, despite the delays in taking this project forward into development.