Guinea to Develop Simandou Iron Ore Reserves with Chinese Support

Guinea’s Simandou mountains hold one of the largest untapped iron ore deposits in the world with more than 1.8 billion tons of estimated reserves, and iron content exceeding 65.5 percent. After almost a quarter-century of delays, attributed to lack of infrastructure and political issues, the riches of Simandou are on the verge of being harvested.

Guinea's military government has announced that it is going to relaunch the development works at the Simandou mine, one of the largest untapped deposits of high-grade iron ore, after consultations with Chinese investors and officials, according to media reports.

The media has reported, citing the government, that Rio Tinto Group, Winning Consortium Simandou (WCS) and China Baowu Steel Group decided to resume infrastructure development at the site from March. The companies are set to complete negotiations on the project’s paperwork before 28 February.

Earlier this month, a Guinean government delegation reportedly traveled to China to hold a meeting with financing partners and stakeholders in the Simandou project, including the Chinese Export-Import Bank, the Development Bank, and the Industrial and Commercial Bank of China.

The Simandou mine is in the Simandou mountain range in the southern part of Guinea in the Nzérékoré Region. The efforts to develop the site have faced various obstacles over the years, including mining rights and infrastructure disputes, political changes in the West African nation, and subsequent delays in construction.

Launching Simandou Mine

In March last year, the country's government suspended operations at the site. Progress in the development of the mine stalled because of disagreements over how the project would be financed and what share of revenues the government would get.

In July, Anglo-Australian multinational company Rio Tinto, the Guinean government and WCS created a joint venture to start building rail and port infrastructure needed to transport iron ore from the mine in the far south-east of the country to Guinea’s coast so that it can then be exported.

In October, Baowu, China’s biggest iron and steel producer, signed a deal with WCS, which consists of Singaporean shipowner Winning International Group, Chinese aluminum producer Shandong Weiqiao and Guinean logistics firm United Mining Suppliers, to invest in the northern Blocks 1 and 2 controlled by the consortium.

The mining concession is divided into four blocks. The rights to the southern blocks, three and four, of the Simandou mine are held by Rio Tinto, Chalco Iron Ore Holdings and the government.

In December, Baowu said it had reached a consensus with all the stakeholders on the development of infrastructure, noting that the investment would depend on government approvals from both China and Guinea. Guinea's government, for its part, called the agreement "an important milestone" that will allow the partners to start the financing of the project, which is estimated to be approximately $15Bln. It underlined that the deal was largely facilitated by the participation of Baowu.

The recent announcement comes as China seeks to reduce its dependence on Brazilian and Australian iron ore, and in general diversify its partners-suppliers of natural resources. This kind of global quest has already made China one of the biggest importers of raw materials from Africa. Crude oil, copper, cobalt and iron ore account for a large share of Africa’s exports to China. It is also a main driver of the Belt and Road initiative, an infrastructure development strategy that involves infrastructure, trade, and investment enhancement aimed at improving connectivity on a transcontinental scale.