The Government of Guinea has announced that the shareholders of the Simandou iron ore project have signed a US$15bn financing agreement, which will be used to build the infrastructure necessary for the mine's future development.

Simandou is the world’s largest untapped iron ore deposit with estimated reserves exceeding 2Bt with an average grade of 65% Fe. The development of Simandou has been delayed since 1997, punctuated by corruption scandals, lawsuits and political changes, adding to a difficult geography and a large required investment.

The iron ore deposit is now divided into two concessions:

Simandou North (Blocks 1 and 2) is owned by the Winning Consortium Simandou (WCS) of Winning International Group of Singapore (50%), China’s Weiqiao Aluminium (50%) and United Mining Suppliers (nominal shareholding). WCS has an 85% controlling stake and the Government of Guinea 15%.

Simandou South (blocks 3 and 4) is owned by Simfer, a joint venture between Rio Tinto (53%) and Aluminium Corporation of China (Chinalco 43%). Simfer has an 85% controlling stake and the Government of Guinea 15%.

The development of the mine also requires the building of a port and a 550km railway. The above-mentioned funding agreement accord would be used for rail and port infrastructure building. The contractor, Compagnie du Trans-Guinéen, is a joint venture 15% owned by the Guinean government and the other 85% equally held by Rio Tinto and WCS.

Rio Tinto estimates that its initial share of capital expenditure to develop the Simfer mine and the co-developed rail and port infrastructure project is approximately US$6.2bn. Total production capacity (Simandou North and South) would be 120Mt/y with the Simfer-owned mine at 60Mt/y.

The development of Simandou has become more attractive in recent years to all parties as the steel industry's decarbonisation trend has gained momentum. One of the easiest ways to reduce carbon emissions in steelmaking is to use higher grade, low impurities iron ore. With proven reserves showing a Fe content of 66.4%, 1.0% SiO2, 1.2% Al2O3 and 0.07% P, Simandou will provide, along with Vale’s Carajas, the world’s highest quality iron ore. Given China’s stringent carbon emission targets and Rio Tinto’s challenges in replacing its depleting assets in Western Australia, stars have been aligning for the Simandou development.   

However, the 2025 target for first ore delivery looks very optimistic and Project Blue believes that 2026/2027 is more realistic, given the infrastructure challenges. But after three decades of waiting, it looks like the development of Simandou is now getting closer.