World’s largest untapped iron ore project secures $23b in financing

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By Colin Hay - 
Rio Tinto ASX Guinea Simandou iron ore project

Reports out of the West African nation of Guinea suggest that the giant Simandou iron ore development has hit a major milestone in its development with the project’s backers securing approximately $23 billion in financing.

The funding will support the co-development of more than 600 kilometres of new multi-use rail together with port facilities that will be used to export iron ore from the Simandou mining concessions in the southeast of the country.

The creation of the new multi-use rail together with port facilities was seen as a major stepping stone in bringing Simandou to commercialisation.

Key agreements finalised

The financing announcement comes after Rio Tinto (ASX: RIO) and the Simfer joint venture concluded key agreements in August with the Republic of Guinea and Winning Consortium Simandou (WCS) on the trans-Guinean infrastructure for the project.

“Simandou is no longer a dream but a reality,” Guinea government spokesperson Djiba Diakite said in the statement on the new financing.

“There is no doubt that the project will be delivered on schedule by the end of December 2025.”

In February, Rio Tinto chief executive officer Jakob Stausholm said that the company’s board had given the green light to the project.

Green steel potential

Speaking at Rio’s latest annual general meeting, Mr Stausholm said the company was confident of the success that could be achieved at Simandou.

“With our Oyu Tolgoi underground going from strength to strength, I believe we can repeat this success at the Simandou project in Guinea – where we are at an earlier phase.”

“Simandou has really matured over the last year. This is a unique project, both in its challenges and opportunities.”

“It can be a country-maker for the people of Guinea and provide the world with high-grade iron ore needed for green steel.”

Simandou is expected to be the the world’s largest untapped reserve of high-grade iron ore, estimated at over 2 billion tonnes.

Rio has reported that the proved ore reserves estimate for the Ouéléba deposit at Simandou contains 273 million tonnes at 66.4% iron.

World-class resource

Speaking after the signing of the infrastructure agreements in August, Rio Tinto’s executive committee lead for Guinea and copper chief executive Bold Baatar said the Simandou project would bring together the complementary strengths and expertise of Rio Tinto and its partners, the government of Guinea and WCS, to unlock a world-class resource.

“Simandou, the world’s largest known undeveloped supply of high-grade, low-impurity iron ore, will strengthen Rio Tinto’s portfolio by complementing our existing Pilbara and Iron Ore Company of Canada products.”

The infrastructure capacity and associated cost will be shared equally between Simfer – which is developing blocks 3 and 4 of the Simandou project – and WCS, which is developing blocks 1 and 2.

China Baowu Steel has also previously entered into a term sheet agreement with WCS that may see it partner in the scope for blocks 1 and 2.

WCS is a consortium between Winning International Group (49.99%), Weiqiao Aluminium (part of the China Hongqiao Group) (49.99%) and United Mining Suppliers (0.0002%).