Rio Tinto consortium agrees rail deal for iron ore mine in Guinea

The Simandou project in West Africa has some of world's richest iron ore deposits

A Rio Tinto Group locomotive in Western Australia. The company has agreed to a pact with the Guinea government for building a rail line. Bloomberg
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The development of the world’s biggest untapped iron ore deposit came a step closer after Rio Tinto and its consortium partners agreed a deal with the Guinea government for building a rail line.

The Simandou project in Guinea has some of the richest iron ore deposits anywhere in the world, but its development has been frustrate for years by disputes over ownership and infrastructure, and by political changes in Guinea. Yet in the past year, a series of agreements have moved its development closer.

Rio said Friday that it had struck a deal with Guinea and the Winning Consortium Simandou, which is building another project at Simandou to develop the 600 kilometres of rail lines needed to transport the iron ore to the port.

Simandou is divided into four blocks, with blocks 1 and 2 controlled by the Winning Consortium Simandou, backed by Chinese and Singaporean companies, while Rio and Aluminum Corporation of China, known as Chinalco, own blocks 3 and 4.

The two parties have been in discussions about the shared access to the railway, as well as other areas such as the environmental impact. Rio said Friday that rail and port capacity and the costs of building them will be shared equally between the two consortia.

Rio said last year that its share of the project would be roughly $4 billion. It offers the world’s No 2 miner a potentially huge source of supply as the company looks to grow its most profitable business.

“With these agreements we have reached an important milestone towards full sanction of the Simandou project,” Bold Baatar, Rio’s executive in charge of the project, said on Friday.

Guinea has shown flexibility in the project schedule that makes room for extending the commencement of production by a year to the first quarter of 2026, Gerard Rheinberger, Rio’s managing director for Simandou, told reporters in Guinea’s capital, Conakry on Friday. The extending will only be considered in case of force majeure, he said.

The initial agreement signed by the partners last year sets December 2024 for the completion of construction of the mine and the infrastructure and the start of production in the first quarter of the following year.

Updated: August 13, 2023, 3:30 AM