Operations begin at $35b Simandou project
Rio Tinto (ASX: RIO) and partners have celebrated the highly anticipated commencement of operations at the Simandou iron ore project in Guinea.
The Republic of Guinea President joined project partners WCS, Baowu, Chinalco and Rio Tinto yesterday in a ceremony at the port in Forécariah prefecture to mark the start of operations at Africa’s largest greenfield integrated mine and infrastructure project.
The Simandou deposit contains about 2.4bt of high-grade iron ore, averaging 65% iron content, positioning it as one of the largest high-quality iron ore mines globally.
Production rates are expected to reach full capacity of 120mtpa by 2030, 60mtpa of which will come from SimFer, a consortium 53% owned by Rio. When the project reaches full capacity, it will account for about 5% of total global supply.
As the Simandou operations approach full capacity, S&P Global estimates all-in sustaining costs in the range of $55-$60/t which is expected to exert downward pressure on prices, particularly impacting lower-grade, high-cost producers.
The Simandou project threatens to flood an already oversupplied market. Internal forecasts by some of the world’s largest mining companies indicate that the price of iron ore will fall to $85/t as Simandou reaches full production capacity, according to S&P Global.
The project is divided into four blocks, with blocks one and two controlled by WCS and supporting Chinese companies, including China Baowu Steel Group.
Rio Tinto serves as majority shareholder and managing partner for blocks three and four with partners Chinalco and the Guinea Government. Blocks three and four contain majority of the Simandou’s resources, boasting about 1.5bt in reserves.
Rio Tinto chief executive Simon Trott comments on the progress.
“This outstanding achievement has been made possible through the dedicated hard work of thousands of our colleagues, and the complementary strengths and expertise of Rio Tinto, our SimFer partners, the Government of Guinea and WCS,” he said.
“Today we are unlocking an exceptional new source of high-grade iron ore that is in demand from customers for low-carbon steel making, enhancing our world-class portfolio of iron ore mines in the Pilbara and Canada.”
Once commissioned, all co-developed infrastructure and rolling stock will be transferred to and operated by the Compagnie du TransGuinéen (CTG), in which SimFer and WCS each hold a 42.5% equity stake, with the Government of Guinea holding the remaining 15%.
The operation will also support one of Africa’s most significant transportation infrastructure developments. More than 600km of trans-Guinean rail, together with barge and transhipment vessel port facilities, will support the export of a combined total of up to 120mtpa of mined iron ore.
Testing and commissioning of the mine, rail and barge port system infrastructure is underway, with both WCS and Rio-led SimFer having commenced the transport of iron ore from mine gate to the port via the new rail line.
Guinea Minister and Chief of Staff to the President of the Republic and chairman of the Simandou 2040 strategic committee Djiba Diakité comments on the operation.
“Simandou is more than a mining project — it is the driving force behind a national transformation,” he said.
“This collective success reflects the vision of the head of state and the determination of an entire nation to build a future of shared prosperity. This inauguration marks a foundational milestone for Guinea, which now stands as a key player in sustainable development and economic sovereignty in West Africa.”
Chinalco President Wang Shilei says the commencement of operations reflects the joint efforts and pragmatic cooperation between China and Guinea, contributing to Guinea’s industrialisation and modernisation process.
“Chinalco is committed to working together with all partners to…advance the high-quality development of the Simandou iron ore project [and] promote the continued deepening of the comprehensive strategic partnership between China and Guinea,” he said.