Rio Tinto Advances Simandou Project with Final Approvals

Rio Tinto has fulfilled all prerequisites for its investment in developing the Simandou high-grade iron ore deposit in Guinea, including obtaining essential regulatory approvals from both Guinean and Chinese authorities. The transaction is scheduled to finalize during the week of July 15, 2024. With the recent approval from the Board of Simfer, this paves the way for Simfer to proceed with its investment and funding for the co-development of rail and port infrastructure. This collaborative effort involves partnerships with Winning Consortium Simandou (WCS), Baowu, and the Republic of Guinea, signaling a strategic advancement in infrastructure development crucial for the project's success.

Bold Baatar, Rio Tinto's Executive Committee lead for Guinea and Copper Chief Executive, expressed gratitude to the Government of Guinea, Chinalco, Baowu, and WCS for their collaboration in achieving a milestone in the development of the Simandou project. Baatar highlighted that Simandou will provide a substantial new supply of high-grade iron ore, enhancing Rio Tinto's portfolio and supporting the steel industry's decarbonization efforts. Additionally, the project includes the development of trans-Guinean rail and port infrastructure, which is expected to contribute significantly to Guinea's economic growth and development.

A new 600-kilometre multi-use trans-Guinean railway, coupled with port facilities, will facilitate the export of up to 120 million tonnes per year of mined iron ore from Simfer and WCS's respective concessions in southeast Guinea. Marking a significant milestone in African development, this project stands as the continent's biggest ever greenfield investment in a fully integrated mine and infrastructure complex.

Bold Baatar, Rio Tinto's Executive Committee lead for Guinea and Copper Chief Executive, expressed gratitude to the Government of Guinea, Chinalco, Baowu, and WCS for their partnership in achieving this milestone for the world-class Simandou project.

Simfer is solidifying its involvement in the Simandou project by acquiring a stake in the WCS companies tasked with building the essential rail and port infrastructure. This strategic move ensures Simfer's participation in the entire project lifecycle, from mine development to product transportation. Simfer will also undertake a portion of the construction itself and commit funding towards the co-developed infrastructure, totaling approximately $6.5 billion (with Rio Tinto's share around $3.5 billion).

Chalco Iron Ore Holdings Ltd (CIOH) has fulfilled its capital expenditure obligations to Simfer, making payments totaling approximately $985 million to cover expenses incurred up to the end of 2024.

The infrastructure's capacity and costs will be evenly split between Simfer and WCS. Simfer will manage and operate a 60 million tonnes per year mine in blocks 3 and 4 of the Simandou Project, while WCS will handle blocks 1 and 2.

As part of the co-development agreement, Simfer and WCS will oversee distinct infrastructure components to leverage their respective expertise. Simfer is taking a major step forward in infrastructure development with the construction of a dedicated 70-kilometer rail line and a 60 million tonne-per-year transhipment vessel (TSV)  port. This strategic investment will significantly enhance their operational efficiency and export capacity. Meanwhile, WCS will build a dual-track 536-kilometre main rail line, a 16-kilometre spur rail line, and a 60 million tonnes per year barge port.

Upon completion, all infrastructure and rolling stock will be transferred to and operated by Compagnie du Transguinéen (CTG), a joint venture with Simfer and WCS each holding a 42.5% equity stake and the Guinean State holding a 15% stake.

Rio Tinto's giant Simfer iron ore mine is set to begin production in 2025. Over the following 30 months, they'll gradually ramp up operations to reach a targeted annual capacity of 60 million tonnes. Rio Tinto's share of this output is expected to be 27 million tonnes per year. Initially, the mine will produce a single fines product before transitioning to dual fines suitable for blast furnace and direct reduction processes.