A Pilbara ‘killer’ development resumed after proponents settled a long-running dispute.
Rio Tinto recently reopened its US$20 billion (A$26.7B) Simandou Project, 526km southeast of Conakry.
Rio, the Simfer joint venture (JV), Winning Consortium Simandou (WCS) and Republic of Guinea all agreed to construct a 670km long railway line between the mine and domestic ports.
The decision was reached despite the longer, cross-country route costing more than US$800 million (A$1.2B). Proponents had wanted to build a railway line to the nearest port in neighbouring Liberia. This shorter route would be covered in the original US$12B (A$17.7B) infrastructure expenditure.
“Infrastructure capacity and associated cost will be shared equally between Simfer, which is developing blocks three and four of the Simandou project, and WCS which is developing blocks one and two,” a Rio spokesperson said in a public statement.
“China Baowu Steel Group has also previously entered into a term sheet agreement with WCS that may see it partner in the WCS scope for blocks one and two of the Simandou mining concession and the infrastructure JV.”
These co-development convention and associated agreements are widely understood to cover access rights for third party rail users, tariff structures, taxes and other key principles. They are hoped to progress the project after about a year of negotiations. China-backed WCS earlier forced as many as 10,000 workers to go on leave indefinitely.
The mine is home to one of the world’s “best undeveloped” mineral deposits. It is widely speculated to be resource-rich enough to devalue, compete against and possibly replace Western Australia’s Pilbara exports.
The project requires constructing the railway, associated infrastructure and both mine and port facilities before the end of 2024. On completion the operation would produce up to 150M tonnes a year of “world class” product from a combined 2B tonnes at 65 per cent grade. It would also create an estimated 45,000 jobs.