Iron ore Photo:VCG

Conditions have now been satisfied for Rio Tinto to invest in the development of the Simandou high-grade ore deposit in Guinea, including the completion of the necessary regulatory approvals from both the Guinean and Chinese sides, the Anglo-Australian mining company said in a press release on Tuesday, marking another step toward production at the world's largest undeveloped iron ore mine. 

The project is seen as strategically crucial for industry players, particularly Chinese companies, as it will enable China to diversify its supply sources instead of overly depending on any single iron ore supplier. It will also help to enhance China's industrial bargaining power on the global stage, which currently remains weak despite its significant role as a key buyer in the global market.

Following the recent approval by the board of Simfer - with Aluminum Corp of China and Rio Tinto Group being the joint shareholders - Simfer can now invest in and fund its share of co-developed rail and port infrastructure in partnership with Winning Consortium Simandou (WCS), which is backed by Singaporean and Chinese companies, as well as with China Baowu Group (Baowu) and the Guinean government, according to the company.

More than 600 kilometers of new multi-use trans-Guinean railway together with port facilities will allow the export of up to 120 million tons per year of mined iron ore by Simfer and WCS from their respective Simandou mining concessions in the southeast of the country, Rio Tinto said, noting that together, "this will be the largest greenfield integrated mine and infrastructure investment in Africa."

Simandou's subsoils contain the world's largest untapped reserves of high-grade iron ore, estimated at over 2 billion tons.

First production from the Simfer mine is expected in 2025, ramping up over 30 months to an annualized capacity of 60 million tons per year, according to Rio Tino.

Simfer's capital funding requirement for the Simandou project as a whole is estimated to be approximately $11.6 billion, of which Rio Tinto's share is approximately $6.2 billion.

The project was temporarily halted by the government of Guinea in July 2022 due to various factors, including infrastructure issues. However, through collaborative efforts from various parties, the Simandou iron ore project resumed in March 2023. 

Tuesday's announcement by Rio Tinto came roughly a month after WCS and Baowu officially completed the equity transfer for the Simandou project, according to the official WeChat account of Winning International Group. 

On May 30, the Guinean government approved Baowu's investment in the Simandou iron ore project and issued a presidential decree to that effect. 

On June 19, WCS and Baowu completed the establishment of joint venture boards for the mining, railway, and port projects, along with appointing directors and executives and finalizing equity transfers. Baowu also made its initial investment, officially becoming a shareholder in the Simandou project.