Rio Tinto Set to Establish a Joint Venture for Guinea’s Simandou Iron Ore Project

Rio Tinto’s subsidiary in Guinea has formed an infrastructure joint venture (JV) with Winning Consortium Simandou (WCS) and the government. The agreement was made to unlock the road to the world’s largest undeveloped iron ore project. While the companies said they must still negotiate final JV agreements, it will potentially be a big milestone for Rio Tinto and WCS, the shareholders of which include a unit of China Hongqiao.

In a concession to Guinea’s military junta, the companies also agreed to give the government a 15% free stake in the JV, called La Compagnie du TransGuinéen. That means the government does not have to contribute to the capital required to build the infrastructure.

The junta, which took power in a coup last September, ordered all work on the Simandou project to stop at the beginning of this month, frustrated with the companies’ pushback over the government stake.

The consortium, which has 15,000 employees including subcontractors and expatriates, put many of its workers on forced leave after the government-ordered halt. The employees are expected to stay on forced leave until the JV agreement is finalized.

WCS and Rio’s subsidiary Simfer Jersey Limited will each hold 42.5% of the new company. They aim to construct a 600 km railway and a port to export the iron ore from Simandou, which is located in Guinea’s remote southeastern corner.

WCS thanked to both Rio Tinto Simfer and the Guinean government in a statement for the “spirit of cooperation” they have shown” to achieve this major milestone.

The companies said they were committed to developing the infrastructure “in line with internationally recognized environmental, social and governance standards”.

The railway will go through ecologically sensitive areas, and is expected to create significant socioeconomic change by connecting remote regions of the impoverished country to the port, which is 80 km south of the nation’s capital, Conakry.

WCS, a consortium of Singapore-based firm Winning International Group (45%), China Hongqiao subsidiary Weiqiao Aluminium (35%) and Guinean company United Mining Suppliers International (20%), won the rights to Simandou blocks 1 and 2 in November 2019.

Rio Tinto has held rights to Simandou blocks 3 and 4 since 1997 through Simfer S.A. which is owned by the government of Guinea (15%) and Simfer Jersey Limited (85%), which is also a JV between Rio Tinto (53%) and Chalco Iron Ore Holdings (CIOH) (47%).

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