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Mining giant pushes ahead with $26B project

Simandou mine site
Simandou mine site

A multinational resources producer refuses to abandon a mega development.

Rio Tinto recently pushed ahead with its US$20 billion (A$26.7B) Simandou Mine, 526km southeast of Conakry.

The proponent revealed it has already incorporated the TransGuinean Company, also known as La Compagnie du TransGuinéen, with Winning Consortium Simandou (WCS) and the Guinea government.

The entity lets all project partners co-develop multipurpose and multi-user infrastructure through a central structure for building rail and the port components. This requires a shareholding agreement, finalising cost estimates and funding, and securing all regulatory approvals plus permits.

“The project’s southern infrastructure corridor has the potential to bring significant benefits for regional economic development by leveraging international project and environmental, social and governance standards,” Rio Simandou project executive committee member in charge Bold Baatar said in a public statement.

“We are most grateful to the government of Guinea and WCS for their collaboration, and look forward to making the promise of Simandou a reality.”

Guinea Mines Minister Moussa Magassouba prefers to construct a 670km long railway line to domestic ports. Building this longer, cross-country route would cause capital expenditure to blow out by tens of billions of dollars.

Neither Rio nor WCS believe such a proposal stacks up economically. However, Magassouba previously warned both Rio and the WCS stand a real chance of being removed from the project if they do not deliver the longer railway, which will proceed “with or without” them.

“Sufficiently responsible financially and technically companies are waiting,” he said at the time.

Rio has since agreed to build the longer and more scenic railway route.

“This milestone paves the way to progress the shareholder agreement and secure necessary financing to construct a strategic corridor with more than 600km of rail infrastructures, extending from south to southwest of the Republic of Guinea – as well as port infrastructure in the Forécariah prefecture,” the company said.

“The infrastructure constitutes the backbone of the Simandou project that presents a significant opportunity for the economic growth of the Republic of Guinea, in addition to the mining activities it will support.”

The proposed 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 latest deal includes constructing a 670km railway, associated infrastructure and both mine and port facilities before the end of 2024. On completion the operation would produce up to 150 million tonnes a year of product from a combined 2B tonnes at 65 per cent grade. It would also create an estimated 45,000 jobs.

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