Chinese state-owned steel giant China Baowu Group is seeking to develop Simandou iron ore mine located in Guinea, acquiring the shares of the project held by Aluminum Corp. of China known as Chalco, in cooperation with other steelmakers in order to secure iron ore supply, as reported by China-based Caixin Global. The details of the share purchase have not been disclosed yet, SteelOrbis understands.
Baowu is trying to raise $6 billion of funds for developing the mine, and is seeking to convince other Chinese steel companies to co-invest in the Simandau project. However, the steel giant predicts the mine’s infrastructure works, which include the construction of a cross-country railroad and deep-water port, could require an investment of more than $15 billion.
Baowu is reportedly negotiating with steel companies such as Shougang Group Co. Ltd and China Minmetals Corp, while also welcoming overseas investors.
Guinea’s National Institute of Statistics indicates that Simandou has more than 8.6 billion mt of iron ore reserves. It is considered to be the world’s largest and highest-quality untapped reserve. 150 million mt per year of iron ore is expected to be produced from the mine.
The Simandou project consists of four blocks, two belonging to a Chinese and Singaporean-backed consortium, while the other two are owned by Rio Tinto Plc and Chinalco, as previously reported by SteelOrbis.