The government of Guinea, Australia-based miner Rio Tinto, China's largest metal producer Aluminum Corp. of China (Chinalco) and the International Finance Corporation (IFC), the financing arm of the World Bank, have jointly announced that they have signed an investment framework agreement for the development of two blocks of the Simandou iron ore project in Guinea. The project will be the largest combined iron ore and infrastructure project ever developed in Africa.
The US$20 billion project will be owned 47 percent by Rio Tinto, 7.5 percent by the Guinean government and 41.3 percent by Chinalco, with the remaining shares held by IFC. The project will produce 100 million mt of high grade iron ore per year at full production.
Within the coming days, the government of Guinea will submit the investment framework for the consideration of the Guinean National Assembly in order to seek its ratification. In the meantime, the parties, under the leadership of Rio Tinto, are working together to assemble a consortium of investors who will finance, build and own the multi-user 650 km railway and deep-water port infrastructure within the agreed time frame.
In 2008, the military junta cancelled Rio Tinto's mining tenements in the Simandou project, two of which Brazilian miner Vale ended up buying. In April this year, the Guinean government revoked Vale's mining license in Simandou due to a technical committee report indicating that the mining licenses were obtained through corrupt practices. Those allegations are now to be settled at a US district court upon the complaint made by Rio Tinto against Vale and its partner regarding the mining licenses.