Rio Tinto OKs US$6.2B Simandou iron mine

Rio Tinto’s (NYSE: RIO; LSE: RIO; ASX: RIO) board has given the green light to the Simandou iron ore mining project in West Africa, CEO Jakob Stausholm said on Wednesday. 

The mining giant aims to start iron ore production from the US$20 billion development in Guinea as early as 2025, Stausholm told the London-based Financial Times. 

Rio Tinto plans to invest US$6.2 billion in the mine, rail and port project in collaboration with other companies, including five from China. 

However, final investment approval from Rio’s state-owned Chinese partners, including Chinalco and Baowu, is still pending. Nonetheless, Stausholm expressed confidence they would grant approvals soon.

In January, Baowu raised US$1.4 billion from a bond issue in China intended to support the project, Rio’s CEO said.

Deepwater port

The project entails the construction of a 552-km rail line to transport high-grade iron ore from two new mines in the Simandou mountains — one to be constructed and operated by Rio Tinto — to a new deepwater port on Guinea’s Atlantic coast.

Simandou, anticipated to be the world’s largest and highest-grade new iron ore mine, is expected to increase global seaborne supply by around 5%.

Rio Tinto holds two of four Simandou mining blocks as part of its Simfer joint venture with China’s Chalco Iron Ore Holdings (CIOH) and the government of Guinea. Rio Tinto holds a 53% stake, while CIOH holds the remainder.

The project has been delayed by prolonged negotiations in a complex ownership structure, legal disputes, Guinea’s political changes and construction challenges.

In addition to the Simandou project, Rio Tinto is scaling up production at the Oyu Tolgoi underground copper mine in Mongolia, aiming to produce 500,000 tonnes of the metal annually starting from 2028.