Rio Tinto sets $6.2 billion price for Simandou iron ore deposit in Guinea
Rio Tinto (ASX:RIO) has placed a $6.2 billion price tag on its share of developing the Simandou iron ore deposit in the African country of Guinea. The iron ore, located in Guinea's Simandou mountains, represents one of the world's largest untapped deposits of the commodity, boasting a grade of approximately 65% Fe, similar to the high-grade iron ore deposits in Brazil controlled by Vale.
This announcement follows Rio Tinto's recent disclosure of plans to invest over half a billion dollars in studies and exploration of the vast Rhodes Ridge iron ore deposit in the Pilbara, with production scheduled to commence by the end of the decade. Rhodes Ridge exhibits an average Fe content ranging from 61% to 63%, in line with the typical Pilbara ore from Rio's existing 17 mines.
Both projects were prominent topics during Rio's investor day briefing in Sydney.
Rio Tinto anticipates the first production from the Simandou operation in 2025, with a ramp-up period of approximately 30 months to reach an annualized capacity of 60 million metric tons, of which 27 million tons will belong to Rio Tinto. The project is being developed in collaboration with Chinese partners and the government of Guinea. It is progressing under the Simfer joint venture, which includes CIOH, a Chinalco-led consortium, Winning Consortium Simandou (WCS), Baowu (a major Chinese steelmaker), and the Republic of Guinea.
Rio Tinto reports that as of December 31, 2022, the Simfer joint venture's mine concession held an estimated Total Mineral Resource of 2.8 billion tonnes, of which Rio Tinto has converted approximately 1.5 billion tonnes to Ore Reserves, supporting a 26-year mine life with an average grade of 65.3% iron and low impurities. Additionally, Rio Tinto reports Mineral Resources, exclusive of Ore Reserves, totaling 1.4 billion tonnes at 66.1% Fe and low impurities.
Bold Baatar, Rio Tinto's Executive Committee lead for Guinea and Copper Chief Executive, stated, "We are continuing to work closely with the Government of Guinea, Chinalco, Baowu, and WCS towards full sanction of this world-class project by all partners."
This monumental project will result in the largest greenfield integrated mine and infrastructure investment in Africa. It will involve the development of more than 600 kilometers of new multi-use rail, along with port facilities, co-developed by the Republic of Guinea, Simfer, and WCS. This infrastructure will enable the export of up to 120 million tonnes of mined iron ore annually from the respective Simandou mining concessions in the southeast of the country.
The cost of developing this shared infrastructure will be split equally between Simfer, which will operate a 60 million tonne per year mine in blocks 3 and 4 of the Simandou Project, and WCS, responsible for developing blocks 1 and 2.
Regarding the Rhodes Ridge mine, it could initiate operations at a level between 40 to 50 million tonnes but has the potential to more than double in size over time. Simon Trott, the head of Rio Tinto's iron ore business, stated, "Longer term, the resource could support a world-class mining hub with a potential capacity of more than 100 million tonnes of high-quality iron ore a year."
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.