China-backed JV wins $14bn iron ore deal at Guinea’s Simandou
A consortium representing Chinese, French and Singaporean interests has won a $14bn tender to develop part of Guinea’s Simandou iron ore project, edging out rival Fortescue.
Reuters report that the consortium, which includes Société Minière de Boké (SMB) and Singapore’s Winning Shipping as well as Guinean government interests - has committed to develop blocks 1 and 2 of the largest known deposit of its kind, holding more than 2 billion tonnes of high-grade ore.
Rio Tinto holds a 45% stake in blocks three and four of Simandou, which it is planning to develop. State-controlled Chinalco owns 40% and the Guinea government 15%.
Guinea has sought to develop the Simandou deposit for decades, but the project has been mired in protracted legal disputes and the high costs have curbed interest.
The government required the winning bidder to build a 650 km (400 mile) railway and deepwater port to transport the ore from the remote southeastern corner of Guinea to the coast for export, deterring some miners from bidding.
“The Simandou Project will be crucial for Guinea’s future. This mega deposit is an opportunity in terms of employment and wealth creation for the whole country,” said Sun Xiushun, the SMB-Winning consortium’s chief executive.
A commitment to build the railway dubbed the ‘Transguinéen’ was pivotal in the decision to grant the blocks to SMB-Winning, Guinea’s mining minister Abdoulaye Magassouba told Reuters.
Investors in the relatively little-known winning consortium include Chinese aluminium producer Shandong Weiqiao, a unit of China Hongqiao and Yantai Port Group, as well as Guinea’s government. The consortium is Guinea’s leading exporter of bauxite, an aluminium ore.
Magassouba said the government would now thrash out the technical details of the deal with SMB-Winning and put the resulting agreement to a vote in parliament. SMB-Winning aims to bring the deposit to production within five years of the agreement being ratified.
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