The Simandou product of more than 66% iron content will be the caviar of iron ores as the “normal” iron content is only 58%, Gerard Rheinberger told Business Report at the sidelines at Mining Indada in Cape Town.
“The high grade and low impurities make the Simandou product a premium grade product and that will help the world’s steel makers reduce their carbon footprint. It will also be less energy intensive as instead of going the blast furnace route, Simandou can be used in direct reduction iron (DRI) kilns or blended with scrap steel in electric arc furnaces (EAF),” he said.
Rio Tinto created a joint venture, Simfer, with Chalco Iron Ore Holdings (CIOH) and the Government of the Republic of Guinea. Rio Tinto is the majority shareholder and managing partner of Simfer.
First production from the Simfer mine is expected in 2025, ramping up over 30 months to an annualised capacity of 60 million ton per year.
The mine will initially deliver a single fines product before transitioning to a dual fines product of blast furnace and direct reduction ready ore.
The Simandou mountain range lies in the south-east of the Republic of Guinea, over a surface area more than 100km. Its subsoils contain the world's largest untapped reserve of high-grade iron ore, estimated at some 2.8 billion tons.
Rio Tinto estimates that its initial share of capital expenditure to develop the Simfer mine and the co-developed rail and port infrastructure project is approximately $6 billion (R113bn).
In what will be the largest greenfield integrated mine and infrastructure investment in Africa, some 640 kilometres of new multi-use rail together with port facilities will be co-developed by the Republic of Guinea, Simfer and WCS. This will allow the export of up to 120 million tons per year of mined iron ore by Simfer and Singapore-based WCS from their respective Simandou mining concessions in the southeast of the country.
The co-developed infrastructure capacity and associated cost will be shared equally between Simfer, which will develop, own and operate a 60 million ton per year mine in blocks 3 and 4 of the Simandou Project, and WCS, which is developing blocks 1 and 2.
Once complete, all co-developed infrastructure and rolling stock will be transferred to and operated by the Compagnie du Transguinéen (CTG) joint venture, in which Simfer and WCS each hold a 42.5% equity stake and the Guinean State a 15% equity stake.
“The infrastructure we will develop will be transferred to the state after 35 years, but the mine will operate for a century, so we are in it for the long haul. It will be truly transformative for Guinea,” he said.
Highlighting the importance of the Simandou project to Guinea, Rheinberger shared the panel with Moosa Cisse, the Guinean Minister of the Economy and Finance and the governor of the Guinean central bank, Karamo Kaba. These two gentlemen spoke about how the revenue flow to Guinea would transform the economy with annual revenue of $600m expected in the next few years, rising to $2bn per year by 2040.
“One of our challenges as Rio Tinto is to manage the expectations of the ordinary Guinean as although the Simandou project is transformative, it is no magic wand and will not solve all the country’s problems overnight,” Rheinberger said.
BUSINESS REPORT