From discord to 'iron caviar'. Guinea's $20 billion mining project to revolutionize global iron market
Twenty-seven years after acquiring permission for iron mining in the Simandou mountains in southeastern Guinea, Rio Tinto, the third largest British-Australian mining conglomerate, is finally proceeding with the massive investment project, as detailed in the Financial Times.
The venture involves mining high-quality iron ore, setting up over 341 miles of railroad, and building a seaport. The magnitude of the investment surpasses the limits of a single investor. Seven multinational corporations are part of the project, including five from China and the Guinean government.
Troubles already existed as Chinese stakeholders needed Beijing's approval for investment initiation, causing years of delay. In 27 years in Guinea, the nation underwent two coups, had four different leaders, and held presidential elections thrice.
Rio Tinto has also faced turbulent times. Amidst six different CEOs, it lost half its licenses, endured extended legal fights with several corporate rivals, reached a settlement with U.S. authorities over corruption charges, and even tried to entirely withdraw from the project, according to the Financial Times.
There's now a chance in 2024 that one of the world's most significant mining projects might finally launch, as Chinese authorities have given their businesses the green light to invest in Africa.
Harvesting "Caviar"
In collaboration with a consortium led by the world's largest producer of aluminum, Chinalco, Rio Tinto will construct one iron ore mine, currently known as the Simfer project. The total investment by the British-Australian conglomerate is expected to be $6.2 billion. The initial ore shipment is slated for 2025, with production set to spike to 60 million tons annually by 2028, contributing to approximately 5% of the global iron ore market transported by sea, as reported by the Financial Times.
The second mine, the WCS project, will be established by the world's largest steel producer, Baowu, and a consortium led by the Singapore-based Winning International Group.
Iron ore demand is rising, with the steel industry requiring steadily larger supplies. Meanwhile, most identified and readily accessible deposits have already been exploited. The industry's approach toward the environment and the changing times reflect an increasing need for high-quality iron ore for hydrogen and carbon dioxide cleaning, rather than smelting with coke.
With an average iron content exceeding 65%, the ore from Simandou has one of the highest iron contents globally. As such, Bold Batar, the CEO of Rio Tinto, accurately described it as the "caviar of iron ore" in an interview with the Financial Times.
