Rio Tinto, Guinea eye third-party Simandou rail development

Guinea and a consortium led by Anglo-Australian mining major Rio Tinto are looking to turn a multi-billion-dollar rail infrastructure project for the Simandou iron ore mine over to a third party.

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“The government of Guinea is leaning towards third-party development of infrastructure,” Rio ceo Sam Walsh said in a press briefing on Thursday August 8.

Rio Tinto, alongside joint-venture partners Chalco and International Finance Corp (IFC), is developing blocks 3 and 4 of the Simandou iron ore mine in the west African country, one of the largest untapped iron ore resources in the world.

Under the terms of a 2011 agreement with the government of Guinea, Rio and its partners are responsible for 49% of the cost of developing infrastructure associated with the mine, including a 650km multi-user rail line connecting Simandou with the seaborne market.

The government of Guinea has struggled to set up the financing for its half of the project, however, with costs soaring to an estimated $20 billion.

If infrastructure development is turned over to a third party, Rio Tinto will not have to dedicate any capital to the Simandou rail project.

“They [the government] are in talks with international third-party infrastructure providers,” Walsh said. “This is a change that makes sense. If it means that the project can move on, then it is a good and wonderful thing.”

Rio Tinto said in the 2011 agreement that the mine would start production in 2015, but this deadline will be “hard” to achieve, Walsh said.

Guinea’s mines minister, Mohamed Lamine Fofana, said that the target would probably be missed.

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