SYDNEY/JOHANNESBURG - Rio Tinto's Guinea subsidiary has formed an infrastructure joint venture with Winning Consortium Simandou (WCS) and the government, paving the way for work to resume on the world's largest undeveloped iron ore project.
The joint venture (JV) for the Simandou railway and port is a milestone for Rio and WCS, whose shareholders include a unit of China Hongqiao, but the firms said they must still negotiate final JV agreements, without giving a timeline.
In a concession to Guinea's ruling military junta, the companies gave the government a 15% free carried stake in the JV, La Compagnie du TransGuinéen (The TransGuinean Company).
The junta, which took power in a coup last September, on July 3 ordered all work on the Simandou project to stop, frustrated with the companies' pushback over the government stake.
Djiba Diakité, chairman of the government's committee on Simandou, said: "the Republic of Guinea reassures the partners, and the world of its firm will to develop the Simandou project in the best interests of the people of Guinea, and all partners."
WCS and Rio's subsidiary Simfer Jersey Limited each hold 42.5% of the company, which will be "central" to the "co-development" of the more than 600 kilometre-long railway and the port being built to export ore from Simandou, which lies in Guinea's remote southeastern corner, the JV partners said in a joint statement.
This is also a step towards securing the necessary financing for the infrastructure, they said.
WCS Chairman Sun Xiushun said: "We are extremely grateful to our joint venture partners, the Guinean government and Rio Tinto Simfer for the spirit of cooperation they have shown in achieving this major milestone."
WCS, a consortium of Singapore-based firm Winning International Group (45%), China Hongqiao subsidiary Weiqiao Aluminium (35%) and Guinean company United Mining Suppliers International (20%), won the rights to Simandou blocks 1 and 2 in November 2019.
Rio Tinto has held rights to Simandou blocks 3 and 4 since 1997 through Simfer S.A. which is owned by the Government of Guinea (15%) and Simfer Jersey Limited (85%), itself a joint venture between Rio Tinto (53%) and Chalco Iron Ore Holdings (CIOH) (47%).
CIOH is held 75% by Chinalco, 20% by Baowu, with China Rail Construction Corporation and China Harbour Engineering Company each holding 2.5%. (Reporting by Praveen Menon Additional reporting and writing by Helen Reid Editing by Kim Coghill and Mark Potter)