Rio Tinto Faces Pressure to Build Refinery at Guinea's Simandou

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Global mining giant Rio Tinto's (London, England) plans for the world's largest and highest-grade iron ore mine in Guinea have hit a new hurdle as the military-led Guinea government has demanded investment in local processing facilities.

The government, which took power in the West African nation in 2021, said that those foreign companies involved in the giant Simandou ore project must invest in creating domestic downstream refining operations so that the country can benefit from local processing. If not, they face threats of projects being delayed or being stripped of mining rights. Simandou is divided into four blocks with Rio Tinto holding rights to blocks 3 and 4 through Rio Tinto SimFer, a joint venture with the Government of Guinea and Chalco Iron Ore Holdings (CIOH) (Hong Kong, China). These blocks contain ore reserves estimated at around 1.5 billion tonnes, with Rio Tinto being the majority shareholder and managing partner.

Rio Tinto is also working with the government and Winning Consortium Simandou (WCS), developers of Simandou blocks 1 and 2, to co-develop the infrastructure needed to export mined iron ore from the far southeast of the country to Guinea's maritime borders and beyond. This includes 600 kilometers (km) of rail infrastructure -- spanning the length of the country -- as well as port infrastructure on the coast of the Forécariah prefecture in Guinea. Industrial Info is tracking six Simandou projects worth more than US$7 billion in investment. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports. WCS is backed by Chinese firms including steelmaker China Baowu Steel Group Corporation (Shanghai Shi, China). Simondou is expected to eventually produce 120 million tonnes of premium ore annually, with Rio Tinto expecting to export first ore in November.

Ismael Nabe, Guinea's Minister of Planning and International Cooperation, told the Australian Financial Review: "We want to build a refinery in Guinea. That's our game plan. We are going to build refineries, be they for bauxite or iron ore. If Baowu comes to Guinea, they will build a refinery before shipping it out of the country". Comparing Guinea's position to that of Western Australia's iron ore sector decades ago, Nabe added: "We want to develop, we want to transform locally. We want to use this money to develop other sectors, like agriculture, education, and infrastructure."

A Rio Tinto spokesperson responded to AFR: "We are committed to working with our industrial partners and the government on a feasibility study for the construction of a pellet plant, which will help us understand the viability and options available together. Right now, we're focused on delivering the first shipments from Simandou."

Guinea is already the world's second-largest producer of bauxite, which is used to make alumina for aluminum production. It has previously stripped some foreign miners of their mining rights, citing "mining code violations" Last month, it revoked a large bauxite mining concession from the local subsidiary of Emirates Global Aluminium (GAC) (Abu Dhabi, United Arab Emirates), handing it to a new state-owned company. The government claimed that GAC had failed to build a promised alumina refinery. Similar actions have occurred in Niger, another West African nation which came under the control of a military-led government in recent years. In July, French uranium miner Orano said that its majority-owned joint venture with Niger, SOMAIR, was near bankruptcy due to the imposition of export restrictions imposed by the military government.

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