Exclusive: Rio Tinto Foots the Simandou Iron Ore Expenses as Chinese Financing Hits Snags!

Rio Tinto, the Anglo-Australian mining titan, has been single-handedly footing the bill for the preliminary endeavors at its holdings in Simandou – a coveted iron ore deposit that's among the world's largest untouched reserves. While Rio Tinto eagerly advances the project, its Chinese associates have yet to pitch in their financial share, according to insiders familiar with the situation.

The renowned mining company has two of the four prized Simandou blocks through a partnership with China’s Chalco Iron Ore Holdings (CIOH) and Guinea's government, where this treasure trove of mineral wealth sits.

To date, Rio Tinto has poured over $500 million into the venture. Ideally, these expenses would have been shared with CIOH. However, there's been a hiccup, as the Chinese group awaits its nation's nod on financing matters.

Breaking down CIOH's ownership: 75% is under the Aluminum Corporation of China (Chinalco), Baowu Steel Group owns 20%, while both China Railway Construction Corporation (CRCC) and China Harbour Engineering Company (CHEC) share the remainder at 2.5% each.

There's a slight unease, as an inside source voiced concerns, "If Rio's comrades don't secure China's financial endorsement, the funds might just run dry." It's worth noting that this informant opted to remain anonymous.

While Rio Tinto chose to keep mum on the subject, attempts to reach Chinalco, Baowu, CRCC, and CHEC for insights went unanswered.

China's business realm, with its deep-rooted ties to governmental bodies, often navigates intricate approval processes, especially in an economic climate that's been somewhat turbulent post-pandemic.

The coveted Simandou has its own saga, mired in complexities. It's been a hot topic of debate and negotiation for years, owing to various reasons - from legal disputes, Guinea's evolving political landscape, to the challenging task of laying down 600 km of infrastructure to transport the mined ore.

Despite the maze of challenges, Raphael Gnambalamou, an authoritative voice from Guinea's mines ministry, remains optimistic, noting that "the project is on a favorable trajectory."

Worth mentioning, Simandou’s remaining blocks belong to the Winning Consortium Simandou (WCS), a trio comprising the Singaporean Winning International Group, Weiqiao Aluminium of the China Hongqiao Group, and United Mining Suppliers. A representative from WCS conveyed their robust progress, proudly highlighting a formidable team of over 10,000 individuals working diligently on the project.

Rio Tinto's arm, Simfer, alongside its partners, has also made significant strides, engaging approximately 3,000 professionals. They've also committed to pooling resources and dividing expenses for the expansive trans-Guinean railway project alongside WCS.

On the financial front, Rio Tinto has allocated a generous $800 million for the project in 2023 and has plans to invest a whopping $2 billion annually in the subsequent two years.

Source : Reuters (Reporting by Clara Denina)