Following a statement made during the Council of Ministers of Guinea on March 10, 2022, the Guinean Executive has decided to pause all activities related to the implementation of the gigantic Mount Simandou iron ore mining project.
The reasons behind this situation are due to the fact that the head of the Guinean junta, the colossus Colonel Mamadi DOUMBOUYA, believes that the mining groups holding permits on Simandou have not taken into account the interests of Guinea in the development of their projects and this, despite his express request made during their meeting in December 2021
Thus, contrary to the commitments made by the junta in the aftermath of its September 5, 2021 coup d'état, which put an end to the 11-year reign of Alpha Conde, where it had decided not to call into question the mining conventions in force in the country, the junta decided to suspend preparatory work on the construction of the Guinean railway, which is a prerequisite set by the Guinean government in the granting of permits on Simandou. This railroad, about 650 km long, is intended to bring future iron ore production from Simandou (in the Upper Guinea region) to the port to be built in the prefecture of Forécariah in Lower Guinea.
Additional delays to be feared.
By deciding to "cease all activity on the ground pending answers to questions posed to the various actors and clarification of the modus operandi in which Guinea's interests will be preserved," the junta risks prolonging the implementation of the exploitation of Simandou iron ore. This exploitation has long been hoped for. Since acquiring its first permits in 1997, Rio Tinto has been delaying the project for several reasons, mainly Guinea's demand that the Simandou production be exported via the Guinean coast rather than via the facilities of neighboring Liberia, whose coastline would be closer, which would imply lower transportation costs. Also, for a period of time, the price of iron on the world market was not favorable to amortize such a heavy investment.
On the other hand, having obtained its Simandou permit in November 2019, the Chinese-backed Winning Consortium Simandou seems ready to get down to business in the realization of the Guinean railroad, and the exploitation of its shares (Blocks 1 and 2, North Simandou). The first timetable given by the consortium provided for preparatory work to be carried out and effective exploitation to begin by 2025. In March 2021, the consortium had already officially launched the construction of the Guinean trans [railroad] in Madina Oula (in the prefecture of Kindia, in Lower Guinea). Since that date, the consortium has continued work on the ground, suggesting compliance with the timetable given to the Guinean authorities.
A difficult pooling of efforts
The Guinean authorities' requirement to export Simandou iron via the Guinean coast, located more than 650 KM from the mining site, complicates the situation and adds to the associated investment costs. Thus, under pressure from the Guinean authorities, Rio Tinto and its partner Chinalco (holding about 45% and 40% respectively) and the Winning Simandou Consortium are considering joining forces to build the Guinean Trans. However, discussions between the two groups are likely to be laborious given Rio Tinto's constraints to comply with much higher social and environmental standards. Already, the WCS consortium has been accused of blowing up protected chimpanzee habitats along the railroad route.
Huge and high-quality reserves.
Despite the heavy investments associated with the eventual construction of the 650 km long Trans Guinean Railway from the Simandou to the Guinean coast, the rich Simandou iron deposit remains profitable.
According to our colleagues at mining.com, with two (2) billion tons of high-quality iron ore (between 66% and 68% grade), Simandou's reserves remain profitable and are the most easily exploitable apart from those of the Pilbara region in Australia and Brazil.