SYDNEY — Rio Tinto said on Thursday that its Guinea subsidiary has formed a joint venture with the government and the Winning Consortium Simandou (WCS), paving the way for work to resume at the world’s largest underdeveloped iron ore deposit.
The deal is a breakthrough for Rio, after a setback earlier this month when the Guinea government asked the global miner and WCS to halt construction at the Simandou iron ore project.
The joint venture incorporation, called La Compagnie du TransGuinéen (The TransGuinean Company), will be central for the co-development of the rail and the port components of the Simandou iron ore development project, Rio said in a statement.
The miner said the parties would now work on a “shareholding agreement, finalizing cost estimates and funding, and securing all necessary approvals and other permits and agreements required to progress the co-development of infrastructures.”
The announcements comes after the Guinea government ordered a halt to work at the project earlier this month, after Rio’s Guinea subsidiary Simfer and WCS missed an extended deadline to agree on a joint venture.
The project has faced several disruptions over the years due to disagreements between the companies and political changes in Guinea. The joint venture is intended to cover the rail and port infrastructure the companies will use to export the iron ore.
The joint venture “paves the way to progress the shareholder agreement, and secure necessary financing to construct a strategic corridor with more than 600 kilometers of rail infrastructure extending from south to south-west of the Republic of Guinea,” the statement said.
At the release of its half year results on Wednesday, Rio Chief Executive Jakob Stausholm said talks were under way with the Guinea government but the negotiations were not easy.
Rio Tinto has held rights to Simandou since 1997. Through Rio Tinto Simfer, it owns a 45.05% stake in the southern half, Blocks 3 and 4, of the deposit, with Aluminium Corp of China (Chinalco) holding 39.95% and Guinea’s government the remaining 15%.
WCS holds Blocks 1 and 2 of Simandou. (Reporting by Praveen Menon; Editing by Sam Holmes and Kim Coghill)