Rio Tinto forced to halt work on Guinea’s Simandou iron ore mine

Rio Tinto, the second-largest Australian mining company, has faced a fresh setback in its push to develop the long-stalled Simandou iron ore project in Guinea after the West African nation’s government issued a stop-work order.

Guinea’s Mines Minister Moussa Magassouba wrote to Rio Tinto and China-backed SMB-Winning Consortium over the weekend, directing them to stop all work related to Simandou from 8am local time on Monday. The letter from the nation’s military rulers said the companies had shown an unacceptable “lack of willingness” to agree on a joint venture for funding the project’s transport infrastructure.

The government’s intervention adds to doubts surrounding the timeline for developing Simandou, which is considered the world’s biggest untapped resource of the steel-making ingredient iron ore.

Guinea’s ruling junta, which took power in a coup in September, has become increasingly impatient with Rio Tinto and other companies involved in the Simandou project. In March, it halted construction works on the mine and forced Rio Tinto and the SMB-Winning Consortium to establish a framework for the project’s infrastructure including a 670-kilometre railway line and a port.

Rio Tinto has a 45 per cent stake in a consortium that owns two of Simandou’s iron ore tenements. The SMB-Winning Consortium, made up mostly of Chinese entities, owns the other two.

Loading

Rio Tinto declined to comment on Tuesday.

Iron ore, Australia’s most valuable commodity, brought in export earnings of more than $130 billion in the past financial year, new federal government trade data shows. However, analysts predict Guinea’s Simandou region may one day rival the iron ore volumes of Western Australia’s minerals-rich Pilbara, while China is increasingly looking to Simandou as a way to lessen its reliance on Australian supplies, which Chinese President Xi Jinping has described as a “strategic weakness”.

Benchmark iron ore prices have been as high as $US140 a tonne this year, but fell on Monday night below $US100 a tonne amid escalating concerns about COVID-19 outbreaks in China curtailing demand for steel.