Rio Tinto's Guinea unit has agreed terms with joint venture partners including China's Baowu to develop infrastructure at the massive Simandou iron ore deposit, according to Reuters.
This is the next step in building a project at Simandou Iron Mine. Rio Tinto has held a stake in the project since 1997.
Simandou, located in a remote corner of Guinea, has long been hampered by the challenge of getting high-grade iron ore from the mine to market.
Guinea's government requires any developer to build a 600km railway to the coast.
Rio Tinto's Guinea unit last July formed a joint venture with WCS and the Guinean government to develop rail and port infrastructure.
A spokesman for Rio Tinto said it and Baowu Resources had now signed a non-binding letter of intent as the next step needed to reach shareholder agreement, cost estimates and regulatory approval.
The companies did not disclose any details of the terms of the agreement.
Rio Tinto said the partners had pledged through a term sheet that the project would meet "internationally recognised ESG standards" and help Guinea benefit economically.
China Baowu Iron & Steel Group Co LTD, the country's largest steelmaker, said in a statement on its wechat account on Dec 24 that its subsidiary had signed a term sheet for Simandou Infrastructure.
China Baowu said it would speed up negotiations on a shareholder agreement, lead the formation of a Bao Consortium and implement project financing to accelerate the development of the project.
China Baowu said the Baowu consortium planned to invest in Win Alliance, taking a 49 per cent stake in InfraCo and MineCo, but did not say how much it would spend on the stakes. It plans to increase its stake in MineCo to 51 per cent when the mine comes on stream.
Gerard Rheinberger, managing director of Rio Tinto Simandou, said: "Baowu's participation in the project is a positive signal for the importance of Simandou and the long-term attractiveness of its high-grade, low-impurity iron ore."
Simandou is the world's largest undeveloped iron ore project, a key ingredient in making stainless steel.
The Winning Alliance is a consortium made up of Singapore company Winning International Group(45%), Weiqiao Aluminium Industry, a subsidiary of China's Hongqiao, (35%) and Guinean company United Mining Suppliers International(20%), It won the rights to Simandou Blocks 1 and 2 in November 2019.
Rio Tinto has held the rights to Simandu Blocks 3 and 4 through Simfer s.a. since 1997. Simfer s.a. is owned by the Government of Guinea (15%) and Simfer Jersey Limited(85%), itself a joint venture between Rio Tinto (53%) and Chinalco Iron Ore Holdings (CIOH)(47%).
CIOH is 75 per cent controlled by Chinalco, 20 per cent by Baowu, 2.5 per cent each by China Railway Construction Corporation and China Harbour Engineering Corporation.
