Rio Tinto May Be Forced To Invest Heavily in Downstream Industries in Guinea.

African mining industry news on September 8: According to Mining Network, the government of Guinea is strongly promoting that mining companies build domestic smelting and refining facilities, requiring major mining companies to submit clear domestic processing plans in order to obtain higher value from mineral resources and promote economic development. This resource nationalism policy may force companies like Rio Tinto to make high-cost downstream investments in Guinea, especially on its flagship project - the Simandou iron ore project, which is the world's top iron ore project. Since coming to power in 2021, the Guinean government has clearly required mining companies to formulate "hard plans" for building smelting and refining facilities domestically. Guinea's Minister of Planning and International Cooperation Ismael Nabe said in an interview with the Australian Financial Review: "Our strategy is clear - the mined minerals in Guinea must be processed in Guinea. We plan to build a refinery in Guinea, and this is our goal. If Baowu comes to Guinea, they must build the refinery before the ore is shipped out." This policy echoes the rising trend of resource nationalism on the African continent. In recent years, several African countries have required mining companies to process minerals locally to increase resource value and promote economic diversification. For example, Guinea, as the world's second-largest bauxite producer, has cancelled some agreements with companies like Emirates Global Aluminium due to the slow progress of the alumina refining plant construction. The Simandou iron ore project is a "giant" in the global mining industry, divided into four blocks. Among them, the 1st and 2nd blocks controlled by the Chinese consortium including Baowu, and the 3rd and 4th blocks controlled by Rio Tinto and Chinese state-owned enterprise Chinalco, all face new policy challenges. Nabe compared Guinea's ambition to the iron ore boom in Western Australia decades ago and emphasized that mining revenue should support agriculture, education and infrastructure development. He said: "We not only need to mine the ore, but also make these resources benefit all aspects of Guinea." Rio Tinto obtained the exploration license for the Simandou iron ore project in 1997, but the project has suffered from political turmoil - including two coups, four changes of the head of state and three presidential elections - resulting in long-term delays in development progress. Now, with the promotion of the military government's new policies, Rio Tinto, while advancing the Simandou iron ore project, may need to invest additional funds to build supporting refining or processing facilities to meet local requirements. The Simandou iron ore project is hailed as "the largest and highest-grade undeveloped iron ore in the world", and it is expected to produce 120 million tons of high-quality iron ore annually upon full production. The first shipment of ore from the project is scheduled for November 2025, marking the project's approach to its harvest period. To support ore transportation, the Simandou iron ore project has built a 600-kilometer-long railway line to connect the inland mining area with the new deep-water port on the Guinea Atlantic coast. Rio Tinto will be responsible for operating one of the mines and contributing key production capacity to the project. Despite the tightened policies, Guinea's bauxite exports still increased by 36% in the first half of 2025, reaching a record 99.8 million tons, mainly benefiting from the strong pull of Chinese demand. Data from the U.S. Geological Survey shows that Guinea's bauxite export volume in 2024 will exceed 130 million tons, with reserves estimated at 7.4 billion tons. In the iron ore sector, the Simandou iron ore project will become a new pillar of Guinea's resource map. Its high-quality ores not only bring higher economic benefits, but also have the potential to consolidate Guinea's position in the global iron ore market. However, the new regulations of the military government mean that companies like Rio Tinto need to balance the relationship between resource extraction, local processing and economic benefits during the development process. This will have a profound impact on the cost structure and investment returns of the project. In recent years, many African countries have strengthened their control over mineral resources and required mining companies to process locally to increase added value and employment. The history of the Simandou iron ore project: As one of the most promising iron ore projects in the world, the development of Simandou iron ore has gone through ups and downs. Political instability is its main challenge. Mining is the economic pillar of Guinea, and the export of bauxite and iron ore is crucial to the country's foreign exchange income and economic growth.