After decades of challenges, the Simandou iron ore project in Guinea, West Africa, is poised to commence operations. The project, located in a remote and biologically rich region, holds the world’s largest untapped iron ore deposit, estimated at a minimum of 3 billion tonnes. The remoteness of the deposit combined with military coups, corruption scandals and corporate intrigue helped keep Simandou’s valuable trove in the ground for almost three decades. The commencement of operations has the iron ore market on edge, with the potential to shift power dynamics amid uncertain demand and China’s growing influence.
The scale of the Simandou project is immense, with Rio Tinto planning to extract ore with a remarkably high iron content from an 8-kilometre ridge. The $US23 billion ($35 billion) venture is Africa’s largest mining project to date and could position Guinea as the continent’s second-largest exporter of minerals and metals by value. The project includes a brand-new railway carrying ore to a purpose-built port, from where it will be dispatched to China’s steelmaking furnaces before the end of this year.
For years, global iron ore production has been dominated by a few major companies, including Rio Tinto Group, BHP Group, and Vale. Rio Tinto Group is one of the world’s largest mining companies. In April 1998, a geologist working for them confirmed the presence of vast quantities of iron ore at the Simandou deposit. However, Rio Tinto now holds only a quarter share of the Simandou project, with Chinese firms owning the majority.
The influx of rich new supplies from Simandou is expected to grant Beijing greater leverage in controlling iron ore prices and reducing reliance on foreign mining giants. This strategic move reinforces China’s dominance in mining and refining African resources, spanning from copper and cobalt to lithium. The project aims to transform a vulnerable point in China’s supply chain into a position of strategic strength.
