The China-backed consortium that has secured rights to develop half of the huge Simandou iron ore deposit in Guinea expects to produce its first tonnes of the steelmaking ingredient in five years' time.
Fadi Wazni, the chairman of SMB-Winning, the consortium, said it was already "advancing" discussions with partners interested in backing its ambitious plan to build a 110 million-tonne-a-year iron ore mine in the west African country at an estimated cost of $15 billion. These include China Railway Construction Corporation (CRCC), China's state-owned railway constructor, and large steel mills.
Although Guinea has some of the world's best deposit of iron ore, it has yet to export a single tonne of the commodity, with attempts to develop Simandou stymied by legal rows and economics.
Conakry has insisted that any project to develop Simandou, which is estimated to contain 2bn tonnes of high-grade iron ore, includes a 650 km trans-Guinean railway linking the deposit with a deepwater port on the coast.
Rio Tinto, one of the world's biggest mining companies, has spent billions of dollars trying to develop its half of Simandou and has not been able to make the project work, even with backing from Chinese partners.
Mr Wazni said the first phase of the project would cost $5-8 billion for the rail and $1.5 billion each for port and mine development — and produce 60 million tonnes of iron ore a year from blocks 1 and 2 of Simandou in 2026.
The second phase would see $5 billion invested to double the capacity of the railway to 200 million tonnes and $2 billion to open new ore bodies and expand a deepwater port at Matakong. At this stage Simandou would be producing 110 million tonnes of iron ore annually.
"We think we can secure $5 billion for the rail almost immediately," said Mr Wazni, adding that SMB would also invest some of its own cash.
He said the rail line could also serve other iron ore projects in Guinea, including blocks 3 and 4 of Simandou — owned by Rio Tinto and a consortium of Chinese state-owned enterprises.
"We will accommodate whoever wants to be accommodated," he said.
If SMB can deliver on its ambitious plan it could have a big impact on the iron ore market, adding extra supply at about the time analysts expect Chinese steel production to have plateaued.
(Writing by Emma Yang Editing by Harry Huo)
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