Rio Tinto Ltd (ASX:RIO) (LSE:RIO, ASX:RIO, OTC:RTNTF) said the final green lights have been given for the $11.6 billion development of the Simandou high-grade iron ore deposit in Guinea.
First production from the Simfer mine is expected in 2025, ramping up over 30 months to an annualised capacity of 60 million tonnes per year, with Rio's share to be 27 million tonnes a year.
Guinean and Chinese regulatory approvals have now been received for the project so that co-investment will be made in the development of rail and port infrastructure that is expected to be Africa's largest new mine and infrastructure investment.
"Simandou will deliver a significant new source of high-grade iron ore that will strengthen Rio Tinto's portfolio for the decarbonisation of the steel industry, along with trans-Guinean rail and port infrastructure that can make a significant contribution to the country's economic development," said Rio Tinto copper chief executive Bold Baatar.
Under the terms of the transaction, Simfer, a joint venture between Rio Tinto, China's Chalco Iron Ore Holdings (CIOH), and the government of Guinea, will invest roughly $6.5 billion, with Rio Tinto saying its share will be about $3.5 billion.
CIOH has made the first payment of $410 million to cover expenditure until the end of last year and last week a second payment of $575 million to cover spending in 2024.
Once complete, the co-developed infrastructure and rolling stock will be transferred to and operated by a joint venture, in which Simfer and a Singapore-led consortium each hold a 42.5% equity stake and the Guinean State a 15% stake.
Of the total estimated $11.6 billion capital funding requirement for Simfer for the Simandou project, Rio Tinto's share is roughly $6.2 billion.