On Monday the 26th of May The Government of Guinea and Rio Tinto (LON:RIO) have finally inked a game changing deal over the Simanduo iron ore mine
The deal project which will be the fifth largest iron ore producer would require infrastructure investment to the tune of $20 billion. Rio Tinto and its partners China Chalco and the World bank in the agreement identified the need for a new 700km railway across the country to Conakry, Guinea’s capital in the north, at a conservatively estimated cost of $7 billion, Reuters reports:
It will also require a deep-water port and supporting infrastructure to the tune of $6.5 billion. Breaking it down to $4 billion for the port at Morebaya and $2.5 billion for the support infrastructure respectively.
There was a little challenge with the route which the 700km railway should take considering there is shorter and cheaper option. However considering the economic benefits the entire project including the railway will bring to the nation the longer route was chosen. The infrastructure project would be a 30 year concession that allows the developer to manage the infrastructure for 30 years after which it will be handed over to the Guinea.
Guinea’s ore has proven to be one of the richest in the world and one of the easier ore to access. The project one fully operational will contribute in the region of $7.6 annually to the country’s economy
Initially scheduled for next year, the project will at least take another decade to complete.
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07 November 2014