SYDNEY: Global mining giant Rio Tinto says it is set to finalize a $20 billion deal to develop the world’s biggest untapped iron-ore deposit in Guinea later this month following years of delays.
The Simandou iron ore project, which could create Africa’s biggest-ever infrastructure venture, will boost Guinea’s annual revenue by $1.2 billion through income tax and royalty payments and pump billions more into the nation’s economy, Rio chief executive Sam Walsh said.
“Later this month, we expect to sign the investment framework that formalizes our partnership with the government of Guinea, Chalco and the IFC,” Walsh said in a speech in Washington on Saturday and uploaded on to the company’s website Monday.
“This has taken some time to bring to fruition and I think this signing will inject the project with renewed momentum,” he added in the speech on infrastructure investment in developing countries, a key theme of this year’s G20 meetings chaired by Australia.
Walsh said the “remarkable project” would see billions of dollars invested in developing infrastructure in one of Africa’s poorest nations, which is still recovering from decades of military dictatorships and misrule.
The deal will formalize the partnership for Simandou with Guinea’s government,
China’s state-run aluminium group Chalco and the International Finance Corporation, a division of the World Bank.
“When fully operational, the annual economic contribution of Simandou to the Guinean economy is estimated to be $7.6 billion—that’s 22 times the $340 million in international aid contributions to Guinea in 2012,” Walsh added.
“It would be fair to say that this represents a new paradigm for Guinea.”
The estimated $20-billion project will include a railway to carry iron ore from the Simandou mountain range to a deep-water port 650 kilometers (400 miles) away.