Rio Tinto in $157m first shout for Simandou

afr.com:

Rio Tinto has loaned $US100 million ($156.9 million) to the Chinese and Singaporean companies that will build railways and ports for Guinea’s Simandou iron ore project, in a major show of faith in its consortium partners, rival miners and the grand plan to build an African iron ore industry.

Rio plans to mine iron ore from two tenements in the Simandou mountains through the “Simfer” consortium, which features four Chinese companies including state-owned steel and aluminium giants Chinalco and Baowu.

The Simandou mountains in Guinea contain high-grade iron ore Rio Tinto

Despite those powerful partners participating in the Simfer consortium, the $US100 million loan was made by Rio individually, and was designed to fund ongoing studies until a final feasibility study and funding agreement for the rail and port can be struck with the Guinean government and a rival mining consortium.

The railway will traverse close to 600 kilometres of Guinean countryside on its way to a river port and trans-shipping operation in the Morebayah Estuary.

The cost of the transport infrastructure is yet to be confirmed, but it isexpected to cost between $US12 billion and $US20 billion.

Rio transferred the $US100 million to the rival “Winning” consortium that will mine iron ore from two tenements in the Simandou mountains that are adjacent to where the Rio’s “Simfer” consortium will mine.

Rio transferred the money to the rival consortium because Winning will initially own the company that will build the railway and port infrastructure.

Rio’s Simfer consortium is expected to acquire a 34 per cent stake in the Winning companies building the transport infrastructure and eventually fund 50 per cent of the costs.

But those transactions won’t occur