Simandou iron ore project in Guinea has been halted. Guinea’s ruling junta ordered the halt, with interim president Mamady Doumbouya saying it is not clear how the mine will preserve national interests.
Simandou, owned by Rio Tinto and a Chinese-backed consortium, spent years in limbo because of disputes over ownership rights and the complexity and expense of transporting ore to the coast.
The current government, who took power in a military coup in September, said in a statement that Doumbouya had not seen any progress in that direction, despite having discussed the matter with Rio Tinto’s boss Jakob Stausholm in December.
“[Colonel Doumbouya] therefore ordered the cessation of all activity on the ground pending the answers to questions posed to various actors and the clarification of the operational mode by which the interests of Guinea will be preserved,” government spokesperson Ousmane Gaoual Diallo said in the statement.
Rio Tinto, the world’s second largest miner owns about 45% of Blocks 3 and 4 of Simandou, while Aluminum Corp. of China (NYSE: ACH) holds 40% and Guinea’s government the remaining 15%. Blocks 1 and 2 are controlled by China-backed SMB Winning Consortium.
“It’s a bold move by Doumbouya, and it may yet come back to bite him. This is the culmination of several months of rumblings that now have risen to the surface and boiled over,” Eric Humphery-Smith, Senior Africa Analyst at risk intelligence company Verisk Maplecroft, said in a note.
At two billion tonnes in iron ore reserves and some of the highest grades in the industry (66% – 68% Fe, which attracts premium pricing), Simandou is one of the most easily exploitable iron ore deposits outside of Australia’s Pilbara region and Brazil’s.
At full production, the mine is expected to export up to 100 million tonnes per year. Simandou would by itself be the world’s fifth-largest producer behind Fortescue Metals (ASX: FMG, Vale (NYSE: VALE) and BHP (ASX: BHP).