Rio Tinto and partners ink deal to develop Africa's largest iron ore project

27th May 2014 11:13

Rio Tinto, Chinalco and the International Finance Corporation (IFC) have signed an 'investment framework' to develop 20bn dollars-worth of iron ore deposits in Guinea.The agreement for blocks three and four of the Simandou project, formalised with Guinea's government, has been years in the making and represents the largest combined iron ore and infrastructure project ever developed in Africa.Rio said in a statement that the deal provided the West African state "with the opportunity to reap the benefits of its rich mineral wealth and transform its wider economy".The companies estimate that the project, when fully operational, has the potential to double Guinea's current gross domestic product, creating a total of 45,000 jobs. At full production, the high-grade iron ore mine is expected to produce 100m tons per year."The signing marks a significant milestone and provides the legal and commercial foundation for the project. It also allows the project to move towards realising the opportunities it presents for Guinea and all the shareholders," Rio said.Rio holds a 46.57% stake in the project while Chinalco owns 41.3% and the IFC holds 4.625%. The Republic of Guinea owns the remaining 7.5% interest."The parties have re-affirmed their continued support for the Simandou project and the implementation of the necessary programme of works for its delivery through the agreement and no monetary consideration is payable pursuant to the agreement itself," Rio said in a statement.Once ratified, the partners will finalise a Bankable Feasibility Study within a year to determine parameters including the cost and timeline of the project.Rio's shares were down 0.6% at 3,239p by 11:27.BC