The launch of Guinea’s US$20 billion Simandou iron ore project marks a globally significant milestone.
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The event on Tuesday at Guinea’s Morebaya port, attended by Chinese and regional African leaders, saw the departure of the first shipment of ore from the Simandou project – a major feat after nearly three decades of development.
The Chinese delegation was led by Vice-Premier Liu Guozhong, who underscored the importance Beijing has attached to securing high-grade ore for decarbonising the national steel industry and diversifying away from Australian supplies.
Guinea’s Simandou 2040 plan aims to use mining revenues to develop infrastructure, agriculture and education in the West African country, while also signalling the mine’s immediate global importance.
Most extracts from Simandou – the world’s largest known untapped deposit of high-grade iron ore – are expected to be shipped to China, given the heavy investments by Chinese firms in the project. But the majority Chinese stake is a key concern for both the Guinea government and British-Australian mining giant Rio Tinto regarding future market stability, which has created an unusual alliance.
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Guinean officials are aware of the possibility that Chinese firms would use the massive influx of high-grade ore to suppress global iron ore prices, but have pledged to actively collaborate with Rio Tinto to leverage the mine’s premium product and Rio Tinto’s market expertise to maintain stable high prices for the ore.