Sky News Australia published Jan 22, 2023: China is progressing with the construction of a giant iron ore mine in the African country of Guinea with the mine expected to be operational by 2025.
Kalkine Media published September 16, 2022: Rio Tinto and China’s Baowu commit to $3b Pilbara iron ore expansion. Rio Tinto to boost its production from the Pilbara region; Rio Tinto announced on Wednesday, 14th September, that it would collaborate with its largest client China Baowu Steel Group, to construct an iron ore project in Western Australia for $2 billion.
CNBC International published Jan 16, 2023: Mining giant says 2023 ‘will be a real turning point for the world’ as China reopens. Andrew Forrest, chairman and founder of Australian miner Fortescue Metals, shares his views on iron ore prices and discusses the impact of China’s reopening.
Afr.com, Financial Review
written by Emma Connors and Michael Smith
Monday January 23, 2023
Singapore/Tokyo | China has moved closer to reducing its dependence on Australian iron ore with a landmark deal in Guinea, West Africa, that will unlock one of the world’s biggest unexploited deposits after more than a decade of negotiations.
China steel giant Baowu reached the deal a month ago with joint venture partners to mine and ship iron ore from the Simandou project in south-east Guinea – the world’s most important new entrant to the market – bringing the biggest threat to Australia’s export dominance of the commodity closer to reality.
Satellite photos taken last week and seen by The Australian Financial Review show work on key port infrastructure, more than 550 kilometres from the deposits according to the proposed rail route, is well under way. According to the project developer, Winning Consortium Simandou (WCS), the ambitious project includes 235 bridges, as well as tunnels that run up to 11 kilometres.
Iron ore and gas have been the main two Australian exports spared Chinese bans and restrictions during more than two years of heightened tensions between the two countries.
The Financial Review has learnt Guinean government officials travelled to Beijing and Shanghai this month to meet with Baowu after the steel maker took a lead role in the project, paving the way for the release of funds for overseas investment by Chinese regulators.
The latest developments suggest the long-delayed project has growing momentum, making the biggest threat to Australia’s iron ore export dominance a medium-term reality. As Xi Jinping’s China emerges from the pandemic determined to stabilise its economy, Baowu has been given the green light by Beijing to ensure first production by 2025 becomes a reality.
The high-grade and massive volume of the iron ore in the Simandou range in Guinea is well documented. Previous attempts to exploit it have been hampered by the difficulty and expense of access and transportation, and political obstacles. However, satellite images show work is under way on what the Guinean government describes as the world’s largest mine, rail and port infrastructure project.
“The project now has momentum and investment from some substantial Chinese entities and those factors demonstrate how serious China is about developing Simandou,” said Alan Clark, whose resource advisory firm CM Group has been active in Guinea for many years.
China is determined to reduce its dependency on Australian and Brazilian iron ore, which account for most of its steel-making needs. In 2021, the Chinese government drafted a five-year plan to invest in new mines offshore.
While it has increased domestic production and sought more supply from Russia and Mongolia, that would only be a fraction of the game-changing supply offered by the Simandou project which, analysts said, would become the world’s third-largest producer after Australia and Brazil, and account for 10 per cent of global iron ore supply.
Baowu on Friday posted details on its WeChat account of a week-long visit by Guinean government officials that followed the signing of a Simandou project infrastructure term sheet on December 23. The visit aimed to “deepen the bilateral trust relationship, and jointly promote the success of the Simandou project cooperation”.
The December 23 agreement came as a new centralised buying group, the China Mineral Resources Company (CMRC), began discussions with mining companies used to dealing with China’s steel mills individually. Analysts say both developments reflect Beijing’s determination to reduce its reliance on Australia, which supplies 60 per cent of its iron ore imports.
Baowu is central to CMRC and the Simandou project.
Securing approvals
The December 23 Simandou term sheet advances an infrastructure joint venture formed last year between the Guinean government and the two consortiums, Simfer Jersey and Winning Consortium Simandou, with rights to mine Simandou.
Rio Tinto, which has a controlling interest in Simfer Jersey, focused on Blocks 3 and 4. Simfer and WCS each have a 42.5 per cent share in the infrastructure joint venture.
Industry sources said while the project was progressing, there was still no formal agreement on the infrastructure sharing arrangements between the rival consortiums.
Winning International, the Singapore-based shipping firm and the largest stake-holder in WCS, refused an interview request, citing “the sensitive nature of ongoing negotiations with the government of Guinea and other industrial partners”.
The Rio Tinto backed consortium expects to have access to the infrastructure, but executives have told analysts there was still a lot of work to do finalising cost estimates and funding, and securing approvals and other permits.
In its quarterly report released last week, Rio described the December 23 agreement as “a pivotal next step towards securing the shareholder agreement, cost estimates and regulatory authority approvals necessary to progress the co-development of rail and port facilities”.
In November, Fortescue Metals boss Andrew Forrest, who is also advancing plans to expand in Africa, had a swipe at Rio’s Simandou investment. “We didn’t waste billions and billions of dollars to get 50 per cent of 50 per cent,” Dr Forrest said of his own investment in the region.
Rio chief financial officer Peter Cunningham said at an investor day briefing in November that the Simandou project was the most uncertain element of the company’s capital spend allocation.
“It is in our capital guidance but is dependent on us reaching agreement to commit to the project with our JV partners, the Government of Guinea and WCS on the infrastructure pathway.”
Analysts note WCS has a track record of getting ambitious infrastructure projects off the ground in Guinea.
Guinea’s government said in March last year the infrastructure projects must be completed by December 2024 and commercial production must start by March 31, 2025. Construction of the rail link was dramatically halted in July last year when thousands of workers were stood down due to a dispute between Guinea’s government and both WCS and Rio Tinto, Reuters reported at the time.
Equity stake
However, it is understood work is now progressing. A corporate presentation shows the consortium’s advanced planning for the 552 kilometre Trans-Guinean Railway and river port at Moreyaba, with earthworks visible on satellite photos.
In September Baowu, which has minority interest in the Simfer joint venture, signed a co-operation agreement with WCS that was expected to lead to it taking an equity stake in the SWC subsidiary companies leading infrastructure and mining.
By December 23, Baowu was named as an addition to the joint venture partners, along with Simfer, WCS and the Guinean government. This agreement, announced on Baowu’s social media account, is seen as a crucial step for giving China’s regulators the green light to release the capital required for the project. China’s capital outflows, even by private companies, are closely regulated.
“The Winning Baowu consortium is funded substantially by Chinese interests. There’s no doubt the iron ore will go straight to China,” Mr Clark said.
Together with its partners, Winning International played a pivotal role in accelerating Guinean bauxite exports. The SMB-Winning Consortium claims to have invested almost $US3 billion ($4.3 billion) in infrastructure in Guinea, including $US700 million on a 123-kilometre railway between the Santou mining zone and Dapilon port.
Mining executives in Africa have said the infrastructure related to the project was highly ambitious because of the mountainous terrain and the need to build dozens of bridges, purpose-built tunnels and a huge wharf. However, they concede that China had the financial resources to make it happen if determined enough, while Winning has a track record of success in difficult projects in Guinea.
“The 110-kilometre Simandou mountain range in Guinea is one of the best medium- to long-term solutions to reduce dependency on Australia and is widely regarded to be the highest-quality iron ore still untapped in the world,” the Lowy Institute’s Peter Cai and Richard McGregor wrote in a 2021 paper about China’s plans to wean itself off Australian iron ore.
The difficulties of developing big mines in African countries have prompted many to dismiss Simandou. The recent history of bauxite mining in Guinea suggests this could be a mistake, Mr Clark said.
“Oddly enough, this is an example of where the iron ore industry could learn something from bauxite. Guinea has rapidly and successfully developed its bauxite mining export industry from 2015 to the point where it is now the largest global exporter to China by far,” he said.
“That suggests Simandou will progress. Our base case is it enters the market in 2025.
“Simandou is never going to be a low cash cost producer servicing the Chinese market. The transport costs to get it to the coast are significant, and it’s a long way to China. Even when you take the higher ore grade into account, it still won’t be a lower cost producer than the delivered material from Australia.
“But it is vital for China to develop new supply sources that are not Australian or Brazilian and not controlled by the current crop of large multinational mining companies.”
🚨👇 I ADDED THE FOLLOWING 👇🚨
The psycho Communist globalist are destroying America's ability to be energy independent. They are quickly putting laws in place across America at the federal, state, and local level to ban fossil fuel production. They don't want us using gas at all for cars, heating home and water, and cooking. They insist mining will not be tolerated in America. Yet, everyone else is mining around the world. Why are we putting up with this shit?
I found this article dated June 28, 2022 titled, "Biden’s Radical, Anti-Fossil Fuel Energy Policy Costs Americans Dearly" by The Heritage Foundation. You can CLICK HERE to read the entire article.
The 3 key takaways are:
1) It was no secret on the campaign trail that Joe Biden wanted to end America’s use of conventional energy such as coal, oil, and natural gas.
2) The Biden administration has proposed or finalized regulations that restrict nearly every aspect of the oil industry
3) Biden’s radical energy policy is reality-defying and based on an anti-fossil fuel fiction that is causing unnecessary hardship and costing Americans dearly.
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