REG - Rio Tinto - Simandou iron ore project update
06/12/2023 07:00
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RNS Number : 7929V Rio Tinto PLC 06 December 2023
Notice to
ASX/LSE
Simandou iron ore project update
6 December 2023
Rio Tinto is providing an update today at its Investor Seminar on the world
class Simandou iron ore project in Guinea, which is being progressed in
partnership with CIOH, a Chinalco-led consortium, Winning Consortium
Simandou 1 (#_ftn1) (WCS), Baowu and the Republic of Guinea.
Simandou is the world's largest untapped high-grade iron ore deposit. The
Simfer joint venture's(( 2 (#_ftn2) )) mine concession held an estimated
Total Mineral Resource as at 31 December 2022 of 2.8 billion tonnes, of which
Rio Tinto is today reporting the conversion of an estimated 1.5 billion tonnes
to Ore Reserves that support a mine life of 26 years, with an average grade of
65.3% iron(( 3 (#_ftn3) )) and low impurities. Rio Tinto is also reporting
Mineral Resources exclusive of Ore Reserves of 1.4 billion tonnes at 66.1% Fe
and low impurities.
Rio Tinto estimates that its initial(( 4 (#_ftn4) )) share of capital
expenditure to develop the Simfer mine and the co-developed rail and port
infrastructure project is approximately $6.2 billion 5 (#_ftn5) .
Rio Tinto Executive Committee lead for Guinea and Copper Chief Executive Bold
Baatar said: "We are continuing to work closely with the Government of
Guinea, Chinalco, Baowu and WCS towards full sanction of this world class
project by all partners.
"Simandou will deliver a significant new source of high-grade iron ore that
will strengthen Rio Tinto's portfolio for the decarbonisation of the steel
industry, along with trans-Guinean rail and port infrastructure that can make
a significant contribution to the country's economic development."
In what will be the largest greenfield integrated mine and infrastructure
investment in Africa, more than 600 kilometres of new multi-use rail together
with port facilities will be co-developed by the Republic of Guinea, Simfer
and WCS. This will allow the export of up to 120 million tonnes per year of
mined iron ore by Simfer and WCS from their respective Simandou mining
concessions(( 6 (#_ftn6) )) in the southeast of the country. 7 (#_ftn7)
The co-developed infrastructure capacity and associated cost will be shared
equally between Simfer, which will develop, own and operate a 60 million tonne
per year 8 (#_ftn8) mine in blocks 3 and 4 of the Simandou Project, and WCS,
which is developing blocks 1 and 2.
Under the co-development arrangement, Simfer and WCS will deliver separate
infrastructure scopes to leverage expertise 9 (#_ftn9) . Simfer will
construct the approximately 70 kilometre Simfer spur rail line and a 60
million tonne per year transhipment vessel (TSV) port, while WCS will
construct the dual track approximately 536 kilometre main rail line, the
approximately 16 kilometre WCS spur rail line and a 60 million tonne per
year barge wharf.
Once complete, all co-developed infrastructure and rolling stock will be
transferred to and operated by the Compagnie du Transguinéen (CTG) joint
venture, in which Simfer and WCS each hold a 42.5% equity stake and the
Guinean State a 15% equity stake 10 (#_ftn10) .
First production from the Simfer mine is expected in 2025, ramping up over 30
months to an annualised capacity of 60 million tonnes per year (27 million
tonnes Rio Tinto share). The mine will initially deliver a single fines
product before transitioning to a dual fines product of blast furnace and
direct reduction ready ore.
Simfer's initial capital funding requirement for the Simandou project is
estimated to be approximately $11.6 billion, of which Rio Tinto's share is
approximately $6.2 billion, broken down as follows(5).
US dollars in billions (nominal terms) Simfer capex 11 (#_ftn11) Rio Tinto share
Mine and TSVs, owned and operated by Simfer
Development of an initial 60Mt/a mine at Simandou South (blocks 3 & 4), to $5.1 $2.7
be constructed by Simfer
Co-developed infrastructure, owned and operated by CTG once complete
Simfer scope (funded 100% by Simfer during construction) $3.5 $1.9
Rail: a 70 km rail-spur from Simfer mine to the mainline, including rolling
stock
Port: construction of a 60Mt/a TSV port
WCS scope (funded 34% by Simfer during construction) $3.0 $1.6
Port and rail infrastructure including an approximately 552 km trans-Guinean
heavy haul rail system, comprised of a 536 km mainline and a 16 km WCS rail
spur.
An IRR in the low double digits 12 (#_ftn12) is anticipated for the combined
Simfer mine and the co-developed infrastructure through ownership of CTG.
Rio Tinto's share of capital investment remaining to be spent from 1 January
2024 is expected to be $5.7 billion. Rio Tinto's expected funding requirements
for 2024 and 2025, are included in its share of capital investment guidance
for this period, with project funding expected to extend beyond this
timeframe.
Rio Tinto expects its full year expenditure for 2023 to be around $0.9 billion
to progress critical path works, including around $0.4 billion to be funded by
CIOH after receiving Chinese regulatory approvals.
Full sanction of the project by the Rio Tinto Board is subject to remaining
conditions being met, including joint venture partner approvals and regulatory
approvals from China and Guinea.
Further details on the Simandou project can be found in the 2023 Investor
Seminar presentation at www.riotinto.com/invest
(http://www.riotinto.com/invest) .
Simandou Mineral Resources and Ore Reserves(( 13 (#_ftn13) ))
Rio Tinto is reporting that the Proved Ore Reserves estimate for the Ouéléba
deposit at Simandou contains 273 Mt at 66.4% Fe, 1.0% SiO(2), 1.2% Al(2)O(3)
and 0.07% P and the Probable Ore Reserves estimate contains 1,226 Mt at 65.0%
Fe, 0.9% SiO(2), 1.8% Al(2)O(3) and 0.10% P.
This Ore Reserves estimate has been made by the Competent Person and reported
in accordance with the JORC Code as required by Simfer's Mining Convention. We
note that, consistent with the JORC Code, some elements are at pre-feasibility
level and work continues to refine all elements to feasibility level
consistent with Rio Tinto's global practice.
Rio Tinto is also reporting Mineral Resources exclusive of Ore Reserves for
the Ouéléba and Mineral Resources for Pic de Fon deposits at Simandou of
1,360 Mt at 66.1% Fe, 1.5% SiO(2), 1.5% Al(2)O(3) and 0.06% P consisting of
Measured Mineral Resources of 153 Mt at 67.0% Fe, Indicated Mineral Resources
of 460 Mt at 66.2% Fe and Inferred Mineral Resources of 746 Mt at 65.8% Fe.
The Mineral Resources cut-off for reporting is Fe greater than or equal to 58%
and Al(2)O(3) + SiO(2) less than or equal 8% and P less than or equal to
0.25%.
The declaration of the 1,499 Mt Ore Reserves estimate is as a result of the
conversion of 1,469 Mt of undiluted Mineral Resources, inclusive of dilution,
at Ouéléba.
Mineral Resources and Ore Reserves are quoted on a 100% basis. Rio Tinto
ownership percentage is 45.05%.
Mineral Resources and Ore Reserves declaration
A tabulation of the update to the Mineral Resources at Simandou is provided in
Table A. A tabulation of the new Ore Reserves at Simandou is provided in
Table B.
Table A Simandou Mineral Resources as at 6 December
2023((b) (c))
Likely mining method((a)) Total Measured and Indicated Mineral Resources
Measured Mineral Resources Indicated Mineral Resources as at
6
Decemb
er
2023
Tonnage Grade Tonnage Grade Tonnage Grade
Mt % Fe % SiO(2) % Al(2)O(3) % P % LOI Mt % Fe % SiO(2) % Al(2)O(3) % P % LOI Mt % Fe % SiO(2) % Al(2)O(3) % P % LOI
O/P 153 67.0 1.9 1.1 0.04 1.1 460 66.2 1.8 1.5 0.05 1.9 613 66.4 1.8 1.4 0.05 1.7
Likely mining method((a)) Total Mineral Resources Rio Tinto Interest Total Mineral Resources
Inferred Mineral Resources as at 6 December 2023 as at
31
Decemb
er
2022
Tonnage Grade Tonnage Grade Tonnage Grade
Mt % Fe % SiO(2) % Al(2)O(3) % P % LOI Mt % Fe % SiO(2) % Al(2)O(3) % P % LOI % Mt % Fe % SiO(2) % Al(2)O(3) % P % LOI
O/P 746 65.8 1.3 1.6 0.07 2.8 1,360 66.1 1.5 1.5 0.06 2.3 45.05 2,830 65.8 1.2 1.5 0.08 3.0
(a) Likely mining method: O/P = open pit
(b) Mineral Resources of iron ore are stated on a dry in situ weight basis
(c) Simandou Mineral Resources tonnes decreased due to conversion of Resources
to Reserves following completion of the feasibility study for Ouéléba
Table B Simandou Ore Reserves as at 6 December 2023 ((b)
(c))
Type of mine((a)) Total Ore Reserves Rio Tinto Interest Rio Tinto Share Marketable product
Proved Ore Reserves Probable Ore Reserves As at
6
Decemb
er
2023
((d)
(e))
Tonnage Grade Tonnage Grade Tonnage Grade
Mt % Fe % SiO(2) % Al(2)O(3) % P % LOI Mt % Fe % SiO(2) % Al(2)O(3) % P % LOI Mt % Fe % SiO(2) % Al(2)O(3) % P % LOI % Mt
O/P 273 66.4 1.0 1.2 0.07 2.5 1,226 65.0 0.9 1.8 0.10 3.9 1,499 65.3 0.9 1.7 0.09 3.7 45.05 675
(a) Type of mine: O/P = open pit
(b) Reserves of iron ore are reported on a dry weight basis and shown as
recoverable Reserves of marketable product after accounting for all mining and
processing losses.
(c) Simandou iron ore Reserves tonnes are reported for the first time since
2016
(d) Only Measured and Indicated Resources have been considered in the
conversion of Mineral Resources to Ore Reserves after the application of
modifying factors
(e) Simandou Ore Reserves relates to the Ouéléba portion only of the Simfer
mine (blocks 3 & 4)
Contacts
Please direct all enquiries to media.enquiries@riotinto.com
Media Relations, Media Relations, Media Relations,
United Kingdom Australia Americas
Matthew Klar Matt Chambers Simon Letendre
M +44 7796 630 637 M +61 433 525 739 M +1 514 796 4973
David Outhwaite Jesse Riseborough Malika Cherry
M +44 7787 597 493 M +61 436 653 412 M +1 418 592 7293
Alyesha Anderson Vanessa Damha
M +61 434 868 118 M +1 514 715 2152
Michelle Lee
M +61 458 609 322
Investor Relations, Investor Relations,
United Kingdom Australia
Menno Sanderse Tom Gallop
M +44 7825 195 178 M +61 439 353 948
David Ovington Amar Jambaa
M +44 7920 010 978 M +61 472 865 948
Laura Brooks
M +44 7826 942 797
Rio Tinto plc Rio Tinto Limited
6 St James's Square Level 43, 120 Collins Street
London SW1Y 4AD Melbourne 3000
United Kingdom Australia
T +44 20 7781 2000 T +61 3 9283 3333
Registered in England Registered in Australia
No. 719885 ABN 96 004 458 404
LEI: 213800YOEO5OQ72G2R82
This announcement contains inside information.
This announcement is authorised for release to the market by Andy Hodges, Rio
Tinto's Group Company Secretary.
riotinto.com
(( 1 (#_ftnref1) )) WCS is currently a consortium of Singaporean company,
Winning International Group (50%), Weiqiao Aluminium (part of the China
Hongqiao Group) (50%) and United Mining Supply Group (nominal shareholding).
WCS is the holder of Simandou North Blocks 1 & 2 (with the Government of
Guinea holding a 15% interest in the mining vehicle and WCS holding 85%) and
associated infrastructure. Baowu Resources has entered into an agreement to
acquire a 49% share of WCS mine and infrastructure projects through a
Baowu-led consortium, subject to conditions including regulatory approvals. In
the case of the mine, Baowu has an option to increase to 51% during
operations.
(( 2 (#_ftnref2) )) Simfer Jersey Limited is a joint venture between the Rio
Tinto Group (53%) and Chalco Iron Ore Holdings Ltd (CIOH) (47%),a Chinalco-led
joint venture of leading Chinese SOEs (Chinalco (75%), Baowu (20%), China Rail
Construction Corporation (2.5%) and China Harbour Engineering Company (2.5%)).
Simfer S.A. is the holder of the mining concession covering Simandou Blocks 3
& 4, and is owned by the Guinean State (15%) and Simfer Jersey Limited
(85%). Simfer Infraco Guinée S.A.U. will deliver Simfer's scope of the
co-developed rail and port infrastructure, and is, on the date of this notice,
a wholly-owned subsidiary of Simfer Jersey Limited, but will be co-owned by
the Guinean State (15%) after closing of the co-development arrangements.
3 (#_ftnref3) Refer to "Simandou Mineral Resources and Ore Reserves" section
at page 4 below.
4 (#_ftnref4) A true-up mechanism will apply between Simfer and WCS (as
defined below) to equalise their out of pocket costs of constructing the
co-developed rail and port infrastructure.
5 (#_ftnref5) Estimated numbers, subject to approval by the Simfer board and
government authorities.
6 (#_ftnref6) WCS holds the mining concession for Blocks 1 and 2, while
Simfer SA holds the mining concession for blocks 3 and 4. Simfer and WCS will
independently develop their mines.
7 (#_ftnref7) Co-development of the rail and port infrastructure remains
subject to a number of conditions, including regulatory approvals in Guinea
and China, the entry into a number of legal agreements, ratification of the
investment framework for co-development by the Republic of Guinea, and
agreement between Simfer, WCS and the Republic of Guinea regarding the budget
for the rail and port infrastructure.
8 (#_ftnref8) The estimated annualised capacity of approximately 60 million
dry tonnes per annum iron ore for the life of mine schedule is underpinned as
to 18% by Proved Ore Reserves and 82% by Probable Ore Reserves as set out in
the Table 1 Release referred to in the footnote below. Rio Tinto confirms that
all material assumptions underpinning the production target in the Table 1
Release continue to apply and have not materially changed.
9 (#_ftnref9) Simfer will hold 34% of the WCS-Baowu InfraCo during
construction.
10 (#_ftnref10) The ownership of the rail and port infrastructure will
transfer from CTG to the Guinean State after a 35 year Operations Period, with
Simfer retaining access rights on a non-discriminatory basis and at least
equivalent to all Third Party Users.
11 (#_ftnref11) Subject to adjustment as described in Footnote 1.
12 (#_ftnref12) 11 to 13% (post-tax, real basis). Based on Wood
Mackenzie and CRU average pricing for iron ore (65% grade), with a premium
applied for DR product.
(( 13 )) These Mineral Resources and Ore Reserves have been reported in
accordance with the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves, 2012 and the ASX Listing Rules in a
release dated 6 December 2023 titled "Release of Mineral Resource and Ore
Reserve Estimates for Simandou" (Table 1 Release) which is available on Rio
Tinto's website at resources & reserves (riotinto.com)
(https://www.riotinto.com/invest/financial-news-performance/resources-and-reserves)
. The Competent Person responsible for the information in that release that
relates to Mineral Resources is Kaye Tindale, a Member of the Australasian
Institute of Mining and Metallurgy (MAusIMM). The Competent Person responsible
for the information in that release that relates to Ore Reserves is Michael
Apfel, a Member of the Australasian Institute of Mining and Metallurgy
(MAusIMM). Rio Tinto confirms that it is not aware of any new information or
data that materially affects the information included in the Table 1 Release,
that all material assumptions and technical parameters underpinning the
estimates in the Table 1 Release continue to apply and have not materially
changed, and that the form and context in which the Competent Persons'
findings are presented have not been materially modified.
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