Simandou mine

Geology

The Simandou mine is a large iron mine located in the Simandou mountain range of southern Guinea's Nzérékoré Region. Simandou represents one of the largest iron ore reserves in Guinea and in the world having estimated reserves of 2.4 billion tonnes of ore grading 65% iron metal.

Contents

• When will rio profit from simandou mine
• Simandou mine restores business relationship
• Geology
• Corruption and Controversy
• Production
• References

The Pic de Fon and Ouéléba iron deposits are located approximately 4 km from one another at the southern end of the Simandou Range, approximately 550 km ESE of the capital Conakry. Both deposits are approximately 7.5 km in length and up to 1 km wide. At both banded iron formations (metamorphosed to staurolite-grade itabirites) have been enriched to form haematite and haematite-goethite mineralisations. The potential yield of the two deposits is estimated at 2.25 billion tonnes of high-grade iron ore.

Corruption and Controversy

The Simandou mine has known much turmoil and many mining rights disputes over the years. In 2008 Rio Tinto Group, the licensee of the Simandou concession, was ordered by the Guinean government to relinquish the northern half (Blocks 1 and 2, east and southeast of Kerouane) to BSG Resources, a company controlled by the Israeli diamond investor Beny Steinmetz.

In March 2010 Rio Tinto and its biggest shareholder, Aluminum Corporation of China Limited (Chinalco), signed a preliminary agreement to develop Rio Tinto's iron ore project.

In April 14, 2013, Frederic Cilins, an agent for Beny Steinmetz's company, was arrested in Jacksonville, Florida as a result of an FBI investigation that began in January 2013. The investigation aimed to establish whether potential illegal payments made to obtain mining concessions in Guinea had been transferred to the United States in breach of the Foreign Corrupt Practices Act, which allows U.S. officials to pursue bribery cases abroad. Cilin's detention followed covert FBI recordings of a series of meetings that allegedly showed he had plotted the destruction of documents which it is claimed could have shown the Simandou exploitation rights were acquired following the payment of millions of dollars in bribes to Guinea government officials.

Cilins pleaded guilty in March 2014 and was sentenced to 2 years in jail. No charges were brought against Steinmetz or BSGR.

Back in 2010, BSGR sold 51% of their stake to Vale (NYSE:VALE) for $2.5 billion. However, after Vale had paid in $500 million, the government of Guinea led by President Alpha Conde launched an investigation into the legality of BSGR's license. In April 2014 the Guinean government cancelled BSGR's mining rights in Simandou, and in May 2014 BSGR sought arbitration over the government's decision to expropriate the company's mining rights. During the same month Rio Tinto filed suit against Vale and BSGR over the validity of their mining license. BSGR denied any wrongdoing and the lawsuit was dismissed in 2015 in the US. In November 2016, BSGR filed suit against Rio Tinto for compensation.

In 2016, former Guinean mining minister, Mr. Mahmoud Thiam, accused head of Rio Tinto’s Guinea operation department, Steven Din, of offering him a bribe in 2010 with the aim of regaining Rio Tinto's control over half of the undeveloped Simandou project.

In November 2016, Rio Tinto admitted to paying $10.5 million to François Polge de Combret, a close adviser of President Alpha Condé, in 2011 in order to obtain rights on Simandou. During the same month the company agreed to sell their remaining 46.6% stake in the mine to Aluminum Corporation of China Ltd. (Chinalco) for $1.3 billion. President Conde denied knowing about the bribe. However, according to recordings presented by FRANCE 24, Guinean authorities knew about the Simandou briberies by Rio Tinto.

Production

Mining operations were expected to start before the end of 2015. Rio Tinto Limited plans to build a 650 km railway to transport iron ore from the mine to the coast, near Matakong, for export. Much of the Simandou iron ore is expected to be shipped to China for steel production.

Despite assurances, the mine is still not operational. The mine is expected to produce up to 95 MTpa of ore.