Rio Tinto and Chinalco have completed the formation of their joint venture which will develop and operate the Simandou iron ore project in Guinea, following completion of all regulatory approvals.
A consortium led by Chalco has made an earn-in payment of $1.35bn, as part of a memorandum of understanding (MoU) reached with Rio Tinto in March 2010.
Rio Tinto and the Chalco now hold a 53% and 47% stake respectively in the JV, while the remaining 5% is held by the International Finance Corporation, part of World Bank.
The Government of Guinea is expected to take up 20% stake in the project in the near future.
As per the MoU, the JV will develop the Simandou mine and undertake the development of rail and port infrastructure around the project.
Rio Tinto's Simfer subsidiary will continue to manage the development of the Simandou project as per the MoU terms.
The project also requires significant additional development expenditure before it becomes fully operational.
Simandou iron ore mining project is located in south eastern Guinea and is expected to produce over 70 million tonnes of iron ore per annum once operational.
Image: Rio Tinto now owns a 53% stake in the joint venture which will develop the Simandou iron ore mining. Photo: Rio Tinto.