China Baowu Steel Group (Baowu) has secured 10bn yuan ($1.4bn) through a bond issue, a major chunk of which will be used to fund the Simandou iron ore project in Guinea, according to a Reuters report.

The three-year fixed-rate bonds carry an annual coupon rate of 2.45%.

The funds are earmarked for various operational expenses including debt repayments, working capital and project construction.

A significant portion, approximately 70% of the raised capital, has been allocated specifically for the development of the northern blocks of the Simandou project.

The northern region’s mining blocks are under the development of Winning Consortium Simandou (WCS), which comprises Singapore-based Winning International Group (45%), China Hongqiao subsidiary Weiqiao Aluminium (35%) and Guinean company United Mining Suppliers International (20%).

Located in the south-eastern part of Guinea in West Africa, the Simandou project is poised to become the world’s largest and highest-grade new iron ore mine.

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By GlobalData

According to Baowu’s statement, the entire Simandou project is scheduled for completion and operational commencement in 2026.

Last year, Rio Tinto’s Guinea unit entered a non-binding term sheet with Baowu to build infrastructure for the Simandou mine, reported Reuters.

China Baowu intends to fast-track negotiations with Rio Tinto for the shareholder agreement, lead the Bao Consortium formation and implement project financing.

In July 2022, Rio’s Guinea unit formed a joint venture with WCS and the Guinean Government to develop the rail and port infrastructure required to transport high-grade iron ore from the mine to market.