The Government of Guinea and mining giant Rio Tinto have signed a $20bn deal to develop the Simandou iron ore mine in the south-east of Guinea.
As part of the deal, the Republic of Guinea will own a 7.5% stake in the project, while partners Rio Tinto, Aluminium Corporation of China and the International Finance Corporation (IFC) will own 46.57%, 41.3% and 4.625% respectively.
The investment framework signed by the partners for blocks three and four of Simandou is built on the 2002 Convention de Base (CdB), signed between the mine owner, Simfer, and the Republic of Guinea.
Rio Tinto Diamonds & Minerals CEO Alan Davies said the signing of the framework agreement is the culmination of years of collaborative and tremendous work.
"We will now concentrate on progressing the plans for the development of the mine and pulling together the consortium of investors who will finance and develop the infrastructure," Davies said.
At full production, blocks three and four of Simandou can produce 100 million tonnes of high-grade iron ore a year.
The project also includes the construction of a new 650km trans-Guinean multi-user railway to transport iron ore to the coast, and building of a new deep-water multi-user port in the Forécariah prefecture to ship the iron ore to China and Europe.
When fully operational, the project will have the capability to double the country’s current gross domestic product and create around 45,000 jobs.
Additionally, it will also create sub-contracting and procurement opportunities and help indirect economic development in the form of new and upgraded roads, and the development of fibre and wireless communications.
Guinea Mines and Geology State Minister Kerfalla Yansané said Simandou is one of the largest and best quality iron ore deposits in the world.
"This estimated $20bn project, aiming to develop blocks three and four of Simandou along with the infrastructure, will boost Guinea’s whole economy and spur our southern growth corridor through mining, agriculture, forestry, livestock and trade," Yansané said.
"It’s about unlocking our huge potential, supporting our efforts to tackle poverty through jobs creation and economic diversification, and getting more attractive to foreign direct investment."