Rio Tinto’s subsidiary Simfer has signed a settlement agreement with The Government of Guinea to secure the southern concession of the Simandou project in Guinea.

Under the terms of agreement, Simfer will pay $700m to the Guinean Public Treasury upon promulgation of presidential decrees granting its mining concession, known as blocks 3 and 4, and the approval of the proposed Chalco and Rio Tinto Simandou joint venture.

According to the agreement, the Government of Guinea has the right to take a 35% stake in the project, including 15% at no cost to the government.

The Government of Guinea is planning to set up a state mining company to hold its stake.

Rio Tinto Iron Ore chief executive Sam Walsh said the company is expecting a total investment of more than $10bn to bring the mine and associated infrastructure on stream.