BEIJING, October 5 (TMTPOST)— State-owned Baowu Steel Steel Group, the world’s largest steel producer, signed an agreement with a Singaporean consortium last Friday in order to jointly develop part of the Simandou iron ore project in Guinea.
According to Baowu Steel, its subsidiary Baosteel Resources Co., Ltd will establish a consortium with major domestic steelmakers, infrastructure construction concerns, and strategic investors to work with Winning Consortium Simandou (WCS) in developing the Simandou North Iron Project in Guinea.
Located in Guinea, Africa, Simandou has an average iron ore grade of 65.5%, exceeding that of Australia's iron ore mines. The potential reserves of Simandou are about 10 billion tons, and after the project is put into operation, the annual production can reach 100-150 million tons, i.e., 5%-7% of the total global output. The high mineral price in the past two years is also an important driving force in accelerating the development of Simandou.
The Simandou project is expected to be developed at a total cost of US$15 billion, and the project's supporting railroad, which is about 650 kilometers long, as well as the port facilities in Forécariah province off the coast of Guinea, are considered to be the most difficult parts in the construction of the entire project.
Baowu Steel said that the signing of the term sheets between the two sides marked that Baowu will be an important potential investor committed to promoting the development of the Simandou North Iron Project and the construction of infrastructure in Simandou within the framework of multiparty and win-win cooperation.
Simandou is the world's largest iron ore mine to be developed. Among the four blocks of Simandou 1 to 4, the mining rights of blocks 3 and 4 are held by Simfer SA, a joint venture company formed by Rio Tinto Group and Chinalco Group.