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The Chinese government is close to backing Rio Tinto\u2019s newest mine in the heart of a remote African chimpanzee rainforest, where the global resources giant expects to dig up 1.5 billion tonnes of iron ore over the next 26 years, stimulating its growth and expenses.<\/p>\n
The dual-listed miner, headquartered in Melbourne and London, is on track to tap into the world\u2019s largest high-grade iron ore deposit by 2025 in Guinea\u2019s Simandou mountains, a sensitive habitat for endangered western chimpanzees.<\/p>\n
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The Simandou mountains in Guinea contain high-grade iron ore.<\/span>Credit: <\/span>Rio Tinto<\/cite><\/p>\n The deposit in south-eastern Guinea is shared between a number of Chinese state-owned enterprises, Rio\u2019s Simfer consortium and the Guinea government. Rio says it will spend $6.2 billion to galvanise its iron ore output from the project and fund its share of the $US23.2 billion ($35.4 billion) mine.<\/p>\n A Chinese railway builder, constructing the 600 kilometre cross-country tracks needed for the ore to reach a deep water port on the Atlantic coast, was exposed two years ago for blasting without plans to protect the apes and their habitat.<\/p>\n Rio boss Jakob Stausholm said the miner was keenly focused on the environment, sustainability and governance aspects of its Guinea operations.<\/p>\n \u201cWe have come up with a solution around the mine that really takes into consideration ESG matters, protecting the rainforests with the chimpanzees. It actually leads to much higher cost, but we just have to draw a line and get these things right,\u201d Stausholm said.<\/p>\n Production from Simandou at full capacity will reach 120 million tonnes a year, equating to nearly 5 per cent of the global seaborne iron ore market. Rio\u2019s share is 27 million tonnes.<\/p>\n Stausholm said iron ore mines around the world are running down reserves and Simandou\u2019s output will be comfortably absorbed by steelmakers without affecting prices.<\/p>\n \u201cI do think we are pretty close to getting approval from the Chinese authorities. Sanction is imminent, and this project is all about execution,\u201d Stausholm said.<\/p>\n \u201cIt\u2019s a different product from in the Pilbara. This is the highest grade iron ore on the planet. The only product that it goes into heads-on competition with is the iron ore from northern Brazil.\u201d<\/p>\n The low-impurity iron ore extracted from the Guinea operation has an average grade of 65 per cent and is suitable for DIR electric arc furnaces, a form of green steelmaking that will significantly help Rio\u2019s customers reduce their planet-warming carbon emissions, he said.<\/p>\n Rio told investors it was well-positioned to capitalise on sustained commodity demand driven by decarbonisation, with copper demand to grow by 4 per cent a year to 2035. Rio\u2019s capital expenditure will reach $10 billion a year over the next three years as ramps up its iron ore output, but it has deferred its spending on decarbonisation, lowering its guidance to between $5 billion and $6 billion to 2030. Previously it was $7.5 billion.<\/p>\n The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. <\/i><\/b>Sign up to get it every weekday morning<\/i><\/b>. <\/i><\/b><\/p>\nMost Viewed in Business<\/h2>\n
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