Rio Tinto and Chinese joint-venture partner Baowu Resources are moving closer towards final agreement on developing the vast Simandou iron ore project in the West African republic of Guinea.

Simandou is one of the world's largest undeveloped iron ore projects. However, its remote location means project developers will have to construct and operate a 600-kilometre rail line, as well as build and operate a new port to export the ore.

Last summer, a Rio Tinto unit formed a joint venture with the Guinean government and Winning Consortium Simandou. WCS is a consortium comprising bulk shipping operator Winning International Group, China Hongqiao Group, Guinean mining logistics company UMS, and Yantai Port Group.

Anglo-Australian Rio Tinto's involvement is via Simfer Jersey, itself a joint venture between Rio Tinto and a consortium led by China’s state-owned Chalco Iron Ore Holdings. CIOH is held by Aluminium Corporation of China (Chinalco) and Baowu Resources. Under the latest agreement, Baowu will become a direct investor in the project.

In late December, Baowu Resources announced that it was moving ahead with getting directly involved in Simandou, via plans to take an equity stake in the WCS consortium.  The company is a major global manufacturer of stainless steel, and its involvement is viewed as an important step forward for the project. Around the same time, a foundational term sheet was signed for the financing, development, construction and operation of the railway and ports infrastructure.

Baowu will take stakes both in the mine (WCS MineCo) and the infrastructure unit WCS InfraCo. Financing from China is likely to be needed to move the US$15 billion project forward. The Republic of Guinea is being advised by Watson Farley & Williams.

Rio Tinto will explore two iron ore blocks at Simdandou, and WCS the other two. They will each hold a stake in the infrastructure element. Simandou is targeted to export up to 160 million tonnes per annum.

Rail operations are targeted to begin by March 2025. The project is particularly attractive to the Chinese steel industry, since it reduces heavy dependence on Australia.