Global mining giant Rio Tinto is set to finalise a US$20 billion deal to develop the world’s biggest iron-ore deposit in Guinea this month after years of delays, AFP has reported.
The Simandou iron ore project, which could create Africa’s biggest-ever infrastructure venture, will boost Guinea’s annual revenue by USD 1.2bn through income tax and royalty payments and pump billions more into the nation’s economy, Rio chief executive Sam Walsh is quoted as saying.
“Later this month, we expect to sign the investment framework that formalises our partnership with the government of Guinea, Chalco and the IFC,” Mr. Walsh said in a speech in Washington on Saturday and uploaded on to the company’s website on 19 May.
“This has taken some time to bring to fruition and I think this signing will inject the project with renewed momentum,” he added in the speech on infrastructure investment in developing countries, a key theme of this year’s G20 meetings chaired by Australia. Mr. Walsh said the “remarkable project” would see billions of dollars invested in developing infrastructure in one of Africa’s poorest nations, which is still recovering from decades of military dictatorships and misrule.
The deal will formalise the partnership for Simandou with Guinea’s government, China’s state-run aluminum group Chalco and the International Finance Corporation, a division of the World Bank. “When fully operational, the annual economic contribution of Simandou to the Guinean economy is estimated to be USD 7.6bn — that’s 22 times the USD 340m in international aid contributions to Guinea in 2012,” Mr. Walsh added. “It would be fair to say that this represents a new paradigm for Guinea.”
The large investment into infrastructure in Guinea by Rio will surely spur additional economic growth and demand for goods and services in the West African region. With the region experiencing heavy infrastructure investment with companies such as Dangote Cement (DANGCEM NL) being well positioned to benefit from the increase in demand for cement in the region.