Public Management

Guinea: Simandou Set to Commence Production in 2025

Guinea: Simandou Set to Commence Production in 2025
Monday, 04 November 2024 15:12

(Ecofin Agency) - In 2021, Colonel Mamadi Doumbouya led a coup that brought him to power in Guinea. One of his main goals is the Simandou project, which has been stalled for decades but is set to begin production next year.

The Simandou project could deliver its first iron by the end of 2025. The Chinese steelmaker Baoshan Iron & Steel, a subsidiary of BaoWu, said on Oct. 30 that it expects to load the first cargo of iron ore from the project by the end of the coming year. This suggests that the project might be finalized soon. 

If the forecast materializes, Col. Doumbouya will achieve his goal in less than five years. After taking office in September 2021, the Guinean leader prioritized Simandou. At first, he suspended all activities related to the project but later reached a historic framework agreement at the end of March 2022.

Pressured by Col. Doumbouya, the two main companies involved in Simandou–Rio Tinto Simfer and Winning Consortium Simandou–agreed to combine their resources to speed up the project’s development.  The two firms formed a joint venture with the Guinean government called Compagnie du Transguinéen (CTG) to manage the rail and port infrastructure needed for ore shipment. The framework agreement also includes penalties, including the potential withdrawal of mining permits if the development schedule is not followed.

Col. Doumbouya set up a strategic committee to monitor the Simandou project. The committee ensures that the various commitments related to the project are met. It directly reports developments to the leader. Members of the committee include some of Doumbouya’s closest advisors such as the Secretary General and Director of the Office of the President. 

Simandou could significantly change Guinea's economy beyond just mining. The planned 600-km railway for ore transport will also support agricultural transport and passenger services. The government plans to allocate 20% of CTG revenues and 5% from mining activities to fund higher education for young Guineans through scholarships and regional universities.

Local contractors are already contributing to Simandou's development, with $80 million in subcontracts signed, according to Saifoulaye Baldé, CEO of the Bourse de Sous-traitance et de Partenariats (BSTP). The IMF estimates that starting mining at Simandou in 2025 could boost Guinea's GDP by 26% by 2030 compared to a scenario without the mine.

Simandou can produce over 100 million tonnes of high-grade iron ore annually. Most of its output should be shipped to China, as Chinese companies massively invested in the $15 billion project.

Emiliano Tossou

 

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