TIDMRIO
RNS Number : 7929V
Rio Tinto PLC
06 December 2023
Notice to ASX/LSE
Simandou iron ore project update
6 December 2023
Rio Tinto is providing an update today at its Investor Seminar
on the world class Simandou iron ore project in Guinea, which is
being progressed in partnership with CIOH, a Chinalco-led
consortium, Winning Consortium Simandou [1] (WCS), Baowu and the
Republic of Guinea.
Simandou is the world's largest untapped high-grade iron ore
deposit. The Simfer joint venture's ([2]) mine concession held an
estimated Total Mineral Resource as at 31 December 2022 of 2.8
billion tonnes, of which Rio Tinto is today reporting the
conversion of an estimated 1.5 billion tonnes to Ore Reserves that
support a mine life of 26 years, with an average grade of 65.3%
iron ([3]) and low impurities. Rio Tinto is also reporting Mineral
Resources exclusive of Ore Reserves of 1.4 billion tonnes at 66.1%
Fe and low impurities.
Rio Tinto estimates that its initial ([4]) share of capital
expenditure to develop the Simfer mine and the co-developed rail
and port infrastructure project is approximately $6.2 billion [5]
.
Rio Tinto Executive Committee lead for Guinea and Copper Chief
Executive Bold Baatar said: "We are continuing to work closely with
the Government of Guinea, Chinalco, Baowu and WCS towards full
sanction of this world class project by all partners.
"Simandou will deliver a significant new source of high-grade
iron ore that will strengthen Rio Tinto's portfolio for the
decarbonisation of the steel industry, along with trans-Guinean
rail and port infrastructure that can make a significant
contribution to the country's economic development."
In what will be the largest greenfield integrated mine and
infrastructure investment in Africa, more than 600 kilometres of
new multi-use rail together with port facilities will be
co-developed by the Republic of Guinea, Simfer and WCS. This will
allow the export of up to 120 million tonnes per year of mined iron
ore by Simfer and WCS from their respective Simandou mining
concessions ([6]) in the southeast of the country. [7]
The co-developed infrastructure capacity and associated cost
will be shared equally between Simfer, which will develop, own and
operate a 60 million tonne per year [8] mine in blocks 3 and 4 of
the Simandou Project, and WCS, which is developing blocks 1 and
2.
Under the co-development arrangement, Simfer and WCS will
deliver separate infrastructure scopes to leverage expertise [9] .
Simfer will construct the approximately 70 kilometre Simfer spur
rail line and a 60 million tonne per year transhipment vessel (TSV)
port, while WCS will construct the dual track approximately 536
kilometre main rail line, the approximately 16 kilometre WCS spur
rail line and a 60 million tonne per year barge wharf.
Once complete, all co-developed infrastructure and rolling stock
will be transferred to and operated by the Compagnie du
Transguinéen (CTG) joint venture, in which Simfer and WCS each hold
a 42.5% equity stake and the Guinean State a 15% equity stake [10]
.
First production from the Simfer mine is expected in 2025,
ramping up over 30 months to an annualised capacity of 60 million
tonnes per year (27 million tonnes Rio Tinto share). The mine will
initially deliver a single fines product before transitioning to a
dual fines product of blast furnace and direct reduction ready
ore.
Simfer's initial capital funding requirement for the Simandou
project is estimated to be approximately $11.6 billion, of which
Rio Tinto's share is approximately $6.2 billion, broken down as
follows(5) .
US dollars in billions (nominal terms) Simfer Rio Tinto
capex share
[11]
Mine and TSVs, owned and operated by Simfer
Development of an initial 60Mt/a mine at Simandou
South (blocks 3 & 4), to be constructed by Simfer $5.1 $2.7
Co-developed infrastructure, owned and operated by
CTG once complete
Simfer scope (funded 100% by Simfer during construction)
Rail: a 70 km rail-spur from Simfer mine to the mainline,
including rolling stock
Port: construction of a 60Mt/a TSV port $3.5 $1.9
WCS scope (funded 34% by Simfer during construction)
Port and rail infrastructure including an approximately
552 km trans-Guinean heavy haul rail system, comprised
of a 536 km mainline and a 16 km WCS rail spur. $3.0 $1.6
An IRR in the low double digits [12] is anticipated for the
combined Simfer mine and the co-developed infrastructure through
ownership of CTG.
Rio Tinto's share of capital investment remaining to be spent
from 1 January 2024 is expected to be $5.7 billion. Rio Tinto's
expected funding requirements for 2024 and 2025, are included in
its share of capital investment guidance for this period, with
project funding expected to extend beyond this timeframe.
Rio Tinto expects its full year expenditure for 2023 to be
around $0.9 billion to progress critical path works, including
around $0.4 billion to be funded by CIOH after receiving Chinese
regulatory approvals.
Full sanction of the project by the Rio Tinto Board is subject
to remaining conditions being met, including joint venture partner
approvals and regulatory approvals from China and Guinea.
Further details on the Simandou project can be found in the 2023
Investor Seminar presentation at www.riotinto.com/invest .
Simandou Mineral Resources and Ore Reserves ([13])
Rio Tinto is reporting that the Proved Ore Reserves estimate for
the Ouéléba deposit at Simandou contains 273 Mt at 66.4% Fe, 1.0%
SiO(2) , 1.2% Al(2) O(3) and 0.07% P and the Probable Ore Reserves
estimate contains 1,226 Mt at 65.0% Fe, 0.9% SiO(2) , 1.8% Al(2)
O(3) and 0.10% P.
This Ore Reserves estimate has been made by the Competent Person
and reported in accordance with the JORC Code as required by
Simfer's Mining Convention. We note that, consistent with the JORC
Code, some elements are at pre-feasibility level and work continues
to refine all elements to feasibility level consistent with Rio
Tinto's global practice.
Rio Tinto is also reporting Mineral Resources exclusive of Ore
Reserves for the Ouéléba and Mineral Resources for Pic de Fon
deposits at Simandou of 1,360 Mt at 66.1% Fe, 1.5% SiO(2) , 1.5%
Al(2) O(3) and 0.06% P consisting of Measured Mineral Resources of
153 Mt at 67.0% Fe, Indicated Mineral Resources of 460 Mt at 66.2%
Fe and Inferred Mineral Resources of 746 Mt at 65.8% Fe. The
Mineral Resources cut-off for reporting is Fe greater than or equal
to 58% and Al(2) O(3) + SiO(2) less than or equal 8% and P less
than or equal to 0.25%.
The declaration of the 1,499 Mt Ore Reserves estimate is as a
result of the conversion of 1,469 Mt of undiluted Mineral
Resources, inclusive of dilution, at Ouéléba.
Mineral Resources and Ore Reserves are quoted on a 100% basis.
Rio Tinto ownership percentage is 45.05%.
Mineral Resources and Ore Reserves declaration
A tabulation of the update to the Mineral Resources at Simandou
is provided in Table A. A tabulation of the new Ore Reserves at
Simandou is provided in Table B.
Table A Simandou Mineral Resources as at 6 December 2023(b) (c)
Total Measured and Indicated Mineral
Resources
Measured Mineral Resources Indicated Mineral Resources as at 6 December 2023
=================================================== =================================================== =================================================
Likely
mining
method(a) Tonnage Grade Tonnage Grade Tonnage Grade
======== ========================================= ======== ========================================= ======== =======================================
% % Al(2) % % % Al(2) % % % % Al(2) %
Mt Fe % SiO(2) O(3) P % LOI Mt Fe % SiO(2) O(3) P % LOI Mt Fe SiO(2) O(3) P % LOI
======== ===== ========= ======== ===== ====== ======== ===== ========= ======== ===== ====== ======== ===== ======= ======== ===== ======
O/P 153 67.0 1.9 1.1 0.04 1.1 460 66.2 1.8 1.5 0.05 1.9 613 66.4 1.8 1.4 0.05 1.7
=========== ======== ===== ========= ======== ===== ====== ======== ===== ========= ======== ===== ====== ======== ===== ======= ======== ===== ======
Total Mineral Resources Total Mineral Resources
Rio
Tinto
Inferred Mineral Resources as at 6 December 2023 Interest as at 31 December 2022
============================================= ============================================== =================================================
Likely
mining
method(a) Tonnage Grade Tonnage Grade Tonnage Grade
======== =================================== ======== ==================================== ========= ======== =======================================
% % %
% % Al(2) % % % % Al(2) % % % Al(2) %
Mt Fe SiO(2) O(3) P LOI Mt Fe SiO(2) O(3) P LOI % Mt Fe % SiO(2) O(3) P % LOI
======== ===== ======= ====== ===== ==== ======== ===== ======= ====== ===== ===== ========= ======== ===== ========= ====== ===== ======
O/P 746 65.8 1.3 1.6 0.07 2.8 1,360 66.1 1.5 1.5 0.06 2.3 45.05 2,830 65.8 1.2 1.5 0.08 3.0
=========== ======== ===== ======= ====== ===== ==== ======== ===== ======= ====== ===== ===== ========= ======== ===== ========= ====== ===== ======
(a) Likely mining method: O/P = open pit
(b) Mineral Resources of iron ore are stated on a dry in situ
weight basis
(c) Simandou Mineral Resources tonnes decreased due to
conversion of Resources to Reserves following completion of the
feasibility study for Ouéléba
Table B Simandou Ore Reserves as at 6 December 2023 (b) (c)
Total Ore Reserves
As at 6 December 2023 (d)
Proved Ore Reserves Probable Ore Reserves (e)
=============================================== =============================================== ==============================================
Rio Tinto
Type Rio Share
of Tinto Marketable
mine(a) Tonnage Grade Tonnage Grade Tonnage Grade Interest product
======== ===================================== ======== ===================================== ======== ====================================
%
% % % Al(2) % % % % % Al(2) % % % % Al(2) % %
Mt Fe SiO(2) O(3) P LOI Mt Fe SiO(2) O(3) P LOI Mt Fe SiO(2) O(3) P LOI % Mt
======== ===== ======= ======== ===== ==== ======== ===== ======= ======== ===== ==== ======== ===== ======= ====== ===== ===== ========= ===========
O/P 273 66.4 1.0 1.2 0.07 2.5 1,226 65.0 0.9 1.8 0.10 3.9 1,499 65.3 0.9 1.7 0.09 3.7 45.05 675
========= ======== ===== ======= ======== ===== ==== ======== ===== ======= ======== ===== ==== ======== ===== ======= ====== ===== ===== ========= ===========
(a) Type of mine: O/P = open pit
(b) Reserves of iron ore are reported on a dry weight basis and
shown as recoverable Reserves of marketable product after
accounting for all mining and processing losses.
(c) Simandou iron ore Reserves tonnes are reported for the first
time since 2016
(d) Only Measured and Indicated Resources have been considered
in the conversion of Mineral Resources to Ore Reserves after the
application of modifying factors
(e) Simandou Ore Reserves relates to the Ouéléba portion only of
the Simfer mine (blocks 3 & 4)
Contacts
Please direct all enquiries to media.enquiries@riotinto.com
Media Relations, United Media Relations, Australia Media Relations,
Kingdom Americas
Matt Chambers
Matthew Klar M +61 433 525 739 Simon Letendre
M +44 7796 630 637 M +1 514 796 4973
Jesse Riseborough
David Outhwaite M +61 436 653 412 Malika Cherry
M +44 7787 597 493 M +1 418 592 7293
Alyesha Anderson
M +61 434 868 118 Vanessa Damha
M +1 514 715 2152
Michelle Lee
M +61 458 609 322
Investor Relations, United Investor Relations, Australia
Kingdom
Tom Gallop
Menno Sanderse M +61 439 353 948
M +44 7825 195 178
Amar Jambaa
David Ovington M +61 472 865 948
M +44 7920 010 978
Laura Brooks
M +44 7826 942 797
Rio Tinto plc Rio Tinto Limited
6 St James's Square Level 43, 120 Collins Street
London SW1Y 4AD Melbourne 3000
United Kingdom Australia
T +44 20 7781 2000 T +61 3 9283 3333
Registered in England Registered in Australia
No. 719885 ABN 96 004 458 404
LEI: 213800YOEO5OQ72G2R82
This announcement contains inside information.
This announcement is authorised for release to the market by
Andy Hodges, Rio Tinto's Group Company Secretary.
riotinto.com
([1]) WCS is currently a consortium of Singaporean company,
Winning International Group (50%), Weiqiao Aluminium (part of the
China Hongqiao Group) (50%) and United Mining Supply Group (nominal
shareholding). WCS is the holder of Simandou North Blocks 1 & 2
(with the Government of Guinea holding a 15% interest in the mining
vehicle and WCS holding 85%) and associated infrastructure. Baowu
Resources has entered into an agreement to acquire a 49% share of
WCS mine and infrastructure projects through a Baowu-led
consortium, subject to conditions including regulatory approvals.
In the case of the mine, Baowu has an option to increase to 51%
during operations.
([2]) Simfer Jersey Limited is a joint venture between the Rio
Tinto Group (53%) and Chalco Iron Ore Holdings Ltd (CIOH) (47%),a
Chinalco-led joint venture of leading Chinese SOEs (Chinalco (75%),
Baowu (20%), China Rail Construction Corporation (2.5%) and China
Harbour Engineering Company (2.5%)). Simfer S.A. is the holder of
the mining concession covering Simandou Blocks 3 & 4, and is
owned by the Guinean State (15%) and Simfer Jersey Limited (85%).
Simfer Infraco Guinée S.A.U. will deliver Simfer's scope of the
co-developed rail and port infrastructure, and is, on the date of
this notice, a wholly-owned subsidiary of Simfer Jersey Limited,
but will be co-owned by the Guinean State (15%) after closing of
the co-development arrangements.
[3] Refer to "Simandou Mineral Resources and Ore Reserves"
section at page 4 below.
[4] A true-up mechanism will apply between Simfer and WCS (as
defined below) to equalise their out of pocket costs of
constructing the co-developed rail and port infrastructure.
[5] Estimated numbers, subject to approval by the Simfer board
and government authorities.
[6] WCS holds the mining concession for Blocks 1 and 2, while
Simfer SA holds the mining concession for blocks 3 and 4. Simfer
and WCS will independently develop their mines.
[7] Co-development of the rail and port infrastructure remains
subject to a number of conditions, including regulatory approvals
in Guinea and China, the entry into a number of legal agreements,
ratification of the investment framework for co-development by the
Republic of Guinea, and agreement between Simfer, WCS and the
Republic of Guinea regarding the budget for the rail and port
infrastructure.
[8] The estimated annualised capacity of approximately 60
million dry tonnes per annum iron ore for the life of mine schedule
is underpinned as to 18% by Proved Ore Reserves and 82% by Probable
Ore Reserves as set out in the Table 1 Release referred to in the
footnote below. Rio Tinto confirms that all material assumptions
underpinning the production target in the Table 1 Release continue
to apply and have not materially changed.
[9] Simfer will hold 34% of the WCS-Baowu InfraCo during
construction.
[10] The ownership of the rail and port infrastructure will
transfer from CTG to the Guinean State after a 35 year Operations
Period, with Simfer retaining access rights on a non-discriminatory
basis and at least equivalent to all Third Party Users.
[11] Subject to adjustment as described in Footnote 1.
[12] 11 to 13% (post-tax, real basis). Based on Wood Mackenzie
and CRU average pricing for iron ore (65% grade), with a premium
applied for DR product.
([13]) These Mineral Resources and Ore Reserves have been
reported in accordance with the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves, 2012 and
the ASX Listing Rules in a release dated 6 December 2023 titled
"Release of Mineral Resource and Ore Reserve Estimates for
Simandou" (Table 1 Release) which is available on Rio Tinto's
website at resources & reserves (riotinto.com) . The Competent
Person responsible for the information in that release that relates
to Mineral Resources is Kaye Tindale, a Member of the Australasian
Institute of Mining and Metallurgy (MAusIMM). The Competent Person
responsible for the information in that release that relates to Ore
Reserves is Michael Apfel, a Member of the Australasian Institute
of Mining and Metallurgy (MAusIMM). Rio Tinto confirms that it is
not aware of any new information or data that materially affects
the information included in the Table 1 Release, that all material
assumptions and technical parameters underpinning the estimates in
the Table 1 Release continue to apply and have not materially
changed, and that the form and context in which the Competent
Persons' findings are presented have not been materially
modified.
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