By Global Times
China Baowu Steel Group Corp and the joint ventures formed by Chinese and foreign enterprises SMB Winning Consortium and Simfer, have signed an infrastructure buildup agreement with Guinean government, reaching important cooperation consensus on joint investment and development of railways and ports of the Simandou project in Guinea, according to Baowu’s Wechat account over the weekend.
The Simandou project in Guinea has the world’s largest untapped iron ore reserve of high quality, with an estimated annual output of 120 million tons of capacity at the initial stage. Analysts said the deal marks a milestone in the months-long negotiation which will lay a solid foundation for the resumption and exploration of the Simandou project.
It is significant for China to diversify its iron ore import sources, which has been previously over-reliant on Australia that accounts for over 60 percent of China’s total import of iron ore.
It is expected that the Simandou project, once completed, would at least double China’s ore imports from Africa, drastically elevating China’s pricing power at the international market, analysts said.
The deal was signed on Thursday. It represents a new development in reaching agreement on detailed terms including investment structure, funding terms, construction model and localization policy, after a joint venture La Compagnie du TransGuinéen was incorporated in July to co-develop the multi-purpose infrastructure for the Simandou project.
The project’s development requires accompanying basic infrastructure, including a railway with a length of over 600 kilometers that stretches across Guinea’s east and west, as well as port in the country’s western coast.
In March, Guinea’s government ordered the halt of all construction activities at the Simandou project, saying that it was seeking to clarify how the country’s interests will be preserved, according to a Reuters report.
“The project’s development will further facilitate the industrialization and economic growth of Guinea, and provide green low-carbon metallurgical furnace choice for the high-quality development of Chinese and global steel industries,” Baowu said.
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