Rio Tinto in Guinea for the long run

Rio Tinto will not exit Guinea, Lawrence Dechambenoit, Vice President Corporate Relations Europe, Middle East and Africa for Rio Tinto, told delegates at a panel discussion on Wednesday, 5 February at Investing in African Mining Indaba, writes Leon Louw.

The mining sector in the West African state of Guinea is booming and has prompted the establishment of a Central Corridor, which entails a collaborative effort among mining companies, agriculture, the government, regional communities and other stakeholders to drive economic growth in the region and in the country. Guinea has the biggest bauxite and iron ore deposits in the world, but the benefits have yet to trickle down to local communities. Mining as a catalyst for regional development in Guinea was the topic of a panel discussion at an event organised by the UK Department of International Trade at today’s Investing in African Mining Indaba.

The lack of efficient rail roads and big enough ports has been a constraint for the mining industry in Guinea. Bauxite and iron ore are both bulk materials and has to be shipped long distances by road or rail from pit to port. With more than 400km of rainforest between an iron ore deposit like Simandou and the ocean, it becomes an extremely costly exercise to export raw materials. Simandou has a chequered history and various battles have been fought over the mining rights to the richest iron ore deposit in the world. Global giant Rio Tinto and mining mogul Benny Steinmetz have been prominent at Simandou, and rumours about Rio Tinto exiting Guinea continues resurfacing.

However, in a strong statement on Wednesday at Investing in African Mining Indaba, Lawrence Dechambenoit, Vice President Corporate Relations Europe, Middle East and Africa for Rio Tinto said unequivocally that Rio Tinto will remain in the country and that it is seeking ways to develop Block 3 and Block 4 at Simandou. “We are working on a solution to developed Simandou. We will not sell our share in Simandou. It is extremely difficult to fund a project of this magnitude, and the main reason why we still haven’t developed mine, is that we were not able to raise the financing. Next year when we sit here again, I hope to tell you that we have found a solution to export ore from Simandou,” he said. Rio Tinto also has bauxite interests in Guinea.

Meanwhile, Guinea Aluminium Corporation exported its first shipment of bauxite from its mine in north west Guinea early last year. The company hopes to produce at a rate of 12m tonnes per year. Furthermore, the government has organised a late 2019 bidding round for Simandou’s Block 1 and Block 2, where activities have been on ice for close on ten years. The Singaporean-Guinean Société Minière de Boké won the rights to the 369km2 concession.      

Leon Louw is a specialist in African affairs and mining. For more about doing business in Africa and fragile states, politics, mining in Africa, and the political risk of operating in Africa, please send Leon a message.