What’s new: The Guinean government has again suspended construction of the Simandou iron mine, citing the inability of investors to reach an agreement on the start of a joint venture, according to an official statement issued on Tuesday.
This is the second time this year that the authorities to make a break on the development of the project, considered crucial for China to reduce its dependence on Australian iron ores.
While the West African country’s ruling junta blamed the investors for the shutdown, sources familiar with the project told Caixin that the investors had submitted an agreed joint venture plan to the government, but had not never received a response.
The sources added that the government demanded tangible benefits from the project, such as cash payments, so it tried to force investors to compromise by suspending the project.
The context: Simandou is considered the largest reserve of the highest quality iron ore in the world. The region holds more than 8.6 billion tonnes of ore with an average iron content of 65%, among the highest in the world, according to the National Institute of Statistics of Guinea.
The projected annual production will reach 100 to 150 million tons, or 5 to 7% of the world total. Chinese investors are among the main forces pushing the Simandou project because it could drive down prices for Chinese steel mills. Investors in the project include London-based mining giant Rio Tinto PLC, Chinese aluminum giant Aluminum Corp. of China and Shandong Weiqiao Pioneering Group Co. Ltd.
In March, the Guinean government halted project activities, saying foreign investors were not working in the country’s interest. But construction resumed two weeks later, after investors offered the government a free 15% stake in the mine infrastructure.
Related: Guinea agrees to take over Simandou iron ore project with new infrastructure package
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