By ZHUANG Jian

China Baowu Steel Group, known as China Baowu, has acquired a stake in the Simandou iron mine in Guinea, Africa.

On October 8, China Baowu announced that its subsidiary, Baowu Resources, had signed a shareholder agreement for a joint venture with Winning Consortium Simandou (WCS) for the northern block of the mine. WCS is a consortium set up by Winning International Group from Singapore, China Hongqiao, and UMS Guinea. 

WCS won the public tender to develop Simandou Iron Ore Blocks 1 and 2 for US$14 billion (100 billion yuan). According to the formal agreement, the Guinean government holds 15 percent equity, while WCS holds 85 percent.

The Simandou iron mine, located in the southeast of Guinea, is the world's largest undeveloped high-quality iron ore deposit. Initial capacity is set at 120 million tons of ore annually.

Since Guinea granted exploration rights for the mine in 1997, development has been delayed. Infrastructure construction is a major challenge due to the mine's location. It requires building a railway over 600 kilometers from east to west in Guinea, as well as other basic infrastructure such as ports along the western coast.

China Baowu first entered the project in September 2022. In March of this year, a formal agreement was signed for the Cross-Guinea Company. It will be the future owner and operator of the railway and port infrastructure. For a minimum of 35 years after the project is completed, it will provide a total iron ore transportation capacity of no less than 120 million tons per year for Simandou.

The Cross-Guinea company was jointly established by the government of Guinea, WCS, and Simfer. WCS and Simfer each hold 42.5 percent of the shares, while the government of Guinea holds 15 percent. Baowu plans to indirectly hold 20.8 percent of the equity by holding shares in WCS.