Rio's Simandou part of the African boom

RIO Tinto said its massive Simandou iron project in Guinea demonstrated the right way to play the long game in Africa.
Rio's Simandou part of the African boom Rio's Simandou part of the African boom Rio's Simandou part of the African boom Rio's Simandou part of the African boom Rio's Simandou part of the African boom

Simandou. Copyright 2014 Rio Tinto

Justin Niessner

Rio diamonds and minerals chief executive Alan Davies told delegates at the Mining Indaba in Cape Town yesterday that Simandou represented the miner’s faith in macro social developments in Africa as well as the viability of shared-value approach to development.

Having just arrived in Cape Town after a weekend visit to Rio’s QIT minerals sands operation (QMM) in Madagascar, Davies offered the remote ilmenite complex as a blueprint for community-minded success in Africa.

“I think this is the model that works best, partnerships built to maintain and share value,” he said.

“The model in Simandou builds on this experience and marries it with the huge task of raising, financing and funds for what is a nation-building infrastructure development, which will be a catalyst for growth in the Guinea growth corridor for decades to come.”

Davies outlined a number of growth trends in Africa, tracking familiar but noteworthy fundamentals in population growth, a booming middle class and increased commodities consumption.

With an emphasis on long-term perspective, he sketched Simandou as complementary to these continental growth trends.

“The Simandou project will be a catalyst for the better and therefore will provide greater opportunity for Guinea to develop its economy,” he said.

“As with QMM, this is about harnessing private investment to help diversify the economy. It will be transformational.”

Simandou is one of the largest high-grade iron ore deposits in the world, and is tipped to have a lifespan of more than 40 years. Rio has called for thousands of jobs to be created directly by the operation, with billions of dollars of direct investment leading to enormous flow-on benefits.

About 650km from a port, infrastructure needs will include a railway, deepwater export facility, roads, wireless communication and electricity installations.

With the magnitude of the investment doubtlessly ruffling investors and analysts in the current low iron ore price environment, Davies continued to press the long-term bankability of raw materials in the African market.

This vision was characterised as a strategic element of a shared-value policy, which has aimed to ensure the success of partnerships in host countries through comprehensive engagement initiatives.

“We’ve been around long enough to be well acquainted with the perennial talk of Africa’s potential,” he said.

“We’ve seen the booms and busts of commodity prices come and go. We’ve spent enough time in different countries and communities to appreciate the diversity and dynamism of this continent of 54 nations.

“As I spend time with people on site, I ask myself the same question, how can we do a better job of unlocking this potential?

“One thing I’m certain of, adversarial relationships don’t work and compliance alone just doesn’t unleash the potential.”