Transforming Guinea: Chinese-backed group to build 650km railway in $14bn mining deal

In return for permission to mine a massive, untapped deposit of high-grade iron ore in the West African country of Guinea, a Chinese-backed international consortium has agreed a $14bn deal to build a 650km railway across the country, and a deepwater port to ship the product.

Winning the rights to mine blocks one and two in the Simandou mountain range is the joint venture between Guinea’s Société Minière de Boké (SMB) and Winning Shipping of Singapore, backed by Chinese aluminium producer Shandong Weiqiao and China’s Yantaï Port Group.

Their prize is the Simandou deposit deep in southern Guinea, believed to be the world’s largest of high-grade iron ore. Contained in two 7.5km drifts, the deposit is thought to be composed of about 65% haematite, with some estimates of probable value exceeding $100bn.

Access for export is difficult, however, because Guinea wraps clockwise around its neighbours Sierra Leone and Liberia, meaning the shortest route to the sea is through Liberian territory.

But the JV clinched the deal by promising to build a heavy-duty, standard gauge railway the long way around north through four regions of Guinea to the Guinean coast at Matakong.

The Guinean government has always insisted that whoever develops the deposit must build a much longer, and more economically valuable, railway.

Sun Xiushun, chief executive of the SMB-Winning group, said in a statement: "The Simandou Project will be crucial for Guinea’s future. With the Transguinean railway, Guinea will now have a real lifeline linking four regions, accelerating administrative and economic decentralisation and strengthening the country’s rail network."

The project is unusual in that it will involve building a pier that may be as long as 20km to reach deep water off Guinea’s shallow coast.

SMB-Winning beat a rival bid from Australian mining company Fortescue.

The JV must complete the port and railway within five years of the ratification of the agreement.

It is expected that most of the iron ore mined will be bought by the Chinese steel industry.

Plans to mine the 2.2 billion tonnes of ore in the Simandou range long have been the subject of legal disputes and corruption allegations. In the past 10 years, bribery investigations have been launched by the FBI, the US Department of Justice, the UK’s Serious Fraud Office and the Australian authorities.

Guinea has ramped up its mining activity in recent years. The Financial Times notes that since 2015, Guinea has tripled its production of bauxite for aluminium to 60 million tonnes, but has not exported any iron ore at all.

Photograph: The iron-rich Simandou mountains in southern Guinea (From Société Minière de Boké)

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