In one of the latest developments in the Guinean iron-ore mining saga, Niron Metals, led by former Xstrata CEO Sir Mick Davis, announced a clear-cut plan to begin mining the Zogota deposit. This comes on the heels of a partnership created between Niron Metals and the Guinean government that allows for a group of investors, to extract iron ore from the mine. The partnership also follows an agreement reached in 2019 that was brokered by French President Nicolas Sarkozy and that resolved the seven-year dispute between the Guinean government and BSGR, where Steinmetz serves as an advisor.
A feasibility study conducted by Niron Metals together with Guinean authorities found that the deposit could produce some two million tons of iron ore a year. It also found that the deposit is located near the surface, meaning that it is suitable for open-pit mining—a low-cost method that requires minimal infrastructure. Consequently, production could begin relatively quickly, though an exact date has not yet been established.
In April 2020, Niron Metals concluded negotiations and signed an agreement with Liberian President George Weah that would give the company permission to move iron ore through Liberia instead of Guinea. The deal will reduce operational costs since the Liberian port of Buchanan is closer to Zogota and some infrastructure is already in place. Previously, the government of Guinea had insisted that mining companies export the ore from local ports. However, it changed its position in October 2019 when it signed an agreement allowing several Guinean mines, including Zogota, to send exports through Liberia.
Zogota Developments Connected to Simandou Dispute Resolution
The latest developments are part of a larger resolution of the saga between BSGR and the Guinean government that had continued for the better part of a decade surrounding the Simandou deposit. Simandou is considered one of the largest iron-ore reserves in the world and is estimated to hold 2 billion tons of iron ore.
In 2019, the Guinean government withdrew allegations of corruption and dropped an arbitration case with BSGR. The case was filed after BSGR was stripped of its mining rights to two of Simandou’s four blocks in 2010. BSGR had originally received them in 2008.
Rio Tinto, the owner of the rights to Simandou before BSGR, was also accused in 2016 of being involved in offering bribery payments worth $10.5 million to Guinean government officials. As a result, Rio Tinto fired two of its top executives.
In November 2019, SMB-Winning, a Chinese-backed consortium, won the rights to blocks 1 and 2 of the Simandou mine, and an agreement to develop them was signed in June 2020. The consortium includes the Singapore-based Winning Shipping, Chinese aluminum producer Shandong Weiqiao, China’s Yantai Port Group, and Guinea-based transport and logistics firm United Mining Supply. As part of the concession, SMB-Winning committed to a $14 billion infrastructure project in which it would build a deep-water port as well as a 650-kilometer railway that will include 39 bridges, 1,000 culverts, and 28 kilometers of tunnels for the purpose of exporting the iron ore.
Rio Tinto still holds a major stake in blocks 3 and 4. It is also considering a joint venture with SMB-Winning in order to pay for the required infrastructure.
