Rio Tinto has stockpiled 2 million tonnes of high-grade iron ore at its Simandou project in Guinea for a shipment in mid-November, three sources told Reuters, which would be the first from the mega-mine that should reshape global supply and prices.
In its third-quarter production report published, Rio declared that SimFer – one of the two Simandou mines – had accumulated 1.5 million tonnes of ore, the first ore having been loaded by rail in October.
A spokesperson declared that the company continues to advance the project “at a sustained pace”, without giving details.
Pressure on rivals The first shipment should be destined for China, the world’s leading steel producer and consumer of more than 70% of seaborne iron ore, the sources indicated, speaking under cover of anonymity.
Rio will initially transport the exports via infrastructure belonging to partner Winning Consortium Simandou, whose port is nearing completion.
“We plan to start loading a vessel towards November,” declared Rio, without disclosing the initial volumes.
The ownership of Simandou, which is linked to the Atlantic by a 600-kilometre (373 miles) railway and a deep-water port, is shared between a consortium composed of Rio and the Chinese state company Chalco, and WCS, a Singaporean-Chinese consortium.
Simandou, which holds about 4 billion tonnes of ore containing on average 65% iron, should produce 120 million tonnes per year at full capacity, SimFer contributing half.
According to the International Monetary Fund, the project should increase Guinea’s GDP by 26% by 2030.
The Guinean military government plans to officially launch the project on 11 November.
WCS, which operates the other Simandou mine, has also started stockpiling ore in September, launching a race for the first market shares.
“The prices of iron ore could come under downward pressure if Australian and Brazilian miners do not react to the rise in power of Simandou,” declared Tom Price, head of commodities at Panmure Liberum.
“An annual production of 120 million tonnes by 2028 would increase seaborne supply by 8 to 9%.”
Rio’s Chief Financial Officer, Peter Cunningham, declared in July that the launch of Simandou would probably force certain higher-cost suppliers to leave the market.
The launch of the project comes as China strengthens its grip on Guinea’s resource sector, the leader in bauxite exports.
Chinese steelmakers, under pressure from margins and a prolonged real-estate slowdown, are turning to lower-cost and higher-grade ore to reduce their emissions and energy consumption.
By MNM with Maxwell Akalaare Adombila et Clara Denina
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