NEWS

Simandou: Guinea’s Megaproject

2025-11-19
PACT

The first ore wagons have begun their journey down the mountains of southern Guinea, carrying premium‑grade iron ore from the long‑awaited Simandou mine. After more than a decade of legal disputes, stalled bids and infrastructure delays, the project is entering its operational phase. It is a defining moment for the Republic of Guinea and an important shift in Africa’s role within the global steel industry.

At the official inauguration at Morebaya port, President Mamadi Doumbouya stood alongside senior government officials and several visiting heads of state. The message was clear. After years of uncertainty, Simandou is no longer a distant promise but a functioning industrial venture.

Simandou 2040, Morebayah Port – Credit: Presidency of the Republic of Guinea

Deep in Guinea’s forested south-east, the Simandou range holds one of the world’s largest remaining high-grade iron-ore deposits: an estimated 3.3 billion tonnes averaging around 65% Fe. For a country that already dominates global bauxite exports, Simandou offers a chance to move beyond bulk extraction and position itself as a strategic supplier to an industry increasingly focused on low-carbon, high-efficiency inputs.

High-grade ore has become essential to reducing emissions in steelmaking, and its scarcity makes Simandou’s entry significant. The project could rebalance a market historically shaped by Australia and Brazil, adding a third major axis of long-term supply.

At its core, Simandou is a private-sector–driven megaproject with one of the largest investment profiles on the continent. The integrated mine, rail and port system — valued at roughly US$20–23 billion — reflects the scale of transporting iron ore across Guinea’s mountainous interior to the Atlantic coast.

The deposit is divided into two development blocs:

  • Simandou South (Blocks 3 & 4), led by Rio Tinto, in partnership with China’s Chalco (Chinalco) and the Government of Guinea.
  • Simandou North (Blocks 1 & 2), operated by the Winning Consortium Simandou (WCS) — a Singapore–China partnership involving Winning International Group, Shandong Weiqiao / China Hongqiao and Yantai Port Group.
A man holds a lump of iron ore at the blocks three and four of the Simandou mine, one of the largest high-grade iron ore deposits, run by Rio Tinto and partners’ joint venture, SimFer, in the Nzerekore Region, Guinea November 5, 2025. REUTERS/Luc Gnago

The two groups operate independently but rely on shared heavy-haul rail and deep-water port infrastructure, consolidated under the Compagnie du TransGuinéen (CTG). Co-owned by both consortia and the Guinean state, CTG forms the logistical backbone of the entire corridor and represents one of the project’s most complex engineering undertakings.

Rio Tinto’s filings estimate roughly 1.5 billion tonnes of proven and probable reserves in the southern blocs at ~65% Fe, an unusually high grade that reinforces Simandou’s global relevance. The northern blocs are similarly rich, though reported differently across operators.

The Guinean state holds a 15% free-carried interest in each mining company and in the infrastructure SPV. This provides a stake, board representation and future dividends without upfront financial obligations. Operational control and capital risk rest largely with the private operators. The structure combines Western mining standards with deep Chinese industrial integration and long-term offtake commitments, while allowing the state to align the project with national development priorities..

For Guinea, the macroeconomic impact could be significant. IMF projections suggest Simandou could expand GDP by around 26% by 2030, driven by export volumes, capital inflows and corridor-wide logistics activity. The 650-km rail line and new port open opportunities for agriculture, cross-border trade and regional value chains. Producers in the forest region may access new markets; border economies in Liberia and Sierra Leone could benefit indirectly; and new growth poles may emerge along the corridor.

Fiscal revenues are expected to rise meaningfully. Estimates indicate Simandou could account for roughly 3.4% of GDP annually across the 2030s. Yet the central development question remains unchanged: how will these revenues translate into measurable social progress rather than simply expanding the fiscal envelope?

To that end, Guinea has announced the Fonds de Richesse Simandou, its first sovereign wealth fund, capitalised at around US$1 billion and expected to launch in 2026. Its mandate is to channel mining revenues into long-term investments in education, infrastructure, agriculture and industry — forming the anchor of the broader Simandou 2040 strategy. Comparable initiatives in countries like Botswana reflect a wider trend among African resource exporters to institutionalise long-term savings and stabilisation mechanisms.

“We will set aside a share of all revenues for the sovereign wealth fund to help us raise more capital and make further investments,” Minister Nabe reportedly said.

The Simandou 2040 roadmap outlines a transformation agenda that includes downstream steel and semi-finished goods production; expanded logistics, energy and water systems; investment in vocational and tertiary training; environmental safeguards and climate resilience; and the integration of regional value chains under AfCFTA.

In sum, Simandou is envisioned as the backbone of Guinea’s future industrial economy — a rare chance to convert mineral abundance into broad-based development, provided governance systems remain disciplined and implementation steady.

Inflection Point or Repeat Cycle?

Simandou arrives in a country that already knows the limits of mineral booms. Guinea has become the world’s leading exporter of bauxite, yet remains one of the lowest-income and most politically fragile states worldwide. Decades of high-volume extraction have not translated into broad-based prosperity, diversified production or resilient institutions. That experience hangs over Simandou: the ore is different, but the underlying governance test is the same.

Yet the project’s scale, integration and timing make it qualitatively distinct. A shared rail–port backbone, a dedicated wealth fund and a long-term “Simandou 2040” roadmap create policy tools that did not exist when the bauxite industry took off. If these mechanisms function as intended, Simandou could break Guinea’s low value-capture cycle and support a more developmental use of mineral wealth.

But none of this is automatic. To avoid turning a world-class deposit into another missed development opportunity, Guinea will need stronger institutions, transparent revenue management, credible fiscal rules and a social contract that ensures communities directly feel the gains. Large-scale infrastructure and mining investments must translate into jobs, skills development and durable economic linkages beyond the extractive enclaves. In a country where the working-age population is expanding rapidly, long-term payoffs will depend on whether these investments generate employment, SME participation and the growth of domestic and regional supply chains. Greater inclusion of Guinean and West African firms in the value chain is essential to converting demographic momentum into genuine economic opportunity.

For investors, policymakers and DFIs, the watchwords remain: transparency, local value creation, infrastructure spillovers, human-capital investment and long-term governance discipline.

Viewed from this lens, Simandou is best understood not as a guarantee of transformation but as a rare inflection point. It offers Guinea the possibility of turning mineral abundance into enduring economic gains, while giving Africa a more visible position on the global iron-ore map. Whether it becomes a reference case for effective resource management or another example of high-volume, low-dividend extraction will depend less on the quality of the ore than on the quality of the institutions built to govern it.

References (accessed November 2025)

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