Still, China is reliable. The world's largest iron ore mine in Guinea, delayed by Western companies for 30 years, starts production

Foreign media: How the world's largest mining project has made China a global hegemon

A $23 billion iron ore mine in Guinea marks Beijing's new dominance in the global resource sector.

China firmly controls Simandou

After nearly three decades of delays, political struggles and corporate disputes, the $23 billion Simandou iron ore mine in Guinea has finally started production. This project, once seen as an unattainable dream, has now become the largest mining development project in history, centered around high-grade ore deposits that could reshape the global steel production landscape. For one of the poorest countries in the world, Guinea, this mine represents an opportunity to double its economy by 2040. According to the Financial Times, for China, this is a strategic victory that could weaken Australia's monopoly over iron ore supply.

New ambitions in Guinea

The Simandou gold mine is expected to produce 120 million tons annually, becoming an important engine for Guinea's long-term growth. Mining Minister Bouna Silla called it "an opportunity to change people's lives," and launched a national plan called "Simandou 2040," which includes investing $20 billion in infrastructure, schools, and industrial development. General Mamady Doumbouya, who seized power in 2021, tied his presidential term to the success of the gold mine, insisting that Guinea must hold a 15% stake in the mine and its port and railway logistics company.

A history of scandals and setbacks

The Simandou project was discovered by Rio Tinto in the 1990s and later became a case study in resource political risk. In 2008, the late dictator Lansana Conté of Guinea issued an order to strip Rio Tinto of half its concession rights, transferring them to BSG Resources, a company owned by Israeli billionaire Beny Steinmetz. BSG Resources later sold part of its shares to Brazilian company Vale for $2.5 billion. However, this deal eventually collapsed due to bribery allegations, international litigation, and a Swiss court conviction against Steinmetz, although he always denied any wrongdoing. For years, global mining giants hesitated due to the project's high costs, until Chinese companies stepped in.

China takes over the project

In 2019, the Simandou Joint Venture (WCS), a Sino-Sino joint venture, acquired the disputed block, and the project finally resumed. With the support of China Baowu Steel and shipping giant Sun Xiushun, WCS quickly built a 650-kilometer railway connecting the mine to the Atlantic coast. At the same time, Rio Tinto retained a 25% stake in the western mine and partnered with China Aluminum Company, a state-owned aluminum group. This created a duopoly mine - half developed by the Rio Tinto-China Aluminum joint venture, and half by WCS, but both were funded and engineered by China.

A geopolitical balancing act

President Doumbouya plays the dual role of a nationalist and a pragmatist, demanding that the railways built by China use American locomotives and French signaling systems to dilute foreign influence. An official joked that this combination "looks like the United Nations." However, this arrangement reflects a clear shift in power. As the world's largest steel producer, China consumes nearly three-quarters of the global iron ore. With the Simandou mine, China can now influence prices and reduce its reliance on Australian and Brazilian suppliers, who have dominated the market for decades.

Impact on the global market

Once fully operational, the Simandou mine could supply about 7% of the world's seaborne iron ore. Analysts predict that in the coming years, the mine's output will push iron prices from around $100 per ton to $70-80 per ton, putting pressure on existing producers in Australia's Pilbara region. The Simandou mine ore has an iron content of up to 65%, giving it a key advantage in the transition to "green steel," helping steel mills reduce carbon emissions. As the global decarbonization process accelerates, this environmental advantage may make it indispensable.

Future challenges and risks

Despite the bright prospects, the Simandou mine still faces some common risks. Guinea's frequent coups and record of political instability have raised concerns about resource nationalism and investor safety. Environmental groups warn that the project will destroy tropical rainforests and water systems, and the completion of the project could lead to thousands of local workers losing their jobs. The government has promised to invest 5% of mine revenues and 20% of logistics profits into education and community development, but the specific implementation remains unclear.

A turning point for Africa and China

Currently, optimism dominates in Conakry. The mine's operation has earned Guinea its first-ever sovereign credit rating, an important step for its entry into the international market. At the same time, China has demonstrated its ability to provide state-backed financing and coordinate industries, completing a project that Western companies failed to complete for nearly 30 years. As trains begin to transport ore to the coastal areas, the first shipments are heading to Chinese ports. The Simandou mine is not only a symbol of Guinea's national awakening but also a sign of Beijing's growing control over the future of global minerals.

Source: moneycontrol

Original: www.toutiao.com/article/1848636827138180/

Disclaimer: The article represents the views of the author.