The Anglo-Australian mining company Rio Tinto Group said that they are hoping to work together with their Chinese partners on the project at Simandou mine in Guinea. They are expecting to receive financial and technological support from the Chinese side to accelerate the project.
While the move is an indication of the rising significance that some Australian companies attach to Chinese companies and the market, industry experts said more pragmatic changes may be needed to improve deteriorating relations between China and Australia to restore the level of trust needed for closer cooperation.
Jakob Stausholm, CEO of Rio Tinto Group, said in a recent exclusive interview with Caixin Media that he hoped that together with their Chinese partners, they can unlock the incredible iron ore mine.
Simandou, in the remote southeastern corner of Guinea, is the world’s largest known iron ore deposit of its kind, with about 10 billion tons of iron ore reserves, data showed.
However, a source with the Anglo-Australian mining group told the Global Times on Thursday that one big challenge for the project is to build a railway that delivers iron ore from inland to the sea port. And the infrastructure is very expensive and difficult to build.
Guinea’s government has asked Simandou’s developers to build a 650-kilometer railway and a deepwater port to transport the ore from remote corners of Guinea to the coast for export, media reports said.
“The technical and financial requirements for building railways are high, because transporting iron ore requires heavy-haul railways but the country’s soil is soft,” said the source, noting that after years of research, it has been found that China may be the only one with financial and technical capabilities to complete this project.
“The recent statement is the reflection of the rising significance that Australian mining companies attach to China in terms of maximizing their market interests,” Ge Xin, a senior analyst with Beijing Lange Steel Information Research Center, told the Global Times on Thursday.
Rio Tinto’s Australian iron ore operations in the Pilbara, Western Australia, have now shipped more than six billion tons to customers globally, with around half of that delivered to customers in China, according to the data that the company sent to the Global Times on Thursday.
However, given the current souring relations between China and Australia, experts believe it is important for the Australian side, especially the government, to make more pragmatic changes to improve the relations, an important foundation for closer cooperation.