The same causes which maintained the status quo on the Simandou iron ore for years and have been the pretext for Rio Tinto to freeze the project seem SIMFER catch Chinalco who took over the project in October 2016. They include, declining prices of iron on the world market ( 72 per ton with a decrease of 9% over the year) and the costs associated with this mega project estimated at 20 billion.
Chinalco shareholder SIMFER (blocks 3 and 4) which bought 47% of Rio Tinto shares had not materialized the transfer to mid-January the shares of Rio Tinto Chinalco according to officials at the Guinean Ministry of Mines. This clearly indicates that the Chinese aluminum giant playing for time as his predecessor.
In the sale agreement between Rio Tinto and Chinalco, it is expected that Rio Tinto receives payments from 1.1 to 1.3 billion $ on the basis of the project development schedule while the initial payment for the shares begin when the first commercial production, on a per tonne.
As with Rio Tinto, the Guinean authorities will eventually take their troubles patiently because Chinalco must face the reality of the market: the abundance of supply and slowing demand driving prices down.
While prices had tripled between 2006 and 2011, they came down from virtually their dXCHARXavant-crisis level.
