As indicated in a previous dispatch, the National Assembly adopted, last Saturday, November 21, 2020, by a majority of votes, the conventions relating to port and rail infrastructure for the evacuation of iron ore from blocks 1 and 2 of the Simandou. (located in Kérouané in Upper Guinea) between Guinea, the Winning Consortium Simandou Ports SAU, Winning Consortium Simandou Railway SA and Winning Consortium Simandou SAU.

Deposits not to be confused in blocks 3 and 4 of Simandou, initially held by Rio tinto and located in the prefecture of Beyla, in forest Guinea.

The investor, the SMB-Winning Consortium, firmly established in Boké in the context of bauxite mining, has undertaken to build a 660 to 679 km railway linking the mine to a port. in deep water, with a final capacity of 80 Million Tons per year (MTPA) located in Matakang, in the prefecture of Forécariah, in the Lower Coast and a railway line which is to be doubled from 2038.

These mining and infrastructure components require an overall investment estimated at 14 billion US dollars. On equity, the SMB-Winning Consortium will invest six (6) billion US dollars in the realization of the project. The duration of the two agreements (port and rail) is 35 years.

The report presented by the Honorable Mohamed 1 Kéïta, himself introduced by the President of the Mines and Industry Commission, the Honorable Eva Cross provides details in terms of economic benefits for Guinea and brought to the attention of the national representation .

According to the document read in plenary session before the Ministers of Mines and Geology, Abdoulaye Magassouba, of Transport, Aboubacar Sylla and of the Budget, Ismaël Dioubaté, the Commission met during the various working sessions, the representatives of the departments involved, in in order to collect the information and data necessary for the analysis of the Agreements and to assess their feasibility, to ensure the advantages and spin-offs for the Guinean State, the local authorities and the strategic partner company. The results of these exchanges were widely shared with the deputies in inter-commissions, underlines the document.

From the presentation of the project:

The Guinean State has set as strategic objectives of its mining policy, the diversification of mining for the development of its mineral resources. It is with this in mind that research work has been carried out which has revealed iron ore resources of exceptional quality on the Simandou chain.

For the development of this deposit, a tender procedure was organized by the Ministry of Mines and Geology with a view to the allocation of mining rights for blocks 1 and 2 of Simandou. Following the provisional award, the negotiation of a mining agreement was initiated between the State and the Consortium, in accordance with the procedure provided for this purpose.

It should be recalled that the Basic Agreement for the exploitation project of the Simandou Blocks 1 and 2 deposit was promulgated by Decree No D/2020/143/PRG/SGG of July 3, 2020, after the adoption by the Council of Ministers, then by the National Assembly by law L/2020/004/AN of June 26, 2020, and obtaining the favorable opinion of the Constitutional Court on July 2, 2020.

This basic agreement includes the general and specific conditions for the construction of rail and port infrastructures. The finalization of these agreements, the negotiations of which were conducted by a joint commission comprising representatives of the ministries in charge of Mines and Geology, Transport, Budget, Economy and Finance, assisted by technical, legal and financial resources, completes the investment framework of the Simandou Blocks 1 and 2 project.

The object of the agreements will consist in the realization and the development by phase of an integrated production chain of iron ore, accompanied by port and railway infrastructures of great magnitudes and a multi-activity and multi-sector industrial zone.

While the total investment is projected at US$16 billion, the consortium plans to build a steel plant with a capacity of 500,000 tons per year worth US$1 billion.

A period of 7 years and two months is planned for the construction of the project infrastructure and the start date of production.

In accordance with the provisions of the Basic Agreement, the company must imperatively reach the date of first commercial production from the date of entry into force and within the time limits below, 74 months for the commissioning test and an additional 12 months for reaching the date of first commercial production.

The operational schedule to date provides for the completion of the studies and the start of the infrastructure and mine construction works before the end of 2021 and the commissioning of the entire project by the end of 2025.

Several stages are planned for the realization of this project and for a duration of 74 months and 12 additional months to reach the date of first commercial production.

Expected benefits of the project:

The construction of port and rail infrastructure will enable the State to open up the areas crossed (Kerouané-Kankan-Kissidougou-Faranah-Mamou-Kindia and Forécariah) by the 650 to 679 km long railway which will link Simandou to Matakang (Forécariah ) deep water port.

These infrastructures may be used not only for the transport of people and goods but also by companies operating in these areas, in compliance with the principles of infrastructure sharing, with however; a priority reserved for iron ore from Blocks 1 and 2.

During the study phase, at least eight (8) local companies will be engaged in various fields: environmental studies and management, camp construction, catering, security and sampling creating more than 400 full-time jobs and 960 part-time jobs.

By carrying out its commitments, the consortium will enable Guinea to position itself among the world's largest producers of iron ore in the next six (6) years.

Tax advantages, the report of the Mining and Industry Commission emphasizes that the Companies, its affiliates and its exclusive Subcontractors are subject to taxes, duties, taxes and royalties of a fiscal nature in accordance with the provisions of the General Tax Code, the Customs Code and the Mining Code in force. However, due to the specificities, the integrated and industrial nature of the project, certain exemptions have been granted.

These exemptions, based essentially on the provisions of the Investment Code, have the essential objective of allowing timely repayment of the loans that will be contracted within the framework of the financing of the Infrastructures. These include corporation tax (IS) for the first 10 years, the Contribution Foncière Unique and the Patente.

In return, the contribution to local development at the rate of 0.5% of turnover to which the mining company is subject will be calculated on the turnover of the Mine, the Railway and the Port. In 25 years of operation, Guinea, in addition to the hundreds of jobs, even thousands of direct and indirect jobs that will be created, expects a quantified envelope of approximately 15.5 billion US dollars to finance its development.