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Guinea Plans Sovereign Wealth Fund Backed by Iron-Ore Income

By Ougna Camara
A conveyor belt transports iron ore to a stockpile at the Gudai-Darri mine operated by the Rio Tinto Group in the Pilbara region of Western Australia, Australia, on Tuesday, June 21, 2022. Gudai-Darri, with an annual capacity of 43 million tons, is expected to increase iron ore production volumes and improve product mix from the Pilbara from the second half of this year, according to a company statement. Photographer: Carla Gottgens/Bloomberg (Carla Gottgens/Bloomberg)

(Bloomberg) -- Guinea plans to use some of its income from mining the world’s largest iron-ore reserve to create a sovereign wealth fund.

The facility will fund key development projects in the government’s so-called Simandou 2040 Program, Planning and International Cooperation Minister Ismael Nabe said in parliament on Monday.

We aim to “transform agriculture, education, health and to increase the construction of modern infrastructure, a large-scale railway linking mining and agricultural areas to the port of Conakry,” he said.

The Simandou mine is expected to start production by the first quarter of 2026. It is divided into four blocks, with blocks 1 and 2 controlled by Winning Consortium Simandou, backed by Chinese companies including Baowu Group. Rio Tinto Plc and Aluminum Corp. of China, known as Chinalco, own blocks 3 and 4.

The project entails mining 8 billion tons in iron-ore deposits, with an estimated annual output of 160 million tons.

The government owns 15% in each of the mine’s shareholding groups. It also owns 15% in Compagnie du TransGuinéen, a joint venture of the partners building a rail road and a port for the mine.

Guinea has been under military rule since 2021 when General Mamadi Doumbouya seized power through a coup. The nation is the world’s top exporter of bauxite, a raw material used to produce aluminum.

©2024 Bloomberg L.P.