DLA Piper advises Chalco Iron Ore on Simandou investment in Guinea

DLA Piper has advised Chalco Iron Ore Holdings Ltd (CIOH) on its investment in the Simandou high-grade iron ore deposit in Guinea - one of the largest greenfield integrated mine and infrastructure investments in Africa.

The Simandou mine is the largest and richest undeveloped high-grade iron ore deposit in the world. This is a significant transaction which will help to decarbonize the steel industry, as well as make a significant contribution to Guinea's economic development by bringing high quality iron ore revenue to Guinea. High-grade iron ore assists in the decarbonisation of steelmaking by enabling more efficient and cleaner production processes, significantly reducing CO2 emissions.

On 16 July 2024, Rio Tinto, the leading global mining group announced that it had received all the necessary Guinean and Chinese regulatory approvals to move forward the development of the Simandou iron ore deposit in Guinea. The transaction closed shortly after.

The Simandou project has been in development for over a decade. CIOH and Rio Tinto formed a joint venture company, Simfer Jersey, to invest in the development of a 60 million tonne per year iron ore mine in blocks 3 and 4 of the Simandou project. Simfer Jersey will also invest and fund its share of a co-developed rail and port infrastructure, including more than 600 kilometers of new multi-use trans Guinean railway and port facilities which will allow the export of up to 120 million tonners of mined ore per year. The first production is expected in 2025, ramping up over 30 months. The mine will initially deliver a single fines product before transitioning to a dual fines product of blast furnace and direct reduction ready ore.

By 11 July 2024, CIOH has paid its share of capital expenditures amounting USD985 million required by Simfer Jersey to progress critical works up to the closing of the infrastructure investment agreement. CIOH has continued to invest further amounts as required in order to achieve the closing of the investment agreement for the port and the rail infrastructure.

DLA Piper was appointed in July 2023 and has provided legal advice on multiple aspects of the project including risk analysis, strategy, iron ore sales and marketing arrangements, financing, and negotiations with other stakeholders.

Hong Kong based foreign legal consultants Carolyn Dong and Russell Wilkinson led the transaction, together with Karim Maalioun, based in London. All are part of the firm's Energy and Natural Resources sector team.  

They were supported by a large team of lawyers which included partners and senior counsels Neil Macdonald (Abu Dhabi), Alex Jones (Perth), Daniel Colgan (Brussels),Tina Xia  (Hong Kong), Jennifer Jin (London), Nick Sceales (Perth), Parwana Zahib-Majed (London), Rosie Li (Hong Kong), Janet Zheng (Hong Kong) and Thomas Armstrong (Brisbane).

Carolyn Dong commented, "The DLA Piper team worked tirelessly to help our client overcome challenges and finally reach a closing. This transaction demonstrates DLA Piper's strength in providing our clients with a best-in-class service spanning multiple areas of law across different global jurisdictions. Our firm truly operates as one global team."