The Pilbara killer is here.
A Guinean government minister, meanwhile, said the West African country would inaugurate rail and port facilities for the giant Simandou iron ore project on Nov. 11.
The locomotives are arriving.
SIMFER, the joint venture of the government of Guinea, Rio Tinto, and the Chinalco-led CIOH consortium, has celebrated the arrival of the first four locomotives for the Simandou mining and infrastructure project at the Port of Morébaya, Guinea.
These are the first of 78 locomotives ordered by Rio Tinto SimFer under a $US 277m contract placed with Wabtec in July 2024 on behalf of La Compagnie du TransGuinéen (CTG), the entity established to own and operate the railway and port infrastructure for the Simandou iron ore project.
…Wabtec also signed a separate contract worth $US 248m with Winning Consortium Simandou (WCS) to supply an additional 65 Evolution Series ES43ACmi locomotives and associated services in January. These locomotives will be deployed on the Trans-Guinean Railway.
Indeed, the railway is transporting ore to the port.
Rio Tinto Group, a major stakeholder in the project, announced in its third-quarter production update on Tuesday that it had commenced loading iron ore at the Simandou mine earlier this month. The ore is being transported via the newly constructed Trans-Guinea Railway to a port on the western coast. The news followed an Oct. 11 disclosure from Baowu Resources, a subsidiary of China Baowu Steel Group Corp., stating that the first engineering train had begun operating along the railway.
143 locomotives of iron ore bearing down on the Pilbara’s 550. Mwahaha.
More.
One industry source, who requested anonymity as they were not authorised to speak on the matter, suggested that if no new contract was signed with BHP, CMRG would likely purchase iron ore from West Africa’s Simandou iron ore project, part-owned by Rio Tinto, to fill the gap.
…Chinese media outlet Caixin reported there was a chasm between what the two sides had on the table, with BHP pressing for a price of around $US110 a tonne, and CMRG pushing for around $US80 a tonne.
It also quoted a Chinese steel executive calling that gap “too wide” and calling BHP’s expectations “out of step with market reality.”
As I have said before, this dispute is a reverse echo of that which enabled BHP to break the iron ore contract system in 2008-10. It took years to achieve and morphed through several stages.
I expect the same this time, except China will be the ultimate winner.
What is weird about it is why bother? If the oversupply is coming, and it is, the market will deliver lower iron ore prices much faster than contract negotiations will.
China may actually delay it if it locks BHP ore out of the market.
