The Simandou iron ore project in Guinea — the largest untapped iron ore deposit globally — is on track for first production in late 2026, with the consortium including Rio Tinto, Chalco, and the Guinean government reporting 85% completion of the 670 km trans-Guinean railway.
Simandou has the potential to produce 120 million metric tons per year at full capacity, representing approximately 7% of current global seaborne iron ore trade. The ore grade of 65–67% Fe is significantly higher than the Australian average of 62%, offering steelmakers a way to reduce emissions by using higher-grade feed.
The project economics are viable at current prices. Simandou's break-even cost is estimated at $50–60/mt CFR China, according to Rio Tinto disclosures, giving it a healthy margin at $101/mt. However, the capital expenditure of $20 billion for rail and port infrastructure creates high upfront costs.
The market impact of Simandou will be gradual. Phase 1 production of 30 Mt/yr is expected in late 2026, ramping to full 120 Mt/yr by 2030. In the medium term, the incremental supply could put downward pressure on prices, particularly for medium-grade (62% Fe) ore.
Simandou's timeline is the most important long-term supply factor in iron ore. Its high-grade output will compete with Australian and Brazilian medium-grade ore, potentially compressing premiums for 65% Fe material. For long-term contracts, index-link to 62% Fe rather than 65% Fe to capture any grade compression.