PROJECT

Projects

Environmental & Social Review Summary

Project Number

31067

Company Name

RIO TINTO SIMFER SA

Date ESRS Disclosed

Mar 27, 2012

Country

Guinea

Region

Africa

Last Updated Date

Jun 12, 2021

Environmental Category

A - Significant

Status

Completed

Previous Events

Approved : May 24, 2012
Signed : Jun 28, 2012
Invested : Jun 29, 2012

Sector

Iron (Pellets, etc.)

Industry

Metals and Mining

Department

Infra-WBG Dir. Minerals & Metals

Project Description

The Simandou Project is a world-scale mining project comprising: (i) an open pit iron ore mine in the Simandou Range in southeastern Guinea, approximately 600 km south east from the Guinean coast, (ii) a trans-Guinean railway of approximately 670 km in length to transport the ore from the mine to the Guinean coast; (iii) a new Port facility located south of Conakry in the Forécariah prefecture; and (iv) various associated developments providing utilities and infrastructure to the project including construction workforce facilities, roads, quarries, power generation and distribution and water supply. First ore is anticipated in 2015, with the production expected to increase over the following years to an estimated 95 million tonnes per annum.

The mining resource is located in the southern part of the Simandou Range and covers deposits at Pic de Fon and Ouéléba. The main geological units are known technically as hematite and goethite (iron ore), itabirite and phyllite. These minerals extend up to 500 m below the surface and the two orebodies are estimated to contain more than two billion tonnes of high grade iron ore.
The Simandou Project is being developed by Simfer, a Guinean-registered company. Simfer is a subsidiary of the international mining group Rio Tinto, and holds a mining concession to explore and mine iron ore in the southern part of the Simandou Range. Simfer is owned 5% by the International Finance Corporation (IFC) and 95% by a company owned jointly by the Rio Tinto Group (53%) and a consortium led by Aluminium Corporation of China, Chalco, (47%).

In April 2011, the Republic of Guinea and Simfer signed a Settlement Agreement pursuant to which a modified mining concession covering the southern part of the Simandou range was issued to Simfer. The Settlement Agreement also provides inter alia, for the separation of the mining activities from the principal infrastructure activities (the railway and port). The mine will continue to be held by Simfer whereas the rail and port infrastructure will be held by an infrastructure company to be established between the Republic of Guinea and Simfer’s other shareholders (Rio Tinto, Chalco and the IFC).

The total project financial commitments for Simandou III activities currently forecast at approximately $4.0 billion. This amount includes the $700 million settlement sum (as agreed in the agreement signed between Simfer and the GoG, announced by Rio Tinto plc on 22 April 2011), technical studies and resource definition drilling through to the completion of the PEA and DE, as well as long lead item orders and early construction works. The long lead item orders and early construction works will be necessary during this period in order to achieve the targeted first production in 2015.

IFC received board approval on May 24, 2012 to invest an additional $150 million to contribute towards achieving the Decision to Mine milestone at the end of 2012. In 2006 IFC obtained board approval to invest $5 million in equity to Simfer (Simandou I project) and a further $30 million in 2007 (Simandou II project), of which $32 million in total has been disbursed.

Overview of IFC's Scope of Review

IFC owns a 5% equity interest in Simfer SA (“Simfer”), a Guinean-registered company and holder of an iron ore mining concession (the “Simandou Project”) in the Simandou mountains of South-East Guinea. Simfer SA is 95% owned via Simfer Jersey Limited which is jointly owned by the Rio Tinto Group (53%) and a consortium led by Aluminium Corporation of China, Chalco,(47%).

Simfer has undertaken extensive iron ore exploration work in Guinea since 1996 and IFC’s long relationship with the Simandou Project has developed since 2005. IFC has visited Guinea and the Simandou Project area numerous times with a team of environmental & social and technical staff between August 2005 and May 2012.

Since exploration started in 1996, Simfer has conducted several environmental and social studies. Since IFC’s first investment in the Simandou Project (“Simandou I”), it has monitored the implementation of its Action Plan (AP) through the review of Annual Monitoring Reports, monthly conference calls and site visits.

The current phase of the project (the “Simandou III”) encompasses the completion of a Preliminary Engineering Assessment (“PEA”), Definitive Engineering (“DE”), early construction works and advance ordering of long lead items with total financial commitments, including the US$700 million payment as part of the Settlement Agreement with the Government of Guinea (April 2011), estimated at approximately US$4.0 billion up until end of 2012. IFC’s most recent Environmental and Social (E&S) due diligence for the Simandou III investment took place in September 2011 when a visit to the project area was conducted with the objective of site familiarisation and gauging the level of community support for the project. The visit included a reconnaissance flyover of the Simandou ridge, the furthest east 50 km of the railway, potential biodiversity offset areas and the location of a potential hydropower dam (Lolema). There was also an inspection of the facilities at the workers camp, Canga East which serves as the hub for all exploration activities associated with the mine component of the project. Meetings were held with local authorities and representatives from the local communities of Beyla, Moribadou, Nionsomoridou Waterferedou II, Lamandou and Kerouane.

The World Bank Group Board of Directors approved the Simandou III project on May 24, 2012. Since the due diligence visit, IFC personnel have visited the proposed Port area and flown the entire length of the rail corridor, and the mine site as part of the supervision of the project. Additionally, IFC have attended numerous meetings with Simfer and their consultants to provide guidance in the development of the Social and Environmental Impact Assessments (SEIAs), the resettlement and compensation approach, review the technical, environmental and social documentation and generally discuss the status of the project.

The project finalized the Social and Environmental Baseline studies (SEBs) for the mine in 2009 and the railway and port in 2012. Four “early works” SEIAs were approved by the Government of Guinea in the PEA phase (late 2011 and early 2012). During the Definitive Engineering (DE) Phase the project completed the SEIAs for the main components (Volume I, Mine;Volume II, Rail; and Volume III, Port), undertook an extensive consultation programme and submitted them to the Government of Guinea for approval. A separate volume (Volume V) containing the Social and Environmental Management Plans for all of the SEIA components was also submitted to the GoG. Several construction phase Environmental and Social Management Plans are under development.

The PARC Framework agreement has been completed and agreed with the IFC and the project has been declared a Project of National Importance (PIN) by the State (4th October 2012). The Framework is currently under Government review and is pending approval. Once approved by the GoG, IFC will disclose the Framework. Detailed Resettlement and Compensation Plans (PARCs) will be required for the rail, port and mine components and the project has committed to the preparation of these prior to any resettlement activities taking place.

Simfer continues to work to ensure that a successful resettlement programme will be delivered according to IFC principles, standards and PARC Framework. Through the identification and implementation of ‘project avoidance criteria’, engineering designs are adjusted to minimise potential resettlement and socio-economic impacts.
Since its appraisal of the three investments in Simandou (Simandou I, II and III), IFC’s input on E&S issues has included the following: (i) review and provision of comments on the Terms of Reference (ToR) for the different components of the project SEBs and SEIA, (ii) review and provide comments on several other key documents including: Public Consultation and Disclosure Plan (PCDP), PARC Framework, local climatological studies, biodiversity critical habitat assessment, health impact baseline studies, grievance mechanisms etc.; (iii) contribute to the development of the biodiversity strategy for the Pic de Fon and Oueleba areas; (iv) assess opportunities for social and economic development (v) review and endorse four “early works” SEIA’s (Camps, Marine Offloading Facility, Roads and Quarries),(vi) reach agreement on the “early works” Environmental and Social Action plan (ESAP) and (vii) review and endorse the SEIAs for the main project.

E & S Project Categorization and Applicable Standard

Environmental and Social Mitigation Measures

Stakeholder Engagement

Client Documentation

File Name Actions
ESAP.pdf
Vol. A_Project Framework_FINAL.pdf
Camps.pdf
Final Quarries SEIA_EN_V2.02.pdf
MOF.pdf
Quarries.pdf
Revised Early Works ESAP July 2013 FINAL.pdf
Roads SEIA 2012 05 03 EN.pdf
Roads.pdf
Simandou Project ESAP July 2013 FINAL.pdf
Vol. B_Social Baseline_Report_ FINAL.pdf
2011_11_14_Camps_EN_Final_Consolidated_V4.00.pdf
2011_11_15_MOF_EN.pdf
Stakeholder Engagement Plan.pdf
Vol. B_PDF_Social Baseline_Appendices_FINAL.pdf
ATTWEL5J.pdf
Vol. E_Summary and Conclusion_FINAL.pdf
Vol. D_Biodiversity baseline_FINAL.pdf
Vol. C_Physical Baseline_Report_FINAL.pdf
Vol. D_Appendices_Final.pdf