Simandou mine: How China is driving Guinea’s new model for resource growth
The Simandou mine shows how China and Guinea are redefining resource development. By linking mines, railways, ports and local skills, it offers a new model for sustainable growth, says academic Gu Qingyang.
On 2 December 2025, the first shipment of iron ore from the Simandou project was loaded and dispatched. A bulk carrier carrying 200,000 tonnes of high-grade iron ore departed from the port of Morebaya in Guinea, bound for China. The moment marked the beginning of full-scale development for a world-class iron ore deposit that had remained dormant for nearly three decades.
The restart of Simandou is not merely the launch of another mining project. It illustrates a new approach in how Chinese companies expand overseas and offers a potential breakthrough for resource-rich developing countries that have long struggled to convert natural wealth into sustainable development.
The main obstacle was not mining itself, but infrastructure. The deposit lies deep inland, more than 600 kilometres from the coast.
When resources alone aren’t enough
Simandou is one of the world’s highest-quality iron ore deposits, with an average iron content exceeding 65% and enormous reserves. Yet since its discovery in the 1990s, it remained an untouchable prize in global mining. The main obstacle was not mining itself, but infrastructure. The deposit lies deep inland, more than 600 kilometres from the coast. Guinea lacked railways, ports and reliable power supply, while political and policy instability further complicated the project.
Traditional international mining investors focus primarily on project-level financial returns. For a mega-project like Simandou — requiring hundreds of kilometres of heavy haul railway, a new deep-water port and long-term stable operations — the upfront sunk costs, extremely long payback period and multiple non-technical risks far exceeded the limits of conventional financial models.
Over the past decades, global mining giants such as Rio Tinto entered and exited the project several times, ultimately unable to overcome this systemic challenge. Simandou demonstrated a hard truth: in regions with weak infrastructure, even world-class resources cannot realise their value unless embedded in a functioning physical and economic system.
What enabled Simandou to move forward this time was the introduction of a new, system-based solution centred on Chinese enterprises, but organised in a very different way.
... they viewed “mine + dedicated railway + deep-water port + shipping logistics” as a single, integrated system that must be planned, invested in and operated as a whole.
Synchronising mine, rail and port
Winning International Group, a Singapore-based company with extensive experience in West Africa, played a key early role in project development, commercial structuring and coordination. Its private sector background helped reduce political sensitivity and improve negotiation efficiency. Within this framework, Chinese state-owned enterprises such as Chinalco and Baowu, along with infrastructure giants like China Harbour Engineering and China Railway, contributed capital, technology and engineering capabilities to ensure physical delivery of the system.
At the same time, Rio Tinto remained in the shareholder structure as the original licence holder, providing technical standards, management experience and international market credibility. The Guinean government participated through equity stakes, aligning its interests with the project’s long-term success.
This diversified ownership and governance structure — led by a private firm, supported by Chinese SOEs, involving international partners and the host government — helped spread risks and improve resilience against political uncertainty.
Chinese companies brought with them an approach shaped by decades of domestic industrialisation: synchronised, end-to-end infrastructure development. Instead of treating the mine as a standalone asset, they viewed “mine + dedicated railway + deep-water port + shipping logistics” as a single, integrated system that must be planned, invested in and operated as a whole. This broke with the traditional sequence of “develop the mine first, add infrastructure later”, turning an otherwise impossible project into a viable one.
What was once an unbearable burden on a single licence holder is divided among specialised entities, each managing risks in areas they understand best.
Breaking risk into pieces
The driving logic behind the investment went beyond short-term project profits. For China, the world’s largest steel producer, Simandou represents a future supply of more than 120 million tonnes of high-grade iron ore annually — stable, high quality and relatively controllable. The investment is about supply chain security and cost stability, helping to offset risks arising from the high concentration of the global iron ore market. The combination of strategic demand and patient capital provided the project with momentum to endure economic cycles.
Simandou also represents an innovation in business model: full-chain risk sharing and a new way of thinking about risk. Traditional resource investments focus on geological, cost and price risks at the mine level. The Simandou model breaks risks down and reallocates them.
Mining risks are borne by the mine operator; the construction and operation of the 600-kilometre railway are handled by a dedicated rail company; port risks are managed separately; even shipping is partially internalised by participating parties. What was once an unbearable burden on a single licence holder is divided among specialised entities, each managing risks in areas they understand best.
The underlying philosophy is not to eliminate all risks, but to convert complex systemic risks into manageable, modular ones through careful design and aligned incentives. Large projects are ultimately about sustaining a balance among multiple interests, and ensuring long-term operation is itself the most effective way to reduce future political and social risks.
Shaping supply chains, not just mining them
Strategically, the project also marks a shift from resource acquisition to participation in rules and systems. By leading or deeply engaging in the construction and operation of railways and ports, Chinese companies are no longer merely buyers of resources or holders of mining rights. They become operators and standard setters within regional logistics systems. This gives them substantive influence over the supply chain — from the source to shipping — over decades, a form of control more durable than trade contracts or financial stakes alone.
The project’s success depends on a stable, community-of-interest governance structure. It combines the flexibility and efficiency of Singaporean firms, the scale and credibility of Chinese enterprises, the technical standards of multinational companies and the sovereign and development priorities of the host government. Such a hybrid arrangement reduces perceptions of the project as a geopolitical tool of any single country, making it easier to gain acceptance from international markets and local communities, and enhancing long-term sustainability.
Perhaps more valuable than its commercial success is what Simandou offers resource-rich countries. It provides a practical blueprint for turning the “resource curse” into a development lever.
Guinea will acquire one of the most important transport corridors in its history — serving not only mining, but also agriculture, trade and urban development along the route, laying a physical foundation for economic diversification.
From resources to national development
In the past, resource exports often delivered only cyclical fiscal revenues. Under the Simandou model, mine development is conditional on building national-level strategic railways and modern ports. Guinea will acquire one of the most important transport corridors in its history — serving not only mining, but also agriculture, trade and urban development along the route, laying a physical foundation for economic diversification.
Through equity participation, Guinea can share long-term returns while systematically learning modern mining management and large-scale infrastructure operation and maintenance. Tens of thousands of jobs and training opportunities will help develop local industrial workers and technical talent, enabling a shift from simply selling resources to building human capital and state capacity.
As a system project requiring 25 to 30 years of operation, Simandou forces investors and the host country into a long-term partnership. Investor returns are tied to the sustained operation of infrastructure, community stability and the overall development environment. This alignment encourages greater commitment to local capacity building and social responsibility, offering a way out of the cycle of “development, conflict and stagnation”.
However, despite the promise of this innovative model, Simandou still faces formidable tests. Key challenges include whether railways and mining operations that cut across ecologically sensitive areas can meet international standards of environmental protection and ecological restoration; whether tens of thousands of affected local residents will receive fair compensation, secure employment opportunities, and a genuine share of the development dividends; and whether the project can retain its commercial nature and withstand unnecessary politicisation amid shifting West African geopolitics and intensifying great power competition. These challenges will determine the long-term viability of this new development model.
Ultimately, the story of Simandou is about turning the impossible into the possible. It may well become a new model for resource development, provided governance and execution remain aligned — one that prioritises system building, shared risks, shared benefits and long-term development.
