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Home › Dodgy Deals ›
Target Dodgy Deal
Simandou Iron Ore ProjectGuinea

Project – Target

This profile is a priority campaign target
Lead organisations:
BankTrack, Advocates for Community Alternatives (ACA), Center for Transnational Environmental Accountability (CTEA) & Human Rights Watch
Contact:

Giulia Barbos, giulia@banktrack.org

Last update: 2023-09-22 11:04:30
Satellite view of the Simandou mining area. Photo: Google Earth

Project – Target

This profile is a priority campaign target
Lead organisations:
BankTrack, Advocates for Community Alternatives (ACA), Center for Transnational Environmental Accountability (CTEA) & Human Rights Watch
Contact:

Giulia Barbos, giulia@banktrack.org

Last update: 2023-09-22 11:04:30
Why this profile?

Why this profile?

Nestled in the forested mountains of Guinea in West Africa, the Simandou iron ore mining project involves the construction of a large open-pit mine, a railway line and a deep-water port. The project risks the displacement of local communities, lost livelihoods, the destruction of critical habitats for endangered species, deforestation, and environmental pollution including greenhouse gas emissions. Communities in every area of the project have already suffered serious impacts to their agricultural and fishing livelihoods, pollution of water sources, and loss of land as a result of unchecked construction activities. Moreover, there are concerns regarding the project's transparency and accountability, as well as the potential for corruption and conflicts of interest.

 

What must happen

Banks and other financial institutions considering providing direct or indirect finance to this project should ensure its numerous environmental and social impacts and risks are addressed to the satisfaction of local communities. More specifically, communities demand that project developers commit to upholding the highest environmental and human rights standards, including those relating to resettlement and land acquisition; increase transparency by publishing all project agreements and up to date impact assessments; keep the communities informed by meaningfully consulting with them on an on-going basis; properly account for impacts on climate change and biodiversity; and develop an independent grievance mechanism to address community complaints.

Project-affected peoples’ recommendations are set out in more detail by Action Mines in their report on the project here (see page 32, in French).

About
Sectors Mining
Location
Status
Planning
Design
Agreement
Construction
Operation
Closure
Decommission
Website https://www.riotinto.com/en/operations/projects/simandou

The Simandou project, located in the Simandou mountain range area in southeastern Guinea, is one of the largest untapped high-grade iron ore deposits in the world. Simandou’s iron has been coveted by the largest international mining companies for decades, but complicated operational logistics, combined with extreme political instability, corruption allegations, and legal disputes, have made this a challenging feat to achieve.

The northern half of the mining area, Block 1 and 2, is owned by Winning Consortium Simandou (WCS), led by Singapore-based Winning International Group.

The southern part of the mining area project – Block 3 and 4 – is owned by Simfer, led by Anglo-Australian mining company Rio Tinto, which acquired rights to Simandou in 1997. 

In August 2022, WCS and Rio Tinto Simfer agreed to start the construction of a 650 km railway, a deep-water port, and other infrastructure needed to support mining operations, with a view to start production by 2025.

Impacts

Impact on human rights and communities

Land acquisition and displacement The construction of the railway and mine sites will likely force hundreds of people to leave their lands and homes. This has already been the case for local communities who have been evicted to make space for Winning Consortium Simandou (WCS)'s living quarters in Block 1 and 2. These communities, especially women, were not properly consulted. In addition, the railway, which is currently being constructed for the Simandou project, passes through a territory that is home to at least 450 communities. ​​Several community members have already been impacted by the railway infrastructure, and have expressed concerns about the obstacles they face in negotiating equitable compensation, with many reporting under-compensation or outright theft of their agricultural lands. 

Impacts on livelihoods WCS' own environmental and social impact assessment (ESIA) (1) warns that deforestation and land loss associated with the construction of the mine’s infrastructure risk impacting activities that communities rely on for food security, such as farming, hunting, and fishing, and access to water sources. Coastal communities living nearby the port that is also currently being developed for the Simandou project complain of the complete devastation of their livelihoods, as port construction and vehicle traffic have driven away fish populations and blocked them from access to productive fishing grounds.

Impacts on civic space Guinea's civic space, including threats to freedom of association and expression, is classified as “repressed” in the CIVICUS 2022 assessment. Rights-holders at the local and national levels may risk reprisals when seeking to denounce violations of their rights. 

Impacts on cultural rights The pathway of the railway, as identified by WCS, has the potential to impact over 100 cultural sites, including areas and structures of spiritual value like sacred sites, graves, and cemeteries. Many of these have yet to be assessed for significance, and it remains unclear how many will be destroyed or relocated. WCS's ESIA for its mining blocks fails to meaningfully assess or plan for preservation of cultural sites at all.

(1) Winning Consortium Simandou, Projet ferroviaire de Simandou: Études d'impact environnemental et social, Vol. 1, pp. 50-60 & 64-67, Nov. 2021.

Impact on climate

Carbon emissions The Simandou iron ore mine has the potential to generate significant carbon emissions, including during land and forest clearing, drilling, blasting, hauling, and processing. WCS’s own environmental and social impact assessment (ESIA) estimated that Blocks 1 and 2 alone have the potential to produce up to 19 million tonnes of carbon emissions over the 22-year anticipated lifetime of the mine, equivalent to burning 10 million tonnes of coal. An independent expert evaluated the company’s ESIA, and concluded that this is “likely a gross underestimate”, because of a failure to  include emissions resulting from deforestation. On top of this, the land clearing alone - also as estimated by WCS - could release up to 271,300 tonnes of carbon dioxide, which, according to an analysis by Human Rights Watch, is equivalent to burning about 136,000 tonnes of coal.

Not only will the project lead to significant deforestation, but according to WCS’s ESIA, the energy needed to power the mining operations will be generated with a Heavy Fuel Oil (HFO) power plant, a major source of carbon emissions and other toxic byproducts. Additionally, the railway that will connect the Simandou mine with the coastal port will utilize locomotives run on diesel fuel.


Impact on nature and environment

Impacts on biodiversity and wildlife The clearance of large areas of forest for mining can lead to habitat loss and fragmentation, disrupting ecosystems and affecting biodiversity. The Simandou region is home to a diverse range of wildlife, including endangered and endemic species. The loss of habitat can lead to a decline in these populations, which can have long-term ecological consequences.  Winning Consortium Simandou (WCS)’s activities have already put nature into great danger, as the company has already cleared approximately 85% of land necessary for the construction of the railway, according to an analysis by Earth InSight. The railway’s route cuts through extensive tracts of primary rainforest known to be the natural habitat of the critically endangered Western Chimpanzee and African Forest Elephant and the endangered Western Red Colobus monkey.

There are clear indications that the impacts of the railroad construction extends well beyond what was presented in the ESIA. A 2022 review of WCS’s environmental and social impact assessment revealed that the company failed to assess its mining blocks for these well-known endangered species, and that its plans to mitigate impacts on biodiversity were grossly inadequate. 

Impacts on protected nature areas The railway traverses several protected areas, including the Haut Niger National Park, which was created to protect one of the last remnants of dry forest in Guinea, and the Outumba-Kilimi-Kuru Hills-Pinselli-Soya Transboundary Priority Landscape, which includes primary forest, buffer zones, and corridors essential for the survival of endangered species such as the forest elephant, pygmy hippopotamus, and the Western African chimpanzee. The railway will run just adjacent to other protected areas, such as the Outumba-Kilimi National Park in Sierra Leone and Kounounkan Classified Forest, likely opening these previously isolated areas up to inward migration and exploitation for bushmeat and forest clearance.  

Impacts on water sources The railway currently being developed cuts across several important waterways, and communities have already reported that critical water streams have been polluted due to construction activity.  Pollution of water sources – as explained by a 2022 assessment of the WCS’s environmental and social impact assessment – could have devastating impacts, as the mining blocks cover over 100 km of mountains whose streams feed directly into the water of the Niger River, Africa’s third longest river and a critical water source across four West African countries. Therefore, a comprehensive analysis of the project’s impacts on water is necessary before it goes ahead.


Impact on pandemics

Emergence of new infectious diseases Several studies suggest that large-scale industrial development projects, such as mining, can increase the risk of zoonotic disease transmission, which can lead to pandemics. A recent report by the United Nations Environment Programme (UNEP) emphasises the importance of protecting biodiversity and natural ecosystems in preventing future pandemics. The report notes that the destruction of natural habitats, including deforestation, which often takes place in mining operations and is a risk associated with the Simandou project, can increase the likelihood of zoonotic disease transmission. Furthermore, the railway associated with the Simandou project cuts across an area that was the epicentre of the West Africa Ebola outbreak, which killed over 11,000 people between 2013-2016. This shows the concrete risks of pandemics and other widespread disease outbreaks in this area in Guinea.


Other impacts

Links to impacts at Boké bauxite mine WCS was set up by the same founders as the SMB Winning Consortium, a mining group that exploits the Boké bauxite mine in northwestern Guinea. This consortium has a disastrous track record of unremediated human rights impacts and disrespect of community land and environmental rights, as documented extensively in a 2018 Human Rights Watch report and a 2023 Natural Justice community audit. The pattern of negligence with respect to air quality, uncompensated or undercompensated taking of lands, and pollution of water sources already observed along the Simandou railway route - along with the lack of transparency and hesitation to engage substantively with affected communities - is strikingly similar to the criticisms of SMB’s record at Boké.

Financiers

The total costs of the Simandou project are reported at US$ 15 billion. Finance for the project is not yet agreed.

The two main project sponsors are Australian company Rio Tinto, which is leading the Simfer consortium, and Singapore-based Winning International Group, which is the majority shareholder of the Winning Consortium Simandou (WCS). WCS is developing Blocks 1 & 2 in the north, and the Simfer consortium is developing Blocks 3 & 4 in the south.

Commercial banks finance Rio Tinto via loans, bonds, and shareholdings. See more information on our Rio Tinto Dodgy Deal Profile here.

Commercial banks have also financed Winning International Group, a privately held company, via loans. DZ Bank, BNP Paribas, Credit Suisse, and Standard Chartered all provided loans to Winning International Group in the years between 2018 and 2022 (Profundo finance research, June 2023).

In addition, Baowu Group, which is part owner of Simfer and appears set to buy an important stake in WCS’s operations as well, leads a consortium of Chinese steel manufacturers and other investors that is expected to implement project financing.

Institution type
Finance type
Year
Companies

Block 1 and 2 of the Simandou project are owned by the Winning Consortium Simandou (WCS), which is owned by Singapore-based Winning International Group (45%), China's Hongqiao Group (35%) and Guinea's United Mining Suppliers (15%).

Blocks 3 and 4 are owned by Simfer, which is jointly owned by Australian mining company Rio Tinto (53%) and Chinese Chalco (47%).  Chalco is in turn owned by a consortium of Chinese state-owned enterprises, most notably Chinalco and Baowu, the world’s largest aluminum and steel companies respectively.

 

Project sponsors

Rio Tinto

Australia
Profile
Website

Winning International Group

Singapore
Website
No companies

Other companies

China Baowu Group

China
Website
No companies
Governance
Norms & standards

Applicable norms and standards

Equator Principles
IFC Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts
IFC Performance Standard 2: Labor and Working Conditions
IFC Performance Standard 3: Resource Efficiency and Pollution Prevention
IFC Performance Standard 5: Land Acquisition and Involuntary Resettlement
IFC Performance Standard 7: Indigenous Peoples
International Council on Mining and Minerals (ICMM)- 10 Principles
OECD Guidelines for Multinational Enterprises
Transparency International- Business Principles for Countering Bribery
UN Guiding Principles on Business and Human Rights
Universal Declaration of Human Rights
Voluntary Principles on Security and Human Rights
Maps

Simandou Project: conservation view

Source: Map for Environment / Earth InSight

News
BankTrack
Partners
Blog
External
BankTrack news BankTrack blog Partner news Partner blog

How Rio Tinto’s Simandou mine is now a valuable iron ore asset

2023-08-02 | The Australian
BankTrack news BankTrack blog Partner news Partner blog

Simandou iron ore project to restart in March, Guinea says

2023-02-01 | Mining.com
BankTrack news BankTrack blog Partner news Partner blog

Guinea: Ensure Respect for Rights in Massive Iron Ore Project

2022-12-07 | Human Rights Watch
BankTrack news BankTrack blog Partner news Partner blog

Guinea reaches deal with miners to resume Simandou iron ore development

2022-03-27 | Reuters
BankTrack news BankTrack blog Partner news Partner blog

Timeline: The battle for Simandou

2021-01-22 | Reuters
BankTrack news BankTrack blog Partner news Partner blog

“What Do We Get Out of It?” The Human Rights Impact of Bauxite Mining in Guinea

2018-10-04 | Human Rights Watch
BankTrack news BankTrack blog Partner news Partner blog

Simandou Iron Ore Project

2014-06-10
Resources
Documents
Videos
2023-07-26 00:00:00

Winning Consortium Simandou Land Acquisition and Resettlement Framework

Company document
2023-07-26 00:00:00 | Winning Consortium Simandou
2023-07-26 00:00:00

Winning Consortium Simandou Grievance Mechanism

Company document
2023-07-26 00:00:00 | Winning Consortium Simandou
2022-09-22 00:00:00

Letter from WCS and Simfer to Human Rights Watch on Simandou OpEd

Correspondence
2022-09-22 00:00:00 | WCS and Simfer
2022-09-23 00:00:00

Simandou response to Human Rights Watch

Company document
2022-09-23 00:00:00 | Rio Tinto
2022-10-03 00:00:00

Evaluation of the Climate Impact Assessment ESIA for the Simandou Blocks 1 & 2 Mining Project

NGO document
2022-10-03 00:00:00 | Environmental Law Alliance Worldwide
2022-12-02 00:00:00

A Technical Review of the Simandou Railway EIES through the lens of International Best Practices for Biodiversity Assessment and Mitigation

NGO document
2022-12-02 00:00:00 | Environmental Law Alliance Worldwide
2019-02-20 00:00:00

Complaint concerning IFC loan to the “Compagnie des Bauxites de Guinée” (CBG)

NGO document
2019-02-20 00:00:00 | Inclusive Development International
2020-11-12 00:00:00

Winning Consortium Simandou SAU, Port Infrastructure Agreement, 2020

Company document
2020-11-12 00:00:00 | Resources contracts
2020-11-11 00:00:00

Winning Consortium Simandou SAU, Railway Infrastructure Agreement, 2020

Company document
2020-11-11 00:00:00 | Resource contracts
2020-06-09 00:00:00

Winning Consortium Simandou SAU, Exploitation License, 2020

Company document
2020-06-09 00:00:00 | Resource contracts
2014-05-22 00:00:00

Simandou 3&4, SIMFER, Rio Tinto, Concession, 2014

Company document
2014-05-22 00:00:00 | Resource contracts

COP15 - Conservation of biodiversity in the context of climate change

2023-06-19 14:27:12

SIMANDOU ENTRE ESPOIR ET DECEPTION

2023-06-19 14:26:03
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