World's leading bauxite exporter Guinea taps iron ore income for sovereign wealth fund

The West African nation Guinea, one of the leading bauxite producers and the world's top bauxite exporter, intends to channel a portion of the revenue generated from mining the world’s largest iron ore reserve into a sovereign wealth fund.

According to Planning and International Cooperation Minister Ismael Nabe, who addressed parliament on December 9, 2024, this fund will be utilised to finance critical development initiatives under the government’s Simandou 2040 Program.

A sovereign wealth fund is a state-owned investment fund comprised of money generated by the government, often derived from a country's surplus reserves.

Ismael Nabe said, "We aim to transform agriculture, education, health and to increase the construction of modern infrastructure, a large-scale railway linking mining and agricultural areas to the port of Conakry."

The Simandou mountain range, located in the southeastern region of the Republic of Guinea, spans over 100 kilometres and boasts an exceptional iron ore reserve.

It is expected that the Simandou mine will begin production in the first quarter of 2026. However, Simandou has a complex ownership structure. The deposit is divided into four blocks, with the southern blocks 3 and 4 being owned by the Simfer consortium (85 per cent) and the Government of Guinea (15 per cent).

Simfer is composed of 53 per cent Rio Tinto and 47 per cent China’s Chalco Iron Ore Holdings (CIOH). CIOH is, in turn, owned by the Aluminium Corporation of China (Chinalco) (75 per cent), Baowu Steel Group (20 per cent), China Railway Construction Corporation and China Harbour Engineering Company (2.5 per cent each). Blocks 1 and 2 are controlled by the Winning Consortium Simandou (WCS) (90 per cent) and the Government of Guinea (10 per cent). WCS is composed of the Winning International Group of Singapore (50 per cent) and Weiqiao Aluminium (50 per cent), with United Mining Suppliers also having an insignificant share.

Image credit: RIO TINTO

Information credit: BNNBloomberg; Geology For Investors