Active Mixed AidData Chinese Aid

China Development Bank provides $702 million loan for the Simandou Iron Ore Mining Project (Linked to Record ID#191)

$702K USD

Funder	China Development Bank (CDB)
Recipient Organization	Chalco Hong Kong Ltd.
Country	Guinea
Start Date	Apr 19, 2012
End Date	Jan 22, 2032
Duration	7,217 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`63778`

Grant Description

China Development Bank provides $702 million loan for the Simandou Iron Ore Mining Project On July 29, 2010, the Aluminum Corporation of China (Chinalco) entered into a joint venture agreement with Rio Tinto and its affiliate for the development and operation of the Simandou Iron Ore Mining Project, a premium open-pit iron ore mine located in Guinea.

Chalco Iron Ore — a subsidiary of Aluminum Corporation of China — holds 47% of the equity interest in Simfer Jersey, which in turn holds 95% equity interest in Simfer S.A (the project company responsible for the Simandou Iron Ore Mining Project). Rio Tinto holds 53% of the equity interest in Simfer Jersey (see Record ID#191).

Then, on April 19, 2012, Chalco Hong Kong — a subsidiary wholly owned by Aluminum Corporation of China (Chinalco) — signed a $702 million loan facility agreement with China Development Bank (CDB). This loan, which is captured via Record ID#63778, carried an interest rate of Libor plus a 0.9% margin.

As of December 31, 2012, the loan’s outstanding (principal) amount was $438,750,000.

The proceeds of the loan were to be used by the borrower to facilitate the long-term shareholding investment for Chalco Iron Ore in the Simandou Iron Ore Mining Project (i.e. to support Chalco Hong Kong’s capital contribution in Chalco Iron Ore). This project has been plagued by controversy and the Simandou mine is still not operational.

In November 2016, Rio Tinto admitted to paying $10.5 million to François de Combret, a close adviser of President Alpha Condé, in 2011 to obtain rights to the Simandou mine.

During the same month, Rio Tinto agreed to sell its remaining equity stake in the mine to Aluminum Corporation of China Ltd. (Chinalco) for $1.3 billion. President Condé denied knowing about the bribe. However, according to recordings presented by FRANCE 24, the Guinean authorities knew about the bribe.

📋 Staff Comments

The French project title is Projet Simandou. The Chinese project title is 西芒杜铁矿项目 or 西芒杜項目詳細工程設計報告.
For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.
On October 6, 2010, Aluminum Corporation of China Limited (Chalco), through Chalco Hong Kong, established Chalco Iron Ore as a limited liability company under the laws of Hong Kong, with a registered capital of HK$2,000 and its registered address at Room 4501, Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong. Chalco Iron Ore, which serves as the investing entity of the Simandou Project in Guinea, is owned as to 65% by Chalco Hong Kong. As at 31 December 2012, the total assets of Chalco Iron Ore amounted to $1.843 billion, of which the cost of long-term equity investment in the Simandou Project amounted to $1.836 billion.
Simfer S.A. is a project company legally incorporated in Guinea in 2002 for the purpose of investing in and developing the Simandou Project.
Chalco Iron Ore Holdings Limited, the valued entity, is a controlled subsidiary of Chalco Hong Kong Ltd. Simfer Jersey is a shell entity and only serves for investment in Simfer SA by Chalco Iron Ore and Rio Tinto plc. Simfer SA is a mining company in Simandou and is the operation entity in the future.

📚 Sources & References

Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934
PROPOSED TRANSFER OF THE EQUITY INTEREST AND THE BANK LOANS BY CHALCO HONG KONG TO CHINALCO OVERSEAS HOLDINGS
信用等级通知书
Zhong Lun Law Firm
中铝与力拓联合开发几内亚西芒杜铁矿项目
中国铝业股份有限公司关于中国铝业香港有限公司债务转移的公告
葛红林调研西芒杜铁矿项目和CBG铝土矿
Projet Simandou
EFB attendues fin décembre 2015
RT-Simandou-BOT-convention-EN
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2017
Aluminum Corporation of China Limited
Aluminum Corporation of China Limited
Rio Tinto and Chinalco in Deal for Iron Project
Chalco
Rio Tinto formalise Guinea iron ore venture
Rio Tinto
Chinalco in Iron-Ore Venture
NYSE_ACH_2012
武鑫 Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.