A group of Chinese enterprises, led by the Aluminum Corporation of China (Chinalco), is eyeing to develop the Simandou iron ore project in Guinea in West Africa.

The Chinalco Iron Ore Holdings consortium was established in line with an agreement signed by the Aluminum Corporation of China Limited (Chalco), a listed arm of Chinalco, with Australia's Rio Tinto in July 2010 to create a joint investment in the Simandou project, the Xinhua News quoted Xiong Weiping, Chinalco president, as saying.

Rio Tinto and Chinalco encountered a falling off when in 2009, Rio Tinto rejected a $19.5 billion equity and asset tie-up investment with Chinalco, China's state-owned aluminum producer. The two firms resolved their issues last year when they became joint-venture partners in the Simandou iron ore deposit in Guinea.

Enterprises that comprise the Chinalco Iron Ore Holdings include Chinalco's Chalco Hong Kong Ltd., Baosteel Resources Co., the China-Africa Development Fund Co., China Harbor Engineering Co. and a branch of China Railway Construction Corp.

In the Rio Tinto - Chinalco deal, the Anglo-Australian miner will put a 95 per cent holding in Simandou. Chinalco will invest $1.35 billion for a 47 per cent stake, an effective 44.65 per cent interest in the project itself. The government of Guinea, meanwhile, has the option to buy up to 20 per cent of the project.

The Simandou iron ore mine reportedly is the world's biggest undeveloped iron ore deposit, with 2.25 billion tonnes of ore. The project, to cost $6 billion, is forecast to produce 70 million tonnes of ore in 2013, with a capacity to increase production later.