The first commercial shipment of iron ore from Simandou has departed for China

The first commercial shipment of iron ore from Guinea’s massive new Simandou deposit has left for China, marking the beginning of a significant redistribution of global supplies of raw materials for steel production, according to Bloomberg.

The Winning Youth, loaded with ore from Simandou, left Guinea on December 2, according to data from the ship tracking service Kpler. The shipment is expected to arrive in China in mid-January.

The scale of the Simandou deposit has the potential to change the iron ore trade, as high-quality reserves provide China with an alternative to the dominant supplies from Australia and Brazil. The project is divided into four blocks, involving Rio Tinto, Winning Consortium Simandou, and other Chinese companies, with full production ramp-up planned over the next 2.5 years.

The first ship was loaded three weeks after the ceremonial start of barge loading, which precedes the transshipment of ore to large Capesize vessels. The time taken to load the Winning Youth highlighted potential operational challenges on the road to full-scale exports.

The project has already had an impact on the maritime transport market. Brokers note a sharp increase in demand for Capesize vessels and an increase in daily rates to $38,430 per day according to the Baltic Exchange average index, the highest figure in the last two years.

The ship departed from the port of Morebaya, specially built for Simandou ore, and is heading to the port of Majishan in the eastern province of Zhejiang in China.

As GMK Center reported earlier, the Simandou project in Guinea threatens to further change the dynamics of the iron ore market, which is already facing an uncertain future in terms of demand. Internal forecasts by some of the world’s largest mining companies indicate that the price of iron ore will fall to $85/t over the next three years as Simandou in Guinea reaches full production capacity within the next 2.5 years.