Feasibility Study Essay

1527 WordsSep 6, 20137 Pages
Assessment of Feasibility of Simandou Project * Feasibility Study 1. Reserve The Rio Tinto Simandou project comprises of three core elements, a mine, a rail way, and a port with relevant associated infrastructure. The mine is the most important sector to determine if sponsor would get sufficient return and if the project is feasible financially. The mine has a length of 6 kilometers to 8 kilometers, width of 1 kilometer to 1.5 kilometers, and depth of 300 meters. According to the information disclosed by Rio Tinto, the mine contains more than 2.4 billion tons of high quality ore and would be able to export up to 95 million tons per year at full production. (Rio Tinto Simandou 2013) Based on the statistics in the Mining Almanac, the total estimated resource is about 2.4 billion tons in Simandou, which is similar to the announcement of Rio Tinto. However, the volume of measured and indicated ore is only 1,665 million, the remaining ore is inferred and occupies a material part of the total resource. Please refer to the following table. | Tonnage (MT) | Grade (%) | Content (Mt) | M&I | 1,665.00 | 66.00 | 1,098.86 | Inf. | 728.00 | 66.10 | 481.21 | Meas. | 330.00 | 67.20 | 221.76 | Ind. | 1,335.00 | 65.70 | 877.10 | (Mining Almannac 2013) If the inferred resource was not found in the mine, or the indicated resource turned out to be less than the indication, the project probably end up as failure. Thus the reserve volume plays a key role in determining if the project is feasible. Referring to information released by the Rio Tinto, the project is expected to export 95 million tons by mid of 2015. Whether the project can generate sufficient income according to the time line will depend on two factors. Firstly, there is strong demand in the commodity market to provide high price of ore. Secondly, Rio Tinto is able to provide

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