During mid-May, Sam Walsh, CEO, Rio Tinto, spoke at Infrastructure Week in Washington, D.C. The weeklong event discussed solutions, approaches and best practices being developed nationwide to modernize the aging infrastructure in the U.S. Walsh was the keynote speaker at a forum hosted by the International Finance Corp. (IFC), where he discussed the power of innovative partnerships in building infrastructure projects that create growth.
During mid-May, Sam Walsh, CEO, Rio Tinto, spoke at Infrastructure Week in Washington, D.C. The weeklong event discussed solutions, approaches and best practices being developed nationwide to modernize the aging infrastructure in the U.S. Walsh was the keynote speaker at a forum hosted by the International Finance Corp. (IFC), where he discussed the power of innovative partnerships in building infrastructure projects that create growth. “Big infrastructure investments in transportation, power, energy, communications and water are daunting,” Walsh said. “They are difficult to achieve in the U.S. and they are even harder in the developing world. Aid alone can’t eradicate extreme poverty; broad-based economic growth is its only certain end. To achieve that, we must invest in infrastructure that facilitates trade and commerce.”
As a global business leader with operations in both the developed and developing world, Walsh has an informed perspective on the need for infrastructure investment and its ability to generate economic growth. He is also a strong advocate for the power of partnerships to achieve mutually beneficial outcomes. That’s why he was asked to lead a panel discussion on how development banks, financial markets, the private sector and civil society can bring vital infrastructure to the poorest countries while contributing to global economic growth.
Rio Tinto faces many tough engineering challenges in terms of safely getting minerals out of the ground, but it also confronts equally tough challenges in terms of getting minerals to markets. In some cases, there is no existing infrastructure. As a result, the company is one of the leading private investors in, and operators of, infrastructure. This infrastructure brings wider benefit to the communities and businesses that can share it, which unlocks broader-based economic activity that benefits entire regions as a whole.
Walsh cited Rio Tinto’s Simandou iron-ore project (See Leading Development, p. 4) in Guinea as a prime example of where an innovative partnership will also address infrastructure challenges. Rio Tinto is working with the government of Guinea, Chalco, and the IFC to build the mine and establish a consortium to finance, build and operate the infrastructure along what the company is calling the Guinea Growth Corridor. “No single institution can develop Simandou alone,” Walsh said. “But an innovative partnership will.”
The key ingredient to successful partnerships is trust and mutual benefit. Guinea’s government recognized that companies like Rio Tinto need regulatory and legal certainty to risk shareholders’ money. They have implemented a number of legal changes that substantially improve the country’s investment climate.
In addition to Guinea’s ownership stake in the mine, Rio Tinto will pay a total annual income tax and royalty payments of approximately $1.2 billon, essentially doubling the country’s annual revenue intake. It’s safe to say that the Simandou project represents a paradigm shift for Guinea—a nation that ranks 178 out of 187 countries on the UNDP’s Human Development Index. Without new approaches, Guinea’s wealth would remain untapped, and infrastructure for broader economic development would remain unbuilt. Readers can listen to the 1-hour-long panel discussion here.
Steve Fiscor, E&MJ Editor-in-Chief,
sfiscor@mining-media.com
