Simandou iron ore officially commences operations, with at least three major players in the dry bulk shipping market actively positioning themselves. However, Clarksons forecasts that new shipping capacity before 2028 may significantly exceed demand.
After years of financing disputes, construction controversies, and policy twists and turns, the Simandou iron ore project has finally shed its label as a “paper-rich mine.” The production commencement ceremony was held on November 11, 2025, at the Port of Morebaya in Guinea. The presence of President Mamady Doumbouya of the Republic of Guinea, Chinese Vice Premier Liu Guozhong, Rwandan President Paul Kagame, and Gabonese President Brice Clotaire Oligui Nguema underscored that Simandou is not merely a single mining site in Guinea but is viewed by African resource-exporting countries as a demonstration project capable of shifting global steel raw material flows.
According to industry estimates, if the entire 120 million tons per year (full production capacity) of Simandou iron ore is shipped to China, approximately 18.7 million DWT of additional shipping capacity would be required. Currently, at least three major players in the dry bulk market are arranging new shipping capacity for the Simandou iron ore transport market. According to Clarksons statistics, the planned delivery capacity of dry bulk carriers before 2028 has already exceeded 45 million DWT, suggesting the dry bulk market may face oversupply pressures in the next three years.
Chinese Capital Active in Taking Stakes as High-Grade Simandou Ore Commences Operations
At the Simandou iron ore production commencement ceremony, alongside the attendance of the four countries’ political leaders, shareholder representatives of the Simandou iron ore project were also present to witness this historic moment. These included Sun Xishun, Chairman of Singapore’s Winning International Group (Winning International) and Chairman of the SMB-Winning Consortium for Simandou; Zhang Bo, Chairman of Shandong Weiqiao Pioneering Group Co., Ltd. (Shandong Weiqiao); and Hu Wangming, Chairman of China Baowu Steel Group Corp., Ltd. (China Baowu).
Based on the publicly disclosed ownership structure of the Simandou iron ore project (see Figure 1), the owner of the northern section (Blocks 1 & 2) is the Winning Consortium (holding an 85% stake), within which China Baowu holds a 49% stake; a consortium comprising Winning International, Shandong Weiqiao, and others holds the remaining 51% stake. The southern section (Blocks 3 & 4) is held by the Guinea government (15% stake) and Simfer S.A. (85% stake). Simfer S.A. is owned by Rio Tinto Group (53%) and Chalco Iron Ore Holdings Limited (Chalco Iron Ore) (47%). The shareholders of Chalco Iron Ore are Aluminum Corporation of China (Chinalco) (75% stake), China Baowu (20% stake), China Railway Construction Corporation (CRCC) (2.5% stake), and China Harbour Engineering Company (CHEC) (2.5% stake). It is evident that Chinese capital holds a significant share in this Simandou project, and the proportion of iron ore expected to be shipped to China is projected to be at least 70%.
Following the production commencement ceremony, the first batch of 9,850 tons of high-grade lump ore was loaded onto the self-propelled barge “Winning Max 1” for transshipment to the bulk carrier “Winning Youth,” which was anchored 20 nautical miles off the Port of Morebaya. This move signifies the formal entry of Simandou iron ore into the global iron ore supply chain. It is reported that a round trip for the barge takes approximately 6 hours. Between November 11 and 14, the “Winning Youth” had received iron ore from two barge loads.
The Simandou iron ore deposit possesses 4.4 billion tons of proven reserves, making it the largest undeveloped high-grade hematite open-pit mine in the world. Once it reaches its full annual production capacity of 120 million tons, it will account for 7.5% of the global seaborne iron ore trade volume in 2024, enough to reshape the seaborne iron ore supply landscape. Alexis Ellender, Head of Dry Bulk at Kpler, believes, “This year will only see small shipment volumes, with real volume increases expected in 2026.”
Liu Guozhong stated that the Simandou project is the crystallization of nearly 70 years of friendship and cooperation between China and Guinea, and between China and Africa, and is bound to contribute to Guinea’s economic development and the implementation of the “Simandou 2040” strategic plan.
Djiba Diakité, Chief of Staff of the Presidency of the Republic of Guinea and Chairman of the “Simandou 2040” Strategic Committee, emphasized in his speech: “Simandou is not just a mining project; it is a powerful engine driving national transformation.”
Rising Transport Demand Prompts Shipping Companies to Ramp Up Capacity Deployment
With the formal launch of the Simandou iron ore project, the shipping market on the Guinea-China route is poised for new development opportunities, with demand for Capesize vessels and ore carriers expected to receive a significant boost. Shao Fei, Senior Market Analyst at the Shanghai International Shipping Institute (SISI), previously told this publication that Capesize vessels dominate the mainstream ship types on the Guinea-China route, and the project’s operation will directly drive growth in transport demand for this vessel type. Taking a 170,000 DWT Capesize vessel as an example, the one-way voyage from Guinea to China takes nearly 40 days, allowing for about 4.5 round trips per year. If all 120 million tons of iron ore produced annually by the Simandou project were shipped to China, meeting this transport demand alone would require 155 Capesize vessels. It is noteworthy that the overall fleet age of Capesize vessels in the dry bulk fleet is relatively young, with fewer vessels over 25 years old. However, as a large number of vessels were built between 2010 and 2012, this cohort will gradually enter an aging phase after 2030, also providing potential space for the newbuilding market. Clarksons data shows that since 2023, three major dry bulk shipping companies—Winning International, COSCO Shipping Bulk Co., Ltd. (COSCO Bulk), and China Merchants Energy Shipping Co., Ltd. (CMES)—have keenly seized market opportunities and successively placed orders for Capesize vessels and ore carriers at Chinese shipyards (see Table 1). Some of these new vessel orders are specifically planned to accommodate the transport needs of Simandou iron ore.
Specifically, as a company deeply involved in the Simandou project, Winning International started planning early for new ship orders and has continuously increased its efforts. In September 2023, Winning International took the lead by signing a construction contract with China State Shipbuilding Corporation Qingdao Beihai Shipbuilding Co., Ltd. (Beihai Shipbuilding) for two 325,000 DWT-class ore carriers; by June 2024, the company reached a cooperation with Hengli Heavy Industry, adding orders for six ore carriers of the same specification; in July 2025, Winning International placed another order with Hengli Heavy Industry for two 325,000 DWT-class ore carriers. As of September 2025, its total cumulative new ship orders reached 10 vessels. All 10 new ships adopt the “WinningMax” design pioneered by Winning International, fully aligning with the company’s green and environmentally friendly operational policy, while also being specifically optimized for the characteristics of the bauxite sea trade from West Africa to China and the entire logistics chain. Compared to traditional Baltic Capesize vessels, the “WinningMax” design is expected to reduce energy consumption per ton-mile by nearly 50%, offering significant energy-saving advantages; more notably, this ship type incorporates methanol fuel adaptation design provisions and is equipped with a 12,000 cubic meter methanol fuel storage tank, laying the foundation for using green methanol as a power source in the future, enabling “zero-carbon” operation throughout the entire voyage and fully meeting the increasingly stringent environmental requirements of the international shipping market. Regarding the delivery schedule, Winning International’s 10 new ships will be delivered in phases: 4 in 2026, 5 in 2027, and 1 in 2028, providing stable transportation capacity support for its participation in the Simandou project.
Cosco Shipping Bulk’s investment in Capesize bulk carrier orders is even stronger, making it a leader in the global dry bulk carrier newbuilding market in recent years. In February 2023, Cosco Shipping Bulk took the lead by placing an order for two Capesize vessels with Cosco Heavy Industry (Yangzhou), initiating a large-scale ordering plan; entering 2025, the company’s ordering pace accelerated significantly: 5 additional orders in February, 2 orders placed with Beihai Shipbuilding in May, and in July, not only ordering 6 vessels from Cosco Heavy Industry, but also placing orders for 4 vessels each with Beihai Shipbuilding and Tianjin Xingang Shipbuilding Heavy Industry, both under China State Shipbuilding Corporation, followed by an additional 4 orders with Beihai Shipbuilding in September. As of September 2025, based on the 2 orders placed in 2023, Cosco Shipping Bulk accumulated 25 new orders in the first nine months of 2025, bringing the total number of orders to 27 vessels, setting the highest record in recent years for the scale of dry bulk carrier orders by global shipowners. The delivery schedule for these new ships has also been clarified, to be fulfilled gradually starting from 2026: 2 deliveries in 2026, 3 in 2027, 19 in 2028, and 3 in 2029, forming a continuous and stable supplement to transportation capacity. It is worth noting that to coordinate with the transportation connection for Simandou iron ore, Zhanjiang Port is simultaneously constructing the “Cosco Simandou Iron Ore Sorting Warehouse”, designed with an annual processing capacity of 5 million tons, with the construction unit being Zhanjiang Cosco Shipping Logistics. The port supporting facilities within the same system are being constructed first. Industry analysts believe this move may further corroborate that Cosco Shipping Bulk’s new ship orders are directly linked to the cargo source of the Simandou project, highlighting its precise layout for the project’s transportation needs.
Another central state-owned enterprise, China Merchants Energy Shipping (CMES), is also actively involved in expanding its dry bulk carrier fleet, following market development trends to arrange transportation business related to the Simandou project. In June 2024, CMES concentrated orders for ten 210,000 DWT-class Capesize bulk carriers at Chinese shipyards, with 2 built by Qingdao Shipbuilding Co., Ltd. under China Merchants Industry Group, and the other 8 undertaken by New Times Shipbuilding. The total investment for this batch of vessels reached 5.45 billion yuan. To quickly supplement capacity, in December 2024, CMES also chartered in two 210,000 DWT-class Capesize bulk carriers through China Merchants Leasing, with a total charter cost of approximately 730 million yuan, forming a capacity expansion model combining “newbuilding + chartering”. Regarding the delivery schedule, the 10 new ships ordered by CMES will be delivered gradually starting from 2027: 2 in 2027, 7 in 2028, and 1 in 2029. Industry sources revealed that a portion of the ships ordered and chartered by CMES will be specifically used for transporting the Simandou iron ore project, fully reflecting its firm optimism about the growth in iron ore transportation demand brought by the project, and also demonstrating the responsibility and commitment of central state-owned enterprises in seizing opportunities in the international shipping market and safeguarding the transportation channels for important national materials.
Regarding the current performance of the Capesize bulk carrier market and the ordering logic of shipowners, Wang Xiang, General Manager of Veson Nautical Greater China, provided a professional interpretation. He stated that the core reason for the recent firm freight rates and ship prices for Capesize bulk carriers is the continuous recovery of China’s iron ore demand; meanwhile, the number of newbuilding orders for this ship type has been low in recent years, leading to limited growth in market supply. The imbalance between supply and demand provides strong support for prices. From the supply side, high shipbuilding costs, continuously extending delivery cycles, ongoing tightening of environmental regulations, and uncertainty in ship fuel technology pathways have all, to some extent, dampened shipowners’ willingness to place orders, keeping market supply relatively controlled, which further consolidates the firmness of freight rates and ship prices. Although current newbuilding prices are high, Wang Xiang still believes that the large-scale ordering by companies like Cosco Shipping Bulk holds significant medium to long-term strategic importance. He analyzed that with the formal commencement of production at the Simandou iron ore mine in Guinea, demand for long-haul iron ore transportation will increase significantly. Capesize bulk carriers, as the main ship type for this route, are highly suitable. Considering that most new ship deliveries are concentrated after 2027, the current large-scale ordering by shipowners is more about pre-positioning for the expected growth in transportation demand in the coming years. It allows them to lock in relatively stable shipbuilding resources while reserving sufficient capacity for subsequently undertaking large-scale transportation businesses like the Simandou project, representing a rational choice that balances market opportunities and long-term development.
Experts from the Shanghai Shipping Exchange also informed this publication that with the rising transportation demand for Simandou iron ore, Capesize vessel capacity on the Guinea-China route will further increase starting in 2026. The ordering actions by major shipping companies will not only promote the development of the domestic shipbuilding industry but also provide a solid guarantee for the stable operation of the Guinea-China route, facilitating the smooth and efficient operation of the global iron ore trade supply chain.
Supply Matrix Changes: Who Will Be Replaced by the Simandou Mine?
Analyzing from the perspective of the global shipping market, whether in China or other regions, the current scale of iron ore consumption cannot directly absorb the additional 120 million tons of supply from the Simandou project. Therefore, the core question brought by this project focuses on: which part of the global iron ore market’s production will it replace?
Industry analysis suggests that, in terms of impact on the bulk carrier market, the ideal scenario would be for Simandou iron ore to replace domestic Chinese iron ore, but achieving this goal is extremely difficult. Currently, China’s annual iron ore production is about 200 million tons. To absorb Simandou’s 120 million /year capacity through replacement in the short term would mean a 60% reduction in domestic ore production, which faces many practical obstacles.
A more feasible alternative is Guinean ore replacing Australian ore. The advantage of this substitution model lies in its more significant ton-mile effect. Furthermore, the long waiting times at Guinean ports contrast sharply with the efficient operations at Australian loading ports; this difference will further amplify the transportation capacity demand brought by the shipping distance, providing stronger support for the bulk carrier market. Considering multiple factors, the replacement of Australian ore with Guinean ore is fully justified. On one hand, China hopes to diversify its raw material sources to mitigate supply risks; on the other hand, Australian ore has long enjoyed a premium due to its high grade, a situation that places significant cost pressure on many Chinese buyers and creates space for Guinean ore to enter the market.
However, the deep interconnection between China and Australian mines makes the possibility of completely detaching from Australian ore difficult to achieve in the short term. China still holds substantial investments in Australian mines, and recent important changes have occurred in the settlement of Australian iron ore trade: In early October, after difficult negotiations, China Mineral Resources Group (CMRG) and BHP reached a consensus and signed an annual price supplement agreement, stipulating that about 30% of BHP’s spot iron ore trade with China will be settled in RMB starting from the fourth quarter of 2025. For long-term contracts, a one-year “observation period” is set; if the market acceptance of the China iron ore index meets expected standards in 2026, discussions will be held on whether to change the long-term contract price to RMB denomination.
Industry insiders stated that assuming 120 million tons of Australian ore are replaced by Guinean ore within the next three years, and considering the differences in shipping distance and waiting times while keeping other conditions constant, the full operation of the Simandou iron ore mine could provide a transportation volume increase of 18.7 million DWT for the market. It is important to note that the planned delivery capacity of new Capesize vessels before 2028 already exceeds 45 million DWT, approximately twice the aforementioned incremental demand. Therefore, relying solely on this substitution scenario is hardly sufficient to provide substantial positive support for the Capesize market.
In the real market, the incremental volume brought by the Simandou project will not target a single source for replacement but will intensely disrupt the global iron ore supply matrix. This change will exert downward pressure on ore prices, impacting high-cost mines globally, with related mines in China and Australia bearing the brunt initially.
Although the dry bulk shipping market faces pressure from oversupply, industry insiders indicate that potential upside still exists. One plausible scenario is China emulating its coal stockpiling strategy by using US dollars to establish a strategic iron ore reserve, thereby reducing its US dollar exposure. This measure aligns with the expansion plans of Australian miners and possesses practical feasibility. Another potential positive factor could come from stronger-than-expected growth in Chinese steel production, although this scenario seems more distant as China’s economy has clearly moved away from relying on large-scale expansion of infrastructure and manufacturing capacity for growth.
Besides China, India’s infrastructure sector is also set for significant expansion. However, its development pace is slower than China’s, and in the medium term, it is more likely to prioritize the development of domestic mines rather than importing large quantities of iron ore, making it difficult to become a major growth point for global iron ore demand. Perhaps the most compelling positive factor in the current market is “market change” itself – although its impact is difficult to quantify, this change affects fleet operational efficiency, brings market volatility and bullish sentiment, providing some variable support for the Capesize market.
