Simandou operations. Source: Rio Tinto.

What goes around, comes around, and for Rio Tinto (RIO 0.68%), it must feel like it's receiving its just due as it announced a deal to proceed on the massive Simandou iron ore project in Guinea. 

One of the first major miners on the scene in 1997, Rio saw half of its rights to develop the project stripped from it by the country's dictator, Lansana Conte, who turned around and granted them to BSG Resources in 2008. Two years later, BSG partnered with Brazilian mining giant Vale (VALE 1.82%) to develop the northern Simandou claim, but following Conte's death, a new democratically elected government alleged the bidding process was rife with fraud and set aside their claims. Last month, Guinea stripped from both BSG and Vale their rights to the iron ore deposit.

And now earlier this week, the Guinean government agreed to an investment framework to help jump-start the long-delayed mining operation. Although there's no time frame for when construction will begin, let alone production starting, but laying the groundwork for the necessary infrastructure to be built goes a long way to solving a lot of the issues that were the root cause for the original delays.

The Simandou mountains are home to one of the world's richest iron deposits, estimated to be worth $50 billion. But it's in a remote, undeveloped region of the country with a lack of access to any port for shipping. When Vale originally bought into the project, it said it was committed to renovating 660 kilometers of the Trans-Guinea railway and was negotiating contracts with Liberia for construction of an integrated railway-port system for transporting iron ore from Simandou to a maritime terminal on Liberia's Atlantic coast.

The government, however, preferred a Guinean port be utilized, but that would require the construction of a separate railway system through heavily forested country. Determining the best course of action was behind the delays Vale experienced and was the rationale Conte used to strip it of its rights.

The framework hammered out on Monday, however, sets the basis for the undertaking. According to Reuters, which says it's seen the documentation, there are three components to the plan:

  • A 650-kilometer jungle railroad at a cost of approximately $7 billion;
  • A deep-water port at Morebaya at a cost of $4 billion; and
  • Support infrastructure estimated to cost at least $2.5 billion.

Guinea was looking to retain a 51% stake in the infrastructure project on hopes that financing would materialize allowing for a 40-year development plan that would double the size of the country's economy and open additional regions of the country.

Reuters, though, said such an outlook wasn't feasible so instead it gives Rio 15 months after Guinea's parliament ratifies the framework to come up with a financing plan with an as-yet-unspecified consortium that would be responsible for the infrastructure. It would then have 32 months to put financing in place, after which a deadline for starting production would be set. The consortium would own and operate the infrastructure for 30 years, with the Guinean government assuming control and ownership afterwards.

Rio Tinto is currently suffering from depressed iron ore pricing, which has fallen from above $130 per tonne to 20-month lows just above $100 per tonne, exacerbated by its continuous production of ever greater amounts of iron ore, a record 266 million tonnes during 2013, up 6% from the year-ago period. If prices continue falling -- and Rio Tinto says trying to predict which way they'll head is a fool's errand -- any savings its realized from cuts to capital spending will have been wasted.

The opportunity it has been given again at Simandou seems to run counter to the Chinese proverb that says "Fortune does not come twice," until one remembers the rest of the saying, which cautions, "Misfortune does not travel alone." 

The hope of Rio Tinto and iron ore miners everywhere is that China will maintain a ferocious appetite for the steelmaking ingredient as it builds out its infrastructure. It is also a partner in the Simandou project, having a 41% stake through Chinalco, the government-owned miner. And that could tip the balance of karma in its favor.