[Ferro-Alloys.com] Rio Tinto has struck a deal with Guinea's government to push ahead with plans to develop a $US20 billion iron ore project.

The government, Rio Tinto, Chinalco and World Bank-owned International Finance Corporation signed an investment framework deal and are all shareholders in the Simandou project.

The deal would legally underpin the estimated $US20 billion ($A21.64 billion) project with Rio leading talks with investors to finance, build and own a 650km railway and deep-water port.

The mine could produce 100 million tonnes of iron ore a year, operate for 40 years, double the country's GDP and stimulate 45,000 indirect jobs, the partners said in a statement.

A bankable feasibility study will be due in one year with Rio previously saying it hopes to be producing by 2018.

Rio chief executive Sam Walsh said it was an important milestone in the development of the world-class iron ore resource for the benefit of all shareholders and the people of Guinea.

The government will have a 7.5 per cent shareholding, Rio 46.57 per cent and Chinalco 41.3 per cent.

The government will receive royalties of 3.5 per cent for iron ore shipments.

It will also have options to increase its shareholding to 35 per cent over 20 years.

Rio is suing Brazilian miner Vale and Israeli billionaire Beny Steinmetz and his company over the rights to develop Simandou.

Rio alleges they bribed officials and conspired to steal mining rights.

• [Editor:Yueleilei]