Chinese giant Chalco, which is selling its stake in Rio Tinto's (ASX, LON:RIO) Simandou iron ore project in Guinea to its parent firm Chinalco, said Friday the cost of the development will surpass the US$18 billion.

According to an internal report released by the Hong Kong-listed company, the Simandou mine will have a life of 35 years, with production starting in December 2018, more than three years later than initially scheduled.

According to The Australian, Chinalco will pay Chalco a bit over $2bn for the stake in what could be Africa's biggest mine, down from a previously reported $2.2bn.

The deal will let Chinalco hold on to the iron-rich mountain deposit as well as a $700 million "settlement payment" by Rio to Guinea for the many delays in developing four Simandou tenements.

Chalco and its Chinese partners have spent $1.85 billion on Simandou, including $1.35 billion to enter the deal in July 2010. Currently world No.2 miner Rio Tinto owns 51% of the ambitious project, Chalco 45% and the World Bank the remainder.

Rio is developing the southern part of Simandou, which is expected to produce over 95 million tonnes of iron ore per year, and so far it has spent more than $3 billion building open pits in the area.

BSG Resources, a company in the stable of billionaire diamond magnate Beny Steinmetz, and Brazilian giant Vale (NYSE:VALE) hold the northern part of the Simandou concession.