Global mining giant Rio Tinto Tuesday said it has formalised an agreement with Guinea's government to develop the world's biggest untapped iron-ore deposit after years of wrangling over the US$20 billion deal.

The penning of an investment framework for the Simandou project with its partners, Chinese state-run aluminium group Chalco and the International Finance Corporation, a division of the World Bank, provides the legal and commercial foundation to push ahead.

"Today is an important milestone in the development of this world-class iron ore resource for the benefit of all shareholders and the people of Guinea," said Rio chief executive Sam Walsh.

The Simandou iron ore project would create Africa's biggest-ever infrastructure venture, boost Guinea's annual revenue by US$1.2 billion through income tax and royalty payments and pump billions more into the nation's economy, Walsh said.

Guinea President Alpha Conde said it was of "critical importance" to his country, which is still recovering from decades of military dictatorships and misrule.

"It's a nationwide priority that goes beyond the mines and far beyond our generations," he said in a statement issued by Rio.

"With transparent and fair deals, our mining sector has the potential to be a game changer for Guinea. This project also represents a symbol of our continent's tremendous efforts to meet its infrastructure challenges and build inclusive growth".

The investment framework is expected to be brought before the Guinean National Assembly within days for ratification.

Once this is done, the partners will finalise, within a year, a feasibility study to confirm project parameters including cost and timeline. No date was given for production to start.

In the meantime, Rio will lead talks with investors to finance the estimated US$20 billion investment, which will include a railway to carry iron ore from the Simandou mountain range to a deep-water port 650 kilometres (400 miles) away to export the ore.

The joint-venture includes the development of the port, the establishment of fibre optic and wireless communications, and more than 1,000 kilometres of new and upgraded roads.

Rio was awarded control of all four tenements at Simandou -- which it said held 2.25 billion tonnes of iron ore resources -- in 2006, but was ordered by the then military dictatorship to relinquish two northern concessions in 2008.

These concessions were given to BSG Resources (BSGR), a firm controlled by Israeli billionaire Beny Steinmetz, which in turn sold half its rights to Brazilian mining giant Vale.

The permits were declared void by the Guinean government last month, although Conde said this was part of a wider clampdown on mining rights and not "case-specific" despite claims of corruption against BSGR.

BSGR has strongly denied the allegations.

In April, Rio launched a complaint in a US district court against the awarding of the northern Simandou mining concessions to the VBG consortium, which was formed in 2010 by Vale and BSGR, appealing for damages over the loss of the permits.