That is speculation.

We have absolutely no idea how consciousness is produced from electrical and chemical signalling between a large ball of fats.

We know that it is (because we perceive our own), but we can't map from one thing to another.

If consciousness is merely neural activity in a brain, then why can't we simulate really simple brains?

Because really simple brains don't have consciousness, they aren't sufficiently powerful enough to have the "mental machinery" needed for consciousness.

We know that brains can implement things like theory of mind, self-awareness and abstract concepts; these particular things don't require a human mind but they do appear only in animal brains above some level of complexity, and don't appear in brains so simple that we'd have the power to simulate them in 2020.

We don't know that. How would we ever observe such a thing?

Like the core problem of consciousness is that we experience it, but have no way of identifying it otherwise.

Reductionism is by definition less than a full perspective on life, humanism and depth of possibilities.