West Africa Rail to be rebuilt from iron ore boom #freight
West Africa Rails Rebuilt With Iron Ore Boom’s Proceeds: Freight
This article was written by By Jana Marais – 2012-02-22T00:00:01Z to view the fill article – click here
Iron ore exports from African Minerals’ Tonkolili and London Mining Plc (LOND)’s Marampa mines are set to boost Sierra Leone’s economy by 51 percent this year, the fastest projected pace of any nation in the world, according to the International Monetary Fund. Guernsey, U.K.-based African Minerals is spending $1.2 billion on rails and ports and developing a mine in the first phase of its Tonkolili project.
In Guinea, where two coups have ousted presidents since the mid-1980s, Rio Tinto is spending $1 billion on the first phase of its Simandou project, which is estimated to produce 95 million tons of ore by 2015. London-based Rio plans to invest more than $10 billion on an iron-ore mine, 650 kilometers of industrial railway, 21 kilometers of tunnels and a new deep- water port south of the capital, Conakry.
‘Hugely Beneficial’
“It’s amazing for our country,” Guinea’s Mines Minister, Mohamed Lamine Fofana, said in a Feb. 7 interview in Cape Town. “The direct impact is hugely beneficial to the population: about 10,000 jobs, local sales, subcontracting. And indirectly, we get a lot of taxes.”
African Minerals said in an e-mail yesterday that starting shipments last year “would not have been possible without the support of our investors who have funded this $1.5 billion project and the Government of Sierra Leone who have created a positive investment climate for mining in the country.”
Shares in London Mining, which also has development projects in Greenland and Saudi Arabia, have lost 1.4 percent this year. That’s mainly from uncertainty about “access to funding, slower pace of production ramp-up, smaller development scale and slightly lower quality infrastructure links,” Seth Rosenfeld, an analyst at Jefferies Group Inc. in London who has a “buy” recommendation on the stock, said in an e-mail.
China’s steelmakers are driving the boom in iron ore, with imports set to increase 1.25 billion tons over the next decade, from 679 million tons last year, according to Raw Materials Group, based near Stockholm. Global iron ore exports amounted to 1.1 billion tons last year, from 504 million tons in 2001.
Deposit Handover
Prices for iron ore delivered to China have more than doubled in the past three years. The cash price of the benchmark 62 percent-iron ore arriving at China’s Tianjin port surged to $135.40 a ton by Feb. 21 from $59.50 on Nov. 21, 2008, when data became available, according to the Steel Index, a London-based independent provider of prices.
Investing in West Africa doesn’t come without risks, as Rio Tinto and ArcelorMittal have experienced. Guinea’s government ordered Rio Tinto to hand over two blocks of its Simandou deposit in 2008 to BSG Resources Ltd., the Guernsey-based company controlled by Israeli diamond investor Beny Steinmetz. While exporting through Liberia would be a cheaper and shorter route, Guinea has pushed Rio Tinto to build the railway to support the country’s development.
Vale SA (VALE), the world’s largest iron-ore producer, will only decide at the end of the year whether to go ahead with its plan to develop a mine with BSG at Simandou after assessing mining rules in the West African nation, the company said on Feb. 16.
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