Ann: Shandong's Investment in AMI Sierra Leon, page-15

re: Ann: Shandong's Investment in AMI Sie... All systems go in Sierra Leone...

Trader Vitol makes first major iron ore move

www.guardian.co.uk/business/feedarticle/10170004

By Clara Ferreira-Marques
(Reuters) - Energy trader Vitol has made its first major move into iron ore, with an offtake agreement with London Mining that pits it against rival Glencore as traders compete for a slice of the lucrative iron ore market.
Traders and banks have been piling into physical iron ore trading alongside strategic buyers seeking to secure volumes, attracted by large trading volumes, a pricing mechanism that is becoming far shorter and China's appetite for steel as it expands cities, power lines and rail links.
The new arrivals are taking on a market dominated by Vale , Rio Tinto and BHP Billiton , which have a joint share of around 60 percent, leaving even the world's largest commodity traders to battle over offtake from emerging players.
London Mining will this year produce 1.5 million tonnes, a tiny fraction of the 1.1 billion tonne global market.
Vitol has agreed a $45 million (28 million pounds) offtake-related prepayment loan, securing 2 million wet metric tonnes, with a 5-year deal that means London Mining is now fully funded to expand capacity at its Marampa project in Sierra Leone to 5 million tonnes by 2014.
"This is an important growth opportunity for the Vitol Group as we make our first major move into the iron ore business, which provides good synergies with our growing coal business and our dry bulk expertise," a Vitol spokesman said.
Glencore in January last year secured an agreement for the first 1.8 million tonnes of production from Sierra Leone. Glencore's five-year deal included a $27 million prepayment and covers 9.5 million tonnes of production.
"The optimal situation for us is to have a number of customers. We have a significant amount of additional production to come on quite quickly - by the end of 2013 we will be producing at the rate of 5 million tonnes per annum," Chief Executive Graeme Hossie told reporters.
"We had a number of parties - in excess of 5 legitimate parties - chasing this offtake from our ore."
INTEREST
London Mining said it had the option to expand the relationship with either trader, or both, or of doing deals directly with steel producers to sell any additional output.
Hossie said the miner had seen interest in its production from trading houses and banks keen to grow in physical trading and Chinese buyers.
Last year, Shandong Iron & Steel, the world's ninth-largest steel company, agreed to pay $1.5 billion for a 25 percent stake in London Mining rival African Minerals .
London Mining on Thursday posted a wider core loss for 2011, as corporate cost increase with the miner's move from developer to producer and with the ramp up of the Marampa operation.
Its EBITDA (earnings before interest, tax, depreciation and amortisation) loss widened to $40.5 million from $31.4 million the previous year.
Marampa produced over 271,500 tonnes of concentrate as at March 26, the miner said, adding five supramax shipments had now been made, selling 243,190 tonnes of ore to Chinese and European customers through Glencore.