FYI...
I'm sure you will agree, this would have to be the first article since the February 25 contract signing that actually sheds some light on the project.
I found several key take-away points, being:
• Off-take agreements by consolidating 3 mine permits made this project viable (and remember, the railway passes by other potential sites)
• $45 - $50 per tonne landed in China?
That would have to be an absolute no-brainer for China, and their desire to reduce and/or eliminate reliance on [expensive] Australian IO
Unless FFI proves to add significant value, and soon, I might have to consider selling my FMG early 2023! But those divies are nice!
• The subject of litigation (and consequences) was avoided, once again
• Laying of first stone by end of 2022, start of work beginning 2023
Cédric KETCHANGA (Bestway Finance):“Our project is based on Off takingagreements”March 21, 2022
Cedric Ketchanga, Bestway Finance Ltd
For one of the rare times after the signing of the Public-PrivatePartnership contract with the State of Cameroon, CédricKETCHANGA, the Administrative Director of Bestway Finance Ltdagreed to answer BOUGNA's questions. The very discreet youngCameroonian, chose our newspaper to shed light on the financialarrangement of this project which appears to be one of the mostimportant recorded over the past five years in the mining sector.
You have just signed the partnership contract with the State ofCameroon. A contract which, according to observers, the fastestcontract of this scale signed between Cameroon and a consortium inthe mining sector. Does this compliment suit you?We are indeed very surprised and happy with the way things have beenhandled since the beginning. We were lucky, as we had already mentionedduring the signing ceremony, that the Minister of State, His ExcellencyPierre OBA , who was the driving force behind this project, took it to heartto implement this cooperation between the two countries. Someone had to lead this project. In particular to accept that the Congolese ores whichcome from Nabeba, Avima and Badondo , and which represent 100million tons, cross to pass via Cameroon, for export to China.
This means that today, the Congolese have agreed to see their minesfinance infrastructure on the Cameroonian side. I would like to remind youof the 600 km of railway, 510 will be built on the Cameroonian side, and 90km on the Congolese side. We know everything, the Minister of Transporthas also reminded us that this double-track railway line can also be used forthe transport of goods, and allow local residents to use it.
We, today, want to say that the impetus and the speed of this project camewhen senior civil servants showed their patriotic side. As soon as theyseized the opportunity to present, especially for the Cameroonian side,everyone followed suit and they accelerated things.
You see, the Congo could have effectively stayed on its territory andbrought these minerals out without going through Cameroon. It is not alandlocked country. There is the Port of Pointe Noire. It's true, the distancesare not the same, but the Congo could have pulled back if we were slower.We were therefore able to seize this opportunity at the right time.
Let's talk about the financial aspect. We observed some doubt aboutthe dealer's ability to find the money to finance this project. Whatguarantees do you give to those who read you?I would like to recall, before getting to the heart of the matter, that thisproject does not in any way require the debt of the two States. Whetherfrom Congo or Cameroon. We do not require a state guarantee. It is aproject that is financed from start to finish by private companies, privateactors.
This is why the framework of the contract, which is a PPP, but which shouldno longer be considered as a BOT. Because today we have private actorswho provide nearly 5,400 billion FCFA.
To get back to the heart of the matter, I would like to point out that this hasnot been done in recent decades. We had to consolidate all the permits intoone. This offered more opportunities to see the project come to fruition.
The tone set by the Congo, by recovering the three permits of Avima,Badondo and Nabeba, (which belonged to three different companies), andgrouping them into one, allows us today to have a structuring of thefinancing on the basis of the technical offers, with larger Chinese steel mills.In particular Bao Steel, which consumes nearly 1.2 billion tons per year.Today, what we do is to engage 15 years of production in advance. Thisallows Chinese APC contractors to come into the consortium to structure thefinancing as it is written.
Indeed, people today are asking questions that we could understand. Sincethe amounts shown are not the amounts with which we are familiar. 10billion dollars is practically Cameroon's budget.
But this is done through “offtaking agreements” . It means that we sell 15 years of production inadvance. This allows Chinese APC Contractors to join the consortium, andeach to take out financing with their financial players on both sides. Thisbecause there are guarantees. A single permit could not serve as aguarantee.
Last July, when signing the MOU with the State of Cameroon,Bestway Finance Ltd said it was counting on forecasts of the price of iron at 80 dollars per ton. Today, we are at 160 dollars, after a successive decline over the past three months. Does this trendj eopardize your forecasts?The price of iron, as we know, tends to fluctuate. Except that, we have been very conservative. Even when we make “off taking agreements”, we set aprice in advance. Both parties (seller and buyer) set a price. The buyer today, I can tell you, has set us a price that is actually around 80 dollars.
What you need to know, and which is important, is that in the Kassaïcraton, where all these permits are found, in particular Mbalam on the Cameroonian side, the cost price of the ore is around 30 dollars per ton.And the cost of transport, we can add 15 to 20 dollars to Asia. What makes that in reality, you have a cost price of your ore to 50 dollars.
This is thelowest ore cost in the world. Because all these major iron ore producing countries (Australia, Brazil, Canada), have weighted costs around 90 to 100dollars. Why ? Because in terms of railways, the costs are enormous. The investments are greater and above all, in terms of extraction, we have agrace in the Kassaï craton. Iron is DSO, which means you don't need to drill. It is iron that is picked up flush. It actually reduces operating costs.
So you have to understand one thing, it's the appetite that there is around this project is due to one thing. We have an unbeatable operating cost in the world. This is why we have all the interests of these Chinese companies that come to us. Our operating cost is actually around $30. Whatever the price of iron on the market, we will always remain competitive.
All we needed today was cooperation. The will oft wo heads of state to build, to build this project together. It always has been said since, and we tried today to bring a drive in this direction. States have nothing to put in, nothing to invest. We,today we have to focus on the fact that these are private partners who come with full funding.
The former concessionaires maintain a sort of sword of Damocles over the project, and therefore over the consortium. Avima Iron Ore Ltd, for example, is seeking billions of FCFA in compensation, and has already gone to court. Aren't you worried that these court cases will derail the project? How do you view these threats?States are sovereign. We did not go to war with private companies. We respect the investments that have been made around the project. But we also try, at some point, to be able to find the solution. We all know that these iron ores, the only problem was the railway, the transport, the exploitation. We had to keep the engineering going.
We knew how to plant things. I'm not saying that the others didn't know.But we were able to convince the States not to put in the money, which they don't have. You who follow these issues very closely, you know that in the old structures, the old partners asked the States at some point to contribute.
And the solution, the key, was to get the States to trust us without however committing themselves. We know the economic context that we have experienced in recent years. With in particular an oil price which has fallen on the market, and which had had a negative impact on the economies of our different countries. The key, once again, was to get states to trust partners, without committing more.
When do you plan to lay the foundation stone?We have completed the challenge. This day of February 25, 2022 will be remembered, since we have accomplished the hardest part. Sign binding agreements with Cameroon. It really was the missing piece of the puzzle. With this document,
we can say that the laying of the first stone will be done by the end of 2022, for a start of work at the beginning of 2023, and a start of the exploitation of these ores by the first quarter 2025.
Interview with Frégist Bertrand TCHOUTA
Source:
https://bougna-net.translate.goog/2022/03/21/auto-stop/cedric-ketchanga-bestway-finance-notre-projet-repose-sur-des-accords-de-off-taking-agreement/?_x_tr_sl=fr&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=sc
