The Chinese Sinosteel wins the very first iron ore exploitation license in Cameroon
(Business in Cameroon) - On July 1, 2022, the Head of State, Paul Biya, signed the decree granting Sinosteel Cam SA the operating permit for the Lobé iron deposit in Kribi, in the region from southern Cameroon. This subsidiary of the Chinese mining giant Sinosteel Corporation thus becomes the very first mining operator to obtain an iron ore mining permit in the country.
President Biya is thus paving the way for the operationalization of what could well become the very first industrial mining project in Cameroon (since 2003, there has been an operating permit for the Nickel-Cobalt deposit in Lomié, but the work of operations have never started, Editor's note), less than two months after the signing, on May 6, 2022, of the mining agreement on this project, between the Cameroonian government and the Chinese mining operator.
Negotiated for nearly 7 years, that is to say between November 18, 2015 and May 6, 2022, the signing of this mining convention had sparked a lively controversy in the country. The benefits of the project for Cameroon were notably considered negligible and many analyzes had flourished, accusing the government of having sold off the Lobé iron deposit in Kribi to the Chinese Sinosteel.
"On the basis of the law which indicates that the operating permit must be granted as soon as the agreement is signed, but above all on the basis of the truth, the President of the Republic signed the permit, despite the controversy. We are currently in the phase which consists of taking advantage of the permit, which covers an area of 138 km2", blows a source familiar with the matter. It must be said, however, that the decree granting the operating permit to Sinosteel has so far not been made public as is customary with other decrees.
22.9 billion FCFA in annual revenue for the State
According to the same source, this phase of taking possession consists of actions such as the demarcation of the land, the installation of plaques indicating the now owner of the site, obtaining the declaration of public utility, the setting setting up of the commission for the evaluation of the properties impacted by the project for the purpose of compensating the owners and the signing of a long lease with the State of Cameroon.
"The law gives us 2 years to build all the infrastructure related to the project and at most 5 years to launch commercial operation. But we are aiming to launch commercial operation in 3 years at the most", indicates our source. This specifies that since the ore will be extracted in the open pit, the largest infrastructures to be put in place are the enrichment plant and a wharf or an ore terminal at the deep water port of Kribi, located 20 km from the operating site.
As a reminder, according to the mining agreement, which defines the rights and obligations of the parties to this project, the exploitation of the Lobé iron deposit in Kribi Kribi, with a potential of 632 million tonnes of iron with a average content of 33%, should provide the State of Cameroon with annual revenues of 22.9 billion FCFA, including 4.9 billion FCFA intended for local communities.
The budget thus projected, which does not take into account " common law taxes and dividends for the 10% free shares of the State " in the operating company (provision of the 2016 Mining Code), learns- on, is mainly made up of revenue from the ad valorem tax (14 billion FCFA, including 3.5 billion FCFA for local communities).
Hope for the local steel and metallurgy industry
It also includes 4.7 billion FCFA annually for the export tax, 2.8 billion FCFA for the 1% of production going to the State under the contract for sharing production, or CFAF 1.4 billion to replenish the special local capacity development account for communities, established by the 2016 Mining Code.
In order to be able to provide such income to the State of Cameroon, thanks to this exploitable iron deposit over more than 50 years, we learn, the company Sinosteel Cam SA intends to ensure an annual production of 10 million tons of iron from an average content of 33%. The enrichment of the ore should also make it possible to produce 4 million tons of iron each year with a content of more than 60%, we learn. According to official estimates, the Lobé mining project in Kribi should generate 600 direct jobs and around 1,000 indirect jobs.
Faced with the delay in the project to exploit the iron deposit of Mbalam (East region), torn between Cameroon and Congo, or the lack of dynamism around the project to exploit the deposit of Nkout (region from South) ; the effective exploitation of the Lobé iron deposit in Kribi should boost the Cameroonian steel and metallurgy industry, which has been booming for several years. In fact, despite major investments made over the past 10 years, local metallurgists and steelmakers still depend on imports of billets (waste molten iron in the form of ingots and used in the production of reinforcing steel, Editor's note), due to the scarcity of scrap metal on the local market.
Thanks to the Lobé project in Kribi, these economic operators should benefit from the provision of the 2016 Mining Code, which imposes the local transformation of at least 15% of the mineral substances extracted from the Cameroonian subsoil. In its article 29, the law on the Mining Code in Cameroon also provides that "the State guarantees the availability of the raw material, i.e. a minimum of 50% of its share, to local processing structures of mineral substances from mining. 'artisanal and semi-mechanized artisanal mining '.
Brice R. Mbodiam
ANS Price at posting:
1.7¢ Sentiment: Buy Disclosure: Held
