Hi Tolate.... here you go!
· Metals· 11 Dec 2019 | 13:51 UTC
· London
SundanceResources' iron ore project nearing go-
ahead, Cameroon deal foreseenAuthorDiana Kinch
EditorDan Lalor
CommodityMetals
Highlights
Sundance Resources' 40 millionmt/year iron ore project in Congo Brazzaville and Cameroon looks set toresurface following years of adjustment, with the expected signing later thismonth of a mining accord by the Cameroon government, a project investor said.
Like another majorAfrican iron ore project, Simandou Blocks 1&2, the $6 billion Sundanceproject is to be be developed mainly with Chinese financial backers who willprovide infrastructure, and all the ore was expected to go to China.
Aime Emmanuel Yoka, managingpartner of Singapore-based Marys Capital Investments, one of the partners inthe project, told S&P Global Platts in an interview the Cameroon governmentwas set to renew its Mbalam Convention by the end of this year.
That will allow Sundance'svarious foreign partners to operate in Cameroon and get necessary permits.
On the Congo Brazzaville side,everything was in place, Yoka said. A new mining convention was ratified in2016 and the country's parliament is fully open to foreign investment.
Sundance, a direct shipping ironore (DSO) project with mines 40 km apart in Congo Brazzaville and Cameroon, hassuffered disruptions and uncertainty following a helicopter crash in which theentire board of the original project died in 2010.
Feasibility studies werenonetheless completed in 2012. The project was further held up by a subsequentfall in commodity prices and delays in Congo and Cameroon establishing a miningconvention.
Iron ore's price surge in 2019signaled a distinct market for high-grade ore which can help reduce emissionsin the steelmaking process, improving prospects for Sundance's high-gradeproject.
Following the expected renewalof the Mbalam Convention, the project will still need approval from bothAustralian and Chinese authorities.
According to an agreement signedon July 5, Sundance's majority stakeholder partner will be AustSino, a companyregistered on the Australian Stock Exchange (ASX). Funds and resource companiescurrently with holdings in Sundance are Marys Capital Investments, D&EShaw, Seringan, Noble Resources, Blackstone and Wajin, while strategic partnersinclude the China Railway Construction Company CRCC, Shenzhen Yantian Port,steelmaker Baowu and stainless steel producer Tsingshan.
The strategic partners wereexpected to put up 30% equity for the project, with 70% being put up by theirbanks as debt, involving agreements and transactions that need to be finalizedpost June 2020, according to Yoka.
"I am 70% sure this will goahead," Yoka said.
Infrastructure hurdle
Sundance's partners have alreadyinvested $500 million in exploration and feasibility studies and the mineinstallations are partly built.
The big hurdle isinfrastructure. A $3.4 billion, 540 km railway from Cameroon, with a 40 kmbranch line to the mine site in Congo Brazzaville, is required for efficientshipping to an existing port at Kribi in Cameroon, where another $800 millionwill be required to construct a Sundance terminal.
The railway and port terminalwere expected to take three years to build, meaning first production from themine was foreseen in 2024. Energy supplies are also needed.
Yoka envisaged that onceinfrastructure was in place, Sundance could produce 15 million mt DSO of 62% Fequality in its first year of operation, rising to its full 40 million mt/yearin the second year.
The project is greenfield andopen pit, with enough DSO reserves (517 million mt) for 13 years and then afurther 6 billion mt of itabirite reserves that could give the mine a total 25years mine life.
The idea is to mine at both theCameroon and Congo Brazzaville sites and blend the two ores before shipping toguarantee payback, Yoka said.
Resource nationalism may,however, pose risks to the project, especially as the Chinese operators may beexpected to wish to bring in some of the labor for the project, which may clashwith local labor laws.
The project was expected tocreate some 5,000 direct jobs, represent 15% of Congo Brazzaville's GDP for theyears of its operation and 10% of Cameroon's.
"The Chinese investors knowthat the local population represents a significant risk to the project,"Yoka said.
"It will be a tough battleto get the percentage of local and percentage of Chinese labor sorted out. Butour job is to ensure that all parties, investors and populations alike benefitfrom the project."
-- Diana Kinch, [email protected]
-- Edited by Dan Lalor, [email protected]
Source:
https://www.spglobal.com/platts/en/market-insights/topics/commodities-2020
