tonkolily project update, page-27

Sierra Leone says China mine deal to kickstart economy.

By: Reuters
16th July 2010

FREETOWN,SIERRA LEONE (miningweekly.com) Chinese firm Shandong Iron & Steel's $1,5-billion deal this week to buy a stake in an iron ore mine in Sierra Leone has the potential to transform the West African country's economy, its mines minister said on Friday.

The cash injection from Shandong's purchase of 25% of African Minerals Tonkolili project will help finance building a mine that produces an initial 10-million tons of iron-ore per year, employing thousands of Sierra Leoneans and providing much-needed government revenue.

"For too long Sierra Leone has been described as a country with rich mineral resources, but ... it has demonstrated no impact on our economy, instead we have continued to regress and remain poor, but this time the goverment is determined that progress must be achieved," Mines Minister Alpha Kanu told Reuters in a telephone interview.

While many mining firms are exploring in Sierra Leone and elsewhere in Africa, it is large-scale commitments like this, and like the billion-dollar iron ore deals signed in neighbouring Guinea this year, that give governments the income they need to rebuild ruined economies.

CREATE JOBS, PAY TAXES

African Minerals expects the first ore to be delivered to port ready for shipment in the last quarter of 2011. The second phase of development will bring production capacity of 25-million tons per year, scheduled for the end of 2012.

"Sierra Leone's government is very confident it will bring in a lot of money both foreign exchange as well local payment of royalties and other taxation," Kanu said, declining to give a figure for how much the government expects to earn from Tonkolili.

Prices of iron ore delivered to China, the biggest consuming market for the steelmaking raw material, were around $118 per ton this week, down from a high of over $185 in late April, but analysts expect prices to rise again when Chinese steel production increases later this year.

Part of the deal between Shandong and African Minerals was an offtake agreement, under which the Chinese steel mill guarantees to buy production from the mine. A big, fully functional mine requires thousands of workers.

"Now that the company has started its operation in preparation for mining, there are about 2 000 Sierra Leoneans who have been engaged by the company," Kanu said. "With this new development, there are hopes for the employment of 4 000 to 5 000 workers within the next two years."

Sierra Leone, in common with other countries in the region, is trying to attract international investors with money and know-how so it can convert its mineral resources into cash. The former British colony is trying to rebuild its economy after emerging in 2002 from a decade of civil war.


African Minerals appoints CRM representative to board.

16th July 2010

JOHANNESBURG (miningweekly.com) - Aim-listed iron-ore and base-metals-miner African Minerals on Friday announced that it had appointed China Railway Materials Commercial Corporation (CRM) vice-president and senior economist Liu Guoping as a non-executive director.

CRM, which is a large-scale Chinese State-owned railway services provider and steel trader, is a significant shareholder in African Minerals, owning 12,3% of the company.

African Minerals executive chairperson Frank Timis said that Guoping's background and experience would be a major asset to the company as it progressed the Tonkolili iron-ore project through development and into production.

Guoping has been employed by CRM since 1995, and currently also holds a directorship at ASX-listed iron-ore company FerrAus.
"We welcome Guoping to the board of African Minerals, cementing the company's ties to CRM as one of its major shareholders," concluded Timis.

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