Modern Mining August 2015

IRON ORE

probably double the size of Guinea’s GDP. Rio’s plan is to develop Simandou in stages. Stage 1 encompasses the development of the southern Ouelaba mine to a capacity of approx- imately 50 Mt/a while Stage 2 would see the Pic de Fon deposit being developed, which would double capacity to 100 Mt/a. The tentative date for first production at Simandou is 2019 but it not clear at the moment what impact – if any – the plunge in the iron ore price will have on this timeline. Of course, the public image of the project has been damaged by the ongoing dispute – now before the US courts amongst others – over two of the exploration blocks at Simandou, with Rio reportedly claiming that Beny Steinmetz’s BSGR and Brazilian iron ore giant Vale had conspired to “snatch” its rights to the two blocks. As far as Modern Mining is aware, the blocks in question do not figure in the current development plan so – in theory – the legal wrangling should not impede the progress of the project but it could certainly deter potential investors. Elsewhere in West Africa the outlook for new iron ore mining ventures is mixed. Many of the juniors are continuing to work on their projects but few seem to have made any really significant progress in recent months. In Cameroon AIM-listed International Mining & Infrastructure Corp (IMIC) is plan- ning an initial 1 Mt/a mining operation at Nkout and has promised a PFS in H2 2015 while, in Guinea, Sable Mining Africa, also listed on AIM, is continuing to progress its Nimba project. A PFS on Nimba completed in March last year outlined a US$299 mil- lion mine able to produce 3 Mt/a and Andrew Groves, the company’s Chief Executive Officer, said earlier this year that the goal was to

in Congo) to Lolabe on the Cameroon coast to transport the ore. Also required is a Multi- Terminal Facility at Lolabe capable of loading ‘China-max’ vessels. As a result of this heavy infrastructural demand, the total cost of the project has been put at around US$5 billion – a huge hurdle for Sundance, essentially a junior company, to clear given current market conditions. The company though has made what it calls a “breakthrough” on this front, having signed a Transition Agreement with the Cameroon Government in June this year moving the fund- ing and ownership of the port and rail link to the latter, leaving Sundance with responsibility for just the mine infrastructure. Another project with a major infrastructural component is Rio Tinto’s Simandou in Guinea, said to host one of the world’s largest untapped (over 2 billion tonnes), high grade iron ore resources. According to Rio (whose partners in the project include Aluminium Corporation of China (Chinalco) and the International Finance Corporation), the resource can sustain a mine life in excess of 40 years at a production rate of 100 Mt/a and has the potential to make Guinea one of the world’s top iron ore exporters. It requires, however, a new multi-user 650 km long railway line, the Trans-Guinean, linking south-east Guinea with the coast along the Southern Growth Corridor, as well as a new deep-water port at Moribaya, south of Conakry, which will be the first in Guinea to provide access to large cargo ships. The cost of the project is estimated at a huge US$20 billion (which would make it the biggest ever African mining development), with about two-thirds of this going into the infrastructure. Balanced against this, the economic impact of the project would be substantial and it would

A blast at Kumba’s Sishen mine, Africa’s biggest iron ore mine. It will produce 33 Mt of iron ore in 2015 (photo: Kumba Iron Ore).

The cost of Simandou is estimated at a huge US$20 billion (which would make it the biggest ever African mining development), with about two- thirds of this going into the infrastructure.

August 2015  MODERN MINING  41