IRON AND STEEL
As iron ore dispute continues Sierra Leone reviews its mining code
A dispute between London Mining and African Minerals over an iron ore concession is embarrassing the Sierra Leone Government’s efforts to attract foreign investment as it develops a new mining policy.
Posted: Wednesday , 10 Sep 2008
FREETOWN (Reuters) -
Sierra Leone is reviewing its mining policy while two foreign firms fight over the rights to a potentially lucrative iron ore project, the government of the West African state said on Tuesday.
The Marampa iron ore deposit at the centre of a legal battle between London Mining (LOND.OL) and African Minerals (AMIq.L) is estimated to be worth at least half a billion dollars, according to one London Mining executive.
Demand for the mineral, a key ingredient in steel, is high and with world steel production forecast to hit a record 1.3 billion tonnes in 2008, mining firms are scouring the globe for resources to sell to steelmakers in China and elsewhere.
"We are currently doing a review of mining policy and we want to make sure that as part of that London Mining and African Minerals are being looked into very closely," Sierra Leone Information Minister Ibrahim Kargbo told Reuters.
"We expect some kind of interim report soon," he added.
The mining sector accounts for 90 percent of exports from the impoverished former British colony, where illegal diamonds financed a 1991-2002 civil war.
The disputed area in this case, which amounts to 30 percent of London Mining's total concession, is worth about $500 million in iron ore sales and $30-50 million a year in taxes and royalties to the cash-strapped government, Graeme Hossie, deputy managing director of London Mining, told Reuters.
"Recently, we received a letter from the ministry of minerals saying they are going to demarcate the land in favour of African Minerals' exploration licence," he said.
"But we have a legally issued mining licence issued in 2005, and that takes precedence over any latterly issued exploration licence."
London Mining said it had already invested $15 million, and was ready to invest a further $40 million to upgrade the existing railway from the mine to the port at Pepel to an expanded capacity of 7.5 million tonnes a year.
"We want to attract international private investors," Minister Kargbo said. "So we are very embarrassed that they have this dispute going on."
London Mining issued a writ at the weekend against African Minerals for trespass and to prevent it from entering the Marampa deposit.
African Minerals, which wants to swap its interest in the disputed land for a 10 percent stake in Australian mining firm Cape Lambert Iron Ore (CFE.AX), said on Monday it would also take legal action against London Mining for trespass and removal of iron ore tailings from the land.
An estimated 50 million tonnes of iron ore tailings from the old DELCO mine, which operated from the 1930s until its closure in 1975, lie dormant on the disputed territory.
Modern processing techniques mean the iron can now be extracted from the low-grade tailings, as well as from an estimated 100 million tonnes of hard rock beneath.
(Editing by Daniel Magnowski and Christopher Johnson)
© Thomson Reuters 2008. All rights reserved.
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