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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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An Iron Major Bets On This Unloved Place

West Africa has had a tough go of things lately.

The recent flare-up of ebola in places like Guinea has topped off a deeper list of issues. One of the major ones being regulatory stability--with questions having emerged over just how workable big deposits here are.

A lot of the debate has focused on iron ore. With Guinea holding some of the largest undeveloped deposits on the planet. Which have unfortunately been plagued by government asset seizures, legal wrangling, and a lack of infrastructure that has held back progress.

But this week, the area got a major vote of confidence. From one of the most high-profile players in the iron space.

That's European steel giant ArcelorMittal. Who announced that it will purchase a nearly 50% stake in Guinea's massive Mount Nimba iron ore project.

ArcelorMittal will buy the mining rights from exiting players BHP Billiton and Areva SA. And join in partnership with remaining project owner Newmont Mining to advance Mount Nimba.

The move is a significant one. The Mount Nimba project contains nearly a billion tonnes of high-value direct shipping iron ore. Making it one of the biggest and likely most valuable development projects going on Earth for this commodity.

ArcelorMittal declined to mention the purchase price for the deal--but it's almost certainly in the billions. Making this a big bet for the major on a region that many players (such as BHP) have decided to take a pass on.

The move is especially surprising given recent events in Guinea. Which saw the government revoke the rights to two iron ore concessions in the north of the country earlier this year.

But ArcelorMittal is forging ahead. Although the new deal reportedly comes with a caveat--that the company be allowed to ship its mined iron across the border into Liberia. An area where ArcelorMittal already operates iron ore mines.

That's a route that Guinea's government has resisted in the past. Insisting rather that miners build billion-dollar infrastructure projects to ship iron from the Guinean coast.

We'll see how they rule on ArcelorMittal's plan. Either way, the deal shows that the prize here is big--enough for the world's largest players to take some significant risks.

Here's to rolling the dice,

Dave Forest




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Leave a comment
  • Roland on August 11 2014 said:
    http://en.wikipedia.org/wiki/Mount_Nimba
    "Mount Richard-Molard...is the highest peak of the Nimba Range...Strict Nature Reserve, forbidding tourism...rich in iron ore and cobalt....intensive mining in the Liberian portion of the mountain until reserves were exhausted in 1989." It's right on the 3-way border.

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