FREETOWN, Sept 9 (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: Quote, Profile, Research, Stock Buzz) and
African Minerals (AMIq.L: Quote, Profile, Research, Stock Buzz) 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: Quote, Profile, Research, Stock Buzz), 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.
