Mick Davis Moves Closer to Iron Ore Mining With Liberian Deal

MONROVIA (Capital Markets in Africa) – Mining dealmaker Mick Davis has won permission to export iron ore from a planned mine in West Africa, adding momentum to the industry veteran’s comeback.

Davis, through his new Niron Metals vehicle, has signed an agreement with Liberia that will allow him to use a rail and port to export iron ore from the mine that he’s seeking to build in neighboring Guinea, according to a statement. The Zogota project, where mining giant Vale SA has already spent hundreds of millions of dollars, could be brought on quickly and relatively cheaply.

“This MOU is an important milestone in our plans to develop the Zogota project,” Davis said. “We intend to complete our feasibility study within six months and continue to work with relevant stakeholders to bring Zogota rapidly into production for the benefit of all.”

Earlier this year, a remarkable make-up deal between billionaire mining tycoon Beny Steinmetz and the Guinean government, ending a seven year dispute, gave Davis the opportunity to relaunch his mining career. As part of the deal Davis stepped in to develop the Zogota iron ore mine, but its economic viability has always rested on shipping out via neighboring Liberia using existing infrastructure.

The rail and port are currently operated by steelmaker ArcelorMittal, which has its own iron ore mine on the Liberian side of the border. The company has previously said it would let other companies use it, assuming there’s spare capacity, or they pay for upgrades. The Liberian government said that it will start discussions with the steelmaker.

“Feasibility studies will be available in three to six months,” according to a statement released on Tuesday by Guinea’s Mining and Geology Ministry after a visit by Mining Minister Abdoulaye Magassouba and Niron Metals officials to Zogota last week.

Zogota, which could potentially produce about 20 million tons a year, is unlikely to be the only target of Niron, which Davis set up with Switzerland-based Fos Asset Management founder Marcos Camhis and Varda Shine, formerly of diamond giant De Beers.

While Guinea has some of the world’s richest iron ore deposits, including the fabled Simandou mine that Rio Tinto Group, Vale and Steinmetz have fought over for years, it has never exported a ton. One of the major obstacles has been the cost of building rail to export out of Guinea rather than through Liberia, a much shorter route.

Davis made his name as Xstrata Plc’s chief executive officer, where he took a debt-laden coal miner and built it into a $50 billion giant before a friendly takeover by Glencore Plc. Yet he lost out on the CEO role of the new company. Since then his private-equity vehicle, X2 Resources, folded after failing to make any deals and in 2017 he was on the cusp of being appointed Rio Tinto ’s chairman, before falling victim to a shareholder revolt.

Source: Bloomberg Business News