Chinese steel giant Shandong Iron and Steel Group has acquired the remaining 75 per cent stake in the Tonkolili iron ore mine from mining giant African Minerals Limited (AML), reports Tuesday indicated.
The deal involving over $170 million reportedly increased the Chinese`s control on the vast iron ore resources in Sierra Leone`s Tonkolili District to 100%. It also means Shandong will assume control of AML`s associated infrastructure company African Port and Railway Services, a press release by the Shandong-based steel manufacturer said.
Shandong`s immediate plans include an over US$600m funding to embark on Phase 2 of the Tonkolili Project, which will see production increased to 25 million tonnes a year.
The change of hands in the ownership of what is the largest investment in Sierra Leone`s mining sector follows months of financial problems within AML, owned by Romanian-British businessman FrankTimis.
AML last month announced the appointment of administrators, meaning it went into administration, another term for liquidation, after failing to repay Shandong, which was its lender and partner in the Tonkolili project. At the time, the Chinese firm had 25% stake in the project when in 2011 it funded the AML railway project with in a $1.5 billion deal.
The downfall of AML, until now dubbed the largest single employer in the private sector in Sierra Leone, had worried many, particularly the government, which feared over the loss of revenue and jobs for the youths.
Fall in global iron ore prices had been blamed largely for problem. But the impact of the Ebola outbreak was said to have worsened it.
Tonkolili is said to be the second largest iron ore mine in Africa with one of the largest magnetite deposits in the world.
State House last month announced that work at the mine was to commence sometime this month for the long break occasioned by the problem.
© Politico 22/04/15
