Big turnout for tender on African iron ore rail line

Big turnout for tender on African iron ore rail line :Perth – In a sign appetite for African resources could be turning, an international tender to build a 500 kilometre rail line across Cameroon to haul iron ore will close next month, with the winner known early in 2014, said Sundance Resources.

The line leading to the Atlantic would provide the only means to export millions of tonnes of ore Sundance and other companies are hoping to mine in West Africa.

Africa’s iron ore explorers are largely out of favour with Western investors.

As a result, prospectors like Sundance, Bellzone and West African Minerals have seen their shares fall about 70 percent this year.

But a robust demand for iron ore keeping the price above $130 a tonne was again turning sentiment in favour of the sector, Sundance Chief Executive Giulio Casello said.

The tender has attracted a range of parties, including sovereign wealth funds, Chinese banks and steel companies hungry for the ore as global steel demand accelerates, said Casello.

“There is money out there,” he said .

Based on studies, it’s estimated it will cost around $4 billion to build the line and a port, according to Casello.

“The tenders will close in late December and we expect to be able to say by the first quarter of 2014 or start of the second, ‘here is our infrastructure solution,’“ Casello said.

BOON FOR CHINESE MILLS

Sundance has already spent $200 million preparing to develop its Mbalam-Nabeba mine project straddling Cameroon and the Republic of Congo.

Ore shipped by Sundance at a rate of 35 million tonnes yearly would offer mills in China and Europe an alternative supply source to Brazil and Australia’s Pilbara iron belt.

“China is screaming out for new supply sources to counter the control the Australians and Brazil have on the market,” said Keith Goode, an analyst with Eagle Mining Research.

At a grade of 62.6 percent iron, Sundance’s ore is richer than most dug in Australia and Brazil.

By comparison, a mine under development in Australia by Gina Rinehart’s Hancock prospecting contains ore grading around 58 percent iron.

GMP Securities Europe has dubbed the region where Sundance wants to mine the “African Pilbara.”

Casello said Sundance’s mine could still be built for around $1 billion and shipments could start as early as 2018 if the rail line and a port are completed in time.

A takeover by China’s Hanlong Group fell through this year, leaving Sundance to raise money though other means.

Hanlong remains its largest shareholder, with a 14.1 percent stake.

Casello doubts Hanlong will sell down anytime soon as the stock was “mortgaged to the China Development Bank, which has a desire to see the value of the project increase.”

Hanlong borrowed the money to purchase to the stock.

Big turnout for tender on African iron ore rail line

Source : www.thepost.co.za

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