LONDON (Reuters) – The Republic of Liberia has signed an outline deal with a new venture set up to mine iron ore in Guinea to be shipped via Liberia, an export route the Guinean government has vetoed for years for the much larger Simandou project.
The Zogota iron ore project in Guinea is being developed by former Xstrata boss Mick Davis through his Niron Metals venture.
Following a pledge on economic cooperation by the presidents of Guinea and Liberia at the start of the month in Dakar, an announcement on Thursday in London said the Liberian government and Niron Metals had signed a memorandum of understanding regarding the passage through Liberia of iron ore from the Zogota deposit.
Chairman of the Liberian National Investment Commission Molewuleh Gray said the government would begin talks with the railway and port operators relating to third-party access.
Davis, also chief executive of Britain’s ruling Conservative Party, said the agreement was a milestone in development of Zogota. He said the aim was to complete a feasibility study within six months and bring it rapidly into production.
Davis headed mining company Xstrata before its merger with Glencore and then set up private investment vehicle X2, which failed to make any deals.
The Guinea project marks a relaunch of Davis’ mining career and opens up the prospect of iron ore mining, overshadowed for years in Guinea by the failure to exploit the giant Simandou project.
Simandou has been hindered by years of legal wrangling as well as the $23 billion cost of the required infrastructure to export through a Guinean route.
Guinea has stuck to its view that ore mined from Simandou must be shipped via the country’s own ports, but has said the much smaller Zogota, which is located further south, would be permitted to send its ore through Liberia.
The Zogota project’s shorter export route would rely on Liberian rail infrastructure owned by Arcelor Mittal. Arcelor Mittal could not immediately be reached for comment.