An iron ore train travels across the desert. In quest of the iron ore, Russia’s steel giant Severstal has arrived in Africa.
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Looking for Iron Ore, Severstal Reached Africa
In quest of the iron ore, Russia’s steel giant Severstal has arrived in Africa. The company pays $37.5 million for Putu Range iron ore deposit in Liberia with the estimated reserves of 500 million tons. The analysts speak of the outstanding cheapness of the acquisition but specify that the costs of the project implementation may bring to naught that advantage.
Russia’s Severstal announced Friday an intention to buy out 61.5 percent in African Iron Ore Group Ltd (AIOG), which, via its subsidiaries, is entitled to the geological survey and exploitation of the iron ore deposits in Putu Range, Liberia, with the estimated reserves of above 500 million tons of ore. The deal budget will amount to $37.5 million.
What’s more, acting via Lybica Holding B. V., Severstal is willing to become a minority holder at Mano River Resources Inc. (which currently controls AIOG) by acquiring 6.29 percent in that African company for £2 million ($4.12 million). In addition, Severstal may buy out additional 6.29 percent during 18 months.
In Severstal, they said they are buying out the stocks both from Mano River and private investors that own 20 percent in AIOG. Of the amount paid to Mano River, $15 million will go for the geological survey and preparation of the feasibility study for the deposit.
Incorporated in the British Virgin Islands, Mano River Resources Inc. has the stocks quoted at TSX in Toronto and AIM in London. It deals with projects related to mining gold, rough diamond and iron ore mining in Liberia, Sierra Leone and Guinea. The assets are worth $45 million.
Although the explored reserves of Putu Range aren’t impressive, in Severstal, they expect the investments to pay back after the geological survey. The plans are to annually mine up to 10 million tons to 20 million tons of iron ore concentrate and ship the ore to the company’s plants in the United States and Western Europe or sell it to external consumers.
www.kommersant.com
All the Article in Russian as of May 26, 2008
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