Liberia says signs $3 bln iron deal with BHP

The Business of Mining - thebusinessofmining.com | June 15, 2010 | 8:05 am

“Mining giant BHP Billiton has signed a deal with the government of liberia to go ahead with a $3 billion iron ore project, an official in the west african country said on monday.

The mineral development agreement (MDA) will allow BHP Billiton to continue exploring for iron ore at Goe Fantro, Kintoma, St. John River South and the Tolo Range, National Investment Commission chairman Richard Tolbert said.”

Source: Reuters, June 14 2010

Observations:

  • According to the newspaper the Australian the mineral-development agreement covers taxes, duties and other trade terms to develop four iron-ore deposits.
  • BHP’s announcement comes days after announcing $12 bln investments in the Canadian potash business. However, for both announcements the actual cash to be spend is still very much uncertain.
  • BHP has not yet confirmed the deal on its own website.

Implications:

  • Iron ore miners are stepping up there efforts to gain access to deposits outside Australia, which is threatening to significantly increase mining taxes.
  • Liberia and neighbouring Guinea host some of the best iron ore deposits yet to be mined. The unstable political situation in the countries have long kept the large diversified miners from pursuing investments in the area. However, current government seems to be willing and able to close long term deals.

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