Iron ore price rises on firmer steel outlook, but trade tensions cap gains
Lower Chinese steel product inventory driven by robust exports also supported iron ore prices above $100/t.
Fortescue Metals Group has held talks in Liberia on opportunities in the West African nation, though it disputes a government claim it’s already agreed to join a plan to upgrade the nation’s railways — a key step to unlock iron ore riches in neighboring Guinea.
Andrew Forrest, the billionaire founder of the world’s No. 4 iron ore exporter, attended meetings in Liberia, including with President George Weah, to discuss philanthropic work “as well as potential future economic and development opportunities,” Chief Executive Officer Elizabeth Gaines said Thursday in a statement.
Liberia said it had signed a MOU with an entity representing Fortescue and Sheikh Ahmed Dalmook Juma Al Maktoum of the United Arab Emirates
Talks were introductory and Perth-based Fortescue hasn’t entered into any specific commitments, according to Gaines. “Fortescue is not a party to any agreement with the Liberian government,” she said, adding the producer also doesn’t have any exploration tenements in West Africa.
Liberia said Monday it had signed a memorandum of understanding with an entity representing Fortescue and Sheikh Ahmed Dalmook Juma Al Maktoum of the United Arab Emirates aimed at upgrading existing railways and building new lines from the Guinean border to an existing port on the coast, according to a government statement.
Guinea has some of the world’s richest iron ore deposits, including the fabled Simandou mine that Rio Tinto Group, Vale SA and billionaire Beny Steinmetz have fought over for years, yet the nation has never exported a ton of the steelmaking material. One of the major obstacles has been the cost of building a railway to export out of Guinea, rather than using a much shorter route through Liberia.
“The memorandum of understanding, amongst other things, provides that the investors will upgrade the existing railways in Buchanan for now and will subsequently build new railways from Guinea to the Port of Buchanan without a cost to the government of Liberia,” according to the statement. Al Maktoum signed the pact, while Fortescue’s Forrest attended the ceremony, Liberia’s statement said.
Steelmaker ArcelorMittal, which has an iron ore mine in Liberia, operates an exiting line from its mine to the Port of Buchanan. ArcelorMittal has said it would let other companies use it, assuming there’s spare capacity, or they pay for upgrades.
Plans to expand the rail infrastructure come amid renewed interest in Guinea’s mineral riches. Earlier this year, Steinmetz and Guinea agreed to end their dispute in a deal that’s led mining dealmaker Mick Davis to try and develop a project there. Billionaire investor Robert Friedland is in talks with BHP Group about taking control of another asset that has sat dormant for years, while Rio is looking at new ways to develop the giant Simandou deposit.
Fortescue is seeking to apply its expertise in infrastructure and exploration to add growth in new markets, though is currently focused on work in Ecuador and Argentina, Gaines said. The producer has also committed to about A$5.5 billion ($3.9 billion) of project spending on new iron ore mines in Australia in the past 18 months.
(By David Stringer and Thomas Biesheuvel)
Comments