Solid Minerals
Guinea and Rio Tinto Seal $20 Billion Mine Deal
LONDON – A landmark agreement on Monday has brought an end to three years of contractual wrangling over how best to develop Africa’s biggest mining project, a $20 billion iron-ore deposit nestled in the remote forests of Guinea.
But even though Monday’s deal resolves years of contractual uncertainty, it sets a new challenge: Finding deep-pocketed investors willing to spend tens of billions of dollars building the railroad and port needed to make the huge deposit economically viable.
For months, Rio Tinto and its partners Aluminum Corp. of China Ltd. , or Chalco, and the International Finance Corp., the private-sector arm of the World Bank, have been in talks with President Alpha Condé’s reformist government to figure out a way for the Simandou mine to be financed and executed.
Rio Tinto currently holds a license to mine around half of the deposit, around $10 billion worth of iron ore at current prices. The infrastructure and mining project will cost an estimated $20 billion to build, of which two-thirds is infrastructure costs.
Part of the new plan unveiled on Monday is to create a new consortium to fund and manage the construction of a 650 kilometer railway from the mine to Guinea’s Atlantic coast, as well as building a deep-water port to ship the iron ore to China and Europe.
Rio Tinto and its partners will now pitch this idea to potential financiers. Investors will be offered decades of steady yields, generated through tariffs charged on goods transported by rail, all the while helping one of the world’s poorest countries transform its economy.
“We are already in serious talks with around 30 different institutions,” said the person, who wasn’t authorized to speak publicly on the matter.
Sovereign-wealth funds, private equity, iron-ore customers and export credit agencies are among those who have been approached, said the person, though they declined to specific which ones.
In a phone interview, Guinea’s Mining Minister Kerfalla Yansané said U.S. giant General Electric GE 0.00% had already expressed an interest in participating in the new consortium.
GE couldn’t wasn’t immediately available for comment.
Concluding a financing deal could finally push the mine into production by early 2019, bringing in foreign investment and creating tens of thousands of jobs.
“This project is of critical importance for the people of Guinea. It’s a nationwide priority that goes beyond the mines and far beyond our generations,” said Mr. Condé.
By linking a publicly listed multinational with a Chinese state-owned company and a global development financing body, Monday’s deal breaks new ground in bringing together a disparate set of groups whose African interests don’t always converge.
“Today is an important milestone in the development of this world-class iron ore resource for the benefit of all shareholders and the people of Guinea,” said Rio Tinto Chief Executive Sam Walsh.
The pact, which will have to be ratified by parliament, consolidates a dizzying array of existing agreements signed with Mr. Condé’s predecessors. It also hands Guinea a significant share of the project, potentially growing to a 35% stake over the next 20 years.
Simandou has had a fraught history since Rio Tinto first secured exploration rights in 1997.
Already stymied by the lack of rail and port infrastructure, plans to turn it into a working mine have been further complicated by political upheavals, commodity-price volatility and contractual wrangling.
Mr. Condé, a veteran opposition leader elected in 2010 on a promise of securing fairer deals for Guinea’s mineral riches, has sought to promote an agenda of transparency and good governance. However, Guinea’s recent history contains enough examples of broken government promises to make some funders cautious.
The architects of the deal, senior executives at Rio Tinto and the IFC, say that was part of the reason they sought to conclude a clear and legally watertight framework agreement before raising the financing.
“This agreement is bankable, if it gets ratified by parliament. It’s a very solid framework. We haven’t had that yet. It enables us to have discussions with potential lenders,” said the executive at the IFC.
– WALLSTREET JOURNAL
The Nigerian Government has threatened to come down heavily on foreigners sponsoring bandictory as a way of sustaining illegal mining activities in parts of the country.
The warning was handed down in Abuja by Minister, Solid Minerals Development, Dr Oladele Alake, while receiving a delegation of the Nigeria-China Chamber of Mines led by its National President, Dr. Olugbenga Ajala.
Details of these were contained in a statement released by Head, Press & PR, Ministry of Solid Minerals Development, Alaba Balogun over the weekend.
The statement cited, Dr Alake, thus, “The government will come down firmly on these unscrupulous foreign operators sponsoring banditry to perpetrate illegal mining: let me use this medium to appeal through you to tell those sponsors to desist or face the full wrath of the law.”
According to Dr Alake, the Ministry is committed to establishing a multi-agency task force that will end the activities of illegal miners and their collaborators.
The Minster made it clear that the FG had given illegal miners a 30-day-ultimatum to legitimise their businesses, quit Nigeria or incur the wrath of the law.
According to him, this will help “to streamline and structure the Small-Scale Artisanal Miners for maximum yield to the Federal Government.”
The delegation paid a courtesy call on the Minsiter at the Ministry’s headquarters in Abuja.
By Edozie Obasi-Eze
Amidst heightening uncertainties in the domestic petroleum products market characterised by scarcity and irregular pricing, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has declared that there’s no intention to review pump prices upwards.
This was contained in an advisory issued by General Manager, Corporate Communications, NMDPRA, Kimchi Apollo.
He stated that the Nigerian National Petroleum Corporation Limited (NNPCL) had imported PMS with current stock levels sufficient for 34 days.
In an attempt to address panic buying and speculations which have seen price of Premium Motor Spirit (PMS) oscillate between N180-N250 in the Lagos area, Apollo assured that there was enough quantity of the product in the country already.
He said, “Consequently, marketers and the general public are advised to avoid panic buying, diversion of products and hoarding.
“In keeping with the Authority’s responsibilities as outlined in the Petroleum Industry Act (PIA), the Authority assures the public that it would continue to monitor the supply and distribution of petroleum products nationwide, especially during this holiday season.”
The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) says it is verifying and reconciling revenue collections in the Solid Minerals Sector of the economy.
The Federal Commissioner, RMAFC, Chief Tokunbo Ajasin, stated this at a strategic meeting on the commission’s 2022 nationwide monitoring of revenue collections of the Nigerian mining sector in Akure on Monday at the state Ministry of Finance Conference Hall.
This is contained in a statement by Mr Banjo Egunjobi, the Head of Media Unit of the ministry.
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Ajasin said 25 enterprises exported minerals in 2019 with no record of royalty payment, while about N2.76 billion outstanding liabilities had been established against 2,119 mining companies nationwide.
He said that this arose from failure to pay the Annual Service Fees for their company titles.
According to the Federal Commissioner, the Commission is empowered to monitor all revenue accruals from the extractive industries to ensure prompt and accurate remittances to the Federation Accounts.
He added that the monitoring was a follow-up on the 2016 exercise to assess the challenges hindering optimum revenue collection from the sector.
Ajasin said the monitoring comprised revenue collections and the activities of miners in the state.
According to him, the major issues of concern to the Commission is the Nigeria Extractive Industries Transparent Initiative NEITI 2020 report.
He added that the number of defaulting companies would be determined after engagements.
“There is also the issue of underpayment of royalty by 25 enterprises that exported minerals in 2019 with no record of royalty payments.
“These companies owe the government about N482 million in overdue royalty.
He said the 2,119 mining companies’ default nationwide arose from the failure to pay the annual service fees for their respective mineral titles.
Ajasin also said the Commission’s mandate in the extractive sector was to recover the established liabilities owed to the Federation Account.
He, therefore, urged participants to explore the opportunities in the state to harness the revenue potential in the Solid Minerals sector to boost Internally Generated Revenue.
The State Commissioner for Finance, Mr Wale Akinterinwa, stated that the process of allocating the 13 per cent derivation on crude oil paid to the states across the federation depended on the effective monitoring of revenue and the collection of established liabilities from mineral resources.
Akinterinwa noted that the cooperation given by the state Ministry of Finance, Ministry of Energy, Mines and Mineral Resources and others to enforce payment of the reported liabilities would assist in fulfilling the objectives of the exercise and a means of engaging some Strategic Revenue Drive for the state.
The commissioner said the present administration of Gov. Oluwarotimi Akeredolu would do everything at its disposal to facilitate the collection of revenue as listed in the NEITI Audit Report 2022.
He, therefore, urged stakeholders to accord full cooperation to the RMAFC team and be committed to achieving the desired goal.
Also the Permanent Secretary of the Ministry, Rev. Jide Ekpobomini, said sourcing for a quick alternative to all income was necessary and could not be overemphasised.
He said government revenue inflows would surely be boosted if the sector was vigorously harnessed.
Also his counterpart from Ministry of Energy, Mines and Mineral Resources, Mr Wemimo Ogunsanmi, said the state government had initiated a strategic mineral development plan to exploit the solid minerals sector, hence the establishment of the ministry.
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