Lakshmi Mittal
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Mittal beats Kumba to Faleme iron ore
Allan Seccombe
Posted: Fri, 23 Feb 2007

[miningmx.com] -- ARCELOR MITTAL has signed binding agreements with the Senegalese government to develop an iron ore mine at Faleme deposit of some 750 million tonnes in that country at a cost of $2.2bn, the company said on Friday.

""We are delighted at having signed the binding agreements with the State of Senegal in Dakar yesterday (Thursday) and are now looking forward to moving forward with this important project. Once completed, the Faleme project will prove to be an important and competitive source of iron ore supplies for our European plants," said Lakshmi Mittal, CEO of Arcelor Mittal.

"This project is an important step in our strategy of creating West Africa as a mining hub for iron ore supplies to our steel plants around the world. We are confident Senegal will prove to be a strategic location to extend our existing footprint in the promising West African markets," he said.

South Africa's Kumba Iron Ore had recently resumed limited drilling of the Faleme iron ore deposit as talks with the government over who can access the concession continued, management said last week.
perhaps it's not such a bad thing
However, analysts said the Faleme project had not featured in their view of Kumba, being that it was only likely to be developed beyond 2010.

"For Kumba, it's disappointing, but it shouldn't change their share price. Faleme was never in my base case anyway," said an analyst. "It puts a bit of a dent in their hopes of meeting whatever iron ore targets they've been talking about."

"They've got no experience of developing any iron ore mines anywhere except South Africa, so perhaps it's not such a bad thing," the analyst said. "A significant point is that it brings another iron ore producer onto the market."

Kumba, which is majority owned by Anglo American, had the project in its growth pipeline.

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Kumba and state-owned project development company Miferso had signed an agreement in July 2004, exploring the potential for a mine at Faleme. Kumba’s board had given the nod to a bankable feasibility study for the project and the associated infrastructure to get the ore to the coast some 750 km away.

However, Miferso, a , which owns the deposit and with whom Kumba had an agreement, subsequently signed a memorandum of understanding with Mittal to develop the deposit.

Ironically, Mittal is Kumba's largest South African customer and has rights to ore at just above cost price.

"The project is an integrated mining project and will encompass the development of the mine, the building of a new port near Dakar and the development of approximately 750 km of rail infrastructure to link the mine with the port," Mittal said in a statement posted on its website.

Production at themine will start in 2011, it said, and will achieve production capacity of between 15 million and 25 million tonnes at peak operations.

"The Company will also consider selective investments in the downstream steel facilities," it added.