Sierra Leone cautious on mining windfall estimate

Wed May 4, 2011 4:09pm GMT

* Finance Ministry more cautious than company estimate

* Revenues depend on project timing, ore prices

By Simon Akam

FREETOWN, May 4 (Reuters) - British miner African Minerals AMIq.L has told Sierra Leone the country can expect $1 billion in revenues from its iron project by 2015, but the government is sticking with lower forecasts for now, documents show.

African Minerals bills its Tonkolili site as the world's largest deposit of magnetite, with 12.8 billion tonnes of the ore, and said last month initial production in the West African country was due to start later this year. [ID:nLDE73B0K9]

Phase I is expected to gradually ramp up to annual output of 12 million tonnes of ore. Phase II is due to boost production to 23 million tonnes though its timing is dependent on financing arrangements which have yet to be put in place.

"Subject to variables such as iron ore pricing and the timing of the company's development of Phases I and II, payments to the government could total $1 billion over the next few years," African Minerals told Reuters in an April 29 email. It said Phase II could begin 30 months after finance is in place.

Key iron ore indices, based on spot Chinese deals and which global miners use in setting contract prices, rose on Tuesday. Metal Bulletin's 62 percent index .IO62-CNO=MB gained 28 cents to $181.73 a tonne, the highest since April 12.   Continued...

Powered by Reuters AlertNet. AlertNet provides news, images and insight from the world's disasters and conflicts and is brought to you by Reuters Foundation.