Chinese firm to make $2.6bn investment in Liberian iron ore mining
China Union intends to spend US$2.6bn to bring the Bong iron ore deposit to production within two years, and will also recondition the capital’s port and build a hydro power plant.
A Chinese firm will make the biggest ever investment in Liberia when it signs a $2.6 billion iron ore deal in January, the West African nation says.
The 25-year project to be undertaken by China Union <000036.SZ> will directly and indirectly create 18,000 jobs, and give Liberia an immediate cash boost of $40 million on signature.
“This is the biggest investment in our country’s history,” Richard Tolbert, Chairman of the National Investment Commission, told Reuters late on Monday.
The deal, which beat nine rival bids, will trump the world’s largest steelmaker, ArcelorMittal which is spending $1.5 billion in Liberia, also on iron ore.
Many firms have scaled back or postponed African mining projects as metals prices have crashed in the past six months, and most analysts believe a severe global recession will cut demand for industrial minerals for years to come.
Tolbert said the timing of the Chinese investment was a vote of confidence in Liberia.
“In the midst of the global financial crisis … this is really a significant sign of the attractiveness of Liberia,” Tolbert said.
SIGNATURE BONUS
Before its 1989-2003 civil war, Liberia was the world’s fifth largest producer of iron ore, and foreign investment in the mineral is a centrepiece of President Ellen Johnson-Sirleaf’s stratgegy of economic rebuilding.
China(cnmining) Union intends to bring the Bong deposit, to the north-west of capital Monrovia, to production within two years, and will also recondition the capital’s port and build a hydro power plant to supply the city, Tolbert said. He did not give details of the overall size of the Bong deposit.
Part of the deal is a $40 million signature bonus to be paid to the government, Tolbert said. “This amount will go into the government treasury for development purposes,” he said.
A $300 million signature bonus paid by China National Petroleum Corp to Niger for an oil deal earlier this year drew criticism from rights groups, who said there was insufficient transparency on how it would be spent.
President Johnson-Sirleaf has promised zero tolerance of corruption. In September, Liberia disqualified two companies from bidding for another mining project on grounds of previous “acts of violation” by the firms.
As well as iron ore, Liberia aims to develop offshore oil. Anadarko Petroleum , Hong Kong Tongtai Petroleum, Repsol and Woodside have signed exploration deals.