These are the big players circling Guinea’s iron ore riches
Investors from Robert Friedland to Mick Davis have converged on the country in a modern-day resource rush
For years, the huge iron deposits under Guinea’s mountainous jungle were practically forgotten by the mining industry. Caught up in wrangles between owners and authorities in the West African nation, it seemed the super-rich ore might never be dug up. That all changed in 2019, as investors from billionaire promoter Robert Friedland to legendary dealmaker Mick Davis converged on the country in a modern-day resource rush.
For the first time in years, projects such as Simandou — Guinea’s crown-jewel deposit — might finally be developed. That would have huge implications for Guinea, which is facing political upheaval as President Alpha Condé pushes for a third term, and the global iron ore industry. The new tonnes threaten to arrive just as steel demand is cooling, and the high-quality iron ore buried in Guinea will pile pressure on existing miners.
Here’s a run-down on the biggest names circling Guinea’s iron ore riches:
- The Bauxite Tycoon — Fadi Wazni. The story: Wazni is the chair of the SMB-Winning Consortium, a group that’s rapidly developed a bauxite mining business in Guinea in just half a decade. It’s won the right to develop parts of Simandou, but it will require much money to make it happen. The plan: The group plans to eventually mine 100-million tonnes a year — making Guinea the world’s third-biggest iron ore shipper, behind just Australia and Brazil. The plan will require spending of $14bn. The catch: An initial $8bn project, including a 650km railway stretching across the country, still needs to be financed. Nonetheless, Wazni says the company plans to start work on the rail as soon as April and is in talks with partners for funding. “The SMB Consortium have transformed the bauxite market in a matter of two years,” said Tyler Broda, an analyst at RBC Capital Markets. “This is a big deal. This is something that can significantly change the dynamic for iron ore.”
- The Mining Legend — Mick Davis. The story: The former Xstrata CEO was one of mining’s most successful operators and dealmakers, but struggled to re-establish himself since selling to Glencore. The plan: Davis’s Niron Metals is studying development of the Zogota iron ore mine, a smaller project that could produce about 20-million tonnes a year. An assessment of the mine’s economic viability is expected to be completed soon. The sweetener: Davis has already agreed on an export route through Liberia with both governments. “Mick’s involvement rang a bell,” said Marcos Camhis, whose private equity fund owns 25% of Niron. “This market is now open. Serious people are looking at it again.”
- The Billionaire Promoter — Robert Friedland. The story: Friedland has been involved in some of the biggest mining discoveries in the past three decades. In September, Friedland’s High Power Exploration won rights to develop the Nimba deposit. The plan: HPX plans to build a “starter” mine of 1-million to 5-million tonnes a year as quickly as possible, while feasibility studies are being completed for an expanded operation of at least 20-million tonnes annually. Friedland “certainly has the track record and reputation to garner investment interest”, said Ben Davis, an analyst at Liberum. “But this will certainly be a stretch.”
- The Miner — Rio Tinto. The story: Rio Tinto owns the other half of Simandou not controlled by SMB. The latest: Rio has begun looking at new ways to develop the mine, with a focus on options to export ore out of the country. Wazni says he’s had talks with Rio and sees it as a natural customer for his rail line. The dilemma: The SMB plans pose a challenge for Rio. A rival developing the deposit will threaten its position as one of the largest producers. Yet shareholders are unlikely to welcome any plans to pour billions of dollars into Guinea. “Rio is completely in a dilemma,” said RBC’s Broda. “It doesn’t make sense for them to put more tonnes into the market just to protect their market share.”