Jan. 30 (Bloomberg) -- Gabon is close to removing control of its largest iron ore project from China Machinery Engineering Corp. and awarding it to BHP Billiton Ltd., said an official from the African country’s mining ministry.
Gabonese officials including Mines and Oil Minister Alexandre Barro Chambrier will meet executives of Melbourne- based BHP in Cape Town early next month to complete the deal, Michel Edzang, an official at the Mining Department and adviser to the minister, said in an interview in Libreville. A spokesman for BHP, the world’s biggest mining company, declined to comment.
The West African nation started a review in 2010 of Belinga after a consultant to the government said progress developing the mine had been slow. China Machinery, which had estimated Belinga could produce 30 million metric tons of the steel-making raw material a year at a cost of about $3.5 billion, said it remained in talks on the venture.
“We’re still discussing with the Gabon government on how to solve the problems,” Cai Ning, manager of China Machinery’s engineering department, said today by phone from Beijing. “We’re waiting for their reply. We didn’t say we’re withdrawing and the project is still ongoing.”
China has strengthened ties with Africa as it seeks to secure access to the continent’s raw materials. Export-Import Bank of China loaned about $67.2 billion to sub-Saharan African nations in the past decade, according to a Fitch Ratings report in December.
A move into Gabon would mark a shift by BHP toward diversifying its production of iron ore, which is dominated by output from mines in Western Australia. Iron ore contributed 29 percent of BHP’s $71 billion in sales for the 2011 fiscal year.
The mining company may partner with India’s Abhijeet Infrastructure Ltd. in the Belinga project, which requires the construction of a railway, Edzang said in the Jan. 26 meeting. BHP is expected to start production from its manganese mine in Gabon this quarter, he said. Manoj Jayaswal, chairman of Nagpur, India-based Abhijeet Group, couldn’t immediately be reached for comment.
Minister Barro Chambrier said Jan. 14 on Radio Television Gabonaise there were “accelerated discussions” on the exploitation of Belinga, in the northeast of the country. He didn’t name the parties the government was in talks with.
“The Gabon government didn’t fulfill its part, hindering the project and making it unable to move forward,” China Machinery’s Cai said. “The truth is, we have been working on the project because the Chinese government gives high priority to this project.”
Without the Gabon government’s approvals, China Machinery lacks the legal right to proceed, Cai said.
China Machinery said in 2009 that it had signed a 25-year contract to build and operate the mine, near Gabon’s border with the Republic of Congo. As part of the accord, the Beijing-based company said it would build a 500-kilometer (310-mile) railway, a port and a hydropower station. China Machinery signed an initial agreement on Belinga in September 2006, according to its website.
Development has previously been opposed by environmentalists because Belinga lies within Gabon’s Ivindo National Park, a rain forest that is home to elephants, western lowland gorillas and chimpanzees.
--With assistance from Abhishek Shanker in Mumbai. Editor: John Viljoen
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