Bridge the gap - Cameroon iron ore challenges
In west-central Africa, exploration has revealed an emerging iron ore province extending from the Atlantic margin of Cameroon to the north and western part of the Republic of the Congo, which could prove to be on a similar scale to the Pilbara in Western Australia.
The resources are based upon Archean (more than 2,500 million years old) metamorphosed banded ironstone formations (BIFs). These BIFs occupy a broad semi-circular belt in the south of the country and into Congo, representing the northern part of the Congo craton and comprising gneiss, granulites, granites and granodiorites cut by mafic volcanic rocks typical of a greenstone terrane. Known in Cameroon as the Ntem formation, it dates between 3.6–2.8 Ga. Overlying the greenstones in a non-uniform manner are Proterozoic carbonates, sandstones, conglomerates, shales and the Bélé LIbongo tillite (glacial deposits).
Of particular economic note within the Ntem group are extensive BIFs that were first identified in bilateral studies between internationally operating geological agencies such as the BRGM (France), BGR (Germany) and the United Nations Development Programme. Today, a number of companies have obtained licences covering these extensive iron ore deposits in Cameroon as well as over the border in the Democratic Republic of the Congo. Demand for iron ore is driving these projects forward, with the principal market, China, taking the majority of the seaborne trade, which accounts for more than one billion tonnes each year. In the past, the price of iron ore was determined in negotiations between the major seaborne producers in Australia and Brazil with the steel mills in Asia – chiefly Japan and China. The market is supplier-led, following the initiation of a spot market and consequent volatility in prices. Although the exponential growth in Chinese industry and urbanisation is now beginning to slow, there is still strong demand and record prices. Furthermore, the cost of raw materials in steel making, iron ore and metallurgical coke now represent a much higher proportion than they did a decade ago.
Luis da Silva, CEO of Afferro Mining, is fully aware of these opportunities and their challenges. ‘Afferro has four licences in the south of Cameroon covering 1,470km2, including ownership of the advanced Nkout project, which has a preliminary resource statement indicating resources of 1,200 million tonnes grading 32.9% Fe, and inferred resources of 1,330 million tonnes at 30.3% Fe.’ The principal ore within the BIF is magnetite, which is easily upgraded to a saleable concentrate in test work. The resource extends over 8.9km to a depth of 680m within the target pit. The planned operation is to drill, blast and truck to an on-site concentrator for shipping to overseas markets. The deposit also has the potential to produce direct shipping-grade ore from a high-grade 25.1Mt weathered cap grading 57.7% Fe.
Power requirements in processing are also important, and are dependent on the grade and hardness of the ore. The Bond Work index of the ore at Nkout is around 12-13KWh per tonne of ore, while recovery rates are 80–90% at >70% Fe product. ‘With open-pit mining and excellent metallurgy, we expect low production costs,’ says da Silva. ‘Our current programme of bulk testing should be complete by the end of the year and will allow us to factor our attractive metallurgy into our prefeasibility study in 2013.’
Getting from A to B
Transport infrastructure is also a critical component in developing new bulkcommodity mines where values per tonne are low, such as iron ore at US$100/t and coal at US$80/t. There are a number of well-tested solutions but all require a port and, at some stage, a rail link. The use and upgrading of existing rail structure has been successful elsewhere, for example when Fortescue Metals Group obtained access to the Rio Tinto rail link in the Pilbara, Western Australia. These tend to be the lowest-cost options, with the proviso that transport tariff pricing is transparent and fair. Existing links may not have the spare capacity for a project, as was experienced by Kumba Iron Ore in South Africa, which uses a state-owned railway. Upgrading existing rail structure is also possible, something that was undertaken by African Minerals in their Tonkolili iron ore project in Sierra Leone, which renovated 74km of old rail and connected it to 125km of new rail – although this will have to undergo a further upgrade to support the heavy-gauge trains needed for phase two of the project.
If the iron ore concentrate is fine-grained then a slurry pipeline might be the answer, as was used in the Minas Rio project in Brazil as well as in a number of projects in Australia. Although competitive in price, their disadvantage is the sole use of carrying concentrate. Most developing countries, particularly those in Africa, need rail infrastructure to assist economic growth. Road haulage may be an answer, which is extensively used in Western Australia for distances up to 150km where the topography is relatively flat and the climate dry. Trucking in a hilly and wet climate such as Cameroon may have its own problems. Using river links and coastal waters with barges offers a low-cost transport option but entails loading/unloading costs. It is being trialled by London Mining at its first-phase Marampa, and is extensively used in Indonesian coal operations.
Spreading the cost
The Afferro preferred option is to share infrastructure costs. Sundance Resources is developing the Mbalam project, whose Mbanga mine site is located some 510km from the Cameroon port of Kribi. Planned production is 35Mt per year to be railed to Kribi, where an iron ore export terminal will be built to load 300,000t ships. The company is in negotiations with Hanlong Mining and the China Development Bank to establish an iron ore corridor in southern Cameroon.
Other companies, including Core Mining’s Avima project and BHP Billiton’s Belinga project (in Congo and Gabon respectively), will have similar interests in sharing this corridor to deep water. This link is part of the Sundance definitive feasibility study, and envisaged shared use via the construction of links to developing mines (Nkout will be 20km from the proposed route) and passing loops to allow 100Mt a year capacity. A common iron ore terminal would also be shared.
‘Infrastructure financing is key to the development of the west-central African iron ore region,’ says da Silva, and there are several examples of this. In Sierra Leone, African Minerals has secured phase one with a US$417 million loan, including US$293 million by China Railway Materials Commercial Corporation. Shandong Iron and Steel has also offered US$1.5 billion for 25% equity and discounted off-take. In Canada, Alderon sold a 25% stake in the Kemi project for US$120 million to Hebei Steel (see October 2012 Materials World), while at the Zanaga project in the Congo, Xstrata is to invest US$106 million to partially fund the feasibility study for 50% plus one share of the company.
‘It is our intention to seek a joint venture partner to take Nkout forward,’ says da Silva. The Cameroon Government continues to be pro-active in developing this iron ore province and is currently building a multi-use port near Kribi. Afferro has been assured of third-party access to the port, as well as rail infrastructure at competitive rates. The Afferro management is experienced in managing such jointventure relationships – in late 2011, the company sold its minority stake in the Putu iron ore joint venture in Liberia to majority partner Severstal, three years after it started and having added significant value to the project.