MAC: Mines and Communities

At last, the Indian giant steps down from an African mountain

Published by MAC on 2010-08-08
Source: Business Standard

UN forces Tata to halt its invasion of Mount Nimba

Fifteen years ago, a number of environmental and human rights groups drew public attention to the threat mining would pose to Mount Nimba, one of Africa's most important sites of special scientific significance, long classified as a "Strict Nature Reserve".

Spanning 25 kilometres and three West African states (Guinea, Liberia and Ivory Coast) the mountain is believed to host at least 6 billion tonnes of high grade iron-ore.

The international campaign to save the area (joined by EDF of the US, Minewatch in the UK, NGOs in Guinea, and members of the IUCN) quickly dissipated, as Liberia descended into horrendous civil conflict.

However, in late 2007, the Ivory Coast government contracted with India's leading industrial conglomerate, Tata, to mine a significant part of the mountain.

Only now - two and a half years later - has the United Nations stepped in to carry out an environmental impact study of Tata's concession, forcing the company to suspend its plans.

Why has it taken so long for this to happen?

And why, of late, have we not heard from those who once warned, so vociferously, of the dangers posed by this massive proposed venture?

They can hardly argue that they weren't forewarned. See:

Tata suspends work on Mt Nimba

Business Standard

5 August 2010

Tata Steel has suspended work on Mount Nimba, West Africa's largest iron ore deposit. Rich in unique endemic species of fauna, Mount Nimba is classified as a ‘Strict Nature Reserve'.

"We have suspended all work pending an environmental report from United Nations Educational, Scientific and Cultural Organisation," said a Tata Steel official. There is, however, no timeline for the report.

In late 2007, Tata Steel inked a joint venture agreement with Sodemi, the state mining company of Ivory Coast, for development of the Mount Nimba iron ore deposit. Tata Steel has a 75 per cent stake in the project.

A technical team from the Ivory Coast had been set up for exploration and feasibility assessments, said sources. The Mount Nimba range is understood to have reserves of around six billion tonnes, with an iron ore content of 68 per cent, a few percentage points higher than India's best ore. The deposit, spread over three countries - Liberia, Guinea and Ivory Coast, was the first foreign iron ore deposit for Tata Steel.

According to the arrangement, the iron ore from Mount Nimba was to be supplied to its UK and Netherlands facilities under Corus, which accounts for 65 per cent of the Tata Steel group's production, but has no captive mines. Tata Steel's Indian operations have 100 per cent iron ore and 50 per cent coking coal security.

Tata Steel and Sodemi were eyeing other iron ore deposits in West Africa, said industry sources.

Also, Tata Steel is looking to increase its participation in its Canadian partner's, New Millennium Capital Corporation's (NMCC's), iron ore projects.

Tata Steel holds 27.4 per cent in NMCC and 80 per cent in the company's Direct Shipping Ore project.

As part of its initiative to secure coal security, Tata Steel increased its stake in Australia's Riversdale Mining to 21.8 per cent. Some production from Mozambique is also expected to flow in the next year.

The scramble for raw material security is imperative in a volatile market. When the prices of finished products tumble, raw materials prices don't come down to the same extent. Raw materials for steel companies have seen major changes over the past few years, the most dramatic being, changing the 40-year annual benchmarking contract for a quarterly mechanism. What made such a strategy shift possible was an oligopolistic scenario, where the industry is dominated by just a handful of companies.

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