"Severstal" goes to Africa

Liberia President Ellen Johnson-sirlif signed a law on Severstal's permission to extract iron ore at the PUTU deposit, the Kommersant newspaper writes with reference to the company's message.

Putu resources are estimated at 1 billion tons of ore with iron content 37.6%, but these are preliminary parameters: the field is less than half explored. Severstal plans to start industrial production and processing of ore in 2017. Estimated capacities - 20 million tons of pellets per year. The exact parameters of the project will become known after the completion of the preliminary technical and economic justification (FEO) in 2012. The amount of investment is 2.5 billion dollars, it includes the construction of the GOK and related infrastructure.

Severstal gained access to the library deposit in 2008, having redeemed 61.5% from African Iron Ore Group (renamed Saverstal Liberia Iron Ore, 38.5% belongs to African Aura), which owned a license for exploration, in 2008 for $ 38 million today. Putu has another $ 30 million. In addition, in Africa Severstal, 93.3% Crew Gold, producing gold in Guinea, the share in the gold mining company Core Mining, leading exploration at two iron ore deposits in the Congo and Gabon.

Negotiations with the Government of Liberia on obtaining permission to prey were difficult and lasted more than a year, explained Boris Granovsky Director for Strategy of Severstal Resource. The main reason for the disagreement was the size of the tax rate: "Severstal" asked for special conditions taking into account the size of the investment. We agreed by 25% from profit, while in Liberia this tax is usually 30%. The company is also obliged to pay royalties in the amount of 4.5% of sales. Conditions enter into force after the training of a feasibility study for 15 years. Then they can be reviewed every five years.

In terms of reserves and quality of Putu ore, an interesting project, says Boris Krasnozhenov, analyst Renaissance Capital. For example, he notes, in Russia the content of iron in ore is no more than 30%, and in China they also work with 10%. The field is 120 km from the sea, which makes it convenient in terms of logistics, adds Dmitry Smolin from Uralsib. Asia and Europe will be the main sales markets, Boris Granovsky says. In the future, Severstal can build its own port in Liberia, a source in the company added.