UK-based London Mining Plc. has announced that Saudi Arabian General Investment authority (SAGIA) has approved the creation of its earlier announced 50:50 JV company with Saudi Arabian National Mining Company (National Mining), called Saudi London Iron Ltd (SLI), for the development of the Wadi Sawawin iron ore project near the western coast of Saudi Arabia.
SLI, targeting production of up to 20 million mt per year of DRI pellets, is currently undertaking a bankable feasibility study for the first five million mt per year pellets with feedstock from the Wadi Sawawin open pit mining project. The study is expected to be completed by the end of this year.
Moreover, SLI has concluded a strategic memorandum of understanding with Saudi Advanced Production for Iron & Steel Ltd. (SAPIS) according to which SAPIS is to purchase the entire production of SLI for the lifetime of the mining rights. The prices will be based on the international iron ore pellet price (Vale benchmark for Europe) plus a premium to be agreed to reflect transportation savings due to the location advantage for local customer supply.
Under the terms of MoU, SAPIS will secure a developer, which will invest all capital to bring the project in question into production. In addition, the company is also to secure all equipment necessary for mining and pelletizing operations and also for jetty/port operation required by SLI.
SLI is to provide and recover to SAPIS the long term cost debt funding from sales of products.