The Russian steel and mining company Severstal has announced that it has signed a 25-year mineral development agreement for the Putu iron ore project with the government of Liberia in Western Africa. Severstal has held a 61.5 percent interest in the project since 2008, following the expenditure of $30 million in a pre-feasibility study.
Exploration completed thus far at the Putu project indicates a mineral resource of 1.08 billion mt of iron mineralization at an average grade of just under 40 percent. A pre-feasibility study on the project should be completed by September 2012.
Meanwhile, UK- and Canada-listed African Aura Mining, which holds 38.5 percent in the project, said bringing Putu into production would require up to $2.5 billion in capital expenditure. A 3.56 percent interest in African Aura is held by Severstal.
The expectations from the site are 20 million mt per year of magnetite concentrate production.
"Given that the global market is experiencing an iron ore shortage, this can be a very profitable venture for Severstal," UralSib Financial Corporation analyst Dmitry Smolin said, adding that Africa could become one of the major players in the iron ore market within three to five years.
In May 2010, Severstal acquired a 16.5 percent interest in Core Mining Ltd., which controls exploration licenses for the Avima iron ore deposit in the Republic of Congo and the Kango iron ore deposit in the Republic of Gabon., while on September 14 the company raised its stake in Crew Gold Corporation, operating in Guinea, to about 93.38 percent.