Business | Markets
Qatar Steel abandons Mauritania ore plans
Qatar Steel is no longer seeking a stake in the $2.2-billion Guelb Al Aouj iron ore development in Mauritania over differences about the terms of its investment, one of the project leaders said yesterday.
- By Shakir Husain, Staff Reporter
- Published: 23:42 August 21, 2008
Dubai: Qatar Steel is no longer seeking a stake in the $2.2-billion Guelb Al Aouj iron ore development in Mauritania over differences about the terms of its investment, one of the project leaders said yesterday.
Australian firm Sphere Investments, which has a 50-50 partnership with Mauritania's state-owned mining firm Societe Nationale Industrielle et Miniere (SNIM) for Guelb Al Aouj, said several global mining and steel companies are now keen to join the project following the Qatari firm's pullout.
Qatar Steel had agreed a year ago to buy a 15 per cent stake from SNIM and Sphere for $112.7 million. The company was also to receive iron ore output for its steel plant as part of the deal.
Sphere told the Dubai International Financial Exchange, where its shares are traded, that Qatar Steel is unable to formalise the agreements "on terms and conditions acceptable to Sphere and SNIM."
Huge potential
Qatar Steel is the second Gulf company after Saudi petrochemicals giant Sabic to have abandoned a bid to invest in Guelb Al Aouj, which Sphere estimates can yield one billion tonnes of iron ore and potential for similar amount after further expansion.
Sphere managing director Alexander Burns does not consider the Qatari pullout as a setback for the project.
"Many international mining and steel companies want to partner with us now. The most active ones are from India, Europe, Russia and China," he told Gulf News by phone from Australia.
The Guelb Al Aouj project will include an open cut mine and pelletising plants to produce direct reduction pellets for export.
Sphere expects to receive a better price for partly selling its share to new investors as the price of iron ore has gone up by about 80 per cent in one year.
"We will go through a competitive process and select the best partner," Burns said.
SNIM and Sphere are together offering 49.9 per cent to potential investors, the same share Sabic and Qatar Steel would have acquired if their deals had materialised.
Burns said he did not believe the recent military coup in Mauritania was a factor in the Qatari pullout.
"I doubt it very much," he said, adding that the new stake seekers are also "comfortable with the political landscape" in Mauritania.
Burns said he will be holding consultations with SNIM next week about the proposals that have been received. A deal can be expected in four to six months, he added.
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