BlackRock World Mining manager Catherine Raw has had to defend a disastrous investment in Sierra Leone iron ore miner London Mining, which has cost the trust nearly $120m in writeoffs:
Raw said London Mining had been hit with a ‘confluence of events that happened incredibly quickly’. She pointed to the 40% fall in the iron ore price over the year, London Mining’s failure to ramp up operations quickly enough, and the spread of the Ebola virus, which hampered the company’s attempts to find an investor.
She said that while the BRWM team had factored in a possible slump in the iron ore price when examining the investment, it had not anticipated a shock like the Ebola outbreak.
Raw added that while they were aware when making the investment that London Mining may have needed to call on external funding, mining giant Glencore’s contract to buy iron ore from the company had appeared a likely source. However, it was a dispute between London Mining and Glencore over this contract that precipitated the company’s problems.
London Mining’s Marampa mine, which boasts a billion tonne resource, is about 120 km from Freetown, the capital of the West African nation.
The Marampa mine is a brownfields site formerly operated by the Sierra Leone Development Company (DELCO) and William Baird between 1933 and 1975.
Marampa reached a peak production of 2.5mtpa before low iron ore prices forced its closure.
Continuing weak market economics and civil war prevented redevelopment of the mine until the mining licence was acquired by London Mining in 2006.
Continue reading Raw: we won’t make London Mining mistakes again – Citywire Money.