Australian Billion-Dollar Iron Ore Company Denies MOU with Gov’t

Fortescue Metals Group Ltd. billionaire founder, Mr. Andrew Forrest

The fourth largest global iron ore exporter, Fortescue Metals Group Ltd., has denied reports from the Liberian government that its billionaire founder, Andrew Forrest, has signed a Memorandum of Understanding (MoU) to indicate its agreement to join a plan to upgrade the nation’s railways — a key step to unlock iron ore rich deposit in neighboring Guinea.

On Thursday, July 18, a statement released by the Liberian government said Mr. Forrest has “expressed delight and joy for the smooth kick-off of investment discussions between his party, and the Government of Liberia (GoL) after a live coverage of their arrivals on Sunday, July 14 at the Roberts International Airport (RIA). The President’s office also posted 15 minutes of live coverage of Forrest’s arrival.

“I am here to grow your economy,” Forrest is said to have told local media after the signing ceremony. “I am here to grow your social services, and to grow the standard of living of the Liberian people.”

According to Bloomberg, Andrew Forrest, the billionaire founder of the world’s #4 iron ore company, attended meetings in Liberia, including the one with President George Weah to discuss philanthropic work, as well as potential future economic, and development opportunities,” Chief Executive Officer Elizabeth Gaines said Thursday in a statement.

“Talks of introductory and Perth-based Fortescue have not entered into any specific commitments,” according to Gaines. “Fortescue is not a party to any agreement with the Liberian government,” she said, adding that the producer does not also have any exploration tenements in West Africa.

Gaines maintained that Forrest eyes opportunities in Liberia, but did not sign any deal.

The press statement was issued against the Government of Liberia’s own report that it had signed a MoU with an entity representing Fortescue, and Sheikh Ahmed Dalmook Juma Al Maktoum of the United Arab Emirates, with the aim to upgrade existing railways, and building new lines from the Guinean border to an existing port on the coast.

“The MoU provides that the investors will upgrade the existing railways in Buchanan for now, and will subsequently build new railways from Guinea to the Port of Buchanan without a cost to GoL,” according to the GOL statement.

Al Maktoum signed the pact. Steelmaker ArcelorMittal, which has an iron ore mine in Liberia, operates an exciting line from its mine in Nimba to the Port of Buchanan. ArcelorMittal has said it would let other companies use the facility, assuming there is spare capacity or they pay for upgrades.

Bad Media Causes Retraction?

The Daily Observer has gathered that the press statement issued by the Australian company against any signed MoU is because of “bad press” in Europe.

In a Financial Review publication, dated July 18, 2019, Columnist Matthew Stevens cited the “I am here to help you” statement from billionaire Forrest, but questioned how does the Australian mining magnate imagine he might achieve those ends?

“Freeing our own imagination for a moment, it is hard to see how Forrest has arrived in Liberia in partnership with Al Maktoum, eyeing only for a rebuild of a railway set. And the timing of his unexpected arrival in Monrovia could well be telling the extent of his now famously productive imagination,” the Financial Review report said.

“You see, Forrest has bobbed up in Liberia at the same time as the symbiotic worlds of iron ore mining and steel making are trying to work out whether or not they have entered a period of unexpected disruption.

“The homeland of that uncertainty is Brazil and its face is the world’s biggest single iron ore exporter, Vale. Over just three years Vale has inflicted two tailing dams tragedies on the host communities of its southern iron ore production system.”

It added, “the second and far more deadly of those disasters, the collapse of the Brumadinho dam in January this year, triggered a new round of executive bloodletting and saw the southern system shut for business until just recently.The closures left an already tight seaborne iron ore market short of about 80 million tonnes on an annualized basis, a situation that continues.”

The Financial Review further said: “The question for everyone from Chinese steel mills to iron ore entrepreneurs is whether or not Vale’s problems will be passing or whether the disaster and its mitigation will father structural supply shortage. Through the past two decades or so it has become conventional wisdom that the next most likely new iron ore province sits in the southern reaches of Guinea near the border of Liberia.”

“The Nzerekore region of Guinea hosts a series of very large, very high grade iron ore deposits including the ill-starred Simandou prospect that tantalised Rio Tinto for the better part of 15 years and the Nimba project that is presently owned by BHP but has been coveted by others including billionaire copper whisperer Robert Friedland.  Simandou and Nimba are large deposits of 67-68 per cent iron ore. To put that grade into context, Rio’s benchmark product is 62 per cent while Vale’s top grade benchmark is a 65 per cent product.  As was revealed in April this year, there is international interest in the smaller rich pockets of iron ore on the contiguous mountain ranges that host Simandou and Nimba. On Good Friday, a new investing entity, formed by Sir Mick Davis, Niron Metals, signed a rail access MoU with President Weah’s government.”


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