Sierra+Leone+Strategic+Minerals

=Chinese Companies Are Likely To Continue Large Amounts Of Investment Into Tonkolili Iron Project=

Executive Summary:
Due to China's increasing appetite for minerals, it is highly likely that Sierra Leone's mining operations, most notably the Tonkolili mine, will continue to attract significant investment in the next 5 years. The Tonkolili mine, which sits over massive deposits of iron ore, saprolite, and manganite, has received large investments in the past few years by Chinese companies. In 2012, Shandong Iron and Steel Group (Shandong Steel) made a USD 1.5 billion investment into African Minerals Ltd (African Minerals) for a 25 percent stake in the Tonkolili mine in central Sierra Leone. In 2013, another Chinese company, Tianjin Minerals (Tewoo), bought a 16.5 percent of the Tonkolili mine for a price of USD 990 million. African Minerals is looking for investors for to help expand their mining operations, including a railway from Tonkolili to Pepel Port. The Gold mining industry in Sierra Leone has yet to see Chinese involvement, but the falling cost of gold gives Chinese companies a ripe opportunity to buy out existing gold mining companies. In Sierra Leone, Amara Mining Plc holds and operates a gold mine in Baomahun which the Chinese may likely see as a prime target.

Discussion:
Sierra Leone's mining industry is a huge contributor to the nation's economy. The mining industry accounts for 90 percent of the country's exports and 20 percent of the country's GDP. The country has a large varied mineral base including iron ore, bauxite, gold, and diamonds. So far, Chinese investors have only become involved in the iron mining sector, however, the large deposits will likely draw more Chinese companies to invest into the nation.

The Tonkolili mine is one of the world's largest magnetite iron ore deposits, sitting on an estimated 12.8 billion tons of iron ore. Since its discovery in 2008, it has attracted significant investment from various Chinese companies. In 2010, CRM invested around USD 300 million for 12.5 percent interest in African Minerals which helped fund the first part of the Tonkolili project. Then in 2012, Shandong made a USD 1.5 billion investment into African Minerals for a 25 percent stake in the Tonkolili project. The mine once again received Chinese investment in 2013, when Tianjin Minerals bought a 16.5 percent stake in the mine for a price of USD 990 million. With the help of these Chinese investors, African Minerals was able to go from their discovery in 2008 to exports of over 20 million tons a year in 2013. In 2013, African Minerals shelved a USD 2.5 billion plan to acquire and develop another mine, due to the failure of the Tonkolili mines to meet production expectations. However, the company will be looking at a revised and less costly version of the plan to be released in 2014. African Minerals will be looking for investors to fund this expansion and may look toward Chinese investors once again.

There are currently no Chinese companies involved in Sierra Leone's gold mining industry. However, with the falling cost of gold it may be a ripe opportunity for Chinese companies to buy out existing gold mining companies with gold mining operations. One such target is Amara Mining Plc which holds and operates a gold mine located in Baomahun in central Sierra Leone.

Analytic Confidence:
Analytic confidence is medium. Source reliability ranges from medium to high. There is no conflict between sources. The analyst had low expertise on the subject, did not use a structured analytic method, worked alone, and collaborated with a team. The subject is moderately complex and the deadline was moderately difficult to meet.


 * Analyst****:** Jared DeTal