Just after Vale’s new bosses shelved major commitment in Guinea, Vale’s former boss, Roger Agnelli is staging a return to the West African country in a bid to get a slice of the BHP Billiton’s Mount Nimba iron ore deposit in the country.
Agnelli is returning to Guinea for investment under the shadow of a mining company he co-founded – AGN Participacoe – while partnering with billionaire banker Andre Esteves. He will return to mining and Guinea through B&A Mineracao, a partnership between his venture AGN Participacoes and Esteves’s investment bank BTG Pactual Group.
Agnelli’s company is one of the companies seeking to get a piece of BHP’s share in the Nimba concession. Others include world’s largest steelmaker, ArcelorMittal, which mines iron ore just over the border in Liberia.
“The sale (of Nimba) is in a second phase now. B&A, ArcelorMittal and other suitors have visited the site in Guinea and Liberia and have made non biding bids. Later this month the companies should come out with binding offers,” a source knowledgeable of the situation told Reuters.
Another source told the news agency that Jonah Capital, a private investment company which is a partner of Anglo American subsidiary Kumba Iron Ore in Liberia, was also among the suitors.
Nimba is a promising investment but as it is common among most iron ore deposits in the region; miners developing it will need to overcome a chronic lack of infrastructure. It also faces environmental scrutiny, given its proximity to a World Heritage site in the forested south of Guinea.
World largest miner, BHP, owns a stake of just over 40 per cent in the venture behind the Mount Nimba deposit, as does gold miner Newmont Mining Corp. A third party, French power plant builder Areva Group, is being bought out of the venture, which will leave BHP and Newmont with a 50-per-cent slice each, a source told Reuters.
BHP indicated earlier this year it was pulling out of Guinea, as projects there and in neighbouring Liberia fell victim to the global miner’s focus on ma jor a s sets. It has since said Australia and Brazil will alone be able to satisfy global demand for iron ore – without recourse to new producing regions like West Africa.
BHP’s exit was a blow for Guinea, which had been courting investors, and hopes a new mining code – backed by George Soros – will help clean up the industry and encourage investment.
Agnelli has in the past led Brazilian miner, Vale, to acquire a stake in iron ore assets that controversially included blocks of the giant Simandou deposit confiscated by the government from rival Rio Tinto two years ago.
He however stopped working for vale last year after a decade at the helm. Analysts said that his plans for a multinational Vale did not chime with the Brazilian government’s own more nationalistic view.
“Agnelli has money to spend… but for a financial investor, this is not the easiest asset to start with.”
Many see Agnelli’s new venture as a sort of revenge against its former employer, Vale – and take a slice of Simandou, one of the world’s largest untapped iron ore deposits.
Simandou, one industry source pointed out, was Agnelli’s “baby”: “Is it personal revenge? Absolutely,” the source said.
Reuters reported that Agnelli is already going head to head with Vale at home, taking a stake in Rio Verde, which mines potash and phosphate, areas of activity for Vale too.
Others though, said B&A Mineracao had no plans to take on Simandou, a project which for the Vale-BSG blocks alone could cost an estimated $10-billion to develop.
“Some have the perception that Agnelli is actively trying to get a stake in Simandou but I think this is wrong,” a source close to the situation said. “The focus of B&A right now is to win the bidding for the Nimba project.”