• Home
• /
• Business

Positive Findings at Wadi Sawawin Iron Ore Project

JEDDAH - The Oslo-listed London Mining, which is incorporated and registered in the United Kingdom, has announced positive findings from a combined feasibility study and market study into the Wadi Sawawin iron ore project in Saudi Arabia.

Aside from Saudi Arabia, the company has iron ore mining, exploration and development projects located in Greenland, Sierra Leone, Mexico and coal projects in South Africa and Colombia. London Mining has off-take agreements in place with Chinese steel producers.

Highlights of the study, released on Friday, and made available to Khaleej Times here, include a net present value (NPV) of $1.6 billion and capital expenditure (capex) of $1.8 billion to develop an 11.6 mtpa open pit iron ore mining operation supplying a benefication and pelletising operation via a 60 kilometre slurry pipeline to produce 5 mtpa of DR pellets for sale via the Red Sea.

It may be noted that on September 5, 2008, London Mining announced that Saudi London Iron Ltd (SLI), the joint venture formed between London Mining and the National Mining Company was approved by the Saudi Arabian General Investment Authority (SAGIA) and had signed a strategic MOU with Saudi Advanced Production for Iron and Steel Ltd (SAPIS) for full off-take and financing of development capital.

The study assumed a long term pellet price of $115/tonne free on board (FOB). However, it noted that the price was considered conservative considering a forecast gap of supply/demand in the Middle East and the premium it could fetch for lower transportation cost due to the close proximity to consumers.

The open pit mine would have an initial life of 14 years and benefit from a low stripping ratio (1.25) with payback anticipated to be 6 years. The iron grade of the open pit is expected to average around 41 per cent, with a pellet grade of 67.2 per cent.

“The proposed port and pellet site in Saudi Arabia offers proximity to customers and pelletising cost advantages, such as low natural gas costs, to maximise margins available in DR pellet production,” the company said in a statement.

“London Mining’s and the National Mining Company of Saudi Arabia’s objective are to create a globally competitive low cost, premium product operation,” it added.

London Mining and joint venture partner National Mining Company of Saudi Arabia considered a Phase I development which will include a 5 million tonne per annum (mtpa) mining and pelletising operation that is planned to be in production by 2012, assuming early financing canbe arranged.

“The feasibility results on the first 5 mtpa phase of the Wadi Sawawin project demonstrate that a new, high tonnage, high margin iron mine and pelletising operation can be established in the Middle East through the London Mining and National Mining Company joint venture,” explained Graeme Hossie, managing director of London Mining.

· habib@khaleejtimes.com