Gerald ramping up to 3 million mt/year of high-grade iron ore at Sierra Leone

London — Global trader Gerald Group's Sierra Leone mining subsidiary SL Mining is already producing at 2 million mt/year at its high-grade Marampa iron ore mine and will reach 3 million mt/year "almost immediately" following its current official restart, a Gerald Group spokesperson told S&P Global Platts.

"It will get ramped up to 3 million [mt/year] almost immediately with much larger expansions being considered," the spokesperson said in a emailed response to questions in the run-up to the planned official restart of the company's activities June 1. The capacity of the Marampa mine was previously put at 6 million mt/year.

This follows SL Mining's striking of an accord earlier this month with the government of Sierra Leone to allow mining activities to resume at SL Mining's high-quality iron ore property in the west African nation, following a two-year break marked by legal tussles. The problems had reportedly involved royalty issues which had led to the government's confiscation of a mine license.

The agreement gives Gerald the immediate right to ship the current stockpile of around 707,000 mt of ore at the site, with a reported Fe content of around 65%.

"In terms of the stockpile, we would typically export to Chinese steel mills in the immediate (future)" the spokesperson said.

As part of an out-of-court accord, a new company, "NewCo", will be formed to operate the iron ore mine, in which Sierra Leone will take a 10% stake and Gerald Group 90%. SL Mining/Gerald Group and the government will withdraw their respective existing legal claims and allegations to allow a rapid commencement of mining operations, Gerald Group said in a May 11 statement.

Gerald will pay a fixed sum of $20 million in two installments of $10 million prior to Dec. 31 as part of the new agreement.

S&P Global Platts assessed the 62% Fe Iron Ore Index at $188.25/dry mt CFR North China on May 24, down $11.85/dmt from May 21. Despite a declining price trend in recent days, iron ore prices nonetheless continue at historically high price levels following a recent surge in steelmaking production, particularly in China.

Mines being 'reevaluated'

UK-based consultancy SteelExpertWitness, which offers litigation support, said it is not surprising that some iron ore projects that may have been considered uneconomic in 2014-2015 are now being reevaluated in the view of the current spate of high iron ore prices.

SL Mining had previously restarted production at the Marampa project in 2018 after a four-year stoppage, following earlier failed attempts by other international companies.

"As a general point, with iron ore prices at their present levels, it is not surprising that some projects that were uneconomic in the 2014/2015 period are now being re-revaluated," said SteelExpertWitness' practice head Roger Emmott. "A key issue will continue to be the long-term prices for iron ore. Plans to decarbonize steel make this ever more complex. More scrap will in all likelihood become used, but so too will demand for the highest grades of ore used for DRI (direct reduced iron). Volumes of sinter fines will likely reduce; pellet usage will likely increase both in blast furnaces and for DRI."