ORE MINERS and the business press call it the new frontier. Others see a second scramble for Africa. Either way, the quest for West Africa's iron-ore resources is driving a railway and mining boom worth an estimated $US 25bn. According to US bank J P Morgan Chase, ore deposits that may rival those of Australia's Pilbara region are spurring mining companies to invest in the construction or rehabilitation of some 5100km of railways and nearly a dozen new ports.
China's apparently unstoppable growth has been the driving force behind the global resource boom of the last decade. That most of the new projects in West Africa have strong Chinese backing should be no surprise. At a presentation to the Sydney Mining Club in March last year, Mr John Welborn, chief executive officer of Australian miner Equatorial Resources, which is currently developing a mine and railway in Congo, quoted China Iron & Steel Association official Mr Wu Xichun: "By 2015, China wants to import 50% of its iron-ore from Chinese owned mines elsewhere in the world."
China's boom continues, apparently impervious to gloomy warnings from some quarters that its economic growth is slowing. "Like so many commodities today, the development of iron-ore in West Africa is a China story," Welborn told IRJ. "Chinese steel mills are desperately seeking new sources of supply to diversify their reliance on the Big 3 [Rio Tinto, BHP and Vale]."
Much of this ore will come from West Africa. New mines have opened in Liberia and Sierra Leone, countries previously more famous for vicious civil wars than mining, new mines are being developed in Congo, and extraction of a vast iron-ore deposit - possibly the world's largest - is imminent in Guinea.
In each of the new projects, the miners have either rebuilt a railway to carry ore to the coast, or have plans to build new lines, sparking a railway boom on a scale not seen in Africa since the colonial era. The difference this time is that governments are demanding a slice of the action, while the miners have had to satisfy shareholders that the projects minimise environmental damage and create jobs.
Heavy-haul railways are not new to West Africa. In Liberia, the 267km standard-gauge Lamco (Liberia American Mining Company) Railway - recently rehabilitated by steel giant ArcelorMittal - was already running
90-wagon 10,700-tonne ore trains in the 1970s. In neighbouring Guinea, the Compagnie de Bauxite du Guinea (CBG), assisted by the Aluminum Corporation of America (Alcoa), operates the Boké Railway, which has been quietly getting on with heavy haul for the last 40 years with six-daily 13,000-tonne bauxite trains behind pairs of EMD SD40-2 locomotives. And in Mauritania, 16,800-tonne ore trains run most days on the 704km Société Nationale Industrielle et Minière (SNIM) line from the mines at Zuoerate to the port at Nouadhibou, incidentally providing a vital passenger service for locals across the road-less desert.
What is new to the region, however, is the massive scale of the projects, and, in some cases, the sheer speed at which they are being accomplished, driven as always by the urgency of China's need for raw materials. This report covers the major heavy-haul rail projects either currently underway or where construction is imminent.
In 2007, ArcelorMittal, the world's biggest steelmaker, won a concession to redevelop the slumbering Tokadeh Mine in the north of the country and rebuild the port of Buchanan and the old Lamco railway which had ceased operating in 1992 after rebel attacks. As a result, the railway needed a complete overhaul from the ballast up.
"The challenge Liberia faced - to rebuild a country after decades of civil war - was enormous," ArcelorMittal Liberia (AML) spokesperson Ms Hesta Pearson told IRJ. "The railway was badly damaged and had to be rehabilitated. AML had to re-ballast the tracks, replace rails and sleepers, rebuild all bridges, replace culverts and construct rail access roads."
By the time AML took over, most of the railway's original locomotives had rusted away but much of the rolling stock could be saved. Better yet, the line itself was mostly intact, if hidden in the undergrowth. "In fact local villagers used parts of the line with small hand-propelled trolleys named 'make-a-ways' to take produce to market," says a source close to the project. "These were quite rustic being made of wood with old car bearings for 'wheels'."
AML chose Brazilian contractor Odebrecht to rebuild the 243km stretch from the Tokadeh mine to Buchanan. The company wanted to get the line back in operation as quickly as possible. After clearing the vegetation, every fourth sleeper under the original 59.9kg rail was replaced, opening the line for ballast trains, after which the remaining sleepers were replaced.
Meanwhile, the company set about repairing rolling stock. By the end of 2011, 195 of the original ore wagons had received new bogies, brakes and rotary couplers - crucial for use in rotary tipplers at the port - and two 90-wagon rakes were available for service. To haul them, AML bought three new 3.3MW ES44AC locomotives from GE to complement a solitary EMD GP38-3 locomotive.
The line reopened to traffic in May 2011. In September that year, Liberia exported ore for the first time in 20 years and by the following December, three ore carriers had been loaded at Buchanan and there was a large stockpile awaiting shipment. The total bill for refurbishment of the railway, mine, port and ancillary infrastructure was $US 800m.
"We currently run two trains a day, with 70 wagons per train," says Pearson. Frequency will increase to three trains a day in the dry season. Loads are 80-90 tonnes per wagon, although tonnage varies according to train schedule. AML has reportedly run trials with 120-wagon trains, and 140-wagon rakes could be introduced in the future, aided by the use of distributed power.
If ArcelorMittal Liberia's railway project was quick to market, African Minerals' $US 1.2bn refurbishment of the former Marampa mining railway and port in Sierra Leone was completed at light speed, which indicates the pressure miners are under to get their ore to market.
In 2009, London-based African Minerals signed a 99-year lease with the government of Sierra Leone to rehabilitate the 74km 1067mm-gauge railway from the port of Pepel to the old mine at Marampa (now owned by fellow miner London Mining) and build a 126km extension to a new iron-ore mine at Tonkolili.
It seemed a tall order: the civil war in Sierra Leone destroyed the country's transport network and by 2010, according to a Bloomberg News report, the country was ranked third-lowest on the World Bank's 2010 logistics performance index which measures efficiency and quality of transport networks.
In a bold move, African Minerals decided to raise capital and begin construction of the mine and new railway even before the final resource estimate was known. It was the right decision - the ore body consists of an estimated 11.6 billion tonnes of magnetite lying under 1.1 billion tonnes of saprolite with 126 million tonnes of direct shipping ore (DSO) lying on top of both. Mining the latter would support the company for about nine years while the other ore bodies are developed.
Of the $US 3bn of debt and equity that the company has raised, $US 1.5bn is from the Shandong Iron & Steel Group in China. In return for its investment, the Chinese steelmaker will receive 10 million tonnes of iron-ore a year at a preferential rate.
As the railway's original rolling stock and locomotives were beyond repair, African Minerals bought new bottom-dump hoppers, and private South African locomotive operator RRL Grindrod is building a second batch of 14 RL30SCC Co-Co diesel-electric locomotives for the railway to complement the 20 that African Minerals has already leased from the company.
Tonkolili began production just 14 months after the mining permit was issued and the first ore trains ran in November 2011. As a Bloomberg report noted in 2012, until the first trains operated, Sierra Leoneans had not seen a functioning locomotive in nearly three decades. With production gradually being ramped up, the railway is expected to be carrying iron-ore at an annual rate of 20 million tonnes by the second quarter of this year.
The second phase of the project - which will see annual tonnage eventually increase to 50 million tonnes, and involves construction of a port at Tagrin Point, and a standard-gauge heavy-haul railway from there to Tonkolili - is already underway.
The biggest West African rail project of all has yet to see a single sleeper laid. Lying in the Simandou Range in eastern Guinea is what may be the world's largest iron-ore deposit, which has attracted interest from heavyweights Rio Tinto and Brazil's Vale.
Rio estimates Simandou's output at 95 million tonnes a year by 2015. To haul the ore, Rio plans to build a 670km standard-gauge railway from the mine west across the country to a port to be built south of the capital Conakry. The project is being developed by Guinean-registered Simfer which is owned 5% by the International Finance Corporation and 95% by a company jointly owned by Rio Tinto and the Aluminium Corporation of China (Chalco).
The planned railway is a project of epic scale. While it would be quicker and less costly to build a shorter line south from the Simandou Range to a new or existing port in neighbouring Liberia, the Guinean government has pushed Rio Tinto to build the new east-west railway to boost the country's development, according to a report from Bloomberg.
The proposed railway will be single-track with 13 passing loops. There will be three tunnels, 34 river bridges and nine bridges over roads. The terrain is around 20% dense forest and about 25% open woodland.
The biggest challenge for the builders will be the 70km crossing of the heavily-forested Mamou Mountains in the centre of the country, a section that will require five river bridges and 78 culverts. Two tunnels of 12km and 11.6km will also be needed. Each tunnel will be fitted with security gates at both ends to prevent pedestrians using them as thoroughfares, a further indication of the unusual environment facing railway operators in Africa.
Trains will be 240-wagon consists hauling up to 37,000 tonnes of ore each, pulled by six GE ES44AC locomotives distributed in pairs throughout the train. The company plans to run nine loaded ore trains daily plus a fuel train from the port to the mine every two days. Track speed is pegged at 80km/h for loaded trains and 100km/h for empties, giving 36 hours for a round trip from the mine.
Rio Tinto has been prospecting in the Simandou range since 1996 and has committed over $US 3bn to the project so far. According to a Rio Tinto spokesperson, the company is currently finalising the engineering studies in relation to the railway works. "The rail SEIA was completed in September 2012 and is currently under review by the state," he says.
In a key development in October, the state declared it a "Project of National Interest" which effectively protects land needed for the rail and port infrastructure from being bought or developed by third parties while the project secures the relevant rights. Meanwhile, early works which are part of the rail and port construction have begun.
It is happier story for Rio Tinto than fellow miner Vale. The Brazilian group had proposed building a new line southwards from its planned Zogota mine at Simandou through Liberia. Production at Zogota was due to begin in 2012 but according to Reuters in November, Vale has since put the mine and railway on hold, citing "cool demand and opaque regulation."
For Equatorial Resources, the Australian miner currently busy developing a deposit in the Congo, the proximity of its mine to an existing heavy-haul railway was a rare stroke of luck. Equatorial's Mayoko - Mossendjo Iron Project plans to transport its ore along a 285km 1067mm-gauge dedicated heavy-haul line built in 1962 to carry manganese from the north of the country to a connection at Mount Bélo on the Congo Océan Railway (CFCO) which links Brazzaville, the capital, to Pointe Noire on the Atlantic coast.
"We were pleasantly surprised by some aspects of the rail system," Welborn told IRJ. "While there are challenges, we can use [the line] right away."
In August 2010, Equatorial Resources entered into a 25-year agreement with the Congolese government to use a 465km section of the railway from the mine to Pointe Noire. A subsequent funding agreement was signed with CFCO in October 2011. As part of the deal, Equatorial Resources' investment in the line will be regarded as payment up front for future rail charges.
Welborn says Equatorial Resources will share the rail link with other mining companies such as South African miner Exxaro which is also developing a mine close to the existing line.
The mining companies will operate their own trains on the line and Equatorial Resources is currently investigating potential locomotive builders in South Africa, Eastern Europe and China. Welborn says the fleet will likely be a mixture of owned and leased units. The company anticipates moving around 5 million tonnes a year when production begins.
Cameroon and Gabon
In Cameroon, Sundance Resources is developing the $US 4.7bn Mbalam Iron Ore Project and plans to build a 510km railway from its Mbarga mine to a new port to be built at either Lalobé or Kribi. The project gathered new momentum last November after the Cameroonian government authorised the Mbalam Rail Corridor, effectively setting aside the land earmarked for the corridor. Projected annual tonnage from Mbalam is 35 million tonnes. Sundance also plans to build a 70km extension from Mbarga to the Nabeba mine in Congo.
In 2011, Sundance apparently signed a port and rail access deal with Australian miner Legend Mining which plans to mine a large ore body at Ngovayang. Sundance's proposed rail corridor passes close to Ngovayang. Sundance is currently in the process of being acquired by Hanlong Mining, a deal that is widely regarded as crucial to the project's success.
Gabon is also on track to enjoy its own infrastructure boom as mining projects move closer to fruition. The standard-gauge 684km Transgabonais Railway, built at crippling cost between 1973 and 1986, already carries manganese from Moanda in the southeast to the port of Owendo, traffic that Comilog used to send via Congo on the line that Australian miner Equatorial Resources has earmarked for its Mayoko ore project. Comilog subsidiary Setrag has a 30-year concession to operate the railway which includes providing a guaranteed freight and passenger service along with the manganese traffic.
Gabon's main iron-ore deposits are at Belinga and Makoukou in the northeast. As a result of the Gabon government's recent cancellation of a concession awarded to CMEC of China in 2007, possibly due to concerns that the company would not be able to deliver, it is unclear who will develop the resource. In February 2012, Reuters reported that the Belinga concession had been awarded to BHP Billiton but the company declined to comment.
Whoever does win the concession will be faced with the prospect of building a 237km railway from the mines to a junction with the Transgabonais at Booué in the centre of the country. There is also the possibility that due to high ore tonnages, the line would have to be extended to a new port that may be built at Santa Clara, near Owendo.