An active investor in Guinea since 2006, BSGR entered into the joint venture with Vale in 2010, creating Vale BSGR Guinea (VBG) in order to develop Guinea’s Zogota & Simandou Blocks 1 & 2.
BSGR GUINEA HISTORY
- BSGR has been an active investor in Guinea since 2006, with exploration projects in iron ore, bauxite and uranium, including the discovery of the Zogota iron ore deposit.
- BSGR contracted the following consultants for the development of its feasibility studies: MSA Geological Consultants and Fugro (aeromagnetic studies), Foraco, Energold and Geoprospect (Drilling), Snowden (geology and resources review), SRK (mine plan, geotechnical engineering and hydrogeology), Bateman Engineering (plant and general infrastructure), Environ (environmental specialist studies and socio-economic studies), and WSP (port and rail).
- Throughout 2008 and 2009, a total of 180 holes and 16,173 metres were drilled.
- In December 2008, BSGR was awarded an exploration license covering Blocks 1 & 2 of Simandou for an area of 369 km2 valid for three years and renewable for another two years.
- Between April 2009 and June 2010, BSGR drilled 94 holes with a total of 15,846 meters.
- Total expenditures by BSGR on the Zogota feasibility study and exploration works on Blocks 1 & 2 between 2006 and April 2010 exceeded $160million.
- In December 2009, following negotiations with the Government, a Concession Agreement was signed which provided a framework for a two-phased project comprising of the Zogota and Simandou Blocks 1 & 2 iron ore deposits.
- In March 2010, BSGR was awarded a concession agreement on the Zogota project by the Government of Guinea.
- The Concession Agreement included the provision of an export route through Liberia, which would be exclusive for the following 3 years.
VBG - VALE BSGR GUINEA (VBG)
- In 2010, Vale entered into a 51% - 49% joint venture with BSGR to jointly develop the world class integrated mining project in Zogota & Blocks 1 & 2.
- The US$2.5 billion transaction with Vale was based upon milestone achievements, and provided for an immediate payment of US$500 million.
- BSGR Guinée subsequently changed its name to VBG-Vale BSGR Guinée.
- In the course of 2010, a drilling program of 65,000m was undertaken, of which 35,000m were carried out in the first 14 months.
- VBG duly submitted its comprehensive feasibility study in respect of Blocks 1 & 2 in September 2011, three years after it had been granted the exploration permits on those areas. This has been an unprecedented accomplishment in the region by any major company.
- VBG has since been waiting for a response from the Guinean authorities on its feasibility study. This uncertainty and lack of response has unfortunately prevented VBG from undertaking the work in question and has made it impossible to start the operations by the end of 2013 as planned.
- In August 2012 significant unrest occurred in the town of Zogota which prompted the Government of Guinea to freeze project work and activity on the Trans-Guinea Railway.
RATIONALE BEHIND THE LIBERIA EXPORT SOLUTION
- The planned transport solution through a port near Buchanan in Liberia includes the construction of a connecting railway from Zogota to an already existing railway in Liberia during Phase 1 of the project. Phase 2 would involve the building of an integrated new railway and deep-sea port south of Buchanan. This could export 50m tonnes of ore pa from Simandou Blocks 1 & 2.
- The distance through Liberia comprises about 350km of railway, which is half the distance contemplated by a Guinean railway corridor.
- The deep-sea waters (more than 28m deep) off the coast of Liberia, which are critical to the use of very large ore carrier vessels (VLOC), range from 2 to 3 km from the Liberian shore, whilst in Guinea these waters start at around 15km to 20km from the coast. This significantly impacts the economics and technical development of the port jetty, berth and construction operations.
- The feasibility study of VBG and BSGR concluded that evacuation through Liberia was the best and only viable option both technically and financially, securing better economics for the project in the long term in case of market volatility.
- Time to market would be reduced from 7 years to 3 years for the development of the infrastructure, which would make the Guinean project more competitive and resilient on the world market.
THE TRANSGUINEAN RAILWAY SOCIAL COMMITMENT OF US$1 BILLION
- The Trans Guinean Railway represented a gift from the JV to the people of Guinea amounting to US$1 billion.
- VBG’s integrated two phased mining project combined with a Liberia export solution, justified the commitment by the company to build a US$1 billion transguinean railway for the benefit of the people of Guinea.
- The company promoted the US$1 billion commitment knowing that the multiplier effect of such a cross-country railway would have a tremendous impact on the economic growth and social improvement of the people of the country. It would boost trade with Mali, create economic growth locally, including in the Guinée Forestière and provide Kankan with the opportunity to become an economic centre within the country.
- Such a US$1 billion commitment stood as an unprecedented contribution of a company to the social development of a country. This commitment was by far the largest such gift in the history of the African mining world setting a new precedent in the mining industry for Guinea.
- The Government of Guinea stopped work on the Trans Guinea Railway in April 2011.