Sahara Mining introduces a game-changing new steel mill for Mali
News that Sahara Mining S.A. will mastermind a US$300 million fully integrated steel mill at its high grade iron ore operations in Mali spells big news for the country and a kick-start to its future as a premier multi-commodity mining destination
Like neighbouring gold haven Ghana, Mali’s surge in yellow metal mining rages on. All manner of surveys have followed Thomson Reuters GFMS and earmarked the country as Africa’s third largest gold producing nation, but in doing so reports also note that there is a wealth of other underexplored resources ripe for extraction, including base metal market darling, iron ore.
The story of Sahara Mining SA (“Sahara”)—the West Africa-focused iron ore explorer/producer operating a high grade Malian haematite mine—encapsulates Mali’s bright future in multi-commodity markets. In September, the company announced that it will imminently build a US$300 million fully integrated steel mill: The first of its kind for the region offering 300 million tons per annum capacity, a new-build 70 megawatt power plant, and generating around 5,000 jobs once operations commence by April, 2013.
“We’re in the process of acquiring land, and as soon as it’s done—maybe next month—we’ll commence construction,” says Indian business entrepreneur Sandeep Garg, Sahara’s founder and CMD who also heads wholly owned subsidiary Sandeep Energy and Steel.
“It’s a historic project for the West African region. Its success and sustained production will send a message to the entire world that this region is coming along very well and investors everywhere ought to watch it closely.”
Praised by Malian Mines Minister Amadou Cisse, and on track to commence construction by the year-end, Sahara’s steel mill will offer massive proportions for the nation’s future mining industry. The company aims to become a major player in West African iron ore and promises to better the communities it enters along the way.
Blue sky in Mali
Starting life by sourcing scrap metal for Indian and Chinese markets, Sahara quickly established a firm foothold in Mali, along with other countries such as Gambia and Senegal. It didn’t take long for the group to spot the benefits behind obtaining their own mining licenses and gathering good tenements, which culminated in February, 2010, with Sahara picking up the mine license for its 2,107 square metre Tienfala iron ore project (now in operation) in the Koulikoro region, 20 kilometres north-north-east of the capital, Bamako. Tienfala is now home to Indian standard reserves of 92.13 million tons, haematite of 64 per cent (going up to 67 per cent) and good basis for steel making due to phosphorous, alumina and silica levels.
“Of the total 2,107 square kilometre area, we have done prospecting for around 10 per cent—200 square kilometres—and on that we’re basing our reserves estimate. From that we have also completed an aeromagnetic survey which was done by a South African company. The results are incoming and we hope that they will go beyond one billion tons,” Garg explains.
“For this current year we’re producing around 50,000 tons per month, or 6.6 million tons per annum, and we plan to ramp that up to 500,000 tons per month in the next five years.”
Figures from Tienfala continue to deliver good news for all concerned (the Government of Mali has a 20 per cent stake in Sahara). A long-term, three-year stock mechanism contract with Chinese group, Continental Minerals (owned by Jinchuan Group Ltd) is in place. Australian-headquartered mining consultancy Runge has begun working on the JORC report for the project. Results from the aeromagnetic survey will soon be returned, and first construction work on the highly anticipated steel mill is mere weeks away.
Right company, right projects, right ethos
While the steel mill is, without doubt, a major and much-needed project for Mali, Sahara’s existing set-up at its Tienfala operations already offers a well-positioned base for its construction. For example, the company owns an extensive truck fleet, used for transporting iron ore by road (a highway runs right along the mine’s entrance) and the return leg of the vehicle’s passage to port presents Sahara with ideal options for bringing in the necessary coal for the future plant.
“We have a company from India named Predominant Engineers with whom we’ve signed a contract for the project,” Garg details.
“They’ll provide the steel mill for us on a fully turnkey basis. They will then install and commission it, and run it for six months before handing it over to us.”
The planned power plant is also taken care of, and will consist of two 35 megawatt turbines from Japan, to generate the 60 megawatts of power required for the steel mill.
“The surplus 10 megawatts power, we will sell,” Garg adds.
“As ever, our top priority is the Government of Mali, and with this project we foresee very good impacts for the country. Lastly, in terms of employment which is also important, we’ll generate approximately 5,000 jobs.”
Add in Sahara’s other Malian mining license, Dogoro (50 kilometres south-west from Bamako) and its applications for copper and other iron ore ground, and it becomes clear that in this ambitious new producer, Mali has a real gem.
“We’ll definitely be looking forward to adding mining properties to our portfolio,” Garg confirms.
“The long-term goal is to export more than one million tonnes of iron ore per month.”
Tienfala promises to deliver the resources, the markets continue to support overwhelming demand, and Sahara has the management team and country commitment to bring this vital project to completion. The steel mill, as Garg says, will be a historic project for the West African region. It will also prove a key step in Sahara’s quest to become a driving force in West African resources.