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Cameroon initiates Mbalam iron ore mine construction amidst funding uncertainty

Acting Minister of Mines, Fuh Calistus Gentry (pictured), is set to preside over a ceremony on December 22, 2023, to launch the construction of the mine for the globally significant Mbalam iron ore deposit located between Cameroon and Congo.  The “draft program” for this mission signed by the Acting Minister himself on December 19, 2023, does not indicate where the ceremony will take place, nor whether the Congolese authorities will participate. However, it mentions that after the “launch of mine construction work”, “exchanges with local authorities” are planned in Ntam, a Cameroonian town bordering Congo in the Eastern region.

Since August 17, 2022, when the Cameroon Mining Company Sarl (CMC) was awarded the mining permit for the Mbalam iron ore deposit, no information has yet filtered out, either on the financing or on the financial partners of this gigantic mining project. Announcements made by AustSino, partner of Bestway Finance (a Singapore-based investment vehicle with the same parent company as CMC) on the Mbalam mining project did indicate that a group of Chinese companies have joined the project.

They include China Railway 20 Bureau Group Corporation (CR20G), China Machinery Engineering Corporation (CMEC), China Civil Engineering Construction Corporation (CCECC), and China National Chemical Engineering Heavy-Mechanized Corporation Ltd (CNCEHMC), as well as CCC Mining Group Limited. Most of these are construction and infrastructure companies, or mining companies. No financial partners appear on this list. Or maybe, for the construction of the Mbalam mine, Cameroon Mining Corporation is exclusively supported financially by its parent company Coconut Logic Holdings Pte Ltd (which also controls Bestway Finance), an investment vehicle based in Singapore.

Lack of transparency

This situation further complicates the uncertainties surrounding the management of the Mbalam iron ore project, which has faced challenges since the initial developer, Australian Sundance Resources, was unable to see it through to completion. Many observers in the Cameroonian mining sector remain puzzled by how a company (CMC), established on March 16, 2022, managed to secure a mining agreement with the State just two years after its inception (by March 31), followed by the issuance of an operational permit within a mere five months of its establishment. All this on a world-class iron ore deposit.

There is also a lack of transparency surrounding the awarding of this concession, as with all others in the country. In fact, like all the other active mining permits in Cameroon, the CMC mining permit has still not been made public to date, in violation of Article 144 of the 2016 Mining Code (a new one has just been promulgated by the Head of State, ed). This article states that “the acts that enshrine the award, extension, renewal, transfer, farm-out, withdrawal or waiver of an operating permit must be published in the Official Journal and the newspapers of legal announcements.”

As a reminder, the Mbalam iron deposit, which extends to Nabeba in Congo, is considered a world-class reserve. Sundance Resources Ltd, the first developer of the project, planned a two-phase deployment. Phase I involved the annual production of 40 million tons of direct shipping ore over 12 years and phase II to be the extension of the operation stage by over 15 years thanks to the production of a high-grade hematite itabirite concentrate. This project roadmap required an investment of more than CFA5,000 billion. This includes the construction of the mine, a 510 km railway line to the port of Kribi, and a mineral terminal on the same port platform.

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