PEPEL, SIERRA LEONE – Red piles of iron ore and rusting railway wagons in the deserted stockyard at the port of Pepel bear silent witness to a crisis engulfing Sierra Leone’s mining industry and threatening others across West Africa.
The conveyor belt out to the jetty on the slow-moving Rokel river has remained idle for most of the past few months as only a handful of ships have anchored at the moribund port.
At the height of the commodities boom last decade, West African countries became magnets for miners seeking untapped iron ore, diamonds, gold, bauxite and other minerals.
In Pepel, locals anticipated an economic surge for their civil war-ravaged country when London-listed firm African Minerals (AMLZF.PK) started shipping ore four years ago from its Tonkolili mine.
Discovered in 2008 and lying some 200 km (124 miles) to the northeast, Tonkolili is one of the world’s largest iron ore deposits.
But a 60 percent slump in iron ore prices .IO62-CNI=SI over the past year, amid a slowdown in Chinese consumption, brought a bonanza that had been expected to last 60 years to a screeching halt.
The iron ore slump hit debt-strapped African Minerals hard. Prices fell below its high costs, forcing it to shut operations in November, and it went into administration in March after failing to repay its partner, China’s Shandong Iron and Steel Group.
“We were devastated when we heard that the company was closing down,” said Pepel’s chief Alhaji Bai Adam Kabbah. “We don’t want this company to leave us, as we have started deriving some benefits.”
Shandong acquired the 75 percent stake in Tonkolili it did not already own last month and has pledged to invest $600 million (£380.7 million) and increase production by 25 percent.
Yet, despite an announcement by President Ernest Bai Koroma this month that production would restart soon, it was not clear when that will happen and if it would be profitable.
A spokesman for Shandong said the timing of the reopening and the expansion had not yet been defined.
Across the region, dozens of mining projects that attracted investors when iron ore hit $190 per tonne in 2011, have either stalled or been abandoned as prices hover around $60.
With analysts saying prices may stay low for years, it could sound a death knell for West Africa’s iron ore industry.
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