Escalating internal conflict threatens Mali’s iron ore exports

An escalation in fighting between rebel groups and government forces in the West African nation of Mali is threatening iron ore exports from the country, according to local miners and political observers.

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The export routes used by India-owned iron ore producer Sahara Mining to move material from its operations near Mali’s capital, Bamako, to the port of Dakar in Senegal have been affected by the conflict, a spokesman told Steel First on Monday January 14.

“The availability of inward-bound trucks to Bamako from Senegal [has been affected] so there is a slowdown in the movement of ore to Dakar,” Sahara Mining spokesman Ashish Kumar said.

The miner is shipping just 15,000 tonnes per month of ore from its operations at Tienfala, around 50km from Bamako.

Sahara Mining started operating in Mali in 2010, exporting high-grade lump iron ore to customers in China and India. The miner emerged last year as the country’s largest iron ore exporter.

Its iron ore output is as yet unaffected by the conflict and remains at a level of 50,000 tonnes per month.

French troops deployed
France launched airstrikes over Mali on January 10 in response to government pleas for help against Islamist fighters who have taken control of much of the landlocked country’s northern territory.

Intervention by the former colonial power in Mali comes a year after Tuareg rebels in the north of the country rose in an insurgency against the government, aided by Islamist group Ansar Dine.

The rebellion toppled the government in March 2012 and Islamist rebels now control around two-thirds of the country. The insurgency recently started pushing south, prompting France’s deployment of force.

Investor fears
The escalation in fighting has led other miners operating in the country to issue production statements in a bid to allay investor fears.

Gold miners in Mali, including RandGold Resources, have issued statements saying their operations are continuing as normal. Randgold noted that the conflict zones are around 700 miles away from its operations.

Mali’s other active iron ore producers and explorers, Sinosteel and Earthstone Resources, did not respond to requests for comment at the time of publication.

China-owned miner Sinosteel India has the capacity to produce around 30,000 tpm of high-grade lump iron ore and 10,000 tpm of iron ore fines from its operations close to Bamako.

Diversified Indonesia-based miner Earthstone has two iron ore projects in Mali.

‘Disaster’ averted
“The view on the ground is that the disaster of a rebel advancement to the capital has been averted by French forces,” Africa Practice analyst Manji Cheto said.

“If rebels do manage to advance to the south they will try to control mineral resources. If that happens, then anything is on the cards. Mali would effectively enter into a full-blown war,” Cheto added.

Mali has become popular with Canadian mining investors in recent years. The prices of shares in Mali-focused exploration companies have fallen significantly on the news of French troops being deployed in the country.

Fears that violence could spill across Mali’s borders to its resource-rich neighbours, such as Guinea and Cote D’Ivoire, have yet to be realised but miners and investors across West Africa will keep a close watch on the developing situation.

“There’s a need to provide a level of reassurance, now the threat is becoming more credible,” Cheto said.

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