Sierra Leoneans hadn’t seen a functioning locomotive engine in 30 years until African Minerals Ltd. rebuilt the rail network to export iron ore in November, almost a decade after civil war ended.
An iron-ore boom in West Africa, which may have deposits to rival Australia’s ore-rich Pilbara region, is motivating African Minerals, as well as miners Rio Tinto Plc and ArcelorMittal, to spend $25 billion on 3,170 miles of new and rebuilt railways and 11 new ports in West Africa, according to JPMorgan Chase & Co.
African Minerals is already benefiting, with its stock gaining 25 percent this year. More is to come: Nations including Guinea, Sierra Leone, Liberia and Republic of Congo may supply 250 million tons, or 9 percent of global iron ore output, by 2020, according to mining researcher Raw Materials Group.
“The standout development is African Minerals,” according to Matt Fernley, an analyst at GMP Securities Ltd. in London who said the stock is his “top pick in the sector. If you’re in Africa in iron ore, you want a world-class deposit and you want control over your own infrastructure. They have both.”
Iron ore exports from African Minerals’ Tonkolili and London Mining Plc’s Marampa mines are set to boost Sierra Leone’s economy by 51 percent this year, the fastest projected pace of any nation in the world, according to the International Monetary Fund. Guernsey, U.K.-based African Minerals is spending $1.2 billion on rails and ports and developing a mine in the first phase of its Tonkolili project.
In Guinea, where two coups have ousted presidents since the mid-1980s, Rio Tinto is spending $1 billion on the first phase of its Simandou project, which is estimated to produce 95 million tons of ore by 2015. London-based Rio plans to invest more than $10 billion on an iron-ore mine, 650 kilometers of industrial railway, 21 kilometers of tunnels and a new deep- water port south of the capital, Conakry.
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