The government of Sierra Leone has asked Shandong Iron and Steel Group, which now owns the Tonkolili iron ore project outright, to start processing some of the ore inside Sierra Leone.
Demand for the ore in China has begun to pick up after the deep downturn, and Freetown believes that this is the ideal time to push for greater investment within Sierra Leone, before the Chinese company begins to ramp up its capacity within its own home market.
Shandong bought a 25% stake in the venture from UK-registered African Minerals Ltd (AML) in 2012, and subsequently bought out the project after AML ran into difficulties as a result of falling demand and prices for the Tonkolili ore. The Chinese firm currently ships all output from Tonkolili to the Port of Qingdao for processing.
Freetown is currently assessing which incentives it could introduce to encourage domestic processing. The China Iron and Steel Association led a delegation of potential investors to the country in early November, in order to discuss the investment. The association’s vice president, Hou Jun, has suggested that investment of US$700M will be required to develop a processing plant.