Shandong Steel Invests in African Minerals Mine

Shandong Steel will invest US$ 1.5 billion for a 25 percent stake in African Minerals' Tonkolili mine located in Sierra Leone

(Beijing) – Shandong Iron and Steel Group, one of China's largest state-owned mills, has agreed to invest US$ 1.5 billion in African Minerals in an aim to expand its access to iron ore assets in Africa.

According to African Minerals, Shandong Steel will invest US$ 1.5 billion to the miner's Tonkolili project. The Wall Street Journal reported that the investment will grant Shandong Steel a 25 percent stake in Tonkolili, which has a total value of US$ 6 billion.

The company also reached an agreement enabling Shandong Steel to buy 10 million tons of iron ore from Tonkolili at a discount every year.

African Minerals said it will use the capital from Shandong Steel to construct a railway line linking Tonkolili mine and the coast.

The Tonkolili mine is located in Sierra Leone in Western Africa. The mine has a proven reserve of 10.5 billion tons of iron ore. It contains a hematite reserve that is estimated to have 100 to 200 million tons in deposit.

Shandong Steel's investment follows China Railway Materials Commercial Corp., which paid US$ 247 million to become African Minerals' second largest shareholder on June 18.