A worker in an ArcelorMittal blast furnace in Hayange, France.
STEEL giant ArcelorMittal and BHP Billiton have terminated discussions to jointly develop their iron ore projects in Guinea and Liberia.
The companies will now independently develop the mines.
West Africa is a burgeoning iron ore growth area and many major companies formed joint ventures to develop the infrastructure needy projects in the past year.
In January, ArcelorMittal and BHP Billiton announced they were talking about combining their iron ore interests in the region but the move, aimed at creating a platform for a West African iron ore business, which includes the construction of railway and other infrastructure, failed.
"The companies were unable to reach a commercial agreement," ArcelorMittal said citing a disagreement over proportional ownership and problems with synchronising timing of development.
ArcelorMittal said it plans to begin shipping from its iron ore site in Liberia by the second half of 2011 despite the end to talks.
ArcelorMittal is spending close to $US1.5 billion ($1.6bn) to rehabilitate an old iron ore mine in Nimba County and develop railway and port infrastructure.
BHP Billiton said it too is going forward with plans. In June it announced that it signed an agreement with the Liberian government to mine four iron ore leases. BHP Billiton has spent $US50 million on exploration in Liberia since 2005.
BHP Billiton also has a 43.5 per cent interest in Guinea's Euronimba, which owns 95 per cent of the Nimba project.
"Guinea and Liberia continue to be an important part of our plan to create an iron ore business in West Africa," a BHP Billiton spokesman told Dow Jones Newswires. "This decision doesn't change our commitment."
Macquarie Bank analysts estimate the companies' Liberian projects could each produce 15 million tonnes a year with a forecast ArcelorMittal production start date of 2011 and BHP Billiton date sometime from 2015.
Analysts said the region has the potential to be a mega ore producer akin to Western Australia where BHP Billiton and Rio Tinto mine much of their iron ore.
BHP Billiton or ArcelorMittal could still form another joint venture with a different party given the recent trend of iron ore joint ventures in the West African region, analysts said.
Such combined efforts include the biggest iron ore miner Vale, which acquired a 51 per cent stake in Guinea iron-ore mining company BSG Resources and Rio Tinto which is developing its Guinea Simandou project with Aluminium Corporation. of China.
"It's not a huge significance for them (ArcelorMittal and BHP) because it was very early stage talks," said Charles Kernot, an analyst at Evolution Securities.
"There are other people in that part of the world doing things so other deals could emerge," Mr Kernot said.
For example, analysts at Renaissance Capital said they believe China is seeking to source more than 20 per cent of its iron ore needs from the region, potentially 150 million tonnes per year over the next decade.
Iron ore mining and exploration company Bellzone Mining last month agreed to a multi-billion dollar financing package with China International Fund to develop its Guinea iron ore project.
Source:theaustralian