Mining company at centre of fight against Ebola in Sierra Leone goes bust
The London-listed company at the centre of coordinating efforts to fight the spread of Ebola in Sierra Leone has gone bust.
London Mining, which employs 1,400 people at its iron ore mine in Marampa, 120 miles east of the capital Freetown, and is building an Ebola treatment centre, appointed administrators on Thursday after failing to find a buyer for the severely debt-laden firm.
The collapse of the company raises fears about international efforts to combat Ebola, which has claimed about 4,500 lives in Sierra Leone, Guinea and Liberia.
London Mining is building a 130-bed Ebola treatment centre near Lunsar, 60 miles east of Freetown, and has donated Le 709m (£103,000) to Sierra Leone’s efforts to fight the spread of the disease.
There are also fears about the increased risk to London Mining’s staff if the mine seizes operations. At present, all staff have their temperature checked twice a day, and medical staff are on hand to address any concerns. None of the company’s employees have yet contracted the disease.
London Mining and its administrators said they would do all they could to keep the mine going while they search for a buyer, but said “although at this time this is not confirmed”.
Dan Desjardins, London Mining’s managing director, who has been central to coordinating efforts to fight the spread of Ebola, said on 8 October: “We are part of this community and this nation. A strengthened healthcare system is essential for safeguarding the health of our employees and our host communities .
“We believe it is our duty to provide what help we can to stem the spread of this disease.”
The heavily-indebted company, which has been pushed to the brink by collapsing iron prices combined with the difficulty of working through the Ebola crisis, is one of Sierra Leone’s biggest employers and contributes about 10% of the nation’s GDP.
The administrator, PwC, said the company has already held “advanced discussions” with several potential buyers, and “it is hoped these discussions will mean that a sale of Marampa can now be concluded quickly, with operations continuing and the workforce protected”.
Russell Downs, joint administrator and partner at PwC said: “The collapse in iron ore prices and the resulting impacts on this business have been very dramatic. Our focus is to ensure that a buyer is found for the Marampa mine operations given it is such an important part of the Sierra Leone economy. We are liaising with key stakeholders and asking for a short window of forbearance as we look to conclude a transaction.”
Graeme Hossie, London Mining’s chief executive, said: “I salute all our employees for their dedication and contribution in creating what is now an important part of Sierra Leone’s economy and ongoing development.
“I also applaud them for the ongoing leadership role our team has played within the private sector in Sierra Leone in helping address the challenges of the current Ebola crisis. The Marampa mine retains excellent fundamentals and it is our sincere wish for it to find the appropriate financial support to continue operating over the longer term.”
London Mining, which has been operating in Sierra Leone since 2005, suspended trading in its shares on 10 October after warning that it did not have enough cash to continue to run the mine. The shares, which had traded above £4 in 2011, were suspended at 0.75p valuing the company at just £1m.
Potential buyers for the company include India’s third-largest steelmaker, JSW Steel, and Frank Timis, the founder of African Minerals, which owns a neighbouring mine.
Standard Chartered, the company’s biggest lender, had already hired PwC to negotiate with potential bidders.
London Mining has warned that the Ebola outbreak could cost it an additional $1 per tonne of iron ore produced.
Liberia’s finance minister, Amara Konneh, warned on Thursday that the Ebola crisis would stall the countries economy for at least the next year. “Growth is expected to be 0% for 2015,” he said in an interview with Monrovia-based Front Page Africa.
Konneh’s prediction is worse than the latest World Bank estimate of 2.5%, down from the previous projection of 5.9%.
Konneh said Ebola has “seriously affected economic activities and livelihoods throughout the country with domestic food production, mining activities, hospitality industry, and transport services all declining”.
The Ebola crisis has caused billionaire Lakshmi Mittal’s steel empire ArcelorMittal to delay expansion of its iron-ore mine in the country and Malaysian giant Sime Darby has reduced its Liberian palm oil operations.