JSPL ends talks for acquiring Afferro Mining

Jindal Steel and Power Limited (JSPL) has pulled out of the discussions for acquisition for Afferro Mining site in Cameroon saying the project was not financially viable.

The mutual exclusivity period between both the companies has ended without any conclusive outcome, JSPL said in a statement.

The company said low grade magnetite and related problems in beneficiation, new mining code in Cameroon, financial unviablility, lack of infrastructure (road, rail, port, power) were the major deterrants for acquiring the Afferro mining site.

JSPL further said much of the iron ore reserve at the Afferro site is low grade magnetite for which beneficiation reports have not been satisfactory. The initial reports suggest that beneficiation to the desired percentage will be possible at high costs and low yields, which will reduce the overall potential of the deposit.

Secondly, Afferro has four major concessions of the two biggest and explored concessions are due for renewal in 2013. Under the new mining code in Cameroon, companies can seek exploration permit for seven years only. The seven year period for both the major concessions is expiring in 2013. In addition, 50% of the license area will have to be given back to the government, if at all an extension is provided under special conditions. The future potential of the area, thus, remains unclear.

The company further said it is in advanced level of discussions with many other parties in Africa for iron ore mines.