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BHP Billiton Prepares To Sell Stake In Guinea Major Iron Ore Deposit

LadleBHP Billiton, one of Australia’s largest and most prominent mining companies, has been actively seeking a buyer for its sizable stake in a huge and rich iron ore deposit which is located in Mount Nimba in the African nation of Guinea, close to the border of neighbouring Liberia.

The company’s upper management decided earlier this year to divest itself of any assets it owns in West Africa so that it can invest in other parts of the globe, places where it does not currently have any business interests.

After letting it be known that it was willing to, actually that it wanted to, sell its 41.3% share in the rich iron ore deposit, BHP Billiton was able to find a willing buyer. It is ArceloMittal, the world’s largest -- be far -- steelmaker. The deal is said to be imminent and, when completed, will involve the transfer of five hundred million dollars ($500 Million in U.S. funds) to the Australian mining conglomerate.

That infusion of cash will almost immediately enable BHP Billiton to explore new purchase opportunities in Asia, other parts of Africa, in the Western hemisphere, as well.

Of course, new investments will almost certainly lead to new projects. And, when that happens, Australian workers are likely to benefit.

While BHP Billiton is preparing to sell its substantial holdings in the iron ore deposit, there are other partners in the venture who have yet to express any interest in selling their shares. These companies include Newmont Mining and Areva, a well-known French mining firm.

BHP Billiton and ArceloMittal offered no formal comments on the sale, but industry analysts claim it’s a “virtual done deal” that will be finalized just as soon as executives for both companies “sign on the dotted line.”

Interestingly, and perhaps importantly, ArceloMittal is already heavily invested in iron ore projects in nearby Liberia. It also operates the rail line that runs directly to the Atlantic seaport of Buchanon which is the only way that companies mining ore at Mount Nimba can carry it to to the world’s export markets.

For that reason alone, the purchase of BHP Billiton’s sizable stake in the iron ore deposit makes lots of sense for ArcelMittal. By ll accounts, the purchase is a clever business move.

Prior to reaching its current tentative agreement with ArceloMittal, BHP Billiton had been engaged in talks with B&A Minercao, a large Brazilian company that, for a few months, seemed intent on purchasing BHP Billiton’s stake in the iron ore deposit. When those talks collapsed, ArceloMittal “filled the gap.”

The soon-to-be-completed sale fits right in with BHP Billiton’s global strategy. It wants to exit West Africa and concentrate its efforts elsewhere. This sale will help to speed its departure from Guinea, Liberia and other countries in the region.

The sale of its shares in the Mount Nimba project will also enable the huge Australian company to cut expenses, at least in the short term.

The company’s strategy appears to be sound and sensible and will likely prove beneficial to Australian mining workers when new investments take place.

At this time, however, there has been no mention of any pending new acquisitions or purchases. Nevertheless, BHP Billiton is a huge, aggressive and wealthy company that is constantly looking for new investment opportunities. It seems certain, even likely, that this successful organization will find ways to invest the money it receives for the sale of its stake in the iron ore deposit in Guinea.

That is almost certain to take place sooner rather than later.

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