London Mining Says Other Clients Want Ore Amid Glencore Dispute
Sept. 22 (Bloomberg) — London Mining Plc said it sees no problem finding other customers for its iron ore after Glencore Plc refused a prepayment for the steelmaking ingredient.
“We are trying to resolve the dispute with Glencore,” Chief Executive Officer Graeme Hossie said today in a phone interview. “Should it result in a termination of the offtake agreement, there are other parties wanting to step in.”
The company, which operates the Marampa iron-ore mine in Sierra Leone, fell as much as 13 percent in London trading. That brings the stock’s decline this year to 78 percent after a slump in ore prices and an Ebola outbreak in the West African nation. Hossie declined to comment on the size of the missed payment by Glencore, which has a contract to buy 2 million tons a year at spot prices until the first quarter of 2017.
A spokesman for Glencore declined to comment.
London Mining fell to the lowest in intraday trading since first selling shares in 2009. The stock traded 6.7 percent lower at 24.25 pence by 10:39 a.m. in London.
The company also has offtake agreements with Cargill Inc. and Vitol Group. London Mining, which is in talks with potential partners about funding the expansion of the Marampa mine, plans to produce 4.9 million wet tons to 5.1 million wet tons of iron ore this year.
London Mining said it’s in talks with its bank to provide short-term replacement funds, while the company has also agreed a termsheet for a $30 million facility from Afreximbank.
“This is not a situation that we’re happy with,” said Hossie. “It’s not clear a termination should follow this. That’s being considered.”
To contact the reporter on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net Dylan Griffiths, Tony Barrett
