The Ebola Crisis and Iron Ore in West Africa


Of the 4,922 Ebola related deaths reported by the World Health Organization, all but 27 of the cases have occurred inside of the iron ore rich countries of Sierra Leone, Liberia and Guinea.

One of the unnoticed aspects of the tragedy in Africa is the disruption to the steel supply chain. Overall, iron ore pricing has fallen 39% this year, and the impact of Ebola on it has been dramatic. One estimate warned that the cost of the crisis will add $1 per ton of iron ore produced.

Used in steel making, iron ore mining accounts for a huge portion of the gross domestic product in these areas and employs thousands of people. Significantly, none of the mines in the region has reported any cases of Ebola among their workers. In fact, preventative actions have been implemented on site at these facilities to address concerns about spreading the disease.

Nonetheless, the deadly virus is taking its toll on these companies and iron ore prices in general. The challenge for them is how to provide a healthy and safe environment while keeping their production stable. ArcelorMittal, the world’s largest steel maker is continuing its existing operations in Liberia, but it is suspending its expansion plans in the country.

Dealing with Ebola in Western Africa

While the delay will most likely cost ArcelorMittal money, the other two major companies in the area are struggling to remain open. African Minerals and British based, London Mining both have seen their stock drop more than 90% this year. All three, however, remain steadfast in their commitment to their host communities and have dedicated substantial funds to the fight against Ebola.

London Mining’s managing director, Dan Desjardins commented, “We are part of this nation, and we believe it is our duty to provide what we can to stem the spread of this disease.”  Underscoring their perseverance, London Mining is building a 130 bed treatment center while negotiating a sale to keep the Marampa facility in service.

To date, the U.S. has averted a catastrophe as a result of the Ebola outbreak. Steel prices have remained strong as well, but the depressed value of raw materials to produce steel in an integrated mill has made that process competitive with the electric arc furnace (EAF) process.

Ebola is a global threat and it will require a cooperative effort to stop it from spreading worldwide as quickly as it has in West Africa. It appears that the iron ore mining companies in the epicenter of the battle are drawing on all of their resources to end the suffering.

Archives

Copy link
Powered by Social Snap