Mining company African Minerals (AML) has failed to repay its lender and partner in the Tonkolili Iron Ore project Shandong Iron and Steel Group (SISG) and is set to appoint administrators.
Shandong which holds 25% stake in Tonkolili and took control of the holding companies in the project after taking on some of the debt of AML from banks and demanding immediate repayment recently.
The company said it is working to identify a suitable insolvency practitioner to represent and protect the interests of its creditors and stakeholders.
According to AML, the decision to apply to appoint administrators does not directly affect the situation of the operating companies which own and operate the mine and related infrastructure.
The companies are completely under control and responsibility of SISG through one subsidiary, which has a 25% shareholding and another that has taken control as secured lender of AML's 75% shareholding.
Following this, AML can no longer make decisions in respect of the operating companies.
At present, SISG completely holds responsibility of the future of the operating companies, and their ability to pay creditors, obtain funding, and restart operations.
In order to cover payment of February salaries for national and expatriate staff in Sierra Leone, funds have been released from the operating companies' restricted bank account in Hong Kong.
In late November, AFL closed operations in Sierra Leone over a lack of working capital.
Image: African Minerals' mining operations. Photo: courtesy of African Minerals.