India’s JSW Steel in talks to buy debt-ridden London Mining

5 October 2014 (Last Updated October 5th, 2014 18:30)

India-based JSW Steel is reportedly in talks to purchase the British iron ore mining firm London Mining.

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India-based JSW Steel (JSW) is reportedly in talks to purchase the British iron ore mining firm London Mining.

London Mining, which operates a small mine in Sierra Leone, has recently accumulated significant debts due to fall in the price of iron ore, driven by the low demand from China and increased competition.

The outbreak of the Ebola virus in Sierra Leone has drastically affected production at the mine, The Sunday Times reported.

In addition to production difficulties, London Mining was hit by the extra $2 a tonne being charged by cargo ships for docking their vessels in Sierra Leone, forcing the company to spend more on exporting its mineral.

"London Mining is likely to be cheap due to its low market value of $10m." 

According to a source close to the matter, London Mining is likely to be cheap due to its low market value of $10m, reported Reuters.

The deal is likely to appeal to JSW, as it comes at a time when the Indian Supreme Court has cancelled numerous mining licences in the country.

JSW is one of the worst affected companies as it is has been forced to stop production at its mines and import iron ore. Ten million tonnes of ore is expected to be imported this fiscal year ending 31 March 2015. Sources have told Reuters that the deal will allow JSW to meet some of its demands for the steel-making ingredient.

"Talks [with London Mining] have been going on for many months," the agency reported.

"JSW people have visited them also."

JSW's purchase may include African Minerals, a UK-based minerals exploration, development and mining company that owns a low-cost rail line and port in Sierra Leone.


Image: The Sierra Leone mine operated by London Mining. Photo: courtesy of London Mining.

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