Frustrated Gabon to Recall China’s Rights into Iron Ore Deposit, Mulls Transfer to Australia’s BHP Billiton – Report

China's loss could become Australia's best gain.

Apparently irked over China's slow progress in developing the Belinga iron ore deposit, the government of West African nation Gabon has been reported mulling to transfer the mine's exploration and ownership rights to BHP Billiton Ltd., in what could be a winning moment for the latter as it works to branch out its main production base away from Western Australia's Pilbara region.

Citing unidentified sources, Bloomberg News reported Gabon government authorities and officials from BHP Billiton Ltd. have been holding talks since December over the possible transfer of rights. Both parties are reportedly scheduled to hold further discussions in e in February in Cape Town.

Mining giant BHP Billiton Ltd. is currently developing a manganese mine in Gabon. It reportedly has offered to install more than 10 exploration drilling rigs at the Belinga iron ore deposit after representatives from Gabon revealed the government is frustrated over the status of exploration and development works at the site in the northeast of the country.

The world's second-largest economy, through China Machinery Engineering Corp., acquired the rights to explore the Belinga, Gabon's biggest iron ore deposit, from as early as September 2006 through a signed initial agreement with federal authorities. It was in 2009 that China Machinery Engineering Corp. finally signed and entered into a 25-year contract to build and operate the mine, located near Gabon's border with the Republic of Congo. The agreement included the construction of a hydropower station, a port and a 500-kilometer (310-mile) railway. China Machinery had said the Belinga iron ore deposit would cost $3.5 billion, with production yield expected at 30 million metric tonnes annually.

However, the government of Gabon found that China Machinery Engineering Corp. had been lagging behind, after a government-hired consultant reviewed the status of the Belinga iron ore deposit and discovered exploration and development works had been slow.

One of the cited reasons for the slow progress had been the environmental protests by concerned Gabon residents, claiming the Belinga iron ore deposit is situated right within Gabon's Ivindo National Park, a rainforest home to forest elephants, western lowland gorillas and chimpanzees.