Amalia Gold moves into Liberia.

A small South African mining house, Amalia Gold, has landed a deal with the Liberian authorities giving it exclusive rights to develop the West African country's mineral resources including offshore oil and gas reserves.

Under the terms of the agreement, which was won from under the noses of South Africa's bigger mining corporations, Amalia and the Liberian state have set up the Liberian Resources Corporation (LRC). An Amalia subsidiary, Holistic Resources West Africa, will run LRC and hold a 40% stake.

Equity in Holistic Resources, recently floated on the London Stock Exchange, is held by Amalia and Commonwealth Gold, the offshore arm of the South African company also with a London listing. LRC's formation was formally guaranteed ahead of the recent elections by the signing of an agreement with the Transitional Council in Liberia.

The agreement is being seen as a major coup because it is based on future profits and mutual benefits rather than an advance cash transaction.

The geology of the country is largely unexplored but significant deposits of diamonds and gold are known to exist. A huge informal trade based on small-scale alluvial mining is well established. The geological structure also indicates that large deposits of nickel and bauxite are also likely to exist while prior to the eight-year civil war Liberia was a major exporter of iron ore. Holistic Resources hopes to make initial earnings from the regulation of Liberia's informal alluvial gold and diamond mining industry but the next project likely to bear fruit is the resuscitation of iron ore exports.

Data on deposits is now being evaluated and it is anticipated that potential investors and former buyers of the ore will be approached within the next 6-12 months.

Liberia is thought to have 4.4bn tonnes of inferred iron ore deposits with at least 246m tonnes of proven mineable reserves in the north-west alone.

Data on the deposits in the Nimba Mountain range, which spans the border with Guinea, has been gleaned from Swedish company Granges which was formerly active in the area. It is thought that capital expenditure of up to $700m could be needed to boost output to an envisioned 50m tonnes per year. At one time Liberia exported 27m tonnes of iron ore per annum, mainly to Europe, because its comparative proximity gave it a $2-3 per tonne advantage on Brazilian ore. Major steel-producing countries are likely to support this initiative as there is some unease over the Australian and Brazilian dominance of the global iron ore export market.

Ore on the Liberian side has been heavily worked but there are plans to revive a plan to export ore from the 460m tonne Guinean deposit through the Liberian port of Buchanan. At 66.7% Fe content the Guinean deposit is thought to be the best in West Africa.

French company, La Source, has investigated building a 1,000km railway to Conakry for the ore but this is likely to engender opposition from environmentalists and would involve massive capital expenditure. Buchanan, at 180km, is far closer to the deposit and a rail link is already in place. However, 90% of the sleepers are said to have been removed for use as firewood.

Another deposit to be looked at is the Bong deposit, south of the Nimba Mountains. This was mined by the German company Exploration und Bergbau, a subsidiary of steel giant Thyssen, at a rate of 7m tonnes per year until 1989 when fighting saw the abandonment of the mine and the 3m tonne per year ore pelletising plant. There is thought to be sufficient ore to continue mining at this rate for another 12-15 years but all equipment has been destroyed.

Many of the deposits elsewhere in the country have an iron content of under 50% and would have to undergo a costly beneficiation process. There is some disquiet amongst European companies active in Liberia before the civil war but Amalia has stated that it will respect the rights of any companies formerly involved in the country.

Should the iron ore export business get off the ground it could provide the impetus for mineral-based industrial business elsewhere in the region as a proposal to build an iron carbide plant on the Gabonese coast would provide a market for the ore. Gabon is hoping to utilise its own gas resources but as its own ore deposits are undeveloped and lie far inland at Belinga it would need to import iron ore either from Liberia or alternatively Brazil.