Iron ore producer London Mining heads for administration

London Mining is probably one of the first of the many small-scale world iron ore miners that are likely to buckle under the huge economies of scale that are being achieved by dominant producers BHP Billiton, Rio Tinto and Vale in a market in which low prices have taken hold. For instance, West African miners, like London Mining, produce at costs of about $75-85 per ton delivered to China, compared with the "Big Three" whose costs range around $45-55. Given this scenario, it is easy to understand why recent talks on the acquisition of London Mining by JSW Steel (India's third largest steelmaker) came to nought. GK.

(Reuters 16 October 2014) – Embattled West African iron-ore miner London Mining Plc said on Thursday that its board had decided to place the company into administration.

The company, which owns the Marampa mine in Sierra Leone, has been battling high costs, a sharp drop in iron prices and the impact of the Ebola virus on operations in West Africa.

"The board and management will be working with the administrator of London Mining Plc to maintain the Marampa mine as a going concern, although at this time this is not confirmed," the miner said in a statement.

London Mining warned in late September that it did not have enough cash to operate its only mine and that it was in talks about a potential "strategic investment".

However, it said last Friday that the only potential investors left in the strategic process were unlikely to let the company continue as a going concern. It did not name the potential investors.

London Mining was one of several junior miners set up in West Africa during the boom years on the back of rising demand for iron ore, hoping to turn the region into a new producing frontier to compete with Australia and Brazil. Instead, they have battled infrastructure woes, high costs and low prices.

Trading in London Mining shares were suspended last week at the request of the company.