London - Anglo American has struck an exploration deal in Gabon which could hand it ownership of the Mebaga iron ore project, as the miner and unit Kumba Iron Ore look to Africa's untested regions for growth in the steelmaking ingredient.
Exploration and development firm Ferrex, focused on iron ore and manganese, said on Thursday that it had signed an agreement with Anglo and majority-owned Kumba, according to which the major will fund the exploration of the Mebaga project and surrounding areas for up to two years.
The deal could see Anglo refunding most of the exploration spending to date, Ferrex said.
The global mining firm, which will manage the exploration work, could also eventually move to 100 percent ownership of the mine project.
In an environment of cooling prices - with major miners still grappling with the impact of boom-year acquisitions that soured and ambitious projects where costs soared exponentially - Anglo and rivals have come under pressure to cut back the amount they spend on hunting for new mines, particularly in new frontiers like West Africa's iron ore-rich pockets.
Relatively low-cost and low-risk agreements like the deal struck with Ferrex, however, could provide a solution for both Anglo and the development firm.
Anglo, for its part, has already cut back the amount it spends on early stage projects and slashed its project pipeline, as it tries to boost returns for investors.
Exploration and development firms, meanwhile, have struggled to raise cash on public markets to fund increasingly costly projects, forcing them to consider alternatives to the go-it-alone strategy - such as partnerships with majors.
Anglo owns almost 70 percent of Kumba Iron Ore, whose main producing assets are in South Africa, but which has long expressed an interest in iron ore projects in West Africa, a region with huge potential where only a small minority of deposits discovered have made it into production.
Shares in AIM-listed Ferrex jumped 8 percent in early trade. - Reuters