* Arcelor to expand rail capacity to 20 mln T/year by end2015
* Rail will not have spare capacity even after Arcelorexpansion
* Liberia says rail has 50 mln T/year potential capacity
* Arcelor to produce 5-6 mln T of ore in Liberia next year
By Maytaal Angel
LONDON, April 11 (Reuters) - Mining companies in Guinea suchas Sable Mining, who need a means to begin exportingiron ore, will have to wait years to make use of an existingrail link through Liberia, the railway's operator ArcelorMittalsaid on Friday.
Liberia, which neighbours Guinea, has an existing rail linkto the Buchanan port on the Atlantic. This offers a far shorterand cheaper export route for deposits such as Guinea's MountNimba than a potential route across Guinea itself, which wouldtake years to develop and require heavy investment.
The export route is vital for mines to be profitable atcurrent prices. <.IO62-CNI=SI>
While ArcelorMittal, the world largest steelmaker,is open to sharing the railway, it says it will not have anyspare capacity even after it expands the line to an annualcapacity of 20 million tonnes by the end of next year.
"I'm sceptical that we will see ore flow from Guinea throughLiberia in the next two years, I think it will take longer thanthat, but I think it's a good thing for Guinea and Liberia tomake this happen," ArcelorMittal's head of government andcommunity relations, Joe Matthews, told Reuters.
The billions of dollars required to build rail or roadconnections have frozen many West African iron ore projects andrendered others all but impossible in an environment ofuncertain prices and tough access to cash.
Co-operation with neighbours is crucial for Liberia - anemerging iron ore producer - and for Guinea, one of the world'spoorest countries whose giant untapped reserves could help itprosper.
Liberia's deputy minister of operations at the ministry ofmines, Sam Russ, told Reuters on Wednesday that he expected tosee Guinea's ore flowing through his country in the next coupleof years.
"We're looking at a very aggressive schedule. The frameworkhas not been worked out (but) the heads of state of Guinea andLiberia are in agreement. I think in a year or two we'll see theproject going on stream," Russ said.
CONSTRAINTS
ArcelorMittal exported around 5 million tonnes of iron orefrom Liberia last year using all the current capacity on itsrail line.
It expects to export the same amount this year, and around5-6 million tonnes next year, with the railway's capacityexpansion scheduled for completion only towards the year-end.
It said that just assembling the equipment to expand theline took 18 months.
For Sable to use the line in two years' time, it would needto assemble equipment, expand the line and build an unloadingfacility at the port all within that timeframe.
In addition to these technical challenges, there could befinancial as well as legal delays in concluding the frameworkunder which stakeholders Guinea, Liberia, ArcelorMittal, Sableand other miners will operate.
"I don't know what Sable's financial capabilities are but ifthey have to get ready in the next few years they must have donelots of work already in Guinea," said Matthews, speaking on thesidelines of a West Africa mining investment conference inLondon.
He added that Liberia and Guinea are very constrained interms of funds to help expand the railway, and want miners totake on all the related costs.
Liberia's Russ remained optimistic: "Feasibility studieshave shown that the potential capacity of the line is 50 milliontonnes per year. Depending on signal rearrangement you canincrease capacity. If you have sidings where trains can move offyou can increase capacity."
Aside from Sable Mining, export through Guinea is alsocritical for the other Mount Nimba deposit owned by major minerBHP Billiton and gold miner Newmont.
Brazilian mining firm B&A Mineracao recently pulled out oftalks to buy BHP Billiton's stake in Mount Nimba amid questionsover Guinea's political stability and whether the governmentwill allow firms to export through Liberia. (Reporting by Maytaal Angel; Editing by Anthony Barker)
