April 13, 2010 / 2:15 PM / 10 years ago

UPDATE 2-Gabon to review China's Belinga deal, Vale hovers

* Gabon says to review 2006 deal with CMEC

* Belinga iron ore project stalls, govt wants action

* Brazil’s Vale says market needs projects like Belinga

(Adds further Gabon comment, background)

By Phal Gualbert Mezu

LIBREVILLE, April 13 (Reuters) - Gabon is ready to review a 2006 deal it signed with a Chinese firm to develop the Belinga iron ore project in the central African country, a government official said late on Monday.

The move came soon after a delegation from Brazilian mining company Vale (VALE.N)VALE.SA met Gabon’s President Ali Bongo, who has made expansion of the country’s mines a cornerstone of his economic policy since he replaced his late father last year.

China National Machinery and Equipment Import and Export Corp (CMEC) beat Vale in 2006 to sign an agreement with Gabon under which it would build a mine, but work has not advanced beyond feasibility studies and the project has drawn heavy criticism from environmental groups.

Gabon, for whose government diversifying the country’s oil-dependent economy is a top priority, is keen that Belinga comes to fruition, and a review of the agreement with CMEC may open the door for Vale.

“An official letter has been sent to the Chinese party to invite them anew to the negotiating table,” said a Gabonese government official who is working on Belinga.

“It is a question of reviewing the agreement signed with the Chinese party,” he said, speaking on condition of anonymity.

GABON DIVERSIFYING

Gabon may invite parties other than CMEC to participate in Belinga, the official told Reuters, in particular “the Brazilians, who have proven expertise,” he added.

As in many African countries, China is a consumer of raw materials from Gabon. A subsidiary of state-owned oil firm Sinopec (0386.HK)(600028.SS)(SNP.N) signed a deal in 2004 to buy crude oil from Total Gabon (EGAB.PA), the local operation of French oil major Total.

China’s Vice Minister of Commerce Fu Ziying is due to visit Gabon next week as part of a tour of five African countries.

Vale is the world’s biggest producer of steelmaking raw material iron ore, prices of which .IO62-CNI=SI have doubled since September on the market for immediate delivery.

“Gabon contains mineral deposits of good quality and good volume, such as the Belinga project, and growing global demand necessitates the establishment of new projects,” Vale’s Director of Mineral Research Eduardo Ledsham said during his visit.

President Bongo expressed happiness that Vale, which is already active in Gabon’s manganese industry, “wishes to contribute to the progress of Gabon,” the government official said.

In a statement earlier this month, ratings agency Fitch pinpointed Belinga as one of the projects that would help lessen Gabon’s reliance on oil exports as supplies from its main wells declines.

The country, one of the few in the region to have launched a Eurobond 362420AA9=RRPS, has earned billions of dollars from oil over decades, raising its per capita gross domestic product well above that of its neighbours.

However, output has been falling for years and at around 250,000 barrels per day is far below its peak. (Writing by Daniel Magnowski; editing by James Jukwey)

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