The European Investment Bank (EIB) and SNIM (Société Nationale Industrielle et Minière) have signed a EUR 22.5 million financing agreement for the renovation of the Guelbs power station.
SNIM, a limited company established in 1978, is the only iron ore producer in Mauritania and the leading supplier to the major European steel-making groups, competing with Brazil, and the Canadian mines. SNIM operates open-cast iron ore mines, including the one at Guelb El Rhein, where the power station project aims to replace old generators which have been operating for 20 years with new sets.
The finance contract for renovation of the Guelbs power station was signed in Zouerate on 26 November by Mr Mohamed Saleck Ould Heyine, General Manager of SNIM, and Mr Philippe Maystadt, EIB President.
The President of the EIB and the General Manager of SNIM, together with Mr Alexander Burns, Managing Director of Sphere Investment Limited, also signed a memorandum of understanding relating to an equity participation by the EIB in the company El Aouj S.A., for which the terms of references were signed at Chinguetty on 28 November by Sphere Investment Limited and EIB Director General, Mr Jean-Louis Biancarelli.
Under the terms of this agreement, the EIB announced its intention to acquire a direct EUR 5 million equity participation in the Mauritanian company El Aouj S.A., a subsidiary of the Australian company Sphere Investments Limited.
This participation by the EIB will enable Sphere Investments Limited, in partnership with SNIM, to finalise the feasibility study on the exploitation of the Guelb El Aouj iron ore deposit and pelletisation of the ore.
If the results of the feasibility study are positive, as the initial phase appears to indicate, Sphere Investments Limited and SNIM will contribute to developing the exploitation of low-grade iron ore in Mauritania's Tiris region, a strategically important sector for the Mauritanian Government.
While the EIB loan to SNIM is aimed at consolidating the company's competitiveness, the acquisition of a stake in EL Aouj S.A. should contribute to the exploitation of new mining reserves and support SNIM in its diversification efforts.
The EIB, the European Union's long-term financing institution, is supporting Mauritania's industrial and mining sectors in accordance with the mandate entrusted to it under the Cotonou Agreement, which was concluded between the European Union and the ACP States. The mining sector and SNIM are playing a crucial role in the development of the Mauritanian economy and constitute one of the country's main sources of foreign reserves.
The EIB was established in 1958 by the Treaty of Rome to finance capital projects that further the core objectives of the European Union (EU). It also participates in the implementation of the EU's cooperation policy towards third countries which have cooperation or association agreements with the Union.
Currently, the Bank's loans in the African, Caribbean and Pacific (ACP) countries are granted under the ACP-EU Partnership Agreement, signed in Cotonou in June 2000. The total financial package available under the Cotonou Agreement amounts to EUR 15.2 billion for 2002-2006, of which EUR 11.3 billion is grant aid from the EU Member States, EUR 2.2 billion is managed by the EIB under the Investment Facility (replacing risk-capital financing), and up to EUR 1.7 billion is in the form of loans from the EIB's own resources. The Investment Facility is a revolving facility (the proceeds of loan repayments will be invested in new operations), aimed at supporting technically, environmentally, financially and economically sound projects in the private sector or commercially run part of the public sector.