Ebola Virus Brings Mining to a Halt in West Africa

Simandou operations. Source: Rio Tinto Simandou.

It wasn't all that long ago energy and mineral resources were rushing pell-mell into Africa in a bid to exploit its vast wealth, but in the continent's western nation of Guinea activity has been brought to an abrupt halt because of the ebola virus outbreak that's struck the country killing 84 people. 

Brazilian mining giant Vale (NYSE: VALE  ) reported it had evacuated six members of its international staff out of Guinea and gave local workers leave until the crisis is brought under control. Rio Tinto (NYSE: RIO  ) has apparently contributed $100,000 to help contain the virus' spread. So far, more than 120 people have been struck with the virus, one of the most lethal known to man as it's reported to have a 90% mortality rate when left untreated.

Inspired by an earlier outbreak of the virus, the 1990s movie Outbreak perhaps overstated its horrific symptoms -- e.g., the liquefying of internal organs -- but internal and external bleeding is a possibility (giving it its former name, ebola hemorrhagic fever), though the World Health Organization says it's more commonly characterized by the sudden onset of fever, intense weakness, muscle pain, headache, and sore throat. That, however, is followed by vomiting, diarrhea, rash, impaired kidney and liver function, and ultimately death if untreated.

Where much of western Africa is just beginning to come to terms with its vast mineral wealth, Guinea is home to one of the world's richest mineral deposits, the $50 billion iron ore resource in the Simandou mountains. Vale, Rio Tinto, and BSG Resources are locked in a lengthy and complicated legal battle over who has rights to the resources, though it's possible the country itself will just take control of them once more (it's alleged the country's former dictator improperly stripped Rio Tinto of its rights and sold them to BSG who in turn took on Vale as a partner).

Guinea is tragically poor, raped by its own government over the years, but has vast mineral wealth. In addition to the iron ore in Simandou, it also has one of the world's largest reserves of bauxite and significant quantities of diamonds, gold, uranium, and even oil in the waters off the country's coast. With the virus outbreak and the fear it is spreading to surrounding countries, with both Liberia and Senegal closing their borders.

In an abundance of caution, miners are putting their staff on "lockdown," even though the primary concern is the spread of the disease in the densely populated capital rather than in the rather remote mining areas of the country.

The miners might not feel any financial impact from the virus at the moment, since Vale, for example, has seen its interest in Simandou suspended until the government decides how it wants to proceed. But if the virus spreads to neighboring countries -- and there are cases being reported in Liberia, Mali, and just today Ghana -- interest in the African continent might wane ultimately undermining the continent's efforts to become a major mineral power.

Boost your 2014 returns with The Motley Fool's top stock
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2905773, ~/Articles/ArticleHandler.aspx, 10/20/2014 1:14:02 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement