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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.

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Rich Duprey

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time.

Having made the streets safe for Truth, Justice and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. So follow me on Facebook and Twitter for the most important industry news in retail and consumer products and other great stories.


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