In late November the president, Mohamed Ould Abdel Aziz, laid the foundation stone of a large infrastructure project to expand output of the state-owned iron miner, Société nationale industrielle et minière (SNIM), at its Guelb el Aouj site (January 2010, Foreign trade and payments). The project, Guelb II, aims to increase annual output of ore to 18m-20m tonnes by 2012, from current levels of 12m-13m tonnes, and to build a new plant with capacity to enrich 4m tonnes of ore a year. The plan also involves construction of a new power plant, as well as port and railway infrastructure. The total cost of Guelb II has been put at around US$750m, which will be met in part by assistance from donors such as the African Development Bank and the European Investment Bank (January 2010, Foreign trade and payments). Sphere Minerals, SNIM's Australian partner at the Guelb site, was in the process of being bought out by a UK-Swiss mining giant, Xstrata, as this report was going to print. On December 16th Xstrata acquired over 75% of Sphere's shares that were currently in issue. Although an Xstrata spokesman, quoted in mid-November, claimed that it was too early to commit to actual investment figures, Mauritania's mines and industry minister, Mohamed Abdallahi Ould Oudaa has told Bloomberg, a global information provider, that Xstrata will invest US$6bn in the country.

We expect global demand growth for steel, and by extension iron ore, to be sluggish in 2011-12, largely because the construction sectors of OECD economies are set to remain lethargic. However, SNIM will be hoping that its extra output will find buyers in Asia, and in particular China, where demand is expected to remain strong. The company's client base has already shifted radically eastward and it is well positioned to capture even more of Asia's demand for iron ore now that it is publicly trading ore on the Chinese spot market (October 2010, The domestic economy).