Timis's African Minerals agrees $1.5bn Chinese deal

African Minerals, the mining group with assets in West Africa, has signed a deal with a Chinese steel-maker for a $1.5bn (£989m) investment that will help to develop what its controversial chairman, Frank Timis, says could be the biggest iron ore mine in the world.

The group yesterday penned a memorandum of understanding with Shandong Iron & Steel, which is subject to due diligence and the two parties agreeing a discount for the iron ore produced.

The money will be invested in African Minerals' Tonkolili project in Sierra Leone. Mr Timis claims that resource could contain up to 10.5 million tonnes of ore.

Over the past year, African Minerals has made several announcements regarding investments. In a statement to the stock exchange last September, it said that a number of large mining groups were interested in building a stake in the group, including the FTSE 100-listed miner ENRC. ENRC has always refused to comment on the statement, which helped to push up African Minerals' share price by nearly 70 per cent over the last 12 months. Yesterday, a spokesman said of the ENRC statement: "Can we skip over that, let's not go there." The talks with ENRC have now ended.

Mr Timis is executive chairman and owns 15 per cent of the group, which has a market value of more than £1bn. He is also a former chairman of Regal Petroleum, which last month had its licence in Ukraine suspended. Regal was also fined a record £600,000 last year for "serious breaches" of Aim's rules, relating to its 2005 claim that a Greek asset could hold up to 227 million barrels of oil. It later admitted that the well was not viable.