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T Bumi Resources Minerals Tbk, a non-coal mining unit of coal giant PT Bumi Resources Tbk, is set to start iron ore production in Mauritania after securing an exploitation permit from the West African government.

The concession is expected see exploitation activities start between March and May this year, with an output of 600,000 tons of iron ore per year, Bumi Minerals CEO Kenneth Farrell said in an e-mailed statement released on Thursday.

Bumi Minerals is to boost output to 1 million tons of ore by 2014 in an 990 km2 area of iron ore, he added.

“We were happy to obtain the necessary exploitation permit early this month,” Farrell said in the statement, adding that the permit was obtained earlier, on Jan. 13.

Bumi Minerals has established a new business entity named Tamagot Bumi S.A. to fulfill a regulation in Mauritania that requires the establishment of a local firm to begin exploitation in the West African area.

“In this case, the government of Mauritania has exercised its right. Therefore, its ownership in Tamagot Bumi is 20 percent,” stated a Bumi Minerals file submitted to the Indonesia Stock Exchange (IDX).

Based on the regulation in Mauritania, all concessions that have received exploitation permits are required to divest a 10 percent stake of the respective concession at no cost to the local government prior to commercial productions.

The same regulation also gives the Mauritanian government the right to buy another 10 percent stake in these concessions for prices agreed by the buyers and sellers, according to Bumi Minerals statement.

Bumi Minerals was established in 2010 to take over the non-coal assets of Bumi Resources, including the 24 percent stake in PT Newmont Nusa Tenggara, with a diverse portfolio of minerals ranging from copper, gold and zinc to diamonds.

The company has planned to spend US$581 million on capital expenditures from 2011 to 2013, with most of them (or $275 million) being spent this year to develop five subsidiaries other than the one operating in Mauritania.

The other units are PT Citra Palu Minerals and PT Gorontalo Minerals with copper and gold concessions in Sulawesi, PT Dairi Prima Mineral with zinc deposits in North Sumatra and Konblo Bumi Inc. with diamonds and precious metal concessions in Liberia, West Africa.