The Perspective
Atlanta, Georgia
January 27, 2019

 

Dear [Mr. Editor]:

The recent article by Mr. Karweaye contains several inaccurate factual statements and a clearly misleading statement. 

First, the writer's statement of estimated production of fourteen trillion ounces of gold is simply ludicrous, as anyone can easily tell, and therefore is more likely to be a fabricated number than an honest mistake.  
Why?  Fourteen trillion ounces of gold, at US$1000 per ounce (about 20% less than the current market price), would be valued at 14 quadrillion US Dollars or US$14,000,000,000,000,000.    This number is about 700 times (Seven Hundred times, not merely seven times) bigger than the annual gross national product of the United States.  

Second, the writer refers to Brent Oil having a current price of US$107 per barrel.  Over the past year, as can be verified on the internet in about two minutes, Brent Oil has been as high as about US $85 per barrel to a low of around US$52 per barrel, and as of January 18 was about US$62 per barrel. 

Finally, the writer complains that the royalty, at 3%, is an insignificant portion of Hummingbird revenues.  He neglects to point out that royalties are effectively payable from gross revenues of Hummingbird, which means that Government receives 3% of revenues even in a year in which Hummingbird's cost of production exceeds its total revenues.
  
It may indeed be that the Hummingbird contract contains some unwise provisions.  But a message that is so careless with facts cannot be trusted to be accurate in its more subjective conclusions, and an organization which does not check easily verifiable numerical statements makes everything it publishes suspect.

Yours faithfully

A friend of Liberia

 

Editor’s Repsonse:

Dear Mr/Ms. A Friend of Liberia:

You have argued, indirectly, that our Website should not have carried Karweaye Hummingbird article because the author did include erroneous statements, for example, his assertion that the goldmine field contains 14 trillion ounces of gold. In another example, you stated that Mr. Karweaye  did include a wrong oil price. You also argued that the Company's three percent (3%) royalty payment is reasonable because the percentage is based on revenue.

Sir/madam, our website is pleased to comment on your view, however, it wishes to limit itself to relevant issues. In the view of the Managing Board members and Editors, the article met the most important criteria (substantive issues, including the subject matters, facts and the coherence of the arguments). In his article, the author focused on the idea of Liberia's benefits to be generated from its natural resources. And, yes, the author provided relevant information to support his assertions. He argued successfully that the country will not generate enough revenue if it does not play a role in the management of its natural resources. He gave many names of countries that are playing a significant role in the management of their lucrative assets and other countries that have begun to change their laws.

In essence, the focus of the article was to advocate for Liberia to gain higher benefits from its natural resources. In regard to obtaining a higher benefit, you have argued against the idea that Liberia should gain a higher benefit. For instance, you stated that the three percentage allocated for the country is reasonable since it is based on revenue. 

Sir, royalty payment is usually based on revenue and not profit. That is how many industries determine royalty payments, and certainly, three percent is not a good number for Liberia. Interestingly, you did not say anything about the World Bank owning an interest in the gold minefield even though it serves as the principal economic adviser to the Liberian government. 

Thanks.

The Editor