The Perspective
Atlanta, Georgia
Posted: January 14, 2023
|
|---|
Liberia is among the top iron ore-producing countries in Africa and has a potentially long future in the mining sector due to the under-exploration and current development of mining projects of global significance. Although the iron ore mining sector is a key component of national development, with 47 percent of total export earnings in 2020, it has never been able to create a positive impact on Liberia's economy or its people due to the corrupt concession agreements and poorly monitored regulatory system.
Before the civil war, Liberia was the world’s fifth-largest producer of iron ore and in the 1970s, Africa’s leading producer of iron ore. Currently, the country has one of the world's largest remaining iron ore deposits. The western cluster iron ore project consists of three deposits, including two idle mines that span Bomi, Grand Cape Mount, and Gbarpolu Counties. The project covers the Mano River iron ore deposit (the former National Iron Ore Company, closed in 1976); the Bomi Hills iron ore deposits (the former Liberia Mining Company, closed in 1985); and the Bea Mountain iron ore deposits, which are virtually untouched. The project contains over 3 billion tons of iron ore with a production estimate of 30 million tons of Iron Ore annually, composed primarily of quartz, hematite, and magnetite as well as weathering and replacement products such as martite and limonite.
History of Western Cluster Iron Ore Deposits Concession
In January 2008, the Liberian government declared the South African mining firm, Delta Mining Consolidated the provisional winner of a $1.5-billion bid to develop the Western Cluster Iron Ore Deposit. According to the government, Delta Mining Consolidated beat various rival bids for the Liberian concession including those from India's Tata Steel, the world's sixth-largest steel maker, Sinosteel Corporation, Xingxing Group, Rio Doce South Africa, ArcelorMittal, and Bahlodi Africa.
However, Delta Mining Consolidated’s reputation in Liberia was tarnished after a scandal emerged around its bid for the Western Cluster iron-ore concession. The company was alleged to have paid kickbacks to the late Willis Knuckles, then a senior minister and trusted aide to President Sirleaf, in exchange for help in gaining access to the valuable western Cluster Iron Ore Deposit. Delta was disqualified amid bribery allegations but cleared of corruption after a meeting at the Executive mansion.
Eventually, the concession was granted to an Israeli firm, Elenilto Minerals and Mining on January 28, 2010, despite advice by renowned Liberian economist Dr. Togba Nah-Tipoteh and others not to award the western cluster iron ore deposits to Elenilto Minerals & Mining LLC because the company lacked the credentials and experience to operate one of Liberia's last mining sites, but those bits of advice and cautions fell on deaf ears by President Ellen Johnson Sirleaf.
Sesa Goa Limited, India’s largest exporter of iron ore in the private sector and a subsidiary of Vedanta Resources Plc acquired Western Cluster Limited, a subsidiary of Elenilto via a ‘flip’. Sesa Goa bought 51% of Western Cluster Ltd from Elenilto Minerals & Mining LLC in 2009 for $90 million, on the same day, Elenito signed a 25-year mining lease with the Sirleaf government for the mine. Less than six months later, Elenilto (a phony company set up to facilitate and ‘flip’ the deal) bailed out altogether by selling the remainder of the Western Cluster to Vedanta for $33.5 million in cash without throwing a shovel.
After the termination of Delta Mining Consolidated from the Western Cluster iron ore project bid, the United Kingdom-based Sable Mining bought a 36.5 percent stake in Delta Mining Consolidated in 2010 for US$36.9 million and set its focus on Wologizi, a mountain situated in Lofa County. It is viewed as the final significant concession region in Liberia and Sable's eyes, a mother lode with the possibilities of millions. Sable Mining was previously called BioEnergy Africa and floated on Aim in September 2008 with a 94 percent interest in an ethanol fuel project in Mozambique. In October 2009, the company changed its name to Sable Mining.
According to Global Witness, in its report titled: The Deceivers, more than US$950,000 in bribes and other suspicious payments were made to top Liberian officials by the United Kingdom-based Sable Mining Company and its Liberian lawyer, and Ellen’s Johnson Sirleaf's Unity Party Chairman at the time and current Senator Varney Sherman. The Global Witness report further revealed how Sable Mining Company wanted to get the concession rights to Liberia's Wologizi iron ore. The report says the officials who took bribes include the Speaker of the Liberian House of Representatives & Bomi Representative Alex Tyler: $75,000 for "consulting expenses" and Richard Tolbert, chairman of the National Investment Commission: $50,000 for “consulting fees.”
The report uncovered Morris Saytumah, Minister of State for Finance, Economic and Legal Affairs, a Senator at the time received $50,000 for "consulting fees”, and Willie Belleh, Director of Public Procurement and Concessions Commission supposedly got $10,000 for "counseling expenses". Two of the greatest payments went to people recognized in the report as "Big Boy 01" and "Big Boy 02", each getting $250,000 without any clarification of why the payments were made. The report, likewise, claims that President Sirleaf's child, Fombah Sirleaf, who was the director of Liberia’s National Security Agency likewise benefited from "a $7,598 hunting excursion to South Africa paid for by Sable". Others referenced in the report include then-Senator Sumo Kupee and Cletus Wotorson, both supposedly getting $5,000 each for "consulting fees".
According to the Global Witness report, Varney Sherman gave Sable CEO Groves a spreadsheet of accounts indicating payments made to specific, named ministers and government employees in Liberia. Sherman received the funds via Salans. Sable's attorney at Salans said that the company had no knowledge of or justification for the simple transfer of monies to another law firm's client account at the request of its client.
After the Global Witness report came out, Cllr. Sherman attested that Sable was a rebirth of Delta because legitimately they reserved the privileges toward the Western Cluster. Phil Edmonds, a former Britain cricketer, and Andrew Forests, a Zimbabwean mining businessman came into the picture in April 2010 and bought a minority stake in Delta. The arrangement seemed OK at the ideal opportunity for Sable since Delta previously had an arrangement in Liberia and an organization. The majority of Sable's tasks were run from Cllr. Sherman's office. Sherman was recently sanctioned by the US Department of Treasury under the Global Magnitsky Act. According to the US Treasury, “in 2010 Harry Varney Gboto-Nambi Sherman (Sherman), now a prominent lawyer, Liberian Senator, and Chair of the Liberian Senate Judiciary Committee, was hired by a British mining company in an effort to obtain one of Liberia’s last remaining mining assets, the Wologizi iron ore concession. Sherman advised the company that, in order to obtain the contract, they first had to get Liberia’s concessions law changed by bribing senior officials. In 2016, Sherman was indicted by the Liberian government, along with several other government officials, for their involvement in the USD 950,000 bribery scheme. In 2019, the presiding judge acquitted all individuals accused of being involved in the bribery scheme. Sherman offered bribes to multiple judges associated with his trial and had an undisclosed conflict of interest with the judge who ultimately returned a not guilty verdict in July 2019. Sherman has routinely paid judges to decide cases in his favor, and he has allegedly facilitated payments to Liberian politicians to support impeachment of a judge who has ruled against him. Sherman’s acts of bribery demonstrate a larger pattern of behavior to exercise influence over the judiciary and the Ministry of Justice.”
Not only was the deal irregular and highly suspicious, but the total $123.5 million Sesa Goa Limited, a subsidiary of Vedanta Resources Plc that acquired Western Cluster Limited paid for one of the largest remaining iron ore deposits in the world, was a fraction of the potential value of the 3 billion tonne reserve, yet, Gesler Murray, the current Minister of Mines and Energy announced to the public that the government of Liberia has granted Western Cluster Liberia a Class "A" permit to start its mining of iron ore in accordance with the Mineral Development Agreement (MDA) which calls for the exploration, mining, and marketing of iron ore.
As previously stated, Western Cluster Limited is a step-down subsidiary of Vedanta Resources Pl, the same company that had an agreement with the Zambian government to mine copper at the Konkola Copper Mines in the country, but the company ran into issues with the local administration. Senator Edwin Snowe of Bomi County is on record as proudly saying he was part of the team that traveled to India and negotiated how the government of Liberia could waive the US$20 million the company had accumulated in taxes in order for the company to start operation in Liberia. I wondered if Snowe and others in the Weah-led administration were aware that in 2014, a video surfaced of Vedanta Resources Plc Boss, Anil Agarwal in March 2014 while addressing a trade organization in Bangalore India proudly boasted of how he bought Konkola Copper Mines in Zambia for just $25 million, rather than the $400 million asking price, and received loud cheers when he stated that the company brings in $500 million in profit each year. Meanwhile, Vedanta was claiming that there was a loss or minimal profit at KCM. The Zambian government put Vedanta's local arm into liquidation in May 2019, accusing Vedanta of environmental and financial regulation breaches.
In the mining industry in Liberia, mineral extraction – particularly of iron ore, gold, and diamonds is mined in industrial and artisanal concessions. Each mode of operation lacks transparent due diligence in several key areas, including procurement, subcontracting, and joint venture reporting practices. Artisanal or small-scale mining (ASM) is accompanied by illegal intervention by corrupt political and state security actors, a lack of transparency in production and export data, and human rights abuses, including child labor, environmental degradation, and unsafe working conditions.
Liberia's iron ore mining plays a significant role in the economy. Growing demand and the struggle for access to this valuable material by manufacturers of steel can provide an opportunity for buildings and infrastructure, automotive, metal products, etc. to enrich themselves in a poorly regulated and monitored environment. In addition, under the new mining regulations in Liberia, mining companies are supposed to return a portion of their profits through royalties for developing mining communities. Still, these mining royalties are often mismanaged or misappropriated by corrupt officials. If managed in a transparent and accountable manner, the revenues generated from mining in these communities can contribute to poverty reduction in Liberia and leverage development.
Transparency and Accountability in the mining sector
Building accountability in the mining sector is essential for ensuring a sustainable future for the industry in Liberia Transparency is essential for ensuring accountability in the mining sector in general. In Liberia, mining companies must be open and honest about their operations, including their environmental and social impacts. This can be achieved through public disclosure of information, such as financial records, environmental reports, and social impact assessments. This information should be made available to the public, allowing stakeholders to hold companies accountable for their actions. Additionally, companies should engage in meaningful dialogue with local communities to ensure that their operations are not causing any harm.
Regulation in the mining sector
In addition to increased transparency and accountability, improved regulation is also necessary for building accountability in the mining sector. Governments should create and enforce regulations that ensure companies are operating in a responsible manner. These regulations should cover a range of issues, including environmental protection, labor rights, and human rights. Companies should also be held accountable for any violations of these regulations, with appropriate penalties imposed for non-compliance. This will ensure that companies are held responsible for their actions and incentivize them to operate in a responsible manner.
Building accountability in the mining sector especially the iron ore is essential for ensuring a sustainable future for the industry in Liberia. This can be achieved through increased transparency during the bidding and Mineral Development Agreement processes and improved regulation. Companies must be open and honest about their operations, while governments must create and enforce regulations that ensure companies are operating in a responsible manner. Only by taking these steps can we ensure that the mining sector is held accountable for its actions and that its operations are not causing any harm. I rest my case.
© 2019 by The Perspective
E-mail: editor@theperspective.org
To Submit article for publication, go to the following URL: http://www.theperspective.org/submittingarticles.html