Chinese Company Dupes African Minerals… Killing Sierra’s Leone Economy

26 mai 2018Wathinote Diversification économie

Date of publication: May 2018

One of Sierra Leone’s most successful and biggest mining company with stakes in the Port Loko District, Bombali and Tonkolili Districts is on the verge of collapse with thousands of Sierra Leoneans probably going out of employment if Shandong Iron Ore Mining, a China based company, continues to hold on to money needed for investment.

African Minerals holds 75% of the Tonkolili project while Shandong has 25% of the project.
African Minerals, Sierra Leone has agreed with partner Shandong Iron and Steel Group to get access to $284 million of cash previously earmarked for phase II expansion of the Tonkolili iron ore mines.
The project funds to be used as a working capital, is meant not only for construction and capital as originally designated and drawdown to begin immediately.

African Minerals was, according to a Memorandum of Understanding was to separate financial and operational management of the Tonkolili project companies from the corporate level as a result of the accord with Shandong.
Tonkolili has the biggest iron ore deposit in Africa and the third largest in the world, African Minerals Tonkolili Project is found on the hills around Bumbuna, Mabonto and Bendugu.

Unfortunately, as a result of the Ebola crisis in the country, the company’s export rate drops from its usual forecasting and thus affecting its market share. However, the company’s iron ore asset is enormous and thus the need for investment and operation in the country to which Shandong Mining company has refused to release the agreed amount for operations to continue in the Tonkolili Iron Ore Mine.

African Minerals Sierra Leone Ltd. has an account in China, with the HK Bank

The action by the China based iron ore mining company has created a state of bewilderment in the country with almost 10,000 Sierra Leoneans to be out of jobs.

Presently, the country is faced with a crisis that has annihilated the economy and the Government struggling to cope with problems of continuous drop in investment and drop in revenue, which many people are saying is contributed to by the by the Shandong Mining Company. It has openly contributed to further stagnate the economy due to its refusal to release funds needed for the operations of AML Sierra Leone.

The action by Shandong, if not addressed now will be devastating to the country’s economy and to also make Sierra Leoneans to think that the purpose of the company buying shares in AML Sierra Leone LTD. was to milk millions of dollars from the mines in Sierra Leone with no concern for the affected communities and chiefdoms whose lands are being mined for iron ore minerals.

This is not the first time that Chinese Companies have duped the Government and people of Sierra Leone. A case in point is Kinko, another Chinese Company that was widely acclaimed by the Government and people as the savior of the Country, but turned out to be a big disappointment and left the country and Government walloping in darkness.

The Ebola outbreak has indeed affected many investments in the country but it is not an excuse by Shandong for its deliberate refusal and deceitfulness to release funds or respect the Memorandum of Understanding it signed with African Minerals for the good of Sierra Leone. Although mining activities are ongoing and other international investments in the mining sector are operating and there is yet a case to show any grave impact of Ebola on the operations of companies in this sector.

For the purpose of helping Sierra Leone and the international community the reason for the action of Shandong should help us know whether the international market is refusing iron ore from Sierra Leone or not.

Has iron ore from this troubled West African country facing stigma and refusal by the international market to place money on it? Or is it a deliberate attempt by Shandong to destroy the country’s most formidable mining company?

African Minerals is developing and mining the wholly owned Tonkolili iron ore project in Sierra Leone, with a JORC compliant resource of 12.8Bnt. The project, which currently has a mine-life in excess of 60 years, is being developed in a number of staged expansions.

The $1.7bn development of Phase I is fully funded and is expected to produce 20 million tonnes of direct shipping iron ore per annum at full capacity. African Minerals demonstrated could achieve this target of 20Mtpa (million tonnes per annum) export run rate in Q2 2013. The next stage of Project expansion now contemplates the production of up to 35Mtpa of 64% high grade hematite concentrate and the expansion of the current port facilities at Pepel, expected to enter production in 2016.

The Company has also developed significant port and rail infrastructure to support the operation of the Project, via its subsidiary African Rail and Port Services (SL) Limited (“ARPS”), in which the Government of Sierra Leone (“GoSL”) has a 10% free carried interest.

The Company’s investments throughout the country have created much positive impact on the lives of the people in the country and with China’s role to continue supporting the Government and people of Sierra Leone there is every need for Shandong to reconsider its decision and make available the funds for operations of the Company to continue.

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Chinese Company Dupes African Minerals… Killing Sierra’s Leone Economy

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