Controversial Mining Agreement Gets Senators’ Backing

The Senators also request that the “Executive Branch of Government ensure that concession agreements that come before the Legislature contain sufficient social benefits to residents of the affected counties." 

 

-- But the terms of the agreement have been kept secret from the public and the project-affected communities.

The controversial Bao Chico mining agreement, which is before the Senate for ratification, has received backing from Senators Numene Bartekwa and Simeon Taylor.

The agreement, submitted by President George Weah, is for a 25-year Class A mining license for the extraction of iron ore in Gbarpolu County, and its terms have been kept secret from the public and the project communities. But the Bao Chico Resources agreement came after another Chinese iron ore company, China Union, struggled to make an impact and, in a space of a few years, shut down its operations.

Although Senators Bartekwa and Taylor have endorsed the Bao Chico deal, they have done so with caution— suggesting fundamental changes in the way concessions agreements are negotiated for the benefit of affected communities.

At a joint Senate Committee on Concessions, Investment, Mines, and Energy hearing over the weekend, the senators expressed mounting frustration at government negotiation which benefits concessionaires, to the detriment of the people. The two lawmakers recalled that adequate housing facilities have not been provided by several concessionaires in the past, something they expressed regret does not represent the dignity of employees. 

Despite being irritated, Senators Bartekwa and Taylor of Grand Kru and Grand Cape Counties, respectively, did not reject the Bao Chico deal, but only appealed for an increment from US$300,000.00 to US$850,000.00 – an amount the company is expected to pay per year as social development fund.

The Bao Chico deal is expected to bring in an annual social contribution of US$300,000 and, after five years, escalate to US$500,000 until the end of the term. Also, the addition of US$10,000 is expected for Gbarpolu County as General Education Funding, while US$50,000 will be provided annually as Scientific Reserves Fund -- whatever that is.

The Senators also request that the “Executive Branch of Government ensure that concession agreements that come before the Legislature contain sufficient social benefits to residents of the affected counties." 

“It was important that affected communities across the country have something to show when companies are operating in their respective counties, and to ensure that the issue of infrastructure and housing for employees are taken into serious consideration when negotiating concessions,” the Senators said during the joint committee hearing.

The Senators’ appeal comes as they have the power to amend the deal, approve or reject it, which they believe, like any other concession deal, is loaded with unfavorable clauses for the country. The hearing was attended by officials of the executive, which include the Minister of Justice, Cllr. Frank Musa Dean, Emmanuel O. Sherman, Deputy Minister for Operations and the Assistant Commissioner of National Investment Commission (NIC).

Senator Bartekwa is the Chair of the Senate Joint Committee on Concession and Investment, while Senator Taylor chairs the Mines and Energy Committee.

 Deal

Bao Chico, which the Senators have backed, is a Chinese Company, owned by China Henan International Cooperation Group Co. Ltd.  The deal comes just a few years after the US$2.6 billion agreement, which was signed with the China Union in 2009 under the administration of then-President Ellen Johnson Sirleaf to excavate iron ore from the country’s former Bong Mines, did not go as planned, as the company remains shut down since 2014.

Since then, the iron ore concession – the area where the ore mining was done – only boasts of idle machines gathering rust.  The company, according to its management, had to close due to the fall in the global price of iron ore and the impacts of Ebola in 2014.

The 25-year agreement was expected to generate 3,000 to 4,000 jobs with an additional 15,000 indirectly, which hardly came to fruition. President Weah had said that the Bao Chico deal would bring huge direct benefits in the forms of employment and revenues, including the payment of all taxes and duties; payments of royalties, and a signature fee of US$3 million.

However, the President did not state the total number of jobs the concession is expected to create. 

Put into perspective, the Bao Chico Resources deal dwarfs in comparison to ArcelorMittal Liberia, the country’s only functioning iron ore concession, which is now making annual contributions of US$3 million toward the social development funds across Grand Bassa, Bong and Nimba counties. This is in addition to royalties, taxes, railroad and road infrastructure, as well as a TVET institute. 

Bao Chico Resources, Liberia Limited, according to a 2015 LEITI report, is a non-publicly listed iron ore company that is ultimately owned by the Government of the People’s Republic of China.

The Mineral Exploration of the entity is owned by Bao Chico Resources, Liberia Ltd., which is 100% owned by Bao Chico Resources. Bao Chico Resources is owned as follows: Baosteel Resources, 50.1%; CHICO (China Henan Cooperation Group Co.), 40%; and Chico Africa Development, 9.9%. All three of these entities are 100% owned by the Government of the People’s Republic of China.

 Infrastructure

Meanwhile, the Senators have called on the Executive to ensure that the issues of infrastructure and housing for employees are taken into serious consideration when negotiating concessions.

 The Senators further challenged the executive officials involved in the concession talks to ensure the increased provision of the scholarship funds in the BAO CHICO agreement, and to ensure that persons in Gbarpolu County are afforded adequate consideration to help them acquire the requisite knowledge to take over some managerial roles in the future.