....“Due to the significant impact of the supervening circumstances on the Company, the Company is relieved of all financial obligations, of all kinds of nature, owed to the Government, which have not been paid by the Company,” an excerpt from the MoU.
When Western Cluster Liberia limited left the country nearly 12 years ago, a debt of US$23.5 million was incurred during this period.
The money represented the company's total outstanding financial obligations with the government, according to the MoU signed between Western Cluster and President George Weah's administration as a means of allowing the mining company to realize its 25-year mineral development agreement.
However, Vedanta Resources PLC, the parent company of Western Cluster Liberia, requested the government to cancel the US$23.5 million, saying certain supervening circumstances forced the Company to suspend its operations in 2011 after acquiring the full rights to the Bomi Hills mine from Elenilto in a deal worth close to US$100 million.
The government agreed and the debt of US$23.5 million was canceled — paving the way for Western Cluster, whose parent firm is worth billions of dollars, to resume mining operations, which began last year.
According to the MoU, Western Cluster was the one that engaged the government to resume their operations in the Bomi Hills Mines, saying: “As the supervening circumstances have been removed, subsided and/or ameliorated, the Company has decided to resume its operations; and pursuant to the same, the parties have negotiated the terms under which the Company shall resume its operations.”
“Due to the significant impact of the supervening circumstances on the Company, the Company is relieved of all financial obligations, of all kinds or nature, owed to the Government, which have not been paid by the Company to the Government and/or which would have accrued to the Government or any other beneficiary under the Agreement pursuant to the terms of the Agreement,” the MoU reads.
However, the government after canceling the debt, settled for US$10 million, as a final settlement of all of Western Cluster's financial obligations.
The first half of the money has been paid as a result of the government issuance of a class A mining license to the company, through the Ministry of Mines and Energy.
The license was issued as of the date the MOU was signed, while the Ministry of Public Works issued for transportation of the iron ore by road from the Bomi Hills mines to the Freeport of Monrovia for a period of not less than three (3) years.
The road permit, the government claimed, is mandated in the mineral development agreement, and is needed to facilitate the seamless transportation of iron ore.
“In lieu of all such pending financial obligations up to the anniversary of the effective date of the agreement, which is till August 3, 2021, the Company shall pay to the Government an amount of US$10 million towards a final settlement for all such pending financial obligations.”
The issuing of the license and road permit was the prerequisite conditions laid down by Vedanta Resources PLC, the parent company of Western Cluster to make the first half of the US$10 million available.
The balance of US$5 million, according to the MoU, would be paid by Western Cluster no later than 45 days from the date of its first iron ore shipment.
The MoU, however, is silent on the resulting health issues that would arise from the transportation of ore by road. The company's "feasibility study" to ascertain the environmental impact of trucking the ore was not attached to the MoU as well.
Transportation of ore by road, according to the New Jersey Department of Health, "prolonged or repeated contact can discolor the eyes causing permanent Iron staining, while other studies have proven that the prolonged inhaling of iron oxide fumes can cause lung disease in humans.”
“There are other commercial users of this road for the transportation of their goods. Hence the Government acting through its Ministry of Transport and Ministry of Public Works to work out the methodology to recover the cost of road usage which shall be used for maintenance of the road by the company,” the MoU noted.
The Western Cluster ore deposits lie in Bomi Hills, Bea Mountain, and Mano River, in the country western Liberia region, a county known for its high poverty rate in the country.
The Bomi Hills deposit was once owned by the former Liberia Mining Company (LMC), which ceased work in 1990. Similarly, this is the case of the Mano River deposit, which was once owned by the former National Iron Ore Company (NIOC), which also ceased operation in 1990. The Bea River deposit remains unmined.
The Western cluster iron ore deposit was first acquired by Elenilto Minerals & Mining LLC, Delaware (Elenilto), who then established Western Cluster Liberia as a wholly-owned subsidiary before selling it to Sesa Goa, a subsidiary of Vedanta Resources PLC, in 2011 under the administration of the President Ellen Johnson Sirleaf without throwing a shovel.
“The company shall rehabilitate the road from Bomi Hill mine to the Freeport of Monrovia by repairing the existing potholes. Once the transportation of ore is started by the company, the newly generated potholes, if any, will also be repaired by the company to maintain the usability of the road,” the MoU noted.
“The Company will provide US$3 million as a contribution for the rehabilitation of the corridor between the St. Paul Bridge and the Freeport of Monrovia. The above contribution shall be payable by the company in two equal installments of US$1.5 million each. For the avoidance of doubt, all approvals mean the Government's issuance of a Class A Mining License, the issuance of a road permit for the transportation of iron ore, and the grant of a land lease for a parcel of land, contagious to the LMC and NIOC piers, at the Freeport of Monrovia.”
“The second and final installment of US$1.5 million shall be paid 30 days after the 1st shipment of iron ore. The remaining US$1.5 million must be paid before the company makes its second shipment,” the MoU noted. For the road from the Bomi Hills Mines, to the St. Paul River bridge reconditioning of the road by filling up the potholes, WCL will pay to the contractor doing the above repair an amount to the extent of US$1.5 million for the road.
Meanwhile, the government, as part of its commitment to have Western Cluster resuming operations, agreed to the company's demand to assist in negotiating with China Union Investment Liberia, another iron ore-producing company in Liberia, for using China Union's loading equipment facilities at reasonable market price(s) or “any other such arrangement which will help the company to ship the Iron ore from Liberia.”
The MoU noted that the condition under which the government negotiates the return of Western Cluster is absolutely necessary “and accordingly, the Government shall apply its best efforts to ensure that all the pre-conditions are satisfied to facilitate shipments of iron ore by the Company.”
“The Parties agree that prior to the advent of supervening circumstances which forced the Company to suspend its operations, the Parties were negotiating certain amendments to the Mineral Development Agreement. The Parties, therefore, agree that negotiations for the amendment of the Agreement shall resume within six (6) months from the date of execution of this MOU.
However, it remains clear whether the amendments to the Mineral Development agreement have started since the MoU was signed on April 27, 2022.
Government officials who signed the MoU include Gesler E. Murray, the Minister of Mines and Energy; Molewuleh B. Gray, Chairman of the National Investment Commission; Samuel D. Tweah, Jr., Minister of Finance and Development Planning and Cllr. Frank Musah Dean, Jr., Minister of Justice.
Western Cluster Liberia was represented by Chetan Savant, Head of Projects, Western Cluster Limited, Liberia.