The Minister of Mines and Energy, Gesler Murray and Minister of Justice, Cllr. Frank Musa Dean, have separately disclosed that the Liberian Government has issued a “Notice of Termination” to the Severstal Russian Steel (owner of the Putu Iron Ore Concession) but is still negotiating for an “amicable dissolution or divorce.”
The two Ministers said though the Russian Company was delinquent in payments and reports, owing US$15 million in Corporate Social Responsibility (CSR) obligations and failing to submit technical plan and environmental reports, it has developed a geological survey and plant, spending US$280 million, which put the value and numerical of the Putu Mountain Iron Ore deposits from US$500m to about US$4.5 billion.
The Mines and Energy Minister said while SeverStal Russian Steel is contesting against being in default, it received the notice of termination. But the government has verified and confirmed the “geology development and studies” which had increased the value of deposit to US$4.5 billion instead of the previous survey of deposit value of US$500 million.
On Thursday, September 24 during the 59th day sitting, Liberia’s Attorney General, Minister Dean, and Mines and Energy, Minister Murray, noted that despite negotiating for an “amicable dissolution or divorce,” the Liberian government is seeking a bid for mining rights.
“We have received several letters of intent for mining rights and at the same time the Russian company has expressed interest to continue its quest for mining rights,” Min. Murray said.
Justice Minister Dean indicated: “The notice of termination was issued, but the government is negotiating for an amicable divorce for a turnover of the geological survey and plant for which US$280 million was expended.”
However, a motion in Thursday’s sitting mandated Ministers Murray and Dean to submit three reports on next Tuesday; the legal status of the Putu Mountain iron ore deposits; the amicable dissolution or divorce of Severstal, and report on the affected communities and what the country will accrue.
The Putu Mountain Iron ore deposit is situated in the mountainous Putu province between Grand Gedeh District #2 and River Gee District #1.
Severstal is a Russian company mainly operating in the steel and mining industry, headquartered in Cherepovets. Severstal is listed on the Moscow Exchange and LSE, and it is the largest steel company in Russia. The company is owned and controlled largely by billionaire Alexey Mordashov.
Severstal owns major industrial facilities in Russia, Ukraine, Kazakhstan, France, and Italy, as well as in several African countries including Liberia. The company also has mining assets, thus securing its supply of raw materials. Severstal has been ranked among the 16th best of 92 oil, gas, and mining companies on indigenous rights and resource extraction in the Arctic.
Meanwhile, the intervention of the House sparked following a petition of revision from the Grand Gedeh Bar Association (GGBA). The petition for review came at the time of the company’s 10th anniversary since the signing of the Putu Iron Ore Mineral Development Agreement (MDA).
According to GGBA, the MDA was signed on September 2, 2010 between Putu Iron Ore and the Government of Liberia, and this was followed by an announcement that a Class ‘A’ mining license for mining iron ore in the Putu Mountain Range in Grand Gedeh County has been granted the company, a subsidiary of Severstal Russian Steel, a leading Russian steel producer.
However, after three years of operations, the company shut down its operations in Liberia owing to what officials say was the drastic reduction in the price of Iron Ore on the world market and the conflict that erupted between Ukraine and Russia in 2014.
The Grand Gedeh Bar Association says its petition for review is based on “section 31 Periodic Review” and “31.1 Profound Change in Circumstance” of the agreement, which called for both parties – the Government on the one hand and the company on the other hand, to meet once every five years after the date of the agreement for review and, if necessary, to make a change.
“Seven years is a substantial period of a 25-year contract to be left in suspense with the state of clearly outlined social development projects and contributions to project affected counties and mandated environmental assessments uncertain,” said GGBA’s President P. Alphonso Zeon, in a letter addressed to the Chairman of the Grand Gedeh County Legislative Caucus.
Under the agreement, the Bar stated that Putu obligated itself to pay US$3 million to the people of Grand Gedeh, River Gee and Sinoe Counties each year as social development contributions.
Citing Section 8.2 a, b and c under “Community Funding Obligation,” the Bar stated that the company now owes US$21 million since 2014 and nearly a quarter of a million in education and scientific research funding stipulated in the agreement to be paid annually.