When I committed to occasionally write a few lines as a way of contributing to the national conversation, I thought it would be useful to intersperse the comments with other thematic issues that are linked to my professional background that might impact our palm oil and rice concerns. Consistent with that outlook, my argument will focus on the depleteble resources sector, both past and present to see how we treat this engine of growth.
The presentation will be done in two stages: The first will touch on hard minerals while the second one will deal with the soft minerals that produce energy and drive the oil industry in an attempt to bring some clarity for the good of our people, who might still be confused on the impact of these resources as knowledge about these are relatively new to our people. These are enclaves in which I have spent a good deal of my professional life.
The question of prosperity in our recent history immediately brings to mind the mining industry. The mining industry, as one of the most important industries of our time, the largest employer and greatest generator of foreign earnings then in Liberia was a fundamental stabilization factor. As such this industry remains a dynamic investment force for the future. The architects of President Tubman’s open door policy no doubt might have realized that investment in plant capacity was quite crucial for the creation of jobs, and that the most important investment needed was that which created the greatest number of long term jobs per dollar invested, thus the birth of the Mining Enclaves. Against the cyclical attractiveness of the iron ore industry, now essentially underpinned by the level of consumption by the
Chinese end users (for the time), we as a country, are now presented with an excellent opportunity to explore the ambiance the we will have to create, if we must continue to attract the requisite financial investments to this industry which requires sizeable capital for its sustained operations, even in time of downturns.
While Liberians must all be hopeful that recent positive political moves cushioned by the Government’s aggressiveness in addressing her investment posture has yielded some comforting results in inducing the 16 billion dollars of foreign direct investment, the Government’s persistence and resilience can go a long way towards creating a climate in which Liberians can feel that they have a real, equal and meaningful part to play; jobs and the creation of comfort for individuals must surely rank as two of the most powerful factors in creating real socio-economic stability. It is not going to be immediate and sometimes painless, but come, it will. Howbeit, the jobs and stability necessary cannot co-exist in an environment of uncertainty fuelled by persistent labor dislocations or shaken by an environment of cyclical violence. It might sound like the age old chicken-or egg argument. High incidence of violence leading to less investment to yet more violence and it is my cautious view that with positive political expediency, effective legal framework and sound economic plan buttressed with political will, the foreign investment community can display the moral and economic fortitude our times demand.
To properly appreciate what a potentially dynamic factor the mineral industry is, come with me back in history; then perhaps we could further cherish the potential contribution of the mining industry to future prosperity of Liberia. We must, however recall that mining, whether iron ore or alluvial diamonds and gold was the cornerstone of our economy during the 60s, 70s and early 80s. It provided substantial percentage of our foreign exchange earnings, then. We know that mining venture such as the major Iron ore Mines then, Bokon Djere, Kokoya Gold fields, Jeebloom, the prolific diamond bearing flats and floodplains of the Lofa, Man, Yah and Via rivers, Kumgbor, Dambala Bombo Crossing, Weasua and Weaju, among others contributed significantly to output and wage employment growth, as well as growth in volume and value of exports. Taxes paid by the mining sector were a significant factor in the phenomenal growth in public sector revenues throughout the sixties and seventies and the economic ripples of these investments extended far beyond the mining enclave, in creating jobs and improving the welfare of adjoining communities. The Ministry of Lands and Mines gave consistent geological guidance and search for these irreplaceable minerals. But no matter how laudable the contributions were, the Mining sector cannot rest on its past laurels.
In view of the unexpected calamities Liberia suddenly experienced when she was reversing the downward decline of the derivatives of the mining industry that sent the recent investor scrambling to safety, temporarily abandoning most of their operations, and downturn of the price of iron from a high of $100 plus to a low $40. This huge loss in revenue could not even be compensated by the low price of oil which is on the increase again. The residue of the high grade iron ore deposits left from the older mines are hard and contain lesser iron content requiring intensive crushing and beneficiation which is energy intensive. That is effectively the principal purpose of the Ministry of Lands, Mines and Energy; replacement and /or development of irreplaceable resources. Refreshingly Liberia has recently announced the launching of its first mechanized gold mining operations which might soften our landing to an extent. But that is inadequate to offset the revenue being lost.
All minerals are irreplaceable commodities. As these commodities are irreplaceable, Government must now design an urgent strategy and plan for the quantification of the many other numerous indications minerals discovered thru the Geological and Resources Appraisal Program (GERA) then launched jointly by the U.S. Geological and Liberian Geological surveys, for not only the quantification but the discovery of newer resources yet to be discovered. The Government will do well if she utilized the services of past and now retired earth scientists to assist the Ministry of Lands, Mines and Energy to help build capacity in that Ministry or re-design strategies. These individuals are so patriotic they would gladly help if consulted. They still have professional contacts with their counterparts in the U.S. Geological Survey. To diversify and attract investors of diverse interests, the investor must be able to project his stream of financial returns based on what the country has quantified as mineable reserves.
The need and expediency of replacing these irreplaceable minerals forcefully inform Government of the immediacy for Government to strengthen the capacity of that Ministry of Lands, Mines and Energy, particularly the Geological Survey. This is by no means cheap, especially with the advent of newer technology, such as Landsat Imagery, Spectral and Microwave Remote sensing and other geoscience tools, which make discovery much more certain, less tedious and less costly than before; and these improvements can be accessed under the continuing bilateral arrangements with advanced Governments, especially the United States which initiated the First Appraisal Program. Paired against this is the price of doing nothing. The resources are there begging to be quantified.
Maybe some of you might be curious as what minerals actually have been discovered so far as reserves or as indicator minerals which need to be quantified. Our geologic exploration programs have confirmed substantive tonnages of proven, mineable and probable reserves of iron ore as wells as tremendous indicator minerals, which could form the basis of future wealth and prosperity. These include: gold, diamond, bauxite, manganese, tin(cassiterite), chromite, barite, kyanite, phosphate, rutile, platinum, silver, sulfur, titanium, tungsten, zinc, uranium, niobium-tantalium, As I indicated earlier, these indicator minerals demand some serious program of quantification to determine their reserve status.
What could we as a nation do to sustain this sector?
Without going into details, as the editor cautions on very long articles, I will just run thru these:
1. Government might, as a first step launch investment forums among potential investors both in and out country. Government implemented that already as evidenced by the attraction of $16billon dollars, which is not a check paid out to Government but is to be invested over a negotiated period consistent with the duration of the concession.
2. As security conditions continue to be challenging with the concessions, and the national monitoring system might have some problems coping with all the mines, Government could consider amalgamation of her interests into one entity. A Minerals commission, like the Ghana Minerals Commission. This would require knowledge of all Government’s mineral assets. It would be a public vehicle dedicated solely to the development and improved commercialization of her mineral wealth, a job too specialized and tedious for any Government bureaucracy.
3. To enhance a scrupulous development of the Government’s mineral wealth, she must revisit her mineral policy towards making it more investors friendly. The objective here is to accrue the largest possible benefits to Government consistent with optimal returns to the investor.
To end this portion of the presentation let me emphasize that the Government must take serious the factors that inhibit the potential investor. They have to do with risk and reward. It has been said many times that risk pervades business like gravity pervades physics. While investors may tend to be optimistic on the reward side and seem to have confidence in their ability to estimate potential returns, everyone worries about the risk side. See you on the continuation of the second phase- Energy and Oil.