By Ballop Kamara
The Port and Rail in Sierra Leone is presently the most topical issue. This is between China Kingho and ARISE IIP. Both companies have shown interest to manage the Port and Rail. The Port and Rail is where precious minerals are being transported before reaching the seaport at Peppel.
In February 2023, the Government of Sierra Leone informed China Kingho, now Leone Rock, of plans to terminate its contact on the port and rail. Before that, Leone Rock has enjoyed certain privileges in managing the port and rail, taking undue advantage over other mining companies. The initial agreement between the government of Sierra Leone and Leone Rock is that ‘’Government will notify Leone Rock of its plans to bring in a third party to manage the port and rail.’’ This notification became an issue, with Leone Rock challenging the government and threatening litigation, in an event the port and rail contract is terminated. ARISE came in as a third party and signed an agreement with the government of Sierra Leone. The agreement, which is presently in Parliament awaiting ratification, has been stalled, as there are leaked intelligence within the corridors of government that the newly appointed Mines Minister, Julius Mattai, also owner of INTEGEMS, a consultant environmental company working for Leone Rock, is using his office to influence government decision in awarding the port and rail project to Leone Rock.
What seems to be very fishy is the way and manner Leone Rock has been operating in Sierra Leone, using the names of different companies in its bid to get government contracts or agreement.
It could be recalled few years back that the Parliamentary Committee on Transparency and Accountability probed Sierra Leone’s National Minerals Agency (NMA), raising concern over the circumstances under which four large-scale mining licenses were granted to China Kingho Company Limited. It was revealed during that hearing due diligence was not done before awarding of the mining licenses to the company to undertake large-scale mining operations in Sierra Leone.
The committee was also able to establish that the parent company, China Kingho Energy Group, is bankrupt, with a net worth of a paltry 667,000 Hong Kong dollars.
The multifaceted and apparently cloudy structure of the parent company, prompted lawmakers to inquire into the application details of its subsidiaries in Sierra Leone. The investigations found that the four subsidiaries in Sierra Leone have defaulted on the terms and conditions of their license agreements, and violated certain provisions prescribed in the Mines and Minerals Act of 2009.
China Kingho Mining Company Limited, Mass Energy Mining Company Limited, Northern Mining Company Limited and Southern Mining Company Limited are all subsidiaries of China Kingho in Sierra Leone.
These subsidiaries are in arrears of $4.9 million due to the Government of Sierra Leone.
The evidence adduced shows that since the companies were granted four large-scale mining licenses in 2014, they have not yet started mining operations, either because they are bankrupt and unable to undertake such large-scale mining operations, or simply cannot attract a financier to partner with.
In a letter addressed to the National Minerals Agency, the Managing Director of China Kingho stated that the projects required huge capital investment for the construction of railways and port facilities.
The letter reads: “We have approached several partners in this regard, but it has been extremely difficult to get the much-needed capital…We are constrained to get dependable partners to commence work with.”
The company then decided to relinquish one of its licenses (the Southern Company Limited) and pleaded with the NMA to waive off the penalties attached to the outstanding payment of $4.9 million dollars.
It was further revealed that the company did not fulfill certain criteria for the award of large-scale mining license under the Mines and Minerals Act of 2009.
The Committee on Transparency and Accountability inquired into whether China Kingho has the adequate financial resources, technical competence and experience to carry out effective mining operations in Sierra Leone, a precondition for the award of large-scale mining license, as stipulated in section 108 subsection 3 of the Mines and Minerals Act of 2009.
The Committee exposed one of the shareholders/directors of China Kingho, who happens to have two different identities. It was revealed that this individual bears the name Gilbert Zao, but has a completely different name on the mining license application document.
The Committee perceived there was some form of corruption in the awarding of licenses to China Kingho Company Limited.
The Members of Parliament suspected the Minerals Advisory Board was either influenced or remained complicit in its decision-making process to approve large-scale mining licenses to China Kingho.
The committee quizzed the NMA boss to get the facts but he denied any wrongdoing.
Members of the Committee frowned at the Environmental Protection Agency, National Minerals Agency and Ministry of Mines and Mineral Resources for not performing due diligence on China Kingho before awarding those large-scale mining licenses.
The lawmakers are suspicious of the decision-making process and are anxious to probe deeper to unearth whosoever benefitted from such mining approval decision.
Sierra Leone is endowed with vast mineral resources, but these resources have not been harnessed to promote national prosperity and an efficient, dynamic and self-reliant economy.
Since the discovery of diamonds in the 1930s, Sierra Leone’s mineral wealth has been largely plundered. The plundering of these natural resources was identified as one of the major factors that ignited the civil war.
Many of those who took up arms attributed their struggle to the high incidence of poverty and unemployment, exacerbated by massive corruption and abuse of power by the ruling elite. They blamed the governing elite for being selfish and insensitive to the plight of the masses.
During the Consultative Conference on Peace and Security in April 1999, the then British High Commissioner to Sierra Leone – Mr Peter Penfold, observed:
“The tragedy of Sierra Leone is that her people are among the poorest in the world, while the country is among the richest. The reasons for this are entirely man-made. Other countries in the world are poor because of natural disasters, few resources, infertile territory or bulging populations. Not so in Sierra Leone. Just a relatively few people are responsible for the misery and hardship suffered by so many.”
When Kingho was awarded the contract to mine at Tonkolili, their first shipment exported from the mines totaled 20 million dollars. It was like frying Sierra Leone with her own oil. Reports are that the total of iron ore estimated resources of 13.7 billion tonnes was previously owned by China’s state-backed Shandong Iron & Steel Group.
Shandong bought the mine in 2015, but stopped operations when the Sierra Leone government canceled its license, along with those of several other big projects, in 2019 amid a push to ensure the country benefited from its natural resources. (https://reut.rs/3t8Q36e)
Kingho restarted operations at the site, complete with a rail and port transportation system, and promised to construct a plant to process high grade products from raw magnetite and build an industrial park in the future, which are all pipedreams.
It appears that amidst all those ugly past, Sierra Leone government is still in the dark, forgetting that Leone Rock is today frying Sierra Leoneans and the Sierra Leone Government from the sale of the iron ore inherited from Shandong, which costs over twenty million united states dollars.
This week will be a week of cabinet decision, and if President Bio and his cabinet fail to examine what had happened in the past and then make the same mistakes to award Leone Rock the contract to manage the port and rail, that singular decision will either make or break Sierra Leone.
It will be prudent for the Bio government to know that Leone Rock, being a mining company, will no way be transparent on the quantity of minerals to be exported out of Sierra Leone. They will prefer to under-report, so as to dodge government taxes, which, to a larger extent, will be more loss to the government and people of Sierra Leone.