Despite the controversy and clamoring over the decision by the Liberian government to award the western cluster to the Israeli mining firm, Elenilto, there are confirmed reports that the company has finally sold out to India's Sesa Goa in a deal which the Israeli company earned close US$100 million without throwing a shovel.
President Ellen Johnson-Sirleaf had been advice by prominent Liberian politician Dr. Togba Nah-Tipoteh and Economist Samuel Jackson not to award the western cluster to Elenilto because the company lacked the credentials and experience to operate one of Liberia's last mining sites.
The Liberian leader ignored the advice and awarded the contract to Elenilto. After the deal was signed, reports started to emerge that the selection of the company by the Inter-ministerial Mining Committee was illegal and fake because Elenilto didn't meet the guidelines prescribed by the Ministerial Committee.
According to reports, Elenilto deal with Sesa Goa was attractive with the Israeli snatching a whopping US$123.5 million. However, of this amount, the Government of Liberia received US$45 million from levies and obligations paid by the company.
On Friday, the Vedanta-Group Sesa Goa announced that it has acquired the remaining 49-percent stake in Liberia's western cluster's project for US$33.5 million.
Sesa Goa's website confirmed that the remaining 49 percent of the outstanding common shares of Western Cluster Ltd (WSL) was acquired from Elenilto Minerals & Mining LLC Delaware, for a cash consideration of USD33.5 million.
The transaction puts Sesa's shareholding in the western cluster to 100 percent. Early this year, the company acquired 51 percent stake in the western cluster when it paid about US$90 million in January.
"WCL is a logical and strategic fit with Sesa's existing iron ore business and is expected to create significant long-term value for all stakeholders," the company said in the filing to the Bombay Stock Exchange. It added that at WCL, exploration activities were progressing well, with over 42,000 metres of drilling completed till November 30, 2012.
The project is on track for first shipment in 2014, however, in November, the company said it would have finalized the capital expenditure plan for the first phase of its Liberia iron-ore mining project by January.
Sesa Goa said it is aiming to produce 10 million tonnes of iron ore per annum in the first phase from western cluster.
According to the company's website, its Managing Director PK Mukherjee said in November that the company completed over 31,000 metres of drilling at the project site and first shipment from the project will be delivered between 2013-14.
The deal comes on the back of higher-than-estimated iron ore reserves of 1 billion tones. The Goa-based miner said it also has plans to ramp-up the production by up to 30 MT in the second phase, which is expected to begin by 2016-17.
The company begun exploration of the asset during April-May and said that it would be spending about Rs 400-450 crore on the project this year.
The investments would be made largely on payments to the local government, exploration, equipment and other related studies for the project. During the last quarter, the iron-ore miner's net sales, at Rs 294 crore, dropped sharply due to host of reasons, including a ban on mining in Goa and slump in iron ore prices.
Sesa is India's largest producer and exporter of iron ore in the private sector with operations in the states of Goa and Karnataka in India and a large integrated project site in Liberia, West Africa. Founded in 1954, for about 6 decades, Sesa has been involved in iron ore exploration, mining, beneficiation and exports. Sesa is a subsidiary of Vedanta Resources plc, the London-listed FTSE 100 global diversified natural resources major. Sesa also manufactures pig iron and metallurgical coke, with a 0.56 mtpa metallurgical coke plant and a 0.625 mtpa pig iron plant in Goa, and an associated 60 MW power plant.