13 January 2016

Liberia: Putu Mining Shuts Down Over International Crisis

Photo: Tami Hultman/allAfrica.com
Ore is scraped from the mountain top in northern Liberia (file photo).

Monrovia — Months after FrontPageAfrica reported that Russian Iron Ore Company, Putu Mining, has shut down its activities in Liberia, Senator Alphonso Gaye of Grand Gedeh County has corroborated reports by this paper, a day following the resumption of legislative duties on Capitol Hill.

In an interview with reporters, the Grand Gedeh lawmaker said the CEO of the company has confirmed to him that the company has perpetually shut down operations in Liberia due to the ongoing conflict between Ukraine and Russia, and also due to the drastic reduction in the price of Iron Ore on the world market. "As we speak, the company has perpetually closed," he said. "I met with the CEO and he spoke to me very clearly that Putu will no longer operate under the existing circumstances.

As a matter of fact, he confirmed that he has been laid-off and has left the country and 99% of the company's work force has been laid off in the presence of Putu through their lawyers, the Sherman and Sherman law firm. The head office of the company has also been closed and the presence of Putu in Liberia is at the Palm Spring Hotel in a little cubical office", the lawmaker explained.

He said the management team confirmed to him that the crisis between Russia and Ukraine has led to the closure of the company because most of the shareholders are Russians. "The initial projection and what they are experiencing cannot allow the company to function under the existing MDA. Therefore the owners have requested that the government and shareholders need to sit for a review of that agreement because the agreement is calling for some basic infrastructures that must be built before the company begins operation."

The construction of the highways between Zwedru and Greenville and a railway from the mining site to the Port of Greenville some of the projects the company promised to undertake. In November 2015, The Management of the Putu Iron Ore Mining Company (PIOM) reassured the government and people of Liberia that it remains committed to the implementation of the Mineral Development Agreement (MDA) it signed with government.

The PIOM Management clarified that although in the last few months its activities have been reduced, it has not closed down its operations, as rumoured. The scaling down in operations was attributed to the Ebola outbreak. The company gave the assurance that it will continue to meet its obligations to government and communities impacted by its operations.

The PIOM Management in the statement said that it was giving the reassurance because the scaling-down in its operations in the last few months has been misinterpreted as closure. The Management stressed however that the company has been beset by unforeseen circumstances which have negatively impacted the project and resulted in delaying implementation.

The PIOM Management at the time made specific reference to the Ebola outbreak in the country, which it stated hampered normal working activities in the country, and a steep decline in the world market price for iron ore which is impacting iron ore investments not only in Liberia but worldwide. In 2012 the Minister of Lands, Mines and Energy, Patrick Sendolo, disclosed that the first shipment of iron ore by Putu Mining Incorporated, a Russian-owned iron ore mining company, will begin in 2017.

Speaking about 1,948 feet on top of Putu Mountain, the company's production site in the town of Tiama, Grand Gedeh County, he made the comment after a brief meeting with Christian Mosurenko, Country Manager of the Putu Iron Ore Mining Incorporated.

On July 10, 2014 OAO Severstal, a leading Russian steelmaker, announced that a Class A mining license for mining iron ore in the Putu Mountain Range was granted to the Putu Iron Ore Mining Co Inc, which is a 100%-owned subsidiary of Severstal. The license was issued by the Government of Liberia through its Ministry of Lands, Mines and Energy and follows a feasibility study submitted on 31 March 2014.

"The issuance of the Class A mining license...indicates that the company's feasibility study responded to the requirements outlined in the MDA (Mineral Development Agreement). We believe that it will further improve the investment perspective of the project," said Dmitry Sakhno, Severstal's project department director. The Ukrainian crisis prompted a number of governments to apply sanctions against individuals, businesses and officials from Russia and Ukraine starting from March 2014. Sanctions were approved by the United States, the European Union (EU) and other countries and international organizations.

Russia responded with sanctions against a number of countries, including a total ban on food imports from the EU, United States, Norway, Canada and Australia. Both these sanctions applied to Russia and Russia's import bans in response have contributed to the collapse of the ruble and the 2014-15 Russian financial crises.

The Putu iron ore project is a 13km long iron rich ridge, located only 130km inland from the shoreline of Eastern Liberia. In February 2011 an independent mineral resource report estimated 2.4 billion tonnes of iron ore at 34% total Fe for the project. In June 2011 the resource estimate was increased to 3.2 billion tonnes of iron ore.

A Mineral Development Agreement detailing the fiscal and legal terms for the development and mining of the Putu iron ore deposit was granted and ratified by the Government of Liberia on 9th September 2010. The agreement term is for a period of 25 years and this can be extended further in line with the life of mine. Severstal held a 61.5% interest in the project from 2008 until April, 2012, when the company - through its subsidiary Lybica Holdings B.V. - acquired the remaining 38.5% interest from its partner in the project, Afferro Mining Inc.

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