A brief survey of mineral resources in Africa and notes on the mineral industry in Liberia

-,1

/fA cJy

CS/2796 ""k

-~~~ ,,.. 1 • • • • ,

NotesPra~e-a

for-the Conference-

on

Africa.

- a:nd the Problematics of' the Future

By

' 1

_

.rot!: 1971

. ·. ~

i'

.

,;~·

. : f

-s

~

.

.);

.•

.. ^·

"' ·

PARTI

. .

·!i!!JNk sm!t- · OF:: Ql!:tcA .

-r· ,,,,,:· , . · •

. !ntroduct i®

· The

present • ·

Ill;te~'ti~ll!;èqnomic

· oi:-der

is·· co!ltrolled by the highly

. developèd _{• .} C61]ntrles _{' t .}

(th~ ·

_.

.C.t~e)

_{•. . . ,}

.

_.

.

The,

Ç~~te c~t.rols

_{.• •} aboUt ,90 p$]:-cent Of the

w()rld' 's e~~· ~e ..

eXamp+e: of this

~tlation

'is' in.

'the

.mining

sector.

The Centre

j,roduoe~

a.boot:

66 ·~~oerit

of

th~

tforl:d¹s

min~~is

^but oonsrimes aboùt · 90-·

percent. ~- The Thf~ W~~~d

.(Periphê.ry) preduces

~bout

^{a third of the}

out prit of

l«Jriai~

minerilaf: BU.pply and consumes a.bout 1/25 to 5/31 of whàt i t

produèes. 1 . . . . .

• • 1 • •

.Becaus. e

of .its

- dominent:

positiQnt the Centre ha.e obtained

~d

^c.ontinuès

t9 a.oqui;re t;emen4ous amo\Ult" ot'

mine~l ·

^raw

mat~rfals ; fr~~n;

the ·Periphery at prieeS that are n(Jt renuaei~a.'ti.ve

·.l!ii

th those of manu:f'actured prOducts. This · has resùl ted nOt only

in.

^a

oon~a.nt ~d

çowing out flow of mineràl

' . ^. . . ^. . . ^{: .}

<.'.om!nodities from the ·Periphery, bu~ to its underd~êlopmen-t. It is there- fore apparent tha:t 'the Centre .has been taking àdva.nt~ of the basic needa of

tns

Pe:r.iphery.

Con:fronted lfith this i11;e<p18.lity and dispa.rlty and. the oontinuous

. .. . . . . .

desire to imprave the stan~rd of living of th~ir pe6plest · Thirèl World èountriest most- espeoia.Ily the Afrioari people must tum ineYitably toward strategies dês:tgned

ât

a<:;hierlng :ra.pid and suetained economie groWth by the exploitation. of their own trtineral resources. This paper will address it-

. . .

self to the survey of mineral j.esourees in AfriOà.t multinational control of thé mineral industcy in L:fberiM a.nd· a. mmeral' policy for Africa..

Mineral

Prodù.otion

Africa has ·large

a.nA

signifi~t _{. t} nüneral _. resouroes (See plate 1).

Exploration for min•ral.sr in.rnost· Ati1:~_countries is still in the embryonio

· . . • . ·· · . ~

stage aad no· doubt Af'rica.'s IJhare. of-rn~Eirals will in~fu.ture continues to:

.: .... , .... ^· ..

.. ~ -.·

-2-

F-rom 1948-1973 mining and qtiarrying production increased. remark1:1bly!

)

4:-:---the average annual rate cf growth was 6.1 :percent between 1948-1960,

16

percent _. over

l960,...l970t

_. and dropped _{· .} to

4·5

percent, during _.

1970-1973.

_{. ~}

1;hB per c-e.pi ta ou.tp11t of minirig and qua:rrying increased from U.S. $2.7 in 1950 to

n.s. $5

in

l963t

â.nd increa:sed aharply to

u.s.

^{$18.4 in}

;1.970

and

1:'e~.ched. U .S. $19.7 in 1972. · Îhe share. of mining and qua;rrying in the GDP of

..1 . . . ·.

Afrlca. increased t'rom 3

.o

percent in 1950 to 4.2 percent in Jp63 and to 12.4 percent in 1972, hlgher

tha~.

the share o·f ma'nuf"aetv.ring. 2

In 1976. the sha,re of Afric--a ·in wbrld: mineral oi:ttput was as follol'rs:

. .

Gold.t 72 percent; ditunonclst 95 percerrt; cobalt oret 78 percent; ohrome ore

~l9 percent; me.nganese oret 31 pei•cent; erude petroleumr 11 percent; bau:d te or•e, JO pet·csnt (See Appendixes 1-15}.

'3om<3 minerals of lasser :i.mporta.nce 811ch as nickel• rutile and t.in have d.:i.}>tinctly coneolidated their posi t:i.on in world. market. Also in worl.d

minerû trade of 1976 Af.rica 's sha.re of' phosphate ore PJ!!OUl'l.ted. to 30 percer1·tt co}Jp€!1' ore 24 percent' urctXlium ore 8 percent t tin ore

5

percent ^t coal

3

P("':rcent <:1.:nd :~ percent oach of lead oreH nickel ore anet silver ore.

f~r>id.est Afrioa pe;eaesaes about

8o

percent of total world. reserves of

.oto::;pbe:te rocb

7

LI percent of chrome ore

89

percent metsJ.lurgical grade chrorrd te, LlO percent of mangr:-.nese ore, 19 percent of u:r::>.-nium oret 2.1

j

perc:~rr-l: of bauxfte, 8 pf-~rcent of nickel oret 75 percent. of go1d oret 97

perce:d of diArnond.st 10 percent crude oil a.nd 7.6 percent natural g-a.s

1).

J:J.rea,d.y intens1.ve p.:'eo1o~dc invee:;ti.gation ha.s. prod:nced remarkable rec-i!lt s in the f'o1lo\'r.l.ng coUl!.tries: copper in l·iauri tania; iron ore in aa·bont Guinee., Nigeria and Ivory Coast; mercury :i.n A1geria; potassium in Zf.Li!'*e' nir}kel· i.n. Botswana. ~d Zimba.bv-:ret uraniu·.m. in Niger and. Centrai .A..fr:ica..n Hepublic and petroleum in Ivory Coast and Cameroun.

D:t stri but ion

....,.,W;:jo;t .. -• . . ,,..-1\'•Gc'tilr' . . . 111

IJI:inera.l resources a.re concentrated in very few countriest thi.s a.ccounts d so for the variations in produc1iion. · In 1972-73 three oountries L:i.bya;, I-Jigeri.a and Algeria produce 36.6 peroentr 35.5 percent and. 17.3 percent of

'

- j -

thê to-tal_ crude petroleum respectively; l.ibya and Alge!'ia. produoe

66.6

a11d

30 • 2 percent reepectively

6t'

na.tu.re.l B'flS • . -Zambia.t Moroccot Mozambiq-ue a.nd

. .. . . j ' ' .• ' . .. '

Nigeria :prcd:uèe abçmt

95

pe~eent o:f' t.h~ coe..l output:; two· countrl_es- only Li bet·ia and Mau.ri.tan:la. prod.:u;ce

84 p~rcent

^{of' -the}

ir~

·ore; Zambia. and Zaire produce 98

percen~

^cr( coopel'; Nigeria and Zaire

·produo~ 8o ~roent.

^{of the}

tin; :Moroccot Zambia and Tiilli$Îa produ.èè 97 percent.

CJf lead

^{ore; Zaire a.nd}

7 ;a..~bia.

^p1·oduce

80-_ pereent

of z.inc; Morocco. and

'f'tmisia~ 82 · percent

of the

phoaph~te rock; ~pon and Ghana produce

85

l}érceirt of the. ~eae ore;

Ohana and Zairè produee 94 J)ercent of gold and 72 .. percent of dirunonds (Se~

A-ppendix

18}~

9 ..

t?r~ti•ihu:tion ·to ®P

The contribution of the

minéral

^{E!ector to CIDP} is~ about 1 percent for the worldt and 0.8 percent for t_he industria,Üzed <"..Ountries and a'l:l?ut 1.2-

1.5

pereèli~

· in

^deyeloping·c~untrles~ Fo'r. aome-:Arri~-countrlès H is far higher;hl Gebèn H is 79 J)êrcentt in Libya and Spa.nj,sh Sahara it is 70

. .. . . . ^' . : . . .

percenti in A1geriat Péoplee Republic of tJH~ Congot Botswana' M'auri tania,

. . . . . :

Niger;iar Nà.11ib:ta., Zambia, it is between 40-50 percent·; in Guinea.t Sierra Leone, Togo; Liber:i.a.t Morocèot 7.-a.irer i t is between 20.:..35 ·percent

(Ap:pendix 19}. !n 1972~ Libya and Nigeria a,ccoünted for 61-percent of total' minfng output i.n Africa (Appendix 21).

/

About 1 percent of all employees in the world are employed ,in the mbdng aection.4 li'or most developed

count~ies

^_this figure does not exeeed the 1 perce-.nt mar'kt however,' in some Afr;ica,"i countri.es this ,

. . .

percentage i s mu ch higher. In Zaire emplo~rment in the mining sector account s for 16 percent

of

total labor force, 15.5 percent

in

Zambiar 10 percent in Libya and l:2 percent in I.iberia •

. ~pen~

Ew;t.!!!

Mining in A:frica. ha.s :(ollowed <;mly one pattern, that is supplying the industria.lized countt'iee Wi th ra.w ma:terial s at very low cost.

Nigeria and Libya which a.re the major oil prod.ucing countriea of A:frica and account for 4 percent and 3 percent of' world output of oil respectivelyt expor-t over

90

percent of thei.r a.nnue.l production. !ron ore is no ex.ceptionr

-4-

Liberia.' 'the ma,jor iron ore produce'JJ in Africa;, and -ranks ninth with

. ' . ^.

Venez-aela a.s world expçrrter of iron ore, expol't s 10~ pe-rcent. Za,ire pro<Iltces 38 perce:n:t of the· world output of diamo.nds. and. èxpQrta all of them. Za.il•e and ?.ambia a.c.count for 9 pereent

of

^{ita a.unua.l} production end ?.,a.mbia., 95 ..

percent.. As ina.jor producer of ba.uxi.tè

in

Africa,t. Oùinea exporta about 70 percent of :i.ts annua.f production. Moroceo ·produces 18 percent

o-f

the wor1d output of phosphate, but exporta 97 percent.

'!;he capital n,eeded for financing theae projeèts a!'e provid.ed by the d.e--1eloped: comrtries.. Therefore revenues ob_ta1ued from the marketing of these l'l'oduc-t.s are all repatriated. Only the low wages paid the.nationals of the

' '

host cou.ntrles coupled with tues pa.id to theee govertJ.ments constitute the contribution mè.d.e. to the o-wn.crs of t.he l'llinera.l resou'rces. The dow. stream rrri.nillg a.eti.v'ity need.ed

to

^increa.se

^the

^{benêfita to the hoet count.rfes. (and to}

r1ome extent t}lc abolishi.ng

or·

^{the éaptive} r.Jàt,u.re of 'the industry) ~s kep-t at

. .

a \rery minimrun and. primitive stage.

:flot only ia the capital for the development of the rnitd.ng .industries providec.}. by the multinational compa:n1.es and their eubei.dia.ries,. b11t they al so control mana-gement, marketing, prieing

and

transpo:tt aspects which add to low -revenues for the host countries. These forms of economie domination Will be el ea:r·ly i1lustr~.ted in Part II of the_ Pa:per: The Structure qf the Iron Ore In.düstr:t in Liberia

. .

·Table 1

Cominodity

..

^{( ·.1}

Diamonds Cobalt ··

Golrl

Chromite.Ore

Met • Grad.e Ch:romi te Me.nganese

. Phosphaté

Ta.ntatin

Copper ·

Crude Pet.roleum

Uranium

-~.u:dte ..

-.Iron Ore .

Tin

Coa1 Nickel

Le ad.

Sibrer · Zi.nc

Na.tural Ga.s

...

,... .

Share of woi-ld output (percent),

. ^' . ·,.

, ^.. ·; .

95

78 72

39 NA 31

30 .

^..

30

24 11

2l

10 .

8 8

5

.

^'

4 3 3 3 NA

. ^.

'

..

Share' o.f"-toial

wi>r~d-'re$erves

. - 'fatŒ!f!-t} ·

97

42

75

..

74

89

·'40 ^·,_

80

75

. 0.~4

'· 10

19

21

l· 5

5 ^.--

-· ^_, 0 •.

4 . 8

1 1 1 7~6

-6-

PAR'J.' II

J.ntroduct ion ^/

In 1944, Mr. Tubmant the then President of Liberiat officia.lly

ina.ugura.ted. the "Open Door· Policy"' the principtù policy rrieasu:re for invest- me.nt in Liberia. • . Thus th.e foundatfori of an unequal ~:x-change between Liberia and the

Centre

was eatablished. Sorne ofthe highlights of the nopen DooT' Po 1 i c,y" al!'e:

1.

')

c. •

3.

t;

_.1•

6.

7 _{1 .}

8.

lF'o-:r~.ign trade :ta virtually free of restrictions.

Foreign excha.l'ige tr?..nsaotiona aTè unrestricted •.

Oovernroent advoca.tes -the ma.ximun employment. of ~..talified

M'berians.

11'he Governme.nt pursues a free t~de policy which is designed to promote and enco\lrage interna:tional business and to attract primate foreign investme:hts by permit_ting the ,J_nh.runpered. movemen-t of currehcy and goods. ·

Covernment does not exercise controls or transfer

rov~tlitiest earntn~s• or dividende ancl no restrictions on,the free mbveme~t of capital into or .out

of

^{the country.}

The u~s. dollars is the basic moneta:r;y 1mit along with the Liberian dollar.

Government does pot limi-t the exte.nt of foreign control of business ent:i.ties.

Govérnment encourage :foreign firms to.enter into pa.rtne~

sh1p w:tth Li,ber:!..en citizens for owne:rship and management of busines$. ,._,entures.

9. Non-ne:t:i.one.lizàtion of priva te enterprises.

10. Facilita.ting tne emplo;yment

or

the· necessary foreie;n tech.l"l.ical and managerial personnel toge-ther wi th . _ u.nrestricted home· -tra.nsfer of sa.virtgs of su ch personnel.

5

Investment. Incentive Code

On April 15, 1966, the Législature pa.ss•.:td into Law, the Investment

·~

.

!

-·r-

..

Incent ivt:J Cod.et rtthich is ·the othe,r. basic poJ.icy for invest'll1ent in Liberi$..

'l'hi s law provides t~x incentives and other rn;ivileges to ne-w business vf;ntu:rss. The primar;r parpose of this Cotie is to prornote 'speedly dècision

meJd.nf: o:n investment proposa..l of u:p t.o $150;000 as well as standardized

the ,~?;~meral ocmd.it:i.ons under whir.:h priva te ca~1i

..

tal at

. r:.

this l~!el of' investme:nt c43-n 'be employer! in the Liber:i.?,n economy.-

;llhe Corrmeroia.l Po1icy of Liberis. is based on un:restricted. trade with aJ.l ootmtries. Trad:i.ne mth develop:in,g Coun:trieï!l is be.sed on most.;.

fav{)red na:Hon principle. '!nere ia no t;:r.:che.nge · cor:rtrol and no import

c:oni:!'ol for exehs . ..Ytge pu.r:poses. ~eept for fire arms, a.mttn;lnitiont ·. rried.id.:nest live ^{<:• .} .nima:l:s which are suhjeot to special measures of Hcense ooni:ro1'

i;he::re a:rq no r~stricttons on the importa:tion ar~d exportation of goods and.

serv:tces.

·.'l'he Isiberian economy is cha:racterized by a 'toto.l dependence on the p..-od.udion of :tê:1.w materia1s for export es:pec5.;~lly iron ore. . Iron ore min- 1.:ng is the 1a.:rgest. contributor about 32 percent to the gross domeotic pro- èuet ( Appendix 2 3) .

Despite the relative dominance of' the iron ot-e inrlusi:.ry i.ts real·· èon··

trïbc~t:ion i:o ·the National In ecime ^{je ,..1>.cl.} rather low. The mining ind:a.stry con-

·tributed a.bout · 34 percent of.· the aDP in 1970, ho1.revert a:t·tér the d.eduction

to fo:ceign factors of prod.uctionr, deprecia.ti.on. and oost of. Cc'1.pita1, the net v~.1ue F.~d.ded ~ms only 14 percent. Also ':thile t(>taJ. aa:les of iron ore :fnr the period. 1965-197 4 amou..11ted t.o about $1.585 hillion, total govern- rnent revenues for the same period w.è.s $118.2 million or about

7-5

percent of i;ot<.\1 sales (See Appendix 22).

J<':xcept the Nationa.l Iron Ore Company which is 50 percent governmeni;

.

owned, all other iron ore·mj.ning col'!1panies are d.om:i.nated. b;y foreign mlllt1.na.t:ional compauies. Theee oompaniea opera.te as oapti,te mines, the mea.."! by l<thich the large iron and ste\Ù companies of the Centre cbtain Hs ra.vr ma/~erials from the Pertphery tl1rough their nru.ltina.t.ional companies or .:md their sttbr;idiaries. Beca.u:ae o·f this domina..."lce ;;md unequal relationship

-

^{... ~---.-.}

-8-

govern:nen-t revenues are ver;; lo~r. Most of the staff memoors like the ma.ch:Lnet;,r are impo:rteü; the Liberiani7,ation and trlüning programme .is veT"J

sl.o~t; almost all of. the eàrnings of the compa.ni.es ·and' their:' expatriate s·taff are r-epatriated; the finished productà from the ra:w materia.ls a:r-e processed in 't>res-tern capHalist eountriee; nothing is done to mak@ the com_rrnm:i.ty vie.ble when: the ore is exha.11sted or mining has terminated ..

BP.càuae of this complete dominance of this majc.r sector of the !Jiberian

. .·

economyb;y the western capitalist machinery; the mini.ng industcy has Very Jittle effeot on income generating prod1lctive ac;iivities in ether sectors of the economy.

'l'he existing iron ore concession àgreements a,re outdated. Recent ( 1974) negbtiations of the 1..AJ!!CO and Bong Mining CotnpP...ny AgreE>.ments ha,ve to

souw e.r.tent inc:réase gove~..me.•·lt revenùest however these agreements have

f;:~i1ed to bring abou·t an aëcepta.1)1e formula· fo·r profit maximization-~

L.lher-la i s the la:rgest exporter of iron ore in Af.ri:ca a.nd ranks ~-ri th V 0(\i:tz<JEd a. as the ninth le,rgeat exporter in the world.

In t.el'ms of va.ltHH the extraction of iroh ore deposits is the major sc0nomic aoHvity of Liberia. This activity is estimated. to have generated

5:~ pa:r.oent of the GDP in 1.970, compt-tred to 30 percent in 1969 (Appendix 23).

ln 1970, ?.}.) million tons of iro"n ore were producted compa.red to 21.2 miJJ.1.o:n in .1969t e.n i.ncrease of 10.2 percent. Increaaes in 1970 ~-.rere due m<"ir:J;y to the production of' high q·uality types of ore• mainly pellets,

*~sh,c1d fi:nes and concentratea. At present Liberia e-xpor'ts all of its üon ore p::r.oducts (See Appendix 24t for export~ to various countries).

Jly r;ny int$:rne;·tiona,1 standat'd geologie investiga,tion in Liberia is st:i,11 basi.cally in its incip:len"t stage however there ia great enthusiasm and

r 1ppor•'\: for the continued dévelopment of the na:!: ion 'S mineral resourcee.

Pr~~ze.n~~ reserve eatima.te of proven iron ores are s11fficient to supply a merliu.m-dzed steel plant for at lea.st

75

yeara (See .Appendix 24).

r . 1./f' • . ('

:E;?EE..J:::..~n..,~p.~ ~··om~.:c

Pormerly the Bong Mining Company (:BMC) ba.sed its activities on a

.. Gonoession Agreement which w.a· .concluded on September 16r 1958t between the Government of the Repùblic

of

Liberia (GOL) and Exploration and ::Bergban G.m.b.H. (formerly namad Gewerkechaft Ex:ploràtion}r Düë:selforlf. -~lqra.­

ti.o.n ~nd .P..èrgban C.m. b.H.. ope:r.ated this Concession Agreement through the Liberi..an Corporation DEIJ!MCO/German _. - Liberian _. Mining Company (DELlMCO)".

Concurrently BMC

and

:OELIM("AJ were ·. combined through an Agreement o-f Merger dated s.nd approv·ed by the _stockholders of both corporàti.oné on December 16t 1974•

BM'i

.being the surviving corpore:tion.

The Con-cession. Agreement grants for a. perioèt of 70 ye.ars the exclusive

·d.ght and ·privilege tc. search for and exploit depoei.ts of iron ore found

. .

within area.s loca.ted

in

or

about

Bong Range, Salala Districtt Bong Count;y.

Because of GOL ri~ht ·to 50 percent of net pro~its, BMC

is

not 8ubj~ct

' .

to {ha payment of any taxès, feest duties, excisee, royalties or other charges

inr_pl'>s~d by Liberia11 I.aws except a.s otherwise provi:ded in th~ Concession Ag:reement. For import du.ties on non ... industri.al goods a.nd fees for consul.e.r invqioest BMG pays a eum of $200,000 a.tmually.

3!<1C reached ).ts ar.nual· capa.city of

5

m1.1Hon tons in

1970•

In 1974, i t mined 6.7 m:Hlion tona't of which 2.4 million tons were pellets. In 1975 EMC

st.art~cl

a

$120 mill ion extens1.on progro.mme which includest an extenaion of the c:cmcentratort

a

^{seeond pellet plant; erlension of power} plant ànd extension of houa:i.ng ar·eas including infrastructure a ~"are bouses and workshop.

~1-le total investment of :BMC amounts to $223.5 milHon, of whicha.baut

. .

$95-J. million (42.6 percent) were a.mou.ntiMd.

Eë.i:.ism?~l... J.ror~.S?r::_Çompe.ny

(r npc.}

.Pcnmderl ' tn 1958, Nati6n~l Iron Ore Compa.nyt I..td. was the second iron ore produr;e:r in Liberia. C".rOL pr(Y'rided 50 percent of the NIOC's shares. 'l'he Libei'ia Mining Company (IJ>fC) owns 15 percent and the Liberian F;nte:rpriaesa Ltd., l'ihich has sorne 1600 T...iberian shareholders; owns

35

percent.

f.JIOC ha.s an Bo-yee.r Concession to m:l.ne the iron ore deposits loca..ted e.long the Mano River, northeastern Liberia, on the boa:rder with Sterra. Leone.

r~y virtue of an .Agreement dated 1958, a Liberien Company, Mine Management Aaeocia.tes Ltd.' was selected as ma.naging agentf:c1. The ore ie

-10-

rnarket.ed b;y UIOC' s exclusive sales agent sr Mr. H. Muller and Oo.mpany of Ne\v York City, USA.

In 1962, the flrst year of produ:ctionr 602r278 tons was mined. Since

1967, th~ NIOC han ·maintained an annua.l production of 4 million tons, how- ·

ever dne to re-cent. rec~s~ion in the ore ma.rkett coupled With techni6al d.ifficult"fee at the ntinet production :has ·no~

been

tnair.ltained

at

^{3 million}

tons. ·

Sin ce GOL own.s 50 percent equil ty or has the right to a.cquire one-half of the shares of the Conceerrionaire tC:(be iss1J.edt N!OC is not àllowed to pa:r royal t.y ' t~.xès. Also the Concessionaü:•e ia exempt from all taxes of ~,n;r

ch;,-,racter, lrhethe::t~ national or local. The shal'eholders are also exempt from all taxes 'on thei:r shares of· stock and seeu.ritie-st as weil as on

dî.vid.enila~ 'l'e~es \-rhich the Con.ceaeiona.i:r.e 'P@.ys includes exp1ora.tion ta.x ($}0.'J/month)t a, Sllrf1'!.ce tax of 6 cents an acre for the first ten yearst 10 · cents dü.ring the next ten ;renrs and ?.0 cents per acre for the remaining of ... h _{,, .,e}

c

_. orweas1.on,

• ~ 7

1)'otal cap:i, tnl itr-Teatmént to Oetober 31, 1976 is appi.lox:i.matel:v $57 mi 11 ion exch1.ding ô.ep~eciat ion.

Tl·,e IüU.tCO Joint Ventu.re ia a form of multinational corporation which itl part:ne:rship wHh the T..riberian Government, is opera.ting both as an

industrial enterpriae PJltl at the sa.rrK;~ time as a par-tuer i.r1 the explo1.tation

of the

~ J....:J...~ . r~~.

As ë<n international business machinery' th~ I..ANCO .Joint Venture com- bines the financ:ial resourceE( of American, Canad;ia.nt Germant Liberian

and

;),wdis!> :i.nvest.ors and banks and. skills of people from sorne 20 nations and treir l.:i.be'ria.n co-\4orkerst in.to one of the worlà. ^f s large at. and most.

ef:ficient iron ol"e mining enterprise~. Tl'llf LDie6 MiR• 4 a 1 oca:t.ed in ;!;,he

:;~·-Re.ft,.-e, e;~t )g@G- mSa•t nort.l>&asi

et

Mo:tnoovia.

As a business ally of GOLr LAMCO is training sorne 1,250 Liberian mnployees in the teclm.ical a.nd me.nagerial aiills of modern ind.ustry; help- ing educ!;:te

3t400

Liberian chÜdren 6lld adults in its SeYen community

-11-

s<~hoo1s; providing heeüth sêrrlces fOl' $Om& 20,000 people; and gen,e;rating div:l.iends s.nd other· revenues which contribu:te su.bstaritiâlly t·o its. sfl..a.re- hclderf'{' and. to lesser extent to 00! ...

l.AMCO total capita.l inve-9tmen.t now amounts to more tha.n

$275

_million. (}I.JL oWtls

50 ·

perèent of' t.AMCO'e capital sto~k. The othèr

5o

peree~t is · owned. by privaté · inveato.ra. · Private inV"estor's' sha.ree a:ré. held

by

a Cena.d.iat:t .... domicilled ht~lding compruw and Libèrta.n Iron Oret Ltd .• , .(t!O} • . A.'bm:~t

15

par cent of LlO' s stoekt in

tU.rth ·

is owned by the

group

of' Swe.dish

irrv-estol"s .tfuo took the léa.der.l'ihip in férm:i,ng

LAJ100

in

195'5·

The rest of thé 2tock i.~ o-wned by eome ·· 3t000 Americans and. Canâclians e.nO: by more tha.n 2 1 ()00 .: . Li berians •

'fhere ill a Joint Venture Agreement. bétween I.AMOO and thé Bet;hlehem Steel

eorperation ( LlBliJr.tt)

whi ch pr-evidee that. LAifCO ha.s. a..

75

percent a.nd

I.nwr1:!

·a. 25 percent untli'irid:ed · interest i.rt the Concession. ConseQ'Uently

t.he

two

parti~s

^share

prod~etion

^of

th~

^{joint venture}

general!~

^i1l_a

75/75 .

ratio ~rfth the p:rovisio~. that r;.I'Bl!lTH

takf)a

Hs mirdmun~>'port:io!i of 2.5·

The ·liAJ<!CO. Mine went· into pl'Ocl.uotion in 1963 \fi th an a.rulual 6apa9i~y· of 7 ·5 .mi1Hon t.ons or

orer iat~r

^th.e

. a.lmwn ca~cd_ ty Wa.s

incr.eaaed

· · to :w:.

m:Ulion tons (1971)

~

^{. Thé}

~~: w:ro ' .rôt:~i

^{Venture- a.llllua1}

oapaeity

^h.ài'J :silice bèen incx-ea.aed to ·12 million tons a1nitmlly. .

RoWévert -ain ce the Tokedah M.i.n~

wa.s

^{pu:t int() operi.;tion} in 197.3•

Jhe

e,.ge:regaté -pro<htction of).pe.e:Ùy of the LAMOO Joint

ile~ture

^{haa been l l:5}

million tons armuall;r of erude oNi result::i:ng t~ a.ri outpat of finished pt-o- ch..l.cts of 12 .. 3 milli.on,tons.

The Concession .Açeement gra:nts

LA.Mco,

thé ·excl.tuttve right è.ttd pr&..

-v"ilege to èXplore, developt minet -matrufacturet tranaportt loadr shipt sell Rnd eiport iron ol"ét in iron bearlng mi.neralst and columbite found i.n the Concession Areilas.

Alao · a.cco:rding to thia Ag:reeme:n-h neither LAMCO nor LIBm'H shall be sub,ieét to the pa;ymént. to <Jovermnent ·of" an.,y ta:x:esr fees dutieEu excises roya.l ti es or · other t;ha:rges imposed by Liberia.n t.a.w of general a.ppli<'..a.tion.

' 1

-12-

Ho:r;ever I.AMCO sha1l be su.bjeci.: to such ta:xes as real ty lease ·ta:x:es in respec·t of !'ent.a1 payments recëiVed from their partief\1 for rentai ~f la,.'ld and build- ings; tftX fees and chargea for moto!' Vehicles regietrations and dri;~érts

li~enset ent:ey and exit permitat v:t.aast pel"!ttits of' residence• l'tOrk pèrm:tts, cnstom periri:it~; ha:tbo:t- dutiest freight tàXes' whàrfage and tells.. under · the Concession Agreemént as amended in 1914 _L,A.MGO is :requii·ed to :PaJ a.

r.c-ya.1ty to thé {'t()vernment in. the amol'int of

4

percent of iis net sales of iron ore nnd iron· products durine e-a;ch quarter.· ..

Li beria

'Mini»a: •

C(lmPfÙl]-(

LMC 1-

~ ... ~ ilils••. • , '-''* . . -•• _1_

IJ'he first

- r:'i.ntng

comvanyto respo.n.d to Goverr•ment

'a

"Open Door PoHc;t' '~-!~-~ th~ IJ?,bcria Miuing Compàny ( U.1C). · r.Uning operat;io:ns bege.n in 1951 w:l.th a total investmefit of _. $40 miHion. ~' 195'1 the first yea,r _. of production,

600,000 tons were mined. · In 1957, Utc reached i ts fu.ll oapacit~y of 3. million tons. Sixt;r percent of the-ahare capital of" LMC belongs to Repnblic Steel Company; 0-the:r ownera :tnclur:le.

tT. s.

Ste~l à..'ld the Christie Fa.mi1y. Colonel L~ndell K. Ch.ricrtié was the founder a.nrl. fi:rst :Prt:leide~t o.f' LMC •

•

The first three yèa:r.s of operations of LMC proved highly profitable

. . . .

beca.nse. the Compan-y 'a products eamè· on (Jtream in an ore seller"•s market

~~i-t.h high <.Nalit;v;

oPen

he~rth ore hrhi<$ eormna.nded salés priees 1lOt to be EKfLmled .. or surpa;s~d· for over 20

years.

.A.t the saane time oo~:rts were low due to the .lunited. amount of' stl'ippi:o,g andh1asting req'-lired, and the ave.Üa.bility of' c<msiderable f"iont Qrè in adjacent a.rea.s khi. ch . could readi1y be mù,i~ed: and

t r.an.~;Port.«!!d

^{to the aru.$he:r • . The resul ting revenué.s quiekly enabled.}

Ûfc

to•.

. i

a.GCU.!lT..:t.laté the fu:nds to. retirei its debts and to. construct the concentre.>~ting

mill a-t a coat of" tH million wi th no outside f'inancing.

t.b1C· Cqnces-~ion :Agreement to mine the high qüali ty iron ore deposi t s of Bomi ltills o-ates bà;c~ to 1945' @..nd. has an 8o-year Jif$ span.

Accb'rd.ing to -t;,~e Concess:.ton Agl-eemmth !..MC had the exclusive righte and privilege to search a.rid e~ploit depasiis of iron ore, other ores' metals, and minerals with the er.èep-t:ton of gold• pla.tim.L"!l' diamonds, a.nd other preoiou.s stonesr and t() Utracrt, refinét tranS'POrt and export .auch ores.

The Concaes:iona.ire ·is. obli:gat.ed to pay

a:n

expiorati.on taxt surf~.ce tax

-13-

ammmts to :f'ive

(5)

c:~.ni;s per ~<::re for the first five _{' ' .} :v-ea.rs; stx _{.. . . . ·-.} è~nts _·, p~r a.c:re d.ur:iJ'l.g the ne:xt f'ive yeara; ten cents per aore duri:r.g t~e

next

te:n yea:rs a.nd. 'ttnellt'y cents :per e.c!"e d.u:r:l.rtg the re:nai.ning y~a.rs of. the Conee~llsion. · A royalty taj; o:f :t'ive cent a pèr ton on al1 i~ ore shi:pped ·

A colla.ternl Agr~ement dgned on. August

lt 1952•

a.llowed GbL to 9~trlitripa;te in the net.

p1"o:fits of

^iJ{C.. Àcoordingly C',OIJ l>ta.S allowed

15

perçên_t of nat p:ro:fits duri:n;g a p~riod of

5

yearst

35

pereent for the

next ten yea.rs calcuJ.a:ted from the expiration of the :t'ive· years perlod., and

. '

50 p~rceht of' net. pro:f'it-.a· d1.1r:ing the rest· of the_ Concesaiôn Agreement.

QQJ~·.-.JJ~C...·CSJn!2,;~.2.t.

· .. On· Septem~è:r lOt 1976t the Chai:t'fiia.,p. of the· :Bos.rd ôf .Direct ors of LMC info!"''!l~d C-ùiJ o'f

its plan

^{tô caà.~é} p:rodtwtion at the ~nd of 'th~ firQt q:u.a.rte:r

of

^1977. Accordl.Îig .t.o

C~mpa;ey'~

o:f'ficidlh !JMC w:tÜ be

~ble.

^to

prod:uce aal~bl~& er-a,de ore ~tftéT · that da.te.

Howevèr ·

f'.t~her ^geol·og:tc

inv~sti:~t1on of resiXiual ores re'lreal s th.at the c.ondlti<m €'f'

the plant

and n'IMh~ne·!jr çottpled

\ • dtn

·the lac,k of apare pa.rts

must

hav~ in.flu~ced to a la.r-ger ex-tant ll'fa;nage,ment

's

decision to cea~e m±ti:i.n:g

oper.a1dana.

On !l!a.rch 31,

197'T'

af'tër 26

l1;é~:t:rB'

of

mi~in~·

at wli:i.eh tiJ!te, sorne

4 5

milli.on

lone

tons of d.:i::rect ahipp:tng'ore and J.71ll~llio~ io:ng tons .<>f co:ne.ent-ratês· htrv.e beert tnined. and éxported LMC ~~aed: min~~ ôpe~~ions.

As: _., a

r-~müt

of' êesse.tlon _'. of rtlinirigt _. a.bou.t 2,000

·wrk~t'$

_,

·

_.

be~e:-

_{.. . '·}

une~l·O;yed

_{. . .}

. · ...

Mld- the ~omi Hills Conmr-~ity was left without :;tnj'· viable e~ooomic su~i~

ingactivity.

As f'a.r be.ck as

_.!915;

whe:rt l.MC first annou:iiçed its intention of cloa- ing dom the min~~ trois beea:me concerned and on·

•r

^llt

^1976,

A Speci!!ll Shut-doWll CômmiitfH~., ehaired 'by the M•i:ilist.er of

Planning

a.nd Econbmië Affaira, ~<?;(;. appointed 'by the !1!-eeid.ent of l.iberia to monitor U~C's Phas- ing-out Operations.

On Dêcember 29; 1976r the. Speqta.t· Shut-down: Committee ereated a.

Special Sub--Coramittee. dde.gated· With the fo11owing T.~

..

~ of -Refér$!nee:

1. To wo:x-k in oonju.nction. with LMC' s staff in tak:ing a complet& physica.l inven.tocy of all a.ssets and.

. -14-

ai:ld t o pre~ l:ista·or e.uc:h assets for submiasio.n to the Chn.irtnan of

tné

^.Special Shut-down Committee.

2.

To

report ·on the condition of Sl1ch assets a.nd whether they are uaa.ble or non-usa.ble. Pa..rticular reference'

. .

in·th:i.s· ~nnextion shauld be made to the follo't-t"ing a.s:sets!

e.. Those ^àSS9JGS thàt ·cari. be ^expected te re'Ve:tt tc G.ovel':'Ilirlent like the l'ailroadt achoolr housing,

. .

h.oepitP.if pe~sta.t.font ~m:tèr aupply system ^and

d:ook' ta~lities.

b. Those a.s·sets that ~11 be. required t.o srtstain

. . .

fu_rther: activities like the rock crushing

fa.çilities together_ with maintenance. fa.cilities.

Those ass(tts whi.ch

~ill

be ;ec;.uired b:y NIOC lfke

looonf<>.tive

.Sl:lop,

ear

repa.it shop' blaelt-

. ·smi.th ehop• dispe:tcher•s office, l~ta.rehouse and

service, etc •

'3. To apprn;Ls~. tlle value. of all assets in conjun<rtion with the. 'LMO Management· and. report ba.ek to the· Chairman of the Special Committee.

4.

To În~é i-ecolllmenda.tions to -the Special Comzrrtttee with regard. to . the d.isposition of all asset~·h and to n'leke sure tha:t no a.seets are dj.spoeed. of without the_ir know1edge and pe:rm.issi.on ~

5 . .

To report measut-es being tro~,ken by tMC to· render work;i.ng''.sa!'.è. a.nd free from cÜ .. eea.aer as well a.s 'mee:sures heing taken to pre-vent erosion of lano. au:r:f'ace. whioh ha.s heen da.maged as a

1^.1- f .i •· . t . 8 . re su ^1. o m n~ng opera 1ona.

LMC a.rguea thc:,-t it ha.rt not cea.sed mintng operations, but rather

mlapended produétive miningt th~retore eny · claim t~ ita asr:wts is prel!'.ature and illegal. Und.ér the terms. of the Conoeasion Agr~ement OOL ha.s the right t.o cancel the Agreement if LMC fails to eXJ)loit a pa,rticular lo-t .for over

three ,Years. Under such termst OOL cannot exercise its rights to càncel I.M:O' a Concession wi;\;h respect to Bomi Hill e prior to April 1, 1980• and

•

..

.

- ^.

Hon ôf of.e d.epos'i ts • . 'Ilberefore, ;:tcc,rding to liMC,, it reee_r\"es Hs right l:.o ar\::d.t,ra.tion _ov~r

the

intel'preta.tion of ite Co.~:eession Agreement •..

.Be-ca.ù.se of thiE3 new development, T.MC refused to coopera. te. with th.e Special Su~Cofl1mittee

in ^the

fulfillment of its i!é~s ..

!?.t

Re:fex-E~a~e. · And u.:tLt~ss the :provision as sÜ.pula.'ted in .. the .. Concession. Agreement with respect to o\\nership of ~.seets in' honourèd., L."f4C will not carry out i.te planned

c1ea."rling_up

proça.rns~

^{f!nd will}·· not ma]:te a.v'aila.ble to OOL

f~a.s1bili

t;r etudies of p!'O,ieètti which m:~.f ^{lead i;o} sorne viable economie a.otiv:ttyin the a.rea. At

' ' . ^. . :

the moment' no action hae 'be~.n 'tnken by Government to e,esume t\111. ·Qwn,ership of tr.e arieet:a. ·. The Cori cesSion Agreement providês tha.t any dîfficul t;y a.ria- i.r;.g betweeri aontracting .. ,parties she.li be imbmitted to arbitra:t;ion. ArticlE'!

15 of the Concêssion AG-reement ·mates:

each. part;Y shall appoint -~ e;rbitrator .e..nd the two ao ·

. ^' . .

appci:lnted aha1l giv .. e thêi:r d.ecision ~itten six..ty df!,ye BJ'ter ·the qtie~Stion,. is aUPmitted to their df!tl:t'beration. If t}le two arbitratô',r.s cannot, âgt'èe, they sball appOin-t a.

thfrd. arbitrstor -wh6 s'ha.Ü decide withirt

thirty -

days after the matter is submitted

to

^{hfm. Ii they}

cannot

àft!'&e ~~

io .···

· 1;:he . d.eaignation ··of the thire. arb'i.tratol' he' sMll. be .·

' '· . . . . ·.' ·.

e.y;pointèd

by

the. President of Columbia Uni.ver~ity in the .. C'it~y of lq~w Yo:rkt ·United Stàte$ of Amerio~. 9· ....

• ... • 1 -~·

.!M,C: 7 . Wsrke:r$·; Côn tl i.ct .· . . . . ^x

. '; : ... . ^{.~"./ ..}

The· eoonO!'Irl.c·: s:'!S"'',em o.f Liberi.a: ie based on the-capi:tàH.st

.e

^of·

l)r-od,üction _whe:f'è

the ~Ü,ng . Class

Ùoca.l bou:'t'ge'Oiifiel ia the. · compra.dor

cl~ss ~1hich i11

all:La,nce with

the

CEmtre is

co~itted

..

to

explo;i:ta:tion

~f

·i;he working class. This Wa.s evident from the conflict between LMC and the

' . ·. .

workers ovér the-so.;..oalled

rèdundancy _

pa.y. Aware of LMC•s intention to stop _. mining opera;tions.' on·M.a.rch

.3: r.

^{1977, the workers} appealed. to LMC

' .. , . ^{' •' '} .

in the negative and as a result, the woî'kera went on strike on

Nbvember- 2, 1976. GOL intereeded . and: ,, a.sked the wol!'k-ers to retu:rn ' ,. . -' ' '

to

^workt

!'!.nd. tha.t their de!lk'..nds will be rmewed aiJd given seme consideration. ·On

Ncvein,b!lr _. 23, 1976, _{' . •' .} tl1e workers _' ,affi!.j:~ ~t o;n atrike after GOL fa.iled to

This timé OOL intervened. by dispatching a d.~ta.ohment of the

nationtil ;Poliêe Force. Below is the .. AP.lrA. ....; fiANO.A a.eèount o·:f' the Police invasion' of. '.flomi Hill.~;::

this·-timei thé Oove'r:nment d~·otded to intarv~e 'With :force •

. A bu:nch

of

blood -- . thir~ty :Poiicy led by the Police

Dil'·êct:or himsè1ft Edwin Ra::r:1noiü invaded Bomi Hill s •.. The so- (',âlJe($ leid.e:rs_ of i:~e striket B~l!lé of thenr sound. asi-eep in theln _. homes mth _. th~ir _. wiv.es and_ chilrlrent were, duly

:rounded \lP an<t takèn 'to' :jai1. Th~ under orders of Hamont -th~· Pol:i.oe wêlrt Wild, the;; t.ied up> the wor.kerst beat thém 1ip

w:ith flin ·bel

tft•

kickêd a,nd in sul

ted

t.hetri in front o-f the ir·-.

wives 8.nd. chUdl'en~ ·

The

^{hrokert arro of on.e ·of the workers,.}

thé em:pty m.outh of another, t.he bi-g sœl-e on· the backs o.f a. lr:trge rtumber

of

workers bei.i-ten u:p -. àlt of' t!J.is testify to the

11P..dV'antage" tha.t was t;ake:n ôf the wnrkers~ Some .. of

us

who

. never shed a tear' we:re. ·forced. to oey as we listènèd to· the .

workers' sad etor;r a~d as we looked. è:t th~ injuriee inflieted

up(,n

the

,worket-s

hy the 1la:tiona.l Poli~ .Force~ · But we havé

elrled ^i.Ip- our telf;rs nt;>W" and, any.Wa.:y., it is 1'10 lllife O.ry'irig over rice

'th~t

hàs

he~ · waat~d.

on the gtou.nd .. \fuat is importan-t now is for ·U.S. to .. leam i;he l~Ù'lsons 'of. "the recent: ~gly pa.!!!t and prepat".e

our·s~Ùve~· Aét t~,t,

. aS One WO!'ker. put itt "our.

~hildren

will ;hot

· .. · .. · ·.. . . .• ' . . . . ·· . . 10

1)9 treated 'in the sa.me

way

as the gove:r:nment trea:ted us".· ·

\Jnder e:rlretM~ ooere::tont the \<.ro':t'ke.rs. werit ba.c,'c to llrork and thfi: so- t:~î.H~?-d. '~Redtmd.allcy P:ayft _. Wà:l!t _. fo.:rrtlalat~4 _. by LMC P...nd OOL wi th the United

. ' .

Mir1e C~ngr@sa · represe:nting ~he':.wo;r-:\(;.ers' h'ftexoest. Thé . redundanoy pay as

?_greed {)y thé part'iee oon~ernedt• en-t:i;tles· ea.ch worker to one month' s pay

t"6r eac.h year worked.

~ihere _' +.ha. oontra:e.t is _{. . ····;} èoncluded. bétween the _{. .} ernplo;;,rer and ' the employee. for en ind'efinite pe:riod.r the employer shall l1a.ve the right to-disrriisa the employee on condition that

•

-17-

he gi,rea him hro l'teeks \'l!'lt.ten notice in the C·9-Sf: of eala.rieè mnpJ oyees

f ^h t ' 1l

C't' -p~.~'ment in 1 i e11 o suc no 1 ce.

A:rtic¹ e 26 Section 3 of the Ag-reement bet'\r.reen LHC and the Bomi '•iorkers' Un~.cn- t'~f Lib.eria. (AffjJia.ted \v:i.th a.nd Represented 1)y the United. ~1orker's Gong:re:-;s) conclu.deèl .. rul~,r 1 ^t 19?6' statez tha.t;

irl. the eve..'I'Lt of an employee who ber:omes redunda..nt r he may choo1~

1a:vo:N' statu.s "m1 continue his emplo;:rment record wi th no p::'t;n or he rnav select to receive red1mdn.nc~r P.."'.Y of four ( 4) l"feekR' pay for er.ch year served .1? .. ·

On ~1arch 31. ^t 1977, el!l.ch ... TO:rker rece:ived hif'l redundp..ncy pa:y. One of

.the

me.;jor 1 enefid.a.r1es of the Redundanc:v Pay :-ras GOL t-;h:ich receivod

!)e+.t-Ieen 20--28.percent, in taxes. !J'he Uni-ted rHne 1:forkers requested JO percent of (~<-teh \torke:r • s P6.·? but this deme.nd ~.;a;s rejected ^by· the •,rm~ke!'s.

floree of tl:l.r: workera have since left t.he area t.o seek emplo;yment els>!"where.

!t is worth ment:loning that c:hle to Hs ant.icipatecl cessation of

·mtning ope:r·at5ons on !ttryrch 3lr 1977r e, pJ.A.r.ement office wa.a eatablished b:y

· iJ<l'C .3:t. i-ts Doel<' Office to ~.eek errrployment for red1.U1da:nt 't-torkera. However Lrv1C mar!.e i·' perfectly cleHr that the placement office in its end.eavour to seak errtplo; ment for the redund.ru1t employees, does not guara.ntee employment for the re(¹1.l!Hiant employees. Ont of a. t.ota.l 1abor force of 2tOOO, only 50

\1ere reloo;,ted in t:.e\'f jobs hy the placement office.

P.r.ol?..c.E~~?!~?Fli,c, Y~.a.~b~e P,rojactf!_ùl.I....;.h.~ Bomi Area

The fdlowine projects have been p!'oposed for the Bom1. Hills Area.

A fee. si hil i.ty stndy for a rock crusning enterprise wl th a :orcduc- t~ on period of 7-:~ years emplo:rlne 264 Li beril:llls ~ra.s und.ertA.ken

b;~' L.\iC. Ho;-revert due to -the present differencen of opinion bftween GOt. and LMC rega,rding the ownership of the assetst Ll'I.C ir· 1.m;.rilling to mnke this stud.y ;:wailable to GOL.

2.

S:: J

P::.tlm Project

Th~ firm of Harrison Fleming and Compa,ny t-rc?.s contr~.oted hy LMC to

-18-

conduct. ,q feastbili ty st.udy t'or an oil plantati.on. 'T'hé pu:rpose of

·U!~ stud:;r is twofold.: l) to determine the suitabi1i t;y of soil e..nd c1lm~:tic. concliHonst 2) to estima.te the cost for su.ch a :project ~ · 'l'l'lis stud.y •rms comp1etec1 in r..tarch 1977' and final repor-t r.as been-

Sl~·bm:i.tted to C'..OL.

3. Z~.mi.JiiJ-1 s Loggin~ a.lld, rJopd;works PrÇ>,.jeç_1

Th.e feasibili ty st'.ldv for this project ^t.-m,s cond.u.c:ted by a ^Germ?.Xt Group. I t is propôsefl tha:t 1ogs t-tilJ be proceesed i.nto sawn tim- rJer: sheUd vener, ve.neered pl:;rwoo<h cem~mt bounded particle 'noa,:rdt ond standard boa.r(ls. A. tota.1 capital inventment of

fit?

m:U.J.ion :i.B .esttmP.ted l'o.':i.th an anmvü tni'!'.over of $15 million. rphe p:r:J.;iect Hi1l emùlo:v 1,100 persons. The project is to be under taken b;,; the Lïberi<'!..n Develoment Corporat:i.on (LDG).

1,>Joc.->d Horki.n.rr 'l'rrdninR: Gent.er

---···,··

^_, ·~~.--...---

site of the 'J'rop5.ce.1 Tradinr,- Compan:v's (a Stlbsiè.:ie.ry of" LMC)

extstin,~ ~wmill. Altb.ottgh i.he pnrpose of the e~.~Ul is on1y ·::\>r i.rrd.n.lnf"' tf, s' presenee in t.he area me.y con·bri.'but;e to add,itiona1 economJ c ;:}eth'"i t~r for the area.

5.

Res'iJ1ua.1 .Ore

Hest Afr:i.ca Consultants (lrfAC) and Ministr:)T of Lands and Mines

Henor·~ on ore reserves show tha,t there are still conaiderab1e ore depostts whi.ch couJd

ne

mfned, ho.-;ever' due to the condition of the exi sHnr. pln.nt and ~dprnent t ad.}iitiona.l capital eïtpendi tu-re ï>ril1 he required to modify the existing- mill anrl. to provide

1;-dditional min:i.ng equ:ipment. The estirnated coat of the proposed

p'ro.iect is about $1,;/llli 11 ion"

~.:.>.!.r.:'l~}.~_,Ç_o,?\t!ol of t~d.usj.r,y

'l'he rl!ini str:y of Ie.nds t1."1d Mines an<i the Miniatr;r of Finance have direct :ro1. over the mininp inclustry. 'J'he fJii.nistr:'r of Lands anr1 Mines ia vested 2-utbor.Hy to g!'ant or den,.,,. application for prospectinr.;t exploration ?.Jltl.

111~ rtghts cxcept concessions; ~-o condu.ct research and exploration and to

~ct and Ai.stribute informat:i.on about the nation 's minerË'.l re sources; to

.r.~ the obse!"Vance o:f the Mining I.ews and. regulations; and ta promote

!

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s:c.fet·r in t.he mi.:ner:û ind.ustries. On the other ha.nd the ~Hnistcy of

Ji'inance h~s control over iron ore concessions. The Conces;eion Secretariat , n complement<tr:v assistance, to seVElral minist.eri.es inolu.dlng the ~~inistr:-;r

of LB.nds and. Minet. anà. the f',finiatr.Y of F'inancer formulates the policies ?.~ncl ruH~s ne:rt1'.d.:ttinrt to the exploitation of nat11ral resourcesr prepares draft lc:.Hs anrl :regiJ.ld.tions rdating to concession ma.tters, end recommendr; to the Pl'esident of Liberia. on approb;;,.tion of applicatio:n.s for new concessions ^at1d on the re-negotiation of ex'5.sting concessions.

A !Th<il.jor requirement. of gr?..nting and ratifioation of iron ore conces- sions is ·the adfix.'b.trè of ^-~he signa.tut"es of the President· of I..ibêriat. the f-ffini.ster

of

^{Lands am! ?.Unes and the Minister} of Finance on t i t1e of -the

Co~lcession Agreement. The Legislatu.re must a.lso e.uthoriz.e the Concession

Ar;reement •

To-tr~J j ron ore production bad levelled off since 1970 beoause the m5.nee

h~.d

^{by thEm} re<:>.ch their maximum capacity (Ap="< 25).

~he

eleven ye<'l.!' pe:r:i.od of 1966-1976 i!WM the bulk of the ores exportedt( about 21 percent) _... to

HeEr~

^Germany (Appendix 26). ;..

The d-emand for iron and steel product.s in the industrialized nations dud.nr.! thia pe!'ioc:l lro..s tl, gavorab~e one. Rowever in 1975t the ind:ustr;r · · exper:i.enced considerable d.ifficulties in marketing its products due to the faJ.l-off in demand fo!' :i.ron and steel products as a ree,·ult of' the world-

~ride recession. \vith the recession. production and ''alue added at consta.!lt priees d.ecl i:ned, however value added at cu.rrent priees increased by' 53 percent, re.flecting the significant hir,'her' p!'oriuct priee a which cont.inued to 5.ncrease consid.erahJ.y faster then production costs.

The reMes{on. in 1975 reS'...tl ted in drast ic reductions in iron

-i:.J

^~

demrud. A y~d as a resultt the minea decreased operations sharply

t~tock],Yi_~ore

in unpreced.ented quanti"ties throughout the year. JOtlt of a total 1975 procludtion o:f 22 mill:i.on t.onst about 18 million were sold (Appendi:x: 25). Shipments at 20 million J onE.; tons in 1976 Here 2 miJ.1ion i:.ons hif!her t.han in 1975. Production for 1975 representa a 28 percent t1_ec1ine :from 1974· 1976 production arnounts to 11 percent increase :from

-20- .

1_975, bn·!; :;>, declinè of 25 percènt from 1974 (Appendix 25).

SALES REV"EFfUES

'l'otr'l.l ex:poM. vA.lue of iron ore increaee from $10?. 4 million j:n 1965 to

$337 million 1976. During the same period GOL revenues rose from $10.3

-:'!1il1ion to $32 milHm1 (Append:i.x 24). For the ten-year period of' 1965-197.-1 experts increase by 150 percent, t.ffiereas Go,rernment revenues increase bjr

50

·pP.rt-:ent. If we include fig·ures for 1975 and 1976, total e:iports increase i:w 21.1 -percent, wh~reas C.OL revenues increase by 210 percent , .· The rea. son t'or ih5.s PJ.lmoat pt?.rall el increase t-m.s dn.e to hi{!her negotia.ted :i.rort ore p:ri.css for 1975 an~l 1976.

rnr, _.l.~.te ten-year period of 1965-74 may be summarized a.s foJ.lowe:

...

Î

.

^{GOL revmme ~mounted to}

7.5

cent out o-r every d.o11ar of .iron ore SRles;

GOL shares of profits declined from 9·6 ^{cents in}

1965

to

5 ·7

^cents

ln

1974,

a drop of

40

percent;

Tota.1 GOL reveunes of $118 million from a. total· iron ore sales of

tl.

585 bi HiO:n wet'e slil?ht.ly more than inte.rest pa.yments of TA.l1CO a-loue which 3!110tmted to aoout $112 million, 12

(Appe:ndix 22).

For the h1elvê years ( 1965..:.76) period, total 8ales of iron ore produd fl

amounted_ to $2,193 million. Government. revenues for the sa.me period. was

:if.l67 .6 mi11"i.on or 7.6 percent of tote.l salee (Appendix 25).

0n~ of the major pron1.ems in the iron ore industry is priee insta.biHty . ..

lrœ1 ore priCés both CIF c;nd 'FO'B have been on. the downwa.rd trene\ sin ce

1957.

Llespi te this decline i:n priees procluoers have been forcecl to satisfy r;.n incre<:'s:i.-n.g (lema.nd for iron ore inorder to meet the requirements of Horld steel inrh1stries. Conversel7r; the needs of consumin~ countries have incree.t'led. tremendousl~r not only in que.ni;ity but in quality.

'I'o jl';a.tisfy thpse X"è<rUirements, there ha.s been ^Et need not only to achieve better chemical ^qu~üi ty, but a.lso to attain the physica1 qua.l i ti es required

o y

+,he steel making plants. As a coralla.r:'Jt there has been increa.sing

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production j:n -peUets and. sint'er~ feed.

·In

1974

pricefl ahowed a ma.rked increase of 50 peroen·t .from 1973. ili.th

·~he e:xceptior.1 of ~Troc, a.11 the 1.ron ore mir1.es e.xperien.ced ~ decreaoor:l L11

priees in 1976 (Appendix 27).

!l.t the e."1d of 1976, the i.ron ore irvlu~tr;y haà. !?. tot.al working force of e"hout. llt'760 emplo:vees. This number represE>.nts a decrease of 19 e:xpa.tria.te t{ta:rf r~otnpa.réd wlth. 197.5r · a.nd an. i11crei~ae of 131_ Libe:ri~'1. _Staff and 71 hon.:r.l,Y pa.i,(t wc,:rkers. Total ino:reaae of ali employees amounteà t.o 183 r.~.~mcm!ix '28) ⁺

'T'here are three catego!"ies of Concession .A.greements wh1.ch

are

^~mtered.

i!'lt o between the Govermnent and t:be mintng oompanies.

:1. 'The u~n,ua.l p?.rtnerahip" a11d

50:50

profit sher:~ng e.rrru1gement vd th LP..W;o a.nd Bonr.-;

.,.·

~. The $i·r-a.ig11.t in. come tax a.rrEtrJ..g_etuent ,n.t~ J~C and L:tBIDT'H;

· The major :features of theSè. profh-sha.r.ing ,~t.ri'Mgemetrts whioh oontri- bu:te to low revenues for OOL ara aa fo11ows:

1 • Ta.x anrl othe-r J:ixem;;:J.on

. . . --~ ^{.. ' 1} . . . ~ ^•

'J¹he minihf: com-pa.ni.es are not t:rnbject to the ta:itès of {.l:'enem);·

application bui; taxes provB.ed for in the Concession Agreements.

Under n'ùch concession agreementl!'l the C'Orrrpanies have enjoyed consid.ere .. ble tax exemp-tions for e:xa.mplet

~.. the compa.nies are not subject to payment of rm.._y taxes, feest dutiest excisest or other cha.rges imposed by IJiberh.n Laws of General Applicationa.

b. t'hey are not .required to take out permits to do business or seoure import or export licenses;

c. .t;O'Vêrnment ahli-11 not impose any har·bourt freight tl;lJCeer wha.rt"a.ge, toll s or P..ny kinèl of levy;

'1

--22•

d. aH items of .3.-ny nà,-ture imported by the companies or an.,y

e.

of their e.p:entsr managérA• contractorE-a and mtb-contrectors are éxempted from import duties :for an indefin:i.to 'Perit,d; ' Pa;yment of' eonsnJ.ar fees-is 1 imi ted to a. sum of $200,000

per atmual for 'BMC and

4

percent on ne-t. S<11es a. ye=:::r for LAliJ"C0.14

'··

?. .• · ^·1 _{1 ...} l1a;rle.,crement _{~~·~'!1~ ...} ..;.;.;.;;;;...;....;.;=.-,;;--..;;;.;...,. ~-nn_ Sales Fees

j .

Sign:if:i.ca.nt dedt:te'!:io:ns which te1:1d to reduce GDL's profits t\Sllal1y

1 f-:0. i-o P""·yrnent for maJ'la.gernent fees and sel:ling corrmiasd.ons. For

ê:Yt~n;p1et LA.MCO he.s contr~ctural com:nit.ments to fo1lowing comp;:tnies, whi.c>i are themaeJ.ve~ sha,reholders 5..n LA11CO.

for ind.èfini·t;e period., ce.ncelle.ble o11_ t·wj ye!?.r's notice after 1978. Pot' its se:r:vicea Granges get.

10 cer.lt~? par ton of ore deJ,:i.vered. plus e:rpenses.

·b. GrP...nges AB - Sales a.ge!lt :for :i.ndifi.nite périod ca.ncellable on one ;r~a.:rte notice after 1977. As sa.l.es <"-gent G:re..nges :rocei.veB t.wo pe-rc~nt of net invo5.Ge priceor f.o."b. Liber:i.e.n pc,rt, on <.<àles of first

5,ooo,ooo

^tonn; l p~rcent. on. sales i:n

e:r.:cess of 5,(K)Q,OOO tons.

c. Skanrlina.v1skB. Enskill,da BP..nker (Sl~H} - J:.~inanciaJ.

adviscn.• for indj_f:iriitE:: t.ertrlt oancellable on 90 day'e notice. A.!ï.mta.l fees to S:EL.T3 for e.erviceH to June 3Ch 1976 t·.r?.s . e!:ltima;i;ed ~:t. $2000,000.

Ro·v·nJ tv

~ ... .,...,...w;...

'Rov.;ù t:r is compensation to the Go~1ernment ~tFI' O'\>!'üer ( l t ' -the sul>-_

1 soi) for the depletion of i.ts 'non-renetre.ble mine:raJ resonrces.

1 Under the Concession Agreement a.a t5.mendP..d: beginn:î.:ng in 1974•

}JJ1 .. MCO ts r~nuired. to P:lY <:\- royalt;y t,o the GOI. in +.he a.r.Jount of .ê percent of i.t.s net aa.les of iron ore :orodu.cte (lu:r.::\.ng each C"'ù-~rter. The pa:~rment of such :r.o;ya.l t;v J.s mib-ordin.-),ted :t,o the senior_ debt· of ^{IJJ\-.~CO-. · linde~} the tema ^o~~ t.he .B1·!C

•

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