PROBING ELELNILTO

The head of the Liberia Anti-Corruption Commission, Frances Johnson-Morris confirmed to FrontPageAfrica Sunday that her commission is looking into the controversial Western Cluster mining concession contract, dealing a massive blow to the Israeli firm Elelnilto which has been under massive public scrutiny since it won the bid.

Rodney D. Sieh, rodney.sieh@frontpageafricaonline.com

Monrovia -

The Liberia Anti-Corruption Commission has launched an investigation into how the Israeli firm Elelnilto won the controversial Western Cluster bid.

The head of the LACC Frances Johnson-Morris confirmed to FrontPageAfrica Sunday that her commission has received a complaint and is already in the process of investigating.

“They have submitted it to us and we will act and begin looking into how the whole thing came together,” the LACC boss said.

FrontPageAfrica has also learned that former Minister of Lands, Mines and Energy Eugene Shannon and his former deputy ECB Jones have been invited by the LACC to give details on the bidding process leading to Elelnilto winning the bid.

As part of Elenilto winning the bid, it agreed to pay the government of Liberia US$25 million and make an additional US$3.1 million every year as contribution to the community development and additional payment to the government as mineral resource rent tax (surcharge) equal to 21 percent from Elenilto profits.

At the time, Lands, Mines and Energy Minister Eugene Shannon said that though government had given the company provisional rights, the technical committee chose to conduct additional due diligence into their financial status and have communicated to President Ellen Johnson Sirleaf about the additional investigative measures. Elenilto was later requested to submit to the technical committee the list of their financial supporters to make sure that they have the financial capability to do the job. “They have been vacillating. As such, we have given them the option to put in an escrow account US$25 million to guarantee that they have the capability to handle the project,” Shannon said at the time.

Shannon noted at the time that if it is established that Elenilto was not able to deposit the US$25 million in an escrow account and provide a list of viable financiers to undertake the project, then they will have to recommend to the President Johnson Sirleaf that government nullifies the contract.

Four companies made initial submissions to mine the Western Cluster. They included Elenilto Mineral Mining Ltd., Capital Steel, Global from China, Formento Ltd, and Global Steel Holdings.  

Engelinvest Group's unit, Elenilto Mineral Mining, in 2009 secured a 25-year licence to develop the $1.6 billion Western Cluster iron ore project in Liberia, one of the world's largest iron ore mining sites. At least four firms submitted bids to resume development of the Western Cluster iron ore project, which includes three deposits with over 1.1 billion tonnes of iron ore reserves as well as two idled mines. The mines were closed in 1976 and 1985 and their equipment sold as scrap during Liberia’s two civil wars, the last of which ended in 2003.

Last Friday, an activist group, the Grand Coalition of Civil Society Organizations in Liberia, an embodiment of various Civil Society Institutions said it was behind the request for the probe by the LACC.

Since winning the bid, Elelnilto has been embroiled in a series of controversy after several local and international groups raised concerns about the deal. The United Nations Panel of Experts reported in its last report that there have also been problems with the allocation of some mining concessions,

The report said although it was difficult to verify given the lack of transparency in the process, the allocation of the “western cluster” iron ore deposit has been extremely problematic, with the Government having to re-tender the ore deposit after a failed first round. While the concession was allocated in a second round to Elenilto Minerals and Mining Limited, an Israeli company, there appear to be ongoing problems with the agreement and the Panel has not been able to verify that the agreement has been finalized.

But in a stinging reaction to critics of his company, Amir Nagammy, the Chief Executive Officer of Elelnilto told a recent Mining Energy Conference in Monrovia that allegations that his company was ill-equipped to handle the mining of Liberia’s lucrative Western Cluster was farfetched.

Nagammy took aim at critics and  detractors and competitors he says have maliciously embarked on a persistent and systematic campaign to smear the name and reputation of Elenilto, misrepresent the company and its investments – and portraying Elenilto as a small fortune hunting company without the resources and capability to undertake the Western Cluster Project and execute it to the benefit and satisfaction of the Government and people of Liberia.

The probe of the Elelnilto award comes in the wake of a recent FrontPageAfrica revelation that the Indian giant, Vedanta Resources Plc, has agreed to partner with Elenilto and rescue the controversial deal now enduring public scrutiny and widespread debates. That the deal which is said to have the vote of the inter-ministerial committee could bring relief amid concerns over the manner in which Liberia has been giving away its lucrative minerals for cheap. But it remains unclear how the ongoing probe of the process which led to Elelnilto winning the bid will affect the future of the Western Cluster.

The expected Vedanta deal has been hailed as a savior for the coveted Western Cluster.

The high-profile Vedanta recently diversified its mining interests through the acquisition of Anglo American’s zinc assets for US$1.388 billion.  Anglo American placed its zinc operations, along with several other interests, up for sale in 2009 as part of its restructuring. Vedanta on the other hand, has been keen to diversify its mining interests into other regions of the world, which this transaction will help facilitate by giving the FTSE 100 constituent a greater presence in Africa and Ireland. Vedanta will fund the transaction from its existing cash resources, which stood at US$7.2 billion at the end of March.

Assets included in the transaction include the Lisheen Mine in Ireland, a 74% stake in Black Mountain Mining, which in turn owns the Black Mountain Mine and Gamsberg Project in South Africa, and the Skorpion Mine in Namibia. “Anglo Zinc is an excellent operational and strategic fit with Vedanta's existing zinc business and will create significant long term value for Vedanta's shareholders,” Vedanta stated

Ironically, Vedanta was one of five companies who previously bid for rights to exploit iron ore at the defunct Bong Mines. The other bidders are BSGR Resources Ltd, China Union Investment Ltd and Beleh Resources Ltd.  Liberia’s  eastern and western ore belts have deposits estimated at 600 million tones.

The ongoing controversy over the Western Cluster recently pitted Elelnilto against Economist Sam Jackson, who has since lost a consulting deal with Sable Mining amid concerns that Jackson was being paid by Sable to attack Elelnilto. Sable has since distanced itself from Jackson and has denied any ties whatsoever to Jackson’s beef with Elelnilto.

Jackson has been a vocal critic of the Elelnilto deal, arguing that the Inter-ministerial Concession Committee failed to do due diligence during the process of awarding the concession agreement to Elenilto. This he said has created serious embarrassment for the government because of similar action that took place in the past; making reference to the Oranto oil deal. The Oranto, was a company that applied with the Liberian government in 2005 to drill off shore oil on the Liberian waters, but sold its share of 70% Chevron, an American Oil Company for more than US$250 million, an amount that Liberia only received US$15 million in taxes.  “Oranto Oil Company that came here in 2005, its first check of US$10,000 bounced after we gave them free oil blocks. This company last year sold the oil blocks to Chevron US$250 million and paid US$15 million in taxes and left Liberia, what benefit they give Liberia compare to what they carried away?”, Jackson said recently.

The Western Cluster debacle appears to be a nagging election-year issue refusing to go away. Critics and opposition have been pounding away at the deal. A probe by the LACC and a looming debate in the national legislature will no doubt heightened the controversy and threatens the disrupt the future of the Western Cluster arrangement. For now, all eyes will be keenly watching to see the outcome of the LACC probe of a deal to mine one of Liberia’s richest reserves. The probe could possibly make or break Elelnilto or possibly lay to rest the circumstances surrounding how the deal was won. More importantly, it remains to be seen how this latest development would affect Vedanta’s interest in rescuing a deal marred in what is seemingly becoming a never-ending controversy.