FrontPageAfrica has received reliable information that the Putu Iron Ore Mining company, one of the major concessionaires in Liberia, has been hit with a serious financial crisis that could lead to a possible sell out of shares of the company to another company’s whose name is yet to be disclosed. Multiple sources have confirmed to FrontPageAfrica that the company is in negotiation with another company to sell out its remaining shares because major shareholders of the company who are Russian cannot afford to fund the company operations because of the sanction imposed on Russia by the European Union.
When contacted the County senior Senator Alphonson Gaye a senior member of the County of Grand Gedeh Legislative Caucus said: “Honestly, I don’t have this information. What I know is that Putu is going through financial crisis due to the conflict between Russia and Ukraine. The major shareholders of Putu are Russians and the sanctions have blocked their finances.”
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 has 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.
Even though all efforts to have the company comment on the reports have proved futile, FPA has reliably learnt that the senior staff of the company have packed out personal belongings into an unknown location in Monrovia, believed to be at a local hotel. The building once occupied by the company in the Congo Town area is now being occupied by Oxfam, a British NGO which has been operating in Liberia since 1995, delivering both emergency humanitarian assistance and long-term development projects.
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.
Recently, Arcelormittal another mining company in Liberia informed the local work union about its plans to reduce its workforce by about 20%. Mittal Steel blames the job cuts on the unfavorable market conditions. The price of Iron ore on the world market is drastically dropping and according to the world bank for February 2015 Iron Ore Spot Price (Any Origin) is at a current level of 63.00 per dry metric ton, down from 68.00 in January and down from 121.37 one year ago. This is a change of -7.35% from January and -48.09% from one year ago.
Experts say the operation of steel companies is heavily reliant on the price of iron ore on the world market and considering the harsh drop in price due to global economic factors, one could only opt for the economic variables to become favorable. The steel giant decision is already drawing concerns from many people in the port city pressuring some to suggest that the government must have a stimulus plan in order to curb the socio-economic constraints this may cause for many families and their livelihood. Bob G. Smith has just lost his construction job with Fair Play; he told FrontPageAfrica that it feels very devastating.
“Arcelor Mittal Liberia with regret informed the local union today of its intention to reduce its workforce by about 20%, as a result of unfavorable market conditions. This may have an impact on 270 jobs related to the mine support infrastructure, as well as some indirect contractor jobs associated with the mine. Arcelor Mittal senior executives have met personally with senior members of the government of Liberia to explain the reasons for the company’s intentions,” the company stated.
Liberia is primarily known for its iron ore deposits such as Arcelor Mittal's 1Bt Yekepa deposit and African Aura's 1.1Bt Putu deposit. BHP also holds four Exploration Licenses for iron ore in Liberia. However, recent exploration successes by African Aura Mining at the New Liberty project (13Mt @ 3.8g/t, 1.5Moz Au) and by Hummingbird Resources at the Dugbe Project (21Mt @ 1.2g/t, 0.8M oz Au) have raised the profile of Liberia's prospectively for gold and led to a rapid increase in interest and activity.
Liberia is located in the West Africa gold province and borders the republics of Sierra Leone, Guinea and Cote D'Ivoire (Ivory Coast). It is the oldest independent republic in Africa (established in 1847) and is unique within Africa because of its long standing relationship with the United States, which has provided US$230 million under the bilateral aid assistance program during the 2010 FY. It has a hot equatorial climate.
The international community has been encouraged by Liberia's return to democracy in 2005 which has been supported by the UN. Since the current elected president, Ellen Johnson Sirleaf, took power in January 2006, Liberia has moved quickly towards rebuilding, economic growth and normalizing international relations with the rest of the world.
The World Bank and the European Commission have agreed to contribute to Liberia's infrastructure, reconstruction and education. The World Bank has agreed on a US$16.5 million grant for urgent infrastructure projects and the European Commission has given US$80 million for water and electricity projects as well as education. A further US$15 million threshold program has been signed by the Millennium Challenge Corporation to strengthen indicators in land reform, female education and trade.
Liberia is described as one of the last underexplored regions in the world. The main mineral products are diamonds, gold and iron-ore with possible offshore deposits of crude oil, but the bulk of its population live below the belt compare to an average human in Europe, or America.
Source: FrontPage Africa
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