Kemo Cham | Nation Media Group
What you need to know:
- The committee said the National Minerals Agency failed to justify the decision to grant the company the licence.
- Mining licences in Sierra Leone are valid for 25 years, subject to the payment of an annual renewal fees of USD500,000.
- China Kingho Group, headquartered in Beijing, is the largest private coal mining company in China.
Freetown
Sierra Leone’s parliament has ordered a
Chinese mining company to halt its operations amidst investigations into
suspicions of failure to honour its financial obligations.
China Kingho, which mines iron ore, is said to
owe the West African country millions of US dollars in arrears in
unpaid taxes and other financial obligations accrued over eight years.
The parliamentary select committee on
transparency and accountability ordered the temporary closure of the
company’s operations on Tuesday pending investigations.
The committee said it wants clarity about the company’s financial status and ownership structure, among other issues.
Annual renewal fees
Mining licences in Sierra Leone are valid for 25 years, subject to the payment of an annual renewal fees of USD500,000.
China Kingho Group, headquartered in Beijing,
is the largest private coal mining company in China. It has a large
investment in Mozambique and other parts of the world.
The company has been operating in Sierra Leone since 2012.
The lawmakers say within this period, it
registered at least six different mining entities, all of which were
cancelled or abandoned halfway on the excuse of lack of funding, while
it repeatedly defaulted on its financial obligations to the government
on all of them.
Requested licence cancellation
The latest licence issued to the company,
according to the parliamentary committee, was granted in January 2019,
just 16 months after the last Kingho-associated company requested the
cancellation of its mining licence in southern Sierra Leone over lack of
funding.
The committee said the National Minerals
Agency failed to justify the decision to grant the company the licence
to operate on one of the largest known iron ore reserves in the country –
Tonkolili Mines.
“Kingho should not proceed with any work under
this licence until we can clarify that they have the financial capacity
to undertake any work on the Tonkolili Mines,” Mr Ibrahim Tawa Conteh, a
member of the governing Sierra Leone Peoples Party (SLPP) and chairman
of the committee, said at a special hearing on the issue in parliament.
The NMA said it considered the financial model of the parent company before issuing the licence.
Conditions
The minerals regulatory agency was accused of
acting against the Minerals Advisory Board’s conditions for issuing
Kingho with the licence. They include payment of all outstanding debts
to the state and to clearly explain the ownership structure of the
company.
Tonkolili Mines, located in the northern
Tonkolili District, has had a chequered history recently. It was
initially mined by a British Romanian magnate African Minerals Ltd
(AML).
AML was later taken over by its Chinese partner, Shandon, which spent over USD1.5 billion in the mines.
As a result, Tonkolili Mines was a major
factor in the brief spell of economic boom realised by Sierra Leone
between 2011 and 2014.
The effect of the 2014-2016 West African Ebola
epidemic and the slump in iron ore prices at the world market led to
the collapse of Shandong’s operations. The company ended up in court
with the government, which cancelled its licence over failure to fulfil
its financial obligations.
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