By Mohamed Jaward Nyallay
The Transparency and Accountability Committee in the House of Parliament has ordered the Chinese iron ore miner Kingho not to undertake any activity under their current license until they get clarity about their financial status, ownership structure and a number of issues.
The order which was read by the Chairman of the committee, Ibrahim Tawa Conteh of the Sierra Leone Peoples Party (SLPP) comes after a probe into how the National Minerals Agency (NMA) decided to give the company mining license even though it had defaulted on its financial obligations before.
Kingho has a mining license for the Tonkolili Mines. Mining licenses are valid for 25 years, subject to the payment of annual renewal fees.
“Kingho should not proceed with any work under this license until we can clarify that they have the financial capacity to undertake any work on the Tonkolili Mines,” Conteh said at the end of a three hour grilling of the mines officials.
“Today you are trying to disassociate Kingho from the parent company whiles telling us that you also looked at the parent company’s financial model to give them the license,” Conteh told NMA officials.
Tuesday’s hearing was a continuation of Thursday’s probe which revealed that since 2012 to now more than six different Kingho companies have been registered by the NMA and that they have been granted license to mine. This is despite them defaulting on millions of dollars of debts to the state over the course of time.
The latest Kingho license, which was given on the recommendations of the current NMA regime led by Julius Mattai, was given on January 8th 2019. This is just 16 months after another Kingho company, which is associated to Kingho Energy in China, wrote for cancellation of one of their mining license at Gallinas Perri.
In a letter that was read during the hearing in Parliament, the company stated that it could not start mining because it was constrained to get “dependable partners” and meet the capital requirement to start the project. They said they could only start mining at the moment if iron price goes to $130 per ton.
This letter was written four years after the company was granted four separate mining licenses. The letter was written to the Director of Mines in May 2018.
Parliamentarians were bemused by how immediately after that the same NMA could return and register Kingho as what they described as a “separate legal entity”.
“Kingho didn’t meet all their financial obligations. You just gave them the mining rights as you wanted,” Catherine Zainab Tarawallie of the All Peoples Congress said.
A letter explaining the conclusions of the Minerals Advisory Board also highlighted steps that should be followed before the license to Kingho is issued.
Two of those recommendations were for the company to pay its outstanding debts to the state and for it to clearly explain its ownership structure. Tuesday’s probe casts doubts on whether those recommendations were followed.
In their defense, the NMA Director General, Mattai, said they didn’t look at the past history of the company. He said much of the consideration to give them the license was done by looking at the financial structure of the company.
“We looked at the financial model, in Kingho’s case we were looking at the parent company which is the largest coal mining company in China,” Mattai said.
“It is not how much you have, yes we look at that, but we look at your propensity to access funds,” he added.
Parliamentarians challenged the financial strength of the current Kingho company that was granted license. The chairman of the committee said they believe the company didn’t have the financial standing to undertake any viable project in the Tonkolili mines. He said their research has shown that the company’s return at HFC Honkong is just over US$600,000.
Prior to summoning the officials from NMA, Ministry of Mines and the Environment Protection Agency, the committee ordered the NMA to provide bank balance statement of Kingho to show how much money the company holds in bank accounts in the country.
NMA couldn’t provide the document since last Thursday.
The Tonkolili Mines, which has been given to Kingho, has one of the largest deposits of ore in the world with 12.8 billion tonnes of ore.
Politico contacted a local representative of Kingho but they declined to comment on the latest development.
The committee was adjourned until Thursday.
The probe has ruffled feathers in the mines sector with NMA planning a press conference today to “clarify” some things, according to an official.
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