By Kemo Cham
The Chinese mining company, Shandong, has filed a legal challenge at the High Court of Sierra Leone against the decision by government to cancel its licenses.
The Ministry of Mines last week made public the decision to terminate the mining lease with Shansteel, a subsidiary of Shandong, for allegedly breaching various aspects of its agreement with the government and the country’s mining laws.
Shansteel is operating in the country through two companies: the African Railway and Ports Services (APRS) and the Tonkolili Iron Ore Limited (TIOL).
Among other things, the Mines ministry claims that the two companies reneged on the payment of their annual license fees and lease rent respectively since August 2018.
In the letter of notification, dated June 3, 2019 and signed by the Minister of Mines, Foday Rado Yokie, the government also said that TIOL failed to make royalty payments for the April 2018 shipment and to also provide full details of the Phase 2 Mine Development Plan including information on the geology, mining operation, processing and rail operations.
Documents seen by Politico reveal that the two sister companies have filed a joint bid to have the decision overturned.
In the suit being handled by Lambert and Partners as solicitors and filed at the Fast Track Commercial Court and Admiralty Division of the High Court, the plaintiffs are seeking a judicial review and nullification of the minister’s decision.
They are also asking that the costs of and incidental to the action be paid by the respondent.
Minister of Mines and Mineral Resources, Foday Rado Yokie said they were aware of the challenge. “We expected that they would fight back and we have been prepared for it”, he told Politico.
“What is important is that we did everything in accordance with the laws and the mining lease agreement with them”, the minister said.
Shandong acquired ownership of the Tonkolili Mines through the defunct African Minerals Limited (AML). At the time, the Chinese had a 25% stake in the investment which between 2011 and 2013 catapulted Sierra Leone’s economic growth following several shipments of ore.
AML had started its operations in the country in 2011 after the mining lease for the project was approved in August 2010. The project, which involved a fully integrated mines, rail and port infrastructure, was planned to be developed in three phases with the first phase in November 2011, and the second to have commenced in 2014, though production did not start until 2016.
The Tonkolili mine was supposed to have an operation period of more than 60 years. However, a fall in the global price of iron ore on the international market, coupled with complications occasioned by the 2014 Ebola outbreak in the country, forced AML into administration with the subsequent takeover of it by Shandong.
Since 2017 the Chinese have not done any mining. And the government says the company is planning to liquidate, which wouldn’t disfavor the country under this situation.
© 2019 Politico Online
