In an interview
with reporters, the Grand Gedeh lawmaker said the CEO of the company has
confirmed to him that the company has perpetually shut down operations
in Liberia due to the ongoing conflict between Ukraine and Russia, and
also due to the drastic reduction in the price of Iron Ore on the world
market. "As we speak, the company has perpetually closed," he said. "I
met with the CEO and he spoke to me very clearly that Putu will no
longer operate under the existing circumstances.
As a matter of
fact, he confirmed that he has been laid-off and has left the country
and 99% of the company's work force has been laid off in the presence of
Putu through their lawyers, the Sherman and Sherman law firm. The head
office of the company has also been closed and the presence of Putu in
Liberia is at the Palm Spring Hotel in a little cubical office", the
lawmaker explained.
He said the
management team confirmed to him that the crisis between Russia and
Ukraine has led to the closure of the company because most of the
shareholders are Russians. "The initial projection and what they are
experiencing cannot allow the company to function under the existing
MDA. Therefore the owners have requested that the government and
shareholders need to sit for a review of that agreement because the
agreement is calling for some basic infrastructures that must be built
before the company begins operation."
The construction of
the highways between Zwedru and Greenville and a railway from the
mining site to the Port of Greenville some of the projects the company
promised to undertake. In November 2015, The Management of the Putu Iron
Ore Mining Company (PIOM) reassured the government and people of
Liberia that it remains committed to the implementation of the Mineral
Development Agreement (MDA) it signed with government.
The PIOM Management
clarified that although in the last few months its activities have been
reduced, it has not closed down its operations, as rumoured. The
scaling down in operations was attributed to the Ebola outbreak. The
company gave the assurance that it will continue to meet its obligations
to government and communities impacted by its operations.
The PIOM Management
in the statement said that it was giving the reassurance because the
scaling-down in its operations in the last few months has been
misinterpreted as closure. The Management stressed however that the
company has been beset by unforeseen circumstances which have negatively
impacted the project and resulted in delaying implementation.
The PIOM Management
at the time made specific reference to the Ebola outbreak in the
country, which it stated hampered normal working activities in the
country, and a steep decline in the world market price for iron ore
which is impacting iron ore investments not only in Liberia but
worldwide. In 2012 the Minister of Lands, Mines and Energy, Patrick
Sendolo, disclosed that the first shipment of iron ore by Putu Mining
Incorporated, a Russian-owned iron ore mining company, will begin in
2017.
Speaking about
1,948 feet on top of Putu Mountain, the company's production site in the
town of Tiama, Grand Gedeh County, he made the comment after a brief
meeting with Christian Mosurenko, Country Manager of the Putu Iron Ore
Mining Incorporated.
On July 10, 2014
OAO Severstal, a leading Russian steelmaker, announced that a Class A
mining license for mining iron ore in the Putu Mountain Range was
granted to the Putu Iron Ore Mining Co Inc, which is a 100%-owned
subsidiary of Severstal. The license was issued by the Government of
Liberia through its Ministry of Lands, Mines and Energy and follows a
feasibility study submitted on 31 March 2014.
"The issuance of
the Class A mining license...indicates that the company's feasibility
study responded to the requirements outlined in the MDA (Mineral
Development Agreement). We believe that it will further improve the
investment perspective of the project," said Dmitry Sakhno, Severstal's
project department director. 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 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.
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.
By: Henry Karmo.