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.
(African Stand) — 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.
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 fee 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.
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.
Tonkolili Mines is, however, still believed to have huge iron ore deposits, estimated at 12.8 billion tonnes of grading of 64 per cent iron metal.