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BHP Billiton Defaults on Social Funds to Bong County

BHP Billiton Defaults on Social Funds to Bong County

Panta-Wolapolu, Bong County - The children gathered from different villages in Panta –Wolapolu, Bong County, in search of a formal education in mud structures constructed by their parents.

The facility is not conducive to learning, particularly during the rainy season, when children are not able to attend the school. It lacks a library and essential stationary.

Many parents of the children, who walk almost an hour to get here, feel that the annual allotment of US$100,000 in social development funds to Bong County from BHP Billiton’s concession agreement could help construct new school facilities and provide additional learning materials.

They hoped that the Mineral Development Agreement (MDA) signed between their government and BHP Billiton to mine iron ore in the Tutu Mountain in Panta District, Bong County, would have enhanced the school and other basic services in their communities.

But according to this investigation, BHP Billiton, which posted profits of $4.2 billion in the second half of 2016, hasn’t paid its contribution in four years.

BHP Billiton's Liberian iron ore interests comprise exclusive rights granted over four exploration areas; Goe Fantro, Kitoma, St. John River South, and Toto. It also has an exploration license for Kitoma II, as well as the right of first refusal over three additional exploration areas.

The 1.9-billion-ton Joint Ore Reserves Committee-compliant resource includes 132-million tons of 57%-iron DSO, potentially worth billions of dollars once converted into iron ore.

The MDA commits BHP Billiton to an annual payment of US$100,000 to Bong County in social development funds, a portion of which is intended to be allotted at the annual county council sitting to communities directly affected by the company’s operation.

BHP Billiton’s concession was acquired in 2015 by Cavalla Resources, a wholly-owned subsidiary of investment holding company Jonah Capital, a private company with a portfolio of assets, primarily in the mineral resource sector in sub-Saharan Africa.

The citizens, along with their leaders, are to decide the exact amount based on projects selected at the county sitting under the funds management policy.

David Mulbah, the Town Chief of Nylah, says the communities don’t know what was done with funds paid to the county leadership so far, and expressed frustration at the operations of BHP Billiton in their district.

“Our farm land has been damaged and we have nothing to show after the company’s departure. Our leaders cannot tell us what has happened to the company, and neither the money paid to them,” Chief Mulbah stated.

Chief Mulbah along with other citizens in Panta and Zota districts say that much explanation is needed on the operations of BHP Billiton in their district, and what was done with its social development fund contributions.

“We are hearing that the company turned over its assets to another company but this has not been explained to us, even though some of their equipment are still in the districts,” says Mulbah.

“Our hope was that the annual US$100,000 social development fund stipulated by the Mineral Development Agreement (MDA) to the county was going to help us to rehabilitate schools, clinics, bridges including farm to market roads in our districts but to no avail; we used sticks to construct some structures here for our children to gather here to acquire formal education with the hope that some of the funds with be directed to our communities to improve these facilities for our kids, but nothing has been done about that,” Zota district paramount chief Lorpu Kollie explained.

Mr. Lawrence Plator, the chairperson of the Bong County Project Management Committee (PMC) said BHP Billiton only made two payments to the county’s social development fund.

Plator said the company made an initial payment of US$ 100,000 in 2012, and another payment of US$ 135,000 was made in 2013.

Plator explained that BHP Billiton owes the county US$ 365,000 in social development funds for four years, beginning 2014 up to 2017.

He noted that the county has written the Ministry of Finance and Development Planning to seek an explanation on payment of the outstanding funds, after several attempts engage BHP Billiton on the issue failed.

“We have also been engaging the county legislative caucus to get BHP Billiton to pay this money to the county and they have assured us that the company will be made to pay the money to Bong County,” Plator stated.

Bong County Representative Lester Paye, who represents electoral district #4, one of the areas in BHP Billiton’s concession, said the company has failed to meet its financial obligation to the county.

Paye says Billiton owes the county its contribution to the social development fund for the past four years, adding that he has made several unsuccessful efforts to speak with authorities in the company on the issue.

Paye said that the Plenary of the House of Representatives recently voted in favor of a decision to halt the transfer of the agreement between BHP Billiton and Jonah Capital.

BHP Billiton’s concession was acquired in 2015 by Cavalla Resources, a wholly-owned subsidiary of investment holding company Jonah Capital, a private company with a portfolio of assets, primarily in the mineral resource sector in sub-Saharan Africa

According to Paye, the vote was taken when the Ministers of Justice, and Lands, Mines and Energy along with the chairman of the National investment Commission, appeared before the plenary of the House of Representatives.

The House of Representatives demanded these ministries to appear before the plenary of the House to explain why the transfer deal was being carried out unilaterally, without the involvement of the legislature, which has the constitutional responsibility to ratify concession and loan agreements.

Rep. Paye said that several projects in the county are at a standstill due to BHP Billiton’s failure to pay its social development funds.

The decision of the lawmakers stems from a communication from Representative Henry Fahnbulleh (Montserrado County, District #4), who raised concerns about the manner in which government was handling the transfer.

Appearing before the plenary, Minister of Lands, Mines and Energy Patrick Sendolo failed to correctly answer questions regarding what provisions of the agreement gives the Executive the exclusive rights to transfer the agreement.

In response to the lawmakers’ questions, Justice Minister Fredrick Cherue asked for more time to enable them to respond to the lawmakers’ inquiry about the transfer properly. His request was accepted, to the frustration of some lawmakers.

In his communication, Representative Fahnbulleh claimed that BHP Billiton Iron Ore Holdings PTY Ltd in 2016 transferred their assets to Jonah Capitals without the acquiescence of the Legislature.

Section 23.1 states: “That no transfer of (1) this agreement or a mining license, or (2) any rights of the company in a MINE or any immovable infrastructure (other than in ordinary course of renewal and replacement of its properties and other than transfer of products in the ordinary course of business is permitted unless the transfer has received the prior written consent of the government

In August 2014, Jonah Capital and BHP Billiton announced that they had entered into an agreement whereby Cavalla Resources Limited would purchase the entire iron-ore interests of BHP Billiton in Liberia.

Both Jonah and Cavalla have been trumpeting that the deal carries the blessings of the government, which wishes to foster economic growth.

But with lawmakers now raising the alarm that the deal was sealed without their knowledge or input, industry observers say the transfer puts Liberia at risk by putting the concession in the hands of a company that was not vetted by the national legislature.

A member of BHP Billiton’s management team, Josephus Doekie admitted that the company owes the county four years of social development payments, but attributed the situation to the slow pace of the company’s operations in the county.

Doekie explained that BHP Billiton was in discussions with the government to meet up with its obligations to Bong County.

In February, BHP Billiton’s international board released figures that say the company made a profit of $4.2 billion dollars from its global operations just in the second half of 2016.

A source at Liberia’s Ministry of Finance and Development Planning, who spoke on the condition of anonymity, also confirmed that BHP Billiton is indebted to Bong County since 2013.

The source said that since Billiton made its last payment in 2013, no other payments have been made from that concession to Bong County’s social development fund.

The source added that the Ministry is hopeful that with the transfer of BHP Billiton’s assets to Cavalla Resources, the outstanding payment will be made to the county.

Before the recent hearings by members of the House of Representatives on the negotiations between BHP Billiton and Cavalla Resources, BHP Billiton announced that Cavalla, which is owned by Jonah Capital, had been granted exclusive rights over its four exploration areas of Goe Fantro, Kitoma, St John River South and Toto.

Billiton and Cavalla said work has begun at Goe Fantro and the development of the other assets will follow in a “phased approach.”

“Scoping studies indicate that Goe Fantro can be brought into production by 2018 at a capital cost of between $160 million and $230 million to produce $5 million tons a year of 58% to 62% iron at an estimated operating cost of $22/t, free-on-board at Buchanan port,” said Jonah Capital and Cavalla executive chairperson Sam Jonah, in a media release to Creamer Media’s Mining Weekly Online.

“We look forward to working closely with government and the local communities where we operate, to contribute towards the continuing growth of the Liberian economy,” he added.

Jonah said he hoped that the transaction would serve as a catalyst for attracting further investment to Liberia.

Cavalla, which also has a further exploration license at Kitoma II, as well as the right of first refusal over three additional exploration areas, stands to profit heavily from BHP Billiton’s concession if it is able to enter a production phase.

This story was produced in collaboration with New Narratives and the Thomson Reuters Foundation with funding from German Development Cooperation. The funder had no say in its content

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