Monrovia – The Senate Joint Committee on Lands, Mines, Energy, Natural Resources and Environmental; Judiciary, Claims, Human Rights and Petition as well as Investment and Concession have declined to proceed with the ratification of the Mineral Development Agreement between Liberia and Hummingbird Resources.
Report by Henry Karmo – [email protected]
The Joint Committee, according to its chair, Senator Albert Chie, sent the agreement back to the executive to address the “many inconsistencies in the agreement”.
“The Joint Committee hereby recommends to the Plenary of the Senate to suspend the ratification process of the proposed Mineral Development Agreement between Hummingbird Resources (Liberia) Inc., and the Republic of Liberia, pending explanation from the President of Liberia on the issues concerning the lumping of four exploration licenses into a single Mineral Development Agreement and the lack of a plan in the MDA towards the mining of the over four million ounces of inferred gold resource discovered in Sinoe County.
“The proposed Mineral Development Agreement (MDA) between the Government and Hummingbird Resources (Liberia) Inc. lacks many details in crucial areas including the lumping together of four exploration license areas into a single MDA instead of four separate MDAs in line with the New Minerals and Mining Law approved on April 3, 2000, the committee stated,” the joint committee’s report noted.
In the committee’s wisdom, if the agreement is ratified as it is, it will lead to revenue loss in the tune of millions of U.S. Dollars and significant reduction in social development funds and other benefits to the affected communities and counties of Sinoe, Grand Kru, River Gee and Maryland.
“Besides the loss of revenue and benefits, the areas could be susceptible to limited and impetuous exploration work, which could result into some of the areas prematurely and unjustifiably been declared uneconomical and making them relatively unattractive for future investment,” the report added.
Senator Chie said there was no indication of a plan in the Mineral Development Agreement (MDA) to mine the over four million ounces of gold the company claims to have discovered in Sinoe County.
According to him, with the formulation of the MDA, there should have been a provision setting aside production lot(s) over the areas in Sinoe where the gold has been discovered or given a maximum of one year to declare production areas.
“Allotting the company five additional years for exploration over these containing a minable gold resource after exploring for 10 years is excessive and the legal, technical and economic bases are questionable.
“There are other areas of concern in the MDA but could be resolved with minimal consultation with the relevant agencies of Government,” he added.
In accordance with the New Minerals and Mining Law approved on April 3, 2000 (Sections 5.3 and 6.5) and Exploration Regulations issued by the Ministry of Mines and Energy (formerly known as the Ministry of Lands, Mines and Energy) in March 2010 (Section 3 and Section 21), Hummingbird should have given notice to the Minister of Mines and Energy, based on the report of a Competent Person, that it has delineated a gold resource in Sinoe County and wants an MDA over that area.
By the Mining Law and Exploration Regulation, only areas in which a mineral resource has been delineated, should, based on the report of a Competent Person, be subjected to an MDA and the rest of the areas will continue to be a subject of exploration licenses.
At a minimum, in the Hummingbird MDA, parts of the Dugbe License Area with the inferred resource should have been declared a Production Area while the rest of the areas in Grand Kru, River Gee and Maryland Counties could continue to be under exploration.
Giving an additional five years to Hummingbird in the MDA for exploration (Section 4.d) before declaring production areas after exploring for over ten (10) years, especially in the Dugbe Area of Sinoe could be a contravention of the Minerals and Mining Law.