Capitol Hill, Monrovia – On the occasion marking the 10th anniversary of the signing of the Putu Iron Ore Mineral Development Agreement (MDA), the Grand Gedeh Bar Association (GGBA) has petitioned the County’s Legislative Caucus to press the Government of Liberia to review the agreement.
The MDA was signed on September 2, 2010 between Putu Iron Ore and the Government of Liberia, and this was followed by an announcement that a Class A mining license for mining iron ore in the Putu Mountain Range in Grand Gedeh county has been granted to the company, which is a subsidiary of Severstal Russian Steel, a leading Russian steel producer.
However, three years later, the company shut down its operations in Liberia owing to what officials say was the drastic reduction in the price of Iron Ore on the world market and the conflict that erupted between Ukraine and Russia in 2014.
The Grand Gedeh Bar Association says its petition for review is based on “section 31 Periodic Review” and “31.1 Profound Change in Circumstance” of the agreement which called for both parties – the Government on the one hand and the company on the other hand, to meet once every five years after the date of the agreement for review, and if necessary to make a change.
After seven years since Putu cease operations, the Bar wants a determination on whether the agreement is still practically and legally effective; still holds a valid Class “A” license and exploration rights over the designated production area in Grand Gedeh County and whether it is prepared to resume operations.
“Seven years is a substantial period of a 25-year contract to be left in suspense with the state of clearly outlined social development projects and contributions to project affected counties and mandated environmental assessments uncertain,” said GGBA’s President P. Alphonso Zeon, in a letter addressed to the Chairman of the Grand Gedeh County Legislative Caucus, Representative Alex Chersia Grant (District #3, Grand Gedeh County) prior to the submission of the petition.
Under the agreement, the Bar stated that Putu obligates to pay US$3 million to the people of Grand Gedeh, River Gee and Sinoe Counties each year as social development contributions.
Citing Section 8.2 a, b and c under “Community Funding Obligation,” the Bar stated that the company now owes US$21 million since 2014 and nearly a quarter of a million in education and scientific research funding stipulated in the agreement to be paid annually.
As part of the agreement, the Bar also pointed out that the company should have built a two-lane paved all-whether road between Greenville and Zwedru, a railroad for both private and commercial operations and a general port with a capacity of 1 million metric tons of traffic per year.
In addition, the company is obligated to construct a hospital facility, providing a wide range of curative and preventive services supported by a small laboratory, and provides for the employment of Liberians, holding that within the first five years of the agreement coming into effect, the company shall hire at least 30 percent of Liberians in all management positions, including 30 percent of its 10 most senior positions.
Attorney Zeon said beside the failure of the company to pay agreed community funding and undertake the outlined projects as stipulated in the agreement, the Bar was concerned about the potential of an environmental impact on the lives of the people of the region.
The bar noted that consistent with the provision on environmental assessment, three environmental assessments and audits have not been carried out since 2014, assuming that Putu submitted environmental assessment reports for the five years it operated before closure.
The Grand Gedeh lawyers also expressed concern that in the absence of money and roads, the people of Grand Gedeh, mainly those in the immediate vicinity and outside of the production areas are entitled to an environment that supports productive life, free of environmental threats.
The Bar, in its review of the 166-page Mineral Development Agreement said it found several other provisions constituting transfer of control, relinquishment and events of company default.
It added: “Notwithstanding, the findings in the agreement gives sufficient basis for the Government of Liberia to pursue a course of termination of default, it is the view of the Grand Gedeh Bar Association that a meeting of the parties is still essential to review the agreement and reach a consensus in the best interest of the project affected communities, Government of Liberia and the company and its shareholders.”
Meanwhile, the Chairman of the Grand Gedeh County Legislative Caucus, Rep. Alex Chersia Grant, in accepting the Bar’s petition promised to present it to the full caucus for possible actions.