Monrovia – A FrontPageAfrica investigation has found that Solway Mining Incorporated, the controversial company, aggressively encroaching on the steel giant, ArcelorMittal’s iron ore concessions in Liberia, has been linked to Estonian multimillionaire businessman, Aleksandr Bronstein, who has strong ties to the inner circle of Russian President, Vladmir Putin, including Alexey Mordashov, owner of the failed Putu Mining Operations in Liberia.
Report by Rodney D. Sieh, [email protected]
Solway’s overtures has in recent weeks drawn the interest and concerns of both US and British diplomats concerned about what one diplomat described quietly this week as “controversial Russian overtures in Liberia”.
Solway raised eyebrows in July when Emmanuel Sherman, Deputy Minister of Mines & Energy, introduced the company to the people of Nimba County and to the President of their traditional chiefs, Peter Barlon.
Prior to that ceremony, ArcelorMittal, in a communication dated June 26, 2020, directly confronted Solway Mining Inc. informing them of the alleged encroachment on their concession area.
In the communication, titled “Unlawful entry and exploration activities in ArcelorMittal Liberia’s concession area”, ArcelorMittal stated:
“For and on behalf of ArcelorMittal Liberia Ltd. (“AML”), please be informed that Solway Mining Inc. (“Solway Mining”) has unlawfully entered upon and engaged in exploration activities in an area overlapping the concession area in Nimba County granted by the Government of Liberia (the “Government”) to AML pursuant to the Mineral Development Agreement dated August 17, 2005, as amended (“the AML MDA”).” The communication was signed by Mr. Scott Lowe, the General Manager.
The communication continues: “As you cannot possibly ignore, AML has been granted exclusive mining rights by the Government on the former LAMCO concession pursuant to the MDA. The MDA and each of its amendments, as you should be aware, have been duly ratified by the Liberian Legislature and have the force of law. The MDA includes the exclusive right for AML to conduct, among other activities, the exploration, development and production of mining products in the Concession Area, as this term is defined in the MDA.
The Millionaire Behind Solway
ArcelorMittal has been mining iron ore in the county since 2011 and plans to produce 5 million tones in 2020.
With the revelation that Bronstein is behind the company, it appears Mittal may be on the verge of a major fight to secure its concession.”
The company remains one of the country’s anchor foreign investors, and has expressed its commitment to a major expansion project. These disruptions, and potential contractual disputes, do little to encourage investor confidence.”
The Russian publication, Kommersant.ru, recently reported that the Solway Group is run by the Estonian oligarch, Aleksandr Bronstein, and his son, Dan Bronstein.
Aleksandr Bronstein, according to the publication is a business magnate who founded Solway Investment in 2002, after chairing the board of directors of Siberian-Urals Aluminum Company, a Russian bauxite and aluminum producer that merged in 2007 with its main competitor in the country, Rusal, and Swiss trader Glencore.
Previously, the publication reported, Bronstein headed the London-based trading company Raznoimport, which for a long time, was the Soviet Union’s sole importer and exporter of minerals.
Said the report: “Aleksandr Bronstein has also been the head of several mining companies, after starting his career at Estonia’s Ministry of Forestry and Environment. He is reputedly well connected in the business and political world of both Estonia and Russia. Born in St. Petersburg to a family that left Russia to escape anti-Semitism, Aleksandr Bronstein is heavily involved in philanthropic activities for the Jewish community and has served as vice-president of the World Jewish Congress.”
The report states that Solway Investment’s arrival in Liberia marked its return to the African continent, as the company has held interests in Kaminex, which owns copper permits in the DRC. “The Liberian subsidiary has been run since last November by Morgan Alford Warmiller, who previously worked in import-export to Liberia and neighboring countries such as Ivory Coast, notably for EU Commodities and West Africa Rubber Traders. Several other employees of the company, including geologists and executive director, Ben Davies, worked for Aureus Mining when the company operated the New Liberty gold mine in Liberia. Galia Nezhinsky, a crisis communication specialist, oversees part of the group’s public relations.”
Bronstein, Mordashov & Putu Operation
According to the report, the controversy over Solway Mining’s “mining license” began in January 2019 when the company applied for an iron ore exploration permit in Nimba County – which lies on the other side of the border with Guinea to the iron ore deposit of the same name developed by Canadian tycoon, Robert Friedland, (Africa Intelligence 31/08/20). The 55 squared kilometer, three-year concession, was awarded on 14 October to Solway Mining. “The company then began surveying and mapping the site, recently completed an environmental and social impact study, and obtained a permit from Liberia’s Environmental Protection Agency. In the coming months, Solway plans to conduct some wide and closed exploration drillings.”
A FrontPageAfrica investigation has linked Alexander Bronstein to Alexey Mordashov, who previously owned Putu Mining in Liberia. Both Bronstein and Mordashov have collaborated on several projects in the past. In January 2016 Putu shut down its activities over reported conflict between Ukraine and Russia, and also due to the drastic reduction in the price of Iron Ore on the world market.
In 2014, the Government of Liberia issued a class A mining licence (for large-scale operations) to Putu Iron Ore Mining Company, a fully-owned subsidiary of Russian steel and mining major, Severstal. Severstal had since been looking for a partner to develop the 4.4 billion-tonne iron ore resource, which has an estimated preliminary CAPEX of $3-4 billion.
Severstal purchased Putu project in southeastern Liberia in 2012 but did not rush to develop the greenfield deposit amid wider capital cost cutting to improve efficiency.
Interestingly, Putu did not have direct access to an existing rail and port infrastructure in Liberia as is with the case of ArcelorMittal for its Yekepa iron ore project. This, one industry observer explained Thursday, may be an underlying factor behind Solway’s obsession with encroaching on Mittal’s territory, with the blessing of the Liberian government.
Mordashov Targeted by US Treasury Department
Kommersant reported in November 2018 that on the eve of a visit by President Putin to Argentina, Russian authorities recalled the plans of Mordashov for a copper and gold project in Argentina, a joint venture of his investment fund, Aterra Capital and Alexander Bronstein’s, Solway Group, to develop the San Jorge field, but since 2015 they could not get an environmental license.
In January 2018, Mordashov was listed among oligarchs and political figures close to President Vladimir Putin by the US Treasury Department, drawn up as part of a sanctions package signed into law in August 2017.
While all those included were not necessarily subjected to sanctions, the list did casts a potential shadow of sanctions risk over a wide circle of wealthy Russians.
The list included the heads of the two biggest banks, metals magnates and the boss of the state gas monopoly. Putin’s inner circle is already subject to personal US sanctions, imposed over Russia’s 2014 annexation of Ukraine’s Crimea region.
FrontPageAfrica has learned that Solway is quietly eyeing the acquisition of the Putu Iron Ore Mine and is reportedly actively engaging with the Government of Liberia, using the name Fenix Mining, its South American operations under the guise that it is a US company, to unsuspecting Liberians.
Multiple sources confirmed to FrontPageAfrica that the US concerned about Mordashov’s role, blocked the movement of funds, forcing Putu to die of financial strangulation.
The Bronstein – Mordashov linkage to the Russian State, according to diplomatic sources, was the primary reason Putu Iron Ore Mining could not be developed. Now, it appears the pair is trying to return under a new name, Fenix Mining.
Solway, Fenix and Guatemala Issues
Ironically, Solway took over ownership of Fenix Mine operations in 2011 and are now trying to use the brand as reference because of its mining operation in Guatemala.
The UK based online daily, The Guadian reporter in June 2019 that the Finex Mine, which is Guatemala’ largest nickel mine, paid the Government of Guatemala just £1.4 million in compulsory royalty taxes during its first four years of production according to its financial filings with the country’s mining ministry.
According to The Guardian, “Solway benefits from Guatemala’ low nickel royalty rate, which is calculated at just 1% of all the revenues made from selling the unrefined ore it digs out of the ground”.
Solway has devised a “transferred pricing” scheme in which its company, CNG, extracts the ore from the ground. The ore is the sold to ProNiCo, another Solway’s company that operates the refinery at low price.
Said, The Guardian, “CNG is the company that pays the compulsory royalty tax. The price at which it sells to ProNiCo determines the revenues, and therefore how much the Guatemalan treasury receives.”
“At its lowest, the price paid by ProNiCo has been less than the cost of digging the mineral out the ground, Solway concedes.”
One diplomat said Thursday that a lot of these acquisitions and projects undertaken by Russian groups are havens for money laundering activities.
Solway’s Fenix Project is a fully integrated ferronickel production facility in eastern Guatemala first developed in 1960. In 2011, Solway Investment Group purchased 98.2% of the project from the Canadian company, HudBay Minerals, and gave a new start to the project. Today, the Fenix Project is comprised of a nickel mine, a newly built power plant and the ProNiCo metal processing facility. The project has mining rights to 36.2 million tons of nickel ore reserves with 1.86% nickel, as well as the rights to an additional 70.0 million tons of resources within its license area.
Since 2011, Solway has invested almost US $620 million into the Fenix Project. Potential expansion options include the construction of a high pressure acid leach (HPAL) plant at the Fenix site to treat low-grade laterite reserves with nickel below the current cut-off grade of 1.6%.
Earlier this year however, workers in Guatemala accused Solway Investment Group of not taking sufficient measures to protect the rights to health of the workers on the Fenix Mine project in Guatemala. Despite government regulation forcing the suspension of mining operations, the Fenix Mine supposedly continued operating, putting the health of their employees at risk.
The company was also dealt a major blow last February when a Guatemalan court suspended Solway’s Fenix nickel operation in a further blow to the country’s ailing mining sector.
The constitutional court declared admissible an appeal against the energy and mines ministry, relating to its decision to grant a mining exploitation license for Fénix in 2016.
Members of indigenous communities in the El Estor municipality filed for an injunction against the ministry over the granting of the Fénix license in 2018, citing alleged irregularities, Prensa Comunitaria reported on its website at the time.
With sanctions hanging on a lot of Russians businessmen and millionaires with close ties to Putin, the George Weah administration finds itself in a rather complicated dilemma as it opens its doors to Alexandr Bronstein and Alexey Mordashov. Some diplomatic observers say, the encroachment on AML, listed on the Stock Exchanges in New York, Amsterdam, Paris, Luxembourg and Spain, is a debacle poised to present a major diplomatic dilemma for the administration. Like Putu and Severstal before, Fenix and Solway are likely to face similar fate as Russian business interests closely monitored by the US and the UK governments become targets of US and UK sanctions