China Union set for first ore shipment

News Release | February 15, 2014

One of Liberia’s largest investments in the extractive sector, China Union is set to make its first shipment from Bong Mines of about 500,000 tons of iron ore through its newly constructed pier at the Freeport of Monrovia, Bushrod Island.

After four years of hard work, China Union projects to export 500,000 metric tons of iron ore by the end of December 2014, amounting to 50,000 tons per month. This translates into approximately US$1 million in royalties, US$2.5 million in other tax revenues, and US$3.5 million into the Social Contribution Fund.

The concessionaire, China Union plans on doubling its workforce from 232 to 459 local employees and with its first export and increased employment, the company is poised to economically revitalize the Bong Mines area and provide its people a sustainable livelihood.

In 2009, prospects for the abandoned mine took a positive turn when China Union signed a Mineral Development Agreement (MDA) with the Government of Liberia, committing to invest US$ 2.6b to renovate and revitalize the Bong mines. With the completion of Phase one of their operations in July 2013, full-scale mining began with the setting up of camps, hydraulic and conveyer belt machines, and completion of repairs on the railroad between Bong Mines and Monrovia.

The broader economy stands to benefit from this new development, as Government works to ensure China Union’s success as part of its goal of expanding the tax base and generate resources for the major push for infrastructure and human development, assured Finance Minister Amara Konneh.

Speaking at the programs commemorating the first shipment, Liberia’s President, Ellen Johnson Sirleaf expressed satisfaction over the level of work and development carry out by China Union in a bid to resume mining operations at Bong Mines.

“Sometimes we forget, sometimes mischievously   don not know and say, sometimes we are uniformed about the developments. In 2009, when we made the first visit to Bong Mines, it took us hours to get from Kakata to that point. Upon arrival there were no schools, no jobs, no hospital but today, though we haven’t reach where we want to be,  we have come a long way,’’ an elated President Sirleaf remarked when commemorating the historic first shipment of iron ore from the Bong Mines now operated by China Union.

For his part, Finance Minister Amara Konneh said “Our goal is to generate the resources required to build the transport and energy infrastructures, build and equip the educational and health facilities that will fulfill the promises that the Sirleaf Administration made to the Liberian people in 2005 to raise the standard of living for the Liberian people.”

He urged Government’s support to China Union’s goal to export 10 million tons of iron ore by 2016, reaching closer to the record set nearly 40 years ago. “This means assisting China Union in clearing the squatters on the land 25 meters on either side of the railway – for which the concessionaire has committed to paying US$ 6 million in settlement –  to allow China Union adhere to its export timeline.”

According to him, in the extractive sector at large, Government should continue to prioritize its support to concessionaires, ensuring that they meet their full production capacity and exportation timelines, by removing concessions bottlenecks so as to increase tax revenues, employment and foreign direct investment (FDI). 

Now that Bong Mines operational, Minister Konneh urged Government to now direct its energies and focus on the Western Cluster. The Western Cluster Liberia (WCL) iron ore mine in Bomi County projects a capital investment increase of US$ 560 million in 2-3 years (for the Bomi mine only) and more than US$ 2 billion in the next 10 years for all three mines – provided that they are allowed to undertake their proposed means of transporting iron ore over their concession time period.

The Western Cluster’s contribution to government revenue is projected to increase by US$50 million per year for Bomi mine, and by US$ 400 million per year, when all three mines are operational. Moreover, their mining activities will create 1,000 jobs during the Bomi project construction phase, 675 jobs during operation stage, and 600-1,000 jobs during the construction of the railway.

Minister Konneh furthered that another concessionaire, Arcelor Mittal is making headway in Yekepa, Nimba County, with plans to enter phase II of its operations in 2014, bringing an additional US$1.5 billion in FDI and generating US$20 million per year in revenue for Government. At full capacity the company will employ an additional 3,000 people, over 95% hired locally, he disclosed.

“Slowly but surely, the Liberian economy is picking up speed,” Minister Konneh noted and added that government is very optimistic that revenue generated from these various concessions will yield significant, tangible benefits for Liberians in the counties that host these concessions as well as the wider population. “Our students will have access to higher quality education, our farmers will have swifter access to markets; families will benefit from higher quality healthcare and peripheral business opportunities in connection with these concessions.”

Minister Konneh used the occasion to thank President Ellen Johnson Sirleaf for her leadership and tenacity in fulfilling her promise to the Liberian people. “Your energy and abiding sense of urgency spurs us onward, and we look forward to reaching with you all of the milestones that will get us closer to achieving the goals you have set to build a better future for all Liberians,” Minister Konneh extoled the President.

He also thanked China Union for their strong interest, not only in doing business with Government of Liberia, but in being socially responsible by ensuring that their business model uplifts the Liberian people in the areas surrounding Bong Mines. “Let me also congratulate my colleagues on the Inter-Ministerial Concessions Commission for your collective efforts to realize this major goal of ours – to revive the Bong Mines and provide the fiscal space for our economy to grow.”

He challenged his colleagues in government to make these investments work for the benefit of all Liberians. According to Minister Konneh, the people “are depending on us to create jobs for them and we need the revenues to invest in education and healthcare for them. But not only that, the government also needs the revenues to support our infrastructure program.  We cannot waste time anymore!”

Just another symbol of the rise, fall and resurrection of the Liberian economy, the Bong Mines first opened in the 1965 after German iron ore prospector Eugene Plotzki signed a concession agreement with the Government of Liberia (GoL) in 1958 and established the Bong Mining Company (BMC), a German-Italian venture. In 1971, a pelletizing plant was added to the facility, and BMC began exporting pellets of iron ore to Germany.

According to the Historical Dictionary of Liberia, in 1976, BMC’s total production was 10,918,589 metric tons, which was 40% of Liberia’s total production for the year. That year, they out-produced LAMCO, which was usually Liberia’s largest producer, by 300,000 metric tons. Since their destruction during the civil war, however, Bong mine facilities have been dormant, posing a significant loss to the Liberian economy in terms of jobs and revenue.

“In support of this progress, last year, the Government of Liberia did its part, through the Ministry of Finance (MoF), to bring us to where we are today, by successfully settling the housing unit issue with China Union, paying US$4 million to former Bong Mines workers and $600,000 to resettle squatters (check with Amos). This enabled China Union to reach its intended production capacity and begin exporting its ore,” disclosed Minister Konneh.

For his part, Chinese Ambassador to Liberia, H.E Zhang Yue said he was pleased to join Madam President to grace this grant ceremony as ambassador for china to Liberia. ‘’The launching of the first shipment of Iron Ore from bong mine is a new chapter for your friendly and cooperative relations between China and Liberia. The successful operation of this project had made a remarkable contribution to enhance the economic and social development in Liberia.’’