Breach Of Contract… Shandong Iron Ore Mining Licences Terminated

A letter dated 3rd June,2019, addressed to the Chairman of Shandong Iron Ore and Steel Group from the Minister of Mines and Minerals Resources, has indicated the termination of the lease agreement and the mining licences of both the African Railway and Port Services SL Limited and the Tonkolili Iron Limited with immediate effect.
The correspondence from the new Mines Minister, Mr. Rado Yokie notes that, the Government has taken notice that the Tonkolili Iron Ore (SL) Limited and African Railway and Port Services have not paid their annual licences fees and lease rent since August 2018.
The correspondence amongst other things have also indicated that Tonkolili Iron Ore has failed to make royalty payment for April, 2018 shipment and also failed to provide full details of the Phase 2 Mine Development Plan including information on the geology, mining operation, processing and rail operations.
This, according to Government, is breach of the statutory obligations contained in both the Mining Lease agreement of both companies (African Railway and Port Services and the Tonkolili Iron Ore).
“For the said breaches and other pertinent information, which have become available to us, we are left with no option but to cancel the mining licences and terminate the lease agreement between the Government of Sierra Leone and the African Railway and Port Services with immediate effect,” the letter states .
Government concludes by reaffirming their position in relation to the provisions contained in the agreement, which remains binding on both companies. Hence they reserve all rights under the licences and lease agreement and otherwise to ensure that these companies meet their required obligations.
The cancellation of both licences and termination of the lease agreement is coming at a time when the Government of President Julius Maada Bio has assured Sierra Leoneans during the State of the Nations Address that iron ore mining is set to resume in the country by 2021.The mining of iron ore was envisaged by Government to revamp the economy and stabilize the plummeting exchange rate.
How will such a decision by the Government of Sierra Leone, to cancel China’s largest investment in Sierra Leone amounting to over USD 220bn, leave their relationship with China, which has recently proposed to build the Lungi Bridge, the Orugu Dam and also undertake many other projects both in Agriculture and Tourism?
The Chinese North Province Company, Shandong Iron Ore Limited Sierra Leone, took over from the African Minerals Company Limited in 2014 at the peak of the Ebola scourge and the drop in the iron ore price in the world.
After operations, for a little over two years, they left on sabbatical leave in 2018 just when President Bio won the elections in March, 2018. However many Sierra Leoneans say the Chinese were largely enjoying tax holidays and waivers, which amount to billions of dollars during the previous APC government. But that is strictly not forthcoming under the current stiff tax regime.

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