The Government of the United States of America has urged the Government of Sierra Leone to conduct an open and transparent public tender process for the management of the Pepel Rail and Port infrastructure in order to ensure that the most responsive bidder with the best offer would be selected to operate the facility.
Speaking during a local radio interview, United States Ambassador to Sierra Leone, His Excellency David Bryan Hunt stressed the importance of making a “sensible” decision that not only maximises revenue generation for the government, but also ensures fair competition and equitable access to the facility for all stakeholders, including mining and agricultural companies.
Meanwhile, Marampa Mines Limited (MML), an iron ore company operating within the corridor, has expressed concerns about Kingho’s monopoly of the rail and port infrastructure and the potentially problematic loopholes in Kingho’s proposed 20-year lease agreement with the government.
Despite the rail infrastructure’s 20 million metric tonne capacity, Kingho has only exported less than 5 million tonnes between 2022 and August 2023, while granting minimal access (10%) to MML and other mining and agricultural companies for transhipment purposes.
MML states that Kingho specifically targeted Marampa Mines to sell its products to them, threatening to restrict their use of the facility if they fail to comply.
Additionally, MML has highlighted a critical omission in the new Kingho’s lease agreement, as the provision allowing the Government of Sierra Leone to engage another third-party rail and port operator has been entirely removed from the proposed 20-year lease agreement with Kingho. See excerpts from MML’s complaint below:
The current clause 2.03 in the 2021 lease agreement where GoSL has the express right to engage another third party rail and port operator has been removed from the draft Lease entirely.
In the proposed new clause 2.03 of the Lease, Kingho undertakes to grant access to the rail and port to third parties, with a minimal access requirement being set at 10% of the existing capacity, which means that if Kingho utilises 8 million tons per annum capacity, they only need to allow 800 thousand tons to third parties. This amount is entirely too low.
Given the Rail and Port has a twenty million metric tonne capacity, and given the reality, that Kingho exported less than 5 million dry metric tonnes of low-grade iron ore concentrate last year and to date (August 2023) they have only exported 4.4m dry metric tonnes of low grade iron ore, this leaves approximately 14 million tonnes capacity available for third parties that GoSL ought to compel Kingho to provide to third parties now.
Even if Kingho is to increase its production and exports in the future, Kingho will need to expand and such expansion will take many years to achieve. In this context, there is excess capacity that can be utilised by MML now and which would result in increased income in the form of more royalty payments to GoSL.
This 10% minimum of actual capacity proposed by Kingho is entirely insufficient to meet MML’s needs, let alone those of other mining and agricultural companies. This will only fetter the growth not only of MML but all other contemplated industries.
This minimum threshold amount effectively renders any ability of MML to use the rail as meaningless. This is a clear attempt by Kingho to effectively privatise the national assets of Sierra Leone for its sole benefit.
Additionally, this language is almost identical to the language that was in the 2007 African Minerals agreement with the GOSL (with the exception of the 10% requirement), as well as the 2021 agreement between the GOSL and Kingho and neither African Minerals dealing with London Mining, nor Kingho dealing with MML gave access to these companies to use the rail and port to export their products. MML on numerous occasions over the past two years met with Kingho to discuss use and access to the Rail and Port but those discussions never proved fruitful.
