Where the big mining houses have steered clear of Liberia, Amalia has taken on the challenge, reports Madeleine Wackernagel
AMALIA took a considerable risk when it signed up to develop Liberia’s mineral resources last month. Mining juniors have lost their appeal in the aftermath of the Bre-X debacle and the country’s recent political history did not augur well for stability.
Comments one analyst wryly: “I don’t know of any successful businesses operating there – except perhaps for ones with military links. There are good reasons why the big mining houses are steering clear – the risks are too high.”
But Amalia clearly thinks otherwise. Through its international arm, Commonwealth Gold, which is listed on the London Stock Exchange, the company has set up the Liberia Resources Corporation, which is 60% owned by the Liberian government. The government, in turn, has vested all the country’s mineral resources in the corporation and Amalia’s brief is to rehabilitate the mining industry and by implication, the economy, after seven years of civil war.
Liberia is rich in mineral resources: oil, gas, diamond, gold, bauxite, iron ore and nickel reserves are abundant and largely untapped.
The deal was perfectly timed. Amalia wanted to diversify its operations away from gold and Liberia’s interim government needed to crack down on the unregulated mining activity that was bypassing the capital’s coffers. When a multi-party delegation visited South Africa earlier this year in search of potential partners, they picked Amalia over the traditional majors.
Says representative Gerard Potgieter: “The delegation met with a number of mining houses; we were the first to offer what they wanted. We have a good exploration record and weren’t affiliated to any power. The deal was done with the government-in- transition, so it wasn’t party-political.
“Now that the elections have been concluded, the way is open for foreign involvement; the country is actively encouraging private- sector partnerships. So the reconstruction of industry can get under way in earnest.”
But others are less easily convinced. “It’s difficult enough operating in established countries, let alone somewhere like Liberia. What about security of tenure? Not to mention the lack of infrastructure. It’s an incredibly high-risk business,” says a mining analyst.
Comments another: “If Sam Jonah [head of Ashanti] hasn’t got involved, that’s a sure sign that it’s not worth it. The same principle applies in the Democratic Republic of Congo; everyone is taking a wait-and-see attitude.”
The rainy season is in full swing at the moment, but come November, Dr Morris Viljoen, professor of mining geology at the University of the Witwatersrand, will be taking a team of students to follow up on preliminary exploration work on the ground.
“It’s a win-win-win situation,” says Potgieter. “The university is adopting a more commercial approach because government subsidies have been cut; local Liberian students get to work on the project, which helps their studies, and we get a clearer picture of where the minerals are best mined.”
With an estimated annual diamond production of one-million carats, Amalia believes it is on to a good thing, but it acknowledges the problems involved. The country’s infrastructure is in severe disrepair after seven years of fighting and unregulated producers have the upper hand. The company’s first task will be to enhance efficiency of production.
“Mining alluvial diamonds doesn’t need a lot a of capital,” says Potgieter, “but it will need to become more efficient. The situation has been that only the larger diamonds were chosen, which means the deposits have not been optimised. We’re trying to organise the producers more efficiently, with a `small tools programme’ that will see 100 000 local workers formally employed.”
In the present chaos, small diggers are exploited – and of course, the treasury loses out on unpaid taxes as thousands of stones disappear through uncontrolled border posts.
The new leader, Charles Taylor, will want to change all that but without significant foreign input, the country will be on its knees for some time to come.