Meltdown: US$2.6bn Iron Ore Company Crash

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By Varney M. Kamara

China Union is stopping production due to poor financial performance
China Union is stopping production due to poor financial performance

The multi-billion dollar Chinese owned iron ore mining company, China Union Investment has confirmed an unspecified “huge” financial loss, causing it to halt operation.

More than 300 Chinese working on the Company’s iron ore mines in Liberia have been dropped and recalled to mainland China.

Eighty four (84) local staff – Liberians have been given layoff notice. The company has also affected cut in salary.

The company in a communication addressed to local staff said it is in the situation of stopping production and its main focus now is safeguarding its equipment.

Part of the shutdown planned is operating a skeleton staff that will work for half day and half pay.

The iron ore company explained to its workforce “Since last year, the international price of iron ore has always dropped from the highest price of US$140 a ton to US$50, now which results in that a large numbers of mining company reduce production, stop production and even go bankrupt. China Union also suffers a huge loss from it”

It also revealed “Due to the reduced scale of production, China Union implements a large-scale layoffs and reduction in the salary to the Chinese staff.

“The number of Chinese Staff is reduced from the 350 to about 50 now which is decreased by 87.7% and the salary is down significantly.”

Although China Union’s Management did not quantify the shrinking nature of its profit due to the global commodity price dip , an insider claimed it is losing US$20million monthly, since the international financial crisis started nearly a year ago.

This situation seems compounded with reports of graft within the company, which have had spillover effect on  corporate operational funds.

The company in August this year disputed report that it has hit bankruptcy and that it was putting on sale, its assets. But the unfolding situation, which the company itself has documented, could be clear testament to real case of near insolvency.

The company’s mining cite in Bong Mines, Lower Bong County was scene of no work upon a visit there.

More than 300 foreign staff have been laid off and more than 400 Liberians will be unemploy
More than 300 foreign staff have been laid off and more than 400 Liberians will be unemploy

There is unverified information that some Executives of the company are presently locked in jail in China for reportedly pocketing hundreds of millions of dollars belonging to the company. The reportedly jailed China Union executives,( whose names are still being withheld due to what insiders considered the secretive and centralized nature of information from the communist state) are said to have misappropriated and misapplied funds intended for the company’s US$2.6 billion iron-ore mining operation in Liberia.

The amount is said to have been obtained as loan from the Chinese Government, which is extremely furious given the manner in which the company has crumbled financially. President Xi Jinping has been uncompromisingly pursuing anti graft policy with the prosecution and imprisonment of corrupt individuals and officials.

An Executive Mansion source also hinted New Democrat that President Sirleaf’s recent state visit to the People’s Republic of China actually centered on China Union’s ‘bankruptcy’ saga, though the information has not been independently verified.

Both the Liberian leader and her Chinese counterpart are said to have discussed ways in which they can save the company from disgrace and free their governments of further embarrassment from their respective citizens.

New Democrat has also gathered that UNMIL has already intervened in the China Union financial crisis. Fearing the negative consequences of the crisis, the multi international peacekeeping body is scheduled to meet various stakeholders to find a way out of the company’s financial woes.

“Right now we are not doing anything. The company has stopped operation for almost three months running. We only go and sign in and return home at the end of the day. No shipment of iron-ore is taking place at the moment” Kesselee Sumo, head of the China Union’s workers union, the United Workers Union of Liberia, informed this paper Monday.

The company is said to have given its local employees three options, which include the workers accepting or rejecting that one: reduce 82 Liberian workers; work by turns and reduce 30% of the current salary of all Liberian workers.

The layoff has not been implemented yet. Both Management and the workers are expected to meet for final discussion.

“China Union Management will never admit to the fact that it has gone bankrupt, but we’ve been told by some Chinese supervisors that the company has gone bankrupt” Kesselee Sumo, head of the China Union workers’ union informed this paper in an exclusive interview.

Asked what exactly he knew about the latest decision by Management, Sumo replied: “Yes, they’ve written us (China Union’s black employees) and we are holding consultation because this is a serious matter. This issue has to do with our lives and our welfare as a whole. We’ve also informed the umbrella Labor Union of Liberia about this situation, and they’re expected to pay us a visit here (In Bong Mines) to discuss this latest development.”

Sumo however acknowledged that none of the new demands is in their interest. “Firstly, I think it will be difficult to adhere to any of these demands because none is in our favor as workers. This is also a violation of the labor law.”

Rather than continuing with iron-ore operation in Liberia, Sumo whispered that a widespread rumor is circulating amongst workers that China Union intends to divert its attention from Iron-ore production to steel manufacturing, but said details on the reported steel production operation by the company are still sketchy.

Sumo’s revelation was also backed by some employees who showed complete disregard to the company’s new jobless plan.

“I have no reason to listen to what China Union is telling us. This is complete nonsense. We’ll not accept any of those demands” a furious China Union worker, who claimed secrecy for fear of facing intimidation from Management, said to New Democrat.

When contacted for response, the company’s local Public Relations officer Morris Tit refused to talk to this paper on grounds that he was too busy with his boss and therefore could not speak to the press.

China Union Mining  Company signed US$2.6billion Mineral Development Deal(MDA) in 2010 with the Government of Liberia(GOL) to mine iron-ore in Liberia for a period of 17 years, but much of the company’s operation in the country has seen downward trend in recent times, ranging from financial crisis to workers and rights group’s protests.

In 2014, workers of the company staged 21 days relentless protest, a situation which led to injuries amongst workers as a result of violent clashes between the police and demonstrators, something which also disrupted mining activities.

Much of the demonstration centered on issues such as low salary and benefits, molestation against black workers, labor abuse, sanitation, transportation and health matters.

The former Bong Mining Company (BMC) hospital, the only referral hospital whose facility has been taken over by China Union, is now in deplorable state, our reporter who just left the area observed. The hospital is currently without a medical doctor, understaffed, just to mention a few worst case scenarios about China Union’s turbulent mining operation in Liberia.

The people of Fuamah are crying their social benefits and improvements in their lives, but those results don’t seem to be coming anytime soon.

Even the 19 mile road running from Kakata to Bong Mines that brought brief smile on the faces of the locals, is now said to be experiencing series of pot holes due to its low quality, our correspondent also observed.

Except for its actual mining cite in Blonmu, a town which lies few kilometers in the Zawea Mountains, where China Union Management has built some pre-fax houses to host important staff and other top executives, its facilities in central Bong Mines is practically swallowed by grass, despite numerous promises to revamp the camps to allow workers to live there, thus making the area absolutely inhabitable.

“I don’t know why our government brought China Union here(In Liberia) because they’ve proven that they have nothing to offer us but only to carry our resources and leave us empty” John Flomo, a 65 year old elderly man in Fuamah, Lower Bong County, angered by China Union’s poor performance, blasted.

“This company is not improving our lives here. We do not get any sense of relief since it started mining operation here. I don’t blame them but our government, especially the lawmakers, who failed to do the right thing for us. There’s need for the government to revisit this contract” Flomo angrily suggested.