VZCZCXYZ0001
RR RUEHWEB

DE RUEHMV #0117/01 0391027
ZNY CCCCC ZZH
R 081027Z FEB 08
FM AMEMBASSY MONROVIA
TO RUEHC/SECSTATE WASHDC 9750
INFO RUEHZK/ECOWAS COLLECTIVE
RHEHAAA/NSC WASH DC
RUEATRS/DEPT OF TREASURY WASH DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUCNDT/USMISSION USUN NEW YORK 1554

C O N F I D E N T I A L MONROVIA 000117 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR AF/W PDAVIS, AF/EPS CTRIMBLE, EB/ESC 
SSAARNIO, INR/AA BGRAVES 
 
E.O. 12958: DECL: 02/08/2018 
TAGS: ECON EINV EMIN PGOV LI
SUBJECT: LIBERIA STUMBLES IN AUCTION OF TWO NEW IRON ORE 
CONCESSIONS 
 
REF: A. 07 MONROVIA 1089 
     ¶B. 07 MONROVIA 780 
 
Classified By: Ambassador Donald Booth for reason 1.4 (d) 
 
¶1. (SBU)  SUMMARY:  The Government of Liberia (GOL) has 
struggled - if not stumbled - in efforts to award the first 
two iron ore concessions tendered since the Contracts and 
Concessions Review of 2006 and the arrival of the Sirleaf 
administration.  The President announced during her January 
28 Annual Message to the Legislature that Delta Mining of 
South Africa had won the tender for the "Western Cluster" 
iron ore concession, despite the fact that the GOL had yet to 
conduct due diligence on the bid.  Delta is a relative 
unknown in a field of mining heavyweights and both the press 
and the other bidders have questioned the proposal evaluation 
process employed by the Ministry of Lands, Mines and Energy 
(MLME) and the Inter-Ministerial Mineral Technical Committee. 
 A second iron ore concession for the "Bong Range" deposits 
has suffered numerous delays since Expressions of Interest 
(EOIs) were submitted last summer.  It remains unclear if the 
delays and irregularities in the concessioning process are 
simply the result of well-intentioned but inexperienced 
gaffes or a deeper misunderstanding - if not undermining - of 
what the GOL has promised would be more transparent and 
accountable public concessioning procedures.  END SUMMARY. 
 
WESTERN CLUSTER BIDDING BUNGLED 
------------------------------- 
 
¶2. (U)  The "Western Cluster" (estimated at 600 metric tons 
of iron ore) is composed of several deposits covering about 
200 square kilometers including the Mano River deposits of 
the former National Iron Ore Company, the western portion of 
the Bomi Hills deposits from the former Liberian Mining 
Company (LMC), and the greenfield Bea Mountain deposits.  The 
concession is the first to be awarded by the Sirleaf 
administration.  The EOI was released in May and closed in 
July, 2007.  Of the fourteen firms that bid, the MLME 
pre-qualified seven to submit full proposals: Delta Mining 
Consolidated, Sino Steel Corporation, Xing Xing Group Ltd., 
Tata Steel, Companhia do Rio Doce South Africa, Mittal Steel 
Liberia (MSL), and Bahlodi Africa.  An Inter-Ministerial 
Mineral Technical Committee (IMMTC) finalized its evaluation 
on January 23 and the President announced January 28 that the 
winning bidder was Delta Mining of South Africa based on a 
technical evaluation score of 90.1.  The MLME published a 
full summary of the evaluation process including the 
technical scores of the bidders on February 4.  The top three 
scorers (Delta plus Sino Steel at 83.9 and Tata Steel at 
77.9) now move to the Inter-Ministerial Concession Committee 
(IMCC) for a due diligence review.  The IMCC has requested 
assistance from the USG to perform due diligence on Delta, 
and if Delta fails, the concession would pass to Sino Steel 
(China) or Tata Steel (India). 
 
¶3. (SBU)  The Liberian press has criticized the MLME for 
delays and irregularities in the concession bid evaluation 
process.  A month before the IMMTC finalized and signed its 
recommendation, the press reported that Delta Mining had 
already announced it had won the bid on its website.  Later, 
following the official announcement, the press in Liberia and 
South Africa questioned the selection of Delta, a relatively 
small and unknown firm in comparison with some of the largest 
mining and steel companies in the world. 
 
¶4. (C) Mittal's representative in Liberia, Joseph Matthews 
(please protect), also highlighted several abnormalities 
during the bidding phase, and hinted that some missteps 
appeared intentional.  Matthews told Econoff February 7 that 
the letter notifying MSL of the deadline for proposal 
submission never left the Ministry, and the evaluation 
criteria used by the IMMTC were not the same as indicated in 
the request for proposals.  Matthews explained that a 
technical ranking of bids without due diligence on 
feasibility of investment plans was incompatible with 
internationally accepted standards.  MSL has not yet decided 
if it will file a formal protest, but Matthews said 
ArcelorMittal's President, Lakshmi Mittal, phoned President 
Johnson Sirleaf the day of the announcement to register his 
concerns. 
 
BONG RANGE BIDS DELAYED 
----------------------- 
 
 
¶5. (U)  The "Bong Range" deposit in Bong County includes the 
entire 350 square kilometer Bong Mining Company (BMC) 
deposits and residual assets.  The EOI was released June 25, 
2007 and closed August 8, 2007.  The MLME received nine bids 
and on January 25, 2008, shortlisted five firms to submit 
detailed proposals by March 10: BSG Resources Ltd., China 
Union Investment Co. Ltd., Belle Resources, Ltd., Rio Doce 
S.A., and Vedanta Resources, PCL.  Bids languished at the 
MLME from August to January because of the lack of qualified 
technical staff available to evaluate proposals at the IMMTC. 
 The MLME has acknowledged its inexperience and requested 
additional assistance from donors for proposal evaluation. 
The United Nations Development Program (UNDP) recently 
contracted with an external advisor to assist the IMMTC for 
the Bong Range evaluation. 
 
CONCESSION PROCESS: TRANSPARENT BUT CHALLENGING 
--------------------------------------------- -- 
 
¶6. (U)  According to the Public Procurement and Concessions 
Act (PPCA) and the Mineral and Mining Law, all final 
proposals are initially evaluated by the Inter-Ministerial 
Mineral Technical Committee (IMMTC) composed of the MLME, 
Central Bank, National Investment Commission, Ministry of 
Labor, Ministry of Justice, Ministry of Planning and Economic 
Affairs and Ministry of Finance.  The IMMTC hands a ranked 
shortlist of finalists to the Inter-Ministerial Concession 
Committee (IMCC) which then certifies the result as having 
been conducted according to law.  The IMCC is then 
responsible for performing a due diligence audit of the 
winning bidder before entering into negotiations on the 
details of a Mineral Development Agreement.  The GOL's 
decision to announce the "winner" before conducting due 
diligence is not addressed by the PPCA, but it is 
inconsistent with international best practices.  If the 
winner of the scored technical evaluation fails the 
due-diligence audit, the IMCC moves to the second-ranked 
bidder. 
 
COMMENT 
------- 
 
¶7. (SBU)  The mining sector is a cornerstone of Liberia's 
economic recovery and the concessioning process is designed 
to promote transparency and fair play.  To its credit, the 
MLME has consistently published status updates, evaluation 
results and procedural explanations at each step of the 
process.  However, while the MLME has made public 
pronouncements of progress, the Ministry and the IMMTC have 
not adequately explained several procedural irregularities 
noted by the press and the bidders themselves.  A formal 
audit of the evaluation process would be revealing and 
instructional, but barring a formal protest from one of the 
losing bidders, a review is unlikely given the pressure to 
move forward quickly.  The IMMTC has acknowledged its 
inexperience, but some of the mistakes border on malfeasance. 
 The process is admittedly an improvement over the way 
concessions had been awarded in the past, but continued 
vigilance, oversight, and assistance is necessary to 
reinforce the institutions and controls of this embryonic 
practice. 
 
¶8. (SBU)  Although the U.S.-funded GEMAP advisor assists with 
the development of evaluation criteria and attends scoring 
meetings, he does not participate in the selection process 
nor oversee due diligence.  Members of the Deputy-Minister 
level IMCC noted the body did not have the capacity to 
conduct the required due diligence of the winner(s) and 
intend to ask their principals to prepare a formal request 
for U.S.-funded assistance to hire a private, independent due 
diligence firm using GEMAP funding. 
Booth