Sesa Goa Limited (“Sesa”) a majority-owned subsidiary of Vedanta Resource, which signed a Mineral Development Agreement or MDA with the government of Liberia, last week, says it will prioritize the employment and training of Liberians at its concession.
Sesa signing of the MDA with the Government of Liberia follows the purchase of a 51% of outstanding common shares of the Western Cluster Iron ore deposit which was wholly owned subsidiary of Elenilto at US90 million. The MDA is subject to ratification by the Liberian Legislature.
Sesa said it believes in the employment and capacity building of local people over the importation of overseas employees which is cost intensive.
“As a businessman it makes some sense for us, a big sense to engage and invest in the local people then to bring people from overseas to work, which is not possible. No business firm is able to run over the years just importing people from overseas. It is not possible. It has to be local people,” Sesa Goa Managing Director Mr. P.K. Mukherjee said over the weekend.
Mr. Mukherjee said his company believes that in any mining project, the success depends on the relationship with the local people and the support of the government, emphasizing, “We believe in local employment, not only employment but training them.”
Sesa noted that initially when the right skills are not there, “yes, you have to mix but gradually, gradually, it has to be only local people.” “That is the way in India, 70% of the employees come from Goa, a particular state in which the company is located. So this is our business model,” Mr. Mukherjee added.
As part of the MDA, out of the 90m deal, the Government of Liberia gets 15% in withholding tax, which translate into US13 ½ million, while the US76 1/2 million goes to Elenilto.
After the ratification, Sesa is expected to pay US25m to the Government of Liberia; half of this amount which is US12.5 million will be paid after ratification and the remaining US12.5 120-days later.
In addition, Sesa will make available US3.1 million to the Community Welfare Development Fund. The company will make initial payment of US2million within the first year of operations. This is aside the US200, 000 contributions to the Educational Fund. The acquisition is expected to help the Anil Agarwal-led Vedanta Resources’ subsidiary to become a significant player in the West African iron ore hub.
Located in Western part of Liberia and spread over 270 sq km area, the company has assets having long mine-life with an estimated reserve of over 1.05 billion tonne iron ore. The deposits are located close to the coast along Monrovia to Mano River.
“We are highly delighted with this opportunity to consolidate our iron ore business. The Western Cluster Project presents an excellent opportunity for developing a large integrated mining operation and establish our presence in Liberia and Africa,” Sesa Goa managing director PK Mukherjee said.