Octea owes a huge sum of money to the government of Sierra Leone (estimated at hundreds of millions of dollars) but what seems to worry the government at this time is whether the company would be able to sustain its operations and thereby continue to maintain employment of the hundreds of Sierra Leoneans who depend on it for their livelihood.
The ebola epidemic has been partly responsible for the economic misfortunes of two other mining companies, African Minerals and London Mining both of which mined iron ore in the north of the country. Octea is owned by Israeli businessman Beny Steinmetz who is also having problems with the government in neighbouring Guinea over the Simandou iron ore mine.
Sierra Leone’s Mines Minister Minkailu Mansaray (photo) and his team met with Octea officials in London November 16, according to AC, but nothing concrete seems to have come out of that meeting.
The future does not therefore seem rosy for Octea; they owe money not only to the government of Sierra Leone but also to its main financier the British-owned Standard Chartered Bank, the leading bank in Sierra Leone and several other creditors.
There are speculations that Octea might continue mining operations until a few months next year and then close and run away like African Minerals owner Frank Timis did last year at the height of the ebola epidemic. Timis was said to have absconded with 50 million dollars of African Minerals funds.
But it seems like the Sierra Leone government will no longer tolerate surprises in the mining sector this time. It’s closely watching Octea and is likely already drawing up its own plan to keep the mine running in case Octea decides to fold up.
With the ebola epidemic now over, the mining industry and other businesses in the country are very likely to bounce back. African Minerals has already been taken over by a Chinese company, Shandung, and indications are it’s slowly returning to normal. Sierra Rutile, which mines rutile in the south of the country is quite healthy and was operating smoothly even during the epidemic. London Mining has been sold to another company which plans to start operations soon.
So all eyes are now on Octea in Koidu. Will it be able to pay all its creditors or get sympathetic payment arrangements? Will it able to fulfill all or part of its obligations to the government and people of Sierra Leone? Or would it simply cut and run next year? Those are the salient questions Octea would have to answer for now.