Finance

Elenilto Resurfaces in Togo With U.S.$28 Billion Deal (allAfrica.com)

A controversial company which used Liberia as a bargaining chip to enhance its image as a concession giant and walked away with US$123.5 million after selling its interest to Sesa Goa, a unit of Vedanta Resources, has resurfaced in the West African nation of Togo. Elenilto Mineral is promising to produce annually 5 million tons of phosphate, fertilizers and phosphoric acid with total revenues of 28 billion dollars during project life time under a deal announced this week in Lome. Located in western Liberia, the Western Cluster project consists of three mining concessions, the Bomi, Mano and Bea, with over three billion tonnes of iron ore resource. According to its annual report, Vedanta invested $96 million on exploring the resources until March 2014.

According to a release distributed by the African Press Organization Tuesday and signed by Alon Avadani, CEO, Elenilto, controlled by the Israeli billionaire Jacob Engel, was recently awarded by the government of Togo in an international tender, to develop the phosphate mining and fertilizers plant project in Togo. The release said, Elenilto, which leads and controls the consortium, is cooperating in this project with Wengfu as its strategic partner. Wengfu is one of the top leading international phosphate and fertilizers groups with vast experience in the phosphate chemical industry in China and greatly favorable influence in the industry globally.

Rights to Idled Mines

The agreement comes years after the company acquired an investment in Liberia’s mineral-rich Western Cluster promising to spend $2.4 billion develop Liberia’s Western Cluster iron ore deposit. But after years of holding on to the concession, the company, against massive public outcry, sold its interest to Vedanta in a deal which the Israeli company earned a whopping US$23.5 million.

The company had initially promised to produce as much as 1.1 billion metric tons of ore after being awarded the rights to develop the Western Cluster project. The project consists of three deposits and two idled mines, which were closed in 1976 and 1985 during Liberia’s two civil wars, the last of which ended in 2003.

Under the arrangement, Elenilto was expected to pay Liberia a one- time fee of $25 million and an annual tax equivalent to 21 percent of the company’s profit from the deposits, according to the ministry’s statement. It will also pay $3.1 million a year towards community development. Unable to deliver on its pledge, the company held on to the concession before it was finally rescued by Vedanta although Amir Nagammy, the company’s country director at the was emphatic that Elelnilto was in Liberia for the long haul.

Engelinvestment Group entered the metal mining business in mid-2007. In December 2008 the group completed the purchase of approximately 75% of Tanzania’s copper and gold mines – spanning 9,000 km2 and at an investment of tens of millions of dollars. In January 2010, Engel won one of the world’s largest metal mining tenders when it was awarded the 25-year franchise for one of the world’s largest iron ore mining deposits.

The tender included a group of 3 mines containing 1.1 billion tons of iron ore reserves at a 67% concentration, from which 700 million tons of iron could be extracted – designated for the construction and industry businesses, mainly in India and China. In return for the franchise, Elenilto undertook to pay the Liberian government $100 million, $25 million immediately and the remainder in annual payment throughout the franchise period. Furthermore, the company undertook to pay 21% of its profits after the investment had been returned.

“Let Togo be forewarned in a way that provides the Liberian government with an opportunity to help an ECOWAS country, Togo, to avoid the Elenilto pitfalls. Such help for Togo is highly unlikely because of the perennial, pervasive and gargantuan corruption in the Liberian government.” – Dr. Togba Nah Tipoteh, Economist, Presidential Candidate

The company claimed upon winning the tender that it expected the project to produce an NIS 100 billion profit from the project within 20-25 years. Elenilto has yet to remit the initial sum ($25 million) and in framework of the agreement signed with Vedanta the buyer will pay this cost as well.

Engels has slowly built a reputation for investing under the radar and later selling for massive profit. In March 2007 he sold control of the public Engel Group to Azorim Co. owned by Yeshayahu Boimelgreen in return for NIS 430 million. According to the agreement between Vedanta and Engel, Vedanta would pay $90 million in return for 51% of the franchise, a price that reflects a total value of $180 million for the entire franchise. In the months following the sale to Vedanta, multiple sources confirmed to FrontPageAfrica that Vedanta hierarchy became frustrated with Elenilto which sought to raise its profile on the back of the more-experienced Vedanta.

Familiarity Rings: Mirror Has Two Faces

Despite the US$28 billion deal in Togo, it appears Elenilto, as it did in Liberia, is still shopping around for financial assistance and possibly future buyer for the Togo deal as it states in its release that a number of global financial institutions are interested in financing the project. “Discussions in purpose to assemble the financial consortium to support and provide the required financing to develop the project have already begun,” the statement said.

And as it did in Liberia, Elenilto is pledging to “establish one of the largest phosphate mining and beneficiation facilities to produce low cost phosphate concentrates utilizing the connection to the natural gas pipeline of WAGP, the short distance from the mine to port which is less than 30km, and a high production rate of 5 million tons per year, to benefit the economies of scale and to maintain cost advantage in the international phosphate and fertilizer market.”

The company’s statement continues: “Elenilto shall establish a downstream phosphoric acid and fertilizer plant to supply the required nutrients to the agricultures as the future suppliers of food, to the developing and increasing African and International fertilizers customers. Elenilto shall also invest in distribution channels and required logistic facilities to bring the fertilizers to the farmers.”

The project is located near Lome, Togo’s capitol, and is probably the largest phosphate deposit south of the Sahara, with estimated resources exceeding 2 billion tons of phosphate and shall generate sales of over 28 billion US dollars. Thousands of local and foreign employees will be recruited to develop the project and tens of thousands of indirect jobs will be created.

The statement quotes Elenilto’s CEO Avadani, as saying “Elenilto has identified the local market shortage and demand for fertilizers products, and shall supply the phosphate, the fertilizers and the phosphoric acid to Africa and the international market. The fertilizers project is the first and the biggest of its kind in West Africa and shall enjoy relative low operating expenses due to the availability of gas from the WAGP, the close proximity to the port and the size of project.”

The phosphate rock concentrates export of 3 million tons per year, the 500,000 tons per year of phosphoric acid production and 1.3 million tons per year of fertilizer products, shall allow an export of both phosphoric acid and fertilizers to Africa and the international market.

The execution of the final concession development agreement is expected to be during this month, and the sales of concentrates production is expected to begin within 3 years. The company says it is involved in minerals, mining and oil & gas projects in a few countries, mainly in Africa, in the scope of billions of dollars. In reality, Elenilto’s profile is far from the reality. The Liberia experienced could serve Togo a painful reminder of how a little-known scrap company slid under the radar to walk away with millions only to surface elsewhere, a point veteran politician and economist Dr. Togba Nah Tipoteh, a candidate for the Liberian Presidency stressed when FrontPageAfrica contacted him Tuesday.

Dr. Tipoteh who was a vocal critic of the Elenilto deal, in a statement Tuesday said the report that Elenilto is to invest USD1.4 billion to produce phosphates and fertilizers in Togo draws attention to the experience of Elenilto in Liberia. “This experience, when shared with our neighbors in Togo, would be helpful for knowing the real behavior of multinationals such as Elenilto.”

Be Warned, Togo, Dr. Tipoteh Cautions

Dr. Tipoteh added that the sharing of experience is particularly timely, recalling the visit to Liberia of the President of Togo to participate in the first declaration of Liberia as an ebola-free country. “The US$28 billion announced as sales to be made over the life of the Elenilto project in Togo is a ploy just as the US$16 billion announced in Liberia as foreign direct investment in Liberia, raising expectations to the effect that this investment had already been made and the benefits had begun to flow, when in fact such did not exist and companies like Arcelor Mittal have already cut down on the number of employees without reaching close to the number of Liberian employees stated in the Minerals Development Agreement with the Liberian government.”

The truth of the matter, Dr. Tipoteh added, is that Elenilto operated illegally in Liberia with the assistance of the State Managers at the highest levels. “While pretending to be interested in the Western Cluster mining of iron ore, Elenilto proceeded to selling 5% of the Western Cluster assets without having ownership of the assets, as there was no Minerals Development Agreement (MDA) on the Western Cluster. This first set of assets was illegally sold to the Indian Company Sesa Goa. Then the President of Liberia hurriedly signed the MDA and shortly thereafter Elenilto sold the balance of the assets. Elenilto did not meet the legal requirements for bidding as set by the Liberian government, the same government that operated illegally when it signed the MDA with Elenilto. Furthermore, Sesa Goa did not bid for the rights to operate in the Western Cluster but the government of Liberia allowed Sesa Goa to buy the assets illegally.”

Similarly, Dr. Tipoteh says, Elenilto is highly likely to play tricks with Togo. “Let Togo be forewarned in a way that provides the Liberian government with an opportunity to help an ECOWAS country, Togo to avoid the Elenilto pitfalls. Such help for Togo is highly unlikely because of the perennial, pervasive and gargantuan corruption in the Liberian government.”