The government of Sierra Leone has meticulously assessed and approved the proposal submitted by the esteemed Kingho Railway and Port Company (KRP), a well-respected management and operating entity for railways and bulk mineral commodity ports in the nation.
KRP is a subsidiary of the Leone Rock Metal Group (LRMG), the largest investment company in Sierra Leone, which also oversees the country’s largest iron ore mine through its subsidiary, Kingho Mining Company. This approved lease agreement for the rail and port infrastructure underscores the government’s unwavering commitment to the welfare and advancement of its people.
This decision follows a comprehensive review of multiple proposals. The government’s thorough scrutiny has shown that KRP’s offer excels in various critical aspects, ensuring the maximum benefit for the country and its citizens. Under the newly approved lease agreement, LRMG, through its subsidiary KRP, will pay an impressive annual lease rent of $1,500,000, with a yearly 5% increment over the lease period. This achievement averts potential losses for Sierra Leone, as Arise IIP’s proposal fell short, offering a fixed lease rent of only $1,100,000 over the 25-year lease period it had requested.
To address concerns of monopolizing rail and port facilities, the cabinet ministers negotiating with LRMG ensured that KRP would allocate a minimum of 10% of the existing capacity to third-party entities. This guarantees fair and equitable access and dispels any notions of monopolistic tendencies.
In contrast to past practices of granting tax and duty waivers, the government has agreed to a 25% income tax rate in accordance with the Income Tax Act 2000 (as amended), a significant departure from Arise IIP’s initial proposal of 0% income tax for the first 15 years of their 25-year lease. Additionally, while GST is a substantial revenue source, the government has agreed to exempt LRMG from it for only 5 years, after which the company will pay Goods and Services Tax as per the law.
LRMG’s proposal stands out for its commitment to reaching the projected maximum capacity of the railway and port, with an impressive target of 20 million tons within three years. This aligns with the government’s vision of maximizing revenue potential and accommodating third-party users. Arise IIP’s proposal, in contrast, aimed for 30 million tons by 11 years, potentially falling short of the country’s developmental capacity requirements.
Furthermore, the agreement takes into account the welfare of landowners and communities along the rail corridor and the Pepel port by negotiating a surface rent of $250,000, with a 5% annual increment, marking a significant increase from the previous $385 million annual rent paid to these communities. This amount surpasses Arise IIP’s offer of the same amount with no annual increments.
In September 2023, LRMG announced a workforce of over 5,200 employees, with a commitment to create an additional 6,000 jobs during the two-year reconstruction and expansion phase of the rail and port, surpassing Arise IIP’s proposal of 5,000 jobs over an 11-year period. Furthermore, LRMG has already begun contributing to the country’s fiscal growth through the payment of PAYE, unlike Arise IIP, which planned to initiate such payments only after 11 years.
Beyond the Rail and Port agreement, LRMG has demonstrated its dedication to Sierra Leone’s comprehensive development by making substantial investments in various sectors. These include a $158 million investment in licenses from 2010 to 2023, the construction and commissioning of a plant with a capacity of 2 million metric tonnes per annum in 2022, and the upcoming commissioning of a Magnetite Separation Plant in 2025-2055, with a staggering investment of $435 million. LRMG has also committed to support the government’s FEED SALONE initiative and invest in agriculture, while also planning the establishment of a steel smelting and production plant, a significant boon for the country’s economy.
With the government’s endorsement of LRMG’s proposal, Sierra Leone is primed for stable growth and sustainable development. This decision underscores the government’s diligent evaluation of all offers and its resolute commitment to secure the best possible outcomes for the country. By entrusting LRMG with the Rail and Port infrastructure, Sierra Leone has positioned itself to reap substantial benefits, forging a lasting partnership that bolsters economic progress and fosters a brighter future for all its citizens. His Excellency the President’s vision of industrialization through the construction of a steel smelting plant is a vital part of LRMG’s Phase III vertical integration plans.”