US commodity trader Gerald Group will pay Sierra Leone $20-million and cede a 10% stake in an iron-ore project as part of the resolution to a nearly two-year dispute that led to the shutdown of production, the company said.
Gerald's wholly owned subsidiary SL Mining filed for arbitration in August 2019 over a royalty payment dispute and suspended the Marampa mine the following month. Sierra Leone's government responded by cancelling its mining licence.
As part of the agreement signed on Friday, Sierra Leone will take a 10% stake in a new company that will replace SL Mining and resume operations at Marampa by June 1, Gerald said in a statement late on Monday.
Gerald will make two $10-million payments this year and will have the immediate right to ship its current stockpile of about 707 000 t of iron-ore, it said.
Both sides will withdraw their legal claims before the International Chamber of Commerce (ICC) and International Centre for Settlement of Investment Disputes (ICSID), the statement added.
"I am delighted that we have been able to resolve our differences and have a fresh start and new beginning with the Government of Sierra Leone," said Gerald’s chairman and CEO, Craig Dean.
Sierra Leone's Mines Minister Timothy Kabba told a news conference on Tuesday that the agreement was a milestone for the country.
"Whatever the pain we may have borne or dreaded throughout these two years ... this outcome justifies our action," he said.
Gerald estimates that Marampa holds about one-billion tonnes of iron-ore with a potential lifespan of 30 years.