The_Open_Door_deel1

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had been paid to the Liberian Government, 32 cents had been
cashed by the company's shareholders, and 52 cents had
represented the costs of mining and selling the ore. But in
reality the benefits for the shareholders had been much greater
than this statement suggests. To make this point clear one must
take a more detailed look at two financial issues affecting gross
profits: the determination of the sales price of the Bomi Hills
ore and the computation of L.M.C.'s mining and production costs.
The Sales Agreement with Republic Steel
Through a complicated arrangement, based on the Iron Ore Sales
Agreement signed in 1949 between the Republic Steel Corporation
and L.M.C and as revised by the 1952 collateral agreement
between L.M.C and the Liberian Government (note here the
implicit approval of the Government of Liberia) Republic Steel
had been allowed to purchase a maximum quantity of 450,000 tons
per calender year of lump ore for open hearth use, containing
or more iron in the natural state, at privileged prices. It was
agreed that Republic Steel would pay a price equal to 50? of the
yearly average selling price of iron ore sold by L.M.C to
purchasers other than Republic Steel (with a minimum price based
on the 1949 Iron Ore Sales Agreement). Thus, Republic Steel saved
approximately $ 29,500,000.00 during the years 1955 through 1968
(35). Information related to years prior to 1955 was not
available whereas after 1968 Republic Steel ceased buying at
reduced prices. In addition to this, Republic Steel had paid
inaccurately computed prices during the years 1955 through 1963
resulting in paying in some cases more (I 185,646.00) and in
others less ($ 715,211.00) than the amounts required pursuant to
the 1949 and 1952 agreements (36) thereby reducing already undervalued
sales proceeds by a further $ 530,000,00 in this period.
In 1958 L.M.C had completed the construction of a beneficiation
plant with a yearly capacity of 900,000 tons of ore and in 1961
and I962 had expanded the plant, raising its yearly capacity to
1,200,000 tons and 1,400,000 tons of ore respectively. In 1962
mining operations were changed which involved the crushing of a
portion of the lump ore for open hearth and which resulted in a
gradual reduction of the production of lump ore for open hearth
and an increase of the production of blast ore. After 1963
L.M.C. even ceased the production of lump ore for open hearth and
from then on only produced blast furnace ore, natural fines, and
concentrates. (Blast and fines were direct shipping ores which
were generally sold as mined. Concentrates, on the other hand,
were produced in the beneficiation plant where lower grade ores
were processed. The increased emphasis on the production of
concentrates came as a result of the gradual "depletion" of the
rich main ore body and the subsequent mining of ore with a lower
Fe-content though L.M.C. never achieved the full utilization of