The_Open_Door_deel1

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The ore which Republic Steel had been allowed to buy at reduced
prices had been understood to be "lump ore containing 65% or more
iron in the natural state and generally accepted Ly steel
companies in the United States for open hearth use " (37).
The discontinuation of the production of lump ore for open hearth
prompted L.M.C and Republic Steel to adopt a new definition for
the ore , which Republic Steel would be allowed to buy at
privileged prices, "sized Llast furnace ore". This was, however,
- by definition - neither ore containing 65? or more iron in the
natural state nor lump ore for open hearth use (38). As the
market value of blast ore compared unfavourably with the value of
lump ore for open hearth use,and as the previous arrangement had
been based upon the quantity of the latter produced each year by
L.M.C the substitution of "lump ore for open hearth use" by
"sized blast furnace ore" necessitated other changes in respect
of the maximum quantity of blast ore which Republic Steel would
be allowed to buy, and the price to be paid for it. As L.M.C.
and Republic Steel had excluded the Liberian Government from the
new arrangement the Government may have been justified in
accusing the companies of unilaterally changing the 1952
collateral agreement and therefore demanding its cancellation
and the elimination of the new arrangement, replacing it by an
agreement which would have been more beneficial to the Liberian
Treasury. While it is not certain that the Government had
sufficient information to ensure timely action (these and other
practices of L.M.C were not revealed until 1970) it is a fact
that this chance was missed. To avoid misunderstanding it should
be observed that the new arrangement did not work against the
interest of the Republic of Liberia more than the 1952
collateral agreement had done (39).
L.M.C.'s accounting practices and computation of costs
L.M.C.'s accounting practices, which in 1961 - 62 were still
inaccessible for researchers, even when on Government assignment
(40), were investigated for the first time by a Government
contracted firm in 1963 and 1964 when the British firm of
Whinnay, Murray & Company examined the basis of calculation
which was made each year by L.M.C. to arrive at its "net
profits". For a proper understanding of this investigation and
its results it is useful to turn one's attention first to the
1952 collateral agreement which provided, more or less, a
definition of net profits.
The Collateral Agreement (41) to the 1945 Liberia Mining
Concession Agreement (a) gave the Liberian Government
representation on the L.M.C. Board of Directors by granting the
right to appoint two of its five members; (b) entitled the
Government to an interim royalty of (i) $ 1.50 on each ton of
high grade open hearth lump ore exported, and (ii) 10? of the
f.o.b. Monrovia sales price actually received in respect of
secondary ores such as fines; (c) revised the 1949 Iron Ore