Liberia: Govt, ArcelorMittal Sign Groundbreaking Amended Mineral Development Agreement Today;
MONROVIA – Following two years of intense negotiations, the Government of Liberia and the ArcelorMittal have finally agreed to amend the Mineral Development Agreement (MDA) of the company to meet with present day realities in the country.
The relevant authorities of the Liberian government and ArcelorMittal will sign the latest amendment to the MDA in Monrovia on Friday, September 10, 2021.
The signing will bring to three the number of times the MDA amended.
The 3rd Amendment was required to ensure completion of ArcelorMittal Phase 2 project.
A statement issued in Monrovia on Thursday, September 10, 2021 revealed that the Liberian government has secured about US$800 million expansion project to build a mine concentrate, expand capacity of the Rail and Port from the current production of 5 MTPA to 15MTPA within 3 years and a reservation to increase production to 30MTPA over the long term.
It disclosed that the Liberian government also secured a total $65 million payment from ArcelorMittal which includes US$$55million reservation fee for further of expansion rights for the project to 30MTPA and $10 million signing bonus.
The Government has also secured additional contribution of U$300,000 to US$500,000 annually for projects to be implemented directly by affected communities in Bong, Grand Bassa, and Nimba.
The statement added that ArcelorMittal’s expansion project will triple iron ore production in Liberia with a corresponding increase in Government revenue and job creation.
“This US$800 million Phase Two project will result in direct spending into the Liberian economy of approximately $200 million per year. The project will create approximately 1,200 direct employment and 400 indirect employment for Liberians. During Construction, there will be approximately 1,500 jobs created for Liberians”.
The statement maintained that the Amended MDA has also improved the local content provisions of the agreement to require that within 2 years, AML and the Government to development a framework to ensure Liberian owned SMEs can participate in the expansion project through the purchase of goods and services from Liberian owned SMEs.
According to the statement, the Liberian government will also ensure the possibility of a multiuser railroad and port infrastructure to allow Guinean Mining Companies to access Liberia’s transportation infrastructure.
It disclosed that the Amended MDA also allows for expansion of the Railroad and Port to potentially allow an initial 30MTPA of Iron ore from Guinea to transit through Liberia, with Liberia receiving transit fees and greater employment for Liberians.
“Critically important, the Government has finally secured terms creating a framework for multiuse of the existing Rail and Port asset for transport of Guinea ore through Liberia. Following difficult discussions, the amended MDA now provides a clear framework in which the Government can enter into access agreements with Mining Companies for transport of Iron ore through Liberia”.
Quite recently the Government came under pressure from Afreximbank and Thelo DB (research thelo DB) not to sign, saying that the deal may limit the future of the multi-user rail framework since AML would be the operator. A visit was to Dubai was suggested but this did not materialize because the Government responded that it is on the verge of signing with AML and would be difficult to open new discussions. Government’s response was that that discussion with Thelo DB proposal was on a new rail from Guinea, not on the current rail. The Government remains open to a discussion on new rail. With the change of Government in Guinea, discussions on exporting Guinean ore through Liberia may take on new momentum.
In 2005, Arcelormittal signed an MDA with the Liberian government during the administration of ex-President Ellen Johnson-Sirleaf.
The company was the first and single largest private investor in the country since the civil wars in Liberia in 2006.
ArcelorMittal Liberia’s operation center around three key components including mining, railing and shipping iron ore.
Iron ore is excavated from Mount Gangra and processed at a nearby plant in the Tokadeh mines in Nimba County. The ore is then transported by rail on the 243 kilometer railway to the Port of Buchanan, where the ore is loaded onto ships for transportation around the world.
The first shipment of Direct Shipping Ore (DSO) left Liberian shores in September 2011.
The company has immensely contributed to improving the living conditions of citizens and carrying out multiple infrastructural developments since its operations were launched in Liberia in 2005.