Liberia: Government Puts ArcelorMittal in Check over Port of Buchanan Claims

MONROVIA – As the beef between ArcelorMittal Liberia and Prista Port remains outstanding over the Port of Buchanan, the Liberian government has urged the iron ore company to be in full compliance with its Mineral Development Agreement, as the company has threatened to halt phase two of its investment in Liberia.

The concession agreement with Prista was signed August 14, 2019 and approved by President George Weah on September 12, 2019. It was initially ratified by the Senate with Act No. 41 on September 30 and forwarded to the House for concurrence. It was, however, recalled by the Senate for review during their recent extraordinary sitting after ArcelorMittal raised issues with the agreement.

The concession agreement, Prista Port would manage the Port of Buchanan for 25 years. This investment is expected to see US$277 million being infused into the Liberian economy.

Mittal’s Contention

“…under the 2005 MDA, as amended in 2007, specifically Article 7, sub-section (C)(a), relating to land and facilities which constitute the concession area, the MDA states that all infrastructure, assets and facilities of the Yekepa-Buchanan rail and the Buchanan Iron Ore Port do not constitute part of AML’s concession.”

Ministry of Mines & Energy Letter to ArcelorMittal Liberia (AML)

In a letter to the Minister of State, Nathaniel McGill, the Chief Executive Officer of ArcelorMittal Liberia Scott Lowe expressed the company’s “objection to a concession agreement entered into by the National Port of Authority (representing the Government of Liberia) and Prista Port Buchanan LLC on grounds that it includes and overlaps a majority of the current concession area of ArcelorMittal Liberia in Buchanan, Grand Bassa County”. 

The letter added: We have been advised that some initial agreement has been executed. Of critical importance is that it awards the iron ore port and most of the associated facilities currently held by ArcelorMittal Liberia to Prista Port. 

This action undermines and creates uncertainty regarding the security of tenure of ArcelorMittal Liberia’s business and future investment. Recently, representatives of the Prista Port approached ArcelorMittal in London and asserted that their concession would come into effect and that their company would eventually replace ArcelorMittal Liberia (AML) as the concessionaire. We reject this assertion by Prista Port and maintain that no valid concession can ever be granted that overlaps AML’s concession area. 

The importance of this matter is such that ArcelorMittal Liberia cannot proceed with the Phase 2 investment proposal that is currently underway unless and until this situation is corrected. The Company requires absolute certainty that its concessions and permits are in good standing as an essential component of its business case for investment and cannot consider an investment where security of tenure is in dispute or at risk. 

The iron ore company requested the government of Liberia to confirm that it has not ratified and would not ratify Prista Port concession agreement. ArcelorMittal also insists that it will not grant any concession that overlaps or in any way reduces AML’s concession area while it remains valid. 

Mittal Phase II Project

ArcelorMittal Phase 2 project involves the mining of high-grade iron ore at Mounts Gangra and Yuelliton. Both mountains are still greenfield sites as far as mining activity is concerned.

The main benefits from the project accrue to the Republic of Liberia as a whole. National benefits. The Government of Liberia expects mining to support the Liberia Rising 2030 plan, and the Nimba Western Range Iron Ore Project is the flagship for the sector. The current Phase 1 DSO Project was the largest contributor to Liberia’s GDP growth of 9 percent in 2012. 

The Phase 2 contribution was estimated by the International Monetary Fund to be a clear $ 2.4 billion to the Government of Liberia in royalties, taxes and other direct payments. In addition, since the Government is a 30% shareholder, it will receive an equivalent proportion of profits. Beyond the huge capital investment in the project, most of the operational expenditure for the life of the mine will accrue in-country. Beyond this, the project will generate direct employment, skills development and infrastructure benefits to the operational areas.

Putting Mittal in Check

Despite the expressed disenchantment and the threat to withhold investment, the Government of Liberia in a letter dated December 16, 2019 informed the steel giant company of its limitations within the Mineral Development Agreement (MDA).

Contrary to ArcelorMittal’s claim over the Port of Buchanan, the Ministry of Mines and Energy argued that “under the 2005 MDA, as amended in 2007, specifically Article 7, sub-section (C)(a), relating to land and facilities which constitute the concession area, the MDA states that all infrastructure, assets and facilities of the Yekepa-Buchanan rail and the Buchanan Iron Ore Port do not constitute part of AML’s concession.”

The Mines and Energy Ministry further informed ArcelorMittal that the 2007 amended MDA is categorically clear that the government retains full property rights over the Yekepa-Buchanan rail, Iron Ore Port and all ancillary assets, facilities and all infrastructure associated to both assets.

ArcelorMittal Not Compliant

Responding to the company’s threat of halting Phase 2 of its project, the government urged ArcelorMittal that while its concession and permits remain in good standing, it had fallen short of full fiscal and technical compliance. 

“The Government of Liberia wishes to further emphasize that based on its records AML is not in full fiscal and technical compliance and has since issued the appropriate notifications to AML about these issues,” the letter stated.