Liberia: ArcelorMittal Not Taking Full Control of Railway; Says Govt Owns All Railways and Ports
Monrovia – ArcelorMittal Liberia (AML) top management has debunked report that it is opting for sole ownership right of the railroads and port of Buchanan in the current proposed amendment of the Mineral Development Agreement (MDA) it signed with the Government of Liberia.
The proposed agreement, the third amendment to the original MDA signed in 2005, has already been passed by the House of Representatives and forwarded to the Liberian Senate, which is expected to begin its scrutiny in the coming days. The agreement, among other things, called for ArcelorMittal to make US$800 million investment in Liberia, employed over 1,000 Liberians and provide the Government of Liberia with US$55 million within 19 months of ratification.
However, since its passage by the House, there have been series of reports of an eminent deadlock over some of the new clauses inserted by the House. A notable one borders on the ownership right of the railroads and port of Buchanan.
According to the House’s Joint Committee on Investment and Concession, ways, Means & Finance, Judiciary, Lands, Mines & energy and Environment, Article 3 of the proposed Amendment called for the company to have exclusive rights over Liberia’s railroads and the Port of Buchanan; something the Joint committee sees as a complete monopoly of the government’s two major infrastructures.
In the amendment, the Committee called on the government to take ownership of the railroad, Buchanan Iron Ore Port and related Infrastructure. It called for the infrastructure to be structured, regulated, expanded and managed on a non-discriminatory multi-user basis for the benefit of all eligible applicants and the Republic of Liberia.
However, in an exclusive interview with FrontPage Africa, the Interim Chief Executive Officer of AML, Mr. Mahamar Haidara said since 2007, the Government of Liberia has exercised ownership of the rail and port infrastructure, and the current proposed amendment provides further rights to the Government.
“GoL is the owner of rail and port infrastructure since 2007 and this Amendment provides further rights to the Government of Liberia on who can utilize the infrastructure corridor,” he said.
“We need to be careful about some misinformation campaign and propaganda being run in this regard by some vested interests, as ArcelorMittal is investing heavily in Liberia to further expand existing operations to unlock Liberian Iron ore resources for benefit of its people compared to others who are still making studies for potential development of Iron Ore resources for neighboring country with only nominal transit fee benefit for Liberia.”
Mr. Haidara said the agreement strengthens GoL’s demand for other users including Guinean miners to utilize the Liberia infrastructure for their export; adding that the other users will need to invest to increase the capacity of the rail and port for their own use.
He furthered that the third amendment ensures that AML cannot obtain any monetary benefit from other users of the rail and port. “AML also cannot allocate the rehabilitation costs that it has already incurred to other users. These users will have to pay a transit fee only to the Government of Liberia.”
‘Long and Exhaustive Process’
The AML Acting CEO, commenting on the process in crafting the agreement said, it was a ‘long and exhaustive’ process; lasting over 51 weeks and included top officials of the Liberian government, particularly the Executive, senior Government lawyers, members of the Inter-Ministerial Concession Committee and various international (US & Europe) advisors to the Government and executives of ArcelorMittal.
He said AML also discussed with the Government its plans for organic growth in Liberia. With the existence of a large iron ore resource body in Nimba, he noted that AML plans to expand its operations from 15 mtpa to 30 mtpa, which will generate huge benefits for Liberia. He clarified that the planned expansion will not prohibit others from using the rail infrastructure as they can do so beginning in 2025.
Said the AML Interim CEO: “The Amendment to the MDA includes an obligation for AML to present its feasibility study for the 30 mtpa tentative plan to the Government in 2023. The expansion to 30 mtpa in Liberia will further increase investments and benefits for the government and people of Liberia. Current estimates suggest that AML can produce at this level for about 50 years, making the AML Iron Ore operation in Liberia the largest on the African continent. With ArcelorMittal’s focus on decarbonization for its steel making, the superior Liberia concentrate product in future will be the appropriate ore for steelmaking.”
Following the end of Liberia’s devastating civil war in 2003, ArcelorMittal was the first big company to sign a major concession in Liberia. With the signing of the MDA during the transitional government headed by the late Charles Gyude Bryant, the AML boss noted that the act by a large company signaled to the other investors that Liberia was safe and open for business at a time when no one was willing to make the first step.
Counting some of AML major achievements, he said the company has already invested $1.7 billion, of which approximately US$500 million has been spent for rehabilitation of the rail and port facilities to get them fully operational. ArcelorMittal plans to further invest additional US$800 million for its expansion of which US$250-US$300 million to upgrade these infrastructures, he added.
The company has established a US$7 million state-of-the-art Vocational Training Center, now the ArcelorMittal Liberia Training Academy, providing transformational technical skills and career opportunities to Liberia’s youth. It is further investing to expand the VTC facility for Phase Two expansion.
In addition, the company has contributed US$40 million for construction of the Ganta-Yekepa Highway which is well on course; reopened the Liberian iron ore mining sector after almost two decades of dormancy and now providing the single largest export, contributing about 15% of the country’s GDP.
He said: “AML payments from royalties, taxes and other payments to GoL in recent years are approximately $30-$35 million annually. Overall AML has so far contributed US$300 million to GoL towards Royalty, direct & indirect taxes and other payments; AML and its contractors have provided at least 3000 good paying jobs in Liberia and AML’s activities have contributed on an average about $100 million annually to various suppliers.”
Further recounting, he said: “AML has contributed US$3 million per annum for community development fund. It has so far contributed US$42 million towards community development fund. AML provides US$200,000 annually for an advanced scholarship program for Liberian students. 48 students have benefited so far. No other concessionaire has invested so broadly in education than AML. AML was the only iron ore mining company in the region that did not abandon the country during Ebola and subsequent drop in commodity prices. It continued operating under severe losses in the 2015 to 2017 period to ensure that Liberia’s economy did not worsen on top of its health crises.”
‘Existing Infrastructures Renovated’
Following the signing of the first MDA, ArcelorMittal inherited the structures including the housing facilities, work stations and hospital left by the Liberian-American-Swedish Mining Company (LAMCO), a defunct Liberian corporation that mined the iron ore in the Nimba range from the 1960s up to the outbreak of the civil war in 1989.
The company is also required to establish and maintain medical and education facilities in areas of operation, to serve employees, their families and the broader community and to prioritize the employment and development of local Liberians.
The company has faced fierce criticisms on its failure to renovate all infrastructure received from LAMCO, especially housing, hospitals, and the general outlook of your residential areas.
Responding to these reproaches, Mr. Haidara said AML has undertaken major renovation of the existing infrastructure, and upgraded health facilities in its concession area and outside of its concession area at an estimated cost of over $18 million including operating cost.
As per the MDA requirements, AML has rehabilitated, equipped, and operated two hospitals in Yekepa and Buchanan; with over 30,000 people including outpatients receiving medical care from health facilities operated by AML, he stated.
However, he pointed out that AML does not conduct any mining in Yekepa as that ore body was exhausted by LAMCO and the area is now a Nature Reserve.
AML’s center of Mining operations, he said, is now in Tokadeh which is halfway between Yekepa and Sanniquellie. Much of the township infrastructure that was built in the 1960’s are no longer conducive to current standards and are unrepairable.