MONROVIA – The hurdle between ArcelorMittal-Liberia and HPX over the multi-user agreement over the railway running from Nimba to the Port of Buchanan began since 2022 and deepened further while ArcelorMittal which currently operates the rail presented its third Mineral Development Agreement to the Government for amendment.
By Lennart Dodoo, [email protected]
This Agreement has been before the Legislature since 2022.
In September 2021, the Government of Liberia and ArcelorMittal reached an agreement to amend the Mineral Development Agreement (MDA). The agreement allows the company to expand its operations in Liberia and extends its iron ore mining concession for 25 years.
The Agreement, despite its promising US$800 million investment, was rejected by the House in April, 2022 and was sent back to Executive for renegotiation. Key among factors to be negotiated included renegotiating the operational and multi-user right of the railway. This has since been the sticky issue impeding the passage of the Agreement. This was because the Liberian government had sealed a Framework Agreement with HPX in the same 2022 for the usage of the rail to export of iron ore from Guinea through the Port of Buchanan.
The signed amended and restated Framework Agreement with the HPX confirmed the Liberian government’s principles for HPX’s non-discriminatory access to Liberian rail and port infrastructure and identifying HPX’s requirements for the future evacuation of ore from the Guinean Nimba Iron Ore Project.
The Framework Agreement also set out a timetable for detailed negotiations and the implementation of a definitive Concession and Access Agreement for HPX’s infrastructure requirements.
As per the Agreement, HPX looked forward to having the right to extend the railway facility from Yekepa to the Guinea-Liberia border and have access to the Yekepa-Port of Buchanan rail.
HPX group companies Ivanhoe Liberia announced that “the Government of Liberia will grant HPX usage of the Infrastructure Corridor in accordance with its rights and obligations under its current Mineral Development Agreement with ArcelorMittal, and will seek to resolve with ArcelorMittal the technical and commercial terms for HPX’s usage of the Shared Infrastructure in accordance with that Mineral Development Agreement. But there has since been a glitch on reaching common ground on the operation and use of the railway.
Within a few weeks after President Joseph Boakai was sworn into Office, HPX along with Guma Group and the Liberian Government announced a collaboration for the construction of Liberty Rail Corridor – a brand new multi-user infrastructure corridor connecting Guinea and Liberia.
The Liberty Corridor, according to an HPX press release would comprise a brand-new world-class rail system connecting Guinea to a brand-new deep-water port at Didia, Liberia, an extension of the existing hydropower network from Côte d’Ivoire into the Nimba districts of Liberia and Guinea, an upgrade of existing road networks in the Nimba district to all-weather roads and the implementation of fibre optic telecommunication cable connecting Liberia to the Nimba district and potentially beyond.
Liberty Rail Corridor project has sparked both excitement and skepticism within economic and political circles. The project, estimated at $5 billion. While initially appearing as a boon for economic development, several questions and concerns have emerged, casting doubt on its feasibility and potential repercussions.
One of the primary concerns raised is the timing and motivations behind HPX’s lobbying efforts against the ratification of ArcelorMittal’s third amendments. Critics question whether HPX was aware of the feasibility of the Liberty Corridor all along or if this is a recent development. Furthermore, HPX’s shifting stance on operatorship of the railway and port facilities raises doubts about the project’s consistency and long-term viability.
Economists have been particularly skeptical about the economic justification for such a massive infrastructure investment. With the iron ore deposit in Mount Nimba estimated at less than 900 million tons, and significant environmental and logistical challenges associated with mining, doubts arise about the project’s profitability. Additionally, the memorandum of understanding between Guinea and HPX imposes limitations on the volume of ore that can be mined and shipped annually, further complicating the economic viability of the venture.
Of particular concern is the potential involvement of the Liberian government in financing the project. While details remain unclear, the language of the press release suggests the possibility of state participation, raising fears of debt obligations falling on the government. Historically, such infrastructure projects have often relied on state guarantees, leaving the government vulnerable to financial risks.
Moreover, Guinea’s reluctance to allow HPX to pledge the mine as collateral for financing in Liberia underscores the complexities of cross-border investment in the region. With Guinea’s own infrastructure projects underway, the viability of the Liberty Corridor becomes even more uncertain.
In light of these challenges, observers caution against rushing into the project without thorough analysis and transparency regarding its structure and potential risks. The involvement of private capital, without burdening the state with debt, would alleviate some concerns. However, until more details are revealed, the true implications of the Liberty Rail Corridor remain uncertain.
Ultimately, the success of the project hinges on its economic viability and the ability of stakeholders to navigate the complex web of political, financial, and logistical challenges inherent in large-scale infrastructure development in the region. Without careful consideration and prudent planning, the Liberty Rail Corridor could risk becoming yet another failed venture, leaving Liberia and its citizens to bear the consequences.
