A key part of the Liberian government's recovery drive focuses on well-managed exploitation of the country's vast natural resources. Iron ore production began in Liberia in the early 1950s, spurred by rising post-war global demand for steel.
During the 1970s and 1980s, Liberia became a leading world supplier, but production slowed and eventually stopped, thanks to the 1990s civil war and falling world prices. Today, Liberian iron ore is again in demand. Leading the way in restarting production is Arcelor Mittal, the world's largest steel company. Earlier this year, Arcelor Mittal and the government of Liberia reached agreement on a 25-year deal worth U.S.$1 billion that revised an earlier arrangement between Mittal and the transitional administration that ran the country before the democratic government led by President Ellen Johnson Sirleaf was inaugurated in January 2006. The new terms raised the government's stake in Mittal Steel Liberia Limited to 30% and the company's investment from U.S.$900 million and retained for Liberia the ownership of the ports and railways that are being rehabilitated by Mittal. Joseph Matthews, chief executive of Mittal Steel Liberia, talked about the current status of the huge project in an interview from his Monrovia office.
What has Mittal been able to do since the renegotiated agreement was concluded?
While there was some work that was started before, we have now gone in earnest to move this project forward. Unfortunately, from mid-May, when the heavy monsoons started, there wasn't a whole lot of what I would call groundwork that could be started. There are certain things you can only do in the dry season. What we have done is a fair amount of planning. We have just signed on contractors to help us in project management and engineering and to plan out the rail construction and road and port rehabilitation. From the first of September, we started to work on assessing what we have in the three deposits are we are trying to mine.
The next step is to start some drilling and then to estimate what the reserves are that we can mine. The push we have is to see how fast we can move things, so we can get some production out of the ground and moving by late 2009, early 2010.
The three mines are located where?
The three mines are at Tokadeh, Gangra and Yuelliton - all in the Nimba area in the northeastern part of Liberia. We are also constructing a concentrator at Tokadeh, which is 30 kilometers south of the deposit that was mined from the 1960s to the 1980s by Lamco [Liberian-American-Swedish Minerals Company]. We are targeting to have production of over 12 million tons of ore per year.
And what will you have to do to get the ore to market?
Iron ore mining is a major material movement project. We have to rehabilitate about 300 kilometers (200 miles or so) of railway between this mine area and the port of Buchanan on the Atlantic Coast. The project also includes rehabilitating the port, so we can bring in boats and carriers to remove the ore to probably our facilities in Europe.
How will this project benefit Liberia?
Liberia was Africa's premier iron-ore exporter before the war, so this is one of the major natural resources that they have. We are going after mid-grade ore, which means it has to be enriched. We have to build a production facility that will concentrate and beneficiate the ore into a higher grade that can be used at steel plants. We pay royalties based on a market value of the ore, and that provides economic benefits to the country. In addition, since this is a company that is 30 percent owned by the government of Liberia and 70 percent by Arcelor Mittal, 30 percent of the dividends accrue to the country. And we would pay our fair share of taxes. All of this go to the Central Exchequer.
We are talking of employing 3000-3500 people. Mining has never been a very labor-intensive form of business compared to other forms of business here in Liberia, like agriculture. But what we do have to offer, what we have learned from our experience in other countries, is that for every one job we create inside the company, there are about eight jobs created outside – through contractors, sub-contractors and service providers. So this translates to roughly 20,000 to 25,000 new jobs for Liberia. Some of that should start right away during the construction program because we will need a fair amount of people to get the work going.
One of the other things that helps Liberia is that, as a big company with a huge international footprint, we run things according to international business standards. So we bring into this country, for example, a good occupational health and safety program, a good environmental and sociological assessment, internationally accepted standards for work practices and for corporate governance. We bring in good, sound ethical practices. We want to raise the plateau of how business in conducted in Liberia to a higher level.
And thirdly, we will build infrastructure. Obviously we will be building the railroads and ports for where we are working. We are building townships for our employees, hospitals and schools again primarily for our employees, and this will benefit the surrounding communities to the extent that there is excess capacity available. We will spend about U.S.$3 million each year in the communities where we operate.
In addition to this industrial infrastructure, we also provide a lot of soft infrastructure - everything from accounting and auditing firms to copying services and communications services and on and on. These things that we all take for granted in the Western world does not exist in here. Having all of that infrastructure will create a better climate for other investors to come in.
The fact that Liberia's infrastructure was virtually destroyed hasn't discouraged you from moving ahead in Liberia?
No, it hasn't done that for a couple of reasons. One of course, we believe in the positive direction that Liberia is going. Two, we have been successful in many other places that, while not war-ravaged, had their own problems. We went into Mexico when Mexico was getting into an economic downturn. We went into Kazakhstan when they were coming out of a socialist regime and turned around the steel company that had collapsed. We went into Bosnia and built mines and a steel plant there after their war in the 90s.
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We have been a larger risk taker than others. We like to lead the pack. That's part of our business strategy.
What are the major obstacles you are facing as you move forward?
Obviously the lack of infrastructure is probably the biggest short coming we have. Lack of power, lack of good telephone facilities, lack of good internet connections, lack of good roads. All of this increases the amount of time and attention we have to pay into getting things done.
Secondly, there's a lack of trained manpower because unfortunately during the war anybody with any training in Liberia left the country. Even though Liberia was once big in iron ore mining, there are a few people with any recent experience. They all worked about 15-20 years ago and are now up in age and they are not familiar with changes in technology.
But we would not be here if we didn't have the capability to make this happen. All the ingredients are in place for Liberia and us to succeed.
