"The government will now initiate discussions with the railway and port concessionaire, relating to third-party access rights. Thereafter we anticipate accelerated tripartite discussions to commence." -Sir Mick Davis, Chairman of Niron.
The attention of the Daily Observer is drawn to a story carried in its Friday, April 19, 2019 edition headlined, "Niron Metals Company Sign MoU to Export Iron Ore". According to the story, the Government of Liberia and Niron Metals Plc have jointly announced the signing of a Memorandum of Understanding (MoU) to allow the transit through Liberia of iron ore from the Zogota iron deposit in Guinea.
According to reports, the Government of Guinea has already given authorization for Niron to export material from Zogota in compliance with the Mining Code of the Republic of Guinea 2013. The signing of the MoU thus follows the joint vision of economic cooperation, expressed by the leaders of Guinea and Liberia (Presidents Alpha Condé and George Weah) at a meeting held in Dakar on Tuesday, April 2, 2019.
This deal should hold promise for the country but, it stands little chance of success if the terms of the Mineral Agreement ceding sovereign control over the rail and port facilities at Buchanan to Mittal Steel (now ArcelorMittal) remain unchanged or unrevised. According to the chairman of Niron, it is now left to the Government of Liberia to initiate tripartite discussions with ArcelorMittal to secure its agreement for the deal to go ahead.
It can be recalled that upon assumption of office in 2005, President Sirleaf called for a review of the then Mittal Steel concession signed by then Transitional Chairman Gyude Bryant. Article IX, section 3 a of the Mineral Development Agreement (MDA) between Mittal Steel and the GoL provides that "The assets and facilities, which are listed in Appendix F, shall be transferred unencumbered to the CONCESSIONAIRE, irrespective of their conditions... "
Further, according to the agreement, "The GOL and others will be allowed to use these facilities only if there is spare capacity, and at the company's discretion" which means they will have to pay Mittal for the privilege (except for use of roads and highways).
While it is a fact that the facilities at Yekepa and Buchanan were dilapidated and required quite significant investment to restore to prewar levels, it would not be out of place to have GoL make some concessions in this regard; however to completely surrender the facilities to Mittal Steel such that GoL will have to pay to use or to seek Mittal Steel's permission to use them is most unreasonable and constitutes an act of betrayal.
Moreover, ArcelorMittal estimates that between 50 to 60 thousand tonnes or iron ore per day will be transported on six trains a day. Because the railway between Yekepa and Buchanan is a single track, it raises questions whether ArcelorMittal, given the somehow limited capacity of the railway will make any concessions at all during the proposed tripartite discussions as hinted by the chairman of Niron.
In the opinion of this newspaper, GoL should maintain ownership of these prized national assets because they could generate significant revenue for the country by availing their use to others as is the case instant.
Experts say it will also serve to enhance the protection of access to external markets which could prove pivotal for the development of local communities in and around the catchment area. By this, the ceding of control of these assets to ArcelorMittal will come at huge expense to the Liberian people.
It is indeed difficult to understand why, and it beats the imagination that the GoL would have signed such an agreement relinquishing sovereign control over prized national assets such as the Yekepa-Buchanan railroad and the Port of Buchanan, including all the facilities in the Port area.
According to transparency watchdog Global Witness, there are troubling concerns about the ArcelorMittal Steel Concession agreement which include but are not limited to the following:
ArcelorMittal has control over the amount of royalties paid to the government because the MDA does not specify the mechanism to set the price of ore.
The MDA leaves open the basis for intra-company pricing arrangements and therefore creates a strong incentive for Mittal to sell the ore below the market value to an affiliate, which would reduce the actual royalties paid to the GOL.
The MDA provides Mittal with a five-year tax holiday, with a pre-agreed right to renew it; there are no restrictions on subsequent extensions.
A lower rate of royalty may apply once the Concessionaire develops the necessary production facilities to enrich iron ore.
Combined with Mittal's tax structure, the tax arrangements inherent in the arrangements dictate that Mittal could expatriate any profits it makes from Liberia.
In view of the above, President Weah's pledge to revisit concession agreements is exigent and should be done with the greatest amount of transparency. It is widely perceived that from iron ore, the ArcelorMittal Concession area, which has been expanded to include the East Nimba nature reserve, holds a number of other minerals but Mittal, under the Mineral Development agreement, has exclusive rights to these minerals.
This is a stinking national shame and disgrace!