Monrovia — A potential one-billion-dollar investment poised to be the biggest in the mining sector in West Africa is facing crisis here in Liberia and the Liberian government, and the legislature all have a hand in this - probably for the ultimate good of the state, or perhaps, for self-benefits.
In September, Liberia and ArcelorMittal signed a landmark third amendment to the company's Mineral Development Agreement (MDA) which would pave way for the expansion of the company's operations with additional investments.
The Hurdles
There have been so many sticky and unresolved issues surrounding the passage of the new MDA which has been languishing in the corridors of the Capitol for the past nine months.
"Our greatest fear is that the progress that has been achieved on this project and our investment in Liberia is being placed in jeopardy. With the loss of time, comes financial implications for services and logistics being procured, risks to employment opportunities, the huge financial and economic benefits to the country, and then there's the political dynamics which must also be considered ahead of 2023. We're a business and must fully assess all these risk factors continuously," said Mr. Joep Coenen, the new Chief Executive Officer of ArcelorMittal Liberia in an exclusive interview with FrontPageAfrica.
ArcelorMittal started its investments in Liberia in 2006 when the country was just rising from the ashes of 14 years of brutal civil war that broke down every fiber of the country including education and infrastructure but has since been one of the highest tax-paying companies in Liberia.
The amendment currently before the Legislature/or the government is the third since it began operations in Liberia. Mr. Coenen informed FrontPageAfrica that the negotiations for amendment three started in 2016 just before the crucial 2017 general and presidential elections which slowed down the negotiations.
In 2019, negotiations were recommenced and the Liberian government was keen on putting in plain language the multi-user rules of the railway running from Yekepa, Nimba County to the Port of Buchanan in Grand Bassa County.
Mr. Coenen disclosed that much of the 51 weeks of negotiation with the Inter-ministerial Concession Committee (IMCC) and their international advisors were centered around the rules and terms that would allow other parties to use the rail and port infrastructure.
The hitch in passing MDA Amendment Three began when the Liberian Senate made several changes to the version earlier passed by the House of Representatives and sent to them for concurrence. Upon scrutinizing the document, the Senate made some changes to the amendment and sent it back to the House with the recommendation that a conference committee is set up to sort out the differences for passage.
The Senate did not concur with the House in ratifying the draft MDA because it did not address most of the concerns of residents of the affected communities. The Senate accused the government's negotiators during the crafting of the draft agreement of making several waivers to the detriment of the state. The Senate then drew up several recommendations to be addressed before the ratification of the agreement. It then proposed the setting up of a conference committee with the House to resolve their differences.
Some of the Senate's recommendations bordered around disputed areas and exploration, Rehabilitation of Infrastructures, third party's access to rail and port infrastructures, additional revenue consideration, and compliance.
However, rather than proceeding with the conference committee, the House of Representatives shockingly rejected the entire MDA it previously passed and asked that the Executive renegotiates the agreement.
Moments after the rejection of the ArcelorMittal deal, House Speaker Bhofal Chambers described the decision taken by the House plenary as the 'greatest achievement to humanity."
"All that we do is that we seek the best interest of the Liberian people," the Speaker said. "In the wisdom of Plenary, they have decided to... address the interest of our people. I think this is one of the greatest achievements of humanity -- to serve our people selflessly," Speaker Chambers noted. "Our concern is the act of beneficiation, value added to the process. So that is what we have cataloged and felt that in no way we can have the concession agreement being entertained here without the Executive not renegotiating."
Mr. Coenen told FrontPageAfrica that neither the Legislature nor the Executive had informed ArcelorMittal Liberia of the status of MDA No. 3.
He said ArcelorMittal Liberia is closely following the ratification process and the interactions between the Legislature and the Executive.
He said, "The proposed amendment to our MDA is a product of an exhaustive yearlong negotiation with the Government. ArcelorMittal Liberia is certain that we presented our best possible bargains with massive new improvements and enormous benefits for Liberia. We have received no official updates on the status of the MDA from the Government and are confident that whatever outstanding issues will be speedily addressed, and the deal ratified."
According to him, despite all the rigmarole, the company remains optimistic about the future and has no plans pulling out of Liberia. "Pulling out can only be an option when some of these decisions and the prevailing conditions make it almost impossible for use to operate a successful business in Liberia. Are there strong threats undermining our business? Yes! but I don't think pulling out is an option on the table at the moment," he said.
"We've Been Lawful"
Despite the many concerns raised by members of the legislature regarding the implementation of the existing MDA, Mr. Coenen said the company has been law-abiding and is fully compliant with the terms of the MDA with the government.
He said the only provision of the existing MDA that the company has fallen short of is production volumes from 2016, which according to him, were impacted due to Ebola. He said the current MDA fixes that shortfall.
While acknowledging that there is room for improvements, he said, "The reality is when you look back at what has been achieved since 2005 when we began operations and considering our commitment even in the face of some unfavorable market situations, there's so much to celebrate together. A lot has been achieved. From resuscitating Liberia's dormant iron ore mining industry to rebuilding infrastructures such as rail, port, roads, schools, hospitals, and housing that were completely destroyed during the civil war, we have made a lot of gains. We can also celebrate ArcelorMittal Liberia's contributions to job creation, revenue generation, county social development, and interventions in many other ways such as leading in efforts to combat Ebola and Covid-19 ─ some of the most difficult times in Liberia's post-war history. We're proud of our contributions and the partnership with Liberia and reaffirm our commitment to do more."
A Legacy for Weah
The expansion project, as presented by Mr. Coenen, appears to be a legacy project for the Weah-led administration in that it would not only be the biggest investment in the Weah regime but also in the sub-region, thereby, making it critically important to the investment inflow in Liberia.
The deal has already committed a hefty U$65 million payment apart from the massive increase in direct and indirect revenue in form of royalty, various direct and indirect taxes, and contributions to the Government of Liberia.
According to Mr. Coenen, the expansion project as stipulated in MDA No. 3 is designed to be aligned with the government's Pro-poor Agenda for Prosperity and Development (PAPD).
Under the expansion program, ArcelorMittal Liberia will further expand its operations to approximately 30 million tons with a feasibility study to be presented in mid-2023.
According to him, to date, the company has invested US$500 million in the rail and port infrastructure and has begun upgrading the infrastructure with an additional US$200 million planned over the next two years.
"This project is creating 2000 new jobs, especially for young Liberians beginning this year and extending into the next three years of the construction period," Mr. Coenen said.
The concentrator plant and expansion, according to the company's CEO, will create about 1200 new skilled positions for Liberians as the plant is planned to be commissioned in 2023.
He said, ArcelorMittal Liberia is utilizing its training academy, formerly the Vocational Training Center, and its external network to train and prepare more Liberians to meet demands for the highly technical skills associated with operating complex technology such as the concentrator.
When quizzed on how the new agreement would directly impact the communities and counties in which they operate, the CEO said, the new amended MDA provides significant improvements in payments to the government and to the County Social Development Fund (CSDF) for Bong, Nimba and Grand Bassa.
Annual CSDF payments will increase up to US$3.5 million after the amendment is ratified. Currently, 20% of the CSDF is being allocated to specific programs selected by the counties and communities, which AML is financing directly to the communities.
With Government agreeing to direct 100% of CSDF contribution directly to the three counties, a huge opportunity will be created for undertaking many other community development programs in these 3 counties.
There would also be a rise in contribution to Government revenue including royalties, taxes, duties, etc. from an annual US$30-40 million to about US$75 million annually when Phase 2 of the project is ramped up.
The Railway Controversy
The usage and management of the railway running from Yekepa, Nimba County, to the Port of Buchanan remain one of the major unresolved factors stalling the passage of the third ArcelorMittal Mineral Development Agreement, however, in the midst of the rigmarole, the Liberian government sealed a Framework Agreement with High Power Explorations (HPX) for the usage of the rail for the export of iron ore from Guinea through the Port of Buchanan.
The signed amended and restated Framework Agreement with the HPX confirms the Liberian government's principles for HPX's non-discriminatory access to Liberian rail and port infrastructure and identifies HPX's requirements for the future evacuation of ore from the Guinean Nimba Iron Ore Project.
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The Framework Agreement, which is immediately effective, also sets 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 looks 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 over the weekend 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.
It is widely believed and reported that it is because of this arrangement with HPX that the Liberian government has been lackadaisical in ensuring the smooth passage of AcerlorMittal's third amendment.
But commenting on the use of the railway and port facilities, Mr. Coenen told FrontPageAfrica that the new amendment as negotiated by the government's Inter-ministerial Concession Committee and its international advisors detailed a multiuser arrangement for rail and port.
He said the government will continue to be the owner of the rail and port infrastructure as it has been since 2007. According to him, the new amendment provides further rights to the government as to who can utilize the infrastructure corridor.
While Mr. Coenen says he sees no point of contention that would delay the passage of the MDA No.3, he said, "This agreement strengthens GoL's demand for other users including Guinean miners to utilize the Liberia infrastructure for their export. The other users will need to invest to increase the capacity of the rail and port for their own use.
"AML will operate the rail at cost with zero profit for all users of the infrastructure. These users will have to pay a transit fee only to the Government of Liberia."
Asked whether ArcelorMittal at any point in time sought monopoly over the rail and port, the CEO answered, "The answer to that question is NO! AML is not seeking monopoly and exclusive right to the railway. AML welcomes other investors. As AML has already invested US$500 million into the rehabilitation of the rail and port facilities and plans to be the majority user of this infrastructure, it has sought to be the operator. The Government decides which other parties can utilize this infrastructure."
