-- Amid reports of neglect and accidents
ArcelorMittal Liberia (AML) is facing increasing criticism for its management of the critical Yekepa to Buchanan rail line, following a series of derailments and mounting evidence of neglect. Despite the difficulty in obtaining official data from the Liberian government on the frequency of rail accidents, internal reports from AML reveal significant issues with the company's oversight of this vital infrastructure.
Sources indicate that these internal corporate reports, which address the myriad problems plaguing the rail system, are not being shared with the Liberian government, despite oversight by the Ministry of Mines and Energy, the Ministry of Transport, and the Bureau of Concessions.
In fact on March 23, 2022, the Government of Liberia through the Ministry of Mines, in a letter to the former CEO of ArcelorMittal Liberia cited the company for its "failure to maintain the railroad." In the letter, the Ministry stated AML's Mineral Development Agreement (MDA) "Article IX 3(d) requires AML among other things, to invest in the rehabilitation and maintenance of the rail in accordance with standard industry practices during the term of the Agreement." Based on Inspection of the Railroad conducted by an independent expert in 2019, AML had not complied with the standard. The expert, according to the Ministry, found among other things that between 20-30% of the timber sleepers were suffering from rot and the design number of spikes in each base plate have not been used in most instances. Because of the rotting condition of the timbers, this risks shifts in the rails that could result in accidents. The expert, according to the Ministry's letter to AML, also found that the maintenance staff was much smaller than is customary for a railroad of that size, which meant AML was not conducting adequate rail inspections. The letter cited AML on other issues.
These concerns were echoed in ArcelorMittal's 2023 Annual Report, which acknowledged the negative impact of the rail issues in Liberia on the company's overall performance.
In its global 2023 Annual Report to the Board of Directors and Shareholders of ArcelorMittal, the company discloses therein that the rail related issues under management of its local company in Liberia, ArcelorMittal Liberia (which is actually incorporated in Cyprus), led to lower sales and production. The report states clearly to shareholders that "the Mining segment had iron ore production of 26.0 million tonnes for the year ended December 31, 2023, a 9.1% decrease compared to the year ended December 31, 2022. Iron ore production of 13.1 million tonnes decreased 7.9% for the first half of 2023 compared to 14.2 million tonnes in the first half of 2022 reflecting primarily lower iron ore production in AMMC [ArcelorMittal Mining Canada] due to unplanned maintenance. Iron ore production decreased 10.6% in the second half of 2023 compared to the second half of 2022 primarily due to lower production in Liberia where the rail operations were severely impacted by damages to a rail bridge in early November 2023.
On Corporate sales in mining, the report states that "sales in the second half of 2022 were 26.3% lower at $1.5 billion compared to $2.0 billion for the same period in 2021, largely reflecting the effect of lower iron ore reference prices and lower shipments at AMMC due to adverse effects of exceptionally heavy rains in September 2022 and poor weather conditions in December 2022, offset by a recovery in Liberia, which was impacted by rail incidents in the second half of 2021. Iron ore shipments to external customers were 10.0 million tonnes for the year ended December 31, 2023, representing an 8.4% decrease as compared to 10.9 million tonnes for the year ended December 31, 2022, primarily due to lower production in AMMC and Liberia.
The company's rail management woes have been well-publicized in Liberia, with several incidents reported in the past few years. Notably, on November 4, 2023, a train carrying AML equipment derailed and plunged into the St. John River, damaging the Duo Bridge, a key connection between Bong and Nimba Counties. Similar accidents were reported in September 2021 and June 2020, further underscoring the persistent issues with AML's rail operations.
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As Liberia considers the future of its rail infrastructure, particularly in negotiations over multi-user access and management, there is a growing call for stringent measures to ensure the proper management of these national assets. President Joseph Boakai has publicly advocated for a multi-user rail system, a position that has gained support from international stakeholders, including the U.S. Embassy.
Additionally, several reputable companies have expressed interest in managing Liberia's rail network. Among them are Thelo DB, a joint venture between Germany's DB Engineering and Consulting and South Africa's Thelo Ventures, and RDC, a U.S.-based global rail management company with operations in multiple countries. Thelo DB recently secured a significant contract in Ghana to modernize the Western Railway Line, highlighting the potential for similar investments in Liberia.
As discussions continue, it remains to be seen whether Liberia will embrace these opportunities, ensuring that its rail network is no longer subjected to the neglect that has characterized AML's tenure.
