Monrovia — Nestled beneath the untouched slopes of Mount Nimba in neighboring Guinea, the nearly deserted town of Gbakore sits just under an hour's drive from the Liberian border. Guarded by armed soldiers and showing no signs of mining activity or life, the area stands eerily still, with no indication of when it might awaken.
At the entrance of the prospective mine, an old-looking and filthy billboard boldly proclaims: SMFG Societe des Mines de fer de Guinée. Pointing to the mountain far behind the rusting billboard, one of the armed men guarding the entrance to the prospective mine jokingly said to The Liberian Investigator's reporter, "Liberia, you finish chopping your own, now you want our own to pass through you. It won't happen." He chuckled afterward.
SMFG has an office located in Lola, the town that harbors Gbakore. The gigantic office building is also overrun by grass both inside and outside the fence, as if it is completely deserted. "Nothing is happening here," one of the private security guards at the entrance of the building told The Liberian Investigator. "Our bosses only come here by 8 AM and sometimes leave by 10 AM," he added. According to him, SMFG is yet to start any meaningful work in the area. "They have laid off a lot of people and all the white people have left because there are no activities happening right now at the mines. The new government has not given them the permission to mine. They only carried out exploration, but the new President says they will have to build a railway to transport the ore, but they want to pass it through Liberia and that is where the problem is," he further said.
Efforts to get comments from "bosses" in Lola did not materialize as they were said to be either in a meeting or absent on the three occasions The Liberian Investigator visited the office.
The building hosting SMFG offices in Loa, Guinea
Ninamdu T. Dukè told The Liberian Investigator that he worked for SMFG as a community relations officer but was laid off in 2023. "There were over 120 Guineans working with SMFG as contractors mostly in security and in the restaurant, but now, most of them do not have jobs any longer. Most of the foreigners have left. They told me they'll call me when things get better. In fact, most of them left during COVID and have not returned." Asked why he thinks they have not returned, he said, "The company has problems with the government. The problem is about the shipment of the ore. This new government says they should collaborate with the other company, Rio Tinto, to build the rail from Baila to Conakry."
Also speaking to The Liberian Investigator was a security guard who identified himself as Alieu. He said, during the exploration, the area was full of life, but everything is now gloomy with no sign of any major activity starting any time soon. He, however, remains hopeful that the stalemate between the company and government would be settled soon. "A lot of people left Gbakore because nothing is happening here," he said.
Alieu says he is fortunate to be one of the few security guards left in the employ of the company contracted to provide security for the staff squatters in Gbakore. "As you can see, nothing is happening here. Only exploration the company has done; there is no mining activity going on here," he said.
Inside the compound of SMFG Offices in Lola, Guinea
HPX - the owners of SMFG, acquired the Nimba project in 2019 and has reportedly intend to invest around US$105 million in development and environmental studies. HPX is currently working on the Phase 1 development of the Nimba project, which includes discussions with financing partners and governmental approvals.
However, the company has been making frantic efforts with lucrative offers to the Liberian government for a deal that would ensure its usage of the railway running from Yekepa to Buchanan for the shipment of its ore. If this happens, it would be using the railway along with ArcelorMittal, which currently holds the operational and management rights to the facility due to its huge investments in the facility.
Insisting on Liberia, but why?
In February, HPX, supported by Ivanhoe Mines co-chairperson Robert Friedland, initiated a letter of intent (LoI) with the Liberian government and Guma Africa Group, a pan-African investment firm, for the development of the Liberty Corridor - a railway project that intends to connect Guinea's prominent mining region of Nimba to a new deepwater port in Liberia, and extend the existing hydropower network from Côte d'Ivoire to the Nimba districts in both Liberia and Guinea.
Despite the absence of a ratified agreement with the Liberian government, HPX, in a communication dated August 23, 2024, expressed a strong commitment to providing substantial budgetary support to the Government of Liberia for the establishment and initial operations of a National Rail Authority. Bronwyn Barnes, President and CEO of HPX, stated, "We are prepared to provide budgetary support to the Government of Liberia for the formation and initial operations of the National Rail Authority. This demonstrates our commitment to ensuring that the rail management system operates under the highest international industry standards and with full transparency."
This budgetary support proposal is structured under a payment arrangement and will be implemented upon the successful conclusion of their Access [Rail] Agreement with the Liberian government. HPX acknowledged the challenges involved in transitioning to this new model of rail management, particularly given existing legal agreements, such as the one with ArcelorMittal. However, the company expressed optimism that, through cooperative efforts, this transition can be achieved promptly and efficiently.
Lifeless Gbakore where the SMFG operations are centered
Contentious Executive Order
On Friday, President Joseph Boakai raised eyebrows and brought back to memory the US$25 million offer, when he issued an Executive Order 136 For The Establishment of The National Railway Authority.
Executive Order 136, mandates the establishment of a rail regulator tasked with maintaining, operating, managing, planning, and developing the Liberian Infrastructure Assets system. The regulator will also coordinate the access and usage of these assets by Eligible Users to ensure their fair, safe, and efficient utilization.
Further developments include the creation of specialized offices under the National Rail Authority, including the appointments of a Managing Director, Deputy Managing Director for Administration, and Deputy Managing Director for Operations. These positions will be appointed by the President of Liberia to oversee the functional requirements of the authority.
The funding for these operations will come from fees levied against users of the National Railway Assets. Additionally, the government plans to facilitate and propose a draft act, known as the National Rail Authority Act, to the Legislature for its passage into law.
To address disputes arising from the implementation of this and previous executive orders, an arbitration process will be established under the rules of the Liberian Chamber of Commerce and in accordance with Liberian law. According to the executive order, the Liberian government will not interfere with or diminish the rights of any Eligible Users previously agreed upon with the government but will instead regulate and promote these rights.
Third-party user terms and ownership of Rail and Port reverting to the Government of Liberia were incorporated in the First Amendment to the ArcelorMittal Mineral Development Agreement in 2006 (ratified in 2007).
SMFG Staff Quarter in Gbakore over taken by grass
The Railway Saga
ArcelorMittal has always cooperated with the Government of Liberia on discussions with potential third-party users of the rail, but these have not materialized because of other negative influences, unrelated to ArcelorMittal.
To date, only two entities have shown interest, both from Guinea (SMFG & Sable Mining). There have been no Liberian mines that have requested rail access.
SMFG, (now owned by HPX) was previously controlled by BHP. In 2010, there were discussions between BHP and ArcelorMittal to create a joint venture combining the Nimba iron ore deposits in Guinea and Liberia. That transaction was not consummated as BHP's valued SMFG at more than twice ArcelorMittal's investments in Liberia, which was not acceptable. Following that, in 2013 ArcelorMittal had agreed to acquire SMFG from BHP. Despite support from then Liberian President Sirleaf, the Government of Guinea was not willing to allow ore from that deposit to transit through Liberia as then Guinean President Conde preferred that ArcelorMittal partner with Rio Tinto to build the Trans Guinean Railroad. As ArcelorMittal was unwilling to enter another large infrastructure responsibility, the transaction to acquire SMFG from BHP was canceled.
Sable Mining requested rail access in 2013. ArcelorMittal proceeded with that discussion on the basis that Sable made infrastructure capital investments from their Guinea deposit to Tokadeh. However, Sable preferred that ArcelorMittal purchase their ore at the border, but was not able to provide product specs for ArcelorMittal to consider. Sable Mining as an entity succumbed to challenges with Ebola and commodity price crash along with internal corruption accusations (Sen Varney Sherman sanctions etc.).
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The MDA terms of third-party rail usage were never the cause that prevented access by other parties. Subsequently, around 2019, the Government of Guinea signed an agreement with the Government of Liberia that allowed a few Guinean mines to transport their ore via Liberia. This was limited to an annual maximum of 5 mtpa.
Empty SMFG Staff structures in Gbakore
Executive Order Vs. Existing Agreement
The potential conflict between Executive Order No. 136 and the third-party agreement the government already has with ArcelorMittal over the railway primarily centers around the regulation and management of rail infrastructure and the conditions under which third parties can access these facilities. Executive Order No. 136 mandates the establishment of the National Railway Authority, which assumes full authority to manage, operate, and coordinate access to the national rail assets, ensuring fair and efficient use by all eligible users. In contrast, the third-party agreement allows for third-party access to the railroad and mineral port infrastructures owned by the Concessionaire, provided it does not interfere with the Concessionaire's [ArcelorMittal] operations. Access terms must be mutually agreed upon among the Government, the Concessionaire, and third parties, according to the agreement. Concerning costs and compensation, the Executive Order does not specify who bears the costs of enhancements needed for third-party access. However, the third-party agreement with ArcelorMittal states that all necessary enhancement costs shall be borne by the third party, and the Concessionaire shall incur no costs for third-party access. Third parties are also required to pay reasonable and prompt compensation to the Concessionaire (AML). Regarding fee collection and responsibility, the Executive Order does not detail specifics of fee collections from third-party users, while the third-party agreement gives the Government the right to impose and collect transit fees for third-party access. The Government is also responsible for agreements and collections of these fees.
