Recently, the mining giant ArcelorMittal, commonly known as Mittal Steel, dedicated a massive $1.8 billion iron ore concentrator plant in the northeastern county of Nimba. The iron ore concentrator was officially launched with much fanfare by none other than the President of Liberia, His Excellency Joseph N. Boakai.
This was an important and auspicious event attended by dignitaries from corporate and civic circles. Mittal Steel has been a reliable economic partner for more than 20 years in Liberia, exporting some of the highest-grade raw iron ore found anywhere in the world.
It is expected that the mining giant, with its new plant, will triple annual iron ore production from 5 million tons per annum (MPTA) to 15 million MPTA, which is projected to bring an additional $ 200 million to the government coffers as part of Mittal Steel's Phase II expansion project. According to the Liberia Extractive Industries Transparency Initiative (LEITI), for the period 2021-22, Liberia exported 6.4 metric tons of Iron ore, generating $477.2 million. ArcelorMittal is also expected to generate 2,100 jobs, with a further 5,300 jobs created as a result of its Phase II expansion. It seems impressive what the mining giant is doing for both the government and the people of Liberia, at least on paper.
Figure 1Arcelor Mittal Iron ore concentrator
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However, those glossy statistics concealed an ugly flaw. ArcelorMittal is a classic example of a company exaggerating its investment figures while underreporting its production and company profits, leaving a significant gap in its financial records. Senator Nya Twanyen of Nimba County recently accused Arcelor Mittal of exaggerating the money it spent on the Iron ore concentrator.
The iron ore concentrator is not in any significant way an industrial value-added component of the mining operation. All the concentrator does is remove impurities (dirt, stones, and impurities called gangue from the raw iron ore) before export. Anyone visiting the mining town of Yekepa will immediately notice the difference between Mittal Steel, the mining conglomerate, and the operations of the joint Swedish American mining company (LAMCO) that carved out paradise in the middle of the jungle with a lifestyle and infrastructure comparable to the West.
The joint mining consortium-built hospitals and built world-class real estate. Older Liberians fondly remember the genteel and classic lifestyle associated with Area H, P, SW1, and the crown jewels of it all, EA, EU and of course Area F and the Loop in Buchanan.
There was constant electricity, free schools, a hospital, water, school buses and the company's owned private security called Plant Protection Force (PPF), a company-sponsored community radio, and a soccer team famous across West Africa called LAMCO 65. These early investors did not come to Liberia to exploit and export raw materials just to make a profit. The joint venture of LAMCO wanted its European employees and local workers to live in Europe in Africa.
Figure 2 The potholed street of Yekepa
Many older Liberians, when they heard Mittal Steel was coming to Liberia, exploded in rapturous joy, anticipating that the 'good ole days were back.' From the outset, many seasoned observers recognized that Mittal Steel was not LAMCO. Instead of renovating the relatively intact houses in the mining town by just adding a flash of paint, roofing sheets, and plumbing works, Arcelor Mittal opted to bring in containers and tents to house their workers, leaving the existing buildings to be occupied by squatters or left to decay.
There was no PPF this time whose workers were company employees entitled to pension, medical, annual and medical leave. The new security at the Arcelor Mittal mining site belonged to a private security company who were subcontracted while the company increased its export of Liberian ore. The short distance from Sanniquellie to where Mittal Steel operates in Yekepa is still unpaved after 20 years of Mittal Steel operating. Every year, the company renews its vows to pave the remaining stretch of the road after paving the short distance from Ganta to Sanniquellie.
When Mittal Steel came to Liberia to sweeten the deal, there was supposedly a 'Corporate Social Development clause' that give millions of dollars to the counties of Nimba, Bong, and Grand Bassa County. Soon however, local politicians created companies to siphon away millions of dollars by awarding contracts to front companies owned by them, their relatives or associates.
A classic case in point is the procurement of 22 pieces of yellow earth moving machines by the by the Nimba County administration and the county's legislative caucus at the whooping cost of US$4.5 million dollars in 2011 which have been gathering dust for nearly a decade. A source anonymously confided to this writer that the powers that be at the time, were more interested in kickbacks from the purchase of those machines rather than inherent need or capacity. (No fault of Mittal Steel for this).
Contracts were awarded without due diligence or the capacity to perform contractual terms. Contract payments were paid in large amounts with no evidence of work done or supervision.
Figure 3Protestors against Arcelor Mittal Liberia
Mittal Steel knows that too often; government negotiators are often interested in personal gains of wanting to provide sub-contractual services than negotiating tough deals that benefit the entire country. Furthermore, even when contractual terms are negotiated, there are often inadequate monitoring mechanisms to ensure that giant companies like Arcelor Mittal live up to contractual terms that are weak at best and in some cases non-existent. To polish its image, Mittal Steel has engaged the services of some of Liberia's leading newspapers to write positive stories about the mining giant and, in some cases, go after people who dare challenge what they see as Mittal's predatory mining practices.
To be transparent and honest, Mittal Steel is not engaged in any illegal activity. The company is simply doing what giant resource companies have done for decades in African countries: making profits for their shareholders. A private resource company is not a charity, but a profit-making venture. However, pursuing profit while giving pittance to host communities and host countries eventually pays back a bad check.
It doesn't have to be that way. Some countries have proved that there is a better way. When Botswana gained independence, it was a poor and impoverished nation until diamond was discovered. Instead of using the diamond wealth to feed and pamper its elites, the government bought shares in the mining companies such as De Beers and others and established value-adding enterprises in the diamond industry. Botswana polished its diamonds instead of sending them to Belgium for polishing. Today, Botswana is an upper-income country with world-class infrastructure, free health care and free education. How come, after more than half a century of exporting iron ore, there is no huge steel plant producing iron ore for the entire West and Central Africa using Liberia's Iron ore?
Why are all mining companies in Liberia foreign-led ventures with very little Liberian investment and expertise?
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Can't wealthy Liberians put together a mining company, raising the necessary capital to exploit our natural resources for the benefit of its shareholders and the country?
As long as companies like Mittal Steel stonewall and try to exploit vulnerabilities within the legal, economic, and environmental framework of the country, they create an environment where calls for resource nationalism and anarchists interested in destroying private enterprise grows. A prime example is when hooligans attacked the Mittal Steel mining camp on July 4, 2014, destroying mining assets, followed by repeated sabotage attacks against the rail lines from Yekepa to Buchanan. Having a mining company operating in Liberia is, by and large, a positive development. However, the host county Nimba, local communities and the central government must benefit from the mining operations.
Arcelor Mittal, renovate the houses in Yekepa, fulfil your legitimate social corporate responsibilities, employ local people and pay their just benefits, rather than outsourcing services to subcontractors. Pave the short 35 km distance from Sanniquellie to Yekepa with all urgency instead of promising to pave the road every year without doing so. Expedite the relocation and construction of the GW Harley hospital. ArcelorMittal can remain a profitable company while also being a good corporate entity. Until that is done, you make it easy for those who are interested in you packing your bags and leaving while we look for a better company to exploit our natural resources to grow louder.
Nemen Martin Kpahn is a Liberian currently residing in Australia. He holds a master's degree in communication from Griffith University and a Master of Science degree in research from the University of Southern Queensland. Kpahn is pursuing a PhD at the University of Southern Queensland and writes regularly on Liberian politics and society and can be reached at mkpahn@yahoo.com
