After six years of negotiations, the Government of Liberia and ArcelorMittal (AML) have reached a major milestone with the submission of the Third Amendment to the Mineral Development Agreement (MDA). The agreement is aimed at maximizing the benefits from Liberia's iron ore resources while promoting local development and boosting investor confidence.
Negotiations began in 2020, culminating in an initial agreement in September 2021. However, the National Legislature rejected the deal in March 2022, citing areas that required further improvement. After four more years of consultations, the Executive Branch now presents what it calls a "much-improved agreement" designed to serve both Liberians and investors.
"It may not be perfect, but it is a very good agreement. It ensures that we get more benefit from our iron ore resources and the company also gets a return on its investment, but most importantly, that other investors can see that we are ready for business," officials said.
The amended agreement guarantees a substantial flow of funds into Liberia's national and local economies, including: US$200 million Signature Bonus: A one-time payment to the Government of Liberia within 30 days of the agreement taking effect.
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US$5 million Annual Community Fund: To support socioeconomic projects in Nimba, Bong, and Grand Bassa counties, up from US$3 million, with adjustments for inflation.
US$200,000 Annual Infrastructure Oversight Fee: To strengthen government oversight of railroad operations and support the National Rail Authority.
Increased Mining Fees: Annual mining license fees of US$500,000 beginning in 2031, compared with US$50,000 over the past 25 years, and Monthly Royalty of 4.5% on the FOB Buchanan price, replacing previous quarterly payments.
Jobs and "Liberianization" of Management
The agreement emphasizes local employment and leadership opportunities, including Managerial Milestones: 50% of management positions will be held by Liberians within one year, rising to 75% in five years and 90% within ten years.
Top Management: At least one of the top four senior management positions (CEO, CAO, CFA, COO) must be Liberian within one year.
Hiring Preference: Qualified Liberian citizens will be prioritized for all positions.
Supporting Local Businesses: AML will prioritize Liberian-owned SMEs for goods and services and form a joint committee to support these businesses.
Investing in the Next Generation
A US$500,000 annual training budget is earmarked to develop Liberia's future workforce: Technical Scholarships: For geology and mining engineering students, with preference for youth from Nimba, Bong, and Grand Bassa.
Vocational Training Expansion: A new ArcelorMittal Vocational Training Center (VTC) will be established in Grand Bassa County.
Higher Education Support: Annual contributions to the University of Liberia's Mining and Geology Institute and local community colleges.
Modernizing Public Infrastructure
The amendment includes significant infrastructure upgrades: Bridge and Road Repairs: Including KM 2.5 Bridge, St. John River Bridge, and paving of Concession Road in Buchanan.
Sanniquellie Road: Completion of the road from Sanniquellie to Yekepa.
Multi-User Rail System: The railroad will transition from an exclusive company asset to a shared system available to other mining companies and small-scale miners.
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Rail Upgrades and Revenue Sharing: AML will immediately upgrade the rail to 30 mtpa and lease at least 8 mtpa to approved third parties. The government will receive 30% of net profits from leased capacity and 100% of access fees from other users.
Environmental Safeguards
The agreement enforces strict environmental protections:
Water Conservation: Mining operations are restricted to using rainwater exclusively.
Water Fees: AML will pay US$100,000 annually to the Liberia Water and Sewer Company (LWSC) for water usage at its facilities.
The amendment is hailed as a balanced and forward-looking framework, ensuring Liberia benefits immediately from its natural resources while signaling readiness to future investors.
This agreement ensures that the government and the people of Liberia gain more from iron ore resources, while also signaling to investors that Liberia is open for business.
