PoliticsNews & AnalysisArcelorMittal: taking the long view in Liberia

Wed,22Nov2017

Posted on Wednesday, 08 February 2012 15:49

ArcelorMittal: taking the long view in Liberia

By Gemma Ware

A short-term price crunch has done nothing to diminish the steel giant's enthusiasm for its Liberian iron-ore operations, which began this year.

altThe end of 2011 was not a good moment for new shipments of iron ore to begin leaving the ports of West Africa. As Lakshmi Mittal, head of Luxembourg-based steelmaker ArcelorMittal, was glad handing Liberian President Ellen Johnson Sirleaf to celebrate the first boat of ore leaving the rehabilitated mines of Tokadeh in September, the price of the metal was nose-diving.

ArcelorMittal had planned to produce 1m tn of iron ore in Liberia by the end of 2011, ramping that up to 4m tn over the next three years. If a feasibility study for phase 2 of the mine and government approval are forthcoming, that could hit 10-15m tn per year by 2015. 

Next door in Sierra Leone, African Minerals began loading its first shipment of 40,000 tn of ore from its Tonkolili project in early November, while London Mining said it planned to produce its first ore at the Marampa mine before the end of the year. 

This high-quality West African ore will be a big story for the next 10 years. But as these new mines come online in still-fragile post conflict states, boatloads of ore have been building up outside Chinese ports.

In November, ArcelorMittal reported a 51% drop in its net profits for the third quarter of 2011 compared to the same period in 2010. 

Still, commodity analysts remain bullish about the fundamentals of iron ore and say once inventories in China run dry, demand will pick up again. 

For ArcelorMittal, the Liberia project is part of a larger plan to produce 100m tn of ore per year by 2015. "Liberia is one of the first and larger stepping stones to get there," explains Joe Matthews, former chief executive of ArcelorMittal's Liberia operations and now head of government and community relations for mining. 

Matthews is not worried about the short-term price crunch. ArcelorMittal entered Liberia in late 2004 as peace was returning after the brutal civil war. It took over a mine opened in the 1960s by Swedish-run  LAMCO, which pulled out in the 1980s. 

What had been a state-of-the-art operation with a 270km railway line and a port, was destroyed by "a combination of scrap merchants, fighting and torrential tropical weather," says Matthews.

The steelmaker has invested $700-800m to rehabilitate the railway line, rebuild the port at Buchanan and renovate a hospital and houses in adjacent villages. 

Elsewhere in Africa, ArcelorMittal maintains it is always looking for new opportunities. But it is facing trouble in Senegal, where the government has accused the steelmaker of reneging on a contract to produce ore at Falémé.

Senegal sought arbitration at the International Chamber of Commerce in Paris in late 2011. In a statement to The Africa Report, ArcelorMittal said it intended to defend itself vigorously in this arbitration.

"ArcelorMittal has always maintained open and transparent communications with the government and we have also consistently met our commitments in Senegal." 

 

This article was first published in the November edition of The Africa Report, on sale at newsstands,  via our print subscription or our digital edition.



Last Updated on Thursday, 09 February 2012 12:43

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