Liberia: House of Reps reject AccelorMittal $800m development agreement

By Dounard Bondo
Posted on Monday, 11 April 2022 18:53

2020 World Economic Forum in Davos
Lakshmi Mittal, CEO of ArcelorMittal, is seen during the 50th World Economic Forum (WEF) annual meeting in Davos, Switzerland, January 22, 2020. REUTERS/Denis Balibouse

Liberia’s house of representatives rejected last week the third amendment of the $800m mineral development agreement between the country and steel giant ArcelorMittal. This rejection sends the agreement back to President George Weah, who now has to renegotiate the agreement with the company.

ArcelorMittal’s operations in Liberia focus on mining, railing and shipping iron ore. The company is the single largest private investor in the country since the end of the second civil war in Liberia in 2003.

However, the third Mineral Development Agreement (MDA) amendment, which was signed between the company and the executive in 2021, has to be ratified by both houses of the Liberian legislature before being transmitted back to the executive for the President’s signature.

Initially, the senate had ratified the agreement and wrote to the House of Representatives asking for a conference on the ArcellorMittal Liberia (AML) deal to harmonise their position on the agreement for transmission to the executive.

However, the house of representatives rejected the agreement before agreeing to a conference.

Benefits of the agreement

The new ArcelorMittal agreement is purported to cost approximately $800m as the company seeks to expand its operations including:

  • Increase in production;
  • Building a mine concentrate facility;
  • Expanding capacity of the railway and port.

The agreement was also supported by the government which argued that the MDA will not only bring in jobs, but will also fill state coffers with funds to implement projects and grow the budget. Reports say ratification would enable the government to secure $65m in payments from the company.

Despite government support, legislators of the House of Representatives – who are members of Weah’s ruling party – also voted against the MDA. According to Bhofal Chambers, the speaker of the House of Representatives, rejecting the MDA is a great act of humanity.

He also said: “This decision today is done in the best interest of the Liberian people. We look for a better concession agreement. We know that Mittal Steel has been here, and we want to laud Mittal Steel for all that it has been doing but, we also equally feel that if there are gaps, those gaps must be narrowed.”

Nimba-Buchanan railroad

In a letter to the executive, the House of Representatives gave reasons as to why the MDA was rejected. It includes the AML operation of the Nimba-Buchanan railroad; shareholder grievances; ArcelorMittal compliance with their previous MDA.

The proposed agreement would grant ArcelorMittal Liberia “the exclusive right to continue to serve as the operator of the Railroad and puts the company in charge of daily operations for the benefit of each and all Users in accordance with Railroad System Operating Principles and the Multi-User Agreement.”

In response, the House of Representatives believes the agreement would give ArcelorMittal monopolistic control over Liberia’s infrastructure assets, with the ability to use its exclusive rights to block other users’ access to these sovereign assets.

This is despite a previous statement from the company that said: “The government retains ownership and that the agreement strengthens governments demand for other users to utilize the Liberia infrastructure for their export; adding that the other users will need to invest to increase the capacity of the rail and port for their own use.”

The contention over the railway is tied to the presence of High Power Exploration (HPX), a new mining company that plans to use the rail to transport iron ore developed in neighbouring Guinea and export  it through the Buchanan port. To this end, HPX launched a press campaign against that provision of the MDA.

Days after the house’s rejection of the ArcelorMittal MDA, High power exploration (hpx) and the government signed a framework agreement to reaffirm the principles of non-discriminatory access to Liberia’s rail and port infrastructure and to identify HPX’s requirements for future evacuation of ore from the Guinean-Nimba Iron Ore Project.

Hope still abounds

Despite the initial rejection of the MDA by the house of representatives, there is still hope that the agreement is passed given the economic benefits would be important revenue for the government.

“I am sure they will pass this agreement but not until the necessary adjustments are made. I can’t see them dismissing this entirely as AML is major economic player in present day Liberia,” Ibrahim Nyei, a Liberian researcher and political analyst, tells The Africa Report.

“The project about to be launched has been touted by this government for its potential to produce more jobs and contribute to growth. So I hope the thorough scrutiny by the Legislature is about making sure all parties benefit from this growth – the company, the government, the communities, and the country” he adds.

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