The Amended Mittal Steel Agreement-What’s in it for Liberia?

The Liberian government has recently signed an amended concession agreement with ArcelorMittal said to be worth US$800m. Over the past week, the local media has been awash with reports about the amended Mittal Steel concession agreement painting a very rosy picture of what will obtain for Liberia.

The announcement of the new deal came right on the heels of the military coup which toppled the government of Alpha Conde. His government had been in extensive negotiations with the Liberian government concerning the export of iron ore from Guinea through Liberia to the deep water port of Buchanan.

But ArcelorMittal, according to informed sources, mounted stiff opposition to proposals floated by the mining conglomerate to use the Yekepa- Buchanan railway as well as access to use of facilities at the port of Buchanan.  

Several companies were/are said to be involved in the Simandou project and according to reports, each of those firms have links to the government of China. China has been aggressively seeking sources of raw materials around the world, for its industries.

In some cases, China has constructed giant infrastructure projects in exchange for mining rights. Western countries led by the US have often criticized such deals calling them debt traps. 

Reeling from a disastrous defeat in Afghanistan, it appears the US is repositioning itself to address perceived threats from China only a hair’s breadth away from attaining super power status. 

From all indications, the overthrow of the government of President Alpha Conde appears to be part of a wider plan to put paid to China’s mineral ambitions in West Africa beginning with Guinea.

In Liberia, a Chinese firm is reported to have been awarded an iron ore mining concession agreement which, to the best of publicly available information, remains shrouded in secrecy. Attempts to obtain a copy of the said agreement have so far yielded no positive results.

At the moment the Legislature is on recess which makes accessing the agreement difficult. However, this government will be reminded from time to time to make public disclosure of the concession agreement signed between the government of Liberia and a Chinese company.

That brings us back to the issue of the Mittal Steel concession agreement which, according to reports, has been amended. But it remains unclear as to whether such amendments have now addressed departures from best practices.  

For example, it remains unclear whether the amended agreement addresses the confidentiality clause which commits the Liberian government to non-disclosure meaning the public should be kept in the dark about matters involving ArcelorMittal’s operations.

But such is antithetical to best practices which calls for transparency in accessing mineral resources as well as in the exploitation of those resources. 

This is of crucial importance because responsible management of natural resources is a critical requirement to the alleviation or reduction of mass poverty.

Another key issue of concern is ArcelorMittal's overseas tax structure which enables the company to freely repatriate any profit from Liberia. This is bad because, according to experts, it tends to undermine the ability of the government to create long term investment for development purposes.

Additionally, questions are being asked why ArcelorMittal was given the right to remove, extract or use any timber without compensation except those species of trees classified as protected.

 Even then if Mittal Steel so decides those trees are hampering its operations they can be removed, extracted or used without compensation to the government of Liberia.

Another issue of worrying concern concerns obligations by ArcelorMittal to restore the environment which is lacking in the agreement. This is of crucial importance if Liberia is to avoid a repeat of Bomi Holes (excavation pits) which have since filled with water and is now called the “Blue Lake”.

This newspaper has learnt from reliable sources that environmental protection clauses in the agreement were removed during renegotiations of the original agreement under former President Sirleaf.

Under her watch, out of a total of 66 concession agreements signed into law, 64 were fraudulent according to the Moore-Stephens Report which was never contested by her government.

It appears more likely than not that the Mittal Steel agreement was one of those fraudulent agreements. Perhaps that can probably explain why the government under her watch committed itself to a policy of non-disclosure

Liberians, for example, would be interested in knowing just how much Liberia earns on every dollar earned from  iron ore exports. In the past, while a country like Mauritania was receiving  at least 14 US cents on every dollar earned, Liberia on the other hand was receiving less than 10 US cents on every dollar earned.

Most Liberians are not aware that just about all the iron ore ArcelorMittal extracts from Liberia is sold to her affiliates. This encourages transfer pricing which serves to undermine the ability of the country to derive revenue.

More to that, Mittal Steel at one point had the right to set the price of iron ore. It was based on such prices that taxable income of the company was determined. The amended agreement done under President Sirleaf is reported to have changed it to have taxable income based on prevailing world market prices.

 Finally, it remains unclear whether this new amended agreement addresses contentious issues concerning corporate social responsibilities and commitments on which ArcelorMittal is accused of reneging by a number of local communities. 

 A ArcelorMittal sponsored media blitz intended to garner public support for the agreement has seemingly raised public appetite and hunger to know the details of the newly amended agreement. It has also raised a key question and that is what is in it for LIBERIA, for us?