Liberia: ArcelorMittal Claims MDA Lays Out Provisions on Rail Use
... … But its 3rd amended MDA says otherwise
ArcelorMittal Liberia says it wishes to address what it describes as “an incessantly calculated disinformation and propaganda campaign against it, about access to the Tokadeh−Buchanan railway corridor, relative to its amended Mineral Development Agreement (MDA) being ratified by the Legislature.”
According to the concessionaire, “the March 21, 2022 editions of two local newspapers, carried an identical story attributed to Guy de Selliers, Chair of Ivanhoe Liberia and HPX Group companies, accusing ArcelorMittal Liberia of wrongdoing and deliberately distorting the facts around potential users of the railway.”
The article in question was an op-ed by Mr. Guy de Selliers, published in the two newspapers.
“The amended MDA before the Liberian Legislature unambiguously lays out provisions on rail use and access and clearly does not give any exclusive rights or monopoly of the railway to ArcelorMittal contrary to the distortions published in the New Dawn’s and Daily Observer’s publications,” ArcelorMittal says.
But while ArcelorMittal is accusing the Liberian media and other persons of distortion, its revised MDA (2021) signed with the Executive, before the involvement in the Legislature, aims to give the company exclusive rights to the railroad.
Article 3, Section F of the revised MDA, titled: “The CONCESSIONAIRE’s capacity as Railroad Operator” grants ArcelorMittal Liberia “the exclusive right to continue to serve as the operator of the Railroad during the term and any extended term of this agreement…” Section F(2) puts AML “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 (when it becomes effective).”
Section F(3) allows AML to form a wholly-owned subsidiary “for the purpose of recording all the costs, expenses, revenues and activities associated with the Railroad operation…” subject to certain conditions.
And the House of Representatives, having received the proposed MDA on November 24, 2021, cited Article 3, Section 3(f), entitled, ‘The concessionaire’s capacity as Railroad Operator’, complains that such clause gives the steel giant monopolistic control over Liberia’s infrastructure assets; the port and rail infrastructure with the ability to use its exclusive rights to block other users’ access to these sovereign assets.
The House then recommended that the agreement allows for transparent non-discriminatory access to Liberian infrastructure assets, with appropriate oversight by the Government, consistent with other successful multi-user models and best international practice.
“Access to and expansion of port infrastructure is under AML’s complete control and for its exclusive benefit. Other users’ port expansion limited to a very specific location, it appears no technical studies were carried out to demonstrate the viability of the area assigned for multi-user port operations,” the House joint Committees informed plenary before the proposed modifications were endorsed and voted on.
“Other users can only carry out rail expansions subject to very tight controls and exclusivity granted to AML. AML has the ability to block expansions which ‘unreasonably interfere’ with its operations, and it is AML who determines if this ‘interference’ has occurred,” the Joint Committee added. “In practice, expansion of the port or railroad by another user is impossible until 2034 and very difficult to envisage thereafter. AML will also develop the railroad system operating principles and will develop the multi-user rail agreement without any input from other users or potential users, which means any other user will be forced to comply with AML’s rules. There is no effective timely remedy if AML decides to favor its own operations and discriminates against other users.”
“The Proposed Amendment should be amended to allow for transparent non-discriminatory access to Liberian infrastructure assets, with appropriate oversight by the Government, consistent with other successful multi-user models and best international practice. This is so that Liberia receives the maximum benefit to be derived from its infrastructure assets and natural capital. It also means that Liberia is prevented from realizing a given economic potential of its infrastructure assets,” the House disclosed in its proposed amendment to Article 3, Section 3(f) of the original MDA on Dec. 17, 2021 as a precondition for ratifying it.
The Senate, too, agrees with the Lower House’s recommendations, especially those regarding third party access to Liberia’s rail and port infrastructure.
According to the Senate committee report, the agreement as structured does not give the kind of leverage that the government should have.
“We perceive the possibility that Buchanan -- and may I say the entire Grand Bassa County and Nimba County because of these two infrastructures -- could possibly one day become the bedrock of our economy,” Sen. Varney Sherman noted. “If we allow the railway and the port to be accessible to third parties, tremendous financial and economic benefits will be derived therefrom.”
“The amended Agreement was intensely debated and negotiated over a 12-month period between the Liberian Government and ArcelorMittal, with elaborate provisions on multi-user access to the rail and port infrastructures, and long-term continuity of our expanded operations in Liberia,” ArcelorMittal claims.
“The fact remains that ArcelorMittal has already invested over US$500 million on rail and port – and will invest a further US$200 million – in rehabilitating these assets, which continue to be solely owned by the Government of Liberia.
“The Third Amendment to the MDA establishes a very comprehensive non-discriminatory multi-user access regime for the rail and port, with the Government of Liberia as the approving authority and no monetary benefit to ArcelorMittal from other users. In short, the Government of Liberia remains the final authority that determines who else can use this infrastructure. Included in this Third Amendment is a 62 page document clearly identifying the principles for multiple parties to use this rail infrastructure, beginning as early as 2025.
The Government of Liberia has repeatedly clarified this position, most prominently through the Minister of State and Presidential Affairs, Hon. Nathaniel F. McGill, and the Minister of Finance and Development Planning, Honorable Samuel D. Tweh, who have assured the public that the Government maintains full control of the railway and other state assets.
ArcelorMittal Liberia’s US$800 million expansion project is of critical importance to investment inflow in Liberia and will contribute significantly to efforts of the Government of Liberia to lift its people out of poverty as promised in the PAPD.
The project is the largest foreign direct investment in Liberia under President George M. Weah’s administration and puts Liberia on the map as a country of enhanced mining stature, a jurisdiction that values foreign partnership, and a country that is open for doing business and facilitating foreign direct investment.
As the leading private sector investor in Liberia and a reliable partner in Liberia’s post-conflict development, ArcelorMittal Liberia welcomes and encourages a competitive business environment and interposes no objection to efforts that promote and yield positive results to existing and new investments in the country.