Liberia: ‘ArcelorMittal’s Control of Rail Could Jeopardize other Iron Ore Projects’
... HPX and Ivanhoe Liberia, Others, comment further on the issues relating to access to the Yekepa-Buchanan infrastructure corridor
With the Government of Liberia’s December 31 deadline fast approaching for the Legislature to ratify the contentious third amendment to the 2005 ArcelorMittal Liberia (AML) mineral development agreement (MDA), both houses of the Legislature are expected to continue separate hearings today on the MDA, which has already been red-flagged by numerous stakeholders.
Stakeholders include project-affected communities, one of which has filed a lawsuit against the company for unfulfilled promises; a consortium of independent media outlets whose Freedom of Information request on the MDA has elapsed the 30 days required for response; as well as experts and other investors in the Liberian mining sector.
One of the key investors is High Power Exploration (HPX), a privately-owned, U.S.-domiciled mineral exploration and development company, and Ivanhoe Liberia Limited, a Liberian registered mining company and wholly-owned independent subsidiary of HPX. HPX won the concession to mine iron ore at the head of the Nimba mountain range in Simandou, Guinea. Both HPX and its subsidiary, Ivanhoe Liberia, have expressed concern that the amended MDA gives ArcelorMittal exclusive control of the Yekepa-Buchanan Railroad, a national sovereign asset.
“HPX and Ivanhoe Liberia have reviewed the proposed third amendment to the AML MDA, which has been forwarded to the legislative bodies for ratification. We believe that, while reference is made to multi-user access, the detailed provisions relating to transport issues effectively give AML effective control over the use by other mining companies of this important Liberian owned asset,” HPX and Ivanhoe Liberia said in a statement on December 7.
“Without GoL having powers to enforce multi-user access, HPX and Ivanhoe Liberia are concerned that our Nimba iron ore project, as well as other wealth-creating projects, could be jeopardized. In 2019, the governments of Liberia and Guinea entered into a bilateral agreement that was ratified by the Legislature, supporting the transportation of ore mined in Guinea through Liberia, utilizing the Yekepa to Buchanan railway and Buchanan Port. A provisional Right of Access to Transport Services was granted to HPX by the Ministry of Transport of Liberia in August 2021.
“As established in our detailed pre-feasibility study, this project will add to existing direct foreign investment commitments to Liberia by generating an additional US$600 million in direct investment into Liberia, create upwards of 500 permanent jobs in construction and operations, and provide unspecified amounts in third party service-related contracts with local companies," HPX and Ivanhoe Liberia added. "Additionally, the use of this infrastructure by Ivanhoe Liberia and other mining companies will generate substantial income for the Liberian treasury. In the case of Ivanhoe Liberia, we propose paying transit fees on a per tonne basis which can be easily monitored transparently. The level of these fees will be established in line with international practice through detailed negotiations with GoL."
The Consortium of Independent Liberian Media Outlets obtained a leaked copy of the ArcelorMittal third amended MDA and shared it with local stakeholders for insight and understanding. According to a mining economist, the GoL is giving ArcelorMittal the exclusive right to operate the Yekepa-Buchanan railroad through a wholly-owned subsidiary – which lacks transparency and gives AML the leverage to jeopardize the interests of other iron ore projects that may wish to use to rail infrastructure.
The mining economist is referring to Article 3, Section F of the revised MDA, titled: “The CONCESSIONAIRE’s capacity as Railroad Operator”. The Concessionaire refers to ArcelorMittal Liberia. Section F(1) 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).”
But 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.
According to the mining economist, it is better for there to be an independent railroad operator, since ArcelorMittal’s position as railroad operator poses a conflict of interest on the one hand; and since ArcelorMittal Liberia is not in the business of rail management on the other hand.
According to Guy de Selliers, Chairman of Ivanhoe Liberia, “HPX, SMFG, and Ivanhoe Liberia are committed to operating the Nimba Iron Ore project and associated infrastructure, both in Guinea and Liberia, following the highest environmental and social standards. When we make commitments, we abide by them because we know that, as guests in the countries where we operate, we need to earn every day our social license to operate. We are deeply convinced of the benefits for the Liberian people of opening up this major Liberian-owned infrastructure to other users and seek to work constructively with the Government of Liberia, ArcelorMittal, and other potential users to make this possible."
“HPX and Ivanhoe Liberia acknowledge the ongoing review process by the Government of Liberia (GoL) through the National Legislature that is deliberating specific terms of the proposed third amendment to the Mineral Development Agreement (MDA) with ArcelorMittal Liberia (AML),” the HPX and Ivanhoe Liberia statement continued. “[We] look forward to working with government officials and all relevant stakeholders on the transport provisions contained in this amendment to ensure fair multi-user access to the Yekepa/Buchanan infrastructure corridor, thereby maximizing benefits for the Liberian people. Our project is well advanced, with construction starting in 2023, and so these benefits are not a distant prospect. "
It added that “HPX and Ivanhoe Liberia want to contribute to the long-term prosperity of Liberia and the wellbeing of local communities. Our experience operating in other countries shows that these types of major infrastructure projects can be an important catalyst for local economic development. To that end, we are committed to several specific initiatives to support the areas where we will operate. Firstly, we will advocate for the provision of passenger and light freight service on the railroad for local communities and to increase trade and movement between Liberia and Guinea."
The statement added that in partnership with other users and GoL, they are committed to spending resources on several community projects that directly impact health, education, and human development. HPX and Ivanhoe Liberia then promised that they will contribute money for local development funds carefully managed for the benefit of communities in the region.
"Finally, we will implement many biodiversity conservation and carbon offset measures in particular in the East Nimba reserve per best practices in environmental protection. Throughout this process, we will work with GoL and local communities to ensure our actions meet the highest ethical, social, and environmental standards in line with the provisions of a thorough Environmental and Social Impact Assessment that we are committed to undertake. We welcome the opportunity to engage further with GoL and The National Legislature, and are ready to elaborate on the comments made in this press release," the statement said.