Liberia: House Rejects ArcelorMittal’s ‘Monopolistic’ Clauses
... “The proposed amendment as written by AML is highly disadvantageous to a poor struggling country Like Liberia.”
Editor Note: The full text of the House’s amendments to the ArcelorMittal MDA can be found via this link, while the original MDA can also be found here.
The House of Representatives has ratified the ArcelorMittal agreement but not without several amendments, which returns control of the railroad and the port of Buchanan to the Government of Liberia.
The House, in a rare moment of bipartisanship, rejected several original clauses from the ArcelorMittal US$800 million amended agreement which was submitted by President George Weah on November 24.
In it, the administration of President Weah gave ArcelorMittal Holdings A.G. and ArcelorMittal Holdings Liberia Limited exclusive rights to the Yekepa to Buchanan railroad and Port of Buchanan, as captured in Article 3 of the submitted agreement. Accordingly, the company is expected to make a US$800M Investment in Liberia, which will provide the Government of Liberia with US$55M within 19 months of ratification.
But the House’s Joint Committee on Investment, Judiciary, Lands, Mines & Energy; and Ways, Means & Finance, acting in the interest of the public, after much outcry, wrote that if Article 3, Section 3(f) of the submitted agreement is not amended before ratification, it would mean ArcelorMittal Liberia has exclusive rights to the country’s railroad, although the company is just an operator.
According to House, Article 3, Section 3(f) of the ArcelorMittal deal submitted by President Weah, entitled, ‘The concessionaire’s capacity as Railroad Operator’, 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:
“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 mean 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 Joint Committee also complained that the proposed amendment as written by ArcelorMittal Liberia is highly disadvantageous to a poor and struggling country Like Liberia; and that includes the loss of Liberian tax revenue, given that each user would otherwise be paying transit fees to the Government of Liberia, which would generate significant revenue.
It added that the original clause of the ArcelorMittal Agreement also means a loss of Liberian job opportunities, particularly in the construction and operations sectors, together with lost opportunities for local companies to contract with these users.
“The committee recommends that the Proposed Amendment should ensure that other users’ access to the Liberian infrastructure assets is protected, to allow Liberia to fully realize the economic potential of these assets and provide the Liberian people with greater job opportunities.”
In this regard, the House voted the Committee request that Article 9 “Entitled Land And Facilities,” section 3 (d)(4) “Entitled Operation And Maintenance Of Railroad And Port Infrastructure” be amended in the proposed Amendment as stated below:
1. The GOVERNMENT maintains ownership of the Railroad, Buchanan Iron Ore Port, and related Infrastructure (the “Liberian Infrastructure”). Accordingly, the CONCESSIONAIRE acknowledges that the rights of the CONCESSIONAIRE shall remain subject to the sovereign rights of the GOVERNMENT and the Republic of Liberia.
2. The Liberian Infrastructure will be structured, regulated, expanded, and managed on a non-discriminatory multi-user basis for the benefit of all Eligible Applicants and the Republic of Liberia. Each Eligible Applicant will have (i) a right of access to Liberia’s infrastructure to enable it to construct and carry out its own transportation activities, and (ii) a right to be involved in the operation of the Liberian Infrastructure on and from its designation as Eligible Applicant, in each case so as to ensure that all Eligible Applicants (including the CONCESSIONAIRE) have equal priority in respect of the construction and operation of their transportation activities (both as to timing and volumes) on the Liberian Infrastructure;
A. the CONCESSIONNAIRE shall work with the GOVERNMENT to establish passenger and general freight traffic on the Railroad for the benefit of surrounding communities, provided that such non-mining traffic does not unreasonably interfere with the operations of any Eligible Applicant;
B. following the GOVERNMENT’s granting to another Eligible Applicant of a capacity expansion authorization (with respect to the Railroad) or a Berth Expansion (with respect to the Port), the Railroad System Operating Principles, the MUA, and any other operating principles in relation to the Liberian Infrastructure agreed between the Parties from time to time (the “Infrastructure Operating Agreements”) shall be amended in such manner as the GOVERNMENT considers fair and reasonable in order to maximize the economic development of the Republic of Liberia and to implement the principles of this Section 3(d)(4); and
C. the CONCESSIONAIRE shall negotiate any amendments required pursuant to subparagraph C above and any further agreements between an Eligible Applicant and the Parties as may be reasonably required by the GOVERNMENT in connection with such Eligible Applicant’s capacity expansion authorization and/or Berth Expansion in good faith and within a timeframe that is compatible with such Eligible Applicant’s implementation calendar as envisaged by Article 6.1 (Execution of the Right of Access to Railway Infrastructure) of the treaty between The Republic of Liberia and The Republic of Guinea dated 11 October 2019 and given full legal effect by the Republic of Liberia on 6 May 2021 and the Republic of Guinea on 18 February 2020 (the “Implementation Agreement”).
The passage of the ArcelorMittal Liberia Mineral Development Agreement follows a careful review by the House Joint Committee, which craved the indulgence of Plenary to pass the agreement; but with amendments that will serve the best interest of Liberia and its people.
The Committees also recommended that the National Housing Authority draw the plan of housing design to be used by the AML, recruit citizens from affected communities and provide jobs, rehabilitate roads in those counties.
The report further recommended that the company assist with the repair of a 2.5 km bridge linking the rest of Grand Bassa County with the Liberia Agriculture Company facilities as part of its social responsibilities to Grand Bassa County. Plenary’s decision was triggered after a motion by Montserrado County District #16 Representative Dickson Seboe during the 18th Day Sitting of the Special Session. 29 lawmakers voted for the amendment, while four voted against it and two abstained.
Worst still, the Committee informed the plenary that in the original ArcelorMittal Liberia agreement, it notices with a growing concern with regards to the issue of concession area as addressed in Article 3, section (d) (2) of the proposed Amendment.
The proposed amendment provides that: “The government shall ensure that the Concession Area, as well as the assets and facilities, transferred or otherwise made available to the CONCESSIONAIRE hereunder (including the Railroad and the Buchanan Iron Ore Port, which have not been transferred but have been made available for use in the Operations on the terms and conditions set forth in this Agreement), are free from any occupation and encumbrance, and available for the purpose of the Operations contemplated hereby, subject only to the provisions of paragraph e. below (User Access and Future Expansion of the Railroad), paragraph g. below (Access to the Buchanan Iron Ore Port; Port Capacity Expansion), and the Railroad System Operating Principles and the MUA (once it becomes effective).
However, the committee acknowledged that Article 6, sections 6.1 to 6.3 of the Minerals and Mining laws of Liberia, 2000, and section 5.3 of the same law mandates the concessionaire to declare production areas within these areas a Class A mining license would be awarded.
In line with section 5.3 g (3) the Minerals and mining laws of 2000, the Committee said that concessionaires declared production areas of old LAMCO concession areas. The Minerals and Mining law referenced here states in relevant parts that “ in the event where the holder of an exploration license declares only a portion of the exploration areas production areas, the remaining portion not declared must be surrendered to the government and exploration license shall cease to exist”.
“Currently ArcelorMittal Liberia is relying on an agreement that contravenes the most recent mining law of 2000. The previous MDA according to Article 1 (1.7); Article IV (2) defines AML’s concession area as the former LAMCO concession area instead of the production areas declared by the concessionaire.
The committee therefore recommends that to resolve this confusion, the definition of the Concession Area be restated as contained in the 2000 Minerals and Mining Laws of Liberia to be stated as follows: Concession Area shall mean the production areas declared by the concessionaire.
Pursuant to the 2000 Minerals and Mining laws, the undeclared portion of the LAMCO concession area should be deemed as reverted to the government of the Republic of Liberia.
The committee further suggests that Buchanan Iron Ore Port, which has not been transferred but has been made available for use in the Operations of the concessionaire on the terms and conditions set forth, remains the property of the Government of Liberia and shall be free for transfer to any potential investors.
Meanwhile, the House of Representatives has forwarded the instrument to the Liberian Senate for concurrence.