Liberia: House Rejects ArcelorMittal’s US$800M Revised MDA
The House of Representatives has rejected the third amendment of the ArcelorMittal Liberia mineral development agreement (MDA) with the government, saying it would not serve the national interest to have the agreement become law.
The House’s rejection of the US$800 million agreement comes as members seek to build an ambitious legacy of being in the interest of the people after signing concessions agreements in the past including the first and second amendments of the ArcelorMittal Liberia concession agreement.
The AML 3rd amended agreement — expected to be one of the largest mining projects in West Africa — was rejected after the House could not agree with the Senate version of the bill despite the latter proposing a conference as a means of resolving all of their recommendations before forwarding the agreement to the president for his signature.
Moments after the rejection of the ArcelorMittal deal, House Speaker Bhofal Chambers described the decision taken by the House plenary as the ‘greatest achievement to humanity.”
“All that we do is that we seek the best interest of the Liberian people,” the Speaker said. “In the wisdom of Plenary, they have decided to… address the interest of our people. I think this is one of the greatest achievements of humanity — to serve our people selflessly,” Speaker Chambers noted. “Our concern is the act of beneficiation, value added to the process. So that is what we have cataloged and felt that in no way we can have the concession agreement being entertained here without the Executive not renegotiating.”
The House’s move, somehow expected, has been hailed by many as a victory for the country as the AML’s 3rd amended agreement contains clauses that grant it exclusive rights to the Yekepa to Buchanan railroad and Port of Buchanan, as captured in article 3, section 3(f) of AML’s third amendment to the MDA, which President Weah submitted to the House of Representatives in 2021.
Article 3, Section F of the revised MDA, entitled, ‘The concessionaire’s capacity as Railroad Operator’, gives AML “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.
The House, having received the proposed MDA on November 24, 2021, cited Article 3, Section 3(f), complaining 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.
“This gives you the indication that the 54th Legislature, members of the House of Representatives, are supererogatory individuals,” Speaker Chambers added. “And they have done what is good for the country’s interest. It’s not one person. It is the whole body that has decided to take this high ground.”
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.
An analysis of the House of Representatives and the Senate’s recommendations of the 3rd amended ArcelorMittal Liberia MDA is attached to this article.
“For us, we always do negotiations. Government is continuous negotiation and discussing. We did not do it in isolation from the other branches of government — specifically the executive branch of government. So we work in concert to ensure that 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,” the House Speaker noted.
Some of the gaps have to do with ambiguous issues in the original agreement, which the House altered in its proposed amendments to reflect the change they envision, while the Senate also came up with its own set of requirements before ratification.
These include regulation and management of infrastructure on a multi-user basis; Multi-user amendments to the railroad system operating principles; the multi-user agreement and operating principles; definition of eligible users and railroad operators; the ambiguity of railroad system operating principles; AML compliance with new land rights and laws on commercial use of water; AML payment of fees and other levies including port user fees; and monitoring of the actual quantity of minerals exported by AML.
The once publicized ArcelorMittal deal has become a political symbol amid broader clashes over the company’s compliance with its 2nd amended MDA, especially the restoration of infrastructure in the concession area; multi-user of the railroad, and the port of Buchanan; passenger and general freight traffic and ambiguity of railroad system operating principles, among other concerns.
These concerns have put the agreement in the limelight — gaining an outsized profile after stakeholders’ issues, grievances about the 3rd amended MDA. Stakeholders have accused ArcelorMittal Liberia of having neglected its commitment to honoring portions of its original MDA with the Government of Liberia, especially the restoration of infrastructure in the concession area and trying to gain exclusive control over the country's prime assets — the railroad and port of Buchanan.
So, facing pressure from all sides — from the government and the public, the House moved in to outrightly reject the agreement after the Senate had proposed a conference committee, comprising the Senate and the House of Representatives Joint Committees on Judiciary, Investment, Lands, Mines and Energy, Natural Resources to sort out the recommendations proffered by both Houses.
But while the action by the Lower House appears to be a historical first, the rejection might likely not go down well with the Weah administration, which has strongly backed the deal and hopes to make US$55 million within 19 months of ratification. The money is needed by the Weah administration to help meet the government’s 2022 fiscal year budget, which carries a price tag of US$786.5 million, with public administration, security, and rule of law, health, and education as key priorities.
The government, despite admitting the agreement is not perfect, has asked the Legislature to approve the AML project as it would create jobs and stimulate economic growth — bringing in revenue benefits as well as making the country one of the largest iron ore exporting countries in the world.
The rejection of the 3rd amended MDA would not stop it from being passed after renegotiation by the Executive. However, the move signifies that the House of Representatives might likely not be operating according to ‘business as usual. Instead, they would be serious about cross-checking every bill before ratification.
The Government of Liberia and ArcelorMittal Holdings A.G. made and entered into MDA on August 18, 2005, which was ratified by the Legislature, signed by the President, and printed into handbills. The agreement has gone through two different amendments on December 28, 2006, and January 23, 2013, respectively.
The 3rd amendment, which was signed on September 9, 2021, could pave the way for the expansion of the Company’s mining and logistics operations in Liberia and allow ArcelorMittal to significantly ramp up production of premium iron ore, generating a significant number of new jobs and wider economic benefits for Liberia.
It includes the construction of a new concentrator plant and an expected substantial expansion of mining operations, with the first concentrate expected in late 2023, ramping up to 15 million tons per annum (‘mtpa’). Under the agreement, the company will have reservations for expansion for at least up to 30mt while other users may be allowed to invest in additional rail capacity.