Liberia: House’s Letter to Weah Explains Rejection of AML Deal
“... the due diligence exercised on the proposed ArcelorMittal Liberia Mineral Development Agreement established a series of observations that the House of Representatives wishes to bring to your attention,” says House of Representatives
The most significant foreign direct investment to be signed by the administration of President George Weah, the 3rd amendment of ArcelorMittal’s existing concession agreement, valued at US$800 million, has been returned to his office for renegotiation by the House of Representatives.
The House, which has had a history of rubber-stamping nearly every concession agreement submitted by the presidency, took the unprecedented action on March 28, to reject the agreement in its totality — sending a message to the President and his cabinet that the negotiated agreement was, according to the lawmakers, “monopolistic”.
The rejection paves the way for the agreement to be returned, however, the House decision was heavily supported by Weah's own lawmakers from his ruling Coalition of Democratic Change - who put the final nail in the coffin by voting to cast it- off -- compelling the House leadership to write the President that the deal is returning with several recommendations, which should be included in any renegotiated agreement.
It then hands President Weah a clear picture that he had failed to bring together and overcome his own party's opposition to the ArcelorMittal Liberia mineral development agreement (MDA), which is not just a signature project but one that he says could “supports the Government’s ’Pro Poor’ agenda, which is underpinned by the importance of creating jobs to lift Liberian citizens out of poverty.”
In an unprecedented setback for the President, his most trusted ally in the House, Speaker Bhofal Chambers, described the decision taken by the House plenary as the “greatest achievement to humanity” — stunning the public with such a bold statement just hours after his colleagues voted to reject the agreement.
And in a letter to the President, accompanying the return of the AML’s US$800 million agreement, the House of Representatives expressed misgivings about the agreement, particularly the impact of the treaty between Liberia and Guinea on the ownership, operatorship, and users’ rights of the Yekepa to Buchana railroad as enshrined in Article 3 of the treaty with Guinea.
The Daily Observer obtained a leaked copy of the House’s letter, signed by Mildred Sayon, its chief clerk, which noted also that the proposed AML agreement essentially ignores key provisions of the Minerals and Mining Law of Liberia, particularly Article 6, Sections 6.1 to 6.3 and Section 5.3 of the Law.
“Mr. President, the Honorable House of Representatives conveys the following recommendations: That the government retains ownership of the railroads, port of Buchanan, and other related infrastructures; that the government initiates a recruitment process aimed at hiring an independent operator of the railroad to ensure non-discriminatory management of the Railroads and other related infrastructure,” the letter from the House said.
“And any future renegotiation of this concession, other existing concessions, and new concessions gives consideration to the full application of all relevant laws including the Act creating the WASH Commission and the Land Rights Law,” the letter continues. “And that future amendments of the AML MDA, other existing concessions and/or new concessions consider a role for the National Housing Authority to ensure standard and improved housing facilities for employees and their dependents.”
The rejection, which was explained in the House’s letter to the President, 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 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.
But the rejected agreement, which is being returned to the President has been something the executive had seriously been relying on to shore up the country's 2022 fiscal year budget, which is to the tune of US$786.5 million, with public administration, security, and rule of law, health, and education as key priorities.
The Weah administration has strongly backed the deal and hopes to make a US$55 million bonus within 19 months of ratification, a significant amount of which would go to support the budget. The AML agreement has been rated by the President as an ideal deal that would help in reducing the country’s high unemployment rate and stimulate economic growth — bringing in revenue benefits and making the country one of the largest iron ore exporting countries in the world.
The House’s decision meanwhile has now stymied the Weah administration’s effort of scoring a passage for the deal and forced the administration to renegotiate the agreement, guided by the House’s recommendations – which AML may likely not agree to easily. The blowback from the AML 3rd amended agreement, which was expected to be one of the largest mining projects in West Africa, comes after 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.
The House has been taking a hardline position on the AML deal since it was submitted by the President on November 24, 2021, and a month later; passed it on the condition that significant changes be made to the original agreement, as a means of building 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 House’s concerns have put the agreement in the limelight — gaining an outsized profile after stakeholders from the project-affected communities accused ArcelorMittal Liberia of having neglected and refused to honor 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 Energy, and Natural Resources, to sort out the recommendations proffered by both Houses.
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.
An analysis of the House of Representatives and the Senate’s recommendations of the 3rd amended ArcelorMittal Liberia MDA is attached to this article.