Liberia: Pres. Weah Prepared to “Renegotiate” AML US$800m Deal

President George Weah.

... “My government remains fully committed to a fair multi-user access  to and use of the railroad corridor from Yekepa to the Port of Buchanan, and to the Port of Buchanan itself, both by other Liberian enterprises and those from the sister Republic of Guinea,”  President Weah

President George Weah has informed the House of Representatives of his intention to renegotiate the most significant foreign direct investment his administration has ever signed — the third amendment to the ArcelorMittal mineral development agreement (MDA), valued at US$800 million.

The President’s move comes after he had failed to bring together and overcome his own party’s opposition to the 3rd amendment of AML’s existing concession agreement, which is not just a signature project for him — but one that he says could “support the government’s ’Pro-poor’ agenda, and underpinned by the importance of creating jobs to lift Liberian citizens out of poverty.”

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 national budget. 

However, the issue of US$55 million and creation of more than 2000 jobs, as promised by AML, did not deter the Legislature from sending back the deal to the Executive branch on grounds that it gives the steel giant monopolistic control over Liberia’s infrastructure assets, particularly the rail and port, while limiting the state’s ability to grant other users’ access to such sovereign assets. 

President Weah, while acknowledging the Legislature’s action, disclosed that his government continues to believe that the AML amendment agreement is in the  interest of the country and its people. However, having taken note of the Legislature’s decision to decline the agreement, he has directed the members of the Inter-Ministerial Concessions Committee (IMCC) to renegotiate the agreement based on the lawmakers’ observations.

“My government remains fully committed to a fair multi-user access to and use of the railroad corridor from Yekepa to the Port of Buchanan, and to the Port of Buchanan itself, both by other Liberian enterprises and those from the sister Republic of Guinea,” President Weah said has he agrees with the House on the issue of Liberia having control over its infrastructure assets.

“Such access and use will be beneficial to both nations and enhance the goals and purposes of the ECOWAS and the Mano River Union; both of which Liberia is a member. Therefore, l have directed the members of IMCC to review and analyze the points made in your letter, to further confer with you, and then to report their findings to me for further action.”

The Liberian leader noted that after such review is done, he will then authorize the IMCC to hold discussions with ArcelorMittal for the resubmission of an “amendment that fairly satisfies the needs of that company, while also upholding the national interests of Liberia.”

The AML deal was intended to pave the way for the expansion of the Company’s mining and logistics operations in Liberia — and significantly ramp up production of premium iron ore, generating significant new jobs and wider economic benefits for Liberia.

The AML agreement was then 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.

If the deal had gone ahead, the AML expansion project would focus on upgrading the existing rail and port facilities used by AML for shipping of iron ore; the construction of a new concentration plant that could ramp up ore production to 15 million tonnes per annum (‘mtpa’). Under the agreement the company would have reservation for expansion for at least up to 30mt. 

But the elimination of AML’s exclusive rights of  over the Yekepa to Buchanan railroad and Port of Buchanan as captured in article 3, section 3(f) of the AML’s third amendment to the MDA, as earlier submitted by President Weah, was a decisive move especially by the House of Representatives, a group dominated by the ruling Coalition of Democratic Change. Even the House Speaker, Bhofal Chambers, described the House’s rejection of the deal as “patriotic”. 

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 then compelled its leadership to write to the President that the deal is returning with several recommendations, which should be included in any renegotiated agreement.

The House’s action, according to House Speaker Bhofal Chambers, was the “greatest achievement to humanity” — stunning the public with such a bold statement.

The House’s March 28 letter, signed by its chief clerk, Mildred Sayon, noted 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 House said in its letter.

“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.”

Meanwhile, the President's decision to renegotiate  the AML deals comes few weeks after the company informed the government that it takes exception to the government’s decision to signed an updated Framework Agreement with High Power Exploration (HPX), a company which intends to use the Yekepa to Buchanan railroad and Port of Buchanan to export ore from Guinea.

The HPX framework agreement was signed to reaffirm  the government’s principles of non-discriminatory access to Liberia’s rail and port infrastructure and to identify the company’s requirements for the future evacuation of ore from the Guinean Nimba Iron Ore Project.

The Framework Agreement, which isets out a timetable for detailed negotiations and the implementation of a definitive Concession and Access Agreement for HPX’s infrastructure requirements, also focuses on development and expansion rights to the existing Yekepa-Buchanan rail corridor and Port Buchanan by the company.

But for AML, the government’s agreement with HPX is at odds with the government’s legal obligations towards the AML and, if such remains unaddressed, it risks bringing about irreparable harm to current operations and future business plans. 

“Most importantly, they call into question the Government’s commitment to its longstanding partnership with AM. If the Government were to give effect to the HPX Framework Agreement, this will give rise to further violations of AM’s rights under the MDA. AML also trusts that the Government will desist from taking any further steps that may jeopardize AM’s rights under the MDA and the Liberian law generally, and will therefore refrain from taking any action, or facilitating HPX to take any action under the HPX Framework Agreement.”

The HPX framework agreement is built on the 2019 implementation agreement between Liberia and Guinea, securing the use by Guinean mining operators of Liberian infrastructure and transport services, and the right of access to existing transport infrastructure and services within the Yekepa-Buchanan port and rail corridor that was granted to HPX by the Government of Liberia in August 2021.

Editor’s 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.