Rail, Port Key to ArcelorMittal Liberia’s US$500M Expansion

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The single rail line, which runs from Yekepa to the Port of Buchanan, was rebuilt by ArcelorMittal after it was damaged during the Liberian civil war.

As GoL considers benefits of sharing infrastructure with potential miners in Guinea

ArcelorMittal’s elaborate plan to expand its iron ore production in Liberia from the current 5 tons to 15 tons per year will require and investment of US$500 million, on top of the US$1.7 billion the company has already invested in the mine. The expansion plan aims to extend the company’s Liberia mine life by 27 years and allow it to ship out at least 15 million tons of ore per year for the life of the mine.

According to ArcelorMittal Liberia’s chief executive officer (CEO), Scott Lowe, while the Government of Liberia peruses a summary of the company’s expansion plan, the company is “working with the government on an amendment to our MDA (mineral development agreement) and we are in discussions about essential infrastructure.”

By “essential infrastructure”, Lowe is referring to the railroad, which the company built to transport iron ore from its mine in Yekepa, as well as the Port of Buchanan, from where the iron ore will be shipped. Essentially, the company says it needs to convey at least 15 million tons of ore product per year by rail through the port of Buchanan, as the Government of Liberia considers requests from mining interests form just across the border in Guinea, for use of the same rail and port.

“We need to do that to justify that investment. In any business, no investor is going to put money in if there are risks associated in getting the product to the customer,” he says.

The single rail line, which runs from Yekepa to the Port of Buchanan, was rebuilt by ArcelorMittal after it was damaged during the Liberian civil war.

ArcelorMittal Liberia CEO Scott Lowe

“We’ve had a long history with the rail line,” Lowe, who joined ArcelorMittal in March 2019, told the Daily Observer in an exclusive interview on September 4. “We took over in 2005 and there was very little left. The rail line, sadly, had been destroyed by the civil war and by weather and we spent US$700 million to build that rail line up into what it is today. So we think we’ve earned the right to continue operating and then expand that rail for our business.”

ArcelorMittal is not at all opposed to sharing the rail line with another user. In fact, according to Lowe, the company has vast experience operating multi-use, high capacity rail infrastructure.

However, “absolutely essential for this investment decision is the infrastructure, which is the rail and the port for that 15 million tons that we need reserved for us to underpin our investment decision,” he said.

“To add on to that additional capacity for ore out of Guinea would be fantastic, with third parties — we’d support that, as long as it doesn’t jeopardize not only our existing business, but our expanded business and creating a better future for our employees.

On September 5, High Power Exploration Inc. (HPX), a United States-domiciled mining company, won the rights to develop the Nimba iron ore deposit in Guinea, previously held by BHP (45.5%), Newmont Goldcorp (45.5%) and Orano (9%). The three companies all divested their interests entirely to HPX and the Guinean government, which holds a 15% stake. HPX, owned by billionaire mining investor Robert Friedland, aims to jump-start the mine “very soon” with a production capacity of one to five million tons of iron ore and eventually expand to 20 million tons per year.

However, contrary to the Guinean government’s preference, the company’s interests are highly contingent on shipping the product by rail through Liberia’s Port of Buchanan. For this, according to the Australian Financial Review, the Guinean government is imposing a tax of between US$0.825 to US$2, per ton.

Lowe believes that any mining operations in Guinea could take years to get off the ground. ArcelorMittal’s own expansion plans, which have been long in the making, were upstaged by the Ebola crisis in 2014 as well as the drop in the price of iron ore on the world market. Now, back in the swing of active mining operations, the company hopes the Liberian government will focus on the “here and now”, while potential mining operations are sorting themselves out.

“Ore being shipped from Guinea through Liberia wouldn’t be the same economic benefit. And our project is here and now,” Lowe asserts. “The mine is here today and we’re working on our project now. Guinea is an opportunity for the future. Of course, you have to start planning for the future now, if there’s going to be a better future; I understand that, we support that. But right now, for the people of Liberia, I think the best benefit will come from not only our existing mine, but the project we’re working on right now.

“An important point to stress is that a ton of ore from Liberia creates Liberian jobs, Liberian royalties, Liberian taxes. A ton of ore from Guinea does none of those things. And that’s many years away.

“Absolutely essential for this investment decision is the infrastructure, which is the rail and the port for that 15 million tons that we need reserved for us to underpin our investment decision,” says Scott Lowe.

That being said, Lowe insists, ArcelorMittal’s own expansion plans, if the Government of Liberia agrees, could be well in production by the year 2022, well before any iron ore interests in Guinea realize their need for access to the Liberian rail and port infrastructure.

“We’ve recently completed a feasibility study for the expansion and we’ve provided the government with a summary of the at feasibility study. Now we’re doing detailed engineering and later this year we’ll be assessing all the engineering and the additional detailed work that’s being done,” Lowe explains. “This is a project aimed at more than doubling the production of the mine and extending the mine life by 27 years. This will be an exciting thing for Liberia. An additional US$500 million investment would be required to do that. So, if the assessment is then approved and the funding decision is made, then we would be in production in 2022.

“We support the concept of having that rail corridor become a part of creating economic stimulation and development for the entire range — that would be fantastic. What we are looking for is a win-win. And what we need in order to support our business case for a 25 year extension for our mine is we need the first 15 million tons. We’re currently delivering 5 million tons. The rail needs to be upgraded and what we need to support our investment case to more than double the production of the mine and take what is currently like a 4-year mine life and turn it into a 27-year mine life; we need the first 15 million tons (including the additional 10), and we need to continue operating the rail.

“Beyond that, there are single-rail lines around the world that can take a lot more than 15 million tons. You don’t have to duplicate the rail; you can put 50 million tons on that rail on a single line. And we would welcome the opportunity to cooperate with the government on how we would assist in that process.

“The win-win is that we get the capacity that we need, we get to continue to operate the rail for the first 15 million tons. And the additional capacity that can be built there, that would be great. It’s quite common — we own and operate rail lines with very big tonnages and multi-uses all around the world. Canada is an example. Multi-uses include the transport of other commodities [such as] bauxite, iron ore; you can have passengers or agriculture products. It can be a mix but, what people have been talking to us about is a multi-use of which is two iron ore companies sharing the same rail. We have no objection to that, provided that the first 15 million tons of the operatorship of the rail is for us. What we’ve shown is that we can operate high production, high capacity rail systems with multiple uses — multiple companies using that in other countries and we’ll be happy to cooperate in promoting economic growth and development for the entire region. That would be fantastic.”

9 COMMENTS

    • they wrote “we spent US$700 million”.
      I do not believe that. How many Liberian knows what you are doing?
      Why do you want to expand if you are not make extreme profit?
      It is good business when the population is completely not educated? Sweden did built that rail already. Why should I believe that you need to spend that amount of money on it again.
      With these tricks, Liberia does not own anything and you can stay there forever?

      • correction: Why do you want to expand if you are not making extreme profit

  1. Please make sure the rail lines in Liberia solely owned by the Liberian people and not any mining company. Also, keep an eye on these politicians that they make no deals to give away such important assets. Is the mining developments in Guinea and its impact on Liberia giving ArcelorMittal cold feet? Let’s watch and see.

  2. I don’t think the CEO of AML really wants to share the rail and port with the prospective company in Guinea. There would be a lot of economic benefits to the people of Liberia and Guinea if the mine in Guinea comes on board. Besides, it would make sense if the government of Liberia ask the company in Guinea build a brand new port in Cestos, Rivercess county, and a new rail line from Guinea to Cestos as well. It would still be cheaper than building a new rail line and port in Guinea. AML is just afraid of the competition.

    The former LAMCO railway, port and concession areas in Buchanan were supposed to be built in Rivercess. But Rivercess was still a territory at the time so the big shots in Grand Bassa convinced the government and LAMCO to build the concession in Buchanan. This could be an opportunity to open up Rivercess for economic development.

  3. Beware of Arcelor Mittal Liberia. This company was thinking about leaving Liberia and refused to invest to expand in Liberia’s railrod infrastructure. Now that another company is coming to Guinea and have asked to use our (Liberia) railroad for a fee to transport their iron ore from the Guinea mine to the port of Buchanan, Arcelot Mittal want to sabotage everything . Mittal want to expand now. Arcelot Mittal is now giving scholarships for Liberians to go do graduate studies overseas. I hope the Government of Liberia turn this offer from Mittal down. . The new incoming company will invest in the minor expansion. If Mittal want to expand, let Mittal begin to start producing Iron and other finish goods in Liberia. Our people need jobs.
    Every company want to extract raw materials. Firestone have been doing that since 1926 . Firestone don’t want to produce tires or other rubber products in Liberia. It is a shame that Liberia have rubber and we have to purchase surgical rubber gloves from overseas to be used in our hospitals. when Ebola hit us, firestone couldn’t even help with rubber gloves and other rubber protective gears or equiptments. Like I said earlier, The LIBERIAN PEOPLE NEED JOBS. We need factories.

    • Liberia do not have rubber my friend. The rubber in Liberia was brought in by Firestone. We just have the soil to grow the rubber. Our government is not serious. If they were, they would compel Firestone to open a rubber processing plant.

  4. AML was blessed to have met the existing rail line and port in Buchanan, and most of the infrastructure and facilities they are using today. The former company, LAMCO built everything from scratch in 5 years. AML has been in Liberia since 2006 and they are still yet to renovate the community of Yekepa and the concession housing areas in Buchanan. This CEO should shut up. They are making profits, hence the reason they want to increase production. The government should compel AML to renovate or build the communities of Yekepa and Buchanan for their staff first before new MDA agreements. I have a brother who works for AML as a staff and he lives in the Buchanan loop in an old house. Said if anything happens to his house, AML ask him to cover the cost, whereas LAMCO used to maintain those houses every year.

    The best thing for Liberia to do is ask the new company in Guinea to build a new port in Rivercess and railways from Guinea to Rivercess. AML is just afraid of the competition that would come from the new company. Trust me, most Liberians would leave AML for the new company if the pay is good there because AML pays peanuts to Liberians. A friend of mine dad used to make about $2500 USD with LAMCO before the war. AML called him back and wanted to pay him $1500. He said no. Those Indians who owned the company are very cheap. That’s what happens when you have a corrupt government. The former Gyude Bryant government gave the concession to AML because they bribed him and every Legislators at the time over good and experienced companies that refused to pay bribes.

  5. The CEO said that AM shares their railways with other companies in Canada. Well, I live in Canada and I know one thing. The government of Canada is not the same as the government of Liberia. If they were to just do 1% of the kind of bad labor practices they are doing in Liberia, they would be kicked out.

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