Exporting Guinea’s Iron Ore through Liberia: Great Economic Integration Opportunity

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It has been long in the making, but is finally here.  Finance Minister Amara Konneh announced last week that an agreement had been signed between ArcelorMittal and Sable, one of the companies mining iron ore on the Guinean side of Mount Nimba.

Liberia, which borders Guinea, has an existing rail link to the Buchanan port in the Atlantic and offers a far shorter export route from deposits such as the giant Simandou project and Mount Nimba in Guinea. This is vital for mines to be profitable.

The rail line is currently operated by ArcelorMittal, the world’s largest steelmaker.

“ArcelorMittal is open to the multi-use of the rail because it is enshrined in the mineral development agreement signed with them. The government of Liberia would like to use its rail as much as possible for economic integration that is going to benefit both sides,” Minister Konneh told Reuters.

“So this year I will be travelling between Guinea and Liberia bringing all the stakeholders together so that we can close this deal (between Sable and ArcelorMittal).” The Guinean government has so far granted permission to export through Liberia only to Sable Mining (SBLM.L), which is aiming to start production in 2015 and hit 5 million tonnes per year output after that.

To allow more companies to use the line, more works need  to be undertaken to expand the rail’s capacity.

Adding a second rail line is also an option, the Minister said. There is a short and direct route from the Guinean mines to the Port of Buchanan, making it far cheaper than shipping the ore all the way to Conakry,  the Guinean capital.

This agreement will benefit both Guinea and Liberia.  Guinea will gain faster and cheaper means of shipping its iron ore to world markets; while Liberia will earn modest financial resources from the cost of shipping the ore through

Liberia on its railway.  This is a win-win situation for economic integration between the two sister countries, who are both members of the Economic Community of West African States (ECOWAS) and, closer home, the Mano River Union (MRU).  There are vast iron ore deposits in Guinea’s Mount Nimba; so the deal promise a long term means of cooperation between the two sisterly nations.

This deal has been long in the making.  Discussions began between the two nations in the 1980s, following the death in 1984 of Guinea’s first President, Ahmed Sekou Toure, when the government of President

Conteh began eying the exploitation of the Mount Nimba ore.  But that politically and economically chaotic decade in Liberia, that swiftly led to the civil war, was clearly no time for such serious bilateral deals.

Does this teach anyone in Liberia today a lesson about the importance of political stability—especially those who, because they have differences with the present regime, have been calling for regime change?  Who doesn’t have differences with this government? Could such an agreement as that sealed last week have been possible in such a chaotic environment?  Who would enter any agreement with people they do not know and in an atmosphere of instability?

The promise of economic integration between Guinea and Liberia is further enhanced not only by the possible installation of another rail line between Mount Nimba and Buchanan.  Rail transportation could open avenues for other forms trade, such as agriculture and timber. Minister Konneh has already hinted to the possibility of a second rail line to accommodate other companies mining in Mount Nimba.

If carefully planned, the rail between Guinea and Liberia could also include passenger transportation, making it far easier for Guinean and Liberian market women and other businesspeople to traverse (navigate, pass through) the two countries. This would be yet another boost to economic integration.

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