President Weah’s recent visit to Conakry, Guinea, where he reportedly signed an agreement for the construction of a railway from southern Guinea to the port of Buchanan in Liberia for the export of iron ore from that country, is indeed a welcome development which could hold great promise for Liberia.
It can be recalled that this newspaper in its Friday April 19, 2019 edition, reported a story headlined, “Niron Metals Company Sign MoU to Export Iron Ore”, about the signing of a Memorandum of Understanding (MoU) between the Government of Liberia and the Niron Metals Plc to export iron ore from in the Zogota iron ore deposit in Guinea to the Liberian port of Buchanan, using the rail and Port facilities ceded to ArcelorMittal under its concession agreement with the Liberian government.
The Daily Observer at the time reported that the signing of the MoU was in keeping with the joint vision of economic cooperation, expressed by the leaders of Guinea and Liberia (Presidents Alpha Condé and George Weah) at a meeting held in Dakar on Tuesday, April 2, 2019. Media reports at the time said, the Government of Guinea had already given authorization for Niron to export material from Zogota in compliance with the Mining Code of the Republic of Guinea 2013.
This newspaper (Daily Observer) in its April 22, 2019 editorial titled “A Stinking National Shame and Disgrace” noted that the deal should hold promise for the country but, it stands little chance of success if the terms of the Mineral Agreement ceding sovereign control over the rail and port facilities at Buchanan to Mittal Steel (now ArcelorMittal) remain unchanged or unrevised.
It was in apparent realization of this fact that the Chairman of Niron remarked that it was now left to the Government of Liberia to initiate tripartite discussions with ArcelorMittal to secure its agreement for the deal to go ahead. Whether such discussions were ever initiated by the GoL remains unclear. However, revelations that a new railroad is to be constructed from the Zogota deposits in Guinea to the port of Buchanan suggests that Mittal Steel may not have conceded to the use of the former LAMCO railroad.
According to available information, ArcelorMittal estimates that between 50 to 60 thousand tonnes or iron ore per day will be transported on six trains a day. But the railway between Yekepa and Buchanan is a single track and capacity or the lack of it is the key question here. It appears unlikely therefore that ArcelorMittal will concede use of the railroad to another company outside the terms of its Mineral Development Agreement with the GoL.
In view of this, there are now growing concerns that even if another railroad is constructed to get around this hurdle, the project could still falter if issues surrounding the ownership of the port of Buchanan are not sorted out between the relevant stakeholders.
When President Sirleaf first assumed office in 2005, she initiated a review of the then Mittal Steel concession signed by then Transitional Chairman Gyude Bryant. Article IX, section 3a of the Mineral Development Agreement (MDA) between Mittal Steel and the GoL provides that “The assets and facilities, which are listed in Appendix F, shall be transferred unencumbered to the CONCESSIONAIRE, irrespective of their conditions…”
Further, according to the agreement, “The GOL and others will be allowed to use these facilities only if there is spare capacity, and at the company’s discretion”, which means they will have to pay Mittal for the privilege (except for use of roads and highways). Given this provision of the agreement it can be correctly assumed that the Government of Liberia and any party interested in the use of the facilities at the Port of Buchanan will have pay ArcelorMittal for the privilege to do so.
And this is what this newspaper finds very revolting to say the least, is the complete surrender, by the Sirleaf government of such prized national assets (railroad and port facilities) to ArcelorMittal such that the Government of Liberia will now have to pay ArcelorMittal for their use is unreasonable and it constitutes a most unkind act of betrayal.
Just why former President Sirleaf saw it fit to just “banjo” the country’s assets and resources beats the imagination and tends to beg the burning question: What did Mittal Steel have to do to secure such a lopsided concession agreement at the disadvantage of the country and its future?
As transparency watchdog Global Witness has observed, there are troubling concerns about the ArcelorMittal Steel Concession agreement which include but are not limited to the following:
- ArcelorMittal has control over the amount of royalties paid to the government because the MDA does not specify the mechanism to set the price of ore.
- The MDA leaves open the basis for intra-company pricing arrangements and therefore creates a strong incentive for Mittal to sell the ore below the market value to an affiliate, which would reduce the actual royalties paid to the GOL.
- The MDA provides Mittal with a five-year tax holiday, with a pre-agreed right to renew it; there are no restrictions on subsequent extensions.
- A lower rate of royalty may apply once the Concessionaire develops the necessary production facilities to enrich iron ore.
- Combined with Mittal’s tax structure, the tax arrangements inherent in the arrangements dictate that Mittal could expatriate any profits it makes from Liberia.
In view of all the above, President Weah should be careful to avoid raising false hopes. His pledge to revisit concession agreements should be treated with urgency and it should be done with utmost transparency. The Mineral Development Agreement with ArcelorMittal could very well be one of those 66 fraudulent agreements signed into law by his predecessor and ought to be reviewed accordingly.