‘Reject AML US$800m Agreement’

The AML agreement, which has been hailed by President Weah, when ratified, will pave the way for the expansion of the Company’s mining and logistics operations in Liberia.

…Liberian lawmakers urged

The Liberian People’s Party (LPP) has concurred with the decision of the citizens of Grand Bassa and Nimba Counties and asks the lawmakers to reject the latest ArcelorMittal Liberia US$800 million amended agreement signed with the government. 

Such a move, the party said, is based on available evidence, which disclosed that AML, Firestone, Liberia Agriculture Company, Salala Rubber Corporation, Aureus Gold, and 13 other companies paid a paltry US$1.5 million in taxes — which is a huge loss to the country.

“The 2017/18 LEITI report shows that ArcelorMittal paid US$220,728 and US$131,930 in 2016/17 and 2017/18 respectively which pale in comparison by far to the US$53 million paid by Liberians. Interestingly, another extractive company involved in gold mining, called Bea Mountain, paid a paltry US$487,177 and US$1,651,323 in 2017 and 2018 respectively,” noted LPP chair J. Yanqui Zaza in a statement.

It added that worse, the 19 companies paid US$1.7m on profits and the rest of the US$53m represented withholding taxes, including payroll, which means that ordinary Liberian employees are needlessly bearing an unfair tax burden.

The LPP instead of that AML agreement with the government, which was signed last month and wait for ratifications from lawmakers next year is bad for the country as the steel-giant was giving more favorable concessionary terms amid “minuscule tax contribution to the economy in the amount of US$1.5m (US$83,333 on an average) paid in taxes last year.” 

“The US$800m Amendment is bad, particularly where President George Weah-administration will give away two major public assets of Liberia, a railway, and the Port of Buchanan,” Zaza added. Also, it is a bad amendment since ArcelorMittal Liberia will replace the annual payment of US$3m to Nimba ($1.5m), Bassa ($1m), and Bong (US$0.5m) with US$0.9m, US$300k stipulated within the amended 2010 mineral development agreement.”

The AML Agreement

The AML agreement, which has been hailed by President Weah, when ratified, will pave the way for the expansion of the Company’s mining and logistics operations in Liberia as well as significant ramping up of production of premium iron ore, “generating significant new jobs and wider economic benefits for Liberia.”

In a press statement, AML said the expansion project - which encompasses processing, rail, and port facilities - will be one of the largest mining projects in West Africa; and that the capital required to finalize the project is expected to be approximately $0.8 billion, as it is effectively a brownfield expansion.

“The expansion project includes the construction of a new concentration plant and the substantial expansion of mining operations, with the first concentrate expected in late 2023, ramping up to 15 million tonnes per annum (‘mtpa’). Under the agreement, the company will have reservations for expansion for at least up to 30mt.

Other users may be allowed to invest in additional rail capacity. As the largest foreign investor in Liberia, ArcelorMittal Liberia has invested over $1.7 billion in the country over the past 15 years, and more than 2000 jobs are expected to be created during the construction phase, with Liberians envisaged to fill the majority of the roles created

Commenting on the agreement, President Weah said: “We are delighted to have reached this important agreement with ArcelorMittal Liberia, our long-term partner in the development of the mining sector in Liberia.” He said the agreement further supports the government’s ’Pro Poor’ agenda, which is underpinned by the importance of creating jobs to lift Liberian citizens out of poverty.

“The further investment by ArcelorMittal in Liberia bears testament to the company’s confidence in the future of this country. We are confident that our constructive working relationship will go from strength to strength,” the President weah.

LPP wonder

Meanwhile, the LPP has said it wonders why the Weah administration would enter into the US$800 million agreement with AML when it is yet to fulfill many of the provisions stipulated in the US$1.5 billion investment agreement signed in 2010.

The statement alleged that the AML is yet to produce its anticipated 46m tonnes, which would amount to 39% of Mittal Steel’s worldwide 119m tonnes; as such, the government was wrong to amend the 2010 Agreement without increasing Liberia’s 15% ownership to 45%.

“The 45% ownership, at least, might represent the value of Liberia’s 46m tones in proportion to its worldwide 119m tones. The estimate is reasonable because Mittal Steel will be using US$1.5 billion (1%) of its US$130 billion worldwide investment to produce the 46 million tonnes. Predictably, the total production of iron-ore, like any goods and services, depends on the grade and quantity of the iron-ore and total investment. In essence, with good iron-ore, Mittal Steel invested $1.5b. Using assets contributed as the basis for determining the percentage of ownership is a long-standing business practice,” Zaza added.

He further said: “In fact, Mittal Steel used this logic and reduced Liberia’s ownership from 30% to 15% when the parties revisited the 2006 Agreement during the 2010 Amendment exercise which effectively returned the Yekepa-Buchanan railway and the Port of Buchanan to national ownership. In addition, our history shows that Liberia and investors in iron-ore have used assets to determine ownership. For example, documents available for other mining companies indicate that Liberia held 37% ownership in the Liberian American Swedish Mining Company (LAMCO) and 50% ownership of the Liberian Mining Company.”