Home Editorial Renegotiate Arcelor Mittal’s US$800m MDA With Prudence

Renegotiate Arcelor Mittal’s US$800m MDA With Prudence

by newsmanager

A fourth-night ago, the Lower House of Liberia’s bicameral Legislature rejected the much-heralded Mineral Development Agreement (MDA), in the tone of US$800 million that the world-class concession giant, previously inked with the Government of Liberia (GOL).

The 25-year expansion agreement was subsequently returned to the Executive Branch by the Honorable National Legislature, which is also the First Branch of the government, for “renegotiation.”

The Plenaries of both Houses of the Legislature- House of Representatives (Lower House) and House of Senate (Upper House), prior to their December break, tabled the Mittal-Liberia MDA deliberations due to multiple concerns regarding railroad and Buchanan Port facilities.

Some members of the Legislature cited what they characterized as the ‘monopolistic portion’ of the MDA that has to do with Arcelor Mittal controlling the railroad and wanting users to pay fees to it.
Interestingly however, Arcelor Mittal has vowed not to take the recent rejection of the Agreement by the Legislature lightly in the face of the signing of HPX deal to co-use or develop the railroad for both concessionaires (HPX and Arcelor Mittal).

Lately, the Government of Liberia (GOL), and HPX signed a Framework Agreement in which HPX said it is envisaged that infrastructure rights will include an extension of the existing rail line in Yekepa, Nimba County, to the Republic of Guinea and access (with associated development and expansion rights) to the existing Yekepa-Buchanan rail corridor and to port infrastructure at and /or in the vicinity of Buchanan (the “Infrastructure Corridor” where such infrastructure may be shared with other users, (“Shared Infrastructure”).

Informed sources close to the deliberations strongly believe that said Framework Agreement is another major step forward in the realization of the immense benefits of the Guinean-Nimba Iron Ore Project that will provide significant social and economic benefits to the two West African states (Guinea and Liberia) once production is operationalized.

The estimated total project development cost is put at US$2.77 billion (including direct capital costs, plus all engineering, owners cost, contingencies and taxes).

Direct Capital Costs for rail and port development in Liberia, according to those familiar with the discussions, are estimated at more than US$600 million.

Highly-placed and authoritative insiders of HPX hinted that the development of the Nimba Iron Project is estimated to create 2,000 ‘Direct Permanent Jobs,’ of which approximately 1,500 would be in Guinea and 500 in Liberia. This development, they further indicated, will help support ‘Indirect Secondary Employment’ in both countries.

For us, at THE INDEPENDENT, we think that this latest development in the mineral sector is wholeheartedly welcoming, to say the least.

Nevertheless, we are fully aware that Arcelor Mittal-Liberia, on the other hand, has been extensively involved with huge investment in Liberia that is providing hundreds, if not thousands of jobs for Liberians.

While it is a glaring and indisputable fact that Arcelor Mittal-Liberia has miserably failed to meet up with some of its payment obligations to the Government of Liberia relative to Surface Rental, Scientific Research Fund, Mining & Geology Institute, Scholarships and Import Duties, among many others, its amended MDA is equally vital to the development and progress of the country.

We say this simply because, despite the company’s reported pitfalls in meeting some of its obligations in the amended MDA of 2007/2013, the Liberian Government is expected to accrue a whopping US$55 million within 19 months of the agreement from the company, with social development funds now left directly to the discretions of the various counties being impacted by its MDA operations.

Others who are familiar with the MDA deliberations confided in this paper that there are few sticky and crucial issues that the Liberian Government and Arcelor Mittal have to brainstorm on critically, and with high sense of prudence.

One of the issues concerns the question of who controls the operational aspects of the Rail and which company is ready to expand said railroad?

Another cardinal concern has to do with the question: “Where the Liberia government places its newly investment partner, HPX, in the railroad operational package?”

Honestly, we think these concerns are legitimate and need to be appropriately addressed by the Liberian Ruling Establishment, so as to clear any lingering doubts on the Arcelor Mittal Agreement.

We strongly believe that no Foreign Direct Investment (FDI) such as Arcelor Mittal that paves the way for multiple jobs creation in our post-war, post-EBOLA, and Corona Virus-affected country, should be sidelined or rejected totally.

Frankly, despite its demonstration of some shortcomings and or lapses, Arcelor Mittal-Liberia has been with Liberia, playing other cardinal roles that leave chains of indelible positive footprints on the Liberian sand of time in our national drive towards the fortress of development and socio-economic progress.

This is also why we think that it would be more than prudent and wise for the government to invite all interested investors in the mineral development sector of the country to a table for frank discussions, aimed at mutually resolving the array of critical issues that, among others, led to the IMPASSE with respect to the rejection of said MDA.

Indeed, the Government of Liberia, headed by a populist President, Dr. George Manneh Weah, must not allow Arcelor Mittal to prematurely pull out of Liberia, dash the hopes of hundreds of Liberians who are currently benefiting from its employment, including several hundred Liberian students whose tuitions and fees are being bankrolled by MITTAL STEEL in various grade schools, colleges and universities across the country.

This is why we further think that renegotiation of said MDA is in the best interest of the Liberian nation, and as such, its categorical rejection would be tantamount to ‘unconsciously shooting ourselves,’ as a government and nation, in the legs.

In other words, Liberia now needs all credible Direct Foreign Investments that would improve the living condition of its citizenry through jobs provision which will equally strengthen the economic growth of Liberia.

Liberia needs Arcelor Mittal, HPX, Solway and others internationally acclaimed mineral development companies that have interest in investing in Liberia because our people need jobs, infrastructural development, educational empowerment or human resources development, among others, if they are to effectively and efficiently contribute not only to national development and progress but also global peace, development and progress.

It is also in this direction that we find it logical, appropriate, and nationalistic to plead with the Liberian government and people to renegotiate the Arcelor Mittal US$800 million concession deal and avoid the matter going to court. It is better to ‘jaw-jaw than to war-war.’

A Hint to a wise is sufficient.

Related Posts

Leave a Comment