It has been three months since the House of Representatives returned the Third Amended ArcelorMittal Liberia Mineral Development Agreement (MDA) to the Presidency urging renegotiation.
There has been no official position from the government of Liberia regarding the status of the deal even though, the House of Representatives action to return the deal, which in fact, conflicts with an earlier common position with the Senate to set up a Conference Committee to sort out differences in both Senate and House versions of the Agreement.
Growth of the Liberian economy in the incoming years has been projected to be driven by the mining sector, with the iron ore industry in which ArcelorMittal Liberia is the largest investor expected to be the main propeller.
This is largely in part because ArcelorMittal Liberia and the Government in September 2021 announced a landmark agreement for the expansion of the Company’s mining and logistics operations in Liberia.
This would significantly ramp up the production of premium iron ore, generating hundreds of new jobs and wider economic benefits for Liberia.
The expansion project encompasses processing, rail, and port facilities and will be one of the largest mining projects in West Africa with over a billion-capital investment once the deal is sealed.
Groundwork and various technical preparations since got underway including recruitment, procurement, and installation of project facilities but it is being gathered that some key investment decisions on the project could be on hold by ArcelorMittal Liberia due to the political handling of the ratification of the Agreement.
ArcelorMittal’s new Chief Executive Officer Josephus Coenen highlighted recently, that time is of the essence as far as the company’s phase two expansion project is concerned.
For any investor wanting to finance a project on a scale of US$1 billion, a foremost concern would be the security of the investment, which in this case does not appear that ArcelorMittal Liberia has been fully guaranteed by the Government, through the Legislature.
Since the House of Representatives action, the status of the ArcelorMittal Liberia agreement is pretty much unclear without updates from the Executive, especially given a high level of public interest and expectations of Liberians for the operationalization of such a project with profound economic benefits to them.
What’s really at stake? Benefits of the AML Amended MDA?
The fact is that the administration of President George M. Weah has had a hard time attracting serious investments.
The over US$1 billion expansion project by ArcelorMittal Liberia is the biggest Foreign Direct Investment of President Weah’s administration and one would think that such a project would be given serious priority and the support needed, especially given that it is being done by a company with a revered track record of commitment and partnership with Liberia even in very difficult times.
The benefits of the new amendment to the ArcelorMittal Liberia MDA cuts across many different areas including jobs, economic social development, revenue generation, and many others.
As a result of the expansion project over 2000 new jobs especially for young Liberians are being created this year and extending into the next three years of the construction period of the iron ore concentrator in Nimba County.
The concentrator plant and expansion will create about 1200 permanent new skilled positions for Liberians as the plant is designed to be commissioned in 2023, even though this timeline is being seriously impacted by the delay to rectify the AML 3rd amended Mineral Development Agreement.
Aligned to the company’s business strategy, investment in training for Liberians is already in full swing, utilizing its state-of-the-art Vocational Training Institute and its external network to train and prepare more Liberians to meet demands for the highly technical skills associated with operating complex technology such as the concentrator.
The new amendment to the company’s MDA also offers increased benefits for its three operational counties of Bong, Nimba, and Grand Bassa.
Annual County Social Development Fund payments will increase up to $3.5 million after the amendment is ratified.
ArcelorMittal Liberia’s contribution to Government revenues (from royalties, taxes, duties, etc), will increase from the current level of $30-40 million annually to approximately $75 million annually when Phase 2 is ramped up.
Weighing in From an AML’s Perspective
While it is difficult to preempt the next move of ArcelorMittal Liberia relative to the handling of the new deal, the mishandling of its MDA ratification due to obvious reasons best known by Liberian authorities suggests that it is safe to state that there are some powerful cards to the company’s disposal to prevail on authorities to do the right thing.
Liberians employed and looking for employment with ArcelorMittal Liberia are already worried about the risk of losing their jobs should this agreement be further delayed or if the parties fail to resolve whatever outstanding issues.
Projected on possible revenue from the mining sector, the new national budget could suffer serious shortfalls if the AML amended MDA is not ratified in time, leading to new economic challenges for Liberians. A country already struggling for jobs.