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Why Should HPX get 30 mtpa Rail & Port Capacity in Liberia When Government of  Guinea has Approved Only 5 mtpa?

32 10,583

By Julius T Jaesen II

Managing Publisher

juliusjaesen@gmail.com

From all indications, the ratification of the ArcelorMittal 3rd Amendment has been stalled because the Government of Liberia is seeking to give 30 million tons capacity to the Guinean company, High Power Exploration (HPX) to the disadvantage of ArcelorMittal Liberia and several other smaller Liberian iron deposits that are in that corridor.

Our investigation has revealed that HPX, which is not a mining company but rather an exploration company is seeking to secure the infrastructure Concession from the Liberian Government so that it can immediately flip the project in Guinea. Our sources have informed us that the potential buyers of the HPX project in Guinea are consortium of Chinese and Russian companies. These assertions, if true, mean that Liberia will be playing host to another Russian company when the rest of the world is placing sanction on Russia. This will be a geopolitical nightmare.

Documents in our possession show that HPX has only been approved to move 5 million tons per annum (mtpa) through Liberia. Further approval will be needed from the Government of Guinea if HPX wants to move more than 5 mtpa. Even though the Liberian Government is aware of this, it seems that it is still poised to grant HPX the 30 mtpa capacity on the rail and port even experts believe that such capacity is not available at the port.

By giving HPX the 30 mtpa on the rail for 25 years, it means that smaller Liberian iron projects in that corridor along with other smaller Guinean projects will not be able to develop their projects because the cost of constructing totally new rail is prohibitive for smaller projects. However, if HPX believes that it can get approval from Guinea to evacuate 30 mtpa through Liberia then the company should be proposing to construct its own rail in the corridor rather than seeking to block all the capacity on the existing rail and render smaller projects non viable. A project of 30 mtpa is not a small project and so HPX should be able to build its own rail and port but rather it is seeking to use all the remaining capacity on the existing rail.

Our investigators have also been involved that the Guinean Ministry of Mines will be issuing a letter to the Liberian Government very shortly to inform them that Liberia should not give all the capacity on the rail to a single company from Guinea as there are several other companies in Guinea with smaller projects that need the rail capacity and that these companies are far advanced in their approval process than HPX. In fact, HPX has not even started the approval process in Guinea. HPX should have started with the shipment of 5 mtpa while she works on the bigger project but HPX has been unable to do that because from all indications, HPX is not interested in mining; HPX is interested in flipping the project and cashing but to do that, she mush show the full evacuation plan.

HPX seems to be using the Liberian Government in its game of financial chess as a pawn. HPX wants to make big money but in the process, HPX is stalling the government of Liberia from proceeding with the expansion of its investment project. The risk to the Government here is that if iron ore prices take a hit like it did in 2013, ArcelorMittal might be reluctant to make the massive investment and Liberia stands to lose from the royalties, taxes, employment and other indirect economic benefits.

For a country that has not seen any major investment in the economy over the last 6 years, ratification of the ArcelorMittal agreement is a much relief and boost needed to demonstrate that Liberia is still an investment destination.

The Government of Liberia and ArcelorMittal have been negotiating for the last 4 years. Though an agreement was signed on September 10, 2021, but HPX played every trick in the books to undermine the ratification and it succeeded. Today, the ArcelorMittal agreement is still in limbo; no one knows exactly what needs to be done.

HPX is winning and Liberia is losing.

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