The first agreement signed between Mittal Steel (ArcelorMittal) and the Government of Liberia (GOL) was valued at US$900 million at the time when the cost of living was far less than the present-day. However, investigation has established that the company did not completely live up to its contractual agreement and left the people languishing in hardship, but is yet pursuing another 25-year extension deal from government, which observers believe is not in the interest of the country and citizenry.
The Hot Pepper has published a series of investigative articles on ArcelorMittal, first published by Lyndon Ponnie, Publisher and Managing Editor of Concord Times, who conducted the investigation some years ago. The articles include a damning report from the UK-based Global Witness (GW), which referred to the deal as heavily weighted against the interests of Liberia and noted that Mittal took the contract in a controversial faction.
The report dissected the mineral development agreement (MDA), signed on August 17, 2005, five months before democratic elections in Liberia, which gives Mittal the right to extract iron ore from Liberia. “The agreement is heavily weighted against the Liberian government, ceding important sovereign and economic rights to Mittal—almost creating a state within a state,” said Patrick Alley, Director, Global Witness.
The GW report, named, “Heavy Mittal?” revealed that while Mittal’s investment in Liberia could bring much-needed jobs and a major economic boost, the combination of both the “Mittal-friendly” and loose wording in the contract means that Mittal Steel 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 and leaves open the basis for intra-company pricing, creating 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.
“Mittal Steel enjoys a five-year extendable tax holiday in Liberia and, once this is over, has created an international tax regime that encourages repatriation of profits to low tax regimes in Cyprus and Switzerland, thereby potentially denying Liberia significant tax revenues.
“The company structure created by Mittal protects the parent company from guaranteeing or bearing the risk of the activities and liabilities of its subsidiary.
“Two major public assets of Liberia, a railway and the port of Buchanan, are transferred to Mittal Steel and the GOL will only be allowed to use these facilities if there is spare capacity.
“The stabilization clause freezes the laws in the concession area, and has the potential to undermine Liberia’s right to regulate in important public policy areas such as human rights, the environment and taxation and could severely limit Liberia’s ability to fulfill its current and future obligations under the Liberian Constitution as well as its commitments under international law.
“The Concessionaire has far-reaching authority to possess public and private land without providing adequate compensation or the means to seek effective redress.
“The provisions for the maintenance of a security force by the Concessionaire fail to adequately establish the limits of its authority, which could be particularly harmful in Liberia, in view of the historic involvement of private security forces in human rights abuses.
“This MDA places the hard-won rights of Liberian citizens at risk, with no real guarantees of the economic benefits it can expect in return,” says Patrick Alley, Director, Global Witness.
Global Witness emphasized, “Mittal has a duty as the world’s biggest steel company and a self-professed good corporate citizen to lead by example rather than utilize virtually every opportunity to maximize its profit at the expense of Liberia,” added Patrick Alley.
The contract was however renegotiated, following President Sirleaf’s pledge to review all contracts signed by her predecessors in Liberia’s National Transitional Government (NTGL), but did not yield much needed result, as the company allegedly operated on its own terms without any remorse for human rights or dignity.
Montserrado County Senator, Saah H. Joseph, who recently led a six-man Specialized Committee of the Liberian Senate to assess the ArcelorMittal concession area and put members of the Senate in the position to make an informed decision on the company’s renewal deal, expressed disappointment in the company for abandoning affected communities and the lack of housing, health and school facilities in communities adjacent mines operated by the company.
The Senate’s committee’s observation ascertained the fact that ArcelorMittal is not doing much to improve the livelihood of the Liberian people, with pundits calling on the Senate to use the committee’s findings as sufficient reason not to grant ArcelorMittal even a year of a new deal, lest to mention 25 years. To be continued.