The European Union (EU) High Representative and Vice-President Josep Borrell on February 1, 2022 responded to a question that was raised by Romanian MEP Ramona Strugariu in the EU Parliament back in December 2021, which raised concerns about ArcelorMittal Liberia’s Mineral Development Agreement (MDA) with the Government of Liberia (GOL).
In his response, High Representative Borrell said he was aware of the on-going ratification of the amended ArcelorMittal Liberia MDA, and described the deal as the largest in the country and will be one of the largest mining projects in West Africa.
The full text of the response is as follows:
“The High Representative/Vice-President is aware that the Government of Liberia (GOL) and ArcelorMittal (AM) reached an agreement, which is currently under ratification by the Congress of Liberia, to amend the Mineral Development Agreement (MDA) and to expand mining and logistic operations of the company in Liberia. The AM investment is by far the largest in the country and will be one of the largest mining projects in West Africa. One of the objectives of the amended MDA is to share the railway among the three mining companies in Liberia and in Guinea so that transport services are open to the two other mining companies in Guinea.
“The EU is promoting good governance and the rule of law and supporting sustainable and inclusive development in its policy dialogues and cooperation with partner countries, including Liberia. This includes the promotion of human rights and responsible business conduct in line with United Nations Guiding Principles, and applies to all sectors of intervention, including mining.
“There are benefits for the country and its citizens, foreign investments being essential for Liberia’s development. For the EU this investment, with its link to the viability of a decarbonised steel industry in Europe, is of high importance.
“The EU will continue its dialogue on economic governance with the government, to support responsible mining practices in compliance with the internationally agreed labor and environmental standards and the Extractive Industries Transparency Initiative.”
In September 2021, the Government of Liberia and ArcelorMittal signed a landmark amendment to the company’s Mineral Development Agreement (‘MDA’) which paved the way for additional investment of an approximately US$800 million to expand the company’s mining and logistics operations in Liberia.
With the MDA amendment coming into effect, ArcelorMittal Liberia will significantly ramp up production of premium iron ore, generating significant new jobs and wider economic benefits for Liberia. The expansion project encompasses processing, rail and port facilities and the construction of a new concentration plant as well as the substantial expansion of mining operations, with the first concentrate expected in late 2023, ramping up to 15 million tonnes per annum (‘mtpa’).
More than 2,000 jobs are expected to be created during the construction phase, with Liberians envisaged to fill the majority of the roles created. As the largest foreign investor in Liberia, ArcelorMittal Liberia has already invested over $1.7 billion in the country over the past 15 years.
Under the new amendment, AML’s annual CSDF payments will increase up to US$3.5 million after the amendment is ratified. Currently, 20% of the CSDF is being allocated to specific programs selected by the counties and communities, which AML is financing directly to the communities. With government agreeing to direct 100% of CSDF contribution directly to the 3 counties, a huge opportunity will be created for the undertaking of many other community development programs in these 3 counties.
AML’s contribution to government revenues (from royalties, taxes, duties, etc), will increase from the current level of US$30-40 million annually to approximately $75 million annually when Phase 2 is ramped up.