AML’s Expansion Deal: Charting The Path For Liberia’s New Administration

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The year 2014 will mark yet another pivotal moment for Liberia as a Unity Party government will take control of the country from the George Weah administration, but yet with loads of economic challenges.

   With pressing issues such as domestic and international debts, the imperative task of paying public employees’ salaries and the delivery of goods and services, the new government, without any doubt, faces a daunting task.

   Faced with low revenue generation capacity couple with fatigue in donor funding of pubic-sector initiatives, the Boakai government has to fight to deliver on its policy promise.

   Boakai and the Unity Paty presented their platform with acronym “AREST”—Agriculture, Roads, Education, Sanitation and Tourism (AREST)—and Liberians will be looking out for the fulfillment of this promise.

   In the midst of real-time economic challenges, many have started making mention of the ArcelorMittal Liberia-proposed ambitious expansion plan, aimed at extending its operations for an additional 25 years and investing about US$1.2 billion in the Liberian economy.

   This proposal, however, encountered obstacles on its path to realization, failing to secure approval from both houses of the National Legislature under the George Weah leadership.

   But like the saying goes, with new government comes new thinking, the incentives attached to ArcelorMittal’s expansion deal, couple with other benefits, could bring potential relief to the government given that the new administration takes proactive steps to avoid the bureaucratic bottlenecks the stalled the passage of the deal.

   The expansion project, which includes processing, rail and port facilities, seeks to be one of the largest mining projects in West Africa and includes the construction of a new iron ore concentration plant in Yekepa.

   More than 2,000 direct jobs are expected to be created during the construction phase, with Liberians envisaged to fill the majority of the roles created, including thousands of other indirect jobs.

   ArcelorMittal Liberia has committed itself to training and development program for high potential Liberian employees, who will gain on-the-job experience and knowledge in ArcelorMittal’s mining operations globally.

   It is reported that, if passed, the government stands to benefit from more than US$70 million in taxes in a year, while employees will receive advanced training in the fields of mining production and operation optimization, plant maintenance, planning and execution, plant electrical operation systems, and electrical maintenance.

   The company said other training areas in its proposed expansion deal include plant fitting and heavy-duty mobile equipment maintenance, as well as mine production and operations.

   “In addition, it is envisaged that the expansion will further boost the growth of small and medium sized businesses in Liberia, which offer a range of services to ArcelorMittal Liberia,” a company statement said.

   These incentives, including taxes, royalties and signing fees, have the potential to significantly impact Liberia’s economic landscape in a productive manner. 

   The new government, in considering such terms, must seek a balance between fostering economic growth and ensuring that the nation reaps fair benefits from its natural resources.

   For any administration, the news of ArcelorMittal’s proposed expansion must carry weighty implications because the potential infusion of capital from this multinational corporation can provide a much-needed financial boost for an economy almost cash-trapped and evidently suffering substantial investment drought.

   The additional revenue generated from the expanded operations of AML can, without doubt, alleviate some of the economic burdens faced by the government, aiding in the settlement of domestic and international debts as well as solving mounting challenges in health, education and instruction.

   Moreover, the influx of funds from ArcelorMittal’s expansion can facilitate the timely payment of public employees’ salaries, one of the problematic areas in public sector management which hunted the Weah Administration.

   This, in turn, would contribute to social stability and maintain a semblance of economic normalcy, amid the broader challenges the Boakai government would inherit in a matter of a moth and half.

   However, the failure of the proposed ArcelorMittal expansion deal highlighted the complexities involved in balancing economic interests with national sovereignty.

   The new Liberian government must however act in the interest of its people and pass the agreement, ensuring safeguarding measures in the terms of the expansion, making sure that they do not disproportionately favorable any party at the expense of each party’s long-term interests.

   Whatever the situation may be, the in-coming Unity Party government’s stance on the ArcelorMittal deal will raise questions about its commitment to fulfilling promises made during the election campaign, especially those commitments tied around attracting foreign direct investment.

  The electorate, expecting economic improvements and job creation, might scrutinize the government’s ability to navigate complex negotiations with international corporations for the benefit of the nation—if the deal remains stalled at the Legislature.

   It cannot be a situation of business as usual. The new government must position itself to address economic concerns rising from the ArcelorMittal expansion deal.

   The void left by the unrealized ArcelorMittal expansion has been felt throughout government budgeting, and the new administration would need to explore new avenues for honest investment negotiations bent on transparent and well-communicated economic decisions in the broad interest of the country—if it wants to advert facing increased scrutiny regarding its approach to negotiations with foreign entities.

   Clear communication on the rationale behind accepting or rejecting investment proposals would be crucial to maintaining public trust.

   In conclusion, the ArcelorMittal expansion proposal can serve as a crucible for the Boakai administration, testing its ability to navigate economic challenges while upholding the nation’s interests.

   As Liberia grapples with debts, salary obligations and the need for economic rejuvenation, the government’s response to this AML proposal would shape its trajectory in the eyes of both the electorate and the international community.

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