ArcelorMittal’s Mining Development Agreement: BAD DEAL! P-2


It seems like no matter how bad a deal is for Liberia, as long as there is someone who can influence the majority’s opinion that America has interest in the deal it will sail on smooth tides, with a perceived fear that the US will institute punitive action on the state and its government if their interest is not prioritized.

   This statement has been consistently held for ages, with the likelihood of the Federal Government of the United States not being in the know of the actuality. Most times, it is a single member of the US Congress, State Department, Federal Bureau of Investigation or Central Intelligence Agency who would be used to mastermind the intimidation. However, this trend of action has suffered Liberia for many years and kept it underdeveloped while other countries in the sub-region glow in peace and development.

   This scenario is exactly the case of ArcelorMittal, an Indian company that has kept the people of Liberia in maximum suffering and abject poverty.

   Even though it has not done anything much to earn a renewal deal, ArcelorMittal-Liberia is being termed as an interest of the US government; as such, its mineral development agreement should be renewed in the face of the residents of its concession areas and some of its employees crying for better incentives and livelihood.

   This should not be strange to those who still remember the trend of events after the 2003 civil crisis when ArcelorMittal made its way into Liberia through similar US official’s intimidation and threat.

   A huge archive of documents obtained by the media, as well as statements from some former and present Liberian government officials who worked closely with the then Chairman of the Liberian National Transitional Government (LNTG), Charles Gyude Bryant, revealed the psychological pressure endured by the then Liberian Head of State (now deceased) from the former Chief of Mission of the United States Embassy, John W. Blaney, III, to have the Liberian government overturn an earlier bid and award the concession to Mittal Steel.

Then Chairman of the Liberian National Transitional Government (LNTG), Charles Gyude Bryant

   According to the document, the real winner of the bid for the former LAMCO Concession area, Global Infrastructure Holding Limited (GIHL), had signed a memorandum of understanding (MOU) with the Government of Liberia (GOL) on November 28, 2003 with the primary objectives and purposes of entering into a joint venture in respect to the restart of mining activities at the former LAMCO Concession Area.

   The MOU provided that the GIHL would, among other things, carry out the necessary due diligence and undertake a feasibility study on the Nimba iron ore deposits and the industrial infrastructure, which includes but not limited to, what was left of the housing units, the railroad, workshops, the Buchanan port, amongst other assets.

   On October 7, 2004, GOL and GIHL, incorporated the Liberia Global Mining Company for the purpose of undertaking mining operations at the former LAMCO Concession Area.

   Rio Tinto/WATCO, LNM Holdings, GIHL, BHP Billion and Shandong International Trading Group were the companies that tendered proposals for the concession area.

   The document revealed that the Board of Directors of the Liberia Mining Corporation (LIMINCO) submitted the proposals to the Minerals Technical Committee of GOL (the Technical Committee), which was chaired by Mulbah Willie (deceased) and had Albert Chie (now Senate Pro-Tempore) and Gersley Murray (now Minister of Mines and Energy) as secretaries, for evaluation, and that after ten (10) days of deliberation the Technical Committee selected the winner, which was not Mittal Steel, and accordingly submitted its findings and recommendations to the LIMINCO Board for approval.

   At its meeting of Friday, August 27, 2004, the LIMINCO Board adopted the Technical Committee’s recommendations and, upon a motion duly made, seconded and carried, was agreed to commence contract negotiations with GIHL, which was the real winner of the bid proposal.

   On October 4, 2004, by letter NTGL/MKW/3/MLM&E/04, the Technical Committee informed the then Minister of Finance of the Republic of Liberia, Lusene Kamara, who was also Chairman of the LIMINCO Board, that the Technical Committee had entered into, and successfully concluded, negotiations with GIHL as mandated under the Minerals and Mining Law in respect to finalizing a Mineral Development Agreement.

   However, investigation found out that the genuine winner’s bid was overturned allegedly on threats and pressure from the US envoy in favor of Mittal Steel (now ArcelorMittal).

   People who were close to Chairman Gyude Bryant informed the media that, besides letters written by the US Envoy to Chairman Bryant, he made uncounted numbers of telephone calls in which he, the US diplomat, allegedly threatened the then Liberian Head of State, which forced him to overturn the technical committee’s decision to award the concession to GIHL.

   According to the document, Ambassador Blaney’s pressure on Chairman Bryant came weeks after he allegedly received a communication from one Dr. Louise Schorsch, who allegedly sought his assistance.

   The document revealed that, long after the Nimba bid was awarded to GIHL, Dr. Louis Schorsch, President & CEO of ISPAT INLAND, INC., addressed a letter dated September 16, 2004 to Ambassador John W. Blaney III, Chief of Mission, Embassy of the United States near Monrovia, with copies to Chairman Bryant, Minister Jonathan A. Mason who was Minister of Lands, Mines and Energy at the time, and Adilya Mittal, Vice Chairman of LNM Holdings N.V.

   In the letter, Dr. Schorsch, amongst other things, solicited Ambassador Blaney’s support and assistance for an investment project in Liberia that Dr. Schorsch believed would be beneficial to both Liberia as well as Ispat Inland, Inc. and its over 6,000 US employees. He informed the US Embassy official that in 1998 Inland was acquired by Ispat International, which affiliated with the LNM Group.

   The letter also told Blaney that another part of the LNM Group, LNM Holdings NV, was in the process of preparing their technical and commercial proposal in regard to the rehabilitation and development of the Nimba and Western area deposits and their related infrastructures, pointing out that the proposal would have been submitted to the Liberian government by the end of September 2004.

   The communication informed Blaney to note that LNM Holdings NV project would not only boosts the Liberian economy “but also help to ensure the full operation of its Chicago area facilities by providing access to Liberian iron ore and helping them address light raw material markets.

   Dr. Schorsch, in the letter to the US diplomat, said that according to widely used rules of thumb, this will help safeguard in excess of 30,000 jobs in the Chicago area through direct and indirect employment.

   The letter further sought the Ambassador’s support in facilitating their discussions with the Liberian government in order to ensure that the interests of the American steel industry in this matter were reflected through a fair and transparent evaluation and negotiation process once their proposal is submitted.

   Consequently, upon receipt of Dr. Schorsch’s letter, Ambassador Blaney on November 1, 2004 addressed a letter to Chairman Bryant seeking the Chairman’s assistance in improving the transparency of reports that foreign investors’ proposals do not get fair consideration, and that there are no clear rules which potential investors must know and that the process of awarding concessions is somehow questionable. He requested Chairman Bryant’s intervention.

   On receipt of Ambassador Blaney’s letter, Chairman Bryant, on January 14, 2005 wrote to then Lands and Mines Minister, Jonathan Mason, directing that the mining industry be opened to bids which, according to information, was a deviation from the Minerals and Mining Law extant.

   The winner of the proposal, GIHL, vehemently protested Chairman Bryant’s attempt to overturn their proposal and wrote a letter to the Interim National Legislature complaining the Liberian leader and seeking its intervention.

    GIHL told the lawmakers that it had met the requirement of the controlling law, but that Chairman Bryant was tailoring a plan allegedly hashed by Ambassador Blaney to have LNM Group, which failed in its bid, awarded the contract.  Additionally, GIHL informed the Legislature that it was encouraged to finance the employment of some 250 men and women, including ex-combatants, to preserve what was left of the former LAMCO assets as well as undertaking a complete survey of the railroad.

   UK-based Global Witness criticized the US$900 million takeover by Mittal Steel. It said in a report that Mittal took the contract in a controversial faction.

   Global Witness Report said that the deal heavily weighted against the interests of war-torn and impoverished Liberia and it should be substantially re-negotiated, according to an in-depth analysis of the contract published in a report, “Heavy Mittal?”, released by Global Witness in mid-2000.    The report dissected the mineral development agreement (MDA), signed on August 17, 2005, five months before democratic elections in Liberia, which gave 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. To be continued.

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