As Arcelormittal Never Renege On Its Commitment: Liberia’s Biggest Taxpayer Poised To Do More
As the Legislature returned to the Capitol Building yesterday for the start of another legislative cycle, two key businesses remain on its action agenda for consideration: the national budget and the third amendment of the ArcelorMittal Liberia Mineral Development Agreement (MDA). The Executive Branch of government, led by President George M. Weah, transmitted the draft National Budget and the amended Mineral Development Agreement (MDA) for ratification during the Legislature’s special session, held during the latter months of 2021.
Coming with an additional US$800 million investment, the amendment, when ratified, will fund an expansion that encompasses new processing facilities, and further expansion of rail and port facilities. Liberia will boast one of the largest mining projects in West Africa, ramping up from the current 5 mtpa of DSO to 15 mtpa of high value concentrate. The amended agreement brings 2,000 new jobs and GoL remains owner of rail and port infrastructure. Moreover, the agreement before the Senate strengthens GoL’s demand for other users, including Guinean miners, to utilize the Liberia infrastructure for their export. The other users will need to invest to increase the capacity of the rail and port for their own use.
Reflecting on why the Legislature needs to act swiftly on the amended Mineral Development Agreement between ArcelorMittal and the Government of Liberia (GOL), research has shown that foreign direct investment (FDI) brings significant benefits and helps accelerate the development of a country. Such investment and the critical revenue that it delivers are indispensable to economic growth, especially for countries like Liberia that are slowly rebuilding after a devastating civil war, an onslaught by the Ebola Virus and now a new pandemic, COVID. Financial analysts have observed that, until cut short by Ebola in 2014, foreign direct investment (FDI) inflows to Liberia were increasing over the period and the majority of these inflows were concentrated within the extractive industry.
In fact, in July last year President George M. Weah, speaking at an investment forum, said that if the Liberian economy is to be revived the country “will require considerable foreign direct investment (FDI) to fulfill its development goals, as articulated in our national development plan, known as the ‘Pro-Poor Agenda for Prosperity and Development’.”
One of Liberia’s most dependable foreign direct investment (FDI) partners by far has been ArcelorMittal Liberia. The company was the only major foreign investment in the extractive industry that did not leave Liberia at the peak of the widespread Ebola outbreak.
Indeed, ArcelorMittal has never reneged on its commitment to Liberia. Since 2005, the company has invested over US$1.7 billion in Liberia and the mining project and reopened the iron ore mining industry in Liberia after a hiatus of over 20 years. The company is on the threshold of investing another US$800 million, making it the largest foreign direct investment (FDI) during President Weah’s Administration.
AML is the highest tax contributor in the natural resource sector of the country and the highest tax contributor in comparative terms. The Liberia Revenue Authority (LRA) has on more than one occasion certificated AML at a national tax appreciation event. Besides, AML provides US$200,000.00 annually for an advanced scholarship program for Liberian students. Forty-eight students have benefited so far. No other concessionaire has invested so broadly in education than AML. AML also runs several schools in Nimba and can proudly say that the company-run schools are among the best schools in Liberia, evidenced by national exam scores for the last 5 years. Support to livelihood in communities is the single largest across all concessionaires.
AML has been one of the largest revenue contributors in Liberia with payments to the government exceeding US$280 million to date. When Phase 2 of the company’s expansion project is fully ramped up, these payments will reach approximately US$75 million annually.
Other AML ventures:
AML reopened two hospitals in Yekepa and Buchanan that are providing medical care to both employees and local residents. The two hospitals provide medical services to nearly 30,000 people per annum from nearby villages and communities, including villages from neighboring Guinea. The surgical wards are being renovated to provide improved medical services. The AML hospitals maintain active continued engagement and collaborative support for local and national complementary response strategies for Covid-19 and other infectious diseases in Liberia.
AML has been contributing US$3 million annually for the counties in which it operates. To date, the company has paid $45 million towards this commitment. In response to citizen’s complaints that the funds were not benefiting the affected communities, AML convinced GoL that 20% of these funds should be managed directly by these communities. This program kicked off in 2020. CSDF contribution will increase up to $3.5 million after the amendment is ratified.
AML has spent $1.7 million to date on this scholarship program.
AML reopened the Yekepa VTC in 2017 by spending US$7 million to refurbish this state-go-the-art training facility. Enrolment to date is 159 students, and the first batch of 45 recently graduated in 2021
In addition to its MDA commitments, AML has made a US$40 million commitment to fund the paving of the Ganta-Sanniquellie highway. The key section between Ganta and Sanniquellie is expected to be completed in mid-2022. The people of Nimba had complained that LAMCO had not built this highway during its decades in Liberia.
When ArcelorMittal entered Liberia in 2005, the country had no electricity other than private generators. Together with the Ministry of the then Lands, Mines and Energy, World Bank and ECOWAS, AML participated in helping with the execution of plans for the WAPP line connecting the country with Cote D’Ivoire for the provision of electricity. This project is depending on AML being a large off-taker of electricity and, accordingly, the line has been routed via Yekepa and Buchanan.
Of course, as with any major investment of the size of ArcelorMittal Liberia, all has not been perfect. The company has conceded that much more can be achieved. In a recent Op-ed, Stefan Buys, CEO AM Mining, said, “The MDA ratification process has proved helpful in highlighting some community engagement issues, where there clearly is a need for improvement in how we engage with local stakeholders. Everyone at ArcelorMittal Liberia will be working hard to deliver that improvement. We commend ArcelorMittal for boldly acknowledging community-based issues. Be that as it may, Stefan also reminded us that it is critical we all remain mindful of the bigger picture, and what is at stake here is the long term continuity of a large foreign investment for Liberia and a project which will deliver significant employment, social and economic benefits to Liberia for decades to come.”
Foreign direct investment (FDI) is a crucial catalyst in the development, growth, and technological expansion of a nation. Nearly a year ago, with great expectations, President Weah in his 2021 annual message to the Legislature and the nation, proudly announced that Liberia was making significant progress in talks with ArcelorMittal that will yield an $800 million investment. For more than 51 arduous weeks, government representatives on the IMCC (including the ministries of Mines and Energy, Justice, Finance, and NIC), along with ArcelorMittal, deliberated and delivered one of the best mineral development agreements that all sides can be proud of. Now, the ball is in the court of the Legislature and, as many have said, there is not much time to waste. Liberians want to get an opportunity to work and feel the impact of this mega investment. “We call upon the Legislature to put the development of this country forward by ratifying the 3rd Amendment to the ArcelorMittal Liberia MDA.”