Guest Article: “Who are the Hidden Hands Trying to Stop ArcelorMittal MDA Ratification?”
It is over two months now since the third amended Mineral Development Agreement (MDA) between ArcelorMittal Liberia (AML) and the Liberian government, especially the Executive branch, was signed. After the signing ceremony, the amended agreement needed to be ratified by both Houses—the Houses of Representatives and the Liberian Senate.
It was observed that before the draft MDA could hit the Capital Building, it was ‘greeted’ with a series of protests, criticism, demonstrations, etc. What many Liberians did not know is that these anti-AML MDA were to a large extent triggered by two forces, local and external. From the local line, communities of AML’s operations and some officials of the counties have been putting up resistance for its total rejection. From the external front, some parties with a vested interest in the mining industry, railroad, and ports have been behind the scenes quietly feeding their ‘foot soldiers’ and fueling opposition to the ratification of the MDA. What many of the surrogates fronting in this campaign seem to have forgotten, or perhaps, at least appeared to ignore, is the US$500 million ArcelorMittal invested in the rail and port for total rehabilitation and to make these assets operational again.
Despite the massive negative public relations on all fronts, the MDA was finally passed by the lower house with major alterations and has been sent to the Upper House for its actions.
Notwithstanding the passage, the House’s ratification has been met with a barrage of criticisms from many areas of society, basically on the usage of the rail and port.
But what is in the third amended agreement that have generated all of the hypes? Interestingly, a major negative public relation against the MDA were seen on newspapers headlines, online websites, social media, and many other media sources on the purported exclusivity provision in the MDA. Even though our investigation of this matter has not confirmed any such provision in the MDA, we saw it overwhelmingly factored in the House Joint Committee Report. It is important that it is made clear that the exclusivity right mentioned in the House’s Joint Committee Report does not exist in the MDA. The question now is how did the House Committee raise an issue in its report that does not exist in the MDA? From where did the question of rail exclusivity in the House Joint Committee come?
The provision in the MDA calls for multiuser arrangement where AML and any other user can build the capacity of the rail for their used as seen herein Article 3: “The text of paragraphs d., e., and f. of Section 3 (Assets and Facilities) of Article IX of the Current MDA was hereby deleted in its entirety and replaced in the new MDA with the following: Operation and Maintenance of Railroad and Port Infrastructure—Generally.”
‘During the Term or any Extended Term of the Agreement, the GOVERNMENT hereby grants the CONCESSIONAIRE the right (i) to have access to, expand, use, operate and maintain the Railroad on the terms and subject to the conditions outlined in this Agreement (including the Railroad System Operating Principles that are a part thereof) and in the MUA, once it becomes effective and (ii) to have access to, expand, use, operate and maintain the Buchanan Iron Ore Port on the terms and subject to the conditions set forth in this Agreement.
‘The GOVERNMENT shall ensure that the Concession Area, as well as the assets and facilities, transferred or otherwise made available to the CONCESSIONAIRE hereunder (including the Railroad and the Buchanan Iron Ore Port, which have not been transferred but have been made available for use in the Operations on the terms and conditions set forth in this Agreement), are free from any occupation and encumbrance, and available for the purpose of the Operations contemplated hereby, subject only to the provisions of paragraph e. below (User Access and Future Expansion of the Railroad), paragraph g. below (Access to the Buchanan Iron Ore Port; Port Capacity Expansion), and the Railroad System Operating Principles and the MUA (once it becomes effective).”
The reality here is that AML’s third amended agreement does have any provision that imposes hindrance for any other user of the rail. Notwithstanding, HPX has become uneasy with ArcelorMittal remaining the operator and may do anything to remove their perceived fear and pursue a result that put them all on the same footing, even though HPX is from Guinea and would be paying royalties and taxes to the Government of Guinea and not Liberia. Their payment to Liberia would only be for rail and port use.
In fact, over the weekend, HPX and Ivanhoe released a statement commending the legislature for ensuring that the AML MDA stripped out provisions which does not exist in AML’s deal, but which belief would have granted AML exclusive right.
Here is part of the statement: “HPX and Ivanhoe Liberia welcome last week’s decision by the House of Representatives to proceed to ratify the revised ArcelorMittal Liberia (AML) Mineral Development Agreement (MDA), and to strip out provisions that would have granted AML a “complete monopoly” over the Yekepa-Buchanan railway and port”.
They contused: “There is no doubt that the best outcome for Liberia is to have both major projects implemented concurrently. The significant expansion of the infrastructure linked to the Nimba Iron Ore project will in itself transform the Yekepa Buchanan railway and port into one of the largest infrastructure corridors in West Africa.”
Granted. Here is the question: what would have been their role if they were in the seat of AML? Certainly, their statement would have been different, or they would have been taking different steps.
It is good to always have a healthy competition. No one is against healthy competition. However, we must as a country remember that ArcelorMittal is mining our iron ore, hiring Liberians and not Guineans, paying taxes to our government for development, and many more.
Short-term friendship
In the corporate world, different groups align themselves for special interests.
From the committee’s report, it is clear according to some insiders that there were behind-the-scenes players that greatly helped to effect some changes in the entire agreement before its ratification. Today, they are the darling of the day, but tomorrow when the dust settles, the real and true colors will emerge.
They are all pretending to be the best players on the field. But then, one expert asked: Where were they many years ago when Liberia was scouting for investment? They were not visible. Rather, they were increasing the tax base of other countries.
Realistically, no one is arguing that AML has done everything right. As a responsible company, I am told that it has realized some of its shortfalls and has been busy working with affected counties to correct those defaults.
The level of investment at present by AML is significant compared to what other ‘short-term friends’ might be trying to come out with.
With this, the amended MDA has this important line: “Subject to the rights of the CONCESSIONAIRE and as provided in this Agreement, the GOVERNMENT may, at any time during the Term and any Extended Term of this Agreement, authorize the CONCESSIONAIRE and one or more other users to further expand the Railroad capacity for their own respective needs, subject to the subparagraphs below and in accordance with the Railroad System Operating Principles; it being understood that all Users, including the CONCESSIONAIRE in its capacity as User, will be responsible for providing and driving their respective trains for haulage of products, which trains will transit on the Railroad under the control and supervision of the Railroad Operator, in accordance with the Railroad System Operating Principles and the relevant provisions of the MUA (when it becomes effective):
“The CONCESSIONAIRE shall have the exclusive right to complete the ongoing expansion of Railroad capacity as part of its expansion of the mine, the concentrator, and the Buchanan Iron Ore Port to reach 15 MWMTPA of finished products (the “Ongoing Railroad Capacity Expansion”). The CONCESSIONAIRE shall complete the Ongoing Railroad Expansion by the later of (x) 31 December 2024 or (y) the date falling three 3 years after the Third Amendment Effective Date, as any of the aforementioned dates may be extended in accordance with Article XXXIII (Force majeure) (the “On-going Railroad Capacity Expansion Completion Date”). The CONCESSIONAIRE shall attain a volume of product shipped on the Railroad at an annualized rate of at least 10 MWMTPA, calculated on a rolling 6-months basis no later than December 31, 2027.
“The GOVERNMENT hereby confirms that the CONCESSIONAIRE shall have the exclusive right to complete an additional expansion of Railroad capacity of 15 MWMTPA beyond the Ongoing Railroad Capacity Expansion to enable the CONCESSIONAIRE to ship up to a total of 30 MWMTPA of finished products as part of the CONCESSIONAIRE’s plans to expand the mine, the concentrator and the Buchanan Iron Ore Port (the “Additional Railroad Capacity Expansion
In global politics, especially in the mining industry, there are various forces that contend for supremacy and control of territorial dominance. In the case of Liberia, the facts are clear. New players in our neighboring country, Guinea, and Solway in Nimba County have entered to scramble for access to mining infrastructure and minerals in this tiny west African nation- as in the case of HPX and Ivanhoe on the one hand, and Solway investment Group on the others.
With such interest, each of these companies has a vested interest in either iron ore or the rail and port infrastructure. For an example, HPX which has secured the Nimba Mountain in Guinea took up a fight against ArcelorMittal Liberia to ensure not only unhindered access to Liberia’s rail and port, but to totally neutralize ArcelorMittal, including taking away the operatorship also. In this way, HPX can decide to flip its Nimba Mountain deal for a more attractive profit. In the same vein, Solway which was given mining exploration license that overlaps with ArcelorMittal concession area would be in trouble if the AML deal goes ahead as was negotiated with the Government of Liberia. The question here now is are all of these contentions in the best interest of the Liberian people or are HPX and Solway pushing Liberians to front for their interest in the name of fighting a bad ArcelorMittal deal? These questions tend to incite even more deeper questions, particularly, for those who argue for outright rejection of the AML deal. Have these people present an alternative; or have they thought of what next for the languishing people of Liberia if the deal is not passed? Or in extreme situation where ArcelorMittal ends its remaining nine years and walks away, what gain does Liberia get? All of these questions need to be pondered as our Legislature, particularly, the Senate review and debate this agreement.
To the Senate:
After the lower house has completed its work, it is left with the upper house to look into it. This is a place for elders and in their own wisdom, they will see reason to look at it critically. Already, I have been told that many of them have already sensed the manipulation and interference of the hidden hands. The House Special Committee’s report writing, clearly shows that they were hugely influenced.
Look, in this portion, which states these: “Subject to the rights of the CONCESSIONAIRE and as provided in this Agreement, the GOVERNMENT may, at any time during the Term and any Extended Term of this Agreement, authorize the CONCESSIONAIRE and one or more other users to further expand the Railroad capacity for their own respective needs, subject to the subparagraphs below and in accordance with the Railroad System Operating Principles; it is being understood that all Users, including the CONCESSIONAIRE in its capacity as User, will be responsible for providing and driving their respective trains for haulage of products, which trains will transit on the Railroad under the control and supervision of the Railroad Operator, in accordance with the Railroad System Operating Principles and the relevant provisions of the MUA (when it becomes effective):”
Clearly, sources have told me that AML is not against this in anyway. What we need to look at is to be mindful of ‘hidden hands’ in such international negotiations.
Let the senate take its own time to double-check what has been sent. Also, not allow themselves to carry out any cut and paste work. This is not time for a double standard to be played with Liberia’s future, rather, a clean game to be played in which all parties will be winners.
I join the call on the elders’ House of Senate to put the look beyond the rhetoric and peel back the veil of secret manipulations and hidden hands. I have read the Amended MDA that is in the public arena in its entirety and have not seen any major contrast to our desire for national development. Let us identify real problem in the deal and not manufacture some only to discredit, so that this deal pass ratification for the benefit of our people.
Written By James Koluba