By Seltue Karweaye Sr.
Many Liberians have negative views about mining due to a history of exploitation and limited local benefits. Still, Liberians were optimistic when Liberia enacted its Minerals and Mining Law in April 2000, aimed at attracting foreign investment. A key part of this law is the Mineral Development Agreement (MDA) required for Class A mining licenses, which can last up to 25 years.
ArcelorMittal and the Gyude Bryant Administration
On August 17, 2005, the National Transitional Government of Liberia, led by Gyude Bryant, formalized an MDA with ArcelorMittal Liberia (AML). This agreement focuses on exploring and extracting Liberia’s iron ore, with an expected investment of around US$900 million over 25 years.
ArcelorMittal’s MDA with the Liberian government includes a $3 million annual payment to support local communities and a five-year renewable tax holiday. Key provisions benefit the company, such as royalties on minerals, transfer pricing measures, asset transfers, and rights to land and mineral extraction.
The agreement also includes a stabilization clause, the ability to use private security forces, and confidentiality protections. These measures aim to support ArcelorMittal’s operations in Liberia. Following the MDA with ArcelorMittal, controversies arose over allegations of bribery and coercion. Critics claimed the terms were detrimental to the Liberian government and its citizens. A 2006 Global Witness report, “Heavy Mittal?”, highlighted concerns that Liberia had surrendered crucial rights to its non-renewable resources. This raised fears of a “state within a state” favoring ArcelorMittal and showcased how multinational corporations exploit weak regulations for their profit over national welfare.
ArcelorMittal and the Ellen Johnson Administration
In January 2006, Ellen Johnson Sirleaf became Liberia’s president and renegotiated its contract with ArcelorMittal Liberia, which donated 100 Toyota Hilux pickups to each member of 52nd National Legislature In May 2007, the Liberian Legislature ratified the revised Mineral Development Agreement (MDA) amid allegations of bribery related to the approval process, after the donation of vehicles to the National Legislature. This new agreement made significant changes to the initial terms concerning the state’s resources allocated to ArcelorMittal Liberia. The total investment package was increased to $1 billion, and the previously granted tax holiday was eliminated. Consequently, ArcelorMittal later announced a further increase in the overall investment to $1.5 billion.
Under the terms of the MDA, ArcelorMittal committed to providing approximately $73 million over 25 years for socio-economic development in Liberia through the County Social Development Fund (CSDF). This includes an initial $1 million in 2006 and annual contributions of $3 million for the following 24 years, targeting Nimba, Bong, and Grand Bassa counties.
ArcelorMittal and the George Weah Administration
On September 10, 2021, the Government of Liberia and ArcelorMittal Liberia signed an $800 million amended Mineral Development Agreement (MDA) aimed at tripling iron ore production in the country. This agreement followed a freeze on investments in 2019 due to a port dispute and included a $65 million payout to the government, consisting of a $55 million reservation for 15 million metric tons of iron ore and a $10 million signing bonus.
On March 28, 2022, the National Legislature rejected an $800 million mining deal with ArcelorMittal. The third amendment to the mineral development agreement (MDA) did not address the interests of the Liberian people, particularly regarding fiscal benefits, railroad and port management, and mineral export monitoring. Key concerns included unfavorable fiscal terms, issues with port user fees, and ambiguity in railroad regulations. The agreement would have also allowed ArcelorMittal to control Liberia’s infrastructure assets and block access for other users, specifically for the Yekepa to Buchanan railroad and the Port of Buchanan.
ArcelorMittal and the Joseph Boakai Administration
As the Mineral Development Agreement (MDA) between ArcelorMittal Liberia (AML) nears its expiration in 2030, the company is pursuing a renewal strategy through the press and with President Joseph Boakai’s government. On June 5, President Boakai and ArcelorMittal Executive Chairman Mr. Lakshmi Mittal inaugurated a significant $1.8 billion expansion project at the Tokadeh concentrator site in Nimba County.
According to the AML, the expansion project aims to boost annual production capacity from 5 million tonnes to 20 million tonnes, while also improving iron ore quality. The initiative is expected to create approximately 5,000 contractor jobs during construction and around 1,000 permanent positions once operational, benefiting local communities and fostering regional development. Furthermore, ArcelorMittal Liberia has rehabilitated the Buchanan Kilometer 2.5 Overhead Bridge in Grand Bassa County. The company said it invested approximately $700,000 in the project.
Violations of the MDA
An analysis of Section 4.14 of the Liberia Extractive Industries Transparency Initiative’s 15th LEITI Report shows that ArcelorMittal exported 6.4 million metric tons of iron ore from Liberia from July 2021 to December 2022, generating $477.2 million in revenue. This underscores the iron ore industry’s critical role in Liberia’s economic development. Despite significant financial success, ArcelorMittal has struggled to comply with national regulations and fulfill its contractual obligations.
The amended 2007 Mining Development Agreement (MDA) requires that by 2012, at least 25% of senior management positions be held by Liberians, increasing to 50% by 2017. Furthermore, by 2008, at least one Liberian should have occupied a top executive role, such as CEO, CFO, or COO. Unfortunately, these goals have not yet been met, raising concerns about the company’s commitment to local leadership. Article 9 of the amended Mineral Development Agreement (MDA) obligates ArcelorMittal to contribute $200,000 annually to scholarship programs for Liberian students pursuing higher education abroad, potentially resulting in a cumulative fund of at least $3.5 million. However, the company’s 2022 report to the National Investment Commission reveals that scholarship payments did not begin until 2012, indicating a troubling five-year delay in supporting Liberian scholars and raising questions about accountability.
Moreover, due to systemic failures, communities in Nimba County, where ArcelorMittal Liberia operates, have shown little progress since the civil war ended nearly two decades ago. Poverty remains pervasive, and high unemployment rates leave many struggling to make ends meet. ArcelorMittal Liberia has opted to import foreign labor for basic tasks, despite the availability of skilled local workers, raising concerns about unemployment in the country. Civil Service Agency Director General Josiah F. Joekai revealed that around 3,000 Indian nationals are employed in roles that Liberians could perform. He made this statement during a Senate hearing addressing workforce policies and job opportunities for locals.
Additionally, instead of renovating local housing for its workforce, ArcelorMittal has chosen to use shipping containers to accommodate its senior management. This choice highlights the stark contrast in living conditions between management and local employees, contributing to feelings of disenfranchisement and disillusionment among Yekepa, Nimba County residents, who feel overlooked and undervalued in their community.
Between 2015 and 2016, ArcelorMittal cut about 450 jobs and reduced iron ore exports from Liberia due to falling global prices. In response to concerns over layoffs, Liberia’s legislature established a joint committee in 2018 to investigate the company’s compliance with the MDA governing foreign mining operations in the country. The joint committee found that ArcelorMittal violated the MDA by failing to build a necessary processing plant at the Gangra mines in Nimba County, which was to be completed within two years of starting operations. They ordered the company to reinstate laid-off workers within four months and recommended a review of the MDA to enhance accountability and protect the interests of both the government and the company.
The Joint Committee ordered ArcelorMittal to reinstate laid-off workers within four months and called for a review of the MDA to improve accountability. They stressed the need for regular monitoring of government concessions and the rehabilitation of critical infrastructure in Nimba, Bong, and Bassa counties. The goal was to ensure access to adequate housing, safe drinking water, and reliable electricity within a year. Additionally, a framework for a guaranteed agreement between private landowners and ArcelorMittal was proposed, requiring input from district representatives and to be finalized in three months. Given these recommendations, it’s essential to ask what actions ArcelorMittal has taken in response to the report and whether the company has followed the directives.
Despite the provisions in Sections 9.3(e) and 9.3(f) of the MDA that aim to establish a multi-user rail system allowing third parties to access rail and port infrastructure, the AML is opposing the Government of Liberia’s efforts to introduce competition among mining companies. AML’s resistance stems from its desire to maintain a monopoly over railway operations.
The rail deal with Ivanhoe Atlantic, previously known as HPX, is expected to generate over US$1.6 billion for Liberia, offering significant economic benefits and bolstering regional development through improved transportation infrastructure. However, ArcelorMittal Liberia (AML) has cautioned the government that it may take legal action if a proposed agreement granting multi-user rail access to Ivanhoe Atlantic is approved.
The agreement with Ivanhoe Atlantic also includes over US$600 million dedicated to upgrading key infrastructure, including facilities in Tokadeh, Nimba County, and at Buchanan Port, essential for supporting Liberia’s mining operations. This investment precedes the Liberty Corridor project, which could bring an additional US$3 to US$5 billion to develop new infrastructure, including a deep-water port and an advanced rail system, potentially transforming the country’s transportation landscape. In a leaked email to Liberia’s Inter-Ministerial Concessions Committee (IMCC), AML’s CEO, Michiel van der Merwe, expressed that allowing other mining companies access to the Yekepa-Buchanan railway contradicts the terms of AML’s existing Mineral Development Agreement (MDA). He warned that such actions could undermine AML’s investments and commitments, raising significant legal and operational concerns.
Liberia’s transition to a multi-user rail system is essential for the nation’s economic development strategy, extending beyond just AML and Ivanhoe Atlantic. The Yekepa-Buchanan railway, a 360-kilometer sovereign asset built in the 1950s by LAMCO, was transferred to Liberia through a Build, Operate, and Transfer (BOT) agreement. Since AML took control in 2005, it has held a monopoly on the railway, preventing other mining companies from accessing this vital transport route. As a result, billions of tonnes of untapped iron ore remain unusable due to inadequate transport infrastructure. This monopoly hampers Liberia’s economic growth by stifling competition and denying the country much-needed transit fees and infrastructure investments. Introducing a multi-user rail system could help unlock these resources and foster a more competitive and prosperous economy.
Recently, the AML’s U$1.8 billion expansion project at the Tokadeh concentrator site in Nimba County has drawn criticism from Senator Nya D. Twayen. He argues that it does not represent a true investment in Liberia’s long-term economic development and raises concerns that ArcelorMittal Liberia could dismantle the facility at any time, questioning its sustainability and local benefits. Unlike the durable manufacturing facilities built by ArcelorMittal in Brazil, the Nimba County plant is primarily made of prefabricated iron and assembled with screws. This suggests it is designed to operate only for the duration of ArcelorMittal’s investment, limiting its long-term impact on the region’s industrial capacity and economic growth. Additionally, sources at ArcelorMittal Liberia indicate that the project likely costs no more than $550 million, contradicting the stated $1.8 billion cost.
Senator Twayen suggests this is another example of ArcelorMittal inflating expenses to avoid proper taxes and dividends. The lawmaker mentioned that the company is utilizing “transfer pricing” to evade declaring profits, which would benefit Liberia through tax dividends as per the MDA. He explained that this practice involves setting prices for goods and services exchanged between related entities that do not reflect market value, thereby reducing the reported profits in Liberia and, consequently, the dividends owed to the government under the MDA.
AML must be held accountable for its lengthy operations in Liberia. For over two decades, the company has been functioning under a Mineral Development Agreement (MDA) that stipulates clear and specific obligations: constructing and maintaining roads, funding educational scholarships for local students, providing training opportunities for Liberians, hiring qualified individuals for senior management positions, and making substantial investments in the communities directly impacted by its mining activities. However, as Senator Twayen pointed out, the town of Yekepa has sadly become a shadow of its former self, reflecting a significant decline in living conditions and community support. Alarmingly, the disbursement of scholarship funding was delayed for an astonishing five years, denying local students crucial educational opportunities.
This raises an urgent question: where were several governmental institutions, including the Ministries of Mines and Energy, Finance and Development Planning, and Justice, as well as the Inter-Ministerial Concessions Committee (IMCC), the National Investment Commission (NIC), and the Legislature, all possess statutory oversight responsibilities? Unfortunately, these institutions have collectively failed to uphold their duty to monitor and enforce compliance, allowing AML to operate with apparent impunity and disregard for both the letter and spirit of the law. This negligence has allowed AML to violate its commitments and evade responsibility, leaving the Liberian communities directly affected by its operations in a precarious situation.
Senator Twayen’s criticism highlights the need for investments that truly benefit Liberia and its people, fostering long-term infrastructure and economic resilience. As the ArcelorMittal Mining Development Agreement (AML MDA) approaches its 2030 expiration, Liberia must avoid past mistakes with previous agreements.
Conclusion
Joseph E. Stiglitz, former Chief Economist at the World Bank and Nobel laureate, argues that while foreign companies often resist concession agreements, emphasizing contract sanctity, effective negotiations can lead to beneficial relationships. An example is Roan Selection Trust’s $200 million investment in Botswana’s mining sector, which covered mine development, working capital, and infrastructure improvements, including sustainable water management systems. The Shashi sector is crucial for regional development in Botswana. The government promotes profit-sharing agreements with mining companies to align interests and boost socioeconomic growth. By negotiating contracts free from bribery, Botswana has achieved significant growth and reduced poverty over the past 40 years, establishing a sustainable development model for the region.
Like other African countries, mining is vital to Liberia’s economy, contributing significantly to revenue and employment. In 2022, iron ore mining represented 27 percent of total export earnings. According to the Central Bank of Liberia, iron ore exports were 4,874,409 metric tons in 2020, earning US$289 million; this increased to 5 million metric tons and US$346.9 million in 2021. However, revenue fell to US$285.7 million in 2022 despite the same export volume. These figures highlight the need for a well-structured Mining Development Agreement to prevent resource mismanagement. Looking ahead, a key challenge for the Mining Development Agreement is to ensure transparent and efficient management of Liberia’s natural resources. Agreements should disclose contract details to inform communities about environmental and livelihood impacts. Environmental protection and fair compensation for affected communities must be prioritized, along with employment strategies that support local participation.
Natural resources are public assets, and negotiations between the Liberian government and foreign mining companies should be transparent. Local communities must be able to review contracts and understand revenue allocation for development. Ineffective or poorly negotiated management of our natural resources can lead to stagnation, resulting in no economic growth and no meaningful development for the country. It is that simple. I rest my pen.
