MONROVIA-The signing of the third amended 25 years mineral Development Agreement-(MDA) by the Weah-led government and Arcelor Mittal, the world’s largest steel smelting company, last week Friday, was seen as a means to clean up the previous agreement signed by his predecessor Madam Ellen Johnson Sirleaf.
Arcelor Mittal first signed a 25-year deal with Liberia in 2005 and shipped the first iron ore from its Yekepa mine in 2011.
The previous agreement was followed by criticisms from both local and international patterns as well as Liberian citizens.
So, at the signing ceremony, which took two years of re-negotiation, brought both parties at the table in a happy mood.
Before the amended agreement, president Weah expressed his displeasure over some of the clauses; for instance, the use rail road(which did not allow any other company to use it), rehabilitation of the infrastructures of the old LAMCO housing units, increment of the social development funds, focus on the environment among others.
So, in his speech, he said, “I am told that with the signing of this Third Amendment to its Mineral Development Agreement, ArcelorMittal will invest an additional US$800 million United States Dollars into its Phase II iron ore project, which will enable them to move from producing five (5) million metric tonnes of iron ore per year to fifteen (15) million metric tonnes per year within the next three years.”
He continued: “I am further informed that the Agreement contains several benefits that are important to the Liberian people. For example, to name a few, the Government is to receive $55 million United States Dollars to reserve 15 million metric tonnes capacity for ArcelorMittal; and $10 million United States Dollars as signing bonus, for a total of $65 million United States Dollars.”
“I am also informed that this extension and expansion will result in direct spending of about $200 million United States Dollars per year into the Liberian economy over the next several years. This should result in a significant increase in total Government revenue coming from the activities resulting from this Amendment. I am told that the project will create at least 1,000 direct jobs, 2000 temporary construction-related jobs, and about 4,000 indirect jobs, and that there will be an increase in the amount of money going to communities of impact in Nimba, Grand Bassa, and Bong counties,” he said.
But more importantly, an area which has been a point of contention is the muti-track use of the rail.
“Another important benefit, I have also been informed, is that this agreement opens up a multi-user rail system for the transport of goods and iron ore on the rail system.”
The ceremony was witnessed by president George Weah and Mr. Lakshmi N. Mittal, Executive Chairman of Arcelor Mittal said.
The new agreement if ratified by the legislature, will enable the company to invest US$800M. Already, the company’s first 25 years agreement(signed in 2005) has nine more years remaining.
The new agreement means it will triple its iron ore production. “Our commitment is very strong. We will be expanding our mining operations – in the first phase tripling our current production levels to 15 million tonnes a year,” Mittal said.
Mr. Mittal earlier said: “We are also exploring the potential to go beyond that – up to 30 million tonnes a year. The product will also be higher quality and to deliver this premium quality we will be constructing a new concentration plant – with the first concentrate expected in late 2023.”
Many people from the operation areas have expressed their unhappiness over the performance. This led to a strike action which resulted into the burning of some of equipment and subsequent arrest during the regime of former president , madam Ellen Johnson Sirleaf.
The resumption of president Weah’s government led to a call for renegotiation which lasted for two years.
Mittal said, “To deliver on this potential, we will again need to enhance the infrastructure – for example increasing the capacity of the rail link connecting Tokadeh with Buchanan, as well as with the port of Buchanan.
“It is a very ambitious plan and one that we at ArcelorMittal are very excited about. But, ultimately, we hope that it is the people of Liberia that will benefit most from this agreement.
The expansion of our operations is expected to generate thousands of jobs for the local population during the construction and operating phases.”
Mittal Steel had been aiming to expand output to 15 million tonnes much sooner, but those plans were put on hold in 2014 when it declared force majeure on the expansion project because of the Ebola outbreak in Liberia.
With this amended agreement, president Weah now describes Arcelor Mittal as an important partner.
“The government considers you an important ally in its drive to accelerate the growth of our economy under our national development plan,” he said.
Liberia, with huge mining and agriculture potential, has attracted billions of dollars in resource investment since the end of a 1989-2003 civil war, but its infrastructure remains underdeveloped and most of its 5 million people live in poverty.
The amended agreement needs to be ratified by the legislature. No time has been set for its ratification, but is likely to be approved soon.