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ArcelorMittal deal (Pt. 2): GoL to lose US$2.68Bn in rail user fees alone

*EU, US express concerns

The United States Ambassador to Liberia and the European Union Parliament have expressed concerns over the ArcelorMittal new Mineral Development Agreement (MDA) as the country stand to lose a whopping sum of US$2.68 Billion in revenue from potential rail user fees alone if the MDA is ratify in its current form.

The Government of Liberia and ArcelorMittal reached an agreement to amend the Mineral Development Agreement (MDA) in September 2021, paving the way for an expansion of the company’s operations in the country and extending the iron ore mining concession for 25 years.

However, the proposed MDA appears to be embellished with clauses that give ArcelorMittal exclusive rights, while preventing other potential regional mining companies from using the rail for a period of 10 years during the expansion project.

On page 6 of the MDA-User Access and Future Expansion of the Railroad, Article 3 e.1 states: “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).”

Experts say this makes the deal bad because according to them, there will be no new users during the expansion period resulting into loss of rail use revenue to the Government of Liberia and create delays in other mining projects signing up.

That means companies like SOLWAY-Liberia, projected user fees of US$300,000,000, ZOGOTA-Guinea US$1,500,000,000, SMFG-Guinea 675,000,000 and WAE-Guinea US$180,000,000 will all be loss revenue to the Liberian government due to ArcelorMittal’s rail monopoly.

Chart demonstrating potential GoL Revenue loss

The deal has already generated several controversies both locally and internationally. Among those expressing concerns over the ArcelorMittal proposed third amended MDA are European Union Members of Parliament and the United States Ambassador to Liberia Michael McCarthy.

The latter praises the proposed new deal but is worried over clauses within the document that grants the steel giant monopoly over the railroad use.

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The US Diplomat hopes that the Liberian Senate could do its own job to review the MDA in the interest of the Liberian people and not mortgage the railroad to ArcelorMittal.

Amb. McCarthy “This agreement was under negotiation for quite some time, and the senate must now do their own review, but the progress so far sends a signal to investors that deals can get done in Liberia.”

“We also hope that the agreement, if approved by the Senate, will open the door for Liberians to become a future regional exporter of ore from Guinea,” Amb. McCarthy.

Amb. McCarthy does not shared this concern alone. EU High Representative Josep Borrell was questioned about the agreement in last month.

The EU Parliamentarians concerns followed reports suggesting that the new ArcelorMittal MDA is shrouded in secrecy.

Thus, the EU has raised questions over the possibilities of corruption, the potential creation of rail monopoly and the involvement of the population.

The EU also wonders if the new deal MDA compatible with its objectives of promoting good governance and sustainable development in Liberia.

The Union questions its Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy (VP/HR) of any awareness of the controversies surrounding the ArcelorMittal MDA being raised with the Liberian authorities.https://thenewdawnliberia.com/the-case-against-arcelormittals-deal-pt1/ To be continued.

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The New Dawn is Liberia’s Truly Independent Newspaper Published by Searchlight Communications Inc. Established on November 16, 2009, with its first hard copy publication on January 22, 2010. The office is located on UN Drive in Monrovia Liberia. The New Dawn is bilingual (both English & French).
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