By Julius T. Jaesen II
The phase two expansion project of ArcelorMittal in our mineral resource sector that is underway seeks to serve as a major boost for the government of Liberia ambitious policy, the “Pro-Poor Agenda for Development and Prosperity” (PAPD).
This economic boost will happen in many ways.
The Pro-Poor Agenda formulated by the current administration that is headed by President George Weah was established on two goals. Goal number two of the PAPD promised to lift one million Liberians out of absolute poverty and reduce absolute poverty by 23% across 5 out of the six regions of the country in the first six years of the administration. According to the government policy document, the PAPD, lifting our impoverished citizens from the ashes of absolute poverty will be achieved through sustained and inclusive growth driven by increased investments in the country’s mineral resource sector, agriculture and human capital development.
To achieve government’s policy to walk its citizens out of absolute poverty and provide thousands of underprivileged families the opportunity to put bread on their tables is heavily reliant on substantive foreign direct investment in Liberia’s mineral resource sector and other sectors of our economy as also attested by the IMF and World Bank in its GDP growth forecast.
ArcelorMittal, Liberia’s biggest investment partner and taxpayer, phase two expansion project is a big boost to our economy and the government’s ambitious policy agenda. In the new Mineral Development Agreement signed between the Government of Liberia and AML that is pending ratification by the Legislature – AML will be making an additional investment of 1 billion United States Dollars in our economy which will correspondingly create roughly about 2,000 direct new jobs and about 4,000 indirect jobs.
Also, revenues to the Government of Liberia through royalties, direct and indirect taxes, and other payments are expected to average about US$85 million per year for the next 30 years of the project after the revised deal with AML is ratified. Excluding this US$85 million per annum in taxes and royalties, AML has committed itself in the new agreement to provide US$3.5 million to the three counties affected by its operations and expansion project instead of the US$3 million that is being provided under the old agreement. This is welcome news for the citizens of Bong, Grand Bassa and Nimba counties affected by AML’s operations.
Several citizens in these three counties have voiced worries that AML’s corporate social development funds have not had a noticeable impact on their lives and communities in the sixteen years since the company’s activities began. As a result, AML has implemented a mechanism in late 2020 where only 80% of corporate social development funds would be paid to the national government, with the remaining 20% being managed by AML for projects identified by the local communities. This would ensure that high quality and visible projects would be seen in the three affected counties.
Thankfully, in response to community complaints of not seeing the ripple effects of the social development funds, Minister Samuel D. Tweah of Finance and Development Planning, made it clear to the Legislative Caucuses of the three affected counties in October 2021 that any funds received from AML will be immediately transferred to the counties. This is great news worth celebration by residents of the three counties.
AML’s phase two expansion project would increase iron production from 5 million tons per year to circa 15 million per year. The Liberian government stands to gain US$65 million in non-returnable funds from the new arrangement in the form of a signing bonus and port and rail reservation fees if the Legislature ratified the third amendment to the MDA.
The second phase of AML’s development project includes the construction of brand-new processing plants as well as additional rail and port infrastructure. Upon completion, Liberia will be able to say that it is home to one of the biggest mining ventures in the entire West Africa.
Construction of a new concentration facility and extensive mining expansion are both part of the phase two project’s scope. It is anticipated that the first concentrator, as part of the phase two expansion project, would begin processing low-grade iron ores into high-quality exports by the end of 2023, with a capacity of 15 million tons per year (mtpa). ArcelorMittal will secure a reserve for growth of at least 30mt in the new Mineral Development Agreement (MDA). Exports of iron ore at these increased rates will have a significant positive effect on Liberia’s gross domestic product.
AML’s phase two expansion project will also be a boost for locally owned small and medium enterprises that are providing local services and other materials to AML to enhance its operations. The ratification of the new agreement will see AML provide more opportunities to local Liberian small businesses which will correspondingly have a trigger down effect on increasing their workforce. Currently, 52 percent of AML’s local vendors are Liberian owned. But with the passage of the new MDA, this percentage will surge significantly.
AML has made significant investments in the Nimba Vocational and Technical College in order to provide the workforce with the necessary technical skills and competence. As of right now, the student population there has surged. AML has collaborated with the institution and continues to bring cutting-edge mineral skills in minerals processing, logistics, safety, and management supervision techniques to the classroom. In addition to funding a vocational and technical college, AML also offers scholarships to bright young Liberians so that they may study abroad and get experience in fields including geology, engineering, human resources, occupational health and safety, and more. The company has implemented a strategy that encourages young people from Liberia to further their education and return to work for AML once they have the necessary skills and credentials to do so.
When compared to ArcelorMittal, no other FDI firm has made as much investments in physical infrastructure. Current investments amount to more than $1.7 billion US. AML has spent a lot of money on infrastructure projects such the mines at Tokadeh and Gangra, the port in Buchanan, the railroad, the hospital, and employee housing and workspaces.
ArcelorMittal-Liberia is a major sponsor of the Ganta to Yekepa road construction project, an additional commitment that was not included in the prior Mineral Development Agreement. AML, on the other hand, takes great satisfaction in its status as a reliable corporate partner and contributor to Liberia’s progress.
At a current projected cost of over $18 million, AML has updated health facilities both inside and outside of its concession area. AML renovated, outfitted, and currently runs hospitals in both Yekepa and Buchanan to meet MDA standards. Approximately 30,000 patients use the services of AML-run clinics every year.
The Buchanan hospital is undergoing extensive re-modeling and enhancement at work now. The Liberian Government Hospital has also benefited from AML’s direct aid. AML paid $5.52 million nationwide to aid the Liberian government’s response to Ebola and COVID-19. The Ganta-Yekepa Road may get funding of up to $40 million in the United States.
Each year, AML donates $200,000 to a prestigious scholarship program for high school students in Liberia. So far, 48 pupils have gotten help.