MONROVIA – The hope of the government ratifying and signing the much talked about third extension of the Mineral Development Agreement (MDA) which will see the country’s major concessionaire, ArcelorMittal Mining Liberia expanding its investment up to a billion United States Dollars may have been dashed as the new Executive Order #112 issued by President George Manneh Weah on Monday, October 17, 2022, establishing the National Railway Authority “with responsibility to, amongst other things, manage railway and associated infrastructures owned by the Government of Liberia with particular emphasis on Buchanan-Yekepa railway currently operated by AML, may put the substantial foreign investment in serious danger.
The Analyst, having viewed the rationale being advanced by the government for its action as good as it could be, reasoned that the decision also comes with a chaotic confusion with respect to the rights of ArcelorMittal under the Mineral Development Agreement of 2007 which was amended in 2013.
In the MDA, according to investigations conducted by The Analyst, the government of Liberia awarded exclusive right to AML to use and manage the railway amidst AML’s investment of US$500 investment in the infrastructure and Buchanan port. The MDA also states that no other user shall use said infrastructure except by the consent of the company.
“How could the government announce such a decision without making some form of amendment to the AML current Mineral Development Agreement or to have even acted on the passage of the 3rd MDA in which all parties agreed to a multi-user arrangement?
“To have setup a new government authority without the confirmation of the company which was legally awarded the right to operate and manage the railway runs contrary to the government own mineral development agreement with ArcelorMittal”, said a senior lecturer in one of the private universities who pleaded anonymity.
The Analyst can further confirm that in all her dealings, AML has not opposed the usage of the railway by other parties even though it is ArcelorMittal who invested more than $500 million into the railway between Yekepa and Buchanan.
Despite the government’s interest in bringing additional users to the railway, and considering AML’s desire to expand, the company agreed to a multi-user arrangement in its 3rd mineral development agreement which paved the way for additional users to access the rail.
Unfortunately, this deal was vehemently opposed to and rejected by the House of Representatives as “monopolistic” of Liberian infrastructure without understanding the economic implications even despite the call by Minister of Finance and Development Planning on members of the House of Representatives during an interview conducted with the minister by a team of journalists from ELBC on March 10, 2022 to pass the 3rd MDA for AML so that the premier concessionaire in the country can expand its mining operations by building a massive processing plant in Nimba which will require an enormous power supply from the CLSG line and help the government shoulder energy cost.
Tweah had said in the interview that for the next 9 years, no other company will be able to use the Buchanan-Yekepa railway if the legislature fails to pass the MDA before it; arguing that the agreement was well negotiated by some of the best experts in the sector.
“ArcelorMittal has exclusive right over the rail in the current agreement, and for the next nine years, no one else will be able to use it”, said Tweah in the interview, and continued, “For the government to bring anyone else to us to use the rail according to the current agreement, ArcelorMittal has to agree”.
Pundits who spoke to The Analyst are of the opinion that should AML decide to opt for legal action, it could become an unnecessary burden against the government for breach of its rights under the MDA.
“Clearly, this decision is dangerous and risky. We are aware that no ideal investor has come to Liberia in the last five years to match up to even 10 percent of AML investment.
“ArcelorMittal has in its ongoing phase two expansion planned an additional $200million investment to expand the capacity of the rail.
“Are others like Ivanhoe Liberia Limited (‘Ivanhoe’) and Société des Mines de Fer de Guinee (‘SMFG’) which will be given access and use of the rail willing to make similar investment to expand, maintain, and operate the rail?”, said Theodore Swentee III, a social critic told this paper.
What is even curious about the whole executive order is it clearly stated and named the arrangements and parties it was doing business with while the MDA with AML was ongoing which many persons who spoke to The Analyst on condition of anonymity said was done in bad faith against AML especially given all the specifics and timeline the government was pursuing serious negotiations with parties that were interested in using the railway infrastructures in the country.
The official communication from the government about the executive order stated “the Government has also entered into a treaty with the Government of Guinea (the “Implementation Agreement”) dated 11 October 2019 and given full legal effect by the Republic of Guinea on 18 February 2020 and by the Republic of Liberia on 6 May 2021 for the export of certain Guinean Products via Liberia that have been identified and approved by the two governments (‘Approved Infrastructure Projects’).”