Inside ArcelorMittal’s Concessional Agreement -Unbundling Hordes of Impactful Benefits for Liberia

The debate of whether or not to accept the amended Concessional Agreement between one of the world’s leading steel companies and the Government of Liberia has been raging fiercely since it was placed on the table of the National Legislature for ratification. Some leaders and citizens of Nimba, Bong and Grand Bassa Counties, which are the “affected communities”, and other stakeholders, are opposed to the amended Agreement. Following a critical look at it, the Senate passed it but the House of Representatives would not do so on account of what they consider unreasonable to approve. Not many Liberians know what is contained in the Concession Agreement as acquiesced by the Senate and the Executive. It is for those who don’t know, particularly the provisions that are promisingly impactful, that The Analyst flags the other side of the Agreement.

Despite stern opposition to the amended Concession Agreement (CA) between Government and Arcelomittal, a careful review of the CA shows countless amount of goodies contained therein.

But the House of Representatives this week rejected the third amendment of the ArcelorMittal Liberia mineral development agreement (MDA), arguing that the third amendment is not in the national interest of Liberia. The Agreement is worth US$800 million.

The House rejected the 3rd amended agreement that could have become one of the largest mining projects in West Africa. The House could not agree with the Senate’s version even after a joint conference meeting that was intended to resolve all recommendations before presenting it to the President of Liberia for signature.

The Agreement provides for the creation of 2000 new jobs, especially for young Liberians beginning this year and extending into the next three years of construction period.

According to the Agreement, the concentrator plant and expansion will create about 1200 new skilled positions for Liberians as the plant is planned to be commissioned in 2023.

The Analyst has learned that Arcelomittal Liberia utilize its Vocational Training Institute and its external network to train and prepare more Liberians to meet demands for the highly technical skills associated with operating complex technology such as the concentrator.

Additionally, the AML committed itself in the Agreement to training Liberian employees and upskilling them to grow in the organization and taking up senior roles in the company.

The Company, according to the Agreement is to further increase local procurement which will grow multi-fold with the 15mtpa expansion and support development of local businesses and SMEs. This will create further indirect employment in country.

County Social Development Fund (CSDF)

On the County Social Development Fund, the amended Agreement states that there will be annual CSDF payments increased up to $3.5 million after the amendment is ratified, and currently 20% of the CSDF is being allocated to specific programs selected by the counties and communities, which AML is financing directly to the communities.

With Government agreeing to direct 100% of CSDF contribution directly to the 3 counties, huge opportunity will be created for undertaking up many other community development programs in these 3 counties.

Increased Government Revenue

It is also noted that the AML’s contribution to GoL revenues (from royalties, taxes, duties, etc.), which will increase from the current level of c$30-40 million annually to approximately $75 million annually when Phase 2 is ramped up.

The company’s One Million U.S. Dollar investment is already on course with additional new money coming into Liberia, and is the largest investment to date with a proven track record and not a “pie in the sky project.

Arcelomittal Liberia (AML) is a mining company that is already operating in country with a captive market, biggest taxpayer, and is expanding. HPX is an exploration company that does not have clear plan for 30mt, has no funding, needs to secure an investment.

The Company has already invested $200m in the rail, and has begun upgrading the infrastructure with 15m MTPA only the beginning with as plans underway to expand our operations to 30m MPTA.

“Our use of the railway and port is for the benefit of Liberians,” the company said as a matter of fact, adding that its deal has already packaged a hefty U$30m (thirty million US dollars) signing fee instead of a pie in the sky promise of U$30 from an exploration company.

ArcelorMittal Liberia’s US$1 billion expansion project is the largest foreign direct investment in Liberia under President George M. Weah’s administration and is of critical importance to investment inflow in Liberia. It will contribute significantly to efforts of the Government of Liberia to lift its people out of poverty as promised in the PAPD.

Accordingly, the project puts Liberia on the map as a country of enhanced mining stature, a jurisdiction that values foreign partnership, and a country that is open for doing business and facilitating foreign direct investment.

The third amended MDA does not grant ArcelorMittal Liberia monopoly nor ownership of the Tokadeh-Buchanan railway corridor, as the Government of Liberia remains the sole owner and approving authority of the railway and determines who else can use this infrastructure.

AML has already invested $500 million into the rehabilitation of the rail and port facilities and plans to be the majority user of this infrastructure; it has sought to be the operator.

ArcelorMittal Liberia says it welcomes and encourages a competitive business environment and interposes no objection to efforts that promote and yield positive results to existing and new investments in the country.

“Not many companies in Liberia’s post-war economic development have shown a strong degree of commitment and partnership to Liberia like ArcelorMittal Liberia has done,” the Company boast rightfully, adding: “ArcelorMittal Liberia is the single largest private sector investor in the country since the civil wars, and our commitment to Liberia led the way in demonstrating the viability of prosperous business in Liberia. Since then, other companies, large and small, have followed our lead, providing more job opportunities and economic stability throughout the country.”

AML has promised also to utilize its Vocational Training Institute and its external network to train and prepare more Liberians to meet demands for the highly technical skills associated with operating complex technology such as the concentrator.

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