Liberia has had a checkered experience with big transnational concessionaires for a long time now. Many came, and after ripping the country its raw, natural resources, left the country naked economically and ecologically. The beneficiaries have often been the owners of the companies and their governmental cohorts. The tricks and artifices, often wrapped in Concession Agreements, have still found their way in contemporary arrangements and deals. This is certainly why the third Mineral Development Agreement submitted before the National Legislature for ratification has attracted much attention and controversy. A well-knowledgeable citizens group has joined the debate but with deeply critical, forensic analyses of the Agreement and found many paralyzing loopholes and faults which if addressed could lead to sad stories of investments in the Liberian extractive sector. The Analyst reports.
The ratification of the third phase of the Mineral Development Agreement between the Government of Liberia and ArcelorMittal Liberia is currently in an advanced staged, with various interest groups and stakeholders making known their perspectives and proffering diverse insights to make it mutually rewarding.
A citizens group which is acting anonymous because of the official placements of its contributing members has carried out a detailed analysis of the projected losses to the Government of Liberia in revenue and disadvantages for affected communities if the agreement goes into effect.
The authors of the report, based on the pointed findings, are therefore calling on the government not to sign the document. The group is also mobilizing citizen support to speak against the deal which, according to the authors, will be detrimental to the future of the country.
In the document titled, THE CASE AGAINST AML THIRD AMENDMENT, the group detested, for instance, the exclusivity granted to ArcelorMittal, as the only concessionaire to operate in the sector and in addition to holding exclusive operational right for the usage of the railway and the Port of Buchanan—two prime national assets that are major revenue yielding infrastructures in the country.
Discussing the issue of exclusive right with respect to the on-going expansion project of AML, the report said it will take 3 years after the amendment which is expected to reach production at 10 metric tons per annum by December 2027 from the maximum of 5.5 metric ton per annum in 2023.
According to the authors, because of this, there will be no new users during the period which will lead to loss of rail use revenue to the government and delays in other projects that would have been carried out by other mining companies.
As regards the additional railroad capacity when the metric tons might have reached 30 per annum where the government is to receive $55 million in one year and half, the report said when the new construction is completed in 2034, a period of 10 years, the government will lose significantly in mining revenue, mining project and rail use to the government.
The report also highlighted the impact of extending more rights beyond the on-going and additional expansion and stated that AML can extend exclusion by merely paying annual fees without any other channels and that the exclusion could extend up to 17 years of exclusive use and severely affect revenue generation from rail use and delays for other mining projects.
“It is wrong for the government to accept the condition for AML to receive ‘rental fees’ for unused capacity,” the report further indicated, adding: “Rail is owned by the Government of Liberia. For the avoidance of doubt, such transferred assets and facilities do not include the railroad and the Buchanan Iron Ore Port and all Infrastructure associated with either of them, such assets and facilities and associated Infrastructure shall not constitute part of the Concessionaire’s infrastructure and ownership of such assets and facilities is and shall be at all times retained by the Government.”
Said the report further: “Only GOL can receive ‘rail use’ fees. AML is in the mining business, not in the infrastructure leasing business. AML’s attempt is to suffocate potential domestic and regional rail and port users.”
Re-echoing its displeasure to the grant of the right to AML to be exclusive operator as well as exempt from corporate income tax, the report said there will be major conflict of interest and opportunity to manipulate access issues for AML advantage, opportunity for exclusion by capacity manipulation, recalling that in the last 15 years, only 4 metric ton per annum was produced and added that it was very highly unlikely to reach 30 metric per annum which will lead to significant loss of revenue to the government. The report stressed that the government owns the rail and any prevention by AML of the GOL’s use of the residual rail capacity is unlawful undertaking by AML of the substantial economic benefits that would otherwise accrue to the government and people of Liberia.
In a comprehensive and detailed tabular presentation of the total loss to the government which includes taxes, royalties, rail use fees, community equity from 14 years of AML exclusion of Solway, another mining company from the use of the rail, the report put the figure at $1,083,000,000.
Giving the breakdown of the figure, the report said 15% of the ore to be shipped would be $28,000,000.00, another 15% of net profit would yield $67,000,000.
Also the report put taxes at 25% to yield $391,875,000, royalty at 4.5% to be $470,250,000.00, rail use fee to be $142,500,000.00 and Community $78,375,000.00.
In a similar vein, the report said that the total projected loss to the government which has to do with rail use fees from the exclusion of regional mining companies is $2.6 billion and it excludes potential Buchanan Port revenues. It named the regional companies as SOLWAY in Liberia, while Zogota, SMFG and WAE all in Guinea.
While SOLWAY is processing its mineral development agreement with the government will be making significant community engagement and contribution, Zogota, SMFG and WAE have already signed Memorandum of Understanding with the government of Liberia to export their ore through Liberia.
In the tabular presentation, the report said with the projected ore volume of 200,000,000 metric ton at $1.5 per ton would bring $300,000,000.00, Zogota would rake $1.5 billion from 1,000,000,000 metric ton , SMFG from 450,000,000 to produce $675,000,000.00 and $180,000,000.00 from 120,000,000 metric ton to come from WAE Guinea.
The report in its concluding analysis frowned on the agreement and emphatically stated that it will not be in the best interest of the country especially the mineral producing areas of the country that severally being affected by the production activities of AML
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