ArcelorMittal's entanglement in Liberia-Guinea mining talks

ArcelorMittal is at loggerheads with the Liberian government over the terms of renewal for its iron ore mining development agreement (MDA) in northeast Nimba county. The agreement was first made in 2005[1] and President George Weah approved a renewal in September 2021 to support an expansion expected to cost around USD800 million. But the government’s separate negotiations with a competitor and events in neighbouring Guinea now threaten that plan. Inadequate host community engagement, gaps in government effectiveness and the lack of robust legislation are principal hurdles for robust dispute resolution.

Significance – Landscape

Liberia has been reviewing the ArcelorMittal MDA in view of proposed mining developments in southeast Guinea where there are more than three billion tonnes of untapped iron ore deposits at two sites (Simandou and Nimba). Historically, development of the Guinean projects has long stalled due to political instability, infrastructure deficiencies and opposition to a government requirement that the investors build railroads across the country to the port in western Conakry rather than use their preferred export route through Liberia – advantaged by its relative stability and proximity to the sites in Guinea (See: Risks, whys and wherefores in the aftermath of Guinea’s coup).

HPX, which is developing the Nimba project, announced last week that it had reached a deal with the Liberian government to access the country’s rail and port infrastructure and a local newspaper reports that the government has already begun receiving payments for the proposed concession even. This despite parliament not having approved the agreement with HPX or completed its review of ArcelorMittal’s contract, granting the latter a concession on the same infrastructure[2]. The opaque nature of these regulatory procedures will contribute to concerns about the government’s ability to concurrently administer multiple concessions involving competitors. The legal framework is sub-optimal because the proposed system of multi-user concessions was not envisaged in the National Bureau of Concessions Act made in 2010, and political influence is widely disbursed.

The concession area in question falls across three counties that account for nearly 25% of all registered voters in Liberia: Nimba, Grand Bassa and Bong. The size of this electorate underpins the political capital in the hands of the area’s top politicians. Senator Prince Johnson is the most influential politician in Nimba and his endorsement of Weah helped to decide the 2017 presidential election runoff in Weah’s favour. Johnson’s kingmaker role is especially valuable to the ruling Coalition for Democratic Change (CDC) now ahead of 2023 elections. In Grand Bassa, the opposition Liberty Party is dominant and led by Senator Nyonblee Karnga-Lawrence, who is being considered as a vice-presidential candidate for 2023 (See Who's Who: Liberia 2023 Elections). Bong county is the base for Weah’s current vice president Jewel Howard-Taylor whose National Patriotic Party is part of the ruling CDC.

Outlook – Watching Guinea

Last week, Guinea’s military government lifted a month-long suspension that it had placed on the Simandou project. Guinean mining minister Moussa Magassouba said Rio Tinto and its co-investors had agreed to build transport infrastructure across the country, but the agreement is tentative given there is no clear timetable yet for a political transition. This means access to Liberia’s rail and port remains attractive and Liberian officials will look to tailor concession rules in anticipation.

Meanwhile, four factors constrain Liberia’s mechanism for resolving the ongoing dispute in the country and administering resulting agreements: (1) There is inadequate input from civil society including host community stakeholders. (2) There are gaps in coordination between the Senate and House of Representatives. (3) The government’s review of the ArcelorMittal contract and talks with HPX have not progressed through a transparent process, and (4) there are no plans in progress to strengthen the existing law in order to accommodate proposed changes to the concession landscape.

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[1] Under the transitional administration led by Gyude Bryant

[2] Liberia: govt ‘secretly’ signs rail usage framework agreement with HPX while ArcelorMittal MDA still dangles (April 2022). Frontpage Africa.

Photo: Ivan Bandura