On Monday, October 19, 2022, President Weah issued Executive Order No. 112 which would see the establishment of a new institution to manage the Liberia Railway, with particular focus on the Buchanan – Yekepa Railway currently operated by Arcelor Mittal.
According to the decree, the National Railway Authority would exercise an administrative function over Liberia’s railway infrastructure.
As good as it sounds, the executive order also comes with chaotic confusion over ArcelorMittal’s rights under the 2007 mining development agreement, which was amended in 2013.
In this MDA, the Government of Liberia has granted AML the exclusive right to use and manage the railway as part of AML’s $500 investment in Buchanan infrastructure and port. The MDA also stipulates that no other user shall use said infrastructure except with the consent of the company.
Having set up a new government authority without the confirmation of the company which legally obtained the right to operate and manage the rail routes contrary to the government’s mining development agreement with ArcelorMittal.
How could the government announce such a decision without making any form of modification to the current AML mining development agreement or even having acted during the adoption of the 3rd MDA in which all parties have agreed to a multi-user agreement?
In all of its transactions, AML has not objected to the use of the railway by other parties even though it is ArcelorMittal which has invested over $500 million in the railway between Yekepa and Buchanan.
Despite government interest in bringing additional users to the railroad and given AML’s desire to expand, the company agreed to a multi-sweat deal in its 3rd mining development agreement that paved the way for additional user access to rail.
Unfortunately, this deal was rejected by the House of Representatives as a “monopoly” of Liberian infrastructure.
Finance Minister Samuel Tweah even clarified this exclusive right position of AML in an interview with a team of journalists at ELBC on March 10, 2022.
Tweah said it was crucial, he believed, that the legislature pass the 3rd Mining development agreement for ArcelorMittal agreement so that ArcelorMittal can expand its mining operations by building a massive processing plant in Nimba which will require a huge power supply from the CLSG line and help the government with energy costs.
It was during this same interview that the Minister of Finance explained that for the next 9 years, no other company will be able to use the Buchanan-Yekepa railway if the legislator does not succeed in putting the MDA ArcelorMittal before him; arguing that the deal was well-negotiated by some of the best experts in the industry.
Minister Tweah said: “ArcelorMittal has the exclusive right to rail in the current agreement, and for the next nine years no one else will be able to use it.” He continued: “For the government to bring us someone else into rail under the current deal, ArcelorMittal has to agree.
Even if there is no confirmation by the company of the new executive order to establish the National Railway Authority to attract new users, it could become an unnecessary burden if the company takes legal action. justice against the government for the bridge of its rights under the MDA.
Obviously, this decision is dangerous and risky. We are aware that no ideal investor has come to Liberia in the past five years to match up to 10% of AML investments.
ArcelorMital has, in its ongoing Phase 2 expansion, planned an additional investment of $200 million to increase rail capacity.
Are others, such as Ivanhoe Liberia Limited (“Ivanhoe”) and Société des Mines de Fer de Guinée (“SMFG”), which will have access to and use rail, willing to make similar investments to expand, maintain and operate the rail?
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