IPNEWS: The Government of Liberia and AML have been negotiating the Third Amendment to the Mineral Development Agreement (MDA) since 2020. In September 2021, an agreement was signed but was rejected by the National Legislature in March 2022 because the Legislature believed that certain things needed to be cured.
After 4 additional years of negotiations, the Executive Branch has submitted a much-improved agreement which we believe will benefit the Government and people of Liberia in many ways.
It may not be perfect, but it is a very good agreement. It ensures that we get more benefit from our iron ore resources and the company also gets a return on its investment but most importantly that other investors can see that we are ready for business.
1. Massive Immediate and Recurring Revenue
The agreement guarantees a significant influx of capital into the national and local economies:
- US$200,000,000 Signature Bonus: A one-time lump sum payable to the Government of Liberia within 30 days of the effective date.
- US$5,000,000 Annual Community Fund: Yearly payments for Nimba, Bong, and Grand Bassa counties to fund local socioeconomic projects. This is an increase from the original US$3,000,000. This new amount will be adjusted every year for inflation.
- US$200,000 Annual Infrastructure Oversight Fee: Dedicated yearly funding specifically for the government to oversee and monitor railroad operations, ensuring the public’s infrastructure is protected. This is amount will help to support the National Rail Authority.
- Increased Mining Fees: A fixed annual mining license fee of US$500,000 starts in 2031 as compared to the US$50,000 that was paid for the previous 25 years
- Monthly Royalty of a 4.5% on the FOB Buchanan price instead of the old payment that was made 45 days after the end of the quarter.
2. Jobs and “Liberianization” of Management
This agreement moves beyond manual labor, ensuring Liberians take the lead in operations:
- Managerial Milestones: Within one year, 50% of management positions must be held by Liberians, rising to 75% in five years and 90% in ten years.
- Top Management: within one year, 1 of the top 4 senior management positions (CEO, CAO, CFA and COO) will be held by a Liberian.
- Hiring Preference: The company must give absolute preference to qualified Liberian citizens for all levels of employment.
- Empowering Local Business: ArcelorMittal is required to prioritize Liberian-owned SMEs for goods and services and must form a joint committee to support these local businesses.
3. Investing in the Next Generation (Education)
A sustainable future is built through the US$500,000 annual training budget, which includes:
- Technical Scholarships: Funding for geology and mining engineering students, with preference for those from Nimba, Bong, and Grand Bassa.
- New Vocational Training: A new campus of the ArcelorMittal Liberia Vocational Training Center (VTC) will be established in Grand Bassa County.
- Higher Education Support: Direct annual contributions to the University of Liberia’s Mining and Geology Institute and community colleges in the three affected counties.
4. Modernizing Public Infrastructure
The Amendment mandates specific infrastructure upgrades that benefit local transit and trade:
- Bridge and Road Paving: Repairs for the KM 2.5 Bridge and St. John River Bridge, plus the paving of the Concession Road in Buchanan to connect it to the city’s main streets.
- Pavement of the Sanniquellie road: complete the pavement of the road from Sanniquellie to Yekepa.
- Multi-User Rail System: The railroad will no longer be an exclusive “company asset.” It will transition into a system that allows other mining companies and “small miners” to use the tracks, stimulating broader economic growth.
- Upgrade of Rail: AML will immediately upgrade the rail to 30 mtpa and will begin to rent out at least 8 mtpa for any third party that is ready to use and approved by the Government.
- Rail Revenue Sharing: The government will receive 30% of the net profit from any arrangements where ArcelorMittal rents out temporary unused rail capacity to third parties while also receiving 100% of an Access Fees from other users
5. Environmental Protection
- Water Conservation: To protect local rivers and groundwater for community use, the company is restricted to using rainwater exclusively for its mining operations.
- Payment for use of water: the company will pay US$100,000 every year to the Liberia Water and Sewer Company (LWSC) for water use at its facilities.
