Liberia: Amid Economic Hardship, ArcelorMittal Threatens to Halt Further Investments if Government Signs Agreement with Prista Port

by Contributing Writer
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 ArcelorMittal Liberia has threatened to halt phase two of its investment in Liberia on suspicion that its concession area at the Port of Buchanan is being encroached on with the ‘endorsement’ of the Government of Liberia through a deal with Prista Port.

Prista Oil Holding is the mother company of Prista Port Buchanan LLC. It is a Liberian business entity, which was established by the European multinational company Prista Oil Holding EAD, in order to facilitate the recently concluded Concession Agreement with the Government of Liberia for the Port of Buchanan.

By virtue of the Concession Agreement dated 14th August 2019, approved by President Weah on September 12, 2019, and ratified by the Senate with Act No41 on September 30, 2019, Prista is expected to manage the Port of Buchanan for 25 years. They are set to invest a whopping US$277 million in the Liberian economy.

ArcelorMittal’s Claim

In a letter to the Minister of State, Nathaniel McGill, the Chief Executive Officer of ArcelorMittal Liberia Scott Lowe expressed the company’s “objection to a concession agreement entered into by the National Port of Authority (representing the Government of Liberia) and Prista Port Buchanan LLC on grounds that it includes and overlaps a majority of the current concession area of ArcelorMittal Liberia in Buchanan, Grand Bassa County”. 

This action undermines and creates uncertainty regarding the security of tenure of ArcelorMittal Liberia’s business and future investment. Recently, representatives of the Prista Port approached ArcelorMittal in London and asserted that their concession would come into effect and that their company would eventually replace ArcelorMittal Liberia (AML) as the concessionaire. We reject this assertion by Prista Port and maintain that no valid concession can ever be granted that overlaps AML’s concession area. 

The importance of this matter is such that ArcelorMittal Liberia cannot proceed with the Phase 2 investment proposal that is currently underway unless and until this situation is corrected. The Company requires absolute certainty that its concessions and permits are in good standing as an essential component of its business case for investment and cannot consider an investment where security of tenure is in dispute or at risk. 

The iron ore company requested the government of Liberia to confirm that it has not ratified and would not ratify Prista Port concession agreement. ArcelorMittal also insist that it will not grant any concession that overlaps or in any way reduces AML’s concession area while it remains valid.

Mittal Phase II Project

ArcelorMittal Phase 2 project involves the mining of high-grade iron ore at Mounts Gangra and Yuelliton. Both mountains are still green field sites as far as mining activity is concerned.

The main benefits from the project accrue to the Republic of Liberia as a whole. The Government of Liberia expects mining to support the Liberia Rising 2030 plan and the Nimba Western Range Iron Ore Project is the flagship for the sector. The current Phase 1 DSO Project was the largest contributor to Liberia’s GDP growth of 9 percent in 2012.

The Phase 2 contribution was estimated by the International Monetary Fund to be a clear $ 2.4 billion to the Government of Liberia in royalties, taxes and other direct payments. In addition, since the Government is a 30% shareholder, it will receive an equivalent proportion of profits. Beyond the huge capital investment in the project, most of the operational expenditure for the life of the mine will accrue in-country. Beyond this, the project will generate direct employment, skills development and infrastructure benefits to the operational areas.

 

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