-As Pres. Weah’s New Executive Order #112 On Establishing National Railway Authority Sparks Debates
IPNEWS: Less than 24 hours following the announcement by the Executive Mansion on Executive Order #112 establishing the National Railway Authority (NRA) with the responsibility to, amongst other things manage the railway and associated infrastructures owned by the Government of Liberia, the proposal has sparked heated debates.
As the debates mount, the move may anger steel giant, ArcelorMittal Liberia who had been in negotiation with the Liberian government over the passage.
As the debate ensues, IPNEWS takes a deeper look into the NRA, especially attaining investment, and the budgetary constraints it might have, especially the discussion and passage of the Mineral Development Agreement valued at 800 Million United States dollars, which might create some resentments over the proposed establishment that may just pose some danger to Liberia’s foreign investment climate.
On Monday, October 19, 2022, President Weah Issued an Executive Order that would see the establishment of a new authority to manage Liberia’s railways.
The NRA would perform administrative function over Liberia’s railway infrastructure.
As good as this sounds, the Executive Order also comes with chaotic confusion with respect to the rights of ArcelorMittal under the Mineral Development Agreement of 2007 and 2013.
In these separate MDAs, the government of Liberia awarded the exclusive rights to AML to use and manage the railway. The MDA also states that no other user shall use said infrastructure except with the consent of the company.
To have set up a new government authority without the confirmation of the company which was legally awarded the right to operate and manage the railway runs contrary to the government’s own mineral development agreement with ArcelorMittal.
How could the government announce such a decision without making some form of an amendment to the AML current Mineral Development Agreement or to have even acted on the passage of the 3rd MDA in which all parties agreed to a multi-user arrangement?
In all her dealings, AML has not opposed the usage of the railway by other parties even though it is ArcelorMittal who invested more than $500 million into the railway between Yekepa and Buchanan.
Despite the government’s interest in bringing additional users to the railway, and considering AML desire to expand, the company agreed to a multi-user arrangement in its 3rd mineral development agreement which paved the way for additionally users access the rail.
Sadly, this deal was rejected by the House of Representatives as “monopolistic” of Liberian infrastructure.
Finance Minister Samuel Tweah even made this position of AML’s exclusive right clear in an interview with a team of Journalists at ELBC on March 10, 2022.
Tweah said it was crucial, according to him, for the Legislature to pass the 3rd Mineral Development Agreement for ArcelorMittal agreement so that ArcelorMittal can expand its mining operations by building a massive processing plant in Nimba which will require an enormous power supply from the CLSG line and help the government shoulder energy cost.
It was at this very interview that the Minister of Finance explained that for the next nine years, no other company will be able to use the Buchanan-Yekepa railway if the legislature fails to pass the ArcelorMittal MDA before it; arguing that the agreement was well negotiated by some of the best experts in the sector.
Minister Tweah: “ArcelorMittal has exclusive right over the 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 anyone else to us rail according to the current agreement, ArcelorMittal has to agree.
Amidst this renew debate, several legal luminaries have added their voices in an exclusive interview with IPNEWS.
A longtime lawyer preferring not to be named told IPNEWS that President George Weah is in no wrong for the Executive Order owing to the national interest the prospects contained in the executive order for Liberia and the general investment climate.
The legal luminary stated that the Order will also see massive investment capital for Liberia, instill of foreign companies taking charge of the management of Liberia’s rails.
Another difference in the President’s Order argued, on the contrary, that while it may be seen that intentions are good for the establishment of the NRA, the Presidential Order contradicts and undermines the statutory function of the Ministry of Transport as promulgated on August 25, 1987. He stated that presidential orders have a calendar lifespan and wonders why Pres. Weah could not seek the approbation of the Legislature in repealing the Act creating the Ministry of Transport as was done by former President Samuel K. Doe, in repealing the Act of the Ministry of Commerce, Transport and Industries to bring into being the Ministry of Transport.
The Ministry of Transport & Function
The Ministry of Transport was created by an Act of the National Legislature on August 25, 1987, to formulate and administer the transport, insurance, and maritime regulations and policies of Liberia.
The Ministry has two Departments -Administration and management, the and Department of Land Transport Regulatory services, containing several Divisions. These include the oversight responsibility for the execution of policies relating to land, sea, and air transport services operating within the country. It is also mandated to ensure strict adherence to insurance standards and regulations in collaboration with insurance agencies operating in the country.
Interestingly, the Department of Land Transport Regulatory services has four Divisions, the Division of Inspectorate Land & Rail, a Division of Driver’s License, the Division of Motor vehicle & License plate, and a Division of Motorcycle & Tricycle.
IPNEWS reporter visiting the Ministry of Transport Tuesday, witnessed a scene of despair among some staff of the Ministry of Transport, particularly the Department of Land Transport Regulatory services.
Many of the staff spoken to expressed fear of what would become of them given the presidential order.
Political pundits are suggesting that the government of Liberia, must come clear on what will be done with staff and other contracts entered into by the Department of Land Transport Regulatory services, which has now come to an abrupt closure with the coming into force the presidential mandate for the establishment of the NRA.
President Weah Executive Order:
According to the Executive Mansion, Executive Order #112, state that the NRA will manage the railway and associated infrastructures owned by the Government of Liberia.
The Executive Order #112 comes from the backdrop that the Government of Liberia owns certain key assets of national importance comprising railways and associated infrastructures, such as the Yekepa Railway that runs from the station at Yekepa in Nimba County through parts of Bong County to the terminus and associated port infrastructure at or in the vicinity of the Port of Buchanan in Grand Bassa County or Buchanan Port.
President Weah indicated that the Government is committed to the development and enhancement of the Liberian Infrastructure Assets in the national interest to permit increased use of these strategic assets by producers in Liberia for export of minerals and other goods for the benefit of the people of Liberia and the sustainable development of the Liberian economy, including especially Nimba, Bong, and Grand Bassa Counties.
He said these Liberian Infrastructure Assets have been underutilized in the past to the detriment of the people of Nimba, Bong and Grand Bassa Counties, and the nation as a whole.
The President recalled that “the Government has also entered into a treaty with the Government of Guinea (the “Implementation Agreement”) dated 11 October 2019 and given full legal effect by the Republic of Guinea on 18 February 2020 and by the Republic of Liberia on 6 May 2021 for the export of certain Guinean Products via Liberia that have been identified and approved by the two governments (‘Approved Infrastructure Projects’).”
The President’s Executive Order also acknowledges that the “Government has granted the non-exclusive use of the Liberian Infrastructure Assets to ArcelorMittal Holdings A.G. and ArcelorMittal Liberia Holdings Limited (together ‘ArcelorMittal Liberia’) under the terms of a mineral development agreement as amended on 28 December 2006 and 23 January 2013 (the ‘MDA’); and the Government has also committed, pursuant to the terms of a framework agreement with Ivanhoe Liberia Limited (‘Ivanhoe’) and Société des Mines de Fer de Guinee (‘SMFG’) dated 20 December 2019 (as amended on 12 April 2021 and 30 March 2022) (the ‘Framework Agreement’) and the Implementation Agreement (1) to provide access and use of the Liberian Infrastructure Assets to Ivanhoe and SMFG pursuant to their Approved Infrastructure Project; and (2) to enter into a concession and access agreement as regards certain specific terms for the long term use of and access to the Liberian Infrastructure Assets and associated infrastructure and facilities.”
He also indicated in the Order that the Government is committed to the core principles of open, non-discriminatory access on a multi-user basis to the Liberian Infrastructure Assets for ArcelorMittal Liberia, Ivanhoe and SMFG (or their affiliates) together with any other eligible users, including local companies and mining operators approved as such by the Government (“Eligible Users”), and in accordance with best international industry practice and best technical, safety, social and environmental standards (“Core Principles”).
According to the Liberian Leader, the Government will honor its obligations under existing agreements including the MDA, the Implementation Agreement and the Framework Agreement with respect to the use of and access to the Liberian Infrastructure Assets while also making their use available to all Eligible Users in a manner consistent with the Core Principles.
President Weah observed that the NRA will be necessary to provide an organizational structure to facilitate and coordinate access to the Liberian Infrastructure Assets consistent with the Core Principles and to resolve any disputes or disagreements that may arise.
The Liberian President’s Order contends that the establishment of the NRA is consistent with executive powers granted the President by the Constitution to direct all relevant Ministries and agencies of Government in the conduct of their duties and responsibilities.
He declared: “Pursuant to the authority of the President under the Constitution and laws of the Republic of Liberia, I hereby direct that there shall be established a National Railway Authority under the aegis of the Ministry of Transport pursuant to its lawful authority and responsibility.”
According to the Executive Order, the NRA shall establish rules and procedures and enforce standards for infrastructure system management services of private and public common carriers of whatever nature and, in general, to develop, regulate, control and monitor vehicles, boats, ships, fishing vessels and railways and for the inspection and safety of the seas and railways.
It shall establish and implement the overall transportation policy of the Republic, and develop plans for the movement of goods and people within and without the Republic, including goods transiting through Liberia from neighboring countries, regulate the use of ports and harbors, provide for the conduct of any other matters ancillary or incidental to the foregoing.
The Executive Order also states that the National Railway Authority shall, in carrying out its duties, honor all existing legal commitments of the Government to all persons including those with rights to access and use the Liberian Infrastructure Assets.
As owner of the Liberian Infrastructure Assets, the Authority shall be responsible for upgrade, maintenance, open track access, and licensing of Eligible Users on the Liberian Infrastructure Assets, and may review, approve, and incorporate the existing maintenance and upgrade obligations and expansion programs of the Eligible Users.
“In order to provide an organizational structure to manage the Liberian Infrastructure Assets, the National Railway Authority shall appoint an independent operator to operate, manage, plan and implement the development of the Liberian Infrastructure Assets system.
The independent operator shall also have the authority to coordinate access to and usage of the Liberian Infrastructure Assets by Eligible Users so as to maximize their fair, safe and efficient use pursuant to the lawful rights of each Eligible User, and consistent with the Core Principles. It is understood, however, that each Eligible User shall operate its own train and port activities for itself, under the supervision and coordination of the independent operator,” President Weah directed.
As per its mandate also, the National Railway Authority shall ensure that Eligible User access arrangements for the Liberian Infrastructure Assets conform to the Core Principles and that in the case of any negotiations or arrangements by the Government with an Eligible User regarding the future terms of their use of the Liberian Infrastructure Assets, the terms of such arrangements shall be consistent with the Core Principles.
It Orders further states: “In the case of any dispute or failure to agree between or among Eligible Users and/or the Government and/or the independent operator (with regard to such individual operations and expansions as each may carry out), the National Railway Authority shall (promptly, and in any case within 30 days of a request from any Eligible User), in consultation with all such Eligible Users, appoint an eminent international neutral third party to serve with authority to resolve any such dispute or failure to agree in accordance with the Core Principles, and in that case the decision shall be made as promptly as reasonably possible, with the aim of opening within 60 days. The decision of such eminent international neutral third party shall be binding on all parties to such conflict or dispute, although subject to review as permitted under the laws of Liberia.”
According to the President, nothing in the Executive Order shall interfere with or diminish the rights of any Eligible User to access the Liberian Infrastructure Assets, but it shall instead be interpreted such as to enhance and promote the overall benefit of the Liberian Infrastructure Assets to the Republic of Liberia and its citizens.
History of Railways in Liberia & The New Debate:
Historically, three railways were built in Liberia to export ore from mines; they were damaged during the civil war. In 2010, only the Bong mine railway was operational but the Lamco Railway was at least partially rebuilt by ArcelorMittal and put back into service in 2011. There are no rail connections with other countries, although there has been a proposal to extend the Bong mine railway to serve a mine across the border in Guinea.
Origin on the Establishment of the National Railway Authority (NRA)
In January 2015, Sable Mining signed a $1.3 billion deal to export iron ore via Liberia, offering the London-listed firm the transport link it has so far lacked to exploit the site in Guinea where the ore is mined.
The agreement was signed by the head of the Liberia National Investment Commission George Wisner and Sable non-executive director Aboubacar Sampil in the nation’s capital Monrovia.
The 25-year deal, which mandates the firm to expand rail links between the two countries, should allow it to begin transshipping ore from the Mount Nimba mine later this year, Wisner said.
Shares in AIM-listed Sable soared more than 300 percent on Friday before closing up 156 percent. Wisner said the agreement still needs parliamentary approval.
The Guinean government had been reluctant in the past to allow transshipment, insisting mining firms operating in Guinea ship their ore through the port of Conakry, which would have made Mount Nimba too costly for Sable to exploit.
But in October 2013 it granted permission for Sable to export via Liberia.
Wisner said Sable would invest $300 million in the first five years of the project and $1 billion in the remaining 20, and would ship its ore via the Liberian port of Buchanan.
Sable is expected to rehabilitate and expand an existing rail link from Yekepa in northern Liberia to Buchanan in accordance with third-party access rights between the Liberian government and ArcelorMittal, the world’s largest steelmaker, which operates the line.
Wisner said the Liberian government was taking the lead in facilitating the negotiations over third-party access.
“Under our constitution, the rail is owned by Liberia. The ground is owned by the Republic of Liberia. I do not want to pre-empt the negotiation, but I do not foresee any hurdle in the third-party negotiation,” he told Reuters.
ArcelorMittal has previously said that companies in Guinea would have to wait years to make use of the existing rail link through Liberia because there was no spare capacity.
But the LNIC said Sable was also mandated to construct a new line from Guinea via Tokadeh in northern Liberia to link with the existing line at Yekepa.
AML DEBUKES sole ownership right of the railroads and port of Buchanan
ArcelorMittal Liberia’s (AML) top management has continued to debunk a report that it is opting for sole ownership right of the railroads and port of Buchanan in the current proposed amendment of the Mineral Development Agreement (MDA) it signed with the Government of Liberia.
The proposed agreement, the third amendment to the original MDA signed in 2005, has already been passed by the House of Representatives and forwarded to the Liberian Senate, which is expected to begin its scrutiny in the coming days. The agreement, among other things, called for ArcelorMittal to make US$800 million investment in Liberia, employed over 1,000 Liberians, and provide the Government of Liberia with US$55 million within 19 months of ratification.
However, since its passage by the House, there have been series of reports of an eminent deadlock over some of the new clauses inserted by the House. A notable one borders on the ownership right of the railroads and port of Buchanan.
According to the House’s Joint Committee on Investment and Concession, ways, Means & Finance, Judiciary, Lands, Mines & Energy and Environment, Article 3 of the proposed Amendment called for the company to have exclusive rights over Liberia’s railroads and the Port of Buchanan; something the Joint committee sees as a complete monopoly of the government’s two major infrastructures.
In the amendment, the Committee called on the government to take ownership of the railroad, Buchanan Iron Ore Port, and related Infrastructure. It called for the infrastructure to be structured, regulated, expanded and managed on a non-discriminatory multi-user basis for the benefit of all eligible applicants and the Republic of Liberia.
However, the Interim Chief Executive Officer of AML, Mr. Mahamar Haidara said since 2007, the Government of Liberia has exercised ownership of the rail and port infrastructure, and the current proposed amendment provides further rights to the Government.
“GoL is the owner of rail and port infrastructure since 2007 and this Amendment provides further rights to the Government of Liberia on who can utilize the infrastructure corridor,” he said.
“We need to be careful about some misinformation campaign and propaganda being run in this regard by some vested interests, as ArcelorMittal is investing heavily in Liberia to further expand existing operations to unlock Liberian Iron ore resources for benefit of its people compared to others who are still making studies for the potential development of Iron Ore resources for a neighboring country with only nominal transit fee benefit for Liberia.”
Mr. Haidara said the agreement strengthens GoL’s demand for other users including Guinean miners to utilize the Liberia infrastructure for their export; adding that the other users will need to invest to increase the capacity of the rail and port for their own use.
He furthered that the third amendment ensures that AML cannot obtain any monetary benefit from other users of the rail and port. “AML also cannot allocate the rehabilitation costs that it has already incurred to other users. These users will have to pay a transit fee only to the Government of Liberia.”
‘Long and Exhaustive Process
The AML Acting CEO, commenting on the process in crafting the agreement said, it was a long and exhaustive’ process; lasting over 51 weeks and included top officials of the Liberian government, particularly the Executive, senior Government lawyers, members of the Inter-Ministerial Concession Committee and various international (US & Europe) advisors to the Government and executives of ArcelorMittal.
He said AML also discussed with the Government its plans for organic growth in Liberia. With the existence of a large iron ore resource body in Nimba, he noted that AML plans to expand its operations from 15 mtpa to 30
mtpa, which will generate huge benefits for Liberia. He clarified that the planned expansion will not prohibit others from using the rail infrastructure as they can do so beginning in 2025.
Said the AML Interim CEO: “The Amendment to the MDA includes an obligation for AML to present its feasibility study for the 30 mtpa tentative plan to the Government in 2023. The expansion to 30 mtpa in Liberia will further increase investments and benefits for the government and people of Liberia. Current estimates suggest that AML can produce at this level for about 50 years, making the AML Iron Ore operation in Liberia the largest on the African continent. With ArcelorMittal’s focus on decarbonization for its steel making, the superior Liberia concentrate product in future will be the appropriate ore for steelmaking.”
Major Achievements
Following the end of Liberia’s devastating civil war in 2003, ArcelorMittal was the first big company to sign a major concession in Liberia. With the signing of the MDA during the transitional government headed by the late Charles Gyude Bryant, the AML boss noted that the act by a large company signaled to the other investors that Liberia was safe and open for business at a time when no one was willing to make the first step.
Counting some of AML major achievements, he said the company has already invested $1.7 billion, of which approximately US$500 million has been spent for rehabilitation of the rail and port facilities to get them fully operational. ArcelorMittal plans to further invest additional US$800 million for its expansion of which US$250-US$300 million to upgrade these infrastructures, he added.
The company has established a US$7 million state-of-the-art Vocational Training Center, now the ArcelorMittal Liberia Training Academy, providing transformational technical skills and career opportunities to Liberia’s youth. It is further investing to expand the VTC facility for Phase Two expansion.
In addition, the company has contributed US$40 million for construction of the Ganta-Yekepa Highway which is well on course; reopened the Liberian iron ore mining sector after almost two decades of dormancy and now providing the single largest export, contributing about 15% of the country’s GDP.
He said: “AML payments from royalties, taxes and other payments to GoL in recent years are approximately $30-$35 million annually. Overall AML has so far contributed US$300 million to GoL towards Royalty, direct & indirect taxes and other payments; AML and its contractors have provided at least 3000 good paying jobs in Liberia and AML’s activities have contributed on an average about $100 million annually to various suppliers.”
Further recounting, he said: “AML has contributed US$3 million per annum for community development fund. It has so far contributed US$42 million towards community development fund. AML provides US$200,000 annually for an advanced scholarship program for Liberian students. 48 students have benefited so far. No other concessionaire has invested so broadly in education than AML. AML was the only iron ore mining company in the region that did not abandon the country during Ebola and subsequent drop in commodity prices. It continued operating under severe losses in the 2015 to 2017 period to ensure that Liberia’s economy did not worsen on top of its health crises.”
‘Existing Infrastructures Renovated’
Following the signing of the first MDA, ArcelorMittal inherited the structures including the housing facilities, work stations and hospital left by the Liberian-American-Swedish Mining Company (LAMCO), a defunct Liberian corporation that mined the iron ore in the Nimba range from the 1960s up to the outbreak of the civil war in 1989.
The company is also required to establish and maintain medical and education facilities in areas of operation, to serve employees, their families and the broader community and to prioritize the employment and development of local Liberians.
The company has faced fierce criticisms on its failure to renovate all infrastructure received from LAMCO, especially housing, hospitals, and the general outlook of your residential areas.
Responding to these reproaches, Mr. Haidara said AML has undertaken major renovation of the existing infrastructure, and upgraded health facilities in its concession area and outside of its concession area at an estimated cost of over $18 million including operating cost.
As per the MDA requirements, AML has rehabilitated, equipped, and operated two hospitals in Yekepa and Buchanan; with over 30,000 people including outpatients receiving medical care from health facilities operated by AML, he stated.
However, he pointed out that AML does not conduct any mining in Yekepa as that ore body was exhausted by LAMCO and the area is now a Nature Reserve.
AML’s center of Mining operations, he said, is now in Tokadeh which is halfway between Yekepa and Sanniquellie. Much of the township infrastructure that was built in the 1960’s are no longer conducive to current standards and are unrepairable.
