Liberia poised to strip AML of rail monopoly?

Liberia poised to strip AML of rail monopoly?

As negotiations stall, Liberia is poised to strip steel giant, Arcelor Mittal of its exclusive use of the decrepit railway linking its iron ore mine to the Port City of Buchanan, Grand Bassa County.

It can be recalled that on July 18, 2022, tensions between Arcelor Mittal and the Government of Liberia(GoL) were exacerbated by a tender call launched by Mines and Energy Minister Gesler E. Murray.
Interested firms have until 1 August of this year to bid for the contract to conduct a study on the state of the rail line linking Tokadeh, close to the Yéképa Iron Mine of Arcelor Mittal Liberia (AML), and the Port of Buchanan.
The rail corridor, which is crucial for the export of iron ore from Liberia and possibly also soon from neighboring Guinea, is at the heart of the dispute between AML and Monrovia (AI, 29/06/22).

AML Monopoly to end?

President George Manneh Weah did not grant an audience to the large delegation sent by Arcelor Mittal's Luxembourg Headquarters to Liberia in mid-July of this year. AML Chief Executive Jozephus Coenen was only able to arrange meetings with the Minister of State for Presidential Affairs, Nathaniel F. McGill, and with Eugene Lenn Nagbe, the head of the Liberia Maritime Authority (LiMA).

The tender call, whose deadline is surprisingly tight, signals the end of AML's exclusive use of the railway line. The eight-page document states that the 243 km line is destined to become "multi-user". Weah is keen for other mining operators to reach an agreement that would let them use it in order to increase the line's capacity and to develop a passenger service.

AML, Liberia's largest foreign investor, currently transports about five million tonnes per year from the Yéképa Mine. But it has been slow to keep its promise to the GoL to invest in the site and to upgrade the railway to almost triple the amount that can be transported to Buchanan. At a time when its deposit is dwindling, its monopoly on the rail line is a considerable asset and an important source of revenue.

HPX and Solway on track

The call for tenders, which is being overseen by Murray and Molewuleh Gray, the Chairman of the National Investment Commission (NIC), stipulates that an extension of the railway line is planned to neighboring Guinea. The US-Canadian Billionaire and Ivanhoe Mines boss Robert Friedland controls the Société des Mines de Fer de Guinée (SMFG), which is working on the Nimba Iron Ore Project, via his firm High Power Exploration (HPX).

The Nimba Project could lead to an annual production of up to 30m tonnes by 2027, and Friedland is counting on a connection to the Liberian rail corridor to access Buchanan. He has been in contact with Weah, whom he has met several times in Paris and Monrovia this year. The last meeting took place in mid-July of this year in the Liberian capital, facilitated by former Guinean Prime Minister Mamady Youla, the CEO of SMFG. Friedland then travelled by private jet to Conakry where he met with the Minister of Mines, Moussa Magassouba.

Another user eyeing access to the railway is Solway Investment Group. Solway Mining, its subsidiary in Liberia, has a license to operate an iron ore project located next to the AML Mine and it expects to produce 2m tonnes per year from 2023.

Decrepit rail line

Both Solway Mining and SMFG recently commissioned studies on the rail line, which was built in the early 1960s by the now-defunct Liberian-American-Swedish Minerals Company (LAMCO) and whose original carriages are still in use. The line was almost entirely destroyed during Liberia's 1989-2003 Civil War. AML obtained the rail concession in 2005 and tasked the Brazilian Company Odebrecht and the Canadian Firm SNC Lavalin with its rehabilitation.

It started running again in 2011 despite the absence of a proper control system. Mobile phones and radio are used to organize traffic, according to a confidential report conducted in February this year by the South African firm RailSpace Projects International (RSPI). Two collisions and several fatal accidents have occurred in the past two years. RSPI highlighted numerous safety failures and frequent derailments due to lack of maintenance and investment.

The Adani Group option

Negotiations with Arcelor Mittal have been stalled since March when the lower house of parliament rejected the third amendment to the Mining Development Agreement, which was supposed to release $800m in investments. The government is trying, as a last resort, to organise a meeting between AML and HPX on the railway issue. The US ambassador to Liberia, Michael McCarthy, has tried to facilitate the meeting. HPX is willing to sit down with AML, but the latter has not agreed to talks. The president has not ruled out taking the matter to an arbitration court.

As he launches his re-election campaign, Weah and his advisers intend to put pressure on AML and HPX to ensure that the affair, upon which the country's economy depends, is resolved quickly.

The call for tenders is part of that plan. In parallel, the executive is pursuing discussions with the Indian family conglomerate Adani Group. Its founding President, Gautam Adani, who was introduced to Weah by Friedland, is maintaining his proposal to finance the upgrading of the railway. A Liberian delegation led by Lenn Eugene Nagbe and Morris A. Sackor, Executive Director of the NIC and childhood friend of the president, is scheduled to visit the group's Headquarters in Ahmedabad, India in early August. Kind courtesy of Africa Intelligence.

Read 443 times
Rate this item
(0 votes)

About Author

Login to post comments