The Liberian president George Weah is gearing up to restructure his country’s mining sector amid concerns that foreign operators are benefiting from terms and conditions that are unfavourable to the state. With a general election due next year, in which he intends to run for a second term, Weah is hoping to boost mining revenues and renegotiate with mining firms that are accustomed to getting an easy ride when it comes to royalties and levies.
Pressure on foreign operators
Among the various companies that he has in his sights is ArcelorMittal Liberia (AML), the subsidiary of the Luxembourg-based global steel giant. The multinational, which is the leading foreign investor in the country and operates the Yéképa iron ore mine, has had a strained relationship with the government in recent months (AI, 29/06/22).
In the gold sector, where the government does not tax operators on a monthly basis, the Turkish firm MNG Gold Liberia, which is part of the Avesoro Group owned by the Turkish billionaire Mehmet Nazif Günal, is also in the firing line. His son Murathan Günal is in charge of gold extraction at the two concessions that the company secured in Liberia in 2014 and 2016.
However, some senior government officials suspect that the company is not declaring all of its output and is hoovering up permits around its mines without any intention of exploiting them. The authorities are also somewhat bemused by the constant coming and going of helicopters at the mining sites. Hamak Gold, which is run by the businessman and president of the Liberia Chamber of Mines, Amara Kamara, is also under pressure from the government. The first Liberian company to be listed on the London Stock Exchange, it is struggling to hide its current difficulties, reflected in its volatile share price, which is sending out signals of instability to the international markets.
Plans for a state mining company
All of these operators have been recently contacted by the mining ministry and invited to put their affairs in order and renegotiate the terms of conditions of their operations. Weah has expressed his anger in particular at the sums that these companies are paying to the state, and it is true that the former minister for presidential affairs Nathaniel F. McGill, who played a key role in negotiating most of the major contracts in this sector, was guilty of a certain lack of transparency. He was forced to step down in September after being placed under US sanctions (AI, 07/10/22).
As well as instructing his ministers to begin renegotiating, Weah wants to prepare the ground for revising the mining code and setting up a national mining company whose role will be to regulate the sector, attract investors, and acquire a minimum 10% stake in every project. His special adviser, the Ivorian Ousmane Bamba, who for a time had somewhat receded into the shadows, is now coordinating discussions in direct conjunction with the president and the minister of mines and energy, Gesler E. Murray. However, the finance minister Samuel D. Tweah Jr, who has narrowly escaped US sanctions, is being kept at arm’s length from the project.
Among the various options being considered are the imposition of royalties of 5% to 8% on corporate revenues, an obligation to invest 3% of profits back into local communities, and the introduction of product sharing agreements. One of the models they have in mind is Gabon and its Société équatoriale des mines, whose stake in projects can exceed 15%.
ArcelorMittal loses its rail battle
A crucial first step was taken this month when, much to the dismay of ArcelorMittal Liberia, its railway monopoly was consigned to history. Control of the rail line between the Yéképa iron ore mine and the port of Buchanan has been transferred to the new National Railway Authority (NRA). Officially set up on 17 October by presidential decree but still in the process of being constituted, this authority will be responsible for developing this key piece of infrastructure for the mining sector, which has fallen into disrepair for want of maintenance.
Reporting to the transport minister Samuel A. Wlue, one of Weah’s trusted allies, the NRA will oversee its use not just by mining operators but also by local firms and members of the public. Though it also has a mandate to regulate access to the port, the authority will be designating an independent operator of the line, which could soon be extended into neighbouring Guinea. The aim is to accommodate future output from the still uncertain Nimba iron ore project being led by High Power Exploration (HPX) – owned by the American-Canadian billionaire Robert Friedland – through its local subsidiary, Société des mines de fer de Guinée (SMFG).
Other mining firms already established in Liberia had made the development of their projects conditional on the possibility of using the rail line. They include the Switzerland-based Solway Investment Group, which is run by Dan Bronstein and whose subsidiary Solway Mining is gearing up to begin iron ore production on mounts Blei and Detton opposite AML’s mine. On 9 September, Bronstein requested an audience with Weah, and Solway’s chief investment officer Pavel Ermolaev has been in touch with AML boss Jozephus Coenen and also with HPX concerning access to the rail line.
Original Story : Africa Intelligence