House’s letter to Weah explains rejection of AML deal

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“…the due diligence exercised on the proposed ArcelorMittal Liberia mining development agreement has established a series of observations that the House of Representatives wishes to bring to your attention,” says the House of Representatives

The largest foreign direct investment signed by President George Weah’s administration, the 3rd Amendment to ArcelorMittal’s existing concession agreement, valued at $800 million, has been sent back to his desk for renegotiation by the House representatives.

The House, which has traditionally rubber-stamped nearly every concession agreement submitted by the Presidency, took the unprecedented step on March 28 of rejecting the agreement in its entirety – sending a message to the President and to his cabinet that the negotiated agreement was, according to lawmakers, “monopoly”.

The rejection paves the way for the deal to return, however, the House decision was strongly backed by Weah’s own lawmakers from his ruling Coalition for Democratic Change – who put the final nail in the coffin by voting to reject it — convincing the House leadership to write to the president that the deal comes back with several recommendations, which should be included in any renegotiated deal.

It then gives President Weah a clear picture that he had failed to muster and overcome his own party’s opposition to the ArcelorMittal Liberia (MDA) mining development deal, which is not only a flagship project, but which he said could “support the government’s deal”. Pro Poor’, which is underpinned by the importance of creating jobs to lift Liberian citizens out of poverty.

In an unprecedented setback for the president, his most trusted ally in the House, Speaker Bhofal Chambers, described the decision by the House plenum as the ‘greatest achievement of mankind’ – stunning the audience with such a bold statement just hours after his colleagues voted to reject the deal.

And in a letter to the president, accompanying the return of the US$800 million AML deal, the House of Representatives expressed doubts about the deal, particularly the impact of the Liberia-Lawrence treaty. Guinea on the ownership, operation and rights of users of the railway from Yekepa to Buchana as provided for in article 3 of the treaty with Guinea.

the Daily Observer obtained a leaked copy of the letter from the House, signed by Mildred Sayon, its chief clerk, who also noted that the proposed AML agreement essentially ignores key provisions of Liberia’s minerals and mining law , in particular Article 6, Sections 6.1 to 6.3 and Section 5.3 of the Act.

“Mr. Speaker, The Honorable House of Representatives transmits the following recommendations: That the government retain ownership of the railways, Buchanan Port and other related infrastructure; that the government initiate a recruitment process aimed at hiring an independent railway operator to ensure non-discriminatory management of railways and other related infrastructure,” the letter from the Chamber states.

“And any future renegotiation of this concession, other existing concessions and new concessions takes into account the full application of all relevant laws, including the law establishing the WASH Commission and the law on land rights,” the letter continues. . “And that future amendments to the AML MDA, other existing concessions and/or new concessions consider a role for the National Housing Authority to ensure standard and improved housing facilities for employees and their dependents .”

The rejection, which was explained in the House’s letter to the president, was hailed by many as a victory for the country as the AML’s 3rd Amended Agreement contains clauses that grant it exclusive rights to the railroad Yekepa in Buchanan and Buchanan Port, as captured in Article 3, Section 3(f) of AML’s Third Amendment to MDA, which Speaker Weah submitted to the House in 2021.

Article 3, Section F of the revised MDA, titled “The Concessionaire’s Capacity as Railway Operator”, gives AML “the exclusive right to continue to serve as operator of the railway for the term and any extended term of this Agreement…” Section F(2) places AML “responsibility for day-to-day operations for the benefit of all users in accordance with the Rail System Operating Principles and Multi-User Agreement (when it comes into effect) “.

Section F(3) allows AML to form a wholly owned subsidiary “for the purpose of recording all costs, expenses, revenues and activities associated with the operation of the railway…” under certain conditions. The House, having received the proposed MDA on November 24, 2021, cited Article 3, Section 3(f), complaining that such a clause gives the steel giant monopoly control over the infrastructure assets of the Liberia; port and rail infrastructure with the ability to use its exclusive rights to block other users’ access to these sovereign assets.

But the rejected deal, which is being sent back to the president, was something the executive was seriously counting on to shore up the country’s fiscal year 2022 budget, which stands at $786.5 million, with the administration. public, safety and rule. law, health and education as key priorities.

The Weah administration has strongly supported the deal and hopes to make a $55 million bonus within 19 months of ratification, a significant portion of which would go to support the budget. The AML deal has been hailed by the President as an ideal deal that would help reduce the country’s high unemployment rate and spur economic growth, bringing revenue benefits and making the country one of the world’s largest iron ore exporters in the world.

The House ruling, meanwhile, has now thwarted the Weah administration’s efforts to mark a passage for the deal and forced the administration to renegotiate the deal, guided by House recommendations – that AML might not accept easily. The backlash to the 3rd Amended AML Deal, which was to be one of West Africa’s biggest mining projects, comes after House was unable to accept the Senate’s version of the bill, despite the latter proposes a conference as a way to solve all the problems. their recommendations before forwarding the agreement to the President for his signature.

The House has taken a hardline stance on the AML deal since it was submitted by the President on November 24, 2021 and one month later; passed it on the condition that significant changes be made to the original agreement, as a way to build an ambitious legacy of being in the interests of the people after signing concession agreements in the past, including the first and Second Amendments to the ArcelorMittal Liberia Concession Agreement.

House concerns have thrust the deal into the limelight – gaining outsized profile after stakeholders from project-affected communities accused ArcelorMittal Liberia of neglecting and refusing to honor parts of its MDA initial with the government of Liberia, in particular restoring infrastructure in the concession area and trying to gain exclusive control of the country’s main assets – the railway and the port of Buchanan.

So, in the face of pressure from all sides – from the government and the public, the House decided to reject the agreement outright after the Senate proposed a conference committee, comprising the joint Senate and House of Representatives committees on the Judiciary, Investment, Lands, Mines, Energy and Natural Resources, to sort out the recommendations made by the two chambers.

The Government of Liberia and ArcelorMittal Holdings AG entered into and entered into the MDA on August 18, 2005, which was ratified by the Legislative Assembly, signed by the President, and printed on prospectuses. The agreement was subject to two different amendments, on December 28, 2006 and January 23, 2013, respectively.

The 3rd amendment, which was signed on September 9, 2021, could pave the way for the expansion of the Company’s mining and logistics operations in Liberia and allow ArcelorMittal to significantly increase the production of premium iron ore, generating a number important new jobs and broader economic benefits for Liberia.

It includes the construction of a new mill and an expected substantial expansion of mining operations, with the first concentrate expected in late 2023, reaching 15 million tonnes per annum (“mtpa”). Under the agreement, the company will have reservations for an expansion of at least 30 million tonnes, while other users may be allowed to invest in additional rail capacity.

An analysis of the recommendations of the House of Representatives and the Senate regarding the 3rd ArcelorMittal Liberia amended MDA is attached to this article.

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