Monrovia, Liberia – Liberia is faced with a crucial strategic choice: how to control access to its port and railroad assets to optimize national advantages while preserving diplomatic equilibrium.
An infrastructure that has long supported Liberia’s post-war rehabilitation and is still vital to its economic future, the Yekepa-Buchanan railway is at the center of the discussion.
ArcelorMittal Liberia, on the other hand, has spent over $800 million to get the railway running since 2005. The most recent obstacle, however, comes from High Power Exploration (HPX), a mining company that is vehemently requesting authorization to transport iron ore from Guinea’s Nimba deposit via Liberia’s rail network.
Despite ArcelorMittal’s massive investment, HPX has said that it would not let ArcelorMittal to operate the railway, even though HPX and its subsidiary Ivanhoe Atlantic have not made any financial contributions to the rail line and have not received any official Guinean approval for the passage of ore through Liberia.
The idea appears to provide Liberia new sources of income, but below it are a number of economic and geopolitical problems that might influence the region. Even though HPX is actively pushing in Liberia, its goals are contingent upon Guinea’s approval, which Conakry has not yet provided. Guinea has made it apparent that it wants to manage its own mineral exports with its own $15 billion infrastructure plan in place, which includes a deep-water port at Moribayah and a 670-kilometer railway. Still unanswered is why Guinea would permit HPX to use a route through Liberia rather than its facilities.
“HPX is negotiating as if Guinea has already agreed, but the reality is different,” said a representative of Liberia’s Ministry of Mines and Energy, acknowledging the uncertainty. “We run the risk of becoming embroiled in a political and financial predicament if Liberia commits without Guinea’s explicit consent.”
In addition to its contentious $35 million payment to the George Weah administration an arrangement made outside of any formally signed agreement HPX has a history of engaging in unusual business practices. Liberia now runs the risk of allowing rail access to a business that might not have the legal capacity to transport ore across borders in the absence of unambiguous proof of Guinea’s agreement.
The choice is more than just a single transaction for Liberia. The country’s capacity to safeguard its resources, establish investment guidelines, and prevent itself from being only a transit route while others enjoy the full economic rewards is put to the test.
Liberia needs to use its position effectively. Before proceeding with any deal, the government must seek unwavering assurances and legal proof attesting to Guinea’s acceptance. For a deal that might never come to pass, it would have to jeopardize its long-term economic strategy, infrastructure, and sovereignty.
In addition to rail access, Liberia is attempting to establish its dominance in regional economic matters. Or will Liberia let foreign powers determine its destiny, or will it negotiate on its own terms?
The government of Liberia must be honest about HPX’s intention to use Liberia as a transit country for Guinean iron ore when negotiating. There aren’t many long-term economic gains or job development opportunities for Liberians from this agreement alone.
Unlike full-scale mining operations that generate employment and local investment, merely transporting ore through the country does not create a meaningful number of jobs or significant value addition to the economy.
In order to prevent the exploitation of the country’s vital resources with little return, Liberia’s best interests must be protected in all negotiations and any agreement must guarantee real benefits, whether through revenue-sharing schemes, infrastructure improvements, or wider economic opportunities.
Photo credit: Executive Mansion
