Lessons from the ArcelorMittal violence

Some called it the Nimba ‘scare’, others termed it Nimba disturbance; for some, it was the ‘Yekepa Raid’, among others. But what is clear is that last week’s violent incident in Nimba is a national wake up call that must be checked on from all fronts; behind-the-scene happenings, hidden but eventual causes, and mechanisms that would prevent future occurrences on not just ArcelorMittal but also all current and future investments, whether foreign or locally-owned.

The obvious condemnation of what transpired seems however, to be the only thing on everyone’s lips without a second thought to what may have led to such a violent scene like never witnessed in the post-war country’s decade long years of peace. With no intention on my part to justify such violence (which warrant immense and immediate action against perpetrators and their hidden supporters), we must use the Arcelor Mittal situation to put into place corrective measures on issues bordering around how we sign concession agreements, on how we raise expectations of would-be beneficiaries, how we manage or direct proceeds derived out of social funds, and how we follow-up with the least of the contents of the agreements.

As a matter of fact, post-war concessions, be them agricultural like oil palm or rubber or industrial like mining, are all protest-prone to the extent that fire-arms violence erupts at times. The case of the 2007 Liberia Agriculture Company (LAC) anti-expansion violence that killed its Belgian national, Bruno Mitchell who was the Plantation Manager is enough reason for all Liberians and their foreign investors to take cure for avoiding such.

For the case at hand, Nimba youths have in recent months never rested from expressing their frustrations over Arcelor Mittal’s operations until it reached boiling point last week. They had demanded, or probably appealed for greater Liberian employment, implementation and in some cases completion of projects and other infrastructural developments to include schools, hospitals and roads and even a vocational training center in Yekepa and improvement of workers’ conditions, among others.

The company, on the other hand—though maintained that it has lived up to its corporate responsibility at 100 percent—had engaged the locals regularly during and after their protests. Whatever became of the outcomes of the engagements however was not reflected in the recent violence that reportedly left about four national police officers injured and millions of dollars’ worth of properties damaged.

But as the company picks up the pieces in counting its losses and has since resumed operations, let’s take a look at some of the issues.

When Our Lawmakers Pen ‘Hasty’ Agreements

The ArcelorMittal deal was initiated during the Gyude Bryant Transitional Government during a time when warring-fractional lawmakers on Capitol Hill were deemed to have ratified the deal under dubious circumstances, prompting the revision of a deal put forth on the table at around US$900 million to be spent over 25 years. On 17 August 2005, the National Transitional Government of Liberia (NTGL) entered into a Mineral Development Agreement (MDA) with Mittal Steel to exploit Liberia’s reserves of iron ore.  

Of course, it was renegotiated by the current administration in 2006, apparently fueled by a Global Witness report that raised some alarms over some issues in the Bryant deal.

But a year and few months after the revision of the deal, ArcelorMittal in 2008 donated 100 Toyota Hilux DXD4 double-cabin pickups to members of the 52nd National Legislature to be used, according to the company’s former CEO Joseph Matthews, for agricultural purposes in their respective constituencies. The donation ceremony which was held in the Executive Mansion yard was said to be in response to the President’s request for Liberia’s partners to assist in the reconstruction efforts of the government’s agriculture development drive. That met public condemnations too on grounds that it was meant to influence the lawmakers over future actions of the company.

But the deal had the potential to bring a range of benefits, including increased government revenues, the creation of employment positions and improved infrastructure to a nation fresh from the ashes of war and at the time yearned for investment opportunities. Nonetheless, the terms and conditions of the MDA attracted significant criticism from civil society groups due to their alleged impact on human rights.

In a 2006 report entitled ‘Heavy Mittal?’, Global Witness noted that the presence of a stabilization clause in the MDA could undermine Liberia’s right to regulate important public policy areas, such as human rights and the environment. Although the MDA acknowledged that the project was subject to Liberian law, it imposed a number of restrictions on its application including concerns that the MDA precluded modifications to applicable Liberian law without the prior consent of the company. As a result, the report noted that the company was effectively in a position to refuse to consent to any new law or other form of regulation for the duration of the contract. 

Another concern was that the MDA guaranteed that the duties and rights of the company under the agreement shall never be derogated from or otherwise prejudiced by any law or by the action or inaction of the government. As a result, the MDA guaranteed that the duties and rights of the company would take precedence over any domestic law, international law or other form of regulation and that the Liberian Government was obliged to indemnify the company for any and all “claims, liabilities, costs, expenses, losses and damages” as a result of a failure by the government to honor its obligations under the MDA – even if such failure was required under Liberian law.

But the renegotiated MDA of December 2006 between the Liberian Government and Arcelor Mittal saw an amended stabilization clause which still superseded Liberian law on income tax, royalties and other payments due to the government substantially restricted. The amended MDA also made expressed provision for the protection of specific human rights in relation to the project. For example, under that renegotiated agreement, ArcelorMittal is bound to ensure that its private security force follows the Voluntary Principles on Security and Human Rights, that the company must respect certain rights of third parties within the project area including the right of specified people to use infrastructure within the project area. It also called for the company to no longer has the right to secure (at no additional cost) public land outside of the concession area that is necessary for the operation of the project. Acquisition of such land is now subject to good faith negotiation between the parties. 

In short, the renegotiated settlement provides for stronger human rights protection. According to Global Witness at the time, “the renegotiated agreement showed it was possible to secure profitable commercial terms, whilst also safeguarding the interests of the host state and its population.” This, it said, gives Liberia a real chance of extracting reasonable benefits from the concession.  However, the real benefits of this contract to Liberia, Global Witness notes, could only be truly assessed once the company started its operations.

And so, are the previously raised issues in that report that led to the renegotiation like human rights, improved working conditions and benefits of the locals being addressed? 

Were Huge Expectations Raised For Locals?

Another issue we must consider in the aftermath of the Yekepa violence is whether the expectations of the locals were raised beyond the company’s capacities. 

ArcelorMittal contributes US$3 million annually to a development fund as enshrined in the MDA for the three counties where it operates (with Nimba where the mines are located receiving the largest trunk of US$1.5 million dollars, Grand Bassa where the company ships ores through its port receiving US$1 million while Bong receives the remaining half a million because the company’s rail passes through that county).

I remain a testimony to projects in these counties that derived out of the Corporate Funds including community colleges in Nimba and Grand Bassa Counties, among others. The understanding is that legislators, administrators and the citizenry from these counties derive at how they spend their allotted portions of the Funds which ArcelorMittal boosts of being in full commitment to in terms of up-to-date payments.

But aside from this, it is also understood that the company committed itself to other initiatives outside the MDA which may seem to be causing the current problems. Nothing in the MDA says the company should pave the Ganta-Yekepa Road, for instance, but ArcelorMittal made a commitment to this and other issues advanced by the locals. As a matter of fact, locals in Buchanan, Grand Bassa County do have their demands too outside the

MDA to which the Company committed to doing but dragging or refusing to do so later may cause problems (which we hope not for).

May we use the Yekepa scenario to avoid raising expectations of would-be beneficiaries and how we ratify concessions; how we manage or direct proceeds derived out of social funds, and how we follow-up with the least of the contents of the agreements.

In this case, with the reported losses sustained by the company, its target of reaching 100 million tons  by next year would not reached as was in 2012 when its target of 4 million tons could not be met due to weather. A reported capital investment of US$800 million in rails, port, infrastructure, among others is worth protecting but the situation also speaks to how fragile ArcelorMittal’s own security (the hired PGS) is and the need to bolster it. 


About the Author: Nat Bayjay is a Media Consultant/Communication specialist. Doubling as a PressUnion of Liberia Best Investigative & Best Environmental Journalist in 2011, Bayjay uses his journalistic profession to always highlight issues in the country, including political, economical and socio issues through in-depth articles and news analyses. He’s reachable on: nbayjay2010@gmail.com/0777-402737