Liberia: Concession Tug-of-War (2025)

Monrovia — A deepening dispute now threatens to unravel the progress made on Liberia's Yekepa-to-Buchanan railway, a vital economic artery. At the heart of the conflict are two main issues: High Power Exploration (HPX) and its subsidiary, Ivanhoe Liberia, reportedly refusing to recognize ArcelorMittal Liberia's (AML) continued role as railway operator, and HPX's insistence on appointing an independent operator of its choosing.

The Government of Liberia's third-party Multi-user policy, introduced to expand access to rail and port infrastructure, initially received widespread support. It was envisioned as a way to open additional revenue streams and increase economic activity.

AML, which has operated and maintained the railway for nearly 20 years, publicly backs the policy and acknowledges the benefits of broader usage by other mining companies. However, government insiders and economic analysts argue that HPX's demand for a new operator would unfairly disadvantage AML, which retains legal rights under its Mineral Development Agreement (MDA) to operate the railway.

Since taking over Liberia's war-damaged infrastructure in 2005, AML has invested over $800 million in rehabilitating and upgrading the 243-kilometer rail line to U.S. heavy-haul standards. This railway is essential for the transport of bulk commodities and the development of Liberia's mining economy.

Upgrades have included replacing wooden sleepers with steel ties, repairing bridges, acquiring nine GE locomotives, and adding 500 Progress Rail-equipped wagons. By 2025, the line will handle five ore trains daily, each with up to 120 wagons. All nine rail loops are being extended, and a Wabtec rail control system is being installed to improve efficiency and safety.

AML has also undertaken the construction of new sidings and level crossings, and reinforced the Buchanan yard with rock fill, all fully funded by the company.

By contrast, HPX has not invested in Liberia's rail infrastructure. Its primary objective is to transport ore from Guinea through Liberia to Buchanan Port. However, HPX still lacks full authorization from the Guinean government, which is currently investing over $18 billion in its own internal rail system.

Given HPX's lack of investment and local mining operations, its push to control Liberia's railway infrastructure is increasingly being seen as both economically risky and politically questionable.

Government officials familiar with the negotiations argue that replacing AML as operator is not in Liberia's best interest. They highlight AML's support for equitable third-party access, its creation of over 7,000 jobs, substantial tax contributions, and ongoing investments in mining-affected communities.

"It would be reckless to burden ourselves with the cost of hiring and maintaining an expensive independent rail operator just to appease a company whose only contribution is moving ore from another country," said a senior Liberian economic official, speaking on condition of anonymity.

Another economist added, "With declining U.S. aid and budget constraints, Liberia must prioritize sustainable economic policies, not the convenience of foreign entities."

The issue also raises concerns over cost and efficiency. Hiring a new operator, as HPX proposes, could result in higher operational expenses during a period of fiscal tightening. Analysts point to the case of APM Terminals, where independent port operation resulted in lower-than-expected state revenues. A similar outcome with the railway could severely harm Liberia's economy.

Importantly, Liberia's Multi-user framework is not a recent policy shift. The principle was embedded in AML's MDA as early as 2006 and ratified by the Legislature in 2007, reflecting a longstanding national strategy.

Despite claims to the contrary, AML has shown a consistent willingness to cooperate. In 2010, it held talks with BHP Billiton, then owner of SMFG, now under HPX, regarding a potential cross-border mining venture. These discussions fell apart largely due to valuation disagreements and Guinea's decision to partner with Rio Tinto on the Trans-Guinean Railway project.

Another attempt at collaboration came in 2013 with Sable Mining, which sought access to the railway. Talks began in good faith but collapsed when Sable failed to meet technical requirements. The company soon faced a corruption scandal, the Ebola outbreak, and collapsing iron ore prices, factors that derailed progress unrelated to AML.

In 2019, limited efforts to facilitate Guinean ore transit through Liberia resulted in a modest agreement allowing a maximum of 5 million tons per year, far from transformative in terms of national infrastructure revenue.

Throughout, AML has upheld its commitment to government oversight, transparency, and fair third-party access, while firmly defending its contractual right to operate the infrastructure it rebuilt.

The economic stakes of HPX's demand are significant. Handing control to a new operator would add costs, complicate logistics, and potentially repel future investors. More critically, it could weaken one of Liberia's most reliable sources of national income.

At this point, the government stands at a defining crossroads: uphold a strategic partnership with the company that restored its post-war infrastructure and embraces shared access, or gamble its economic future on the demands of a foreign newcomer with no financial stake in the nation's recovery. - Edited by Othello B. Garblah.