Liberia: ArcelorMitta Liberia CEO Tells FrontPageAfrica How the New Agreement with the Liberian Government Was Reached (An Interview)
FRONTPAGEAFRICA: What are some of the benefits of this deal for the people of Liberia?
SCOTT LOWE: The benefits for Liberia is that it increases employment on two levels – there will be an extra, approximately twelve hundred permanent jobs, once the production increases from the current five million tonnes to fifteen million tonnes a year of saleable products but in the meantime, there will be 2,300 construction jobs. So, enormous improvements and benefits in terms of employment, additional revenue and income to the government when we triple out our saleable production – and by the way, we’re going to fifteen million tonnes per annum with this project but we do have plans, and have reached an agreement with the government on the terms of us going from fifteen to thirty million tonnes, ultimately.
So, fifteen million tonnes in this project and in the future we intend to thirty million tonnes per annum and that will really generate much higher levels of taxes and royalties. Now, that always depends on what the iron ore price is at the time but there will be a significant increase in taxes and royalties. So, additional jobs, additional taxes and royalties, and of course there’s added benefits for direct employment as well as indirect employment boosting local service and product vendors and providers to foster local businesses. Just one example of that is that we’ve been working with local vendors on providing railways ties. Previously we’ve had to outsource them from overseas and in the interim we still may need to import some but we’re working with local vendors to boost that. That’s just one example. So, direct employment, indirect employment through local vendor services and products, and significant increases in properties and taxes, and of course it puts Liberia on the map. This is one of the biggest, if not the biggest mine expansion projects in all of Africa for this year. So, this is very significant. It puts Liberia on the map as an investment jurisdiction and I’m sure that other mining companies will be watching with interest and establishes that Liberia is truly well and open for business with a supportive government and that will put Liberia in a great position for attracting other mining companies to invest in the country as well and there is an attractive deposit of iron ore that we have a world class deposit in ArcelorMittal Liberia but there’s gold and other minerals in Liberia as well. So, I think that is a very good indicator to the global mining investment community that Liberia is open for business.
FFONTPAGEAFRICA: Why did you choose Liberia for this large investment instead of another mining jurisdiction?
LOWE: Well, we’ve been in Liberia for fifteen years as you know and we plan to be in Liberia for many decades to come. Liberia is an excellent place, we’ve shown in the last fifteen years that we can have a successful business partnership with the government and the community. We’ve got a world class deposit of iron ore and we’re well located logistically. We can service markets in Europe and Asia as well. So, there are attractive deposits in the right geographic location and a fifteen-year history of working with the government and with our employees and community to operate a successful business and we look forward to many more decades to come.
FRONTPAGEAFRICA: How will the expansion contribute to taxes paid and how will it encourage other companies to invets in Liberia?
LOWE: The taxes paid will definitely increase significantly, initially going from five to fifteen million tonnes, so that’s a 300 percent increase in production. Now, taxes and royalties vary from what the prevailing iron ore price is at the time and certainly a very big increase in taxes and royalties and it encourages other companies to invest in Liberia, not just mining companies but other supporting industries and other large-scale industries can see that when a global company, a global leader like us try to invest, then other companies notice that and they often take a look at what global companies are doing and take a look at the company and I think it improves Liberia as an attractive destination for investment in Africa. When you think about mining in Africa, you immediately think about South Africa, the Democratic Republic of Congo(DRC), about Ghana. These are all countries that are very successful, Zambia with copper and Namibia, Botswana. You think of these countries that have had very successful mining industries, I’m confident that Liberia will be the next great success story in Africa when it comes to mining investment.
FRONTPAGEAFRICA: What is the progress on the official launch of Phase Two and the status of construction works for the Concentrator and other mining infrastructure?
LOWE: That’s a good question. We’ve just signed the MDA which is the major aspect and we’re grateful to the government for the partnership and the work that went into the negotiations, but we haven’t waited, we’ve been working when the MDA was being negotiated, and the amendment to the MDA. While those negotiations were being carried out, we were business beginning to spend money, in any case, to get the process started and we’ve been employing people and getting started with work on the ground and as you may recall this project is a continuation as it originally started several years ago and put on hold when Ebola struck and when there was a downturn in the global commodities prices. But we’ve been working very hard for over twelve months now getting ready for construction. So, we’ve got project teams established and we’re beginning to engage with contractors and get work underway. So, if you visit ArcelorMittal Liberia in Buchanan and Yekepa now, you will see a lot of activities going on, on the ground getting ready for construction to really ramp up.
FRONTPAGEAFRICA: In layman’s terms, explain how the new mining investment by AML will transform operations?
LOWE: It will dramatically transform the operation, the first and most important is that it will convert low-grade iron ore into high-grade iron ore. So, without this project, there would be very limited life. I’ve been working in the mining industry for quite some time now and what always happens is that the very highest grade gets mined first. This area has been mined since the 1960s so all the high-grade iron ore in the mines or what we call direct-shipment ore, that you simply mine out of the ground, crush and sell, that is being rapidly depleted. So, this project was essential for extending the mine life. So, in simple terms, we take what was otherwise uneconomic and unsellable – you could not sell the iron ore without concentrating it first, so it converts low-grade quality iron ore into quality iron ore which provides much extended iron ore life for 30 years and beyond and it will provide a million products that will attract a higher price and a higher price means more taxes and royalties.
FRONTPAGEAFRICA: How are Liberians being factored in the AML’s plan, especially when it comes to jobs, considering that these improvements would require highly skilled individuals? Will the training of Liberians be a top priority?
LOWE: Developing the skills of Liberians is essential to our strategy. We’re committed. Ninety-seven percent of our employees are Liberians at the moment and we aim to increase that number. Now, when we build this concentrator, we’re building a new processing plant that turns low-quality ore into high-quality products, we’re also producing new technology in rail loading, unloading, and ship loading. So, it’s the much-more advanced technological equipment that we’ll be using. So, with that, we will need to proved greater skills for the Liberian workforce. So, a lot of effort is going into developing our people’s skills and we get tremendous feedback from the work we do without vocational training what we’ll be calling our ArcelorMittal Liberia Academy and we know that increasing the skills of our workforce is absolutely critical.
In the first instance when we increase, to be honest, in the first instance when we begin this new technology, we will need to bring some international experts in because we simply do not have anybody in the country who has operated a concentrator or operated this kind of equipment before. We will be working very actively to replace international workers with local people as they become more experienced and skilled.
FRONTPAGEAFRICA: AML made a substantial investment in the Vocational Training Center. Is it yielding the desired results?
LOWE: Yes, it really is. We’re very proud of the graduates of our vocational training facility. We are now making some changes there to not only increase the number of students but also introduce more advanced skills in minerals processing, logistics, safety, and management supervision. So, our vocational training facility will not only be bigger, it will be better. It is producing great results today for our current direction, for a larger and more technologically advanced operation, we need more people and we need higher levels of skills and so we’re in the process right now of expanding and improving that facility.
FRONTPAGEAFRICA: How is AML strengthening and empowering local businesses in their operations area?
LOWE: This is another critical area. I gave an example earlier of railway ties that we’re assisting local vendors to establish their capacity to supply the ties that go into the railway, that’s just one example, there are other services and products we’re fostering and we welcome local vendors. We think that’s great for the economy, for the people of Liberia. Now, of course, there are some equipment and supplies that are simply not available in Liberia that we have to source from other countries but we are certainly very keen and where it’s all possible we will support those local vendors.
FRONTPAGEAFRICA: AML has said that its employees are its greatest resource. How is the company is the advanced international studies scholarship helping to shape the future of the workforce?
LOWE: That’s a really important part where we have the vocational training center in Liberia and expanding and improving as we explained earlier and importantly, we also provide scholarships for talented young Liberians to travel internationally and be trained internationally in a wide range of disciplines in geology, in engineering, human resources and a range of disciplines and so we financially support those promising young Liberians to acquire those skills and qualifications and come back and contribute to the success of AML.
FRONTPAGEAFRICA: There have been reports of planned actions against AML by a group in Grand Bassa for allegedly violating portions of its (AML) MDA. Concerns relate to housing, jobs, training and education, healthcare, etc. How is AML dealing with this?
LOWE: We have had direct interactions with these groups and we take all of our stakeholders’ and interest groups’ concerns seriously and we’re committed to engaging and clarify where there is any miscommunication and concerns. We can’t solve every problem or concern immediately but we can prioritize and work our way through them but the best outcome will come from sitting around the table together, understanding our stakeholders concerns and also the limitations of what the company can achieve and what its constraints are in terms of time and resources. I’m pleased to say that senior members of my team have met with the leadership of the group from Grand Bassa and we will also meet with interest groups and community groups from Bong and Nimba and other areas as well and wherever there are genuine concerns and questions, we’re only too happy to engage constructively and do our very best to address those concerns. I think the most recent meeting was just over a week ago when we met face-to-face with the leadership of the group and worked through their issues and we will continue to do so.
FRONTPAGEAFRICA: Are you confident that these talks will yield to any substantive breakthrough to these lingering problems?
LOWE: Yes, I believe so. We’re very genuine in our engagement and we are committed to working through those issues and finding solutions and agreeing on priorities on how these issues can be addressed. So, it’s good faith and goodwill on both sides and I’m confident we can work through them
FRONTPAGEAFRICA: – What is the issue regarding the reported demolition of structures in the Loop in Buchanan?
LOWE: There was some misunderstanding there, to be honest. Three derelict buildings were very unsafe and could never be repaired – and they were demolished.We knocked down three unsafe buildings to make some space and the space is not for permanent accommodation, that’s for temporary accommodation just for contract workers who will be there for a couple of years only while we building the concentrator. We need to get those contractors soon to do that work. The issue of permanent accommodation is another one we’re working through.. So, we had three unsafe buildings, we knocked them down to provide some space so we can put in some temporary accommodation for temporary workers, those are temporary construction workers. We’ll do a better job of communicating our plans there in the future. So, that our stakeholders and partners have greater visibility and standing of what we’re doing and why
FRONTPAGEAFRICA: Prior to the signing of the extension there were frequent illegal protest/blocking of rail track continue to result in disruption of AML operations and continue economic losses. – Why are there always these groups protesting against AML? What has been the government’s response?
LOWE: We have been working very closely with the government on this issue and the government agrees with ArcelorMittal that this is an illegal activity and interrupts the business, it creates serious insecurity and concerns and impacts on revenue on the government, and its not good for Liberia’s reputation for investment and so, we certainly agree with the government that we cannot allow illegal blockade of the rails, that’s one point. The second point I want to address is what are the underlying issues here. We have worked in good faith to address these underlying issues. You might recall, we reached a settlement, a year ago. We had some redundant workers and we settled that dispute and resolved that we believed at the time settled the matter permanently but then some additional people came forward in the form of contractors and raised some concerns. We’ve been in dialogue with those. We do not have any liabilities with those people because that had been previously adjudicated by the government of Liberia. However, in the interest of finding an amicable solution because the concerns go back many years, they go back, in some cases, more than ten years. In the interest of resolving this permanently for all, we’ve been in dialogue with protesters and with the government and we’re days away, hopefully, very soon in the near future, we should conclude an agreementthat should see an end to that dispute.
FRONTPAGEAFRICA: You made a commitment earlier to empower local businesses. I’ve received reports and complaints that sometimes Liberian businesses are overlooked and giving to foreign interests or Foreign businesses, one example is payroll Outsourcing. And I heard from This one local company that complained that they won the bid and in the end, it was taking from them and giving to an Indian or a Senegalese company. How can you really assure us? That Liberians will be empowered and that they would benefit from what is happening now?
LOWE: The general principle is that we invite and welcome tenders and bids from Liberian businesses and that’s not to say that if it’s something far more competitive internationally, we have a responsibility to the business and we couldn’t award business to a Liberian supplier at a much higher price for example but where they are competitive we welcome the local vendors. So, it’s still a competitive process that needs to be undertaken and ultimately, we award businesses based on the quality of the services and products on price and a range of other factors. We have always been supportive of Liberian owned businesses and will continue to strengthen local commerce and economy through our business dealings. If all other things are equal, we would prefer Liberian vendors but Liberian vendors still need to be competitive.
FRONTPAGEAFRICA: What is AML doing to address lingering issues relating to the environment, health and safety of its employees and contractors?
LOWE: Health, safety, and the environment are our number one priority and we have a health and safety committee. We respond very quickly and we are very thorough in our investigation, we work very closely with our workforce on safety improvement. I’ve worked on many mines around the world and in many countries and I’m very proud of the safety and the serious discipline in which safety is taken by the workforce in Liberia and the management of ArcelorMittal. It is good as any or better than some mining operations I’ve seen in other parts of the world. Safety is a journey and you never get to the end of the destination. None of us will be happy until there’s never any incident or injury. Now, we’ve made vast improvements although we’re not there yet there’s a constant challenge and we’re always raising the standards, we’re never satisfied until we reach perfection. I don’t believe that there’s any company in the world that has a perfect safety record but in summary, I’m very proud of our people, our workers, and our management and the efforts they put into safety. I think we compare very well, even better to other mining operations around the world and we’re not satisfied with current performance and we’re always striving for improvements.
On the environment, we’re really proud of the work that we do with our environment offsets, biodiversity, it’s a very critical part of our environmental strategy and our approach to environmental management. So, we have dedicated areas within our concession in which we do not mine but not only we do not mine in those areas but we actively protect the environment in partnership with the local communities, we have patrols, support livelihood, . It is a very successful program. So, we set these areas aside, we don’t mine in those areas and we work with local communities to protect the biodiversity and I’m very pleased to say that we’ve seen increase sightings of rare and endangered species which is just fabulous news.
FRONTPAGEAFRICA: Sometime back we raised the issue of the number of injuries to employees on the AML plant. Has Mittal improved the conditions for workers since?
LOWE: Yes, we have. I remember you raising the issue with me regarding that individual case but we have a policy in place to look after any injured worker in accordance with the Liberian laws and standards and will continue to focus on that. Our first priority is to not allow people to be injured in the first place but when they are injured we will make sure that they are looked after within the Liberian law and standards and the company’s health and safety policy.
FRONTPAGEAFRICA: How would you rate the contract extension with Liberia – compared to what was signed before?
LOWE: I. think it’s a very good outcome and it’s a positive for the business and the government of Liberia. I think it’s an important milestone for the company and for the government as well. I’m very pleased that there is a 30-year plus horizon for mining life in Liberia. That’s the nature of our business in Liberia, mine has a definite life. Mines open and then mines closed and in my career I’ve been involved in starting new mines and sadly, I’ve been involved in closing mines down when there’s no economic ore remaining and I’m thrilled for the Liberian people that this MDA pins a 30-year mine life that keeps the economic and social benefits that come from the mining operation for many years to come.
FRONTPAGEAFRICA: Scott employment is a major concern in Liberia and all of this noise that you hear around, obviously is because of opportunities that people are seeking. With the signing and coming of phase 2, will Liberians being given priority, especially where the skill sets are present over expats.
LOWE: As I mentioned earlier, ninety-seven percent of our employees are Liberians, only three percent are international. And where we have international workers, we have an active program of training and upscaling Liberians to take over those roles. To be honest, to be practical, when the concentrator was first built – because it’s a brand new technology, not just a process plant but the train loading and ship loading, brand new machines that nobody in Liberia has ever operated before, so, we will need some international expertise – but we will at the same time use that international expertise not only to operate the new, expanded and improved operation but also their job as international mentors we call them would be to upscale Liberians to take their place, that’s absolutely critical.
FRONTPAGEAFRICA: The train collision must have been an embarrassment for AML. What happened and what is AML doing make sure it does not happen again
LOWE: The investigation there showed human error, the procedures were not followed – and I can’t talk about the action that was taken to protect individuals concerned but there were human errors and safety rules violations. But we’ve dealt with that and we’ve put checks and balances in place to make sure that recurrence cannot happen. We’re just fortunate that no lives were lost but unfortunately some people were injured.
There were serious interruptions to the business .. So we’ve put additional controls in place so we can check that people are following those safety rules very diligently.
FRONTPAGEAFRICA: Over the past few years, a lingering dilemma for AML has been the lack of communication especially regarding issues with locals leading to disturbances. What is the company doing to improve in that area?
LOWE: Communication is critical and a bit like safety. No matter how well we’re communicating, we always want to do better and so we’re not perfect at communication, we put a lot of effort in but I’m sure, particularly when there’s so much change going on, we recognize that we’re going to have to communicate even more frequently and with numbers of people, given the level of changes that we’re seeing. But I often remind myself that – as I said earlier, this is a very nice problem to have.
We need to communicate more and then we need to address all these issues. We’re doing that because we’re spending additional US$800 million to provide a 30-year future for our mines and to boost employment and so we don’t take any of those for granted and we know the implication is critical and we do have quite an extensive communication strategy but we’re going to have to do even more, with more people, more stakeholders, more interest groups, more concerned groups and we have to do it more frequently because of the level of change that’s going on but the overriding message is that this is great news for the country, great news for the company, we will work all through the challenges. There will be bumps along the way, there always are but we are committed to the objective of providing a safe and an environmentally-responsible successful business in partnership with our communities, our employees so that everybody benefits.
FRONTPAGEAFICA: In the days leading to the signing of this extension there were a lot of competing forces aiming for the Guinea rail operation. We even had issues with Solway Mining and HPX – and even talk of a group out of South Africa expressing interest and looking to tap in. What was the position of AML all along and how do you see the future of this operation.
LOWE: AML has a concession that provides the company with certain rights, and the Company’s position has always been to protect its existing rights. While I can’t comment on matters that we are currently discussing with Government, what I can say is that whenever issues arise, we always seek to resolve them through dialogue with GoL, and we will continue to engage closely to resolve any differences.
FRONTPAGE AFRICA: What do you make of concerns raised by former Grand Bassa senator Findley in a lawsuit filed Wednesday?
Rodney, we heard of the legal action via social media and in news reports. ArcelorMittal Liberia has not received any official communication from the court regarding said petition but reaffirms that as a law-abiding business operating in Liberia, it always remains respectful of the law.
FRONTPAGEAFICA: Do you have any final thoughts on concerns from many quarters that the contract extension may not be the best deal for Liberia at this time? What assurance can you give them that this deal is something Liberians can look forward to?
LOWE: It is an excellent deal for Liberia and its people because it puts the country on the international map and it shows that Liberia is open for business and I believe it will attract others to Liberia. It creates jobs both during the construction phase so that there are temporary jobs in the years that we’re doing construction then it generates, additionally, more permanent jobs, it creates additional taxes and royalties and it also will support greater opportunities for local businesses. So, I think the message here is that it is great news for Liberia. It was negotiated very carefully, it wasn’t rushed into, there was a lot of detailed negotiations with the government over an extended period. So, this wasn’t rushed, it was carefully considered by the government of Liberia and by ArcelorMittal Liberia and we’re very thrilled with the outcome.
Thanks for your time and the conversation, Rodney.