Identifier
Created
Classification
Origin
08MONROVIA116
2008-02-08 10:25:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Monrovia
Cable title:  

LIBERIA: ARCELORMITTAL INITIATES INFRASTRUCTURE

Tags:  ECON EMIN EINV LI PGOV 
pdf how-to read a cable
VZCZCXYZ0005
RR RUEHWEB

DE RUEHMV #0116/01 0391025
ZNR UUUUU ZZH
R 081025Z FEB 08
FM AMEMBASSY MONROVIA
TO RUEHC/SECSTATE WASHDC 9748
INFO RUEHZK/ECOWAS COLLECTIVE
RHEHAAA/NSC WASH DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUCNDT/USMISSION USUN NEW YORK 1552
UNCLAS MONROVIA 000116 

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR AF/W PDAVIS, AF/EPS CTRIMBLE, EB/ESC
SSAARNIO, INR/AA BGRAVES

E.O. 12958: N/A
TAGS: ECON EMIN EINV LI PGOV
SUBJECT: LIBERIA: ARCELORMITTAL INITIATES INFRASTRUCTURE
WORKS ON IRON ORE MINING CONCESSION

REF: A. 07 MONROVIA 1089

B. 07 MONROVIA 780

UNCLAS MONROVIA 000116

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR AF/W PDAVIS, AF/EPS CTRIMBLE, EB/ESC
SSAARNIO, INR/AA BGRAVES

E.O. 12958: N/A
TAGS: ECON EMIN EINV LI PGOV
SUBJECT: LIBERIA: ARCELORMITTAL INITIATES INFRASTRUCTURE
WORKS ON IRON ORE MINING CONCESSION

REF: A. 07 MONROVIA 1089

B. 07 MONROVIA 780


1. (U) SUMMARY: The world's largest steel company,
ArcelorMittal, announced in December 2007 that it is
increasing its investment in Liberia by US$500 million to a
total of $1.5 billion. ArcelorMittal's Liberian subsidiary,
Mittal Steel Liberia (MSL),has initiated preparatory
activities at its mining concession site in Yekepa (Nimba
County) and at the port of Buchanan (Grand Bassa County).
Total expenditures to date exceed $50 million. During a
January 23 visit by Ambassador Booth to Yekepa, MSL Project
Manager for Yekepa, Mrinal Majumdar, outlined progress on its
infrastructure preparations for mining operations set to
begin in 2010. END SUMMARY


2. (U) MSL has initiated geological exploration and drilling
at Mount Tokadeh and plans to proceed in a phased manner to
assess other western area reserves in Mt. Gangra, Mt. Beeton,
and Mt. Yulliton. MSL is already building access roads and
laboratories for sampling drilled cores and will follow soon
with construction of a power plant, utility facilities and
installation of a concentration plant. (Note: According to
Majumdar, the old Blue Mine site abandoned by LAMCO had 67%
iron ore content while Mt. Tokadeh has an iron ore content of
58% and therefore must be concentrated for export. End note).


3. (U) MSL has completed the rehabilitation of 60 homes at
its Yekepa base - site of the Liberian-American-Swedish
Minerals Company (LAMCO) operation from 1963-1989. About 150
houses in Yekepa and 80 in Buchanan will be ready by June
2008 (Note: at its peak, LAMCO provided 1,450 houses for
employees. End note). MSL will also rehabilitate or develop
infrastructure facilities such as fire and water services,
sewage treatment, a power distribution network for Tokadeh
and Yekepa, workshops, warehousing, maintenance facilities, a
Yekepa airstrip and local road networks. MSL has graded the
road from Saniquellie to Yekepa and plans to pave the entire
Ganta-Yekepa road by the end of 2009 (note: the USG through

USAID funded drainage and bridge repair work on the
Ganta-Saniquellie road in 2007. End note).


4. (U) Three schools are operating in the MSL concession, and
the company has completed renovation of a 65-bed hospital.
The hospital treats patients from as far away as Ganta and
Guinea and conducts ambulance outreach to small villages
throughout Nimba county. The hospital only has one doctor
and MSL is trying to recruit additional staff. (Note: There
are an estimated 122 doctors in Liberia and most of those are
in Monrovia. End note).


5. (U) Work on the port of Buchanan and the railroad from
Buchanan to Yekepa is gearing up. According to Majumdar,
roughly 70% of the 267km long railroad line is in relatively
good shape, but most ties and drains will have to be
replaced, along with some bridgework and expansion to handle
130-car trains. (Note: LAMCO trains were only 20 cars long
but MSL expects to have five times the capacity. In
addition, the railroad may also prove useful to BHP
Billiton's large exploratory concession 40km across the
border in Guinea. End note). Rehabilitation of the port
including ore handling/unloading facilities and
state-of-the-art ship loading facilities for "Cape-size"
vessels is just getting started.


6. (U) Currently MSL employs over 600 persons directly and
through contractors at Buchanan and Yekepa. The geological
survey is conducted by Met-Chem Inc. (Canadian subsidiary of
US Steel) and the drilling by Geosol (Brazil). The
Engineering, Procurement and Construction (PCM) firm for the
reconstruction of the railroad and Port of Buchanan is
overseen by Odebrecht (US) and carried out by a consortium of
three companies: Sandwell (Canada) and Met-Chem along with
Projen (Brazil). MSL estimates that it will ultimately
employ 3,500 persons directly and create 20,000 additional
jobs in the country via contractors and suppliers.


7. (U) MSL expects to complete all infrastructure necessary
to begin mining operations by end-2009. Initial exports will
be in the range of one million tons of iron ore in 2010 but
will increase to a maximum capacity of as much as 15 million
tons per year as early as 2014.


8. (SBU) The agreement reached by MSL and the GOL provides
that the firm pays 4.5% tax on the market value of exported

ore plus income tax and dividends to the GOL. MSL also
contributes $3 million per year to community development.
The GOL holds a 30% stake in MSL and has the same share of
seats on the MSL Board of Directors. (Note: Parent company
Arclelor-Mittal is incorporated in Luxembourg while Mittal
Steel Liberia is incorporated in Cyprus. End note).


9. (SBU) Post has conducted advocacy for MSL on the basis of
MSL's expected imports of U.S.-manufactured equipment for use
in its mining operations. The $300 million rail
rehabilitation is overseen by Florida-based Odebrecht.
Pittsburgh-based Koppers and Burke Parsons of West Virginia
are supplying railroad ties for the project. Progress Rail
(a division of Caterpillar in the United States) has bid on a
contract for iron ore transport wagon rehabilitation. MSL
expects to order $15 million in equipment in 2008, including
haul trucks, motor graders, compressors, port handling
equipment and vehicles, some from Caterpillar dealers in the
United States.


10. (SBU) COMMENT: Before the war, mining accounted for 22%
of Liberia's GDP. Mittal's investment is already having a
positive impact on the rural population. The $3 million
community development grant for use in and around the
concession area is an unprecedented reform, and is included
as a line item in the national budget. The investment is
already serving as an anchor for other investments in Grand
Bassa and Nimba. END COMMENT.

Booth