Liberia to Start Exporting Iron Ore Again, First Large Post-Conflict Investment

With global demand for steel on the rise, Liberia is re-entering the ranks of the world’s significant producers of the iron ore needed to produce it.

During the 1960s and 1970s, Liberia was one of the world’s leading iron ore exporters. But conflict through the decades that followed destroyed a once-vibrant economy and reduced mineral output to zero.

The first ore mined in Liberia in more than 20 years is currently being loaded onto the Nord Voyager, a Panamanian-registered cargo ship, which will make a ‘test’ run to market before regular shipments begin in July. The ship entered the harbour saturday morning which is located 275 kilometers (170 miles) south along the Atlantic coast from the capital, Monrovia.

“This is an exciting moment,” said Rajesh Goel, the ArcelorMittal chief executive in Liberia. “We want this project to benefit the people of Liberia, and we feel confident that it will,” he said in an interview at the company’s Monrovia headquarters. Some 5,000 people have been employed during the construction phase of the project, he said. The workforce required for mining and export operations is about 500.

Front-end loaders began filling 36-ton wagons on the pier with iron ore as soon as the ship was docked. The loading process, involving large cranes which hoist the wagons onto the vessel, is expected to be complete this week. The cargo ship can transport 69,000 tons.

“It’s a temporary arrangement,” said Ross Lockerbie, who directs ArcelorMittal’s Buchanan operations. “The permanent solution is to load the ore onto a conveyor, which we are still waiting to commission.”

The ore comes from mines operated by ArcelorMittal in the northern Nimba region near the border with Guinea. The company, which is the world’s leading steel manufacturer, was formed from a 2006 merger between Luxembourg and Indian-based firms. Lakshmi Mittal, the Indian industrialist who is chief executive, visited Monrovia in December 2007 to announce an increase in the company’s investment commitment from the U.S.$1 billion agreed a few months earlier to $1.5 billion. This week, Mittal met with Liberian President Ellen Johnson Sirleaf in London to provide an update on the project’s progress.

The original concession was developed in the early 1960s by the Liberia-American Swedish Mining Corporation (LAMCO), which ceased operations during the fighting in the early 1990s. ArcelorMittal is developing new mines on the same deposits around the northern Liberian town of Yekepa, where crushing, screening and loading facilities have been constructed, along with significant social infrastructure, including housing and food for employees, plus a school and a hospital.

In Buchanan, port facilities that deteriorated during 25 years of conflict have been replaced with modern ore handling equipment. The port has two quays, one for fueling and the other for loading. In the refurbished railway workshop, train wagons that once were used by LAMCO are being restored. Number 71 came off the repair line on Saturday. A total of 195 wagons from the old stock have been certified as salvageable.

The company has rehabilitated the 250-kilometer railway line from Yekepa to Buchanan to transport the ore, along with a parallel service road. More than 100 bridges have been constructed along the route. Four General Electric locomotives, painted bright ArcelorMittal orange, pull the loaded wagons from mine to port.

This week’s shipment is a test run. “We want to make sure the equipment from our suppliers and consultants performs as per the contract terms and conditions,” Goel said. Once full-scale operations begin next month, output is projected to total four million tons per year – all ore that is mined with a sufficiently high concentration of iron to be shipped directly from mine to market, which is known in the industry as DSO, ‘direct ship ore’.

A larger-scale second phase, boosting production to 15 million tons per year, would incorporate lower grade ore – containing less than 60 percent iron – which would be processed in a concentrator to be built in the Yekepa area. A decision by the company’s board on the expanded operation is expected later this year. The company has another mining concession under evaluation in nearby Senegal.

The rebuilt rail line between Buchanan and Yekepa passes through long stretches of dense bush where thousands of Liberian fled to escape the killing during the civil war between 1990 and 2004. Interrupting the lush underbrush are numerous areas of cleared patches of land with small fires that have been set to make charcoal, the principal fuel for cooking, on sale alongside every road and highway.

Mining began in late April at Tokadeh, a mountainside site 20 kilometers (12 miles) south of the company’s operational center in Yekepa. The first ore shipment was loaded onto rail cars on May 20. The ore lies near the surface, which makes extraction a far simpler process than it is from many of the deep pits minerals are extracted from in other places.

Charl F van der Merwe, a South African mining engineer who arrived in Liberia in April to manage operations, says that mining iron ore is far simpler than the gold, uranium and copper ventures he has worked on during his 25-year career.

Mining takes place at the top of the mountain where the scars from the LAMCO excavations are still evident. The ore is scraped from the hillside and loaded into large trucks for transport to the processing plant beside the rail line. Caterpillar scrapers are constantly used to smooth the dirt road from the top of the mountain to reduce accident risks for the trucks making the steep descent. The ore-filled dirt is fed into crushers, passed through screens and onto a conveyor belt which dumps the processed ore into waiting rail wagons. Under the terms of the concession agreement, the company is committed to significant environmental mitigation to reverse damage caused by the removal of large volumes of soil.

To get mining underway four years after finalizing the concession – an unusually rapid timetable, Goel said – ArcelorMittal has relied heavily on contractors, especially for the construction phase. In Tokadeh, a Ghanaian company, Engineers and Planning, is operating the plant and providing on-the-job training for Liberians.

The company has been criticized by some Liberians for using contractors from India and elsewhere and for not employing more locals. William Coleman, project manager for Engineers and Planning, whose previous 10 years of experience has been entirely in his home country, says there are not enough Liberians with the requisite skills to fill all positions. But he says Liberians are eager for training and that the Liberian workforce at the mine is expected to rise from the current level of 140 to about 200 in the next year.

Goel, the CEO, says ArcelorMittal places priority on building solid relations with both the government and people of Liberia. “We have a pro-active approach towards communities,” he said, citing consultative forums the company has set up throughout the areas where it is working. “People with grievances have open approach to our management.” Anyone whose farm animal is injured by a company vehicle or whose livelihood is negatively impacted by rail or plant construction, for example, will receive compensation, Goel said.

For Van der Merwe, that approach on the part of ArcelorMittal makes this “the most satisfying job” he has had. “I’m very proud to be associated with this project,” he said while driving visitors around the town and mines.

“ArcelorMittal came in when nobody else wanted to come, and it is making a real difference in this country. People here are tired of war. They want to rebuild their country.”