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 
 
¶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