The Government of Liberia (GOL) finds itself at a critical juncture as it faces a US$50 million arbitration notice filed by the Solway Investment Group (SIG). The ongoing negotiations, however, extend beyond this claim, involving a significant dispute with ArcelorMittal Liberia (AML) over the future control of the Yekepa-Buchanan railway. The consequences of this tripartite negotiation are profound, raising fundamental questions about Liberia’s economic sovereignty and the governance of critical infrastructure.
The root of the dispute dates to when Solway Mining Incorporated (SMI), SIG’s Liberian subsidiary, accused the GOL of breaching its commitments following interference by AML in SMI’s exploration license. In May 2022, a letter from Liberia’s Ministry of Mines and Energy to AML explicitly confirmed that SMI’s Class A License, granted in the Nimba region, was legally binding and should have been respected. Despite this, AML allegedly disregarded these legal boundaries and opted to pay GOL for the disputed license area rather than compensating Solway directly. This action led SIG to file an arbitration notice, demanding US$50 million in compensation for its losses.
Under President Joseph Boakai’s administration, Liberia’s financial limitations complicate its ability to meet SIG’s demands. Sources close to the negotiations suggest that AML has offered to pay the US$50 million settlement—but only if the GOL ratifies a controversial third amendment to AML’s Mineral Development Agreement (MDA). This amendment would grant AML exclusive rights over the Yekepa-Buchanan railway, a provision that has stirred considerable opposition due to its potential to monopolize Liberia’s infrastructure.
AML’s 2005 MDA already affords the company substantial control over the rail and port assets related to its operations. However, the agreement’s provision for “third-party access” to this infrastructure has remained contentious. In response to AML’s demands, Speaker Bhofal Chambers of the Liberian legislature rejected the third amendment, raising concerns about AML’s monopolistic tendencies. The legislature emphasized that an open and accessible rail system would serve Liberia’s best interests by fostering economic growth and competition. Speaker J. Fonati Koffa, Deputy Speaker then, has since advocated for a multiuser rail model to prevent AML from monopolizing critical transportation infrastructure.
As Koffa leads the 54th Legislature, AML is again pushing to reintroduce the amendment. A faction of lawmakers, calling themselves the “Majority Bloc,” has even sought to unseat Koffa, with reports suggesting that AML has tacitly supported this challenge by providing financial backing for the Bloc’s campaign. While AML has yet to respond to inquiries regarding its involvement in this political manoeuvre, the implications of such actions raise ethical concerns about the intersection of corporate interests and government politics.
The debate surrounding the third amendment is not merely a political dispute; it’s an economic decision with far-reaching consequences. Proponents of the multiuser model argue that exclusivity would stifle competition and reduce the government’s potential revenue from the railway. According to recent estimates, Liberia could earn billions from access fees if multiple companies were allowed to use the railway. In contrast, SIG’s settlement offers of US$30 million—accepted by the GOL—pales compared to this potential revenue, representing less than a year’s worth of fees from even a single user in a shared system.
Further complicating the situation is AML’s 2023 annual report, which disclosed ongoing financial losses related to its rail operations. The company acknowledged that inefficiencies in rail management had contributed to these losses, prompting a reevaluation of the exclusive ownership model. This acknowledgment raises questions about AML’s ability to manage the railway effectively, strengthening the argument for a multiuser system that could distribute operational risks and generate more significant revenue.
Adding complexity to the situation, the arbitration dispute also underscores broader governance issues within Liberia’s extractive sector. The Liberia Extractive Industries Transparency Initiative (LEITI) Act of 2009 mandates transparency and accountability in all extractive sector operations. However, the ongoing negotiations’ opacity has led to doubts about the GOL’s commitment to these principles. A letter from the Ministry of Mines and Energy to AML in August 2022 stressed better coordination. It urged that future rail and port infrastructure agreements prioritize Liberia’s national interest over corporate expediency.
Speaker Koffa has been vocal in his opposition to AML’s demands, reiterating the need for a fair and open system that serves Liberia’s broader economic interests. “We cannot afford to mortgage our national assets to a single entity,” Koffa remarked during a recent legislative session. His opposition to the third amendment reflects his broader vision for Liberia’s economic future, one focused on shared prosperity rather than the concentration of power in the hands of a single corporation.
The Boakai administration now faces a difficult decision: accept AML’s terms and risk a public backlash or pursue a multiuser rail model that aligns with international best practices but could prolong the arbitration dispute. The stakes are high, both in terms of resolving the US$50 million claim and in shaping Liberia’s long-term economic trajectory.
Amid these developments, the dispute took a significant turn with a letter sent to President Boakai on November 24, 2024. In the letter, Solway’s Chief Investment Officer, Pavel Ermolaev, reiterated SIG’s willingness to settle for US$35 million, stressing the importance of resolving the matter before December 31, 2024. Ermolaev referenced a prior agreement signed under the Weah administration, under which ArcelorMittal had agreed to pay US$50 million to Solway for terminating its assets and mining rights. However, he expressed frustration with Liberia’s counteroffer of US$18 million, describing it as inadequate and unjust. The letter also underscored that if the matter were not resolved by the end of 2024, SIG would withdraw its settlement offer and proceed with arbitration.
In his letter, Ermolaev called for President Boakai’s direct intervention, urging him to take personal control of the situation to ensure a timely and fair resolution. Solway’s commitment to an amicable settlement remains clear, but the letter showed that further delays would push the company toward intensifying its arbitration efforts.
The government’s ability to navigate this dispute will have lasting implications for Liberia’s future. With Speaker Koffa standing firm against the exclusive rights demanded by AML and SIG threatening to escalate arbitration, the GOL faces a delicate balancing act. The outcome of these negotiations will shape the nation’s economic future, its governance of natural resources, and the broader credibility of Liberia’s commitment to transparency and fair governance in the extractive sector.
The path forward remains uncertain as the clock ticks toward the end of 2024. The Boakai administration’s next steps could secure a fair resolution for Solway or further entrench Liberia’s reliance on a single corporate entity for the country’s critical infrastructure. The stakes are not only financial but also political and strategic, and the choices made in the coming months will reverberate throughout Liberia’s economic landscape for years to come.
