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On the 17th of March the Sustainable Development Institute in Liberia released the report “Poverty in the Midst of Plenty: How Post-War Iron Ore Mining Is Failing to Meet Local People’s Expectations”. The report reviews Liberia’s iron ore mining sector. It shows that “Liberia earns too little from its iron ore exports, severely straining state-citizen relations and relations between local communities and foreign multi-nationals operating in the mining sector”. Silas Kpanan Ayoung Siakor from the Sustainable Development Institute in Liberia answers to Real World Radio’s questions based on the findings of the report.
Could you tell us about the background to why you chose to investigate the iron-ore-mining sector in Liberia?
The government has made a big deal about attracting FDI to stimulate development and re-construction in Liberia after the civil war. Lots of promises of jobs were made to communities where these mining companies operate. Expectations about the development benefits have been raised extensively, partly as a result of the governments own public outreach about the benefits of mining operations but also from the companies making a lot of promises of the development benefits of their operation. Expectations have been very high in these communities. We are now in the five first years of the major operation upstarting in the three parts of the country that we looked at in this research. What we try to do is to bring the realities, the stories from the ground to the public. This is more a reality check for the politicians and for the public at large, which has very big expectations of these mining companies.
The report is based on interviews that the Sustainable Development Institute did with local communities directly impacted by mining contracts between the Government of Liberia and Liberia’s major investors in the sector: ArcelorMittal, China Union and Putu Iron Ore Mining. What have been the major key findings been in the report?
The first is the fact that the government is earning too little, in terms of revenue from the sector. ArcelorMittal, the largest steelmaker in the world, exported more than 9 million metric ton of iron ore in 2013 and in 2014 up to August. Based on the price of iron ore at that time, we estimated that the company has generated more than 1 billion dollar from amount that was exported from Liberia. From that amount we also estimated that the actual taxes that the company paid were less then 30 million US dollar. That is very, very small. It is grossly inadequate, if you look at it and compare with the value of the iron ore that was taken out of the country. We are talking about 1 billion dollar versus 30 million dollar in taxes.
The second important finding is that communities, realizing that they are not receiving the development benefits that they were promised by the corporations and the government, are becoming increasingly agitated about these mining operators. So there have protest in all three of the major operations that we visited. At least two public protests in each of them. In each instance the government had used paramilitary units to disperse public protesters.
The report includes recommendations to the Government of Liberia, mining companies, and local and international NGOs. Could you tell me about these recommendations? What are your policy suggestions?
We are recommending the government to do a comprehensive assessment and to actually divide the exact quantity of iron ore that was lifted, the value of the iron ore that was exported and measure that against the total revenue that the government generated and make that information public. We believe that by putting out the exact figures we will be able to stimulate a public debate about whether in fact this is the best model that we are getting involved in in the iron-ore-mining sector.
The second issue is the militarization of the sector, the increasing use of paramilitary units to disperse peaceful protesters. We are urging the government to initiate dialogue between the communities and the mining companies, and to involve the government agencies that have got the responsibility to provide direct oversight over these mining operations. By doing that we believe that community grievances will be brought to the table, and those grievances will then be discussed. Whatever actions are agreed, it will be possible to monitor implementation, both by the company and the government. At this point this does not happen. That is one of the reasons why we have so much conflict between the communities and the iron-ore companies that are operating within their communities.
We also propose that the government need to step up its monitoring activities. The government relies very heavily on data that is produced and presented by the mining companies. There is very little, if any at all, independent verification of the data that they produce. Therefore, we urge the government to adopt a much more rigorous monitoring and evaluation of the companies operations. So that companies are complying with rule-of-law, and are performing to the terms and conditions of the contracts, and they are treating workers in ways that is under Liberian liberal law.
What is your take on the development of reaching a fair and sustainable iron ore mining industry in Liberia?
Personally, I do not believe that the current model that the government adopts for resource development is sustainable. I do not believe that it will deliver real economic benefits for Liberia. That is because we rely entirely on the exports of raw materials, there is no value-addition in the country. We are sending out the iron ore, or the diamonds or the gold, in raw form. By doing that we generate extremely low royalties in terms of the value of those raw materials. That has to change. If that model is not discontinued, there is no way that Liberia will be able to generate the type of economic returns we need to fund our own development agenda.
Right now the government is proposing to give mining companies and other multinationals operating in the company additional tax waivers, in addition to the tax waivers that they already enjoy. If you apply that in the mining sector, with the price of iron ore at an all-time-low, Liberia will generate absolutely really minimum amount of money of these raw materials. We will not be able to support the development needs in the country. Therefore we are urging the government not to give out any more tax concessions. We should be finding ways where we could extract more value from the raw materials that we are exporting.
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