Tuesday, October 03, 2006

MITTAL STEEL - ON TO THE NEXT ROUND OF NEGOTIATIONS

First, a little review of what has been shown to us to date. As is turns out Mittal Steel has been revealed for what it is: a transnational corporation seeking to maximize profit by taking advantage of a country in a desperate situation. The contract presented to the Transitional National Government has a fantastic set of advantages to Mittal Steel built in, leaving only hollow promises to the Liberian people.

When we say, advantages let us be clear. The known details of the contract under consideration:

1) Two major public assets of Liberia, a railway and the port of Buchanan, would be transferred to Mittal Steel and the GOL will only be allowed to use these facilities if there is spare capacity (read, Rio Tinto Mine in Guinea would have access before Liberians);

2) The GOL has no way of guaranteeing the cost of transportation of the iron ore isn't inflated. This could reduce the profitability of the Liberian venture and the state's royalty revenue;

3) The Concessionaire has far-reaching authority to possess public and private land (Hello Nimba) without providing adequate compensation or the means to seek effective redress;

4) The company structure created by Mittal protects the parent company from guaranteeing or bearing the risk of the activities and liabilities of its subsidiary;

5) Under the stabilization clause, the contract freezes the laws in the concession area, Mittal will be able to opt out of Liberian laws governing human rights or environmental standards and they will pay no tax for five years, in a deal which appears to be renewable by them;

6) The provisions for the maintenance of a security force by the Concessionaire fail to adequately establish the limits of its authority, which could be particularly harmful in Liberia, in view of the historic involvement of private security forces in human rights abuses;

7) Mittal Steel would enjoy a five-year extendable tax holiday in Liberia and, once this is over, has created an international tax regime that encourages repatriation of profits to low tax regimes in Cyprus and Switzerland, thereby potentially denying Liberia significant taxrevenues. When they do finally pay tax, it will be at a price set by them;

Finally, 8) There is no guarantee for the Liberian government of how much money they will actually receive.

END OF ROUND ONE
Negotiations are set to resume later this month. Which way will Mittal go?

It turns out that Mittal needs Liberia. The Chinese market for future steel is beckening. Mittal is planning to almost double in size in the next 25 years and half of the ore needed for that expansion is set to come from Liberia. In repeated statements, Mittal has professed that they will be a good corporate citizen. Its investment would be "of considerable benefit to the people of Liberia. Not only do we plan to invest US$900 million over 25 years but we are also committed to make extensive social investments to benefit the communities where the mines will be operating." Sweet mouth Mittal Steel.

Well, Mittal Steel... If you are such a pineapple, let's see your juice!

EarlyBird

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