Russ, S., Bilal, S. 2014. Regulatory reform in the Liberian mining sector: striking the right balance. GREAT insights, Volume 3, Issue 7. July/August 2014.
Liberia, like many African countries, is updating its minerals and mining law. Why update the law now?
Liberia is a resource-rich country that is endowed with considerable natural resources, including iron ore, gold, diamond, etc. We currently boast four iron ore concessions and two gold concessions. However, Liberia remains virtually unexplored and thus, has great potential for economic growth and socio-economic development from these resources. To realise this potential, Liberia needs a strong governance and regulatory framework and regional cooperation in the mining sector.
Since 2006, Liberia has made significant progress towards improving the governance framework around natural resource management. We have a national mineral policy that is based on the African Mining Vision (AMV), which seeks to promote equitable exploitation of mineral resources. We also established a Mineral Cadastral and enacted a Public Procurement and Concession (PPC) Act, which requires open, transparent and competitive bidding for known resources. In addition, we have a Revised Revenue Code that provides special fiscal packages for the resource sectors. Liberia has been a member of the Extractive Industry Transparency Initiative (EITI) since 2007 and remains Kimberley Process Certification Scheme (KPCS) compliant for diamonds.
Our current Mineral and Mining Law of 2000 is outdated and in conflict with other related laws such as: a new Environmental Protection Law of 2007, Public Procurement and Concession Act of 2010. In addition, a number of new allied institutions have been established. The regime lacks regulations in a number of areas including explosives, and mine health and safety.
The new mining law and related set of regulations seek to address these concerns and gaps. They will also seek to balance the interest of the investor to achieve security of tenure and fair returns on investment, as well as the interest of the state to achieve broad-based sustainable growth and development for our country. In other words, we seek a win-win partnership.
The new law will strengthen security of tenure by limiting administrative discretion in the award, suspension, and cancellation of mineral rights, improve local content provisions and provide a clear processes for dispute resolution. In all of this, we will be looking at best practice in the region.
Our process has been transparent and inclusive. We have completed our pre-drafting consultations, during which we sought the views and perspectives of various stakeholders: mining communities, civil society, private sector, government entities and donors and development partners. We are currently reviewing the initial draft which will be distributed to stakeholders for additional comments.
A new law is important but not the only component for reform; what other initiatives will support the reform?
Yes, you are correct. We need strong institutions to support the reform. Two key institutions are the Mining Cadastral and the Liberian Geological Survey (LGS). The Mining Cadastral is important for security of tenure as a key pillar of mineral governance. The Australian Government is providing support to improve cadastral administration and ensure that processing of license is predictable and automatic. The LGS is key to managing technical information and promoting Liberia’s mineral resource potential. The British Geological Survey is providing training to build the human and administrative capacity of the LGS to more efficiently manage technical information.
In addition, we are working with allied institutions of government (the Environmental Protection Agency, Internal Affairs) to improve administrative and regulatory interface by clarifying roles and mandates in support of a more efficient regime.
You have listed local content as one of the key elements of the reform initiatives; how is local content being addressed in the new law?
Local content is the best alignment of the interests of the Government and the concessionaire. It provides the most direct opportunity for the people to benefit from mining, and the interest of the concessionaire as it provides social license. The latter is important because communities are increasingly demanding more benefits from the concessionaire. We are working with concessionaires to develop a rational local content program with due consideration to the stage of mine development and our capacity to absorb.
Infrastructure is a challenge for many mining projects; how is Liberia dealing with the infrastructure challenge?
The lack of infrastructure (power, rail, port, etc.) remains a major constraint on the development of our resources both nationally and regionally. Each concessionaire must essentially build dedicated infrastructures. In the energy sector, we have the twin challenge of a high tariff ($.60 per Kwhr) and low access (2 -3%).
The capital-intensive nature of these infrastructure projects renders smaller but otherwise viable resource projects unattractive. In addition, they limit the socio-economic development of associated communities by denying collateral access to these facilities.
The resource potential in terms of volume and grade of the Guinea-Liberia-Sierra Leone corridor (Simandou, Nimba, and Tonkillili projects) is also significant. Developing these resources is also constrained by lack of infrastructure. Yet, the proximity and alignment of these projects makes a compelling economic case for regional cooperation on infrastructure. We are in discussion with Guinea to use the Nimba-Buchannan railroad to evacuate Guinean ore.
This article was published in GREAT insights Volume 3, Issue 7 (July/August 2014).