Liberia

Background
Liberia lies on the coast of West Africa, sharing borders with Cote d’ivoire, Guinea and Sierra Leone. With the exception of the capital city Monrovia, it is a sparsely populated country with a total population of 4 million on a land area of over 100,000 square kilometres. Liberia was founded in 1847 by emancipated slaves from the United States and is one of only two African countries not to have roots in European colonisation. The country enjoyed more than 100 years of peace before 14 years of intermittent civil war at the end of the 20th Century. Since then there has been considerable political and economic transformation. A new Liberia is now attracting impressive international private sector investment - estimates suggest upwards of US$17 billion since 2006.

The country has an extensive history in the natural resource sector. Since 1926 Firestone have owned and operated the world’s largest rubber plantation, and before the civil war Liberia was the world’s 3rd largest producer of iron ore. Today the country is focussing its efforts on reforming the economic system and rebuilding vital infrastructure to support growth. We have a huge opportunity with our ‘first mover’ advantage to be working in Liberia and to help develop industries far beyond their pre war levels.

Economic Growth & Political Stability
Following the peace deal in 2003, Ellen Johnson Sirleaf was the first woman in the history of Africa to become an elected head of state in 2006 and was recently re-elected for a second six-year presidential term in January 2012. Internationally, she is renowned for being a recipient of the 2011 Nobel Peace Prize, eliminating $4bn of national debt and expanding free primary education to every child in Liberia. Since 2003, peace and national security has been maintained. During this period the country has undertaken two democratic elections and resisted the spread of violence from neighbouring Cote d’Ivoire.

In the past few years Liberia has become one of West Africa’s fastest growing economies, experiencing a 6.8% increase in economic growth in 2011, up from 5.6% in 2010, and the International Monetary Fund estimates real GDP growth will rise to 8.8% in 2012. Despite this, Liberia remains one of the poorest countries in the world, and unemployment (mostly youth) stands at around 80%.

However, the government is working hard to overcome this and the private sector is set to play a central role. The government is strongly focussed on establishing a competitive investment environment - examples include a reduction in corporation tax and import duty exemptions for exploration and mining companies. Alongside such reforms, the government is committed to rebuilding infrastructure and reviving traditional sectors of economic growth such as mining and agriculture. This is supported by many international financial institutions. The World Bank alone invested US$249.6 million in 2011. Infrastructure in Liberia is rapidly improving: expansion of the main airport is continuing, there are three operational deep-water ports, a newly rebuilt railway line and hundreds of kilometres of newly laid tarmac road, such as that between Monrovia and Buchanan which is soon to be completed. The government allocated budget to the Ministry of Public Works has been steadily increasing year on year, with a budget of US$33 million for 2010-2011. Such investment and policy reform only makes it easier for us to operate as a company and move towards development of a mine.

Foreign Direct Investment
Liberia’s high levels of FDI are largely being driven by activity in agribusiness and extractive industries. This is having positive knock-on effects for the country - overall the mining sector’s contribution to GDP is estimated to have increased from 1.1% in 2010 to 6.6% in 2011. In 2007 ArcelorMittal pledged to invest US$1.5 billion in the Nimba Iron Ore Project, and in September 2011 the company began processing iron ore at its Buchanan facilities. In March 2012 ArcelorMittal announced that it had already shipped 1 million tonnes of processed ore and predicts that it will ship a total of 4 million tonnes of ore in 2012. This initial investment is widely recognised as the catalyst for the large investments that continue to follow.

Servestral, a major Russian steel company, has recently acquired 100% ownership of the Putu Iron Ore Project in Eastern Liberia. The company has stated plans to contribute to the redevelopment of the region including constructing a new railway to the coast for the export of the ore, paving roads and renovation of the deep-water port in Greenville, Sinoe County.

In early 2012 a significant oil discovery was made offshore of Liberia, with international oil giants such as Chevron and Africa Petroleum involved in exploration work. These discoveries have the potential to further enhance the outlook for the prosperity and stability of the nation.

Good governance of such large investments is vital for the country. Liberia was one of the first African countries to be compliant with the internationally renowned Extractive Industries Transparency Initiative (“EITI”) and established the Liberian EITI (“LEITI”) in 2009. This is an initiative we are proud to be a part of. The Liberian government’s early and continued commitment to this sends a strong signal to the international community that Liberia is open for business.