REPUBLIC OF LIBERIA

INFRASTRUCTURE POLICY NOTES

LEVERAGING INVESTMENTS BY NATURAL RESOURCE CONCESSIONAIRES

JUNE 2011

WORLD BANK

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 EXECUTIVE SUMMARY

1. Liberia is pursuing a strategy of awarding natural resource concessions for the

development of its iron ore, timber, palm oil and rubber sectors. Since the Peace Accords
of 2003, 30 contracts have been signed and a significant number of further potential
contracts have already been identified. Once all these contracts are awarded, the
concessions will constitute a major “footprint” covering almost 40 percent of the national
territory, and encompassing some 30 percent of the rural population.

2. The infrastructure investments of the (mining) concessionaires are potentially huge and
could easily amount to US$5 billion, compared to recent average annual spending of
US$90 million per year on public infrastructure. By 2030, mines could represent more
than 80 percent of national power demand, more than 90 percent of national demand for
port capacity, and close to 100 percent of national demand for rail freight. Moreover,
about one third of Liberia‟s feeder road network will lie on land managed by mining,
forestry and agriculture concessionaires. These figures underscore the significance of the
concessions in the country‟s long term infrastructure development, and the strategic
importance of leveraging concession investment in infrastructure for national benefit.

3. A review of existing concession contracts indicates that infrastructure issues are typically
covered; though port and rail infrastructure tends to be treated in greater depth than
power and road infrastructure. A central principle that appears throughout the contracts is
one of third party access to surplus power, port and rail infrastructure developed by
mines. However, the strictness with which this principle is applied varies considerably
from one contract to another and from one infrastructure to another. The concept has
been evolving and the most recent contract extends it further requiring that infrastructure
be designed in such a way as to be readily expandable by third parties.

4. Overall, there is a striking absence of cross-referencing between concessionaire

investment plans and broader national development plans. This paper provides some
guidance on how to think in a more integrated fashion about national and concessionaire
demands for infrastructure in the context of a spatial planning framework.

5. Power. Liberia‟s power supply options range from US$0.10-0.30 per kilowatt-hour. If
the country develops its power infrastructure independently, the average cost of power
could be expected to lie in the range US$0.11-0.15 per kilowatt-hour by 2020. The mines
would likely develop large scale thermal power generation with anticipated costs in the
range US$0.08-0.09 per kilowatt-hour. The magnitude of the cost differentials between
the power supply options available to Liberia and to the mines suggests that there are

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 potentially significant benefits from cooperation in power production, as long as
transmission costs are not too high.

6. Once the CLSG transmission backbone is in place, the cost of extending the transmission
grid to the major mining sites is negligible (well below US$0.01 per kilowatt-hour). This
is due to the small size of the country and the large power demands of the mines. As a
result, connecting the mining sites to the national grid could be justified by the kinds of
power cost differentials of a few dollar cents per kilowatt-hour that were described above.

7. If the major mining sites were brought on to the grid, a number of secondary towns could
potentially come within the economic range for grid electrification. Otherwise, the vast
majority of Liberia‟s secondary towns would be too small and isolated to justify grid
electrification in the foreseeable future.

8. The likely power demands of agriculture and forestry concessions are an order of
magnitude smaller than those of mines, and further transmission grid expansion to these
sites would be prohibitively costly in the majority of cases. However, agriculture and
forestry concessionaires are well-placed to generate their own power using biomass
residual from their activities, and may be open to distributing this power to surrounding
communities.

9. Grid connection of mining sites would allow a number of alternative power supply
models to be developed. In particular, mines could each sell surplus thermal power to
LEC. Or alternatively, a single cost-effective large scale thermal or hydro plant could be
developed to supply all mines, with a built in surplus to be sold to LEC. This latter
options turns out to be the lowest cost way to meet both mining and LEC demands for
power, with an estimated aggregate saving of US$1.6 billion in lifecycle energy costs
over the next 20 years. Choice of a hydro-based solution over a thermal one could
potentially save at least 22,000 tonnes of carbon dioxide emissions over the life of the
mines.

10. Rail. Development of a number of new Greenfield mining railways is being considered in
Liberia, including a regional railroad linking Guinea‟s iron ore mines to the Liberian
coast. The cost savings associated with exporting Guinean iron ore through Liberia are of
the order of US$1 billion.

11. In some cases – particularly in the case of the Buchanan to Yekepa corridor – there is the
possibility that two or more parallel railway tracks may be developed to service different
mines. Relative to an integrated double rail system, parallel single lines present
significantly higher investment costs and lower operational performance, due to the

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 difficulties posed by train crossings. Over a 20 year period, an integrated double track
system along this corridor is estimated to save US$313 million (23 percent of total costs).

12. The use of mineral railways for other traffic is limited both by the operational demands of
mining freight and by the spatial patterns of agriculture and forestry production. The
mining sector produces high volumes of freight – that could easily amount to 80 million
tonnes per annum by 2030 – concentrated at a handful of mining sites. Particularly when
single track rail lines are used, the handling of such high volumes calls for highly
intensive and logistically complex use of the infrastructure, making it difficult to
contemplate the sharing of the line once mines are fully operational. Development of an
integrated double track system would however facilitate the sharing of the infrastructure,
because it reduces the operational complexity associated with crossing of trains.

13. Compared with mining traffic, agriculture and forestry traffic is highly dispersed over
millions of hectares and very small – currently at less than half a million tonnes per
annum and even under the most optimistic scenarios unlikely to exceed 3 million tonnes
per annum. Given these freight characteristics, as well as the relatively small size of the
country, road transportation is likely to be the most competitive form of transport for
agricultural and forestry freight in most cases. The only exceptions would be cases where
significant forestry operations are located close to mining railways. There is historical
precedent for infrequent forestry trains (once per week) operating along mining lines,
resulting in more cost-effective transportation of timber.

14. It is, however, important to ensure that rail corridors are developed in a way that supports
and does not interfere with the rural road network needed to support agriculture and
forestry activities. One key issue will be to ensure adequate provision of safe level
crossings for intersections with the rural road network. In addition, the improvement of
parallel service roads needed to operate rail corridors could have secondary benefits for
the local rural economy.

15. Ports. In the port sector, massive expansion in export traffic can be anticipated as the
mining – and to a lesser extent – agricultural and forestry concessions begin to ramp up
their production. Total export traffic could increase from under 500,000 tonnes per
annum today to potentially over 80 millon tonnes per annum by 2030. Though
predominantly iron ore, this would include potentially 3 million tonnes per annum of
agricultural and forestry exports.

16. Once iron ore export exceeds a certain threshold the construction of dedicated piers is
typically warranted. If all mining developments go ahead as planned, Liberia will likely
need three to four of these facilities at different points on the coast line in the vicinity of

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 Monrovia, Buchanan and Greeneville. Some could be developed as an outgrowth from
existing ports, but others will require Greenfield development. A number of the mid-sized
mining interests could potentially share export facilities to avoid further proliferation of
piers, although this will require careful planning and coordination by the Government of
Liberia. There are significant scale economies to be reaped from having larger loading
facilities, although the most pronounced economies of scale arise on the shipping side.

17. While agriculture and forestry exports will continue to show some concentration at the
Freeport of Monrovia, there is also likely to be significant growth in dry and liquid bulk
exports through Liberia‟s secondary ports: Buchanan, Greeneville and Harper.
Agriculture and forestry concessionaires are reliant on NPA to upgrade and expand these
facilities. However, NPA lacks the resources to do so, and at present there are no projects
of this nature envisaged in the PRS2 pipeline. Deficiencies at secondary ports are already
becoming a critical bottleneck for forestry exports, and there are growing demands from
concessionaires for their export needs to be met. It will be critical to find a solution to this
problem as soon as possible, either by prioritizing these upgrades within the public
investment framework for PRS2, or by establishing a Public Private Partnership that will
allow these improvements to be expedited. One possible approach would be for
concessionaires themselves to make the investments in return for clearly defined fiscal
credits (or holidays from port charges), or for the engagement of a third party to do on
their behalf.

18. Roads. There are some 2,100 kilometers of the road that constitute the critical
“concession network” for transporting the agriculture and forestry products of existing
concessionaires to the sea. Only 750 kilometers of this network is actually on concession
land, with the remaining 1,350 forming part of Liberia‟s public network. Concessionaires
are reliant on the state to complete the reconstruction of these roads and ensure their long
term maintenance. While the Government of Liberia has plans to invest in many of these
roads the pace of upgrading is slow relative to the needs of the concessionaires. In fact,
even by the end of PRS2 about half of this “current concession network” will remain in
poor condition.

19. However, the poor condition of these roads and collapse of associated bridges is already
today proving to be a serious bottleneck. Concessionaires have been lodging requests
with MPW for particular road segments to be upgraded, but budgetary resources are not
available for this purpose. As a result, companies are stepping into the breach and making
their own ad hoc road interventions using their own machinery and crews in an
uncoordinated and unsupervised manner.

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20. It is therefore important to find a mechanism for accelerating these investments and
harnessing the financial and technical capacity, as well as the motivation of the
concessionaires, to improve this infrastructure. One possible arrangement that has been
tried with some success in the past – both in Liberia and elsewhere – is for the
Government of Liberia to explicitly encourage concessionaires to invest in these roads in
a coordinated and supervised manner in return for fiscal credits. This type of arrangement
deserves further exploration.

21. Conclusion. Looking ahead there is a need for greater strategic dialogue with
concessionaires as a group. Government interaction with concessionaires to date appears
to have been largely bilateral and focused around legal issues of contract negotiation and
compliance monitoring. As a result, there has been no natural opportunity for broader
multilateral discussions to take place between concessionaires as a (multi-sectoral) group
and government agencies responsible for key areas of policy that are affected by their
activities.

22. Such dialogue is needed in order to make progress on all and any of the key policy areas
identified above such as coherent expansion of the national power system, integrated
development of rail corridors, improved road accessibility to rural areas, coordinated
development of iron ore export facilities, and accelerated upgrading of secondary ports.
In each of these areas, there is the potential for win-win solutions if actions could be
coordinated across the concessionaires and the public sector.

23. At present, there does not appear to be any institutional vehicle for this to take place,
preventing Liberia from finding mutually beneficial solutions that harness the financial
muscle and technical capacity of the concessionaires. Perhaps the time has come to view
natural resource concessionaires increasingly as partners in Liberia‟s broader
development process.

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1. Introduction

Liberia is a country richly endowed with natural resources. These include mineral reserves (iron
ore, gold, diamonds), as well as timber and agricultural potential (cocoa, coffee, palm oil, rubber,
among others). Prior to Liberia‟s civil conflicts, natural resources were developed through a
number of concessions. However, the only one of these to survive the conflict was the Firestone
Rubber plantation.

Since the Peace Agreement in 2003, the government has pursued a strategy of awarding
concessions for natural resource development. Over this period, 30 concessions have been
signed (Annex 1). In the minerals sector, these include five iron ore concessions, with an
estimated production potential of at least 75 million tons per annum, as well as three
gold/diamond concessions. Many of these remain at the exploration stage. In the forestry sector,
these comprise seven large-scale long-term forest concessions as well as nine small-scale short-
term timber sale contracts, covering over one million hectares with estimated production
potential of at least 300,000 cubic meters per year. In the agricultural sector, there are currently
seven concessions, one of which for rice and the remainder for palm oil and/or rubber.

There is also significant potential for the government to award further concessions in future
(Annex 2). In the mining sector, there is one significant additional western site at Wologizi that
has yet to be awarded. In the forestry sector, a further potential of six forest concession areas and
more than 40 timber sales contracts have been identified comprising in excess of one million
hectares. Further concessions are also possible for agriculture, although the details are not so
clear as for the other sectors.

Collectively, the concessions have a significant footprint in the country (table 1). Existing
concessions already occupy more than 20,000 square kilometers, or about 21 percent of the
national land area. When potential future concessions are added, the area covered by concessions
could grow to 38 percent of the Liberian territory. The county of Gbapolu could potentially be
entirely under concession, and a number of other countries (Grand Cape Mount, Grand Gadeh,
Margibi, River Cess) could potentially have half or more of their land area under concession. In
terms of population covered by concession areas, the results are similar. Liberia already has 21
percent of its rural population (or 13 percent of its national population) resident in concession
areas, and that share could increase to 30 percent of its rural population (or 18 percent of its
national population) if all identified potential concession areas were awarded. All the counties
identified above would similarly have very high shares of their population resident in concession
areas. (For a visual representation of the footprint of Liberia‟s natural resource concessions see
Figure A7.1 in Annex 7.)

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 Table 1a: Potential population and land area footprint of concessions by 2030

County Population Resident Land Area

Total Current Potential Maximum Total Current Potential Maximum
(„000s) concession future possible in („000s concession future possible in
areas (%) concession concession km2) areas (%) concession concession
areas (%) areas (%) areas (%) areas (%)
Bomi 84.1 25 2 27 2.0 33 6 39
Bong 333.5 21 0 21 8.7 28 0 28
Gbapolu 83.4 55 64 100 9.8 36 77 100
Grand Bassa 221.7 13 1 14 7.8 9 1 10
Grand Cape Mount 127.1 16 41 57 4.7 22 31 53
Grand Gedeh 125.3 30 21 50 10.7 42 19 61
Grand Kru 57.9 28 3 31 3.9 31 4 35
Lofa 276.9 0 10 10 9.9 0 6 6
Margibi 209.9 60 0 60 2.6 48 0 48
Maryland 135.9 18 1 19 2.3 6 2 9
Montserrado 1,118.2 1 0 1 1.8 7 0 7
Nimba 462.0 13 3 16 11.5 35 6 42
River Cess 71.5 17 14 31 5.1 52 20 72
River Gee 66.8 0 5 5 5.5 0 5 5
Sinoe 102.4 1 23 23 9.7 1 40 41
National 3,476.6 13 6 18 95.8 21 17 38
Rural 2,095.3 21 10 30 - - - -
Note: Due to some overlap between concession areas the national concession footprint is smaller than the sum of the
individual concession footprints.
Source: 2008 Liberia Census

Table 1b: Potential infrastructure footprint of concessions by 2030

Power demand Railways Port capacity Feeder roads

(MW) (kms) (millions of tons) (kms)
Current and potential concessions 400-800 834 75-125 6,000
Rest of Liberian economy 80-190 0 1.5 8,800
Total 480-990 834 76.5-126.5 14,800
Concessions as percentage total 80 100 98-99 36
Notes: Power demand based on World Bank, 2010 study; Port capacity based on NPA 2009 Annual Report for
Liberian traffic and on estimated potential iron ore tonnages for Liberia (lower case) and Liberia plus Vale‟s
Simandou mine in Guinea (upper case); Road lengths based on GIS analysis.

Concessionaires’ also account for a large share of the country’s infrastructure demands and
investment plans. According to a recent World Bank Energy Sector Policy Note, “Options for the
Development of Liberia‟s Energy Sector”, the concession sectors (principally mining) could be
expected to account for 80 percent of the country‟s power sector demand by the year 2030.
Concessions are responsible for the entire national rail network, and concession export traffic
could easily represent well over 95 percent of the throughput of Liberia‟s ports. Moreover, some
36 percent of Liberia‟s feeder road network is located within current and potential concession
areas (see Figure A7.2 in Annex 7). The implication of this is that concessionaire‟s infrastructure
development budgets are orders of magnitude larger than the resources available for public
investment. To put this in perspective, the concessionaires infrastructure investment plans are

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counted in the billions of dollars, compared with recent annual infrastructure spending of US$90
million in the country (AICD, 2010).

Given the significance of the concessionaires, it is critical to understand how their infrastructure
development plans interact with those of the broader economy. A marked tendency in resource
rich countries is for concessionaires to develop their own infrastructure on an enclave basis in
isolation from the rest of the economy, as well as from other concessionaires. This autarchic
model is individually rational for a number of reasons. First, there may be significant
uncertainties in the pattern and timing of concession development that complicate coordination
(as in the case of mining exploration). Second, host countries often lack a developed or reliable
public supplier of infrastructure services. Third, concessionaires plans may be time-sensitive
whereas cooperative solutions may take longer to develop. Fourth, concessionaires are often
competitors in their respective product markets and this may make them unwilling to
contemplate joint development of infrastructure.

The purpose of this report is to simulate or “envision” alternative scenarios of infrastructure

development by government and concessionaires. The report will illustrate the implications and
estimate the costs of the traditional autarchic model. As a point of comparison, it will also
simulate a number of potential cooperative approaches aimed at leveraging synergies between
concession-related infrastructure and the national infrastructure platform – needed by the country
to support its broader development and economic diversification away from natural resource
sectors. This will include exploring scenarios where: concessionaires purchase infrastructure
services from the country; the country purchases infrastructure services from the
concessionaires; and third parties provide common infrastructure platforms that serve the needs
of multiple concessionaires.

This policy note will be structured as follows. Section 2 analyzes how infrastructure development
issues have been treated in concession contracts to date. Sections 3 and 4 explore power and
transport infrastructure respectively. Section 5 draws out some recommendations and principles
to inform future thinking on this matter.

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2. Treatment of Infrastructure in Liberia’s Concessions

Infrastructure issues do not feature all that prominently in Liberia’s natural resource concession
contracts. While all contracts give concessionaires the right to construct the infrastructure
needed to develop production, they do not always give that many details; nor does there seem to
be a consistent approach to dealing with infrastructure across contracts. Forestry concessions
have the least coverage of infrastructure issues; so accordingly, most of the discussion will focus
on mining and agricultural concessions. An overview of how treatment of key economic issues
differs across infrastructure sectors is provided in Table 2. (The analysis draws upon background
research conducted by Brierley, 2011.)

Table 2: Overview of key infrastructure provisions in concession contracts

Electricity Ports Roads Railways
Rehabilitation of No existing China Union has No obligations. China Union and
existing infrastructure. obligation to Arcelor-Mittal both
infrastructure rehabilitate have obligation to
infrastructure at rehabilitate existing
Freeport of Monrovia mining railways.
and Arcelor-Mittal at
Buchanan.
Construction of Right to construct Right to construct Right to construct BHP Billiton and
new infrastructure whatever needed, in whatever needed with whatever needed Putu both have the
some cases plans prior Government with prior right to construct new
must be submitted in approval. BHP Government railroads.
Feasibility Report Billiton, Putu and approval. Roads
Golden Veroleum outside concession
have explicit right to area become public
construct new ports. property.
Third Party Access Concessionaires can Required as long as Required. Can only Required, typically as
to concession (and in some cases facility has excess be denied with long as spare
infrastructure should) supply excess capacity and third government capacity exists, there
energy to party does not authorization in case is no interference
Government and interfere with of clear operational with existing
potentially other third operations. or security operations, and
parties. concerns. Right to associated costs are
toll Heavy Goods covered by third
Vehicles for road parties. Provisions
damage. weakest in the case of
Arcelor-Mittal and
strongest in case of
Putu.
Concessionaire No public Government will give Right assured. No No public
access to public infrastructure exists concessionaire obligation to pay for infrastructure exists.
infrastructure at present. Rights of priority access to repair or
access to future relevant public maintenance of such
transmission not facilities, and roads unless they
explicit but implied facilitate purchase of are sole user.
by right to sell excess adjacent land.
power.
Source: Derived from Liberia Natural Resource Concessions database, 2011

A number of standard features can be detected across concessions. As regards infrastructure

most of the contracts are not very specific in terms of infrastructure demands on the
concessionaire, and simply grant investors the right to construct whatever infrastructure is

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necessary to facilitate their operation. Government approval must first be sought in order to
construct major infrastructure. Upon termination of concession agreements, all permanent non-
movable tangible assets created by investors in their concession areas shall become the property
of the Government without charge.

2.1 Roads

Third party access to concession roads is the norm. Farm roads and trails constructed in the
concession area must be available for public use as long as these activities do not interfere with
the investor‟s activities, and security of assets and safety concerns are satisfied. Approval from
the Government must first be sought to deny public access on such roads. The investor obtains
the right to charge for the use of internal roads by Heavy Goods Vehicles to compensate for
unusual wear and tear imposed by such users, although permission to impose such tolls is first
needed from the Government. Roads constructed outside of the concession area become public
property, although the Government is not able to place taxes or duties on such roads to charge
the investors for usage. The investor has no obligation to repair or maintain road infrastructure
outside of the concession area, unless they are the sole user of such roads.

Government also has the right to develop public infrastructure in the concession area. The
Government is able to construct roads, highways, railroads, telegraph and telephones lines and
other lines of communication within the concession area and to grant such right to a third party.
The Government must first advise investor by notice, and such construction must not
unreasonably or materially interfere with the investor activities or the rights of the Investor.

Forestry contracts include some additional provision relating to roads. Concessionaires are
required to submit an Annual Operational Plan which announces any road construction work
envisaged. They are also responsible for repairing all road damage caused by their activities.

2.2 Ports

A detailed summary of the provisions relating to ports in each of the concession contracts
treating this issue is provided in Annex Table 3a. The discussion here summarizes the main
patterns and highlights some of the most interesting cases.

Government will give concessionaires preferential access to new public service ports proximate
to their concessions. Investors are granted the right to use any airport, harbor, port or similar
facility owned by or operated by the Government under terms and conditions applicable to
persons involved in similar activities as the investor. If the Government constructs a new
general-purpose port proximate to the investor‟s operations, it will grant investor priority
consideration of land areas and priority selection of location and use of berths for the remaining
term. Subject to the payment of appropriate surface rental fees the Government will assist the
investor in acquiring rights to land and to sea areas, including private land necessary for land and
sea-based operational and infrastructure facilities, including bulking stations, offices, value

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added manufacturing, and processing facilities and materials handling/logistics and warehousing
facilities, piers, berths, piping and fuel storage on or near such site.

Beyond the generic right to construct necessary port infrastructure, a number of concession
contracts give explicit rights for the construction of new ports. These are the BHP Billiton and
Putu iron ore concessions, as well as the Golden Veroleum oil palm concession. These contracts
allow for the construction of a new port and/or new facilities at any existing nearby port,
necessary to enable the investor to export production. The Government upon request will issue
the investor with the necessary permits and authorization to construct and operate such new port
or facilities. The Golden Veroleum contract further anticipates that the Investor will require
approximately 100 hectares of land adjacent to or proximate to the piers/berths for land-based
activities. It also anticipates that there will be a need for at least one berth for imports (fuel and
containers vessels) and one berth for exports of CPO, CPKO and other Oil Palm Products
(Golden Veroleum, Section 4.13.b., 2010). In the case of BHP Billiton, Government is required
to assist the company in acquiring land and sea based operational facilities to include a cape-size
port, stockpiling and material handling facilities close to the railroad and Port of Buchanan
(Section 19.3).

Such new ports would be required to provide third party access subject to certain conditions. In
the aforementioned cases, a sub-clause permits third party access to new facilities subject to
consultation with the investor, provided that excess capacity exists, and that third party use of
such excess does not unreasonably interfere with the efficient and economic conduct of the
investor‟s port operations. The technical and commercial terms for such third party use of the
excess capacity shall be mutually agreed to in good faith, among the Government, the Investor
and the third party. The investor will bear no cost for such access; with all applicable costs to be
borne by the third party/ies themselves.

A number of other concessionaires have been given explicit right to extend existing port
facilities. China Union is required to renovate port facilities at the Freeport of Monrovia, and as
part of the agreement Government is required to help them acquire 2,000 acres of land near the
port for a railway station and others port facilities (China Union, Section 6.6, 2005). Arcelor
Mittal is required to complete the full rehabilitation of the Buchanan iron ore port within three
years of the commencement date (Arcelor Mittal, Article 4 of Amendment, 2006).

2.3 Railroads

A detailed summary of the provisions relating to railroads in each of the concession contracts
treating this issue is provided in Annex Table 3b. The discussion here summarizes the main
patterns and highlights some of the most interesting cases.

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A number of concessionaires have assumed the obligation to rehabilitate existing rail lines,
which they would subsequently use. This is the case of Arcelor-Mittal and China Union. Arcelor-
Mittal is required to complete the full rehabilitation of the Yekepa to Buchanan railroad within
three years of commencement. (Arcelor-Mittal Article 4 of Amendement to the Concession
Contract, 2007). As regards third party access to the line, the concession only states that the
Government has the right to use the infrastructure as long as the concessionaire does not utilize
its full capacity; there is no mention of other third parties (Arcelor-Mittal, Article 7,c,b, 4 of the
Amendment to the Concession Contract, 2007). The China Union concession contract grants the
company the right to develop, use, operate and maintain the railway linking the Non-Goma
Mines to the Freeport of Monrovia. This entails that the company complete – within five years of
contract effectiveness – the rehabilitation and extension of the line up to a capacity of 12 million
tonnes of iron ore concentrate per annum plus common carrier freight and passenger traffic. The
company also has the right to extend the line to the Goma Mines should it elect to develop a
production area at that location. China Union‟s operation of the railway is subject to honoring
existing third party rights on the line. The China Union concession also explicitly contemplates
the possibility that other mines may in future want to make use of the line. In particular, China
Union has agreed to undertake in good faith negotiations with respect to the further renovation
and expansion of the railroad to provide for transportation of minerals from other mines subject
to equitable compensation for any such obligation (China Union, Section 6.6(a) of Concession
Contract, 2009). This goes significantly further than the provision in the Arcelor-Mittal contract.

There are other concessionaires on the Yekepa-Buchanan corridor that could either share the
existing infrastructure or develop new routes. This is the case of BHP Billiton whose concession
was signed in 2010. Due to its geographic location, BHP Billiton could potentially make use of
the existing Yekepa-Buchanan line that has already been granted to Arcelor-Mittal. Although
Arcelor-Mittal is not contractually required to provide third party access to the line, BHP Billiton
is encouraged to explore such a third party arrangement. Nevertheless, the company is given the
right “at its sole discretion” to construct a new railroad of its own to the sea and obliges the
Government to grant the company the right to develop such a railroad including assistance with
procurement of private land (BHPB, Section 19.3.c of Concession Contract, 2010). More
recently, Vale who is the concessionaire for the Simandou iron ore deposit adjacent to Yekepa on
the Guinean side of the border, has been negotiating with the Government a concession to
provide rail access to a Liberian port. The deposits at Simandou are estimated to be significantly
larger than those of Arcelor-Mittal and BHP Billiton combined.

In the case of Putu, new rail infrastructure would clearly need to be developed. Due to its
isolated green field location, the Putu mine does not have the possibility to share rail
infrastructure with other concessionaires. The company is thus given the explicit right to
construct a railroad from the mine to a port location to be subsequently agreed with the
Government. The concession contract is very explicit in requiring that the railroad should not

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only be designed to support the maximum design capacity of the mine, but should be designed so
that it can readily be expanded on a commercially feasible basis to carry twice this amount of
traffic. The Government or any other third party may choose to expand this capacity at their own
cost to service their own requirements (Section 6.7(a)). The concessionaire has stated its
intention to begin the construction of the railroad in 2014, with an anticipated lead time of three
years. The axle load of the railroad is to be 32.5 tonnes and the cost of the project is estimated at
US$ 435 million.

2.4 Electricity

A detailed summary of the provisions relating to electricity in each of the concession contracts
treating this issue is provided in Annex Table 3c. The discussion here summarizes the main
patterns and highlights some of the most interesting cases.

The concession contracts typically give the right to generate, transmit and distribute electricity.
In the case of agricultural concessions, there is no mention of prior government approval.
However, development of new power infrastructure is subject to the laws regulating the sector,
and must give adequate attention to public safety and the environment. In the case of the mining
concessions, some (AmLib, BHP Billiton, Putu) but not all, require a Feasibility Report to be
submitted to the government spelling out energy generation plans.

Two of the mining contracts, make specific reference to hydro-power as a generation option:
BHP Billiton and China Union. In the case of BHP Billiton the contract clarifies that any plans to
develop hydro-power require the prior approval of the Minister and most utilize the full hydro-
potential available at the site. In the case of China Union, the company is given the right to either
develop the 130 mega-watts SP1 hydro-power project on the St Paul River (as long as this is
done in accordance with the National Power Development Plan for the St Paul Basin) or
purchase 100 mega-watts from other hydro-electric plants on the St Paul River. The company is
also explicitly entitled to construct a Heavy Fuel Oil plant.

The concessions cover in particular detail the treatment of excess energy production by
concessionaires. Almost all of the contracts consider the possibility of concessionaire‟s having
excess power generation capacity. The contracts typically establish that the concessionaire can
sell surplus energy to the government or to third parties. In most cases, this is an option open to
the concessionaire, although in some cases (Arcelor Mittal, China Union) it appears that the
concessionaire is required to sell such surplus energy. Typically, the government has the right of
first refusal on the sale of excess energy by the concessionaires, after which the energy may be
sold to third parties. In the case of Putu, the concessionaire is obliged to develop power
generation capacity in such a way as to make it commercially viable to expand the plant to
produce twice as much as what is needed by the mine. Moreover, the mine has an obligation to
provide power to all third party users within a 10 kilometer radius of the plant.

14
Detailed provisions are given regarding the cost at which excess energy would be sold to the
government or other parties. The mining contracts typically refer to principles of cost plus a
reasonable profit margin. In the case of the BHP Billiton contract the profit margin is explicitly
defined as 12 percent. For the agricultural contracts, excess energy is to be sold at the same price
charged by the public utility.

The concession contracts are silent on a number of issues. With the exception of the China
Union concession, none of the contracts make reference to the possibility of concessionaires
purchasing power from a (future) national grid. Nor do they mention anything about the
transmission arrangements that would be needed to allow excess energy from concession sites to
be purchased by the government for wider use.

2.5 Final observations

This brief overview of the infrastructure provisions contained in Liberia’s natural resource
contracts leads to a number of observations.

First, infrastructure issues are treated throughout the concession contracts. Typically, the issues
raised by port and rail infrastructure are treated in more detail than those raised by power and
road infrastructure.

Second, the contracts reflect a number of general principles that are not always uniformly
applied. The central principle is one of third party access to surplus infrastructure capacity, be it
a port, a railway line, or surplus power generation capacity. However, the strictness with which
the principle is applied varies considerably from case to case.

Third, the interface with national infrastructure planning is not well developed. There are a few
instances where specific reference is made to national development plans (notably in the case of
hydro-power), but this tends to be the exception rather than the rule. More generally, the
contracts do not give the sense of the concessionaires operating within or accommodating
themselves to a pre-existing national plan.

Fourth, there is some evidence of evolution in the infrastructure provisions that have been
negotiated over time. The most recently negotiated contract for the Putu site shows more
sophistication in its requirements than some of the earlier ones. In particular, this contract goes
somewhat beyond the third party principle to suggest that concessionaire infrastructure should be
developed in such a way as to readily permit scaling-up by a third party.

15
3. Power

3.1 Power supply options

Historically, the typical modus operandi of mining and other concessions entails autarchic
development of power supply options on an individual basis. This takes place without any
attempt to integrate with the national power system. Based on interviews with mining company
executives and mining specialists, it is likely that these self-supply plants could initially take the
form of Heavy Fuel Oil plants during the start-up phase when power demands remain modest
(10-20 MW) and then switch to coal-fired plants once mines reach full production phase and
generate loads of the order of 100 MW or more. Self-supply arrangements would entail
transportation of liquid or solid fuels from ports to mining sites along the mining railroads,
taking advantage of empty returning trains; although specialized wagons may well be needed
(certainly in the case of liquid fuels). Expert opinion based on experience in neighboring
countries suggest that mining companies would expect to secure such large scale power supplies
at a cost of no more than US$0.10 per kilowatt-hour. In the case of agriculture and forestry
concessionaires, self-supply is likely to take the form of smaller diesel or HFO plants, at costs
that would be closer to US$0.20 per kilowatt-hour. Given the prevalence of forestry and tree
crop concessions, biomass based on wood chips could also be a viable alternative.

As of today, Liberia lacks a national power transmission grid that would even make it possible to
contemplate alternative more collaborative energy solutions. Nevertheless, financing for a
national transmission backbone is expected to be approved by the World Bank by 2012 and
feasibility studies already exist. This line would form part of the CSLG (Cote d‟Ivoire – Sierra
Leone – Liberia – Guinea) inter-connector, developed within the broader framework of the West
Africa Power Pool. The Liberian portion of the line would enter the country from the Guinean
border at Yekepa run down to Buchanan and across to Monrovia and exit into Sierra Leone at
Mano. Such a line is scheduled to be completed by 2015, and on that basis it is possible to
envision how a national power transmission network might evolve in Liberia building from this
backbone.

Once such a national transmission backbone becomes available, a number of alternative power
supply options could be considered. At one extreme, all concessions could be connected to the
national grid and purchase power from Liberia Electricity Corporation (in the absence of
regional trade) or from the West Africa Power Pool (assuming trade develops). At the other
extreme, the Liberia Electricity Corporation could purchase power from individual concessions if
agreements were made to incorporate excess capacity into the design of their (likely thermal)
generation plants. With full inter-connection, it is even possible to envisage a single large
generation plant developed on a scale that could satisfy both mining and Liberian power
demands at low cost. Such a plant could either be hydro-power, coal-fired, or under some future
development scenarios even gas-fired, based on import of Liquid Natural Gas (LNG) from

16
neighboring producers in the Gulf of Guinea (Angola, Nigeria) by sea. A plant of this nature
could potentially be developed as an Independent Power Project, for example.

The economic case for a more coordinated approach to national power system development
hinges on the existence of substantial cost differentials between the sources of power currently
available to different parties (table 3).

Table 3: Levelized unit cost of alternative power supply options (US$/kWh)

Liberia National Grid West Africa Power Pool Concessionaires

Mount Coffee Hydro 0.100 Ivorian Gas-Fired Mines
Biomass (benchmark) 0.110  Lower bound 0.069  Heavy Fuel Oil (<20MW) 0.160
Mano River Hydro 0.160  Upper bound 0.170  Coal-fired (100MW) 0.090
Saint Paul Hydro 0.160 Guinean Hydro  Coal-fired (500MW) 0.076
Heavy Fuel Oil 0.160  Lower bound 0.058 Agriculture/Forestry
Biomass (current) 0.210  Upper bound 0.110  Diesel (<10MW) 0.290
Diesel (benchmark) 0.290  Heavy Fuel Oil (>10MW) 0.160
Diesel (current) 0.320  Biomass (benchmark) 0.110
Sources: Costs for Liberia national grid and WAPP upper bound are taken from World Bank, 2010; Costs for WAPP
lower bound are taken from AICD, 2009; Costs for mines are based on interviews with interviews with mining
companies and mining specialists at the World Bank.

As regards Liberia’s domestic power supply options, these range in cost from US$0.10 to
US$0.30 per kilowatt-hour. Moreover, the lowest cost source of power – Mount Coffee –
provides only 30 mega-watts of firm energy. Thereafter, most of the country‟s power options
jump up to a cost of US$0.16 per kilowatt-hour, which is expensive in absolute terms; even if it
is only half the cost that the country faces today. An unknown quantity is biomass, currently
quite expensive at US$0.21 per kilowatt-hour, but with the potential to fall towards US$0.11 per
kilowatt-hour based on international experience.

As regards power supply options available through the West Africa Power Pool, these include
imports of gas-based electricity from Cote d’Ivoire and hydro-power from Guinea. The exact
cost of these import options is hard to estimate. A recent report estimated the import prices based
on recent trading experience at US$0.11 per kilowatt-hour for Guinean hydro and US$0.17 per
kilowatt-hour for Ivorian gas (World Bank, 2010). However, in both cases, generation costs
could be well below US$0.10 per kilowatt-hour. According to the West Africa Power Pool
Master Plan, the availability of such power for import to Liberia is constrained to 80 mega-watts
in the medium term. However, it is conceivable that the supply of power through the WAPP
could be expanded more rapidly, particularly if Public Private Partnerships are envisaged either
directly with mining companies of with third parties based on Power Purchase Agreements from
the mines.

As regards power supply options available to concessions, mines in particularly are likely to
have access to relatively cheap forms of power. These would likely take the form of Heavy Fuel

17
Oil for small scale generation in the start-up phase, transitioning to coal-fired plant as production
scales-up. The cost of generating power with Heavy Fuel Oil for the mining concessions could
be similar or slightly lower than for the Liberia Electricity Corporation because of their ability to
purchase the fuel at a large scale. The costs of coal-fired generation for mines are estimated
based on standard cost and efficiency parameters, giving figures of the order of US$0.09 per
kilowatt-hour at a scale of around 100 mega-watts. Agricultural and forest concessionaires, on
the other hand, due to their smaller scale would likely need to purchase fuel at the national price,
but could also have access to their own biomass resources.

The wide variation in power supply costs suggests potential benefits from integrated
development, but this is contingent on the feasibility of connecting the grid.

3.2 Feasibility of grid expansion

The first step of this exploration is to look at a first order feasibility of inter-connecting all the
concessions to a future Liberian national grid. This feasibility depends both on the load of power
that each concession demands and the distance of the concession from the planned CSLG
transmission backbone: broadly speaking, the larger the load and the shorter the distance, the
lower the cost premium associated with inter-connection. By estimating future power loads, and
computing distances of concession sites to the CLSG line, a unit cost of transmission can be
computed for each site.

Precise power demand projections for each concession are not available, but can be estimated
based on production potential. Even projections of production potential are quite tentative in
nature. Mining specialists estimate 10-20 mega-watts per million tonnes per annum of iron ore
production, and 30-50 mega-watts for a small to medium size gold mine. Forestry specialists
estimate 20 kilowatt-hours per cubic meter of round logs processed. Agronomists indicate 120
kilowatt-hours per tonne of rubber processed. In both cases, the amounts of power involved are
negligible compared to the mining industry.

The costs of connecting iron ore and gold mines to the power transmission network are
negligible. A number of mining sites are already located close to the CSLG line (Arcelor Mittal,
BHP Billiton, Belle Resources and Iron Resources). For the others, a simulation is conducted
assuming that they could either connect directly to the nearest CSLG sub-station, or to a
neighboring mine that was closer to the sub-station. On this basis, all identified mining sites are
between 24 and 105 kilometers from the nearest node of potential connection to CSLG. The cost
estimates are based on a conservative assumption that power demand would be 100 mega-watts
at each iron ore mine and 30 mega-watts at each gold mine. Even on this basis, the levelised unit
cost of power transmission to mining sites are negligible; typically amounting less than half a
dollar cent per kilowatt-hour for the iron ore mines and between a half and one dollar cent per
kilowatt-hour for the gold mines.

18
Expansion of the national grid to incorporate mining sites can therefore be economically
justified by relatively small differentials in power generation cost. Since per unit transmission
costs are so low, investments to extend the reach of the CSLG national transmission backbone to
the mining sites could be economically justifiable to permit either purchase of grid power by
mining companies or purchase of mining power by the Liberia Electricity Corporation, as long
as there was a power cost differential of at least US$0.01 per kilowatt-hour between grid power
and power produced at mines. (An illustrative simulation of what a future national power grid
might look like developed on this basis is provided in Figure A7.3 of Annex 7.)

On the other hand, the costs of connecting agriculture and forestry concessions to the
transmission network are much higher and look hard to justify in most cases. Based on the
coefficients provided, it seems unlikely that power demand at any given agricultural or forestry
concession site would exceed one mega-watt. At such low levels of power consumption, power
transmission costs can easily rise to US$0.10 per kilowatt-hour even at relatively short distances
of 10 kilometers. This suggests that grid extension for such sites is unlikely to be viable in most
cases. Moreover, agriculture and forestry concessionaires have the potential to generate their
own power based on the biomass residuals generated by their production activities. They may in
some cases be open to distributing some of this power to surrounding communities.

Table 4: Estimated levelized unit costs of connecting mining concessionaires to CSLG lines

Mining site Nearest CSLG Distance to Total Cost of Levelised Unit Cost
Sub-Station (or Sub-Station Transmission of Transmission
other mine) (kms) (US$m) (US$/kWh)
Iron Ore
Arcelor Mittal Yekepa - - -
Belle Resources Monrovia 99 - -
BHP Billiton Yekepa - - -
China Union Monrovia 47 16 0.0038
China Union Belle Resources 56 19 0.0046
Iron Resources Yekepa 124 - -
Piom Iron Resources 117 28 0.0061
Western Cluster 1 Monrovia 42 11 0.0023
Western Cluster 2 Mano 39 11 0.0024
Western Cluster 3 Western Cluster 24 8 0.0015
Wologizi Belle Resources 105 26 0.0065
Gold
Bea Mountain Mining Corp. Mano 7 5.3 0.0044
AmLib United Minerals 1 Iron Resources 56 9.0 0.0075
AmLib United Minerals 2 Buchanan 89 14.7 0.0123
AmLib United Minerals 3 Monrovia 19 5.6 0.0047
AmLib United Minerals 4 Iron Resources 56 9.0 0.0075
AmLib United Minerals 5 Piom 64 10.1 0.0084
Source: Madrigal & Romo, 2011

A potential additional developmental benefit of connecting mines to the transmission network

would be to increase the possibility of connecting secondary towns to the grid. Under the
assumption that an expansion of the national grid could be justified based on the inter-connection

19
of mining sites, a relevant question is to what extent this might help to accelerate the grid
electrification of Liberia‟s secondary towns (table 4). There are 17 towns which – according to
the 2008 Census – had a population in excess of 10,000. The potential load of these towns can be
estimated by making some simple assumptions: a household load of 0.33 kilowatts, 10 percent of
households connect to the grid, and non-residential demand would be about half of residential
demand. On this basis, the load associated with each of these towns ranges between 0.1 and 0.4
mega-watts, with the exception of Monrovia.

Under a hypothesis of off-grid diesel power, grid electrification becomes attractive once
transmission costs fall below US$0.10 per kilowatt-hour. In the absence of grid electrification, it
is assumed that these towns would generate power using small scale diesel plant at a cost
approximately US$0.30 per kilowatt-hour, whereas grid power would cost of the order of
US$0.15 per kilowatt-hour approximately. On this basis, any towns that can be connected to the
national grid for less than US$0.10 per kilowatt-hour in terms of levelised transmission costs
would be worth connecting.

The possibility of connecting to a local mining concession significantly increases the number of
towns that could viably be connected to the grid: from three to seven (table 5). The simulations
consider three possible grid electrification options for each town: connecting to the nearest
CSLG sub-station, connecting to the nearest point on the CSLG transmission line using a
medium voltage shield wire, and connecting to the nearest mining concession by means of a
small transformer and 11 kilovolt line. Calculations are only made for towns within 40
kilometers of any of these features, since costs otherwise escalate rapidly beyond the viable
range. The analysis shows that if the only grid electrification option is to connect to the nearest
CSLG sub-station, only Monrovia and Buchanan are viable for grid electrification. Using the
shield wire approach does not change the story very much; Ganta is the only additional town that
could be served using the shield wire approach for less than US$0.10 per kilowatt-hour. Using a
connection to the nearest mining concession, an additional four towns look to be viable for grid
electrification: namely, Harbel (BHP Billiton), Kakata (AmLib United Minerals), Saniquellie
(BHP Billiton), and Tubmanburg (Western Cluster).

However, under a hypothesis of off-grid biomass power, the economic case for grid
electrification looks much weaker. Local generation based on biomass – costing somewhere in
the range of US$0.11-0.21 per kilowatt-hour – has the potential to be substantially cheaper than
diesel generation. Since the cost of grid power would probably also fall somewhere in this range
grid electrification would cease to be attractive, except possibly in a couple of towns (Kakata and
Saniquellie) where the cost of transmission is of the order of US$0.01-0.02 per kilowatt-hour.

20
 Table 5: Estimated levelized unit costs of connecting secondary towns to national grid
Town Nearest CSLG Sub-Station Nearest Point on CSLG Line Nearest Mining Concession
Distance Cost Unit cost Distance Cost Unit cost Distance Cost Unit cost
(kms) (US$m) (US$/kWh) (kms) (US$m) (US$/kWh) (kms) (US$m) (US$/kWh)
Buchanan 9 1.0 0.071 9 1.4 0.100 45
Foya 192 93 33 1.5 0.197
Ganta 60 7 1.3 0.079 24 1.1 0.070
Gbarnga 120 36 3.1 0.228 38 1.7 0.127
Greenville 148 148 84
Harbel 41 5 1.2 0.129 7 0.5 0.054
Harper 306 302 148
Kakata 33 1.9 0.142 15 2.3 0.171 15 0.2 0.011
Karnplay 35 2.0 0.650 14 1.1 0.360 29 1.3 0.444
Monrovia 26 1.6 0.004 24 2.6 0.007 40
Pleebo 298 290 128
River Gbeh 270 223 71
Sacleapea 75 21 2.5 0.529 39 1.7 0.359
Sanniquellie 29 1.8 0.387 4 1.2 0.257 10 0.1 0.024
Tubmanburg 46 31 2.9 0.562 4 0.4 0.075
Voinjama 161 132 33 1.5 0.144
Zorzor 98 73 73
Source: Madrigal & Romo, 2011

3.3 Feasibility of power exchange with mines

An existing model of Liberia’s power sector will be used to analyze the different options
available. The preceding section established that the transmission cost of connecting the mines is
negligible in relation to the likely costs of generation at less than a dollar cent per kilowatt-hour.
However, the case for connecting to the grid hinges on the magnitude of the cost differentials
that can be secured via the grid. In order to identify these differentials, a number of simulations
are conducted using the Liberia power supply model developed by the World Bank in 2010 to
underpin the study on Options for the Development of Liberia’s Energy Sector. The unit costs of
different power supply options are essentially as reported in Table X above. The model assumes
that Liberia will meet its demand by gradually drawing on a range of domestic hydro (Mount
Coffee, St Paul River, Mano river) and thermal options (diesel, Heavy Fuel Oil, biomass). It also
assumes that a limited supply of 80 mega-watts of power would be available for import from the
West Africa Power Pool (Cote d‟Ivoire or Guinea) in the medium term.

A number of different energy supply scenarios can be considered. The five scenarios used are
summarized in Table 6. Following the approach adopted in the earlier study both low and high
demand scenarios are considered. Under the low demand scenario, by 2030 there would be 300
mega-watts of mining demand and 80 mega-watts of non-mining demand. Under the high
demand scenario, by 2030 there would be 700 mega-watts of mining demand and 160 mega-
watts of non-mining demand. The simulations explore three possible energy supply options for
the mines. The first is off-grid self-supply resulting in several coal-fired plants of around 100
mega-watts in scale. The second option is that mines are connected to the transmission network

21
and purchase power generated by the Liberia Electricity Corporation from the grid, which might
be domestic hydro-power from the Saint Paul River or imported power from the West Africa
Power Pool. The third option is that mines continue to self-supply, but are connected to the grid
so that their excess power can be sold to the Liberia Electricity Corporation. The fourth option is
that mines are connected to the transmission network and purchase power from a single large
scale privately operated thermal plant located near the coast, and excess capacity from this plant
is supplied to the Liberia Electricity Corporation over the grid. (For graphical illustrations of
each of these four energy supply scenarios see Figures A7.4-A7.7 in Annex 7.)

Table 6: Overview of power model scenarios considered

Technology Low Demand High Demand

Mines Mines use 100 MW thermal plants 300 MW mining 700 MW mining
self-supply 80 MW non-mining 160 MW non-mining
Mines buy Mines grid connect and buy from LEC based on 300 MW mining 700 MW mining
from LEC domestic, regional power sources 80 MW non-mining 160 MW non-mining
Mines Mines use 100 MW thermal plants but grid 700 MW mining
sell to LEC connect selling excess to LEC 160 MW non-mining
individually
Mines sell Mines grid connect and purchase from single large 700 MW mining
to LEC private thermal plant selling excess to LEC 160 MW non-mining
collectively
Source: Romo, 2011

The scenario where mines purchase power from the Liberia Electricity Corporation does not
look attractive either to the mines or to the country (figure 1). Assuming that the mines choose to
self-supply, they could be expected to obtain power for around US$0.09 per kilowatt-hour,
whereas by 2030 the Liberia Electricity Corporation would be facing costs of between US$0.11
to US$0.15 per kilowatt-hour depending on the demand scenario. If instead the mines connected
to the grid with a view to purchasing power from the Liberia Electricity Corporation, the average
cost of power in Liberia by 2030 would jump to around US$0.17 per kilowatt-hour. This is
because the much higher demand from the mines – at 700 mega-watts versus 160 mega-watts for
the rest of the country – would rapidly exhaust Liberia‟s 200 mega-watts of potential domestic
hydro-power and 80 mega-watts of lower cost power available through the West Africa Power
Pool in the model, obliging the Liberia Electricity Corporation to develop a large tranche of
additional expensive diesel and HFO plant. All parties would be worse-off under this type of
cooperation than under autarchy.

The lowest average cost of power for all parties is obtainable under the scenario where the
mines generate power collectivity and sell the excess to Liberia Electricity Corporation (figure
1). Under the third scenario, mines continue to generate power individually but connect to the
grid so that the surplus can be sold to the Liberia Electricity Corporation. This results in an
average cost of power for the country of US$0.12 per kilowatt-hour by 2030. This is
significantly better for Liberia than the US$0.15 per kilowatt-hour that would otherwise result.
However, the best outcome results when the mines connected to the grid with a view to

22
purchasing power from a single large scale private thermal power producer located on the coast,
which would supply all the mines from a single source and sell excess power to the Liberian
Electricity Corporation, the average cost of power in Liberia by 2030 would fall to US$0.08 per
kilowatt-hour. All parties would be better-off under this type of cooperation than under autarchy.
The magnitude of the cost reductions obtainable for the Liberia Electricity Corporation of
between US$0.03 and US$0.08 per kilowatt-hour would seem to readily justify the cost of
expanding the national grid which amounted to less than a dollar cent per kilowatt-hour. Instead
of collective development of thermal power, it is also possible to envisage a scenario where via
some kind of Public Private Partnership arrangement mines collaborate to develop a major
hydro-power site either in Liberia on in the Guinea highlands. The outcome could be expected to
be similar in terms of costs. Such an approach may be harder to implement, however, given the
long lead times and much higher construction risks associated with hydro-power over thermal-
fired plant.

Figure 1: Average cost of power for Liberia in 2030 under different demand scenarios
and supply options for the mining sector

0.18
Average cost of power in 2030 (US$/kWh)

0.16
0.14
0.12
0.10
0.08
0.06
0.04
0.02
0.00
mines self-supply

mines self-supply

mines sell to LEC

mines sell to LEC

mines buy from LEC

mines buy from LEC

High demand:

High demand:
High demand:
Low demand:

individually

collectively
High demand:
Low demand:

Source: Romo, 2011

The overall cost savings from such a collective approach to power generation could be very
substantial, particularly for the mines (table 7). The largest savings accrue to the mines, which
would reduce their overall energy costs from US$6.8 to US$5.4 billion, a saving of US$1.4
billion over a 20 year period (or US$70 million annually). The savings for the Liberia Electricity
Corporation are not insignificant either with total energy costs falling from US$1.4 to US$1.2

23
billion, a saving of US$0.2 billion over a 20 year period (or US$10 million annually). If the
mines were not able to generate power collectively, but could at least grid connect so as to be
able to sell excess power to the Liberia Electricity Corporation, the aggregated costs of power
production would fall from US$8.1 to US$7.9 billion over a 20 year period (savings of US$10
million annually).

Table 7: Total energy costs under different scenarios

US$ billions 2010-2030 Low Demand High Demand

Mines LEC Total Mines LEC Total
Mines self-supply
3.7 0.6 4.3 6.8 1.4 8.1
Mines buy from LEC
3.0 0.9 3.9 8.9 2.0 10.9
Mines sell to LEC individually
6.5 1.4 7.9
Mines sell to LEC collectively
5.4 1.2 6.6
Source: Romo, 2011

24
Intermediate solutions are possible where power exchange occurs in both directions, and
indeed there is historical precedent for this. The above scenarios focus on situations where the
mines either buy power from LEC or sell power into the grid. However, it is conceivable that
power trade between LEC and the mines could run in both directions. For example, it is
reported that before the war, Bong mines would purchase Mount Coffee hydro-power from
LEC during the wet season and sell thermal power to LEC during the dry season. It is easy to
see why such an arrangement could be mutually advantageous, allowing LEC to sell excess
hydro-capacity in the wet season and Bong mines to benefit from the lower cost hydro-power.
At the same time, by purchasing energy from Bong mines in the dry season, LEC could benefit
from scale economies in generation of thermal power. There may be scope for revisiting these
kinds of arrangements in the future. And, in any case, as LEC considers prospects for
developing further thermal generation capacity, the signature of a Power Purchase Agreement
with a mining plant should feature as an option worth exploring.

The various power scenarios considered differ not only in terms of costs but also in terms of
environmental impact. In particular, the scenarios where mines self-supply using coal-fired
plant will lead to much larger carbon dioxide emissions annually than a scenario where mines
are able to buy hydro-power from the national grid (Saint Paul River) or regional power pool
(Guinea); assuming that such hydro-power were available in sufficient quantities. Some
illustrative calculations suggest that the savings would be of the order of 2,000 tonnes of
carbon dioxide emissions annually accumulating to some 22,000 tonnes over the life of the
mines.

Figure 2: Comparison of CO2 emissions according to source of power supply for mines

6.00
thousand of tonnes of CO2

5.00

4.00

3.00

2.00

1.00

-
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

Mines self-supply using coal-fired power Mines buy hydro-power from LEC

Source: Romo, 2011

25
4. Railways

4.1 Coordinated rail development by mines

A number of key questions surround the development of Greenfield railroads to service new
mines in Liberia and neighboring Guinea. Three of Liberia‟s mining concessions – Arcelor
Mittal, China Union and Western Cluster – are associated with railway lines that have been built
in the past but require extensive rehabilitation (see Figure A7.8 in Annex 7). The other three
mining concessions – BHP Billitin, Putu and Wologizi – are Greenfield sites that will need to
develop their own rail infrastructure. In addition, the mines located at the major Simandou iron
ore deposits found just over the Liberian border in Guinea, could potentially also export through
Liberia if suitable rail capacity could be developed. The identification of rail transport solutions
for these different sites raises a number of important policy questions. To which ports should
new rail links be constructed? What can be gained from coordinated development of rail
solutions that serve multiple concessions? Some preliminary answers to these questions can be
given based on some first order simulations of alternative rail systems. Full details of the models
are provided in Annex 4, with the main highlights summarized below.

For iron ore mines located on the Guinean side of the border, the lifecycle cost savings of
exporting via Liberia are of the order of US$1 billion. The Simandou mining deposits in Guinea
are located some 800 kilometers from the Guinean port of Conakry, but only kilometers from the
Liberian port of Buchanan. As a result, the cost of moving iron ore over a twenty year lifecycle
would be almost three times as high: at US$3.49 per tonne via Conakry versus US$1.22 per
tonne via Buchanan (Figure 3). The associated investment costs are also three times as high:
US$1.2 billion via Conakry versus US$0.4 billion via Buchanan. Indeed, the overall cost savings
of the Buchanan route over a twenty year period amount to US$1.2 billion, when the full
lifecycle costs of running the two alternative railroads are taken into account. (For a graphical
representation of these alternative routes see Figure A7.9 in Annex 7.)

At present, there is the possibility that several parallel lines could be developed along the
Buchanan corridor. The right to rehabilitate the existing line on the Buchanan corridor was
given to Arcelor Mittal as part of its concession contract, with no explicit obligation to provide
third party access. However, there is the possibility of other mining traffic both from Guinea and
from the BHP Billiton concession located in the same corridor, also needing rail access to port
facilities at Buchanan or nearby. In principle, these concessions may need to develop their own
railroads raising the possibility of one or even two new tracks running close to or even parallel
with the existing Arcelor Mittal line. An alternative approach would be to consider the
development of an integrated rail system on the corridor comprising two parallel lines operated
as a single double track system. (For a graphical illustration see Figure A7.10 in Annex 7.)

26
 Figure 3: Comparative analysis of rail options for Guinean deposits

(a) Unit costs of transport (b) Total lifecycle cost

4.0 2.0
Cost of iron ore transport to

3.5

Lifecycle rail transport cost

3.0 1.5
port (US$/tonne)

2.5

(US$billions)
2.0 1.0
1.5
1.0 0.5
0.5
0.0 0.0
To To To To To To
Conakry Monrovia Buchanan Conakry Monrovia Buchanan

Source: Des Longchamps, 2011

The operational and financial benefits of a double track system over development of two parallel
lines are unambiguous. A simulation of these two possible scenarios – two parallel single track
systems versus one integrated double track system – serves to illustrate the economic issues that
arise (figure 4). First, the investment costs of the integrated double track system are significantly
lower at US$629 versus US$826 million: a saving of 24 percent. Second, moving up to three
million tonnes of iron ore per month on a single track line is a challenging task involving
carefully planned operations, since it could easily entail 15 train rotations per day implying at
least 30 train crossings (of inbound and outbound locomotives) that need to be planned and
monitored. A double track system avoids all the operational difficulties associated with crossing
of inbound and outbound trains on a single track system. As a result, trains can move faster, with
the average velocity rising from 60 to 70 kilometers per hour. Third, for the same reason, longer
trains can be used with locomotives pulling 105 rather than only 70 wagons each. As a result,
fewer locomotives and drivers are needed on a double track system, leading to significant
savings in operating costs as well as capital costs. Fourth, track maintenance costs from a double
track system are substantially lower than on two parallel tracks, even accounting for the more
intensive use of the double track. When the investment and lifetime operating cost savings are
fully taken into account, the double line generates savings of US$313 million over and above the
two single lines.

27
 Figure 4: Comparative analysis of rail options for sites around Yekepa

(a) Unit costs of transport (b) Total lifecycle costs

1.4 1.4
Cost of iron ore transport to

Lifecycle rail transport cost

1.2 1.2
1.0 1.0
port (US$/tonne)

(US$ billions)
0.8 0.8
0.6 0.6
0.4 0.4
0.2 0.2
0.0 0.0
Single Single Two One Single Single Two One
Line Line single double Line Line single double
(Rehab) (New) lines line (Rehab) (New) lines line

Source: Des Longchamps, 2011

Due to the small size of the country, a number of different railroad routes are feasible to access
alternative ports from a given site. The other Greenfield sites – at Putu and Wologizi – are quite
remote from other mining operations. In the case of Putu, the nearest port would be Greeneville,
but the mine is also within range of the port at Buchanan (figure 5). Linking to Greeneville port
leads to savings of US$200 million (or 40 percent) in overall lifecycle costs of rail transport over
a period of 20 years, with the unit transport cost falling from US$1.19 to US$0.71 per tonne. In
the case of Wologizi, a direct line to Monrovia could be developed (figure 6). But significant
cost savings would result from linking-up to the existing Bong railroad, thereby saving US$100
million (or 20 percent) in overall lifecycle costs for rail transport. Linking to the old line at
Tubmanburg, on the other hand, does not appear to offer any advantages. Finally, any future line
from Guinea into Liberia could potentially connect either to Buchanan or Monrovia ports. The
cost differential between the two single track routes is relatively small; however the Monrovia
route does not offer the opportunity to develop a double track corridor. Although the cost
differences between the different rail routes are not insignificant; in practice, they could be
overwhelmed by cost differentials between port services offered at different sites, particularly if
concentration of traffic at a single site would permit substantial economies of scale. (For a
graphical illustration of alternative rail export routes for the Putu and Wologizi iron ore sites see
Figures A7.11-A7.12 in Annex 7.)

28
 Figure 5: Comparative analysis of rail options for Putu site

(a) Unit costs of transport (b) Total lifecycle costs

1.4 0.6

Lifecycle rail transport costs

Cost of iron ore transport to

1.2 0.5
1.0
port (US$/tonne)

0.4
0.8

(U$ billions)
0.3
0.6
0.4 0.2
0.2 0.1
0.0 0.0
To To To To
Buchanan Greeneville Buchanan Greeneville

Source: Des Longchamps, 2011

Figure 6: Comparative analysis of rail options for Wologizi site

(a) Unit costs of transport (b) Total lifecycle costs

1.4 0.6
Lifecycle rail transport costs
Cost of iron ore transport to

1.2 0.5
1.0 0.4
port (US$/tonne)

0.8
(U$ billions)

0.3
0.6 0.2
0.4 0.1
0.2 0.0
0.0
Direct line Via Via
Direct Via Via
Bong Tubmanburg
Line Bong Tubmanburg

Source: Des Longchamps, 2011

Across the board, rates of return associated with rail development are very low, and negative in
some cases. By ascribing industry standard revenue of US$0.005 per tonne kilometer of iron ore
transported, it is possible to estimate the profit associated with the development of these various
railroad options. This is useful because it serves to illustrate the extent to which the railroads
would be viable as free-standing businesses operated by third parties. The results indicate that
the rate of return on railroad investments rarely surpasses one percent for Greenfield sites, rising
to four percent where only rehabilitation spending is needed. In the case of the more remote sites
– Putu and Woligizi – returns to rail road investments are in fact slightly negative.

29
4.2 Rail and broader development agenda

Beyond their significance to the mining industry, railroads can sometimes be valuable conduits
for general freight and passenger traffic. However, the feasibility of this depends on the volumes
of non-mining traffic involved and the extent of the operational restrictions imposed by mining
traffic.

Mixed use of rail lines is hard to reconcile with the operational demands of mining traffic,
particularly in single track rail systems. As noted above, intensive use of a single track system to
transport some three million tonnes of iron ore traffic per day, would require intensive use of the
infrastructure and careful coordination of up to 30 train crossings per day. As was demonstrated
in some detail in the recent Transport Master Plan, this does not leave much physical scope for
non-mining traffic. Moreover, such traffic would likely face extensive delays due to cross-over
issues. A double track system, on the other hand, has much greater capacity and would make it
more feasible to combine rail and non-rail traffic on a given system.

Given the economic geography and likely traffic patterns of non-mining traffic in Liberia, the
road network is likely to be a much more appropriate conduit. Liberia is a small country: most of
its key economic corridors are no more than 250 kilometers in length. Over these relatively short
distances, road transport – both for passengers and general freight – can compete quite
effectively with rail. Moreover, along the routes of actual and potential mining railroads, there
are no towns above 40,000 population that could be expected to generate enough passenger
traffic to justify a dedicated train. In terms of general freight, this is mainly forestry and
agricultural traffic that is quite dispersed in nature, making it relatively costly to concentrated at
railroad loading points. The volumes involved even under a high growth scenario will likely be
only a fraction of those generated by the mines. There are a few cases, however, where proximity
of significant forestry operations to mining sites would make rail transport attractive, and there is
some historical precedent of timber transportation along mining railways albeit on a very small
scale (for example, one train per week). Beyond these specific instances, developing the trunk
and feeder road network into the rural areas is likely to be much more critical to the economic
diversification of the country than the sharing of rail infrastructure.

What will be important is to ensure open access to service roads developed alongside railway
lines. More relevant to the development of the local economy than the railroad itself may be the
service road that runs parallel to it and that provides continuous access to surrounding
populations. The service road is needed by the mining company both to construct and maintain
the railroad, and provide access to emergency equipment in the case of a derailment. The mining
companies therefore have the incentive to keep these roads maintained and accessible, generating
a secondary benefit for local populations.

The provision of an adequate number of safe level crossings is also critical to ensure that the
railroad does not cut-off rural areas. A key issue is to ensure that the railroad does not infringe

30
on existing road routes, and that safe level crossing arrangements are provided. An intensive
train operation requires a strong protection at level crossings, to avoid incidents and casualties,
damages and delays. For instance, the railway line that goes from Buchanan to the Arcelor Mittal
site in Nimba has approximately 38 crossings. When and where possible, crossings should be
built above or below the line. Manning of level crossings is important to ensure safety
procedures are followed. Once again, the provision of safe level crossing arrangements can be
more easily managed in a double track system than in two parallel single track systems. Railways
lines act as a magnet for local resident and particularly in urban areas encroachment of the line
by local residents and businesses is a real problem, as it can considerably slow down the trains to
allow for safe operation. Consideration must be given to the protection/fencing of the right of
way, particularly in urban areas, weighing the additional capital expense against the long term
operational benefits.

31
5. Ports

Liberia’s export traffic – though modest today – is poised for a major expansion over the coming
years (table 8). Export traffic through Liberia‟s ports is modest as of today amounting to less
than half a million tonnes; the bulk of which is channeled through the port of Monrovia.
However, strong growth in export traffic volumes can be anticipated during the PRS2 period and
beyond. If existing mining concessions were to attain 50 percent of their production potential
during the PRS2 period, export volumes would jump to over 40 million tonnes of iron ore, while
agriculture and forestry cargo could amount to 1-2 million tonnes. By 2030, assuming that all
existing natural resource concessions reach their full production potential (and without taking
into account any additional concessions or potential cross-border traffic from Guinea), export
volumes could jump to around 80 million tonnes of iron ore and some 3 million tonnes of
agriculture and forestry cargo.

Catering to this burgeoning export traffic will entail a major expansion in port capacity, both at
new and existing sites. In addition to the overall growth in export traffic, there will be a changing
pattern of export traffic with Monrovia playing a less dominant role and secondary ports such as
Buchanan and Greeneville becoming more significant. There is also the possibility that new
Greenfield export facilities could be developed.

The policy issues that arise are very different for the iron ore sector versus the agriculture and
forestry sectors. Due to their massive scale, and particular operational requirements, iron ore
companies are responsible for building and operating their own port facilities. The main policy
issue that arises is the extent to which these facilities should be within existing ports or at new
Greenfield locations, and the extent to which mining companies should be encouraged to
aggregate demand at a small number of facilities versus allowing individual bulk facilities to
proliferate along the coast. By contrast, agriculture and forestry concessions operate on a much
smaller scale and rely entirely on government for investment in suitable port facilities. The main
policy issue that arises is how to accelerate the upgrading and rehabilitation of the smaller
secondary ports on which these concessions are critically reliant.

32
 Table 8: Estimation of export traffic through Liberia’s ports

(a) As of 2011

„000s Agriculture and forestry Agriculture and forestry Minerals

Mt pa Other Agricultural Forestry Total Dry bulk Liquid Total
Agriculture Concession Concession cargo bulk cargo
Monrovia - 276.7 3.8 280.5 103.1 177.3 280.5 6.6
Buchanan - 13.1 8.3 21.4 19.0 2.4 21.4
Greeneville - 3.2 12.9 16.2 12.9 3.2 16.2
Harper - 7.2 7.2 7.2 - 7.2
National - 300.3 25.0 325.3 142.3 183.0 325.3 6.6
Note: Forestry figures provided by SGS. Other figures derived from LISGIS data apportioned across ports according
to size and location of concession areas.

(b) As of end PRS2 (simulated)

„000s Agriculture and forestry Agriculture and forestry Minerals

Mt pa Other Agricultural Forestry Total Dry bulk Liquid Total
Agriculture Concession Concession cargo bulk cargo
Monrovia 170 1,121 36 1,326 49 1,277 1,326 12,500.0
Buchanan 59 34 77 170 90 80 170 12,500.0
Greeneville 27 18 121 165 123 42 165 5,000.0
Harper 26 14 - 40 4 36 40 -
National 282 1,186 233 1,701 266 1,435 1,701 42,500.0
Note: Estimates based on full production potential of existing agriculture and forestry concession contracts only,
plus 20 percent of potential production of smallholder agriculture. Minerals based on 50 percent of potential
production from existing mining concessions only.

(c) As of 2030 (simulated)

„000s Agriculture and forestry Agriculture and forestry Minerals

Mt pa Other Agricultural Forestry Total Dry bulk Liquid Total
Agriculture Concession Concession cargo bulk cargo
Monrovia 848 1,084 187 2,119 253 1,867 2,119 44,900.
Buchanan 297 34 117 448 184 264 448 25,000
Greeneville 134 18 221 373 233 139 373 10,000
Harper 131 14 14 159 34 125 159 -
National 1,410 1,150 540 3,100 705 2,395 3,100 79,900
Note: Estimates based on full production potential of existing agriculture, forestry and minerals concession contracts
only.

5.1 Iron ore port facilities

The nature of required iron ore export facilities varies according to the scale of export. For
export volumes of up to about 10 million tonnes of iron ore per year, mining companies could
potentially operate using standard quay facilities and Panamax (70,000 tonnes) vessels. Beyond
this volume of production, larger vessels such as Capesize (180,000 tonnes) and Chinamax or
Valemax (400,000 tonnes) are required. Due to the draft requirements of these larger ships, it is
typically uneconomic and often infeasible to dredge normal entry channels, and dedicated finger
piers need to be built some two to three kilometers in length out into the ocean.

33
There are significant scale economies in iron ore export facilities, but the largest scale
economies arise in shipping costs. There are significant economies of scale as the fixed costs
associated with the dedicated pier are spread across larger volumes of cargo (figure 7a). The
costs of port handling fall from around US$3-4 for small volumes of around 5 million tons per
annum to around US$1-2 for large volumes in excess of 100 million tons per annum. However,
by far the strongest scale economies can be found with respect to shipping costs (figure 7b).
These range from US$50 per tonne for Capesize (180,000 tonnes) and US$20 per tonne for
Chinamax (400,000 tonne) vessels respectively. As this comparison shows, the costs of shipping
exports dwarf those associated with port handling.

Figure 7: Economies of scale in iron ore exports

(a) Port handling costs (b) Shipping costs

4 100
90
Port handling costs

80
Shipping costs
3
(US$/tonne)

(US$/tonne)
70
60
2 50
40
1 30
20
10
0 0
5 mtpa 10 25 50 100 Handymax Panamax Chinamax
mtpa mtpa mtpa mtpa (30,000 mt) (70,000 mt) (400,000 mt)

Source: Authors calculations based on parameters provided by local and international ports specialists Jonathan
Massaquoi and Theun Elzinga.

In practice, mining companies sometimes share export facilities but are unlikely to share
shipping. Consultations with ports specialists suggest that concessionaires on the eastern side of
the country could likely be served by Panamax scale facilities through upgrading of Buchanan
and Greeneville or development of new Greenfield sites. A single larger facility may be needed
in the west of the country to serve the various deposits in that region, potentially accommodating
larger scale ships. If Vale were to export Guinean iron ore through Liberia, the associated scale
of export would likely warrant a dedicated facility, which could either be located west of
Monrovia or east of Buchanan.

The main policy issues surrounding iron ore ports relate to the location of Greenfield sites and
the pooling of cargo from medium-sized mines. This suggests that Liberia will require a
minimum of three significant iron ore export facilities, one each in the Buchanan, Greeneville
and Monrovia areas, rising to four in the advent of transit traffic from Guinea. The facilities at
Buchanan and Greeneville could potentially be accommodated within the framework of the
existing ports, possibly requiring construction of specialized finger piers. In the case of

34
Monrovia, the volumes of iron ore involved if all the western mining sites – Bong, Western
Cluster, and Woligizi – become productive may require the development of a dedicated facility
somewhere on the coast west of Monrovia. However, without clear policy intervention the
number of dedicated iron ore facilities developed could potentially proliferate beyond the three
to four outlined with each major mining site developing its own dedicated pier.

5.2 Agriculture and forestry port facilities

Shortcomings at secondary ports are impeding export of agricultural and forestry products by
concessionaires. The deficiencies in Liberia‟s secondary port facilities at Buchanan, Greeneville
and Harper are already proving to be a binding constraint for the export of timber, rubber and
palm oil under the existing natural resource concessions. Consultations undertaken with
concessionaires underscored the significance of the problem, particularly for forestry
concessionaires that are already in a position to export timber. Problems cited include the
obstruction caused by a sunken vessel at Greeneville port, the need for dredging at ports, and the
very poor performance of the ports in terms of loading cargo leading to lengthy delays and
supplementary costs.

Concessionaires are reliant on NPA to make the necessary investments, but NPA lacks the
resources to do so. As noted above, under the terms of their concession contracts forestry and
agriculture concessions are not expected to invest in port facilities, but simply to make use of
services provided by the National Ports Authority (NPA). Notwithstanding, NPA appears to lack
the resources needed to make all of the necessary upgrades at Liberia‟s secondary ports and no
such projects feature in the government‟s project pipeline for the PRS2.

Some very approximate estimates of spending needs at Liberia’s secondary ports can be made
(table 10). Based on discussions with local and international port specialists, it was possible to
sketch out the cost structure for Liberia‟s secondary ports. This made it possible to identify the
need for investments in navigational aids, and initial dredging to restore full navigability. It was
also possible to estimate the annual operating costs in terms of dredging requirements, as well as
loading services (the latter being based on estimated throughput for 2030 as shown above). On
this basis, the up-front investments needed to get the ports fully functional range from U$1-7
million. These consist primarily of up-front dredging. Due to the natural characteristics of the
ports, dredging requirements vary greatly and are largest for Greeneville and smallest for Harper.
The on-going operating costs similarly range from US$1-7 million at each port, depending on the
volume of projected traffic.

35
 Table 10: Approximate estimate of investment and operating needs at secondary ports

Buchanan Greeneville Harper

Investments (US$) 3,250,000 7,300,000 770,000
Navigational aides 250,000 - 70,000
Dredging (up-front) 3,000,000 7,300,000 700,000
Operating costs (US$ pa) 7,760,000 4,930,000 730,000
Dredging (on-going) 600,000 3,600,000 70,000
Dry bulk
Storage 320,000 40,000 50,000
Loading 6,600,000 1,200,000 150,000
Liquid bulk
Storage 80,000 40,000 60,000
Loading 160,000 50,000 400,000
Notes: Cost estimates are based on throughput projections from table 9(c)

In most cases, the levelized costs of using the ports fall in the range US$3-10 per tonne. These
are somewhat higher than the range of US$1-3 per tonne more typically found in the developing
world, perhaps reflecting the relatively small scale of operations in some cases. This can be
compared with shipping costs of the order of US$80 per tonne for Handymax (20,000 tonne)
vessels. As this comparison shows, the costs of shipping exports dwarf those associated with port
handling.

Table 11: Concessionaires with a stake in dry and liquid bulk operations at various ports

Port Mining Concessionaires Forestry Concessionaires Agricultural Concessionaires

Monrovia Amlib United Minerals
Bea Mountain Mining Corp.
China Union Iron Ore Ltd
Buchanan Amlib United Minerals
Arcelor Mittal
BHP Billiton
Greeneville Amlib United Minerals
Piom (Silverstar/Mano JV)
Harper
Alpha Logging Inc. ADA-LAP Rice
Bargor & Bargor Ent. Inc. Firestone
Bassa Timber Corp. Salala
B+V Timber Co. Sime Darby
Sun Yeun Corp.
Thunderbird Int‟l Liberia Inc.
Todi
Akewa Group Cos. Cocopa
EJ&J Investment Corp. Liberian Agricultural Co.
ICC
Libbing Company
Liberia Tree & Trading Co.
Tarpeh Timber Corp.
Euro Liberia Logging
Geblo Logging Inc.
Cavalla/Firestone

To break out of the impasse with Liberia’s secondary ports, Public Private Partnership
arrangements could fruitfully be explored. Liberia‟s secondary ports are thus caught in an
impasse: they are needed to permit concessionaires to export but no resources are available for
rehabilitation. A possible solution would be to construct a Public Private Partnership
arrangement. One option would be for the group of concessionaires depending on each of the
ports to form an association and jointly finance the rehabilitation and operating costs of the port

36
(table 11). In return for taking on this responsibility, they could be remunerated by a holiday on
port charges or some other kind of tax credit until the full value of their investments was
recognized. Alternatively, a third party contractor could be brought in to invest in port operations
and manage them based on contracts with agricultural and forestry concessionaires.

37
6. Roads

For most of Liberia’s concessionaires the road network will provide the key linkage to ports and
external markets. Whereas the iron ore concessionaires rely predominantly on rail links for
transportation, all the other concessionaires – including gold and diamond mines, forestry and
agriculture – rely exclusively on roads to access their sites and evacuate their products to the sea
for export. While iron ore concessionaires are developing their own rail links, all other
concessionaires rely on the Government of Liberia for the provision of roads linking their
concession sites to ports. Their concession contracts do not contemplate any responsibility for
them to develop road infrastructure off their immediate sites, and in many cases the scale of their
business would not make this a viable proposition.

Viewed through this prism, it is possible to think of a sub-set of Liberia’s roads that forms this
basic access network for the concessions. The map highlighting this critical “current concessions
network” can be viewed as Figure A7.13 in Annex 7. From the map, it is immediately apparent
that this “current concessions network” breaks down naturally into five sea corridors and
associated branches. The first corridor runs from Monrovia out to the northwest towards
Tubmanburg and Mano. The second corridor runs from Monrovia out to the northeast through
Bong and on to Lofa. The third corridor runs from Buchanan to Nimba. The fourth corridor runs
from Greeneville up towards Zwedru. The fifth corridor runs from Harper in the southeast
outwards towards a number of forestry and agricultural sites. These corridors broadly coincide
with those identified in earlier studies (MPEA, 2010), with the difference that they are much
more broadly defined to include not only the backbone route but also the associated branches
that ensure that all concession areas are connected. A somewhat more extensive version of the
network can be identified in order to link not only current concession, but potential future
concessions already identified by the Government of Liberia. This longer network will be
referred to as the “potential concession network” and can be viewed as Figure A7.14 in Annex 7.

This critical “current concession network” comes to a total of some 2,100 kilometers. About
1,000 of these kilometers are primary roads, and the balance of 1,100 kilometers is feeder roads.
About 750 of these kilometers are actually located on concession areas, and would therefore
notionally be the responsibility of the concessionaires themselves to develop, while the balance
of 1,350 kilometers is located off the concession area and would be the responsibility of the
Ministry of Public Works. The “current concession network” is predominantly unpaved. The
more extensive “potential concession network” comes to a total of 3,300 kilometers (of which
1,400 kilometers are on concession sites and the remaining 1,900 pertain to the public network).

The “current concession network” is currently in poor condition, and according to current plans
will not be entirely rehabilitated even at the close of PRS2. Liberia‟s road network was
destroyed during the conflict period. A number of road projects being undertaken during the

38
period of the first Poverty Reduction Strategy (PRS1) are beginning to improve road conditions.
However, their impact on the “current concessions network” is minimal: even once all the PRS1
projects are completed, only 8 percent of the network will be in good condition (Table 8a).
Substantial progress could be made during the period of the second Poverty Reduction Strategy
(PRS2). If all planned projects go ahead, about 45 percent of the “current concessions network”
would be in good condition by the end of this period, which is to say 2015. On the Monrovia to
Mano and Manrovia to Lofa corridors, the concession network would essentially be complete. In
the Buchanan and Greeneville corridors, the situation may end-up better than predicted to the
extent that the key corridor routes run parallel to existing or planned mining railroads and will
likely be rehabilitated and maintained by mining concessionaires as rail service roads. However,
in the southeast only 23 percent of the “concession network” would be completed even as of end
PRS2. At that point in time, some 1,000 kilometers of the “current concession network” would
remain to be rehabilitated, about half of them located in the southeast of the country. In the case
of the “potential concession network” only 36 percent of the network would be in good condition
as of end PRS2 with a further 1,900 kilometers remaining to be rehabilitated (Table 8b).

Table 8: Evolving condition of critical “concession networks”

(a) Current concession network

Total length Percentage of network in good condition Remaining length in

of roads At Peace At close of At close of need of rehabilitation
(kms) Accord PRS1 PRS2 (kms)
Monrovia to Foya 706 0.0 0.8 25.1 5234
Monrovia to Lofa 349 0.0 22.1 64.4 47
Buchanan to Nimba 665 0.0 0.0 54.9 300
Greeneville to Zwedru 376 0.0 0.0 48.4 194
Harper to hinterland 26 0.0 0.0 0.0 26
Total current network 2,122 0.0 3.9 44.7 1,010
Source: Derived from Liberia Infrastructure Projects Database, 2011
Notes: The percentage of the network in good condition considers only those portions of the network that are
located off concession areas and constitute a public responsibility. Regarding roads located on concession areas, it is
assumed that the concessionaire has both the obligation and the interest to maintain them in good condition.

39
(b) Potential concession network

Total length Percentage of network in good condition Remaining length in

of roads (kms) At Peace At close of At close of need of rehabilitation
Accord PRS1 PRS2 (kms)
Monrovia to Foya 914 0.0 0.6 32.4 613
Monrovia to Lofa 457 0.0 18.2 57.9 110
Buchanan to Nimba 831 0.0 2.6 45.2 434
Greeneville to Zwedru 685 0.0 3.2 34.9 424
Harper to hinterland 416 0.0 13.3 6.4 333
Total potential network 3,303 0.0 5.7 36.4 1,914
Source: Derived from Liberia Infrastructure Projects Database, 2011
Notes: The percentage of the network in good condition considers only those portions of the network that are
located off concession areas and constitute a public responsibility. Regarding roads located on concession areas, it is
assumed that the concessionaire has both the obligation and the interest to maintain them in good condition.

The reconstruction of the “current concession network” to a lightly paved standard will cost
some US$555 million (table 9). More than half of these investment needs would be funded
during the PRS2 period with a balance of US$212 million worth of projects remaining at the end
of PRS2, as of 2015. By far the most expensive corridors to reconstruct are Monrovia to Mano
and Buchanan to Nimba corridors, each in well in excess of a hundred million dollars due to the
presence of significant paved road sections. At the other extreme, the cost of reconstructing the
Greeneville and Harper corridors is under US$10 million in each case. In the case of the
“potential concession network” total reconstruction costs would escalate significantly to US$835
million, with more than half of the investment remaining to be made by the end of the PRS2.

Table 9: Spending needs for the critical “concession networks”

(a) Current concession network

Total Investments US$m

length of During During PRS2 Beyond Total needs
roads PRS1 PRS2
(kms)
Monrovia to Mano 839 0.2 71.7 102.7 174.4
Monrovia to Lofa 936 50.2 196.4 92.9 103.5
Buchanan to Nimba 753 - 67.6 101.4 169.0
Greeneville to Zwedru 677 - 7.3 93.4 100.6
Harper to hinterland 591 - - 7.6 7.6
Total network 3,797 50.4 343.0 212.2 555.3
Source: Derived from Liberia Infrastructure Projects Database, 2011

40
 (b) Potential concession network

Total Investments US$m

length of During During PRS2 Beyond Total needs
roads PRS1 PRS2
(kms)
Monrovia to Mano 839 0.2 87.7 124.5 212.2
Monrovia to Lofa 936 50.4 220.1 89.5 130.6
Buchanan to Nimba 753 643.5 68.6 137.8 206.4
Greeneville to Zwedru 677 661.8 10.2 166.4 176.6
Harper to hinterland 591 2.2 3.1 106.3 109.3
Total network 3,797 54.1 389.6 445.6 835.1
Source: Derived from Liberia Infrastructure Projects Database, 2011

The deficient condition of the “current concession network” is already proving to be a binding
constraint on production in the agriculture and especially forestry sector. The delays associated
with completing the reconstruction of the “current concession network” are worrisome. There is
already evidence that deficient road quality is preventing forest concessionaires from evacuating
their timber, and this is one of the reasons why timber production and exports are falling well
short of original projections. In that sense, it looks as though current road investment plans are
not fully synchronized with the award of concessions. And the timing of planned investments
under PRS2 and beyond, may represent unacceptable delays from a concession perspective.

Concessionaires report that MPW is unable to respond to their needs forcing them to engage in
ad hoc rehabilitation on their own initiative. Consultation with concessionaires reveals that these
have been approaching the Ministry of Public Works to request that critical road segments be
upgraded, but the Ministry if unable to respond because budget has not been allocated to these
segments. In the absence of any public intervention, concessionaires are already engaging in ad
hoc and road upgrading to address the most critical bottlenecks on their export routes. These
interventions are undertaken in an uncoordinated and unsupervised fashion, and the lack of any
remuneration for this work means that concessionaires have no incentive to go beyond the bare
minimum needed to safeguard connectivity. Bridges present a particular problem due to the large
number of dilapidated and unsafe crossings. Concessionaires indicate that the repair of bridges
falls beyond their immediate capabilities, particularly given the potential safety concerns
associated with them.

As in the case of ports the current situation therefore represents something of a stalemate. On
the one hand, MPW is responsible for investing but lacks the financial resources and likely the
technical capacity to do so at the requisite scale and speed. On the other hand, the
concessionaires have the financial resources and the technical capacity (machinery and crews),
but due to the lack of remuneration are likely to do so only in a minimalist and likely sub-optimal
manner.

A potential solution is to make use of Public Private Partnerships to upgrade the “current
concession network”; and there is some historic precedent for doing so. Concessionaires report

41
that prior to the war there was a framework of fiscal credits for road investments undertaken by
forestry and agricultural concessionaires. This provided a financial framework for
concessionaires to invest and maintain critical roads under the supervision of MPW, knowing
that the costs incurred would be remunerated. Consultations suggest that there may be openness
on the part of the concessionaires to explore the re-establishment of such a framework today.

There are a number of ways in which this responsibility could be allocated across
concessionaires. Concessionaires could either take responsibility for rehabilitating and/or
maintaining allocated stretches along the corridor, or some kind of association of concessionaires
depending on one specific road access route could be formed. Figure A7.15 in Annex 7
illustrates how the “current concession network” can be broken down into a dozen branches each
of which serves a grouping of between one and six concessions (on average about three). By way
of illustrative simulation, Annex 6 presents a detailed breakdown of each of the 12 shared
corridor branches that have been identified showing which concessionaires would be involved in
each grouping. By sharing responsibility for the roads along each corridor, the burden on each
individual concessionaire is reduced to a fraction of the branch in each case, about one third on
average.

MPW would continue to play a critical role under such a PPP arrangement. MPW would need
to review and approve the road investment plans submitted by the concessionaires to ensure that
they conform to technical standards and are priced at a reasonable cost. Upon completion of the
works, MPW would need to provide certification to the Ministry of Finance that the works had
been completed to the requisite standard as a precondition for authorizing the associated tax
credit. In view of the safety issues associated with the reconstruction of bridges, MPW could also
take direct responsibility for reconstructing these even as concessionaires took responsibility for
the roads.

42
6. Conclusions

Natural concession contracts are playing a large and growing role in Liberia‟s economic future.
These concessions create major demands for infrastructure, which look very large relative to the
rest of the economy. An important distinction is to be made between mining (iron ore)
concessions, which are large enough to develop their own vertically integrated transport and
energy systems, versus agriculture and forestry as well as gold and diamond concessions that
operate on a smaller scale and still depend on the state for provision of road links to the sea.

Liberia‟s existing 30 concession contracts contain various clauses relating to infrastructure

provision. In general, they tend to focus primarily on rail and port infrastructure. Although, in
some ways the greater scope for sharing and leveraging of infrastructure lies in the power and
roads sector. The guiding principle evident in the concession contracts is one of third party
access, although the meaning and stringency of this principle has been evolving over time and is
somewhat unevenly applied across contracts and infrastructures.

As Liberia‟s spatial and sectoral development plans are only now taking shape, it has not so far
been feasible to attempt a closer integration between private and national development plans for
infrastructure. This paper has attempted to explore the potential for synergies and leveraging of
public and private infrastructure platforms in different spheres. The main findings are as follows.

In the power sector, there are significant cost differentials between the power supply options
available to LEC and to the mines. As a result, power supply scenarios where LEC purchases
power from the mines present significant cost savings, which could in principle accrue to both
parties as long as pricing is adequately structured. The lowest cost option entails the
development of a single large scale thermal generation plant sited along Liberia‟s coast, sending
power to all major mining sites and LEC along a national transmission network. A similar
arrangement could be envisaged based on a large scale hydro plant located on the Saint Paul
River or in the Guinean highlands, although the longer lead times and higher risks involved may
make this harder to implement. A large scale plant of the kind envisaged here could potentially
be developed by a special purpose vehicle co-owned by the mining companies or a third party
under a PPP arrangement. Choice of a hydro-based solution over a thermal one could potentially
save at least 22,000 tonnes of carbon dioxide emissions over the life of the mines.

Such a scenario is possible only because the scale of power demand at the mines is large enough
to warrant significant transmission branches to be developed from the planned CLSG regional
transmission backbone at negligible unit costs. The expanded reach of such a transmission
network would also accelerate grid electrification for a number of secondary towns.

In the rail sector, the synergies between concessions and the rest of the economy are more
limited. The sharing of high volume single track mineral railways with other traffic is
complicated by the operational issues involved in maintaining the right flow of traffic through to
recipient vessels at ports and managing numerous crossings of in-bound and out-bound traffic.

43
Moreover, compared to projected mineral freight, Liberia‟s agriculture and forestry freight is tiny
and highly dispersed over millions of hectares, suggesting that road transportation is likely to be
more cost-effective in any case. The only exceptions would be significant forestry operations
located close to mining sites, where there is some historical precedent for occasional (weekly)
forestry trains to run over mining lines. Most important is to ensure that mineral railways do not
interfere with local agriculture and forestry traffic by creating adequate and secure level
crossings. Such traffic may benefit more from the improvement of service roads running parallel
to rail tracks than from the rails themselves.

In the port sector, massive expansion in export traffic can be anticipated as the mining – and to a
lesser extent – agricultural and forestry concessions begin to ramp up their production. Total
export traffic could increase from under 500,000 tonnes per annum today to potentially over 80
millon tonnes per annum by 2030. Though predominantly iron ore, this would include potentially
3 million tonnes per annum of agricultural and forestry exports.

Once iron ore export exceeds a certain threshold the construction of dedicated piers is typically
warranted. If all mining developments go ahead as planned, Liberia will likely need three to four
of these facilities at different points on the coast line in the vicinity of Monrovia, Buchanan and
Greeneville. Some could be developed as an outgrowth from existing ports, but others will
require Greenfield development. A number of the mid-sized mining interests could potentially
share export facilities to avoid further proliferation of piers, although this will require careful
planning and coordination by the Government of Liberia. There are significant scale economies
to be reaped from having larger loading facilities, although the most pronounced economies of
scale arise on the shipping side.

While agriculture and forestry exports will continue to show some concentration at the Freeport
of Monrovia, there is also likely to be significant growth in dry and liquid bulk exports through
Liberia‟s secondary ports: Buchanan, Greeneville and Harper. Agriculture and forestry
concessionaires are reliant on NPA to upgrade and expand these facilities. However, NPA lacks
the resources to do so, and at present there are no projects of this nature envisaged in the PRS2
pipeline. Deficiencies at secondary ports are already becoming a critical bottleneck for forestry
exports, and there are growing demands from concessionaires for their export needs to be met. It
will be critical to find a solution to this problem as soon as possible, either by prioritizing these
upgrades within the public investment framework for PRS2, or by establishing a Public Private
Partnership that will allow these improvements to be expedited. One possible approach would be
for concessionaires themselves to make the investments in return for clearly defined fiscal credits
(or holidays from port charges), or for the engagement of a third party to do on their behalf.

In the road sector, there are some 2,100 kilometers of the road that constitute the critical
“concession network” for transporting the agriculture and forestry products of existing
concessionaires to the sea. Only 750 kilometers of this network is actually on concession land,
with the remaining 1,350 forming part of Liberia‟s public network. Concessionaires are reliant

44
on the state to complete the reconstruction of these roads and ensure their long term
maintenance. While the Government of Liberia has plans to invest in many of these roads the
pace of upgrading is slow relative to the needs of the concessionaires. In fact, even by the end of
PRS2 about half of this “current concession network” will remain in poor condition.

However, the poor condition of these roads and collapse of associated bridges is already today
proving to be a serious bottleneck. Concessionaires have been lodging requests with MPW for
particular road segments to be upgraded, but budgetary resources are not available for this
purpose. As a result, companies are stepping into the breach and making their own ad hoc road
interventions using their own machinery and crews in an uncoordinated and unsupervised
manner.

It is therefore important to find a mechanism for accelerating these investments and harnessing
the financial and technical capacity, as well as the motivation of the concessionaires, to improve
this infrastructure. One possible arrangement that has been tried with some success in the past –
both in Liberia and elsewhere – is for the Government of Liberia to explicitly encourage
concessionaires to invest in these roads in a coordinated and supervised manner in return for
fiscal credits. This type of arrangement deserves further exploration.

Looking ahead there is a need for greater strategic dialogue with concessionaires as a group.
Government interaction with concessionaires to date appears to have been largely bilateral and
focused around legal issues of contract negotiation and compliance monitoring. As a result, there
has been no natural opportunity for broader multilateral discussions to take place between
concessionaires as a (multi-sectoral) group and government agencies responsible for key areas of
policy that are affected by their activities. Such dialogue is needed in order to make progress on
all and any of the key policy areas identified above such as coherent expansion of the national
power system, integrated development of rail corridors, improved road accessibility to rural
areas, coordinated development of iron ore export facilities, and accelerated upgrading of
secondary ports. In each of these areas, there is the potential for win-win solutions if actions
could be coordinated across the concessionaires and the public sector. At present, there does not
appear to be any institutional vehicle for this to take place, preventing Liberia from finding
mutually beneficial solutions that harness the financial muscle and technical capacity of the
concessionaires. Perhaps the time has come to view natural resource concessionaires increasingly
as partners in Liberia‟s broader development process.

45
Bibliography

Brierley, S. 2011 Background analysis of infrastructure coverage in Liberia‟s natural resource

concessions, Mimeo, World Bank, Washington DC

Des Longchamps, H., 2011 Background analysis of railroad development options for Liberia,
Mimeo, World Bank, Washington DC

ESMAP, 2006 Technical and Economic Assessment of Grid, Mini-Grid and Off-Grid
Electrification Technologies, Energy Services Management Advisory Program, World Bank,
Washington DC

ESMAP, 2008 Study of Equipment Prices in the Power Sector, Energy Services Management
Advisory Program, World Bank, Washington DC

GTZ, 2011 Transport Master Plan of Liberia, Capacity Development for the Transport Sector in
Liberia, Monrovia

Madrigal, M. and Z. Romo, 2011 Background analysis of transmission development options for
Liberia, Mimeo, World Bank. Washington DC

MPEA, 2010 Liberia’s Vision for Accelerating Growth: Development Corridors Desk Study,
Ministry of Planning and Economic Affairs, Monrovia

Romo, Z., 2011 Background analysis of power supply development options for Liberia, Mimeo,
World Bank, Washington DC

World Bank, 2010 Options for the Development of Liberia’s Energy Sector: An Energy Sector
Policy Note, Africa Energy Department, World Bank, Washington DC

46
 Annex 1: Existing Concession Contracts
Sector Investor Name Commodity Contract Signing Contract Size
Date Termination (hectares)
Date

Agriculture Firestone Liberia Inc. Rubber Effective Date: 12/31/2041 (3.2) 48154 (4.1.)
04/12/2005 (1.14),
Amended date:
03/31/2008

ADA Commercial Inc. Rice 04/05/2008 03/05/2028 (2) 15,000 (1.30)

Liberia Forest Products Inc. Palm Oil 12/21/2007 2057 ~ 8014

(19,795 acres)
(3.1.c)
LIBINC Oil Palm Inc. Palm Oil 12/31/2007 2057 ~ 13, 967
(34,500 acres)
(3.1.c)
Rubber Cultuur Maatschappij Rubber 08/01/1959 2029 (13) ~ 40, 486
'Amsterdam' and Nordmann (100,000
Rasmann and Company with acres) (2)
respect to the Salala Rubber
Plantation.
Sime Darby Plantation (Liberia) Palm Oil, Rubber 04/30/2009 2072 (63 years) 220,000 (1.12)
Inc. (3.1)

Golden Veroleum (Liberia) Inc. Palm Oil 08/16/2010 65 years from 220,000
date of signing (4.1.d)
(3.1)

Mining PUTU Iron Ore Mining Inc. And Iron Ore 09/02/2010 2035 (25 years) Not found
Mano River Iron Ore Ltd. (3)

China-Union (Hong Kong) Iron Ore 01/19/2009 2034 153,000 acres

Mining Co.,Ltd. And China-
Union Investment (Liberia) Bong
Mines Co., Ltd.

Mittal Steel Hodling A.G. And Iron Ore 08/17/2005 (amended 2030 617 sq km
Mittal Steel (Liberia) Holdings 12/28/2006)
Limited.
AMLIB United Mineral Inc. Gold, Diamonds 03/05/2009 03/05/2034 1443 sq. Km
(Rivercess) in total
exploration
AMLIB United Mineral Inc. Gold, Diamonds 03/05/2009 03/05/2034 area.sq. Km
200
(Grand Gedeh)
AMLIB United Mineral Inc. Gold, Diamonds 03/05/2009 03/05/2034 100 sq km =
(Monserredo) 24,710 acres
BHP Billiton Iron Ore 09/16/2010 2035 2373 sq km
(included
Initial and
Additional
Exploration
areas)

47
 Sector Investor Name Commodity Contract Signing Contract Size
Date Termination (hectares)
Date
Forestry Alpha Logging and Wood Logs 10/06/2006 10/05/2033 119,240
Processing Inc. (Area A)
EJ & J Investment Corporation Logs 10/06/2008 10/05/2033 57,262
(Area B)
GEBLO Inc. (Area T) Logs 09/17/2009 09/16/2034 131,466

International Consultant Capital Logs 09/17/2009 09/16/2034 266,910

(ICC) (Area K)
Liberia Tree and Trading Logs 10/06/2008 10/05/2033 59,374
Company Inc. (Area C)
.
Euro Liberia Logging Company Logs 09/17/2009 09/16/2034 253,670
(Area F)
Atlantic Resources Ltd. (Area P) Logs 09/17/2009 09/16/2034 119,344 (A1)

Akewa Group of Companies Logs 07/21/2010 07/20/2013 5000

(A3)
B + V Timber Company (A6) Logs missing missing 5000

B + V Timber Company (A9) Logs 06/27/2008 06/27/2011 5000

Bargor and Bargor Ent. Inc. (A7) Logs 06/27/2008 06/27/2011 5000

Sun Yeun Corp. (A15) Logs 07/21/2010 07/20/2013 5000

Sun Yeun Corp. (A16) Logs 07/21/2010 07/20/2013 5000

Tarpeh Timber (A2) Logs 06/ 27/2008 06/26/2011 5000

Thunderbird International Logs 10/01/2010 11/30/2012 5000

Liberia Inc. (A8)
Bassa Logging Timber Logs 07/21/2010 07/20/2013 5000
Corporation (A11)
Source: Derived from Liberia Natural Resource Concessions database, 2011composed by the World Bank with
information provided by the Ministry of Foreign Affairs, Liberia and Bureau of Concessions at the Ministry of
Finance, Liberia.

48
 Annex 2: Potential Concession Contracts

Sector Name Resource Location Area_SqKm

Agriculture Kedica Farm Rubber Maryland 51.07
Forestry TSC "A-19" Forestry Grand Cape Mount 42.41
TSC "A-10" Forestry Grand Cape Mount 50.44
TSC "A-4" Forestry Gbarpolu 49.82
TSC "A-17" Forestry Gbarpolu 39.71
TSC "A-18" Forestry Gbarpolu 51.31
TSC "A-12" Forestry Lofa 49.95
TSC "A-13" Forestry Lofa 50.05
TSC "A-14" Forestry Lofa 50.23
TSC "A-1" Forestry Grand Bassa 51.84
TSC "A-20" Forestry Rivercess 53.07
TSC "B-1" Forestry Rivercess 51.14
TSC "B-2" Forestry Rivercess 50.39
TSC "B-3" Forestry Nimba 52.65
TSC "B-4 Forestry Nimba 51.27
TSC "B-5" Forestry Nimba 50.85
TSC "B-6" Forestry Grand Kru 53.26
TSC "B-7" Forestry Grand Gedeh 50.58
TSC "B-8" Forestry Grand Gedeh 52.38
TSC "B-9" Forestry Grand Gedeh 50.39
TSC "B-10" Forestry Grand Gedeh 50.87
TSC "B-11" Forestry Grand Gedeh 50.15
TSC "B-12" Forestry Grand Gedeh 50.10
TSC "B-13" Forestry Grand Gedeh 50.43
TSC "B-14" Forestry Grand Gedeh 50.45
TSC "B-15" Forestry Grand Gedeh 50.95
TSC "B-17" Forestry Grand Gedeh 50.15
TSC "B-18" Forestry Grand Gedeh 51.47
TSC "B-19" Forestry Grand Gedeh 50.64
TSC "B-20" Forestry Grand Gedeh 51.93
TSC "C-1" Forestry River Gee 47.20
TSC "C-2" Forestry River Gee 53.15
TSC "C-3" Forestry River Gee 50.30
TSC "C-4" Forestry River Gee 50.72
TSC "C-5" Forestry River Gee 50.51
TSC "C-6" Forestry Mary Land 49.91
TSC "C-7" Forestry Grand Kru 50.44
TSC "C-8" Forestry Grand Kru 46.38
TSC "C-9" Forestry Grand Gedeh 53.35
TSC "C-10" Forestry Grand Gedeh 49.70

49
 Sector Name Resource Location Area_SqKm
Forestry cont. TSC "C-12" Forestry Rivercess 52.35
TSC "C-13" Forestry Sinoe 50.61
Area "D" Forestry Gbarpolu & Grand Cape Mount 3670.20
Area "H" Forestry Sinoe 2604.48
Area "J" Forestry River Cess 825.92
Area "M" Forestry Gbarpolu 3693.11
Area "G" Forestry Grand Gedeh 1296.74
Area "E" Forestry Nimba 588.34
University Forest Forestry Sinoe & Grand Kru 1222.07
Mining Amlib United Minerals Inc. Diamonds Grand Bassa 200.00
Mano River Resources Inc. (Kpo) Diamonds Gbarpolu 200.00
Belle Resources Inc. Iron Ore Gbarpolu 531.93
Iron Resources Inc. Iron Ore Nimba 496.75
Western Cluster Iron Ore Grand Cape Mount 93.10
Western Cluster Iron Ore Bomi & Gbarpolu 114.42
Western Cluster Iron Ore Grand Cape Mount 63.06
Wologisi Range Iron Ore Lofa 237.85

Source: Derived from Liberia Natural Resource Concessions database, 2011composed by the World Bank with
information provided by the Ministry of Foreign Affairs, Liberia and Bureau of Concessions at the Ministry of
Finance, Liberia.

50
 Annex 3: Detailed provisions of concession contracts on infrastructure

Table 3a: Detailed provisions of concession contracts for port infrastructure

Company Relevant Current Desired Port Option to build new port Option to extend Existing port in
sections Port of of Use in Contract (Yes/No) Contract (Yes/No)
Use
AGRICULTURE

Firestone Liberia Inc. Section 6 Freeport Freeport No specific clause No specific clause

ADA Commercial Inc. Section 5 Unknown Unknown No specific clause No specific clause

Liberia Forest Products Section 4 Freeport Greenville No specific clause No specific clause
Inc. and 5
LIBINC Oil Palm Inc. Section 4 Freeport Buchanan No specific clause No specific clause
and 5
Rubber Cultuur Article 5 c. Freeport Freeport No specific clause No specific clause
Maatschappij 'Amsterdam'
and Nordmann Rasmann
and Company with respect
to the Salala Rubber
Plantation.
Sime Darby Plantation Section 7.2 Unknown Unknown No specific clause No specific clause
(Liberia) Inc.
Golden Veroleum Section 4 Freeport Greenville Yes (4.12) n/a
(Liberia) Inc.
MINING

Putu Iron Ore Mining Inc. Section 6 n/a Newly Yes (6.7.e) n/a
And Mano River Iron Ore constructed
Ltd. Port, to be
decided at
Feasibility
stage
China-Union (Hong Kong) Section 6 n/a Freeport n/a China Union is Required to
Mining Co.,Ltd. And Renovate Port Facility (Freeport)
China-Union Investment and Govt. is required to help
(Liberia) Bong Mines Co., them acquire 2000 acres of land
Ltd. near port for Railway station and
others port facilities. (6.6)

Mittal Steel Holding A.G. Article 4 Buchanan Buchanan n/a AM is required to complete the
And Mittal Steel (Liberia) (2007 Full rehabilitation of Buchanan
Holdings Limited. Amended Iron Ore Port within 3 years of
version) Commencement date (4, 2007)

AMLIB United Mineral Section 6 n/a n/a n/a n/a

Inc. (Rivercess) (Grand
Gedeh) (Monserredo)
BHP Billiton Section 6, n/a Buchanan Yes (see next box) Govt. is required to assist
Section 19 Company in acquiring Land and
sea based operational facilities to
include a cape-size port,
stockpiling and material handling
facilities close to the Railroad
and Buchanan port (19.3)

Source: Constructed by the World Bank with information from Concessionaire contracts and questionnaire.

51
 Table 3b: Detailed provisions of concession contracts for railroad infrastructure
Company Relevant Location Rights and obligations Capacity requirement Third-party access
sections
MINING

Putu Section 6 To be New construction is The Railroad shall be designed Yes- borne at the cost
determined required (6.7) so that it can be expanded on a of the third-party (6.7.
commercially feasible basis to b-c)
carry on a continuing basis twice
as much traffic as is anticipated
initially, but the Company is
under no obligation to build such
capacity.
Arcelor-Mittal Article 4 of Yekepa to Require to fully rehabilitate Not stated Yes- „to the extent that
Amended Buchanan the Railroad from Yekepa the Concessionaire
contract Port to Buchanan (4, 2007) does not utilize its
Infrastructure to full
capacity the
Government shall have
the right to use said
Infrastructure‟ (Article
7, c, b,4, 2007)

BHP Billiton Section 6 Yekepa to New railroad construction is
and 19. Buchanan permitted if company
Port cannot agree third-party
access Railroad capacity
and Company is allowed to
construct new rail spurs to
other parts of Production
Area (19.3.c-d)
Government is required to
„use best endeavors‟ to
provide the Company rail
capacity through Third
parties (19.2.b)
China Union Section 6 Non-Goma Renovation is required to
Mines to existing railroad from Non-
Port Goma mines to port with
right to further extend
railroad to Goma deposit
area (6.)
n/a Yes- if such extra
capacity exists and
third party access does
not unreasonably
interfere with efficient
and economic conduct
of operations (19.3.f)
12 mtpa. (Section 6.6) Yes- as long as
concessionaire states
that it doesn‟t
„unreasonably interfere
with the efficient and
economic conduct of
the operations.‟ (6.7)

Source: Constructed by the World Bank with information from Concessionaire contracts and questionnaire.

52
 Table 3c: Detailed provisions of concession contracts for power infrastructure
Company Relevant Details
sections

MINING
BHP Billiton 19.4,  Feasibility Report should spell out energy generation plans
6.1.c  Any plans to develop hydro power must have the prior approval of the Minister and must
fully utilize the available hydro power at the location
 Company is required to follow appropriate laws related to public safety and protection
of the environment
 All parties acknowledge that the Energy facility constructed may (but company is
under no obligation to) generate more power than is needed by the company and that
the Government has the first right to purchase this „Excess Energy‟ as long as the
government enters into a four year contract or longer, is not the Company has the right to
sell the excess energy to any Third Party.
 The price charged for the excess energy sold to the Government will be agreed between
the parties, plus a return of on equity of 12% per annum of marginal cost of the installed
capacity to generate the excess energy
 Power sold to third parties, the Concessionaire shall have no liability for any franchise,
all sales to third parties will be applicable for taxes or fees related to the sale of
electricity, including sales tax.

Arcelor-Mittal 16.c  Entitled to generate, transmit and use electricity according to Law regulating such use.
(2007)  Electricity purchased from the Government will be charged at fair market pricing
 If Concessionaire produces more water than it utilizes it shall sell the extra production to
the Government and if the Government declines, to other third party users, in each case
at fair market price
China Union 19.3  In accordance with Modified Bid materials the Company is entitled to provide for its
energy needs by i) construct a heavy-oil power plant ii) development of a hydro-electric
power plant at SP1 on the St. Paul‟s river near Hyendi town with the generating capacity
of 130MW and iii) the purchase of 100MW of power from other hydroelectric plants in
the St Paul‟s River basin, leading to a total of 130MW of power as a result of the
activities from ii) and iii).
 The Hydropower plant shall be designed, constructed and operated in compliance with
the National Power Development Plan for the St Paul‟s basin
 Government will provide technical information regarding development plans to
Government technical advisors and shall also enter into additional agreements with the
Government and other third party developers regarding technical, operational,
ownership, and economic matters related to the Hydro-Power plant.
 Company is required to follow appropriate laws related to public safety and protection of
the environment
 If Concessionaire produces more electricity than it utilizes it shall sell the extra
production to the Government, and if the Government decides to decline to another
Third Party, in each case at a price equal to costs plus a reasonable profit margin to be
agreed by the Concessionaire and the Government
 If sold to third parties the Concessionaire shall have no liability for any franchise, license
or similar fees, otherwise imposed by Applicable law, but shall be imposed by tax
applicable to the sale of electricity, including service tax.
Putu 19.3  Feasibility Report should spell out energy generation plans
 Any proposed hydro should have the prior approval of the Minister and may not be
approved unless the optimal energy potential of the river is utilized
 Company is required to follow appropriate laws related to public safety and protection of
the environment
 Power Plant shall be designed to exceed energy needs of Company and excess energy
supplied to third party users within a 10km radius (24/7 access)
 Residential users shall be charged at reasonable rates based upon their ability to pay
 Companies shall be charged at reasonable rates
 Non-profits and Government agencies will be supplied free of charge
 If sold to third parties the Concessionaire shall have no liability for any franchise, license
or similar fees, otherwise imposed by Applicable law, but shall be imposed by tax
applicable to the sale of electricity, including service tax
 The Power Plant shall be designed and constructed so that it can be expanded on a
commercially feasible basis to have twice the electricity generating capacity necessary to
service operations.

53
Company Relevant Details
sections

MINING
AmLib 19.3  Feasibility Report should spell out energy generation plans
 Any proposed hydro should have the prior approval of the Minister and may not be
approved unless the optimal energy potential of the river is utilized
 Excess power shall be sold to the Government of Liberia or any persons, institutions or
entities approved by the Ministry of Lands, Mines and Energy.

AGRICULTURE
Liberia Forest 4.1  Investor has the right to generate, distribute and allocate electricity,
Products  Investor shall reasonable coordinate and consult with relevant agencies of Government
regarding such activities
 Government has first priority to purchase any surplus energy, charge will not exceed the
prevailing market rate
 Investor sells energy to other uses at the generally applicable tariff rate changed by the
Government public utilities
LibInc 4.1  Investor has the right to generate, distribute and allocate electricity,
 Investor shall reasonable coordinate and consult with relevant agencies of Government
regarding such activities
 Government has first priority to purchase any surplus energy, charge will not exceed the
prevailing market rate
 Investor sells energy to other uses at the generally applicable tariff rate changed by the
Government public utilities
ADA rice 4.1  Investor has the right to generate, distribute and allocate electricity,
 Investor shall reasonable coordinate and consult with relevant agencies of Government
regarding such activities
 Government has first priority to purchase any surplus energy, charge will not exceed the
prevailing market rate
 Investor sells energy to other uses at the generally applicable tariff rate changed by the
Government public utilities
Golden 7.2  Investor has the right to generate, distribute and allocate electricity,
Veroleum  Investor shall reasonable coordinate and consult with relevant agencies of Government
regarding such activities
 Investor shall initially supply free metered or unmetered electricity to Employees and
Dependents, to create an incentive to restrict water use water may be metered and an
allowance given to employees to cover reasonable water usage
 All net income will be subject to taxes and duties
 Investor may, but is under no obligation to produce surplus energy to Government or
other third parties
 Government has first right of purchase
 For the Government, Price must be at the cost of production or a price agreed by the
Investor and Government
 For other third parties, the price should be at the generally applicable tariff rate charged
by public utilities, provided this price is higher than cost of production
Sime Darby 7.2  Investor has the right to generate, distribute and allocate electricity,
 Investor shall reasonable coordinate and consult with relevant agencies of Government
regarding such activities
 All net income will be subject to taxes and duties
 Investor may, but is under no obligation to produce surplus energy to Government or
other third parties
 Government has first right of purchase
 For the Government, Price must be at the cost of production or a price agreed by the
Investor and Government
 For other third parties, the price should be at the generally applicable tariff rate charged
by public utilities, provided this price is higher than cost of production
Source: Constructed by the World Bank with information from Concessionaire contracts and questionnaire.

54
 Annex 4: Detailed results of rail development models

Table 4a: Simulated alternative rail options for iron ore deposits in Guinea

Pierre Richard to Pierre Richard to Pierre Richard to

Conakry Monrovia Buchanan
Line capacity 1x1 1x1 1x1
Monthly volumes (tonnes) 2,000,000 2,000,000 2,000,000
Distance (kilometers) 780 298 267
Speed (kilometers per hour) 60 60 60
Journey time (hours) 13.0 4.97 4.45
Loading / unloading time (hours) 2.0 2.0 2.0
Rotation time (hours) 15.0 6.97 6.45
Train capacity (tonnes per train) 6,650 6,650 6,650
Wagons per train set (#) 70 70 70
Wagon payload (tonnes per wagon) 95 95 95
Operations
Rotations per month (#) 301 301 301
Rotations per day (#) 11 11 11
Service length (hours) 6 6 6
Number of services (#) 59 23 20
Number of drivers (#) 71 28 24
Number of locomotives (#) 9 5 4
Size of wagon fleet (#) 490 280 210
Investment costs (US$m) 1,241.1 487.2 431.4
Platform cost 936.0 357.6 320.4
Track setup 234.0 89.4 80.1
Locomotive costs 27.0 15.0 12.0
Wagon costs 44.1 25.2 18.9
Operating costs (US$m) 34.2 13.5 11.9
Track maintenance 7.8 3.0 2.7
Locomotive maintenance 1.4 0.8 0.6
Wagon maintenance 1.3 0.8 0.6
Drivers salaries 0.7 0.3 0.2
Fuel costs 15.5 5.9 5.3
Overheads 7.5 2.9 2.6
Revenues (US$m)
Transportation revenues 93.6 35.8 32.0
Depreciation (US$m)
Building costs 39.0 14.9 13.4
Rolling stock 3.6 2.0 1.5
Profit before tax (US$m) 16.9 5.3 5.2
Rate of return on investment (%) 1.4 1.1 1.2
Levelized unit cost
(US$/tonne-kilometer) 0.0045 0.005 0.005
(US$/tonne) 3.49 1.38 1.22
Source: Des Longchamps, 2011

55
 Table 4b: Simulated alternative rail options for iron ore deposits in Yekepa area

Nimba to Nimba to Nimba to Nimba to

Buchanan Buchanan Buchanan Buchanan
(Rehabilitation) (Greenfield) (Greenfield) (Greenfield)
Single Line Single Line Parallel Tracks Dual Railway
Line capacity 1x1 1x1 2x1 1+1
Monthly volumes (tonnes) 1,500,000 2,000,000 4,000,000 4,000,000
Distance (kilometers) 267 267 267 267
Speed (kilometers per hour) 40 60 60 72
Journey time (hours) 6.7 4.5 4.5 3.7
Loading / unloading time (hours) 2.0 2.0 2.0 2.0
Rotation time (hours) 8.7 6.5 6.5 5.7
Train capacity (tonnes per train) 6,650 6,650 6,650 9,975
Wagons per train set (#) 70 70 70 105
Wagon payload (tonnes per wagon) 95 95 95 95
Operations
Rotations per month (#) 226 301 602 401
Rotations per day (#) 8 11 21 14
Service length (hours) 6. 6 6 6
Number of services (#) 23 20 40 23
Number of drivers (#) 28 24 48 28
Number of locomotives (#) 4 4 8 5
Size of wagon fleet (#) 210 210 420 420
Investment costs (US$m) 175.1 431.4 862.8 629.5
Platform cost 64.1 320.4 640.8 416.5
Track setup 80.1 80.1 160.2 160.2
Locomotive costs 12.0 12.0 24.0 15.0
Wagon costs 18.9 18.9 37.8 37.8
Operating costs (US$m) 10.0 11.9 23.9 19.7
Track maintenance 2.7 2.7 5.3 5.3
Locomotive maintenance 0.6 0.6 1.2 0.8
Wagon maintenance 0.6 0.6 1.1 1.1
Drivers salaries 0.3 0.2 0.5 0.3
Fuel costs 4.0 5.3 10.6 7.1
Overheads 1.9 2.6 5.1 5.1
Revenues (US$m)
Transportation revenues 24.0 32.0 64.1 64.1
Depreciation (US$m)
Building costs 4.8 13.4 26.7 19.2
Rolling stock 1.5 1.5 3.1 2.6
Profit before tax (US$m) 7.7 5.2 10.4 22.5
Rate of return on investment (%) 4.4 1.2 1.2 3.6
Levelized unit cost
(US$/tonne-kilometer) 0.0035 0.0046 0.0046 0.0035
(US$/tonne) 0.95 1.22 1.22 0.93
Source: Des Longchamps, 2011

56
 Table 4c: Simulated alternative rail options for iron ore deposits in Putu

Putu to Buchanan Putu to Greeneville

Line capacity 1x1 1x1
Monthly volumes (tonnes) 1,500,000 1,500,000
Distance (kilometers) 212 123
Speed (kilometers per hour) 60 60
Journey time (hours) 3.53 2.05
Loading / unloading time (hours) 2 2
Rotation time (hours) 5.53 4.05
Train capacity (tonnes per train) 6,650 6,650
Wagons per train set (#) 70 70
Wagon payload (tonnes per wagon) 95 95
Operations
Rotations per month (#) 226 226
Rotations per day (#) 8 8
Service length (hours) 6 6
Number of services (#) 12 7
Number of drivers (#) 15 9
Number of locomotives (#) 3 2
Size of wagon fleet (#) 140 140
Investment costs (US$m) 339.6 203.1
Platform cost 254.4 147.6
Track setup 63.6 36.9
Locomotive costs 9.0 6.0
Wagon costs 12.6 12.6
Operating costs (US$m) 7.8 4.7
Track maintenance 2.1 1.2
Locomotive maintenance 0.5 0.3
Wagon maintenance 0.4 0.4
Drivers salaries 0.2 0.1
Fuel costs 3.2 1.8
Overheads 1.5 0.9
Revenues (US$m)
Transportation revenues 19.1 11.1
Depreciation (US$m)
Building costs 10.6 6.2
Rolling stock 1.1 0.9
Profit before tax (US$m) (0.4) (0.7)
Rate of return on investment (%) (0.1) (0.4)
Levelized unit cost
(US$/tonne-kilometer) 0.0056 0.0058
(US$/tonne) 1.19 0.71
Source: Des Longchamps, 2011

57
 Table 4d: Simulated alternative rail options for iron ore deposits in Wologizi

Wologizi to Monrovia Wologizi to Monrovia Wologizi to Monrovia

(Direct) (via Bong) (via Tubmanburg)
Line capacity 1x1 1x1 1x1
Monthly volumes (tonnes) 1,500,000 1,500,000 1,500,000
Distance (kilometers) 223 236 250
Speed (kilometers per hour) 60 60 60
Journey time (hours) 3.72 3.93 4.17
Loading / unloading time (hours) 2 2 2
Rotation time (hours) 5.72 5.93 6.17
Train capacity (tonnes per train) 6,650 6,650 6,650
Wagons per train set (#) 70 70 70
Wagon payload (tonnes per wagon) 95 95 95
Operations
Rotations per month (#) 226 226 226
Rotations per day (#) 8 8 8
Service length (hours) 6 7 6
Number of services (#) 12 11 14
Number of drivers (#) 15 14 17
Number of locomotives (#) 3 3 3
Size of wagon fleet (#) 140 140 210
Investment costs (US$m) 356.1 284.4 342.9
Platform cost 267.6 192.0 240.0
Track setup 66.9 70.8 75.0
Locomotive costs 9.0 9.0 9.0
Wagon costs 12.6 12.6 18.9
Operating costs (US$m) 8.1 8.5 9.2
Track maintenance 2.2 2.4 2.5
Locomotive maintenance 0.5 0.5 0.5
Wagon maintenance 0.4 0.4 0.6
Drivers salaries 0.1 0.1 0.2
Fuel costs 3.3 3.5 3.7
Overheads 1.6 1.7 1.8
Revenues (US$m)
Transportation revenues 20.1 21.2 22.5
Depreciation (US$m)
Building costs 11.2 8.8 10.5
Rolling stock 1.1 1.1 1.4
Profit before tax (US$m) (0.3) 2.9 1.4
Rate of return on investment (%) -0.1 1.0 0.4
Levelized unit cost
(US$/tonne-kilometer) 0.0056 0.0047 0.0051
(US$/tonne) 1.24 1.11 1.27
Source: Des Longchamps, 2011

58
 Annex 5: Detailed Results of Ports Model

Table A5.1: Illustrative port costing model for iron ore facilities (based on Buchanan)

Annual production (mt pa) 5,000,000 10,000,000 25,000,000 50,000,000 100,000,000

Capacity needs
Monthly production (mt pm) 416,667 833,333 2,083,333 4,166,667 8,333,333
Vessel capacity (mt) 70,000 120,000 180,000 400,000 400,000
Time taken to accumulate load (days) 5.0 4.3 2.6 2.9 1.4
Vessel calls per year 71 83 139 125 250
Time ship spends in port (hours) 19.5 17.0 24.5 27.0 27.0
Single berth occupancy ratio (%) 16 16 39 39 77
Ship transport cost (US$/mt) 50 40 30 20 20
Berthing requirements
Length of entry channel (m) 2,400 2,400 nap. nap. nap.
Width of entry channel (m) 210 210 nap. nap. nap.
Natural draft of entry channel (m) 10 10.0 nap. nap. nap.
Vessel beam (m) 32 40 40 56 56
Vessel draft (m) 13 15 18 23 23
Desired draft (m) 15 17 20 25 25
Shortfall in desired draft (m) 5 7 nap. nap. nap.
Vessel overall length (m) 230 270 300 380 380
Length of berth required (m) 260 305 2,500 2,500 2,500
Unit cost of quay investment (US$/m) 80,000 80,000 65,000 65,000 65,000
Volume of dredging required (m3 pa) 226,800 327,600 nap. nap. nap.
Unit cost of dredging (US$/m3) 8 8 nap. nap. nap.
Storage requirements
Safety margin 5 5 5 5 5
Storage capacity required (m3) 350,000 600,000 900,000 2,000,000 2,000,000
Land storage ratio (has/mtpa) 0.5 0.5 0.5 0.5 0.5
Land area required (has) 175,000 300,000 450,000 1,000,000 1,000,000
Unit cost of land (US$/ha/pa) 10 10 10 10 10
Loading requirements
Working hours of port (hpd) 24 24 24 24 24
Rate of loading required (mt ph) 4,000 8,000 8,000 16,000 16,000
Time taken to load ship (hours) 18 15 23 25 25
Capital cost of loading machines (US$) 150,000,000 175,000,000 175,000,000 220,000,000 700,000,000
Unit cost of loading (US$/mt) 1.1 1.2 1.2 1.5 0.9

59
Annual production (mt pa) 5,000,000 10,000,000 25,000,000 50,000,000 100,000,000
Investment costs
Navigational aides (US$) 250,000 250,000 250,000 250,000 250,000
Quay or pier (US$) 20,792,000 24,408,000 162,500,000 162,500,000 162,500,000
Loading equipment (US$) 150,000,000 175,000,000 175,000,000 220,000,000 700,000,000
Total investment costs (US$) 150,250,000 175,250,000 337,500,000 382,500,000 862,500,000
Operating costs
Dredging (US$ pa) 1,814,400 2,620,800 nap. nap. nap.
Renting storage land (US$pa) 1,750,000 3,000,000 4,500,000 10,000,000 10,000,000
Loading (US$ pa) 5,500,000 12,000,000 30,000,000 75,000,000 90,000,000
Total costs (US$ pa) 9,064,400 17,620,800 34,500,000 85,000,000 100,000,000
Shipping cost (US$ pa) 250,000,000 400,000,000 750,000,000 1,000,000,000 2,000,000,000
Levelized unit cost (20 yrs)
Iron ore (US$/mt) 3.32 2.64 2.06 2.08 1.43

60
 Table A5.2: Illustrative port costing model for dry and liquid bulk facilities
(based on Buchanan)

Annual production (mt pa) 100,000 500,000 1,000,000 5,000,000

Capacity needs
Monthly production (mt pm) 8,333 41,667 83,333 416,667
Vessel capacity (mt) 20,000 20,000 20,000 20,000
Time taken to accumulate load (days) 72 14 7 1
Vessel calls per year 5 25 50 250
Time ship spends in port (hours) 28 28 19 19
Single berth occupancy ratio (%) 3.2 16.0 22.1 110.4
Ship transport cost (US$/mt) 80 80 80 80
Berthing requirements
Length of entry channel (m) 2,400 2,400 2,400 2,400
Width of entry channel (m) 210 210 210 210
Natural draft of entry channel (m) 10 10 10 10
Vessel beam (m) 30 30 30 30
Vessel draft (m) 10 10 10 10
Desired draft (m) 12 12 12 12
Shortfall in desired draft (m) 2 2 2 2
Vessel overall length (m) 150 150 150 150
Length of berth required (m) 170 170 170 170
Unit cost of quay investment (US$/m) 40,000 40,000 40,000 40,000
Volume of dredging required (m3 pa) 75,600 75,600 75,600 75,600
Unit cost of dredging (US$/m3) 8 8 8 8
Storage requirements
Safety margin 2 2 2 2
Unit cost of land (US$/ha pa) 10 10 10 10
(a) Timber
Storage capacity required (m3) 40,000 40,000 40,000 40,000
Land storage ratio (has/mtpa) 0.1 0.1 0.1 0.1
Land area required (has) 4,000 4,000 4,000 4,000
(b) Rubber/Palm oil
Storage capacity required (m3) 40,000 40,000 40,000 40,000
Land storage ratio (has/mtpa) 0.5 0.5 0.5 0.5
Land area required (has) 20,000 20,000 20,000 20,000
Loading requirements
Working hours of port (hpd) 24 24 24 24
Rate of loading required (mt ph) 1,000 1,000 1,500 1,500
Time taken to load ship (hours) 20 20 13 13
(a) Timber
Capital cost of loading machines (US$) 675,000 675,000 675,000 675,000
Unit cost of loading (US$/mt) 2.75 2.75 2.75 2.75
(b) Rubber/Palm oil
Capital cost of loading machines (US$) 3,000,000 3,000,000 3,000,000 3,000,000
Unit cost of loading (US$/mt) 0.55 0.55 0.55 0.55

61
Annual production (mt pa) 100,000 500,000 1,000,000 5,000,000
Investment costs
Navigational aides (US$) 250,000 250,000 250,000 250,000
Quay (US$) 6,780,000 6,780,000 6,780,000 6,780,000
(a) Timber
Loading equipment (US$) 675,000 675,000 675,000 675,000
Total investment costs (US$) 6,299,000 6,299,000 6,299,000 6,299,000
(b) Rubber/ Palm oil
Loading equipment (US$) 3,000,000 3,000,000 3,000,000 3,000,000
Total investment costs (US$) 4,406,000 4,406,000 4,406,000 4,406,000
Operating costs
Cost of dredging (US$ pa) 604,800 604,800 604,800 604,800
(a) Timber
Renting storage land (US$pa) 320,000 320,000 320,000 320,000
Loading (US$ pa) 220,000 1,100,000 2,200,000 11,000,000
Total operating costs (US$ pa) 1,023,840 1,903,840 3,003,840 11,803,840
Total shipping cost (US$ pa) 6,400,000 32,000,000 64,000,000 320,000,000
(b) Rubber/ Palm oil
Renting storage land (US$pa) 80,000 80,000 80,000 80,000
Loading (US$ pa) 11,000 55,000 110,000 550,000
Total operating costs (US$ pa) 211,960 255,960 310,960 750,960
Total shipping cost (US$ pa) 1,600,000 8,000,000 16,000,000 80,000,000
Levelized unit cost (20 years)
Timber (US$/mt) 16.73 5.55 4.15 3.03
Rubber/palmoil (US$/mt) 21.61 4.76 2.66 0.97

62
 Annex 6: Detailed Results of Road Corridor Simulation

Destination Port
No. of Corridor

Distance Based
Total Distance

Responsibility
Saving from

for Corridor
Concession

Percentage

Percentage
on Sharing
from Port
Members

Adjusted
Corridor
Number

Sharing
1 ADA-LAP Rice 6 Monrovia 351 106 39 55
1 B+V Timber Company 6 Monrovia 139 12 12 6
1 Bassa Timber Corporation 6 Monrovia 131 11 11 6
1 Bea Mountain Mining Corp. 6 Monrovia 109 7 8 3
1 Sime Darby 6 Monrovia 114 15 17 8
1 Sun Yeun Corporation 6 Monrovia 158 28 23 15
1 Thunderbird Int‟l Liberia Inc. 6 Monrovia 139 13 12 7
2 B+V Timber Company 3 Monrovia 136 24 20 26
2 Bargor and Bargor Ent. Inc 3 Monrovia 141 29 23 31
2 Sime Darby 3 Monrovia 151 40 31 43
3 Todi 1 Monrovia 53 44 86 100
4 Alpha Logging Inc. 5 Monrovia 245 143 72 61
4 Amlib United Minerals 5 Monrovia 53 8 19 4
4 China Union Iron Ore Ltd (HK) 5 Monrovia 101 37 44 16
4 Firestone 5 Monrovia 74 14 24 6
4 Salala 5 Monrovia 107 31 36 13
5 BHP Billiton Limited 1 Monrovia 68 63 100 100
6 Akewa Group Companies 2 Buchanan 76 34 52 54
6 Tarpeh Timber Corporation 2 Buchanan 70 29 48 46
7 Amlib United Minerals 4 Buchanan 128 22 19 9
7 ArcerlorMittal 4 Buchanan 269 92 37 40
7 BHP Billiton Limited 4 Buchanan 235 61 28 26
7 Cocopa 4 Buchanan 212 57 30 25
8 International Consultant Capital 2 Buchanan 218 163 90 90
8 Liberian Agriculture Company 2 Buchanan 45 19 50 10
9 Amlib United Minerals 4 Buchanan 96 29 33 30
9 EJ&J Investment Corporation 4 Buchanan 79 20 29 21
9 Libbing Company 4 Buchanan 33 12 41 13
9 Liberia Tree & Trading Company 4 Buchanan 102 34 37 35
10 Amlib United Minerals 4 Greeneville 208 98 56 44
10 Euro Liberia Logging 4 Greeneville 167 47 33 21
10 Geblo Logging Incorporated 4 Greeneville 123 27 26 12
10 Piom(Silverstar/Mano JV) 4 Greeneville 173 52 35 23
11 Atlantic Resources Limited 1 Greeneville 114 72 99 100
12 Cavalla/Firestone 1 Harper 28 26 100 100

63
Annex 7: Maps

64
Figure A7.1: Footprint of Liberia’s existing and potential concession areas

Source: Barra, 2011 GIS Analysis

65
Figure A7.2: Overlap between concession areas and road feeder networks

Source: Barra, 2011 GIS Analysis

66
Figure A7.3: Possible future evolution of Liberia’s power transmission grid

Source: Barra, 2011 GIS Analysis

67
Figure A7.4: Liberia’s future power infrastructure under scenario of self-supply by mines

Source: Barra, 2011 GIS Analysis

68
Figure A7.5: Liberia’s future power infrastructure under scenario where mines buy power from LEC

Source: Barra, 2011 GIS Analysis

69
Figure A7.6: Liberia’s future power infrastructure under scenario where mines individually sell power to LEC

Source: Barra, 2011 GIS Analysis

70
Figure A7.7: Liberia’s future power infrastructure under scenario where mines collectively sell power to LEC

Source: Barra, 2011 GIS Analysis

71
Figure A7.8: Liberia’s pre-existing mineral rail lines

Source: Barra, 2011 GIS Analysis

72
Figure A7.9: Alternative rail export routes for Simandou iron ore deposits in Guinea

Source: Barra, 2011 GIS Analysis

73
Figure A7.10: Alternative rail development scenarios for the Yekepa to Buchanan corridor

Source: Barra, 2011 GIS Analysis

74
Figure A7.11: Alternative rail export routes for the Putu iron ore deposit

Source: Barra, 2011 GIS Analysis

75
Figure A7.12: Alternative rail export routes for the Wologizi iron ore deposit

Source: Barra, 2011 GIS Analysis

76
Figure A7.13: Liberia’s critical “current concession network”

Source: Barra, 2011 GIS Analysis

77
Figure A7.14: Liberia’s critical “potential concession network”

Source: Barra, 2011 GIS Analysis

78
Figure A7.15: Sub-division of “current concession network” into shared branches

Source: Barra, 2011 GIS Analysis

79