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(Updated with Addendum, 4/8/2009)
China Union and the Government of the Republic of Liberia have recently signed a 25-year agreement to mine and explore for iron ore in the Bong Range of Liberia. The deal, which has been given to the Liberian House of Representatives for review and ratification, is reported to be the largest ever foreign investment in Liberia. Revenue Watch and Columbia University have prepared an assessment of the final contract, highlighting issues that warrant close scrutiny by Liberia's legislature. A key feature of the contract is that it represents a deviation from the original bid terms—a concession by the Government of Liberia to China Union in acknowledgement of the impact of the economic crisis. The extent of the deviation cannot be known, however, without access to the original bid materials and several annexes to the agreement that were not made available—either to RWI, Columbia, or the Liberian House of Representatives. Citing their lack of access to these crucial documents, the plenary of the House of Representatives halted proceedings on the contract as of February 27 until such time as those key documents and annexes are provided. Among the documents requested for review are elements of the original bid materials, which would be necessary to evaluate the extent to which the signed agreement deviates from the China Union's initial bid.
In this analysis, RWI and Columbia University have focused on the fiscal framework established by the contract, citing a number of areas that demand further scrutiny. While we cannot say with certainty, given the incomplete information made available to us, the contract appears to depart materially from the strengthened fiscal framework that Liberia has sought to develop in recent years through legislative drafting and precedent-setting contract negotiations. While some of these departures may be warranted by the economic crisis, a full analysis is necessary to insure that Liberia gets full value from these resources over the long term.
UPDATE: Our report on the China Union/Liberia deal now includes an addendum with commentary on Section 6 of the contract, which was previously unavailable and covers the proposed fiscal regime.
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