On the eve of the recent visit of coastal West African leaders to the White House, it was announced that a letter of intent had been signed between Guma Africa Group and the Government of Liberia to develop the Liberty Corridor. The details of that agreement remain confidential. However, important questions still need to be asked about what role the US Government played in the negotiations. Those questions will force consideration of favoritism in US commercial diplomacy. They will also demand evaluations of the conduct of US ambassadors, a senior advisor to the American President, and a reported candidate for US Assistant Secretary of State for African Affairs. That is because there are concerns that the US Government has endorsed a commercial project that will benefit Chinese and South African individuals and entities who undermine US national security and foreign policy interests, as outlined in the America First Foreign Policy Agenda endorsed by the Trump Administration. For these reasons, the US Congress should seek to address the numerous questions being raised about the US Government taking sides in this commercial dispute.
What is the Liberty Corridor?
The Liberty Corridor is a heavy-duty railroad that will connect the Nimba District of Guinea with a new deepwater port in Didia, Liberia. The new corridor will be developed on top of the existing Yekepa-Buchanan Railway Corridor. Its development will not only promote regional economic integration in West Africa. It will allow Ivanhoe Atlantic to export iron ore from its Kon Kweni Iron Ore Project through Liberia.
This deal is opposed by a Luxembourg-based multinational steel and mining company known as ArcelorMittal (AML). Back in 2005, AML entered into a Mineral Development Agreement with the Government of Guinea. One of the provisions of that agreement granted AML a monopoly over the Yekepa-Buchanan Railway. Since then, AML has invested a huge sum of money in expanding its operations and upgrading the infrastructure along that corridor. The Liberty Corridor will bring an end to that monopoly and potentially reduce the value of future phases of the project for AML shareholders.
The project, however, has been championed by US-based Ivanhoe Atlantic. In 2019, Ivanhoe Atlantic (then known as High Power Exploration) acquired the rights for the Nimba Iron Ore Mine. The Kon Kweni Iron Ore Project (KKIOP) represents one of the highest-grade iron ore deposits that has yet to be developed in the world. According to Ivanhoe Atlantic, there are over 700 million tons of Direct Ship Ore (DSO) in the ground. Over 200 tons of that is high-grade ore. The Liberty Corridor provides a mechanism for Ivanhoe Atlantic to get that ore to market on favorable terms.
This could prove to be a game-changer for Ivanhoe Atlantic and the US mining sector. There are other undeveloped mineral deposits in the Southern Guinean Highlands. One is the Simandou Iron Ore Mine, which is estimated to have 1.5 billion tons of ore. Rio Tinto holds the rights to that mine. To export its ore, Rio Tinto is supporting the development of a 670 km railway from Simandou to a new deepwater port in Forécariah, Guinea. The problem is that the Simandou Iron Ore Mine is a highly controversial project. In 2023, Rio Tinto settled a Foreign Corrupt Practices Act case with the US Securities and Exchange Commission related to the project. However, there are lingering concerns about the influential role being played by Chinese companies in the project.
The Liberty Corridor is seen as a valuable alternative to the Trans-Guinean Corridor for the KKIOP. Industry experts suggest that Ivanhoe Atlantic would have struggled to realize the full potential of the Nimba Iron Ore Mine if Robert Friedland had chosen to stand and fight with Rio Tinto, Winning Consortium Simandou, and the Government of Guinea for fair and open access to the Trans-Guinean Corridor. Ivanhoe Atlantic simply lacked sufficient leverage to achieve the desired outcome.
The US Government has publicly endorsed the Liberty Corridor. The US Embassy in Monrovia publicly declared that the US Government welcomed “the signing of a concession and access agreement between US-owned Ivanhoe Atlantic and the Government of Liberia” on the eve of the recent visit of West African leaders to the White House.
Issues for the US Congress
This project raises several issues that the US Congress may want to consider. Two of the most important involve the appearance of favoritism and insufficient due diligence in US commercial diplomacy.
Concerning allegations of favoritism, private claims have been made that the letter of intent was only signed between the Guma Africa Group and the Government of Liberia on the eve of the White House visit, allegedly through coercive actions undertaken by the US Government behind the scenes.
According to individuals with knowledge of the negotiations, that diplomatic intervention was spearheaded by the US Ambassador to Liberia, Mark Toner, with the support of Senior Africa Bureau Official Troy Fitrell and Senior Africa Advisor to the President of the United States, Massad Boulos. Those unattributable remarks demand critical scrutiny from the US Congress. If true, then US commercial advocacy not only favored one company (i.e., Ivanhoe Atlantic) over at least one other (i.e., AML). It favored a company whose chairman of the board is J. Peter Pham, a former US Special Envoy who is reportedly a candidate for Assistant Secretary of State for African Affairs. It is therefore not surprising that concerns are being voiced about the appearance of impropriety.
Concerning insufficient due diligence, private claims have been made that the US Government failed to take reasonable steps to ensure that the Liberty Corridor fully aligned with US national security and foreign policy interests before endorsing the deal. Those allegations revolve around the claim that the project will benefit Chinese and South African individuals and entities who undermine US national security and foreign policy interests as outlined in the America First Foreign Policy Agenda embraced by the Trump Administration:
- People’s Republic of China: Through Ivanhoe Capital, there is an indirect association between Ivanhoe Atlantic and Ivanhoe Mines, and the two largest shareholders of Ivanhoe Mines are Chinese companies, CITIC Metal and Zijin Mining Group. Both have close ties to the Chinese Communist Party.
- South Africa: Through Guma Africa Group, there is a direct association between Ivanhoe Atlantic and Robert Gumede, a South African who has reportedly been accused of corruption. Among other things, the South African Special Investigating Unit recently sought to recoup over 20 million dollars from one of his companies for a “fraudulent and overpriced personal protective equipment (PPE) contract awarded during the COVID-19 pandemic.” Through the Liberty Corridor, there is also an indirect association between Ivanhoe Atlantic and Thelo Group. According to local media, TheloDB is in the running to be the independent operator of the new railway. The Chairman of the Thelo Group is Ronnie Ntuli, a South African, who has been linked to controversial Broad-Based Black Economic Empowerment (BBBEE) projects. Among other things, the South African Parliament once blocked the sale of a 30% stake in ASA Metals to a set of politically connected BBBEE partners “at the expense of impoverished communities.” Ntuli was reportedly one of those partners. To compound matters, Julius Malema (Economic Freedom Fighters) was linked to the scheme.
The Liberty Corridor, therefore, raises important questions for the American people:
- Concerning favoritism, one has to wonder whether the US Government coerced the Government of Liberia into signing the letter of intent with Ivanhoe Atlantic. Did Boulos, Fitrell, and Toner have any conflicts of interest that may have improperly influenced US commercial diplomacy (e.g., business connections; post-retirement employment interests)? Did Ambassador Pham ever make improper use of government connections and private information that was gained during his time in office for personal gain in the private sector?
- Regarding insufficient due diligence, one has to wonder whether the Liberty Corridor is well aligned with the strategic goals of countering major corruption, mitigating the Chinese Communist Party’s predatory practices, rewarding performance and merit in US diplomacy, and resetting bilateral relations between South Africa and the United States.
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Currently, the American people do not have the answers to any of those questions. That makes it difficult to make sense of the private claims and counterclaims about the deal. The US Congress could put an end to all of this political theater by simply holding a public hearing on the matter and setting the record straight once and for all.
Of course, that raises a follow-up question: How should the White House respond to a Congressional hearing on the matter? Assuming everything was actually above board with the negotiations, the White House might want to consider welcoming such oversight by the US Congress. A public hearing would not only provide the Trump Administration with a platform to put to bed insinuations about Boulos, Fitrell, Pham, and Toner, such as those made in a recent article in Africa is a Country. It would provide the Trump Administration with a platform to make the case to the American people in support of its approach to US commercial diplomacy. That includes its goal of putting an end to the global stranglehold that companies linked to the Chinese Communist Party have on access to critical minerals.
Image: Facebook |Ivanhoe Mines Ltd.
Michael Walsh is a Non-Resident Senior Fellow in the Foreign Policy Research Institute’s Africa Program.