Mineral Riches and Deficiencies

Mineral Resources

In 2008, Liberia's 3rd largest export category was Precious Stones and Metals. About $21 million USD were exported from Liberia that year. In the 1st quarter of 2010, gold production increased by 10% year-over-year to just over 5400 ounces, between $5 million USD and $6 million USD in value. Diamonds increased by about 220% from the same period a year prior to 4920 carats. Both are good signs because even the first quarter revenues would keep this as the second largest export category. These amounts are small by world standards, but even small outputs are meaningful in a post-conflict society.[1]

The United Nations had placed a ban on diamond exports from Liberia from 2001 to 2007. Diamonds had previously fueled the civil conflicts that plagued the country in the 1990s. Charles Taylor, the deposed president, has been charged by The UN with waging war on Sierra Leone to get at that countries mineral resources, particularly diamonds. Since then, Liberia has joined The Kimberly Process, an international scheme to prevent diamonds from funding war. Despite the position of the precious gems in past wars, they remain a great asset to Liberia and a proven source of wealth.[2]

Less glamorous minerals are also very important to Liberia, particularly iron ore. I recently spoke with a man who works for a Chinese iron firm and got great insight into the current and future investment. His company expects to employ 3000 people in Liberia when the mine is fully operational, 700 of those will be Chinese. It has already invested $23 million USD to secure rights to exploit reserves and must spend another 40 million before operations begin. The firm is still just prepping the logistics to start operations. Liberia lacks basic infrastructure that minerals firms need to operate efficiently, so the firms must plan well to make their operations successful.

Both BHP Billiton and ArcelorMittal, two of the largest basic metals firms in the world, have committed to $3 billion USD and $1 billion USD investments respectively (Liberia's current GDP is less than $900 million USD). Liberian ore is expected to go to Europe and China primarily. Each firm has people on the ground and I've even seen job postings from the firms in country (few private sector firms list jobs in newspapers here. Most postings are for aid organizations). Yet, because of limited infrastructure, the firms are some time from full sizable production.[3, 4]

Much of the investment will go toward infrastructure. Liberia needs enhanced rail and seaports to effectively move ore from the country's interior to the sea. The Central Bank of Liberia also cites electricity and water infrastructure as primary impediments to growth in extractive industries. These mining deals should help to remedy the problem.

Liberia's major industries are often very dangerous for employees. Not only are they places where people die, but the work is hard and worker's bodies are greatly strained as a result of the work. This is often true for mining and harvesting the agricultural cash crops rubber and cocoa. It also poses a problem for the government of Liberia to protect workers in industries that can easily exploit them while it must push for economic growth. The balance is tough but a challenge that Liberia must face.

1. Liberian Central Bank Economical Financial Bulletin: 1st Quarter 2010
2. Kimberley Process: Liberia enters the diamond trade
   
3. ArcelorMittal Liberia
4. $3.5bn push into Liberia's iron ore lode