Forging ahead in Liberia

MONROVIA, LIBERIA

Just outside of the capital, tucked away in a compound for ArcelorMittal employees, Joe Mathews gathers with friends and co-workers for dinner in his home away from home. His Liberian cook prepares authentic Indian cuisine.

His quarters are posh enough, but the noisy residence – powered 24 hours a day by generators – pales in comparison with his home in Greenbrier, a world away in Chesapeake.

After living in Mumbai and the United States, Mathews spends most of his time these days working in Liberia. The CEO for ArcelorMittal Liberia heads a $1.5 billion mining venture in the West African nation, Liberia’s biggest foreign investment since 14 years of civil war ended in 2003.

When Mathews talks about the world’s largest steel company’s commitment to this developing nation, his energy and optimism can fill two rooms. But as the most powerful private economic entity in the country, he said, the pressure on ArcelorMittal to deliver more is a constant.

“Managing the expectations is a real challenge,” Mathews said. “Liberia is a great place to apply our 'Transforming Tomorrow’ motto. Our presence will create a demand for products and services that, in turn, should attract many other needed investments.”

Over dinner, he’s attentive to guests, making sure wine glasses are full and people have plenty to eat. He shares stories about the Liberian people, such as the men who created oversize carts to haul goods from village to village.

The men traveled miles taking turns pushing loads down a derelict railway line. Some had created thriving businesses. But ArcelorMittal’s plans meant that they could no longer use the tracks. So the company offered them cash or shiny red wheelbarrows as it refurbished more than 150 miles of railroad from the coastal port of Buchanan north to the mining town of Yekepa, on the border where Liberia, Guinea and Côte d’Ivoire meet.

“Small investments here are just as important as large ones,” he said.

Before making his way to Liberia, Mathews – who has a graduate degree in business management and a background in metallurgical engineering – worked at other steel companies for 20 years.

“I worked in Detroit, Pittsburgh and Indiana,” he said. “I liked what I was doing even though the industry was not doing very well.”

Then a 1999 phone call from evangelist and Virginia Beach businessman Pat Robertson lured him to Liberia.

“I thought, 'Umm, why would he be calling me?’” Mathews recalled. “It turns out that through some mutual contacts he wanted to talk to me about a business idea. He’s a very interesting character. I spent almost three hours talking to him, and he has the ability to make you feel like you’re the exact person he needs.”

The conversation with Robertson evolved from starting a dot -com business to a venture in Liberia – gold exploration. Freedom Gold Ltd. was then a Robertson-owned company based at the headquarters of his Christian Broadcasting Network in Virginia Beach.

Mathews, who would go on to serve as the gold mining company’s vice president of finance and administration, said when he told his wife that Robertson wanted him to go to Liberia, he said: “I grew up in India. How difficult could it be?”

He was soon to find out.

“You know the difference between India and America. There’s at least that much difference between Liberia and India,” Mathews said. “The war had left the country without electricity, running water and land-line telephones. However, the climate and the weather remind me of where my grandparents lived in India, Kerala . It’s the red dirt and palm trees.”

Despite the semblance of home, Liberia is thousands of miles from his wife and three daughters in Chesapeake.

At the start, Mathews worked from Virginia Beach, making several trips a year to Liberia to set up an exploration program in the southeast, in Sinoe County.

Liberia’s civil war appeared over in 1997 with the election of one-time warlord Charles Taylor as president, but fighting broke out again in 1999 as a new rebel group emerged in the northern end of the country. The fighting intensified in 2002 and came south in 2003.

“We tried to batten down our hatches and continue working, but we had to close down our camps” and leave in 2003, Mathews said. “That was the big war.”

After that, Mathews said, he worked on different projects before then-Mittal Steel contacted him in 2005 about a Liberian mining venture because of his experience with steel and his time in the country. He started working for Mittal on Jan. 1, 2006.

Living apart from his family is probably the toughest part.

In the first couple of years, while the mining agreement was hashed out and Mathews met with contractors in the United States, he was able to be home every four to six weeks.

“In 2008, that’s when things really started to pick up,” said Mathews, 56. “I have not had a chance to get to Chesapeake more than once every two months. It’s not the best situation.

“Unfortunately, I don’t think Liberia is quite ready for family yet.”

Mittal merged with another steel giant, Arcelor, shortly after Mathews started the job. The Luxembourg-based company operates in more than 60 countries in Europe, Asia, Africa and America and employs more than 300,000 people.

In 2008, it reported revenue of nearly $125 billion and produced 103.3 million tons of steel, about 10 percent of global steel output.

ArcelorMittal came to Liberia four years ago as part of an effort to increase its iron ore production to two-thirds of its steel output. It has pledged to spend an estimated $1.5 billion over 25 years rebuilding properties that once belonged to the old Liberian American Swedish Mining Co., or LAMCO.

Yekepa , the seat of ArcelorMittal’s iron ore concession, is surrounded by mineral-rich hills and thick jungle. LAMCO built a mining community there in the 1960s and ran the high-grade ore mine until Liberia’s civil war began in 1989.

The plan is to mine the iron ore around Yekepa, then transport it by rail to the port city of Buchanan , where it will be exported to Arcelor-Mittal steel mills around the world.

In the deal Liberia brokered, the government owns 30 percent of the mining company and will receive a 4.5 percent royalty fee. ArcelorMittal also promised to spend $3 million annually for community development projects in the three counties where it operates.

The company received the green light in May 2007 to rehabilitate Yekepa and since has worked to reconstruct hospitals, clinics and schools.

In Buchanan, the third-largest city in Liberia, workers spent months renovating more than 120 homes abandoned by LAMCO. The city lies on Waterhouse Bay, along the Atlantic Ocean, and was once a thriving port.

Locals hope it will be again.

Liberian Augustus Miles took his 3-year-old son, Robert, to ArcelorMittal’s refurbished hospital not far from the port. He said his son had been coughing up blood and was suffering from throat and chest pains. Miles, who was waiting for the staff to do an X-ray on his son, said he can appreciate the work the company has done in the community so far. Liberians benefit when people live and work there, Miles said.

“It costs more, but this hospital is all right for us,” he said. “I just want him well.”

Liberians have survived conflict and repression almost continuously since the government was overthrown in 1980 and again in 1989. During the civil wars, an estimated 300,000 people were killed and 1.5 million displaced out of a population of 3.5 million.

The U.S. Department of State says the civil wars have left the country decimated and in economic ruin. Liberia is slowly re-entering the global economy but still suffers from 85 percent unemployment. With no national electricity grid, most households and businesses depend on generators, leaving most of life subject to fluctuating fuel prices.

Liberia remains one of the poorest and least-developed countries in the world, with per-capita gross domestic product of $195 per year. The life expectancy is 35.

Yet t hings are changing for the better.

Under the rule of President Ellen Johnson Sirleaf , Africa’s “Iron Lady,” Liberia has become the “fastest improving African nation,” according to the latest Ibrahim Index of African Governance from the Mo Ibrahim Foundation . The index evaluates sub-Saharan African nations in such areas as security, rule of law, transparency and corruption, human rights, and economic and human development.

Liberia’s security situation is now stable, though still dependent on United Nations peacekeepers. The economy grew 8 percent last year and is expected to continue to expand because embargoes on timber and diamonds were lifted recently.

“President Ellen Johnson Sirleaf’s efforts gave us the confidence to say, yes, this project is worth taking and spending the money to build our infrastructure, rehab the rails, and reconstruct the ports and to build a power plant along with a mining and process facility,” Mathews said.

Earlier in 2009, some 2,800 people worked on the railway. The company hoped to create a total of 3,500 direct and 20,000 indirect jobs as a result of its investment.

In March, however, ArcelorMittal announced that it needed to make “temporary adjustments to protect its long-term goals.” Like many companies, ArcelorMittal has been affected by the downturn in the financial markets and the credit crunch, it said. As a result, the company has cut steel production by nearly 50 percent this year.

For the remainder of 2009, it is scaling back its activities in Liberia. Officials said they expect to retain about 1,200 Liberian jobs as well as reduce the number of expatriates in the work force by at least 80 percent, accelerating the transition of some essential positions to Liberians.

The hope had been to start shipping ore by year’s end, Mathews said, but it now looks to be two years off.

Besides the global recession, other challenges loom for ArcelorMittal Liberia.

The country’s lack of infrastructure is a problem. Human resources also are limited.

“There’s a lack of skilled labor,” Mathews said. “It’s not like we can just advertise and get people locally. There’s a lack of supporting institutions.

“The nation also has very little businesses or industry. Everybody is geared towards government or NGO (non-governmental organization) work. And to change that mind-set is challenging.”

Meanwhile, the market price for iron ore, as for other commodities, has slumped in the wake of the financial crisis, reducing the potential payout Liberia can generate from its minerals.

Despite recent losses – ArcelorMittal lost $2.63 billion in the first quarter – Marcus S. Wleh , its manager of corporate responsibility, recently announced that the company would fund two projects for about $1.5 million in the mining communities.

“This is the first round of funding; things are slow. But we’re committed to improving quality of life for Liberians,” said Wleh, explaining that a committee selects the community projects to fund with input from the Liberian government.

The company also is working on a public-private partnership with West African Power Pool, World Bank and the government to develop a transmission line that would connect Monrovia to Côte d’Ivoire – formerly called Ivory Coast.

Besides improving the infrastructure, the company will continue to support hospitals and educational facilities where it operates.

Even if the economy picks up and ArcelorMittal forges ahead, there’s still the concern that expectations about its contributions to Liberia will outpace what the company stands to gain from mining iron ore.

Eugene Shannon, Liberia’s Minister for Lands, Mines and Energy, said the country has high hopes for the steel company.

“But the truth is we are going to be as compromising as possible,” Shannon said. “In a downturn, you cannot be as hard on people as you can be when things are normal.”

Even without his family, Mathews is committed for the long term.

In a place where most people earn less than a dollar a day, small investments go far, he said, showing photos of Liberians cheering along the newly repaired railway as the train passed.

“We once built a road to a remote exploration site. As this road opened, so did access to many villages along the way,” Mathews said. “We were constantly being thanked by the village elders. In one village, we were presented with a white goat and five white chickens. My Liberian colleagues explained that white is the ultimate symbol of gratitude.”

Marquita Smith, (757) 222-5149, marquita.smith@pilotonline.com