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Last Updated: Tuesday, 3 October 2006, 08:45 GMT 09:45 UK
Iron ore deal 'bad for Liberia'
Making steel
Mittal employs more than 300,000 workers in 60 countries
The world's largest steel company, Mittal, has been accused of setting up a state within a state in one of Africa's poorest countries, Liberia.

Lobby group Global Witness say a $900m deal to mine iron ore allows Mittal to opt out of human rights and environmental laws and is inequitable.

Liberia is trying to recover from 14 years of conflict, which left the country in ruins.

The contract is being reviewed by Liberia's new, elected government.

Global Witness calls the deal a missed opportunity for Liberia.

Mittal declined to comment on the report.

Strong position

BBC developing world correspondent David Loyn says Liberia's economy will undoubtedly be strengthened and the contract will provide jobs.

Ellen Johnson-Sirleaf
President Johnson-Sirleaf is reviewing all contracts signed by the former government
But Global Witness say the contract means Mittal will be unaccountable to the democratic government and not give it high enough returns.

Mittal is planning to almost double in size in the next 25 years and half of the ore needed for that expansion is set to come from Liberia.

Global Witness Director Patrick Alley told the BBC's Network Africa programme that this put Liberia in a strong position to negotiate a better deal.

Under the contract, Mittal will be able to opt out of Liberian laws governing human rights or environmental standards and they will pay no tax for five years, in a deal which appears to be renewable by them.

When they do finally pay tax, it will be at a price set by them.

"There is no guarantee for the Liberian government of how much money they will actually receive," Mr Alley said.

The deal was signed last year by Liberia's interim power-sharing government, set up to end the long civil war.

President Ellen Johnson-Sirleaf, who took office in January, has said she will review all contracts signed by the interim government.

Global Witness says the first round of negotiations in September were inconclusive and are set to resume later this month.


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