13/10/06 ( Financial Times) LOndon  -  The Liberian government of Ellen Johnson-Sirleaf has secured its first significant foreign investment, weeks before it hopes to complete the renegotiation of a controversial iron-ore concession signed by her predecessor with Mittal Steel.

Joseph Boakai, Liberia's vice-president, told the Financial Times this week that an agreement had been reached with Nardina Resources, a London-listed company shortly to be renamed Equatorial Bio-fuels, to develop the country's palm-oil industry.

Initially targeting the international market in palm-oil for foodstuffs, the industry may expand into refining palm-oil for biofuels. Michael Frayne, Nardina's chairman, said the company planned to invest between $500m and $750m over 20 years. After capital costs had been recouped - projected to take six or seven years - the company expects to pay Liberia $1bn (£540m) in tax.

Mr Boakai, who was in London on a week-long tour to court foreign investors, said the deal could be swiftly followed by concessions in agriculture, mining and fishing - with the prospect of investment in gold and diamonds once United Nations sanctions were lifted.

"We are moving from emergency to development," he said, adding that investors "are starting to develop confidence" in a country that was until recently gripped by a civil war that claimed 250,000 lives between 1989 and 2003.

The palm-oil development is forecast to create at least 60,000 jobs. An "outgrower scheme" will provide start-up assistance and guaranteed markets to smallholders. "It creates immediate employment opportunities for ex-combatants and also provides some economic development for communities," Mr Boakai said.

Since taking power in January, the government has been reviewing all contracts signed by the unelected interim administration. Among them is a $900m iron-ore concession agreed with Mittal Steel, then majority-owned by Lakshmi Mittal, which this summer merged with Arcelor to become Arcelor Mittal, the world's largest steel company.

Liberian negotiators are currently in New York hammering out a revised deal with Mittal. The 15m tonnes of iron ore Mittal hopes to extract annually in Liberia are part of its strategy to become 64 per cent self-sufficient by extracting 98m tonnes globally by 2010.

Mr Boakai expected the renegotiation to be completed in November. Any settlement would have to be "in the best interests of the Liberian people" and let the government retain control over state infrastructure.

A spokesman for the company said it was confident its investment would be of considerable benefit to the people of Liberia. "Not only do we plan to invest $900m over 25 years, we are committed to making extensive social investments to benefit the communities where the mines will operate. We are currently involved in constructive discussions with the government of Liberia and are confident agreement will be reached to the satisfaction of both parties."