AMN - Sierra Leone adds to African mining uncertainty – comment by Yolanda Torrisi

As Africa’s mining industry awaits imminent release of a new mining charter in its most advanced jurisdiction, South Africa, Sierra Leone has added to the overall uncertainty with a review of mining law and mining contracts appearing certain. A spokesperson for the West African country’s president has told Reuters that he intends following through with campaign promises in this regard to ensure the nation benefits from its natural resources.

Sierra Leone joins the growing list of African countries heading down this path. It includes Mali, Tanzania, Zambia and the Democratic Republic of Congo, with a number of others making similar noises.

According to official figures, diamonds, iron ore and mineral sands constitute more than 80% of Sierra Leone's exports but generate only 15% of its total revenues.

In an address earlier in May, newly elected President Julius Maada Bio denounced what he said was an “extreme lack of transparency” in the sector under his predecessor Ernest Bai Koroma. He also called for an immediate review of both the 2009 Mines and Minerals Act and the individual licences of mining companies.

The President’s press secretary told Reuters: "We have to look at these agreements, and we have to look at the laws that govern them. There have been many issues in terms of how concessions were given to mining companies and treatment of workers that people deemed unfair."

He said: "We have to remember that mining companies are here for business, to make profit at the end of the day. At the same time, as a government, it's our job to ensure that they display proper corporate social responsibility and comply with international best practices."

Sounds rather familiar as it is similar to other claims made by governments around the continent in recent times.

Companies operating in Sierra Leone include China's Shandong Iron and Steel which owns the Tonkolili iron ore project while BSG Resources’ controlled diamond miner Koidu Holdings Ltd is a supplier to Tiffany and Co. Sierra Minerals, which is owned by Dutch industrial group Vimetco NV, runs the country's only bauxite mine and Australia's Iluka Resources mines mineral sands via a subsidiary.

It will be a difficult task for the country to gain more revenue from mining while trying to attract new investment after a long slump in commodity prices stalled mining and exploration projects and sent some companies to the wire. The last thing companies will want to hear is moves to increase government revenue.

The President’s plans are believed to include new legislation that would consolidate all mining revenues into a single account from which funds could be allocated to health and education projects in mining communities.

However, at the same time, mining companies may welcome more certainty regarding legislation and proper enforcement of regulations, which could lead to better investment conditions. It is, therefore, a fine line that the government must tread.

Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the continent. Contact:yolanda@yolandatorrisi.com