Government digs deep to reform mining
Mining is a sensitive sector in Sierra Leone– diamonds in paticular helped fuel the 11-year conflict. The mining sector accounts for 90 per cent of exports and 20 per cent of GDP, according to World Bank statistics. The government now wants the sector to sparkle for all Sierra Leoneans.
Dredger, Sierra Rutile Ltd. 2008.
© Debra Percival
“We are the second largest producer of rutile in the world (and the number one producer of raw rutile). We have big deposits of bauxite and iron ore. We have diamonds scattered all over the country and we are mining the source rock for diamonds, kimberlite and gold,” explained Alhaji Abubakar Jallon, Minister of Mineral Resources, former Executive Director of the National Diamond Company and former geophysicist.
With registered diamond exports worth US$125.3M in 2006, the gem is the country’s number one export without counting its unregistered trade. Altogether the mining sector provides a livelihood for 250,000 people or 14 per cent of the labour force, but the government feels that mining could bring in more for Sierra Leoneans.
The past fiscal regime has not attracted a large number of quality investments, say World Bank officials. Other drawbacks are a lack of transparency in granting mineral rights, large numbers of unlicensed, informal artisanal miners, as well as smuggling of gold and diamonds and the environmental and social impacts on local communities. According to World Bank figures, just 2 per cent of fiscal revenues came from the sector in 2000.
A World Bank technical assistance project (US$6M via the International Development Association) is expected to be approved in July 2008 to look at ways of making the industry more transparent in the current regime, increasing mining revenues for the government and improving governance support for Extractive Industry Transparency Initiative (EITI)*, which the country committed to in 2006. This will back up steps to regulate the sector so far including the 2003 Core Mineral Policy and collection of geodata.
Minister Jallon wants companies to do more to build up infrastructure around mines: “If you are mining somewhere, give us an electrical plant that will serve both you and the people of the area. A recent mining forum held in Conakry, Guinea, sponsored by the World Bank and African Development Bank (ADB), reached the consensus that we should link mining with infrastructure.”
And there should be no repeat of the old type of agreement, the Minister told us. One example is Delcros, an iron mining company that when operating for 20 years built a railway and port to export. When the mine closed, the port and railway were redundant: “This is the sort of situation that should not occur anymore,” he said.
“If we are going to allow anyone now to develop the mine – because a lot of people are coming to see us and there are other deposits like more than 100 million tonnes (tons or tonnes?) of bauxite as well as the remnants of the iron ore – we are encouraging them to form a consortium between those who want to mine iron ore and those that want to mine bauxite, as they have to use the same railway and the same ports,” said Jallon.
He added: “The cabinet has empowered me set up a sub-committee to look at all the agreements of the big mining companies, and in the process we will inject that into the new agreements between us and the mining companies.”
“The worst thing we have discovered is that people come here and get a mining exploration licence which they take to the stock market and raise money on our heads. They say it’s legal but we want to change this,” continued Jallon.
Alfred Carew, executive secretary of the National Forum on Human Rights and chair of the National Advocacy Coalition on Extraction, told us that he believes Internet companies are doing the same thing. He’s worried about the social costs of mining, such as the employment of child stonecrackers, prostitution, disease in mining areas and the environmental fallout.
The Minister spoke about the current ‘free-for-all’ in the diamond district of Kono and related smuggling: “We try our best to organise it in a structured way. In most cases you have a dealer who helps the landowner and workers get machinery. You then have to sell to this man because he’s the one who helped you. This man will give the diamonds to an exporter who has a licence and is the only one with the authority to export.To get the licence you have to pay US $40,000. We believe that smuggling takes place in between this but we can’t prove it.”
He said that the country subscribes to the Kimberley Process, which prohibits sale of diamonds from the world’s conflict zones: “I sign a Kimberley certificate for anybody who is exporting. But you have to go to the destination to get an end picture. Somebody has to be there however to check if the diamonds arrived. There’s heavy administration involved.”
* The EITI involves the regular publication of revenues paid to governments by all materials, oil, gas and mining companies.
Trailblazing – Sierra Rutile Ltd.
A €24M loan grant in part from ‘SYSMIN’, the EC’s former fund to assist the mining sector with the remainder from the European Development Fund (EDF) has enabled Sierra Rutile Ltd. to start up again in the Bonthe District in the South-west. Rutile (titanium dioxide) is mainly exported to Europe, North America, Brazil, Japan and Russia where it is used in paint pigment, with the higher grades going to manufacture welding rods.
The grant for the re-start was passed on to the government, which then channelled the monies in the form of a commercial loan to the company. Bob Lloyd, the company’s managing director describes it as: “a significant milestone in the re-birth of Sierra Leone at the end of the conflict.” With projected production this year of 180,000 tonnes, the company is already on target to beat last year’s 140,000-tonne figure.
The extraction process leaves large bodies of water. These can be used for other productive purposes, explained Jean-Pierre Milard, who is an EU-funded technical assistant to the Ministry. And since the process is not toxic, there are many possible ventures. Bob Lloyd explained that Sierra Rutile Ltd. has set up a foundation which is currently funding a pilot agriculture reclamation on one of the ‘lakes’. Others include aquaculture and the pristine white sand left beached by mining is triggering thoughts of tourism.
It seems the company has many more years in business. Bob Lloyd showed The Courier a map pinpointing the reserves found around Bonthe. And exploration is also ongoing along the coastline.
The capital and interest on the loan amounting to €45M are to be repaid to the government of Sierra Leone 2008–2013, starting with an initial €716,000 in June this year.The EC is expected to have a say in how these monies are used. Bob Lloyd said that relations with the local population were good; officials meet regularly with the eight paramount chiefs of the chiefdoms surrounding the mine.
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