Sierra Leone’s new president will follow through with campaign promises to review mining contracts and consider changes to the law that would ensure the West African nation benefits from its natural resources, his spokesman told Reuters..
As commodities recover from a collapse in 2015 cash-strapped governments in Mali, Tanzania, Zambia and Democratic Republic of Congo have demanded a bigger share of the proceeds by increasing taxes and in some cases banning exports.
Extractives – mostly diamonds, iron ore and mineral sands – constitute more than 80% of Sierra Leone’s exports but generate only 15% of its total revenues, according to official figures.
In an address to lawmakers earlier this month, President Julius Maada Bio, who was elected last month, denounced what he said was an “extreme lack of transparency” in the sector under his predecessor Ernest Bai Koroma.
He called for an immediate review of both the 2009 Mines and Minerals Act and the individual licenses of mining companies.
“We have to look at these agreements, and we have to look at the laws that govern them,” Yusuf Keketoma Sandi, the president’s press secretary, told Reuters on Thursday.
“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.
Major companies operating in Sierra Leone include China’s Shandong Iron and Steel which owns the Tonkolili iron ore project. BSG Resources-controlled diamond miner Koidu Holdings Ltd is a supplier to Tiffany and Co.
Sierra Minerals, owned by Dutch industrial group Vimetco NV, runs the country’s only bauxite mine. Australia’s Iluka Resources mines mineral sands via a subsidiary.
Those companies either declined to speak about the pending reviews or did not immediately respond to a request for comment.
“We have to remember that mining companies are here for business, to make profit at the end of the day,” Sandi said. “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.”
Democratic Republic of Congo’s unilateral move to increase mining taxes and deny mining companies the right to short-term getout clauses enraged mining executives, but it also has the potential to stir up resource nationalism across the continent.
Mali’s government said in March that it was negotiating with mining companies to draft a new mining code but would move to implement a new law unilaterally if no compromise is reached.
However, Sierra Leone faces the tricky task of squeezing more revenues from the extractives sector while attracting new investment after a years-long slump in commodities prices stalled projects and bankrupted some companies.
Its economy contracted by more than 20% in 2015 at the height of the Ebola epidemic and Bio promised voters a national renaissance.
His plans 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.
Sierra Leone mining law expert Sonkita Conteh told Reuters that cleaning up legislation and properly enforcing regulations should draw the investors the country desperately needs.
“We’ve been mining in Sierra Leone for the past 80 years, and it’s very hard to point to the tangible differences,” it has made to people’s livelihoods, he said.
“This is the time to step back and really look with a fresh eye at all of these activities and see whether the mining is of benefit to these communities rather than a few select people and companies.”