Sierre Leone to review mining contracts

Sierre Leone to review mining contracts

1st November 2007

by Reuters

Sierra Leone's government will review all mining contracts in the West African state to try to clean up corruption and cheating and maximise benefits for the nation, Minister of Mines Alhaji Abubakarr Jalloh said.

"We're not going to allow our minerals to be a curse to us," Jalloh told Reuters in an interview this week.

"We are going to review all mining agreements, big or small."

Mining is the mainstay of the economy in Sierra Leone, one of the world's poorest countries where illegal "blood" diamonds financed a 1991-2002 civil war.

The mining sector accounts for 90 percent of the country's exports. A number of international companies operate there, mining diamonds, rutile and bauxite.

Jalloh said the government did not intend to disrupt the operations of legitimate investors, but wanted to root out corruption and stop illegal mining by firms which only had exploration permits.

"We just want to make sure that we are getting the best for our deposits," said Jalloh, a geophysicist who was appointed to the cabinet by President Ernest Bai Koroma after the latter won a tense election last month in the former British colony.

The two biggest direct investors in Sierra Leone are mining companies -- UK-listed Titanium Resources Group, which mines rutile and bauxite, and Koidu Holdings SA, which is a kimberlite diamond operation.

Koidu Holdings is 65 percent owned by global private resource group BSG Resources Ltd and 35 percent by Magma Diamond Resources, a subsidiary of Geneva-based Beny Steinmetz Group.

Explaining that the government would check mining licences and their status, Jalloh said he wanted to see a greater government role to guarantee national interests in the mining sector, which was dominated by foreign operators.

"We lack the capital and know-how and therefore we have to rely on people from abroad. But sometimes they just corner you and if you don't do what they want they will leave," he said.

He said the state should seek to form joint ventures.

"Government will sit on the board. We can't stop existing mines from operating but we want to sit down with them and improve," he added.

Effective management of mineral resources is seen by analysts as crucial to the country's stability. The fight for control of the diamond areas in the east was a major factor behind the 11-year civil war.

CRACKDOWN ON GRAFT

Jalloh promised a crackdown on graft and illicit mining. "Some people say they are exploring but they are mining. If they are mining (without a licence) they are cheating and I'm going to challenge that," he said.

He added that corruption among government civil servants in the mining sector would also be targeted.

"It is happening. People give fake contracts and inflated contracts and they don't perform," Jalloh said.

Under a scheme sponsored by the British government's development arm, foreign experts are helping the Sierra Leone administration to overhaul its mining sector.

Sierra Leone was being encouraged to sign up to the UK-led Extractive Industries Transparency Initiative (EITI), which would ensure government and mining companies publish all payments that pass between them.

Jalloh said the country needed to broaden its mining activities to look beyond precious gems, whose extraction provides work for up to 300,000 artisanal miners.

"There has been too much focus on diamonds in this country. They are easy to access and easy to smuggle and it's quick cash, but it's not the only thing," he said.

"We are expecting a lot from these other big mines - the first industrial goldmine is coming, and we hope for more from bauxite and iron ore," he added.