Overview
Sierra Leone is well known for its vast endowment in minerals, which include diamonds, rutile, bauxite, gold, iron ore, limonite, platinum, chromite, coltan, tantalite, columbite, and zircon, as well as promising petroleum potential. In the 1990s, the 11-year civil war funded with revenue from the minerals sector engulfed the country, resulting in widespread killing, the destruction of infrastructure, and a severe contraction in the economy. The sector was also greatly affected by the dual shock of the drop in iron ore prices and the Ebola epidemic in 2014.
Mining has been the mainstay of the economy since independence, and the government has remained heavily dependent on mineral resources over the years. In 2021, mining contributed 0.6 percent to GDP, 67 percent of export earnings, 4.1 percent to total government revenues, and 3 percent to employment. The government established the National Mineral Agency under the Ministry of Mines and Mineral Resources in 2012 with a mandate to implement clear policies and regulations, enhance transparency and accountability, and ensure mineral resources support economic and social development. Sierra Leone became a member of the Kimberley Process in 2003 to protect the legitimate trade in rough diamonds, and in 2007 enacted the Diamond Cutting and Polishing Act to issue licenses entitling the holder to buy, deal in, export, import as well as cut, polish, crush, and set diamonds for trade. In 2006, Sierra Leone joined the Extractive Industry Transparency Initiative (EITI) to improve governance and revenue management in the extractive sector. The government undertook a geophysical survey and collected data on the type, quantity, and location of minerals in the country in 2019.
In Sierra Leone, mineral licenses are available for five types of rights: reconnaissance, exploration, artisanal, small-scale mining, and large-scale mining - with artisanal activities reserved primarily for Sierra Leonean nationals. Mining fees and renewals are subject to annual charges, and royalties are assessed on the market value of the extracted minerals. To commence mining, an environmental impact assessment license valid for 12 months must be secured from the Environmental Protection Agency, and firms must provide a healthy and safe working environment for workers.
In addition to the Public Financial Management Act of 2016 and the Extractive Industries Revenue Act of 2018, Parliament enacted the Mines and Mineral Development Act of 2022, which requires companies to obtain the Free Prior and Informed Consent (FPIC) from local communities and landowners before starting or continuing projects, as well as the Environment Protection Act of 2022 to improve transparency and accountability in the minerals sector.
Leading Sub-sectors
Mining activities require machinery and equipment, construction, and other services, which present the best prospects for U.S. companies. Companies with expertise in geological and exploration services, feasibility and engineering services, equipment and plant maintenance and repair, and spare parts for mining equipment can also find opportunities in Sierra Leone.
Mining consumables, including explosives, tires, and lubricants, are also in high demand. Construction services are critical, especially for exploration companies to set up and commence work in the country’s largely undeveloped interior.
Opportunities
Investment opportunities exist for U.S. companies using the most advanced technology to access and export minerals. As mentioned above, land issues can complicate the commercial viability of direct primary production. Numerous concessions have been frozen or renegotiated by the Government of Sierra Leone, and even when official paperwork seems to be in order, community opposition to mining projects may render them nonviable. Exportation of mining and construction equipment and services presents an opportunity for U.S. firms producing or involved in the marketing of such equipment. Demand for technical and engineering services is likely to increase, particularly with the release of the report of the airborne geophysical survey. With more investors expected to enter this sector, construction and the demand for construction materials will increase.
Resources
Sierra Leone Ministry of Mines and Mineral Resources
Website
Email: info@mommr.gov.sl
Telephone: (+232) 30 749247 / (+232) 78 537069