Mining in Sierra Leone
The mining industry of Sierra Leone accounted for 4.5 percent of the country's GDP in 2007 and minerals made up 79 percent of total export revenue with diamonds accounting for 46 percent of export revenue in 2008. The main minerals mined in Sierra Leone are diamonds, rutile, bauxite, gold, iron and limonite.
Mining in Sierra Leone has been seen as one of the key factors for instability in the country and one of the reasons for the country's recent civil war. Traditionally, benefits from diamond mining have ended up with private companies and corrupt officials rather than the country's government and people.
The Ministry of Mineral Resources is responsible for the management of the country's minerals sector and the Mines and Minerals Act 2009. Sierra Leone is a candidate for the Extraction Industries Transparency Initiative. GoSL publishes data on licenses and payments by mining companies on their Online Repository established by Revenue Development Foundation, the repository was launched in January 2012.
History
Organised mining began in the 1920s with bauxite first being recorded in 1920 along the Falaba to Waia road. Diamonds were found in the early 1930s, from 1934 to 1956 the Sierra Leone Selection Trust held the monopoly for mining, prospecting for and marketing diamonds throughout Sierra Leone. The Consolidated African Selection Trust Ltd, which owned mining operation around West Africa, provided the initial capital for the SLST.The monopoly was originally given for 99 years but in 1955 the SLST gave up rights to alluvial deposits outside its lease area. This allowed artisan and small scale mining of alluvial deposits, and by 1965 there had been a large movement from agricultural work to working these deposits. In 1970 a joint SLST and government organisation was formed called the National Diamond Mining Corporation.
Before the start of the Civil War in 1991 250,000 people made a living in the mining and quarrying sector with direct and indirect employment accounting for 14% of the country's total labour force. The mineral wealth of Sierra Leone, especially in diamonds, became a key factors in its instability and the outbreak of Civil War.
Resource curse
Despite being among the top-ten diamond-producing nations, the mining sector faces many challenges, including weak laws and smuggling issues. Sierra Leone is losing large revenue that could have been earned from taxes and licensing agreements. Those revenues could be reinvested for example in the healthcare sector to help those people whose health is affected by mining operations.Research suggests that 50% of Sierra Leone’s diamonds were smuggled annually. Sierra Leone’s mining performance is extremely poor as compared to Botswana, where mining contributes approximately 38% to their GDP.
Rutile
Sierra Leone is ranked as one of the top five producers of rutile, a titanium ore, used in paint pigment and welding rod coatings. The government issued leases for mining rutile are held by Sierra Rutile Limited which is owned by Titanium Resources Group which is owned by European and U.S investors. These leases cover 580 km2 of land where there are 19 identified deposits of rutile. In 2009 the Government of Sierra Leone received Le 1,854 million in royalties from rutile mining.In 2009 production decreased by 19.07 percent to 63,860 tons, and exports were worth US$ 35,920,300.
On 8 December 2016, Sierra Rutile Limited, Sierra Leone's largest rutile producer, was acquired by Australian mineral sands miner Iluka Resources.
Gold
Gold mining in Sierra Leone consisted of small scale operation exploiting alluvial deposits. After the end of the Sierra Leone Civil War exploration of gold grew and by 2013 to 2015 new modern mines are expected to be in production. In 2010 Cluff Gold, a British company, found gold deposits in the rocks of the southern Kangari hills and is planning to build a mechanised mine to extract it.In 2009 production levels of gold fell by 17.71 percent to 5060 Troy Ounces from 6150 Troy Ounces in 2008. This was due to a drop in mining activity in the second half of the year and was despite a rise in the price of gold on the global market. The drop may also have been due to increased smuggling as the Government of Sierra Leone had raised the duty to higher than the neighboring countries. The increase in the value of gold meant gold exports were worth 15.73 percent more at US$4,764,000 in 2009 compared to US$4,116,400 in 2008.
Diamonds
Overview
Diamonds are found in about a quarter of Sierra Leone in the south-east and east of the country, with the diamond fields covering 7,700 square miles. The main production areas are concentrated around the drainage areas of rivers in the Kono, Kenema and Bo Districts. In the Kono, Kenema, Bo and Pujehun Districts there are 1,700 artisanal mining licenses in operation.In 2009 the government recorded exports of 400,480 carats of diamonds; this included 143,620 carats of industrial diamonds and 256,860 of gem diamonds. This was an increase of 7.86 percent on the previous year which was a result of legislative changes, in the form of a new mining law, to enable fees and royalties to be collected more effectively and an increase in the amount of diamond mining. Diamond exports were worth US$78,373,900 in 2009, accounting for 59 percent of the country's exports. The drop in the value of diamonds on the world market meant that the value of diamond exports decreased by 20.68 percent in 2009 compared to 2008.
The largest diamond found in Sierra Leone, and the third largest diamond in the world, was a 969.8-carat rough diamond. It was found in 1972 and named the An-al of Sierra Leone.
Sierra Leone should have been one of the world’s richest countries, being blessed with resources, including gold and diamonds. However, it remains one of the world’s poorest countries, ranking 203 out of 206 countries by World Development Report. Revenue from mining in Sierra Leone has not been redistributed to benefit the larger population. The mining industry contributed 4.5% towards its gross domestic product in 2007. Economic development is low due to poor management of resources and unrealized potential revenue.
Historical context
Diamonds were first discovered in Sierra Leone in the 1930s by British colonialists, with significant mining efforts beginning in 1935. Sierra Leonean diamonds are renowned for their high quality, and retained a high value on the market. The colonial government granted exclusive mining rights to the Sierra Leone Selection Trust. The De Beers Diamond Consortium, however, quickly took control of the mining trade shortly after and established offices in Freetown, as well as in mining districts around the country. Under colonial rule, mining efforts were largely controlled and overseen by De Beers and the British government, and profits were generally contained to British and European stakeholders. Growth of the mining industry contributed to the development of mining communities in bettering employment, infrastructure, and social services, though the communities saw little material gains in their own lives.Despite the control that De Beers had over the industry at the time, many other actors, both internal and external, realized they could accrue a great deal of profits through illicit mining and smuggling of diamonds out of the country. Very quickly, the illegal diamond trade expanded, and a strong pipeline was established between Sierra Leone and Liberia as traders – many of whom were Lebanese – carried diamonds across the border. These illicit mining efforts let local communities realize more of the gains from trading diamonds. In an effort to gain greater control over the diamond industry, the Sierra Leonean government enacted legislation in 1956 that allowed for legal marketing of diamond production within the nation. In doing so, the government granted a monopoly to the De Beers Group, making it a Central Selling Organization. However, this only furthered the illicit mining industry, as legitimate diamond exports continued to decline throughout the next several decades.
Seven years after gaining independence, Siaka Stevens was elected Prime Minister of Sierra Leone in 1968. He is regarded as the first person to officially make diamond mining and trading a tool of political power, and encouraged illicit mining under his rule. He nationalized the diamond mines, including those run by De Beers, and created the National Diamond Mining Company. The NDMC gave Stevens and his right-hand man, Jamil Mohammed, unprecedented wealth and power through profits gained in the mining industry. Centralization of the mines and subsequent profits through the 1970s and 1980s drove out much of the corporate mining that was once dominant in Sierra Leone. It is reported that, under Stevens, legitimate diamond exports dropped from more than two million carats in 1980 to 48,000 carats in 1988.
As Siaka Stevens’s rule came to its end in 1984, De Beers removed itself from Sierra Leone and sold its remaining shares to the Precious Metals Mining Company which was controlled by Jamil Mohammed. The corruption within the government continued as Stevens’s successor as Prime Minister, Joseph Momoh, took office. Illicit diamond trading prospered and Mohammed, as well as other Lebanese traders who were also tied to the mining efforts, continued receiving funds through the trade in Sierra Leone. In 1987, though, Mohammed was exiled following a failed coup attempt and connections with Lebanese traders faded into the 1990s. This allowed for an influx of Israeli investors and stakeholders to enter the diamond trade in Sierra Leone who had ties with Antwerp, the center of the global diamond market. The HRD, a Belgian group that structures formal trading agreements of diamonds and monitors diamond trading, retained lackluster standards that allowed traders to smuggle diamonds out of Sierra Leone and sell them to European buyers. The HRD listed a diamond’s country of origin to only be that which it is exported from, which in this case was often Liberia, allowing diamonds to continue being funneled out of the country through its neighboring nation.