By: Tommy Trenchard
FREETOWN, Feb 20 (Reuters) – A new government agency charged with enforcing Sierra Leone’s mining laws will “definitely” recommend changes to some of the West African nation’s existing contracts with mining companies, the agency’s head said on Wednesday.
President Ernest Bai Koroma won a second term in November having promised during his campaign to boost tax revenues from its burgeoning minerals sector in order to reduce rampant poverty.
The new National Minerals Agency will launch its operations next month with a sector-wide review of contracts, Sahr Wonday told Reuters in an interview.
“If we feel they’re not in the best interests of the country, it’s incumbent on us to recommend changes to the government… Definitely we will be recommending changes,” he said.
Wonday did not say which specific contracts would be targeted for revision.
Renewed interest in its largely untapped mineral resources has sparked an economic revival in Sierra Leone a decade after the end of a devastating 1991-2002 civil war.
Iron-ore shipments by British companies African Minerals and London Mining (Other OTC: LIIGF –news) helped fuel estimated economic growth of 20 percent last year, one of the world’s fastest growth rates.
[notification type=”info”] However, Sierra Leone remains one of the world’s poorest and least developed countries, and there is widespread frustration that the mining boom has done little to improve the lives of ordinary Sierra Leoneans. [/notification]
Koroma’s government came under fire in his first term for setting a tax rate of 6 percent for London Mining – far below the 37.5 percent level stipulated in Sierra Leone’s mining laws – though the contract has since been revised to a new tax rate of 25 percent.
“You’ve had a lot of agreements that have not been transparent and have not been negotiated in the best interest of the country,” Wonday said. “Sometimes the excuse is that we had to do it because we want to attract these investors.”
Several governments across Africa have moved to renegotiate contracts and revise their mining codes to get more revenue from the mining industry against the backdrop of the rise in commodity prices.
Liberia and Democratic Republic of Congo have carried out wholesale reviews of all their contracts, while Guinea is in the process of reviewing its mining deals.
A number of countries, including Ghana and Ivory Coast are fiddling with tax and/or royalty rates.
A spokesman for Koroma, while acknowledging that changes to some contracts were likely, said revisions to existing deals would be discussed transparently with companies.
“Nothing is permanent… These agreements are being constantly reviewed. We don’t impose changes. It is a matter of negotiation,” Unisa Sesay told Reuters.