The government of Sierra Leone has cancelled or suspended licenses of several big mining projects, including the Tonkolili and Marampa iron ore mines.
Julius Maada Bio, Sierra Leone’s President since his election last year, has been in the process of reviewing mining contracts and considering changes to the law that would ensure the West African nation benefits from its natural resources. Several other African countries are also reviewing the licenses for mining to primarily to safe guard their interests. Some of the contracts have been awarded several years back and the license money has not been increased much since then. Also, some of the countries are feeling that miners are not strictly following contractual obligations for complying with environmental laws. There are also allegations about illegal mining and other corrupt practices.
Major mining companies in Sierra Leone include China’s Shandong Iron and Steel, which owns the Tonkolili iron ore project. Gerald Group, another mining behemoth, owns the Marampa mines. It is known that Tonkolili has challenged the decision in the country’s high court. Its stand is that grounds to justify the cancellation of its licenses were invalid as it had paid all its fees and royalties, as required by law of the land.
UK-based African Minerals (AML) through its subsidiary Tonkolili Iron Ore, had developed the Tonkolili iron ore mine, which commenced production in 2011. It is an integrated mine, rail and port infrastructure, is planned to be developed in three phases. Tonkolili mine is having an operational period for more than 60 years. The ownership pattern is that AML owns 75% stake in the mine, while Shandong Iron and Steel Group (SISG) own the remaining 25%. Subsequently, China Railway Materials Commercial Corporation (CRMCC) invested £167.8m on the project. Shandong Iron and Steel Group (SISG) agreed to provide US$1.5bn investment for the project, as part of its share in the company and contracted for off take up to 10Mtpa of iron ore at discounted prices under a Memorandum of Understanding (MoU) signed in July 2010.
