NewsWest AfricaSierra Leone's iron present and oil future

Sat,18Nov2017

Posted on Monday, 29 October 2012 17:01

Sierra Leone's iron present and oil future

By Gemma Ware in Lunsar

Tailings being graded at the London Mining concession at Marampa, before being blended with weathered ore/Photo©GEMMA WARE FOR TARLondon Mining's iron ore operation is part of a mining boom that has fuelled huge growth projections, while new taxes and monitoring schemes are starting to shape up.

 

Soft, sparkling and silver, iron ore splats like rain as it falls off conveyor belts at the river terminal at Thofeyim after being trucked in on a 45km private road built by London Mining from their mining concession at Marampa, near Lunsar, in northern Sierra Leone. It is early days for the UK miner, which took over an abandoned mine operated by the Sierra Leone Development Corporation (DELCO) from the 1920s.

Since it shipped its first cargo in April, around 4,000-4,500tn of iron ore per day is being processed, and the target is to reach 1.5m tn by the end of 2012. Three-quarters of what is going into the state-of-the art processing plant are tailings left by DELCO and blended with easy-access weathered ore, explains Coz Kampanaos, head of business planning at London Mining. The firm aims to produce 5m tn of ore per year by 2014, and it is preparing a bankable feasibility study for a ramp-up to 9m tn. 


Overseeing the mining boom of the past year that has fuelled huge gross domestic product growth projections, Sierra Leone's government is still putting in place the institutions to monitor and tax the companies that have returned since the end of the war. 


The Mines and Minerals Act passed in 2009 created the National Minerals Agency to be a watchdog over the sector, although there is still a lack of clarity about exactly what powers it will have. The announcement of who will sit on its board is eagerly awaited in Freetown. Since the government passed the act, it has set about renegotiating parts of some mining contracts. In March, parliament ratified London Mining's new lease agreement that replaces a fixed rate of 6% income tax for 10 years with an increasing scale that will reach 30% by the 11th year of operations. 


Governance issues


The government plans to comply with the criteria of the Extractive Industries Transparency Initiative. Donors have praised the government's new online repository launched in February that shows payments made by mining companies. However, a gap still remains between the expectations of the miners and the government. "The one thing we cannot do is magic out of thin air tens of thousands or hundreds of thousands of jobs, let alone millions of jobs," says Kampanaos.


Alternative Investment Market-listed miner African Minerals Limited (AML) began exporting a lower-grade iron ore in November 2011. In April, AML revised its export target down from 15m tn for 2012 to 10m tn. In early July, the trucks on the 74km railway line taking AML's iron ore from the mine at Tonkolili to the port at Pepel were stationary after a derailment. "These incidents are typically rectified in a few hours and have not meaningfully impacted operations," a spokesman for the company said.


Eyebrows have been raised in the past about AML's attention to corporate governance. In a surprise move in early May, chief executive Alan Watling quit the company, and AML's colourful Romanian-Australian chairman Frank Timis replaced him. However, on 4 July, the company announced that Timis would be replaced as chief executive by Keith Calder, the former chief executive of Western Coal. Timis will step back from his role as executive chairman into a non-executive role, although no time frame has been given for the transition. 


The management changes follow the escalation of a protest over pay at AML in Bumbuna in April, which left one woman dead, reportedly as a result of the intervention of the police, who are often heavy-handed. Inquiries are ongoing, and AML would not comment.


Other miners have successfully increased their production. In mid-July, Koidu Holdings, which rebranded itself as Octéa Diamond Group, opened a new 180tn-per-hour processing plant as part of a $200m expansion project. It has a target to boost diamond output from 10,000 to 45,000 carats per month later this year by mining kimberlite seams. Owned by Israeli magnate Beny Steinmetz, Octéa is reported to be considering a listing on the Hong Kong Stock Exchange.


UK-based miner Stellar Diamonds has begun exploratory drilling on a kimberlite seam in Tongo. It is in discussions with the government over a licence it held in Kono, which it says was arbitrarily revoked. Gold miner Cluff Gold is finalising a feasibility study for operations on a gold seam on its Baomahun concession but has hit delays over its proximity to a forestry reserve. Sierra Rutile (formerly Titanium Resources), also reported a 60% increase in production in April-June 2012, compared with 2011. Gamalangai.lt - Mediniai langai ir durys už gerą kainą


Sierra Leone is also gearing up for a new round of oil exploration. The government launched a licensing round for an additional nine offshore blocks in January, with provisional licences awarded in early July. They include one block for African Petroleum – whose non-executive chair is Timis – in conjunction with Kosmos Energy, as well as two blocks for Chevron Sahara in a consortium with Noble Energy and ODYE Limited. The biggest offshore oil finds so far have been by the US-based Anadarko Group working in a consortium with Repsol and Tullow, but they are still in the exploration stages. 


Parliament passed the Petroleum Act in September 2011. It calls for the creation a new petroleum directorate. There are now provisions for state participation in the industry through a national oil company and for the establishment of a petroleum ministry, neither of which has yet been created●




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