Sierra Leone passes mining bill, hikes royalties
Reuters | Wed, 18 Nov 2009 10:53
[miningmx.com] -- Sierra Leone's parliament has passed a new mining act that raises royalties and increases community benefits despite the opposition walking out, a senior minister said late on Tuesday.
The new Mines and Minerals Act 2009 will hike diamond and gold royalties, give the government the right to take a stake in big mining projects and require companies to contribute to local community funds.
The bill aims to remedy the effects of years of mismanagement, corruption and a 1991-2002 civil war that have hamstrung the West African nation's mining potential, leaving it among the world's poorest countries despite vast resources.
Passage came on the eve of the Sierra Leone Trade and Investment Forum in London, which the country hopes will attract a raft of interest in an economy still emerging from civil war.
"We got the bill through parliament," Minister of Minerals and Presidential Affairs Alpha Kanu told Reuters by telephone. "There was a lot of opposition because of a procedural issue but everyone liked the bill itself."
Members of the opposition Sierra Leone People's Party (SLPP) walked out one by one and did not return, citing a procedural complaint that the gazette had been published only once.
Kanu had to re-introduce the bill, which passed with 58 members, beyond the required quorum of 33, thanks to the support of traditional paramount chiefs and sympathetic members of the People's Movement for Democratic Change.
"This act means a lot. We now can control our environment, there's a new provision for the health and safety of our workers and every company will contribute to community development funds," Kanu added.
Sierra Leone's gem-fueled civil war killed some 50,000 people and left infrastructure and farmlands in ruins, pushing out many large foreign companies that had sought to develop the country's vast minerals deposits. Companies that remained sought favourable terms for their operations.
HIKES IN ROYALTIES
The law hikes royalty rates to 6.5 percent on diamonds from 5 percent, and to 5 percent on gold and other precious metals from 4 percent.
Companies must now spend 0.1 percent of annual gross revenues on community initiatives, and new entrants would work under a new non-exclusive "reconnaissance" licence, which will replace the "prospecting" licence and is renewable only once.
"We found out that over the years people were negotiating their own agreements outside the mining act," Trade and Industry Minister David Carew told Reuters by telephone earlier.
"As a result there were various qualities of agreement inconsistent with our policy, negotiated at a time when the country was vulnerable," he added.
The two ministers said private Israeli-owned Koidu Holdings, which mines the country's deepest kimberlite diamond pipe and previously enjoyed a "special agreement," had already accepted the standards set by the new act.
Officials are now reviewing the country's deal with Sierra Rutile, owned by AIM-listed Titanium Resources Group, which mines the world's third largest deposit of rutile, used in paint pigment and toothpaste, Carew added.
Former British prime minister Tony Blair, who sent in troops to stabilise the country during the war, will attend the Sierra Leone Trade and Investment Forum in London, also backed by billionaire George Soros.
In recent years Sierra Leone has become one of Africa's top reformers, keen to become investor-friendly and rising seven places to 30 over the past two years in the widely-viewed Ibrahim Index of African Governance.
