Sierra Leone’s Parliament Queries Contract Approval Process as New Mining Law is Developed

In the midst of legislative reform in the mining sector, Sierra Leone’s parliament is investigating agreements made with China-based Kingho Mining, which began exporting iron ore from the Tonkolili mine in January. A committee for mines says parliament did not ratify any contracts with Kingho, but the mines ministry says this was a one-time shipment that did not require ratification. 

Significance

Ownership disputes and unstable governance have hampered work at the country’s two iron ore mines, Tonkolili and Marampa. 

Tonkolili was previously run by another Chinese firm Shandong, which had smooth relations with the government while the All People’s Congress (APC) was in power. But its licenses were revoked for unpaid fees after the Sierra Leone People’s Party (SLPP) won power in 2018, and Kingho was authorised to take over the mine. This takeover happened despite parliamentary disapproval on grounds that Kingho’s financial standing was questionable and its ownership structure was unclear. 

Meanwhile, licenses for Marampa were awarded to US-based Gerald Group in December 2017 under opaque circumstances. The APC government submitted the mining lease agreement to parliament on the outgoing legislators’ last day in office. The agreement was ratified the same day, but power changed hands and the SLPP government suspended the agreement two years later and seized the mine over a royalty dispute.

The Bio government has been rewriting legislation for the industry in the midst of these takeovers. This will likely see it extract more revenue from operators and widen the political sphere of influence over the industry. Mines Minister Timothy Kabba said in January that a new bill will soon be submitted to parliament to replace the Mines and Minerals Act 2009, which the APC enacted when it was in power. 

Conclusion

We see that there are four major challenges to governance reform in Sierra Leone’s mining industry in the near to medium term:

·      Firstly, weak political debate and stakeholder input will precede policymaking. The ruling party will not only be able to side-step the opposition’s concerns about the Kingho mining deal but it will also push legislative reforms through parliament using the power of incumbency – but without a transparent process (see procedure for Marampa deal above). Weakened by the slew of intense corruption investigations targeting the last APC government, APC legislators may also grudgingly accept government proposals for fear that they could be targeted for dissent;  

·      Further, an ongoing turf war between the National Minerals Agency and the mines ministry will limit coordination between the two bodies. In recent years, these tensions and claims of insubordination have led to an impasse;

·      The administration of the industry will also be susceptible to unpredictable change. There have now been three mines ministers in as many years. This high turnover rate in leadership does not inspire confidence and makes policy continuity susceptible to risk. Similar ministerial changes at the lands and justice ministries exemplify this;

·      Finally, the mining sector will continue to bear the weight of institutional weakness given that decision-making stems from a small circle that includes the president, the chief minister and the finance minister.

Songhai Advisory is an African-owned and managed firm delivering local knowledge supporting transformative and sustainable economic outcomes in the region. Please get in touch if you have any questions. We would love to hear from you! questions@songhaidvisory.com