Mining News

Sierra Leone’s mining industry spurs economic growth

Posted by Alana Wilson on 4/4/2014 4:40:03 PM

By Alana Wilson

An article in the Globe highlights the rapid economic growth in Sierra Leone due to its emerging mining industry. Sierra Leone is noted to be one of the world’s poorest and least developed nations.

The rapid expansion of Sierra Leone’s nascent iron ore mining industry fuelled economic growth of 20 per cent last year, according to IMF data, but prices also surged in the impoverished West African nation.

Interest in its largely untapped mineral resources has sparked a flood of investment in Sierra Leone a decade after the end of a devastating 1991-2002 civil war. Its economic growth rate is ranked among the highest in the world.

Despite this economic growth, the author notes that frustrations remain as more than half of the population of 6 million are living on less than $1.25 (U.S.) per day. Concerns have also being raised that the economy could become overly reliant on natural resource exploitation to the detriment of other export and broad-based economic development.

“We are aware of it and the government is also aware of it,” Francis Kumah, the IMF’s resident representative in Sierra Leone, told Reuters on Thursday, adding that the country needed more policies to diversify its economy.

While challenges remain, the mining sector presents tremendous opportunity for economic growth in the nation. However the long term success of this sector—and its ability to provide good social, environmental, and economic outcomes—will depend on the mining regulatory environment and policies implemented.

Sierra Leone was added as a new jurisdiction in the 2013 Survey of Mining Companies. It’s score on the Policy Perception Index, a measure of the attractiveness of the policy environment based on 15 factors, was 17.2 out of a possible 100. It ranked 96th out of 112 jurisdictions ranked in the global survey suggesting significant room to improve its policies to become more attractive to mining investment.

Sierra Leone had the highest percentage responses for ‘encourages investment’ for socioeconomic agreements/community development conditions (9% of respondents rated as ‘encourages investment); labour regulations and employment agreements (9%); and the quality of its geological database (8%). The factors rated as most discouraging to investment in Sierra Leone were the availability of labour and skills (where 54.6% of respondents indicated they were ‘strongly deterred’ or ‘would not pursue investment as a result’); quality of infrastructure (41.6%); and the security situation (33.3%).

The survey results consistently reinforce the importance of stable, transparent and predictable policies to attract globally mobile mining investment. Sierra Leone should focus on providing such an environment if it hopes to continue to build and develop its mining sector.

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