London-listed African Minerals Ltd gravely missed its predictions for output in 2012, but the country’s large miners are gearing up for expansion as smaller ones are told to use or lose their licences. As Sierra Leone plans to unleash a new wave of regulators and tax inspectors on mining companies, large-scale iron ore miners are starting to ramp up production and are facing hard work ahead to raise finance for expansion.
Sahr Wonday, director general of the newly created regulator, the National Minerals Agency (NMA), says the government is still unsure exactly how much it earns from the mining sector. The numbers he has seen so far put the sector’s contribution to government revenue at just $76m in 2012. The discrepancy is due to the fact that people don’t keep their receipts, the documentation processes are not among the strongest. The sector is traditionally led by gold, diamonds and bauxite mining, but two iron-ore projects run by United Kingdom-based African Minerals Ltd. (AML) and London Mining plc have come on stream in the past two years. Corporate tax breaks mean they are yet to start paying much other than 3 percent royalty rates.
London Mining plc finalised a lengthy renegotiation of its contract last March, replacing a fixed rate of 6% income tax for 10 years with an increasing scale that will reach 30% by the 11th year of operation. However, AML, founded by the colourful Romanian-Australian businessman Frank Timis, has not had its contract renegotiated after it was ratified in 2011.