Extractive Industries

Sierra Leone's mining sector has made a significant recovery since the 11-year civil war ended in 2002. The country produced more than 400,000 carats of diamonds in 2010, making it the world's 10th-largest producer and accounting for nearly half of the nation's total exports. Offshore oil reserves were discovered in 2009, but production has yet to begin, and Sierra Leone's economy is likely to remain highly dependent on diamond revenues (source).

Mining

Sierra Leone is rich in minerals and historically has been strongly dependent on mining, especially of gem-quality alluvial diamonds, for its economic base and foreign currency earnings. Other mineral commodities that are produced include bauxite, rutile, ilmenite and gold. In the past the mining industry has generated up to 18% of the country’s GDP and 90% of its export earnings. Sierra Leone is among the top 10 gem-quality diamond producing nations in the world. Gem quality stones account for approximately 60% of the country’s production. Though rich in diamonds, it has continually struggled to manage their exploitation and export. Total diamond output from Sierra Leone decreased by 38.5 per cent in 2008 and the country slipped in the rankings from 8th to 10th place (equivalent to 0.39%) within Africa. The mining and export of bauxite and titaniferous heavy mineral sands in Sierra Leone resumed in 2005. The country was the second largest bauxite producer in Africa, after Guinea, and in 2008 accounted for 5% of total output. Sierra Leone was the third largest world producer of rutile after Australia and South Africa, and accounted for 15.61% of total output. It has some of the world's largest reserves of rutile and is ranked fourth in terms of its reserve base. Ilmenite co-production was relatively modest by comparison but the country was ranked fourth in Africa in 2008. Sierra Leone is a relatively small producer of gold. The marked increase in the world market price has led to an expansion of alluvial gold mining activities into new areas of the country. 

Sierra Leone is widely recognized as a highly prospective target for mining activities. The return to political stability in Sierra Leone coupled with positive global developments in the mining sector now offers the ideal opportunity to rejuvenate the domestic mining sector. Key developments that have significantly improved the prospects of the country’s mining sector include:

  • The successful implementation of an IMF-supported economic reform programme, which has established a sound macroeconomic environment;
  • The introduction of the certificate of origin scheme and implementation of the subsequent Kimberley Process, which has facilitated a rapid return of diamond exports to official channels; and
  • Strong global demand for minerals, underpinned by rapid growth in emerging economies, which has fuelled an investment revival boom in the mining sector. Of particular interest to Sierra Leone is the dominance of junior exploration companies in this revival, since they will be most likely to underpin the exploration investments needed to establish Sierra Leone’s mineral potential, and the increasing appetite of major mining companies to make large investments in what are perceived high-risk, emerging economies.

To note: source for the above.

Kimberley Process.

Established in 2003, the Kimberley Process was one of the very first initiatives to use transparency requirements to track so-called ‘blood diamonds’ (rough diamonds used by rebel movements to finance wars against legitimate governments) and restricting their import from states where they were used to support conflict. Under this scheme, member states can certify their diamonds as conflict-free before entering the international market. This initiative was developed from UN resolutions aimed at limiting conflicts and atrocities linked to diamonds in states such as Sierra Leone - the focus of these webpages - and Guinea, Zimbabwe, AngolaCote d’Ivoire, and the Democratic Republic of Congo (DRC).