Sierra Leone: Sierra Leone Mining Dispute Highlights Pitfalls for U.S. Companies

The resolution by Sierra Leone to shut down the operations of U.S.-owned SL Mining has called into query that executive’s commitment to the rule of thumb of regulation in regards to foreign investors.

Since the mid-1990s, the U.S. Authorities has initiated diversified applications to rep U.S.-Africa trade and investment – from the African Development and Opportunity Act (AGOA) to the Prosper Africa initiative that became launched in 2018. The success of these initiatives depends in share on American corporations receiving magnificent therapy of their dealings in Africa.

Prosper Africa “brings collectively providers and sources from across the U.S. Authorities” to promote U.S. industrial process in Africa, but how can there be sturdy U.S. investment on the continent if the legitimate pursuits of American corporations are not revered and the U.S. executive doesn’t retract action to abet American industrial pursuits?

Wait on in mind Sierra Leone.

In December, the Millennium Whisper Company – a U.S. executive agency – selected Sierra Leone for a five-year grant program “to chop support poverty by means of focused investments that carry economic growth.” The announcement of the MCC compact, became welcomed by President Julius Bio, who stated: “We now salvage achieved this on legend of of the wide positive aspects we salvage made in controlling corruption, investing in of us, retaining democratic rights and enabling economic freedoms.”

SL Mining, a Sierra Leone firm wholly owned by the Gerald Group, one of many sphere’s finest metallic procuring and selling corporations, became granted a mining license settlement (MLA) that became ratified by Sierra Leone’s parliament in December 2017.  At this time after, the firm started constructing of the first segment of its Marampa iron ore project in Lunsar in the Port Loko district.

The project became commissioned in January 2019, reviving an historically distressed mine to invent the easiest quality iron ore focus in Africa. One month after SL Mining began exports in June 2019, the Sierra Leone executive imposed an export ban on the project and, soon after, cancelled the firm’s mining license, alleging breaches underneath the MLA.

SL Mining denied the costs and – as prescribed underneath the MLA – filed for dispute arbitration with the International Chamber of Commerce (ICC), which issued peremptory orders and partial final awards compelling the manager to allow the firm to proceed to characteristic. Sierra Leone challenged these orders forward of the English High Court, which two months ago brushed aside Sierra Leone’s claim and upheld the ICC’s partial final award, concluding that SL Mining “wins on every assert of affairs.”

The judgment by the courtroom, widely viewed as reaffirming the characteristic of arbitration in dispute resolution, became welcomed by the world investor community. However, the Sierra Leonean executive has to this level refused to conform with the ICC orders, forcing the project to dwell dormant.

In the world market, these detrimental traits salvage enormously hampered the nation’s standing. “Iron ore from Sierra Leone is becoming more and more more much less relevant,” stated Erik Sardain, a prime consultant with Roskill. “Or not it is too vital war for producers who salvage invested time and energy and salvage they manufacture not salvage any approach of coping with the manager.”

The impact of SL Mining’s shutdown is also being felt by Sierra Leonean households in the neighborhood besides to nationally, as hundreds of jobs relied on the wide-scale mining operation. Sooner than the shutdown, the Marampa project employed spherical 1,500 Sierra Leoneans. In Lunsar, the mine became the town’s economic backbone, and the inability of earnings from the mine, including royalties to the town, stalled community tasks.

Delight in a lot of in the community, Abdullai Bangura has paid an mountainous assign. Bangura labored as a plant electrician, earning a steady earnings, but now he farms cassava and groundnuts, barely sufficient to abet his family in Rogbanneh Village. Locals salvage a magnificent relationship with SL Mining, and they need the firm support.

In step with the settlement that the parliament ratified, the Sierra Leone executive is obligated to rep the export ban and allow SL Mining to characteristic the mine whereas the dispute is resolved by means of arbitration. But the manager has elected to position 1,500 of us out of work, jeopardizing the livelihoods of yet every other 15,000 of us who relied on that earnings. As neatly as, the manager disadvantaged itself of over $100 million in earnings in the construct of taxes and royalties from the project at newest iron ore prices.

The executive extra tried to intimidate SL Mining workers, most seriously with the unjustified immediate-timeframe detention of administration, including Gerald Group’s Chairman and CEO, a U.S. citizen. The detention not ideal drew the condemnation of the U.S. Embassy, but the British and Indian High Commissions as neatly.

The nation’s true dispute with SL Mining is a assert of affairs in Washington as Ambassador David Reimer begins his assignment in Freetown. The neatly-regarded diplomat arrived in the nation a couple of months after the MCC Board of Directors selected Sierra Leone for the compact geared in the direction of lowering poverty.

Sierra Leone’s MCC’s scorecard, a share of the compact approval assignment, became a priority of the gentle American ambassador, Maria Brewer, who became commended by President Bio for helping salvage the compact when she departed in February. The executive has welcomed the MCC compact.

However, newest abilities suggests that a successful MCC compact will not be assured. Sierra Leone became selected for a an identical program in 2012, forward of it became rescinded a year later after the manager failed the MCC scorecard indicator for corruption. If the new compact proceeds, this is capable of perhaps well perhaps retract several years forward of the MCC disburses colossal funds to Sierra Leone underneath its newest compact. Decision of the SL Mining assert of affairs by the 2 events is susceptible to be a truly fundamental MCC consideration gripping forward.

In the meantime, China’s process in the African mining sector is a recurrent assert of affairs of U.S. policymakers, and Chinese language mining operations in Sierra Leone salvage a demonstrably sad tune file. In 2019, the manager’s resolution to grant a license to China’s Kingho for the Tonkolili mine in northern Sierra Leone sparked a parliamentary inquiry over the deal’s lack of transparency. In January, Kingho shipped its first batch of iron ore from the Tonkolili mine, no matter lacking a parliament-ratified MLA.

Reimer’s tenure represents a risk for both countries to address these concerns and make the bilateral relationship. “We remain deeply committed to Sierra Leone’s success as a democratic nation and to the wellbeing of its of us,” he’s quoted as pronouncing all the strategy by means of a ceremony last month at Verbalize Condo the assign Bio approved the successes of the MCC $44 million Threshold Program, which began in 2015.

Reimer indicated his commitment to searching out for resolution of the SL Mining dispute when he looked forward of the Senate Committee on Foreign Kin for his affirmation listening to in December. Responding to a question by then-chairman James Risch (R-ID), who asked how he would retort to the SL Mining case, Reimer committed to “sharp on the SL Mining case instantly” with the manager whereas also working to construct the nation a more perfect-attempting peril for American investment. Inconvenience about corruption in Sierra Leone became also raised all the strategy by means of the listening to by Bob Menendez (D-NJ), who now chairs the Committee, which has oversight of the MCC.

The Biden administration has acknowledged a commitment to promoting U.S. industrial pursuits in Africa, alongside with transparency and the rule of thumb of regulation. An necessary ingredient of the rule of thumb of regulation is honoring commercial contracts, but relatives between Sierra Leone and the United States are in the intervening time clouded by the dispute animated SL Mining.

The dispute touches the total priorities of the Biden administration in Africa and its neatly timed resolution may possibly well well support Sierra Leone address underlying points, from poverty and gradual social constructing to the absence of a steady deepest sector to pressure economic growth. It also would red meat up the rule of thumb of regulation, which will not be ideal a key pillar for the U.S.-Sierra Leone relationship but besides is necessary to blueprint investment to a nation struggling to higher the lives of its of us.

The SL Mining case gifts a prime test for U.S. trade and investment coverage. Will the administration proceed to allow Sierra Leone to abilities responsibility-free, quota-free trade advantages underneath AGOA if the manager refuses to honor contracts or respect internationally binding courtroom decisions? Will the MCC exercise its authority to put off disbursement of funding on a compact with a executive that disregards world regulation?

I noticed these instruments broken-down successfully to promote better trade and investment performance all the strategy by means of my time in executive, and I hope the commercial rights of American corporations will be defended by the U.S. executive in this and various cases.

Gregory Simpkins is Government Director of the African Merchants Affiliation and writes the Africa Rising 21st Century weblog. He lately retired from the U.S. executive the assign he last served as Senior Advisor in the U.S. Agency for International Trend Agency’s Africa Bureau. Sooner than that executive carrier, he became Physique of workers Director for the U.S. Condo Subcommittee on Africa, World Properly being, World Human Rights and International Organizations.

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