Sierra Leone is endowed with rich natural resources. The mining industry is dominated by large-scale producers of iron ore, diamonds, rutile, and bauxite as well as small-scale and artisanal mining of gold and diamonds. The country possesses one of the largest rutile reserves in the world. Mining is significant to the economy of Sierra Leone. Mineral exports contributed about 2.7% to the national GDP and accounts for 91.1% of total exports in 2016.

Sierra Leone’s upstream oil and gas sector is currently in the exploration stage. In the past decade, interest in oil and gas has been high resulting from the announcement of a discovery of commercial hydrocarbons. This has thus sparked off interest among several global oil producers. In recent years, exploration activity has been on the decline but the Petroleum Directorate has intensified its investment drive in 2018.  

Prudent management of natural resources is a pillar of the national Agenda for Prosperity and there is strong commitment to align the EITI with these reforms. The president of Sierra Leone,  his excellency Julius Maada Bio has made strong commitment in using the EITI as a tool to bring reforms that will attract much-needed investment in Sierra Leone.

The Mines and Mineral Act (MMA, 2009) governs the mining sector, in addtion, the National Minerals Agency Act was established to create the National Minerals Agency to promote the development of the minerals sector. The petroleum sector is governed by the Oil/Gas-Petroleum Exploration and Production Act (2011). The fiscal regimes for the extractive sectors are incorporated in the Income Tax Act (2000) (ITA) and its amendments, as well as the Finance Act (2017). The main fiscal tools in the mining sector are corporate income tax and mineral royalty. The main fiscal instruments in the upstream oil and gas sector are royalty and corporate income tax.

Contracts

The government of Sierra Leone does not have a contract disclosure policy. Information on companies’ shareholding structures is now available in its on-line Mining Cadastre Administrative System (MCAS).However, both the Extractive Industries Revenue Act and SLEITI Bills have provisions and objectives which are intended to promote contract disclosure. The NMA has disclosed thirteen (13) mining agreements on their website.

Licenses

The National Minerals Agency is the principal point of contact for the general public in all matters to do with mineral rights.The types of licenses issued include reconnaissance license, exploration license, small-scale mining license and large-scale mining license.

Sierra Leone has one of the best web-based cadastre systems in West Africa. The Mining Cadastre Administration System (MCAS) provides information on license holders, coordinates, application dates, and duration of licence in support of the NMA in the management of mineral rights. In addition to the MCAS, an online repository also provides information on (license) payments made during the year.

Objectives of beneficial ownership transparency in Sierra Leone

• Due diligence in licensing and preventing conflict of interest
• Preventing transfer mispricing
• Transparency in ownership of extractive assets and rights help by PEPs
• Prevent corruption and illicit financial flows to help maximise revenues from extractives

In 2017, SLEITI with support from Herbert Smith Freehills (HSF) conducted a report that would review the legal framework, and prepare recommendations for Beneficial Ownership Disclosure reform. 

Progress on implementing beneficial ownership disclosure 

Sierra Leone is collecting beneficial ownership information from the 20 largest extractive taxpayers. In addition, steps are being taken to support and improving the due diligence procedures employed by the National Minerals Agency and the Petroleum Directorate in order to make these government agencies better informed in their dealings with prospective commercial partners, and better equipped to lead to the systematic collection and recording of beneficial ownership data.

Sierra Leone EITI is holding a series of technical workshops to review current legal and institutional framework for beneficial ownership and build the capacity of relevant stakeholders for the implementation of beneficial ownership. Read Sierra Leone's beneficial ownership roadmap below for more information.

Iron-ore production remains the key contributor to Sierra Leone‘s GDP growth. In 2016, 6,175,958 WMT was produced with a production value of just over 170 million USD.  Gold is mostly mined artisanally and presently production comes from alluvial deposits. Diamond is also been mined mainly from alluvial deposits at the Bo, the Kenema, and the Kono districts. Diamond production increased from 299 thousand carats in 2015 to 303 thousand carats in 2016. The total value of mineral exports increased by 31 percent in 2016 to 471 million USD from 358 million USD in 2015. Total mineral exports accounted for about 91 percent of total exports in 2016 compared to 95 percent in 2015.

The upstream oil and gas activity is in the exploration phase occurring off shore and parceled into 14 blocks.

The 2016 report shows that Sierra Leone received just over USD 26 million in revenue from its extractive industry operations. 100% of these revenues came from the mining sector.The oil and gas sector was not active in the fiscal year 2015/2016. Revenues were mainly collected through mineral royalties and mining licences.