IN THE STOPE
credible investors will study our datasets, and then engage
our mining sector professionals and government in frank and
open dialogue on how we can do business over the long term.
“We are not interested in players who finagle numbers
and financial data or who arbitrarily conjure up untenable
excuses about tax burdens or the implications of fiscal
or foreign exchange policies. We believe that patient
and credible investors would communicate with us as a
government and work collaboratively to ease tax burdens
and streamline policies that work in our mutual best
interests. Clearly, as a government, we can guarantee security
of permitting and tenure if you are that ethical, transparent,
trustworthy, and patient.
“Investors who are ready to foster a sustainable and long-
term relationship with the people of Sierra Leone. As a
government, we have mapped out a risk matrix of what
potential players would consider in investing in our country.
Profitability ranks very highly. A threat to profitability is the
tax regime – the more burdensome it is, the less an investor
can repatriate or reinvest. The more unpredictable it is, the
less likely it is that the investor can make future investment
or other business decisions based on the profit margins of
potential earnings. Financiers, the mining companies, and the
government, all have vested albeit often-times, competing
interests in the profit margins. Often, what drives investment
decisions is whether investors and their financiers believe
a new project can make them an acceptable profit margin
that is not threatened by an unpredictable tax regime. We
also recognise that potentially higher returns for investors
will encourage longer term investments. Sierra Leone does
not arbitrarily discriminate against foreign companies and
there are no restrictions on the repatriation of profits or the
sale of assets. As a Government, we are committed to EITI
benchmarks and we want to eliminate corruption and tax
fraud in the mining sector.
“Our Extractive Industries Revenue Act 2018, Income Tax Acts
2002, The Mines and Minerals Act (MMA) 2009, the Petroleum
Act 2011, and Finance Act 2019 all contain business-friendly
exemptions and provisions. What we are doing with the new
Mines and Minerals act that is being developed is to clarify,
simplify, and consider expanding the scope and scale of those
business-friendly exemptions, waivers, and holidays. Through
all this though, we remain vigilant on the thorny issue of
beneficial ownership and illicit financial flows. So, when we
insist on financial records, it is not because we want to restrict
the business space. We have an obligation to do due diligence
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in order to ensure that the ecosystem for mining is free of bad
actors and bad business practices. Obviously, we recognise
the attendant environmental footprint of mining activities
and their implications for our people. We do so informed,
by data and knowledge of best practices across the mining
industry. Until recently, our environmental laws and legislation
were interpreted and executed by various agencies that
had different mandates. Often, those independent agencies
charged fees, and acted independently and without reference
to other related agencies. We now have a standalone Ministry
of the Environment that will harmonise and implement
environmental laws and policies across board and pre-
determine the environmental liability of potential investments.
“We have also gone a few steps further to ease the burden
on investors in the mineral sector. There is an eye-line
mark that is pre-determined. An investor’s pre-determined
environmental liability will not go beyond that. Here’s where
we sweeten the deal. We believe that as companies introduce
innovative technologies (including, of course, low carbon
technologies) and new processes and practices, they will
naturally reduce their environmental footprint. We have
introduced an environmental impact framework that is a
jointly-monitored environmental management plan. As a
government, we believe that we should reward companies
with reduced environmental liability in fees when they reduce
their environmental footprint.
“Over the last year, we have used a matrix to reduce
environmental impact assessment fees by an average of 45%
and we are considering sector-specific EIA fee regulations
to ensure that we continue to reduce EIA fees by company
and by sector. We have also introduced flexible payments
in instalments for small and medium companies and
some companies can now pay the equivalent fees in local
currency. And talking about small and medium companies,
let me digress briefly and mention that our policies are
very attentive to the interests of African mining juniors. We
recognise that the competition for scarce private equity
investment funds is even stiffer for them.
Allow me, ladies and gentlemen, to put a spin on the old
English adage “A bird in hand is worth two in the bush.” We
believe that a good investment experience by an established
company (the bird in the hand) is good enough to attract
two prospective ones in the bush. We want all three birds not
just the one in hand. We are actively courting prospective
investors, always. So, we do want to keep the bird in hand and
bring in the other two from the bush too.”
African Mining
African Mining April 2020
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