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Sierra Leone shows signs of recovery

Sierra Leone shows signs of recovery

One of Sierra Leone’s largest companies has announced a major new investment – a tentative sign of growth in a country hit hard by the Ebola outbreak.

Sierra Rutile, which produces mineral sands in the West African country, has begun a $77m expansion of its Gangama Dry Mine project – small by global standards, but significant for a country starved of direct investment since the outbreak began last year.

The company itself was not directly affected by the disease, and did not have to evacuate or repatriate staff to keep its operations running.

“That is primarily because of luck,” John Sisay, Sierra Rutile CEO, says. “But also we got wind of Ebola quite early, and we put very stringent protocols in place to make sure that our staff were well aware of what Ebola was and how to keep away from it.”

The availability of fuel, as well as the breakdown of some transport infrastructure, did impact Sierra Rutile’s business, however.

“In terms of impact on our operations, of course there was the cancellation of flights and perception issues,” Sisay says.

“We suffered some supply chain issues, but like everything else you take it in your stride and try to learn from it. I think we have a much more proactive and efficient supply chain as a consequence of it.”

The longer term socio-economic impacts of Ebola remain a concern, according to Sisay, who believes the private sector needs to take a leading role in driving a recovery.

“The need for employment in what was already a challenging situation, in terms of, for example, youth unemployment, has increased exponentially,” he says. “When you get all of those questions within society, of course you are concerned. But for us it’s really important to change the narrative on Ebola in Sierra Leone, and why we are first out of the blocks, if you like, in terms of regenerating, bringing the economy back to life.”

“[The] announcement by Sierra Rutile of a major investment in its mining operations, marks a turning point as we start to rebuild our economy following recent Ebola-related challenges,” Sierra Leone’s president, Ernest Bai Koroma, said in a statement following Sierra Rutile’s
announcement.

“I am proud that one of Sierra Leone’s most important companies has not only weathered the Ebola storm, but is now emerging as a leading regional player in rebuilding our country’s future.”

The outbreak has killed more than 10,000 people in Sierra Leone, Liberia and Guinea, and devastated the economies of all three countries. Many public services, including education, have been halted by outbreak; agricultural production has collapsed and all three nations – which were growing fast – fell back into recession.

At the World Bank and IMF’s spring meetings in Washington DC this April, the Mano River presidents said that they would need $8bn to rebuild their economies, and called for a development initiative based on the European postwar ‘Marshall Plan’.

Mining could be a significant part of any recovery, but the fall in iron ore prices over the past 18 months from over $100 per tonne to $57 per tonne has proved devastating for the industry in the region.

African Minerals – which owned one of Sierra Leone’s largest iron ore assets, the Tonkolili mine – went into administration in March; although its sale in April to Shandong Iron and Steel Group, a Chinese industrial conglomerate, has offered some hope that the large-scale infrastructure projects associated with the mine could be restarted. Shandong, previously a minority shareholder in the project, has committed to invest $600m in the asset, after paying $170m for the 75% of the deposit that it did not already own.

Such investments are encouraging, Sisay says, but there is still a long road to putting Sierra Leone back on the international investment map.

“The government has a hard sell to get perception change,” he says. “People had only just started dealing with the fact that the civil war ended 14 years ago, and now we’ve got Ebola.”

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Written by African Business Magazine

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