Mining Laws Enable Resource Looting

By Mahmud Tim Kargbo

Sunday, 20 April, 2025

Sierra Leone remains trapped in a paradox: a nation endowed with mineral wealth, yet immobilised by chronic poverty and underdevelopment. For decades, successive governments have insisted that foreign investment in mining would drive prosperity. Instead, opaque contracts, toothless laws, and elite collusion have embedded a regime of legalised looting—where the country’s vast resources enrich multinational firms and political elites, while frontline communities bear the cost through environmental degradation, displacement, and economic marginalisation.

This investigation dissects the post-war legal frameworks and landmark mining agreements that have defined Sierra Leone’s extractive sector. It exposes a systemic failure marked by constitutional breaches, fiscal sabotage, and institutional decay—while outlining a pathway to reform grounded in global best practice and resource justice principles.

A Legal Architecture Built to Favour Investors

The 2002 Mines and Minerals Act—enacted in the aftermath of civil war—was designed less as a developmental blueprint and more as an open invitation to foreign capital. It imposed among the continent’s lowest royalty rates (3–5%) and required neither Parliamentary ratification nor community consent for mining agreements. Critical transparency provisions were absent, allowing backroom deals shielded from scrutiny.

More damaging still were the fiscal stabilisation clauses: contractual mechanisms that lock in investor tax terms for decades, stripping the government of its future policy-making sovereignty. Environmental safeguards were skeletal; enforcement, almost non-existent.

Despite widespread criticism, the 2022 Mines and Minerals Development Act, passed two decades later, retains many of these flaws. Although it includes stronger language around local content, gender inclusion, and Free, Prior, and Informed Consent (FPIC), it permits rent allocations to parliamentarians and traditional authorities—a mechanism that, according to civil society watchdogs, institutionalises elite capture.

“You cannot reform a broken system by rewording its manual,” says Dr. Kumba Sesay, an expert in African resource governance at the University of Pretoria. “The 2022 Act was a missed opportunity to shift the paradigm—from investor-centricity to citizen benefit.”

 

The law’s token 1% allocation to the Community Development Fund remains below the 2.5% threshold proposed by the National Advocacy Coalition on Extractives (NACE), and enforcement mechanisms remain hollow.

Case Studies in Resource Misgovernance

Marampa Mines Ltd (Iron Ore) – 2021

After a controversial revocation of SL Mining’s license, Sierra Leone signed a fresh lease with Marampa Mines Ltd, even as an international arbitration ruled in favour of SL Mining. The lack of public disclosure on fiscal terms and community benefits raises significant governance and legal red flags.

“Sierra Leone has shown a willingness to flout arbitral rulings and enter shadowy replacement agreements,” notes Maria Gutierrez, Senior Legal Counsel at Oxfam International. “That undermines investor confidence and community trust alike.”

Kingho Mining Company Ltd – 2022

Kingho’s agreement granted exclusive access to key national infrastructure—the Pepel Railway and Port—without full public review. It included vague provisions on job creation and no binding local value-addition benchmarks, raising monopoly and fairness concerns.

CTC Mining (SL) Ltd – 2024

The CTC agreement locked in fiscal terms for 25 years, using stabilisation clauses that bar Sierra Leone from altering tax or royalty rates, even in times of crisis. Environmental and social impact clauses remain generic, offering communities little legal recourse.

Koidu Limited (Diamonds)

This long-standing contract, linked to the opaque OCTÉA group and the controversial Steinmetz empire, exemplifies the dangers of offshore ownership. Displacement and under compensation of local residents remain unresolved, while diamond exports continue unabated.

Sierra Rutile Ltd (Rutile)

Despite its acquisition by Iluka Resources, Sierra Rutile has been dogged by labour unrest and corruption allegations. In 2018, a strike over the dismissal of union leaders exposed systemic worker exploitation and management opacity.

Bagla Hills: A Conservation Flashpoint

The temporary 2011 effort to allocate mining rights within Gola Rainforest National Park, a UNESCO-classified biodiversity hotspot, demonstrated how environmental laws can be sidelined when political actors are aligned with extractive interests.

Patterns of Exploitation and Elite Capture

Sierra Leone’s extractive landscape reveals a recurring architecture of failure:

Opaque Contracts: Most mining agreements are shielded from public scrutiny, defying Extractive Industries Transparency Initiative (EITI) standards.

Regulatory Weakness: Agencies like the National Minerals Agency (NMA) and Environmental Protection Agency (EPA) lack the financial autonomy and authority to enforce compliance.

Marginalised Communities: Surface rent and corporate social responsibility projects offer only symbolic relief; long-term poverty and social neglect remain.

Illicit Financial Flows: Tax holidays, customs exemptions, and profit shifting deprive the country of critical revenue. A 2020 Global Financial Integrity report ranks Sierra Leone among the top African nations losing wealth through capital flight.

Institutionalised Collusion: Government officials often serve foreign interests in exchange for unofficial payments or political favours—an entrenched pattern of state capture.

Legal and Constitutional Breaches

Sierra Leone’s 1991 Constitution is clear: Section 40(3) obliges the President to ensure natural resources benefit all citizens. Section 47(2) empowers the President to invalidate contracts that compromise national sovereignty.

Similarly, Article 21 of the African Charter on Human and Peoples’ Rights affirms the people’s right to control and benefit from natural resources. International case law, such as Occidental v. Ecuador and Parkerings v. Lithuania, supports governments’ right to reform exploitative contracts—particularly when they undermine public interest.

“Stabilisation clauses may offer investor security, but they should never be a license to rob nations of their future,” argues Dr. Samuel Asante of the Natural Resource Governance Institute (NRGI). “Sierra Leone has every right—legally and morally—to renegotiate terms that violate its sovereignty and hurt its people.”

Toward a Just and Sovereign Resource Future

Key Recommendations:

Mandate full disclosure of all mining contracts, environmental assessments, and beneficial ownership data.

Amend the 2022 Mining Act to:

• Raise the Community Development Fund contribution to a minimum of 2.5%.
• Ban rent payments to parliamentarians and chiefs.
• Outlaw fiscal stabilization clauses that preclude future tax reform.

Establish a Sovereign Resource Audit Commission—with legal authority to review, investigate, and recommend renegotiation or prosecution where needed.

Strengthen oversight bodies by giving the NMA and EPA full budgetary autonomy and enforcement powers.

Implement a rights-based compensation framework, ensuring communities receive fair restitution, resettlement, and revenue shares.

Ratify and operationalize the African Mining Vision (AMV) and other international standards promoting transparency, local beneficiation, and environmental stewardship.

 

Adopt a Green Minerals Policy, linking mining governance to climate resilience and biodiversity protection.

Final Reflection

Sierra Leone’s mining sector has become a global cautionary tale: a resource-rich country whose laws were not merely bypassed—but actively weaponised against its own people. International corporations, exploiting legal loopholes, stabilisation clauses, and offshore secrecy, have been aided by domestic actors willing to trade sovereignty for short-term gain.

True reform will not come from donor-led audits or cosmetic legislative tweaks. It will require a moral and legal realignment—a decisive shift toward governance rooted in transparency, justice, and the constitutional promise that the wealth of Sierra Leone belongs to all its people.

The law must cease to be a tool of plunder. It must become a shield for the poor, an instrument of equity, and the backbone of a democratic state that puts its people before profit.

 

References:

Government of Sierra Leone. (2022). The Mines and Minerals Development Act, 2022. https://www.nma.gov.sl/wp-content/uploads/2024/08/The_Mines_and_Minerals_Development_Act_2022.pdf

National Advocacy Coalition on Extractives (NACE). (2023). Position Paper on the Draft Mines and Minerals Act

International Chamber of Commerce. (2021). Arbitration Case No. 23898/TO (Gerald International v. GoSL)

Extractive Industries Transparency Initiative (EITI). (2022). Sierra Leone Validation Report

African Commission on Human and Peoples’ Rights. (1981). African Charter, Article 21

Global Financial Integrity. (2020). Illicit Financial Flows from Africa

ICSID. (2004). Occidental Petroleum v. Ecuador, Case No. ARB/06/11

ICSID. (2007). Parkerings v. Lithuania, Case No. ARB/05/8

Oxfam International. (2017). From Aspiration to Reality: Unmasking Corporate Influence in African Mining