The news of the increase in price of iron ore could not come at a better time than now for the economy of Sierra Leone as the country is yet to recover fully from the slump in the world price of the commodity which seriously affected the operations of the country’s two flagship investment projects in the mining sector. Both companies – a London listed African Minerals (SL) Ltd which was acquired in 2015 by the Chinese Group – Shandong Iron and Steel, and the former London Mining (SL) Ltd and now Timis Corporation (SL) Ltd, scaled down their operations considerably in the second half of 2014 amidst the fall in the market price of iron ore to about US$40. This affected the output of the mines. Also, the Ebola Virus Disease (EVD) outbreak affected the operations of both companies, as expatriates had to be evacuated from the mine sites as part of a “risk-aversion” measure. Eventually, the companies, who were the main employers laid off their staff causing massive unemployment in the country. This had a negative effect on the country’s economy as revenue collection fell sharply during the period.
From 2012 to mid-2014, the sector was a major driver to the country’s economy and contributed to the economic growth levels. In 2012, the country’s investment value, according to UNCTAD report was US$950million as a result of huge investment in African Minerals (SL) Ltd. Production output in 2013 from both companies was about 14.3million tons and real GDP (with iron ore) for the same year was at 15.2%. These favourable developments enhanced growth for 2013 with (non-iron ore) real GDP growth at 5.5%, compared to 5.3% in 2012.
The country’s economy contracted by 21% in 2015 due to drastic decline in economic activities due to the fight against the EVD scourge. In November 2015, the country announced the end of the EVD and economic activities rebounded.
According to www.mining.com, higher grade iron ore with 65% iron ore content topped US$80 a tonne in recent weeks; thus recovering about 10.6% in value since hitting five-month lows. For Sierra Leone, it is expected that this increase in price of iron ore will trigger an increase in production by Shandong Iron and Steel which will get the country to its pre-2014 production and export figures. It is also expected that other sectors will benefit greatly from the iron ore boom as more tourists will visit, and potential agribusiness companies will join the bandwagon of economic activities in the country.