The Sierra Rutile Review 1 2015

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THE SIERRA RUTILE REVIEW SIERRA RUTILE’S $44 MILLION VOTE OF CONFIDENCE IN SIERRA LEONEAN ECONOMY GREENHOUSE AGRICULTURE TO BOOST SMALLHOLDER FARMERS IN SIERRA RUTILE’S MINING COMMUNITIES Sierra Rutile gave Sierra Leone’s Ebola-hit economy a big vote of confidence on 21 April 2015, with the news that it is set to construct a $44 million dry mine at Gangama, substantially expanding its rutile mining operations in the South of Sierra Leone. Announcing the multi-million dollar investment at a meeting of international investors in London, John Bonoh Sisay, Sierra Rutile’s CEO said: “We are very excited to be embarking upon the next phase of Sierra Rutile’s expansion. Sierra Rutile is a strong company with a first class mining asset and operating team. Many other operators struggled to contain the impacts of Ebola, but we have worked tirelessly to mitigate these and emerge even stronger as an organisation. The Gangama expansion project is a significant investment in our operations and an important milestone in our history. As well as creating jobs in the area, both in the construction and operating phase, it will help secure the long-term future of the company and positions us well to become the world’s premier low-cost producer of high-grade mineral sands.” Sierra Rutile has been one of Sierra Leone’s leading mining companies, since it started operations 48 years ago. The company currently employs almost 2,250 people, either directly or through contractors, 95% of whom are Sierra Leone nationals. Commenting on the good news, the President of Sierra Leone, His Excellency Dr Ernest Bai Koroma said: “Sierra Rutile’s announcement of this major investment in its mining operations marks a turning point as we start to rebuild our economy following recent Ebola-related challenges. 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 construction of the new Gangama dry mining operation will be similar to Sierra Rutile’s previous expansion project – the Lanti dry mine, which was commissioned in January 2013. It will be developed in two phases, each capable of mining 500 tonnes per hour. Sierra Rutile’s board of directors has approved the $44 million budget for the first phase of the project. Gangama Phase 1 is expected to drive down Sierra Rutile’s total operating cash costs to $595/t and all-in operating cash costs to $670/t on average over its first five years, cementing Sierra Rutile’s position in the global market as the premier low-cost producer of high quality rutile. Construction of Gangama Phase 1 will begin this quarter and take 12 months, with first production targeted for the second quarter of 2016. Sierra Rutile is working with agro-support specialists - Fresh Salone, on a greenhouse agriculture initiative intended to boost smallholder farming within neighbouring mining communities and contribute to Sierra Leone’s economic recovery. The US$45,000 agricultural livelihood sustainability project includes the construction of five greenhouses, training for 93 farmers in agribusiness and modern farming techniques, a drip line irrigation system and the supply of fertiliser, seeds and pesticides to five farmer cooperatives in Imperi, Lower Banta, Upper Banta and Jong chiefdoms. Sierra Rutile’s Corporate Social Responsibility Manager, Jasmine Clerisme, says: “In 2012 we undertook a livelihood survey of our mining communities. This showed that 82% of the population engaged in farming lacked access to capital and quality inputs. This is because farming was largely done at a subsistence level with limited opportunities for generating sustainable income. The introduction of greenhouse agriculture provides an opportunity for smallholder farmers to increase their income and improve their business and financial management skills through targeted training.” As part of the initiative, the five cooperatives will enter into an agreement with ATS, Sierra Rutile’s catering service provider to supply produce at negotiated rates. ATS currently sources only 18% of its supply needs from local farmers but the introduction of greenhouse agriculture is expected to increase this figure to 95%, and provide a reliable market for local farmers. Commenting on the project, Alhaji Sidi Baun a master farmer with over 35 years of farming experience and head of the Matagelema Farmers Cooperative in the Lower Banta chiefdom, said: “The benefits that this initiative brings extend beyond the farmers who are directly involved, to the entire chiefdom. The skills that we acquire will be learned for life and passed on, helping us greatly in our fight against poverty. SIERRA LEONE’S BUSINESS COMMUNITY CALLS FOR INVESTMENT-LED POST EBOLA ECONOMIC RECOVERY FIVE CHIEFDOMS WITHIN BONTHE AND MOYAMBA DISTRICTS RECEIVE LE 510 MILLION FROM SIERRA RUTILE TOWARDS AGRICULTURAL DEVELOPMENT FUND Sierra Rutile has paid US$120,000 (Le 510 million) towards agricultural development in the five chiefdoms in its area of operations as part of its corporate social obligations. The payment was witnessed by representatives from the Government of Sierra Leone. The money, which is based on Sierra Rutile’s annual profits, is paid directly to the Government through the Ministry of Agriculture Forestry and Food Security, the Ministry of Local Government and the Ministry of Mines and Mineral Resources. These Ministries allocate the money among the chiefdoms, based on the extent to which their livelihoods have been affected by mining activities. This year Imperri Chiefdom received Le 180 million; Lower Banta Le 100 million; Upper Banta Le 90 million; Jong Le 90 million; and Bagruwa Le 50 million. When Sierra Leone’s business community and international investors came together earlier this year in London’s House of Commons, to discuss the post-Ebola economy at a Chamber of Mines sponsored event, the overwhelming message was that a sustainable economic recovery for Sierra Leone needed to be investment-led. The event - ‘Post Ebola economic renaissance in Sierra Leone and the role of the private sector’ - was chaired by British politician, the Right Honourable David Lammy MP and attended by over 150 international and national business people, financiers and investors. Representatives from Sierra Leone included Dr Samura Kamara, the Minister of Foreign Affairs; Momodu Kargbo, Governor of the Central Bank; Joseph Kamara, the Head of the Anti-Corruption Commission; Professor Monty Jones, Special Advisor to the President and H.E. Mr. Edward M. Turay, our High Commissioner to the UK. The opening speech was delivered by Sierra Rutile’s John Sisay, who is also President of the Sierra Leone Chamber of Mines. He emphasised the country’s resilience and economic potential. “Sierra Leone is a country that holds much promise. It has been tested over the years, but at every given occasion has shown itself capable of facing down its challenges. Our country has made resilience its backbone and real hope its oxygen. We are a small country of six million people, but we have big ambitions and our problems are small enough to fix.” Simon Cleasby, CEO of Addax Bioenergy - a large agri-industrial investment in Sierra Leone – gave the investor’s perspective. He told the audience that Addax’s experience of investment in Sierra Leone was positive, notwithstanding the immense challenges that the country is facing. “We started production in 2014, have just made our first sales of bioethanol, and remain completely committed to our investment, as well as to Sierra Leone,” he said. The keynote speaker, Dr Samura Kamara, Minister of Foreign Affairs, focused on economic diversification: “Mining is the main driver of revenue in Sierra Leone and the sector is estimated to provide about 300,000 jobs, which is second only to agriculture. As such it is extremely important to our future prosperity; however Ebola reaffirmed our need to diversify the economy, as we have learned from shocks such as this, and of course the civil war, that resilience depends on opportunities for growth, employment and development across different sectors.” Three other panellists - Mykay Kamara MD of A&A Investments and Services; Isha Johansen, President of SLFA; and Amara O Kuyateh, Deputy Director General of NASSIT - joined the speakers in answering questions from the audience. Capacity building emerged as a particular theme, with Mykay Kamara saying: “It’s incredibly important that we couple increased liquidity with capacity building. It is not just about injecting capital into companies. We have to do that alongside capacity development, across all aspects.” Kamara’s point was underscored by NASSIT’s Amara Kuyateh who said: “We need to invest in local leadership, building the systems that support it and investing in the capability of local people. Sierra Rutile is a testament to what investing in local leadership and local capabilities can achieve.”
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