May 14, 2020 / 8:49 AM / 18 days ago

Sierra Leone mining revenue sinks as pandemic hits production and prices

FREETOWN, May 14 (Reuters) - Sierra Leone is weathering a dramatic crunch in mining revenue as COVID-19 restrictions hurt companies’ ability to export gold and diamonds and access essential supplies.

Revenue from mining dropped from $2.24 million in April 2019 to just $0.33 million in April 2020 - an 85% decline year on year, according to mines ministry figures seen by Reuters.

Mining accounts for more than 80% of the West African country’s export revenue, generating the lion’s share of its foreign currency reserves.

“This means big trouble for Sierra Leone,” said mining minister Foday Rado Yokie. “We’re praying that things start up again the next few months because this is completely debilitating to our economy.”

Gold and diamond exports have ground to a halt since March 21, when Sierra Leone suspended all air traffic in an effort to slow the spread of the coronavirus.

Shipments from Chinese-owned Dayu Mining, which operates the country’s largest gold mine, have been on standby for more than three weeks, said Mohammed Daffae, the company’s public relations manager.

Dayu Mining, which usually ships gold by air, initially attempted to export by sea but temporarily misplaced three containers of gold concentrate.

It has since suspended production entirely as supply chain disruptions have hindered access to spare parts and other supplies needed for maintenance, rendering much of its digging equipment unusable.

“If things continue on like this, we’re going to have to start making some really difficult decisions,” Daffae said.

Frustration is mounting in the community that hosts the mine, he added, with more than 300 local staff furloughed and its community development projects on hold.

COVID-19 and a steep decline in diamond prices have caused investors to shy away from projects in Sierra Leone, said Ibrahim Sorie Kamara, co-founder of Trustco Holdings’ diamond mining subsidiary Meya Mining.

Without access to significant in-country capital, he said, the threat to such projects could prove existential.

“The worst thing that has happened with COVID-19 is how hard it’s hit the West, which we rely on,” Kamara said. “You have to be able to look inwards for relief when the greater market can’t offer support.” (Reporting by Cooper Inveen Editing by Helen Reid and David Goodman )

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