Sierra Leone cancellation of iron ore contract represents fresh rise of Africa’s resource nationalism

Iron ore pellets

THE controversial cancellation of an iron ore contract by the government of West Africa’s Sierra Leone was a fresh manifestation of resource nationalism, said the Financial Times in a report on Thursday.

The newspaper cited an announcement by Gerald Group, a metals trader, on Tuesday that its license to mine the steelmaking ingredient was cancelled “with immediate effect” by the government, and it would pursue claims for more than $500m in compensation.

“African countries which, up until now, showed less tendency towards resource nationalism are now trying their luck,” Eric Humphrey-Smith, an analyst at risk consultancy Verisk Maplecroft, told the newspaper. “There is a significant trend and governments are sharing notes with peers,” he said.

Whilst the likes of South Africa and Liberia had adopted less aggressive mining codes, other African countries wanted to address the colonialist practices of investors. Zambia and the Democratic Republic of Congo were identified as two examples of this.

However, economics would have the final word on politically motivated decisions on how minerals are developed. “Although politically popular, these experiments will be assessed against the impact on investment and public revenues,” said Thomas Lassourd, a senior economic analyst at the Natural Resource Governance Institute.

“Time will tell whether the world’s need for strategic minerals such as copper, cobalt and gold is enough to convince mining companies to operate in Africa at a much higher cost,” said Lassourd.