Bankruptcy of controversial mining company leaves communities in Sierra Leone at risk

Resettled communities in Sierra Leone are at risk of losing access to water and food as a result of African Minerals, the UK-based iron ore mining company, going into administration last month. It remains unclear whether the new Chinese owner will uphold agreements to provide rice and water tanks to families who were involuntarily displaced to make way for the mine. This is one of the main findings of a new SOMO report, published today.

African Minerals in Sierra Leone

African Minerals’ decision in March to appoint administrators marked the final phase of its demise, which is largely due to its inability to react to the spiraling down of global iron ore prices. The collapse of the iron ore sector is becoming more and more evident, and is commonly attributed to the drop in demand in China and the increased supply from major companies in Australia and Brazil. African Minerals, a company implicated in forced resettlements, labour unrest and grave human rights abuses, relocated villages that became unable to provide for their own livelihoods. By way of compensation, the company agreed to provide water trucks and bags of rice to resettled communities.

Bankruptcy

African Minerals’ mining operations have been suspended since December 2014, and with the company’s bankruptcy the mine has been handed over to the Chinese Shandong Iron & Steel Group, a former client and creditor. It remains unclear whether the arrangements with the resettled communities will be upheld by the new owner, leaving the resettled communities at serious risk. Should the provision of food and water be ceased, the effects for this vulnerable group could be devastating.

Iron ore sector

Impacts of the global iron ore sector

SOMO’s new report is the second in a series of case studies on the global iron ore sector. In this series, the adverse impacts are linked to competitive business strategies and characteristics of the global iron ore market. As such, this report provides insight into the decision making process of iron ore mining companies and the ways in which these affect local communities. This report also provides relevant insight for governments, the international community and local stakeholders on the role of multinationals in conflict-affected areas.