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Q.1. It has been a great success for
the company to be able to obtain funding
to relaunch its activities, what have been
the challenges you had to meet and most
importantly when and how will you start
operating again?
A.1. Sierra Rutile used to be the
biggest single donator to the Governments
revenue. Most of the people think that it
was the diamonds but in reality rutile alone
earned more than 50% of the country's foreign
exchange. In 1995 the mines had to be closed
down because of the war. The challenge since
then is to reopen them, to attract investors
back. The general feeling about Sierra Leone
is that the war is still going on. The country
has not been good in putting its case to
the outside public and the investors and
there is still a lot of nervousness about
bringing in huge amounts of capital. To
start up our activities we would need 64
million USD, so as you can see we are talking
about serious amounts here. We have a significant
shareholder who will invest part of that
money but also we had to negotiate with
some of the development banks and with the
EU. Most of the private capital, as a result
of lack of information is still nervous.
With the development banks we were able
to finalize the negotiations to secure the
funds that we need and we are hoping that
by the end of November we would be able
to start the initial phase of mining. It
still remains a challenge; we had to put
up very serious guarantees both inside and
outside the country to make sure that we
get what we need. Even the development banks
that specialize in countries like this one
are still nervous about Sierra Leone. They
argue that anything can happen again and
then the money is lost. That is why after
spending 64 million USD in one year, even
if your payback period is not so long, for
them anything longer than a year is too
long. Even though, I don't believe that
Sierra Leone would go through that kind
of a war again.
Q.2. There are 4 known deposits, what
are the plans and the schedule to relaunch
them?
A.2. Three of the 4 known reserves
are already in the pipeline for exploration.
The fourth one still needs a lot of geological
work, we are not completely sure about the
quantity of the deposits there, but with
the rest with a conservative lifeline they
will last until 2016. The whole amount of
the reserves is estimated at over 280 million
tonnes of rutile; if we could exploit all
of that it would last for around 25 years.
Another important thing is that all the
deposits are in the South of the country
which makes the work a lot easier for us
since it is quite a machine intensive work
and if we would have to ship the machines
across the country, it would make it far
less profitable.
Q.3. Once the biggest employer and the
major foreign currency earner in the country,
what will be the importance of Sierra Rutile
this time for Sierra Leone?
A.3. Sierra Rutile has 3 main functions
to fulfill with its restart. The first one,
of course is an indicatory, that Sierra
Leone is back in business. Sierra Rutile
will start with 64 million USD, but if we
want to bring it up to a good level it will
require a total investment of 112 million
USD. In the West Coast of Africa you don't
get a bigger private investment, outside
the petroleum industry, than this one. It
is a very strong indicator to the psychology
of investing in Sierra Leone and that is
very important for the future of the country.
Secondly, job creation. According to conservative
estimates when we start operating, we will
employ 700 people directly and 1200 people
indirectly, you also have to take into consideration
the multiplying effect, according to the
last studies as a result of opening the
rutile mines again we will have around 5000
new jobs created in the economy. Also Sierra
Rutile will be spending money in the country
that also has a multiplying effect. Now
that the country has come out of the war,
the people need something to do, they need
jobs, if they will remain again without
jobs for a long time, they will become vulnerable
to destabilization. The third aspect is
the Government revenue. As you know most
of the revenue at this point of time is
external donations and you can't run a country
on donor funding especially with Liberia
looking like the next darling of the aid
world, Sierra Leone will drop off that list,
which it should. We have had our help, they
have put our house in order and now it is
time that we took care of it ourselves.
It is very important to reassess the private
sector and to get revenue from the private
sector, from internal sources. These are
the main 3 points of having rutile mining
back in the country.
Q.4. What are the plans to exploit the
other minerals that are present in the area,
such as ilmenite or zircon?
A.4. The process of mining rutile is
very similar to the process of mining ilmenite,
for example and we have always been doing
that. Lets say, if you mine 140 000 tons
of rutile, you will also mine 90 000 tons
of ilmenite, it is essentially just a lower
grade of rutile. With zircon it's similar,
even though, you need a slightly different
processing procedure. We will also start
mining the zircon and we will stockpile
it and then sell it, it will not be our
main focus but we will definitely sell it
over the time. The other important mineral
is the bauxites, we also have a daughter
company that is into bauxite mining and
eventually we also want that to develop.
For now, these are the main minerals that
we have discovered in that area.
Q.5. Once you start operations, what
will be the target markets for Sierra Rutile
and how will you market and sell the product?
A.5. In the first year, we are planning
to produce 90 000 tones of rutile, under
the current mining plan the optimal level
would be around 140 000 tones. When we position
it on the market, we have to know that it
is a natural rutile, it is 94% to 96% of
TiO2. Everywhere else in the world the producers
of rutile would get, at the best around
83% to 84% and so they have to upgrade it
and even then they can't reach what we have.
So we are talking about a higher level of
specification for the rutile. A 140 000
tones of that rutile amounts for 25% of
the global market, at least that was the
share that it had before. With the closure
of the mines you had of course substitutes
coming in, but I am sure that we will regain
our positions. At the beginning it may be
a lower market share but then eventually
it will grow up. We already have an in-house
marketing department that will be in charge
of helping us to sell it. Since the closure
of the mines in 1995, in the pigment market,
where they rutile is being utilized, there
has been a lot of mergers, so we are talking
about a handful of companies, with most
of them situated on the East Coast of the
USA and they are going to be our main targets.
The way we intend to market it to them is
with a different approach. Since 1995 they
had undergone many changes, they had to
change their processing every time they
received new raw material. This time we
will first start mining, we will stockpile
the products in their backyards, a quantity
enough of say 3 to 6 months of production,
so they can have some confidence and they
can start using it for production. That
is the best way for us to actually break
in into the market.
Q.6. The Government claims to have played
a key role in helping to provide for the
funding, how would you rate the level of
your cooperation with them?
A.6. It is important to have the
Government in the mix, so to say. In this
particular case, the EU technically can
not give money to a private company, so
they found and elegant solution and they
will give a loan to the Government of Sierra
Leone, which the Government will transfer
to us. This debt we will pay back to the
Government and that money the Government
can use for further development projects
over the time. Basically what is going to
happen is that they will give us the money,
we will manage it and we will pay it back
to them. Obviously, the Government is a
critical partner since it is very difficult
to mine in sub-Saharan Africa; we need them
to give us security. There is a lot of interference
in this part of the world; many people don't
understand what is the difference between
private business and public sector. You
need to have a good Government in place
that actually understands that, to leave
you alone, so that you can get on with the
business that you are in. They are a critical
partner for us and obviously when we go
to meet the potential partners it is very
important for them to see that we speak
the same language as the Government. Another
aspect of the investor's nervousness is
that they are usually reluctant to invest
in Africa, even without a war, because you
have these nationalizations. They need a
Government that understands the capital
markets and that is able to give them the
security that they need that is another
key factor why we need them. Up to now,
this Government has been helping us tremendously.
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Q.7. There
has also been an extensive environmental impact
study carried out, have the results been really
satisfying?
A.7. There is obviously a significant
impact on the environment because of the
way that rutile is mined. The method we
have chosen is what we believe to be the
most effective one, by using a dredge that
sits on water. What we intend to do is to
prepare the ground by building damns and
then we will leave it for 2 to 3 years and
fill it in with water from the rain. What
we can do afterwards is to drain it to a
slump level that can be used to plant rice,
for example. We actually started the fish
farming there in 1993, it went quite well,
but you can't just have the whole area as
ponds for fish farming. It is a very tricky
thing, we will have to negotiate with the
locals to see what they want and we will
also have too look at what is the best for
us. In our environmental policy we intend
to reintroduce various crops to the area,
we will try to improve and mechanize the
type of farming that they have. In terms
of using the ponds, yes you can use it for
fish farming, but you will not be able to
gain much in the long term perspective,
that is why our policy is to diversify the
agriculture.
Q.8. Since you represent the biggest
private investment in the country it is
important for our readers to know how you
would rate the level of security and stability
in the country and what are your expectations,
how lasting it is going to be?
A.8. I feel very confident about
the positive developments in Sierra Leone.
In the history of the war, you could really
notice that the war took hold in the country
when the army split up. Prior to that, the
army, as badly trained as they were, were
at least united, while when the army split
up, the rebels came in between and that
is when the whole mess started and you did
not know anymore who was who. I think that
with the training that the army is receiving
from IMATT with the help of the British,
the Americans and other nations will make
them better trained than they ever were
in our history. We don't have to be as well
trained as the British Army, because its
not the British that will come across our
borders, we just have to be better trained
than the rest of the armies in the West
Coast of Africa. The situation in Liberia
is I think very far from being over, but
at least it got the worlds focus and Charles
Taylor will go. I don't think that the rebels
after that will just come together and lay
down their arms, but at least you got the
world attention focused there and they will
maintain it. When talking about regional
destabilizing factors it would be actually
Guinea (Conakry) and not Liberia. Guinea
is going to be a completely unpredictable
place; we don't know what is going to happen
there. I believe that the Sierra Leone Army
is efficient enough to defend our borders
and the integrity of the country. There
is also a very efficient leadership in the
country; both the opposition and the ruling
party will not go to the extent of destabilizing
the country. Looking at the possible flashpoints,
many people thought that the Special Court
on Sierra Leone will be one, but I don't
think so, if there will be important people
arrested than it will be a sort of sacrificing
them for the peace process. Another flashpoint
may arise in the next 5 years in case the
country will not start developing economically.
Then we might go back to that critical point
when people have no jobs and they will be
more vulnerable to the ideas of the like
of Foday Sankoh, the rebel leader. I think
that the main decisive power about the future
of this country is the economic development.
Q.9. When speaking about the economy
and the development, this is when the investors
come into the picture. How ready is the
country together with its new Investment
Code that is still to be adopted to welcome
all these foreign investors?
A.9. I have read the new Investment
Code, but I think that they need to focus
more on the incentives side of it. There
is a problem, namely the Government is eager
to get revenues, but you need to give incentives
if you want to be attractive. So the Government
is facing a dilemma now, whether to get
revenues quickly or to get long term investors.
If you can give a tax holiday of ten years
and it will create 1000 jobs, you can get
more revenues through the back doors. Frankly
speaking, the Government does not seem to
realize that to the full extent. I don't
want to blame them for that, because we
don't have any other Government that had
an exposure to capital markets. This is
one of the challenges for them in the future;
the Government machine has to become more
streamlined to receive investors. Right
now, if an investor is coming he will find
it rather frustrating, because there is
no one place where you can go to get the
right kind of information that you are looking
for. I think that they will have to do it,
if I can choose between 50% of nothing or
50% of a dollar; I would go for the 50%
of a dollar. I sincerely hope that they
will do it soon, because the first thing
that the investors are asking for is, what
incentives am I going to get? They really
need to push it through, the problem is
that they don't spend too much time consulting
with the private sector and I think that
this is something that they should do, because
we are the ones that will be affected by
it.
Q.10. Could you also tell us about your
career so far and how you were appointed
to such a responsible position?
A.10. I did my studies in the UK
my first degree was in politics and economics,
and my first job was buying diamonds, I
was working for De Beers. Soon I started
a private company that was also a diamond
buying company, I have worked in Angola,
Zaire, Rwanda, but I found it really boring.
After that I went into acquisitions and
mergers, I was a venture capitalist. Most
of my work I have done here in Africa, which
perhaps reflects well on my personality.
Eventually we bought Sierra Rutile, and
it has been in the pipeline since 1995.
I am not an engineer so the reason why I
am here is to make sure that the company
starts well. You see, Africa is not that
different, if you know one country well,
you may be able to figure out easily how
things work in the rest of the continent,
it always comes down to the same issues
and the same things. When you meet with
the Government they always have the same
good and bad issues that run further, you
just need to identify them and then you
can move on.
Q.11. If you would have to summarize
the importance of Sierra Rutile and advertise
it to the outside world, what would you
say?
A.11. Sierra Rutile is the hope
for Sierra Leone in terms of its future,
because once the rutile mining starts, the
bauxites will start soon after and so on.
Let me tell you a story from the time when
Sierra Rutile was operating. Many people
here could not afford to go the UK for holidays,
so they would take their families to the
rutile area, because they considered that
as the west. You had 24 hour electricity
here, you could buy anything, so the rutile
area was a sort of an oasis and it gave
hope to the people. Everybody wanted to
work with Sierra Rutile, if you go to the
most successful companies and talk to the
management you will find out that they all
worked for Rutile and had their training
done here, because we had a very different
work ethic and culture. In terms of showing
the professionalism and the potential of
Sierra Leone, rutile is the commodity that
embodies it.
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