A.1. The situation has been developing in a very satisfactory way, as the increase in the amount of legal exports also indicates it. The certification scheme was introduced in October 2000, the amount of export for that year was 10 million USD worth of diamonds. It increased to 26 million USD in 2001, to 41 million USD in 2002 and as of June 2003 we have already exported 37.8 million USD. If the trend continues we expect to export over 70 million USD by the end of 2003. In that regard the development has been satisfactory. In the area of smuggling, one would easily think that if the legal export is increasing, the illegal smuggling must be going down, may be not in the same proportion but definitely it should be reducing. We have an understanding with the UNAMSIL forces and the police to act together to reduce illegal activities especially the illicit mining. Eventually the illegal trade and smuggling will also be covered by these joint actions. We have introduced both air and land patrols in the mining areas. I must say that apart from the legal export of diamonds there has also been an increase in the number of legal mining licenses. As of December 2002 we had roughly given 1200 licenses, as of June 2003 we have about 1900 licenses distributed. There has also been a substantial increase in the areas of mining, mainly in the district of Kono. Over 50% of the mining licenses are for this part of the country. As you see together with the legal export, there has been an increase in legal mining activities and I am very happy about it, I believe that this trend will continue.

Q.2. The certification scheme is by no means perfect according to some, how would you reply to these people?

A.2. Everything has a start. Those people who are making those remarks think that compulsory monitoring should be applied immediately. The other group of people prefer to go step by step. We start with internal monitoring, self monitoring and than the industry will gradually join that process. We should not forget that diamonds are a very different commodity from others. Most people that are engaged in that area would like to keep their figures confidential. Many don't like to publish their results, just because they think that others would take advantage of it. So far the first year of the Kimberly Process has produced very positive results. Many of the NGOs would like to have compulsory monitoring, but I think that we have embarked on the process and eventually it will come in too.

Q.3. The so called "Lebanese factor" in the diamond business used to be of major concern for a number of years for businessman, how will you neutralize the negative results of those years?

A.3. Well, the figures speak for themselves. We have about 5 Lebanese groups or individuals that are engaged in the export of diamonds and about 30 Sierra Leonean. When you look at the performance and the legal export numbers, it's about 15% to 20% by the Sierra Leonean and the rest comes for these Lebanese groups. The government has taken a number of steps to raise the number of nationals in that business; first of all they have reduced the license fees for Sierra Leonean. Whereas the foreigners pay a fee of 30000 USD per annum, the Sierra Leonean pay 5000 USD per annum. Another important step is that there is no limit to the number of Sierra Leonean who would like to be engaged in that business. Like in every business the market will determine the needs and the number of participants. With the increased number in legal exportation, we don't have any base to think that the other groups are involved in smuggling. It has always been the smuggling side of this business that people have been critical of, and we are sure that it is decreasing, not necessarily abandoned altogether, but it is reduced considerably. Purely from the legal operations, one can see that the Lebanese are leading, but the Sierra Leonean will compete soon. The main problem here is the access to capital; it is more favourable to the Lebanese. Generally speaking, the banks consider mining as a very high risk area and are not willing to give loans, no matter what kind of mining we are talking about. The controlling factor in this case is the availability and access to capital.

Q.4. Some specialists say that one of the possibilities to eradicate the illegal trade of diamonds and get more funds into the Govt. pockets is to stop individual mining, what do you think about that?

A.4. Lets go back a few years time, when the whole country was under the concession of one company called SLST the Sierra Leone Selection Trust. It soon became apparent that they could not police the whole area. They started operations in 1933 and by 1956 it was clear that they could not control it, since diamonds have been discovered all over the country. Soon they were convinced to give up most of the areas and to retain the most lucrative ones, in terms of grade, which were the Kono and Tongo areas. The Government has decided to give the rest of the territory to individuals and most of what we are exporting is coming from those individuals. The company Branch Energy will be the first one to go into production in September or October. Our policy is: unless you can attract big mining companies you should not prohibit individual mining. This is also what I will advise to the Government. At the same time we have to prepare the conditions and attract large, reputable companies to come and mine here. We are still at the stage of opening the doors to them.

Q.5. One has to know that Sierra Leone has much more to offer, not just diamonds. One of the recent successes was to obtain funding to relaunch rutile mining, could you elaborate on that?

A.5. We were one of the biggest producers of rutile in the world and we had the best quality until 1995, when the mine was overrun by the rebels. In fact it was the largest single producer of rutile in the world. Fortunately for the company, most of the important components of the assets were preserved, the mining machinery, the power plant, the treatment plant was untouched, and those are very important assets. The residential areas were ruined, but those could be reconstructed easily, so it was very easy for them to decide to come back. Also they had a formidable security setup founded by them.

The Government, through the EU has granted 25 million Euro, the US based OPIC, has also provided a 25 million USD loan and the shareholders will provide another 14 million, a total of 64 million USD will be required for the startup. There are also other important mining areas such as bauxites; a feasibility study is being done now in the area formerly mined by Sieromco. They are planning to start the development of the site in October - November. There are also a number of gold mining licenses distributed and I know at least of one company that has applied for a mining lease and they will start development soon, the so called Baomahun Gold Mining Company. They have decided to come in and even though there are still some difficulties with the local people, those can be settled and at the end of it we will have a mining company to come in and take over the site. Platinum is also in the exploration stage. It can be found mainly in the Western area around Freetown. We have dimension stones that we used to export in a bulk form. Now, there is a project to polish it here, so when it is exported it has added value. It is all equally important for us and in the coming 3 to 4 years we are expecting to have at least 4 working mines: one diamond, one or two rutile, one bauxite. Iron ore is coming back to the scene, we are developing it actively. The whole portfolio of minerals going into production will be increased very soon.

Q.6. The Even though, the country needs to diversify its productive base, mining and mineral resources will remain one of the most important sectors. The latest developments are the offshore oil exploration bids awarded. What more could you tell us about that?

A.6. The bids were opened in May. We have evaluated 3 bids and we have awarded licenses. The largest of the bidders was Repsol of Spain, active in many areas of the world. They have received 2 Blocks, Block 6 and 7. A medium sized company, the Nigerian based Oranto participated too and they have been awarded Block 5. The third one was the small sized, american backed Number 8 Investment, with a strong Sierra Leonean connection. They have been awarded Block 4. These companies will be applying to the Government for exploration licenses, we already have a model agreement ready and then they will be going into exploration. They will also do 2D and 3D seismic surveys and then eventually start drilling wells before they can say that they have discovered significant reserves.

Q.7. What about finding oil onshore?

A.7. At first we will develop the offshore potential. Much work has not yet been done on the onshore side. The tendency in the world now is to go into the deep water areas, most of the work we had done before was in the shallow waters, just by the shelf. The latest experience in Brazil, for example shows also that the real reserves are in deep water, that is another reason why we are developing the deep water areas.

Q.8. What would be the challenges for you to develop further in the future the mining potential of the country?

A.8. We have come up with a number of initiatives. We are developing the Foreign Investment Act, where we have made special concessions for mining ventures. For example the corporate tax in the mining sector is 30% compared to 35% in the other sectors. Similarly, the machinery necessary for exploration work can be imported duty free. We are doing as much as we can. We are conscious that we are in competition with the neighboring countries. Without trying to be over competitive we are trying to make conditions as favourable as possible for investors. Most of the mining will be done in the rural areas and you have to know there are addition special concessions for taking an industry upcountry.

Q.9. How do you expect these companies to change the rural and cultural landscape of the country?

A.9. We will be very cautious especially with the rutile. Rutile mining, by nature is one that damages the environment immensely. To start mining, first of all you have to flood the target area and then dig down up to 30 feet that takes away a lot of land that could be used in agriculture. However, partly the answer is that if you can not dry out the area afterwards, at least create some fish ponds to utilize it, it is better than to leave unused. The Government needs the proceeds of the mines, we have around 1.87 million tones of rutile, the in situ value of it is easy to calculate just multiply it by 400 USD per tone and you will come up with an impressive sum. But you have to have people who are ready to bring in their capital to be able to explore it and turn it into real value. We and the lenders are insisting on ecological and social impact surveys, and our american partners insisted that all this is made public. All that has been done, this survey is available here too, so that anybody can come and take a look at the environmental considerations as well as the social impact of the operation.

Q.10. You are traveling a lot to attract foreign investors to the country, how are you being received and what is the reaction of the business community?

A.10. First of all the good news travel very slow. There are very few people that actually know that the war is over. For instance, in March I traveled to Ontario, Canada and they have still not heard that the war was over and that we have signed a peace treaty in January 2002. You actually have to travel and let people know and promote the positive development. There was also an exhibition on minerals that have attracted a lot of very big mining companies, and we took the opportunity to let them know about the potential we have here. Everybody is looking for places to invest and when they find the proper conditions, they are going there. We have already a number of new companies that have expressed their interest, made enquiries and we are hoping for more to come to cover the entire country. One would wish that every rock had a mineral with an economic value, but nature does not do things that way. But to find that out, you have to come in, you have to do exploration first and so we are trying to get people become interested in exploration activities and so far it has been very satisfactory.