Sierra Leone Model Projects US$3.63 Billion from Hypothetical Bauxite Mine

A hypothetical large-scale bauxite mine in Port Loko District could generate approximately US$3.63 billion for Sierra Leone’s Government and host communities over 25 years, according to a fiscal model presented by Mines and Mineral Resources Minister Julius Daniel Mattai.

Mattai presented the analysis in Freetown in September 2026 under the title From Ore to Treasury: Sierra Leone’s Mining Fiscal Regime Explained in Plain Language. The presentation was prepared in collaboration with the National Minerals Agency.

The model used Mining Company A Limited, a fictitious operation, to demonstrate how production, revenue, costs and statutory payments could develop over a 25-year licence period. It estimated total gross revenue of US$14.46 billion and combined Government and host-community receipts of US$3.627 billion.

Illustrative production and revenue

Under the assumptions, the mine would produce five million tonnes of bauxite in its first year, six million tonnes in its second year and 10 million tonnes annually from the third year onward. The assumed free-on-board price was US$60 per tonne.

Those figures produced estimated gross revenue of US$300 million in the first year, US$360 million in the second and US$600 million annually from the third year. Operating costs were set at 50 per cent of revenue, while capital expenditure over the first three years was estimated at US$250 million.

The model also included a US$200 million debt facility carrying assumed annual interest of 5.5 per cent, with contractor payments set at 15 per cent of revenue.

Eleven fiscal charges

Mattai described Sierra Leone’s mining fiscal regime as comprising 11 charges drawn from four principal laws and applied in an order established by legislation. Seven were presented as payable regardless of whether a company makes a profit, while four depend on profitability.

The charges identified were royalty, mining income tax, minimum alternate tax, mineral resource rent tax, withholding taxes on contractors, interest and dividends, State participation, surface rent, rehabilitation funding and the Community Development Fund.

For bulk minerals such as bauxite, rutile and iron ore, the model applied a royalty of three per cent of market value. This produced estimated royalty payments of US$433.8 million over the project period, including a projected US$18 million annually once production reached its assumed mature level. Twenty per cent of the royalty total, or US$86.76 million, was allocated to mining districts in the model.

Mining income tax was applied at 30 per cent of chargeable income under the Extractive Industries Revenue Act 2018, as amended by the Finance Act 2026. In a mature year, the model showed chargeable income of US$276 million and mining income tax of US$82.8 million.

Mattai said mineral resource rent tax is intended to apply to exceptional returns after project expenditure has been recovered. He recommended that it be modelled on its statutory base, using accumulated net receipts rather than applying it directly to chargeable income. The model estimated a mature-year payment of US$27.6 million and a total contribution of US$640.16 million over the period.

Community and State interests

The presentation applied a Community Development Fund contribution of at least one per cent of annual gross revenue. That amounted to US$3 million in the first year, US$6 million in a mature year and an estimated US$144.6 million across the project.

It also outlined a 10 per cent free-carried and non-dilutable State interest in large-scale mining operations. A further 35 per cent interest may be acquired on agreed terms, subject to required approvals. The model separately addressed surface rent, with 70 per cent allocated to landowners and 10 per cent each to the Paramount Chief, Constituency Development Fund and District Council.

For a mature year with US$600 million in gross sales, the model estimated Government and host-community receipts of US$154.6 million, equivalent to 25.8 per cent of sales. Across 25 years, the combined share was estimated at 25.1 per cent of gross revenue.

The presentation excluded dividend withholding tax because no dividend policy was assumed, meaning the modelled Government receipts could be higher if dividends were declared.

Mattai said the exercise was intended to show how existing laws should be applied, improve transparency and help public officials understand the financial implications of mining agreements. He also called for every mining project to be tested against the statutory fiscal baseline before agreements are signed.

Among his recommendations were clearer treatment of unresolved fiscal issues, digital community development agreements and stronger systems for measuring mineral production and exports. “We cannot put the ore back,” he said, while stressing that exported bauxite leaves Sierra Leone only once.