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In a strategic move aimed at bolstering Sierra Leone’s mining sector and national infrastructure, the country’s Ministry of Finance has successfully secured a USD 300 million financing package from China Overseas Engineering Group Company Limited (COVEC). The investment is intended to fund the construction of mining operations, transportation infrastructure, and beneficiation facilities at the Tonkolili North Iron Ore Deposit.
The landmark agreement was formalized on July 1, 2025, during a signing ceremony in Beijing, China, between the Mineral Wealth Fund (Sierra Leone) Limited (MWFSL) and COVEC. This Supplementary Agreement builds upon a Framework Agreement previously signed in September 2024 and signals a significant advancement in Sierra Leone’s efforts to channel its mineral resources into sustainable economic growth.
Financing Structure: No Burden on National Budget
Under the terms of the deal, COVEC will provide financing through an Engineering, Procurement, and Construction (EPC) Contract, paired with a Deferred Payment Agreement and a Joint Venture Agreement. Crucially, the financing structure is designed to be non-recourse to Sierra Leone’s national budget, ensuring that no additional sovereign debt is incurred.
The Tonkolili North project falls under the legal framework of the Sierra Leone Mines and Minerals Development and Management Corporation Act 2023, which governs state participation in mining ventures. Through MWFSL—a fully state-owned project company—the government aims to maximize mineral wealth for public benefit without direct fiscal liabilities.
Strategic Implications: Infrastructure, Employment, and Revenue
Finance Minister Sheku Ahmed Fantamadi Bangura, who also serves as Chairman of MWFSL, described the agreement as “transformative,” emphasizing its potential to generate significant socio-economic benefits.
“This partnership enables us to unlock Sierra Leone’s mineral wealth responsibly and effectively,” Bangura stated. “Beyond mining operations, it will catalyze infrastructure development, create employment opportunities, and generate revenue, all within the bounds of our national legal and regulatory framework.”
Mr. Jiang Zhe, Chairman of COVEC, affirmed the company’s long-term commitment to the project, stating: “We are proud to collaborate with Sierra Leone on this milestone initiative. Our focus is to deliver world-class infrastructure and mining projects that are fully aligned with the country’s development goals.”
Broader Context: Resource Nationalism Meets Pragmatic Partnerships
The agreement reflects Sierra Leone’s evolving approach toward resource governance—balancing state participation with foreign investment partnerships. By leveraging a deferred payment model and joint venture structure, the government seeks to secure critical infrastructure investments without incurring unsustainable financial obligations.
For China, the deal strengthens its footprint in Africa’s mineral sector, particularly in iron ore, a strategic commodity for its industrial supply chain.
Key Takeaways for Global Investors and Tax Professionals:
- Financing Model: Non-recourse, deferred payment-based, with EPC and JV components
- Regulatory Backbone: Sierra Leone Mines and Minerals Development and Management Corporation Act 2023
- Risk Mitigation: No direct budgetary exposure for Sierra Leone
- Strategic Benefits: Infrastructure expansion, local employment, revenue growth
- Geopolitical Angle: Strengthening of China-Africa economic ties through resource-backed investments
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