Sierra Rutile Limited, a subsidiary of Iluka Resources, has said that it will suspend its operations from 19th November this year due to rising costs in recent years and huge losses over the past four years.
The company said that its operational continuity has only been made possible by loans from Iluka and the International Finance Corporation (IFC) through its investment in 2019. These challenges have been exacerbated by the impact of the COVID-19 pandemic, making the company’s financial performance unsustainable.
In this regard, Sierra Rutile has provided the Government of Sierra Leone six months’ notice of its intention to suspend operations in accordance with Section 118 (1) (b) of the Mines & Mineral Act 2009, unless sufficient cost reductions and productivity improvements can be made to ensure its commercial viability.
During the six-month notice period, Sierra Rutile says it will evaluate the feasibility of continuing mining operations in the existing mining area (Area 1), through implementing cost reductions and improved productivity, and continue the evaluation of the feasibility of developing the Sembehun group of deposits.
Located 20-30 kilometres north-west of Area-1, Sembehun collectively represents one of the largest and highest known quality rutile deposits in the world. In addition, Sierra Rutile will continue the process currently underway to identify third parties willing to invest in this next phase of the development of its mines.
According to Sierra Rutile, if the cost base of the company’s operations can be reduced sufficiently to enable a return to profitability, new investors can be attracted for the continuation of mining operations in Area-1 and the Sembehun development, and it will withdraw the suspension notice and mining operations will continue.
Sierra Rutile’s Chief Executive Officer, Theuns de Bruyn, said: “The decision is not one we have arrived at lightly. We have made significant investments in our operations and our local communities in line with our long-term vision for Sierra Rutile and its role in the country’s overall development. We remain committed to our local communities, workforce, suppliers and contractors, and our partnership with the Government of Sierra Leone, and will work in collaboration with these groups to identify solutions. As we have said, a cost base reset and new investment would see the operations continue and we could progress the Sembehun development – but there is work to do and we are keen to undertake that work collaboratively with the Government over the coming months.” Mr Bruyn added that IFC has been briefed and that it supported their efforts to improve operations and identify potential third party investors as they seek to continue the company’s positive contribution to Sierra Leone’s economy.
Sierra Rutile assures that it is committed to minimising the potential impact of any suspension on its workforce, communities, suppliers and contractors. And it said will continue to ensure ongoing two-way engagement with all stakeholders and acknowledges the critical role they have played in supporting the company and its operations to date.