Mining spurs Sierra Leone to 20 pct GDP growth in 2013 - IMF

Thu Apr 3, 2014 12:15pm EDT

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* Sierra Leone's mineral resources largely untapped

* Boom in iron ore mining has driven GDP growth

* Mining wealth yet to trickle down to country's poor

By Umaru Fofana

FREETOWN, April 3 (Reuters) - The rapid expansion of Sierra Leone's nascent iron ore mining industry fuelled economic growth of 20 percent last year, according to IMF data, but prices also surged in the impoverished West African nation.

Interest in its largely untapped mineral resources has sparked a flood of investment in Sierra Leone a decade after the end of a devastating 1991-2002 civil war. Its economic growth rate is ranked among the highest in the world.

British miners African Minerals, which operates the Tonkolili project, and London Mining, owner of the Marampa mine, both began shipping iron ore in 2011.

"Economic activity continues to expand robustly, mainly on account of a sharp increase in mining activity," Malangu Kabedi-Mbuyi, who headed a recent International Monetary Fund mission to the country, said in a statement.

Sierra Leone remains one of the world's poorest and least developed countries, and there is widespread frustration that despite the mining boom, more than half of the population of 6 million lives on less than $1.25 per day.

Economic growth excluding iron ore mining activity was 5.5 percent last year, while inflation eased from 12.5 percent in 2012 to 8.5 percent at the end of 2013, the statement said.

Gross international reserves reached 3-1/2 months of import cover, supported by increased export receipts from iron ore, while the fiscal deficit narrowed to 1.9 percent of non-iron ore GDP, from 5.6 percent in 2012.

The dominance of its mining sector has also raised concerns that natural resource exploitation will stifle other exports and fail to encourage broad-based economic development.

"We are aware of it and the government is also aware of it," Francis Kumah, the IMF's resident representative in Sierra Leone, told Reuters on Thursday, adding that the country needed more policies to diversify its economy.

"There is the awareness to do so now and that is a good thing," he said, citing efforts by the agriculture and marine ministries to expand the revenue base. (Additional reporting and writing by Joe Bavier; Editing by Ruth Pitchford)

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