Reuters, according to a draft agreement between the miner and government, reported that Sierra Leone plans to increase iron ore miner London Mining tax rate by 19 percentage points to 25%.

The changes to London Mining lease agreement are outlined in a renegotiated agreement which is still to be signed by Sierra Leone president and approved by parliament.

The draft also said the company is no longer permitted to calculate royalties after deductions, while exemptions of charges and duties on sales of scrap metals and discounts on fuel duties will also be removed.

The document forecast that Sierra Leone take from the operation will rise from 35% to 49% and from USD 1.8 billion to USD 2.2 billion throughout the lifespan of the mine which will contribute to boosting growth in the country.

The document said "The figures are based on the assumptions in the financing model used by the GoSL (government of Sierra Leone) team and consistent with the model used by the IMF."

Sierra Leone director of mines, when asked to comment, said the terms of the new agreement are not expected to change from the current draft.

London Mining declined to comment.

London Mining is one of two iron ore projects coming on line in Sierra Leone. British peer African Minerals which has its own tax arrangements with the government has started shipping ore from its Tonkolili mine.

The initial agreement had fixed London Mining tax rate at 6% for the first 10 years of operation. But the agreement had stirred local controversy because it failed to conform to the poor West African nation's mines and minerals laws which specified a rate of 37.5%.

The International Monetary Fund has said renewed iron ore exports will push Sierra Leone's GDP growth to a staggering 51.4% next year.

Several governments across Africa have moved to renegotiate contracts and mining codes to get more revenue from the mining industry against the backdrop of the rise in commodity prices and widespread perceptions that the region's vast mineral wealth has not translated into broad prosperity.

(Sourced from Bloomberg)