Mali, Africa’s third largest gold producer behind South Africa and Ghana, has been mulling a review of its 2012 Mining Code for some time now, but progress has been slow.
While the changes have not yet been finalised or announced, the country has been considering the scrapping of a 30-year exemption that protects companies with projects in the country from changes to the fiscal framework, along with other changes.
Compiled by CHANTELLE KOTZE.
Having led the National Directorate of Geology and Mines in Mali, Lelenta Hawa Baba Bah was named the new Minister of Mines in September 2018 following a change in government under president Ibrahim Boubacar Keïta.
As minister, she will oversee the government’s bid to revise the mining code.
Holders of a Mining Permit in Mali are required to enter into an agreement referred to as a “Convention d’Établissement” or “Mining Convention Agreement” with the Malian government prior to the commencement of exploration or mining activities.
This agreement operates in parallel with the Mining Permit and, with the applicable Mining Code and other relevant legislation, governs the conditions that apply to exploration and mining operations.
These conditions cover work obligations, reporting, taxes, duties, customs, local content, training obligations, and Mali government equity participation.
The new agreement guarantees a new 10% lower income tax rate of 25%, and has resulted in the Mali government granting a 10-year extension to the Syama Mining Permit.
Furthermore, the emerging miner has also been guaranteed that royalty rates, taxation regime, and fiscal provisions can only be improved by future legislative amendments.
“Mali is a well-managed, long-standing, globally important gold mining jurisdiction,” says Resolute Mining’s MD and CEO John Welborn.
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Overall economic growth in West Africa is projected to be at 3.6% in 2019 and 2020, boosted by the recovery of commodity prices and improved production and service sectors in the region, according to the African Development Bank.
As early as 2000, Economic Community of West African States (ECOWAS) members stated their strong commitment to harmonising tax regimes in the extractive sector, with a view to avoiding tax competition and its negative impact on public revenues.
West African Economic and Monetary Union (WAEMU) member countries agreed on a common policy and common mining code for the mining sector in 2003, which set the tax and customs benefits that can be granted to mining companies in member states.
The code also specifies provisions at the national level (lease term, rights and obligations, amount of fixed fees and duties on plot area) and at the community level (mining tax basis and rates, duration of exemptions, government participation, and terms of the stability clause).
But the code was never implemented. So tax regimes differ widely across member states.