Ouagadougou, Burkina Faso — 27 September 2012 – Seven new mines are preparing to open operations in Burkina Faso and, together with an improved mining code, this should double the mining sector’s contribution to the country’s economy in the coming years.
“The new mining code “’ a revamp of a 2003 document that is due to be tabled in parliament by the end of this year “’ will benefit both the state and mining companies in equal measure,” mines minister Salif Lamoussa Kabora told Reuters here.
The current draft of the law includes a 20% tax on the sale of licences, a move that may hit expansion plans by miners operating in the country, which has attracted small and mid-sized companies.
Kabora said there would be a number of other changes to the tax system aimed at increasing government revenues from the sector, but declined to give any further details.
Kabora said that the sector’s contribution to the economy currently represents 12.7% of Burkina Faso’s roughly US$10 billion gross domestic product. But he said the figure was set to leap with the opening of the nation’s eighth mine at the end of 2012 and another six mines in the coming years.
“If I look at the projections, with 14 mines it should come to 20 to 25% of GDP. That is our aim,” he added.
Miners already operating in Burkina Faso, one the world’s poorest countries, include Avocet Mining plc, Cluff Gold plc and Blackthorn Resources.
The Bissa-Zandkom gold mine, a joint venture between Burkina Faso and Russia’s Nordgold, is due to launch production in December. Operations expected to come online by 2015 include the Perkoa zinc mine, joint-owned by Blackthorn and Glencore, and the Tambao manganese mine.
Geology similar to neighbouring Ghana and Mali, Africa’s second and third largest bullion producers respectively, has made Burkina Faso attractive to miners lured by gold prices hovering around historic highs.
While a strategy aimed at selling the country’s mining potential to investors has proved successful over the past decade, Kabora said the current mining code has not allowed Burkina Faso to fully benefit from the sector’s growth.
“In the 2003 code we were trying to attract lots of mining companies. We achieved that…but we were not a country with a mining tradition. There were errors,” Kabora admitted. “We have decided to make some corrections. But I can assure you that this code will not make investors flee…These changes will benefit the state as well as the mining companies,” he added.
On the Fraser Institute’s 2011/12 mining index “’ a measure of industry perceptions of a country’s policies and minerals potential “’ Burkina Faso is ranked third most attractive in Africa, behind Botswana and Ghana and ahead of heavyweights such as South Africa and Mali
Source: Reuters Africa. For more information, click here.