Abidjan, Ivory Coast — 01 November 2012 – The new windfall tax imposed on gold profits by the Ivory Coast government could hamper plans by international miner Randgold Resources to branch out from its Tongon mine and launch new projects in the West African country.
Reuters reports that in September the Ivory Coast government adopted a 19% tax on gold profits, seeking to capitalise on current high gold prices to help fund reconstruction following a decade-long political crisis.
Mining companies were quick to criticise the move, however, claiming they were not consulted beforehand. The government has said that while the tax is not negotiable, the rate could still be changed.
“From our point of view, we have protection in our investment agreements with the government on the development and operating of Tongon,” Randgold CEO Mark Bristow said in an interview. “But more importantly, any changes in taxation will impact the ongoing opportunities and the encouragement of further exploration and investment in building new mines," he added.
The tax increase follows a raft of similar moves by other African countries to boost their share of mining revenues as companies move in to develop the continent’s enormous potential.
The government of the Democratic Republic of Congo (DRC) said on Tuesday it was seeking to raise its stake in new projects to 35% from 5% under a revised mining code. Ghana introduced a 10% windfall tax this year, which it has yet to apply.
Last October, Randgold, which focuses on West Africa, launched operations at Ivory Coast’s Tongon mine, with annual output of 280,000 to 300,000ozpa expected over the next five years. It continues to explore on the Nielle concession where Tongon is located, as well as on its Diaouala property.
“Randgold Resources is very committed to having more than one mine,” Bristow said. “We are still investing significantly in exploration. We are one of the biggest explorers in Cote d’Ivoire as well as the biggest producer.”
Source: Reuters Africa. For more information, click here.