Mali announces mining code ending tax exemptions and other protections

Umar Ali 23 August 2019 (Last Updated August 23rd, 2019 14:45)

The Mali Mines Ministry announced a new mining code on 21 August 2019, ending exemptions from VAT for mining companies operating in the country.

Mali announces mining code ending tax exemptions and other protections
The miners involved were illegally mining at Globe and Phoenix gold mine, the oldest mine in Kwekwe. Credit: Iamgold.

The Mali Mines Ministry announced a new mining code on 21 August 2019, ending exemptions from VAT for mining companies operating in the country.

The code shortens the 30-year “stability period” during which mining companies’ existing investments are protected from changes to customs and fiscal regimes.

The new length of the stability period was not made clear in the announcement, but in 2018 the Economy Ministry stated the government was aiming to reduce it to the lifespan of a mine.

In a statement, the Mines Ministry said the code intended to address the “shortcomings” of legislation passed in 2012 by contributing a “substantial increase” in the mining sector’s contributions to Mali’s economy.

Mali is Africa’s third-largest gold producer. According to the Mines Ministry, industrial gold production in the country rose by 23% in 2018 and is expected to increase further in 2019.

This announcement follows similar regulatory changes in African countries such as the Democratic Republic of Congo (DRC), where they have been met with opposition by mining companies.

Eversheds Sutherland partner and head of mining Warren Beech told Reuters: “It’s the reality of the playing field at the moment, a lot of companies in Mali will have looked at what happened in DRC and Tanzania and they will have to be very cautious.

“The battle plan is to see what it means, understand the impact, and engage with government.”

Mali’s government had been negotiating with mining companies to draft a new mining code, but declared in March 2018 that if no compromise was reached it would move to implement a new law unilaterally, much like the changes in the DRC.

West Africa analyst at Verisk Maplecroft Eric Humphrey Smith told Reuters: “This reform shouldn’t come as a surprise, even if it is probably later than anticipated. Miners will have known about the government’s intentions for well over a year now.”