Mining major Rio Tinto and the Madagascar Government have signed an agreement on future fiscal arrangements for long-term and sustainable operations at the QIT Madagascar Minerals (QMM) mine in Fort Dauphin.
The QMM mine is 80% owned by Rio Tinto, with the remaining 20% stake owned by the Madagascar Government.
The mine is a major source of ilmenite, which produces titanium dioxide.
Last year, water from the mine site was released into the surrounding environment following heavy rains. This resulted in dead fish floating in downstream waters, Mongabay reported.
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Locals had protested to this and Madagascar’s water ministry investigated the incident. The company had to release the water because of the failure of the mine’s tailings dam and to prevent the total collapse of the mine.
The move led to the prohibition of fishing, impacting local fishers. This coupled with food insecurity, resulting from lessening soil fertility, gave rise to unrest in the region.
Under the new terms of the agreement, the royalty has been increased from 2% to 2.5% and WMM will begin issuing its first dividend to the government this year.
The government also agreed to invest $12m of the dividend towards the rehabilitation of 109km of the National Road 13.
Rio Tinto will also invest $8m in the road project, which is also expected to bring significant improvement to the region by providing for the movement of people and supplies across hard-to-access areas.
Furthermore, the company will cancel $77m in advances made to the government to finance the mine’s funding.
The government will now hold a 15% free carry ownership of the mine while maintaining its stake with no obligation to contribute to capital funding or exposure to dilution.
The company also agreed to increase its support for local communities by doubling its annual contribution to fund programmes of interest.
Rio Tinto iron and titanium managing director Sophie Bergeron said: “Rio Tinto is committed to the responsible development of its mineral sands extraction business in Madagascar.
“This agreement is a significant milestone to support a long-term future for QMM and reaffirms our commitment to provide increased benefits for all parties, including the communities of Madagascar.”