Mining in Cameroon is a significant contributor to the nation’s economy. With a new regulatory framework, Cameroon hopes to position itself further as an attractive destination for international investors. Here’s a snapshot of the new legal framework for mining.
Framework – Mining activities in Cameroon are governed by the Mining Code 2023. This new code complements (but does not replace) the Mining Code 2016. It relies on various mining regulations as well as other laws such as the Environmental, Labor, and General Tax Codes.
Mining Rights – of most interest to international investors, mining rights (which must be held by a Cameroon-registered company) include:
i. an ‘exploration permit’ issued for 3 years over an area up to 500 Km2, renewable three times for 2-year terms. Applicants deposit a guarantee and sign an exploration contract;
ii. a ‘small mine license’ issued for a 5-year term, renewable for 3-year terms, over the area of the deposit specified in the feasibility study; or
iii.an ‘industrial mining license’ issued for a 20-year term, renewable for 10-year terms. Holders must enter a mining agreement (convention minière) with the State governing the mining activities, the fiscal and customs regime, and the stability of the framework. As with a small mine license, holders who undertake to develop refinement capacities in Cameroon will benefit from various investment incentives.
State Participation – the State obtains a 10 % free-carry, non-dilutable participation in the company, and a paid additional participation at “market price”. Interestingly, the State has a right of first refusal on share transfers.
Production Sharing – the law introduces the concept of production sharing. Pending guidance in a mining regulation, the law provides that sales profits are split with the State, 1-5% for precious metals, and 2-15% for all others. The agreed terms will be set out in the mining convention.
Taxes and Fees – In addition to taxes in the General Tax Code, such as corporate tax (25%), the Mining Code imposes a surface tax on the mining area, capital gains (10%), and a mining ad valorem tax (5% on precious metals, 3% on base metals, and 10% on radioactive substances).
Local Priority – priority is given to Cameroon workers, contractors, and services providers. Various funds for local development, rehabilitation, and local capacity development, will receive annual contributions from mining companies.
International Engagement – Cameroon is a member of the Central African Economic and Monetary Community (CEMAC), the Kimberley Process, and the Extractive Industries Transparency Initiative (EITI). Importantly it is also a signatory to a number of investment treaties.
Why Cameroon? – Cameroon offers a positive environment for mining investment, supported by political stability and well-developed infrastructure. Its minerals include gold, bauxite, cobalt, iron ore, and uranium. With works at the Mbalam iron ore project progressing, and multiple international companies currently undertaking exploration, the future is bright for Cameroon mining.
Why Serus? – Our bilingual team has extensive experience working in Cameroon. Working in French and English, we manage project acquisition, due diligence, and prepare all forms of mining agreements including royalty, JV, convention, construction, and earn-in agreements.
Please contact our team or email felix@seruslegal.com.
The contents of this insight do not constitute legal advice and are subject to input from a lawyer.