Mining in the Ivory Coast has played an important role in the country becoming one of Africa’s most attractive investment destinations. In the decade since the code was introduced, its gold production has increased eightfold to become Africa’s sixth largest producer. With the code under review, this snapshot discusses the current legal position.
Framework – the Mining Code for Ivory Coast was introduced in 2014, greatly helping modernize the mining sector. Many of the concepts it introduced, including local development and content, are now commonly seen across West Africa. The code is accompanied by extensive additional legislation, including mining regulations, as well as the Environmental, Tax and Labor Codes.
International – Ivory Coast is a member of OHADA, with harmonized business law across member states. It is also a member of the West African Economic and Monetary Union and Economic Community of West African States, which have both implemented laws and policies that harmonize regional mining laws, as well as the Kimberley Process and Extractive Industries Transparency Initiative (EITI).
Mining Rights – of interest to international investors, the Code provides for the grant of:
an Exploration License, for 4 years over an area up to 400 Km2, renewable for up to 8 years. The perimeter is reduced by a quarter at renewal, but this is waived if an ‘option right’ is paid and works will be completed over the entire perimeter; and
a Mining Permit, for 20 years renewable, conferring the right to use and mine the land. A Mining Convention is negotiated and signed with the State, being a contract detailing the terms for project development and stabilizing the tax and customs regime.
State Participation – the State is entitled a 10 % free-carry, non-dilutable participation in the company, and a paid 15 % participation at “market price”.The State can also impose a 5% local shareholder.
Taxes and Fees – In addition to corporate (25%) and surface tax (on the mine surface area), miners pay a mining (ad valorem) tax, calculated on turnover after deducting transportation and refining costs. The rate for gold is scaled (3-6%) depending on the market price, while other substances are fixed between 1-5%, with reductions for in-country refining. Companies must contribute 0.5% of turnover (less taxes) to a Local Development Fund. Exemptions can be obtained when negotiating the mining convention, including for customs duties and value-added tax.
Why Ivory Coast? – The country has extensive infrastructure and a stable political and legal regime. Thanks to investment and its two main exports – coffee and cocoa – the economy is now the second largest in West Africa. It boasts resources of gold, copper, titanium, nickel, bauxite, manganese, and iron ore. The presence of Randgold and Endeavour are a testament to the positive environment. While the results of the current review of the mining code remain to be seen, the future looks bright for mining in Ivory Coast.
Why Serus? – Serus is an international law firm that uses technology and lower overheads to provide legal services at a significantly better value. Our bilingual (Fr-Eng) team has extensive experience working in Ivory Coast. We advise on asset acquisitions, and prepare all forms of mining agreements including mining conventions, as well as JV, royalty, and earn-in agreements.
Please contact our team or email felix@seruslegal.com for more information.
The contents of this insight do not constitute legal advice and are subject to input from a lawyer.