An experienced geological engineer who previously served as Minister for Mines, the Senegalese President Macky Sall understands the significance that mining holds for Senegal. Delivering on his election promise to reform the mining sector, his government implemented the Mining Code of 2016 which overhauled the former 2003 mining code, introducing a modern mining framework to Senegal.
Framework – In replacing the previous code, the 2016 Mining Code introduced local development and transparency requirements, production sharing agreements, and changes to royalties and fees.
Mining Rights – Exploration activities are governed by an exploration permit. For mining activities, either a (i) ‘small mine license’ which is limited to an area of 500 hectares with a term of five years, renewable for five years terms, or (ii) a ‘mining license’ for larger operations, issued for an initial term of 5-20 years (depending on the mineral and the investment required), renewable until the resource is exhausted.
In all cases, the mining title must be held by a Senegal-registered company. The company must also enter into a mining agreement with the State, called a convention minière, detailing the terms and conditions of the activities and guaranteeing the stability of the legal conditions.
Taxes and Fees – while most of the tax provisions are found under the General Tax Code, the mining code sets out details on surface and mining royalties. Mining royalties are levied on the market value of the marketed mining product. Royalty rates differ depending on the mineral and whether they are processed in-country so that, for example, the royalty for iron ore and gold is 5% but this can be reduced to 2% and 3.5% respectively if refined in Senegal. Companies must also contribute 0.5% of turnover (less annual taxes) to a local development fund for local communities.
Production Sharing Agreements – Mining companies may enter into a production sharing agreement with the State, giving the company the exclusive right to explore and mine an area and then recover the costs from mineral sales. These mineral sales are not subject to mining royalties, but profits from the sale are split with the State as per the terms of the agreement.
Why Senegal? – Senegal is a stable, attractive location for mining investment. Known for its ease-of-doing business, its mineral-rich subsoil includes gold, platinum, iron, copper, phosphate, and titanium. Given Senegal’s political stability, infrastructure and mineral prospects, it will continue to be an attractive environment for mining investors. The established presence of many international mining companies further underscores the country’s potential.
Why Serus? – Our bilingual team has extensive experience working in Senegal. Working in French and English, and through a vetted local network, we manage project acquisition, due diligence, and prepare all forms of mining agreements including royalty, JV, convention, construction, and earn-in agreements.
Serus is an international law firm that uses technology and lower overheads to provide legal services at a significantly better value. 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.