23 Aug New mining code in Mali removes VAT exemption for miners
Mining companies operating in Mali will lose their right to value-added tax exemption during production, amongst other regulatory changes contained in a new mining code announced by the Mines Ministry.
The new code in Mali will also shorten the ‘stability period’ during which miners’ existing investments are protected from changes to fiscal and customs regimes. Under the previous code, stability was ensured for 30 years.
In a statement, the Mines Ministry said the changes seek to redress the ‘shortcomings’ of a 2012 law by bringing a ‘substantial increase’ in the contribution of the mining sector to the economy.
However, the move by Africa’s third largest gold producer is viewed by some as a new instance of resource nationalism on the continent, and could lead to a period of protracted negotiation between the government and corporates in the sector.
Companies with major operations in Mali include Barrick Gold Corp, B2Gold, Resolute Mining and Hummingbird Resources. The government had been negotiating with a group of miners to draft a new code, but warned that it would implement a new law unilaterally if no compromise was reached.
“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,” said Eric Humphery Smith, West Africa analyst at consultancy Verisk Maplecroft.
The previous iteration of the code was already advantageous for miners, he added.