As shown by attendance at the African Ministers Roundtable held by Norton Rose Canada on March 6, 2012, as part of the PDAC Conference, interest in Africa as a mining destination remains high.
At the roundtable, government representatives from Ethiopia, Guinea, Cameroon, Algeria and Senegal spoke about the latest developments in their countries. As the speakers made clear, countries throughout Africa are seeking to remain competitive in attracting foreign investment while balancing a need to maintain a level of control within the industry.
In 2000, Algeria began a reform of its mining sector aimed at making the industry more friendly to foreign investment. The new mining law has rescinded the 49% limit on the level of foreign participation and instituted a mining bid system modelled on that used in the hydrocarbon industry.
Although the new bidding system has been criticized internationally, the fact Algeria is the second-largest country in Africa and its reserves remain largely unexplored leaves little doubt its mining industry will continue to develop in the coming years.
Sierra Leone is seeking to improve transparency within the mining industry by introducing the Mining Cadastre and Administration System (MCAS). MCAS is an online repository, available to the public, to administer and register mineral rights applications, payments, maps and licenses. MCAS’s aim is to attract foreign investment by promoting good governance and revenue transparency.
Guinea’s new mining code, adopted as of September 9, 2011, entitles the government to an overall shareholding of up to 35% in the share capital of mining companies in Guinea. Part of this interest is to be a “free interest,” which the government is entitled to for no compensation. The remaining part will consist of an option to purchase an additional shareholding at a price to be agreed with the investor.
The proportion of each form of interest varies depending on the nature of the project. However, the interest available for purchase can be reduced in exchange for an increase in the mining tax rate. Under Guinea’s previous mining code the state was only entitled to 15% of the share capital of mining companies.
In a global market where so many industries are struggling, mining remains profitable and productive. Expect other countries to follow the lead of Algeria, Sierra Leone and Guinea in encouraging the development of their mining industries.