Mali’s new mining code ends tax exemptions, shortens regulatory stability period

BAMAKO - Mining companies operating in Mali will no longer be exempt from value-added tax during production and will only be protected from fiscal changes for a shorter period, according to a new mining code announced by the Mines Ministry on Wednesday.

An opening salvo in what could be a protracted negotiation between the government and corporates over mining regulation in Africa’s third-largest gold producer, the move is seen by some as a new instance of “resource nationalism” on the continent.

The regulatory change seeks to redress the “shortcomings” of a 2012 law by bringing a “substantial increase” in the contribution of the mining sector to the economy, the Mines Ministry said in a statement.

The new code in Mali shortens the “stability period” during which mining companies’ existing investments are protected from changes to fiscal and customs regimes.

Changes to regulatory stability clauses have been strongly opposed by international mining companies elsewhere in Africa, most notably in the Democratic Republic of Congo where miners spent months at loggerheads with the government.

Under Mali’s previous law, stability was ensured for 30 years. It was not made clear on Wednesday what the length of the new stability period would be, but the Economy Ministry said last year that the government aimed to reduce those protections to the lifespan of a mine.

“It’s the reality of the playing field at the moment, a lot of companies in Mali will have looked at what happened in DRC and Tanzania and they will have to be very cautious,” said Warren Beech, partner and head of mining at Eversheds Sutherland in Johannesburg.