The World’s Newest Mining Code: Opportunity Or Major Risk?

When a nation develops a new mining code, it’s usually a good thing — today, new and more progressive regimes are in the works in several parts of Africa, like Nigeria, which could spur exploration and development. 

But one part of that continent looks like it will be first in releasing a new code. And the news may not be all good. 

That’s the eastern African island of Madagascar. Which said this week that it is weeks away from unveiling new mining rules to the industry and investment communities.

As reported by Reuters, Madagascar’s president Hery Rajaonarimampianina (yes, his real name) said that the mining code will be passed by the government “this year or at least at the beginning of next year”.

Rajaonarimampianina said the country is currently debating the “finer points” of the code — but his comments suggest we could see the framework released within the next several weeks.

So the question is: what will the new rules say?

The president gave little indication on the changes that might be coming. Simply saying that the new code “will be an improvement across all aspects” of the existing one. 

That claim looks somewhat dubious however. Given reports this past September that suggested the government may move to take a 10% carried interest in existing mining projects — and raise royalties in the industry. 

Those concerns make the upcoming announcement of the new code a key development for projects like the Ambatovy nickel mine operated by Sherritt, Sumitomo, and Korea Resources Corp. As well as Rio Tinto’s Port Dauphin titanium mine in the south of the country. 

The new regulations will also be critical for the future of Madagascar’s exploration industry. The country has great potential — and next to no modern work carried out. But anti-mining rules could kill any activity here, especially given the currently-depressed state of global mining investment. 

Watch the next few weeks for an announcement of final terms, to see if the country is headed for opportunity or oblivion.  

Here’s to making the right choice,

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Dave Forest

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