The Burkina Faso’s Government is planning to implement the new Mining Code by the end of 2013. The Minister of Mines has not yet published the final version of the new code as key amendments are still in preparation and are to be tabled before Parliament next year. However, the new concept announced by the Minister of Mines last September, indicates that a more balanced approach based on the idea of increasing benefits to the country and its people is to be applied.
The proposed project will reduce the duration of Mining Conventions from 25 years to 20 years and renewal periods from 10 to 5 years. The authorities are considering to change tax rate on the sale or transfer of rights attached to mining titles. Contracts relating to the assignment or transfer of rights and obligations will remain subject to taxation at the current rate of 20% on the gains realised. However, this tax will not apply to intra-group transfer of an exploration licence before its conversion into an exploitation permit. The new code will also provide the Government with the right to acquire additional stakes in mining companies that up to now amounts to only 10%. Furthermore, the companies will be obliged to distribute an amount equivalent to 1% of their turnover to the Local Development Mining Fund (LDMF) that is planned to be created under the new Mining Code.
The proposed amendments may be a cause for concern for many foreign investors. The new regulation relating to the governmental participation in the capital of mining companies will give the Government a greater say in the investments decisions of operators. Investors will also be expected to share their profits with the governmental LDMF which will probably affect the financing process of mining projects though the percentage of their participation is limited to 1%.