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Legal framework

The Ivorian legal system has been strongly influenced by the French civil law tradition of codifying the law. Under the current Third Republic regime and the Fourth Constitution, the prerogatives of the executive power, although within the framework of a presidential regime, have been restricted. Within the entire national territory, the different sections of the Supreme Court (composed of the Court of Cassation and the State Council), the Courts of Appeal and tribunals are responsible for performing judicial functions.

The main laws applicable to mining activities are the Code, the decree dated 25 June 2014 implementing the Code, the Environment Code and the Labour Code. Additional regulation must also be scrutinised, such as the Order on Surface Royalty dated 26 March 2014 and proportional taxes in the mining sector. A draft of a collective labour agreement for the mining sector is being discussed among stakeholders.

The Ivory Coast's economy is highly integrated within the West African region. It is a Member State of the Organisation for the Harmonisation of African Business Law (OHADA) and of the West African Economic and Monetary Union (WAEMU), which enacted a mining code in 2003. The WAEMU Mining Code governs any mining operation relating to the prospection, exploration, exploitation, detention, traffic, transport, treatment, trade and transformation of minerals within the territories of the WAEMU Member States. The amendment of the WAEMU Mining Code is being discussed among the WAEMU Member States. The Ministers of Mines of the Member States have already agreed on some guidelines, such as the non-stabilisation of issues relating to human rights, health, safety, employment, environmental and social aspects, improvement of the rules relating to sub-contracting and introducing mechanisms for allowing the national private companies to acquire participating interests in mining companies.

The Ivory Coast is also a member of the Economic Community of West African States (ECOWAS), which enacted a Directive on the harmonisation of guiding principles and policies in the mining sector in 2009, the main objectives of which are to harmonise mining laws in the region, to improve transparency and to protect the environment and local communities. A Supplementary Act to the ECOWAS Mining Code was approved on 29 June 2019, which aims at ensuring that the local communities benefit from the revenues arising from mining operations.

At the international level, the Ivory Coast has made good progress in terms of transparency. It joined the Kimberley Process Certification Scheme in 2013, with the aim of stopping the traffic of conflict diamonds. As a direct consequence, the embargo on diamond exports from the Ivory Coast was lifted by the UN Security Council on 29 April 2014. The Ivory Coast also joined the Extractive Industries Transparency Initiative (EITI) in 2006 and has created an agency with a similar agenda at national level. In May 2013, it was declared compliant with the 2011 EITI Rules and in May 2018 it was declared to have made 'meaningful progress' towards implementing the 2016 EITI Standard.

According to the Code, the main regulatory bodies in the Ivory Coast are the President of the Republic and the Ministry of Mines and Geology (the Ministry), the department in charge of implementing mining policy. The current Minister of Mines and Geology is Mr Jean-Claude Kouassi.

These authorities require, inter alia, mining operators to provide reports and keep various documents available, depending on the nature of the permit issued. The main reporting requirements are in respect of statistics on performance, employment, advancement of exploitation and exploration operations.

Mining rights and required licences and permits

i Title

The Code reaffirms the sovereign ownership of the Ivorian state of the natural underground resources located within its territory, including territorial waters and the continental shelf up to the international border. Subject to the provisions of the Code, the state may, however, grant a mining title (i.e., a permit or authorisation allowing an Ivorian or foreign company to undertake mining activities in the Ivory Coast).

ii Surface and mining rights

Mining substances are divided into two categories: quarry substances and ore substances. Focusing on ore substances, activities covered by the Code can be split into three standard phases: prospection, exploration and exploitation. Contrary to prospection and exploration activities, the legal framework for mining exploitation has been divided into two main regimes based on the type of deposit and the importance of the facilities involved. More specifically, the authorisation regime applies to semi-industrial and artisanal exploitation of ore (as well as to industrial or artisanal exploitation of quarry substances), whereas the permit regime applies to regular exploration activities and exploitation of ore. This chapter mainly focuses on the permit regime.

Exploration permitAttached rights

The exploration permit grants an exclusive right to explore within a perimeter, which cannot exceed 400 square kilometres, and to dispose of the products extracted during these operations. However, disposal is subject to a prior declaration to the Ministry and the payment of the applicable mining duties.

In addition, the permit holder is automatically entitled to request and obtain an exploitation permit at any time during the exploration period provided that it has carried out all its obligations and that a feasibility study has proven the existence of one or several deposits within the perimeter of the permit.

As to its legal nature, the exploration permit is a movable and indivisible right that may not be farmed out, pledged or mortgaged.

Conditions and procedure for granting

As described below, requirements and standards for eligibility are quite high and may exclude companies with limited experience, financial or technical capacities.

First, the applicant must be a national natural person or a legal person established under Ivorian law, thus excluding other investment vehicles such as branches. A minimum share capital of 20 million CFA francs is required for such legal entities, compared to one million CFA francs under the former Mining Code, which constitutes a drawback in the eyes of investors.

Second, to be eligible, any applicant seeking an exploration permit must meet specific technical and financial criteria. For instance, the applicant must have undertaken two exploration projects in the past 10 years and have recruited a technical manager with at least seven years' experience in exploration work. Furthermore, the applicant must have sufficient financial resources to provide for the exploration costs by paying a deposit into a bank account at a first-ranked financial institution in the Ivory Coast. A minimum exploration budget of 1.6 million CFA francs per square metre is also required for the first four years.

As to the procedure, the permit is officially granted by decree. The holder must then start the exploration work within six months of that date.

Duration and renewal

The duration of validity has been extended from three to four years and is renewable twice for successive periods of three years, which constitutes an increase of one year from the previous Code. The holder of the permit must apply for renewal at least three months before the expiry date and renewal is granted automatically if the applicant has fulfilled all its obligations. Exceptionally, an additional renewal for a maximum of two years may be granted if the reason for the request is a delay in finalising a feasibility study.

In principle, after each renewal, the size of the perimeter is reduced by one-quarter; however, the holder of the permit may keep the entire perimeter subject to payment of an option right and provision of proof that work will be completed over the entire perimeter.

Assignment and transfer

The exploration permit can be assigned or transferred upon obtaining approval from the Minister, which is automatically granted if the applicant has fulfilled all its obligations pursuant to the Code.

Relinquishment

The holder of the exploration permit may be allowed, without penalty, to relinquish the rights granted by the exploration permit on all or part of the perimeter of the permit. The relinquishment must be approved by the Administration of Mines and is subject to full payment of the amounts due at the time of the relinquishment and the fulfilment of its obligations relating to the environment.

Withdrawal of permit

The exploration permit may be withdrawn, without compensation and following an unsuccessful 60 days' formal notice if the permit holder does not comply with all its obligations and commitments, such as providing proof of the constitution of the banking reserve, payment of taxes, royalties and duties, not carrying out exploitation activities within the exploration perimeter, or delaying or suspending exploration work for more than six months.

Exploitation permitAttached rights

The holder of an exploitation permit has an exclusive right to exploit the deposits within the limits of its perimeter, and the right to transport or to arrange the transport of the extracted ore, the right to trade with the ore on the internal or external markets and to export it. It is also allowed to establish the necessary facilities to condition, treat, refine and transform the ore.

Unlike exploration permits, exploitation permits are indivisible, immovable rights that may be mortgaged subject to approval by the Minister of Mines and Industry.

Conditions for granting and procedure

The Code requires the exploitation permit holder to establish a company under Ivorian law, the sole purpose of which is to exploit the deposit located within the perimeter. The permit will then be transferred to this exploitation company.

The holder of the exploitation permit must prove within six months of delivery of the permit that its staff includes experienced engineers, mining geologist teams and a technical manager meeting the same requirements as for the exploration stage, and that it has paid a deposit into a bank account of a first-ranked financial institution in the Ivory Coast. The time limit to start development work has been reduced from two years, as stipulated in the former Code, to one year.

The Administration of Mines may put out to tender any perimeters not attributed and on which work has revealed the existence of potential mining assets.

Mining convention

A mining convention must be signed between the state and the holder of the exploitation permit within 60 days of delivery of the permit.

The convention's main purpose is to stabilise the tax and customs regime applicable to the exploitation operations; however, the Code does not limit its purpose, and other essential rights, obligations and conditions may be incorporated into the convention. A template convention may be provided by the state. The decree implementing the Code further provides for the main obligations to be included in the mining convention, in particular the rights and obligations of the title-holder and the undertakings of the state. In any case, the convention cannot derogate from the provisions of the Code and the decree implementing the Code.

The mining convention has an initial duration of 12 years, renewable for successive periods of a maximum of 10 years. The fact that the duration of a convention does not mirror the duration applicable to an exploitation permit as described below may create difficulties that should be carefully assessed and anticipated by the parties.

State participation

In exchange for the exploitation permit, the state is allowed to obtain a 10 per cent free-carry and non-dilutable participation in the share capital of the operating company. Any additional participation of the state in the company's operating share capital (which cannot exceed 15 per cent) may be negotiated at market conditions.

However, this percentage does not pertain to participation by state-owned companies. Therefore, any participation by SODEMI (Société pour le développement minier de la Côte d'Ivoire) in the share capital may indirectly increase the control of these entities on the operating company.

Duration and renewal

The exploitation permit is granted for the lifetime of the mine as indicated in the feasibility study, with a maximum duration of 20 years. It can be renewed for successive periods of a maximum of 10 years. Applications for renewal are made under the same conditions as for exploration permits.

In the event of persisting adverse market conditions or a force majeure event, the holder of the exploitation permit may request a postponement or suspension of the mine exploitation work, extending, if approved, the duration of the permit for a maximum of two years, which may be renewed only once.

Assignment and transfer

Assignment and transfer are made under the same conditions as for exploration permits.

Relinquishment

The holder of the exploitation permit may be allowed, without penalties, to relinquish the rights granted by the exploitation permit on all or in part of the perimeter of the permit. The relinquishment is approved by the Administration of Mines and is subject to full payment of the amounts due at the time of the relinquishment and the fulfilment of obligations relating to the environment and the rehabilitation of sites (see Section IV).

Withdrawal

The exploitation permit may be withdrawn, without compensation and following an unsuccessful 60 days' formal notice if the exploitation permit holder did not comply with its obligations and commitments. In particular, it may be withdrawn if the exploitation company does not provide proof of the payment of the deposit into the bank account in due course or if it has delayed or suspended the exploitation work without authorisation, or did not pay the relevant duties, royalties or taxes.

iii Additional permits and licences

The holder of a mining title remains subject to specific laws and regulations governing, in particular, environmental protection, construction, hazardous or unsanitary buildings or facilities and the protection of the forestry heritage.

iv Closure and remediation of mining projects

Any applicant for an exploitation permit must submit a closing and rehabilitation plan for the mine to the administration. This plan shall be approved by the administrations for mines and for the environment. The content of such a plan is further detailed in Section IV.

Furthermore, at the beginning of the exploitation, an escrow account for the rehabilitation of the environment must be opened with a first-ranked financial institution in the Ivory Coast. The aim of this account is to cover any costs relating to the environmental rehabilitation plan at the end of the exploitation operation. Funds in this account are recorded as costs when determining the tax base for business profits tax.

v Additional consideration

A main innovation of the Code is the extensive list of criminal and administrative sanctions attached to any infringement of obligations or requirements included in the Code. Criminal sanctions include a prison term of up to five years and fines of up to 50 million CFA francs. Administrative sanctions cover, in particular, annulment of the permit, closing of the exploitation perimeter or confiscating materials used to commit the infraction.