Madagascar: Mining Comparative Guide

1 Legal and regulatory framework

1.1 Which legislative and regulatory provisions govern mining in your jurisdiction?

The Malagasy legal framework relating to the mining sector comprises the following statutes:

• Law 005-022 dated 17 October 2005 amending Law 2001-031 dated 8 October 2002 establishing a special regime for large-scale investments in the Malagasy mining sector (LGIM);
• Law 99-022 dated 19 August 1999 on the Mining Code, amended by Law 2005-021 dated 17 October 2005 relating to the Mining Code;
• Decree 2006-910 dated 19 December 2006 implementing the Mining Code amended by Decree 2010-023 dated 25 January 2010;
• Decree 2003-784 dated 8 January 2003 implementing the LGIM; and
• Inter-ministerial Order 12032/2000 dated 6 November 2000 regulating the protection of the environment in the mining sector.

1.2 When was the mining legislation last reviewed?

The Mining Code is being revised by the Ministry of Mines and Strategic Resources. A reflection committee - including representatives of the ministry, experts, professionals from the mining sector and representatives from civil society - has been set up to work on a draft law.

1.3 What other legislative and regulatory provisions have relevance for mining operations in your jurisdiction?

p>In addition to laws specific to the mining sector, the following laws have relevance for mining operations in Madagascar:

• Law 2015-003 dated 19 February 2015 on the Malagasy Environmental Charter;
• Decree 2015-1035 dated 20 June 2015 on the gold regime;
• Decree 2015-663 dated 14 April 2015 on the creation and statutes of the Agence Nationale de la filière Or, the national agency for the gold sector;
• Decree 000-308 dated 2 October 2000 amended by Decree 2017-175 dated 16 March 2017 on the creation and statutes of the Bureau du Cadastre Minier de Madagascar (BCMM); and
• Decree 99-954 dated 15 December 1999, amended by Decree 2004-167 dated 3 February 2004 relating to compatibility of investments with the environment.

1.4 Are there any regional treaties or laws that need to be taken into account?

No.

1.5 Which bodies are responsible for enforcing the applicable mining laws and regulations? What powers do they have?

The following bodies are responsible for enforcing the applicable mining laws and regulations:

• The Ministry of Mines and Strategic Resources, through the Mining General Management Office, is in charge of the management, supervision and control of mining activities; and
• The BCMM is in charge of the management and control of mining permits and the mining registry, including the preparation and documentation of the grant, renewal, transformation, transfer and cancellation of mining permits.

1.6 What is the regulators' general approach in regulating the mining sector?

In regulating the mining sector, the Ministry of Mines and Strategic Resources and the BCMM have paid special attention to the following points:

• maximisation of state revenues;
• community development;
• proper management and rehabilitation of the environment;
• promotion of the supply of local goods and services;
• creation of jobs and valorisation of national skills;
• proper governance of the mining sector; and
• a policy of first come, first served with respect to the grant of mining permits.

However, since 2010, the grant of new mining permits has been suspended and this suspension is likely to continue until publication of the revised Mining Code. The current international and national context relating to COVID-19 could delay such publication.

2 Mining industry

2.1 How mature is the mining industry in your jurisdiction?

The mining industry plays an important role in the Malagasy economy, with two or three significant exploitation projects and a large number of operators conducting exploration activities. Madagascar has significant mining potential. However, the development of the sector has been slowed down by successive political crises in 1972, 1991, 1996, 2002 and 2009.

2.2 What are the key minerals which are mined in your jurisdiction and where is mining activity typically based?

The key minerals which are mined in Madagascar are:

• nickel;
• cobalt;
• ilmenite;
• zirsill; and
• chromite

Mining activities are typically based in East, Southeast and Southwest Madagascar.

2.3 Are any minerals deemed strategic and, if so, what impact does this have?

Madagascar law does not consider any specific minerals as strategic.

2.4 Who are the key players in the mining industry in your jurisdiction?

The key players in the mining industry in Madagascar are:

• Ambatovy Minerals SA/Dynatec Madagascar SA;
• Qit Madagascar Mineras SA;
• Kraoma SA; and
• Toliara Sands SARL.

2.5 In addition to exploration rights and mining rights, what other mining rights and titles exist (eg, artisanal or small-scale mining rights)?

Malagasy law provides for a small-scale mining permit, which is available only to nationals using artisanal exploration and exploitation methods.

3 Exploration rights

3.1 What licences are required to undertake prospecting and exploration activities in your jurisdiction? Do these vary depending on the type of mineral or the location of the activity?

An exploration permit covers minerals in the permit area for which it has been granted. However, if the permit holder discovers a new mineral that was not initially mentioned in the exploration permit, it can request an extension of the permit to cover such discovery.

The exploration permit or ‘R' permit gives the holder the exclusive right to carry out prospecting and research activities within a defined area. The research permit confers on the holder, within the limits of its perimeter and for the period of its validity, a right of priority to apply for an exploitation permit or ‘E' permit covering all or part of the perimeter covered by the R permit.

The exploration permit does not vary depending on the type of mineral or the location of the activity.

3.2 What requirements must be satisfied to obtain a licence?

The main principle set out by the Mining Code is the ‘first come, first served' approach. In addition to this, the following requirements should be satisfied:

• Only Malagasy registered entities can acquire exploration permits (justified by the certificate of incorporation and memorandum and articles of association).
• The applicant must provide proof of its capacity to carry out the activities (eg, that it is not subject to any ban).
• The applicant must pay the annual mining administration fees corresponding to the requested squares:
• • 25% of the fees as a processing fee upon filing the application dossier;
  • 56% of the fees 20 days after filing the application dossier; and
  • 19% of the fees within five days of the Bureau du Cadastre Minier de Madagascar's (BCMM) decision to grant the permit (failure to pay results in cancellation of the granting decision).
• The requested squares must be confirmed as available (subject to a BCMM check based on the exact location of the squares provided by the applicant).
• The limits on the number of squares the applicant can request must be observed (ie, an entity can own several R permits, but the R permits cannot cover more than 10,000 square kilometres or 25,600 squares).
• The references of the permits held by the applicant must be confirmed.
• An investment plan and exploration programme, duly signed by the applicant, must be submitted.
• An environmental commitment letter must be submitted confirming that the applicant will not commence activities until it has obtained the necessary environmental authorisation.

3.3 What is the procedure for obtaining a licence? How long does this typically take?

The documents listed in question 3.2 must be filed with the BCMM along with a completed and signed application form (a template is available from the BCMM) in triplicate (including one original).

The R permit covering a defined area will be granted by order of the minister of mines or his representative, within 30 working days, to the first eligible person to submit an application dossier that fulfils all requirements set out in question 3.2

3.4 Who can own exploration rights in your jurisdiction? Do specific requirements or restrictions apply to foreign operators?

Only Malagasy registered entities can own mining rights. As of the time of writing, no restrictions apply regarding foreign ownership of mining companies. However, this may change depending on the outcome of the ongoing revisions to the Mining Code.

3.5 What fees and other charges are incurred in obtaining a licence?

No other administrative fees are payable in relation to the R permit application.

3.6 What is the duration of a licence? What is the process for renewal?

The R permit is valid for five years, renewable twice for periods of three years.

The renewal process is as follows:

• The renewal application dossier is submitted to the BCMM at least 45 working days prior to expiry of the R permit.
• The application dossier is verified by the BCMM.
• A filing receipt is issued by the BCMM upon payment of the renewal fees.
• The renewal application is registered in the BCMM register.

The renewal application dossier includes the following:

• the application form, duly completed and signed;
• evidence of payment of all administrative fees in the previous year;
• the mining permit card that is subject to the renewal application;
• an exploration programme, duly signed;
• a copy of the environmental authorisation;
• a description of the work completed during the previous term of the permit (if no activity was performed, renewal can be granted only for half of the previous perimeter); and
• copies of any security documents over the R permit that is subject to the renewal application.

The renewed R permit will be granted by the ministry within 30 days of filing of the renewal application.

3.7 What are the operator's rights and obligations under the licence?

The operator's main obligations are as follows:

• to pay common corporate taxes in accordance with the General Tax Code;
• to pay the mining administrative fees;
• to comply with the exploration programme;
• to comply with the environmental requirements deriving from the environmental authorisations or licences;
• to file any renewal application in a timely manner; and
• to submit work reports to the Ministry of Mines or the regional department of the ministry.

3.8 Are there any requirements re relinquishment of an exploration licence or part of the area covered by an exploration licence?

The R permit holder can relinquish all or part of the permit area, subject to filing a request addressed to the municipality or the local representative of the Ministry of Mines and seeking confirmation from the latter that all closing work relating to the relinquished squares has been completed.

The relinquishment dossier must be submitted to the BCMM and include the following:

• a completed relinquishment application form, including:
• • the references of the R permit;
  • the identity of the holder of the R permit;
  • an indication of whether relinquishment is full or partial;
  • Laborde coordinates;
  • an indication that the works to close the mine have been completed; and
  • where necessary, an indication that the environmental remediation work has been carried out;
• the R permit that is subject to relinquishment;
• copies of the work reports relating to the relinquished squares;
• environmental clearance from the National Environmental Office or the ministry evidencing completion of all closing environmental work or a satisfactory commitment letter to complete all remaining environmental work;
• a document evidencing the approval of the R permit holder's creditors that hold a security over the permit;
• a document from the ministry evidencing completion of all closing works; and
• evidence of payment of administrative fees and any other mining fees.

3.9 Can licences be transferred? If so, how and subject to what consents? Do any restrictions or taxes apply to direct or indirect transfers?

R permits may be transferred. The transfer agreement is signed and filed together with any relevant paperwork (eg, corporate authorisations) at the BCMM, which then passes the transfer file to Ministry of Mines. In theory, approval is granted within 35 days.

The following conditions must be satisfied in order for the transferred permits to be valid:

• the issue of a ministerial order, duly signed by the minister of mines for exploration;
• the issue of the transferred permit card, duly signed by the managing director of the BCMM; and
• continued payment of the mining administrative fees.

3.10 Does an exploration licence give any priority when applying for a mining right?

The R permit confers on its holder, within the limits of its perimeter and during its term, a right of priority to apply for an exploitation permit covering all or part of the perimeter covered by the R permit.

4 Mining rights

4.1 How is ownership of mining rights determined in your jurisdiction?

An exploitation or E permit covers the minerals mentioned in the permit that exist within the permit area for which it is granted. However, if the permit holder discovers a new mineral that was not initially mentioned in the exploitation permit, it may request an extension of the permit to cover the discovery.

The E permit gives the holder the exclusive right to undertake exploitation and exploration within the defined perimeter.

Any application for an E permit for which an environmental impact study is required must be accompanied by a letter of commitment not to start any mining activity before obtaining the environmental permit, after approval of the environmental impact assessment document prepared by the applicant in accordance with the environmental regulations in force.

The E permit is issued within 30 working days of submission of the application to the Bureau du Cadastre Minier de Madagascar (BCMM).

4.2 What are the key requirements in order to apply for a mining right?

The main principle set out in the Mining Code is the ‘first come, first served' approach. In addition to this, the following requirements should be satisfied:

• Only Malagasy registered entities can acquire exploration permits (justified by the certificate of incorporation and memorandum and articles of association).
• The applicant must provide proof of its capacity to carry out the activities (eg, that it is not subject to any ban).
• The applicant must pay the annual mining administration fees corresponding to the requested squares:
• • 25% of the fees as a processing fee upon filing the application dossier;
  • 56% of the fees 20 days after filing the application dossier; and
  • 19% of the fees within five days of the Bureau du Cadastre Minier de Madagascar's (BCMM) decision to grant the permit (failure to pay results in cancellation of the granting decision).
• The requested squares must be confirmed as available (subject to a BCMM check based on the exact location of the squares provided by the applicant).
• The limits on the number of squares the applicant can request must be observed (ie, an entity can own several R permits, but the R permits cannot cover more than 10,000 square kilometres or 25,600 squares).
• An investment plan and exploration programme, duly signed by the applicant, must be submitted.
• An environmental commitment letter must be submitted confirming that the applicant will not commence activities until it has obtained the necessary environmental authorisation.

4.3 What fees and other charges are incurred in obtaining a mining right?

No other administrative fees are payable in relation to the E permit application.

4.4 What is the duration of a mining right? What is the process for renewal?

The E permit remains valid for 40 years and is renewable several times for periods of 20 years each.

The renewal process is as follows:

• The renewal application dossier is submitted to the BCMM at least 45 working days prior to expiry of the R permit.
• The application dossier is verified by the BCMM.
• A filing receipt is issued by the BCMM upon payment of the renewal fees.
• The renewal application is registered in the BCMM register.

The renewal application dossier includes the following:

• the application form, duly completed and signed;
• evidence of payment of all administrative fees in the previous year;
• the mining permit card that is subject to the renewal application;
• an exploration programme, duly signed;
• a copy of the environmental authorisation;
• a description of the work completed during the previous term of the permit (if no activity was performed, renewal can be granted only for half of the previous perimeter); and
• copies of any security documents over the E permit that is subject to the renewal application.

The renewed E permit is granted by the ministry within 30 days of filing of the renewal application.

4.5 Who can own mining rights in your jurisdiction? Do specific requirements or restrictions apply to foreign operators?

Only Malagasy registered entities can own mining rights. As of the time of writing, no restrictions apply regarding foreign ownership of mining companies. However, this may change depending on the outcome of the ongoing revisions to the Mining Code.

4.6 Do any indigenous ownership requirements apply in your jurisdiction?

No indigenous ownership requirements apply to E permits.

A small-scale regime allows nationals to undertake exploration and exploitation activities using artisanal techniques.

4.7 What role does the state play in the mining industry in your jurisdiction?

As of the time of writing, no mandatory provision entitles the state to a share in a mining company. However, the state and any private company are free to negotiate state participation in the mining company.

4.8 Are there requirements for the government to enter into a mining development (or similar) agreement in addition to the licences/permits? When is this required or available?

As of the time of writing, there is no mandatory requirement for the government to enter into a mining development agreement in addition to the permits. However, the state and any private company are free to negotiate any agreement relating to the development of a mine.

4.9 Can mining rights be transferred? If so, how and subject to what consents? Do any restrictions or taxes apply to direct or indirect transfers?

E permits may be transferred. The transfer agreement is signed and filed together with any relevant paperwork (eg, corporate authorisations) at the BCMM, which then passes the transfer file to the ministry. In theory, approval is granted within 35 days.

The following conditions must be satisfied in order for the transferred permits to be valid:

• the issue of a ministerial order, duly signed by the minister of mines for exploration;
• the issue of the transferred permit card, duly signed by the managing director of the BCMM; and
• continued payment of the mining administrative fees.

4.10 Can security be taken over mining rights?

Security may be taken over E permits. The mortgage agreement must be signed and registered together with the relevant paperwork (ie, corporate authorisations) with the tax authority and the BCMM.

4.11 What provisions apply with regard to closure or abandonment of a mining right?

Prior to commencing any abandonment or closure works, the holder of an E permit must submit the following documents to the regional department of the Ministry of Mines:

• a topographic plan of the area in which the abandonment works will take place;
• a plan of the underground gallery and the drilled holes to be closed;
• the techniques to be adopted for the performance of the closing works; and
• the techniques to be adopted to mitigate environmental impacts.

The regional department of the ministry must issue its approval or refusal within 15 days of submission of the above documents. A refusal must be motivated and the permit holder will be given the opportunity to adjust the relevant document(s) accordingly.

Furthermore, before any mining activities are commenced, the permit holder must obtain an environmental permit following the approval of an environmental impact study report by the National Office for Environment. The environmental impact study report sets out the environmental specifications of the project and includes:

• all environmental measures that must be completed by the permit holder during the life of the project until the definitive abandonment of the mine, including all restoration works;
• the financing and budget for mitigation and restoration measures; and
• provision for the mitigation and restoration works, along with any security or guarantee in favour of the state. This could take the form of funds deposited in a bank account in Madagascar in order to finance the restoration works. Use of the funds will be subject to certain conditions, such as the following:
• • The funds must be used exclusively for the restoration works;
  • Further deposits must be made if necessary to cover any changes to the restoration works/measures; and
  • The funds will be under the control of the Ministry of Mines, the Ministry of Environment and the National Office for Environment, which can use the funds to finance any restoration works as and when needed.

Before the effective abandonment of the mine, the permit holder must recruit an independent auditor duly approved by the National Office for Environment in order to conduct an audit of the performance and completion of all mitigation and restoration works foreseen in the environmental specifications. The audit report is subject to the approval of the National Office for Environment, which will issue the definitive environmental clearance (quitus environnemental) that releases the permit holder from all its environmental obligations.

5 Surface rights

5.1 Does the law of your jurisdiction distinguish between mining rights and surface rights? If so, how does an owner of mining rights acquire surface rights?

The permit holder must enter into a lease agreement with the landowner with respect to:

• the use of land;
• the right to establish all constructions and infrastructure that may be necessary to conduct the exploration/exploitation activities; and
• the right to remove trees and other assets on the land.

5.2 Where surface rights are acquired, what are the operator's rights and obligations as regards the landowner? And what are the landowner's rights and obligations as regards the operator?

The operator must maintain good neighbourly relations with the landowner. Thus, the operator must:

• inform the landowner of its right to occupy the land parcel covered by the mining permit;
• obtain the landowner's authorisation before starting work on the land; and
• enter into a lease agreement or any other form of contract with the landowner to cover all compensation for the use of the land and any damage caused to the property as a result of the mining activities.

In short, the relationship between the two parties will be governed by the contract between them.

5.3 Please give an overview of the process for any mandatory acquisition of surface rights (eg, process and time to enforce).

If the landowner refuses to enter into an agreement with the permit holder, the latter may submit a request to the Ministry of Mines in order to arrange for the project to be declared a public utility project and to initiate an expropriation procedure. Expropriation is a detailed and time-consuming process that can last for a year or even more.

5.4 Are any native title issues applicable, either at the exploration licence stage or when a mining right is issued?

The concept of native title is broadly recognised. In this regard, even occupants without formal land titles must be considered by the permit holder. In principle, local communities must always be consulted whenever their land may be affected by a given project. Under these circumstances, their consent is generally required before any project can proceed. Consent is required regardless of the type of activity (exploration or exploitation).

5.5 Are any other rights needed to use the land (eg, zoning permissions or planning requirements)?

None that we are aware of.

6 Environmental issues

6.1 What environmental authorisations are required to undertake prospecting, exploration and mining activities in your jurisdiction? Do these vary depending on the type of mineral or the location of the activity?

In principle, the commencement of exploration activities is subject to the issue of an environmental authorisation by the Ministry of Environment after the approval of an environmental commitment plan submitted by the permit holder. However, an environmental permit may be required if significant impacts on the environment are contemplated. In this case, an environmental permit should be obtained from the National Office for Environment following the approval of an environmental impact assessment study report submitted by the permit holder.

The commencement of exploitation activities is subject to the performance and submission of an environmental impact assessment study by the permit holder in order to obtain an environmental permit from the National Office for Environment.

6.2 What environmental obligations must the operator observe while the mine is operational?

The environmental impact assessment study report approved by the National Office for Environment sets out the environmental specifications of the project.

The environmental specifications mainly include:

• all environmental measures that must be completed by the permit holder during the life of the project until the definitive abandonment of the mine, including all restoration works;
• the financing and budget for mitigation and restoration measures; and
• provision for the mitigation and restoration works, along with any security or guarantee in favour of the state.

6.3 What environmental obligations must the operator observe in relation to closure of the mine?

The environmental specifications include:

• all environmental measures that must be completed by the permit holder during the life of the project until the definitive abandonment of the mine, including all restoration works;
• the financing and budget for mitigation and restoration measures; and
• provision for the mitigation and restoration works, along with any security or guarantee in favour of the state. This could take the form of funds deposited in a bank account in Madagascar in order to finance the restoration works. Use of the funds will be subject to certain conditions, such as the following:
• • The funds must be used exclusively for the restoration works;
  • Further deposits must be made if necessary to cover any changes to the restoration works/measures; and
  • The funds will be under the control of the Ministry of Mines, the Ministry of Environment and the National Office for Environment, which can use the funds to finance any restoration works as and when needed.

Before the effective abandonment of the mine, the permit holder must recruit an independent auditor duly approved by the National Office for Environment in order to conduct an audit on the performance and completion of all mitigation and restoration works foreseen in the environmental specifications. The audit report is subject to the approval of the National Office for Environment, which will issue the definitive environmental clearance (quitus environnemental) that releases the permit holder from all its environmental obligations.

6.4 What are the potential consequences of breach of these requirements – both for the operator itself and for directors, managers and employees?

Failure to comply with environmental obligations could lead to the following administrative sanctions:

• closure of the company;
• direct use of the provision for environmental restoration by the Ministry of Mines, the Ministry of Environment and the National Office for Environment;
• suspension of the environmental permit; and
• an injunction to complete the restoration within a specific timeframe, subject to the payment of penalties per day or month of delay.

The permit holder may also incur civil liability and ordered to pay damages by the civil court.

The managers and directors may also incur criminal liability if the breach of the environmental obligations results in physical damage to individuals, communities and/or their property.

6.5 Which bodies are responsible for enforcement of environmental obligations?

The Ministry of Environment and the National Office for Environment.

6.6 What is the regulators' general approach in regulating the mining sector from an environmental perspective?

No answer submitted for this question.

7 Health and safety

7.1 What key health and safety requirements apply to operators in your jurisdiction?

The following requirements apply to operators:

• to establish and maintain healthcare systems and health facilities, taking into account:
• • preventive measures for the health of workers and their families;
  • first aid care in case of illness affecting workers;
  • primary healthcare for workers and their families;
  • water treatment and regular supplies of drinking water to workers and their families; and
  • arrangements for medical evacuation, where necessary;
• to establish periodically revised hygiene and health rules and set up a hygiene and health service;
• to establish suitable medical centres;
• to ensure adequate supplies of equipment, medical products and medicines and the presence of medical staff;
• to conduct periodic medical examinations and provide reports on the state of health of the workers and their families; and
• to create individual record sheets, including medical information on each worker.

7.2 What reporting requirements apply with regard to mining accidents in your jurisdiction?

The operator must report any accident at the mine, within 10 days of its occurrence, to the Ministry of Mines, the Ministry of Labour and Ministry of Public Health, as well as to the territorially competent gendarmerie.

This report must detail the circumstances and consequences of the accident, including the date, the damage and relief measures undertaken.

7.3 What are the potential consequences of breach of these requirements – both for the operator itself and for directors, managers and employees?

Breach of these requirements is punishable by the temporary and immediate suspension of work, after formal notice by the Ministry of Mines. The permit/authorisation may also be suspended.

The company may also incur civil liability and the managers and directors civil and criminal liability, depending on the nature of the breach.

7.4 What best practices in relation to health and safety should operators consider adopting in your jurisdiction?

Madagascar law does not prevent mining companies from implementing any available health and safety standards, as long as these do not constitute a breach of the national legislation.

7.5 Which bodies are responsible for enforcement of health and safety obligations?

The Ministry of Public Health and the Ministry of Labour, Civil Service and Social Laws are responsible for the enforcement of health and safety obligations.

7.6 What is the regulators' general approach in regulating the mining sector from a health and safety perspective?

The ministries and their departments play an active role in regulating the mining sector from a health and safety perspective. This may involve anything from simple inspections to the application of sanctions where required.

8 Processing, refining and export

8.1 What requirements and restrictions apply with regard to the processing or refining (beneficiation) or minerals?

With regard to the processing and refining of minerals, the operator must maintain a processing register indicating the quantities, origin and estimated value of all substances used as inputs to the operation.

The E permit holder must also retain the following documents:

• an entry and exit register in respect of all minerals, specifying their origins and their destination; and
• the originals of all invoices, for a period of five years.

The export of minerals is subject to an export declaration submitted to the regional department of the Ministry of Mines. The export declaration dossier includes:

• a declaration form, duly signed;
• the types of minerals and the quantity of samples to be controlled; and
• a free pass, duly completed, with respect to the products to be exported or all invoices relating to the products.

The regional department of the Ministry of Mines will undertake a compliance check of the products and issue a compliance certificate within 48 hours of receiving the export declaration.

8.2 What requirements and restrictions apply to the export of minerals?

In addition to the requirements set out in question 8.1, the proceeds of export must be repatriated within one month of the effective export date.

9 Taxes and royalties

9.1 What taxes, royalties and similar charges are levied on mining operators in your jurisdiction? How are these calculated?

Mining operators are subject to the following ordinary tax regime:

• Income tax: 20% of net profit.
• Non-resident income tax: withholding tax of 10% of any income realised in Madagascar by a non-resident.
• Tax on dividends: 10% with respect to dividends paid to non-resident shareholders.
• Salary income tax: 20% of the salary.
• Impôt sur les revenus des capitaux mobiliers: 20% on loan proceeds.
• Value-added tax : 20%.
• Registration fees: From 0.5% to 5%, depending on the nature of the transaction.
• Mining royalty: 2%, payable on the sale of minerals.

9.2 Are any tax incentives available for mining operators?

Law 005-022 dated 17 October 2005 amending Law 2001-031 dated 8 October 2002 establishing a special regime for large-scale investments in the Malagasy mining sector (LGIM) introduced a specific incentive regime for large-scale investment projects involving an investment of more than MGA 50 billion, once certification has been granted by way of government decree. The LGIM regime mainly consists of:

• a legal, financial and tax stability guarantee;
• the possibility to take advantage of any more favourable measures; and
• certain tax and financial exemptions, under certain conditions.

9.3 What other strategies might mining operators consider to mitigate their tax liabilities?

The Mining Code also provides for a stability regime, which guarantees the stability of the legal regime and tax and customs laws in force at the time of application to benefit from stability regime. This stability regime does not provide for specific exemptions or derogations from the laws in force.

9.4 Have there been any significant changes to the taxation rates applicable to mining companies in the last three years?

None that we are aware of.

10 Disputes

10.1 In which forums are mining disputes typically heard in your jurisdiction?

The parties often choose international arbitration, but sometimes contracts provide for local jurisdiction.

10.2 What issues do such disputes typically involve? How are they typically resolved?

Mining disputes often relate to title ownership arising from a delay in grant of the title card and the ministerial order approving the transfer. Such administrative delays put the purchaser in a difficult position, because the transfer agreement alone is not enough to evidence title ownership. The parties often resolve their disputes by way of a settlement agreement before a judgment or an arbitral award is issued.

Disputes relating to the use of land by mining companies are also common in Madagascar. Any issues relating to land are sensitive and may slow down the development of a project. The government can sometimes be forced to temporarily suspend a project due to challenges from the local communities.

10.3 Have there been any recent cases of note?

One recent title ownership dispute ended up with a settlement agreement between the parties.

11 Trends and predictions

11.1 What changes have there been to the mining landscape in your jurisdiction in the last five years?

The administrative fees paid to the Bureau du Cadastre Minier de Madagascar were made subject to value added tax. Apart from that, no major changes have been implemented.

11.2 How would you describe the current mining landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The suspension of the grant of new permits since 2010 has slowed down the development of the sector. However, this is expected to end upon publication of a new Mining Code, which is currently under review. A committee composed of representatives from the Ministry of Mines, experts, professionals from the mining sector and civil society has been set up to work on the draft law. Among other things, changes to the royalty regime for the sale of minerals, the state participation regime and the social responsibilities of mining companies are envisaged.

12 Tips and traps

12.1 What are your top tips for mining operators in your jurisdiction and what potential sticking points would you highlight?

It is advisable to comply at all times with all regulations that are applicable to the mining sector. Specific attention should be paid to land, employment and environment laws, as these are often the sources of disputes with local communities that may slow down the development of a project.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.