The legal framework for mining investments in Mali underwent considerable change with the adoption of a new Mining Code in 2023, established by Law No. 2023-040 of 29 August 2023. This new Mining Code repeals Ordinance No. 2019-022/P-RM of 27 September 2019 in the Republic of Mali ("new Mining Code") and has recently been supplemented by the Implementation Decree No 2024-0396/PT-RM of 9 July 2024 ("the Implementation Decree").
In parallel, Law No 2023-041 of 29 August 2023 on local content in the mining sector, sets out an ambitious framework to help develop local human and material capacities in terms of transformation, capacity building and transfer of know-how. This legislation has also been recently supplemented by an Implementation Decree, i.e. Decree No 2024-0397/PT-RM, which has also been issued on 9 July 2024.
A combined review of the new Mining Code and its Implementation Decree confirms that Mali's new legal framework for mining is characterised by a general strengthening of State control over the mineral permitting system, the companies holding permits, and the processing and transformation of extracted minerals. As a result, this new legislation has given rise to concerns among mining companies with some experts fearing that mining investment in the country will slow.
State intervention in the mineral permitting process
Instead of streamlining the mineral permitting process, the new Mining Code offers a range of categories of mineral titles available to authorise exploration and mining. It maintains various categories of mineral permits and authorisations based on the nature of exploitation, whether industrial or artisanal, as well as the scale of the mining operation, whether a big-scale or small-scale mine. This proliferation of permit categories may increase the risk of having different mineral permits overlapping the same mineral areas.
Furthermore, the new Mining Code creates a special permitting regime for mineral substances of strategic interests, which are defined by the Implementation Decree as being lithium, uranium, thorium, tungsten tantalite, cobalt and rare earth, and can be explored and mined in zones of strategic interest. These strategic interest zones may include mining reserves preserved for future generations or places characterised by the presence of strategic indications or substances. The State may suspend the ability to apply for mineral titles in these zones, for a given period or a given substance. As the Implementation Decree refers to a Decree for the classification of such strategic zones, they cannot yet be mapped.
The State is therefore given special powers to regulate mineral substances and zones of strategic interest. It is also given priority in the allocation of mineral titles.
The new mining legislation specifies that a State mining company or any company in which the State has a majority shareholding has a right of priority where there is an allocation of exploration permits.
Concerning the granting of exploration permits, Mali has moved away from the 'first come, first served' principle under the previously applicable (2019) Mining Code towards a priority given to the State through the preference given to State-owned companies or any company in which the State has a majority shareholding interest. Additionally, the State can prevent an excessive number of exploration permits in the hands of a few companies by stipulating that the same company cannot hold more than three (3) exploration permits in the same geological district.
The State is also given priority in the scenario where a mineral substance other than that covered by the large-scale mining permit is discovered within the perimeter of that permit. The previously applicable (2019) Mining Code provided that the permit holder could either extend their permit on this new mineral substance or partly transfer his permit for the part of the perimeter containing that mineral substance to another mining company with the capacity to exploit it. The new Mining Code changes this rule and now provides that the holder of a permit who is not interested must transfer his rights over the part of the perimeter concerned to the State free of charge.
In addition to the granting of exploration authorisations and exploration permits, the State also has priority in acquiring the plant, machinery and equipment of mining companies whose operations come to an end and which were acquired at fair value.
The new Mining Code introduces changes to the authorities responsible for issuing certain mining permits and authorisations. These changes reveal increased action by Ministries other than the Minister of Mines, in the context of prioritisation of a sector that is essential to the development of the national economy. For example, exploration permits, which used to be granted by order of the Minister for Mines, are now granted by decree adopted by the Council of Ministers on a proposal from the Minister for Mines.
As regards exploitation, the small mine exploitation permit is now issued by interministerial order of the Ministers of Mines and Economy and Finance, whereas previously it was issued by a simple order of the Minister of Mines. Similarly, large-scale mining permits are now awarded by Presidential decree taken by the Council of Ministers, rather than by decree of the Prime Minister.
The approval regime for transferring mineral titles includes rights of pre-emption, rights of first refusal and other priorities enabling the State to control both direct and indirect changes of ownership of mineral titles and the companies holding them.
As confirmed by Article 117 of the Implementation Decree, any change of control of the company holding an exploitation or mining permit is subject to approval by the Minister of Mines.
As for the cession of this type of permit, it requires prior approval by both the Minister of Mines and the Minister of Finance, before final approval by a Decree taken in the Council of Ministers.
The State has strengthened its rights in the management of mining resources by granting itself a right of pre-emption and a right of first refusal in the event of the transfer of mineral titles by their holders. The right of pre-emption allows the State to acquire a mineral title in preference to a third party for the same price. The right of first refusal enables it to conclude a commercial transaction with the holder of a mineral title before a third party.
State participation in mining companies
Mali's new Mining Code maintains the right for the State to own a 10% free, carried, and non-contributing shareholding interest in every mining company holding an exploitation or mining permit. This interest attracts priority dividends, which must be paid. In the scenario where there is not enough cash flow for their payment, the mining company must contract a loan to finance such mandatory payments, as confirmed by the Implementation Decree (see article 125).
The State is also given the option to take an additional contributing paid shareholding interest, called a «participation en numéraire», of up to 20%.
The new Mining Code stipulates that the shareholdings of the State and Malian investors may not be diluted in the event of a capital increase within the mining companies, qualifying these shareholdings as priority shares. This conflicts with previous Mining Codes and the Common Mining Code of the Western African Economic and Monetary Union ("UEMOA"), which limited this rule of non-dilution of the State's shareholding interests to the State's free shareholding interest.
In addition to the above-mentioned 30% state participation (10% free and non-contributing participation and 20% additional contributing participation), Article 82 of the new Mining Code also introduces an obligation for operating companies to sell 5% of their shares to Malian investors. As a result, the shareholding of the Malian state and private sector in the mining companies may be increased to 35%. Although Senegal, Burkina Faso and Guinea Conakry also provide for a total stake that may exceed 30%, this increased State-owned or State-controlled participation is above the average observed in practice in many African jurisdictions.
Local transformation
Article 26 of the previous (2019) Mining Code required holders of mining permits to treat, refine or process mining products in accredited units located in Mali. These operations could nevertheless be carried out outside the country if necessary. Article 25 of the new Mining Code amends this provision by requiring refining and processing operations to be carried out in State-owned units located in Mali. If there are no State-owned refineries, operators may carry out these operations in other (private) refineries located and authorised in Mali, subject to authorisation from the Ministers of Mines and Finance.
The new Mining Code thus rules out the possibility of mining operators carrying out the above-mentioned operations outside Mali, and the Implementation Decree does not provide more details regarding the conditions under which such local transformation operations must be conducted (see article 143).
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.