On 18 July, 2024, Burkina Faso’s Transitional Legislative Assembly (“ALT”) unanimously passed a comprehensive new mining code, the Law No 016-2024/ALT. This new mining code significantly increases the State’s control and domestic participation by mandating local investment, strengthening regulatory oversight, introducing local processing requirements and enforcing stricter penalties for overproduction and violations.
Background
The new mining code comprises 309 articles across 10 titles. It addresses key aspects such as mining titles, taxation, financial guarantees, regulation and sanctions. Motivated by the rising prices of precious metals, particularly gold, and the increased interest from both the State and investors, the new mining code aims to provide a holistic approach to managing mining activities and the market of mineral substances. The government intends to use this new framework to enhance sector oversight, generate long-term revenue for the population and support national priorities. The new mining code also introduces provisions for the treatment of mining tailings, aligning with Burkina Faso’s broader goals of regulatory reform and resource management.
Next Steps
The implementation of this new mining code is dependent on the drafting and approval of implementation regulations. Four draft decrees for the implementation have been submitted to the relevant stakeholders to review by the Ministry of Energy Transition, Mines and Quarries. Once adopted, these texts will allow the law to fully produce its effects.
Comment
Time is still needed before the new mining code becomes fully implemented. Before that, foreign investors should understand major changes that will impact their interests.
The mandatory local investment requirement stipulates that mining companies must open their capital to Burkinabè investors, allowing the government to hold up to a 15% free-carried interest and an additional 30% contributing share. This change increases local ownership and reduces the share available to foreign investors. Furthermore, the mining industry is aligned with general laws in governing foreign exchange, tax and custom duties, which limits mining companies from enjoying a distinct investment regime by reserving most exemptions, concessions and incentives solely for the exploration phase. Moreover, the three-year preparatory period benefit no longer extends to the exploitation/extraction phase.
Additionally, companies must comply with local processing requirements, mandating that at least 50% of their production be processed within the country. Fiscal and customs advantages for mining companies during the exploitation phase are abolished. The new mining code enhances oversight by empowering mining administration agents as judicial police officers, increasing monitoring and control of operations, and introduces stricter sanctions for violations. These measures will likely lead to increased operational costs and complexities for foreign investors.
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