Fiscal and legislative reforms are sweeping through the mining sector as governments, eager to capitalise on the extractive boom, roll out new regulations to bolster funding. These changes come amid a push for a fairer distribution of mining revenues. “It’s in vogue. [Even] Senegal is getting in on the act,” says a mining expert from Burkina Faso.
However, this push for reform — driven by the West African Economic and Monetary Union (WAEMU) community mining code, which took effect in 2023 and aims to standardise state participation in mining projects between 10% and 15% — has proven more complex than anticipated.
Foggy conditions in Côte d’Ivoire
The latest country to opt for reform is Côte d’Ivoire, where the 2014 mining code is currently under review. Jean-Claude Diplo, president of the Groupement professionnel des miniers de Côte d’Ivoire (GPMCI) and boss of the Canadian group Allied Gold in the country, says he accepts the change: “It’s a trend that we understand and support. Mining codes have a life expectancy of seven to 12 years. Reforming them allows us to respond to changes in the context and to make the necessary adaptations to take account of the new difficulties and problems faced by the various players.”
We are entering a grey area in which miners can no longer plan ahead from one fiscal year to the next
The two-point increase in the ad valorem tax – tied to turnover and indexed to gold prices – under Côte d’Ivoire’s 2025 Finance Act would bring in more than 40bn CFA francs ($63.4m) in additional government revenue this year. Although the Ivorian extractive sector has attracted more than $3bn in investment over the past decade, the government now wants a larger share of the revenue.
While the tax is a sticking point, the GPMCI is more concerned about the decline in the quality of dialogue with the government in recent years, and the removal of provisions guaranteeing the stability of the tax and legal framework.
“We are entering a grey area in which miners can no longer plan ahead from one fiscal year to the next. Coverage is breaking down, which introduces the legal risk so feared by investors,” says Diplo.
Stormy Sahel
In neighbouring Mali and Burkina Faso, ruled by military juntas that have made sovereignty the cardinal value of their economic policy, the situation for foreign gold producers is getting trickier by the day.
In Burkina Faso, the new mining code, adopted in July 2024, allows the state to collect up to 15% free of charge in new mining projects, compared with 10% previously. In addition, it can “subscribe up to 30%, for itself and/or for the national private sector, in return for payment, for an additional stake in the capital of operating companies”.
This is a critical moment for the exploitation of mining resources, which puts the credibility of the state at stake
This rule mirrors the one introduced in Mali under Assimi Goïta’s 2023 legislation. While gold already makes up 90% of Mali’s export revenues and over 20% of tax revenues in both Sahelian nations, the measure aims to replenish their coffers, strained by military expenditures.
In Mali, legislative reform follows an audit carried out by Mazars and Inventus Mining, which estimated the loss of revenue in the country’s mining sector at between CFA300bn and CFA600bn (between $475.9m and $951.8m) due to a series of irregularities on the operators’ side and weaknesses in the legal framework.
While the revisions comply with the WAEMU regulation, the speed of the rollout is exacerbating tensions with foreign companies. Amid financial pressures, threats to withdraw licences and even the imprisonment of managers, mining companies are laying low, for the most part.
Mali’s ‘credibility at stake’
To address the infractions revealed by the auditors, Allied Gold, Resolute Mining and Robex have reached agreements with the Malian authorities to settle their respective disputes, accepting that their mines will from now on be governed by the 2023 Code.
But with Barrick, operator of Mali’s largest mine at the Loulo-Gounkoto complex, the standoff has dragged on and on. No agreement has yet been reached to bring it into line with the 2023 code. According to Reuters, the junta is demanding $5.5bn from the mining group for the operation of its two mines in the country.
Given the apparent lack of compliance, the junta detained four of its executives, issued an arrest warrant for its CEO, Mark Bristow, blocked its exports and seized stockpiles of gold. In response, Barrick initiated arbitration proceedings against the Malian state. The country’s largest employer with some 8,000 employees, the company announced the suspension of its operations at the mine on 14 January.
“This is a critical moment for the exploitation of mining resources, which puts the credibility of the state at stake,” says Malian economist Modibo Mao Makalou, president of International Business Services Mali. “I hope that the Malian side will be receptive to Barrick’s outstretched hand for an amicable settlement.”
Retroactivity, a major issue
While it is too early to predict the impact of the tougher rules of the game on the sector in the Sahel, several sources – speaking on condition of anonymity – say they believe that ongoing operations will be maintained, although they are betting on a drop in future investment.
Cautious about the success of the nationalisation of mines and sceptical about the ability of governments to manage and mobilise funding, they predict a proliferation of small mines and limited success for major projects led by the local private sector.
Pointing to the situation in Mali and Burkina Faso, a source says: “The problem arises particularly when reforms are retroactive. This creates fiscal and regulatory instability that jeopardises the financial equilibrium of mining projects. For new programmes, investors will take the new situation into account when calculating their business model.”
However, this scenario is unlikely to occur in Senegal or Côte d’Ivoire, where authorities say they “will not apply retroactive measures”.
The economist Makalou says the challenges facing the mining sector in West Africa are clear: “Governments must ensure that their mining sector remains attractive in relation to their competitors in Africa, while encouraging investment in local processing.”
Doing so is proving to be a tricky tightrope walk, promising new episodes to come in the battle for economic sovereignty over the riches of West Africa’s subsoil.