The Mining Law Review: Guinea
With an area of 245,857 square kilometres, the Republic of Guinea (Guinea) is comparable in size to the United Kingdom but its mining resources are considered to be among the most important in the world. Guinea is thought to have the largest bauxite reserves in the world, located mainly in the Boké and Kindia regions of Guinée-Maritime. It rests on two untapped world-class high-grade iron deposits around the Simandou and Nimba mountains in Guinée-Forestière and benefits also from substantial reserves of gold and diamonds, notably in Haute-Guinée.
While a number of these deposits were discovered decades ago, Guinea has often been considered a prime example of the 'resources curse' affecting resource-rich developing countries. Indeed, despite being one of the world's top bauxite producers – making the mining industry a key sector of the Guinean economy – Guinea was ranked only 132nd of 196 nations in terms of gross domestic product (GDP) in 20182 and 174th of 188 nations listed on the human development index in the 2018 United Nations Human Development Report.3
Yet, thanks to the arrival of new players on the market, improved governance of the sector, and significant logistical progress, Guinea has been experiencing a real bauxite boom in recent years. Supported by a growing global demand for aluminium, Guinea has become the world's third largest producer of bauxite, behind Australia and China,4 tripling its production from 20 million tons per year in 2015 to nearly 60 million in 2018. The bauxite industry has driven the growth of the country's GDP, which has exceeded 7 per cent on average over the last three years, as well as state mining revenues, which increased from US$293 million in 2015 to US$355 million in 2018.5
Once less successful than bauxite, iron and gold projects are again also beginning to attract a growing number of investors. In June 2020, the government approved the signature of the basic agreement for the development of two of the four blocks of the Simandou deposits. However, Guinea's key iron deposits are still in the exploration or development phase and the financing of integrated iron ore mines, rail and port projects remains a challenge for the government of Guinea and mining developers, especially during a period when the iron ore price is low. As a result, the development of projects in Guinée-Forestière has been slow.
The main reasons generally put forward to explain Guinea's failure to fulfil its mining potential are, in addition to commodity price volatility, underdeveloped infrastructure, power supply constraints, lack of local development, political instability and an investment climate perceived as weak.
Similar to a number of other African countries, the Guinean legal regime that governs mining has been significantly amended during the past two decades, with successive moves to tackle these issues, attract foreign investors and promote transparency and good governance.
Nevertheless, since the 2016 economic upturn, which was mainly driven by the extractive sector, Guinea's GDP growth reached 6.2 per cent in 2018 and 5.6 in 2019.6 Deflecting the uniquely significant importance of the mining sector in Guinea, the African Union decided in July 2018 to settle the African Minerals Development Centre (an organisation in charge of the implementation of the African Mining Vision) in Conakry.7 However, the recession caused by the covid-19 pandemic and lower aluminium prices could affect investors' craze for costly projects. On the contrary, the prices of some metals, such as gold, have increased, which could lead to a renewal of interest from international mining companies for gold projects in the country, once the global transport of goods returns to normal.
II LEGAL FRAMEWORK
Guinea declared independence from France on 2 October 1958 with Ahmed Sékou Touré as President. In the 26 years of his presidency (1958–1984), the country suffered from diplomatic isolation and was largely closed to international investment. The development of the mining sector was managed by the state, and the involvement of foreign companies was limited and negotiated on a case-by-case basis without the benefit of a general legal framework for the sector. The Ministry of Mines was not set up until 1981.
Between 1984 and 2008, Guinea was ruled by General Lansana Conté, a period during which the country sought to open itself up to foreign investment.
In this context, the first Mining Code was adopted by Order No. 076/PRG/86 of 21 March 1986 (the 1986 Mining Code). Inspired by the desire to accelerate economic development, the 1986 Mining Code attempted to create a more favourable environment for foreign investment and to reduce the state's involvement in the mining sector.
The adoption of the 1986 Mining Code was supported by the World Bank and the International Monetary Fund (IMF). This was part of a wider effort by these organisations to reduce investment risks and uncertainties and to improve the deteriorating financial situation of certain developing countries under structural adjustment programmes.
The 1986 Mining Code, inspired by the French Mining Code and comprising 148 Articles, set up three types of mining titles (exploration permit, exploitation permit and concession, a long-term mining title covering both exploration and exploitation work) and provided for specific rights and obligations in relation to each of them.
Following the adoption of the 1986 Mining Code, Guinea adopted an investment code by Order No. 001/PRG/87 of 3 January 1987. It aimed to reopen the Guinean economy to the private sector by guaranteeing that there would be no discrimination between foreign and national investors, providing for freedom to transfer capital (including profit repatriation) and offering protection against nationalisation.
The 1986 Mining Code has often been highlighted as an example of the first generation of mining policies characterising the economic liberalisation of the 1980s, described collectively by the World Bank as the 'Strategy for African Mining' in its 1992 report of that title.
The 1986 Mining Code was regarded positively by investors but did not lead to the expected surge in investments, as a result of continued uncertainty regarding state participation in the mining sector,8 among other reasons.
As a consequence, a new Mining Code (comprising 186 Articles) was enacted by Law No. L/95/036/CTRN of 30 June 1995 (the 1995 Mining Code) with a view to:
- promoting further transparency, limiting the discretionary powers of the state and providing greater clarity on state participation;9
- simplifying and clarifying permission procedures, in particular establishing a new department – the Centre for Mining Promotion and Development (CPDM), financed by the World Bank and the IMF and intended to act as a 'one-stop shop' for investors;
- guaranteeing certain rights to investors (e.g., the right to dispose freely of mineral substances and the freedom to import goods and services);
- providing for more detailed tax provisions and making the fiscal regime more attractive to investors;10 and
- providing for more detailed environmental obligations, including a requirement that all operations comply with the Environment Code that was adopted in 1987.
The 1995 Mining Code fits into the pattern of the second generation of African mining codes introduced in the early to mid 1990s, which continued the trend of liberalisation and privatisation while recognising the need for enhanced social and environmental requirements.
The 1995 Mining Code was also positively received by investors and led, in conjunction with increasing commodity prices (in particular for iron ore and gold), to increased foreign investments in the sector. However, it was also criticised for a number of reasons, including a failure to pass the necessary secondary legislation referred to in the 1995 Mining Code (including with respect to a model form mining convention).
In order to represent and manage the state's activities in the mining industry, SOGUIPAMI (Société Guinéenne du Patrimoine Minier) was created by Decree No. 218/PRG/ SCG dated 11 August 2001. SOGUIPAMI is a state-owned company responsible for managing the shareholdings held by the state in mining companies and the development of mining permits. In addition, SOGUIPAMI is entitled to hold research permits either on its own or in partnership for promotion purposes. As a result of Decree No. 2019-123 dated 19 April 2019, the oversight of the company has been transferred from the Ministry of Mines to the Presidency.
In 2008, the army seized power in a military coup led by Moussa Dadis Camara, which led to two years of social unrest and economic instability. A number of commissions were also set up to revise the 1995 Mining Code in 2008 and 2009.
In January 2010, General Sékouba Konaté assumed power as interim President. Guinea set up a transitional Parliament by Order No. 001/PRG/CNDD/SGPRG/2010 of 9 February 2010, but on 21 December 2010, the long-time opposition leader, Alpha Condé, was inaugurated as the country's first democratically elected President since independence. It was the height of the commodities boom and a reform of the mining sector was a key element of Alpha Condé's electoral campaign.
The 1995 Mining Code underwent profound review and a new code was approved by the National Transitional Council by Law No. L/2011/006/CNT of 9 September 2011 (the 2011 Mining Code). With its 221 Articles, the 2011 Mining Code was intended to be the cornerstone of Guinea's reform of the mining sector, raising the contribution of the mining sector to the government's revenue, promoting Guinea's economic and social development and enhancing its attractiveness by improving transparency.
The 2011 Mining Code introduced a number of key changes, in particular:
- the state's entitlement to a 15 per cent free carried interest in exploitation projects relating to iron ore, bauxite and gold (which was the most publicised change);
- the requirement for minimum investment obligations for the issuance of concessions;
- a prohibition for mining conventions to derogate from the terms of this new code;
- the requirement for holders of exploitation permits and concessions to enter into 'development agreements' with local communities living around the areas of operations;11
- detailed environmental and rehabilitation obligations;
- the introduction of a new tax regime, including amendment of the surface royalty and extraction tax;
- a number of transparency and anti-corruption initiatives, including:
- the introduction of 'know your client'-type disclosure requirements;
- an obligation to enter into a code of good conduct providing for, inter alia, compliance with the principles of the Extractive Industries Transparency Initiative, to which Guinea adhered to in 2005 and acceded to in 2007;
- an obligation to file an annual anti-corruption plan detailing, inter alia, actions undertaken to prevent corruption; and
- an undertaking to publish all mining titles and conventions on the internet;12 and
- the setting up of a National Mining Commission, comprising a Strategic Committee and a Technical Committee, in charge of supervising the activities of the CPDM.
Guinea also launched, by Presidential Decree D/2012/045/PRG/SGG, a review process managed by the Strategic and Technical Committees with a view to renegotiating and harmonising mining conventions with the 2011 Mining Code, which was completed in April 2016.
By the time the 2011 Mining Code was published and entered into force, commodity prices had declined and the 2011 Mining Code was criticised for being influenced by 'resource nationalism'. As a consequence, Guinea amended the 2011 Mining Code by Law No. L/2013/053/CNT of 8 April 2013 (the 2011 Mining Code as amended in 2013, 'the Mining Code'), with a view to introducing:
- decreased maximum area limitations for exploration permits;
- reduced investment thresholds for the issuance of a mining concession;
- reduced royalty and tax rates and increased stabilisation periods for certain tax rates from 10 to 15 years; and
- increased flexibility in relation to the transfer of the infrastructure's ownership to the state and applicability of this new code to existing mining conventions.
Law No. L/2013/053/CNT was promulgated by Presidential Decree D/2013/075/PRG/SGG dated 17 April 2013. It was published in the Official Gazette and entered into force in June 2013.
Further regulations were then adopted to implement the Mining Code, including four decrees in January 2014: (1) Decree D/2014/012 on the management of the authorisations and mining rights; (2) Decree D/2014/013 on the implementation of the financial provisions of the Mining Code; (3) Decree D/2014/014 on environmental and social impact assessment for mining operations; and (4) Decree D/2014/015 adopting a model form mining agreement. Order A/2016/5002/MMG/SGG adopted on 1 September 2016 specified a new cadastral procedure. To the best of our knowledge at the time of writing, these texts are still expected to be published in the Official Gazette. In practice, the relevant Guinean authorities operate on the basis that these implementing regulations are in effect (indeed, a number of these decrees explicitly provide that they came into effect immediately upon signature).
Decree D/2015/007/PRG/SGG dated 14 January 2015 also finally puts in place a system for an accelerated management and monitoring of the files for the development of integrating mining projects with investments of US$1 billion or more.
Finally, Guinea adopted Law No. 0032/2017/AN as promulgated by Decree No. 0/2017/278/PRG/SGG dated 24 October 2017 on public-private partnership. Although mining rights are excluded from its scope, this Law will apply to integrated mining projects comprising both mining and infrastructure aspects. To the best of our knowledge, at the date hereof, the implementing decrees of Law No. 00325/2017/AN have not been adopted yet.
III MINING RIGHTS AND REQUIRED LICENCES AND PERMITS
Article 3 of the Mining Code states that mineral substances within the territory of Guinea are the property of the state and cannot be subject to private appropriation except as provided for by the Mining Code.
The Mining Code provides for a separation between ownership of minerals while they are in the ground and ownership of minerals once extracted. A private party that holds a mining right granted under the Mining Code acquires ownership of any minerals it extracts pursuant to that mining right.
ii Surface and mining rights
Articles 17 et seq. set out three types of mining titles with the following key rights and obligations.
Key rights and obligations
|Exploration permit||Exploitation permit||Concession|
|Purpose||Exclusive right to explore||Exclusive right to explore, exploit and dispose of||Exclusive right to carry out all kinds of mining operations|
|Maximum initial term||3 years||15 years||25 years|
|Maximum area||500km2 (bauxite and iron ore)|
|Based on deposits identified in a feasibility study|
|Maximum number||Three (bauxite)|
Three (iron ore)
|State participation||N/A||Non-contributing, carried interest of 15 per cent for iron ore, bauxite and gold upon the grant of the title and up to a further 20 per cent interest on terms to be agreed with the title-holder.|
|Transferability||No||Yes – subject to approval by the Minister of Mines, an environmental audit and a health and safety audit.|
|* Decree D/2014/012 on the management of the authorisations and mining rights (see above) sets the minimum expenditure at US$500 per square kilometre per year and provides that expenditure incurred abroad will be taken into account up to a certain amount, which will be set out in a joint order of the Ministries of Mines and Finance.|
† This amount will increase by 10 per cent per month from the fourth month of delay until the 12th month of delay.
‡ The terms of this account will be detailed by a joint order of the Ministers of Mines, Environment and Finance.
|Exploration permit||Exploitation permit||Concession|
|Conditions for grant||Sufficient financial and technical capabilities*|
|N/A||N/A||Requires an investment of at least US$1 billion in relation to iron ore and bauxite or US$500 million in relation to gold and certain other substances.|
|If exploration work has been undertaken by the state, the state may seek reimbursement on the basis of an assessment by an independent auditor.||If the exploitation permit or concession is granted to someone other than the entity that made the discovery, a fair compensation must be paid to the latter to cover the exploration costs that have been incurred.|
|Process for grant||If no deposit has been identified, awarded on a first-come, first-served basis.||If an exploration permit is in place, an application must be filed no later than three months before the end of its term.|
|If a deposit has been discovered, based on a competitive tendering process.||If there is no exploration permit, or the holder of the relevant exploration permit does not apply, based on a competitive tendering process.|
|Granted by an order of the Minister of Mines upon recommendation of the CPDM following approval of the Technical Committee.||Granted by ministerial decree upon recommendation of the Minister of Mines following approval by the National Mining Commission.|
|Key documents for grant||A feasibility study including:|
|* The definition of 'financial and technical capabilities' will be set out in a presidential decree. The Management Decree defines 'financial and technical capabilities' as the 'minimum professional, technical and financial requirements that are deemed to be necessary by the awarding authority', based on the deposit in question and the mining title requested.|
† The process to be followed to enter into local development agreements with local communities will be set out in a joint ministerial order.
|Exploration permit||Exploitation permit||Concession|
|Number of renewals||Two||Unlimited||Unlimited|
|Term of renewals||2 years||5 years||10 years|
|Time for applying for renewals||Three months before end of term||Six months before end of term||Six months before end of term|
|Extensions||May be granted for a term not exceeding one year if a feasibility study is not completed by the end of the second renewal for justified reasons.||N/A||N/A|
|Relinquishment||50 per cent on each renewal||N/A||N/A|
In addition to the foregoing, Article 18 of the Mining Code provides that mining agreements will be entered into with holders of concessions and exploitation permits on the basis of a model form mining agreement. The model is provided by Decree D/2014/015/PRG/SGG adopting a model mining agreement and dated 17 January 2014. Mining agreements are intended to supplement the provisions of the Mining Code. Although mining agreements are to be ratified by the legislature, as was the case under the 1995 Mining Code,13 the Mining Code provides that mining agreements may not deviate from the terms of the Mining Code.
iii Additional permits and licences
The Mining Code provides in a number of different Articles that mining companies operating in Guinea must comply with all applicable Guinean mining laws and regulations. Articles 120, 143 and 144 state that specific authorisations are required for certain operations, including land clearing, building of communication transmission lines or infrastructure and disposal of non-recycled waste. In practice, numerous additional permits and approvals are required for mining projects. It is therefore advisable for operators to implement a strict compliance methodology to secure and maintain the required permits and approvals from the relevant authorities.
iv Closure and remediation of mining projects
According to Article 131 of the Mining Code, mine closure must be notified 12 months in advance and a closure plan must be filed six months before the date of closure in order to:
- eliminate health and safety risks;
- rehabilitate the site to a condition acceptable to the local community; and
- restore vegetation with similar characteristics in the surrounding area.
Following a rehabilitation inspection by the Ministry of Mines and the Ministry of the Environment, a notice of discharge will be issued. This notice will discharge the title-holder from all obligations in relation to the mining title. Should the site fail this inspection, rehabilitation work will be carried out by the administration at the expense of the title-holder.
IV ENVIRONMENTAL AND SOCIAL CONSIDERATIONS
i Environmental, health and safety regulations
Article 7 provides that title-holders must comply with, inter alia, applicable provisions of the Public Health Code, the Environment Code, the Water Code, the Employment Code, the Wildlife Code, the Livestock Code, the Real Estate Code, the Forestry Code, the Pastoral Code and the Local Communities Code.
Article 145 also provides that title-holders must apply whichever are the highest standards applicable in Guinea or those followed by title-holders in their other operations.
ii Environmental compliance
Article 142 provides that the environment must be protected in accordance with the provisions of the Environment Code or 'international best practices in this area'.
iii Third-party rights
Articles 115 et seq. set out specific provisions relating to the protection of title-holders' existing rights. Article 118 allows the Minister of Mines to create a buffer zone within a title area to protect an adjoining title.
The Mining Code contains specific provisions that protect persons' land rights over which mining titles are granted. Articles 123 and 124 state that:
- the grant of a mining right does not extinguish a pre-existing property right and any mining right is subject to the consent of the landowner;
- title-holders must provide reasonable and adequate compensation to the legitimate occupants of the land;
- the state will assist in procuring the necessary consent from the landowner, if any; and
- if the necessary consent cannot be obtained, the state may impose easements or expropriation and set an appropriate level of compensation.
Specific rules govern the resettlement plan to be implemented for populations that are displaced as a result of mining activities.
iv Additional considerations
Article 130 provides that a 'contribution to local development' must be paid by title-holders from the date of first commercial production. This contribution is set at 0.5 per cent of the turnover for bauxite and iron ore and one per cent in relation to other substances. To that end, a Local Economic Development Fund has been created by a Decree D/2017/275/PR0/SGG dated 31 October 2017.
Article 107 also provides that:
- title-holders and related contractors must give preference to Guinean companies, provided that they offer comparable prices, quantities, qualities and delivery schedules; and
- in any case, the proportion of small and medium-sized businesses owned or controlled by Guineans must be progressively increased towards the following minimum thresholds:
|Year 1 to Year 5||Year 6 to Year 10||Year 11 to Year 15|
|10 per cent||20 per cent||15 per cent||25 per cent||30 per cent|
Title-holders must submit an annual report to the Minister of Mines on the use of small and medium-sized businesses owned or controlled by Guineans detailing their progress towards achieving the thresholds set out above.
Articles 108 and 109 set out various obligations regarding employment:
- fixed-term work permits for foreigners in the mining sector must be approved by the mining administration and may be renewed only once;
- title-holders and their contractors are required to:
- exclusively employ Guineans for all unskilled positions; and
- submit a training and development programme that encourages as much as possible the transfer of technology and skills to Guinean businesses and staff; and
- may employ a 'reasonable number' of expatriate workers only;
- must give preference to employing Guinean managers with the required skills; and
- must employ a set percentage of Guinean nationals depending on the type of position and stage of the project, as follows:
|Year 1 to Year 5||Year 6 to Year 10||Year 11 to Year 15|
|Senior managers||33 per cent||20 per cent||60 per cent||80 per cent||90 per cent|
|Managers||50 per cent||30 per cent||80 per cent||90 per cent||100 per cent|
|Qualified workers||66 per cent||40 per cent||80 per cent||95 per cent||100 per cent|
|Unskilled workers||100 per cent||100 per cent||100 per cent||100 per cent||100 per cent|
The Mining Code also states that:
- as of the date of the first commercial production, the assistant managing director of the title-holder must be a Guinean national;
- after five years of the date of the first commercial production, the managing director of the title-holding entity must be a Guinean national; and
- title-holders must file an annual report on measures taken for employing Guineans.
V OPERATIONS, PROCESSING AND SALE OF MINERALS
i Processing and operations
While title-holders are free to export raw materials from Guinea before they are processed, Article 139 states that title-holders are strongly encouraged to establish facilities in Guinea for the conditioning, treatment, refining and processing of extracted minerals.
If any infrastructure is required, Article 121 stipulates that its construction will be carried out directly by the state or within the framework of a public-private partnership. Furthermore, regardless of how the project is financed, transport infrastructure must be transferred to the state at no cost after a five-year grace period from the date the title-holder has reached a 'fair return on investment'.14
ii Sale, import and export of extracted or processed minerals
Law No. L/2013/053/CNT of 8 April 2013 introduced a pre-emption right in favour of the state over 50 per cent of the production of a title-holder if it sold minerals at a price below arm's-length price for a continuous period exceeding three months.
The taxable income of the title-holder may also be readjusted in such a case.
iii Foreign investment
Article 184 requires title-holders to 'repatriate all export proceeds resulting from sales of mineral substances on accounts of the central bank of Guinea, opened abroad with reputable financial institutions'.
As noted by a number of practitioners, the drafting and practical implications of Article 184 are unclear and will need to be considered by investors when structuring mining operations.
It shall also be noted that executives from the Ministry of Mines are entitled to inspect any document, statement of account or supporting document obtained or prepared by title-holders.
Articles 159 et seq. set out a number of specific taxes, in addition to those provided for by the General Tax Code, as well as tax exemptions, which derogate from the General Tax Code.
In particular, the Mining Code states that:
- the corporate tax rate for mining companies has been set at 30 per cent instead of 35 per cent under the General Tax Code;
- title-holders can opt to defer the amortisation of fixed assets purchased during the exploration and development phases from the beginning of the exploitation phase, subject to prior approval by the Director General of Taxation; and
- the stabilisation of certain tax terms is guaranteed to title-holders who have signed a mining agreement for up to 15 years from the date the concession is granted.
Pursuant to Article 165 implementation Decree A/2018/5212/MEF/MMG/MB/
MATD/SGG, 15 per cent of the mining tax revenues shall be allocated to local authorities' budget. The total amount shall go into a fund to foster development of rural communities.
Title-holders must pay an annual surface royalty in accordance with the table below:
|Surface royalty (US$ per km)|
|Award||First renewal||Second renewal|
An extraction tax deductible from taxable profits is payable in accordance with the table below:
|Iron ore||3 per cent||Price of iron ore on the basis of Platts China Iron Fines CFR (Cost and freight Incoterm) 62 per cent minus the transport costs, as measured by Baltic Exchange Capesize Index Route C3-Tubarao/Qingdao|
|Bauxite||0.075 per cent||Three-month LME (London Metal Exchange) seller price|
|Gold||5 per cent||London PM fix|
An export tax is payable when ore is exported without first being processed in Guinea. The rates are 2 per cent on iron ore and 0.075 per cent on bauxite, on the same basis as for the extraction tax.
Provided that lists of relevant materials and equipment are filed with the Ministries of Mines and Finance prior to each phase, the Mining Code sets up a specific regime for title-holders, including:
- an exemption from customs duties during the exploration and development phases; and
- flat rates of 5 per cent on materials and equipment required to process ore in Guinea and 6.5 per cent on materials and equipment required to extract ore.15
iv Other fees and taxes
The issuances, renewals, extensions and transfers of mining titles are subject to registration fees, which are to be set out by implementing regulations.
Finally, Article 91 details the capital gains tax applicable to direct and indirect transfers of mining titles, as summarised below.
|Transfer of exploitation permit or concession||35 per cent||Difference between price and net book value of the title|
|Transfer of shares of a title-holder||Difference between price and net book value of the shares|
|Indirect change of control or influence of a title-holder within 12 months|
VII PRIOR MINING TITLES AND TRANSITIONAL PROVISIONS
The Mining Code provides for a number of transitional provisions regarding titles existing at, and mining conventions entered into before, its date of entry into force. In particular, it does not affect the ownership and validity of existing mining titles, but it applies in full to mining titles not covered by mining agreements.
Further, its application to mining agreements entered into before its entry into force had to come in gradually via amendment agreements to be entered into with title-holders within 24 months of publication of the Mining Code. These amendment agreements had to cover three types of provisions:
- provisions dealing with transfers of interest, capital gains tax, environment, relationship with local communities and health and safety, which shall not be negotiable and shall apply immediately upon the entry into force of the amendment agreements;
- provisions relating to training, employment and support to Guinean businesses, which shall not be negotiable and shall apply progressively for a period not exceeding eight years; and
- other provisions, including in relation to tax and state participation, that shall give rise to negotiations between the title-holder and the government.
VIII OUTLOOK AND TRENDS
The success of the 2011 Mining Code, as further modified, in achieving its aim of balancing investment promotion and sustainable economic and social development will largely depend on its practical implementation. Although a number of implementing regulations have been passed, some of them remain outstanding or unpublished.
The country is currently experiencing socio-political unrest because of the presidential election of October 2020 and the opposition of part of the population to a potential third term of President Alpha Condé under the Constitution of April 2020. Some projects have also been disrupted by conflicts between mining companies and local communities complaining about the social and environmental impact of the industry. The adoption of the new Environment Code in July 2019, which is supposed to provide a better framework for activities affecting the environment, and the launch of the Local Economic Development Fund, aims in part to address these issues.
However, uncertainty about the recovery of the post-covid-19 global economy could affect some companies' willingness to make socioeconomic commitments including the construction of expensive infrastructure, while communities' expectations with regard to mining companies keep growing as production figures increase.
1 Stéphane Brabant and Bertrand Montembault are partners at Herbert Smith Freehills. The authors would also like to acknowledge the assistance of Paul Morton and François Adao.
8 Article 13 of the 1986 Mining Code provided that the state had an option to acquire an unspecified interest in any company holding an exploitation permit or concession.
9 In particular, Article 167.2 provided that 'due to the degree of investment required, the state does not take free shares in the capital of a company [producing bauxite or iron ore]'.
10 In particular, the 1995 Mining Code included a number of tax exemptions and a stabilisation regime whereby 'companies [that] have signed a mining agreement are entitled to the stabilisation of the tax and customs regulations in effect at the date of signing the mining agreement and throughout the term of such agreement'.
11 Despite increased recognition of the necessity to foster an inclusive model of the mining industry, local communities remain very frustrated with the situation. On 25 February 2019, 13 villages in the Boke mining region seized the mediator of the organisation branch of the World Bank which finances the Guinea Bauxite Company, a partly state-owned company. They explained that some of the land they owned had been expropriated without their knowledge and in violation of their compensation rights. See www.inclusivedevelopment.net/campaign/guinea-alcoa-rio-tinto-bauxite-mine/.
13 The 1995 Mining Code also provided that mining agreements were to be concluded and concessions were to be awarded for the exploration and exploitation of bauxite and iron ore, which were considered as 'substances of special interest'.
14 As indicated, it is likely that Law No. 0032/2017/AN promulgated by Decree No. 0/2017/278/PRG/SGG dated 24 October 2017 on public-private partnership will apply in this context.
15 Such materials and equipment will also be exempt from value added tax (VAT) during the exploration and development phases (title-holders are subject to VAT under the General Tax Code during the exploitation phase and input VAT can in principle be deducted from output VAT due).