After several months of discussions, a new Mining Code was adopted by the transitional national assembly of Burkina Faso on 18 July 2024 and promulgated as the Act No 016-2024/ALT enacting Mining Code in Burkina Faso on 31 July 2024 ("new Mining Code"). This new Mining Code will gradually replace the one from Act No 036-2015/CNT of 26 June 2015 as amended by Law No. 012-2023 /ALT of 25 July 2023 ("2015 Mining Code"), since the 2015 Mining Code still applies to mineral permits that were granted prior to the enactment of the new Mining Code, at least during a transitional phase.
As is often the case, this new piece of legislation is actually not codified and not a code per se, in that it does not include the multiple implementation regulations it refers to, which have not yet been adopted.
Further, another "Legislation on Local Content in the Mineral Sector" has also been adopted and promulgated in parallel, instead of being integrated into the new Mining Code. It was adopted on 18 July 2024 and promulgated as the Act No 017-2024/ALT, relating to local content in the mineral sector in Burkina Faso on 31 July 2024.
There are many provisions of the new Mining Code that cannot be implemented, because they are dependent on the drafting and approval of implementation regulations. Thus, we suspect it will take a some time for the new Mining Code to take effect, even after its promulgation.
However, it is possible to point out some major changes that result from the Mining Code, irrespective of changes that result from the Legislation on Local Content in the Mineral Sector.
Multiplication of different categories of mineral titles
The new Mining Code has not streamlined the various categories of mineral titles available to authorise exploration and mining. It creates two (2) different categories of mineral permits allowing exploration and six (6) categories of mineral permits allowing exploitation and mining, depending on factors such as whether exploitation is of industrial or artisanal nature, totally or partly mechanised, or related to a big scale mine or a small scale mine. This proliferation of categories of mineral permits will increase the risk of having different mineral permits overlapping the same mineral areas.
Reinforcement of regulation of mineral operations
All mineral titles, except the prospection permit, will be granted with a technical schedule, which will include technical conditions of mineral exploration and/or exploitation operations, and therefore supplement the terms and conditions usually included in mineral titles. Its content will be defined by implementation regulations.
The granting of any industrial exploitation permit is subject to a triple permitting process in that it requires the joint submission and approval of a technical application, an environmental and social impact study and a community development plan.
The companies performing only treatment, transport, transformation and commercialisation of mineral substances, and not their extraction, or the companies limited to the exploitation of mineral steriles and waste, are subject to a prior administrative authorisation, which is distinct from a mineral permit.
Further, a specific approval regime applies to gold commercialisation and gold refineries.
Therefore, the conditions under which a company can conduct exploration or mining operations are not exclusively documented by the mineral title applicable to the relevant mineral area, in that specific and additional administrative permits are required to carry out certain operations.
Alignment of the investment regime on the general regime defined by general laws governing foreign exchange, tax and custom duties
Under all Mining Codes previously enacted in Burkina Faso, mining companies could benefit from a specific regime deviating from the general legislation governing foreign exchange, tax and custom duties, during the different phases of mining projects, including exploration, pre-development and exploitation (extraction and production phase).
The new Mining Code limits the ability for mining companies to benefit from an investment regime totally different from other industrial companies in that most exemptions, concessions and incentives are reserved for the exploration phase and the 3-year preparatory phase preceding the commencement of extraction, and no longer apply during the exploitation/extraction phase.
Local transformation requirements
The new Mining Code requires the mining company to transform or complete beneficiation of the mineral production in-country, within the national territory of Burkina Faso, up to a certain proportion of such mineral production, which threshold is fixed, depending on the nature of the mineral substances, by simple regulation, and, therefore, does not require any amendment to the Mining Code.
This local transformation is designed to be achieved through the local ownership of mining companies and companies engaged in transformation operations.
Local ownership of mining companies
Under the new Mining Code, the mining companies holding industrial exploitation permits must be partly owned by local shareholders, i.e. individuals or commercial companies domiciled in Burkina Faso. A part of the share capital of the mining company must be reserved for national investors, from the date of the constitution of the company, under rules to be defined under further implementation regulations.
If exploitation is semi-mechanised, the exploitation permits must be reserved for companies totally owned by Burkinabe nationals.
State ownership of mining companies
The local ownership and control of mining companies will also be reinforced through the ability of the State of Burkina Faso to acquire ownership and take control of all or part of the share capital of mining companies, in case of disposals of shares in mining companies.
The new Mining Code not only maintains the right for the State to own a non-contributing or free-carried shareholding interest (up 15 % (fifteen percent)) in the mining company holding an exploitation/mining permit.
It also allows the State to own a further contributing shareholding interest (up to 30% (thirty percent)) in the same mining company, or to allocate it to the "national private sector", which means investors of Burkinabe nationality, without any further precisions regarding the conditions of allocation, distribution or transfer of such shareholding interests.
In addition, the State is vested with a pre-emptive right, which it can exercise in case of a cession of a mineral title, or a cession of shares in the mining company holding such title, or to acquire gold and other mineral substances.
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.