On the 26th of June 2015, a new Mining Code was adopted by the National Transition Council (NTC) after the uprising and entered into force on 16 July 2015. The new code’s reform was aimed in particular at striking a balance between the state’s interest and the rights of the mining operators, as well as including new provisions on environment protection, human rights and the fight against rural poverty, in particular through the creation of a local development fund for areas hosting mining sites, in line with the legislation of other West African mining jurisdictions.
- Law No. 036-2015/NTC dated 26 June 2015 relating to the Mining Code;
- Decree No. 2017-023 dated 23 January 2017 relating to mining taxes and royalties;
- Decree No. 2017-024 dated 23 January 2017 relating to the organisation, operation and collection of the local development fund;
- Decree No. 2017-0035 dated 26 January 2017 relating to the model mining convention;
- Law No. 2017-028/AN dated 18 May 2017 relating to the trade of gold and other precious minerals in Burkina Faso;
- Decree No. 2017-036 dated 26 January 2017 relating to the management of mining titles and authorisations;
- Decree No. 2017-068 dated 15 February 2017 relating to the organisation, operation and collection of the fund for rehabilitation and closure of mines;
- Decree No. 2018-0232 dated 26 March 2018 relating to the level of production for semi-mechanised exploitation and industrial exploitation of small-scale mines;
- Decree No. 2018-0249 dated 29 March 2018 relating to the grant and renewal of approval for the trade of gold and other precious minerals from artisanal or semi-mechanised production;
- Law No. 006-2013 dated 2 April 2013 relating to the environmental code (the Environmental Code); and
- the General Tax Code of Burkina Faso (as amended).
- Exploration Title
- Industrial exploitation licence (large-scale or small-scale mines) Semi-mechanised exploitation licence for mining substances
- Authorisation for the industrial exploitation of quarry substances
- Authorisation for the semi-mechanised exploitation of quarry substances
All minerals contained in the soil and the subsoil of Burkina Faso are the property of the state. However, any holder of a mining title is granted exclusive rights to the area of its licence for the relevant mineral subject to its mining title and is allowed to dispose of the extracted minerals. (Article 6 of the 2015 Mining Code) Article 43 of the 2015 Mining Code provides that the state shall be granted a 10 per cent free equity participation in the company holding an exploitation licence and further permits the state to acquire additional equity but only if it reaches an agreement with the investor. Just as in other Francophone countries the State in Burkina Faso enjoys a priority dividend that is payable to the State before any other allocation of the distributable profit. As is common in many jurisdictions Mining Titles are issued on a first-come, first-served basis. Exploration Licence An application for an exploration licence is to be filed accompanied by documents and information, such as information about the applicant, the projected work plan for the first year of exploration and the corresponding budget with the mining registry (Article 28 of Decree No. 2017-036). For exploration licences, the applicant need not be a Burkinabe registered company. The exploration licence is to be granted by an order of the Minister of Mines within 60 days of the date of application as long as the applicant complied with the mining regulation. This grant is particularly conditioned upon payment by the applicant of a fixed duty and a copy of the certificate of registration of the applicant (Article 28 of Decree No. 2017-036). The exploration licence gives its holder the exclusive right to explore within the limits of its perimeter the mineral substances specified in the licence and the exclusive right to dispose of the products extracted during this exploration phase. (Article 32 of Law No. 036-2015/NTC)
Industrial Exploitation Licence (Large-Scale or Small-Scale Mines)
Applications for industrial exploitation licences must be filed at least 90 days before the expiry of the exploration licence relating to the same area and minerals (Article 41 of Law No. 036-2015/NTC). However, unlike an exploration licence here the applicant must be a company incorporated under Burkinabe laws (Article 100 of the Mining Code). The application is filed at the mining registry accompanied by the documents specified in Article 70 of Decree No. 2017-036 relating to the management of mining titles and authorisations, which includes:
- A feasibility study conducted by a local or internationally recognised firm (which shall include a training and promotion plan for the local managers and staff)
- Any favourable advice from the Minister of Environment based on an environmental and social impact study, an environmental management and social plan and a rehabilitation and closure plan
- A draft mining convention to be signed with the state
- A commitment to transfer to the state 10 per cent of the exploitation company
- A closure and rehabilitation plan
Once an application is received by the administration it must send application to a specific technical committee within 30 days. It must then be submitted to the Council of Ministers within 60 days of reception of the advice given by said technical committee (Article 72 of Decree No. 2017-036). The grant of an industrial exploitation licence is made by a decree of the Council of Ministers based on a report by the Minister of Mines and officially notified to the applicant (Article 40 of Law No. 036-2015/NTC). An industrial exploitation licence gives holders the exclusive right of exploitation of the deposits identified in the licence, within the limits of the initial exploration area (Article 45 of the Mining Code).
Semi-Mechanised Exploitation Licence
Semi-mechanised exploitation licences are only granted to companies created under Burkinabe law. Decree No. 2017-036 lists the documents that are to be accompanied by an application, which includes an environmental impact study and environmental feasibility advice from the Minister of the Environment.
A semi-mechanised exploitation licence is also granted by a decision made by the Council of Ministers within 60 days of the application, following the advice of the Minister of the Environment and the Minister of Mines. It confers on its holders the exclusive right to exploit and dispose of the mining substances specified in the licence according to mining regulation (Article 57 of Law No. 036-2015/NTC).
Authorization for Industrial or Semi-Mechanised Exploitation of Quarry
Substances An application for authorisation of exploitation of quarry substances is filed accompanied with the documents specified in Decree No. 2017-036, which shall include information about the applicant and, depending on the nature of the work, and environmental impact study. An authorisation for industrial exploitation of quarry substances is granted by an order of the Minister of Mines. It confers on its beneficiaries the exclusive right to exploit quarry substances contained on and below the surface. It also grants several other rights, such as the right to dispose of products on the internal market or to export them (Article 89 of Law No. 036-2015/NTC). This same process applies to the semi-mechanised exploitation of quarry substances.
Obligations of Title Holders
Mining titleholders are required to comply, among others, with a number of obligations depending on the type of their licence, which includes the following:
- Carry out the exploration programme submitted to the mining administration
- Produce an annual report of completed work
- Begin the exploration work at least six months after being granted the licence and pursue it
- Comply with the environmental regulations
- Inform local authorities of the nature of work to be undertaken on the territories that are the subject of the exploration licence
- Generally, comply with the obligations set out in the Mining Code
- Begin the development work within two years of issuance of the licence
- Exploit the deposit in accordance with the feasibility study and the development plan submitted to the Administration of Mines (Articles 51-54 Mining Code)
Mining Title Terms
Exploration Licence – Valid for three years and renewable twice for successive periods of three years. Industrial Exploitation Licence for Large Scale Mines – Valid for an initial 20 year period from issuance or for the lifetime of the mine if earlier.
Industrial Exploitation Licence for Small Scale Mines – Valid for an initial 10 – year period from its issuance or for the life of the mine if earlier. Both types of industrial exploitation licence are renewable for consecutive periods of five years until the relevant deposits are exhausted.
Semi-Mechanized Exploitation Licence – Valid for five years and renewable for three additional years. Authorisation for Industrial Exploitation of Quarry
Substances – Valid for five years and renewable for three additional years.
Authorisation for Semi-Mechanised Exploitation of Quarry Substances – Valid for three years and renewable for three additional years.
Authorisation for Artisanal Exploitation of Quarry Substances – Valid for two years and renewable for two additional years.
Authorisation for temporary exploitation of quarry substances is valid for the period defined in the authorisation without exceeding one-year Assignment of title rights are permitted subject to the authorization of the Minister of Mines.
Royalties and Taxes
Articles 143 and more of the Mining Code set out specific taxes and duties to be paid by mining title-holders and authorisation holders, which include the payment of fixed and proportional duties. Royalties Decree No. 2017-023 specifies the proportional duties which include a surface tax, to be paid annually by any title-holder or authorisation holder, based on the occupied land area and the duration of the title or authorisation; for instance, the surface tax for industrial exploitation licences (large-scale mines) (except for uranium) is as follows:
- For the first five years: 7.5 million CFA francs per square kilometre per year
- From the sixth to the 10th year: 10 million CFA francs per square kilometre per year
- From the 11th year: 15 million CFA francs per square kilometre per year
Proportional royalties related to the value of extracted or sold products are based on the value and nature of the extracted products (Article 146 Mining Code).
For instance, the proportional royalties for industrial exploitation licences (large-scale mines) are calculated as a percentage of the turnover of the sold product that has been extracted:
- 8 per cent for uranium
- 7 per cent for diamond and other precious stones
- Between 3 and 5 per cent for gold depending on the market price fixed by the London Metal Exchange (3 per cent if the gold price is less than US$1,000, 4 per cent if the gold price is between US$1,000 and US$1,300 and 5 per cent if the gold price exceeds US$1,300)
- 4 per cent for other precious metals
- 3 per cent for base metals and other mineral substances
Taxes Title-holders benefit from different tax regimes at the exploration and exploitation phases.
Exploration Phase – Title-holders are exempt from paying VAT during the exploration phase on the import and acquisition of goods required to carry out the geological or mining activities, with certain exceptions.
They also benefit from an exemption on:
- Industrial, business, agricultural profit or corporate tax;
- Minimum flat-rate perception tax
- Contribution of business licensing tax
- apprenticeship tax
- registration fees of capital increase
Exploitation Preparatory Work – Exploitation licences or authorisations for exploitation of quarries title holders are exempted from payment of VAT as specified by Article 154 of the Mining Code when:
- The preparatory work is carried out by the licence or authorisation holder
- Construction of the mine is subject to a turnkey contract
These exemptions are not to exceed two years for mines but may be extended to one additional year if the investments represent more than 50 per cent of the projected investments (Article 157 of the Mining Code). The benefit of the exemptions shall cease the date commercial production commences.
Exploitation Phase: Exploitation licence Holders are liable to pay:
- Tax on profits at the standard rate
- Tax on securities income at a rate of 6.25 per cent
Exploitation licence Holders benefit from a tax exemption for seven years on:
- Minimum flat-rate perception
- Contributions of business licensing tax
- Apprenticeship tax
- Mortmain tax (Article 162 of the Mining Code)
However, it must be noted that if the term of an exploitation licence is less than 14 years, the exemption period shall not exceed half of the valid term. The exemptions are applicable from the date of the first commercial sale.