Mali has a new Mining Code. The National Transition Council, the transitional legislative body, adopted it on 7 August 2023. The text was promulgated by the President of the Transition, Assimi Goïta, on 28 August 2023. Since the adoption of this new Code, there have been reports, particularly on social networks, that the Malian state has a 35% stake in the capital of mining companies. This is a serious misreading of the new text.
Mali’s new Mining Code states that “the granting by the State of an operating licence entitles it to a free shareholding set at a minimum of 10% of the capital of the operating company”. The text goes on to specify that this State shareholding may not be diluted, even in the event of a capital increase, and the related shares are considered to be priority shares. The 10% rate set out in the Mining Code entitles the Malian State to receive priority dividends equal to 10% of the company’s annual profit. These provisions are identical to those in Burkina Faso’s Mining Code.
In Mali, however, it is specified that the State reserves the right to receive all or part of dividends in kind. A decree issued by the Council of Ministers will specify the procedures for collecting these dividends.
In addition to the 10% free of charge, the Malian State has the option of increasing its stake in the capital of the operating companies. To do so, it buys an additional 20% in cash. The Code describes this practice as “cash participation”, which refers to the participation acquired by the State on the basis of a financial contribution, based on research and feasibility study costs and taking into account previous work carried out by the State and tax benefits granted by the State. There is a further condition: the Malian state has 12 months from the date of issue of the operating licence to purchase the additional 20%.
“The method for calculating the State’s cash stake is as follows: The acquisition price of the cash interest shall be equal to the percentage chosen by the State multiplied by the total cost of the exploration work and the Feasibility Study relating to the deposit, incurred by the Exploration Company prior to its decision to bring the said deposit into production, plus interest at the BCEAO rate plus two per cent (2%) over the duration of the investment. Expenditure already borne by the State for research work within the Perimeter, also increased by interest at the same rate, is deducted from this acquisition price for the cash interest acquired by the State. Tax expenditure or exemptions granted by the State to the holder of the research permit and to its subcontractors within the perimeter that is the subject of this operation will also be deducted from the amounts paid to the operating company for the State’s cash holding”. This new provision is a real revolution in the Code, because it adds value to all the previous work carried out by the State to reveal the deposit, bring it up to date and develop it before the arrival of the investor.
Another innovation in the Code is that it requires operating mining companies to sell 5% of their shares to national investors. The terms of this retrocession will be defined by a decree issued by the Council of Ministers. “Shares held by the State and national investors may not be diluted in the event of a capital increase. These holdings are considered to be priority shares”, the Code states.
The transfer of mining titles to foreign investors is authorised by the same Code, which states: “The natural deposits of mineral substances contained in the soil and subsoil of Mali are, by right, the property of the State. The State shall develop them either directly or indirectly, in particular by calling on private initiative in accordance with the provisions of this Code”.
A summary shows that the Malian state’s free stake in the capital of mining companies remains at 10%. However, the State may pay for an additional 20% of shares 12 months after the creation of the company, which must reserve 5% for national investors in return for payment. Malian interests could reach 35% in certain companies, which is different from the Malian State taking free shares.
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