Minesactu.info’s best article of 2023 is: Rising gold prices: Increase royalties to benefit from mining income
The article was written at a time when Burkina Faso was in need of money to meet the costs of the insecurity and humanitarian crisis. It was also written in a context of rising gold prices, falling production costs for several mining companies and low royalties.
The article analysed the companies’ figures to reveal that only Essakane had high production costs, spending 1,376 $ per ounce of gold produced. But the company benefited from a good gold price of 1,943.6 US dollars per ounce, which helped to mitigate the high production costs.
In contrast, a company like Roxgold produced an ounce at 719 $, Orezone at 1 109 $ and Houndé Gold at 1 154 $, while selling their gold at more than 1 900 $. A superprofit is being made for these companies, some of which are overproducing.
Burkina Faso did not benefit from the good health of the companies because royalties were collected at a maximum rate of 5% when the price of gold was above 1,300 dollars an ounce. The article had a progressive rate “6% if the price reaches 1,500 dollars, 7% if it is 1,800 dollars, 8% if it is 2,000 dollars”.
Shortly after the article was published, the government increased the royalty collection rate.
Under the terms of the change in the rate, the government retained: 5% if the price is between 1,300 and 1,500 dollars per ounce, 6% if the price of an ounce of gold is between 1,500 and 1,700 dollars per ounce, 6.5% if the price is between 1,700 and 2,000 dollars per ounce, 7% if the price is over 2,000 dollars per ounce.
At the current gold price, royalties are collected at 6.5%, i.e. 1.5% more. Given the level of production and the price of gold, the impact of this change is estimated at around twenty billion FCFA, pending the final figures.
Impact journalism.
Elie KABORE
#Mines_Actu_Burkina
