October 2013

Answers to 10 key questions about mining under Senegalese law

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By Mouhamed Kebe

1. What are the relevant government authorities for the mining sector?

  • Ministry of Mines
  • National Department of Mines
  • Departments of Mines in each of the country’s 14 administrative districts

2. What are the main laws that govern mining policy in Senegal?

The legal framework governing exploration and mining in Senegal is set out in the Mining Code, the Environmental Code, the General Commercial Law and the Forest Code, all of which have been updated in the last 15 years. They are as follows:

  • Statute n°2003–36, dated November 24, 2003, enacted the Mining Code
  • Decree n°2004–647, dated May 17, 2004, implemented the Mining Code
  • Regulation n°18/2003/CM/ WAEMU, dated December 22, 2003, enacted the WAEMU Mining Code
  • Environmental Code n°2001-01 of January 15, 2001
  • Uniform Act of OHADA relating to General Commercial Law, dated December 15, 2010
  • Statute n°98/03, dated January 8 1998, enacted the Forest Code, and its implementing decree is dated February 20, 1998

3. What authorizations and permits are required for a company?

The state may authorize a company to undertake mining operations by granting:

  • A permit for the exploration of mineral substances.
  • A permit for exploitation.
  • A mining concession or a small-scale mining permit in the case of a small mine, or artisanal mining licence in the case of artisanal mining.

A convention should be signed between the mining title holder and the state, which determines the rights, obligations and commitments related to these titles. The state has the right to at least a 10 per cent interest in all mines operating in Senegal, and may negotiate for more.

4. What restrictions are there on companies that would like to begin mining?

As is laid out in the Mining Code, no person shall undertake or conduct an activity regulated by the mining legislation in Senegal without prior authorization of the state.

These persons or entities must demonstrate a specific set of technical and financial capabilities before carrying out mining operations.

5. Are there different rules applicable to foreign investment?

There is no separate regime for foreign investors. Once authorization to establish or invest in the country is granted, the rules are the same for nationals and foreigners.

However, specific rules aiming to make investment more attractive have been set up under the Investment Code.

6. How much does it cost to acquire mining titles?

The grant, renewal, extension or conversion and the sale, transfer or farm-out of mining titles for exploration and exploitation are subject to payment of fixed duties, paid in one instalment as provided below:

  • exploration permits: 500,000 XOF (West African CAF francs) ($1,048)
  • mining concessions: 7,500,000 XOF ($15,735)
  • other mineral mining rights: 1,500,000 XOF ($3,144)

The above amounts are reviewed every five years by decree.

(Note: $1 = roughly 477 XOF)

7. Are there any duties or taxes to be paid to the state for mineral production?

Under the Mining Code, any exploitation of mineral resources is subject to payment of an annual mining royalty rate of three per cent of the pithead value. The terms of payment and collection of mining royalties are specified in the implementation decree (n°2004–647). There are no exemptions.

8. What guarantees does the government of Senegal offer to mining operations?

Installations and infrastructure built or acquired during the course of mining operations may not be subject to any measures of expropriation, except in circumstances of “force majeure” or public necessity. In such a case, the state must pay a fair compensation.

Holders of mining permits have free choice of suppliers, contractors and service providers and partners. However, protocols, contracts and agreements that aim to assign or partially or fully transfer the rights and obligations of the mining title are subject to prior approval of the ministry.

The tax and customs regime will not change for as long as a mining title remains valid. As such, throughout the period of validity of a mining title, changes to the base rules, perception and pricing of taxes and fees are not binding to the holder of the mining title except at the request of the title holder, and provided the title holder adopts the new rules in their entirety.

Subject to exchange control regulations and the Mining Code, the holder of a mining title may freely:

  • Import, without financial regulation, equipment it already owns.
  • Import goods and services required for its activities.
  • Export the minerals extracted, concentrates and other derivatives after completing all legal formalities.
  • Transfer abroad the dividends and the capital invested and the proceeds of liquidation of their assets.
  • Transfer abroad funds in repayment of debts outside of principal and interest.
  • Pay foreign suppliers for goods and services necessary for the conduct of mining operations.

9. What are the obligations of the holders of mining titles?

Holders of titles for exploration must:

  • Keep proper accounting of expenses for mining ­operations.
  • Provide reports and information necessary for the administration of the mines.
  • Declare any decision to halt exploration or exploitation of mineral substances in advance to the minister of mines.
  • Indemnify the state or any person or entity against damages that may occur.
  • Conduct site rehabilitation at the end of each mining title except for areas that continue to be covered under another mining exploitation title.

10. How are disputes settled in the mining sector?

In principle, disputes relating to the implementation and interpretation of the provisions of the Mining Code are under the jurisdiction of the courts of the Republic of Senegal. However, the holder of the title and the Senegalese state can include specific provisions allowing parties to resort to arbitration in case of dispute.

Mouhamed Kebe, based in Dakar, Senegal, is the managing partner of Geni & Kebe and practises in the area of corporate and investment law with a concentration in the Francophone African Region. He is involved in a wide range of corporate transactions including formation of companies and subsidiaries, corporate governance, cross border mergers and acquisitions, and dispute resolution.

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