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Guinea Government Introduces New Mining Code

The government of Guinea has introduced a new mining code aimed at increasing local participation and revenue from the country’s rich mineral resources. The code, which comes into effect on the date of first commercial production, sets out various obligations for title-holders and contractors operating in the sector.

Local Economic Development Fund

The government has established a Local Economic Development Fund, which will be funded by title-holders from the date of first commercial production. The fund will receive:

• 0.5% of turnover for bauxite and iron ore
• 1% for other substances

This contribution is aimed at promoting local economic development.

Preference for Local Companies

Article 107 of the code requires title-holders and their contractors to give preference to Guinean companies provided that they offer:

• Comparable prices
• Quantities
• Qualities
• Delivery schedules

The proportion of small and medium-sized businesses owned or controlled by Guineans must also be progressively increased towards minimum thresholds of:

• 10% for exploration
• 20% for development
• 25% for exploitation
• 30% for production

Employment Obligations

The code sets out various employment obligations for title-holders and their contractors, including:

• The requirement to exclusively employ Guineans for unskilled positions
• Submission of a training and development programme that encourages technology transfer and skill development
• Employment of a reasonable number of expatriate workers

Operations, Processing, and Sale of Minerals

The code encourages title-holders to establish facilities in Guinea for:

• Conditioning, treatment, refining, and processing of extracted minerals

Title-holders are also required to file an annual report on measures taken to employ Guineans.

Foreign Investment

Article 184 requires title-holders to repatriate all export proceeds resulting from sales of mineral substances to the central bank of Guinea. The drafting and practical implications of this article are unclear and will need to be considered by investors when structuring mining operations.

Charges

The code sets out various specific taxes, including:

• Corporate tax rate of 30% instead of 35%
• Deferral of amortisation of fixed assets
• Stabilization of certain tax terms

Royalties and Taxes

Title-holders must pay:

• An annual surface royalty ranging from $10.15 to $300 per km depending on the type of permit or concession
• An extraction tax deductible from taxable profits at a rate of 3% for iron ore, based on the price of iron ore on the Platts China Iron index

The new mining code aims to increase local participation and revenue from Guinea’s mineral resources while providing a stable investment framework for foreign investors. The government hopes that these measures will contribute to the country’s economic development and poverty reduction efforts.