Gabon's mining sector is governed by law no. 05/2000 dated 12 October 2000 bearing the mining code as amended and supplemented by law no. 008/2005 dated 30 March 2005 (the Mining Code) and application decree no. 001085/PR/MMEPRH dated 17 December 2002.
A draft new mining code was adopted by the Council of Ministers in April 2013. After being adopted by the Senate on 22 May 2014, the text was presented on 18 June 2014 by the Minister of Mines to the deputy members of the economic affairs, production and development committee, and is expected to be adopted by the National Assembly before the end of 2014.
Gabon's draft mining Bill requires any mining title applicant to incorporate a Gabonese company (whereas the current regime allows the grant of mining titles to all natural persons and legal entities). It also prohibits the superimposition of mining titles (authorised under the Mining Code) except in cases of derogation allowed upon the competent services’ favorable technical opinion.
The exploration permit (PR) remains valid for a term of three years renewable twice for the same duration, but the number of permits is limited to three per operator (two for diamonds). The maximum surface area of a permit (limited in the Mining Code) is set at 1500 km² (5000 km² for diamonds). A sanction for failure to complete the minimum exploration works and expenditure programme is introduced (a penalty equal to ten per cent of the amount of unrealized investments).
Exploitation permit and mining concession
In most of its provisions, the draft mining Bill refers jointly to the exploitation permit (PE) and the mining concession. The only difference is that, as in the Mining Code, the PE is granted for a period of ten years, renewable for one or several periods of maximum five years each, while the mining concession is granted for 25 years, renewable for one or several periods of maximum ten years each.
The draft mining Bill proposes that both types of title be granted by decree issued at the behest of the Minister of Mines (whereas a mining concession is currently granted by decree of the President of the Republic).
The maximum surface area for a mining concession is set at 1500 km².
A PE or concession application must include a feasibility study and an environmental impact report (so no longer just a development and exploitation commencement plan).
PE and concession holders must start exploitation within five years from the execution of the underlying mining convention, failing which their title will be withdrawn. The mining convention must be executed within three months from the grant of the related title.
The grant of a PE or a mining concession will enable the State, if necessary, to initiate an expropriation procedure for public utility purposes for all areas covered by the titles.
Assignments, transfers, leases, mortgages
Under Gabon's draft mining Bill, PEs and mining concessions are assignable, transferable and leasable, subject to the prior approval of the Minister of Mines. A new State pre-emption right has been introduced, where a mining title is assigned or transferred. The State’s approval of the transfer is deemed acquired (in the absence of the exercise of its pre-emption right) within a timeframe of 60 days; the pre-emption right is not applicable where a mining title is assigned or transferred between affiliated companies. The draft mining Bill lists the reasons to justify a refusal to approve the operation: insufficient technical and financial capacity on the part of the beneficiary; the strategic nature of the substances covered by the mining title; incompatibility with the State’s mining policy.
Under to the draft mining Bill, the PE and the mining concession will both constitute a real property right distinct from the ownership of the soil and sub-soil; mortgages can henceforth be granted over PEs as well as concessions.
In addition to establishing the mandatory content of mining conventions, which must accompany both exploration and exploitation operations, the New Bill provides that a model convention shall be set by regulations. The signatory parties would have the possibility of amending such model, without however departing from the New Bill.
Under Gabon's draft mining Bill, the State is entitled to ten per cent participation (free of all charges and non dilutable) in the share capital of any exploitation company. For marginal projects, or where the economic context so requires, the State may renounce its ten per cent free-carried participation. Lastly, the State is also entitled to an optional participation right of up to a maximum of 25 per cent in the share capital of the exploitation company; this would be negotiated and contributory.
To strengthen investment protection, the State will guarantee the transparency of mining title grants and compliance with the rights attached thereto, as well as the independence and professional expertise of the specialised courts and jurisdictions.
The draft Bill also proposes the creation of a regulatory authority which will guarantee the practice of fair and effective competition in mining operations and ensure compliance by mining companies with their obligations.
Sub-contractors are required to create a Gabonese company to carry out their business. Under the draft Bill, the same general obligations and benefits as applicable to mining title-holders also apply to sub-contractors, including the benefit of the tax and customs regime provided for in the Bill, subject to the approval of the State’s competent services.
Employment and local companies
Mining title-holders and their sub-contractors are required to:
- propose internships to nationals
- employ as a priority nationals with equal qualifications and experience
- establish an annual training programme for their people
- establish a plan for the progressive transfer of know-how and expertise and the ‘Gabonization’ of jobs.
PE and mining concession holders must solicit local SMIs and SMEs – however, no quota is specified.
In exchange for the benefits provided in the Bill, the beneficiaries of a mining convention and their sub-contractors must give preference to Gabonese companies for any construction, procurement or service supply agreements, at equivalent conditions of quantity, price, delivery and payment.
Gabon's draft mining Bill also provides for the creation of several funds, including a training fund aimed at supporting the training and capacity building costs of the workforce and a mine support fund which should strengthen of the technical skills of the administration in charge of mines.
As the State aims to industrialise Gabon’s mining sector, the draft Bill provides that, when national needs require it, PE and concession-holders must allocate a portion of their production to local transformation; when applicable, this portion is set in their mining convention.
PE and concession-holders are also required to present an industrialization plan to the Minister of Mines. Compliance with provisions relating to local transformation will create an incentive-based tax and customs regime. For example, exit duties and fees applicable to ore exports, with a rate between zero and five per cent, would be set in the mining convention and would decrease according to the level of transformation of the exported ore.
In addition, imports exclusively aimed at local transformation would be exempted from customs duties and fees, in compliance with a list set by regulations.
Lastly, the policy applicable to any PE or concession-holder concerning the local transformation of the mined substances will be defined in their underlying mining convention.
Under Gabon's draft mining Bill, mining title-holders are subject to the standard taxation regime in addition to taxes imposed under the Mining Code,
There are amendments to exemptions granted to PR holders, involving the scope of VAT exemption, and the fact that exemption from the tax on securities income (impôt sur le revenu des valeurs mobilières) no longer applies. However, the registration fees on deeds bearing capital increase and on professional leases is included in the list of exemptions.
PE and concession-holders (and their subcontractors) are exempted from corporate tax and the minimum lump sum tax (impôt minimum forfaitaire) forthe first five years of exploitation, with a possible maximum extension of three years for large mining projects having a lifespan equal to or greater than 20 years. However, if a holder were to obtain a return on investment during the exemption period, it would then be liable to pay the tax on profits from the financial year following the realization of the profits.
The Bill also modifies the rates and amounts of the duties and fees applicable to title-holders, as set out below.
The draft mining Bill introduces several variations to the amount of fees relating to PRs.
The fees owed for an assignment or a transfer between affiliated companies is reduced from FCFA 20,000,000 to FCFA 5,000,000 for PEs and from FCFA 50,000,000 to FCFA 5,000,000 for concessions.
There is a fixed fee equivalent to five per cent of the transaction for all other (non inter-affiliate) assignments, mergers, leases, transformations, conveyances or transfers, applicable to the holders of these exploitation titles.
Surface area fees
The amounts of fees owed each year are increased for each mining title: from FCFA 80,000 per square km to FCFA 100,000 per square km for PEs and from FCFA 100,000 per square km to FCFA 120,000 per square km for concessions.
Royalty (ad valorem) tax
The Bill introduces a new definition of the carreau-mine value of the ore, which represents the taxable basis of the ad valorem tax owed by PE and mining concession-holders. The carreau-mine value is defined, for exports, as the difference between its ‘official assignment price’, instead of its free on board price, and the total amount of costs incurred for the mineral substance between the carreau of the mine and its delivery point in Gabon.
Failing determination of actual costs, the basis of the tax is equal to 70 per cent of the ore’s FOB price for exports and 60 per cent of the ore sale price for local sales.
The draft mining Bill establishes a joint technical committee responsible for setting the official sales price of each type of ore, with the price to be published by the State.
The tax rates are set in the mining convention but must remain within the range provided in the Bill: between three and five per cent for base metals and other substances; between eight and ten per cent for precious stones; and between four and eight per cent for precious metals.
PE and concession-holders are subject to a reporting obligation, requiring the submission by 30 April each year of data relating to annual production.
The draft Bill empowers the administration in charge of mines (before their grant or during the performance of mining operations) to refuse, suspend or not renew the tax and customs benefits provided in the Bill, if it were to conclude that the goal of supporting preference for national jobs and bringing added value to the development of the mining sector and the local economy is not complied with.
This weakens the stability clause introduced by the Bill, according to which the stabilization of the tax and customs regime is guaranteed to mining title-holders, covering the rate and basis of the taxes and fees applicable on the date of their underlying mining convention.
In the event of a dispute, the State will guarantee mining title-holders:
- the acknowledgment of decisions issued in the framework of bilateral agreements and multilateral treaties such as those of the Multilateral Investment Guarantee Agency and ICSID (the International Centre for the Settlement of Investment Disputes)
- the acknowledgment of arbitration awards in application of the 1958 New York Convention.
Disputes relating to a mining convention which cannot be amicably settled may be referred to any arbitration court appointed by the parties.
The renewal of mining titles and the change from a PR to a PE or a mining concession is subject to the provisions of Gabon's draft mining Bill. Title-holders must comply with the provisions relating to hygiene, health and safety within one year, and must comply with the environmental provisions within three years, subject to sanctions. They can also requesting that the mining convention model introduced by the Bill be applied to them.