Background

• The UEMOA “Union Economique et Monetaire Ouest Africaine” (West African Monetary and Economic Union) is in the process of elaborating a regional mining framework called the “Common Mining Policy”.

• Key features of Common Mining Policy: • Common mining law; and

• Regional database of geological information.

What is the UEMOA?

• An organization of 8 West Africa States established by treaty in 1994 to promote economic integration among countries that share a common currency, the CFA franc.

• Comprises Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, Togo.

• Population: 72 million over 3.5 million square kilometers.

Map of UEMOA Member States

UEMOA Objectives

• Creation of a common market with the free flow of persons, goods, services and capital in order to facilitate sustainable growth;

• Implementation of macroeconomic convergence criteria and an effective multilateral surveillance mechanism in order to impose a fiscal discipline to Member States;

• Adoption of a customs union and common external tariff;• Harmonization of fiscal policies 18% VAT currently in place

within the Union; and • Adoption of regional sectoral policies.

What is the authority of UEMOA to regulate mining at community level?

• UEMOA’s authority stems from its mandate:

• to regulate the fiscal and customs regime within the Union direct bearing on mining; and

• to create sectoral policy in various sectors including human resources, agriculture, land use planning, energy, infrastructure, transportation, telecommunications, industry, and mining.

Mining Legislation

• On December 14, 2000, UEMOA enacts the “Additional Act No. 01/2000 relating to the adoption of the Common Mineral Policy of the UEMOA”, which provides, among other things, for:

• Promotion of the mining sector;

• Harmonization of the regulatory frameworks;

• Setting up of a sub-regional system for geological information;

• Development of competitive local mining companies;

• Local processing of mineral products; and

• Preservation of the environment.

Mining Code

• On December 22, 2003, the UEMOA adopts the Regulation No. 18.2003/CM/UEMOA relating to the Adoption of the UEMOA Community Mining Code (the “Mining Code”).

• Mining Code to govern all of the operations relating to exploration, exploitation and commercialization of mineral substances on all of the territory of the Union.

• Objectives of Mining Code: • Define the types of mineral mining titles in the Union; • Simplify the process through which mineral titles are granted; • Define a model mining convention; • Adopt a program for the protection of the environment; and• Define a tax system applicable to minerals.

Key provisions of Mining Code

• Stability of the fiscal and customs regime during the period of validity of the mining titles;

• Free transfer of money necessary to the activities regulated by the Mining Code;

• Free transfer of net benefits to be distributed and of the monies used to finance project after the payment of taxes;

• Free circulation and commercialization of the products derived from the exploitation activities;

• Mining royalties to be set at the Community level in implementing regulation; and

• 10% carried interest in favor of host government.

Obligations of Title Holders

• Obligations of title holders include:

• Maintain proper accounting in accordance with the West African Accounting System;

• Pay the annual payment of the surface tax; and

• Pay the fees associated with the application, renewal, transfer, lease or transformation of mining titles.

Taxes and Royalties

• Surface taxes; and

• Fees relating to the application, the renewal, the transfer, the lease etc. of mining rights

both regulated by the mining legislation of each Member State, unless governed by Union texts.

• Mining Code states expressly that the royalty will be set out in the mining regulations.

Advantages for investors as set out in Code

• During Exploration:

• Customs: equipment imported for exploration benefit from the temporary admission regime and exemptions;

• Taxes: fiscal advantages in respect of VAT, income taxes, the minimum lump sum tax, employer taxes (taxe patronale), contribution on patents, property taxes and fees payable for the constitution or the capital increase of companies.

Advantages for investors as set out in Code

• During Exploitation: Customs: • Temporary admission regime applicable to certain equipment

first 3 years beginning at the date of the first production.Taxes: • Exemption on VAT the period ending on the date of the first

production; • Exemption on the contribution on patents, income taxes, employer

taxes 3 years beginning as of the date of the first production;• Exemption on property taxes and the minimum lump sum

payment or its equivalent During the entire exploitation period;• Holders of exploitation mineral rights may benefit from an

accelerated amortization system.

Mining Titles

• Article 9 of the Code states that the nature, administration of the mining titles and obligations and rights attached thereto will be governed by the national legislation of each Member State, unless specifically governed by Union texts;

• Mining title issues that would be of import to investors not addressed in Mining Code:

• Types of mining rights, application process to obtain mining rights, duration of mining rights, renewal conditions; and

• Security of tenure issues including conditions required to graduate from exploration to exploitation.

• These should be addressed in the Model Mining Convention and/or regulations. To the extent that they are not, it would weaken considerably the effort to have a harmonized mining legislation within the Union;

Effective Entry into Force of Mining Code

• The provisions of the Code will be specified in implementing regulations and in a model mining Convention.

• Upon the adoption of the implementing regulations, the Mining Code will enter into force.

• The implementing regulations and the model mining Convention still being negotiated – issue arises as to the extent to which certain provisions will be governed by national legislation or at the Union’s level.

• Question being raised by Member States include how to ensure that countries benefit from the “super-profits” arising from the rise of commodities prices, and how to foster the reinvesting of mining companies in the local economies.

Second feature of Common Mining Policy -Regional Mining Database

• Second major feature of the Common Mining Policy the regional system of geological and mining information.

• Regional system being set up in partnership with the African geological network for a sustainable development (SIGAfrique).

• At this time, 11 participating countries (Angola, Burkina Faso, Ethiopia, Guinea, Kenya, Madagascar, Mali, Mauritania, Niger, Senegal, Tanzania) and 2 regional centers (UEMOA and the Southern and Eastern African Mineral Center headquartered in Dar-Es-Salaam, Tanzania).

• The SIGAfrique network is intended to be Pan-African. • SIGAfrique’s website: http://www.sigafrique.net available in both

French and English.

Objective of SIGAfrique

• Facilitate access to data and other relevant information regarding African geosciences to the earth science community;

• Contribute to the establishment of a common earth science language in Africa;

• Create, first a network of African geological surveys and at a later stage a network between African and European geological surveys and other institutions; and

• Transfer databases at regional level in technical centres (including UEMOA) equipped with servers and other data management and exchange facilities.

Scope of SIGAfrique Project

The project covers:

• Regional geology;

• Regional hydrogeology;

• Mineral occurrences and related socio-economic data;

• Development indicators relevant to the mineral resources sector; and

• Bibliographical data.

SIGAfrique Website access to online maps

SIGAfrique UEMOA Website: http://sigafrique.uemoa.int

SIGAfrique UEMOA Website provides discussion forum

Other geological database initiative: AEGOS

• African European Georesources Information System (AEGOS) • AEGOS aims at:

• gathering geological information from various sources (principally the European Geological Surveys), in multiple formats and different languages, and putting together a harmonized geoscientific data; and

• setting up the preparatory phase for the building of an information system containing and making accessible data and knowledge on African geological resources including mineral resources, raw material, groundwater and energy (geo-resources).

• AEGOS is a collaborative effort with SIGAfrique• Website: http://www.brgm.fr/brgm/aegos/partners.htm

AEGOS Challenges

• Move from paper to digital geo-referenced interoperable data; • Acquire large data sets concerning geological infrastructure of Africa

(including airborne surveys, mapping programs);• Overcome the current dissemination of data sets in making them

accessible through the internet in a secured environment; • Develop a shared/distributed/interdisciplinary spatial data

infrastructure;• Strengthen human and technical capacities necessary to turn data into

information and expertise required by a wide range of end-users; and • Promote the re-use of public data through combinations and modeling

in environmental, social and economic contexts in support to sustainable development policies.

The Future of Common Mining Policy

• Mining Legislation enactment of implementing regulations and model Mining convention. Unclear at this stage what the law will look in its final form. Looking ahead, questions arises as to whether the law should contemplate downstream activities.

• Geological database development of the SIGAfrique and AEGOS initiatives would conceivably be of considerable help to companies.

• UEMOA track record a September 2002 IMF survey cited the UEMOA as "the furthest along the path toward integration" of all the regional groupings in Africa. However, the Common Mining Policy faces several challenges, including the lack of infrastructure and funding.

Fasken has the expertise in Mining and in Africa

• Fasken named “Global Mining Law Firm” for fourth consecutive year by the 2008 Edition of International Who’s Who.

• Fasken with offices located in Johannesburg and London, has the expertise and experience to assist you with your investment in Africa.

• Fasken has a strong Francophone / West African / civil law expertise in our Johannesburg and Quebec City offices and with Daye Kaba in Toronto.

• Please visit us at: www.fasken.com

• Contact: Daye Kaba dkaba@fasken.com