Opportunity galore in West African mining landscape
Senegal and Côte d’Ivoire have both made major commitments to increase their countries’ mining production and use of clean energy in the near future. Africa Legal asked Khaled Abou El Houda, managing partner of Houda Law Firm (HLF), about the challenges facing investors in these West African nations.
Houda says Senegal has created a favourable investment climate through a clear and transparent legislative and regulatory framework, formalised by a mining code dating from 2016. “The new PPP Code introduced in 2021 also significantly improved the investment potential of energy projects in the country,” he noted.
While Senegal boasts significant mining potential, so far only phosphates and their derivatives, and construction materials have dominated the sector. However, gold is also attracting interest from foreign companies.
Côte d’Ivoire is currently experiencing a mining boom with the sector’s contribution to the country’s economy expected to grow rapidly. The Ivorian mining sector is dominated by manganese, bauxite and gold production, and a general increase in production of gold, manganese, nickel, bauxite and diamonds is expected in 2023. A big boost to gold figures in 2023 will be the start of production at the Floleu and Zoukougbeu gold mines.
Houda commented that the Senegalese and Ivorian markets offer numerous opportunities to international companies in the mining sector because there is a lack of local expertise in certain areas. Local subcontractors are therefore very open to partnerships with foreign companies that can provide them with specific know-how.
In Senegal the Ministry of Mines and Geology grants all the mining titles and regulates the mining sector. At the exploitation phase, the state is granted 10% of the share capital of the exploitation company throughout the lifetime of the mine. The state usually also chooses two members of the Board of Directors of the mining company. On top of this, the state may negotiate for itself, or the national private sector, an additional stake of up to 25% in the share capital of the exploitation company.
HLF’s extensive experience and knowledge has helped countless companies navigate the regulatory processes in both Côte d’Ivoire and Senegal. “Although both countries have made excellent strides in making the processes more investor friendly, guidance is still necessary for the successful completion of mining transactions,” commented Houda..
He also highlighted that Senegal and Côte d’Ivoire have both made major commitments to increase the production and use of clean energy. Senegal, for instance, introduced the Gas-to-Power 2018 strategy which aims to reduce national energy dependence on oil and coal by encouraging investment in gas as a transitional fuel in the energy transition. “Several projects are underway to support Senegal's energy ambitions, including the Great Ahmeyim Turtle (GTA) natural gas project and the Cap des Biches gas plant,” Houda explained. Senegal has also begun to invest in renewable energy with the largest wind farm in West Africa, the Taiba N'Diaye Wind Farm (PETN), which became operational in 2020. Additionally, the largest solar project in West Africa also found its home in Senegal.
“We can see initiatives towards energy-transition in the energy sector, but not yet in the mining sector, which would be a great opportunity. In addition, more regulatory clarity on ESG issues in the mining sector would be of great importance to all stakeholders,” Houda said.
Houda has cemented his reputation as an expert on mining issues through his nomination as an Honorary member of the Chamber of Mines of Senegal and his role of Secretary General of the Canadian Institute of Mining, Metallurgy and Petroleum, Senegal Section (ICM SENEGAL). In addition, the teams in Senegal and Côte d’Ivoire are well versed in the mining regulatory landscape.
Since its inception in 1977, HLF has been involved in the development of the mining industry in Senegal and later in Côte d’Ivoire, including opportunities to consult with the regulators and provide guidance on the relevant laws in Senegal. HLF mainly advises mining companies in their regulatory approvals, financing needs and labour negotiations in the two West African countries.
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