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UPDATE 1-Mali's new mining code ends tax exemptions, shortens regulatory stability period

Thu 22nd August, 2019 5:18pm
* Mali Mines Ministry sets out new regulation
    * Miners will no longer be exempt from VAT during production
    * Regulatory "stability period" will be shorter
    * Change aims to increase contribution of mining to Mali
economy

 (Adds comments, context)
    BAMAKO, Aug 22 (Reuters) - Mining companies operating in
Mali will no longer be exempt from value-added tax during
production and will only be protected from fiscal changes for a
shorter period, according to a new mining code announced by the
Mines Ministry on Wednesday.
    An opening salvo in what could be a protracted negotiation
between the government and corporates over mining regulation in
Africa's third-largest gold producer, the move is seen by some
as a new instance of "resource nationalism" on the continent.
    The regulatory change seeks to redress the "shortcomings" of
a 2012 law by bringing a "substantial increase" in the
contribution of the mining sector to the economy, the Mines
Ministry said in a statement. 
    The new code in Mali shortens the "stability period" during
which mining companies' existing investments are protected from
changes to fiscal and customs regimes. 
    Changes to regulatory stability clauses have been strongly
opposed by international mining companies elsewhere in Africa,
most notably in the Democratic Republic of Congo where miners
spent months at loggerheads with the government.
    Under Mali's previous law, stability was ensured for 30
years. It was not made clear on Wednesday what the length of the
new stability period would be, but the Economy Ministry said
last year that the government aimed to reduce those protections
to the lifespan of a mine.
    "It’s the reality of the playing field at the moment, a lot
of companies in Mali will have looked at what happened in DRC
and Tanzania and they will have to be very cautious," said
Warren Beech, partner and head of mining at Eversheds Sutherland
in Johannesburg. 
    "The battle plan is see what it means, understand the
impact, and engage with government."
    Companies operating in the country including Barrick Gold
Corp  ABX.TO , B2Gold  BTO.TO  and Hummingbird Resources
 HUMR.L  had no immediate comment on the new code. 
    AngloGold Ashanti  ANGJ.J  is assessing the impact of the
new mining code on its Mali operations, which make up less than
3% of the company's production, a spokesman said. 
    Jamie Boyton, chairman of Capital Drilling  CAPD.L  - which
operates in west and east Africa, said as a service company he
is relatively sheltered from resource nationalism, but "all
investors want to see stability."
    Mali's government had been negotiating with a working group
of mining companies to draft a new code, but said last year that
it would move to implement a new law unilaterally if no
compromise was reached. 
    It was not clear whether the new code was the product of
compromise or whether it was proposed without consultation. 
    "This reform shouldn’t come as a surprise, even if it is
probably later than anticipated. Miners will have known about
the government’s intentions for well over a year now," said Eric
Humphery Smith, West Africa analyst at consultancy Verisk
Maplecroft. 
    The previous iteration of the code was already advantageous
for miners, he added. 

 (Reporting by Tiemoko Diallo, Additional reporting by Helen
Reid in Johannesburg and Barbara Lewis in London
Writing by Edward McAllister and Helen Reid
Editing by Leslie Adler and Kirsten Donovan)
 ((edward.mcallister@tr.com; +221 33 864 5782;))
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