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  • GDP, US$bn: 9.8
  • GDP per capita, US$: 391.8
  • Population, mn: 24.2
  • Inflation, CPI ave: 6.6
  • FX, LCY/US$: 3,181.4
  • Budget Balance, % of GDP: -3.9
  • Mining GVA, US$bn: 0.1
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100
Score: 75
Low Risk
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Mining Overview Commentary plus sign

MADAGASCAR MINING REGULATION

 GENERAL

Madagascar is the largest island in the Indian Ocean and the fourth largest island in the world, it is located southeast of the African continent, across the Mozambique Channel, and has a 5,000 km coastline. It is currently emerging as a major exploration target. The preamble of the Constitution (2010) notes the importance of preserving the exceptional natural wealth of Madagascar, including flora, fauna and mineral resources, for future generations. Madagascar is one of the 17 recognized mega-biodiversity countries, and over 80% of the country’s plant and animal species are endemic to Madagascar. The country relies on agriculture, including fishing and forestry, which accounts for more than a quarter of the country’s GDP, and employs 80% of the population.

The country’s natural resources include nickel, graphite, chromite, bauxite, titanium, salt, quartz, cobalt, iron, coal, gold, uranium and ilmenite (an ingredient used as pigment in paints, paper and plastics). Rio Tinto began production at its ilmenite mine in Fort Dauphin in January 2009. Gemstone mining also contributes to Madagascar’s economy.

The country began a five-year mineral resources governance program in 2003 as part of its economic reform efforts to improve and enforce the legal and statutory framework; promote investment in the minerals sector through the Agence de Promotion du Secteur Minier; improve geo-scientific knowledge of Madagascar; and address environmental, health and safety, and poverty concerns. The 2005 amendments to the 1999 Mining Code were intended to modernize and simplify the country’s mining legislation and encourage investment by large international companies, while promoting environmental protection. These efforts attracted new junior and senior mining companies, though a political crisis in 2009 stifled mining development. The political situation in Madagascar has remained unstable in recent decades, with coups d’état and popular uprisings.

The Fraser Institute ranked Madagascar 76th in its latest PPI survey of 109 jurisdictions.

 PRINCIPAL LEGISLATION AND REGULATOR

The principal minerals legislation in Madagascar is the Mining Code (Loi no. 99 du 19 août 1999 portant Code Minier) as modified by Loi no. 2005-021 du 27 juillet 2005 portant modification de certaines dispositions de la Loi no. 99-022, which is implemented by the Mining Decree (Décret no. 2006-910 du 19 août 2006 portant application du Code Minier). The Mining Code provides that all mineral substances on the surface, sub-soil, water and seabed of Madagascar belong to the State. Research, exploitation, processing, packaging, transportation and marketing of minerals and radioactive substances are subject to special agreements with the State, as fixed by regulations pertaining to radiation protection measures.

Other important mining legislation includes Loi no. 2001-031 du 8 octobre 2002 établissant un régime spécial pour les grands investissements dans le secteur minier Malagasy (LGIM), as modified by Loi no. 2005-022 portant modification de certaines dispositions de la Loi no. 2005-022. This legislation provides a special exchange, tax, customs and legal scheme applicable to mining investments of 50 billion Malagasy Ariary (MGA/Ar.). The mining titleholder for such mining investments must receive a certification of eligibility from the Council of Government. Further relevant legislation includes the joint decree of the Ministry of Environment, Water and Forests and the Ministry of Energy and Mines, on suspension of the granting of mining and forestry permits in conservation zones (Arrêté interministériel no. 19560/2004).

Any Malagasy national or any legal entity organized under the laws of Madagascar can obtain mining titles. For mining title eligibility, legal entities must elect domicile in Madagascar and designate an authorized representative domiciled in Madagascar. Only Malagasy nationals and groups of Malagasy nationals can obtain permits reserved for small-scale exploitation and alluvial gold mining; state, local and regional authorities and government employees are not eligible for mining titles. Titleholders must obtain environmental authorization prior to beginning works. The Mining Decree states that permits must indicate that research and/or exploitation work can only begin after the corresponding environmental authorization has been obtained and presented to local authorities.

The Mining Code classifies mineral substances into quarries, mines and fossil deposits. Mining titles are mineral specific; titleholders must submit a declaration to the Mining Cadastral Registry Office (Bureau du Cadastre Minier du Madagascar (BCMM)) and obtain a permit extension and environmental authorization in the event of a discovery of other mineral substances. Ownership of mines and fossil deposits is distinct from land ownership. The Mining Code also includes provisions limiting mining in certain zones, provides for relations between mining titleholders, and regulates the holding, transport, treatment, and marketing of mining products.

A guarantee of stability may be accorded to mining investments of at least Ar. 500 million if the investor selects this option. The guarantee prevents any modification of laws or regulations regarding legal, tax, currency and customs regimes from applying to the relevant investment for the duration of the guarantee. The investor may seek the benefit of more favourable measures. The duration of the guarantee depends on the size of the investment.

The central government, autonomous provinces, and regional and local authorities are each responsible for aspects of the mining industry. The mining industry is administered by the Ministry of Strategic Resources (Ministère auprès de la Présidence chargé des Ressources Stratégiques), which supervises the installation and control of the central services and decentralized departments of the ministry, and oversees the BCMM, the Gold Agency (Agence de l’or) and all other official mining entities. The BCMM establishes and maintains the mining licence maps and has a central office and an office in each of the six autonomous provinces. The BCMM receives all mining title applications and transmits a draft arrêté granting the permit, or a draft decision granting the small scale exploitation permit, with its technical opinion to the Minister in charge of mines, or to the Interregional Director of the Ministry in charge of mines for the relevant territory, or to the mining authority of the Decentralized Territorial Community if there was a transfer of competence, within fifteen days. The General Directorate of Mining Resources develops strategies to implement the policies of the Ministry in charge of mines and includes the Direction de l’Administration Minière (DAM) and the Direction des Etudes Géologiques et Minières (DEGM).

The Mining Code created a National Mining Committee (Comité National des Mines) as well as a Provincial Mining Committee (Comité Provincial des Mines) for each autonomous province. These committees aid in communication, consultation and cooperation between the private mining sector, the mining administration, and the regional and local authorities. The National Mining Committee is also consulted in relation to any draft laws regulating mining. In the event of litigation between titleholders, or between titleholders and landowners, the parties have recourse to a binding mediation procedure by the Provincial Mining Committee in the relevant jurisdiction.

 GRANT AND FORMS OF MINERAL TITLE

Prospecting can be done freely throughout the territory, except in protected zones, temporarily reserved zones, and areas covered by mining titles or exclusive authorizations to reserve perimeters (Autorisations Exclusives de Réservation de Périmètres (AERPs)). Any natural or legal person conducting prospecting activities must first make a declaration to the BCMM; the declaration of prospecting is valid for one year from the date the BCMM grants the authorization.

AERPs are granted by the BCMM for areas outside protected or reserved zones or perimeters that are already subject to a mining title or authorization. The AERP is granted to allow the beneficiary to consult with the local authorities regarding the environment and the existence of alluvial gold mining activities, inform the local authorities and any artisanal gold miners, undertake prospecting activities, and begin an environmental impact assessment. The AERP is issued upon proof of payment of the relevant fee; it confers the exclusive right to prospect in an area (maximum 15,000 km2) and to request a research or exploitation permit for the relevant perimeter. The AERP is valid for a maximum of three months and is not renewable. The same person cannot obtain another AERP over all or part of the previous perimeter until three months after the expiration of the first AERP. Before the expiration of the authorization, the beneficiary should submit an application for a research or mining permit with the BCMM. No environmental authorization is required for prospecting activities undertaken subject to an AERP.

Research and exploitation rights can only be acquired through a mining title, issued by the BCMM, in conformity with the Mining Code. The permits are generally granted on a first come, first served basis. Requests for mining titles or authorizations are inadmissible for perimeters that are already subject to another holder’s AERP, and the maximum total area covered by mining titles held by a single person are as follows: 10,000km2 for the research permit; 1000km2 for the exploitation permit, and 100km2 for the small exploitation permit.

The Mining Code includes provisions covering artisanal alluvial gold mining. Such activities take place pursuant to an artisanal gold mining authorization, issued by the authorities of the relevant communities, which is valid for one year, renewable for one-year periods. The authorization is personal and cannot be assigned, transferred or leased. The authorization is subject to the rights of a mining titleholder.

 The Mining Code provides for the following mining titles:

 

  • Research Permit (Permis R): This permit confers the exclusive right to engage in prospecting and exploration for the substances for which it was granted within the relevant perimeter. The commencement of works must be preceded by the approval of the environmental commitment plan (plan de l’engagement environnementale (PEE)), which is submitted to the Mine Environment Department of the Ministry in charge of mines. An environmental impact assessment may be required. The research permit is valid for five years, renewable twice for three-year periods. Subject, where applicable, to the prior approval of the landowner, the research permit confers the right to construct temporary or permanent infrastructure, and to cut wood and use water, within the perimeter, in accordance with existing legislation. The titleholder also has the right to dispose of extracted mineral substances for laboratory analysis, samples, or industrial testing. The research permit also confers a right of priority in requesting an exploitation permit (Permis E) for the relevant perimeter. The research permit is assignable, transferable and can be leased or pledged.

 

  • Exploitation Permit (Permis E): This permit confers the exclusive right to exploit the relevant substances and conduct prospecting and exploration within the relevant perimeter. Commencement of works must be preceded by approval of the environmental impact study (EIS), which is submitted to the Mine Environment Department of the Ministry in charge of mines. The permit is valid for 40 years, renewable for periods of 20 years. Subject to any prior accord with the surface titleholder, the permit includes the right to construct necessary infrastructure and to use timber and water within the perimeter, in accordance with relevant regulations. The permit also includes authorization to transport mineral substances and their derivatives, concentrates and primary derivatives, to locations for storage, treatment and sale on domestic and foreign markets. Companies can also establish treatment, refining and other facilities for the mineral substances. The exploitation permit can be assigned, transferred, leased and mortgaged, and is divisible.

 

  • Small Scale Exploitation Permit (Permis réservé aux petits exploitations miniers – Permis PRE) (PRE): This title confers the exclusive right to conduct prospecting, exploration and exploitation of the relevant substances within the perimeter. Commencement of works must be preceded by approval of the environmental plan by the Mine Environment Department of the Ministry in charge of mines; an EIS may be required. The permit is valid for eight years, renewable for periods of four years. Subject to any prior agreement with the landowner, the permit includes the right to construct necessary infrastructure, and to cut wood and use water within the perimeter, in accordance with relevant regulations. If the permit holder intends to stop exclusively using artisanal methods it is obligated to request that the permit be replaced with a standard exploitation permit (see Décret 910 162–64). The permit can be assigned, transferred, leased and mortgaged, and is divisible. PRE are granted by the competent Interregional Director of the Ministry in charge of mines, who delegates authority to the Technical Mining Authority of the Decentralized Territorial Communities. Applications for a PRE must be accompanied by a PEE, in accordance with existing environmental protection legislation, which is transmitted by the BCMM to the Mine Environment Department and approved by the competent authority. The permit is issued within 30 days.

 

Standard mining titles are granted by the Minister in charge of mines, or his representative, within 30 days of receipt of a complete application. A letter of engagement to not begin mining activity prior to receiving an environmental authorisation must accompany applications for a research permit or exploitation permit. Prior to commencing operations, mining titleholders must report to the local authorities (Collectivités Territoriales Décentralisés) and submit a copy of the permit.

Renewal of mining titles is of right provided the titleholder has satisfied its legal and regulatory obligations. Renewal requests are submitted to the BCMM prior to the expiration of the original mining title. If the titleholder has not commenced research or exploitation work, the renewal can only be issued for a maximum of half the original perimeter size.

Mining titles can be freely assigned or transferred to anyone eligible to obtain mining titles under the Mining Code. The instrument assigning, transferring, leasing, pledging or mortgaging the mining title must be submitted to the BCMM. The original titleholder retains its environmental obligations in relation to works already completed. If the acquiring party does not assert its lack of liability for past actions then joint and several liability will apply. Mining titleholders may work in association with another person or legal entity provided the act of partnership is registered with the BCMM. In the event of disputes, only final court decisions, for which all appeals are exhausted, are enforceable for registration of mineral rights or their transfer with the BCMM.

The titleholder may be subject to suspension for serious misconduct, as determined by the Minister in charge of mines or his representative, after receiving notice in conformity with legal and regulatory procedures. The duration of the suspension is fixed by regulations and is a calculation based on the degree of impact on health, public safety and environment. The title can also be suspended for three months for work that intrudes into areas that are closed due to mining activity.

Non-payment of annual administrative mining fees within the allotted time is sanctioned by cancellation of the permit, after exhaustion of legal procedures. The following stages are observed in the cancellation of such mining titles: a list of non-paying titleholders is displayed at the BCMM; a formal notice is served to the titleholder and any secured creditors; the holder has a right to answer within 45 days; the relevant authority makes a decision within 30 days of the presentation of the defence; a finding of non-payment resulting in the decision to cancel the mining permit is made; notification of the cancellation is given; and finally the act of cancellation is published in the Journal Officiel. Persons or entities whose permits have been cancelled are ineligible to receive another mining title for three years following the date of cancellation.

 DEVELOPMENT CONSIDERATIONS

Implementation of the environmental protection provisions in the Mining Code is overseen by the Ministers responsible for mines and the environment. All persons or entities conducting mining operations must take necessary measures to minimize and repair all damage caused by their activities, and are responsible for environmental degradation caused by the mining operations. All mining activities and related construction of infrastructure and facilities is done according to an Environmental Engagement Plan (PEE) or an EIS. The titleholder must repair all surface and environmental damage caused by the mining and owes an indemnity, corresponding to the value of the prejudice caused, to the landowner. All mining titleholders must also set aside funds for the rehabilitation and protection of the environment. The titleholder’s environmental responsibility remains intact until it receives the environmental discharge from the relevant authority (that grants environmental authorisations) upon completion of rehabilitation efforts. If at the end of the mining operations, the titleholder does not voluntarily execute its obligations under the EIS or the PEE, the competent tribunal can confiscate the provision set aside for rehabilitation, at the request of the mining authority. The Mining Code also provides for protected zones and areas where mining operations are not allowed. Protected zones can be prescribed by order of the Minister in charge of mines, and research and exploitation in these zones can be subject to certain conditions.

Décret 910 provides further details regarding the environmental commitments. A research or PRE holder must have obtained approval of the PEE from the Mine Environment Department of the Ministry in charge of mines, prior to beginning any research or exploitation works. Exploitation titleholders must have obtained approval of the EIS, drawn up according to the relevant legislation, prior to any exploitation works. Environmental authorization concerning a PEE must be issued to the holder within 90 days following the date of admissibility of his request; this period can be lengthened by environmental regulation. The Décret also provides for the relevant Ministries to declare certain areas temporarily reserved or closed to the granting of mining titles and authorizations for public works, environmental and/or geological investigations, and small-scale or alluvial gold mining. During a temporary reserve, the obligation to pay annual mining administrative fees is suspended.

Titleholders must inform local authorities and provide documentation (including environmental authorization) to the Mayor prior to commencement of mining activities. Any opening or closing of research or mining operations must be declared to the Minister in charge of mines beforehand. Mining titleholders are authorised to construct and maintain necessary facilities related to the permit or the environmental authorization.

Mining titleholders and landowners agree to their respective rights and obligations in a lease contract. The mining titleholder can dispose of quarry substances necessary for the mining operations upon payment of just compensation. The titleholder must inform the landowner of its right to occupy the portion of the property covered by the mining permit. The mining titleholder must request authorization for the cutting of wood necessary for mining operations within the perimeter, upon payment of just compensation, and for the execution of works outside the perimeter, including developing roads, emergency works, and the occupation of the relevant land. The titleholder may carry out the work to the extent that the works can be declared a public utility. Décret 910 provides that in the event of a landowner refusing to contract for a lease for occupancy of the ground within the perimeter, the titleholder must submit the dispute to the Mayor of the concerned Commune, who, if there is no conciliation, will send the case to the Provincial Committee of Mines to initiate the procedure of amicable settlement. If this procedure does not lead to an agreement, the standard lease contract terms, established by order of the Minister in charge of mines, are taken as reference by the relevant tribunal for final settlement of the dispute. Operations may be declared a public utility by request to the Minister in charge of mines only in the conditions required by Ordonnance no. 62-023 du 19 septembre 1962 relative à l’expropriation pour cause d’utilité publique.

The Décret also outlines the rights and obligations of landowners and traditional occupants and the procedures for compensation. In terms of community development, mining titleholders commit to prioritizing the employment of Malagasy personnel with similar capacities and qualifications. The titleholder should set up a theoretical and practical training scheme for Malagasy nationals and should support accession of Malagasy personnel to all positions within the project according to their individual capacities.

 ENVIRONMENT REGULATIONS

 See Madagascar Environmental Regulation.

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Environmental Overview Commentary plus sign

MADAGASCAR ENVIRONMENTAL REGULATION

 GENERAL

Madagascar is the world’s fourth largest island and is home to a large number of unique animal and plant species. It is located southeast of the African continent, across the Mozambique Channel, and has a 5,000 km coastline. Madagascar is one of the 17 recognized mega-biodiversity countries, and over 80% of the country’s plant and animal species are endemic to Madagascar. A number of these rare species face a direct threat from oil and mining development projects.

Madagascar’s natural resources include graphite, chromite, coal, bauxite, rare earth elements, salt, quartz, tar sands, semiprecious stones, gold, mica, fish, and hydropower. The preamble of the Constitution (2010) notes the importance of preserving Madagascar’s exceptional natural wealth, including flora, fauna and mineral resources, for future generations.

Natural hazards include periodic cyclones, drought and locust infestation. Madagascar’s current environmental challenges include soil erosion, resulting from deforestation, overgrazing, desertification, and surface water contamination.

 PRINCIPAL LEGISLATION AND REGULATOR

The principal environmental legislation is the Environment Charter (Charte de l’Environnement Malagasy Loi no. 90-033 du 21 décembre 1999, modified by Loi no. 97-012 du 6 juin 1997 et Loi no. 2004-015 du 19 août 2004), the Renewable Natural Resources Management Law (Loi no. 96-025 du 30 septembre 1996 relative à la gestion locale des ressources naturelles renouvelables) and the Industrial Pollution Law (Loi no. 99-021 du 19 août 1999 sur la politique de gestion et de contrôle des pollutions industrielles). There have been several government orders pertaining to environmental issues, including: Décret no. 99-954 du 15 décembre 1999 modifié par le Décret no. 2004-167 du 3 février 2004 relatif à la mise en compatibilité des investissements avec l’environnement [Décret MECIE], Arrêté Interministériel no. 12032/2000 sur la réglementation du secteur minier en matière de protection de l’environnement, and Arrêté interministériel no. 4355 du13 mai 1997 portant définition et délimitation des zones sensibles which provides for sensitive zones requiring additional protections. The Décret MECIE fixes the rules and procedures for ensuring that investments are compatible with environmental protection, including the EIS procedures and the granting of environmental permits, which are required prior to the commencement of mining works.

The Mining Code (Loi no. 99 du 19 août 1999 portant Code Minier) as modified by Loi no. 2005-021 du 27 juillet 2005 portant modification de certaines dispositions de la Loi no. 99-022 and the Mining Decree (Décret no. 2006-910 du 19 août 2006 portant application du Code Minier) also include numerous environmental provisions. All persons or entities conducting mining operations must take necessary measures to minimize and repair all damage caused by their activities, and are responsible for all environmental degradation caused by the mining operations. Titleholders are only released from the obligation to rehabilitate the site upon receipt of the environmental discharge after completion of rehabilitation efforts.

Other relevant legislation includes the Water Code (Loi no. 98-029 du 20 janvier 1999 portant Code de l’Eau), the Forestry Code (Loi no. 97-017 du 8 aout 1997 portant révision de la législation forestière) and the related decree on forest exploitation (Décret no. 98-782 relatif au régime de l’exploitation forestière). Environmental regulations applicable to the mining sector are set through joint orders by the Ministers in charge of mines and environment.

The Ministry responsible for the management and protection of the environment is the Ministry of Environment, Ecology and Forests [hereafter Ministry of Environment]. The National Environment Office (Office National de l’Environnement (ONE)) is under the Ministry of Environment and is responsible for ensuring the compatibility of investment activity and environmental protection. The Director General of ONE issues environmental permits, while environmental compliance authorizations for PRE and research permits are issued by the Ministry in charge of mines on the advice of its Mine Environment Department.

 EIA PROCESS AND OTHER PERMITS

Article 10 of the Environment Charter requires environmental impact studies for public or private investment products likely to cause environmental harm, whether due to their technical nature, magnitude or the sensitivity of the surrounding environment, and this requirement is reiterated in Article 4 of the MECIE Décret. Both documents include a list of projects for which EIS are mandatory, which includes any mechanized mining exploitation or extraction, any research permit projects in sensitive zones and other research activities identified by joint order of the Ministers responsible for mines and environment.

The MECIE Décret provides that all projects in Annex I, including industrial mining exploitation and extraction, as well as research projects as decreed by the Ministers of environment and mines, must submit an EIS, obtain an environmental permit following a favorable evaluation of the EIS, and then follow a Project Environmental Management Plan (Plan de Gestion Environnementale du Projet (PGEP)) constituting the project’s environmental specifications. For such projects, issuance of the environmental permit is necessary prior to commencement of all works. The environmental permit is issued following favorable review of an EIS by the ONE, on the basis of the technical opinion of the technical evaluation committee after evaluation of the EIE, and following the results of a public inquiry. The Director General of ONE issues the environmental permits.

Annex II projects include research permit projects and PRE permit projects. Annex II projects are subject to a preliminary screening by the ONE on the basis of a project description; it is then necessary to produce an Environmental Engagement Programme (Programme d’Engagement Environnemental (PEE), which will be assessed by the environment department of the relevant Ministry. The appropriate department will prepare and send additional reports to the Ministry of Environment and to the ONE. Approval of the PEE is required prior to commencement of works and is issued by the relevant Ministry on the basis of a technical analysis by its own environment department.

The EIS consists of a scientific analysis of the possible environmental impacts of a project and includes the following: description of the project; analysis of the environment and the possible effects of the project; an environmental management plan; and a non-technical summary in Malagasy and French to facilitate public information of the contents of the study, including the initial state of the site, the modifications caused by the project and the measures proposed to mitigate or repair environmental damage.

Evaluation of the EIS consists of the following stages: the project promoter submits the materials including the EIE report to ONE and pays the relevant fees; there is a public hearing or public inquiry and the EIE documents are made available by the local authority for between 10 and 30 days; ONE establishes a technical evaluation committee (CTE, in French) to evaluate each EIS dossier, within 60 days in the case of a public inquiry or on-site document consultation, or a maximum of 120 days for projects with a public hearing. ONE must grant or deny the environmental permit within these deadlines on the basis of the report, the public evaluation, and the technical advice and evaluation from the CTE. In the event the permit is refused, the project promoter can solicit the Minister in charge of environment for a second review, which must be completed within 30 days, and ONE has a further 10 days to issue a decision. In the event that ONE refuses the permit, the Minister in charge of environment can deliver the environmental permit.

The MECIE Décret also provides for monitoring and surveillance of the implementation of the environmental management plans.

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