Focus on Bissau investment immigration and Guinea's life and economy: Xinhua News Agency, Conakry, April 8 (Reporter Hao Wangle) - The National Transitional Council (acting parliament) of Guinea passed the revised 2011 Mining Code at a plenary session on the 8th. The revision modifies certain tax provisions previously considered too "harsh" by investors and moderately relaxes the conditions for foreign investors to engage in mineral resource development in Guinea.
The revised Mining Code provides a degree of tax relief. It stipulates that the mineral resource tax on bauxite exports is reduced from 0.55% to 0.15%, and the industrial and commercial tax is reduced from 35% to 30%. Meanwhile, the import tariff on mining equipment required for mineral projects is reduced from 8% to 6.5%.
At the same time, the revised Mining Code stipulates that the area for iron ore and bauxite prospecting licenses is increased from 350 square kilometers to 500 square kilometers, and for other minerals from 50 square kilometers to 100 square kilometers. The capital requirement for obtaining mineral concessions has also been reduced from $1 billion to $500 million.
However, the revised version does not modify the proportion of shares held by the government in mining enterprises.
Guinea's new mining regulations were approved by parliament in September 2011, stipulating that the state may hold up to 15% of shares in the country's mineral projects, and within a certain period, the state may acquire up to 20% of shares through purchase. In addition, mining taxes and other tax rates were significantly increased.
Upon its introduction, the new Mining Code immediately drew much criticism. Industry insiders believed that the new law increased the burden on mining enterprises, dampened the confidence of foreign investors, and was detrimental to the development of Guinea's mining sector. Subsequently, after consultations with mining companies, the Guinean government decided to amend certain provisions of the new law.
Guinea is rich in mineral resources, containing two-thirds of the world's bauxite, as well as large amounts of high-grade iron ore. The abundant mineral resources have attracted the interest of international mining giants including BHP Billiton and Rio Tinto; however, due to political instability, a weak economic foundation, and huge initial project investments, most investors remain in a wait-and-see mode.
