Last June, Burkina Faso’s transitional parliament nearly unanimously (77 legislators on 78 in favour) passed a new mining code that will ensure communities benefit more from the country’s raw materials. This new code – which replaces former mining regulations of the past 12 years – was among the World Bank’s requirements for an investment of $100 million to support the West African country’s development. In addition to the mining code, the country also passed an anti-corruption law last March.
Communities eagerly awaited these two legislations: street demonstrations of October 2014 forced President Blaise Compaoré to step down (after nearly 30 years in power) and to flee the country.
Quick facts about mining industry in Burkina Faso:
- Fourth gold-producing country of Africa
- Gold is country’s first export product since 2009
- Gold resources make for more than 12% of national GDP
- 36 tons extracted in 2014
- Revenues of 256 million Euros in 2014
Corporate accountability is a hot topic right now in the business world. Both communities living close to projects and consumers are asking companies to be accountable for their operations and supply chain.
Here are a few changes brought by the new mining code:
- Reduce tax and customs exemptions
- Deletion of exemption from value added tax (VAT) on hydrocarbons
- Tax under the regular system (tax on businesses)
- Mining companies must grant 1% of monthly revenues (before tax) to a fund dedicated to communities living nearby mining sites
These changes should not have major impacts on investors. That being said, some mining companies and the Chamber of Mines did mention some concerns when it comes to the distribution of funds. Will the capital reach communities? Raising funds is already hard. What are the risks for developing projects?
Beyond financial risks, social license to operate is another major risk for mining projects. Nowadays losing its social license can lead to serious economic consequences for an organisation. One of the challenges for extractive projects lies in balancing their role as a socially responsible operator (through their response to stakeholder requests) and their control of costs, loss in productivity and damages to reputation. A third important risk for mining companies will be implementing the new code. This will probably be more difficult for developing projects as they’ll have to review their budget, strategy and more in order to implement it.
Mining companies will have to consider:
- Social investments towards the fund
- Local employment
- Cultural heritage sites to protect
At Boréalis we help companies mitigate the risks of their operations through a web application that allows to plan, measure and demonstrate their CSR efforts and impacts on communities in a synergistic fashion. They can thus gain and maintain a social license to operate, all while fostering local project development.
Since the passing of the new mining code in Burkina Faso we’ve been working with one project and are in discussions with another one. We work closely with clients to manage their CSR data, engagements, processes, etc. I’ll be in Burkina Faso this September, more specifically for the Promin conference (Sept. 17-19) in Ouagadougou, and at the Franc-Mine day (Sept. 19). Looking forward to see you there!
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