2023 – Madagascar Introduces Progressive Reforms to Strengthen Sustainable Mining Practices and Combat Illegal Gold Trade

Mark Agnor | Shutterstock

On 30 March 2023, a meeting of the Council of Ministers was held in Antananarivo during which several important issues relating to the mining sector in Madagascar were discussed. As part of President Andry Rajoelina’s "Sustainable management of natural resources in Madagascar" government initiative, the Council of Ministers approved a progressive review of all mining permit applications currently lodged with Madagascar’s mining registry (BCMM or Bureau de Cadastre Minier de Madagascar in French).

As part of the review, Madagascar’s Ministry of Mines and Strategic Resources (Ministère des Mines et des Ressources Stratégiques in French) have put forward an action-plan which would seem to prioritise for now those applications for the renewal of mining permits held by artisanal or small-scale mining operators (Permis Réservés aux Petits Exploitants or “PRE”), as these represent the majority of applications currently on backlog at the BCMM. All pending Research Permits i.e. exploration permits (Permis d’Exploration or PR) will then be reviewed, while exploitation permits i.e. those permits for large industrial companies (Permis d’Exploitation or PE) will be granted last. At the same time, the Council of Ministers also approved a separate plan to streamline the mining sector generally in order to strengthen the sustainable management of natural resources, although no further detail was provided exactly how this was supposed to happen.

Together with the Ministry of Mines and Strategic Resources, the Ministry of Economy and Finance has put in place measures to better control the overall management of gold resources in Madagascar. This comes in the wake of several high-profile cases in Madagascar of attempts by certain individuals to illegally smuggle out of the country huge quantities of precious metals. According to official sources, only 3 tons of gold were found to be legally exported in 2018. However, following a survey conducted in Dubai, which is the main destination for gold exported from Madagascar, this number increased from 12 to 15 tons of illegally exported gold. The total value of illegally exported gold has been valued at USD 945 million. Following the publication of these figures and several damaging reports, on 25 September 2020 the Government of Madagascar took measures to regulate gold production and to counter illegal resource-exploitation. It took over three years to conduct a major investigation with the participation of various stakeholders in Madagascar with the results of the investigation having been included in the latest government decree which was issued on March 30th 2023 during the Council of Ministers’ meeting.

The most important measures that will be put in place as part of this important reform are:

  1. Strengthening the rules and procedures for obtaining a licence to open a gold counter in an effort to regulate the activities of legal operators in the gold industry in Madagascar.
  2. Strengthening the rules for the promoters of gold counters and their partners to prevent fraud and the use of nominees in the illegal export of gold from Madagascar.
  3. Revising gold export regulations to establish clear rules for the licensing of gold counters to all operators wishing to export gold from Madagascar.
  4. Establishing measures and requirements for the repatriation of foreign exchange and the transfer of funds in the interbank foreign exchange markets to regulate the export of gold from Madagascar.
  5. Establishing legal measures and sanctions to combat the illegal export of gold.
  6. Shortening the period of time required to return money earned from exports from Madagascar.
  7. Strengthening gold export regulations for buyers and sellers in Madagascar.
  8. Establishing gold traceability measures to identify the origin of the gold and the routes used to extract it.
  9. Revising the rules and sanctions for the establishment of gold counters to prevent abuse and illegal activities.
  10. Establishing a one-stop shop to facilitate all the formalities required to obtain a gold export permit in Madagascar.

The issuance of this Presidential Decree appears to demonstrate the Government of Madagascar’s willingness to cooperate with international standards governing the export of precious metals and the re-opening of the BCMM is welcome news to international companies in the mining sector. Indeed, the positive measures to regulate gold purchase and sale operations and to reduce illegal gold trafficking activities bode well for the future. However, whether or not such measures will actually be enforced in Madagascar and whether they will translate into an actual reduction in the amount of gold being illegally exported out of the country remains to be seen.

Sources

Tags: BCMM Council of Ministers Gold gold mining madagascar mining