Q: Poupak, was the adoption of this new Code a surprise?
A : No, in fact the new Mining Code was announced some time ago and was expected before the end of this year. In August, the Government adopted a new law and issued a Decree for the creation of a State Entity called the Société Guinéene de Patrimoine Minier/. This entity is in charge of managing the Government’s portfolio in mining projects. At that stage, we were already expecting the Mining Code to follow shortly.
Q: Is the new mining code very different to its predecessor?
A: It’s certainly more comprehensive and in many parts much more detailed. It imposes a number of new obligations on mining operators in the Country.
Q: We are seeing many governments in mining jurisdictions reviewing levels of state ownership in mining projects. Is this something that the new code addresses?
A: It is. The new mining code now entitles the Guinean State to an overall shareholding of up to 35% in the share capital of mining companies in Guinea. Previously, that right was limited to a 15 per cent shareholding in the capital of companies involved in precious substance metals. Now, this overall participation is divided into two parts. One is free interest which is fixed at 15 per cent in most instances. The other is a contributing interest. This is where the Government can acquire a 20 per cent stake at a price to be agreed with the investor. Now, what is interesting is that the Code allows investors to reduce the right of the State to its contributing interest by increasing the applicable tax rate.
Q: And are there any changes that affect companies holding mining title?
A: Yes. Any change of control in an entity holding a mining title is now subject to approval or validation by the Ministry of Mines. This may include the acquisition of just 5 per cent of the share capital of that entity. In addition, even changes that result from a stock exchange transaction must, in certain instances, be notified to the Ministry.
Q: What other changes should companies be aware of?
Well, as expected, the anti-bribery provisions that were announced earlier this year have been included in the new Code. This includes an obligation to implement an ‘Anti-bribery surveillance plan’ and also to sign a ‘Code of Good Conduct’. The new law also contains substantial ‘transparency’ provisions. For example, a mining company and its direct subcontractor must inform the State of their corporate structure, as well as the identity of their shareholders, directors, managers and senior managerial employees.
One other key change concerns employment and training. Now, while the principle of preference to local employees and contractors and the transfer of technology was already established in the 1995 law, the new legislation brings more strenuous obligations. This includes the imposition of specific quotas and also training obligations. For example, a Guinean national must be appointed as deputy managing director of a mining company as soon as it commences exploitation. Also, within 5 years from commencement of exploitation, a Guinean national must be appointed managing director
Q: So, I guess the important question is what does the new code change for companies who are already operating in Guinea?
Well, to begin, the ownership of mining titles which pre-date the new code will remain valid. However, provisions in the new code which relate to Taxes, Duties, Employment, Training, Transparency and Anti-Bribery will apply to all companies that have reached exploitation stage. The Code does not specifically state ‘notwithstanding any provisions to the contrary contained in a Mining Convention’. However, at this stage, this may be implied. Especially given the reference to parties harmonizing the provisions of their mining convention with other provisions of the Code.
Q: To conclude, are there any specific recommendations that you can formulate?
Well, the new Mining Code is not yet in force. In fact, an official version is not even yet available. However, in anticipation of the changes to come, we do recommend that mining companies review any existing mining conventions. We are of course available to look at any specific scenario and also advise on bringing conventions in line with what seems to be Guinea’s new mining code.
Back to top