The mining sector in Guinea contributes around 25% of the countrys income, with bauxite production by far the most important contributor. The past few years have been characterised by an ongoing programme to modernise and re-structure the aluminium industry to make it efficient and profitable, and to increase production.
Guinea has one of the world’s largest bauxite reserves as well as being one of the largest producers, after Australia. It is estimated that Guinea contains an estimated 24% of global bauxite reserves. Guinea accounts for 94% of Africa’s bauxite production. Bauxite accounts for 20% of Guinea’s GDP and 90% of exports. Gold and diamonds are also major export products. Although Guinea has significant commodity reserves, the country has been poorly explored and future potential exists for gold, base metals, iron ore and diamonds.
A new mining code introduced in mid-1995 offers a range of guarantees and tax incentives to new investors, who may now own up to 85% of any venture in Guinea.
Guinea is underlain by the extensive Archaean West African craton. To the north and west of the country, younger Proterozoic rocks occur and to the east by the Birimian Supergroup, which includes greenstone belts, responsible for most of West Africa’s gold and iron ore reserves. Weathering of tertiary sediments and laterisiation has resulted in the formation of Guinea’s extensive bauxite deposits.
Mineral Policy and Legislation
1. Mining Code
The 1986 Mining Code was revised in 1995 of which a new edition including a translation into English was issued in October 1997. The code is based on French Civil Law and is comparable to that of other Francophone countries in the region. The code establishes a new Government Centre of Mining Promotion and Development (CPDM) which is receiving international financial support, including substantial sums from the World Bank in order to harmonise the code with other national legislation, to undertake new surveys and to create a national database of geological information. The CPDM is supposed to be a “one stop window for investors”. Applications for mining licenses are said to be processed within two months at most.
2. Right of Ownership on Minerals
Deposits of minerals or fossil substances located below or on the surface of the ground, as well as underground water and geothermal resources belong to the State. Holders of mining titles have property right on extracted substances.
3. Mining Titles
The Guinean Mining Code lists five different mining titles:
- Reconnaissance permit: Allows prospecting of mineralised sites not under any exploration or exploitation permit. Duration is three to six months.
- Exploration permit: Grants exclusive right to explore for all the substances specified in the permit. Area: 500 km² maximum. Duration: Three years, may be renewed twice for two years each.
- Exploitation permit: Exclusive right and free disposal of all the mineral substances specified in the permit completed by a Mining Agreement. Area comprises the ore deposit and the surface installations as defined by the feasibility study. Duration: Ten years, renewable for five-year periods.
- Mining concession: Reserved for large ore deposits which involve important investments and scopes of infrastructure as defined by the feasibility study; the grant of the Concession is completed by a Mining Convention. The duration is 25 years, renewable for 10-year periods.
- Artisanal mining: Allowed only to Guinean nationals on consigned areas.
4. Mining Tax Regime
Every holder of a mining title must pay fixed and variable surface fees, royalties, income tax and other taxes:
Fixed and Surface Fees
|Description||Fixed Fees (FG)||Surface Fees (FG/km²/year)|
|Exported Bauxite||10%||FOB value|
|Bauxite processed into Alumina||5%||Value calculated on basis of FOBCBF (Compagnie des Bauxites de Guinée)|
|Bauxite processed into Aluminum||0%|
|Imported Ore (Raw Ore)||7%||FOB value|
|Ore concentrates||3,5%||FOB value|
|Ore precessed into steel||0%|
|Base Metals, Radioactive Substances and Particular Minerals|
|Exported Ore||7%||FOB value|
|Ore concentrates||3,5%||FOB value|
|Ore precessed into Refined Prod.||0%|
|Dore Bare||5%||London fixing|
|Diamonds and gems|
|Uncut stones||5-10%||Sale value|
|Cut stones||2%||Sale value|
State participation in gold, diamonds and gems is 15% free equity. Particular minerals defined by the Code (bauxite, iron ore, etc.) carry 0% free equity.
Fiscal Regime and Commercial Legislation
1. Income Tax and others
Corporate Tax: 35%
Withholding Tax: 15%
Additional Profit Tax: 50% when return on equity exceeds 20%
2. Duty and Customs Exemptions
- temporary exemption during the exploration phase according to a list of equipment.
- During the construction, expansion and start-up phases, the equipment, materials, heavy vehicles and tools are subjected to a duty and customs registration fee of 0.5% of the CIF value.
- During exploitation:
- Full exemption for processing plants (processing ore in semi-finished or finished products).
- For extractive operations, a 5.6% duty and customs tax on the FOB value of materials, equipment, heavy vehicles, consumables (including fuel), diesel oil and lubricants not used in the processing of the ore in finished or semi-finished products.
3. Other Incentives and Guarantees
- Straight line and/or declining blance method of depreciation;
- Capital allowance of 5% on investments made throughout the financial year;
- Mineral depletion allowance;
- Corporate tax exemption from four to eight years, according to the mine sites (bauxite and iron ore);
- Opening hard currency accounts in Guanine banks (for internal and external mining operations, including debt services);
- Free repatriation of dividends subject of withholding tax;
- Stability of fiscal and duty regime as granted by the Mining Agreement;
- Should the State participate (see 2.4), the level will be negotiated so that the managerial control of the sector by the private investor will not be impeded.
Boké Alumina Corporation, Alumina Company of Guinea, Centre de Promotion et de Developpement Miniers, Compagnie des Bauxites de Guinee SA, Euronimba, Guinea Aluminum Products Corporation Ltd, Halco Mining Inc, La Societé Aurifère de Guinée, Ministère des Mines, de la Geology et de l’Environment, Ministry of Mines and Geology, Office des Bauxites de Kindia, Secretariat of State for Mines and Energy (hydrocarbons division), Societe Ashanti de Guinee, Société Aurifére de Guinée SA, Societé des Bauxites de Kindia, Societé Mifergui-Nimba, Societe Miniere de Dinguiraye
Aredor, Bankole, Bidikoum, Boke, Dinguiraye, Droubja, Fria, Friguia, Halco aluminium mine, Karta mine, Kerouane, Kindia, Kiniero, Lero Karta, Mifergui, Mount Nimba, Sangaredi, Siguiri, Silidara, Simandou