2024 – Investing in Francophone West Africa's Mining Sector: Understanding Legal Frameworks and Risk Management Strategies

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The relevant laws and regulations:

- Regulation No 18/2023/CM/UEMOA dated 23 December 2003 on the Community Mining Code
- Economic Community of West African States Investment Code dated July 2018
- Additional Act No 01/2008/CCEG/WAEMU dated 17 January 2008 adopting the UEMOA common environmental improvement policy.
- Additional Act No 01/2000 dated 14 December 2000 adopting the WAEMU Common Mining Policy.

Investment in Francophone West Africa’s mining sector can provide individuals and companies with rich rewards with an increasingly attractive investment regime and abundance of natural resources, but challenges remain for those investors who venture to the Continent ill-prepared.

The purpose of this article is to explore the legal frameworks and identify the key risk management strategies with these investments which can help mitigate risk associated with your investment.

1- Legal frameworks

The mining sector in Francophone West Africa is governed by common legal frameworks and regulations specific to the organization or sub-organization as well as local regulations specific to each country. In other words, each country within Francophone West Africa possesses its own set of laws and regulations governing the mining sector. For instance, the respective mining codes of the West African countries are as follows:
- Mali has its Mining Code through the Law No 2012-015 dated 23 August 2023
- Ivory Coast relies on its Mining Code through the Law 2014-138 dated 24 March 2014,
- Burkina Faso has the Mining Code through the Law No 036-2015 dated 29 October 2015,
- Benin has its Mining Code through the Law 2006-17 dated 17 October 2006,
- the Senegalese Mining Code through the Law 2016-32 dated 8 November 2016.

Any entity or person considering any form of investment should carry out a thorough review of all mining legislation, as well as the overarching legal framework of that jurisdiction to ensure they have a comprehensive understanding of all the rights and obligations as well as the regulatory environment they would be subject to. Understanding all these regulations is absolutely crucial to a successful investment.

The Community Mining Code and the Community Investment Code with their various additional acts aim to adopt a common mining policy and a common policy for improving the environment in West Africa such as the regional sub-organization as West African Economic and Monetary Union (WAEMU) and the regional organization Economic Community of West African States (ECOWAS).

Concerning the mining policy within the WAEMU framework, the specific key issues aim to create a favorable climate for mining investors, diversify mining production, process mineral substances locally, promote the coexistence of industrial mines and artisanal miners and protect the environment.

Taken together these legal frameworks set out the requirements in terms of the rights and responsibilities of investors, the processes for obtaining licenses and permits, and what steps are required for complying with environmental and social impact assessments. In addition, the investors must also consider the rules for renewal of mining permits, royalty rates, environmental regulations, and community engagement requirements in the specific jurisdiction to ensure compliance and to ensure mitigation of legal risk.

2- Risk Management Strategies

Investing in the mining sector in West Africa has always had significant inherent risks associated with it ranging from political instability to unexpected regulatory changes to environmental concerns and pressure from lobby groups.

Political risk has long plagued West Africa and is an important factor that weighs heavily on the mind of any investor in the mining sector in Francophone West Africa, with rapid changes in government and unexpected civil unrest sadly commonplace in many West African jurisdictions. This instability often translates into sweeping changes to existing legislation, taxation regimes, or licensing requirements affecting the long-term viability of established mining projects and their operations in country. At the same time, civil warfare or military-backed coups often result in significant disruption to mine operations which in turn lead to delays and damage to infrastructure of mining activities and production lead times. Such uncertainty over a project significantly impacts the investment climate and investor confidence and adversely affects the overall success of mining activities in the region.

Concerning regulatory change, given the ever-changing nature of legal frameworks in Africa, investors should be mindful of any amendments to important laws and regulations in force in the relevant jurisdiction that may impact mining operations and investment opportunities. To this end, uncertainty or instability within the regulatory framework may dissuade potential investors from committing much-needed private capital to a mining project, or a specific region of a country, which could lead to the decline of a specific project or the development of the mining sector, or adversely affect the day to day lives of rural communities in a particular area or region.

Finally, about environmental concerns, it is well-documented that mining activities can have drastic adverse effects on the environment. One of the major concerns of increased global mining activity is deforestation as commercial mining operations require more and more land for infrastructure and their associated extraction activities. Accordingly, in the majority of countries within Francophone West Africa, an investor is obliged to carry out an environmental impact assessment in collaboration with the competent authority and to obtain either an environmental certificate or environmental attestation depending on the jurisdiction.

In conclusion, successfully navigating the mining sector in Francophone West Africa necessitates not just a comprehensive review and knowledge of its different legal frameworks, but also the ability to implement a variety of risk management strategies to harness the region's vast mineral resources and mitigate potential challenges along the way. John W Ffooks & Co, with its in-depth expertise in this field and proven track record of advising numerous international investors either considering or already engaged in the mining sector in Francophone West Africa, is well-positioned to guide investors through the complexities of these investments. By entrusting your project to John W Ffooks & Co we will help you unlock the region's considerable investment opportunities so that, as an investor, you not only capitalize on such prospects but at the same time make a significant contribution to the growth of the mining sector in French-speaking West Africa.

Tags: ECOWAS Legal Framewroks mining code Mining Sector risk management WAEMU West Africa