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ABIDJAN — Reuters – Ivory Coast plans a windfall tax of 19 per cent on gold mine profits to share in the benefits from soaring world prices for the metal. The decision, revealed in a government document, sets the scene for a possible dispute with foreign companies building up the sector.
West Africa-focused Randgold Resources Ltd., Australia’s Newcrest Mining and Toronto-listed La Mancha Resources all operate mines in the country. In August, the government granted production permits to Canada’s Endeavour Mining Corp. and Occidental Gold, a unit of Australia’s Perseus Mining Limited.
The document, seen by Reuters on Friday, also establishes a rate of 13 per cent, though it does not specify in what circumstances it will be applied. Under the proposal, submitted on Wednesday and adopted during a cabinet meeting, the West African nation will set an indicative cost of production at $615 (U.S.) per ounce, with profits taxed at a rate of 19 per cent.
“The price of gold, which was around $300 per ounce in 2002, is today above $1,700, or practically a six-fold increase without any comparable increase in production costs,” read the text of the proposal obtained from government spokesman Bruno Kone.
“Mining companies have therefore benefited from this favourable climate without any effect for the state.”
The new tax was created through changes to Ivory Coast’s 2012 budget, but it was not immediately clear whether it would be applied retroactively.
Randgold’s CEO Mark Bristow told Reuters that while his company was open to dialogue with the government, it already operated under a clearly defined tax regime.
“We have very specific and legally binding stability agreements,” he said. “It’s my understanding that this will still need to go to parliament and there will be industry dialogue … It’s a process.”
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