The major features of the mining industry in Madagascar are as follows.

• Ownership and licensing: Mining rights and licences are regulated to ensure transparency and equitable access. These include exploration licences, mining permits and small-scale mining permits. Licences are granted following a competitive process to enhance fairness and investment opportunities.
• Environmental and social obligations: Mining projects are required to prepare and implement environmental and social impact assessments.
• Operators must contribute to local community development and respect the rights of affected populations.
• Royalties and taxes: Mining operators are subject to the specific royalties and tax rates detailed in the Mining Code to ensure that state and local communities benefit from mining activities. A portion of the royalties is allocated to local development funds.
• Foreign investment and partnerships: The Mining Code promotes foreign investment but includes provisions to ensure collaboration with local entities. This includes requirements for local input in procurement and employment.
• Sustainability and transparency: Madagascar adheres to the Extractive Industries Transparency Initiative (EITI), ensuring all mining-related financial transactions are transparent.
• Operators are either small groups or individuals using artisanal methods or mining companies.
• The main mining activities are gold mining and quarrying fossils and rare deposits.

The legal system in Madagascar is civil law. The main sources of mining legislation in Madagascar are:

• Law No 2023-007, dated 27 July 2024 and revising the Mining Code, which determines the main rules for mining activities, the regulations for mining licences and the obligations and rights of licence holders and others relevant parties that might be engaged in mining activities;
• Law No 2023-002, dated 27 July 2023, relating to investment in Madagascar;
• Law No 2015-005, dated 26 February 2015, recasting the Protected Areas Management Code;
• Law No 2005-022, dated 2 August 2005, amending certain provisions of Law No 2001-031, dated 8 October 2002, establishing a special regime for major investments in the Malagasy mining sector (the Law on Large Mining Investments (LGIM)) – the LGIM is currently being reformed to align with the revised Mining Code;
• Law No 2001-031, dated 8 October 2002, establishing a special regime for major investments in the Malagasy mining sector (LGIM);
• Decree No 2024-1464, dated 23 July 2024, relating to mining, fossils and quarrying permit regulations – implements the new mining code and provides details regarding permit/licence regulations;
• Decree No 2017-415, dated 30 May 2017, setting the terms and conditions for the application of Law No 2015-005 of 26 February 2015, overhauling the Protected Areas Management Code;
• Decree No 99-954, dated 15 December 1999, amended by Decree No 2004-167 of 3 February 2004 on the environmental compatibility of investments (the Decree on the Compatibility of Investments with the Environment (the MECIE Decree));
• Decree No 97-740, dated 23 June 1997, relating to mining permits for the exploration, exploitation and transportation of hydrocarbons; and
• Interministerial Order No 12032/2000 relating to environmental protection regulations in the mining sector – governs rules and requirements in order to balance mining activities with the impact on the environment.

Mineral resources are the property of the nation (Article 5, Law No 2023-007, dated 27 July 2024, revising the Mining Code).

With that said, the Ministry of Mines, as a representative of the state, along with other relevant ministries, such as the Ministry of Environment, solve any conflicts. Such conflicts may concern, for instance:

• incompatibility regarding protected areas with respect to Chapter VIII, Articles 126 to 149 of Law No 2023-007, dated 27 July 2024, revising the Mining Code; and
• disagreement with landowners regarding already-owned or -occupied lands, pursuant to the provision of Licence VII, Article 298 and following Law No 2023-007, dated 27 July 2024, revising the Mining Code.

In Madagascar, the state plays dual roles in the mining sector, as follows:

• grantor-regulator – the state, represented by entities such as Bureau du Cadastre Minier de Madagascar (BCMM – the mining registry) and the Ministry of Mines, oversees mining activities by granting mining rights, enforcing regulations and ensuring compliance; and
• owner-operator: the state may directly engage in mining operations through contracts with private companies, typically via specialised government bodies or state-owned companies.

There is no mandatory national or government joint venture, contracting or participation in mining activities in Madagascar.

Mineral rights do not have any constitutional basis in Madagascar. They derive from the mining laws, government authorisation (ie, mining permits) or conventions with landowners (if any). Mineral rights have the status as property in the form of a mining licence.

The transmission of or any action relating to a mining licence are regulated by Law No 2023-007, dated 27 July 2024, revising the Mining Code. Sales of strategic mining substances extracted from the land are also governed by the previous key provision.

The granting authorities in Madagascar are national authorities: the Ministry of Mines and the BCMM. The BCMM is represented all over the jurisdiction by its twelve offices, which are in Antananarivo, Antsiranana, Sambava, Mahajanga, Maevatanana, Ambatondrazaka, Toamasina, Antsirabe, Fianarantsoa, Manakara, Toliara and Taolagnaro.

There are no overlaps of jurisdiction between the two authorities. The Ministry of Mines represents the government in administrative and governance matters, while the BCMM regulates all matters regarding mining licences and activities.

Mineral rights are granted through a mining licence under an order of the Ministry of Mines, delivered via the BCMM.

The guarantee of security of tenure in Madagascar’s mining sector is based on the principle that any mining licence or mineral rights not formally recognised and registered by the BCMM cannot be enforced.

Any mining licence holder is entitled to request a stability guarantee from the Ministry of Mines.

The length of a mining licence can vary from one to 25 years according to the category of activity (ie, the mining licence/authorisation). The terms of renewal also depend on the type of mining licence but are always reduced compared to the term and land area of the initial mining licence.

The holder of an exploration licence is entitled, at any time, to transform it into a mining licence.

The holder of a mining licence is entitled to cancel, at any time, part or all the land object of his or her mining licence.

Mining licences are modifiable and transferable, with any change related to said licence being registered with the BCMM.

The regulations for environmental protection and the licencing of mining projects in Madagascar are:

• Law No 2015-003, dated 20 January 2015, updating the Malagasy Environment Charter;
• Law No 2023-007, dated 27 July 2024, revising the Mining Code;
• Decree No 99-954, dated 15 December 1999 and amended by Decree No 2004-167 of 3 February 2004 on the environmental compatibility of investments (the MECIE Decree); and
• Interministerial Order No 12032/2000, relating to environmental protection regulations in the mining sector.

Exploration and mining project licensing are subject to environmental processes, as follows:

• compliance with environment protection regulations by mining licence holders;
• the obtainment of an environmental authorisation or licence prior to the commencement of any mining activity;
• the submission of an environmental impact assessment document (étude d’impact environnemental (EIE)) approved by the relevant environmental authority (ie, Office National pour l’Environnement (ONE)) to the relevant environmental body of the Ministry of Mines; and
• approval from the Environmental Commitment Programme (Program d’Engagement Environnemental (PEE)), the relevant environmental body of the Ministry of Mines.

The relevant bodies in charge of the approval of documents and the granting of environmental licences or authorisations are the Ministry of Environment (a national body) and the provincial director of the Ministry of Mines (a provincial authority).

In the event of breach of any environmental requirement, the environmental authority is entitled to make a request to the Ministry of Mines/Provincial Director of the Ministry of Mines for the suspension of activities.

Environmentally protected areas in Madagascar are regulated by:

• Law No 2015-005, dated 26 February 2015, recasting the Protected Areas Management Code;
• Decree No 2017-415, dated 30 May 2017, setting the terms and conditions for the application of Law No 2015-005 of 26 February 2015, overhauling the Protected Areas Management Code; and
• Law No 2023-007, dated 27 July 2024, revising the Mining Code.

These key provisions provide mining licence holders and operators with protection while performing their mining activities in three domains: protected areas, reserved areas and prohibited areas.

The Mining Code addresses potential community issues arising from mining projects. It requires that relationships with landowners or occupants be governed by negotiations, written agreements and fair compensation for damages. In cases where an amicable agreement cannot be reached, disputes are resolved through a process starting with conciliation and, if necessary, moving to amicable settlement or litigation procedures with juridical bodies.

In Madagascar, prior and informed consultation is mandatory for mining projects, particularly when they involve local communities. This process is typically led by the investor but must comply with legal frameworks that ensure the consultation is transparent and inclusive. The objective is to ensure that communities affected by the mining project are informed about potential impacts, and that their consent is sought.

The consultation involves the participation of local populations, affected parties and, where applicable, governmental bodies. The investor is responsible for initiating the consultation process, which should include environmental and social assessments as well as compensation plans.

Certain categories of communities benefit from protection regarding mining projects. For example, Law No 66-025, dated 19 December 1966 and ensuring the cultivation of agricultural land, protects farmers against immediate relocation regardless of their licence of occupation.

In Madagascar, community development agreements are typically mandatory for mining projects, as outlined by the Mining Code. These agreements are part of the broader corporate social responsibility (CSR) framework for mining companies and are tied to specific legal obligations.

Key provisions of the Mining Code include:

• local content requirements ensuring that mining companies contribute to the local economy through job creation, training and the use of local goods and services; and
• contribution to the Mining Social and Community Investment Fund (FMISC), which is intended to support local community development and environmental management projects.

The main ESG guidelines/regulations applicable in Madagascar are:

• Decree No 99-954, dated 15 December 1999 and amended by Decree No 2004-167 of 3 February 2004, on the environmental compatibility of investments; and
• Interministerial Order No 12032/2000, relating to environmental protection regulations in the mining sector.

The mining regulations also establish the ESG guidelines, requiring specification of the CSR plans of mining licence holders.

Illegal mining activities are regulated and sanctioned by the mining laws of Madagascar. Therefore, illegal mining is an issue in Madagascar; it constitutes a breach of the laws and undermines the insecurity of the Malagasy mining industry.

The Malagasy government has taken various steps to combat illegal mining. According to the Mining Code, Madagascar aims to formalise artisanal mining by providing legal frameworks for small-scale mining operations. This would allow informal miners to be integrated into the formal economy under regulated conditions, including in relation to licensing and oversight.

Enforcement measures include restrictions on illegal mining camps, seizures of equipment and penalties for those involved in illicit activities. The BCMM plays a key role in regulating and overseeing mining activities.

Mining companies often co-operate with government agencies to address illegal mining. This can include sharing intelligence, helping to monitor mining activities and supporting initiatives to promote responsible artisanal mining practices.

The following list provides good examples of environmental and community relations/consultation around mining projects in Madagascar:

• establishment of a written agreement entered into between the mining licence holders and landowners/occupants regarding their respective rights and obligations;
• obtainment of explicit authorisation, from the landowner by the mining licence holder, against adequate compensation, with respect to wood-cutting works within the mining perimeter; and
• settling disputes through non-litigious procedures prior to any referral to the relevant courts.

Bad examples of environmental and community relations/consultation around mining projects include the following:

• the mining licence holder fails to inform the landowner of the rights of the licence holder to occupy the plots covered by its mining licence;
• the mining licence holder proceeds with relocation prior to completing the payment of compensation to landowners/occupants subject to forced relocation; and
• the mining licence holder fails to repair damage to private or public areas, as well as to the environment, caused by its activities.

The Malagasy legislation approaches climate change from the standpoint of environmental protection. Initiatives affecting the mining industry in Madagascar, which must comply with environmental protection measures, include the following:

• mining licence holders are required to comply with environmental protection regulations;
• mining licence delivery is subject to the obtainment of an environmental licence/authorisation;
• eventually, new research requiring an exploration licence will also require an EIE; and
• the approval of the PEE will be required for the granting of research and mining licences.

The authors are not aware of any specific key provisions focusing solely on climate change in Madagascar.

Law No 2015-003, dated 20 January 2015 and updating the Malagasy Environment Charter, mainly establishes sustainable development initiatives. Sustainable development initiatives focus on:

• socio-economic development;
• sustainable management of the environment; and
• good environmental governance.

There are currently no Malagasy government or legislative initiatives regarding the increasing demand for the so-called energy-transition minerals, such as lithium, cobalt, rare earths and copper.

The tax system for the mining industry in Madagascar includes three main tax obligations:

• income tax;
• VAT (mandatory or voluntary); and
• specific taxes on mining activities – 5% of the value of the exporting mines (2% mining rebate and 3% mining royalties).

Several waivers are allowed for mining investors and projects. For example, equipment and tools necessary for exploration and development that are not available in Madagascar are exempted from VAT payment.

Tax stabilisation agreements are available in Madagascar. Mining companies can enter into agreements with the government to stabilise taxes and other fiscal obligations for a specified period, typically between five and ten years.

Where transfer/capital gains tax on the transfer/sale of a mining project takes the form of indirect transfer of the shares of a company that is a mining licence holder, income tax shall be applicable to the transfer or sale.

These tax levies remain applicable even if the transfer occurs through corporate structures outside the jurisdiction.

The key features in Madagascar that are attractive for mining investment include the following.

• Stable legal framework: The government has established a stable rule of law, with protections for foreign investments. Mining investments are guaranteed by clear legal structures that offer legal recourse and security. The recent overhaul of the Mining Code, along with its implementing regulations, aims to attract more investment in the mining sector. It is designed to foster a mutually beneficial partnership while ensuring social and environmental benefits. The process for acquiring mining rights is clear and well-regulated under the 2023 Mining Code. Investors must follow a transparent process to obtain mining permits.
• Mining rights and transfers: Investors can acquire mining rights, which are considered a form of property. These rights can be transferred, sold or mortgaged under the law, providing flexibility for investors.
• Support investment protection: The Malagasy government has moved to allay investor fears of any reneging of agreements by guaranteeing returns on their investments through guaranteed maintenance of the legal and regulatory regimes in force at the time of request. A “stability guarantee” is granted to any holder of a permit and is valid for a renewable period of up to five years. Permit holders can request more favourable measures that would have come about after the date of exercising the stability option. Permit holders will not, however, be allowed to derive benefits from the stability guarantee if they fail to fulfil any of the obligations or terms outlined in their mining specifications.

In Madagascar, foreign investment in the mining sector is encouraged but subject to certain regulations. The Mining Code and Investment Code set the framework for foreign participation, with the following key points.

• Foreign investment approval: While Madagascar encourages foreign investment, the government screens foreign proposals, especially in critical sectors such as mining. The Ministry of Mines and Strategic Resources is involved in reviewing applications for mining permits and other rights, and the Ministry of Industry and Commerce evaluates broader investment proposals, especially those involving foreign ownership.
• National interest and security: The Investment Code specifies that investments that could potentially affect national security or strategic resources (such as critical minerals) will be subject to additional scrutiny. The government may review any significant transactions, particularly if they relate to the ownership or control of natural resources deemed vital for national development.
• Environmental and social impact: The Mining Code requires mining projects to obtain environmental and social approval before proceeding, ensuring that the exploration and extraction of resources are in line with sustainable development and responsible mining practices. Foreign investors must meet these criteria to proceed with their projects.

Madagascar is a member of the Common Market for Eastern and Southern Africa (COMESA), with which the United States has an agreement to develop trade and investment relations. In 2017, Madagascar signed the Tripartite Free Trade Agreement (TFFA) in association with the East African Community (EAC), COMESA, and the Southern African Development Community (SADC). Madagascar is one of the signatories to the African Continental Free Trade Area (AfCFTA) but is one of the few countries that has still not ratified the agreement. The AfCFTA came into force on 1 January 2021, ratified by 36 countries.

According to the UN Conference on Trade and Development (UNCTAD), Madagascar has concluded nine bilateral investment treaties (BITs) – with the Belgium-Luxemburg-Economic Union, China, France, Germany, Mauritius, Norway, South Africa, Sweden and Switzerland – and five treaties with investment provisions (the COMESA EU Economic Partnership Agreement (EPA), the COMESA Investment Agreement, the COMESA US Trade and Investment Framework Agreement (TIFA), the Cotonou Agreement and the COMESA Treaty).

As a member of the African, Caribbean and Pacific Group of States (ACP), Madagascar signed the interim Economic Partnership Agreement (APEi) with the EU in January 2013 to ensure easy access to the EU market and obtain progressive tariff reductions. In reciprocation, European goods, except certain specified ones, are now entering Madagascar without payment of any duty.

The main sources of finance for exploration, development and mining in Madagascar include the following:

Private Investment

Domestic and foreign direct investment (FDI): Private investors and multinational mining companies are major sources of funding for exploration and mining activities. Madagascar’s 2023 Mining Code and Investment Code encourage foreign investments by offering incentives such as tax reductions and guarantees against expropriation.

Mining Royalties and Partnerships

Public-private partnerships are commonly formed between the government and private entities for mining projects. Mining royalties contribute to the funding of exploration and development phases.

International Financial Institutions

Organisations like the World Bank, the African Development Bank (AfDB), and other development banks provide loans and grants for mining projects that promote sustainable development and environmental management. For example, Madagascar’s involvement in the EITI supports transparency in resource management, increasing confidence among international lenders and investors.

Madagascar lacks a robust domestic securities market dedicated to mining finance, unlike countries with established mining exchanges like Australia and Canada. However, international securities markets play a critical role in financing exploration, development and mining activities in Madagascar.

Under Madagascar’s 2023 Mining Code, mining tenements and related assets can be used as collateral to secure financing for exploration, development and mining activities. The law explicitly allows the creation of security interests over mining rights to facilitate financing, provided such arrangements comply with the regulations issued by the BCMM, which administers mining permits.

The new Mining Code focuses on the improvement of investment and activities in mining rather than the environmental aspect. Therefore, initiatives towards energy-transition minerals or carbon net zero are not included in the Code.

With that said, the new Mining Code still dedicates an entire chapter to environment protection, detailing the requirements that mining licence holders must adhere to. In addition, Interministerial Order No 12032/2000, relating to environmental protection regulations in the mining sector, includes provisions regulating conflicts between the impact of mining projects and environmental protection.

As the current legislation regulating the mining sector (ie, the new Mining Code and its implementation decree) represents the latest legislation (updates in 2023 and 2024), there is no expectation of any imminent changes.