Madagascar Loi n° 2023-007 — Refonte du Code Minier (Mining Code overhaul; raises royalty to 5% and modernises permit, environmental and fiscal framework)

Mechanism

The 2005-021 Code Minier had governed the sector for nearly two decades; persistent investor uncertainty and a years-long licence moratorium created political pressure for a comprehensive recast. Loi n° 2023-007 was adopted by the Assemblée Nationale in mid-2023, declared constitutionally compliant by the Haute Cour Constitutionnelle in Decision n°07-HCC/D3 of 25 July 2023, and promulgated by the President of the Republic on 27 July 2023.

Headline mechanics:

• Royalty (Article series on redevances/ristournes) — total

ad-valorem royalty rate raised from 2% (under 2005-021) to 5% on extracted substances, comprising: - 2% ristourne minière earmarked for local communities / decentralised collectivities, and - 3% redevance minière accruing to the State. Where products are processed (transformed) domestically, a 30% reduction is applied to the 5% rate — explicit fiscal incentive for in-country value addition.

• Environmental, health and safety chapter — first dedicated

chapter in the mining code addressing environmental impact, rehabilitation obligations, occupational health and safety, and community-impact management.

• Permit regime — tightened procedures for issuance of

research, exploration and exploitation permits; revised regime for small-scale and artisanal operations; modernised cadastre interaction with BCMM.

• Customs, fiscal and foreign-exchange provisions — modernised

alignment with current customs and exchange-control architecture, closing gaps from the 2005 framework.

The Office Malgache des Mines (OMNIS) and the Bureau du Cadastre Minier de Madagascar (BCMM) operate as the principal administrative counterparts; an official English translation was published by BCMM in August 2025, signalling Madagascar's intent to court foreign investment under the new framework.

Downstream implications

• First Madagascar entry in the IPTM register. Madagascar holds

~100 kt cobalt reserves and ~26 Mt graphite reserves (4th-largest graphite holder globally), with operating anchor projects: - Ambatovy (Sherritt / Sumitomo / KOMIR — nickel-cobalt HPAL), - QMM Fort-Dauphin (Rio Tinto — ilmenite/zircon), - Molo / Green Giant (NextSource Materials — graphite), - Toliara mineral sands (Base Resources → Energy Fuels in 2024). Plus emerging REE, vanadium and nickel pipelines under junior developers.

• Fits the "EM resource nationalism" template — joins Indonesia

(hilirisasi), Tanzania (Written Laws No. 4/2024), Kenya (LN 106/2024), Egypt (Law 87/2025), Zimbabwe (raw-lithium ban series) and DRC (cobalt quota system) in restructuring fiscal and value-chain terms during the 2023-2026 critical-minerals cycle. The 30% in-country-processing royalty reduction is a cleaner, more transparent value-add lever than outright export bans — closer to Tanzania's beneficiation incentives than to Indonesia's nickel-ore prohibition.

• State participation — Madagascar's prior Code Minier did not

impose mandatory state equity; some commentary on Loi 2023-007 references a "free state participation" element, but the precise legal provision and whether it operates as a default carry across all exploitation permits or only on negotiated large-scale projects is unclear from public summaries (see Open questions).

• Repricing pressure on existing project economics. The

effective tripling of the State-accruing royalty share (from 2% → 5% gross, before the 30% domestic-processing rebate) is material for marginal-cost mines but manageable for tier-1 assets. For Ambatovy — already operating below break-even at current LME nickel prices — the change adds incremental fiscal burden that interacts with the project's restructuring in 2024.

• Africa Mining Vision alignment. The 5% royalty / domestic-

processing-rebate structure aligns Madagascar with the AU's African Mining Vision template and is a step toward fiscal parity with Tanzania, DRC and Zambia critical-minerals codes.

Open questions

• Mandatory free state equity — whether Loi 2023-007 introduces

a generalised "free 10% non-dilutable" carried interest for the State across all exploitation permits (as the consolidation rationale suggests), or whether state participation remains case-by-case on a project-by-project negotiated basis as under the 2005-021 framework. Public summaries diverge.

• Royalty-base methodology — whether the 5% rate applies to

gross sales value at export parity (Tanzania/Kenya pattern), to mine-mouth value (older Madagascar convention), or to a hybrid; this materially affects the take from low-grade nickel and graphite operations.

• Implementing decrees (décrets d'application) — the law is the

framework; many fiscal, environmental and small-scale-mining parameters are deferred to implementing decrees. Track which decrees have been issued by the Ministry of Mines since July 2023 and what they specify on rehabilitation guarantees, artisanal-permit thresholds, and community-fund governance.

• Treatment of pre-existing 2005-021 permits — transitional

provisions for permits issued under the old code (whether they benefit from grandfathering on the 2% royalty until renewal, or whether the 5% applies immediately to all extraction post-2023-07-27).

• Stability clauses — whether large-scale conventions (Ambatovy

Investment Agreement, QMM convention) include fiscal-stability clauses that insulate them from the new royalty rate, and what the State's renegotiation posture is.