The Republic of Mali, like many African countries with significant mineral resources, has introduced laws aimed at enhancing participation by Malian citizens in ownership, supply of goods and services, and employment in the mining industry, including through service providers.
Following the introduction of the Local Content Act (Local Content Act), the Republic of Mali published a Decree on 9 July 2024 (Decree) in terms of which the Local Content Act became applicable to the mining industry (mining operators and mining service providers).
Like the South African Mining Charter, the Decree read together with the Local Content Act addresses ownership of companies that are “mining operators” and “subcontractors” (Mining Service Providers). Mining Service Providers that provide services to mining operators (Mining Operators) in the Republic of Mali will, going forward, require 35% Malian ownership (by a Malian company which is defined to mean a company in respect of which 51% of the shareholding is held by Malian citizens).
Unlike the South African Mining Charter, the Decree read together with the Local Content Act does not contain the same level of detail regarding the employment of Malian citizens, and the level of procurement in relation to goods and services from Malian companies. A further Inter-Ministerial Decree is needed to provide this level of detail, and Mining Operators and Mining Service Providers will be required to prepare a plan for implementation, which will be submitted to the regulator, the SPCL, which will guide and enforce compliance with the Local Content Act read with the Decree.
Mining Operators and Mining Service Providers that do not comply with the Local Content Act and Decree will not be able to participate in the Republic of Mali’s mining industry in future.
Importantly, there is no “grace period”, and, technically, Mining Operators and Mining Service Providers will be required to comply with the relevant provisions regarding ownership and related aspects with effect from 9 July 2024. The only transitional arrangement is that where Mining Service Providers have entered into a current contract to provide goods and services, it is not necessary for the Mining Service Providers to comply with the provisions of the Local Content Act and the Decree, for a period of three years (or a shorter period if the contract expires within three years from 9 July 2024). Either at the expiry of the current contract, or the three-year period (whichever is applicable), the Mining Service Providers will need to comply fully with the provisions of the Local Content Act before they can participate in requests for tender and be awarded contacts to provide goods and services to the mining industry in the Republic of Mali. Going forward, a government portal will be used, for the award of contracts to the mining industry (subject to certain exceptions). Mining Operators and Mining Service Providers are therefore required to register on the portal and provide information regarding the ultimate beneficial owners (to verify whether the Mining Service Provider is a Malian company or has 35% Malian ownership).
The Decree makes provision for various offences and penalties for non-compliance, and Mining Service Providers that are currently, and intend providing goods and services to the Malian mining industry, will need to prepare an implementation plan, for approval by the SPCL in due course, to avoid these adverse consequences.
The Decree has changed the landscape of the mining industry in the Republic of Mali, and any foreign companies doing business in Mali, will need to carefully consider the content of the Local Content Act and the Decree to ensure the ability to continue doing business in the Republic of Mali.
Disclaimer: This article is provided for informational purposes only and is not intended to serve as legal advice. Readers should consult one of our legal professionals for advice tailored to their specific circumstances.