Big mining projects: no contract to be renegotiated

Minister Mamy Ratovomalala would have another strategy to increase state profits related to Sheritt International’s exploitation of nickel and cobalt. “Renegotiating the mining code has been through our mind”, he conceded while specifying the ultimate goal of boosting state royalties. “State owed royalties are a small part of the business’ benefits”, explained the minister. In a project of that size, various other taxes are more interesting as the revenue and benefit taxes (IRSA) “. The temptation is huge since the Ambatovy project has provided the malagasy state with merely about 100 millions US dollars.

The strategy of the state would, therefore, pledge a larger flow of cash without altering the big investors’ contracts, particularly those of Sheritt international and QMM exploiting in Taloagnaro. “Altering contracts could deter investors and jeopardize the country’s mining potential”, emphasized the minister. Mamy Ratovomalala is capitalizing the HAT’s umpteenth U-turn from Andry Rajoelina’s promises. “This change is not easy at all “, he added while outlining that the best strategy would be a bilateral renegotiation of partnership case by case.

“Reassuring investors is paramount”, justified the minister. Although contract renegotiation is not being ruled out, the ministry is striving to make a face of stability up. Mamy Ratovomalala reported that the Ambatovy project failed short from being suspended in February 2009 due to technical reasons. Sheritt international is on its way to complete the installation of its structure. The exploitation phase could begin by the end of 2010. And exports would follow suit.

Sheritt International is intending to invest 4 billions of US dollars in the extraction of nickel and cobalt from Ambatovy. The worldwide proliferation of the cell phones is a significant boost making this project even more lucrative, since nickel and cobalt are commodities to the production of cell phones’ batteries. For 20 dollars per pound, it represents a genuine gold mine. The Malagasy state is expected to collect 1,7 billion US dollars from this Eldorado. Socially speaking, job creation is following suit: some 10 000 employees are working for Sheritt in the installation phase. During the exploitation phase, 1 300 employees and workers will run the mining process. 85% of the staff are made of Malagasy nationals.
The authorities’ promises to run the big mining projects dry seem history now. The minister in charge insured the big investors that no contract renegotiation is being scheduled any more. In 2009, the urgent needs to fill up state chesses, and state propaganda, were the incentives for this arbitrary and anti trade idea. Nothing has come true, at least nothing official. On the other hand, another kind of direct contribution from these big mining corporations would have been solicited. The big mining projects are not very high in popular charts because of their induced nasty local inflation. The surrounding population is suffering from their presence rather than benefiting from it.