| CAPE TOWN
CAPE TOWN Feb 4 Ivory Coast is no longer
considering a proposed windfall tax on gold mines and will
instead focus on adjusting royalties and revising the mining
code to increase state revenue, the head of Randgold Resources
Ivory Coast's government in September adopted a new tax on
so-called super profits from gold, seeking to capitalise on
current high gold prices to help fund reconstruction following a
decade-long political crisis.
Mining companies were quick to criticise the move, however,
claiming they were not consulted beforehand. The government had
said the tax was not negotiable, though the rate could be
"That is off the table; it has been sent back to the
Ministry of Mines. This week we have got to numbers that are
workable," Randgold Chief Executive Mark Bristow said in an
interview on Monday, declining to give further details.
The new tax was to be levied on profits above a
government-fixed estimated production cost of $615 per ounce,
with the rate dependent upon the world price of gold, according
to the text of the law, which was passed by parliament in
Companies would have paid 17 to 20 percent of revenues above
the estimated cost level with gold prices between $1,600 and
$1,800 per ounce. Above that range, the rate rose by 1 percent
for each $50 increase in the gold price up to a maximum rate of
50 percent. Below $1,600, it fell by 1 percent per $50 decrease.
"There will be an adjustment on royalties, and there is a
review of the code, but the guidance is that what comes out has
to put Cote d'Ivoire at the top of the competition ranks,"
Randgold, a member of Britain's FTSE 100 index,
operates the Tongon mine in Ivory Coast, 55 km south of the
border with Mali.
Australia's Newcrest Mining and Canada's La Mancha
Resources also 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 tax increase in the West African nation follows a series
of similar moves by other African countries to boost their share
of mining revenues as companies move in to develop the
continent's enormous potential.
The Democratic Republic of Congo, where Randgold is building
the Kibali mine, has said it is seeking to raise its stake in
new projects to 35 percent from 5 percent under a revised mining
"The 35 percent as a number is not significant, as long as
you have someone to fund it. If you expect the mining industry
to fund it, that is a real issue, as all you do is lift the
hurdle rates - and the people who suffer are those in the
country," Bristow said.
"There are many projects that won't work, projects that will
start and not deliver."