Interview with the Minister of Mines and Strategic Resources, Fidiniavo Ravokatra, who is in charge of a key sector for the economic development of Madagascar, a country with great geo-diversity and very significant mining potential.
Will the revision of the mining code lead to stricter market access conditions for investors?
The reform of Madagascar's Mining Code is not a new vision; the previous law, dating from 1999 and amended in 2005, stems from the observation that the mining sector was not contributing its fair share to the national economy. Thus, public and political perceptions led to this reform, aimed at achieving equitable benefits for the sector. Its purpose is not to impose stricter regulations on investors, but simply to ensure that Madagascar is not disadvantaged. The process of reaching a compromise with investors, the local population, and the Malagasy government has been underway since March 2020. The pandemic unfortunately halted our work, but we were able to resume in August. The establishment of a committee to reflect on and draft the Mining Code demonstrates our commitment to an inclusive and participatory approach. Within this committee, five entities are represented: large mines, represented by the Chamber of Mines which includes major investors; national operators working in artisanal mines; civil society; labor unions; and the government. We hold weekly meetings to consider everyone's interests, find compromises, and also to solidify the mining sector's contribution to economic development and Madagascar's emergence. Fortunately, this committee works by consensus, and we are nearing the end of the process, with the legal experts currently drafting the text. The preliminary draft of the mining code should be adopted during the parliamentary session in May-June 2021. It is therefore imminent.
Is graphite the new black gold for Madagascar?
Indeed, demand is strong on international markets because graphite is used in new technologies. Madagascar is among the top 10 producing countries. Currently, several projects are emerging in the exploration and research phase, demonstrating that it is indeed a new black gold. However, we must see how these projects will turn out. Companies must present solid feasibility studies, allowing us to assess their professionalism, before entering the exploitation phase. In Madagascar, when a research permit (RP) is obtained, there is a tendency to rush through the exploration phase without properly estimating reserves or developing the necessary infrastructure. The professional junior companies that now hold exploration permits are very well-developed, and I am closely monitoring the progress of their projects. Graphite is certainly one of the most promising substances in Madagascar's mining sector.
What is the future of the gold mining industry?
This sector has long had an endemic problem with the low quantity officially recorded at the Ministry of Mines.
If we look at the statistics, we were at around 3 tons of gold in 2018. This dropped to 2.4 tons in 2019 and to 1.93 tons in 2020. The reason for this decrease in recorded quantities is clear. In 2019, we began streamlining the gold sector, starting with the reference value used to calculate export fees, since the base was almost 501,300 tons of the value of gold on the international market. So we adjusted the value. The line between formal and informal activity is very thin; perhaps this streamlining caused some exporters to withdraw. However, in 2019, the ratio in terms of export value was higher, even though the quantity had decreased. In 2020, with the officially recorded quantity, the amount of foreign currency due to the State from exports was estimated at $280 million. However, only 11 TP3Ts were repatriated to Madagascar. In September 2020, the government therefore decided to suspend exports. Alongside this restructuring of the sector, we established national gold reserves at the Central Bank, which was then able to purchase gold. There is still a long way to go to produce semi-finished ingots of monetary quality, but the fact that the Central Bank can buy gold from formal suppliers projects a positive image of the entire supply chain. This gold reserve fosters both traceability and hope for medium-term monetary policy.
Gold acquisitions are set to increase. While we initially planned to reach one ton by the end of this year, we should achieve that target very soon, given the enthusiasm of operators to sell their gold to the Central Bank. In Madagascar, we do not yet have large-scale mechanized mining operations; 1001,000 of our gold production is artisanal.
How do you plan to improve the small-scale mining and informal sectors?
While most of these operations currently operate in the informal sector, we aim to formalize them without resorting to repression. Most of these small mines are located in very remote, rural areas. We want these communities to improve their lives by cultivating their land. Changing perceptions means making these small mines genuine drivers of development in these rural areas. We want to control the value chain by first conducting a census of all national operators. This database can be created by working with local authorities, the ministry's regional services, and the municipalities.
For improved traceability, we will provide identification cards to identify them. We can then register them as employees in the formal sector. These operators do not have health insurance. We can consider them as artisans and provide them with social security coverage for healthcare costs. The number of small-scale operators is estimated at 500,000. Conducting this census, which will allow us to register them within the formal sector, is a real challenge. We will then encourage them to form groups or associations to facilitate technical support and ensure traceability of their products. We have already implemented local management through Mining Administration Offices. The regional mining directorates in the former provincial and regional capitals are still too far removed from rural areas. We have therefore decided to establish Mining Administration Offices in mining districts. They will provide the services that users expect from our mining administration, namely the Ministry, the local branch of the National Gold Agency, the local branch of the Mining Cadastre Bureau, and the local branch of the Mining Police. This strategy will support small-scale mining producers in the various municipalities.
What role does the Mining Business Center (MBC) play?
The Madagascar Mining Centre (MBC) is an offshoot of the mining cadastre. Inaugurated in 2017, it was born from the idea of having an infrastructure worthy of the mining sector. Madagascar lacked a platform for national or international events in the extractive sector. To enhance this investment, we installed a Madagascar Mining Gallery within it in 2019, showcasing all the varieties of stones found in our subsoil. This space is dedicated to tourists, who can also purchase stones there, with the necessary formalities completed. Also located within the complex is the Madagascar Lithotheque, comprised of rock and soil samples donated to us by the French Geological Survey (BRGM). Collected over 70 years, this geological heritage is thus being promoted. We encourage geotourism in this location, strategically situated near the airport. The Geology and Gemmology Bureau of Madagascar (BGGM) will also be establishing itself there. It will process geological data and develop the gem industry by establishing the Madagascar Label and, in the medium term, organizing large-scale events. We want to make the MBC the showcase for this sector.
How do you manage the environmental impact of mining?
The existing provisions, the current legal and regulatory framework for sustainable development, and the environmental charter are crucial as they govern the compatibility of mining projects with the environmental charter. For the mining sector, this is a cross-cutting and integrated aspect. Before granting a mining permit, the Ministry requires, upstream, a mining specifications document outlining all the environmental, social, financial, and economic procedures necessary for evaluating the project. This specifications document will be linked to the environmental permit application because, in Madagascar, no mining activity can begin without two documents: the mining permit and the environmental permit. To obtain the latter, an environmental and social impact assessment of the project is required. This is a complex process involving a study of all environmental aspects and integrating the human dimension through a participatory approach with the local population. A report with the community is required to ensure the project's social integration. The economic and social actions to be undertaken in the village, the municipality, the region, and even at the national level for large-scale projects, must be detailed. This is then evaluated by inter-ministerial committees under the auspices of the National Environment Office. These requirements don't stop there, as after a favorable opinion, and during project implementation, semi-annual or annual monitoring is carried out by the inter-ministerial committees. Every investor in the mining sector must therefore strive to manage the environmental impact. With regard to the numerous small mines, it is more difficult to hold them accountable for the environmental and social impact. We are therefore developing another strategy for small operators in collaboration with NGOs.
To conclude this interview, I would like to address the issue of child labor, particularly in the mica mines in the South. This region suffers from recurring food insecurity and water shortages, but this cannot justify child labor in the mines. We have therefore developed a government action plan. The United States has also allocated a fund of $4.5 million, managed by agencies and NGOs, to combat child labor. This fight is a priority for the government, and technical partners have joined this effort.