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The realities of the Mining Sector in Madagascar

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Speculation is the reason cited by the Administration as the reason for the freezing of mining permits. The Minister in charge of Mines has also confirmed that more than 4,000 exploration and exploitation permits combined were issued by the Ministry in charge of Mines but that only 2,000 permits pay royalties and taxes from the State. . The Administration has all the prerogatives necessary to deal with such a situation. Indeed, articles 172, 178 and 199 of the Mining Code in force clearly stipulate that in the absence of payment of administration fees, rebates or mining royalties, the State must proceed to the cancellation of the corresponding mining license after exhaustion of legal procedures. After eight years of blocking, the Administration should be over this speculation. No tangible measure for the remediation of mining permits is currently applied. Freezing is not a solution to this phenomenon.                            If by speculation the Administration intends to grant mining permits without conducting research, Article 52-1 also gives the State the prerogative to renew or transform only half of the initial size of the perimeter. The decree implementing the Mining Code also provides in article 280 that "Every mining permit holder must submit within the month following the end of each fiscal year to the Interregional Directorate of the Ministry of Mines concerned a report of activities in three (3) copies showing in particular: the progress of the work; the results of the research; the workforce employed; the tonnage extracted, processed or sold ... ". These provisions already make it possible to distinguish license holders who do not comply with their specifications.                                                                                                                                                                                                                                                                                              If the State considers as speculation the transfer of mining licenses between the investors then one must understand that this is a current and international practice in the life cycle of an industrial mine. Each phase of a mining project involves different experts, research techniques and investors. Investors are positioned in the development chain of projects according to their expertise and the resources they have:. A good number of companies carrying out exploration activities and pre-feasibility studies that are financed mainly by equity issues on the stock market. The purchasers of these shares are usually individuals. At this stage, the risk of never being able to highlight economically exploitable mineral reserves is very high. Depending on the results, these companies may decide to stop the project or transfer it to another one that may have the resources to continue the exploration activities. If the findings of the research are relevant, these companies could give up their project or create partnerships with other companies that have the necessary skills and financial capabilities to enter the development phase of the project.