Madagascar has extensive deposits of minerals and produces nickel, chromium, cobalt and ilmenite. Its lateritic nickel mining, run by the mining company Ambatovy, ranks among the largest in the world. In 2018, Madagascar’s mining sector accounted for 4.6% of GDP, 4.4% of total government revenues, and 28% of total exports. The country is also considered to be a new frontier for oil and gas prospecting, but oil exploration remains limited.
In addition to the share of the extractive revenues transferred to local communities, the population is concerned by the environmental impact of the sector on the island's unique biodiversity. Madagascar has been using the EITI process to shed light on revenues collected by the government and to provide visibility on the mining sector, including estimates of much government revenue might be lost through illicit gold exports. EITI reporting has also helped strengthen extractive sector governance through disclosures on license allocation and subnational transfers. EITI-Madagascar aims to further improve contract transparency, environmental reporting and systematic disclosure of extractive sector data.
EITI reporting has influenced the government’s decision to implement reforms to formalise the gold sector and increase government revenues.
To clarify contradictions in the disbursement of payments to local communities, EITI-Madagascar carried out a study on subnational payments and transfers in the mining and oil sectors. In the absence of regulation, it was unclear how much each commune should be receiving, with mining company Ambatovy accumulating over USD 18 million in non-disbursed revenue transfers between 2012 and 2018. EITI-Madagascar played a key role in informing mayors and citizens and promoting debate on the necessary regulations, until enabling legislation was passed in 2018.
In 2015, EITI-Madagascar conducted a study on mining titles at the Mining Cadastre office of Madagascar. Concrete recommendations from the study led to the nomination of a new director and the official publication by the Ministry of Mines of criteria for assessing bids of approximately 4000 pending permits. The study was updated in 2017.
Extractive sector data
Production and exports
Top paying companies
Extractive sector management
Tax and legal framework
Madagascar’s extractive industry is mainly regulated by the Mining Code and the Petroleum Code, as well as their respective application decrees. They determine the rights of subsoil use, how to obtain them, and rights and obligations of the engaged parties and government authorities. Other laws on environment, labor and land also contain provisions on extractive sector management.
Companies that are regulated by the Mining Code or the Petroleum Code are subject the General Tax Code. The Law on Large Scale Mining Investments in Madagascar establishes a special regime – including tax provisions – for mining investments amounting to more than USD 12.7 million. Ambatovy is currently the only company to be subject to this law.
The extractive industry is regulated by the Ministry of Mines and Strategic Resources, which develops state policies in the mining sector and ensures compliance with these policies. The Ministry of Economy and Finance, which includes the Revenue Authority and the Customs Authority, oversees the implementation and application of the tax policy.
Licenses and contracts
Madagascar mining cadastre office, BCMM, grants subsoil use rights and manages mining licenses. New licenses are normally issued on a first come first served basis. However, the issuance of new licenses in the mining sector has been suspended by the government for several years. The list of licensees is available on BCMM’s website.
Madagascar national mining and petroleum office, OMNIS, regulates the upstream oil sector. On behalf of the government, it also signs product sharing contracts with oil companies by mutual agreement. Contract templates are available on OMNIS’s website.
Madagascar does not have a legal framework mandating the disclosure of beneficial ownership in the extractive sector. In October 2018, the EITI multi-stakeholder group set up a committee to implement its beneficial ownership roadmap. In 2021, a draft decree mandating the establishment of a public beneficial ownership register was submitted to the government.
Beneficial ownership data is currently disclosed through EITI Reports for beneficial owners that own or control at least 5% of extractive companies, in accordance with the materiality threshold agreed by the EITI multi-stakeholder group. Only four companies reported beneficial ownership data in the 2018 EITI Report.
EITI-Madagascar has been closely tracking the disbursement of extractive revenues to local communities, especially those impacted by the largest mining project in the country, Ambatovy. The Mining Code distinguishes two types of mining royalties: redevances, which amount to 0.6% of the price of the mineral commodity, and ristournes, which amount to 1.4% of the price of the mineral commodity.
Redevances royalties are distributed as follows: 65% to the central government’s general budget; 15% to the Gold Agency; 10% to the cadastre office and control/inspection entities; 10% to the National Mining Committee.
Ristournes royalties are distributed as follows: 10% to the National Equalisation Fund; 90% to local government units, of which 10% are allocated to provinces, 30% to regions and 60% to municipalities.
Royalties from the oil sector are distributed as follows: 50% to OMNIS; 50% to the central government and local government authorities, however the exact distribution is not specified.
EITI-Madagascar is administered by the Madagascar Multi-Stakeholder Group (MSG), also known as the Comité national. The MSG is chaired by the Ministry of Mines and Strategic Resources. It is comprised of representatives from government, industry and civil society. The EITI Champion is the current Minister of Mines and Strategic Resources ad interim and current Prime Minister of Madagascar, HE Christian Ntsay.
Madagascar was found to have made meaningful progress in implementing the 2016 EITI Standard in June 2020, following its second Validation. The Validation identified eight corrective actions to be addressed by the country’s next Validation, which is expected to commence in April 2023.