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Senegal’s mining potential

How the mining sector can become a “pillar of Senegal’s development”.

Senegal’s extractive sector contributed almost USD 90 million to the government in 2013, according to the country’s first EITI Report, published in October 2015. The oil and gas sector contributed nearly USD 7 million and the mining sector over USD 80 million. The report names Senegal as a world leader in the production of phosphates with an annual production of 1.4 million tons, but it also reveals a missed opportunity in revenues from minerals that remain underground. Harnessing the potential of this sector in his country, Senegalese President Macky Sall declared that “mining will be one of Senegal’s pillars of development”.

Untapped potential

Gold production at the Sabodala mine reached six tons in 2013, though the reserves for this mine in south-eastern Senegal could surpass 46 tons.

The south-eastern part of the country is also rich in iron with the Falémé site holding an estimated 750 million tons of iron reserves. Annual production could be in the realms of 25 million tons, but disputes between the government and companies has hampered production.

In the vicinity of the nation’s capital, deposits of heavy minerals could generate, over the next 25 years, an annual average of 570,000 tons of ilmenite and 95,000 tons of zircon. This would put Senegal in the category of the world’s leading producer of these minerals.

Striking the balance

New legislation to increase the contribution from mining companies is being considered. The 2013 EITI Report notes that Senegal’s current mining code exempts companies in the exploration phase from taxes, and from paying customs on equipment, supplies and imported petroleum products used in exploration.

President Sall told Bloomberg during an interview in January 2014 that one of his aims was to “lure more investment in mining to help its economy expand at an average rate of seven percent for a decade”. He reinforced the commitment of his government to “put all the conditions in place to attract companies, have an adequate working environment, a renewed mining code”.

The EITI Report notes that proposed revisions to the mining code include moderate increases in royalties, and the introduction of a tiered tax system based on the price of minerals and the level of local processing. Other changes will include the introduction of a “take it or lose it” clause requiring mining license-holders to extract minerals in an effort to curb speculation, and provisions aimed at promoting the use of local goods, services and staff.

Senegal joined the EITI in October 2013 and this first report presents a picture of the contribution of extractive sector to the economy. It also provides recommendations to address some of the challenges around collecting reliable data about the country’s extractive sector. These include engaging the Ministry of Economy and Finance in providing certifications for the quality of EITI data, developing an online petroleum cadastre, and engaging extractive industry companies to ensure more complete EITI reporting.