Gold-producing companies in Ivory Coast may have to shut down operations in the West African nation if parliament approves a proposed tax on profit, according to Nouho Kone, head of a miners’ group.
A tax of 9 percent to 19 percent on profit “is not reassuring,” Kone, head of the Professional Group of Miners in Ivory Coast, said in a phone interview today from Abidjan, the commercial capital. “The worst-case scenario would be to see companies shut down their mines in the short term.”
Kone is country manager for Endeavour Mining Corp. (EDV) Newcrest (NCM) Mining Ltd. and Randgold Resources Ltd. (RRS) also operate gold mines in Ivory Coast, the world’s biggest cocoa producer. The country is looking to earn more from gold after prices rose 8.6 percent this year amid continued economic uncertainty in Europe and a slower-than-expected recovery in the U.S. Spot prices were little changed, gained less than 0.1 percent to $1,700.15 an ounce by 9:02 a.m. in London.
The plan was adopted by the parliamentary Economic and Financial Affairs Commission last week and lawmakers will vote on the tariff this month. Gold miners want the text modified before adoption, Kone said.
The tax will be collected on gold-mining profit above an average production cost calculated at $615 an ounce in the first quarter of this year, according to Moussa Toure, a spokesman for National Assembly President Guillaume Soro.
This doesn’t reflect actual production costs, which are currently between $1,000 and $1,200 an ounce, Kone said.
“This cost is largely debatable,” he said. “We think it is normal that the government wants to earn more from gold, but our costs of production have also risen.”
Melbourne-based Newcrest, which owns the Bonikro mine in Ivory Coast, has also expressed concern to the government over the profit tax, spokeswoman Kerrina Watson said by phone today. The company has no plans to shut down its operations, she said.
The government will earn 44.3 billion CFA francs ($87 million) in revenue from gold mining this year, more than double an earlier forecast of 21 billion francs, according to a document e-mailed by government spokesman Bruno Kone in September.
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