Mining in Chad

Chad has had very little development of its mining and exploration sector. However, studies conducted by the United Nations Development Program and the Chad Direction de Recherches Géologiques et Minières (DRGM) have outlined several areas which are highly prospective for gold, bauxite, uranium, silver and alluvial diamonds. The 1995 Mining Code is intended to lure foreign investment to Chad.

Identified greenstone belts are located in the southwest of the country and include the Mayo Kebbi belts (containing the Lere, Mourbame and Pala areas). Gold has also been found in the Quaddai region (including the Am Ouchar, Ade, Ardelik and Goz Beida areas). These regions have been likened to the gold bearing Birimian rocks of West Africa. Alluvial gold is mined (producing about 4000 oz gold in 1999) along the Mayo N'Dala river, where a substantial alluvial deposit exists estimated at hosting several tons of gold. Afko, a South Korean company has opened Chad's first gold mine that is located at Pala, approximately 300km south of the capital, N'Djamena. It is also proximal to the major Doba oilfield development, currently being undertaken by Exxon, Petronas and Chevron. It is not known what the mine's output is likely to be.

Due to the extremely arid nature of the Sahara region, conventional stream sediment sampling is made very difficult.

Alluvial diamonds have been reported from the Quaddai, Biltine, Guera and Baibokoum areas.

Bauxite reserves have been identified at Koro, located northeast of Moundou in the south of Chad. Ore reserves estimate 7Mt grading at 57% Al2O3.

Other commodities include silver (at Ofoni), wolframite (at the Yedri Massif in Tibesti), uranium (at Mayo Kebbi and Tibesti) and titanium at the Guera Massif.

Mineral Policy And Legislation

The Ministry of Mines, Energy and Petroleum

The mining sector in Chad is under the responsibility of the Ministry of Mines, Energy and Petroleum, which has several divisions, and of mixed companies under the control of the State. The part of the ministry which oversees activities related to minerals and energy is the Direction Générale, which itself has three components, one each for petroleum (Direction du Pétrole), energy (Direction des Energies), and mining and geology (Direction des Mines et de la Géologie).

Division of Mines and Geology (Direction des Mines et de la Géologie – DMG)

The DMG has a multifunctional role: it manages and implements Chad’s mineral resources policy, manages the mining sector, oversees the exploration and mining activities, and develops strategies for the development of the mining sector. The DMG has three departments (Services), for Geology (Service Géologique), for mines (Service des Mines) and for geochemical analyses (Laboratoire d’Analyses Géochimiques). It also serves as a host organisation for partners, whether they are private or represent international aid organisations or national co-operation organisations. Thanks to the support of UNDP, the DMG also serves as an intermediary for investors. At present, it is well equipped in vehicles and logistics support, a drill rig, a geochemical analytical laboratory (soils, rocks), a petrographic laboratory, as well as a modern documentation and mapping department. Its personnel is trained in field prospecting and exploration techniques, and in data collection, processing and interpretation, which gives them the tools required to fulfil their mandate.

Legal framework for mining related activities

In Chad, the mining legal framework is the same as that of the industrial sector in general, which falls under the following laws:

• the Investment Code (Ministry of Commerce and Industrial Promotion)
• the General Tax Code (Ministry of Finance)
• the Customs Code (Ministry of Finance and Information)
• the Labour Code (Ministry of Public Service and Labour)
• the Environmental Code (Ministry of the Environment and Tourism)

In addition, to be consistent with changes that have occurred in the international mining industry and with the firm intent to involve foreign investors in the development of the country’s mining sector, Chad aims at developing this economic sector. A new Mining Code for Chad has been drafted in June 1995 to replace the 1970 code. The new legal framework encourages the development of a competitive mining sector. Its objective is to attract foreign investors to develop the country’s mining industry. From a legal viewpoint, there is a distinction between ‘various materials’ and ‘mining substances’ (previously named ‘quarry materials’ and ‘concession substances’). Exploration and mining activities for mineral substances are controlled by permits and legal titles, which include:

Permit Type	Artisinal Mining	Prospecting	Small Mine Exploration	Mining of Various Materials	Exploration	Exploitation
Purpose	gold mining	Non exclusive prospecting	mining of all types of deposits	open pit mining of `´	all types of exploration work	mine development including facilities
Average Property	alluvial or elluvial pty	surface work	artisinal mining	property involved	between 25 and 200 km²	previously explored property
Validity	2 years, renewable	1 year, renewable	2 years renewable	5 years	5 years, renewable 2 x	25 years renewable until exhausted
Delivery by	Dir. of Mines	Dir. of Mines	Dir. of Mines	Dir. of Mines	Dir. of Mines	Dir. of Mines
Notes	for citizens or groups of `´	does not give priority for other permits	for citizens or groups	has short term arrangements for short term operations	exclusive right for mining permit on same property	environmental and social impact studies required; can exceptionally be awarded w/o previous exploration permit

Note: In order to obtain a permit or a mining title, one must have created a Chadian company.

Fiscal Regime And Commercial Legislation

Exemptions from taxes and duties

Permit holders, their suppliers and associates are subject to the Customs Code, unless special terms are set by a Mining Agreement. The equipment and machinery, and their spare parts, provided they are used for prospecting and exploration work, are exempt from custom taxes and duties as long as they are used for such purpose. Imported materials and consumables used exclusively for prospecting and exploration work, as well as the personal belongings of expatriate personnel and their families, are also exempt from custom taxes and duties. However, fuel, lubricants and other petroleum based products are subject to these taxes.

Tax on profits

Permit holders, their suppliers and associates are subject to the General Tax Code, unless special terms are set by a Mining Agreement: the current tax rate is 45% but when applied to mining activities, the effective rate is negotiable within the framework of a Mining Agreement. Also, considering the special characteristics of activities of the mining sector, that is, the risk involved and the large amounts of funds to be invested in exploration and in the development of mineral resources, such activities benefit from a particular regime aimed at providing incentives in this sector. A number of deductions are allowed on profits made. These are usually in force in industry.

Foreign exchange rules

Unless prior authorisation was obtained from the Ministry of Finance and Information, all transactions involving:

• foreign currency exchange,
• the movement of capital and all other financial transactions between Chad and a foreign country
• the movement of capital in Chad between a resident and a non-resident,

must be carried out through the Central Bank, the Post administration, or a bank that has been authorized to carry out such operations. The investor, the borrower, the importer or exporter must deal with these authorised intermediaries when presenting the Ministry of Finance and Information any required official request for the appropriate transactions.

The free conversion of Chad currency into a foreign currency is guaranteed for permit holders and their expatriate personnel, within the framework of the treaties establishing the Zone Franc and the UMEAC (which includes Chad, Cameron, the Central African Republic, Congo, Gabon and Equatorial Guinea). With the proper authorisation from the Ministry of Finance, the same permit holders can open and use foreign currency accounts outside of Chad for their foreign currency transaction needs.

Foreign investment rules

According to the Investment Code, a company can be subject to a particular fiscal regime (called ‘Regime D’) if the activity involved is judged to be of great importance to the economic and social development of Chad, and if the investments involved are greater than F CFA 2.5 billion. This regime can be applied for a maximum period of 20 years, plus installation time. It includes a long term fiscal regime which guarantees to the company stable tax rates, tax contributions and other fiscal parameters, which are applicable starting with the establishment of the company.

Among the benefits of such a regime, one can note:

• the exemption from property taxes,
• total or partial exemption on import duties, on primary materials required for operations, on exports,
• temporary exemption on income tax for the company personnel and for the company itself.
• Deductions are allowed when profits are invested in the construction of buildings or in the purchase of equipment and machinery.

At the end of the exploration and exploitation activities, the foreign permit holder can transfer out of the country, in its totality, the gains from the liquidation of the operation and the realisation of its assets.

Procedures for requesting a mining title

a) Request for a permit for prospecting or artisanal mining:

13. prepare a request file for each property, including: the appropriate completed form, 1 location map on the official topographic 1:200,000 scale map showing the extent of the property under consideration, fees (F CFA 100,000);

14. submit file at DRGM in D’Jaména;

15. the file will be transmitted to the Director of Mines, who will arrange for the permit.

b) Request for an exploration permit:

16. prepare a request file for each permit, including: the appropriate completed form, 1 location map on the official topographic 1:200,000 scale map showing the extent of the property under consideration (max. 200 km²), required information about the applicant, work plan and budget for the first year, fees (F CFA 100,000), and a proposal for a Mining Agreement (foreign applicants),

17. submit file at DRGM in D’Jaména;

18. the file will be transmitted to the Director of Mines, who will arrange for the permit;

19. Evaluation of the file by the Ministry, negotiation, finalisation and signing;

20. Delivery of permit after signing of the agreement, for 5 years, renewable

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