New mining law in Central African Republic

New mining law in Central African Republic

Business Day

8th February 2004

Bangui - Central African Republic leader Francois Bozize, who seized power in a coup last March, has enacted a new law aimed at curbing corruption and relaunching the lucrative mining industry, state radio has announced.

The law was enacted this week after having been passed unanimously by CAR's interim parliament in December and then submitted to the International Monetary Fund (IMF) and World Bank for approval at the request of the government.

The Bretton Woods institutions made some amendments to the law, but no details were immediately available as to what they involved.

Under the new law, "the government can issue special buying and export licences to individuals or companies ... when circumstances dictate", the radio said.

At a national conference to debate the situation in CAR's mining industry in July, delegates had called for an end to the policy of issuing special buying licences, saying it created a climate of unfair competition.

Less than a month after seizing power, Bozize had suspended special permits issued for the mining sector by his predecessor, Ange-Felix Patasse, saying they violated the earlier mining law which stipulated that buying and export activity had to go through government-approved transaction bureaus.

At the time, Bozize said "a mafia was crippling" the mining sector, the main source of export revenue in CAR.

The new law also gives the government the right to be directly involved in buying and export activities, but only if it works in partnership with licenced individuals or companies, the radio said.

CAR is the world's fifth largest producer of diamonds, officially exporting some 500,000 carats of the precious stone every year.

Due to years of rampant fraud, however, at least twice that amount has arrived in Antwerp, Belgium, the world diamond trading capital, from CAR every year, experts have said.

And because of widespread corruption under Patasse, who ruled CAR from 1993 until he was ousted in March last year, only between 20 and 50% of export taxes ever reached government coffers.

CAR's alluvial diamonds are reputed to be of excellent quality and highly prized by jewellers.

Although diamonds are the only mineral resource currently exploited on a large scale in CAR, the country also has deposits of gold, uranium, and other minerals. There may also be oil deposits along the country's northern border with Chad.

The new law exonerates mining exploration companies from paying certain taxes.