Madagascar is revising its law on large-scale mining projects. The eligibility threshold rises from $50 to $100 million, a deliberate choice to attract investors capable of processing minerals locally rather than exporting raw materials. Stated goal: 20 major projects open within five years.
A reform of the 2005 legislative framework
The Large Mining Projects Act (LGPE), dating from 2005, had never been fundamentally revised. The Malagasy government has decided to raise the minimum investment threshold from $50 to $100 million — a deliberate filter to attract only large-scale operators with sufficient capital.
The benefits granted remain substantial: tax reductions, customs duty exemptions on extraction equipment, and special provisions for companies committing to local mineral processing before export.
Base Toliara, the $1 billion flagship
The Base Toliara project — heavy mineral extraction in the south of the country — illustrates the category targeted by the new law. The investment is estimated at $1 billion, with extraction capacity close to one million tonnes annually. Suspended since 2019 for regulatory and social reasons, it symbolises recurring tensions between mining ambitions and community concerns.
80% Malagasy workforce mandatory
The new legislation requires that 80% of the workforce be Malagasy nationals, limiting foreign workers to 20%. A mechanism responding to recurring criticism that past mining projects delivered little local benefit.
The incentive for local processing is the other pillar of the text: companies refining or processing minerals in Madagascar — rather than exporting raw materials — benefit from additional tax deductions.
Why it matters
Madagascar has one of the richest subsoils in the Indian Ocean region — nickel, cobalt, graphite, ilmenite, chromite. Mining revenues represent a major opportunity to finance development. But the central question remains: how to ensure value added stays in the country? The new law attempts to answer this. Its success will depend on the state's ability to attract serious investors while honouring community commitments.
Sources: allAfrica, Madagascar Newsroom