Randgold says Ivory Coast tax proposal off table for now

Mon Feb 4, 2013 10:36am EST
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By Clara Ferreira-Marques

CAPE TOWN Feb 4 (Reuters) - Ivory Coast is no longer considering a proposed windfall tax on gold mines and will instead focus on adjusting royalties and revising the mining code to increase state revenue, the head of Randgold Resources said.

Ivory Coast's government in September adopted a new tax on so-called super profits from gold, seeking to capitalise on current high gold prices to help fund reconstruction following a decade-long political crisis.

Mining companies were quick to criticise the move, however, claiming they were not consulted beforehand. The government had said the tax was not negotiable, though the rate could be changed.

"That is off the table; it has been sent back to the Ministry of Mines. This week we have got to numbers that are workable," Randgold Chief Executive Mark Bristow said in an interview on Monday, declining to give further details.

The new tax was to be levied on profits above a government-fixed estimated production cost of $615 per ounce, with the rate dependent upon the world price of gold, according to the text of the law, which was passed by parliament in December.

Companies would have paid 17 to 20 percent of revenues above the estimated cost level with gold prices between $1,600 and $1,800 per ounce. Above that range, the rate rose by 1 percent for each $50 increase in the gold price up to a maximum rate of 50 percent. Below $1,600, it fell by 1 percent per $50 decrease.

"There will be an adjustment on royalties, and there is a review of the code, but the guidance is that what comes out has to put Cote d'Ivoire at the top of the competition ranks," Bristow said.   Continued...