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Côte d’Ivoire will impose a tax of 19 per cent on gold mine profits in an attempt to benefit from soaring world prices

gold gettyThe step was taken by Côte d’Ivoire because gold price has shown a steady increase in recent time without any benefit reaching the country. (Image source: Getty Images)

According to a Reuters report, the decision, revealed in a government document recently, could set the scene for a possible dispute with foreign companies building up the sector.

West Africa-focussed Randgold Resources Ltd, Australia’s Newcrest Mining and Toronto-listed La Mancha Resources all operate gold mines in the country.

In August 2012, the government also granted production permits to Canada’s Endeavour Mining Corporation, as well as Occidental Gold, a unit of Australia’s Perseus Mining Limited.

Under the proposal, submitted last week and adopted during a cabinet meeting, the West African nation would set an indicative cost of production at US$615 per ounce, with profits taxed at a rate of 19 per cent.

“The price of gold, which was around US$300 per ounce in 2002, is today above US$1,700, or practically a six-fold increase without any comparable increase in production costs,” read the proposal obtained from government spokesman Bruno Kone.

“Mining companies have therefore benefited from this favourable climate without any effect for the state,” the document added.

Randgold chief executive officer Mark Bristow told Reuters that, while his company was open to dialogue with the government, it already operated under a clearly defined tax regime.

“We have very specific and legally binding stability agreements,” Bristow said.

The modified tax structure would allow Côte d’Ivoire to earn more than US$86.45mn in revenues from the gold sector this year, more than double the forecast under the previous tax structure, the document said.

The tax increase has followed a series of moves by other African minerals producers, including Guinea, Burkina Faso, DR Congo and Senegal.