Structuring Joint Ventures and Mineral Interest acquisitions in African jurisdictions

This first 2022 Legal & Tax Working Group was held on 18 January 2022 at BDO and assisted those that are discussing JVs and purchases of existing African exploration and mining projects.  As most African countries require a mineral permit to be owned 100% by a locally incorporated company, and furthermore, the Government usually takes a mandatory equity in the operating company at the production stage.

It is important to have the structuring done right early and to follow local tax and legal requirements.

Specifically, we looked at:

• Joint venture structuring – to fit local requirements
• Taxation and other considerations when granting royalty interests
• Bilateral Investment Treaties and selecting the jurisdiction of the acquiring entity
• Tax consequences of joint ventures or share sales
• Preserving VAT exemptions
• Withholding taxes
• Thin capitalisation rules
• FX considerations