The new leader of Madagascar, Andry Rajoelina, has frozen all existing mining contracts in the country as one of his first actions in power.
President Marc Ravalomanana was overthrown by a popular but undemocratic uprising in March, partly motivated by anger over concessions to foreign firms.
The Ravalomanana administration had improved the terms of investment for foreign firms in most sectors and the country was benefiting from strong growth in the mining industry but there must now be some doubt over further investment in the sector.
Rio Tinto is the biggest investor in the country and is developing the $1B QIT (Quebec Iron and Titanium) Madagascar Minerals ilmenite project, which includes the construction of the new port of Ehoala at Tolanaro in southeast Madagascar.
As of early April, the company had yet to be informed of the government’s position on the project, although a Rio spokesperson said that the contract “can only be amended by parliament which the new government has dissolved.”
QIT began production in January and the first shipments, to a Rio Tinto smelter in Quebec, were due by the end of April. Output of 750,000 tpa) is initially targeted, with expansion to 2 mtpa already planned.
The port, which is intended to be a multi-user facility eventually owned by the government, is now complete and it had been hoped that its development would attract other mining investors to the Indian Ocean island nation.
Rio Tinto invested $110M in the port, with a further $35M provided by the World Bank. Rajoelina has pledged to impose higher royalty payments on those investors that are allowed to retain their mining concessions.
To find out more about Bulk Materials International:
