Rio Tinto has signed an agreement with the Government of Madagascar, renewing their long-term partnership for the sustainable operation of the QIT Madagascar Minerals (QMM) mine in Fort Dauphin, Madagascar. The new agreement provides certainty for Rio Tinto on the fiscal arrangements while enhancing the benefits for the people of Madagascar and supporting a sustainable future for the QMM mine.
According to the terms of the agreement, the royalty rate will increase from 2% to 2.5%, and QMM will issue its first dividend to the Government of Madagascar in 2023. In response, the government will invest an amount equivalent to the US$12M dividend in the 109km rehabilitation project of the National Road 13 (RN13). Rio will also contribute up to US$8M to the road project, subject to predefined milestones and deadlines. The project will significantly improve the region’s infrastructure by facilitating the movement of people and critical supplies to hard-to-access areas.
Rio has also agreed to cancel US$77M in advances made to the government to finance its funding of QMM. The state will now hold a 15% free carry ownership of QMM and maintain its 20% voting right, with no obligation to contribute to capital funding or exposure to dilution.
QMM will double its annual contribution to fund community programmes, increasing support for the local population. Rio Tinto’s iron and titanium managing director, Sophie Bergeron, said the agreement represented a significant milestone for the responsible development of the mineral sands extraction business in Madagascar. Bergeron noted the company’s commitment to providing increased benefits for all parties, including the communities of Madagascar.
Rio Tinto has invested US$1B in QMM over the past 25 years after an agreement was signed with the government in 1998. While that agreement remains in place for the duration of QMM’s mining activities, the fiscal component was subject to renegotiation after 25 years. The new agreement was confirmed by the High Constitutional Court of Madagascar on 8 August 2023 and signed by the parties on 22 August 2023. Top of Form
