OUAGADOUGOU (Reuters) - Seven new mines are expected to open in Burkina Faso and together with an improved mining code should double the sector's contribution to the country's economy in the coming years, the west African nation's mines minister said.
The new mining code, a revamp of a 2003 document that is due to be tabled in parliament by the end of this year, will benefit both the state and mining companies in equal measure, Salif Lamoussa Kabora told Reuters in Ouagadougou late on Tuesday.
The current draft of the law includes a 20 percent tax on the sale of licences, a move that may hit expansion plans by miners operating in the country, which has attracted small and mid-sized companies.
Kabora said there would be a number of other changes to the tax system aimed at increasing government revenues from the sector but declined to give any further details.
Kabora said that the sector's contribution to the economy currently represents 12.7 percent of Burkina Faso's roughly $10 billion gross domestic product. But he said the figure was set to leap with the opening of the nation's eighth mine at the end of 2012 and another six mines in the coming years.
"If I look at the projections, with 14 mines it should come to 20-25 percent (of GDP). That is our aim," he said.
Miners already operating in Burkina Faso, one the world's poorest nations, include Avocet Mining Plc (AVM.L), Cluff Gold Plc CLUF.L and Blackthorn Resources BTR.AX.
The Bissa-Zandkom gold mine, a joint venture between Burkina Faso and Russia's Nordgold NGOLY.PK, is due to launch production in December.
Operations expected to come online by 2015 include a zinc mine joint-owned by Blackthorn and Glencore (GLEN.L) and the Tambao manganese mine.
A geology similar to neighbouring Ghana and Mali, Africa's second and third largest bullion producers respectively, has made Burkina Faso attractive to miners lured by gold prices hovering around historic highs.
While a strategy aimed at selling the country's mining potential to investors has proved successful over the past decade, Kabora said the current mining code has not allowed Burkina Faso to fully benefit from the sector's growth.
"In the 2003 code we were trying to attract lots of mining companies. We achieved that...but we were not a country with a mining tradition. There were errors," Kabora said.
"We have decided to make some corrections. But I can assure you that this code will not make investors flee...These changes will benefit the state as well as the mining companies," he added.
On the Fraser Institute's 2011/12 mining index - a measure of industry perceptions of a country's policies and minerals potential - Burkina Faso is ranked third most attractive in Africa, behind Botswana and Ghana and ahead of heavyweights such as South Africa and Mali.
Editing by Joe Bavier and James Jukwey