CURRENT POTENTIALS AND INVESTMENTS OPPORTUNITIES IN BURUNDI MINING/OIL/GAS

Transcription

1 AFRICA OIL AND GAS FORUM AUSTRALIA TUESDAY, 10 MARCH 2015 CURRENT POTENTIALS AND INVESTMENTS OPPORTUNITIES IN BURUNDI MINING/OIL/GAS BY HONOURABLE COME MANIRAKIZA MINISTER FOR ENERGY AND MINES REPUBLIC OF BURUNDI

2 GENERAL INFORMATIONS The Republic of Burundi is in the heart of Africa. Because of its topogaphy, it has been called the «Switzerland of Africa. It is located in the South of Rwanda, in the West and North of Tanzania and in the East of the Democratic Republic of Congo and the northeastern side of the Lake Tanganyika. Located at 1,1ooKw from the Indian Ocean and 1,900 Km from the Atlantic Ocean, Burundi is part the Western arm of East African Rift System. The country covers a surface area of 27,834Km 2 With an average altitude of 1,700m, it forms part of Africa s high plateau. Bujumbura, located on the shore of Lake Tanganyika, is the capital City of Burundi. Products imported via the Tanzania railroad - Lake Tanganyika route are unloaded in Bujumbura port. The present population is 9 million with a growth rate of about 3% per year which makes it the most densily populated country in Africa. The Official language is Kirundi ; French is the langauge commonly used in bsusiness a nd governement communications; English is also used as Burundi is part of East African Community Countries since 2007.

3 Burundi is not yet a mining nor a petroleum country. Like most of the developing countries, Burundi has an economy based primarily on agriculture, which provides occupation for 80% of its population and produces most of the foreign exchange coming into the country. Although, several minerals have been discovered in Burundi, mineral sector (artisanal exploitations) contributes only 1% to the GDP in Burundi s economy. Minerals found in Burundi, as shown in the map below, include inter alia Nickel, Iron-Titanium-Vanadium, Gold, Tin-Tantalum-Tungsten, Rare Earths, Phosphates, Kaolin, Lime stones, Marble, Dolomites, Peat, Platinum group metals and Hydrocarbons.

4 Mineralization map Au Ta-Nb Sn Ni RE V

5 Mining exploitation The map below also shows the location of artisanal exploitations: Area A in the North-West part of the country, Area B in the North-East part of the country, Area C in the -East part of the country. Minerals produced are Gold, Cassiterit, Coltan and Wolframite Industrial Minerals exploited include building materials as clay for bricks and tiles, sand, gravels, dolomite for lime and others rocks for roads.

6 Exploration works Exploration works are in progress for Nickel, Iron- Titanium-Vanadium, Gold, Tin-Tantalum-Tungsten, Rare Earths and Hydrocarbons A feasibility study on Musongati nickel deposit (150 Mt ore reserves at 1.6 %Ni at a cut-off grade 0.8% Ni) is completed and an exploitation permit is granted since Exploration is being carried by small companies and some companies have abandoned their permits for financial reasons. A location map of exploration permits (Scale: 1/1,250,000) is shown below

7 Location map of Exploration permits

8 Opportunities in the mining sector Now, there are opportunities to invest in: Nickel deposits bearing PGM: Waga deposit with 35 Mt ore reserves at 1.38 %Ni (cut-off grade 0.8% Ni) Nyabikere deposit with 46 Mt ore reserves at 1.45 %Ni (cut-off grade 0.8% Ni) Titanomagnetic vanadium deposit at Mukanda in central part of Burundi - Proven reserves: 12 Mt at 0.63%V (cut-off 0.2%V) - Probables reserves: 5Mt Gold occurences in the North and East part of Burundi Tin-Tantalum-Tungsten deposits in the North of the Country,

9 Opportunities in the petroleum sector Only Two basins,in the western part of the country are potentially interesting for hydrocarbons exploration: Rusizi Basin: Block A onshore Basin of Lake Tanganyika: Blocks B, C and D from North to South of Burundi (Blocks offshore). Actually Block A is free. Even Blocks B, C and D granted, exploration activities are slowing down for financial difficulties: Opportunities for ventures

10 Location of Burundi in East African Rift System Burundi is part the Western arm of East African Rift System. Sedimentary Basins in Lake Tanganyika On same trend as Lake Albert discoveries (Uganda) Age of Basin Late Miocene to Recent No volcanics Similar structural regime to lake Albert Neogene exceeds 3km in potential kitchen areas Seeps on western

11 History of Oil Exploration in Burundi : Probe academic seismic grid acquired by Duke University (reprocessed by Surestream Petroleum in 2011) 1984 : Kenting Aeromagnetic survey acquired : Project Geo-Rift studied lakebed geology, supported by Elf Aquitaine : Amoco acquire seismic onshore and drill 2 shallow dry wells Neogene section all sandstone, failed due to lack of seal Expect rapid geological changes into lake to south with incoming of seals and source rocks

12 Possible Oil Kitchens Other East African Rift Basins indicate that a sediment thickness of circa 2500m is required for oil generation However, high geothermal gradients in Burundi onshore wells (>60 deg C/km) suggest maturity may be attained at around 1500m Deep kitchens identified that should charge Burundian acreage within deepest parts of basins in Congolese sector Seeps Sediment Thickness m Sediment Thickness m

13 Oil Seeps in Congolese Waters Opposite Burundi Proves petroleum system Carbon dating indicates a shallow young source rock associated with a thermal anomaly Has been active throughout historical times, estimated 10MMbbls spilled into lake Thought to lie over fault plane but must be charged by extensive source rock and thermal anomaly

14 Current status of legal, regulatory and institutional framework for the promotion of extractive and mineral processing industries in Burundi All mineral exploration, exploitation and trading activities in Burundi are currently regulated under the auspices of the Mining Code of Burundi (Law 1/21 of October, 2013) a review of of the Mining and Petroleum Code of Burundi (D.L 1/138 of July 17, 1976) which is still in force for the petroleum sector. This Law has integrated the international mining best practices, to enable it to meet current and future challenges of Mineral Resources Development in the country and hence provide for greater security for investors. It also provides for greater environmental protection, as embodied in the Environment Code (Law 1/010 of June 20, 2000) from the undesirable effects of mining and petroleum activities on the environment.

15 Investment Code Under the Investment Code (Law n 1/24 of September 10, 2008), foreign investors can repatriate capital and profits. Investment by new firms are eligible for a tax credit arrangements, including the rate, duration, nature of eligible investments and the evidence necessary to administer the taxes are defined by tax legislation. The right to the tax credit is not subject to prior approval. The Law also protects foreign investment against expropriation. Burundi is also a member of the Multilateral Investment Guarantee Agency (MIGA). A trade license is required for anybody who wants to undertake any business within the country. However, the key reforms that the Government has carried out have lead to: Abolishment of import taxes on investment goods including equipments and raw materials (Ministerial Order n 540/878 of July 7, 2010) Revocation of value added tax on imported goods; Countervailing duties are reduced from 5 % to 3% for investments above 5 billion Burundi francs (5 million USD) and to, 1.5% for investments above 10 billion Burundi francs (10 million USD) Reduction of tax rate on profits of 2% if 50 to 200 jobs are created for Burundians and of 5% if more than 200 jobs created.

16 Investment Code ( ) The Investment Code provides a guarantee against expropriation of private property. Expropriation may only occur either for security interest or public purpose, where upon fair and prompt compensation is guaranteed The legislation has provisions for dispute resolution especially in Investment Code. Settlement of investment disputes in mining sector can be done of the discretion of the investor by a domestic or international arbitration. If use is made of international arbitration, Burundi is a member of the International Centre for the Settlement of Investment Disputes (ICSID). An public institute Burundi Investment Promotion Authority to facilitate the investors in Burundi.

17 Mining and Petroleum activities and Related Operations All unextracted minerals under or upon any land, as per the Mining Code, are vested in the Government, subject to any rights which, under the Code, have been granted to any other person. The following types of licenses can be granted: For the mineral sector Prospecting permit for a duration of 1 year renewable once for one year; Research permit for a duration of 3 years renewable twice for 2 years each; Exploitation permit for a duration of 25 years renewable for 10 years each time. For the petroleum sector Research permit for a duration of 3 years renewable twice for 2 years each; Concession for a duration of 25 years renewable for 10 years each time.

18 Prospecting permit and Exploration are granted over areas selected by the applicants. The conditions for granting are defined in specific agreements. An Exploitation permit or a Concession is granted for successful prospecting and exploration after a feasibility study. Taxation Taxation issues are covered in the fiscal Code and the Code of Commerce. The maximum rate of income tax is 30%. The rate of VAT is 18%. Imported goods are charged import duties. Some goods are tax exempted entirely specifically on investment goods including equipments and raw materials. Royalties The law provides that royalties are paid for all minerals. The rates of royalties are harmonized within the East African Community.

19 Challenges and Constraints for Investment and Development of the Extractive and Processing Industries Availability of Energy: a lack of electric power With a potential of hydroelectric power of 1,700 MW, Burundi has only 39 MW installed capacity but is now developing other dams to increase it up to 100MW. Burundi is participating in energy regional integration in exploration, generation and transmission. With the Ruzizi River hydro resource potential ( 472 MW) with DRC and Rwanda and the Rusumo-Falls Hydropower plant (60 MW) with Rwanda and Tanzania, Burundi is going to ensure the energy sector efficiently run and that investment is secured with national and regional power supply. Weakness of infrastructures of transport Burundi is in great need of investments in infrastructure to better connect the country with its neighbours for trade, transport and communications. There are good roads to Rwanda and Tanzania and to the D. Republic of Congo. The International Airport in Bujumbura connects the country by air. There are ferries operating from Lake Tanganika between Kigoma, Tanzania and Mpulungu, Zambia and to Kalemie, Democratic Republic of Congo. Burundi is going to invest in railways projects to connect with Dar es Salam in Tanzania and Monbasa in Kenya with the intent of reducing the cost of transport to businesses and individuals.

20 To conclude, I would like to invite you to Burundi to explore opportunities of investment. We assure you of a warm and constructive welcome. Thank you for your attention