Positioned in West Africa with a coastline lying on the Gulf of Guinea, Cameroon is often depicted as an "Africa in miniature" for its geological and cultural diversity.

Cameroon's soil abounds in a diverse array of natural mineral resources. The studies conducted so far, mapping a maximum of 50% of the Cameroonian soil, have shown the existence of around 50 different types of mineral resources, ranging from gold, diamonds and steal to bauxite or cobalt.

However, the country’s resources remain largely untapped and the mining sector is in its infancy, due in particular to a lack of infrastructure and a challenging business environment.
In order to encourage foreign investments, Cameroon has recently made a number of amendments to its legislation, notably by the law n°2010/011 on mining activities dated July 29, 2010 (the "2010 Mining Law"). This law is aimed at improving the existing mining code dated April 16, 2001 (the "2001 Mining Code").

The mining legislation provides a comprehensive legal framework for the exercise of mining activities as a foreign investor (1), thus providing to foreign investors attractive mining investment opportunities that are however subject to a number of challenges (2).

1. Mining legal framework in Cameroon
1.1 Main features of the mining legislation
The 2001 Mining Code (as amended by the 2010 Mining Law, the "Mining Code") applies to a wide range of mining activities and is implemented by regulation n°2002/648/PM dated March 26, 2002 (the "Mining Regulation"). Liquid and gas hydrocarbons are excluded from the scope of the Mining Code.

Since 2010, the right to carry out mining activities has been reserved to legal entities incorporated in Cameroon. A foreign investor would therefore need to set up a local company before applying for a mining title. In practice, most mining companies in Cameroon are incorporated as “sociétés anonymes”.

As is usual in other African jurisdictions, a mining convention must be entered into between the relevant mining company and the State in order to define the rights and obligations of each party under the relevant mining title.

Although no standard form of mining convention is imposed by law, the Mining Code requires that any mining convention contains details on (among others): health and safety, feasibility studies, State’s participation in the project, employment or training of local personnel, tax regime and applicable jurisdiction. It should be noted that any provision of a mining convention conflicting with the Mining Code would require the enactment of a law.

In addition, the State must be granted a 10% "free" participation in the operating company before an exploitation license is issued to such company. The State (directly or through a company of the public sector) is also granted a right to acquire an additional 10% participation in cash in the mining company (the terms of such participation are negotiated between the parties).

Finally, the Mining Code imposes on the operator an obligation to transform at least 15% of the production in Cameroon.

1.2 Overview of the main mining licenses
Mining licenses are issued on a “first come, first served” basis. The main mining licenses are the reconnaissance license (permis de reconnaissance), the exploration license (permis de recherche) and the exploitation license (permis d'exploitation).

  • The reconnaissance license is a non-exclusive 1-year license granted by the Ministry of Mines (upon approval of the President) for a maximum area of 10,000 km². It aims at performing reconnaissance operations and at identifying minerals. Such license is renewable up to 1 year;
  • The exploration license is an exclusive 3-year license granted by the Ministry of Mines (upon approval of the President) for a maximum area of 500 km², in order to perform exploration works. The license can be renewed twice (however, in case of renewal, the area covered by the license can not exceed 50% of the initial area) and exploration works must be commenced within 9 months of the issuance of the license;
  • The exploitation license is an exclusive 25-year license granted by the President in relation to the operation/exploitation of a mine. The area of the license depends on the nature of the relevant mineral. The license is renewable by successive periods of 10 years and exploitation works must be commenced within 2 years of the issuance of the permit.

Other mining titles (artisanal exploitation license, small mine license) are available but are generally not used in major mining projects. It should be noted that artisanal mining is reserved to Cameroonian individuals and that one of the requirements of the "small mine" license is that it comprises at least 40% of “national interests”.

2. Attractive mining investment opportunities; subject to significant challenges
2.1 Attractive mining investment opportunities
As mentioned above, the country’s resources remain largely untapped compared to the mineral potential of the country, and only a small number of exploitation licenses have been granted to date.
However, the mining sector is now drawing in new investments and players. For example, Sundance Resources Limited signed on November 2012 a mining convention with the Government relating to its US$8.7 billion Mbalam iron ore project. It targets the mining of 35 million tons per annum from iron deposits in Cameroon and Congo, the construction of rail lines dedicated to the transport of iron ore and the building of a dedicated deep water iron ore export terminal.

Another attractive feature of the Cameroonian mining sector is Cameroon’s political and economical stability, which contrasts with other West African countries. Since its independence in the early 1960s, Cameroon has enjoyed a high degree of political stability and low inflation rates.

From a legal and tax standpoint, there are a number of incentives to invest in the Cameroonian mining sector: 

  • the Mining Code contains the standard foreign investor-friendly provisions in relation to mining activities (standard guarantees of non-discrimination, free disposal of assets and free transfer of capital and revenues provisions);
  • in terms of protection of investments, Cameroon has ratified a number of international conventions recognizing foreign arbitral awards (such as the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) and ISCID Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1966)). The Mining Code also authorize the submission of disputes to arbitration;
  • a number of tax exemptions are also available at each stage of the project (for example, full tax exemptions during the exploration phase, exemptions of certain custom duties during the construction phase and exemption from export VAT during the exploitation phase);

Cameroon has been a member of OHADA since 1996, which facilitates corporate and financing transactions ancillary to mining activity.

2.2 Challenges and practical issues
Despite the attractive factors, poor infrastructure and a challenging business environment hamper the mining sector.

Moreover, due to the remote location of the majority of the country’s projects, the lack of water, energy, transport and telecommunication infrastructures is generally seen as a major hurdle for mining investors. However, development of infrastructures and the mining sector has now become one of the priorities of the Government, as the country strives to reach key economic goals by 2035.

The business environment must also be improved, as investors still experience administrative inefficiency and a number of burdensome and time consuming procedures and formalities. Cameroon was only ranked 161th in the 2013 “Doing Business” report of the World Bank (IFC).

Finally, it should be noted that standard taxes and royalties remain quite high compared to other West African countries (eg. corporate income tax of 38.5%, VAT of 19.25%, withholding tax of 16.5%, royalties ranging from 2% to 8% etc).