Linklaters advises Rio Tinto on the renewal of its partnership with the government of Madagascar regarding the ~$1.2Bn QMM Ilmenite Project
Linklaters has advised Rio Tinto, the second largest mining company in the world, on the renewal of its partnership with the government of Madagascar regarding the QMM ilmenite mining project in Fort Dauphin, a project worth more than $1.2Bn of current investment and the second largest private investment in the country. These arrangements aim at ensuring the sustainable operation of QMM through a renewed tax regime and shareholders’ arrangements and enhancing the project’s contribution and support to local communities.
The QMM Project is developed through QIT Madagascar Minerals (QMM), a joint venture between Rio Tinto (80%) and the government of Madagascar (20%). The Project also includes the deep-water Ehoala Port, where the raw material is shipped to the Rio Tinto Fer et Titane plant in Canada and processed into titanium dioxide. QMM is a strategic contributor to the development of Madagascar”s economy, it is the second largest private investment and a large direct and indirect job provider. QMM is strongly anchored on high ESG standards and a “sustainable mine initiative”.
On 22 August 2023, the Rio Tinto Group (including QMM) and the Malagasy State entered into a memorandum of understanding as well as an amendment to QMM’s investment agreement (convention d’établissement), aiming to renew their long-term partnership and create a pathway for the future of QMM’s operation. These arrangements notably provide for: the 25 years renewal of the tax regime applicable to QMM and the adjustment to the mining royalty rate; investments for the development of new deposits; enhanced joint project monitoring; shareholder arrangements, including acceleration of dividend payable to the State and free carry shareholding; increase of social contribution budgets to local communities projects and projects of national interest as well as support to a 109km road rehabilitation project; implementation of best international standards to minimize environmental impacts, in particular water quality; implementation of a carbon compensation partnership with the State.
The Linklaters team in Paris was led by Energy and Infrastructure partner Bertrand Andriani, Mining Sector Leader and counsel Aymeric Voisin and composed of E&I associates Sina Abadie and Marie Kooli, Corporate/M&A partner Nicolas Le Guillou and associate Baptiste Fondeur, Litigation, Arbitration & Investigations partner Roland Ziadé and managing associate Claudia Cavicchioli and associate Hélène Georgelin as well as Tax law partner Cyril Boussion and associate Nicolas Le Guernic.
McCarthy in Canada and Madagascar Law Office were also involved in certain aspects of the transaction for Rio Tinto.
