(Ecofin Agency) - Since the beginning of the year, Senegal has applied a reference price for phosphate exports. This floor price is used to calculate the mining royalty paid by producers. This breakthrough is the result of work carried out with the Intergovernmental Forum on Mining (IGF).

Senegal has introduced a reference price for phosphate exports, which will be used to calculate the mining royalty paid by producers. The Intergovernmental Forum on Mining (IGF) contributed to the reference’s adoption.

In a statement issued on June 18, the IGF explained that the new reference will help keep pace with changes in the international phosphate market.

In January 2024, a decree issued by the Senegalese Ministry of Mines introduced a floor price used to calculate mining royalties. This price is determined in part by taking into account the international price index for Moroccan phosphate applicable on the day the phosphate is shipped from the port of Dakar. Companies can subsequently request for an adjustment if they feel that the selling price realized is lower than the price index applied.

With this new pricing system, Senegal intends to solve the issue of self-assessment by firms, as the latter sometimes underestimate the value of mineral exports. In 2022 for example, Senegal obtained $13 million from the sales of phosphate and phosphoric acid, which the ITIE had estimated at nearly $950 million.

"Phosphates play an important role in our mining sector, but year after year, public revenues are not up to scratch. These revenues pale in comparison to mining revenues from gold or mineralized sands," explains Lamine Diouf, director of monitoring and auditing at the Ministry of Mines.

Senegal is one of Africa's leading phosphate producers, with an annual output of over 2 million tonnes. It is outstripped on the continent by Morocco, the world's second-largest producer, and Tunisia.

Emiliano Tossou