(Ecofin Agency) - Madagascar is set to implement a new mining code adopted in 2023. The code is expected to boost several mining projects in the country, including the long-delayed Toliara project.

Base Resources, the company behind the Toliara project, announced on August 26 that it has reached a preliminary agreement with the Malagasy government regarding the extraction of mineral sands. A binding contract is anticipated soon, aiming to restart a project halted since 2019.

"Knowing that an agreement in principle has been reached with the government on fiscal terms and that the focus is on finalizing a memorandum of understanding to record the agreed terms, we consider that realizing the potential of the Toliara project is now closer than ever," said Tim Carstens, CEO of Base Resources.

The Malagasy government suspended activities on the Toliara project in November 2019 to assess the benefits it could bring to the country and local communities. Around the same time, the government also reviewed its mining code to increase its mining royalties, from 2% to 5%.

Approved by Parliament in 2023, the new mining code is expected to take effect soon after a decree from President Andry Rajoelina. This new law could pave the way for a final agreement with Base Resources, enabling the Toliara project to move forward and generate socio-economic benefits for Madagascar.

According to a feasibility study released in 2019, the Toliara project could produce an average of 780,000 tons per year of ilmenite, 53,000 tons of zircon, and 7,000 tons of rutile over more than 30 years, potentially generating annual revenues of $248.2 million. A more recent pre-feasibility study released in December 2023 estimated the project's net present value at $2 billion, largely due to the mining of monazite.