The upheaval in Madagascar’s government reshapes the outlook for mining, signaling that political change is influencing how the sector is viewed by investors and regulators. The October coup, which toppled President Andry Rajoelina after weeks of protests over living standards, corruption allegations, and limited economic opportunities, has put ongoing extractive-resource management under intense scrutiny and raised questions about the sector’s future trajectory.
But first, a dramatic moment captured global attention. When troops seized the presidential palace in Antananarivo, authorities reportedly found 300 kg of emerald rock allegedly hidden by the previous administration. The government stated that these emeralds would be sold on international markets, where current prices hover around $80 per gram. Newly installed President Michael Randrianirina, a senior military official, declared, “we discovered this national treasure… we don’t know why it was hidden here, but we are simply glad to show that we are ready to live with transparency.” This move was intended as a powerful symbol of a clear break from the prior regime, especially regarding the management of extractive resources. Whether this signals substantive policy change remains to be seen.
Madagascar sits atop substantial mining potential, drawing international attention due to its rich deposits of industrial minerals—graphite, copper, and nickel—as well as gemstones like sapphire and ruby. The country reportedly holds at least 26 million tonnes of graphite and produces about 7,000 tonnes of rare earth elements annually, underscoring its rising importance in this strategically critical sector. It is also among Africa’s larger graphite exporters and hosts lucrative gold reserves, much of which is yet to be fully formalized in export channels.
Investors have already entered Madagascar’s mining scene. Notable projects include the Ambatovy nickel–cobalt mine, a joint venture between Sumitomo Corporation of Japan and KOMIR from South Korea, and the Soalala iron ore project, operated by China’s Wuhan Iron and Steel Corporation. Additional commitments from multinational players are substantial: Rio Tinto has invested over $1 billion in the QIT Madagascar Minerals venture to develop mineral sands and associated infrastructure.
Yet the path for operators, especially smaller players, has been thorny. Industry voices in Madagascar highlight ongoing barriers that hinder timely entry and operation. Michael Randrianavony, co-founder of the GEMVVS mining group, notes that many concessions are foreign-owned but constrained by a maze of laws that slow or block participation. Licencing remains sluggish and unpredictable, with regulators occasionally issuing embargoes on new permits. Broader infrastructure shortcomings and limited electricity access compound these challenges. Transparency International has warned that licensing procedures have become arbitrary and discretionary, which can undermine investor confidence. The Extractive Industries Transparency Initiative has echoed concerns about resource constraints that impede anti-corruption efforts, including contract and beneficial ownership transparency.
Together, these factors have cooled growth in Madagascar’s extractive sector despite its vast resource base. The 2023 Mining Code was designed to standardize procedures and attract foreign investment by offering stability guarantees for mining permits and clarifying permit management. Fiscal incentives accompanied the code, with qualifying corporations receiving exemptions on income tax, customs duties, and value-added tax for locally sourced equipment. International organizations, notably the World Bank, welcomed the move as a step forward and predicted a ramp-up in mining investments—but the long-term impact hinges on continued government commitment.
Political turmoil has raised concerns about immediate disruption to mining operations. Analysts compared the coup to Sahel-style crises that have disrupted foreign projects in similar contexts. However, early reports from Next Source Materials indicated continued operations at the Molo graphite project and normal export activity through Tulear port, suggesting some stability in the near term. Industry observers suggest that the new administration could build on the 2023 Mining Code’s framework if there is a genuine shift toward economic stability and investment-friendly governance. Harena Resources’ country manager argued protests focused on economic grievances might push the government toward policies that improve stability and investment incentives.
The new administration’s composition also signals potential shifts. Prime Minister Herintsalama Rajaonarivelo, a businessman and economist with experience at the World Bank, EU, and African Development Bank, is seen by some as indicating a technocratic, business-friendly approach. Credendo, a credit-insurance group, suggested this appointment could reflect a focus on addressing socioeconomic concerns to prevent renewed protests, hinting at a more pragmatic governance style compared with more nationalist or populist models. Still, most investors are adopting a cautious stance, awaiting clearer, more mature legislation before committing additional large-scale investments. Randrianavony emphasizes that while international firms are ready to participate, they require a more stable regulatory environment to proceed confidently.
In sum, while the October overthrow introduces uncertainty, Madagascar’s mining sector remains buoyed by substantial resource endowments and ongoing foreign investment. The critical question is whether the new government will uphold and extend the reforms of the 2023 Mining Code, which aim to deliver greater transparency and a more predictable licensing regime. If the authorities can deliver measurable improvements in governance and infrastructure, Madagascar could retain its appeal as a strategic hub for mining in Africa; if not, the country risks losing momentum as investors reassess risk and return in a volatile political landscape.
