Madagascar lifts 16-year ban on new mining permits, excludes gold

Madagascar has officially lifted a 16-year moratorium on new mining permits, a landmark policy shift that reshapes the investment landscape across Africa's fourth-largest island. The freeze, imposed in 2008 following environmental and governance concerns, prevented any new mineral extraction licenses. However, the government's 2026 decision strategically excludes gold—signaling a nuanced approach to resource extraction that balances economic growth with selective environmental protection.

## Why did Madagascar maintain a gold exclusion?

Gold mining historically triggered deforestation, water contamination, and community displacement in Madagascar. By reopening permits for other minerals while protecting gold sectors, the government aims to attract foreign direct investment in high-value commodities without repeating past environmental damage. Gold remains excluded because its extraction footprint is notoriously difficult to remediate in biodiversity hotspots.

The lifting of this ban addresses Madagascar's chronic capital shortage. Foreign mining companies have long avoided the island due to permit uncertainty, forcing Madagascar to miss billions in potential revenue. Over 16 years, competitors like Tanzania and Zambia captured investment flows that could have strengthened Madagascar's fiscal position. With over 90% of the population living below $2 USD daily, mineral revenues could fund infrastructure, healthcare, and education.

## What minerals are now open for development?

The reopened permit framework targets laterite nickel (essential for EV battery cathodes), cobalt, rare earth elements, and ilmenite (titanium ore). Madagascar holds the world's seventh-largest nickel reserves and significant undeveloped rare earth deposits—critical inputs for the global energy transition. Lithium deposits remain under assessment. These commodities command premium prices: nickel averaged $8,500/tonne in 2025; cobalt, $17,000/tonne.

International mining majors—including Rio Tinto, Glencore, and Sherritt International—have existing or legacy operations on the island. The permit lift could trigger new joint-venture proposals and exploration activity within 12–18 months. However, execution risk remains high. Madagascar's mining infrastructure is rudimentary; port capacity is constrained; and political stability has fluctuated, deterring large-scale commitments.

## What are the investment implications for 2026?

Investor interest will likely cluster around nickel, given EV supply chain demand and battery megacycle tailwinds. Companies with Madagascar exploration footprints—or those seeking diversification from Congo DRC cobalt/copper exposure—may accelerate feasibility studies. However, gold exclusion signals the government prioritizes environmental governance, potentially lowering regulatory risk and ESG screening concerns that previously dampened institutional capital flows.

The permit lift also carries fiscal dimensions. Madagascar's government has signaled revised royalty structures (details forthcoming), and any agreement will require parliamentary approval. Transparent revenue management remains critical: previous mining projects suffered from corruption allegations and benefit-leakage to politically connected entities.

Currency risk persists. The Malagasy Ariary has depreciated 35% against USD since 2020, compressing project economics for USD-financed operations but improving competitiveness for exports.