In Madagascar, the mining sector aspires to become a pioneering economic engine by 2024. The country is currently witnessing a surge in graphite mining exploitation activities, opening new horizons for investment opportunities and growth.

Mining Landscape of Madagascar

Artisanal mining is a common practice in Madagascar, mainly for gold, gemstones, and ores. Around the 1990s, the island was one of the world’s largest producers of colored gemstones. This situation is underlined by the efforts of the government. However, the potential of the mining sector remains largely untapped due to gaps in capital, equipment and knowledge.

Digital contributions from the mining sector

According to the African Development Bank (AfDB), the mining sector currently contributes 4 % to national gross domestic product (GDP). This includes the entire mining value chain, including exploration, development, exploitation, marketing and export. It is generally divided into two categories: small-scale or artisanal mining, and large-scale or industrial mining.

It is worth noting that the sector is informal, but far from marginalized; artisanal mining provides a livelihood for hundreds of thousands of people in rural areas. This sector provides five times more jobs than the textile and garment industry. However, it is large-scale mining that contributes the most to the national economy.

To be more explicit, according to the Central Bank of Madagascar (BCM), the mining sector represented 6.41 % of the GDP in 2019. In the same year, this category showed a tax revenue of 2,033.21 million USD. The following year, the mining and extractive industry experienced a decline, contributing 3.58 % of the GDP and generating a tax revenue of 1,556.25 million USD. However, these figures are expected to change in the coming years, given the significant increase in exports of mining products in 2022.

Mining Resources in Madagascar

Madagascar’s mining resources fall into several categories, including gemstones, industrial minerals, metals, and ores. The island’s substances are categorized as follows:

• Chromium, Manganese, Vanadium, Titanium, Zirconium and Ilmenite.
• Metals include copper, iron, lead, aluminum, tin, cobalt, and nickel.
• Energy minerals include coal, graphite, lignite, and charcoal.
• Other minerals such as mercury, lithium, magnesium, radium, rare earths, and uranium.

Industrial Minerals Madagascar Map

Among Madagascar’s many mineral resources, nickel and cobalt stand out as critical elements for industry. The country is also a major producer of ilmenite, with the east coast and Tuléar being the main producing areas. Uranium also falls into this category; several mining sites are located throughout the country, such as Makay, Folakary, Faratsiho, and Tranomora in the south of the island.

Furthermore, Madagascar has significant potential for iron mining. Although the iron content of the soil is less than 40 %, several regions have significant reserves. In particular in Soalala, where reserves are estimated at 360 million tons, with an iron content of 30 %, according to a report by the Chamber of Mines of Madagascar. The same study indicates that the south of Madagascar, as well as the north from Fort-Dauphin to Farafangana, hosts several bauxite deposits, including the Manantenina site. This rural commune is also rich in zircon. In addition, Madagascar is one of the largest exporters of high quality, high purity graphite, which is produced in a less industrialized manner.

Untapped potential of graphite

In terms of graphite, Madagascar has vast untapped potential, being the world’s third largest producer. This mineral, which is essential for the production of batteries for electric vehicles, is experiencing ever-increasing global demand. According to consulting firm Project Blue, electric vehicles are expected to exceed 50 % of the natural graphite market for the first time this year.

The first graphite deposits on the island are located in Antsirakambo, operated by Etablissement Gaulois, and in Ampanihy, where exploration is being carried out by MADA-AUST. Several international companies have also launched major exploration projects in Madagascar. The Indian company Tirupati aims to produce 30,000 tons of graphite per year. The Australian company BlackEarth has already taken significant steps in Ambohitsy Haut, in the south of the island.

However, the development of the graphite industry in Madagascar faces several challenges, particularly in terms of infrastructure and renewable energy. Efforts are underway to address these issues, such as the construction of a hybrid solar/battery power plant for the Molo mine or the use of renewable energy by NextSource Materials.

Exploitation of the island’s mineral wealth

A number of mining companies are exploring and extracting industrial minerals in Madagascar, the majority of which are foreign companies. However, it is worth noting that the minerals that attract the most foreign direct investment (FDI) are nickel and cobalt. According to the Central Bank of Madagascar, the volume of mineral exports will increase significantly in 2022, with a 27.4 % increase for nickel and a 67.1 % increase for cobalt.

Nickel and cobalt mining in Ambatovy

The Ambatovy project has not always been the primary monopoly for nickel and cobalt mining in Madagascar. This mining company entered the sector at the end of 2012. It has attracted significant foreign direct investment for the development of the Ambatovy mines, totaling more than 8 billion USD according to the World Bank. This consortium of 4 shareholders, including Sherritt International Corporation, also developed major infrastructure, including the expansion of the port of Tamatave and access roads along the 22 Km pipeline. Ambatovy also built a power plant consisting of 3 units of 35 megawatts each.

Rio Tinto mining operations at Fort Dauphin

In 2009, Qit Madagascar Minerals (QMM) began mining ilmenite and zirsillite at Fort Dauphin. This mining company is 80 % owned by Rio Tinto, with the remaining 20 % owned by the Malagasy state. Since its inception, the project has attracted investments of 1 billion USD. The operation creates nearly 2,000 direct jobs, 97 % of which are Malagasy. Rio Tinto QMM invests approximately 2.5 million USD annually in the environment and community, and supports 150 businesses.

Mining and Mineral Resources: Towards sustainable management

Subsurface wealth represents a non-renewable capital that the Malagasy government can only capitalize on through effective and prudent management. Taking example from Botswana, the Malagasy State should develop exemplary management of the mining sector in order to optimize the comparative advantage of its economy and contribute to sustainable development and shared growth.

Environmental impact of mining projects

Mining, especially graphite mining, has a significant impact on the environment in Madagascar. The extraction of these minerals can lead to landscape degradation and loss of biodiversity. In addition, mining activities are likely to cause soil and water pollution, affecting the health of local communities and the viability of their agricultural livelihoods.

Mining projects in Tanzania, as elsewhere in Africa, often require the clearing of large areas of forest. In Madagascar, deforestation is already a major problem that will be exacerbated by mining activities. In addition, mining can lead to the contamination of soil and water with toxic substances, which can harm local flora and fauna, as well as human health. These activities disrupt local ecosystems and threaten Madagascar’s unique biodiversity.

In light of these environmental challenges, measures are being considered to improve the legal framework for environmental and social impact assessment (ESIA) in the mining sector. In addition, more environmentally friendly alternatives are being implemented, such as the use of solar energy for the Molo graphite mine.

Future outlook for the mining sector

The outlook for the opening of new mines remains uncertain and is closely linked to business developments in Madagascar and conditions in the global mineral markets. Barring any major unforeseen events, the mines currently operating in the industrial system will continue to operate for the next decade. Initiatives such as QIT Madagascar Minerals (QMM), a Rio Tinto subsidiary, and Ambatovy will have achieved profitability. Mining provides the government with stable tax revenues and sources of foreign direct investment (FDI), although it is subject to fluctuations in metal prices.