AFRICA MINING LAW SURVEY 2014
FOREWORD BY PETER LEON During the past decade, Africa has experienced unprecedented and sustained economic growth. An average economic growth rate of 4.7% between 2000 and 2011, 1 led to a more than three-and-a-half fold expansion of sub-Saharan Africa’s economy between 2002 and 2012. 2During the period from 2000 to 2009, Africa had the highest number of countries with an average growth rate of 7% of gross domestic product per annum.3 This extraordinary economic growth was assisted by, among other things, increased foreign direct investment (FDI) from both within the continent and beyond it. FDI flows to African countries increased by 5.5% to US$ 45,8 billion in 2012 even as global FDI fell by 18.3%.4 5Intra-African investment, which grew by 32.5% from 2007 to 2012, is particularly remarkable.6 Africa’s economic boom is expected to continue. This year the World Bank predicts that sub-Saharan Africa will experience economic growth at a rate of 5.3%, rising to 5.5% in 2016. 7According to the International Monetary Fund, of the world’s 10 fastest growing economies between 2011 and 2015, seven will be in Africa.8 Africa’s economic success may, in part, be attributed to its incomparable abundance of natural resources. Africa is estimated to have 10% of the world’s oil, 40% of its gold, and 80 to 90% of its chromium and platinum reserves respectively. Citigroup estimated that South Africa, for example, possesses US$ 2,5 trillion worth of in-situ minerals.9 New oil and gas discoveries in East Africa (Kenya, Tanzania and Mozambique) are expected to transform Africa’s economic and political landscape - over the next decade an estimated 25 billion barrels of oil will become available for export in Africa, and a third or more of African countries may derive the majority of their export earnings from oil and gas, injecting close to US$ 3 trillion into the economies of Africa’s poorest and least developed nations.10 Merger and acquisition (M&A) data also highlights the importance of Africa’s extractive industries. The mining, quarrying and petroleum sector has accounted for nearly 46% of all cross-border M&A activity in Africa by private equity firms in the past four years. 11This trend is exemplified by a survey which found that 66% of institutional investors considered Africa to possess the greatest overall potential of all the global frontier markets. 12The investors surveyed expected some exposure to the continent by 2016, while nearly one-third predicted an investment of at least 5% of their portfolios by the same date.13 Respondents to Ernst & Young’s 2013 Africa Attractiveness Survey ranked Africa as a more attractive investment destination than the former Soviet states, Eastern Europe, Western Europe, Central America and the Middle East.14 Consequently, never before has it been a better time to invest in Africa in general, and its resources sector in particular. With its abundant mineral resources and plethora of under-exploited business opportunities, Africa is ripe for investment. For these reasons it is with great pleasure that we present Webber Wentzel’s second African Mining Law Survey. This publication contains an overview of the mineral regulatory regimes currently in place in 19 African mining jurisdictions with additional information relevant to foreign investors. In 2013 Africa lost one of her greatest sons, Nelson Rolihlahla Mandela. As such, and in closing, it seems appropriate to consider his aspiration for Africa: “I am the product of Africa and her long-cherished view of rebirth that can now be realised so that all of her children may play in the sun”.15
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Peter Leon Head of Mining Sector Group Johannesburg, South Africa
S Devrajan and W Fengler Africa’s Economic Boom: Why the pessimists and the optimists are both right Foreign Affairs May/June 2013, at 70. Ernst & Young Africa Attractiveness Survey: Getting down to business 2013, at 10. Ibid. 4 Ernst & Young, op.cit, at 29. 5 United Nations Conference on Trade and Development (UNCTAD) Foreign direct investment to Africa increases, defying global trend for 2012 26 June 2013. 6 Ernst & Young, op.cit, at 5. 7 World Bank, Global Economic Prospect January 2014 - Sub-Saharan Africa, at 85. 8 Ibid footnote 1. 9 Citigroup “Metals & Mining Strategy: Royales, Riches and Taxes” in Citigroup Global Markets, 27 April 2010, at 1. 10 L Diamond and J Mosbacher “Petroleum to the People, Africa’s Coming Resource Curse and How to Avoid It” in Foreign Affairs September 2013, at 13, 17, 16 and 18. 11 UNCTAD World Investment Report 2013, at 42. 12 When asked to choose two regions from five options, 66% of investors surveyed picked African frontier markets as offering the greatest potential. Invest AD and Economist Intelligence Unit Into Africa: Institutional investor intentions to 2016, January 2012, at 5. 13 Ibid. 14 Ernst & Young, op.cit, at 43. 15 Nelson Rolihlahla Mandela’s final speech as President of the Republic of South Africa to the South African Parliament, Cape Town on 26 March 1999. 1
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Legal Notice: The information in this document is provided for general information purposes only. It does not constitute legal or other professional advice. At the time of writing the content was, to the best of our knowledge, true and correct. We accept no responsibility for any loss or damage that may arise from reliance on information contained in this document.
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CONTENTS
COUNTRIES
PAGE
ANGOLA
6
BOTSWANA
10
CÔTE D’IVOIRE
15
DEMOCRATIC REPUBLIC OF CONGO
19
ETHIOPIA
22
GABON
25
KENYA
28
LIBERIA
31
MADAGASCAR
34
MOZAMBIQUE
38
NAMIBIA
44
REPUBLIC OF CONGO
48
REPUBLIC OF GUINEA
52
SENEGAL
56
SOUTH AFRICA
59
UNITED REPUBLIC OF TANZANIA
66
ZAMBIA
70
ZIMBABWE
74
KEY CONTACTS
80
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ANGOLA MINING LAW SURVEY
Information provided by Linklaters.
1. MINING LAW ISSUES 1.1
Mining Title
Natural resources, either in solid, liquid or gas state, found in the soil, subsoil, territorial sea, exclusive economic zone and continental shelf under the jurisdiction of Angola are the property of the Angolan State, which shall determine the conditions for granting of rights, research and exploration, pursuant to the Constitution, domestic and international Law. Furthermore, geological information belongs to the State and entities carrying out survey operations without holding a mining right are obliged to communicate such activities to the State and hand over all collected information to the latter. All geological information collected is to remain strictly confidential.
1.2
Regulatory authority
Ministry of Geology and Mines (MGM)
1.3
Exploration and Mining Laws and Regulations
• Law 31/11 of 23 September - Mining Code (MC). • OBS: The MC came into force on 22 December 2011.
1.4
Restrictions related to:
1.4.1
Foreign Investments
Mining is subject to a specific investment regime under the MC applicable both to national and foreign investors. Investments must be carried out under an investment contract which must be approved by the MGM. Where the projected investment exceeds USD25 million, the approval must be given by the President of the Republic.
1.4.2 Commodities
No. Mining title holders have the right to freely trade products resulting from their mining activities, subject to compliance with rules governing the sales of minerals and purchase and sale agreements. For strategic minerals, a specific, more stringent regime applies, including, for diamonds, certification in accordance with the Kimberly Process and, for small-scale production title holders, sale through a Stateappointed agency.
1.4.3 Strategic Minerals
Gold, diamonds and radioactive minerals (the State can designate others) may be allocated exclusively to a specific public entity that can exercise these rights on a nation-wide basis. Currently, there is only a national concessionary in respect of the production of diamonds, Enfiama, E.P..
1.4.4 Licence holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated • Local participation (BEE / indigenisation) • State ownership
• Joint ventures are permitted. In establishing such partnerships, preference must be given to national entities/persons subject to the applicable laws. • No restrictions apply. • No local participation requirement. • In consideration for granting mining rights, the Angolan State shall be entitled to compensation in the form of (a) equity participation of not less than 10% in the company that conducts the relevant activities; and/or (b) inkind allocations of the minerals to be extracted. A combination of these two modalities may also be used. The criteria for implementation of the modalities discussed in (a) and (b) above are subject to the approval of the President of the Republic or the minister responsible for the mining sector, by virtue of delegation of powers.
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2. LICENSING SCHEME The acquisition of mining rights is made upon request or after public tender. For strategic mineral or areas deemed to have a high geological potential, the rule is always public tender. Reconnaissance Phase
Prospecting Phase
Mining / Exploitation Phase
2.1
Authorisation required
Yes.
Yes.
Yes.
2.2
Validity of Licence
Maximum of five years.
Maximum of five years.
35 years.
2.3
Renewable
Yes, on an yearly basis and for a maximum of two additional years.
Yes, on an yearly basis and for a maximum of two additional years.
Yes, for additional periods of 10 years.
2.4
Exclusivity of Licence
No.
No.
Yes.
2.5
Transfer of Licence
Yes. An authorisation from the MGM or by the President of the Republic is required.
Yes. An authorisation from the MGM or by the President of the Republic is required.
Yes. An authorisation from the MGM or by the President of the Republic is required.
2.6
Change of control/ shareholding
No.
No.
No.
2.7
Community Consultation
Yes.
Yes.
Yes.
3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
Yes.
3.2
Documentation/ Reports required for approval
Exploration/mining plans, environmental impact assessment and work reports required for each of the mining titles .
3.3
Approval time for grant of mining Licence
Variable.
4. ENVIRONMENT REGULATION 4.1
Applicable Laws and Regulations
• Law 5/98 of 19 June – Environment Law “EL”. • Decree 59/07 0f 13 July – Regulation on Environmental Licensing. • Decree 51/04 of 23 July – Regulation on Environmental Impact Assessment. • Decree 01/10 of 13 January – Regulation on Environmental Audits. • Mining Code.
4.2
Environmental Impact Assessment
Yes. The approval, by the Ministry of Environment, of an Environmental Impact Assessment prepared by the mining operator is a pre-condition for the obtaining of exploration rights.
4.3
Community Consultation
Yes.
4.4
Rehabilitation Fund/ Closure Fund
In addition to the statutory reserves required under commercial legislation, mining companies are required to create a legal reserve of 5% of the invested capital to cover the costs for mine closure and environmental rehabilitation.
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5. TAXES / EQUITY 5.1
Corporate tax rate
25%
5.2
Dividend tax
10%
5.3
Interest payments
15%
5.4
Royalties
Between 2% to 5%, depending on the type of mineral.
5.5
Surface Tax
USD 7/km2 on year 1 up to USD 80/km2 on year 7.
5.6
Capital Gains Tax
• For corporate tax purposes, worldwide capital gains are treated as ordinary business income. • Capital gains from the sale of shares, quotas and other corporate rights do not attract investment income tax.
6. FOREIGN INVESTMENT INCENTIVES 6.1
Governing Legislation
Mining Code. Law 20/11 of 20 May – Law on Private Investment (subsidiary legislation).
6.2
Authority
• Ministry of Geology and Mines in coordination with the Ministry of Finance. • National Authority for Private Investment.
6.3
Incentives Provided
• Investment guarantees: o No expropriation, save for public interest and against fair compensation in accordance with applicable laws. o No cancellation of licences without a due administrative or judicial process. • Customs duties: o The importation of equipment intended exclusively for prospecting, exploration, reconnaissance, mining and beneficiation is exempted from customs duties, provided that such equipment is not manufactured in Angola or, if available, the same does not have the recommended quality or costs 10% more than the imported equipment. • Fiscal incentives and other customs incentives: o Obtainable upon request to the Ministry of Finance during the negotiations of an investment project, provided that the interested party undertakes to make certain notable contributions to the national economy, e.g.: purchase of local goods and services, increase in the country’s exports, skills transfer, local beneficiation, among others. • Foreign exchange: o Investors are allowed to repatriate capital, subject to an authorisation from the Angolan Central Bank. This is subject to a general condition that each investor must make a minimum investment (see section 6.4 below). However, commencement of repatriation of capital can be delayed up to three years from the implementation of investment projects if the amounts invested do not fall within a certain threshold defined for each of the various “development zones” created for purposes of the granting of incentives.
6.4
Minimum Investment Required
Despite that the MC provides for a specific foreign investment regime, the applicable thresholds are in fact established under the general investment regime. The minimum investment amount is USD 1,000,000.00.
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7. LABOUR LAWS 7.1
Restrictions on employment of foreign workers
Titleholders are required to ensure the employment and technical training of Angolans, subject to the applicable labour laws. Employment of foreigners is permitted but preference should be given to the employment of Angolans. Furthermore, companies may only employ non-resident foreigners, albeit unpaid, where their total staff, if comprised by more than five employees, consists of at least 70% of Angolan nationals. Therefore, only 30% of a company’s’ employees can be non-resident foreigners. This is the so-called “principle of Angolanisation”. Nevertheless, when recruiting specialised staff, or certain type of skilled staff that are normally unavailable in the Angolan market, the employer may request an authorisation from the Labour Administration to hire non-resident foreigners in a number greater than the above mentioned quota.
8. RESETTLEMENT 8.1
Resettlement and Housing Requirements
It is mandatory to establish communication/consultancy channels with local communities every time the mining activities have a potential detrimental effect to the communities’ material, cultural or historical assets. The holders of mining rights have the obligation to resettle local communities in case mining activities cause any habitation damage. In such resettlement cases the communities’ habits, traditions and other cultural aspects need to be taken into account by the holder of the mining rights.
9. LOCAL CONTENT 9.1
Employment & Procurement
The holder of mining rights shall give preference to the hiring of national employees living in the surroundings of the concession areas and secure they get are granted with proper training. Provided that the prices are not 10% higher and that same are provided in a timely manner (up to eight working days), preference shall be given to the acquisition of goods and services from local suppliers to the extent the quality is compatible with the economics, safety and overall efficiency of the project.
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BOTSWANA MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title
The right of ownership in minerals is vested in the Republic of Botswana.
1.2
Regulatory authority
Ministry of Mineral, Energy and Water Resources.
1.3
Exploration and Mining Laws and Regulations
• • • • • • • • • •
1.4
Restrictions related to:
1.4.1
Foreign Investments
1.4.2 Commodities 1.4.3 Licence holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated • Local participation (BEE/ indigenisation) • State ownership
Mines and Minerals Act of 1999. Unwrought Precious Metals Act. Precious and semi-precious stones (Protection) Act CAP 66.03. Petroleum (Exploration and Production Act) CAP 67.01. Mines, Quarries, Works and Machinery Act [CAP 44:02]. Explosives Act and Regulations [CAP 24:02]. National Monuments and Relics Act [CAP 59:03]. Mines and Minerals (Prospecting and Leasing Charges) Regulations [CAP 66:01]. Mines and Minerals (Health, Mortality and Labour Returns) Regulations; [CAP 66:01]. Mines and Minerals (Demarcation of Mining Lease Areas) Regulations.
No. The Mines and Minerals Act does not apply to petroleum. • Subject to certain requirements contained in the Mines and Minerals Act, the licence holder may be a corporate entity, individual or joint venture. • A corporate entity must be incorporated in Botswana. An individual must be a citizen of Botswana or ordinarily resident in Botswana for a period of four years or such other period as may be prescribed. • There is no legislated requirement regarding BEE or indigenisation. However, the holder of a mineral concession is required to give preference to materials and products made in Botswana, service agencies located in Botswana and owned by Botswana. • The Botswana Government has the option of acquiring up to 15% working interest participation in a proposed mine. The percentage of government ownership in respect of a diamond mine is negotiated with the prospective licence holder.
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2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining/ Exploitation Phase
2.1
Authorisation required
N/A
• Prospecting licence: yes. • Retention licence: yes.
Yes.
2.2
Validity of Licence
N/A
rospecting licence: Three •P years. • Retention licence: Three years.
25 years.
2.3
Renewable
N/A
• Prospecting licence: yes. • Retention licence: yes – a retention licence may only be renewed once, for a period not exceeding three years, at any time not later than three months before expiry. • During the renewable period third parties can be authorized upon request to have access to the area for the purposes for collecting samples and data required for the purposes for a mining licence.
Yes, unlimited renew period not exceeding 25 years.
2.4
Exclusivity of Licence
N/A
• Prospecting licence: yes. • Retention licence: yes.
Yes.
2.5
Transfer of Licence
N/A
Yes, with the consent of the Minister. rospecting licence: yes, with •P the cosent of the Minister •R etention: yes, with the consent of the Minister.
2.6
Change of control/ shareholding
N/A
rospecting licence: yes, with •P the consent of the Minister. • Retention licence: yes, with the consent of the Minister.
Yes, with the consent of the Minister.
2.7
Community Consultation
N/A
No.
No.
2.8
Mineral Permit
N/A
N/A
Up to five years of scale mining operations for over an area not exceeding 0.5 sqkm per permit (“small scale mining” means the international mining of minerals other than diamonds in operations involving the mining and processing of less than 50 000 tonnes of raw ore per annum and in which the overall investment in fixed assets does not exceed R1 million).
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2.9
Diamond Cutting Licence (DCL)
Up to 10 years. Allows holder to cut and polish rough diamonds in Botswana.
2.10
Diamond Toolmakers Licence
Up to 10 years. Entitles holder to get rough or uncut diamond not suitable for polishing, in tools or to crush or alter such diamond for that purpose or purpose of trade.
2.11
Precious Stones Dealers Licence (PSDL)
Up to five years. Entitles holder to deal in rough or uncut precious stones as a buyer, seller, importer or exporter.
2.12
Semi-Precious Stones
Up to one year. Allows holder to buy or sell semiprecious stones.
2.13
Export Permit
Permit required to export rough diamonds and it must be issued together with a Kimberly Process Certificate (KP Certificate). Process semi-precious stones also require export permits.
3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
Yes. However, where the President considers that any land is required to secure the development or utilization of the mineral resources of Botswana, he may compulsorily acquire that land.
3.2
Documentation/ Reports required for approval
Yes. The forms to be completed for a licence or renewal application contain details regarding the documentation and/ or reports to be submitted for approval.
3.3
Approval time for grant of mining Licence
Law does not provide a timeframe. According to common practice, the proposed timeframe is four months for any mineral except diamonds which takes approximately six months or more if timeframe is extended by the Minister. The government’s target time frames, however, indicate that prospecting licences should be granted or rejected within 60 days, diamond export permits within two days, smallscale mining concessions within 15 days, and large-scale mining concessions within 20 days.
4. ENVIRONMENT REGULATION 4.1
Applicable Laws and Regulations
• The Mines and Minerals Act [CAP 66:01]. • The Environmental Impact Assessment Act, 2011.
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4.2
Environmental Impact Assessment
Yes, the applicant for a mining licence or a retention licence or any renewal of either is required to prepare and submit a comprehensive Environmental Impact Assessment as part of the Project Feasibility Study Report.
4.3
Community Consultation
A notification in the Gazzette and in a newspaper circulating at least once a week for four consecutive weeks, inviting comments or objections from persons who are most likely to be affected by the proposed activity. The competent authority may hold public hearing if after examining the environmental impact statement, the competent authority is of the opinion that the activity is of such a nature that the public should have the opportunity to make submissions or comments at a public hearing or the public concern over the activity is that the activity may have a significant adverse impact on the environment.
4.4
Rehabilitation Fund/ Closure Fund
There are no clear legal provisions that establish an environmental rehabilitation fund as part of the mine closure planning process.
5. TAXES/EQUITY 5.1
Corporate tax rate
22% for a resident company; 30% for a non-resident company. Mining taxable income (excluding diamonds) for a resident company can range between 22% to 55%, or the tax rate derived from the formula 70-1500/x, where x (%) = taxable income/gross income. (VITR is for non-diamond mineral, diamond tax regime is negotiated and VITR can be applied if there is an agreement.)
5.2
Dividend tax
A withholding tax of 7.5% is levied on all dividends paid by a resident company to a resident or nonresident; dividends received from outside Botswana are subject to a flat 15% tax.
5.3
Royalties
Payable on the percentages of gross market value as follows: • 10% on precious stones; • 5% on precious metals; and • 3% on other minerals or mineral products.
5.4
Capital Allowances
100% depreciation of capital expenditures.
5.5
Import Duty
Mining equipment and spared are zero-rated items, otherwise duties are payable.
5.6
Value Added Tax
12% applies to all but zero-rated items, which includes export of minerals, VAT refunds are available upon re-export of items within six months of being brought into the country.
5.7
Taxation for Downstream processing (cutting, polishing and refining of minerals)
15% tax rate (basic rate of 5% and an additional company tax rate of 10%).
5.8
Development Order
0-15% for downstream activities, mineral beneficiation projects such as refineries.
5.9
Deductions allowable
Deductions are allowable: • In expenditure wholly, exclusively and necessarily incurred, amongst others, (i) in Botswana, during the tax year by that person or any associated person in the production of his or her assessable income from mining operations, (ii) outside Botswana, during the tax year by that person or any associated person in the production of his or her assessable income from mining operations to the extent specified in the Twelfth Schedule, and (iii) during the tax year by that person on prospecting operations carried on by him or her in Botswana. • Any liabilities to pay royalties under the Mines and Minerals Act and under the Petroleum Act which arose during that tax year. • For the tax year in which that person commences mining operations, an amount equal to any assessed loss incurred by him or her in respect of prospecting operations carried out prior to the commencement of his or her mining operations.
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6. FOREIGN INVESTMENT INCENTIVES 6.1
Do they exist?
There are various double taxation treaties “DTAs” in place that would apply. In respect to others, those would be negotiable between the licence holder, the Ministry of Mineral, Energy and Water Resources and the Ministry of Finance and Development Planning.
6.2
Governing Legislation
Income Tax Act [CAP 52:01].
6.3
Authority
Commissioner General of the Botswana Unified Revenue Service.
6.4
Incentives Provided
Each DTA provides such tax incentives.
6.5
Minimum Investment Required
In respect of a Mining licence, an applicant must have a debt equity ratio of no more than 3:1 unless the otherwise waived by the Minister of Mineral, Energy and Water Resources.
7. LABOUR LAWS 7.1
Restrictions on employment of foreign workers
Yes. The underlying policy with this issue is that employment of foreign workers should not compete with expertise that is readily available locally.
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CÔTE D’ IVOIRE MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title
Mineral substances, mineral waters and geothermal deposit contained in the subsoil or on the surface of Côte d’Ivoire belong to the State.
1.2
Regulatory authority
The Ministry of Mines, Petroleum and Energy Directorate General of Mines and Geology the implementation of the Mining Code of Côte d’Ivoire.
1.3
Exploration and Mining Laws and Regulations
• Law no 095-553 of 17 July 1995 constituting the mining code in Côte d’Ivoire (Loi n° 95-553 du 17 Juillet 1995 portant Code Minier) (the Mining Code). A new draft bill amending the Mining Code was prepared in 2012 and amended in 2013 but has not yet been adopted. • Mining Decree no 96-634 of 9 August 1996 (the Mining Decree) (Décret n°96-634 du 09 août 1996 portant déterminant les modalités d’application de la loi n° 95-553 du 17 Juillet 1995 portant Code Minier). • Ordinance no 96-600 of 9 August 1996 setting out the tax and mining fees (Décret n°96-600 du 9 août 1996 fixant les droits fixes, les redevances superficiaires, les taxes proportionnelles relatifs aux activités régies par le Code Minier).
1.4
Restrictions related to:
1.4.1
Foreign Investments
1.4.2 Commodities 1.4.3 Licence holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated
• Local participation (BEE/ indigenisation) • State ownership
No. No. However all holders of mineral substances useful for research or operations related to atomic energy must declare this to the Minister of Mines. • Yes, joint venture permissible. • There is no explicit restriction on foreign incorporated licence holders. However to be a licence holder under the Mining Code a foreign incorporated company, must elect Côte d’Ivoire as its domicile and have an authorised representative there, whose identity and qualifications it shall inform the Administration of Mines. Additionally no body corporate can hold a mining licence if it is not registered at the Companies Registry in Cote d’Ivoire. In practice it is very difficult for a company seeking a mining title in Côte d’Ivoire to obtain one without being registered at the Companies Registry. • No specific legislation. • The State is entitled to an equity interest of 10% in the companies holding a‘permis d’exploitation’ (exploitation permit). • This state participation is a free carry percentage that must remain at 10% and thus cannot be diluted per article 5 of the Mining Code.
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2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining/ Exploitation Phase
2.1
Authorisation required
Yes.
Yes.
Yes.
2.2
Validity of Licence
One year.
Fixed term of three years.
20 years maximum term.
2.3
Renewable
Yes, for a further one year term.
• Yes, renewable twice for two years per renewal. • After seven years, an additional renewal may be granted for a period not exceeding three years if collected mining data is of interest and if the extent of exploration work and investment carried out are considered of particularly large by the Administration of Mines.
Yes, renewable periods equal to the demonstrated duration of viability of the deposit, on the same conditions as the original term until the deposit is exhausted.
2.4
Exclusivity of Licence
No.
Yes.
Yes.
2.5
Transfer of Licence
Not clear.
Yes, with the prior approval of the Ministry of Mines.
Yes, with the prior approval of the Ministry of Mines.
3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
Yes.
3.2
Documentation / Reports required for approval
• A letter addressed to the Minister of Mines, Petroleum and Energy to the attention of the Director General of Mines and Geology. • Receipts showing payment of fixed charges and amounts due per kilometer. • Cadastral maps from the Institute of Geography (1/200 000 and 1/50 000 or other maps at 1/20 000 and 1/10 000) showing the perimeter of the solicited area. • All documents relating to the technical feasibility study. • A copy of the commercial feasibility study of the proposed mining exploitation. • Proof of technical and financial capability of the applicant. • An Environmental Impact Assessment with a Environmental Management Program and a rehabilitation plan for the site. • A copy of the mining titles upon which the exploitation permit would be madetwelve months (to be submitted before the beginning of the last quarter). All other mining title holders must submit to the Director of Mines, a monthly report, an annual update report setting out statistical comparisons with the preceding year, an annual technical report setting out in detail the work done during the year and a work programme for the upcoming financial year.
3.3
Approval time for grant of mining Licence
Not specified in the Mining Code (but in practice it takes around six months).
4. ENVIRONMENT REGULATION 4.1
Applicable Laws and Regulations
Mining Code and Law no 96-766 of 3 October 1996 constituting the environmental code (Environmental Code).
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4.2
Environmental Impact Assessment
Yes, for any holder of a mining title per article 77 of the Mining Code.
4.3
Community Consultation
Yes, a public inquiry is required for carrying out an Environmental Impact Assessment.
4.4
Rehabilitation Fund/ Closure Fund
Yes, a tax is payable by mining companies into the Environmental National Fund (Additionally every mining licence must set up a rehabilitation fund, held in an escrow account at the Autonomous Amortization Fund (the ‘Caisse Autonome d’Amortissement’).
5. TAXES/ EQUITY 5.1
Corporate tax rate
25%
5.2
Dividend tax
12% generally and 10% for listed companies.
5.3
Royalties
• 2.5% of the value of production for base metals; and • 3% of the value of production for precious metals, precious stones, diamonds and gold.
6. FOREIGN INVESTMENT INCENTIVES 6.1
Do they exist?
Yes.
6.2
Governing Legislation
The new Investment Code no 2012-487 of 7 June 2012, supplemented by the Mining Code, which together provide foreign investment incentives.
6.3
Authority
The Centre for Investment Promotion and the Ministry of Mines.
6.4
Incentives Provided
• The holder of a prospecting licence, is exempted from 50% stamp duty on capital increase (article 86 of the Mining Code) and Value added tax (article 86 of the Mining Code). • An investor can, at the investment (pre - mining/exploitation stage) enjoy 40% -50% reduction on custom duties for all equipment and materials and first lot of spare parts (depending on the whether the investment is less or at least equal to the minimum investment figure and this after obtaining the approval of the Center for Investment Promotion). • In addition to this any investor at the investment stage (the investment stage), depending on the categorization of the area where he will make his investment (namely whether it is in Zone A, B or C), can be exempted, after agreement from the Center for Investment Promotion, from the following: • Zone A (exemption granted for the period of the agreement): o payment of commercial profit tax and non-commercial profit tax o payment of business licence fees and other contributions; and o 50% of all taxes required to be paid by employers, excluding skills training tax and the additional tax for continued professional training. • Zone B (exemption granted for the period of the agreement): o payment of commercial profit tax and non-commercial profit tax o payment of business licence fees and other contributions; and o 75% of all taxes required to be paid by employers, excluding skills training tax and the additional tax for continued professional training. • Zone C (exemption granted for 15 years): o payment of commercial profit tax and non-commercial profit tax; o payment of business licence fees and other contributions;
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7. LABOUR LAWS 7.1
Restrictions on employment of foreign workers
reference to Ivorian workers within a minimum portion of 80% of the total workforce and a plan for •P the recruitment of Ivorians (‘l’ivoirisation’) must be submitted as soon as an exploitation licence is granted (both per article 42 of the Mining Decree) • Training programme and budget for Ivorian workers must be set up as soon as mining operations begin setting out training plan for Ivorian workers from exploration (including preliminary studies) to exploitation (article 43 of the Mining Decree). • Foreigners require both a work permit and a residence permit (settlement visa for work purposes).
8. RESOURCE NATIONALISM TRENDS 8.1
A new draft bill amending the Mining Code that was prepared in 2012 and amended in 2013 but has not yet been adopted is indicative of the recent trend in African countries adopting new mining legislation with resource nationalist measures. For instance the proposed bill would subject the transfer of mining titles to 20% capital gains tax. It is not clear whether it will be adopted in its current form.
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DEMOCRATIC REPUBLIC OF CONGO (DRC) MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title
The deposits of mineral substances, including artificial deposits, underground water and geothermal deposits on the surface or in the sub-soil or in water systems of the national territory, are the exclusive, inalienable and imprescriptibly property of the State.
1.2
Regulatory authority
Minister of Mines, Mining Registry (Cadastre Minier).
1.3
Exploration and Mining Laws and Regulations
• Law no. 007/2002 of 11 July 2002 establishing the Mining Code (Loi n° 007/2002 du 11 juillet 2002 portant Code Minier). • Decree no 038/2003 of 26 March 2003 establishing the Mining Regulations (Décret n° 038/2003 du 26 mars 2003 portant Règlement Minier). • Ministerial Decree n°0144/CAB.MIN/ 01/2013 of 17 April 2013 regarding the subcontracting of direct mining activities, related or ancillary activities of mining companies in the Democratic Republic of Congo (Arrêté Ministériel n° 0144/CAB.MIN/01/2013 du 17 avril 2013 portant sous-traitance des activités minières directes, connexes ou annexes des entreprises minières en République Démocratique du Congo). • Inter- Ministerial Decree n°0122/CAB.MIN/ MINES/01/2013 and n°782/CAB.MIN/Finances/2013 of 05 April 2013, on the regulation of export of mining merchant products. (Arrêté Interministériel n° 0122/ CAB.MIN/MINES/01/013 et n°782/CAB.MIN/Finances/2013 du 05 avril 2013 portant règlementation des exportations des produits miniers marchands). • Inter-Ministerial Decrees No.0327/CAB.MIN/MINES/01/2013 and No.855/CAB.MIN/FINANCES/2013 of July 4, 2013 (new Decree) that amends and supplements the Inter- Ministerial Decree n°0122/CAB.MIN/ MINES/01/2013 and n°782/CAB.MIN/ Finances/2013 of 05 April 2013, on the regulation of export of mining merchant products. (Arrêté Interministériel n° 0327/CAB.MIN/MINES/01/2013 and No.855/C AB.MIN/FINANCES/2013 of July 4, 2013 modifiant et complétant l’Arrêté Interministériel n° 0122/CAB.MIN/MINES/01/2013 et n°782/ CAB.MIN/Finances/2013 du 05 avril 2013 portant règlementation des exportations des produits miniers marchands).
1.4
Restrictions related to:
1.4.1
Foreign Investments
1.4.2 Commodities 1.4.3 Licence holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated • Local participation (BEE/ indigenisation) • State ownership
No. No (except for radioactive minerals which are placed under a special regime). • Yes. • Legal entities incorporated in the DRC; except for reconnaissance licence for which legal entities may be incorporated in another country. • No local participation requirement. • 5% state ownership in exploitation phase.
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2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining/ Exploitation Phase
2.1
Authorisation required
Yes, reconnaissance certificate (attestation de prospection).
Yes, prospecting permit (permis de recherche).
Yes, exploitation permit (permis d’exploitation).
2.2
Validity of Licence
Two years.
Four years for diamond and other precious metals five years for other mineral substances.
30 years
2.3
Renewable
No.
Yes: • two times, for a duration of two years for diamond and other precious metals; and • two times, for duration of five years for other mineral substances.
Yes, several times, for a duration of 15 years.
2.4
Exclusivity of Licence
No.
Yes.
Yes.
2.5
Transfer of Licence
Not provided.
Yes, approval by Mining Registry required.
Yes, approval by Mining Registry required.
2.6
Change of control/ shareholding
Yes, no approvals needed.
Yes, no approvals needed.
Yes, no approvals needed.
2.7
Community Consultation
No.
No.
Yes.
3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
Yes.
3.2
Documentation/ Reports required for approval
Application forms and, for exploitation permits only, report on the findings during prospecting phase, feasibility study, technical development plan, environmental impact assessment, environmental management plan and results of public inquiry.
3.3
Approval time for grant of mining Licence
30 working days.
4. ENVIRONMENT REGULATION 4.1
Applicable Laws and Regulations
• Mining Code and Mining Regulations. • Law no. 11-009 of 9 July 2011 regarding the fundamental principles for the protection of the environment (Loi n°11-009 du 9 juillet 2011 portant principes fondamentaux relatifs à la protection de l’environnement).
4.2
Environmental Impact Assessment
Yes, for exploitation licence only.
4.3
Community Consultation
Yes, when applying for exploitation licence.
4.4
Rehabilitation Fund/ Closure Fund
Yes.
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5. TAXES / EQUITY 5.1
Corporate tax rate
30% (this is a reduced rate for mining companies – since 1 January 2013 the general corporate tax rate is 35%).
5.2
Dividend tax
10%
5.3
Royalties
Yes, 0,5% for iron or ferrous metals, 2% for non-ferrous metals, 2,5% for precious metals, 4% for precious stones, 1% for industrial minerals.
5.4
Capital Gains Tax
Gains on capital are taxed as part of corporate income at the applicable corporate tax rates.
6. FOREIGN INVESTMENT INCENTIVES 6.1
Do they exist?
Yes.
6.2
Governing Legislation
The Investment Code does not provide for foreign investment incentives in the mining sector. Those are provided by the Mining Code.
6.3
Authority
Minister of Mines.
6.4
Incentives provided
Reduced tax rate for mining companies: • Corporate income tax rate: 30%; • Dividend withholding tax: 10%; and • Exemption of withholding tax on interest paid on loans contracted abroad.
7. LABOUR LAWS 7.1
Restrictions on employment of foreign workers
• • • •
Requirement of work permit. Special tax on salary of foreign workers. Preference to be given to DRC citizens. Foreign workers may not constitute more than 2 to 2,5% of the labour force, depending on the category of the workers.
8. RESOURCE NATIONALISM TRENDS 8.1
• The DRC is in the process of revisiting its 2002 Mining Code. In February 2013, a draft bill providing amendments to the Mining Code circulated to the mining industry. From what has transpired so far, it seems that the new mining code, once adopted, will be resource nationalism inspired. Initial reports in preparation of the drafting of the new mining code mention increased state participation and substantially increased taxation among the key features of the new legislation. • In April 2013, a new Ministerial Decree has established ban on export of copper and cobalt concentrates, however: o a moratorium has been given to mining operators who already produce copper and cobalt concentrates, in order to give them time to comply with the ban. The moratorium is valid up to 31 December 2013; o during the moratorium period, mining operators producing copper and cobalt concentrates can transform minerals either in the DRC or outside the DRC; and o for transformation outside of the DRC, the approval from the Minister of Mines must be obtained. A copy of the contract with the foreign processing entity must be filed along with the approval request. • In June 2013: a new Ministerial Decree has granted exclusivity to DRC companies when mining companies established in DRC subcontracts their mining activities, related or ancillary activities.
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ETHIOPIA MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title
Minerals are the property of the Government and all the peoples of Ethiopia.
1.2
Regulatory authority
Ministry of Mines and Energy or a state organ in charge of the mining sector, as appropriate.
1.3
Exploration and Mining Laws and Regulations
• Mining Proclamation No. 678/2010. • Mining Operations Council of Ministers Regulations No. 182/1994, as amended by Council of Ministers Regulation No. 27/1998. • Mining Income Tax Proclamation No. 53/1993, as amended.
1.4
Restrictions related to:
1.4.1
Foreign Investment
1.4.2 Commodities 1.4.3 Licence Holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated • State ownership • Local participation (BEE/indigenisation)
Yes, artisanal mining of minerals is restricted to Ethiopian nationals only. Yes, artisanal mining of minerals is restricted to Ethiopian nationals only. • Registered entity or joint venture. • A foreign company wishing to invest in the mining sector may be required to establish either a branch of the parent company or its subsidiary in Ethiopia. • No, except large-scale and small-scale mining companies, in which the government shall acquire, without cost, a participation interest of 5% of the operation. Additional equity participation may also be provided for by agreement. • No legislative requirement.
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2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining Phase
2.1
Authorisation required
Yes.
Yes, however, an Ethiopian citizen may prospect without holding a prospecting licence, provided s/he does not interfere in any way with the rights of a licence-holder or any other person.
Yes.
2.2
Validity of Licence
18 months.
Three years.
• Small-scale mining licence – a maximum of 10 years or the lifespan of the deposit, whichever is shorter. • Large-scale mining licence - a maximum of 20 years or the lifespan of the deposit, whichever is shorter.
2.3
Renewable
No.
• Yes, small-scale mining licence – a maximum of five years Yes, twice for a period not subject to fulfilment of obligations set out under the prior exceeding one year per renewal. licence. The Licensing Authority may • Large-scale mining licence – a maximum of 10 years, further allow extension of subject to the fulfilment of the licence conditions. renewal to be made on each year where the licensee proves the necessity to undertake exploration activity beyond the initial work programme. Provided however, that such period shall not exceed five years.
2.4
Exclusivity of Licence
No.
Yes.
Yes.
2.5
Transfer of Licence
No.
Yes, the prior approval of the licensing authority is required.
Yes, the prior approval of the licensing authority is required.
2.6
Change of control/ shareholding
Not provided for.
Not provided for.
Not provided for.
2.7
Community Consultation
No.
No.
No.
3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
Yes.
3.2
Documentation/ Reports required for approval
Inter alia, • records of mining operations; • financial, employment and commercial records; • Environmental Impact Assessment; • inventory of all equipment, machinery and other physical assets; and • other reports and documentation as may be required by the licensing authority.
3.3
Approval time for grant of mining Licence
Approximately 2 - 3 weeks.
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4. Environmental Regulation 4.1
Applicable Laws and Regulations
• Environmental Protection Authority Establishment Proclamation No. 9/1995. • Institute of Biodiversity Conservation and Research Establishment Proclamation No. 120/1998. • Environmental Impact Assessment Proclamation No. 299/2002. • Environmental Pollution Control Proclamation No. 300/2002.
4.2
Environmental Impact Assessment
Yes.
4.3
Community Consultation
Yes.
4.4
Rehabilitation Fund/ Closure Fund
Funds must be paid into a rehabilitation fund.
5. TAXES/ EQUITY 5.1
Corporate tax rate
30%
5.2
Dividend tax
10%
5.3
Royalties
• • • • • •
5.4
Capital Gains Tax
• Yes. The current capital gains tax system applies on sales of building at 15%, and transfer of shares at 30%.
8% Precious minerals. 6% Semi precious minerals. 5% Metallic minerals. 4% Industrial minerals. 3% Construction minerals. 2% Geothermal deposits and mineral water.
6. FOREIGN INVESTMENT INCENTIVES 6.1
Do they exist?
Yes.
6.2
Governing Legislation
Mining Proclamation No. 52/1993.
6.3
Authority
Mining Proclamation No. 52/1993.
6.4
Incentives Provided
The rates of royalty and rentals to be determined under the Mining Proclamation are determined in such a manner as to encourage investment given the priority of development and mineral development areas. Exemption from customs duty and import duties on equipment, vehicles, machinery and spare parts necessary for the mining operations is also offered as an incentive. The government also allows the opening and operation of a foreign currency account in Ethiopia, as well as the retention of a portion of the foreign currency earnings and remittance of profits, dividends and interest on foreign loans. Losses are also permitted to be carried forward for 10 years.
7. LABOUR LAWS 7.1
Restrictions on employment of foreign workers
Yes, permanent foreign workers require a work permit. Short-term service providers (less than three months) such as external experts or consultants do not require work permits. As soon as a foreign worker is involved in permanent work or is in a position that requires a continuous presence in Ethiopia, a work permit is required. Preference must be given to Ethiopian nationals who are appropriately qualified.
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GABON MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title
Minerals belong to the State of Gabon. per article 4 of the Mining Code.
1.2
Regulatory authority
The Ministry of Mining and the Mining and Geology Department.
1.3
Exploration and Mining Laws and Regulations
• Law no 05 -2000 of 12 October 2000 establishing the mining code in Gabon (Mining Code) duly amended by law no 008/2005. On 4 April 2013, the Council of Ministers of Gabon adopted a new draft mining law, which has not been promulgated as yet. • Decree putting into application law no 05 -2000 of 12 October 2000 establishing the mining code in Gabon (the Mining Decree). • Ordinance no 003/2002/PR of 26 February 2002 and the ratification law no 007/2002 of 22 August 2002 relating to the tax rate, fixed fee on the mining titles, authorisations of the mining and carrying activities.
1.4
Restrictions related to:
1.4.1
Foreign Investments
1.4.2 Licence holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated • Local participation (BEE/ indigenisation) • State ownership
No restrictions. • Joint venture is permissible. • No legal restriction, but in practice a company must be incorporated in Gabon in order to obtain a mining title. • Exploitation of precious minerals is reserved for Gabonese citizens or companies with a minimum of 51% Gabonese shareholding. • At least 15% of small size exploitation should be owned by Gabonese. The Mining Code allows the Government to directly or indirectly (though a state enterprise), in association with a mining title holder, participate in all or part of certain mining operations based on modalities set forth in the mining agreement. There is no provision in the laws to the amount and form that this participation can take and it is a usually agreed in contractual negotiations between the mining company and the Government of Gabon when concluding the mining agreement at the exploration phase. The trend has been for the government to take a stake of between 15% to 25%.
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2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining/ Exploitation Phase
2.1
Authorisation required
Yes.
Yes.
Yes.
2.2
Validity of Licence
Maximum term of two years.
Fixed term of three years.
10 years for exploitation permit, 25 years for concession.
2.3
Renewable
No.
Yes, renewable for two further three year terms.
Yes. A Mining Licence is renewable as necessary for five year periods each and Mining concessions are renewable for one or more periods of 10 years each.
2.4
Exclusivity of Licence
Yes per article nine of the Mining Decree and article 34 of the Mining Code.
Yes.
Yes.
2.5
Transfer of Licence
No. per article 24 of the Mining Code.
Yes, upon prior approval of the Ministry of Mines upon favourable opinion of the Mines and Geology Department.
Yes, upon prior approval of the Ministry of Mines upon favourable opinion of the Mines and Geology Department.
3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
Yes.
3.2
Documentation/ Reports required for approval
Yes. For instance the holder of an exploration licence must present, their work program for the year (within two months after obtaining the licence), the annual programme for the following year (before the December of the current year) and the annual account of expenditure made during the preceding year (at the beginning of the year) per article 177 of the Mining Decree. All other mining title holders must provide a quarterly report and annual report to the Administration in charge of mines at the Ministry of Mines. Mining licence holders must provide their quarterly and annual reports on the basis of the contents of their work programs, risk and risk mitigation matrix, work accidents, geological and environmental impact data (per articles 200 to 204 of the Mining Decree).
3.3
Approval time for grant of mining Licence
According to statute the grant of a mining licence should occur within six months of the receipt of completed application.
4. ENVIRONMENT REGULATION 4.1
Applicable Laws and Regulations
• Mining Code. • The Law no. 16/93 of 26 August, 1993 Relating to the Improvement and Protection of the Environment (Environmental Code). • Law no. 16-01 of 31 December 2001 (Forestry Code). • Order no. 0002 Fixing the Method for the Granting of Approvals for the Conduct of Environmental Impact Assessments (EIA Order). • Decree 539 regulating Environmental Impact Assessments (EIA Decree).
4.2
Environmental Impact Assessment
Yes, for an exploitation licence and a mining concession.
4.3
Community Consultation
Yes, when carrying out an Environmental Impact Assessment the applicant for an exploitation licence or a mining concession must present the project to the affected population, organise public consultations and have the minutes of said consultation signed off by the relevant officials.
4.4
Rehabilitation Fund/ Closure Fund
Money is payable into a rehabilitation fund, as determined by a mining convention.
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5. TAXES/ EQUITY 5.1
Corporate tax rate
35%
5.2
Dividend tax
20%
5.3
Royalties
• 3% to 5% of the value of production for metals and others minerals. • 4% to 6% of the value of production for precious metals. • 8% to 10% of the value of production for precious stone.
6. FOREIGN INVESTMENT INCENTIVES 6.1
Do they exist?
The Mining Code provides for some incentives, notably in respect of the prospecting operations.
6.2
Governing Legislation
The Investment Charter of 1998, provides a general framework for foreign investment into Gabon.some foreign investment incentives.
6.3
Authority
Business Development Centre and the Ministry of Mining.
6.4
Incentives Provided
The incentives are provided in respect of the holder of a prospecting licence who is exempted from the following taxes: • tax on natural persons and companies; • minimum default tax on companies; • all taxes on the income from transferable securities paid at a fixed interest rate, including tax on income from debts, deposits and guaranties; • contributions on patentes (trading licence tax), real estate contributions on built and unbuilt property, as well as local taxes charged as such; • the equipment imported for prospecting operations can be declared tax free by the administration if certain conditions are met; and • the holder of an exploitation permit can be reimbursed VAT for certain expenditure related to its activities and, and VAT exemptions on the importation of equipment used for its operations if such equipment cannot be obtained in the domestic Gabonese market.
6.5
Minimum Investment Required
Minimum work expenditure required by the Mining Code for prospecting licences is: • 200.000.000 FCFA per year for the first three year period; • 400.000.000 FCFA per year for the second three year period; and • 600.000.000 FCFA per year for the last three year period.
6.6
Restrictions on employment of foreign workers
Yes, the Mining Code requires the holder of a mining title to give preference to local employees with the same qualifications and experiences as foreign prospective employees and to set up a yearly training program for local employees in accordance with terms set out in the mining agreement. The proportion of foreign workers cannot exceed 10% of the overall national workforce of the company or 15% of the national workers classified as employees or skilled workers, and in the higher classes (but derogations to this may be negotiated with the Government).
7. RESOURCE NATIONALISM TRENDS 7.1
Currently the State has the right to participate in any mining project with the extent of such participation to be agreed upon contractually. However the Gabonese State is exhibiting a greater willingness to obtain a higher stake in projects. This has been manifested in new draft mining law’s reserving for the Gabonese State a 10% non-dilutable free carry interest in mining operators with the possibility of acquiring an additional 25% interest on commercial terms.
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KENYA MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title
All unextracted minerals (other than common minerals) are vested in the Government of Kenya. Common minerals include clay, murram, limestone, sandstone or common mineral substances as declared by the Minister by notice in the Gazette.
1.2
Regulatory authority
Mines and Geological Department under the leadership of the Commissioner of Mines and Geology
1.3
Exploration and Mining Laws and Regulations
• Mining Act (Cap 306). • Mining (Safety) Regulations. • Mining (Local Equity Participation) Regulations. • Explosives Act (Cap. 115). • Trading in Unwrought Precious Metals Act (Cap. 309). • Diamond Industry and Protection Act (Cap. 310). Note: there is a draft Geology Minerals and Mining Bill which is currently undergoing Internal Review and Stakeholder Consultations.
1.4
Restrictions related to:
1.4.1
Foreign Investments
Foreign entities may establish themselves in Kenya, but must have at least 35% local ownership.
1.4.2 Commodities
Soda ash, fluorspar, salt, diatomite, gold and gemstones.
1.4.3 Strategic Minerals
Diamonds
1.4.4 Licence holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated • Local participation (BEE/ indigenization)
•A prospecting right may not be granted to a company, body of persons or partnership but may be granted to an individual as an agent of the company, body of persons or partnership. • Yes. • No. • The Mining (Local Equity Participation) Regulations provide that a mining licence is conditional on the mineral right in respect of which the licence is issued having a component of at least 35% local equity participation of the mineral right. • The draft Geology Minerals and Mining Bill (awaiting cabinet approval) states that the Cabinet Secretary may from time to time gazette different minimum levels of local equity participation for certain minerals. • N/A.
• State ownership
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2. LICENSING SCHEME Prospecting Phase
Mining Phase
2.1
Authorisation required
Yes, Prospecting Right or an Exclusive Prospecting Right.
Mining Lease or a Special Mining Lease.
2.2
Validity of Licence
One year.
Five to 21 years.
2.3
Renewable
May be renewed for a period of one year after expiration of the previous period up to a maximum of five years.
May be renewed for a further 21 years save for a special mining lease.
2.4
Exclusivity of Licence
The Commissioner may grant a holder of a prospecting right an exclusive prospecting right.
2.5
Transfer of Licence
A prospecting right is not transferable. An exclusive prospecting right is transferable; however consent from the Commissioner is required.
2.6
Change of control / shareholding
A prospecting right may only be granted to an individual as agent of an entity
2.7
Community Consultation
Compensation is payable to the land owners.
A lessee may not transfer or assign his lease or any part thereof without the consent in writing of the Comissioner signified by endorsement thereon.
Compensation is payable to the land owners.
3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
Only holders of prospecting rights and exclusive prospecting right may apply for a mining lease
3.2
Documentation/ Reports required for approval
• Preparation of a mine feasibility report. • Conducting an Environmental Impact Assessment Study. • Submission of a cadastral survey of the area applied for.
3.3
Approval time for grant of mining lease
Maximum processing time is within a year or more.
4. ENVIRONMENT REGULATION 4.1
Applicable Laws and Regulations
• Environmental Management And Co-Ordination Act. • Environmental Impact Assessment and Audit Regulations. • Water Quality Regulations.
4.2
Environmental Impact Assessment
Yes.
4.3
Community Consultation
Yes.
4.4
Rehabilitation Fund/ Closure Fund
Upon the expiration of a lease the entities has up to six months from the date of expiry within which to treat or remove any tailings or ore at grass left thereon by him. Upon application of a prospecting, retention or mining licence bond or other financial security, an environmental protection bond, must be provided. The bond must be able to cover costs associated with the implementation of rehabilitation obligations that belong to the holder of the licence. Successful rehabilitation will result in the complete releasing of the bond.
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5. TAXES/EQUITY 5.1
Corporate tax rate
30% for resident entities and 37.5% for non-resident entities.
5.2
Dividend tax
10% [Note: This rate applies to dividends paid to non-residents. A 5% rate applies to dividends paid to residents and citizens of other states in the East African Community.]
5.3
Royalties
• Royalty on extracted minerals: 12% of gross sales value for diamonds; 10% of gross sales value for rare earth elements and radioactive minerals; 10% of gross sales value for niobium; 10% of gross sales value for titanium ores and Zircon; 8% of gross sales value for coal; 5 % of gross sales value for gold, silver, platinum and other platinoid group metals; 5% of gross sales value for gemstones; 8% of gross sales value for metallic ores - iron ore, manganese ore, chromium ore, nickel ore, bauxite and other ores; 5% of gross sales value for fluorspar, diatomite, natural carbon dioxide gas, and all other minerals, unless another rate of royalty is prescribed; 2% of gross sales value on gold exported by dealers; 1% of gross sales value on industrial minerals - gypsum, limestone and silica sand. Exports of these minerals will, however, attract a royalty of 5%; 2 % gross sales value for construction materials. • Royalty on dealership in gemstones mineral dealers shall pay royalty at a rate of 5% on exports of raw gemstones and 1% on value added gemstones.
6. FOREIGN INVESTMENT INCENTIVES 6.1
Do they exist?
Yes.
6.2
Governing Legislation
Investment Promotion Act No. 6 of 2004.
6.3
Authority
Kenya Investment Authority with the Ministry of Finance.
6.4
Incentives Provided
There are tax based incentives available in Kenya, mainly covering exemptions from duty and VAT on capital equipment and machinery to be used in the investment project.
6.5
Minimum Investment Required
Foreign investors require a minimum of $100 000 or the equivalent in any currency. Local investors require a minimum of Sh1 million.
7. LABOUR LAWS 7.1
Restrictions on employment of foreign workers
Work permits are required for all foreign nationals wishing to work in Kenya and the Kenyan government requires foreign employees to be key senior managers or have special skills not available locally. An entity whether local or foreign, may recruit expatriates for any category of skilled labour if Kenyans are not available.
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LIBERIA MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title
Minerals are the property of the State of Liberia.
1.2
Regulatory authority
Ministry of Lands, Mines & Energy.
1.3
Exploration and Mining Laws and Regulations
• Minerals and Mining Act (2000). Note: this Act is under review by the Ministry. • Exploration Regulations (2010). • Mining Regulations (under consideration/drafting). • Public Procurement and Concessions Act.
1.4
Restrictions related to:
1.4.1
Foreign Investments
• No restrictions. • There are legal registrations for a holder of Class A exploration licence, Class A mining licence and diamond and gold licences. Foreigners may only mine for diamonds with the consent of the Minister of Minerals and Energy (the Minister), and may only sell diamonds if 50% of the mine is owned by Liberian Nationals.
1.4.2 Commodities 1.4.3 Strategic Minerals 1.4.4 Licence holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated • Local participation (BEE/ indigenization) • State ownership
Gold and Diamond. • Yes, joint ventures are permissible. • No. • Class A mining licence may be 100% foreign-owned; class B mining licence requires a minimum of 60% local ownership and a maximum of 40% foreign ownership; class C mining licence restricted to 100% local ownership, but may be supported by foreign investment through separate commercial arrangements between the holder of the class C mining licence and the foreign investor. • Equity participation of the government in Class A mining rights is a minimum of 10% and maximum of 15%.
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2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Exploration Phase
Mining Phase
2.1
Authorisation required
Yes.
Yes.
Yes.
Yes.
2.2
Validity of Licence
Six months.
Six months.
One year minimum and three years maximum.
• Class A Mining Licence twenty five years. • Class B Mining Licence - five years. • Class C Mining Licence - one year.
2.3
Renewable
Yes, it is renewable once for a further six month period.
Yes, it is renewable once for a further six month period.
Yes, the licence is renewable for one period of two years.
• Class A Mining Licence - is renewable for twenty five years. • Class B Mining Licence - is renewable for five years. • Class C Mining Licence - is renewable for one year.
2.4
Exclusivity of Licence
Yes, in respect of the mineral only (Gold, base metals and diamonds).
Yes, (Gold, base metals and diamonds).
Yes.
Yes.
2.5
Transfer of Licence
Yes, the permission of the Not provided for. Director of Geological Surveys is required. However, licence cannot be transferred as security.
Yes, the approval of the Minister is required.
Yes, the permission of the Minister is required.
2.6
Change of control / shareholding
Not provided for.
Not provided for.
Not provided for.
Not provided for.
2.7
Community Consultation
Land owner’s consent must be obtained, failing which the Minister’s consent must be obtained.
Yes.
Yes.
Yes.
3. SECURITY OF TENURE 1.1
Exclusive rights from exploration to mining
Yes.
1.2
Documentation/ Reports required for approval
• Individuals - ID Card/Passport/Proof of citizenship and evidence verifying the financial status of the applicant. • Companies - Evidence verifying the financial status of the applicant, business registration certificate, article of Incorporation and the company ownership details.
1.3
Approval time for grant of Mining Licence
30 days.
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4. ENVIRONMENT REGULATION 4.1
Applicable Laws and Regulations
• Environmental Protection and Management Law. • Environmental Protection Regulations.
4.2
Environmental Impact Assessment
Required. In addition the holder a Exploration and/or Mining Licence is required to submit an environmental management program.
4.3
Community Consultation
Yes.
4.4
Rehabilitation Fund/ Closure Fund
Not provided for.
5. TAXES/EQUITY 5.1
Corporate tax rate
The basic rate is 25%, however for mining and petroleum companies it is 30%. Note: Certain mining companies have concessionary tax rates agreed to with the Government.
5.2
Dividend tax
15%
5.3
Royalties
15% on both resident and non-resident companies on all income regardless of source.
5.4
Capital Gains Tax
The gains for non-resident companies are treated as income and gains below L$1.6 million on the sale of personal-use property may be excluded from the income.
6. FOREIGN INVESTMENT INCENTIVES 6.1
Do they exist?
Yes, parties must enter into an Investment Incentive Contract with the Government of Liberia (Minter of Finance). Note: incentives are granted in the mining sector if they are an Approved Investment Project as defined in the Code.
6.2
Governing Legislation
Investment Incentive Code of the Republic of Liberia.
6.3
Authority
Concession and Investment Commission (Commission).
6.4
Incentives Provided
• Reduction of: o withholding taxes; and o corporate income tax (not normally granted). • Reduction or waiver of: o import taxes on capital goods and equipment; and o reduction or waiver of fees.
6.5
Conditions for the grant of the incentives
No Incentives can be granted unless the investor satisfies the following conditions: • falls within the overall priority as established by the National Planning Council; • ensures the permanent employment of Liberians at all levels and carries out appropriate training schemes and, in case of expansion increase, employment and augment training activities in harmony with the volume of expansion; • leaves an option for Liberians to contribute to the enterprises by purchasing shares or otherwise participating in the ownership; • produces a local value added amounting to not less than 25% of the value of gross output; and • takes its raw materials and other supplies of Liberian origin and imports only such items of which the local product is not available in sufficient quantity and/or its quality or price is not approximately equal with the intended imports as determined by the Government.
7. LABOUR LAWS 7.1
Restrictions on employment of foreign workers
Foreigners require both a work permit and a residents permit (settlement visa for work purposes). No foreigners may be employed for the purpose of unskilled labour. As far as possible, Liberian nationals must be employed in skilled management positions. A work permit will not be issued unless the Ministry of Labour is satisfied that there is no suitable Liberian to perform the work required by the employer.
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MADAGASCAR MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title
All mineral deposits situated on the surface, in the subsoil, as well as in underground waters on the national territory belong to the State.
1.2
Regulatory authority
• Minister in charge of Mines. • Bureau du Cadastre Minier de Madagascar (BCMM), the Malagasy Mining Cadastre. • Mining department of the Ministry in charge of Mines. ffice des Mines Nationales et des Industries Stratégiques (OMNIS), the Malagasy state entity •O responsible for strategic minerals (which includes uranium).
1.3
Exploration and Mining Laws and Regulations
•Loi n°99-022 du 19 août 1999 portant Code Minier modifiée par Loi n° 2005 - 021 du 17 octobre 2005 (Law no 99-022 dated 30 August 1999 establishing the mining code modified by Law no. 2005-021 dated 17 October 2005) (Mining Code). •D écret n°2000-170 du 20 février 2000 fixant les conditions d’application de la Loi n° 99-022 du 19 Août 1999 portant Code minier modifiée par le Décret n°2006-910 du 19 décembre 2006 (Decree n° 2000170 dated 20 February 2000 implementing the Mining Code duly modified by Decree no. 2006-910 dated 19 December 2006) (Mining Decree). • Arrêté n°5 470/2012 fixant le modèle de rapport d’activités pour chaque type de permis minier (Order n°5 470/2012 setting the form of the activity report for each type of mining permit).
1.4
Restrictions related to:
1.4.1
Foreign Investments
1.4.2 Commodities 1.5
Licence holder • Corporate entity (joint ventures permissible)? •Jurisdiction in which incorporated (BEE/ indigenisation) • Local participation • State ownership
No restrictions. Restriction regarding strategic minerals (uranium). • Joint-venture is permissible. • If a company, the permit holder is required to be incorporated under the Malagasy company law. • There is no legislated local participation required. • Any project exploring or mining for uranium must form a joint venture company with OMNIS. The promoter must enter into a shareholders’ agreement, which typically gives OMNIS a 20% free carry to USD 1 million, followed by pari-passu contributions or dilution up to a minimum of 10%.
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2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining/ Exploitation Phase
2.1
Authorisation required
Yes. There are two types of authorisation in respect of the reconnaissance: • a declaration of prospecting approved by the BCMM upon request of the applicant; and • an exclusive authorisation to reserve a perimeter (AERP) (authorisation exclusive de réservation de périmètre) issued by the BCMM.
Yes, a prospecting permit (permis de recherche) is required. The prospecting permit shall be issued by order of the minister in charge of mines.
Yes, an exploitation permit (permis d’exploitation) is required. The exploitation permit is issued by order of the minister in charge of mines.
2.2
Validity of Licence
eclaration of prospecting: •D one year from the date of approval of the BCMM. • AERP: three months.
Five years.
40 years.
2.3
Renewable
eclaration of prospecting: is •D not renewable. • AERP is not renewable.
Yes, twice for three years each.
Yes, renewable in increments of 20 years.
2.4
Exclusivity of Licence
eclaration of prospecting: •D yes. • AERP: yes.
Yes.
Yes.
2.5
Transfer of Licence:
eclaration of prospecting: •D not provided for by the Mining Code, but permissible in practice. • AERP: not provided for by the Mining Code, but permissible in practice.
Yes, the prospecting permit is transferable without the requirement for regulatory approval. However, for purposes of enforceability of the transfer against the mining authority, the transfer of the prospecting permit should be registered at the BCMM.
Yes, the exploitation permit is transferable without requirement for regulatory approval. However, for purpose of enforceability of the transfer against the mining authority, the transfer of the exploitation permit should be registered at the BCMM.
2.6
Note: Since 29 November 2010, due to the ongoing political crisis in Madagascar, the Bureau du Cadastre Minier de Madagascar (the Mining Bureau of Madagascar) has suspended the acceptance of all applications (filings) for mining permits and requests for Autorisations Exclusives de Réservation de Périmètres (AERP) (Exclusive Authorisations for the Reservation of Perimeters). The situation may alter pursuant to the Madagascar elections of 20 December 2013.
3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
The holder of a prospecting permit is not exclusively entitled to apply for an exploitation permit but has priority right to do so.
3.2
Documentation/ Reports required for approval
Yes. The holder of a mining permit (prospecting or exploitation permit) shall provide an activity report, in triplicate, in the format provided under Order n°5 470/ 2012 setting the form of the activity report for each type of mining permit, within one month following the end of each financial year.
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3.3
Approval time for grant of mining Licence
30 working days from the application of the prospecting permit and/or the exploitation permit at the BCMM.
4. ENVIRONMENT REGULATION 4.1
Applicable Laws and Regulations
rrêté Interministeriel n°12032/2000 sur la réglementation du secteur minier en matière de protection •A de l’environnement (Inter-Ministerial Order no 12032/ 2000 of 6 November 2000 relating to the regulation of mining areas in relation to environmental protection) (the Environmental Order). • Décret n°99-954 DU 15 DECEMBRE 1999 modifié par le décret n° 2004-167 du 03 février 2004 relatif à la mise en compatibilité des investissements avec l’environnement (MECIE) (Decree no 99-954 of 15 December 1999 amended by Decree no 2004-167 of 3 February 2004 relating to the compatibility of investments with the environment (MECIE)).
4.2
Environmental Impact Assessment
• Yes, an environmental impact assessment is required for an exploitation permit. • A prospecting permit shall require a plan d’engagement environnemental (environmental commitment plan).
4.3
Community Consultation
Yes, for an Environmental Impact Assessment.
4.4
Rehabilitation Fund/ Closure Fund
Yes, rehabilitation funds to be funded by the holder of the mining permit.
5. TAXES/ EQUITY 5.1
Corporate tax rate
20% of the annual net income.
5.2
Dividend tax
The 2012 General Tax Code of Madagascar does not provide for a dividend tax.
5.3
Royalties
10% in general; 2% of the first sale value of the mining product.
5.4
Capital Gains Tax
20%; Capital Gains Tax is applicable to the sale of immovable property under the General Tax Code of Madagascar.
6. FOREIGN INVESTMENT INCENTIVES 6.1
Do they exist?
Yes.
6.2
Governing Legislation
• The Mining Code. oi no. 2005-022 du 27 juillet 2005 portant modification de certaines dispositions de la Loi n° 2001•L 031 du 08 octobre 2002 établissant un Régime Spécial pour les grands investissements dans le Secteur Minier malagasy (LGIM) (Law no 2005-022 of 7 July 2005 amending certain provisions of Law no 2001-031 of 8 October 2002 establishing a Special Regime for large mining investments in the Malagasy Mining Sector (LGIM)). •L oi no. 2001-031 du 08 octobre 2002 établissant un Régime Spécial pour les grands investissements dans le Secteur Minier Malagasy (LGIM) (Law no 2001-031 of 8 October 2002 establishing a Special Regime for the large investments in the Malagasy Mining Sector (LGIM). •D écret no. 2003-784 du 8 avril 2003 fixant les conditions d’application de la loi n°2001-031 établissant un Régime Spécial pour les Grands Investissements dans le Secteur Minier Malagasy (Decree no. 2003784 of 8 April 2003 establishing the conditions of application of the Law no. 2001-031 establishing a Special Regime for Large Investments in the Malagasy Mining Sector).
6.3
Authority
The President of the Republic of Madagascar, Minister of Mines and the Commission Nationale des Grands Investissements, as the case may be.
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7. LABOUR LAWS 7.1
Restrictions on employment of foreign workers
• Preference to be given to local employees. • Mandatory training program for Malagasy employees. • The employment of foreign workers is free. • The Mining Code or the Labour Code does not contain any restriction regarding the employment of foreign workers.
8. RESOURCE NATIONALISM 8.1
Resource Nationalism Trends
The current mining legislation and regulations do not provide any resource nationalism trends. Amendment of the legislation was discussed in 2011, however, in order to implement some resource nationalism provisions.
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MOZAMBIQUE MINING LAW SURVEY
Information provided by Linklaters.
1. MINING LAW ISSUES 1.1
Mining Title
Mineral resources found in the soil or in the subsoil, in territorial waters or on the seabed within territorial waters, in the exclusive economic zone or on the continental platform of the Republic of Mozambique (Mozambique), are the property of the State under the terms of the Constitution (CRM).
1.2
Regulatory authority
Ministry of Mineral Resources (MIREM by its acronym in Portuguese).
1.3
Exploration and Mining Laws and Regulations
• Law 14/2002 of 26 June – Mining Law (ML). • Decree 62/2006 of 26 December – Mining Law Regulation (MLR). • OBS: A new Mining Law (NML), which is intended to replace the current Mining Law, has been tabled for public discussion in 2012, but its approval is pending.
1.4
Restrictions related to:
1.4.1
Foreign Investments
1.4.2 Commodities 1.4.3 Licence holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated • Local participation (BEE/ indigenisation) 1.4.4 Commencement of production
• Only legal persons created and registered in Mozambique may be eligible for mining concessions. • Prospecting and research licences may be granted to either national or foreign individuals and legal persons, although foreign companies must have a representation in Mozambique as a general requirement. If the products to be traded arise from mining activities conducted under mining titles, they may be freely traded by the title holder. Otherwise, a specific licence would be required. • Joint ventures are permitted. • The licence holder must have a representation in Mozambique or in case of a mining concession, it must be incorporated in Mozambique. • No local participation requirement under the ML, but please refer to section 7.1 below regarding State and local ownership requirements under the Mega Projects Law (Law 15/2011 of 10 August). Production must start 36 months from receipt of the latter of (i) environmental license, and (ii) land use rights (DUATs), which must both be obtained no later than 3 years of granting of the mining concession. Breach of any of these periods is grounds for revocation of the mining concession. The NML will require concession holders to start producing within 48 months from the date of issuance of the concession.
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2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining/Exploitation Phase
2.1
Authorisation required
Yes.
Yes.
Yes.
2.2
Validity of Licence
Two years.
Five years. However, note that the NML proposes the following changes in the determination of the validity period of a licence: • for minerals not destined for construction: 5 years; and • for minerals destined for construction: two years.
A period equivalent to the economic life of the mine or mining operation, but not exceeding 25 years.
2.3
Renewable
No.
Yes, but only for up to 5 years. However, note that the NML proposes the following changes: • licences covering minerals not destined for construction: renewable only once for 3 years; and • licences covering minerals destined for construction: renewable only once for 2 years.
Yes.
2.4
Exclusivity of Licence
No.
Yes.
Yes.
2.5
Transfer of Licence
No.
Yes, subject to the obtaining of an approval from MIREM via the National Directorate of Mines. According to the NML any transfer may only occur within two years after commencement of the mining activities. The approval request must include evidence of the exercise of such activities and a tax authorities’ certificate confirming that all taxes are paid.
Yes, subject to the obtaining of an approval from MIREM via the National Directorate of Mines. According to the NML any transfer may only occur within two years after commencement of the mining activities. The approval request must include evidence of the exercise of such activities and a tax authorities’ certificate confirming that all taxes are paid.
2.6
Change of control/ shareholding
No.
No. However, per the coming NML: any direct or indirect change of control of the company holding the license will be subject to the same requirements as the transfer of the license (please refer to the “Transfer of License” section above). Otherwise, the transaction may be declared null and void.
No. However, per the coming NML: any direct or indirect change of control of the company holding the licence will be subject to the same requirements as the transfer of the licence (please refer to the “Transfer of Licence” section above). Otherwise, the transaction may be declared null and void.
2.7
Community Consultation
Yes.
Yes.
Yes.
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3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
• Yes. Notwithstanding, when the development and exploitation of certain mineral resources is considered of public interest for the national economy or for the future development of the region in which they occur, the Council of Ministers may declare that the land on which the mineral resources are located be reserved, specifying the type of activities not allowed in the reserved area, with the aim of preserving such land for the granting of a mining title or for designated areas for mining pass. • Unless excluded from mining activity by law, any area declared as mineral reserve shall be available for application by any person who complies with necessary requirements to obtain a mining title. • Land use for mining operations shall have priority over other land uses whenever economic and social benefits related to these operations are higher . • Land use titles obtained under the terms of the land law and the environmental licence granted with the aim of mining exploitation under a mining concession or mining certificate, shall have a validity period and size consistent with the mining concession or mining certificate and shall be renewed automatically whenever those mining titles are renewed. • When a mining concession is issued on a land subject to land use rights, the rights previously held shall be considered terminated after the payment of a fair and reasonable compensation to the previous holder of the rights, by the concessionaire.
3.2
Documentation/ Reports required for approval
Mining/ work plans, quarterly and annual reports required for each of the mining titles.
3.3
Approval time for grant of mining Licence
Average time period of approval of granting mining licences is 90 days.
4. ENVIRONMENT REGULATION 4.1
Applicable Laws and Regulations
• Environment Law (approved by Law 20/97 of 01 October, the EL). • Environmental Impact Assessment Regulation (approved by Decree 45/2004 of 29 September, the EIAR). • Environmental Regulations for Mining Activities, (approved by Decree 26/2004 of 20 August, the ERMA). • General Directive for Studies of Environmental Impact (approved by Ministerial Diploma 129/2006 of 19 July). • General Directive for Process of Public Participation in the Process of Evaluation of Environmental Impact (approved by Ministerial Diploma 130/2006 of 19 July). • Basic Norms of Environment Management (approved by Ministerial Diploma 189/2006 of 14 December.
4.2
Environmental Impact Assessment
• The Mining Law and the Environmental Regulation for Mining Activities, respectively, classify mining activities into three levels: o Level 1 (ML), which is equivalent to Category C under the ERMA. T use of mechanised equipment. These activities are subject to compliance with the basic norms of environmental management set out in Ministerial Diploma 189/2006 of 14 December; his refers small- scale artisanal mining and mineral exploration activities that do not involve the use of merchanised equipment. These activities are subject to compliance with the basic norms of environmental management set out in Ministerial Diploma 189/2006 of 14 December. oL evel 2 (ML), which is equivalent to Category B under the ERMA. This refers to mineral exploration that involves the use of mechanised equipment, quarrying and the mining of construction materials, and pilot projects, which are subject to the approval of an environmental management plan; and o Level 3 (ML) which is equivalent to Category A under the ERMA. This refers to all other mining activities not included in the previous categories and which involve the use of mechanised equipment. These are subject to the approval of environmental impact assessment (EIA) and an environmental licence.
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It is to be presumed that all activities which may result in some environmental damage have to undergo a pre-assessment in order to determine their category and statutory environmental requirements. • Note that the NML now proposes that the classification of activities adopt the same designation the ERMA: o Category A: activities conducted under a mining concession and that does not cover minerals to be used as construction materials; o Category B: activities conducted under an exploration and prospecting licence (for a pilot project), mining certificate or mining concession covering minerals to be used as construction materials; and o Category C: activities conducted under a mining pass, reconnaissance licence or exploration and prospecting licence (not related to pilot projects). 4.3
Community Consultation
Yes.
4.4
Rehabilitation Fund/ Closure Fund
Persons engaged in Level 2 and Level 3 activities are required to provide a bond to cover the costs of rehabilitation during mining closure. The amount of the bond is based on cost estimates for such rehabilitation, as carried out during or after the life of the mine. The bond may take the form of a bank guarantee, insurance policy or cash deposit into a bank account opened by MIREM for that purpose.
5. TAXES/ EQUITY 5.1
Mining tax regime
• The specific tax framework of mining activities results from the interaction of the general tax system with two specific laws: o the Mining Tax Regime (Law 11/2007 of 27 June); and o the Mining Tax Incentives Regime (Law 13/2007 of 27 June). • Draft legislation replacing the Mining Tax Regime and the Mining Tax Incentives Regime Law has been prepared by the public authorities and subject to public discussion but not yet approved (NMTR).
5.2
Corporate tax rate
32%
5.3
Dividend tax
20% with some exceptions.
5.4
Surface Tax
Mining Surface Tax is calculated in accordance with the type of licence held, validity period and size of the area under licence.
5.5.
Royalties
• Mining Production Tax: o 10% - Diamonds, gold, silver, platinum, precious stones; o 6% - Semi-precious stones; o 5% - Basic minerals; and o 3% - Coal and other mineral products. • Tax rates proposed in the NMTR are as follows: o 7-12% - Diamonds; o 6-10% - Gold, silver, platinum, precious stones; and o 5-10% - Semi-precious stones, basic minerals, coal and other mineral products.
5.5
Capital Gains Tax
Capital gains are included in ordinary corporate income and are taxed as indicated in 5.2 above. However, according to both the Corporation Tax code and the NMTR, capital gains obtained by nonresidents resulting from the direct or indirect disposal for consideration of mining rights in Mozambique (e.g., through the disposal of shares in foreign companies) are taxable as capital gains (qualified as capital gains from the disposal of immovable assets in the NMTR).
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6. LABOUR LAWS 6.1
Restrictions on employment of foreign workers
• Yes. In principle, employers are required to “devote their best efforts to create conditions for integration of qualified Mozambican nationals in posts of greater technical complexity, management and administration”. • The employment of foreigners is, in principle, subject to quotas as follows: o 5% of total number of workers in companies employing more than 100 employees; o 8% of total number of workers in companies employing more than 10 up to 100 employees; and o 10% of total number of workers in companies employing up to 10 employees. • In the aforementioned cases a simple notification to the Minister of Labour is sufficient. Once these quotas have been exhausted, the employers are required to apply for an authorisation to the Minister of Labour, who decides on a case-by-case basis. • However, for short-term assignments (ie, for periods not exceeding 180 days – either consecutive or interspersed – in the same calendar year), a simple notification to the Minister of Labour is sufficient. This applies to mining titleholders, concessionaires, operators, or subcontractors. • In respect of investment projects approved by the Government that stipulate a number of foreign workers greater or lesser than the general quota, no authorisation for the hiring is required: a simple notification to the Minister of Labour is sufficient.
7. INDIGENISATION 7.1
State/Local Ownership
• No state ownership requirements under the mining laws and regulations at the moment. • However, when the NML is passed the State will have the option to participate in the mining undertaking. The NML is not clear as to the percentage and modality of State participation (commercial of free carry). • It should be noted however that currently there is a requirement under Law 15/2011 of August 10 and its complementary regulations, approved by Decree 16/2012 of June 4, (the Mega Projects Legislation) to provide for local participation. This is to be done through: o 5% to 20% of the share capital of the undertaking entity shall be reserved for sale on the stock market. The shares shall be sold preferentially to Mozambican individuals, and the nominal value of each share must be such that is considered accessible to the majority of the Mozambican population with limited financial resources. This must be carried out gradually but shall be finalised by the fifth year from commencement of operations of the undertaking entity; o an undetermined participation of Mozambican public or private sector entities. This is subject to negotiation by the parties; and o 5% free carry of the State. This is ambiguously presented as a right that the State may negotiate at any stage.
8. PROCUREMENT 8.1
Local procurement
Per the NML: the acquisition, by mining companies, of goods and services (above a given limit to be specified in the NML regulation), shall be subject to public tenders, which must be published in the media, especially in newspapers with the largest circulation in the country. Foreign companies wishing to provide goods and services to mining companies shall be required to partner with nationals. The mining titleholders shall be required to give preference to local products and services when comparable, in terms of quality, to products, materials and services that are available in internationally in the specified quantity and within the required timeframe; and at a price (including taxes) not higher by more than 10% than the price for the imported ones.
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9. FOREIGN INVESTMENT INCENTIVES 9.1
Do they exist?
Yes. These are treated under sector specific regulations in the form of investment guarantees and tax benefits.
9.2
Governing Legislation
Mining Tax Incentives Regime (approved by Law 13/2007 of 27 June).
9.3
Authority
Centre for Promotion of Investment, in coordination with the Ministry of Finance, Bank of Mozambique and Tax Authority.
9.4
Incentives Provided
• Investment guarantees: o Legal protection for all property and rights covered by investment projects approved by the Government and implemented under mining titles issued pursuant to the applicable legislation. o Tax stability for the life of the project, which means that any projects are only subject to the Tax Law in force at the date of issuance of the relevant licence. However, the NML suppresses this and determines that tax stability clauses in mining contracts may not exceed 10 years from the start of production; o Repatriation of funds; and o No expropriation, save for public interest and against fair compensation. • Tax benefits: o Exemption, for a five-year period from commencement of mining activities from: (i) customs duties on importation of equipment (for exploration or mining) that is classified as class “K” of the Customs Schedule; (ii) customs duties on importation of certain equipment considered analogous to class “K” goods; (iii) VAT and specific consumption tax on the importation of the above referred goods.
9.5
Minimum Investment Required
Currently under the ML, for the purposes of enjoyment of investment guarantees and tax benefits: USD 50,000. However the NML does not expressly refer to any minimum investment amounts.
10. RESETTLEMENT AND COMMUNITY DEVELOPMENT 10.1
Resettlement and Housing Requirements
The Regulation for Resettlement Resulting from Economic Activities (RRREA) sets out the obligations to be met by undertakers of economic activities, including mining, and provides for safeguards for people displaced and resettled by such activities. Undertakers of economic activities are required to draw up a resettlement plan and submit it to the relevant district administrator for approval. Such plan must include, among others, the following: public consultation; the type of housing to be provided to affected populations (as defined under the RRREA); zoning and environmental aspects; access roads; provision of water and electricity; sewage system; nursery schools; local retail and shopping services; police stations; recreational and sports facilities; worship places; and schools. It is also a requirement to reserve areas for the populations to develop activities such as agriculture and livestock.
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NAMIBIA MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title (state-owned or private)
The right to prospect or mine vests in the State, but may be granted to private persons under licence by the Ministry of Mines and Energy, which is the custodian of Namibia’s mineral, energy and other landbased resources.
1.2
Regulatory authority
Ministry of Mines and Energy.
1.3
Exploration and Mining Laws and Regulations (what are the act/ laws/ regulations that apply)
• Minerals (Prospecting and Mining) Act 33 of 1992. • Constitution of the Republic of Namibia (1990) • Diamonds Act 13 of 1999. • Petroleum (Exploration and Production) Act 2 of 1991. • Petroleum Products and Energy Act 13 of 1990. • Petroleum (Taxation) Act 3 of 1991. • The Mines, Works and Minerals Ordinance, No. 20 of 1968 (repealed, except in so far as it relates to the appointment and powers, duties and functions of the Chief Inspector of mines, and the safety and health of persons employed in or in connection with mines and works). • Regulations promulgated under the Minerals (Prospecting and Mining) Amendment Act, 1997, relating to the Health, Safety and Welfare of Persons Employed or otherwise present in or at Mines. • Geoscience Professions Act 3 of 2012. • Minerals Development Fund of Namibia Act 19 of 1996. • Minerals Policy of Namibia.
1.4
Restrictions related to:
1.4.1
Foreign Investments
Yes, in terms of government policy, which has yet to be incorporated in the relevant mining laws, licences for strategic minerals (uranium, gold, copper, coal, diamonds and rare earth metals) are only to be issued to a state owned company (Epangelo Mining Company, a state owned mining company, has already been established). Such a state owned company may enter into joint ventures with private persons. There are various similar policies discussed below under “state ownership”.
1.4.2
Commodities
It is government policy that licences to exploit strategic mineral deposits (as listed above) should only be granted to state-owned mining companies, or a joint venture including a state-owned mining company, only. The government intends to amend the mining laws to reflect this policy, as discussed in greater detail below.
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1. MINING LAW ISSUES 1.4.3 Licence holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated • Local participation (BEE/ indigenisation) • State ownership
• Corporate entities can hold licences, subject to some restrictions with regard to non-exclusive prospecting rights and mining claims. Joint ventures are also permissible, except for non-exclusive prospecting licences and reconnaissance licences. • Licence holders must be incorporated or registered under the laws of Namibia. This includes external companies registered under Namibian law. • Indigenisation and BEE are under discussion, but are not yet mandated. A Transformation, Economic and Social Empowerment Framework was also designed in 2006, but is not yet in force and it is uncertain whether and/ or when it will be enacted. • The government has adopted a new policy with regard to state-ownership in a “Cabinet decision”. It is intended that the mining laws will be amended to reflect this policy. The policy provides that: o new licences for strategic minerals should only be issued to a state- owned mining company, which can enter joint ventures with private persons; o exclusive prospecting licences and mining licences for strategic minerals which are currently in the pipeline might include a condition, on the basis of existing procedures, that the licence holder give first right of refusal of shareholding in the entity to a state owned mining company should the licensee seek to transfer shares/ raise capital; and o the new policy does not affect existing licences.
2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining/ Exploitation Phase
2.1
Authorisation required
Yes, for a reconnaissance licence.
Yes, for a: • Exclusive prospecting licence; • Mineral deposit retention licence (MDRL); • Non-exclusive prospecting licence; and • Mining claim.
Yes, for a: • mining licence; and • mining claim.
2.2
Validity of Licence
Six months.
• • • •
• Mining licence: 25 years. • Mining claim: Three years.
2.3
Renewable
Yes, but only on one occasion and in the event that the holder is prevented, though or no fault of his or her own, from carrying out the operations authorised under the licence.
• Exclusive prospecting licence: yes. • MDRL: yes. • Non-exclusive prospecting licence: no. • Mining claim: yes.
• Mining licence: yes. • Mining claim: yes.
2.4
Exclusivity of Licence
No, but can be made exclusive in some circumstances.
• Exclusive prospecting licence: yes. • MDRL: yes. • Non-exclusive prospecting licence: no.
• Mining licence: yes. • Mining claim: not specified.
Exclusive prospecting licence: three years. MDRL: five years. Non-exclusive prospecting licence: one year. Mining claim: six months.
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2.5
Transfer of Licence
No.
• Exclusive prospecting licence: Yes, but only to a Namibian citizen, a company, which includes an external company, under the laws of Namibia, or another juristic person established by or under the laws of Namibia. • MDRL: As above. • Non-exclusive prospecting licence: No. • Mining claim: Yes, see details in “Mining/ Exploration Phase”.
ining licence: Yes, but only to a Namibian •M citizen, a company, which includes an external company, under the laws of Namibia, or another juristic person established by or under the laws of Namibia. • Mining claim: Yes, but only to a Namibian citizen(s), a company, including an external company, under the laws of Namibia in which only Namibian citizens may own shares, or another juristic person established by or under the laws of Namibia.
2.6
Change of control/ shareholding
Yes, but the licenceholder must notify the Mining Commissioner of any change in the directors or the share capital of the company, or of any change in relation to a beneficial owner of more than 5% of the shares issued by the company.
• Prospecting licence: Yes, but the licence-holder must notify the Mining Commissioner of any change in the directors or the share capital of the company, or of any change in relation to a beneficial owner of more than 5% of the shares issued by the company. • MDRL: as above. • Non-exclusive prospecting licence: No. • Mining claim: Yes, see details in “Mining/ Exploration Phase”.
•M ining licence: Yes, but the licence-holder must notify the Mining Commissioner of any change in the directors or the share capital of the company, or of any change in relation to a beneficial owner of more than 5% of the shares issued by the company. • Mining claim: As above.
2.7
Community Consultation
• The holder of the licences referred to above shall not exercise the rights conferred upon them on any private land, until the licenceholder has entered into an agreement in writing with the owner of the land relating to the payment of compensation, or under which the owner waives the right to compensation. This agreement must be submitted to the Mining Commissioner. • Further, such licence holders also require the prior written consent to exercise their rights under the relevant licence if the licence area is within 300 meters from any point on the boundary of any erf, as defined in section 1 of the Townships and Division of Land Ordinance, 1963.
3. ENVIRONMENT REGULATION 3.1
Applicable Laws and Regulations
• • • • • • • • • • • •
Environmental Management Act 7 of 2007. Atomic Energy and Radiation Protection Act 5 of 2005. Atmospheric Pollution Prevention Ordinance No. 11 of 1976. Hazardous Substances Ordinance No. 14 of 1974. Nature Conservation Ordinance No. 4 of 1975. Environmental Investment Fund of Namibia Act 13 of 2001. Forestry Act 27 of 2004. National Heritage Act 27 of 2004. Water Act 54 of 1956. Water Resources Management Act 24 of 2004 (yet to come into force). Policy for Prospecting and Mining in Protected Areas and National Monuments (1999). Policy for the Conservation of Biotic Diversity and Habitat Protection (1994).
3.2
Environmental Impact Assessment
Yes, this is mandatory for prospecting and mining operations.
3.3
Community Consultation
Yes.
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3.4
Rehabilitation Fund/ Closure Fund
•L icence holders are obliged to remedy any spillage, pollution or environmental damage they have caused. • The Minister may, on the expiry, cancellation or abandonment of a licence, direct the licence holder to remedy any surface or environmental damage caused. • Although not mandatory, the Minerals Policy of Namibia states that there should be a “Final Mine Closure Plan” together with a funding mechanism for medium to large-scale mining projects.
4. TAXES/ EQUITY 4.1
Corporate tax rate
• Mining companies are subject to a 37.5% tax rate. • Diamond mining companies are subject to a 55% tax rate. • Petroleum companies are subject to a 35% tax rate.
4.2
Dividend tax
• None for Namibian residents. • Dividends paid to a non-resident shareholder that holds 25% or more of the Namibian taxpayer company are subject to non-resident shareholders tax (NRST) at 10%, and dividends paid to a nonresident shareholder that holds less than 25% of the Namibian taxpayer company are subject to a 20% NRST. Both taxes apply unless the rate is reduced under a tax treaty.
4.3
Royalties
• Royalties are levied as a percentage on the market value of the minerals. Market value is determined in accordance with any term or condition of the licence of the holder concerned or, in the absence of such term or condition, is determined by the Minister with reference to the actual price paid and the price paid in international markets. • The percentage payable on the market value is determined by the Minister in a notice in the Government Gazette on any other minerals won or mined by a licence-holder. Currently, these percentages are: o 3% on the market value of precious metals, base and rare metals, nuclear fuel minerals; o 2% on the market value of semi-precious stones, industrial metals, non-nuclear fuel minerals; and o 5% on the market value of oil and gas. • The Minister also has the discretion to levy a windfall royalty on the disposal of minerals if he or she is of the opinion that market prices or new technology has made the mining operations of a licence holder significantly more profitable. The licence holder must be notified in writing and be given an opportunity to make representations regarding the royalty payment.
4.4
Capital Gains Tax
With effect from 1 March 2012, all gains made on the sale of shares in a company holding a mining or exploration license, or a gain made on the sale of a mining or exploration license, is included in the gross income of the taxpayer and thus subject to tax at the marginal rate of tax that applies to the taxpayer.
5. LABOUR LAWS 5.1
Restrictions on employment of foreign workers
An employment permit is required.
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REPUBLIC OF CONGO MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title
• Mining rights, even when granted to the owners of the surface land, are separate rights from surface land ownership. • The Congolese government protects and guarantees the use of the national mining assets defined in the Mining Code in the interest of national development. • The Constitution of the Republic of Congo provides that minerals and fossils in the soil and sub-soil of the country are the property of the State and it is the State who grants certificates, and grants authorisation for transfer or leasing out.
1.2
Regulatory authority
Ministry of Mining (Ministère des Mines).
1.3
Exploration and Mining Laws and Regulations
• Code Minier Loi no 4-2005 du 11 avril 2005 (Mining Code Law no 4-2005 of 11 April 2005). écret no 2007-274 du 21 mai 2007 fixant les conditions de prospection, de recherché et d’exploitation •D des substances minerals et celles d’exercice de la surveillance administrative (Decree no 2007-274 of 21 May 2007 setting the conditions for reconnaissance, prospecting and exploitation of mineral substances and the conditions for the exercise of administrative surveillance). •D écret n° 2007-293 du 31 mai 2007 fixant les règles techniques d’exploitation des carrières de géomatériaux (Decree no. 2007-293 of 31 May 2007 establishing technical guidelines for quarries and geomaterials mining). oi no 24-2010 du 30 décembre 2010 fixant le taux et les modalités de paiement des redevances (Law •L no 24-2010 of 30 December 2010 setting out the rates and conditions for payment of royalties).
1.4
Restrictions related to:
1.4.1
Foreign Investments
1.4.2 Commodities 1.4.3 Licence holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated • Local participation (BEE / indigenisation) • State ownership
No. No. • Joint ventures are permissible and will be recognised in the Mining Investment Agreement between the government and investor(s). • The Mining Code does not prescribe the nationality or place of incorporation of applicants. • None. • The State is entitled to at least 10% shareholding in the mining permit holder, governed by the contractual arrangements between the State and the licence holder.
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2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining/ Exploitation Phase
2.1
Authorisation required
• Yes “prospecting authorisation” (“autorisation de prospection”). • Note, however, that “general interest reconnaissance work and general cartography work” are performed by the State.
Yes, “mining exploration permit” (“permis de recherche minières”).
• Yes, “mining authorisation” (“autorisation d’exploitation”) or “industrial mining authorisation” (“autorisation d’exploitation industrielle”) in respect of small mines / quarries. • Yes, “mining permit” (“permis d’exploitation”) in respect of large mines.
2.2
Validity of Licence
One year.
Three years.
• Small mines/ quarries: Five years. • Large mines: up to 25 years.
2.3
Renewable
Yes: once for one year.
Yes: twice for two years each.
• Yes: Small mines/ quarries: five years each. • Yes: Large mines: 15 years each.
2.4
Exclusivity of Licence
No.
Yes.
Yes.
2.5
Transfer of Licence
No.
Yes (Ministry approval required).
Yes (Ministry approval required).
2.6
Change of control/ shareholding
Yes (notification to Minister required).
Yes (prior approval from Minister required).
Yes (prior approval from Minister required).
3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
Not exclusivity, but “priority”.
3.2
Documentation/ Reports required for approval
Yes (including various corporate documents; technical- economic feasibility study; environmental impact study).
3.3
Approval time for grant of mining Licence
Not specified.
4. ENVIRONMENT REGULATION 4.1
Applicable Laws and Regulations
• Code Minier Loi no 4-2005 du 11 avril 2005 (Mining Code Law no 4-2005 of11 April 2005). oi no 003/ 91 du 23 avril 1991 sur la protection de l’Environnement (Environmental Protection Law no •L 003 /91 of 23 April 1991). •D écret no 86/775 du 7/06/86 rendant obligatoires les Etudes d’Impact sur l’Environnement en République Populaire du Congo (Decree no 86/775 of 7/06/86 making Environmental Impact Studies obligatory in the People’s Republic of Congo). •D écret no 2009-415 du 20 novembre 2009 fixant le champ d’application, le contenu et les procédures de l’étude et de la notice d’impact environnemental et social (Decree no 2009-415 of 20 November 2009 setting the field of application, the content and the procedure of the environmental and social impact studies and notice). • Décret no 2009-1335 du 30 novembre 2009 portant création et fixant les modalités d’alimentation et de fonctionnement du Fonds de réhabilitation des sites miniers (Decree no 2009-1335 of 30 November 2009 concerning the creation, and setting the methods of payment and functioning, of the Rehabilitation Funds of mining sites).
4.2
Environmental Impact Assessment
Yes (for mining permit).
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4.3
Community Consultation
Yes.
4.4
Rehabilitation Fund/ Closure Fund
Yes.
5. TAXES/ EQUITY 5.1
Corporate tax rate
34% (30% for mining and 20% for quarries).
5.2
Dividend tax
20%
5.3
Royalties
20%
5.4
Capital Gains Tax
34%
6. FOREIGN INVESTMENT INCENTIVES 6.1
Governing Legislation
oi n°6-2003 du 18 janvier 2003 portant Charte des Investissements (Law no 6-2003 of 18 January 2003 •L Investment Code). • Décret no 2004-30 du 18 février 2004 Modalités d’agrément des entreprises aux avantages de la Charte des Investissements (Decree no 2004-30 of 18 February 2004 relating to the procedure for approval of the benefits provided by the Investment Code). • Décret no 2003-57 du 22 Avril 2003 portant création, attributions et composition de la Commission nationale des investissements (Decree °2003 – 57 of 22 April 2003 on the creation, attributions and composition of the National Investment Commission). • CEMAC Charte des Investissements Règlement no 17/99/CEMAC-20-CM-03 du 17 décembre 1999 (CEMAC Investment Code no 17/99/CEMAC-20 - CM-03 of 17 December 1999).
6.2
Authority
Minister of Economy and Finance
6.3
Incentives Provided
Investment Regime S Investment Regime G •F or establishment period and first three • In addition to benefits of Investment Regime G, the operational years: Investment Code provides incentives for export, reinvestment of profits, setting up operations in o t he CEMAC customs code regarding the less developed areas and investments of a social & setting up of activities oriented towards cultural nature. Tax benefits include exemption or export; reduction of 50% of corporate income tax. o customs duties exemptions; and o r eduction of 50% of the registration duties for setting up and capital increases, mergers and transfer of shares. • For first three operational years: oe xemption or reduction of 50% of corporate income tax; oa uthorisation to use the declining balance depreciation method; o authorisation to carry forward losses for the following three years; and o 0% VAT on exports
6.4
Minimum Investment Required
• Investment Regime G: FCFA100 000 000.00. • Investment Regime S: FCFA30 000.00 – FCFA99 999 999.00.
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7. LABOUR LAWS 7.1
Restrictions on employment of foreign workers
• Foreign workers must first obtain a three month business visa; then, once in the ROC, must apply for a work permit. • Preference must be given to local employees with the same qualifications and skills; a training program must be set up for local employees; promotion of the use of local products and services when available under equal conditions and to cooperate with other operators in the mining industry.
8. RESOURCE NATIONALISM 8.1
Resource Nationalism Trends
• The State is entitled to at least 10% shareholding (participation in kind) in the licence holder, and may purchase additional shares. • Preference must be given to local employees and local products and services (when comparable to foreign employees, products and services); employees must be trained.
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REPUBLIC OF GUINEA MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title
Mineral or fossil substances contained in the subsoil or on the surface, as well as underground waters and geothermal deposits on the territory of the Republic of Guinea and its exclusive economic zone, belong to the State and cannot be the object of any form of private appropriation, save as provided in the Mining Code and the Land Code.
1.2
Regulatory authority
Minister of Mines, National Directorate of Mines (Direction Nationale des Mines), National Directorate of Geology (Direction Nationale de Géologie) and the Centre for Mining Promotion and Development (CPDM) (Centre de Promotion et de Développement Minier).
1.3
Exploration and Mining Laws and Regulations
Law no. L/2011/ 006/CNT of 9 September 2011 establishing the mining code of the Republic of Guinea (the Mining Code), as amended by Law no. L/2013/053/CNT of 8 April 2013 (Loi no L/2011/006/CNT du 9 Septembre 2011 établissant le Code Minier de la République de Guinée tel qu’amendé par la Loi no. L/2013/053/CNT du 8 April 2013).
1.4
Restrictions related to:
1.4.1
Foreign Investments
1.4.2 Commodities 1.4.3 License holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated • Local participation (BEE / indigenisation) • State ownership
No restrictions. No. • Yes. • Legal entities incorporated in Guinea. • Legal entities incorporated in another country are acceptable for reconnaissance and prospecting with restrictions for prospecting on an industrial scale. • No local participation requirement. • Right of 15% free carry for the state which cannot be diluted in case of a capital increase and right to acquire additional 20% shareholding for consideration.
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2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining/ Exploitation Phase
2.1
Authorisation required
• Yes, either exploitation permit (permis d’exploitation) or Yes. Reconnaissance • Yes. Prospecting permit (permis de recherche) mining concession (concession minière). authorisation is issued by the is issued by an order of • The exploitation permit (large scale or small scale), National Directorate of Mines and the mining concession are issued to a Guineanthe Minister of Mines on (Direction Nationale des Mines), recommendation of the incorporated company, by decree adopted by the upon proposition of the CPDM, Council of the Minister on the recommendation of the CPDM, after favourable after favourable opinion of the Minister of Mines, after favourable opinion of the National opinion of the Titles Technical National Directorate of Geology. Commission of Mines (Commission Nationale des Mines). Committee (Comité Technique des Titres). • Maximum prospecting area: 500 km2 in respect of bauxite and iron ore and 100 km2 for other substances. • Maximum of 3 prospecting permits for bauxite and iron ore and 5 for other substances, par entity/ person.
2.2
Validity of Licence
Six months.
hree years for prospecting •T on an industrial scale. • Two years for prospecting on a semi-industrial scale.
• Large-scale mining exploitation permit: 15 years. • Small-scale mining exploitation permit: Five years. • Mining concession: 25 years.
2.3
Renewable
Yes. Once for a period of six months.
es. The prospecting permit is •Y renewable twice for maximum periods of two years each time, at the request of the holder and under the same conditions as the original permit. • The term of a semi-industrial prospecting permit is only renewed once for a year. • A relinquishment of the mining area is required at renewal of a prospecting permit or a semi-industrial prospecting permit.
• Yes. • The term of an exploitation permit is renewable for several periods of five years or more, upon application of the holders and under the same conditions as its original grant. • The term of a mining concession is renewable for several periods of 10 years or more, upon application of the holders and under the same conditions as its original grant.
2.4
Exclusivity of Licence
No.
Yes.
Yes, for both (exploitation permit and mining concession).
2.5
Transfer of Licence
Law unclear.
No. The prospecting permit is not transferrable.
Yes. Approval of Minister of Mines Required.
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3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
Yes.
3.2
Documentation/ Reports required from exploration to • Exploration Permit: activity reports and financial statements; copies of the environmental notice (notice environnementale), mitigation and Rehabilitation Plan (plan de réhabilitation et d’atténuation. mining • Exploitation Permit: o copy of a valid exploration permit and proof of payment of all taxes and royalties due; o report on the exploration results regarding the nature quality, volume and geographic location of the mineral resource identified; o a feasibility study including: o a detailed Environmental and Social Impact Study (Etude d’impact environnemental et social) accompanied by a Social and Environmental Management Plan (Plan de Gestion Environnementale et Sociale); o an economic and financial analysis of the project and the plan for obtaining the requisite permits and authorisations; op lans and estimates for industrial infrastructures; and o a plan for supporting Guinean companies in creating and/or reinforcing the capacities of SMEs/SMIs or companies owned or controlled by Guinean nationals for the provision of goods and services generally used for their activities, as well as a plan to promote the employment of Guinean nationals. o a detailed schedule of the work to be done; o a community developmentt plan; and o an architectural plan of the company’s headquarters with an application for land allocation made to the competent Administration. o Mining concessions: same documents as for Exploration Permit.
3.3
Approval time for grant of mining Licence
Not provided.
4. ENVIRONMENT REGULATION 4.1
Applicable Laws and Regulations
Mining Code and Environmental Code and its Regulations.
4.2
Environmental Impact Assessment
• Yes, environmental impact assessment is to be submitted with application for exploitation permit or mining concession. • An Environmental Impact Notice is required for a prospecting permit.
4.3
Community Consultation
Yes, when applying for exploitation permit or mining concession.
4.4
Rehabilitation Fund/ Closure Fund
Yes.
5. TAXES/ EQUITY 5.1
Corporate tax rate
30%
5.2
Dividend tax
10%
5.3
Royalties
• Extraction tax to mineral substances other than precious metals (3% for iron ore, 0.075% for bauxite, 3% for base metals and 5% for other precious stones and other gemstones). • Production Tax on precious metals ( 5% for silver, gold, platinoids, palladium and rhodium).
5.4
Capital Gains Tax
Capital gains on transfers of shares are taxed at a rate of 10%.
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6. FOREIGN INVESTMENT INCENTIVES 6.1
Do they exist?
Yes.
6.2
Governing Legislation
The Investment Code does not provide for foreign investment incentives in the mining sector. Those are provided by the Mining Code.
6.3
Authority
Minister of Mines.
6.4
Incentives Provided
Tax benefits for each mining phase as follows: • Prospecting phase: exoneration from VAT, IMF fixed minimum tax, business license tax; professional training fee; real estate fee, and benefit from the temporary importation procedure for the equipment indicated in the mining list relating to the research phase. • Construction phase of the mine: exoneration from VAT and those provided above without exceeding the duration of the construction phase. • Exploitation phase: the holder of mining titles at the exploitation phase benefit from a period of three years from the date of first production the exoneration of the IM fixed minimum tax, the; the real estate fee at a rate of 10%. • The exploitation permit and the mining concession benefit from the stability of the tax and customs regime for a period of 15years from the date of which the exploitation permit has been granted. However, this stability regime is limited to certain taxes only.
6.5
Minimum Investment Required
• There is no minimum investment required for a research permit and exploitation permit. • However, a minimum investment of USD 1 billion is required for a mining concession in respect of bauxite, iron and radioactive substances; and USD 500.000.000.for projects covering other substances.
7. LABOUR LAWS 7.1
Restrictions on employment of foreign workers
• • • • • • •
Preference to be given to Guinean executives with requisite skills. Exclusivity given to Guinean for all unskilled positions. Certain unskilled positions may be reserved for members of local communities. Specific quotas per phase of the mining project and per category of employment. Mandatory training program for Guinean executives. Within five years from the date of first commercial production, the General Manager has to be Guinean. As of the date of the first commercial production, Deputy Manager has to be Guinean.
8. RESOURCES NATIONALISM 8.1
Resources Nationalism Trend
• Right of a 15% free carry participation for the State in the capital of mining companies. • Acquisition option of a 20% additional cash participation in the capital of mining companies. • Companies that process minerals in-country pay 5% on all imports while those that export without processing must pay 6,5%. • Preference to Guinean companies for construction, supply or services contracts if they provide comparable prices, quantities, quality and delivery terms. • Minimum quota for Guinean SMEs and SMIs depending on the phase of project. • Empowerment programs for Guinean SMEs and SMIs. • Mandatory conclusion of a community development agreement setting out the conditions of the implementation of the local development. • Contribution payment for local community development as follows: o 0.5% of the company’s turnover achieved on the mining title of the area for bauxite and iron ore; and o 1% of such turnover for the other mineral substances.
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SENEGAL MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title
Minerals in the soil belong to the State of Senegal, although minerals extracted by mining (exploitation) title holders become the latter’s property.
1.2
Regulatory authority
Minister of Mines; National Department of Mines; Department of Mines in each of the 14 administrative districts in the country.
1.3
Exploration and Mining Laws and Regulations
oi no 2003-36 du 24 novembre 2003 portant Code Minier (Law no 2003-36 of 24 November 2003 •L Mining Code). •D écret No 2004-647 du 17 mai 2004 fixant les modalites d’application de la Loi No 2003-36 du 24 novembre 2003 portant Code Minier (Law Mining Decree No 2003-36 of 24 November 2003). •U EMOA Code Minier Communautaire Règlement no.18/2003/CM/UEMOA du 23 décembre 2003 (WAEMU Community Mining Code Regulation no. 18/2003/CM/WAEMU of 23 December 2003).
1.4
Restrictions related to:
1.4.1
Foreign Investments
1.4.2 Commodities 1.4.3 Licence holder • Corporate entity • Jurisdiction in which incorporated • Local participation (BEE / indigenisation) • State ownership
No. No. • Corporate entities and joint ventures are permissible. • The holder of a mining exploitation permit shall be a legal entity incorporated under Senegalese law. All mining title holders, lessees and persons on whom have been conferred usage rights flowing from mining rights must elect domicile in Senegal and notify the Minister of this. • None. • The State may, directly or through an intermediary enterprise or association with third parties, be engaged in all mining operations. • The State has 10% free participation in all exploitation/ concession mining works; over and above this, the State may negotiate participation by itself and/or the private sector in the capital of the exploitation company.
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2. Licensing Scheme Reconnaissance Phase
Prospecting Phase
Mining/ Exploitation Phase (Exploitation permit and Concession)
2.1
Authorisation required
Yes, “prospecting authorisation” Yes, “exploration permit” (“autorisation de prospection”). (“permis de recherché”).
Yes, “exploitation permit” and “mining concession” (“permis d’exploitation” and “concession minière”).
2.2
Validity of Licence
Up to six months.
Up to three years.
• Exploitation permit: Five years. • Concession: 5 - 25 years.
2.3
Renewable
Yes, renewable once for up to six months.
Yes, renewable twice for up to three years each; extension also permitted for up to three years.
• Yes (until deposit is exhausted): • Exploitation permit: renewable for multiple periods of up to five years each. • Concession: renewable for multiple periods of up to 25 years each. • Extension of either permit may also be requested.
2.4
Exclusivity of Licence
No.
Yes.
Yes.
2.5
Transfer of Licence
No.
Yes, with prior approval of the Minister of Mines.
Yes, with prior approval of the Minister of Mines.
3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
Yes, subject to compliance with the legal provisions in force and proof of a commercially exploitable deposit.
3.2
Documentation/ Reports required for approval
• Proof of commercially exploitable deposit. • Agreement between two or more indivisible co-title holders.
3.3
Approval time for grant of mining Licence
Not specified.
4. ENVIRONMENT REGULATION 4.1
Applicable Laws and Regulations
• Mining Code. • Loi no 2001-01 du 15 janvier 2001 portant code de l’environnement (Law no 2001-01 of 15 January 2001 Environmental Code). •D écret no 2001 – 282 du 12 avril 2001 portant application du code de l’environnement (Decree no 2001-282 of 12 April 2011 applying the Environmental Code).
4.2
Environmental Impact Assessment
Yes, required for an applicant for an exploitation permit or mining concession.
4.3
Community Consultation
• Mining Decree: yes. • Environmental Code: yes.
4.4
Rehabilitation Fund/ Closure Fund
Yes.
5. TAXES / EQUITY 5.1
Corporate tax rate
25% (or 15% on companies with “Free Exporting Enterprise” status).
5.2
Dividend tax
10% withholding tax.
5.3
Royalties
20% withholding tax.
5.4
Capital Gains tax
25% (regarded as operating profits and included in the corporate income tax base).
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6. FOREIGN INVESTMENT INCENTIVES 6.1
Governing Legislation
• Mining Code. Note: benefits under the Loi no 2004-06 du 6 février 2004 Code des investissements (Law no 200406 of 6 February 2004 Investment Code) and Décret no 2004-627 du 7 mai 2004 Décret d’application du Code des investissements (Decree no 2004-627 7 May 2004 Investment Decree) do not apply to the Mining Code or mining sector.
6.2
Authority
• Ministry of Mining (Mining Code). • National Agency for the Promotion of Investment and Major Projects (l’Agence nationale chargée de la Promotion de l’Investissement et des Grands Travaux (APIX)).
6.4
Incentives Provided
Mining Code advantages include the following: • Exploration phase: exemption from all taxes (including VAT) on various input materials; exemption from import and export taxes/duties and most customs duties. • Exploitation phase: exemption from all taxes (including VAT) on various input materials in the production process (including fuel); exemption from various export taxes (for three years for exploitation licences; seven years for concessions; for the loan repayment period, up to a maximum of 15 years, for large exploitation projects). • All title holders benefit from “stabilisation” of the fiscal and customs regimes for the duration of their titles. • All title holders may freely open a foreign currency bank account in Senegal; may, for the most part, import and export funds freely; import and export goods, services and extracted minerals freely.
6.5
Minimum Investment Required
No minimum specified.
7. LABOUR LAWS 7.1
Restrictions on employment of foreign workers
There are no work permits specifically but an approval of the labour contract by the Labour Authorities is required. The non-resident employee must obtain an identity card issued by the resident alien’s police service. His employment contract as an expatriate is then referred to the Directorate of Labour in order to be approved and sealed by this authority. The visa stamp will allow him to work regularly in Senegal.
8. RESOURCE NATIONALISM 8.1
Resource Nationalism Trends
he State has 10% free participation in all exploitation/ concession mining works; over and above •T this, the State may negotiate participation by itself and/ or the private sector in the capital of the exploitation company. • Part of the fiscal resources coming from mining operations must be paid into an “equalisation fund” for local communities (still to be detailed in a decree). • Expropriation by the State of mining infrastructure and plants may take place pursuant to force majeure or public necessity. • Mining title holders, their suppliers and contractors must, as far as possible, use services originating in Senegal and products made or sold in Senegal to the extent that the services and products available are of competitive prices, quality, guarantee and delivery times. • The establishment and use of infrastructure, particularly transport and communication networks, shall be agreed between the State and title holder, and may be used by local communities at an agreed fee, and eventually opened to the public.
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SOUTH AFRICA MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title
A system of State custodianship in relation to mineral and petroleum resources applies. The State, acting through the Minister of Mineral Resources (the Minister), may grant, issue, refuse, control, administer and manage any reconnaissance permission, prospecting right, mining right, mining permit and retention permit.
1.2
Regulatory authority
The Department of Mineral Resources (DMR).
1.3
Exploration and Mining Laws and Regulations
• Amendment of the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry of 2002 (published in Government Notice 838 in Government Gazette No. 33573 on 20 September 2010) (the revised Mining Charter). • Broad-Based Black Economic Empowerment Act, No. 53 of 2003. • Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry (published in Government Notice 1639 in Government Gazette No. 26661 on 13 August 2004) (the original Mining Charter). • Codes of Good Practice for the South African Minerals Industry (published 29 April 2009). • Housing and Living Conditions Standard for the South African Minerals Industry, 2009. • Mine Health and Safety Act, No. 29 of 1996. • Mineral and Petroleum Resources Development Act, No. 28 of 2002. (MPRDA). • Mineral and Petroleum Resources Development Amendment Act, No. 49 of 2008 (partly came into effect on 7 June 2013) (MPRDA Amendment Act); • Mineral and Petroleum Resources Royalty Act, No. 28 of 2008 (the Royalty Act); • Mining Titles Registration Act, No. 16 of 1967; • Occupational Health and Safety Act, No. 85 of 1993; and • Other legislation and regulations promulgated in terms thereof. Note the following proposed Bills are not yet Acts of Parliament: • Broad-Based Black Economic Empowerment Amendment Bill, B42-2012; and • Mineral and Petroleum Resources Development Amendment Bill, B15-2013 (MPRDA Bill).
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1.4
Restrictions related to:
1.4.1
Foreign Investments
Yes. Exchange control approval must be obtained from the Financial Surveillance Department of the South African Reserve Bank (FinSurv) for: • outward capital transfers by residents falling outside the designated limits; • outward loan transfers by corporations to non-residents; • loans from non-residents to residents which do not meet the inward foreign loan criteria; • local financial assistance to foreign controlled companies falling outside certain designated limits; • dividend payments by foreign controlled companies in circumstances where such a distribution would lead to over borrowing; • loans by South African corporations to non-residents; and • inward foreign loans and trade finance facilities from non-residents, which do not meet certain criteria.
1.4.2 Commodities
No restrictions.
1.4.3 Licence holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated • Local participation (BEE / indigenisation)
• State ownership
• Corporate entities and joint ventures (incorporated or unincorporated) are permissible • There are no restrictions in relation to the jurisdiction in which the licence holder must be incorporated. • The revised Mining Charter reiterates the original Mining Charter’s requirement that mining companies commit to “[a]chieve a minimum target of 26 percent ownership to enable meaningful economic participation of [Historically Disadvantaged South African (HDSAs)] by [December] 2014”. Mining companies may, however, offset their HDSA ownership requirements against the value of their beneficiation activities. • Currently there is no requirement that the State must be awarded an equity interest in mining companies.
2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining/ Exploitation Phase
2.1
Authorisation required
Yes (reconnaissance permission).
Yes (prospecting right).
Yes (mining right or mining permit).
2.2
Validity of Licence
One year.
Valid for the period specified in the right. This period may not exceed five years.
Valid for the period specified in the right. This period may not exceed 30 years.
2.3
Renewable
No.
Yes, once, for a period not to exceed three years.
Yes, each renewal may not exceed a 30 year period.
2.4
Exclusivity of Licence
Yes, as long as it relates to the same Yes, as long as it relates to the mineral and area of land. same mineral and area of land.
Yes, as long as it is in relation to the same mineral and area of land.
2.5
Transfer of Licence
A reconnaissance permission may not be transferred, ceded, let, sublet, alienated, disposed of or encumbered by mortgage.
Yes, but only with the Minister’s written consent.
Yes, but only with the Minister’s written consent.
2.6
Change of control/ shareholding
See above.
Yes, the “disposal” of a controlling interest is permissible, but only with the Minister’s written consent. An exception is the case of a controlling interest in a listed company.
Yes, the “disposal” of a controlling interest is permissible, but only with the Minister’s written consent. An exception is the case of a controlling interest in a listed company.
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2.7
Community Consultation
Section 10 of the MPRDA does not require consultation with interested and affected parties to take place in relation to an application for a reconnaissance permission.
• Yes. Prospecting right • Yes. Mining right and mining permit applicants must applicants must consult consult with interested and affected parties. As part with interested and affected of their licence application, applicants must submit parties. As part of their the results of these consultations. licence application, applicants • Further, the holder of a mining right must notify must submit the results of and consult with the relevant landowner or lawful these consultations. occupier of the land in question before commencing • Further, the holder of a mining activities. right must notify and consult with the relevant landowner or lawful occupier of the land in question before commencing activities.
3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
Yes. Note, however, that the successful grant of a reconnaissance permission does not entitle the holder to an exclusive right to apply for or be granted a prospecting right, mining right or mining permit.
3.2
Documentation/ Reports required for approval
Various requirements and reports required.
3.3
Approval time for grant of mining Licence
Variable. The MPRDA provides that a mining right comes into effect on the date that it is executed.
4. AMENDMENTS PROPOSED TO THE MPRDA UNDER THE MPRDA BILL 4.1
Proposed amendments
• On 31 May 2013, the Notice of Introduction of a Bill into Parliament, indicating that the Minister intended to introduce the MPRDA Bill to Parliament, was published in the Government Gazette. • The MPRDA Bill was introduced to the National Assembly on 21 June 2013. Interested and affected parties were invited to furnish the Portfolio Committee on Mineral Resources (the Portfolio Committee) with comments by 6 September 2013. The Portfolio Committee received in excess of eighty written submissions on the Bill, and on 11, 12, 13 and 18 September 2013, heard over forty oral presentations on the Bill. • The Bill may be adopted during 2014, and would, if enacted in its current form, significantly amend certain provisions of the MPRDA. There are a number of concerns surrounding the amendments proposed by the MPRDA Bill, including the vague and ambiguous wording of the amendments proposed by it. The MPRDA Bill also contains a number of provisions under which the Minister is granted the power to determine important issues by regulation.
4.2
Invitation for applications (section 9 of the MPRDA as amended by clause 5 of the MPRDA Bill)
The MPRDA Bill jettisons the “first in, first assessed” principle for licensing applications from the MPRDA in favour of one under which the Minister “must by notice in the [Government] Gazette, invite applications”. In addition, any person may request the Minister to invite applications.
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4.3
Mineral beneficiation (section 26 of the MPRDA as amended by clause 21 of the MPRDA Bill)
•U nder the MPRDA Bill, extractors of “designated minerals” and mineral products will be required to supply such commodities to the local market at the price, in the qualities and qualities and within the timelines prescribed by the Minister. In addition, under the Bill, Ministerial approval is required prior to the export of any designated minerals. • Under the MPRDA Bill the Minister must designate minerals or mineral products for beneficiation. The MPRDA Bill fails to prescribe how the Minister must do so. • The Minister must also publish “conditions required to ensure security of supply” for local beneficiation in the manner to be prescribed by regulation. The conditions are to be published after the Minister has considered, among other things, “national developmental imperatives” and the need to maintain transformation in the minerals industry. These requirements are vague and do not substantively limit her discretion.
4.4
Strategic minerals (section 49 of the MPRDA as amended by clause 36 of the MPRDA Bill)
The Minister may by notice in the Government Gazette prohibit or restrict the granting of any permission, permit or right granted under the MPRDA in respect of a specific mineral by taking into account the designation of any mineral as “strategic”.
4.5
Closure certificates (section 43 of the MPRDA as amended by clause 30 of the MPRDA Bill)
The MPRDA Bill envisages that a right holder is no longer indemnified from liability for environmental damage after the issue of a closure certificate. Such liability will extend to any unknown latent or residual environmental damage. In addition, the Minister will be entitled to retain any portion of a right holder’s rehabilitation provision for a period that she may determine.
4.6
Penalties (section 99 as contained in clause 70 of the MPRDA Bill)
Penalties under the MPRDA Bill may be imposed for non-compliance with the MPRDA, other relevant law, the terms and conditions of a right, or the provisions of the relevant exploration work programme, production work programme, social and labour plan, or environmental management programme. The maximum penalty for non-compliance with the MPRDA is R500 000. The MPRDA Bill, on the other hand, sets penalties with reference to a percentage of annual turnover in South Africa and exports from South Africa in the preceding financial year. The MPRDA Bill also envisages that an appeal against a penalty will not suspend the immediate obligation to pay the penalty unless it is suspended by the Minister.
5. ENVIRONMENT REGULATION 5.1
Applicable Laws and Regulations
• • • • • • • • • • • •
Environment Conservation Act, No. 73 of 1989. Hazardous Substances Act, No. 15 of 1973. National Environmental Management Act, No. 107 of 1998 (NEMA). National Environmental Management: Air Quality Act, No. 39 of 2004. National Environmental Management: Biodiversity Act, No. 10 of 2004. National Environment Management: Protected Areas Act, No. 57 of 2003. National Environmental Management: Waste Act, No. 59 of 2008. National Health Act, No. 61 of 2003. National Heritage Resources Act, No. 25 of 1999. National Water Act, No. 36 of 1998. MPRDA. Other legislation and regulations promulgated in terms thereof.
5.2
Environmental Impact Assessment
An environmental authorisation issued by the Minister is a precondition for the issuing of a permit or the granting of a right under the MPRDA.
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5.3
Community Consultation
• Yes. Applicants for a prospecting right, mining right and mining permit must consult with interested and affected parties. As part of their application, applicants for a prospecting right and a mining permit must submit the results of these consultations. • Further, the holder of a prospecting or mining permit must notify and consult with the relevant landowner or lawful occupier of the land in question before commencing activities.
5.4
Rehabilitation Fund/ Closure Fund
efore the Minister approves an environmental authorisation, an applicant for a prospecting right, •B mining right or mining permit must make the requisite financial provision to ensure the management or rehabilitation of any negative environmental consequences. • Should a prospecting right, mining right or mining permit holder fail or be unable to rehabilitate or manage any negative environmental consequences, the Minister may utilise, on written notice, all or part of the funds mentioned above to remedy the situation. • The holder of a prospecting right, mining right or mining permit must annually assess his or her environmental liability and increase, subject to ministerial approval, his or her financial provision.
5.5
Transfer of the environmental regulation
The MPRDA Amendment Act read with the National Environmental Management Amendment Act, No. 62 of 2008, implement a three-phase scheme for the shift of environmental regulation from the MPRDA to NEMA: • phase one would act as an eighteen month period within which the status quo of the current environmental regulatory regime on mines would be maintained (7 June 2013 - 6 December 2014); • phase two would last from months nineteen to thirty six within which environmental regulation on mines would be regulated by NEMA with the Minister being afforded competency within this period to administer NEMA (the Minister of Environmental Affairs would be the appeal authority) (7 December 2014 - 6 June 2015); and • phase three would start at the beginning of month thirty seven when the interim competency of the Minister to administer NEMA would end and the Minister of Environmental Affairs would be given exclusive competency to administer NEMA (both on mines and elsewhere) (7 June 2015 - onwards).
6. TAXES/ EQUITY 6.1
Corporate tax rate
• A flat rate of 28% applies to all resident companies. Non-resident companies are taxed at 33%. • Mining companies are entitled to a special mining capital expenditure deduction in relation to shaft sinking and mine equipment expenditure. Note, gold miners are entitled to the same deduction but it is calculated according to a different formula.
6.2
Dividends tax
egardless of whether or not shareholders are resident or non-resident, a dividends withholding tax on •R shareholders is levied at 15% on the receipt of declared dividends. • Certain dividends are exempt from the dividends tax, most notably: o local company-to-company dividends; o dividends declared and paid to public benefit organisations; and o dividends declared and paid to retirement funds. • As the dividends tax is a withholding tax, it may be reduced by double taxation agreements. The dividends tax also applies to dividends declared and paid in specie, although the liability in this case falls upon the company declaring and paying the dividend, not the shareholder. • Cash dividends declared and paid by dual listed companies in respect of their locally listed shares to South African resident shareholders are also subject to the dividends tax.
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6.3
Royalties
•T he Royalty Act requires that a person who “transfers” a mineral resource extracted in South Africa to pay royalties for the benefit of the National Revenue Fund. A fluctuating rate applies according to the following calculations: o 0.5 + [earnings before interest and taxes/ (gross sales in respect of refined mineral resources x 12.5)] x 100 = refined mineral royalty rate. This percentage must not exceed 5%. o 0.5 + [earnings before interest and taxes/ (gross sales in respect of unrefined mineral resources x 9)] x 100 = unrefined mineral royalty rate. This percentage must not exceed 7%. • All royalties become payable once the mineral is “transferred.”
7. TAXES/ EQUITY 7.1
Capital Gains Tax
• Any “net capital gain” which arises from any disposal (actual or deemed) by a resident of assets or a non-resident of certain assets is subject to a tax. This tax is commonly referred to as capital gains tax (CGT) but is not treated separately and falls under the umbrella of income tax. • In relation to non-residents, only the disposal of relevant assets situated in South Africa (including rights or interests, directly or, occasionally, indirectly held) and those attributable to a permanent establishment of the non-resident, are subject to CGT. • Any applicable net capital gain is multiplied by the relevant inclusion rate; this amount is then added to the total amount of taxable income. The taxpayer is then required to pay normal tax at the applicable rate. • Current inclusion rates: o unit trust funds and untaxed policy holder funds: 0%; o natural persons, special trusts and individual policy holder funds: 33.3%; and o for all other taxable entities, including permanent establishments: 66.6%. • Certain capital losses may be deducted from capital gains. • Please note that certain double taxation agreement provisions may be relevant.
8. FOREIGN INVESTMENT INCENTIVES 8.1
Do they exist?
Yes.
8.2
Governing Legislation
The Income Tax Act No. 58 of 1962 (South African Income Tax Act).
8.3
Authority
• The Department of Trade and Industry; • The Industrial Development Corporation of South Africa (IDC) and its Strategic Business Units (SBUs); • The South African Revenue Service.
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8.4
Incentives Provided
• The Mining and Beneficiation SBU under the IDC focuses on the development of small- and medium scale mining and beneficiation. It provides, among other things, medium-term financing (for example, loans, suspensive sales, equity and quasi-equity participation) in order to establish or expand junior mining houses and to enable HDSAs to acquire mining assets. o In relation to exchange control, incentives include: o funds held in “non-resident” accounts are freely transferable; o foreign companies, governments and institutions may list instruments, including derivatives based on foreign reference assets, on South Africa’s security exchanges; o any foreign entity wishing to list inward listed instruments on the JSE Limited requires the prior approval from FinSurv; o foreign dividends repatriated to South Africa after 26 October 2004 may be retransferred offshore without restriction; o international headquarter companies that meet certain shareholding and asset criteria may apply for approval from FinSurv to invest offshore without restriction; o the repatriation of capital investments by non-residents is permitted; and o the ability of South African companies, with more than 75% of their voting powers, capital or earning held or controlled (directly or indirectly) by a non-resident, to rely on local financial assistance facilities is restricted. o Certain tax deduction and allowances are available under the South African Income Tax Act. South Africa also has approximately 83 double taxation agreements which may apply to reduce tax liability.
8.5
Minimum Investment Required
In relation to the Mining and Beneficiation SBU, a project should have a finance requirement from the IDC of more than ZAR 1 million in debt and/or more than ZAR 5 million in equity.
9. LABOUR LAWS 9.1
Restrictions on employment of foreign workers
Non-South African citizens or permanent residents must obtain a valid work permit from the Department of Home Affairs. Categories of work permits include general work permits; exceptional skills work permits; intra-company transfer work permits; extraordinary quota work permits and quota work permits. Each permit category has specific requirements which must be fulfilled.
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UNITED REPUBLIC OF TANZANIA MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title (state-owned or private)
The entire property and control over minerals on, in or under the land on the territory of Tanzania is vested in the United Republic.
1.2
Regulatory authority
• • • • •
Minister of Energy and Minerals. Commissioner for Minerals. Mining Advisory Board. Geological Survey Agency of Tanzania. Chief Inspector of Mines.
1.3
Exploration and Mining Laws and Regulations (what are the act/ laws/ regulations that apply)
• • • • • •
Mining Act, 2010 (Mining Act). The Mining Mineral Rights Regulations, 2010 (containing the Model Development Agreement). The Mining (Environmental Protection for Small Scale Mining) Regulations, 2010. The Mining (Mineral Beneficiation) Regulations, 2010. The Mining (Mineral Trading) Regulations, 2010. The Mining (Radioactive Minerals Regulations), 2010.
1.4
Restrictions related to:
1.4.1
Foreign Investments (yes/ no, which ones)
1.4.2 Commodities (yes/ no, which ones) 1.4.3 Licence holder • Corporate entity (joint venture permissible)?
No. Yes (Gemstones - see 1.4.3). • Mineral rights can be granted to individuals and bodies corporate, subject to the following restrictions: o an individual should not be under the age of eighteen years and should not be an un-discharged bankrupt, having been adjudged or, otherwise declared bankrupt under any written law or having entered into any agreement or scheme of composition with his creditors, or taken advantage of any law for the benefit of debtors; o a body corporate should not be in liquidation, made a composition or arrangement with its creditors or having been made an order against by a court of competent jurisdiction for its winding up or dissolution; o licenses for small scale mining operations, whose capital investment is less than USD 100,000, shall only be granted to citizens of Tanzania and companies with an exclusive Tanzanian shareholding and board and the control of which is exercised from within Tanzania by persons all of whom are citizens of Tanzania; o licenses for mining gemstones shall only granted to applicants who are Tanzanians;
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• Jurisdiction in which incorporated
• Local participation (BEE/ indigenisation)
• State ownership
om ineral rights shall not be granted to individuals or bodies corporate which are in default under other mineral rights; and o prospecting licenses shall not be granted to individuals and bodies corporate owning already more than twenty other valid prospecting rights, unless the cumulative prospective areas of such other prospecting licenses do not exceed 2,000 square kilometres. • Holders of licenses for large scale mining operations, whose capital investment is not less than USD 100,000,000 may be required to enter into a development agreement with the United Republic pursuant the terms of which free carried interest in the license holder is granted to the government further state participation in the license holder is required. • The Mining Act provides that the Minister in charge of Mines shall make regulations prescribing the minimum shareholding requirements and procedure for selling shares to Tanzanian public through listing with the Dar es Salaam Stock Exchange.
2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining/ Exploration Phase
2.1
Authorisation required (yes/ no)
The Mining Code does not provide for a reconnaissance licence.
A prospecting licence is required. Prospecting licences are granted by the Commissioner for Minerals.
• A mining licence is required for medium scale mining operations whose capital investment is between USD 100,000 and USD 1,000,000. • A special mining licence is required for large scale mining operations whose capital investment is not less than USD 100,000,000. Both licenses are granted by the minister in charge of mines.
2.2
Validity of Licence
Not applicable.
Period for which the applicant has applied, not exceeding four years.
• For mining licences: 10 years. • For special mining licences: estimated life of the ore body as indicated in the feasibility study or such period as the applicant may request whichever period is shorter.
2.3
Renewable (yes/ no)
Not applicable.
Yes, for a first period not exceeding three years and a second period not exceeding two years. If the holder is not in default and at the end of the second period of renewal a further period is required to complete a feasibility study already commenced by the holder, further renewal is possible for such further period as may be reasonably required for that purpose but not exceeding two years.
Yes: • Mining licences: renewable for the period for which application has been made but not exceeding 10 years. • Special mining licences: renewable for a period not exceeding the estimated life of the remaining ore body.
2.4
Exclusivity of Licence
Not applicable.
Yes.
Yes.
2.5
Transfer of Licence (yes/ no and which approvals are needed)
Not applicable.
Yes, the written consent of the Commissioner for Minerals.
Yes, but written consent required of the Minister of Energy and Minerals.
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2.6
Change of control/ shareholding (yes/ no and which approvals are needed)
Not applicable.
Yes, the Commissioner for Minerals written approval is required.
Yes, the Minister of Energy and Mineral’s written approval is required.
2.7
Community Consultation
Not applicable.
No specific requirements.
Yes.
3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining (yes/ no)
No exclusivity, but the holder of a prospecting licence has priority to apply for a (special) mining licence.
3.2
Documentation/ Reports required for approval
• For mining licences: o description of the area and mineral deposits; o feasibility study; o plan on employment and training of Tanzanians and succession plan on expatriate employees; o particulars of financial and technical resources available; and o procurement plan of goods and services available in Tanzania. • For special mining licences: o statement of period, area and mineral deposits; o proposed programme for mining operations, including a forecast of capital investment, the estimated recovery rate or ore and mineral products and the proposed treatment and disposal of ore and minerals recovered; o proposed plan for relocation, resettlement and compensation of people within the mining areas; o environmental certificate; o details of expected infrastructure requirements; o procurement plan of goods and services available in Tanzania; and o plan on employment and training of Tanzanians and succession plan on expatriate employees.
3.3
Approval time for grant of mining Licence
Not specified.
4. ENVIRONMENT REGULATION 4.1
Applicable Laws and Regulations
• Environmental Management Act, 2004. • Mining (Environment Management and Protection) Regulations, 1999. • The Mining (Environmental Protection for Small Scale Mining) Regulations, 2010.
4.2
Environmental Impact Assessment
An environmental impact assessment is required for a special mining licence.
4.3
Community Consultation (yes/ no)
Yes, for special mining licences.
4.4
Rehabilitation Fund/ Closure Fund
Yes, for special mining licences.
5. TAXES/ EQUITY 5.1
Corporate tax rate
30%
5.2
Dividend tax
The 2011 General Tax Code of Madagascar does not provide for a dividend tax.
5.3
Royalties
• • • • •
5.4
Capital Gains Tax
Capital Gains Tax are applicable.
Uranium: 5%. Gemstone and diamond: 5%. Metallic minerals and platinum group minerals: 4%. Gem: 1%. All other minerals: 3%.
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6. FOREIGN INVESTMENT INCENTIVES 6.1
Do they exist?
Yes, but not applicable to the mining sector.
6.2
Governing Legislation
• Tanzania Investment Act [Cap 38 R.E. 2002]; and • Income Tax Act, 2004.
6.3
Authority
Tanzania Investment Centre and National Investment Steering Committee.
6.4
Incentives Provided
The general incentives provided for by the Tanzania Investment Act do not apply to entities conducting reconnaissance, prospecting or mining operations under the Mining Act. Specific incentives can be requested from the National Investment Steering Committee.
6.5
Minimum Investment Required
Not applicable to the mining sector.
7. LABOUR LAWS 7.1
Restrictions on employment of foreign workers
Expatriates who want to work in Tanzania are required to obtain a work permit. The policy and practice of the Tanzanian labour and immigration authorities is to decline applications for residence permits where local skills are available to meet the requirements.
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ZAMBIA MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining Title
All rights of ownership in searching for, mining and disposing of minerals wherever they may be located in Zambia are vested in the President on behalf of the Republic of Zambia and effective notwithstanding any right, title or interest that may be possessed by any person over the soil in or under which the mineral is found.
1.2
Regulatory authority
Ministry of Mines and Minerals Development.
1.3
Exploration and Mining Laws and Regulations
Mines and Minerals Development Act No. 7 of 2008.
1.4
Restrictions related to:
1.4.1
Foreign Investments
Yes, artisan’s mining rights are strictly for Zambian citizens. Prospecting permits, small-scale mining licences, small-scale gemstone licences, and mining rights for industrial minerals must be held by Zambian citizens or citizen owned companies.
1.4.2 Commodities
No restrictions.
1.4.3 Licence holder • Corporate entity (joint venture permissible)? • Jurisdiction in which incorporated • Local participation (BEE/ indigenisation) • State ownership
• • • •
No, subject to 1.4.1. Yes, a licence holder must be incorporated in Zambia and must have a registered office in Zambia. Yes, (see 1.4.1). No.
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2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining/ Exploitation Phase
2.1
Authorisation required
N/A
Yes, prospecting permit, prospecting licence and largescale gemstone licence (for prospecting operations).
Yes, small-scale mining licence, large-scale mining licence, small-scale gem stone licence, large-scale gemstone licence (for mining operations) and artisanal mining right.
2.2
Validity of Licence
N/A
• Prospecting permit: five years. • Prospecting licence: two years. • Large-scale gemstone licence: 10 years.
• • • • •
Small-scale mining licence: 10 years. Large-scale mining licence: 25 years. Small-scale gemstone licence: 10 years. Large-scale gemstone licence: 10 years. Artisanal mining right: two years.
2.3
Renewable
N/A
• Prospecting permit: No. • Prospecting licence: Yes. • Large-scale gemstone licence: Yes.
• • • • •
Small-scale mining licence: Yes. Large-scale mining licence: Yes. Small-scale gemstone licence: Yes. Large-scale gemstone licence: Yes. Artisanal mining right: Yes.
2.4
Exclusivity of Licence
N/A
rospecting permit: Yes, •P except gemstones. • Prospecting licence: Yes, except gemstones. • Large-scale gemstones licence: Yes.
• Small-scale mining licence: Yes, except gemstones. • Large-scale mining licence: Yes, except gemstones. • Small-scale gemstone licence: Yes, but only in relation to gemstones. • Large-scale gemstone licence: Yes. • Artisanal mining right permit: Yes.
2.5
Transfer of Licence
N/A
rospecting permit: Yes, •P need approval of Director of Geological Survey. •P rospecting licence: Yes, must notify Minister not less than 30 days before the intended transfer. Transfer will be approved once the Minister is satisfied that transferee not disqualified under the Mines and Mineral Development Act No. 7 of 2008; and. • Large-scale gemstone licence: Yes, need approval of the Minister.
•S mall-scale mining licence: Yes, need approval of Director of Mines. •L arge-scale mining licence: Yes, with the approval of the Minister. •S mall-scale gemstone licence: Yes, need the approval of the Director of Mines. •L arge-scale gemstone licence: Yes, with the approval of the Minister.
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2.6
Change of control/ share-holding
N/A
•P rospecting permit: Yes, approval of Director of Geological Survey required. • Prospecting licence: Yes, must notify the Minister not less than 30 days before the intended transfer. Transfer will be approved once the Minister satisfied that transferee not disqualified under the Mines and Mineral Development Act No. 7 of 2008. • Large-scale gemstone licence: Yes, need approval of the Minister, additionally, there is a general restriction that a company which holds a mining right shall not, without the written consent of the Minister, register any transfer of shares in that company to any person, or give another person control of the company, after the dtate of granting of the mining right.
•S mall-scale mining licence: Yes, need approval of Director of Mines. •L arge-scale mining licence: Yes, with the written consent of the Minister. •S mall-scale gemstone licence: Yes, need the approval of the Director of Mines. • Large-scale gemstone licence: Yes, with the approval of the Minister, additionally, there is a general restriction that a company which holds a mining right shall not, without the written consent of the Minister, register any transfer of shares in that company to any person, or give another person control of the company, after the dtate of granting of the mining right.
2.7
Community Consultation
N/A
Require written consent from relevant owner or authority.
Require written consent from relevant owner or authority.
2. SECURITY OF TENURE 2.1
Exclusive rights from exploration to mining
Yes.
2.2
Documentation / Reports required for approval
Yes.
2.3
Approval time for grant of a license or permit
• If all statutory requirements are met, prospecting licences, large scale mining licence, large-scale gemstone licences, shall be granted within 60 days from the date of receipt of the application. • If all statutory requirements are met, prospecting permits, small scale mining licences, small-scale gemstone licences and artisanal mining rights, approval shall be given within 30 days from the date of receipt of the application.
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3. ENVIRONMENT REGULATION 3.1
Applicable Laws and Regulations
• Mines and Minerals Development Act No. 7 of 2008. •E nvironmental Management Act No. 12 of 2011 (EMA) (which Act repealed the Environmental protection and Pollution Control Act No. 12 of 1990). • Air Pollution Control (Licensing and Emission Standards) Regulations, Statutory Instrument No. 41 of 1996. • Environmental Impact Assessment Regulations, Statutory Instrument No. 28 of 1997 (Note: these regulations were promulgated in terms of the Environmental Protection and Pollution Control Act No. 12 of 1990, which Act has since been repealed by the EMA, however, these regulations are still being enforces until new regulations are promulgated in Terms of the EMA). • Hazardous Waste Management Regulations, Statutory Instrument No. 125 of 2001. • Ozone Depleting Substances Regulations, Statutory Instrument No. 27 of 2001. • Pesticides and Toxic Waste Regulations, Statutory Instrument No. 20 of 1994. •W aste Management (Licensing of Transporters of Wastes and Waste Disposal Sites) Regulations, Statutory Instrument No. 71 of 1993. • Water Pollution Control (Effluent and Waste Water) Regulations, Statutory Instrument, 1993.
3.2
Environmental Impact Assessment
Yes.
3.3
Community Consultation
Yes.
4. TAXES/ EQUITY 4.1
Corporate tax rate
The standard rate is 30% for mining companies.
4.2
Royalties (payable by holders of large-scale mining licence, large-scale gemstone licence, small-scale mining licence, small-scale gemstone licence or an artisan’s mining right)
• 6% of the norm value (as defined in the Mines and Minerals Development Act No. 7 of 2008) of the base metals produced under the licence. • 6% of the gross value (as defined in the Mines and Minerals Development Act No. 7 of 2008) of the industrial minerals produced under the licence. • 6% of the gross value of the energy minerals produced under the licence. • 6% of the norm value of the precious metals produced under the licence. • 6% of the gross value of the gemstones produced under the licence.
4.3
Capital Gains Tax
No.
5. FOREIGN INVESTMENT INCENTIVES 5.1
Do they exist?
Yes.
5.2
Governing Legislation
Zambia Development Agency Act No. 11 of 2006.
5.3
Authority
Zambia Development Agency.
5.4
Incentives Provided
Yes. Tax, non-fax fiscal incentives and facilitation service incentives.
6. LABOUR LAWS 6.1
Restrictions on employment of foreign workers
• None under Labour Laws. • Immigration and Deportation Act No. 18 of 2010 - requires employment permits. • Mines and Minerals Development Act No. 7 of 2008 - requires that preference be given to Zambian citizens with regards to employment “to the maximum possible extent”, and applications for licences/ permits for large scale operations must include plans for the employment and training of Zambian citizens.
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ZIMBABWE MINING LAW SURVEY 1. MINING LAW ISSUES 1.1
Mining title (state-owned or private)
The dominium in and the right of searching and mining for and disposing of all minerals, mineral oils and natural gases is vested in the President of Zimbabwe.
1.2
Regulatory authority
Ministry of Mines and Mining Development; Mining Affairs Board; Minerals Marketing Corporation of Zimbabwe; The Chamber of Mines of Zimbabwe.
1.3
Exploration and mining laws and regulations
• Mines and Minerals Act [CAP 21:05]. • Gold Trade Act [CAP 21:03]. • Base Minerals Export Control Act [CAP 21:01]. • Chamber of Mines of Zimbabwe Incorporation (Private) Act [CAP 21:02]. • Environmental Management Act [CAP 20:27]. • Indigenisation and Economic Empowerment Act [CAP 14:33]. • Indigenisation and Economic Empowerment (General) Regulations, (Statutory Imstrument 21 of 2010). • Indigenisation and Economic Empowerment (General) Regulations, (General Notice 114 of 2011)Minimum Requirements for Indigenisation in the Mining Sector. • Minerals Marketing Corporation of Zimbabwe Act [CAP 21:04]. • Precious Stones Trade Act [CAP 21:07]. • Roasting Plant Corporation Act [CAP 21:07]. • Zimbabwe Investment Authority Act [CAP 14:30]. • Zimbabwe Mining Development Corporation Act [CAP 21:08]. • Explosives Regulations. • Mining (Managements and Safety) Regulations SI 109 of 1990. • Mining (Health and Sanitation) Regulations SI 182 of 1995. • Mining (General) Regulations R Government Notice 247 of 1977. • Mines and Minerals (Custom Milling Plants) Regulations SI 239 of 20. • Mines and Minerals (Contracted Inspectors ) Regulations SI 249 of 2006. • Mines and Minerals (Minerals Unit) Regulations SI 82 of 2008. • Mines and Minerals (Declaration of Minerals ) Notice SI 91 of 1990 Regulations. • Copper Control Act [CAP 14:06]. • Explosives Act [CAP 10:08]. • Environmental Management Act [CAP 20:27]. • Atmospheric Pollution Prevention Act [CAP 20:03]. • Hazardous Substances and Articles Act [CAP 15:05]. • Pneumoconiosis Act [CAP 15:08].
1.4
Restrictions related to:
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1.4.1
Foreign investments
1.4.2 Commodities • Coal, mineral oils, natural gases or nuclear energy source material
1.4.3 Licence holder: • Corporate entity • Jurisdiction in which incorporated • Licences available
• State ownership
•U nder the Zimbabwe Investment Authority Act, any person who wishes to obtain the approval of the Zimbabwe Investment Authority (“the Authority”) to invest in Zimbabwe or wishes his or her business activity to be approved by the Authority is required to submit an application to the Authority for an investment licence. An investment under the Zimbabwe Investment Authority Act means an investment in Zimbabwe or a proposal therefor will necessitate the expenditure of convertible foreign currency. (The Minister of Industry and International Trade may also specify a class of investment to be included under this definition.) This in effect means that all new foreign investment into Zimbabwe requires an investment licence issued by the Authority upon successful approval of a project proposal submitted to the Authority. • A completed application form (ZIA 1) acts as the project proposal. The application forms are available and can be collected from the ZIA offices or downloaded from the ZIA website (www.zia.co.zw). • The International Monetary Fund has imposed restrictions on engagement with Zimbabwe for failing to keep up with repayments on its loan which Zimbabwe has owed since 2001. However, steps are being taken to ease the imposed restrictions, including the implementation of an IMF approved StaffMonitored Program Zimbabwe in June 2013. • Under United States and European Union sanctions, transactions with certain specifically designated nationals and linked entities are prohibited. The European Union eased sanctions somewhat in March 2013, suspending the application of sanctions on 81 individuals and 8 entities in the country. President Robert Mugabe remains on the list. The United States, having considered easing of sanctions earlier in the year, declined to do so after the 2013 elections, which it viewed as “flawed”. • No rights to mine coal, mineral oils, natural gases or nuclear energy source material may be acquired except under and in accordance with a special grant issued under Part XX of the Mines and Minerals Act (a special licence granted on land reserved by the Minister against prospecting or pegging). This does not apply to a holder of a block of coal, mineral oil or natural gas claims, which was registered under Part XII of the Mines and Minerals Act [CAP 195:1939]. • Individuals, juristic person and joint ventures may hold prospecting and mining rights (however, only natural persons who are permanent residents of Zimbabwe may hold (non-exclusive) prospecting licences). • Not specified. • (Non-exclusive) prospecting licence; exclusive prospecting order; registered mining location; mining lease (a joined block of registered mining locations); special mining lease (a mining lease which is funded wholly or mainly by investment in foreign currency, which investment will exceed US$ 100 million, and where the mines output is intended principally for export); special grant (a special licence granted on land reserved by the Minister against prospecting or pegging); and a special grant for coal, mineral oils, natural gases and nuclear energy source material. • The indigenisation requirements discussed in paragraph 1.4.4 below may also be of relevance, as the designated entities include state enterprises.
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1.4.4 Indigenisation
The Indigenisation and Economic Empowerment Act requires, amongst other things, that all foreignowned mining businesses must dispose of at least 51% of their shares to indigenous Zimbabweans.. An indigenous Zimbabwean is any person who, before 18 April 1980, was disadvantaged by unfair discrimination on the grounds of his or her race, and any descendant of such person (including any company, association, syndicate or partnership of which indigenous Zimbabweans form the majority of the members or hold the controlling interest). Every non-indigenous mining business in Zimbabwe must achieve the minimum indigenisation and empowerment quota by the disposal of its shares or interests to a designated entity (that being the National Indigenisation and Economic Empowerment Fund; the Zimbabwe Mining Development Corporation; any company or other entity incorporated by the Zimbabwe Mining Development Corporation or the Fund; a statutory sovereign wealth fund that may be created by law; or an employee share scheme or trust, management share ownership scheme or trust or community share ownership scheme or trust). The minimum indigenisation and empowerment quota means, as the case may be, a controlling interest or 51% of the shares or interests which are required to be held by indigenous Zimbabweans in the non- indigenous mining business concerned. Mines and Mining Development Minister Walter Chidhakwa has suggested that these requirements may be “softened” for platinum miners who are willing to build a rfinery in the country.
2. LICENSING SCHEME Reconnaissance Phase
Prospecting Phase
Mining/ Exploitation Phase
2.1
Authorisation required
Not applicable.
Yes.
Yes.
2.2
Validity of licence
Not applicable.
• ( Non-exclusive) prospecting licence: two years. • Exclusive prospecting order: three years. • Special grant: subject to the terms and conditions of the special grant.
• Registered mining location; Indefinite. • Mining lease; Indefinite. • Special mining lease: subject to terms and conditions of lease, but not exceeding 25 years. • Special grant: subject to the terms and conditions of the special grant or, if not specified, indefinite. • Special grant for coal, mineral oils, natural gases and nuclear energy source material: Subject to the terms and conditions of the special grant.
2.3
Renewable
Not applicable.
• ( Non-exclusive) prospecting licence: no. • Exclusive prospecting order: yes. • Special grant: subject to the terms and conditions of the special grant.
• Registered mining location: not applicable. • Mining lease: not applicable. • Special mining lease: yes. • Special grant: subject to the terms and conditions of the special grant. • Special grant for coal, mineral oils, natural gases and nuclear energy source material
2.4
Exclusivity of licence
Not applicable.
• (Non-exclusive) prospecting licence: no, but a prospecting licence can, on the satisfaction of certain requirements, be made exclusive by applying for an exclusive prospecting order. • Exclusive prospecting order: yes. • Special grant: yes.
• • • • •
egistered mining location: yes. R Mining lease: yes. Special mining lease: yes. Special grant: yes. Special grant for coal, mineral oils, natural gases and nuclear energy source material: yes.
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2.5
Transfer of licence
Not applicable.
• (Non-exclusive) Prospecting licence: no. •E xclusive prospecting order: yes, but only on recommendation by the Mining Affairs Board in special circumstances and subject to such terms and conditions it imposes. If a company holds the licence, the requirements contained in the Indigenisation Act must also be met • Special grant: subject to the terms and conditions of the special grant.
• Registered mining location, mining lease and special mining lease: yes, subject to notification 60 days prior to the transfer to the Mining Commissioner, payment of transfer duty by the purchaser, submission of an application to, and registration of the transfer by, the Mining Commissioner. Transfer is also subject to the requirements of the Indigenisation Act. • Special grant: subject to the terms and conditions of the special grant or, if not specified, as above. • Special grant for coal, mineral oils, natural gases and nuclear energy source material: No.
2.6
Change of control/ shareholding
Not applicable.
• ( Non-exclusive) Prospecting licence: no. • Exclusive prospecting order: yes. If a company holds the licence, the requirements contained in the Indigenisation Act must also be met. • Special grant: subject to the terms and conditions of the special grant.
• Registered mining location, mining lease and special mining lease: yes, subject to the provisions of the Indigenisation Act. • Special grant: subject to the terms and conditions of the special grant or, if not specified, as above. • Special grant for coal, mineral oils, natural gases and nuclear energy source material: subject to the terms and conditions of the special grant.
2.7
Community consultation
Not applicable.
• The licence holder must get • Private landowners are entitled to the payment of consent in writing from the an appropriate sum by the mining licence holder, as owner of private land or determined by the Mineral Affairs Board, in compensation an occupier of a portion of for the mining operations on their land. communal land before carrying • Where the licence holder conducts mining operations out prospecting operations. on communal land in the jurisdiction of a single rural Where consent is unreasonably district council, compensation, in an amount determined withheld, the Minister can by the Mineral Affairs Board, shall be paid to the District authorise the licence holder Development Fund referred to in section 3 of the District to exercise his or her rights Development Fund Act [Chapter 29:06]. under the licence regardless of the lack of consent, subject to any conditions the Minister imposes. Where the licence falls on any communal land occupied as a village, written consent from the rural district council for the area concerned must be obtained.
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3. SECURITY OF TENURE 3.1
Exclusive rights from exploration to mining
Yes.
3.2
Documentation/ reports required for approval
Yes, these are set out in detail in the Mines and Minerals Act. This varies depending on the licence or order for which approval is sought.
3.3
Approval time for grant of mining licence
This is not stipulated in the Mines and Minerals Act.
4. ENVIRONMENT REGULATION 4.1
Applicable laws and regulations
• Mines and Minerals Act. • Environmental Management Act.
4.2
Environmental impact assessment
Yes. The Environmental Management Act requires that an environmental impact assessment be acquired for, amongst other things, mineral prospecting, mineral mining, quarrying, and ore processing and concentrating. The Mines and Minerals Act requires that a report on the anticipated impact of mining operations on the environment be submitted as part of the plan for the development and operation of a proposed mine when a special lease is sought.
4.3
Community consultation
Yes.
4.4
Rehabilitation fund/ closure fund
The Environmental Management Act provides for the establishment of the Environment Fund, of which the objects include, amongst other things, rehabilitation of degraded environments and cleaning up polluted environments.
5. TAXES/ EQUITY 5.1
Corporate tax rate
25%, although lower rates may apply under incentive schemes. (Income tax on mining operations is levied at 15% for Special Mining Lease Holders).
5.2
Dividend tax
Dividends from securities listed on the Zimbabwe stock exchange are taxed at a rate of 10%; otherwise, the rate is 15%. The rate may be reduced under a tax treaty.
5.3
Royalties
Royalties paid to a non-resident are subject to a 15% withholding tax. The rate may be reduced under a tax treaty. Mining companies are required to pay royalties on the fair market value of minerals; and these minerals are sold as follows: Precious Stones (15%); Gold (7%); Platinum (10%); Base Metals (2%); Industrial Minerals (2%); Coal Bed Methane Gas (2%); Coal (1%).
5.4
Capital gains tax
The capital gains tax rate on gains from the sale or disposal of a marketable security and immovable property acquired before 1 February 2009 is 5%. A sale of a marketable security (excluding listed shares) and immovable property acquired after that date is taxed at 20% after allowing for deductions. An inflation allowance equal to 2.5% of the cost, alterations and additions of the asset is granted. A capital gains withholding tax of 15% applies on the sales proceeds of immovable property, and of 1% on the sales proceeds of marketable securities. The rate of capital gains withholding tax for unlisted securities is 5% (having been reduced from 10% to 5% with effect from 1 September 2010).
6. FOREIGN INVESTMENT INCENTIVES 6.1
Do they exist?
Yes.
6.2
Governing legislation
• Zimbabwe Investment. • Authority Act. • Income Tax Act [CAP 23:06].
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6.3
Authority
The main administrators are the Zimbabwe Revenue Authority for tax incentives; and the Ministry of International Trade, the Industrial Development Corporation and the Zimbabwe Investment Authority for non-tax incentives.
6.4
Incentives provided
ost incentives in Zimbabwe apply equally to both domestic and foreign investors. For instance, •M in terms of the Build Own Operate and Transfer (BOOT) and BOT Arrangements, contractors may enter into contracts with the state or statutory corporation under which the contractor undertakes to construct infrastructure for the state or statutory corporation which will be in consideration for the right to operate or control for a specified period. Thereafter, the contractor will transfer ownership or control of the item to the state or statutory corporation. The contractor enjoys a tax exemption for the first 5 years, and is then taxed at 15% for the second 5 years. • Furthermore, for mining companies, all capital expenditure on exploration, development and operating incurred wholly and exclusively for mining operations is allowed in full. • Under the Zimbabwe Investment Authority Act, it is contemplated that the Minister of Industry and International Trade, in consultation with the Minister of Finance, shall publish guidelines for investment which shall mention (i) general incentives that may be applicable to licensed investors, whether foreign or domestic; (ii) special incentives that may be applicable to specific categories of licensed investors, whether foreign or domestic; and (iii) any other incentives and conditions that may be applicable to investors, whether foreign or domestic. The Minister of Industry and International Trade may, however, specify different incentives for domestic and foreign licensed investors.
6.5
Minimum investment required
N/A.
7. LABOUR LAWS 7.1
Restrictions on employment of foreign workers
Neither the Labour Act [CAP 28:01] nor the Mines and Minerals Act imposes any such restrictions on foreign workers.
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KEY CONTACTS
Peter Leon Partner, Johannesburg Mining/ Regulatory T: +27 11 530 5248 C: +27 83 250 9781
Brigette Baillie Partner, Johannesburg Project Finance T: +27 11 530 5222 C: +27 83 655 4284
Bruce Dickinson Partner, Johannesburg Corporate/ Mergers & Acquisitions T: +27 11 530 5381 C: +27 82 567 5272
Deepa Vallabh Partner, Johannesburg Corporate/ Mergers & Acquisitions T: +27 11 530 5275 C: +27 82 571 0707
Dries Hoek Director, Johannesburg Tax T: +27 11 530 5207 C: +27 82 940 3569
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
Johan Olivier Partner, Johannesburg Labour/ Mine Health and Safety T: +27 11 530 5194 C: +27 82 882 6896
Jon Forman Partner, Johannesburg Corporate/ Mergers & Acquisitions T: +27 11 530 5231 C: +27 83 677 5990
[email protected]
[email protected]
Jonathan Veeran Partner, Johannesburg Mining/ Regulatory T: +27 11 530 5336 C: +27 83 754 5689
[email protected]
Kate Collier Partner, Johannesburg Labour/ Mine Health and Safety T: +27 11 530 5303 C: +27 82 322 7091
Kenneth Costner Partner, Johannesburg Labour/ Mine Health and Safety T: +27 11 530 5836 C: +27 82 399 9778
[email protected]
[email protected]
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KEY CONTACTS
Lesley Morphet Partner, Johannesburg Competition T: +27 11 530 5359 C: +27 83 456 1765
Manus Booysen Partner, Johannesburg Mining/ Regulatory T: +27 11 530 5224 C: +27 82 852 3223
[email protected] [email protected]
Marius Diemont Partner, Cape Town Environmental T: +27 21 431 7390 C: +27 82 333 3992
Megan Jarvis Partner, Johannesburg Corporate/ Mergers & Acquisitions T: +27 11 530 5804 C: +27 83 440 0220
Nik Alp Partner, Johannesburg Litigation/ Dispute Regulation T: +27 11 530 5339 C: +27 83 212 2353
[email protected]
[email protected]
[email protected]
Patrick Holloway Partner, Cape Town Shipping/ Marine T: +27 21 431 7278 C: +27 82 557 0457
Priyesh Daya Partner, Johannesburg Litigation/ Dispute Resolution T: +27 11 530 5358 C: +27 82 800 4585
[email protected]
[email protected]
Rita Spalding Partner, Johannesburg Mining/ Regulatory T: +27 11 530 5230 C: +27 83 701 4841
[email protected]
Robert Appelbaum Partner, Johannesburg Corporate/ Mergers & Acquisitions T: +27 11 530 5656 C: +27 82 442 7527
Safiyya Patel Partner, Johannesburg Corporate/ Mergers & Acquisitions T: +27 11 530 5853 C: +27 83 631 5198
[email protected]
[email protected]
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KEY CONTACTS
Sipho Methula Partner, Johannesburg Corporate/ Mergers & Acquisitions T: +27 11 530 5311 C: +27 60 505 3649
Steven De Backer Consultant, Johannesburg Africa T: +27 11 530 5224 C: +27 82 852 3223
Stuart McCafferty Partner, Johannesburg Litigation/ Dispute Resolution T: +27 11 530 5356 C: +27 83 212 0741
[email protected]
[email protected]
[email protected]
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