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Part B: Mineral Rights - Part B-4: ASM Licencing - 27. Small Scale Licencing | 27.1 Eligibility

When a mining law addresses small-scale mining, it usually identifies who may or may not engage in the activity. Eligibility in this case may sometimes simply be limited to the eligibility to engage in the activity rather than the specific eligibility to apply for a license. For example, some laws explicitly bar certain large companies from engaging in small scale activities, restrict eligibility to resident country nationals, or restrict eligibility to cooperatives.

The section should indicate whether the licence to engage in SSM is reserved for nationals or allows for joint ventures with foreign entities. In some instances, a law may allow full ownership of SSM ventures by foreign entities. This may be in circumstances where there is an absence of local capacity to engage at that level. In such circumstances, allowing foreign entities to engage in SSM can result in knowledge, skills and technology transfer, provided that conditions are applied to encourage such transfer.

When non-nationals are eligible, it is important to outline in what capacity they are permitted to apply for the license. It is also important to indicate if there are special permissions for nationals from neighbouring countries with which there are reciprocal arrangements, for example for members of economic communities or customs unions. Other general limitations include whether individuals are eligible for SSM licenses and, if so, the age of majority for that purpose; and what entities and/or individuals are excluded from eligibility due to the pendency of bankruptcy and/or liquidation proceedings or criminal charges against them, a prior licence revocation, a prior conviction for fraud, or status as a member of the mining administration or the government, for example.

Under some mining laws, only the holder of a valid exploration licence covering the area applied for is eligible for a small-scale mining licence for that area. Under others, holding a valid exploration licence for the area is not required for eligibility to obtain the SSM license. Consideration should be given to whether or not to make this distinction. Given the requirement to provide a detailed work plan or feasibility study and some form of environmental assessment and site rehabilitation plan with an application for a SSM licence under most mining laws, applicants may find it necessary to obtain an exploration licence for the area in order to reserve it while preparing the required assessment and plans. Alternatively, if the SSM licence is for exploration (“prospecting”) and exploitation, the mining law may provide that such assessment and plans can be prepared during the exploration phase once the SSM licence has been issued, but will be required to be submitted and accepted in order to obtain permission to commence exploitation operations under the SSM license.

27.1. Example 1:

Article [_]

(1) Any person who wishes to carry out small-scale mining operations shall apply for a small-scale mining licence.

(2) A small-scale mining licence shall be granted to–

(a) a body corporate that is incorporated or registered in [Country] and having a minimum of twenty-five percent of its shares held by citizens of [Country]; or

(b) a co-operative society registered in [Country] having a minimum of twenty-five percent of its member being citizens of [Country].

(3) All such co-operatives and bodies corporate shall register with the Director and shall provide such documentation as the [Regulating Authority] may require.

Annotation

Drawn from Sierra Leone’s mining law (2009), this provision addresses only SSM licenses. Eligibility for such licenses is limited to entities. Under Sierra Leone’s mining law, SSM licenses cannot be issued to individuals.

To be eligible, an entity must be either a company that is incorporated or registered in Sierra Leone or a co-operative society that is registered in Sierra Leone. In both cases, the entity must be owned 25% by nationals. Thus, foreign participation in SSM is permitted, provided that the foreign participants act through a company or co-operative society that is at least 25% owned by citizens of Sierra Leone and registered there.

An entity is not required to be the holder of an exploration licence for the area applied for, but it may be such a holder. It probably will be one, in order to preserve the availability of the area while preparing the necessary work plan, environmental permitting requirements and other preparatory work.

The eligible entities must register with the Regulating Authority and provide documentation as required by the Regulating Authority.

27.1. Example 2:

Article [_]

(1) A mining right or non-mining right shall not be granted to any person except in accordance with the provisions of this [Act][Code][Law].

(2) A mining right or non-mining right shall not be granted to or held by —

(a) an individual who—

(i) is under the age of eighteen years;

(ii) is or becomes an undercharged bankrupt, having been adjudged or otherwise declared bankrupt under any written law, or enters into any agreement or scheme of composition with creditors, or takes advantage of any legal process for the relief of bankrupt or insolvent debtors; or

(iii) has been convicted, within the previous ten years, of an offence involving fraud or dishonesty, or of any offence under this [Act][Code][Law] or any other law within or outside [Country], and been sentenced therefor to imprisonment without the option of a fine or to a fine exceeding fifty thousand [penalty units]; or

(b) a company—

(i) which is in liquidation, other than liquidation which forms part of a scheme for the reconstruction of the company or for its amalgamation with another company;

(ii) unless the company is incorporated under [the Companies Act].

(iii) which has not established an office in [Country]; or

(iv) which has among its directors or shareholders any person who would be disqualified under sub-paragraphs (ii) or (iii) of paragraph (a).

(3) A prospecting permit, small-scale mining licence, small-scale gemstone licence and an artisan's mining right shall not be granted to a person who is not a citizen of [Country] or a company which is not a citizen-owned company.

(4) A mining right for industrial minerals shall only be granted to a citizen of [the country] and a citizen-owned company.

(5) Any document or transaction purporting to grant a mining right to any person not entitled to hold the right shall be void and of no effect.

(6) For the purposes of this [Act][Code][Law], "citizen of [Country]" means

(a) in relation to an individual, an individual who is a citizen of [Country]; and

(b) in relation to a partnership, a partnership which is composed exclusively of persons who are citizens of [Country].

Annotation

Drawn from Zambia’s mining law (2007), this provision describes the persons who are ineligible to hold mining rights in general and SSM licenses in particular. By eliminating from consideration the persons stated to be ineligible, the provision results in the following persons being the only ones eligible to receive a SSM licenses: individual citizens of Zambia or Zambian citizen-owned companies, provided that they are not rendered ineligible by the other terms of the provision that apply to all individuals, whether or not they are Zambian citizens, and to all companies, whether or not they are citizen-owned. Foreigners, foreign-owned companies and even joint ventures involving foreigners are therefore excluded from SSM under Zambia’s mining law.

Zambia’s mining law also provides for a small scale gemstone license, for which the applicant licence must meet the same nationality requirements as apply in the case of the SSM license.