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Part B: Mineral Rights - Part B-4: ASM Licencing - 27. Small Scale Licencing | 27.6. Rights of a Licence Holder

Provisions that address what possession of a small scale licence allows the licence holder to do or what the licence holder may be entitled to are collectively treated as rights. Similar to obligations, the rights of a licence holder are usually addressed in articles specific to the licence in question, and occasionally in general provisions applying to all licenses. These rights are generally subject to conditions specified in the mining law and regulations or other laws and regulations, and may include:

  • the exclusive right to extract the specified minerals in the area applied for,
  • the right to obtain an extension of the licence to cover additional mineral substances subsequently discovered in commercial quantities within the licence area,
  • the right to access and occupy the land in the licence area for mining (if ownership of the land or consent of the landowner or lawful occupier/user was required as an element of the licence application, or alternatively the right to obtain such access in accordance with procedures for negotiation/mediation/arbitration and compensation of such owners/occupiers/users specified in the mining law),
  • the right to erect structures and a base camp necessary for the exploitation of the resource in the licensed area,
  • the right to process the extracted mineral substances in order to produce marketable mineral products,
  • the right to use other natural resources such as water and timber,
  • the right to use industrial or quarrying minerals located within the licence area as building materials for necessary facilities at the site or as inputs for processing of the targeted minerals,
  • the right to use or sell the mineral products derived from operations under the SSM license, and
  • the right to grant security interests in the license, to sublease operations under the license, and to transfer the licence to another eligible holder.

As noted in subsection 26.1 above, a mining law may confer the right to explore for and exploit mineral substances in the licensed area. This may cover initial exploration to discover a deposit, in which case authorization to proceed to the exploitation phase will normally require submission and acceptance of findings, a work plan or feasibility study, an environmental impact assessment and mitigation/rehabilitation plan and other elements. Alternatively, the exploration rights granted may be limited to continuing exploration at the site of exploitation in order to determine and evaluate the extent of continuation of the identified deposit within the licence area.

As a general matter, the rights of a SSM licence holder within the licensed area are similar to those of a large-scale exploitation licence holder within its licence area, except that the SSM licence holder’s right may be limited to a certain maximum amount of production or investment. In order to exceed that limit, the SSM licence holder must convert the SSM licence to the type of exploitation licence under which the projected higher level of production or investment is authorized.

27.6. Example 1:

Article [_]

(1) A small scale mining licence to mine minerals granted under this section shall confer on the holder the exclusive right, subject to this [Act][Code][Law] and the Regulations including the Regulations applicable to safety and the protection of the environment, to carry on exploration and mining operations in the mining area, and for that purpose the holder, his servants and agents (being persons not disqualified under subsection (x) of section [_] from holding a small scale mining licence (which is reserved for citizens of [Country], partnerships of [Country citizens] and [Country citizen]-owned companies) ) may, in particular-

(a) enter on the mining area and take all reasonable measures on or under the surface for the purpose of mining operations;

(b) erect the necessary equipment, plant and buildings for the purpose of mining, transporting, dressing or treating the minerals recovered by him in the course of mining operations;

(c) subject to payment of royalties in accordance with this [Act][Code][Law] and the regulations dispose of any mineral recovered;

(d) stack or dump any mineral or waste product in compliance with the applicable regulations;

(e) carry on prospecting operations in the mining area.

Article [_]

(1) The holder of one or more primary mining

licences may-

(a) at any time before the licences expire;

(b) if the holder has tendered the prescribed fee, is not in default and has provided particulars which would be required in an application for a mining licence under article [_], apply to the [Regulating Authority] to convert the SSM licence or licences to a mining licence.

(2) An application made in accordance with subsection (1) shall be granted by the [Regulating Authority] and the mining licence shall be issued within the period of thirty days from the date of receipt of the application.

(3) When granting the licence under this section the remaining period of the former licence s shall not be taken into account.

Annotation

Drawn from Tanzania’s mining law (2010), the first section in the example provides for exclusive rights to carry on both exploration (called prospecting in Tanzania’s mining law) and exploitation of minerals within the licensed area. The right is not limited to specific minerals. The exploration right is for initial exploration to identify and evaluate a deposit. The Tanzanian mining law does not require any prior exploration work to have been carried out under an exploration license as a precondition for the grant of a small scale mining licence (called a “primary mining licence” in Tanzania’s mining law). By contrast, prior work to define the grade and extent of a mineral deposit under an exploration license is required in order to meet the application requirements for an industrial mining license or a large scale exploitation licence under the Tanzanian mining law. Thus, Tanzania’s mining law makes it relatively easy for an applicant (which must be a Tanzanian national or a wholly Tanzanian partnership or Tanzanian-owned company) to obtain a small scale mining license.

Essentially, Tanzania’s mining law removes barriers to entry into small scale mining for Tanzanian nationals and Tanzanian-owned companies; and it relies on regulating their activity by application of the Regulations under the mining law, rather than requiring them to submit studies, plans and work programs in order to obtain the small scale mining licence.

Thus, in subsection (1) of the first section, all rights under the small scale mining licence are subject to the Regulations under the mining law, with special mention of the Regulations on safety and protection of the environment. Compliance with the regulations under the mining law is reiterated as a condition of two of the enumerated rights granted by the SSM licence: (c) the right to dispose of minerals recovered, and (d) the right to stack or dump any mineral or waste product. By contrast, holders of large scale exploitation licences are also required to comply with their environmental management plans as a condition of the right to stack or dump minerals and waste products. No environmental management plan is required of SSM licence holders.

Under the second article in the example, the holder of the SSM licence also has the right to apply for the conversion of the SSM licence into a mining licence for industrial exploitation. This enables the SSM licence holder to graduate to a licence for exploitation based on a higher maximum amount of investment, if the target deposit warrants a greater investment and the licence holder is capable of mobilizing the necessary capital.

27.6. Example 2:

Article [_]

(1) A "PRE" licence is a prospecting and small-scale mining licence, and, within the area under the licence and for the period during which the licence is valid, it confers on the holder an exclusive right to carry out prospecting work and mine the material or materials for which the licence was issued, in accordance with the commitments in the Plan annexed to the application, a template of which shall be set out in the implementing decree for the present [Code][Act][Law].

(2) However, before prospecting and operating work may commence, the commitments in the environmental commitment plan, which is to be submitted to the department in charge of the mining environment for the [Regulatory Authority], must be approved by the relevant authorities in accordance with the regulations relating to environmental protection.

(3) Nevertheless, an environmental impact assessment, the terms for which shall be specified in the regulations, may be required in the event that there are numerous applications for "PRE" licences in one area.

(4) Subject to prior consent from the landowner, should the need arise, the right conferred by an "PRE" licence includes the right to build the necessary infrastructure and to use the wood and water located in the area in accordance with the laws and regulations in force.

(5) Should a small-scale operator cease to use only artisanal techniques when carrying out prospecting and mining work, this shall result in them being required to apply to have their "PRE" licence converted to a standard licence.

Annotation

Drawn from Madagascar’s mining law (2005), this example specifies the rights of an SSM licence holder in a single article. The SSM licence in Madagascar is called the Exploration and Exploitation Permit (“PRE”). Similar to the SSM licence in Tanzania, the PRE under Madagascar’s law grants an exclusive right to conduct prospecting, exploration and exploitation of minerals within the licence area. This contrasts with the general exploration licence and exploitation licence, which are separate licences for the distinct exploration and exploitation phases of mineral development, respectively.

The rights conferred by the PRE licence under Madagascar’s mining law include the rights to construct necessary infrastructure and to utilize wood and water resources found within the licence area. These rights are subject to (a) obtaining the consent of the landowner, if there is one, and (b) compliance with applicable laws and regulations.

All of the rights under the PRE license in this example are subject to several conditions that do not apply in the previous example. They are as follows:

    1) The rights are granted with respect to specific minerals.

    2) The rights granted under the PRE in this example are subject to the commitments made in the plan attached to the licence holder’s application.

    3) The commencement of exploration and exploitation activities under the PRE licence in the example is subject to obtaining the approval by the competent environmental regulatory authority of an environmental commitment plan that must be submitted to the sectoral environmental regulatory service.

    4) An Environmental Impact Study may be required in the event of concentration of PRE licences in a particular area.

    5) If the PRE licence holder utilizes techniques that are not within the definition of “artisanal techniques”, he must request the transformation of his PRE licence into a standard licence.

In conclusion, this example provides for a more carefully circumscribed set of SSM rights in general, and in particular with respect to protection of the environment. This more cautious approach to SSM may be more appropriate in jurisdictions where nature and wildlife conservation and related tourism are important concerns.