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Part B: Mineral Rights - Part B-4: ASM Licencing - 27. Small Scale Licencing | 27.7. Term of License

The term of the licence is the period of time during which it is valid. The mining law or regulation should establish the length of time or the maximum length of time for which a licence is granted. The licence itself should specify the start date and the end date of its period of validity (subject to possible early termination).

The mining law may specify the exact term of a SSM licence or it may specify the maximum term of a SSM licence and authorize the Regulating Authority to set the term of each SSM licence individually within that limit, based on the technical information about the deposit and the technical exploitation plan submitted by the applicant.

The terms of SSM licenses are generally much shorter than the terms of large scale exploitation licenses because by definition SSM is limited to the exploitation of small scale deposits involving limited amounts of investment and/or production. Some mining laws that provide for SSM licenses also contemplate a process for a SSM licence to be transformed into an industrial mining licence with a longer term if justified by the nature of the deposit and the technical operations during the course of operations under the SSM license.

There is considerable variety in the terms of SSM licenses under mining laws. They may be for a term as short as three years, with unlimited renewals, or for as long as ten years with no renewals.

Factors to be considered in setting the term of SSM licenses include:

  • whether the SSM licence covers the exploration and exploitation phases or only the exploitation phase (if the former, a longer term is probably justified);
  • whether the SSM licence is preceded by work of the applicant under an exploration licence (in which case, a shorter term may be appropriate);
  • whether to set a fixed term or a maximum term length and allow the Regulating Authority to set the exact term of the licence subject to that maximum (depending on the enforcement capability of the Regulating Authority to terminate SSM licenses under which work has been abandoned);
  • whether to set the term length in the law or in the regulations (security of title in the law versus flexibility to adjust to subsector conditions by regulation);
  • the extent of the information about the deposit and the work program required to be submitted with an application for the SSM licence (more information available would suggest greater confidence in a relatively short term); and
  • the definition of SSM in the mining law and the ability to transform the SSM licence into an industrial mining licence with a longer term.

27.7. Example 1:

Article [_]

(1) Subject to the provisions of subsection (2), a minerals permit shall be valid for such period, not exceeding five years, as the [Regulating Authority] may determine and may, on application made to the [Regulating Authority], be renewed for further periods not exceeding five years at a time.

(2) Without prejudice to Article [_] (on the Regulating Authority’s power to suspend or cancel a mineral concession), the [Regulating Authority] may terminate a minerals permit issued to exploit industrial minerals if he is satisfied that the holder thereof has ceased to be a citizen of Botswana or has entered into an arrangement with a person who is not a citizen of Botswana, as defined in Article [_], which arrangement has the effect of transferring to that person any interest in such permit.

Annotation

Drawn from Botswana’s mining law (1999), this provision sets a maximum term length of five years, but authorizes the Regulating Authority to set a shorter term for a particular license. The provision also allows for unlimited renewals, each similarly limited to no more than (but possibly less than) five years.

Under Botswana’s mining law, it is not necessary to obtain an exploration (prospecting) licence as a prerequisite to obtaining a SSM license; however, Botswana’s mining law does require the submission of substantial information regarding the deposit, the planned work program, and environmental protection measures with the application for the SSM license. Therefore the holder of a SSM licence is expected to commence operations promptly following the grant of the license.

It is furthermore to be expected that most SSM operations may last no more than five years, because the definition of SSM is as follows:

"small scale mining" means the intentional winning 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 P1 million [about USD 93,000 on July 18, 2016].

On the other hand, the term of a SSM licence in Botswana is subject to unlimited renewals, as long as the operation does not exceed the definition of SSM, the holder is in compliance with its licence obligations, and a complete renewal application is timely filed.

Overall, this is a balanced approach that seeks to set an appropriate term length for the type of operation involved, in light of the pre-licence preparatory work required. It provides flexibility while guarding against the risk of SSM licence areas being tied up for periods that exceed the time of their productivity.

27.7. Example 2:

Article [_] Duration of small-scale mining licence

A small-scale mining licence shall be granted for a period not exceeding ten years.

Article [_] Duration of small-scale gemstone mining licence

A small-scale gemstone licence shall be granted for a period not exceeding ten years.

Annotation

Drawn from Zambia’s mining law (2008), these provisions provide flexibility to the Regulating Authority to set the term of each individual SSM license, up to a maximum of ten years. The provisions are similar to Botswana’s in providing Regulating flexibility, but with a longer maximum term.

Unlike Botswana’s mining law, Zambia requires that a SSM licence applicant be the holder of a SSM exploration licence (prospecting permit). However, that is not required as a prerequisite for a small-scale gemstone license.

Whereas SSM is defined in Botswana’s mining law by reference to limits on annual production and total investment, there are no such limits on small scale mining in Zambia. Rather, the key distinctions in Zambia are that (a) SSM licenses are reserved exclusively for Zambian citizens and Zambian citizen-owned companies, and (b) a SSM licence is for a smaller area and a shorter term than a large scale exploitation license. The potentially longer SSM licence term provides greater security of title to a Zambian mining entrepreneur who may invest substantially more than the holder of a SSM licence in Botswana.

In light of the potentially longer term of the SSM licence under Zambia’s mining law, it includes a provision that authorizes the Regulating Authority to cancel the licence if production for three years or more is less than 50% of the estimated recovery rate for the mine.