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Part B: Mineral Rights - Part B-4: ASM Licencing - 27. Small Scale Licencing | 27.10. Termination of License

The validity of a small scale mining licence typically terminates in the same way that a large scale exploitation terminates, i.e. in one of the following ways:

  • Upon its expiration date, unless and to the extent it is renewed or automatically extended by law; or
  • Upon nullification (e.g., if issued to an ineligible holder, or for mineral substances for which such licenses are not authorized, or over an area that is not available for a SSM licence under the law, or if obtained by fraud); or
  • Upon revocation due to abandonment or breach of conditions that constitute grounds for revocation of the license; or
  • Upon relinquishment or surrender of the licence by the holder prior to its expiration date.

In addition, the mining law may provide that a SSM licence must be transformed into an industrial or large scale exploitation licence if the mining operations exceed the parameters of SSM as defined in the law; and the law may authorize the Regulating Authority to monitor the SSM activity and terminate non-performing licenses in order to avoid excessive areas being tied up by non-productive SSM licence holders.

It is important for termination provisions to specify the obligations of the licence holder in connection with termination of the license. In addition, many mining laws provide the Government with a right to either acquire equipment and installations at the mine site upon termination or require their removal by the licence holder. The holder’s environmental rehabilitation obligation should apply regardless of the type of termination. It is best practice to require the licence holder to provide a bank guarantee and/or environmental escrow account to which the Government has access in order to pay for necessary environmental restoration if the licence holder abandons the mine without performing the necessary clean-up in the case of termination by revocation.

27.10. Example 1:

Article [_]

“Termination” means the lapse of a mineral right by expiry of time, surrender or cancellation; and where the surrender or cancellation is in respect of part only of the area covered by the mineral right, then the mineral right shall be deemed to have been surrendered or cancelled in respect of that surrendered or cancelled area;

Article [_]For All Mineral Rights

(1) Where the holder of a mineral right intends to cease operations either during the period of or on termination of his mineral right, he shall, not less than ninety calendar days or such other period as the [Regulating Authority] may allow before such cessation or termination, furnish to the [Regulating Authority], a full register of assets showing those assets which he intends to remove and those which he intends to leave in the area covered by the mineral right, and shall further notify the [Regulating Authority] of any potentially hazardous substances, erections or excavations in that area.

(2) On receipt of a notice in terms of subsection (1), the [Regulating Authority] may, if he deems it necessary-

(a) certify that specified items of fixed machinery are necessary for the care and maintenance of the area covered by the mineral right and such items and machinery shall not be removed;

(b) require that specified buildings and other items of fixed machinery shall be removed;

(c) require that potentially hazardous substances, erections and excavations be removed or made safe in such manner as he may direct.

(3) If removal of specified assets which the holder has indicated that he wishes to remove is prohibited under paragraph (a) of subsection (2), the [Regulating Authority] shall pay reasonable compensation to the holder for such assets and any person who acquires a mineral right over the area concerned shall reimburse the sum equal to the compensation so paid.

(4) Upon cessation of operations by the holder of a mineral right, the area covered by the mineral right shall revert to the owner thereof provided that if the [Regulating Authority] determines that the area should be retained, it shall be so retained by the [Regulating Authority] subject to payment of fair compensation to the owner for such retention.

(5) Any fresh water dam and the waters impounded thereby shall be left intact on cessation of operations or termination of a mineral right.

Article [_]

(1) Upon termination of any mineral right, the holder thereof shall deliver to the [Regulating Authority]-

(a) all records which the holder is obliged under this [Act][Code][Law] to maintain including full and detailed reports as prescribed containing all information, results, interpretation, data and other related information pertaining to the exploration and mining of minerals under the mineral right;

(b) all plans or maps of the area subject to the mineral right prepared by the holder or at his instructions; and

(c) except for the holder of an artisanal mining licence , a final report which shall be a summary of previous annual reports plus a detailed report on containing all information, results, interpretation and data relating to all activities carried out in the final period of the licence since the previous annual report.

(2) Where the former holder of a mineral right fails to deliver any document required to be delivered under subsection (1), the [Regulating Authority] shall call upon such former holder to comply with subsection (1).

Article [_]For SSM licenses

The holder of a small-scale mining licence shall–

(a) before beginning or ceasing any exploration or mining operations notify the appropriate local government authority or local authority and an authorised officer, of the intention to begin or cease exploration or mining, as the case may be;

(b) carry out rehabilitation and reclamation of mined out areas.

Annotation

Drawn from Sierra Leone’s mining law (2009), these provisions include a definition of “termination” of a mineral right as including its expiration, cancellation or surrender, which may be total or partial.

Under Sierra Leone’s mining law, SSM licenses are subject to general provisions that apply to termination of all mineral rights and specific provisions that apply to termination of SSM licenses.

There are two general provisions on termination. The first governs (a) the required reporting and disposition of assets at the mining site, the reporting of site conditions, and the Regulating Authority’s prerogatives in response to such reports; (b) the restoration of the rights of the property owner to the land, subject to the Government’s option to retain the land upon the payment of compensation to the landowner; and (c) the maintenance intact of any fresh water dam on the site.

The second general provision requires the submission to the Regulating Authority of all records, data, plans and maps required to be maintained under the mining law and a final report summarizing all findings and work carried out under the mineral license.

The specific provisions require the SSM licence holder to notify “the appropriate local government authority or local authority and an authorised officer” in advance of any planned cessation of exploration or mining operations under the license. They also require the licence holder to carry out rehabilitation and reclamation of the mined out areas.

These provisions apply in the case of any type of termination.

27.10. Example 2:

Article [_]. Termination of Mining Rights

1) Mining rights shall terminate if:

a) a licensee relinquishes the whole area or surrenders the licence ;

b) a licence is revoked by the Licensing Authority pursuant to the provisions of this Proclamation, regulations and directives;

c) a licence expires without being renewed ; or

d) without prejudice to the rights of heirs, a licensee dies, or where the licensee is a juridical person, it is liquidated or declared bankrupt.

2) Upon termination of mining rights of the holder of a small scale or large scale mining license, the government may, unless an agreement specifies otherwise, acquire all of the immovable and movable property used in the mining operations at a price equal to the then unamortized value of such assets, as shown in the financial book of accounts of the licensee. If the government does not exercise such right, the licensee shall be free to dispose such assets to another person in accordance with the applicable laws, or otherwise he shall be obliged to remove them as required by his environmental obligations.

3) The licensee shall be required on termination of a small scale or large scale mining license, to fence and safeguard to the satisfaction of the [Regulating Authority], any pits and such other works in the licence or lease area so that the health, life and property of persons may not be endangered.

Article [_]. General Obligations of Licensees

In addition to the obligations under other relevant provisions of this Proclamation, a licensee shall have the obligations to remove constructions in the licence area and lease area upon termination of the licence or relinquishment of the licence area.

Article [_]. Mine Closure

1) The holder of a small scale or large scale mining licence shall apply to the Licensing Authority for a mine closure certificate upon:

a) revocation of the license;

b) termination of the mining operations;

c) relinquishment of the whole or any portion of the licence area; or

d) abandonment of the mine.

2) The application shall be made within 180 days from the occurrence of any of the events specified under sub-section (1) of this Article.

3) No closure certificate shall be issued until the provisions pertaining to health, safety and the environment have been addressed.

Annotation

Drawn from Ethiopia’s mining law (2010), these provisions, like those in the preceding example, specify what constitutes termination of a mining right, including a SSM license, and include both general provisions of all mineral right holders and specific provisions of holders of SSM licenses.

Similar to Sierra Leone’s mining law, the Ethiopian mining law includes relinquishment, revocation and expiration without renewal as events of termination. It also provides for termination in the event of the death of the individual licence holder or bankruptcy or liquidation of an entity licence holder.

The general provisions on expiration of all mineral licenses establish the Government’s right to acquire the movable and immovable property used in the mining operations, at its book value, or alternatively to decline to do so and instead require the licence holder to remove them. The provisions also require all licence holders to fence and safeguard any open pits or other works in the licence area in order to protect the safety of other persons.

The specific provisions on expiration of SSM licenses require the holder to apply for a mine closure certificate within 180 days from a licence revocation, termination of mining operations, total or partial relinquishment, or abandonment of the mine. (Greater clarity is needed as to how this would apply in a case of revocation.) In order for the certificate to be issued, the provisions pertaining to health, safety and the environment must have been addressed.