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Part B: Mineral Rights - Part B-6: Beneficiation - Processing, Trade & Transport - 35. Beneficiation – Processing, Trade and Transport - 35.3 Eligibility for Licence | 35.3(a) Eligibility for Licence as Authorised Processing Facility

Eligibility for licensing to engage in processing of development minerals should be limited to individuals or entities organized under the law of the jurisdiction who are registered to do business in the jurisdiction. If an entity, its authorised powers and business registration should include engaging in minerals processing. Any national or local ownership requirements should be specified. It is generally advisable to require that eligible companies only be involved in the minerals processing business and related activities, including trade, transport and other industrial activities that will use the products of the processing operations, in order to avoid abuse of any import or other fiscal privileges and to minimize tax avoidance by offsetting profits in one line of business with losses in another unrelated line.

35.3(a) Example:

Article [_]

(1) Individuals of at least 18 years of age who are citizens of a member state of the African Union and whose principal residence is located in [the jurisdiction], duly registered and authorised to do business as mineral processors in [the jurisdiction] shall be eligible to be licenced as an Authorised Processing Facility.

(2) Entities shall be eligible to be licenced as an Authorised Processing Facility, provided that they meet the following requirements:

    (a) they are organized under the laws of [the jurisdiction]

    (b) they have the power under their charter document to engage in processing of development minerals

    (c) for licences issued by the national regulating entity, no less than 51% of the ownership shares of the entity are ultimately held and controlled by citizens of member states of the African Union,

    (d) for licences issued by the [provincial/state] regulating entity, 100% of the ownership shares of the entity are ultimately held and controlled by citizens of member states of the African Union, of which no less than 40% are ultimately held and controlled by nationals (i.e., citizens of the licensing jurisdiction),

    (e) they are registered and authorised to do business as mineral processors in [the jurisdiction], and

    (f) they are only authorised to engage in processing of development minerals and associated activities as defined in the regulations.

(3) The following persons or entities shall not be eligible for licensing as an Authorised Processing Facility:

(a) Persons who are bankrupt or subject to bankruptcy, receivership or reorganization/liquidation proceedings;

(b) Persons whose licence under any of the activities provided for in this [Act][Code][Law] has been revoked within the past [_] years.

(c) Persons who have been found guilty of fraud, money laundering or corrupt activities

(d) Persons engaged in activities other than processing, trade and transport of development minerals and associated activities.

(e) Any staff member of the [Regulating Authority] or a regulating entity under this [Act][Code][Law].

Annotation

The example incorporates the parameters for both individuals and companies permitted to carry out business in the jurisdiction. For individuals, there are four requirements: (1) they must be at least 18 years old, (2) they must be citizens of a member state of the AU, (3) they must have their principal residence in the licensing jurisdiction, and (4) they must be duly registered and authorised to engage in the business of development mineral processing under the applicable commercial registration law.

The example imposes 6 eligibility requirements on entities.

For those entities that propose to operate a large scale, complex processing facility that would be licenced by the national regulating entity, the company must be at least 51% owned and controlled by Africans. For those entities that propose to operate a processing facility that would be licenced by the provincial or state regulating entity, the company must be at least 100% owned and controlled by Africans, of which 40% must be citizens of the licensing jurisdiction.

The example also requires that companies be limited to those solely engaged in mineral development processing and related activities, as defined in the regulations. The related activities should include, for example, trade and transport of development minerals and other industrial activities that would utilize the products of the proposed processing facility. The limitation to engage only in the operation of the intended processing facility is purposely to avoid abuse of any fiscal incentives that may be provided under this or any other Act and to minimize tax avoidance by offsetting losses against profits in consolidated financial statements for tax purposes.

This provision further specifies those persons ineligible, in particular for lack of financial capacity, previous malfeasance or conflict of interest.