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Part B: Mineral Rights - Part B-6: Beneficiation - Processing, Trade & Transport - 35. Beneficiation – Processing, Trade and Transport - 35.7 Rights of the Authorised Processing Facility, Trader/Dealer and Transporter Licence Holder | 35.7(a) Rights of the Authorised Processing Facility Licence Holder

The rights of an Authorised Processing Facility Licence holder should include the rights to purchase inputs for its licenced processing facility at freely negotiated prices, the right to process those inputs as contemplated by the licence, and the right to sell those inputs at prices freely determined or negotiated. The territory within which the licence holder is authorised to exercise its rights should be consistent with the territory of the jurisdiction that issued the licence – i.e., the province or state for licensees whose licences were issued by provincial/state regulating authorities, and the national government and the African region for those licensees whose licence was issued by the national regulating entity.

35.7(a) Example:

Article [_]

(1) The holder of an Authorised Processing Facility licence shall have the following rights, during the term of the licence, and subject to the terms and conditions of this [Act][Code][Law] and of the licence:

(a) to purchase raw development minerals for its processing facility from

(i) legal sellers of such minerals within the jurisdiction that issued the licence, or

(ii) if the licence was issued by the national regulating entity, from legal sellers within any member state of the African Union;

(b) to engage in the type of processing of development minerals for which the licence was issued, whether for its own account or for the account of a third party;

(c) to sell, at prices that it freely determines or agrees to, processed mineral products that it has produced for its own account or for the account of a third party to –

(i) purchasers within the jurisdiction that issued the licence, and

(ii) if the licence was issued by the national regulating entity, to purchasers within any member state of the African Union; and

(d) to engage in necessary ancillary activities in connection with the foregoing.

(2) The holder of an Authorised Processing Facility licence shall have the right to benefit from the incentives provided for development minerals processing in this [Act][Code][Law] and in applicable tax and finance laws.

(3) The holder of an Authorised Processing Facility licence shall have the right to construct and operate power supply generation facilities utilizing renewable resources (e.g., hydro, wind, solar or biomass) to provide some or all of the electric power and energy supply needs of the licensee’s processing plant and related facilities. The holder shall also have the right, but not the obligation:

(a) to purchase ancillary services and back-up power from the electric utility authorised to provide electric service in the area where the licensee’s processing facility is situated at rates that are no greater than the lesser of (i) the utility’s average system cost and (ii) its marginal cost; and

(b) to sell surplus electric energy from its renewable energy power plant to the electric utility authorised to provide electric service in the area where the licensee’s processing facility is situated, at the licence holder’s average cost of producing the electric energy.

Annotation

This example provides the Authorised Processing Facility licence holder with the rights to buy development mineral inputs, process such minerals, and sell the processed mineral products. It also provides the licence holder with the right to process development minerals for third parties, to sell those minerals for its own account when it has not been paid by the third parties, and to engage in necessary ancillary activities.

If the licence was issued by the national regulating entity, the licence holder is entitled to purchase development mineral inputs from any legal seller in the country that issued the licence, or in a member state of the AU. It has similar freedom to sell its products throughout the country and the member states of the AU.

If the licence was issued by a provincial or state regulating entity, the licence holder is entitled to purchase development mineral inputs from any legal seller in the province or state that issued the licence. (This could include a nationally licenced Authorised Trader/Dealer selling development minerals in the local province or state.) If licenced by a province or state, it is entitled to sell its processed products only to purchasers within the licensing jurisdiction (which could include a nationally licenced Authorised Trader/Dealer purchasing development minerals in the local province or state.)

The licence holder has the freedom to set or agree to prices for its products.

The example also states that the licence holder is entitled to the benefit of the incentives provided in this Act and in other applicable laws.

Because the Authorised Processing Facility Licence holder may have significant power supply needs which the local electric utility may not be capable of providing, the provision authorises the licence holder to construct and operate its own power supply plant using renewable resources and the rights to purchase back-up power and ancillary services from the electric utility at capped rates, as well as the right to sell surplus power and energy to the electric utility at the licensee’s average cost of production.