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Part C: Fiscal Terms - 36. Fiscal Terms | 36.11 Foreign Exchange

A mining code may regulate how, when, and at what cost license holders can remove mining profits in a foreign currency, in order to manage the value of the country’s currency. Foreign Exchange provisions may require license holders to set up local bank accounts through which they must channel their profits before they are permitted to repatriate their profits abroad. However, as a general matter, foreign exchange rules should be governed by generally applicable law.

36.11. Example 1:

Article [_]

(1) A holder of a mining lease who earns foreign exchange from mining operations?may be permitted by the [central bank], to retain in an account, portion of the foreign exchange earned, for use in acquiring spare parts and other inputs required for the mining operations, which would otherwise not be readily available without the use of the earnings.

(2) The [Regulating Authority], in consultation with the [other relevant Regulating Authorities] may, where the net earnings of a holder of a mining lease from the holder’s mining operations are in foreign exchange, permit the holder of the lease to open and retain in an account, an amount not less than twenty five percent of the foreign exchange for

(a) the acquisition of spare parts, raw materials, and machinery and equipment,?(b) debt servicing and dividend payment,?(c) remittance in respect of quotas for expatriate personnel, and?(d) the transfer of capital in the event of a sale or liquidation of the mining operations

(3) An account opened and operated under subsection (2) shall, with the consent of the [financial entity], be held in trust by a trustee appointed by the holder of the lease.

(4) Subject to this [Code][Act][Law], a holder of a mining lease shall be guaranteed free transferability of convertible currency

(a) through the [central bank], or

(b) in the case of a net foreign exchange holder, through the account opened under subsection (2).

Annotation

Drawn from Ghana’s mining code (2006), this provision authorizes the license holder to hold a foreign exchange account in Ghana with the guarantee of the Bank of Ghana. The clause also stipulates the free transferability of foreign exchange, which is required by WTO.

36.11. Example 2:

Article [_]

(1) No discrimination on foreign exchange in relation to regulation, exchange rate, or other economic policy measures;

(2) Freedom on remittance of profits, dividends, financial resources and free availability of foreign currency in general;

(3) Free disposal of currency generated by exports in the country or abroad.

(4) If the holder of the mining activity sold its production locally, the [Financial Regulating Authority] will provide the foreign currency required for payment of goods and services, procurement of equipment, debt service, commissions, profits, dividends, royalties, capital repatriation, fees and, in general, any other disbursement required or entitled to turn in foreign currency;

(5) No discrimination in regard to the exchange rate, based on which currency is converted to the FOB value of exports and/or local sales, meaning that the best exchange rate for foreign trade transactions should be given; if there is any type of control or differential exchange system. This non?discrimination guarantees everything with regard to exchange rate matters in general;

(6) Free commercialization of mineral products;

(7) Special Regimes stability, when they are granted, for tax refund, temporary admission, and the like;

(8) No unilateral change of the guarantees included in the contract.

Annotation

Drawn from Peru’s mining law (2012), this provision provides for the complete freedom of movement of capital, but, in addition, provides assurance that the financial regulating entity will provide foreign exchange required for mining activities.