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Part D: Environment - 38. Environment | 38.10 General Prohibition Against Wasteful Mining/Treatment

A rights holder may choose to employ methods for extracting minerals that could be considered wasteful. For example, certain mining practices involve the use of enormous amounts of water for excavation, yet yield a relatively small amount of extracted minerals and no reuse of the water.

To protect against these practices, most countries include a general prohibition against wasteful mining or treatment. The regulating authority is permitted to direct rights holders to refrain from wasteful practices and terminate the mining license for noncompliance. The key distinction among different countries’ laws tends to be the level of discretion accorded to the government.

38.10. Example 1:

Article [_]

(1) Where the [Regulating Authority] considers that a holder of a mineral right is using wasteful mining practices, the [Admin Reviewer] shall:

(a) Give notice to the holder specifying the particulars of the wasteful mining practices;

(b) Request the holder to cease the wasteful mining practices and remedy any damage caused by the practices; and

(c)Require the holder to reply in writing showing cause, within a time specified by the notice, why the holder's license should not be revoked.

(2) The [Regulating Authority] shall, where a holder fails, within the time specified in the notice, to cease using the wasteful mining practices or to remedy any damage caused by the wasteful mining practice, cancel the license.

Annotation

Inspired by Zambia’s mining law (2008), this provision provides the government with broad discretion to determine what mining practices are precluded due to wastefulness. The regulator must provide the specific reasons why the practice is wasteful, but ultimately has a great deal of power in setting boundaries for wasteful and useful practices.

Because of the expansive powers provided to the regulator, as well as jeopardy of the entire license if the rights holder fails to comply, this language may discourage investment in mining projects as too risky. In many instances, it may not be possible for the rights holder to remedy all damage that may have been caused by a practice later deemed wasteful.

38.10. Example 2:

Article [_]

(1) Subject to [relevant section]), the [Regulating Authority] may direct the holder of a mineral right to take corrective measures if it establishes that the minerals are not being mined optimally in accordance with the mining work program or that a continuation of such practice will detrimentally affect the promotion of employment and social and economic welfare of all [Country] citizens.

(2) Before making the recommendation, the [Regulating Authority] must consider whether the technical and financial resources of the holder of the mineral right in question and the prevailing market conditions justify such recommendation.

(a) If the [Regulating Authority] agrees with the recommendation, he or she must, within [30 days] from date of receipt of the recommendation of the [Regulating Authority], in writing notify the holder that he or she must take such corrective measures as may be set out in the notice and must remedy the position within the period mentioned in the notice.

(b) The [Regulating Authority] must afford the holder the opportunity to make representations in relation to the [Regulating Authority]'s findings within [60 days] from the date of the notice and must point out that non-compliance with the notice might result in suspension or cancellation of the mineral right.

(3) The [Regulating Authority] may, on recommendation, suspend or cancel a mineral right if:

(a) The holder of that mineral right fails to comply with a notice contemplated in subsection (1); or

(b) Having regard to any representations by the holder, the [Regulating Authority] is convinced that any act or omission by the holder justifies the suspension or cancellation of the right.

(4) The [Regulating Authority] may, on recommendation, lift the suspension of a mineral right if the holder in question:

(a) Complies with the notice contemplated in subsection (1); or

(b) Furnishes compelling reasons for the lifting of the suspension.

Annotation

Drawn from South Africa’s mining law (2002), this provision, compared to Example 1 above, places greater restraint on the regulator’s ability to unilaterally determine that a practice is wasteful and must be corrected.

This is because the regulating authority must consider the rights holder’s financial conditions and the state of the market, and seek the concurrence of the regulating authority (or equivalent high-level official).

Rights holders are therefore more insulated from capricious decisions and accordingly have a greater incentive to commit more resources to the mining operation.