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Part B: Mineral Rights - Part B-1: Mineral Licences - Prospecting/Reconnaissance | 23. Types of Mineral Licences

A mining code may list in one provision the different categories of rights that are offered which allow authorized mining activities to take place. There are typically several options for mineral rights. Most (but not all) mining laws make a distinction between rights for exploration and exploitation of metallic or processed minerals and precious stones, on the one hand, and exploitation of industrial minerals, on the other hand.

The mining laws of all countries in Africa require separate mining rights for pre-exploitation activities – such as reconnaissance, prospecting or exploration – on the one hand, and either mining or quarrying, on the other hand. However, the mining laws of some Latin American countries such as Mexico and Peru provide for the grant of a single concession for exploration and mining.

The earliest stage of superficial investigation of mineral occurrences is generally called “reconnaissance” in Anglophone African countries and “prospection” in Francophone African countries. It is frequently not an exclusive right. The subsequent phase of exclusive, in-depth investigation is called “prospecting” in many Anglophone African countries and “exploration” or “recherche” in Francophone African countries.

Some Anglophone countries provide for an “exploration” licence following the expiration of the “prospecting” licence. Other Anglophone countries also provide for a retention licence available at the termination of the exploration licence for the purpose of maintaining an exclusive right to a significant mineral deposit the exploitation of which is not commercially feasible due to temporary financial, commodity market or technical conditions.

Countries that favour greater administrative control over mineral activities tend to provide for licencing of more separate phases of pre-mining activity, whereas countries that favour an investment-friendly environment tend to provide for licencing of fewer separate phases of pre-mining activity.

Some but not all countries provide for the licencing of prospecting or exploration for industrial minerals. Those that do not do so tend to be the countries that grant quarrying licences only to the owner of the surface estate.

At the mining stage, there may be several types of mining rights, depending on the type of mining involved, rather than on phases of operations. The types of mining rights may include a small-scale mining lease, a semi-industrial mining lease, an industrial mining lease, and a tailings mining lease.

For quarrying at the exploitation stage, there may be a temporary quarrying lease (for particular infrastructure construction projects) and a permanent quarrying lease for the long term exploitation of industrial minerals for sale.

23. Example 1:

Article [_]

(1) Mining permits shall have the following classifications:

(a) "R" licences, which confer on the holder an exclusive right to carry out prospecting and reconnaissance work within a demarcated area;

(b) "E" licences, which confer on the holder an exclusive right to undertake operations, as well as prospecting and reconnaissance, within a demarcated area;

(c) Small-scale mining licences (Permis Réservé aux petits Exploitants miniers "PRE ") which confer on small-scale mining operators the right to undertake prospecting, reconnaissance and operations within a demarcated area.

Annotation

Drawn from Madagascar’s mining law (1999), this example states that only three mining rights are available under the Act for operations with respect to metallic or processed minerals and precious stones:

- The R Permit for prospecting and minerals research or exploration within the delineated area;

- The E Permit for exploitation, as well as prospecting and research within the delineated area; and

-The PRE Permit reserved for small producers conferring the right to undertake simultaneously prospecting, research and exploitation within the delineated area.

23. Example 2:

Article [_]

(1) Subject to the provisions of this [Act][Code][Law], the right to search for or exploit mineral resources is obtained through one of the following mining rights in the form of-

(a) a Prospecting/Reconnaissance Permit;

(b) an Exploration Licence;

(c) a Small-scale Mining Lease;

(d) a Mining Lease;

(e) a Quarry Lease; and

(f) a Water Use Permit.

Annotation

Drawn from Nigeria’s mining law (2007), this example sets forth in a single article all of the different types of mining rights available under the Act, but does not explain the differences among the rights. This type of article should be followed by separate subsections devoted to each type of mining right, commencing in each case with an article describing the type and scope of activities authorized by the respective mining rights. For example:

Article [_]:

A Reconnaissance Permit confers on the holder the [exclusive] [non-exclusive] right to conduct reconnaissance activities for [specified minerals] [metallic or processed minerals] within the specified Reconnaissance Permit area during the term of the licence, subject to the conditions specified in this law.

In this example, “reconnaissance activities” should be a defined term.

Issues to be considered in drafting the corresponding language for each type of mineral licence include: (i) whether the licence confers an exclusive or a non-exclusive right, and (ii) whether the licence confers a right with respect to all metallic or processed minerals and precious stones or only a right with respect to specified minerals.

If the rights conferred by the licence are for specified minerals only, then the law should specify whether a licence may be issued to another qualified person to conduct mineral activities with respect to other minerals within the same area; and if so, what types of mineral licences for what types of minerals. It is frequently the case to provide for the issuance over the same area of both (a) a prospecting or exploration licence for metallic or processed minerals and/or precious stones and (b) a quarrying licence. It is less frequent and potentially controversial to provide for the issuance of two or more exploration or exploitation licences for metallic or processed minerals and/or precious stones over the same area.