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Part B: Mineral Rights - Part B-3: Large Scale Exploitation - 26. Large Scale Exploitation Licensing | 26.2 Requirements for Licence Applications

Regulating entities generally require that eligible entities seeking authorization to conduct mining activities submit particular documents or meet certain criteria as part of the authorization process. Requirements for licence applications at this stage of the mining process are typically more lengthy and specific, incorporating greater elements of environmental and social concerns than at the prospecting or exploration stage.

The general requirements for obtaining a large scale exploitation licence should be set forth in the law to ensure consistency, clarity, objectivity and transparency in the award of the licence. The requirements should then be further detailed in the regulations and/or the relevant bidding documents. Most countries require a feasibility study demonstrating how a proven commercial deposit will be developed. An approved Environmental and Social Impact Study, Environmental Management Plan and Rehabilitation Plan are required virtually everywhere either as a requirement for the grant of the large scale exploitation licence or as a condition prior to the commencement of operations under the licence.

Recently, approved plans for social obligations – local hiring, training and promotion, local procurement, and local community development – are required either as a condition for the grant of the licence or as conditions to be met within a short period after the mining licence takes effect. State participation in the company that holds the exploitation licence may be required, if that policy is enshrined in the mining law.

26.2. Example 1:

Article [_]

(1) As regards a company under [national] law, a Mining Concession shall be given automatically, to the holder of a prospecting licence which has complied with their obligations under the Mining Code, by decree of the Cabinet, on a proposal from [the Regulatory Authority], after receiving approval from [the Advisory Commission]. This application must be submitted at least three months before the end of the period of validity for the prospecting licence in respect of which it is brought.

(2) The following shall be eligible for the Mining Concession system established by the present [Code][Act][Law]: investments of an amount equal to or greater than one (1) billion United States dollars (USA).

(3) An application for a mining concession must be given in together with a file, as detailed in the mining regulations, and which must include each of the following:

(a) a copy of the prospecting licence, which must still be valid, and proof of payment for any taxes and fees due;

(b) a report on the results from the prospecting, with regard to the type, quality, volume and geographic location of the mineral resource which was identified;

(c) the plan for the first or second reassignment, as the case may be, together with the results from the prospecting work, and corresponding to half of the previous surface area;

(d) a feasibility study which is to include:

(i) a detailed environmental and social impact assessment, together with an Environmental and Social Management Plan, including a Hazard Plan, a Risk Management Plan, a Health and Safety Plan, a Rehabilitation Plan, a Plan for the Resettlement of Affected Population Groups, for those affected by the project, and the measures for mitigating the negative impact and optimising the positive impact;

(ii) an economic and financial analysis of the project and the plan for obtaining the necessary licences and permits;

(iii) the plans and estimates for the industrial infrastructure;

(iv) a plan to support Guinean businesses, for creating and/or strengthening the capacities of [SMEs/SMIs] or businesses owned or controlled by Guineans, for the provision of the required goods and services for their activities, and a plan for promoting the employment of Guineans, which must at least comply with the quotas set in the present [Code][Act][Law];

(v) a detailed timetable for the work which is to be carried out;

(vi) a community development plan annexed to the Local Development Agreement, which is to include, among other things, aspects such as training, medical, social, educational and road infrastructure as well as the infrastructure for supplying water and electricity; this Agreement shall be signed and the development shall be carried out once the title has been obtained; and

(vii) an architectural blueprint of the registered office for the company, together with an application addressed to the relevant administration for the allocation of a plot of land; with regard to the allocation of concessions for iron ore, bauxite, gold and diamond, the registered office must be completed within no more than three years from when the concession is allocated.

(4) The allocation of a mining concession shall entail the cancellation of the prospecting licence within the area for the mining concession.

(5) Prospecting related to the operations may continue. Should a mineral of a different category to the one for which the concession was allocated be discovered as part of this prospecting, the holder shall have a pre-emptive right to the relevant operating right. This right must be exercised within no more than eighteen (18) months from the date on which the State is notified of said discovery.

(6) [The Regulatory Authority] shall ensure that the assessment of an application and the cadastral survey are carried out.

(7) The technical evaluation and the environmental and social impact assessment as well as the related opinions shall be matters for [the Regulatory Authority] in conjunction with [the Regulatory Authority].

(8) The decision to approve or refuse the mining title, notify the party concerned and ensure it is published shall be matters for [the Regulatory Authority].

(9) An Agreement determining the operating terms for the Concession shall be negotiated and signed in accordance with the provisions of Article [] of the present [Code][Act][Law].

(10) For a deposit which has been revealed, where there is no valid prospecting licence, a Mining Concession shall be granted following the procedure for a competitive and transparent invitation to tender according to rules to be defined in the regulations.

(11) The invitation to tender shall be implemented by [the Regulatory Authority] together with the [Advisory Commission].

(12) The legal instruments which sanction the allocation, extension, renewal, transfer, subleasing, withdrawal or surrender of a mining concession must be published in the Official Gazette and on the official web site for [the Regulatory Authority].

(13) When areas which have already been prospected are put on the market in order to grant a mining concession, through an invitation to tender, this must be published in at least two widely-circulated newspapers, and this must be done at least forty-five (45) days before the deadline for the submission of tenders.

Annotation

Drawn from Guinea’s mining law (2011, as amended in 2013), this provision complements the eligibility requirements described in 26.1 above by specifying in detail the documents that the holder of an exploration licence must file with the holder’s application in order to obtain the exploitation licence or mining concession for up to one half of the licence area held under the exploration licence. By stating in the Mining Code that the exploration holder who complies with the specified conditions has the right to receive the exploitation licence or mining concession, as noted above in 26.1, and by specifying in the Mining Code the documents required to be submitted, rather than delegating the authority to set the documentary and other requirements to the Executive Branch, Guinea confers a robust right to obtain an exploitation licence or mining concession on the exploration licence holder and eliminates or greatly circumscribes the existence of discretion in the process of granting exploitation licences and mining concessions.

As noted above, Guinea’s mining law also contemplates the awarding of large scale exploitation permits and mining concessions by a competitive bidding process in cases where there exists a studied and documented deposit but no exploration licence is in effect. In such cases, the requirements are set in the bidding rules as established pursuant to regulations.

Guinea’s law requires the submission of a feasibility study among the other documents that must accompany an application by an exploration licence holder for an exploitation permit or mining concession. A significant innovation in Guinea’s law is the stipulation that the feasibility study must take into account:

    1) an Environmental and Social Impact Study including a Threat Assessment, A Risk Management Plan, A Health, Hygiene and Safety Plan, A Rehabilitation Plan, a Relocation Plan for the Affected Populations and measures to reduce the negative impacts of the project and to optimize the positive impacts;

    2) the economic and financial analysis of the project and the plan for obtaining the necessary permits and authorizations;

    3)plans and estimates for the industrial infrastructure;

    4) a plan for the support of Guinean enterprises in the creation or the reinforcement of the capacities of small and medium scale enterprises and industry or enterprises controlled by Guineans for the supply of goods and services necessary for the activities and a plan to promote the employment of Guineans for which the minimum must conform to the quotas in this law.

These factors that must be taken into consideration by a feasibility study for a large scale exploitation project in Guinea are a significant innovation in integrating economic and social development planning goals into the required mine planning process. The setting of fixed local employment quotas in the law, however, creates a rigidity that may be self-defeating and possibly in conflict with international treaty obligations.

This provision of Guinea’s mining law also requires a community development plan attached to a local community development agreement covering, among other things, training; and medical, social, educational, road, water and electric infrastructures; to be signed upon obtaining the mining licence. The law thereby converts a soft law CSR obligation into a hard law requirement for the grant of a large scale exploitation licence.

The innovative expansion of the mine planning requirements in the Guinean mining law does not only apply to very large scale exploitation projects, however. They are requirements for all applications for exploitation permits for small mines as well. Those requirements may constitute a significant barrier to entry for Guinean entrepreneurs seeking to develop small scale mines involving investments of less than USD 10 million, for example. Consideration should be given as to whether or in what form to apply such terms to different sizes and types of mining projects.

The Guinean mining law includes other, more standard documentation required with an application for a large-scale exploitation licence, stipulates the regulatory bodies that review the cadastral and technical aspects of the application, and provides for the negotiation and signature of a mining agreement that sets forth the terms on which the mine will be exploited. It also requires the publication of all decisions regarding mineral licences.

26.2. Example 2:

Article [_]

(1) An application for the grant of a large-scale mining licence shall be submitted to the Mining Cadastre Office in the prescribed form.

(2) An application for the grant of a large-scale mining licence shall–

(a)contain the registered name and place of incorporation of the company, its certificate of incorporation and certified copy of its memorandum and articles of association, the names and nationalities of its directors and the name of every shareholder who is the beneficial owner of five percent or more of the issued share capital;

(b)contain the company profile and history of exploration operations in Sierra Leone and elsewhere;

(c)identify the name and qualifications of the person responsible for supervising the proposed programme of mining operations;

(d)be accompanied by a plan of the area over which the licence is sought drawn in such manner as prescribed;

(e)state the period applied for;

(f)identify the minerals in respect of which the licence is sought;

(g)give or be accompanied by a statement giving details of the mineral deposits in the area of land over which the licence is sought, including details of all known minerals proved, estimated or inferred, ore reserves and mining conditions;

(h)be accompanied by a technological report on mining and treatment possibilities and the intention of the applicant in relation to them;

(i)give or be accompanied by a statement giving particulars of the proposed programme of mining operations, including a statement of-

(i)the estimated date by which the applicant intends to work for profit;

(ii)the estimated capacity of production and scale of operations;

(iii)the estimated overall recovery of ore and mineral products;

(iv)the nature of the products;

(v)proposals for the progressive reclamation and rehabilitation of land disturbed by mining and for the minimisation of the effects of mining on surface water and ground water and on adjoining or neighbouring lands;

(vi)the effects of the mining operations on the environment and on the local population and proposals for mitigation, compensation and resettlement measures;

(vii)any particular risks (whether to health or otherwise) involved in mining the mineral, in particular a radioactive mineral, and proposals for their control or elimination;

(j)give or be accompanied by a statement giving a detailed forecast of capital investment, operating costs and revenues and the anticipated type and source of financing;

(k)contain the identification of interested and affected parties including land owners and lawful occupiers of the proposed mining area;

(l)contain details of consultation with interested and affected parties and the results thereof;

(m)be accompanied by a report on the goods and services required for the mining operations which can be obtained within Sierra Leone and the applicant’s proposals with respect to the procurement of those goods and services;

(n)give or be accompanied by a statement giving particulars of the applicant’s proposals with respect to the employment and training of citizens of Sierra Leone;

(o)be accompanied by details of the applicant’s proposals for insurance including life and health cover for its employees;

(p)give or be accompanied by a statement giving particulars of expected infrastructure requirements;

(q)be accompanied by a report on the proposed marketing arrangements for the sale of the mineral production;

(r)give details of any mineral rights held in Sierra Leone, by the applicant or by any person controlling, controlled by or under joint or common control with the applicant;

(s)be accompanied by an environmental impact assessment licence as may be required by the [Regulating Authority] under subsection (2) of section 131;

(t)set out any other matter which the applicant wishes the [Regulating Authority] to consider; and

(u) be accompanied by the prescribed non-refundable fee.

(3) Where an application for the grant of a large-scale mining licence is made by a person who is not the holder of an exploration licence to which the proposed mining area relate, there shall be provided in addition to the matters referred to in subsection (1), a statement giving particulars of the financial and technical resources available to the applicant for the proposed mining operations.

Annotation

Drawn from Sierra Leone’s mining law (2009), this provision requires documentation supporting an application for a large scale exploitation licence that is similar to Guinea’s law in comprehensiveness. There is some redundancy in the environmental protection requirements; and the requirements with respect to local employment and procurement are described as the applicant’s proposals – which suggests some flexibility and that they may be subject to negotiation

The Sierra Leone provisions also requires the identification of the directors of the applicant company and of all shareholders of a share of five per cent or more; and it further requires:

  • The identification of interested and affected parties including land owners and lawful occupiers of the proposed mining area (k); and
  • Details of consultation with interested and affected parties and the results thereof.

This reflects a sensitivity to the rights of landowners and lawful land occupiers in the affected area, which is often a source of conflict if not addressed early, fairly and openly.