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Part B: Mineral Rights - Part B-3: Large Scale Exploitation - 26. Large Scale Exploitation Licensing | 26.5 Specific Obligations of a Licence Holder

Provisions that lay out, for the holder of a large scale exploitation licence, the necessary responsibility or duty to undertake (or refrain from) certain actions are collectively treated as obligations. Noncompliance with these obligations may lead to fines and/or ordered suspensions of operations until the licensee is in compliance and ultimately revocation of the licence. Where suspension occurs, continued, uncured non-compliance beyond a specified time period may result in revocation of the licence.

Examples of obligations in order to maintain the validity of the licence are: the obligation to commence exploration work within a specified timeframe, the obligation to post and maintain adequate surety for environmental rehabilitation of the worked sites, and the obligation to pay annual maintenance fees per unit area covered by the licence by a specific date each year. Failures to timely meet those obligations would result in loss of licence. All other failures to meet obligations would be punished by fines or suspensions until cured, or ultimately by loss of licence if uncured beyond a specified very reasonable cure period.

Many of the obligations for other types of licences apply to the obligations of large scale mining licence holders as well. The following specific obligations are often included in addition to or in lieu of those for exploration licensees:

  • Commencement of mine development work within a specified time period;
  • Posting of a site rehabilitation surety (e.g., bank guarantee) and/or funding of an escrowed reserve fund for site rehabilitation and remediation of environmental damages during the life of the project;
  • Implementation of an approved Environmental and Social Management Plan, periodically reviewed and updated, including monitoring and reporting;
  • Implementation of an approved work plan;
  • Implementation of an approved local procurement plan;
  • Implementation of an approved local hiring, training and promotion plan;
  • Implementation of an approved community development agreement;
  • Implementation of approved worker health, safety and welfare training and regulations;
  • Implementation of approved infrastructure development, operation and maintenance plans;
  • Maintenance of daily logs and registers of production, product shipments, equipment deliveries and shipments, accidents, and site visitors;
  • Implementation of accident and emergency preparedness and response measures;
  • Periodic filing of reports of operations, production, shipments, sales, costs and geological information;
  • Compliance with periodic and spot inspections and/or audits;
  • Timely and accurate declaration and payment of royalties, customs duties and taxes. (Fiscal terms are presented and discussed in Part C of this Guiding Template.)

It is essential that the obligations of licence holders be clearly stated in one or more chapters of the mining law and not be dispersed throughout the document, in order to be sure that they are internally consistent. Careful consideration should be given to the definition of what constitutes compliance with the requirement to commence work within a specified time period. If the law contemplates that certain plans (and/or agreements) are to be prepared, submitted and approved after the licence is granted, allowance must be made for the time necessary to prepare and negotiate those plans and/or agreements.

26.5. Example 1:

Article [_]: Obligations for maintaining the validity of the right

(1) In order to maintain the validity of their mining or quarrying right, the holder must:

(a) commence work within the period specified in Article [_] (on the obligation to commence work) of the present [Code][Act][Law];

(b) pay the annual surface area fees per square relating to their title, each year before the deadline set in Article [_] (on the terms for annual surface area fees per square) of the present [Code][Act][Law].

(2) Should one or more of these obligations not be fulfilled, the holder shall lose their right in application of the procedure provided for in Articles [_] to [_] (on failure to comply with administrative obligations) of the present [Code][Act][Law].

Article [_]: The obligation to commence work

An Operating Licence holder shall be required to commence development and construction work within three years from when the title establishing their right was issued. The Mining Regulations set out detailed terms for the application of this provision.

Article [_]: The obligation to pay annual surface area fees per square

(1) To cover costs for the services and management relating to the rights established by mining titles, annual surface area fees per square, for each mining or quarrying title which is issued, shall be collected for the Mining Cadastre which shall redistribute a portion to the departments of [the Regulatory Authority] responsible for the administration of the present [Code][Act][Law].

(2) The Operating Licence holder is to pay the surface area fees for the first year when the mining or quarrying title is issued.

(3) The holder is to settle the annual surface area fees per square for each following year before the end of the first quarter of the calendar year. However, annual surface area fees are to be paid pro rata per square, when the initial title is issued, or in the last year during which the title is valid.

(4) Annual surface area fees per square are to be paid at the relevant counter at the Ministry of Mines which issued the mining title, which shall issue the holder with a receipt when payment is made.

Article [_]: Environmental Protection while Operations are Ongoing

(1) Any applicant for an Operating Licence shall be required to submit an environmental and social impact assessment (ESIA), together with an environmental management plan for the project (EMPP), and to obtain approval for their ESIA and EMPP, as well as implement the EMPP.

(2) Before any operations which were not provided for in the ESIA may begin, the Operating Licence holder must revise their ESIA and EMPP, taking into account the impact of the operations which were not previously provided for, in order to obtain approval from [the environmental Regulatory Authority] according to the same procedure as for the original approval. The financial guarantees shall be subject to proportional adjustment.

(3) The Operating Licence holder shall be required to carry out rehabilitation work on all or part of the Area, in accordance with their rehabilitation plan as approved by [the environmental Regulatory Authority], before the Operating Licence is surrendered, revoked, or expires.

(4) The terms for the application of this Article, including financial guarantees, shall be laid down in the Mining Regulations.

Article [_]: Financial guarantees for environmental protection

(1) Before starting any operations which shall affect the surface or subsoil of the Area, the Operating Licence holder is to make a security deposit at a banking institution which is set up in the country, is to have a business stand surety or is to obtain a commitment from an insurance company, or is to deliver a financial guarantee sent by a major bank in order to cover the rehabilitation work (each of these options shall hereafter be referred to as the "guarantee"). The type of guarantee must be approved by [the environmental regulatory authority]. The total amount for the guarantee shall be decided on and, if necessary, adjusted by the relevant authority, based on the extent of the work to be carried out in accordance with the approved rehabilitation plan, and this amount may be increased or reduced based on the cost of the rehabilitation work which remains to be completed.

(2) From when a mining product which follows from an Operating Licence is first marketed, the holder shall set up a rehabilitation fund in a bank account open with a commercial bank set up in [the country] and approved by [the environmental Regulatory Authority], in the name of the holder and the State. Money shall be paid into said fund from the holder's funds, and money shall be authorised to be withdrawn exclusively to pay for rehabilitation work in accordance with the approved rehabilitation plan. Each year, the total amount for the guarantee or surety referred to in the above paragraph shall be decreased by the annual funds paid into the rehabilitation fund. When the holder withdraws funds from the rehabilitation fund, this shall be signed for by [the environmental Regulatory Authority] or by the latter in the event that the holder fails to comply with their obligations with regard to rehabilitation.

(3) If the holder of the Operating Permit does not rehabilitate the Area in accordance with the requirements of the present [Code][Act][Law], [the environmental regulatory authority] shall draw up a certified report in this regard and notify the holder of this by summoning them to appear in order to be heard within ten (10) days. If the holder does not appear within the allotted period of time, [the environmental regulatory authority] shall withdraw the required amount from the rehabilitation fund to pay for the rehabilitation work which was not carried out, and, should there not be sufficient funds in the rehabilitation fund, it shall request that the guarantee be made available to it. If the holder appears within the allotted period of time but does not agree with [the environmental regulatory authority] with regard to a plan and deadline for corrective measures to be taken, or does not carry out the agreed plan within the allotted time, [the environmental regulatory authority] shall withdraw the required amount from the rehabilitation fund to pay for the rehabilitation work which was not carried out, and, should there not be sufficient funds in the rehabilitation fund, it shall request that the guarantee be made available to it. Should there be any shortfall in the funds for completing the required rehabilitation work, the holder shall be responsible for this.

Article [_] The Agreement Relating to the Occupation of the Plot of Land

(1) Before any land may be occupied for more than a year, the Operating Licence holder must identify the landowner, in particular at the relevant land offices, to inform them of the holder's project and to negotiate an agreement relating to occupation of the land.

(2) For plots of land which are part of State property, before they may be occupied, the holder must request that this be put in order at the local land offices.

Article [_]. Landowners

The following shall be considered to be landowners within the meaning of the present [Code][Act][Law]: the registered owners with a title deed, or land certificates, occupants whose ownership is likely to be recognised in land legislation, as well as the State and its various divisions, with their respective public and private State property, in accordance with the laws and regulations in force.

Article [_]. The Temporary Suspension of Land Registration

As soon as the [Land Office of the Ministry responsible for Regional Development] has been notified by [the Regulatory Authority] that the Operating Licence has been granted, all applications for land certification and registration for plots of land within the mining area as well as for any other sector-based activities which involve occupying the land, shall be suspended for a maximum of two (2) years, until the agreements provided for in the provisions of the articles in the present [Code][Act][Law], on agreements relating to occupation by the holder, have been concluded.

Article [ ]. The Role of Local Authorities

(1) Local authorities shall serve as facilitators, as far as is required, for reaching and complying with the necessary agreements.

(2) In the event that the landowner does not reside in the area which was granted to the holder, and in the event that the holder is unable to contact said owner, the holder is to inform the local authorities with jurisdiction that this is the case. They shall then be responsible for bringing the holder and the owner into contact, at the holder's expense.

(3) Where it is still not possible to find or identify the owner, a provisional administrator shall be appointed to represent them. The rules and procedures applicable to this shall be laid down in the regulations.

Article [_]. The Type of Agreement Relating to the Occupation of the Plot of Land

(1) In general, the agreement between the mining licence holder and the landowner is to be drawn up as a lease agreement, indicating their respective rights and obligations, and more specifically, the fees or rent, indemnity, and compensation payable for occupying the land.

(2) The parties may agree on other types of contracts, showing their agreement as regards the occupation by the holder, with their respective rights and obligations.

Article [_]. The Standards for Negotiating an Agreement

The preliminary agreement is to be negotiated in a fair and transparent manner, and must aim to prevent the owners from any form of dispossession and the holder from misuse.

Article [_]. Indemnity and Compensation as regards the Landowner

Rent, indemnity and fair compensation paid to the owners by the holder must be adequate, in accordance with any loss of enjoyment of property or loss which the owners may suffer as a result of the holder's activities.

Article [ ]. Conciliation and Mediation in Order to Reach an Agreement Relating to Occupying the Plot of Land

(1) Failing an amicable agreement being reached, and before any arbitration appeal or appeal proceedings, disputes between mining licence holders and landowners, shall first be subject to either conciliation or mediation at the initiative of either party.

(2) Conciliation shall be carried out with the [national committee for consultation and dialogue relating to mines].

(3) Mediation shall be carried out by the mediation institution for protecting the rights of property owners.

Article [_]. The Conciliation Procedure between the Holder and the Landowner

(1) The [national committee for consultation and dialogue relating to mines] shall have three months to reconcile the parties and shall officially report on the content of the agreement on a deal, even if only partial, or shall report non-conciliation, as the case may be.

(2) The report is to be signed by the parties and the conciliator. If they do not know how to sign their name, this shall be noted.

(3) Either party may file an original copy of the report with the Chief Registrar of the Court of First Instance for the area, which shall include it in its registers. It shall issue execution copies of it and append an order for execution to it, and they count as a writ of execution.

Article [_]. The Mediation Procedure between the Holder and the Landowner

(1) Mediation shall be conducted in accordance with the provisions relating to institutional mediation in the [Code of Civil Procedure].

(2) The organisational structure, functioning and the establishment of the mediation institution for protecting the rights of property owners at the level of local communities shall be defined in the regulations.

Article [_]. The Holder's Responsibility to Compensate the Landowner

(1) The holder shall be required to compensate the landowner for any damage which the work may cause to the surface of the public or private property, as well as to the environment.

(2) The holder is only obliged to compensate then landowner for damage suffered as a result of the mining/prospecting operations.

Article [_]. Temporary suspension on the basis of financial ability

With effect from a written notification (from the Finance Minister charged with the function) by (the Regulatory Authority), all activities within the perimeter of the mining license will be suspended for a maximum period of 2 years, until the agreements contemplated in articles [_] of [code] [Act] [law] have been complied with regarding the financial ability of the holder.

Article[_]. Role of the Local Authority

(1) As and when required, the Local Authority shall act as a mediator in respect of the obtaining and maintaining of the requisite agreements.

(2) In the event that he landowner does not reside within the area of the mining permit and the rights holder is unable to contact the landowner, the local authority must be informed of this fact by the rights holder, and will at the rights holder's cost establish contact between the rights holder and the landowner.

(3) In the event that it proves impossible to locate the land owner, or he is unidentifiable, a provisional administrator will be appointed on the landowner's behalf. The procedures for such appointment are set out in the regulations.

Article [_]. Land use agreements

(1) In general, land use agreements between the land owner and rights holder takes the form of a lease, setting out their respective rights and obligations and more specifically compensation, rental payments and indemnification for the use and occupation of the land.

(2) The parties may agree to different forms of land use agreements governing the right holder's use and occupation of the land and the parties' respective rights and obligations.

Article [_]. Manner of negotiation

The land use agreement must be negotiated on an equitable and transparent basis ensuring the landowner's entitlement to evict the rights holder for just cause.

Article [_]. Indemnification and compensation of the Landowner

The indemnity and compensation payable by the rights holder must be adequate in all respects to ameliorate the loss of use or damage caused by the mining activities to the landowner.

Article [_]. Conciliation and Mediation of disputes regarding land use agreement

(1) Prior to any judicial intervention being instituted, all disputes between landowners and rights holders must be submitted by either party to conciliation and failing which mediation.

(2)Conciliation must be held under the auspices of [the National Committee for Consultation and Dialogue in mining].

(3) Mediation must be held under the auspices of the Institute for Mediation for the Protection of Fundamental Rights.

Article [_]. Procedure for conciliation between the landowner and rights holder

(1) [The National Committee for consultation and Dialogue in Mining] shall attempt to settle the dispute within 3 months of the referral by means of an oral process to determine the terms of the land use agreement.

(2) The minutes of the oral process will be signed by the parties and the Conciliator. If a party cannot sign, mention will be made of this in the minutes.

(3) Either party may place an original minute of the oral process before the Registrar of the Court of First Instance and have it registered. The Registrar will deliver a legally binding decision and manner of execution of the decision.

Article [_]. Procedure for Mediation between the landowner and Rights holder

(1) Mediation will be conducted in accordance with the provisions of institutional mediation in [The Civil Procedure Code].

(2) The organisation, functioning and constitution of the mediation of the protection of fundamental rights at a local community level is governed by the Regulations.

Article [_]. Responsibility of rights holder to remedy damage

(1) The rights holder is obliged to remedy all damages caused by the mining operations to the surface, underground, public or private land and the environment.

(2) The rights holder must provide the landowner with an indemnity equivalent in value to the estimated damage that will be caused.

Article [_]. The Obligation to Consult Local Communities

All Operating Licence holders shall be required to consult with representatives from local communities likely to be affected by said holder's mining operations.

Article [_] The Negotiation of a Community Development Agreement

All Operating Licence holders shall be required to negotiate a Community Development Agreement with representatives from communities likely to be affected by said holder's mining activities.

Article [_]. A Community Development Agreement as a Condition for Authorisation to Commence Operations under the Operating Licence

(1) The conclusion of a Community Development Agreement with the communities likely to be affected by the holder's mining activities is a prerequisite for authorisation being granted to commence operations under the Operating Licence.

(2) The Operating Licence holder must, after obtaining the Licence, submit the Community Development Agreement, signed jointly with representatives from communities likely to be affected by the holder's mining activities and all other invested and affected parties, to the Regulatory Authority.

Article [_]. The Obligation to Perform according to the Community Development Agreement

The Operating Licence holder shall be required to fulfil its obligations under the Community Development Agreement.

Article [_]. The Obligation to Comply with National Legislation

All Operating Licence holders shall be required to comply with the national labour legislation which is then in force.

Article [_]. Recruitment, Training and Promotion Plan

(1) All Operating Licence holders must prepare a Recruitment, Training and Promotion Plan for national staff, in consultation with [the Ministry responsible for Labour]. The purpose of said plan must be to increase the number of national staff employed at all levels in the operation, and it must be submitted to the Regulatory Authority for approval.

(2) Once the recruitment plan has been approved, the State shall make all licences and permits available to the holder, including entry visas required for expatriate staff hired in accordance with said plan.

(3) The implementation of the Recruitment, Training and Promotion Plan for National Staff shall be regularly monitored by the Regulatory Authority.

Article [_] National Procurement Plan

(1) All Operating Licence holders shall be required to draw up a National Procurement Plan in consultation with [the Ministry of Trade and Industry]. The purpose of said Plan must be to maximise procurement in services, material and equipment sourced nationally, and it must identify all services, materials and equipment required to construct and operate the mine, as well as providers and suppliers. Said plan must be submitted to the Regulatory Authority for approval before authorisation to commence operations under the operating licence is granted.

(2) Once the National Procurement Plan has been approved, the State shall give the holder authorisation to import the material and equipment required to construct and operate of the mine under the Operating Licence, if necessary.

Article [_] The Annual Report on the Implementation of the National Procurement Plan

All Operating Licence holders must submit an annual report on the implementation of the approved National Procurement Plan to the Regulatory Authority. In addition, the Regulatory Authority may require that the report be independently audited.

Article [_] The discovery of artefacts of national cultural heritage

(1) In the event that artefacts of national cultural heritage are discovered, whether movable property or not, the holder is prohibited from moving these objects. In this case, the holder is to inform the local administrative authorities and the authorities responsible for [Culture, the Arts and Museums], in writing and without delay.

(2) Depending on the prevailing circumstances, the holder may be required to remove, secure and keep these artefacts of national cultural heritage, and to do so on behalf of the State and at the State's expense, if the local administrative authorities and the relevant authorities responsible for [Culture, the Arts and Museums] do not remove or secure them, and do not declare that the site is to be reserved for an archaeological study to be conducted, within sixty days of notice being given regarding the discovery.

Article [_] Special regulations

Any operating of mines shall be subject to the measures for health, safety, and protection laid down in special regulations.

Article [_] The jurisdiction of [the Regulatory Authority]

(1) An Operating Licence holder must comply with the measures ordered by [the Regulatory Authority] in order to prevent or eliminate the causes of hazards which the work poses to public health and safety, the conservation of deposits, and to public roads and waterways.

(2) In the event of an emergency, or should the holder and their affiliates or subcontractors refuse to comply with these measures, the measures shall be undertaken and carried out by [the Regulatory Authority] at the holder's expense.

(3) In the event of imminent danger, duly authorised officials of [the Regulatory Authority], shall immediately take the necessary measures to avert the danger and, wherever necessary, may make demands of local authorities and operators.

Article [_] The declaration of an accident in a mine or quarry

Any serious or fatal accident which occurs in a mine or its outbuildings, must, without delay and using the fastest method of communication available, be brought to the attention of [the Regulatory Authority] and the administrative and judicial authorities with jurisdiction.

Article [_]: The publication of safety instructions

(1) All Operating Licence holders shall be required to publish safety instructions in terms of the specific conditions of their operations. Said instructions are to be sent to the [Mining Division] and brought to attention of the holder's staff and the public which is able to access the holder's operating site.

(2) The Mining Regulations shall determine how the safety instructions are to be published.

Article [_]: The use of explosives

All Operating Licence holders who make use of explosives shall be subject to special regulations on the use thereof, annexed to the Mining Regulations.

Article [_]: Building authorisation and infrastructure planning

(1) An Operating Licence holder shall be required to build and maintain any infrastructure necessary for the activities connected to their titles or to the related environmental authorisation, in accordance with the provisions of the present chapter.

(2) A plan for any infrastructure which is to be built by the holder is to be submitted to the relevant administrative authority for approval, after consulting with the local authorities with territorial jurisdiction.

Article [_]: The use of project infrastructure

(1) Transportation routes created by the holder within or outside of the mining Area may, when this does not hinder the operations, and subject to the holder agreeing to this, be used for operations by neighbouring mining, industrial and commercial establishments, at their request, and fair compensation is to be set by common agreement between the parties, and shall include interested parties contributing to the maintenance of said routes.

(2) Transportation routes created outside of and within the Area may be open to the public under the conditions provided for in the above paragraph, subject to fair compensation to be agreed on between the holder and the local community whose inhabitants use said transportation routes.

Article [_]: The State's rights over the infrastructure

Unless otherwise expressly agreed in writing between the State and the holder, any infrastructure which is beneficial to the public at a large which is built by an Operating Licence holder, and which remains onsite when the holder's right expires or is no longer valid, shall belong to the State.

Article [_]: Relationship with local authorities

Before beginning activities, an Operating Licence holder shall be required to appear before the local authorities with jurisdiction and give them a copy of the holder's mining title, and obtain an acknowledgement of receipt.

Article [_]: Registers and reports

An Operating Licence holder shall be required to keep registers, and prepare and file reports of their activities in accordance with the Mining Regulations.

Article [_]: Inspections

(1) An Operating Licence holder must submit to inspections carried out by officials in charge of inspecting mining or quarrying operations.

(2) In all instances, these inspections shall take place during work hours for offices, workshops or building sites.

(3) The Mining Regulations shall determine the conditions under which these inspections shall be carried out.

Article [_]: The opening and closure of a prospecting or operations centre.

Whenever a mining operations centre is opened or closed down, this must be reported to the Mining Department, without delay, according to the terms laid down in the Mining Regulations.

Annotation

Drawn from DRC’s mining law (2002) and other sources, this example deals with obligations in two chapters. The first chapter establishes the principle that the holders of all mineral right holders must comply with two specific obligations that have specific time requirements in order maintain the validity of their rights:

  • begin work within the time specified in the Code (three years for large scale exploitation licences); and
  • pay the surface fee per square unit of area related to their licence before he deadline set in the Code (i.e., by the end of the first calendar quarter).

Failure to comply with either of these “licence maintenance” obligations results in the licensee being stripped of the licence.

The obligations listed in the subsequent chapter of the DRC mining law are conditions for operations under the licence, rather than conditions for the maintenance of the validity of the licence. The licensee’s failure to comply with such “operating obligations” will be penalized in the first instance by fines and/or orders to suspend operations until the noncompliance is corrected; and may result in the revocation of the licence if the fines are not paid or the cause of the suspension is not remedied within stipulated timeframes.

The operating obligations set forth in the example are numerous and are grouped in the categories specified below, which generally correspond to those cited in the introduction to this section of the Guiding Template.

Environmental and Social Protection

Environmental and social protection is an essential obligation of every large scale exploitation licence holder, whether the obligation is specified and regulated by the environmental ministry or agency or by the Regulating Authority for the mining sector. The obligation described in the example has the following three components, which are now classic:

(1) The obligation to have submitted an environmental and social impact study (EIES in the example), together with a project environmental and social management plan (PGESP in the example), for approval by the environmental Regulating Authority, to have obtained the approval of the EIES and the PGESP by that authority and to implement the PGESP. The environmental Regulating Authority could be the general environmental ministry or agency or it could be a mining sector environmental regulatory unit, depending on the existing legislative framework and institutional capacity of the country. In some countries, the approval of the EIES and PGEP is required before the large scale exploitation licence can be issued. In others, those documents are required to have been prepared and submitted with the application for the licence, but their approval by the environmental regulatory authority is a condition that must be satisfied prior to commencing work under the large scale exploitation licence.

(2) The obligation to revise the EIES and the PGESP before commencing any work not contemplated by the original documents, and to obtain the approval of the modified plan by the environmental regulatory authority before commencing the work.

(3)The obligation to complete authorized environmental rehabilitation work on any site prior to the relinquishment, the revocation or the expiration of the large scale exploitation licence.

The particulars of compliance with these obligations are to be spelled out in the Regulation. In the current global context, it is essential that the Environmental and Social Impact Study take into consideration the need to balance competing land uses and steps to meet climate change related commitments.

The third article of the second chapter in the example is very important. It requires the licence holder to establish a financial surety or guarantee to assure the completion of site rehabilitation work prior to the commencement of operations under the large scale exploitation licence. The article in the example requires the posting of a financial instrument (surety bond, insurance policy or corporate or bank guarantee) in the first instance, in a form and amount approved by the Regulating Authority. The surety article further provides that the licence holder will replace the approved surety gradually with annual payments into a rehabilitation fund in a local bank account opened jointly in the name of the holder and of the State. The licensee will be able to draw on the fund, subject to countersignature by the Regulating Authority, in order to pay site rehabilitation expenses. If the licensee fails to perform such work, the environmental regulatory authority is authorized to draw from the fund in order to complete the site rehabilitation, after giving the licensee notice and an opportunity to cure the deficiency. The licence holder remains liable for any shortfall in the amount of the fund.

Relations with Landowners

The relations between surface right owners and mining licence holders can be a source of serious conflict if not addressed comprehensively in the law and implemented with sensitivity. A recent trend in mining law is to require mining licence holders to identify the lawful owners or users of the land to be subject to mining operations, and to obtain their consent to the terms and conditions of occupation of the surface area by the licence holder. The example includes provisions to this effect from a draft amendment to the mining law of Madagascar, which includes the following elements:

  • Prior to occupying any land area for more than one year, the licence holder must identify the owner of the land, notify him of the mining project, and negotiate an occupancy agreement with the landowner. If the State is the landowner, arrangements are made through the local land registry.
  • The definition of landowners for purposes of the mining law includes the registered owners, the persons named on a deed, the occupants whose rights are subject to recognition by the real property legislation, as well as the State and its subdivisions.
  • In order to avoid people claiming new property rights in order to negotiate compensation from the licence holder, the example provides that the land registry will be closed to new land claims for a period of two years after notification is given to the land registry service of the grant of a large scale mining licence, so that the licence holder can negotiate the necessary occupancy agreements.
  • The local administrative authority is required to facilitate the conclusion and respect of the necessary agreements. Provisions are included to deal with the case of a landowner who cannot be located.
  • The occupancy agreement will generally be in the form of a lease, but can be in any other legal form agreed upon by the parties.
  • The occupancy agreement must be equitably and transparently negotiated to protect the landowner and the licensee from abuse.
  • If the parties are not able to reach agreement, mechanisms for mediation and conciliation are provided.
  • The licensee is responsible for any damage to property, but his responsibility is limited to the payment of an indemnity in an amount equal to the approximate value of the damage caused.

Sustainable Development Obligations

The concept of Corporate Social Responsibility is increasingly becoming codified in mining laws as a responsibility to negotiate and implement a community development agreement with the community or communities that will be impacted by mining operations. The example requires the large scale mining licence holder to negotiate a community development agreement with the affected communities after issuance of the exploitation licence, as a condition of the grant of the required authorization to commence operations under the licence. The negotiated community development agreement must be submitted to the Regulating Authority for its review and approval, to assure that the agreement focuses on making a contribution to sustainable development and not just the construction of facilities that may not be useful over the long term.

Labour and Employment Obligations

In addition to requiring compliance with the national labour legislation, the example requires the licence holder to develop, in consultation with the national labour authority, a National Recruitment, Training and Promotion Plan designed to increase the employment of nationals of the host country at all levels. This provision makes the approval of such a plan by the Regulating Authority a precondition for the grant of visas and work permits for the expatriate employees of the licence holder. The Regulating Authority is to supervise the implementation of the approved Plan.

Local Procurement Obligations

Similar to the obligation to develop a National Recruitment, Training and Promotion Plan, the example also requires the licence holder to develop, in consultation with the national Commerce department, a National Procurement Plan designed to maximize the procurement by the licence holder of services, material and equipment from national providers. The Plan must be filed with the Regulating Authority for approval, as a precondition to the grant of the required authorization to commence operations under the licence.

Approval of the licensee’s National Procurement Plan is also a precondition to the grant of import licences for the material and equipment needed to build and operate the mine.

The provision requires the licensee to file annual reports on the implementation of the National Procurement Plan.

Cultural Heritage Protection

Consistent with best practice concerning any construction project affecting the area below ground, the article on protection of cultural heritage requires the licence holder to inform the local administrative authority and the national authority responsible for art and culture of any cultural artefacts revealed in the course of digging. The licence holder is required to leave the artefacts in place for inspection and disposition by the cultural authorities; but if the latter do not remove or secure them or declare the site reserved for archaeological investigation within 60 days of notification, the licence holder is authorized to remove the artefacts and preserve them for the State while continuing mining operations.

Security and Hygiene

In the area of security and hygiene, the example provides that:

  • Exploitation is subject to protective measure set forth in special regulations;
  • The licence holder must comply with the measures prescribed by the Regulating Authority in order to prevent or eliminate the dangers that exploitation work may pose to the state of public health, conservation of mineral deposits, water sources and public ways;
  • In an emergency or in the event of refusal of the licensee to comply with prescribed safety measures, the latter are to be implemented by the Regulating Authority at the expense of the licensee;
  • In cases of imminent peril, authorized agents of the Regulating Authority may immediately take the measures necessary to eliminate the danger;
  • Any serious or mortal accident in the mine or its dependencies is to be reported to the local administrative and judicial authorities without delay;
  • The licence holder is required to publish safety instructions for the particular aspects of his mine. These instructions must be delivered to the [Mines Department], and presented to the licensee’s personnel and any other public persons able to access the mine. The details of how the safety instructions must be publicized will be set forth in the regulations.
  • The use of explosives is subject to special conditions set forth in an appendix to the Mining Regulation.

Infrastructure

In the area of infrastructure, the example provides that:

  • The plans for any project infrastructure must be reviewed and approved by the competent administrative authority, after consultation with the local territorial authority.
  • Roads created within and outside of the licence area may be utilized, provided that there is no interference with mine operations and that the licence holder so agrees, by neighbouring mining, commercial and industrial establishments, subject to mutually agreed upon just compensation of the licensee and contribution to the maintenance costs of the roads.
  • Such roads may also be open to use by the public on similar terms as established in an agreement with the local community whose residents make use of the roads.
  • Unless otherwise agreed in writing between the licence holder and the State, any infrastructure remaining in place at the termination of the licence falls within the public domain of the State.

Miscellaneous Obligations
The example provides that the large scale exploitation licence holder is subject to the following obligations in this area:

  • Before commencing mining activities, the holder must meet with the local authorities and present them with a copy of the licence.
  • The holder must maintain the registers and file the reports of activities as required by the Regulation.
  • The licence holder is subject to inspections by authorized agents of the Administration, which inspections shall take place during the hours when the offices, shops and work sites are open, and in accordance with the regulations.
  • The opening or closing of any mining site must be notified without delay to the Regulating Authority in accordance with the regulations.

26.5. Example 2:

Article [_]

The present [Code][Act][Law] requires the holder of a very large-scale exploitation licence (a concession, when the amount of the investment is at least USD 1 billion) that did not discover the commercial deposit for which its concession is granted to indemnify the third party that discovered the deposit, for its costs incurred in that effort.

Article [_]

The holder of a concession must commence development work within 1 year after the issue of the concession, after which increasing monthly monetary penalties will be assessed if work has not commenced. If development work is not commenced within 2 years, the concession may be cancelled. Commencement of development work is defined as the engagement of preparatory, development and construction work in the amount of at least 10-15% of the total investment.

Article [_]

The holder of a concession must deliver reports and supporting documentation in accordance with regulations fixing the content and periodicity of the reports. (This is a general obligation of all mineral right holders.)

Article [_]

The holder of a large scale exploitation licence must file with the [Regulating Authority] a final report of the work accomplished upon termination of the licence.

Article [_]

All mineral rights holders must carry out their operations using techniques confirmed by the mining industry and in accordance with the terms of the [Code][Act][Law], the [relevant environmental legislation] and the respective implementing regulations of each law.

Article [_]

All mineral right holders shall give preference to qualified local PMEs, PMIs or [Country nationality] owned companies in their contracting for goods and services, to achieve specified percentages of such entities among their contracts, to require their subcontractors to subscribe to the same plan, and to file an annual report of their progress towards meeting the applicable standard.

Article [_]

Consistent with article [_] above, all mineral rights holders are required to prioritize the employment of qualified [Country nationals], based on target percentages for each category of worker and annual reporting requirements. These target percentages will be determined in subsequent regulations.

Article [_]

All mineral rights holders are obliged to develop and submit to the [National Office of Training and Professional Improvement] a plan for the transfer of technology and responsibility to [Country national] companies and personnel and a “[Country] Plan” that meets specified criteria.

Article [_]

All mineral rights holders must comply with [Country]’s international agreements, including in particular with ECOWAS, the Kimberley Process and the EITI.

Article [_]

All mineral rights holders shall pay an indemnity to the legitimate occupants of the areas necessary for their activities, determined in accordance with the provisions of the mining [Code][Act][Law].

Article [_]

All exploitation licence holders must enter into a Community Development Agreement (CDA) with the local community situated in proximity to the concession. The CDA must be consistent with principles specified in the regulations of this [Code][Act][Law]. The exploitation licence holder must contribute annually either 0.5% or 1 % of its gross revenues, depending on the category of mineral for which its concession was issued, to a Local Development Fund in order to finance local community development activities.

Article [_]

Exploitation licence holders shall inform the local community 12 months in advance of mine closure and formulate a plan acceptable to the local authorities for the restoration of the mine site at closure in a manner acceptable to the community, eliminating or mitigating all environmental risks and re-establishing the native vegetation at the site.

Article [_]

All mineral licence holders must comply with the [national Insurance Code] and maintain all required coverages with approved companies in [Country].

Article [_]

Exploitation licence holders must submit a prior declaration to the [Regulating Authority] for all purchase, sale, import or export transactions in mineral substances, as well as all beneficiation and transformation operations, including the fabrication of metals, alloys and concentrates.

Article [_]

All mineral licence holders have a general obligation to comply with environmental protection and health regulations, as well as utilize adapted techniques and methods to protect the environment, workers and the nearby populations in accordance with the [relevant Environmental legislation] and international best practices.

Article [_]

All mineral rights holders are obliged to protect against listed potential harm or dangers to the environment, workers and the local populations.

Article [_]

Exploitation licence holders must establish and fund a trust account to guarantee the financing of mine closure and site rehabilitation at the conclusion of mining operations.

Article [_]

All mineral rights holders must establish environmental health and safety regulations that meet the higher of (a) national [[Country] standards adopted by the respective [Ministries of Public Health, Labour and the Environment], or (b) such higher standards as are met by the licence holder elsewhere. The regulations must be approved by the [Regulating Authority] after favourable recommendation by the [Committee for the Evaluation of Health and Environmental Impacts]. Once approved, they must be posted on the most visible sites for workers.

Article [_]

The usage of explosives is subject to regulation by joint orders of the [Regulating Authority] and the [Ministries of Defence and Security].

Article [_]

All mineral rights holders must disclose to the technical department of the [Regulating Authority] the identity of all parties with an interest in them, including shareholders, affiliates, directors, senior executives and control persons.

Article [_]

Allmineral rights holders shall sign a Code of Conduct with the [Regulating Authority] containing anti-corruption measures and an engagement to comply with the twelve EITI principles.

Article [_]

The holder of an exploitation licence shall file annually with the [Regulating Authority], within 90 days after the end of the calendar year, a Plan of Surveillance against Corruption, containing the elements specified in this article.

Article [_]

Exploitation licence holders shall pay the specified annual surface fees per square kilometre of area covered by their concession.

Article [_]

Exploitation licence holders must make payment of the mining tax for each substance mined, at the time when it is removed from stockpiles.

Article [_]

(1) Exploitation licence holders must prepare and submit for approval by the [Regulating Authority] and the [Ministry of Finance], respectively, lists of the goods and equipment that they intend to import, in order to enjoy the benefit of the special import regimes under this [Code][Act][Law].

(2) Mineral licence holders are subject to the various declaration, reporting and payment obligations in the chapters of this [Code][Act][Law] on fiscal obligations, customs and exchange controls.

Annotation

Adapted from, Guinea’s mining code (2011), this provision contains extensive and comprehensive obligations of large-scale exploitation licence holders that include - in addition to work, reporting, health, safety and environmental requirements and fee payments:

(a)local procurement, hiring and training requirements with target percentages;

(b)compensation of lawful occupiers of land within the licenced area;

(c)signature of an anti-corruption code of conduct; and

(d)disclosure of all interested persons.

These are perhaps the most comprehensive and extensive obligations on large-scale exploitation licensees in Africa. (Many of the same obligations also apply to holders of exploration licences and small scale mining permits, as well.)

The articles of the Guinean mining code on the obligations of concession holders (for large-scale exploitation) cited in the example are paraphrased from the original text in French.