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Part B: Mineral Rights - Part B-5: Development Minerals - 30. Development Minerals Exploration Licence | 30.1 Eligibility

A mining law should define what individuals or legal entities can receive a permit or authorization to conduct exploration activities, either by defining who may or may not apply for the right, or by defining prior conditions that must be met before such an entity can be considered eligible to apply.

Issues to be considered include:

  • Whether individuals and legal entities are eligible for exploration rights?
  • Whether foreign individuals or entities are eligible, whether there is preference for local entities, and under what conditions? (When distinguishing between foreign and national entities, mining legislation should define what is meant by a foreign entity.)
  • Whether and what financial and/or technical capacity is required?
  • Which individuals and entities are not eligible for exploration rights?

The eligibility requirements will determine not only who may obtain an exploration licence directly, but also whether and to whom such licence may be transferred in the future.

30.1 Example 1:

Article [_] General rules for exploration licences in development minerals.

(1) As a general principle, all development mineral projects shall be granted a licence and shall have an exploration phase, following the rules of this [Law][Act][Code].

(2) In any case can a development mineral project proceed without licence Only by exception, the exploration phase may be waived, following the rules of this [Law][Act][Code].

Article [_] Eligibility for exploration licence for development minerals in large scale operations.

(1) Only companies duly incorporated or legally incorporated cooperatives of artisanal or small scale miners may apply for the grant of an exploration licence for development minerals in large scale operations under this [Law][Act][Code].

(a) A foreign company can apply for an exploration licence without being incorporated in [Country]. However, if the foreign company is awarded with a licence, it shall incorporate a branch in [Country] before starting operations in the field. This requisite shall be verified by the [Regulating Authority] before the start of the exploration activities.

Article [_] Eligibility for exploration licence for development minerals in artisanal and small scale mining operations.

Only legally incorporated national cooperatives of artisanal or small scale miners may apply for the grant of an exploration licence in artisanal and small scale mining operations under this [Law][Act][Code].

Article [_] Restrictions on grant of mineral rights

(1)No mineral right shall be granted to-

(a) individuals

(b) corporations or cooperatives -

(i)which is not legally registered or incorporated under the applicable legislation, except for foreign entities, following Article [­_] (1) (a);

(ii)which is in liquidation other than a liquidation which forms part of a scheme for the reconstruction or merger of such body corporate;

(iii)in respect of which an order has been made by a court of competent entity for its winding up or dissolution;

(iv) which has among its shareholders any shareholder, directly or indirectly, or a director, that is a government officer, including Police and Army, or a relative following anti- bribery or anticorruption laws.

Annotation

Inspired by Sierra Leone’s mining law (2009) and partially by DRC’s mining law (2002), these provisions modify the general provision on eligibility for mineral licences. In this example, the possibility of granting mineral licences for development minerals to individuals is eliminated.

This approach has several advantages: control will be easier, it stimulates individuals for association, higher environmental standards might be demanded and tax collection would be simpler.

However, it is highly likely than government will have to work on helping people to associate and organize entities to be able to get development minerals licences.

30.1 Example 2:

Article [_] Eligibility for exploration licence for development minerals in large scale operations.

(1) Only companies duly incorporated or legally incorporated cooperatives of artisanal or small scale miners may apply for the grant of an exploration licence for development minerals in large scale operations under this [Law][Act][Code].

(a) A foreign company can apply for an exploration licence without being incorporated in [Country]. However, if the foreign company is awarded with a licence, it shall incorporate a branch in [Country] before starting operations in the field. This requisite shall be verified by the [Regulating Authority] before the start of the exploration activities.

Article [_] Eligibility for exploration licence for development minerals in artisanal and small scale mining operations

Individuals and legally incorporated national cooperatives of artisanal or small scale miners may apply for the grant of an exploration licence in artisanal and small scale mining operations under this [Law][Act][Code].

Article [_] Restrictions on grant of mineral rights

(1) No mineral right shall be granted to-

(a)individuals –

(i) is under the age of 18 years;

(ii) is not a citizen of [Country] or being a citizen, has not been ordinarily resident in [Country] for a period of three years immediately preceding his application for a mineral right;

(iii)is an un-discharged bankrupt, having been adjudged or otherwise declared bankrupt under any written law, or enters into any arrangement or scheme of composition with his creditors; or

(iv) has been convicted of an offence involving fraud

(b)corporations or cooperatives –

(i)which is not legally registered or incorporated under the applicable legislation, except for foreign entities, following Article [_] (1) (a);

(ii)which is in liquidation other than a liquidation which forms part of a scheme for the reconstruction or merger of such body corporate;

(iii)in respect of which an order has been made by a court of competent entity for its winding up or dissolution;

(iv)which has among its shareholders any shareholder, directly or indirectly, or a director, that is a government officer, including Police and Army, or a relative in the levels mandated in anticorruption, anti-bribery and transparency norms.

Annotation

In this example, individuals can be licence holders. The advantages and disadvantages expresses in the previous annotation should be considering when implementing this provision.