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Part B: Mineral Rights - Part B-5: Development Minerals - 30. Development Minerals Exploration Licence | 30.2 Requirements for Licence Applications

Regulatory authorities generally require that eligible entities seeking authorization to conduct exploration activities submit particular documents and show proof of certain criteria as part of the authorization application process. Unlike other licences, the requirements for a licence Application for small scale activities are typically fewer. Some laws may have no requirements beyond those related to eligibility, leaving the definition of the application requirements to the implementing regulations.

Several countries have adopted a two-tier approach to the procedure for issuing exploration licences: that is, (1) an application procedure with defined criteria for areas in which significant deposits have not yet been identified (i.e., “greenfields” projects), and (2) a tender procedure for areas containing known deposits that have been explored or worked previously. For those areas put up for bid, the requirements are set out in the bidding terms and specifications, and the tender is conducted in accordance with established rules for transparency and objectivity. A third possibility is to grant exploration rights to known stratoform deposits by an auction procedure (i.e., by offering them to the highest bidder during a specified auction period, without the other more extensive requirements of a tender procedure).

In addition to identification and eligibility of the applicant, the requirements for the grant of an exploration licence will or may contain some or all of the following:

  • The availability of the area requested;
  • Proof of eligibility and domicile, for the individual applicant and/or the firm seeking authorization;
  • The specification of the minerals to be targeted by the exploration project;
  • A proposed work program for all or part of the licence term;
  • Proof of technical and financial capability to carry out the proposed work program;
  • Compliance with limitations on the number of permits or the aggregate area that a person or entity and its affiliates may hold under licence;
  • Completion and submission of specified official forms;
  • Payment of processing fees upon application; and
  • Payment of any fees required as a condition for the issuance of the licence.

A fundamental issue in designing the requirements is whether to (a) restrict access to mineral exploration licences by imposing technical and financial standards as conditions for the grant of rights, or (b) facilitate access to such licences and eliminate non-performing licensees subsequently based on their failure to meet performance standards under their licences.

In some jurisdictions where the right to a mining licence is attached to the exploration licence, subject to the fulfilment of defined conditions, the signature of a contract between the State and the licensee may be required at the time of issuance of the exploration licence. The contract sets forth the rights and obligations of the licensee during the term of the exploration licence and the conditions under which a mining licence will be issued.In light of increasing global commitments related to Climate Change and Land Use, it would be prudent for the State to require in such cases the conduct of an initial social, environmental and overall sustainable development assessment of the project at an early stage of contract implementation prior to the completion of the exploration phase and the authorization of mine development. The applicant’s commitment to and proposed plans for the funding and conduct of such a study in collaboration with the national and local environmental authorities and their contractors, as well as local communities, could constitute an essential component of the application.

30.2 Example 1:

Section [_]: Tender for exploration licences

Article [_]: General rules for tenders

(1) All licences for exploration of development minerals shall be granted by tender. The application for such exploration licence shall-

(a) be in the prescribed tender form and accompanied by the prescribed tender fee; and

(b) subject to the terms and conditions of the invitation to tender, include the matters required to be included in applications by this [Law][Act][Code].

(2) Applications made under subsection (1) and complying the terms and conditions of the invitation shall be submitted to the [Licensing Authority] for the decision.

(3) The [Licensing Authority] shall consider the competing bids and shall select the bid which is most likely to promote the expeditious and beneficial development of the mineral resources of the area having regard to

(a) the program of exploration operations which the applicant proposes to carry out and the commitments as regards expenditure which the applicant is prepared to make;

(b) the financial and technical resources of the applicant;

(c) the investment commitment for the program of exploration; and

(d) the previous experience of the applicant in the conduct of exploration and mining operations.

(4) No bids or tenders can be performed if the mining area overlaps totally or partially with an environment protected area

Article [­_]: Joint exploration/exploitation licence for artisanal and small scale mining.

(1)When a licence has been granted through a tender process, for an artisanal and small scale development minerals exploration project, the licensee shall have the right to begin the exploration phase without the need of a new tender or the subscription of a contract with the [Regulating Authority].

(2) In such case, the obligations and rights of the parties shall be regulated by this [Law][Act][Code] and other applicable laws. No additional regulation shall be enacted creating more burdens to the licensees.

(3) Prior to start the exploitation phase, the licensee should in any case obtain, regardless of other legal requirements-

(a) The environmental licence, following applicable regulation.

(b) The right of use the necessary land for the project.

(c) The water use permits, following applicable regulation.

Annotation

In this case, there is a tender procedure for all licences of development minerals.

Drawn from Tanzania’s mining law (2010), inspired on Botswana’s mining law (1999) and Tanzania’s mining law (2010), this provision sets forth the requirements for the grant of an exploration licence (called a prospecting licence in the law).The example here provides a tender process for all kinds of licences. It sets out the requirements for the licence in the article describing the required application contents and then refers back to them in the article on the conditions for the grant of the licence.

30.2 Example 2:

Article [_]: General rules for tenders

(1) All licences for large scale exploration of development minerals shall be granted by tender. The application for such exploration licence shall-

(a) be in the prescribed tender form and accompanied by the prescribed tender fee; and

(b) subject to the terms and conditions of the invitation to tender, include the matters required to be included in applications by this [Law][Act][Code].

(2) Applications made under subsection (1) and complying the terms and conditions of the invitation shall be submitted to the [Regulating Authority] for the decision.

(3) The [Regulating Authority] shall consider the competing bids and shall select the bid which is most likely to promote the expeditious and beneficial development of the mineral resources of the area having regard to

(a) the program of exploration operations which the applicant proposes to carry out and the commitments as regards expenditure which the applicant is prepared to make;

(b) the financial and technical resources of the applicant;

(c) the investment commitment for the program of exploration; and

(c) the previous experience of the applicant in the conduct of exploration and mining operations.

Article [_] Exploration licences for artisanal and small scale development minerals projects

(1) Licences for artisanal and small scale development mineral projects shall be granted under the system “first come, first served”. In that case, the [entity/individual] may submit, at any moment, an application for a licence, which shall contain-

(a)Identification of the applicant and its shareholders, if the applicant is an entity, including final beneficiaries of the entity.

(b)Description of the area applied for (including a map and coordinates),

(c)Mention of the minerals for which the licence is requested,

(d)The period for which the licence is requested, which shall be no more than ten years, and

(e)The proposed programs of work, including –

(i)Details of the mineral deposit,

(ii)estimated date by which applicant intends to start the exploration and exploitation phases,

(iii)estimated capacity of production and scale of operations,

(iv)characteristics of product,

(v)envisaged marketing arrangements for sale of mineral product(s),

(2) The [Regulating Authority] shall provide all facilities required for development mineral artisanal mining licence applicants for the application process. Those facilities might include the creation of standardized forms, online application, training and direct help from officers, services that shall be free of charge.

(3) For development minerals artisanal mining applications, the requisite established in Article [_] (1) (e) above shall not be applied.

(4) An application for a minerals permit relating to—

(a) any area in respect of which consent is required under any written law shall be accompanied by evidence that such consent has been obtained;

(b) land of which the applicant is not the owner shall be accompanied by evidence that the consent of the owner, or, in the case of tribal territory, the consent of the appropriate body, has been obtained; or

(c) a prospecting area, retention area or mining area or part thereof shall be accompanied by evidence that the consent of the holder of the prospecting

licence, retention licence or mining licence has been given, unless such holder will not be prejudiced by the issue of a minerals permit.

Article [_]. Limitation to denial of granting licences

(1) The [Regulating Authority] shall grant an application for a licence which has been properly made unless-

(a)the applicant is or was in default in respect of any other mineral right and has failed to rectify such default;

(b)the area for which application has been made or part of it covers or includes an area which is:

(i) subject to another mineral right or

(ii) an area which the Minister has approved in writing as a source of building materials for the construction of tunnels, roads, dams, aerodromes and similar public works;

(iii) an area designated by the Minister as an area in respect of which applications for the grant of a mineral right have been, or will be invited by tender.

(iv) the area requested overlaps totally or partially with an environment protected area.

(2) No additional reasons for rejection of a licence may be included through regulations or administrative decisions.

Article [_]: Joint exploration/exploitation licence for artisanal and small scale mining.

(1)When a licence has been granted through a tender process, for an artisanal and small scale development minerals exploration project, the licensee shall have the right, at any moment, to begin the exploration phase without the need of a new tender or the subscription of a contract with the [Regulating Authority].

(2) In such case, the obligations and rights of the parties shall be regulated by this [Law][Act][Code] and other applicable laws. No additional regulation shall be enacted creating more burdens to the licensees.

(3) Prior to start the exploitation phase, the licensee should in any case obtain, regardless of other legal requirements-

(a) The environmental licence, following applicable regulation.

(b) The right of use the necessary land for the project.

(c) The water use permits, following applicable regulation.

Annotation

Drawn from Madagascar’s mining law (1999), this provision provides for the issuance of an exploration licence to the first eligible applicant who submits a complete application for an available area. No proof of technical or financial capacity is required; and no work program is reviewed as a requirement for the grant of the licence.

Madagascar is an example of a jurisdiction that relies on ex-post requirements for maintaining the validity of an exploration licence rather than limiting access to exploration licences by imposing requirements for their issuance.

In this case, there is a different procedure for exploration licensing between large scale and SSM and ASM projects. While keeping tender for large scale (for transparency purposes), this example uses the “first come, first served” system for ASM, which might bring less burdens in the application process for small players in the market.

The one-stop licence (exploration/exploitation) is maintained for ASM.