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Part B: Mineral Rights - Part B-3: Large Scale Exploitation - 26. Large Scale Exploitation Licensing | 26.9 Renewal of Licence

Addressed often at the same time as the term of licence, renewal of the licence refers to provisions determining when, for how long, and how many times a licence holder may extend the initial duration of the mining licence. In the case of large scale licences, once a mine has been developed and exploration of the deposit has continued, geological risk is diminished and further development or expansion of a mine can be planned with greater accuracy than in the initial feasibility study. Near the end of the initial and subsequent terms of the large scale exploitation licence, the licensee has a track record of performance. If the performance is satisfactory – i.e., the licensee is not subject to any notice of suspension or grounds for revocation of the licence – renewal of the licence should be virtually automatic, provided that an updated ESIA (Environmental and Social Impact Assessment) for the project is approved and any other required plans or agreements are likewise updated and approved.

The length of the renewal term may be a function of the feasibility study for the expansion or extension of the mine (if the initial term was a function of the initial feasibility study) or a fixed number of years. Typically the renewal term is shorter than the initial term. However, some mines have been in operation for centuries – which could not have been predicted initially or in connection with any early renewals.

Where there is language for the exercise of discretion by the regulatory authority when addressing renewal, provisions should include some general objective criteria including compliance with existing legislation. Parties may want to use this opportunity to negotiate new terms and conditions in order to reflect material change circumstances in addition to renewal process language. Denial should be subject to a review process given the extensive nature of the investment in Large Scale Exploitation.

26.9. Example 1:

Article [_]

(1) An operating licence shall be granted for the entire operating life of the mine as indicated in the feasibility study, and this period of validity may not exceed twenty (20) years.

(2) It shall be renewable for successive periods of a maximum of ten (10) years.

(3) The mining title shall be renewable on an application from the holder, submitted at least three months before the current period of validity expires.

(4) The renewal of the mining title shall be automatic when the holder has fulfilled their obligations.

(5) The rights remain valid pending the outcome of the renewal application notified to the holder in writing.

(6) The conditions for the renewal of the mining title shall be specified by decree.

Annotation

Drawn from Cote d’Ivoire’s mining law (2014), this provision provides for successive ten year renewals to which the exploitation permit holder is entitled if in compliance with the obligations of the licence. Whereas the initial term of an exploitation licence is based on the life of the mine as indicated by the feasibility study, but limited to a maximum of 20 years, renewals are for a fixed term of ten years.

The number of renewals is not limited. Moreover, the exploitation licence holder has the right to the renewal of its licence if in compliance with its obligations (although this standard is open to interpretation and ideally could be more specifically limited).

Because Ivory Coast requires a feasibility study as a key element of the application for an exploitation licence, it has chosen to base the initial term of the exploitation licence on the life of the mine projected by the feasibility study. It makes sense since to fit the licence term to the life of the mine, since some mines will be fully depleted in less than ten years while others may continue operating for decades. The twenty year limit of the initial term reflects the reality that any mine must be demonstrated to be acceptably profitable within that timeframe or else it will not be developed. And from the perspective of the State, the mining law may change within that timeframe.

The investor in a mine that proves to have a life longer than the initial licence term is protected by the virtually automatic renewal provision. The renewal term is fixed rather than flexible because no feasibility study is required for renewal. While the renewal term is potentially shorter than the initial term of the licence, the licence holder is protected by its right to virtually automatic renewals and the absence of any limit on the number of renewals.

As in most mining laws, the licence holder must apply for the renewal by a stated time before the expiration of the initial term of the licence – in this case, 3 months. That is potentially a short processing time for an exploitation permit renewal; however, Article 40 provides that the expiring licence continues in effect so long as the holder has not been notified of a refusal of the renewal request. It would be preferable for the law or the regulations to specify that the initial licence continues in effect during any appeals of a refusal to renew, and for a sufficient period of time following a final decision of refusal on appeal – e.g. 6 months – in order to allow for the completion of site closure and rehabilitation work that probably will not have been undertaken beforehand.

See also Option 2 under the preceding sub-topic, for Ethiopia’s similar provision.

26.9. Example 2 :

Article [_]

(1) A holder of a mining lease may, at any time but not later than three months before the expiration of the initial term of the mining lease or a shorter period that the [Regulating Authority] allows, apply in a prescribed form to the [Regulating Authority] for an extension of the term of the lease for a further period of up to thirty years in respect of all or any number of contiguous blocks the subject of the lease and in respect of all or any of the minerals the subject of the lease.

(2) An application made under subsection (1) shall be accompanied with a proposed programme of mineral operations.

(3) On an application duly made under subsection (1) and if the holder has materially complied with the obligations imposed by this [Act][Code][Law] with respect to the holding of and activities pursuant to the mining lease, the [Regulating Authority] shall grant the extension of the term of the lease on conditions specified in writing.

(4) Where the holder has made an application for an extension of the term of the lease, and the term of the lease would but for this subsection, expire, the lease shall continue in force in respect of the land the subject of the application until the application is determined.

Annotation

Drawn from Ghana’s mining law (2006), this provision similarly requires that the renewal application be filed at least three months before the expiration of the existing licence, that the latter is extended if necessary during the processing of the application, and that the licence holder is entitled to the renewal if in compliance with the obligations of the licence. The automatic extension of the licence is a necessary element of renewal provisions that require administrative action on the part of the regulatory authority that may or may not be completed within the three month (or more) period between a timely renewal application and the date of termination of the initial term of the licence.

The renewal term available under Ghana’s law is the same as the initial term of the exploitation licence - up to 30 years – and is substantially longer than the renewal term provided for under the mining law of Côte d’Ivoire, above. However, Ghana’s mining law provides for only one renewal term, whereas the mining law of Côte d’Ivoire provides for unlimited renewals. The maximum initial and renewal term under Ghana’s law is sixty (60) years. That is the equivalent of the maximum initial term plus four renewals under the law of Côte d’Ivoire. Ghana’s mining law does not provide for the unusual case of a mine that continues in operation for more than sixty years, whereas Côte d’Ivoire’s mining law does. Such mines do exist (e.g., Potosi, Bolivia; Almaden, Spain, and salt mines in Canada and Germany have been in operation for centuries). An extension of the exploitation licence term beyond 60 years for a long-life mine would require special legislation in Ghana.