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Part B: Mineral Rights - Part B-5: Development Minerals - 30. Development Minerals Exploration Licence | 30.7 Term of Licence

The term of the licence is the period of time during which it is valid. The mining law or regulation should establish the length of time or the maximum length of time for which a licence is granted. The licence itself should specify the start date and the end date of its period of validity (subject to possible early termination).

The term of an exploration licence should be long enough to allow time for enough investigation to enable the licence holder to make a determination of whether to pursue intensive drilling and sampling of specific targets within the licence area, provided that renewal terms are available during which deeper analysis, feasibility studies, environmental and social impact studies and required or necessary plans for local procurement, hiring and training, and community development can be developed or negotiated. It is thought that the initial term should be short enough to prevent licensees from holding large areas for excessive periods without developing them; however, this goal could also be achieved by gradually increasing the annual fees per unit area payable by the licensees, to encourage voluntary relinquishment, or providing fixed an limited renewals, with or without the previous authorization from the regulating entity, as we will develop in the examples.

It should be noted that as requirements are increased for the grant of a mining licence (for example, Economic and Social Impact Assessment (ESIA), community development agreement, local procurement, hiring and training programs), more time will be needed in order to accomplish them.

The typical term of a large scale exploration licence for metal minerals in Africa is 3 years, or a period not exceeding three years. (Examples: Botswana, Cameroon, CAR, Ghana, Guinea, Malawi, Mauritania, Morocco, Nigeria, South Africa, Uganda, Zimbabwe.) The term is 4 years, or for a period not exceeding four years, in Côte d’Ivoire, DRC for precious stones, Sierra Leone and Tanzania. The term is 5 years in the DRC except for precious stones, as well as in Madagascar and Mozambique. In Angola the term is set by contract.

The terms of SSM licences are generally much shorter than the terms of large scale exploitation licences because by definition SSM is limited to the exploitation of small scale deposits involving limited amounts of investment and/or production. Some mining laws that provide for SSM licences also contemplate a process for an SSM licence to be transformed into an industrial mining licence with a longer term if justified by the nature of the deposit and the technical operations during the course of operations under the SSM licence.

There is considerable variety in the terms of SSM licences under mining laws. There are examples for a term as short as three years, with unlimited renewals, or for as long as ten years with no renewals.

Factors to be considered in setting the term of licences include:

  • whether the licence covers the exploration and exploitation phases or only the exploitation phase (if the former, a longer term is probably justified);
  • whether the licence is preceded by work of the applicant under an exploration licence (in which case, a shorter term may be appropriate);
  • whether to set a fixed term or a maximum term length and allow the regulating authority to set the exact term of the licence subject to that maximum (depending on the enforcement capability of the regulating authority to terminate licences under which work has been abandoned);
  • whether to set the term length in the law or in the regulations (security of title in the law versus flexibility to adjust to subsector conditions by regulation);
  • the extent of the information about the deposit and the work program required to be submitted with an application for the licence (more information available would suggest greater confidence in a relatively short term); and
  • the definition of in the mining law and the ability to transform the licence into a larger scale mining licence with a longer term.

30.7 Example 1:

Article [_]

(1) Where an applicant is entitled to the grant of an exploration licence under the terms and conditions of this [Law][Act][Code], the licensing authority shall issue to the applicant the exploration licence as provided in that section and the licence so issued shall subsist for the following periods-

(a) for the initial exploration period for which the applicant has applied, a period not exceeding four years for large scale mining;

(b) a period not exceeding two years for small scale mining; and

(c) a period of one year for artisanal mining.

(2) In determining the date for the commencement of the period for which the licence is granted, the licensing authority may take account of any period not exceeding six months from the date of the grant which is required by the applicant to make any necessary preparations for exploration operations.

Annotation

Inspired by Tanzania’s mining law (2010), Zambia’s mining law (2008) and Sierra Leone’s mining law (2009), this provision reflects a progressive awareness of the potential need for a somewhat longer than normal exploration term as well the need to accomplish certain formalities and obtain certain approvals before actual exploration work can begin.

30.7 Example 2:

Article [_]

A minerals permit shall be valid for a period not exceeding five years, as the [Regulating Authority] may determine and may, on application made to the [Regulating Authority], be renewed for further periods not exceeding five years at a time.

Annotation

Drawn from Botswana’s mining law (1999), this provision sets a maximum term length of five years, but authorizes the regulating authority to set a shorter term for a particular licence. The provision also allows for unlimited renewals, each similarly limited to no more than (but possibly less than) five years.

Overall, this is a balanced approach that seeks to set an appropriate term length for the type of operation involved, in light of the pre-licence preparatory work required. It provides flexibility while guarding against the risk of licence areas being tied up for periods that exceed the time of their productivity. It might be an option to establishing a limit in the law of the maximum number of renewals that a Licensee can obtain, without moving forward to the exploitation phase.