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Part B: Mineral Rights - Part B-2: Exploration - 25. Exploration Licensing | 25.1 Eligibility

A mining law may restrict what 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.

Eligibility conditions are key in determining the ease or difficulty of access to a nation’s mineral resources.

Issues to be considered include:

  • Whether individuals and legal entities are eligible for exploration rights?
  • Whether foreign individuals or entities are eligible, 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 to whom such a licence may be transferred in the future.

25.1 Example 1:

Article [_]. Eligibility for mining and quarrying rights

(1) Subject to the provisions of Article [_] below (on persons who are not eligible), the following shall be eligible for mining and quarrying rights:

(a) any natural person who is of age and is a Congolese national as well as any legal entity under Congolese law which has its registered office and its administrative office within the National Territory and whose objects are mining activities;

(b) any natural person who is of age and is a foreign national as well as any legal entity under the law of a foreign country;

(c) any scientific body.

(2) Eligible persons referred to in (1) (b) above shall be required to elect a domicile with a representative in the mining and quarrying industry which is set up within the National Territory and to act through their intermediary.

(3) Legal entities incorporated in foreign countries and the scientific bodies cited in 1 (b) and (c) above shall only be eligible for mining and quarry prospecting rights.

Article [_]. Electing a domicile

(1) Electing the domicile referred to in the preceeding Article is to be done intentionally and may only be done in writing.

(2) All service of documents, claims and actions for the performance of an act for which the domicile was elected, may be validly done at this domicile.

Article [_] Agents in the mining and quarrying industries

(1) Agents in the mining and quarrying industries require prior approval from [the regulatory authority] as regards their respectability, ethics, skills and in-depth knowledge of mining legislation, or of the management of the mining and quarrying field.

(2) In addition to representation, part of the role of agents in the mining and quarrying industries is to advise and/or assist any interested person in the granting and exercising of mining and quarrying rights as well as in disputes relating thereto.

(3) [The regulatory authority] shall maintain and publish the list of approved agents and shall update said list on an annual basis.

(4) The Mining Regulations shall lay down the conditions for approving agents in the mining and quarrying industries.

Article [_] Persons who are not eligible

(1) The following are not eligible to apply for and obtain mining and/or quarrying rights, an artisanal miner's card or a merchant's card, as well as authorisation to purchase and sell mineral substances from artisanal operations:

(a) State officials and civil servants, judges, members of the Armed Forces, the Police and Security Services, the employees of public bodies which are authorised to carry out mining operations;

(b) any person who lacks legal capacity, as provided for in Article [_] of the [Family Code];

(c) any person who has been prohibited therefrom including:

(i) a person who has been convicted, by a final judgement, for violating mining and quarrying legislation or legislation relating to economic activities as regards their mining and quarrying rights and affiliates, and they shall have been prohibited from so acting for a period of 10 years;

(ii) a person whose artisanal miner's or merchant's card has been withdrawn, and prohibited from obtaining such a license for a period of three years;

(iii) a person whose authorisation to purchase and sell mineral substances from artisanal operators has been withdrawn, and purchases/sales prohibited for a period of five years;

Annotation

Drawn from DRC’s mining law (2002), these provisions contain specific eligibility requirements for individuals and corporate entities, national and foreign, as well as circumstances that render certain types of individuals and entities ineligible to hold mining and quarrying rights. The eligibility provisions are broken up into four articles, for clarity. They cover, respectively: (1) the general rule of eligibility, (2) the local domicile requirement for foreign nationals and entities, (3) the accreditation and role of mining and quarrying representatives, and (4) the general rule of ineligibility.

The first article establishes who is eligible for what types of licences (unless declared ineligible by the subsequent article on ineligibility). It makes a distinction between (a) citizens of the DRC and companies organized as mining companies under the laws of the DRC that have their official headquarters and principal administrative office in the DRC, on the one hand, and (b) foreign citizens and companies organized under foreign laws, and (c) scientific organizations, on the other hand. Foreign citizens and companies, as well as scientific organizations, are eligible only for exploration licences for mines and quarries. They are not eligible for exploitation licences.

Foreign citizens and companies are required to make an election of domicile in care of a mining and quarrying representative based in the National Territory and to act through such representative. This requirement is intended to assure the administration that they will be able to serve all legal notices for the foreign citizen or company on a known local entity. It will also serve to establish a tax domicile of the foreign nationals and entities in the DRC.

The second article provides that the election of domicile required of foreign citizens and companies must be made in writing; and that any notification, request or legal process concerning anything for which such election of domicile has been made is valid if delivered to that address.

The third article describes the role and control of the mining and quarrying representatives. They must be accredited by the Regulating Authority based on the criteria of honor, ethics, competency and deep knowledge of the mining legislation or the administration of matters relating to mines and quarries. In addition to their role of representation, the mining and quarrying representatives are authorized to advise and/or assist any person or entity interested in the issuance and the exercise of mining and quarrying rights, as well as related dispute resolution. The conditions for accreditation of mining and quarrying representatives are to be set forth in the Mining Regulation; and the Regulating Authority is to maintain and publish the list of accredited mining and quarrying representatives and update it annually. This provision, in effect, creates a new profession – that of mining and quarrying representative – in the interest of establishing a high standard of competency and professionalism in the representation of mining companies before the administrative authorities and dispute resolution bodies.

The fourth article describes the categories of persons who are not eligible to receive mineral rights. They include: (a) the listed categories of public servants, (b) persons lacking legal capacity under the applicable legislation (in this case the Family Code), and (c) persons subject to a prohibition. The latter category includes persons convicted of a criminal violation of the mining law (prohibited for 10 years), persons from whom an artisanal mining or trading permit has been withdrawn (prohibited for three years) and persons whose authorization to operate a trading post for artisanal mining products has been withdrawn (prohibited for five years).

25.1 Example 2:

Article [_] Eligibility for exploration licence.

A person shall not be eligible to apply for the grant of an exploration licence under this [Act][Code][Law] unless that person is a company incorporated or registered under the [Companies Act] and whose name has not been struck off the register of companies at the time of the application.

Article [_] Restrictions on grant of mineral rights

    (1)No mineral right shall be granted to-

(a)an individual who-

(i)is under the age of 18 years;

(ii)is not a citizen of [Country] or has not been ordinarily resident in [Country] for a period of ten 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 or dishonesty;

(b)a co-operative society which is not registered in accordance with the laws of [Country];

(c) a body corporate-

(i)which is not registered or incorporated under the [Companies Act]; or

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

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

(iv)which has made a composition or arrangement with its creditors;

(v)which has among its shareholders any shareholder who holds at least a ten percent share of the company or a director, who would be disqualified in terms of subparagraphs (i) or (iv) of paragraph (a).

Annotation

Drawn from Sierra Leone’s mining law (2009), this provision refers back to and modifies the general provision on eligibility for mineral licences. Unlike the DRC Mining Code eligibility provision which makes exploration licences available to foreign and national individuals and companies, the Sierra Leone provision limits the issuance of exploration licences to corporate entities formed under the Companies act of Sierra Leone only. However, a company can be formed under the Companies act by foreign nationals. This provision, in comparison to the DRC provision, provides the Administration with the additional assurance of knowing that each entity eligible for an exploration licence is subject to the provisions of the local Companies act and registered thereunder, as opposed to being an entity formed under the law of a foreign jurisdiction with a different legal system and tradition and possibly a different language and alphabet.

Neither the Companies Act nor the mining law of Sierra Leone requires the participation of local citizens as shareholders or directors of a company formed under the Companies act that is eligible to hold an exploration licence. Civil society in many African countries has advocated such measures, however; and enlightened mining companies often seek local partners. The issue merits consideration in connection with formulating eligibility requirements.

In addition, countries that are members of a regional customs union, economic and/or financial community, or uniform law organization may wish to consider whether companies formed under the similar laws of other member states should be deemed eligible to hold exploration rights.