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Part B: Mineral Rights - Part B-5: Development Minerals - 30. Development Minerals Exploration Licence | 30.10 Termination of Licence

A mining law should state clearly in one place the various ways in which an exploration licence can terminate, which would include expiration of the term, surrender by the holder, and cancellation or withdrawal by the issuing authority. The law should make clear what the status of the licenced area is upon termination in each manner and any remaining potential liabilities or incapacities that the licence holder may have upon termination.

Some mining laws also provide that an exploration licence is automatically extended during the application process for a mining title once a timely application by the holder has been filed.

The validity of a mining licence typically terminates in one of the following ways:

  • Upon its expiration date, unless and to the extent it is renewed or automatically extended by law; or
  • Upon nullification (e.g., if issued to an ineligible holder, or for mineral substances for which such licences are not authorized, or over an area that is not available for a licence under the law, or if obtained by fraud); or
  • Upon revocation due to abandonment or breach of conditions that constitute grounds for revocation of the licence; or
  • Upon relinquishment or surrender of the licence by the holder prior to its expiration date.

In the cases of small scale and artisanal scale licensing, the mining law may provide that a licence must be transformed into an industrial or large scale exploitation licence if the mining operations exceed the parameters of small scale or artisanal scale production as defined in the law; and the law may authorize the regulating authority to monitor the SSM activity and terminate non-performing licences in order to avoid excessive areas being tied up by non-productive SSM licence holders.

It is important for termination provisions to specify the obligations of the licence holder in connection with termination of the licence. In addition, many mining laws provide the Government with a right to either acquire equipment and installations at the mine site upon termination or require their removal by the licence holder. The holder’s environmental rehabilitation obligation should apply regardless of the type of termination. It is best practice to require, at the granting of the licence, the licence holder to provide a bank guarantee and/or environmental escrow account to which the Government has access in order to pay for necessary environmental restoration if the licence holder abandons the mine without performing the necessary clean-up in the case of termination by revocation.

30.10 Example 1:

Article [_] Termination of mineral rights

“termination” means the lapse of a mineral right by expiry of time, surrender or cancellation; and where the surrender or cancellation is in respect of part only of the area covered by the mineral right, then the mineral right shall be deemed to have been surrendered or cancelled in respect of that surrendered or cancelled area;

Article [_] Applicable to all mining rights licence holders

(1) Where the holder of a mineral right intends to cease operations either during the period of or on termination of his mineral right, he shall, not less than ninety calendar days or such other period as the [Regulating Authority]may allow before such cessation or termination, furnish to the [regulating authority], a full register of assets showing those assets which he intends to remove and those which he intends to leave in the area covered by the mineral right, and shall further notify the [Regulating Authority] of any potentially hazardous substances, erections or excavations in that area.

(2) On receipt of a notice in terms of subsection (1), the [Regulating Authority]may, if he deems it necessary-

(a) certify that specified items of fixed machinery are necessary for the care and maintenance of the area covered by the mineral right and such items and machinery shall not be removed;

(b) require that specified buildings and other items of fixed machinery shall be removed;

(c) require that potentially hazardous substances, erections and excavations be removed or made safe in such manner as he may direct.

(3) If removal of specified assets which the holder has indicated that he wishes to remove is prohibited under paragraph (a) of subsection (2), the [supervising authority] shall pay reasonable compensation to the holder for such assets and any person who acquires a mineral right over the area concerned shall reimburse the sum equal to the compensation so paid.

(4) Upon cessation of operations by the holder of a mineral right, the area covered by the mineral right shall revert to the owner thereof provided that if the [regulating authority] determines that the area should be retained, it shall be so retained by the [Regulating Authority]subject to payment of fair compensation to the owner for such retention.

(5) Any fresh water dam and the waters impounded thereby shall be left intact on cessation of operations or termination of a mineral right.

(6) Upon termination of any mineral right, the holder thereof shall deliver to the [Regulating Authority]-

(a) all records which the holder is obliged under this [Law][Act][Code] to maintain including full and detailed reports as prescribed containing all information, results, interpretation, data and other related information pertaining to the exploration and mining of minerals under the mineral right;

(b) all plans or maps of the area subject to the mineral right prepared by the holder or at his instructions; and

(c) except for the holder of an artisanal mining licence, a final report which shall be a summary of previous annual reports plus a detailed report on containing all information, results, interpretation and data relating to all activities carried out in the final period of the licence since the previous annual report.

(7) Where the former holder of a mineral right fails to deliver any document required to be delivered under subsection (6), the [Regulating Authority]shall call upon such former holder to comply with subsection (6).

Annotation

Drawn from Sierra Leone’s mining law (2009), these provisions include a definition of “termination” of a mineral right as including its expiration, cancelation or surrender, which may be total or partial.

There are two general provisions on termination. The first governs (a) the required reporting and disposition of assets at the mining site, the reporting of site conditions, and the regulating authority’s prerogatives in response to such reports; (b) the restoration of the rights of the property owner to the land, subject to the Government’s option to retain the land upon the payment of compensation to the landowner; and (c) the maintenance intact of any fresh water dam on the site.

The second general provision requires the submission to the regulating authority of all records, data, plans and maps required to be maintained under the mining law and a final report summarizing all findings and work carried out under the mineral licence.

The specific provisions require the licence holder to notify “the appropriate local government authority or local authority and an authorized officer” in advance of any planned cessation of exploration or mining operations under the licence. They also require the licence holder to carry out rehabilitation and reclamation of the mined out areas.

These provisions apply in the case of any type of termination, and for any size of activity in development minerals.

30.10 Example 2

Article [_]

(1) A mining right licence expires at the end of the period for which it was granted (including subsequent renewals thereof), by relinquishment or by revocation. At the end of the term of a mining right licence, the rights conferred on its holder revert to the State free of charge.

(2) Rights granted by the holder to third parties over substances and within the zone covered by the title, automatically lapse at the end of the term of such title.

(3) However, the holder of a mining right licence remains liable for the payment of outstanding duties and taxes and for the obligations incumbent upon it with respect to the environment and rehabilitation of the developed sites, as well as for all the other obligations contemplated under this Code, its implementing regulations and in the terms of reference or the Mining Agreement.

(4) Furthermore, the titleholder shall provide the [Regulating Authority] of a detailed report on the work carried out. All information provided shall become the property of the State.

Annotation

Drawn from the unofficial English translation of Guinea’s Amended Mining Code (2011), this provision:

  • States the three grounds on which mineral licences terminate: (i) at the end of their term, (ii) by relinquishment, or (iii) by revocation;
  • Establishes that the rights revert to the State upon termination and that all rights granted to third parties lapse upon expiration;
  • Preserves the obligations of the mineral licence or authorisation holder after expiration, particularly as to payments due and site rehabilitation; and
  • Requires the holder to submit a final report of work carried out to the Mining Administration.

Thus, these terms clarify the status of the mineral rights and related obligations at termination of the mineral licence or authorisation.

This provision applies to both exploration and exploitation licences.