Mining Law 2020

International Comparative Legal Guides

Mining Law 2020

A practical cross-border insight into mining law Seventh Edition

Featuring contributions from:

Al Busaidy Mansoor Jamal & Co. Georgi Dimitrov Attorneys Rebaza, Alcázar & De Las Casas ALRUD Law Firm Herbert Smith Freehills Reindorf Chambers Anderson, Môri & Tomotsune Holland & Hart LLP VdA Boden Law Jincheng Tongda & Neal Law Firm WILLIAM FREIRE Advogados Claro & Cia. Lawson Lundell LLP Wintertons Cruz Marcelo & Tenefrancia Marval O’Farrell & Mairal Wolf Theiss Dempsey Law Firm Project Lawyers Women in Mining UK Eric Silwamba, Jalasi and Linyama RBMexico-Law-Abogados World Association of Mining Lawyers Legal Practitioners (WAOML)

ICLG.com ISBN 978-1-83918-001-9 ISSN 2052-5427 Mining Law 2020

Published by Seventh Edition glg global legal group 59 Tanner Street London SE1 3PL United Kingdom +44 207 367 0720 Contributing Editor: www.iclg.com Andrew Emrich

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PEFC/16-33-254 www.pefc.org Disclaimer This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualiﬁed professional when dealing with speciﬁc situations. Table of Contents

Expert Chapters

1 New Trade Agreements & Changing Environmental Regulation: Impacts to the Mining Industry Andrew Emrich, Holland & Hart LLP

4 Current Global Trends and Developments in Mining Greg Mulley & Jay Leary, Herbert Smith Freehills

8 World Association of Mining Lawyers (WAOML): An Overview Poupak Bahamin, World Association of Mining Lawyers (WAOML)

10 Advocating for the Employment, Retention and Promotion of Women in the Mining Industry Alex Buck, Women in Mining UK

Country Q&A Chapters

13 Angola 120 Oman VdA: João Afonso Fialho & Ângela Viana Al Busaidy Mansoor Jamal & Co.: Mansoor Jamal Malik & Henry Mitchell 20 Argentina Marval O’Farrell & Mairal: Luis E. Lucero 127 Peru Rebaza, Alcázar & De Las Casas: Luis Miguel Elias 28 Australia Herbert Smith Freehills: Jay Leary & Geoff Kerrigan 134 Philippines Cruz Marcelo & Tenefrancia: Patricia A. O. Bunye Brazil 36 & Alpheus D. Macalalad WILLIAM FREIRE Advogados: William Freire Poland Canada 141 43 Wolf Theiss: Jacek Michalski & Izabela Podleśna Lawson Lundell LLP: Khaled Abdel-Barr & Karen MacMillan Portugal Chile 148 55 VdA: Manuel Protásio & Catarina Coimbra Claro & Cia.: Nicolás Eyzaguirre Russia China 155 62 ALRUD Law Firm: Andrey Zharskiy & Timur Akhundov Jincheng Tongda & Neal Law Firm: Guohua Wu & Yingnan Li 162 Senegal Dempsey Law Firm: Christopher Dempsey 68 Congo – D.R. VdA: Matthieu Le Roux & Olivier Bustin 169 South Africa Herbert Smith Freehills: Peter Leon, Patrick Leyden Ethiopia 74 & Matthew Burnell Dempsey Law Firm: Christopher Dempsey Turkey Gabon 177 80 Boden Law: Değer Boden & Ceren Akkur Project Lawyers: Jean-Pierre Bozec United Kingdom Ghana 183 86 Herbert Smith Freehills LLP: Greg Mulley, Julie Vaughan Reindorf Chambers: Fui S. Tsikata & Yulia Zaytseva & Dominic Dziewornu Quashigah USA Japan 193 92 Holland & Hart LLP: Karol L. Kahalley Anderson, Môri & Tomotsune: Hiroaki Takahashi Zambia Mauritania 201 99 Eric Silwamba, Jalasi and Linyama Legal Practitioners: Dempsey Law Firm: Christopher Dempsey Joseph Alexander Jalasi, Jr. & Eric Suwilanji Silwamba, S.C. Mexico 106 Zimbabwe RBMexico-Law-Abogados: Enrique Rodríguez del Bosque 208 Wintertons: Nikita Madya 114 North Macedonia Georgi Dimitrov Attorneys: Katarina Ginoska & Marija Jankuloska ChapterXX 1 1

New Trade Agreements & Changing Environmental Regulation: Impacts to the Mining Industry

Holland & Hart LLP Andrew Emrich

Introduction encourage increased production of rare earths from American mines, and to establish domestic processing facilities for these Among its other challenges, the mining industry continues to navi- strategic minerals. gate between the shifting winds of economic nationalism, on the one Finally, all eyes remain fixed on the United Kingdom’s impending hand, and new environmental regulation, on the other. Major exit (Brexit) from the European Union later this fall. It remains to mining jurisdictions, such as the United States, have seen the most be seen whether Brexit will be accompanied by a withdrawal agree- significant reconsideration of trade and economic policy in a gener- ment with the EU and what form any such agreement might take. ation, and these changes have had considerable impacts on global Among the key issues under review are the terms of trade between and national environmental policies including the mining sector. At Britain and the EU and the scope and substance of Britain’s resulting the same time, miners in many jurisdictions (including Latin environmental laws, many of which implement EU general standards. America) face renewed environmental scrutiny for large-scale projects. These trends seem poised to continue over the coming year Environmental Regulatory Changes as many countries seek incentives for their own mining industry, even as they face the perennial challenge of striking the appropriate Much publicity has occasioned the United States’ withdrawal from balance on environmental regulation at home and abroad. the Paris Agreement on greenhouse gas (GHG) emissions mitigation, adaption, and finance. This withdrawal marks a clear departure Revisions to Trade Agreements from the previous administration’s focus on multi-national agreements to reduce GHG emissions and represents a renewed focus on The last year has seen efforts to renegotiate several bi-lateral and encouraging the domestic production of energy from traditional multi-lateral trade agreements. The pillar of North American trade sources, including coal. While the details continue to be worked out policy – the 1993 North American Free Trade Agreement (NAFTA) regarding America’s withdrawal from this agreement, U.S. agencies – was renegotiated by the U.S., Canada, and Mexico. The resulting are moving full speed ahead to replace regulations developed in the agreement, the U.S.-Mexico-Canada Agreement (USMCA), has been last administration to achieve the emissions reduction targets set ratified by Mexico and awaits final approval from the U.S. and forth in the accord. These recent revisions to national environ- Canada. Among the changes likely to impact the mining industry is mental regulations represent a significant change for the American the elimination of the Investor-State Dispute Settlement Mechanism mining industry. (ISDS), which allowed mining companies to seek governmental Perhaps the most significant regulatory change is the U.S. remuneration when they believed they had received an unfair trade Environmental Protection Agency’s (EPA) decision to rescind the treatment from the United States. Although the final ratification of Clean Power Plan (CPP). The 2015 CPP represented an expansive the USMCA remains uncertain, the potential demise of NAFTA has effort to reduce GHG emissions from the electricity sector by mining companies and others focused on encouraging streamlined imposing stringent GHG emissions restrictions on states. One of regulation from their own countries to remain competitive with their the key targets of the CPP was the coal industry, as the regulation neighbours. would have required significant reductions in coal-fired electricity, Another area that has received considerable attention over the last thereby accelerating the constriction of a mining sector that was year is the ongoing trade dispute between China and the United already struggling in the face of increased competition from low-cost States. The United States increased to 25% tariffs on certain natural gas and government-supported renewable energy sources. imported Chinese (and other nations’) goods, including steel, and Immediately upon its promulgation, the CPP faced significant imposed a 10% tariff on imported aluminium. Proposed tariffs on legal challenges from half the state governments and a consortium steel and aluminum imported to the United States could increase the of electric utilities, individual mining companies and mining and costs for the American mining industry, which relies on heavy equip- corporate trade associations. In response to these challenges, the ment for its operations, while also encouraging the domestic U.S. Supreme Court took the unprecedented action of staying the production and manufacture of iron ore and aluminium. implementation of the CPP until the courts had an opportunity to China has retaliated by imposing its own tariffs on American undertake a full review of the petitioners’ legal claims. Those goods, including raw rare earth minerals which are shipped to China consolidated legal challenges were working their way through the for processing. China has also hinted that retaliation might more lower appellate court when a change in presidential administrations broadly include restricting the export of Chinese rare earth minerals in January of 2017 brought with it a sea-change in regulatory prior- to the United States. As China retains its global dominance in the ities. production (and processing) of rare earths, American technology, These shifting policy goals reached an apex in the summer of defence, and energy industries are concerned about any disruption 2019, when the EPA issued final regulations to rescind the CPP and in Chinese exports. The ongoing China-American trade dispute has replace it with an alternative regulation for reducing carbon emis- also renewed calls from senior American government officials to sions through technological restrictions at individual power plants.

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This new regulation – the American Clean Energy Rule (ACE) – This latter recommendation appears calculated to curb decisions establishes emissions guidelines for individual states to use when from several lower American courts that require mining projects regulating GHG emissions from coal-fired electricity generating (and other projects) to estimate the impacts of a project’s emissions units. The ACE Rule (and related CPP repeal) removes what many on the climate rather than simply estimating the aggregated GHG viewed as the most stringent governmental regulation on the emissions from a project. When implemented by federal permitting American coal industry in history and allows states to achieve Clean agencies, and if accepted by the federal courts, CEQ’s guidance will Air Act compliance by implementing heat-rate improvements at indi- help address one of the significant environmental permitting chal- vidual power stations rather than requiring a national transition from lenges facing any mining project located on federal lands or involved coal-fired electricity generation to renewable-based generation. The in the extraction of federal minerals. CEQ is expected to finalise ACE rule is expected to face widespread legal challenges of its own, this draft guidance later this year. this time from environmental organisations, and states that support Notwithstanding the removal of regulatory barriers on mining more aggressive reductions in carbon emissions from the electric activities in some countries, the last year has seen the implementation utility sector. of more stringent environmental restrictions in other jurisdictions. Other federal agencies have taken significant actions to streamline By way of example, Argentina’s Supreme Court recently issued a the permitting process for mining projects on federal lands. The significant ruling upholding a law that bans activity that adversely Department of the Interior (the U.S. agency that oversees most impacts glacial and peri-glacial environments. Many saw the law as mining projects on federal lands) issued an order directing that most an effort to curb mining activity near glaciers. The constitutional environmental impact statements (EIS) within its jurisdiction be challenge to the law was brought by a major gold producer and the completed within one year. This directive aims to shorten the time pro-mining San Juan province. After the constitutional challenge it takes mining companies and others to obtain environmental review was rejected by Argentina’s highest court, the focus now turns to and administrative approval to develop minerals on federal lands in Argentina’s individual provinces which are tasked with implementing the U.S. It can currently take project applicants three to five years the law’s restrictions. This law has the potential to limit the operation to complete the EIS process, thereby leaving the capital investment and development of mines in glacially sensitive areas. in these projects stranded as companies await final regulatory approval. The Year Ahead The Council on Environmental Quality (CEQ), the office in the Just as the past year has seen significant changes affecting the mining U.S. federal government that guides the implementation of the industry, geo-political and legal developments over the next 12 National Environmental Policy Act, has also taken steps to accelerate months are poised to have a long-term impact on the mining permitting approvals by circumscribing the scope of environmental industry. Whether the U.S. and China achieve any form of trade impacts that must be analysed before a federal agency may approve détente promises to have widespread impacts on the mining and mining and related projects. This summer, the CEQ issued a draft related interests within those countries, as well as each country’s guidance on how federal agencies should analyse GHG emissions trading partners in areas as widespread as Asia and Latin America. when preparing environmental analyses. This draft guidance was yet Similarly, the final implementation of the USMCA would recalibrate another federal action implementing the 2017 Executive Order the economic and trans-boundary regulatory environment on the 13783, “Promoting Energy Independence and Economic Growth”. North American continent. The final form of Brexit may well set Under CEQ’s draft guidance, agencies are not required to give the trajectory for economic relations between the UK and the EU greater consideration to the potential effects from GHG emissions for years to come. And elections in 2020 are likely to signal whether than to other potential effects on the human environment. So too, the U.S. continues on its current path of relaxing federal regulations agencies may use an estimate of a project’s reasonably foreseeable on mining and encouraging domestic production and processing of GHG emissions as a proxy for assessing potential climate impacts. strategic and other minerals.

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Andrew Emrich helps clients develop their energy and natural resources projects through a multi-faceted strategy involving litigation, permitting, and regulatory compliance. He has represented clients in signiﬁcant litigation in the areas of mining, oil and gas, and renewable energy projects. On the permitting side, Andrew advances his clients’ projects through focused strategies to obtain expeditious and defensible permitting and regulatory approvals. When necessary, he helps clients challenge and reverse agency regulations and permitting decisions that unduly burden mining projects and energy development.

Holland & Hart LLP Tel: +1 303 290 1621 555 17th Street, Suite 3200 Email: [email protected] Denver, CO 80202 URL: www.hollandhart.com USA

Founded in 1947, Holland & Hart is a full-service Am Law 200 ﬁrm with ofﬁces in eight states and in Washington, D.C. We deliver integrated legal solutions to regional, national, and international clients of all sizes in a diverse range of industries. For more information, visit www.hollandhart.com or on Twitter: @HollandHart. www.hollandhart.com

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Current Global Trends and Developments in Mining Greg Mulley

Herbert Smith Freehills Jay Leary

do provide good disclosure on ESG-related matters, it may still be Introduction difficult to assess it, particularly in the absence of comparable data The mining industry continues to face challenges from multiple from their peers. quarters, from more transparency as to the safety of operations and Within the EU in particular, there is an increasing trend for more the impact of those operations on various stakeholders, to the detailed disclosures on a variety of ESG issues. For example, the EU continuing pressures from governments to review the distribution Non-Financial Reporting Directive (EU/2014/95) (NFR Directive) of value generated by the mining sector. Understanding and requires EU-incorporated large “public interest entities”, to disclose engaging appropriately with the various stakeholders continues to be more detailed information in relation to ESG matters than was previ- a key factor in mining companies maintaining their licence to operate ously the case. The disclosures required include information about a and in navigating the various challenges. company’s policies, risks and outcomes as regards environmental, social and employee matters, respect for human rights and anti- ESG and Stakeholder Engagement corruption and anti-bribery matters. This is in addition to the There is continued focus on environmental, social and governance EU-wide payment to governments regime. The aim of that regime (ESG) issues together with the related concept of “licence to operate” was to create greater transparency about payments to governments (which refers to the increasing expectation of shared value outcomes by all companies which are active in the extractive industry. and collaboration between the mining industry and a variety of stake- Companies in extractive industries are required to disclose, on an holders, including governments and local communities). Mining annual basis, all material payments made to governments in all of the companies, along with others in the extractive industry, continue to be countries, worldwide, in which they operate. In relation to climate- expected to go significantly beyond simply providing market share- related disclosures, the Financial Stability Board’s Task Force on holder returns. They are under ever increasing pressure to redefine the Climate-related Financial Disclosures noted in its 2019 status report industry as sustainable and responsible and engage on these issues with that there has been progress in implementing the Task Force’s 2016 a broader group of stakeholders, including not simply shareholders but Recommendations. These recommendations were designed to help also employees and unions, governments and multinational organisa- companies understand what financial markets want from disclosure tions, local communities, NGOs and other representatives of broader in order to measure and respond to climate change risks, and to civil society to name just a few. Indeed, ESG and licence to operate are encourage firms to align their disclosures with investors’ needs. themes which run through a number of the key issues facing today’s There are other important developments with respect to the mining industry (including those relating to tailings dams, mass torts Equator Principles (EPs). These were first established in 2003 as a and resource nationalism, which are discussed below). risk management framework for financial institutions to determine, In fact, more than half (or to be precise, 54%) of global mining assess and manage environmental and social risks of the projects companies rank licence to operate as the biggest risk to their business, they finance. Since then, the EPs have been adopted by 96 financial according to the EY report Top 10 business risks facing mining and metals institutions (known as Equator Principles Financial Institutions, or in 2019–2020, six places up from the previous report. Notwithstanding EPFIs) in 37 countries. EP III which is currently in force covers this, there remains a perception that there is a gap between mining four financial products, including project finance advisory services, companies and their stakeholders on ESG matters, particularly project finance, project-related corporate loans and bridge loans, around sustainable long-term value creating strategies underpinned provided they meet the minimum criteria in terms of the total not just by the growth opportunities but also by the analysis of related project costs, the amount of loan (and EPFI’s individual commit- risks (e.g., regulatory risks, risks arising from the depletion of a ments if relevant) and the loan tenure depending on what is mineral base, water scarcity). Simply put, there appears to be a applicable. The EPs aim to ensure that the projects that EPFIs mismatch between the extent of ESG information expected by stake- finance are developed in a manner that is socially responsible and holders and the information that is actually being made available by reflect sound environmental management practices, in compliance most mining companies. This is perhaps best illustrated by the with all the applicable host country environmental laws. increasingly loud voices from the investor community (whose The EP Association is currently undertaking a targeted review of requests, when considered collectively, can sometimes be seen as the EPs, working towards their version four – “EP4”. The review inconsistent and even conflicting), demanding ESG information to was initially announced in late 2017, and it is anticipated that it will assess risk and strategy while the global miners, although keen to be completed by the end of 2019. The review proposes to broaden provide useful information to satisfy stakeholders, are cautious not the scope of financial products being subject to the EPs by including to disseminate excessive data which might be misunderstood or project-related refinancing and acquisition financing for the projects misapplied once in the public domain. As a result, even where miners that were financed in accordance with the EPs, and introduce additional requirements with respect to the assessment of climate change

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risk and reporting, as well as the social impact, human rights and subsidiaries’ acts or omissions in respect of the matters to which stakeholder consultation. those policies relate. Since all parent companies usually promulgate group-wide policies (in line with best practice), this suggestion by Tailings Dams the Supreme Court has been the subject of widespread commentary, and will no doubt be the subject of careful consideration by multi- The industry continues to scrutinise and respond to issues following national groups in reviewing their governance and policy-making the tragic events in Mariana in November 2015 and more recently in processes. Brumadinho in January 2019, both located in the Minas Gerais state, The Supreme Court also held that although Zambia was clearly Brazil, which involved catastrophic tailings dam failures. Mining the most appropriate forum for the claims to be heard, there was companies continue to consider carefully safety issues and governance nonetheless sufficient evidence before the Court to suggest that the around tailings dams, as do investors and other stakeholders. One claimants would not be able to obtain substantial justice in Zambia aspect of this has included a fresh look at how joint venture operations and that the English Court should therefore assume jurisdiction. are managed and governed, especially in cases where mining compa- Taken together, these findings have likely increased the risk of nies have significant non-operated joint venture interests. mass claims (particularly in respect of environmental and human On 5 April 2019 a group of investors led by the Church of rights matters, which are often the subject of corporate policies, and England Pensions Board and the Swedish Council of Ethics are specific risk factors in the extractive sector) being brought in launched a global request into tailings storage facilities (TSFs). The England against parent companies and their subsidiaries. This will initiative behind the request, which became known as the Investor be especially so where the relevant subsidiaries operate in less devel- Mining & Tailings Safety Initiative, brings together institutional oped jurisdictions – as is often the case in the extractive sector – investors with interests in the mining industry including major asset where access to justice could be an issue. owners and asset managers with over US$10 trillion assets.

Over 700 publicly listed extractive companies received the request to publicly disclose specific information relating to the management Technology-enabled Change of their TSFs, including the estimated consequences of potential Faced with depleting mineral resources and increased sustainability dam failure as well as the safety standards and other measures imple- pressures, the mining industry continues to look towards new tech- mented to prevent such failure, on their respective websites, to be nologies and processes to help improve productivity while also signed by the CEO or the Chairman of the Board. Importantly, the minimising the footprint of mining. request also extended to jointly owned facilities, including facilities New technology in hard rock crashing, sensor based sorting and where the recipient of the request was not the operating partner. coarse particle recovery is already transforming the processing cycle, According to the information available on the Church of England by managing the amount of waste material while also reducing the Pensions Board’s website, as at 21 August 2019, over 49% of the energy consumption and water intensity. mining industry by market capitalisation, including 33 of the top 50 Smart data, machine learning and AI are other tools which can mining companies, have responded. This has resulted in information dramatically decrease the cost and increase efficiency of mining oper- about thousands of individual TSFs being made public on company ations and make them safer. Digitally collected data can be used to websites, often for the first time. create simulation tools such as a “digital twin” or for precision plan- The request for public disclosure follows an earlier call by the ning and operations scheduling. Real-time data gathering enables Investor Mining & Tailings Safety Initiative for a new independent companies to manage operations remotely, including predictive main- and publicly accessible international standard for TSFs based on the tenance and automatic spare-parts replacement, thereby reducing consequences of failure. This intervention has resulted in a global equipment downtime. The long-predicted deployment of 3D and tailings review co-run by the International Council on Mining and 4D printing right at the plant is expected to streamline the procure- Metals (ICMM), the United Nations Environment Programme and ment of spare parts further, while advances in robotics make it possible the Principles for Responsible Investment, which is currently for new types of autonomous machinery, including autonomous vehi- underway. The purpose of the review is to independently assess a cles, to be deployed in a wider range of mining operations. variety of issues affecting the safety of dams and other TSFs, of Market intelligence obtained through digital channels is already which technical, management and communication are just a few. expanding mining companies’ marketing and trading capabilities, and Using a broad and inclusive consultation, the review is also looking algorithms are transforming distribution models, helping to capitalise into how such risks can be appropriately insured against, with the on arbitrage opportunities in the commodity markets. ambition of formulating a new standard for TSFs which will apply Another area of note is blockchain technology, which is being to all dams around the world and replace the multitude of current deployed in industry-backed platforms such as Tracr and Diamond practices and approaches. Time-Lapse which allow the tracking of individual diamonds from the mine to the retailor and verification of their provenance and authen- Mass Torts and Parent Company Liability ticity at each step of the diamond’s movement. One of the more complex challenges posed by the ongoing On 10 April 2019, the United Kingdom Supreme Court issued its automation of the various stages of a mining company’s operations judgment in Vedanta Resources PLC and another v Lungowe and others is its social dimension and, more specifically, the impact it will have [2019] UKSC 20, a case in which the Vedanta group parent company, on the workforce in general and the local communities which Vedanta Resources Limited (formerly, PLC; Vedanta), challenged the depend on mining companies for employment opportunities in jurisdiction of the English courts to hear claims brought against it particular. Traditional occupations are already being redesigned by and its Zambian subsidiary, Konkola Copper Mines (KCM), by the introduction of new technology at all stages of the value chain. Zambian villagers relating to alleged environmental pollution in the Amongst those that have been most affected to date are workers in country’s Copperbelt region said to have been caused by KCM. exploration, mining, and transportation and logistics, where a reduction In dismissing the appeal, the Supreme Court held that it was in the number of roles available can already be seen. While this arguable that Vedanta, as the group parent company, could owe a trend may in the long run be offset by a greater demand for new direct duty of care to the claimants in respect of the alleged damage. occupations created by the advancement of technology, in the short The Supreme Court suggested that the formulation and implementation to medium term, this puts real pressure on various stakeholders to of group-wide policies by a parent company could be capable of ensure that individual communities can adapt to changing industry giving rise to a direct duty of care to third parties affected by its demands.

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Mining companies in particular will need to rethink how they see Mining companies seeking to further mitigate the risks ensure that their employees in the long term. Along with the workers’ own they adhere to international standards of best practice, including the changing expectations of their employers, particularly around the 10 principles identified by the ICMM, maintain their social licence ethics of a company’s operations, there is a growing understanding to operate and ensure transparency in their interactions with stake- in the industry that any future workforce will not only require new holders at both a government and local level. skills (such as data and digital literacy for which there is already a Where the host country is different to a company’s country of growing demand), but will also need to be much more fluid, with an origin, companies may also be able to rely on international invest- increased likelihood of employees from across the organisation regu- ment treaties to protect their investment in the jurisdiction. larly moving between roles, projects and geographies. While the industry continues to monitor public sentiment towards Successful deployment of a new technology also often requires mining operations and the political situation more generally, the transformative changes in the management systems and even the Verisk Maplecroft’s 2019 report notes that over 30 countries around organisation of a company. the world have seen a significant increase in resource nationalism in 2018, including 21 major producers of oil, gas and minerals. As the Resource Nationalism underlying reasons which led to the rise of resource nationalism are complex and multi-faceted it is unlikely to be resolved soon. Resource nationalism, which is to be distinguished from outright Resource nationalism is both cyclical and contagious and it is there- nationalisation, has become a more prevalent development in various fore likely that the trend will continue. jurisdictions. During the last two years, various African and Latin

American countries have introduced a number of measures aimed at exerting greater control over the extractive sector. In its 2019 Report Globalisation and Interconnectedness on the Resource Nationalism Index, the global risk consultancy Verisk The trend towards the globalisation of the mining industry is contin- Maplecroft identified the Democratic Republic of Congo (DRC) and uing. This follows the transition of some of the largest national Tanzania (along with Venezuela in the LATAM region), in particular, mining industries, including that of South Africa, from an industry as the jurisdictions with the highest resource nationalism risk. made up of predominantly domestically based and owned firms to Measures which are typically associated with resource nationalism an industry dominated by international corporations operating out include changes to fiscal policies, such as the introduction of higher of headquarters located in the global financial centres. royalties and windfall profit taxes. The most recent example of this Another aspect of this trend is greater cross-investment between concerns the changes introduced by the Zambian Government in the mineral rich regions of the world, including, for example, South December 2018 in an attempt to maximise both revenues and American mining houses investing in Australia and Africa, and foreign investment. Resource nationalism policies are, however, not Australian companies investing in mining projects in South America, limited to fiscal measures and include various other steps such as as well as the recent examples of strategic investment transactions local content thresholds, free carried interest requirements and bene- involving industry majors acquiring significant minority stakes in ficiation obligations. junior exploration companies. The drivers behind resource nationalism are complex and country- In the gold sector, 2019 will be remembered as a year of rapid specific, however, there are often a number of common political and consolidation epitomised by the completion of two mega-mergers economic factors. One key underlying factor, particularly for countries between Barrick and Randgold on the one hand, and Newmont and with economies which are highly dependent on the export of raw Goldcorp on the other, amid a flurry of smaller deals across the minerals, is commodity price cycles. During periods of price depres- sector, spanning from Canada, Africa and Russia to Australia. While sion, the revenues received by the state from the mining industry will viewed by many industry analysts as a logical step in the current inevitably decrease. This may prompt governments to increase taxes commodity price cycle in what is a highly fragmented industry, the to ensure that the fiscal revenue does not suffer. At the same time, effect of these mergers on returns to shareholders will largely depend once the price recovers or increases, governments tend to increase on the ability of newly merged companies to realise projected syner- taxes in an attempt to derive a greater benefit from the commodities gies and will need to be assessed over the longer term. boom. The changes to the DRC’s mining code, by way of example, The other mineral that has remained in the spotlight is copper. followed a surge in the price of copper and cobalt, two of the While the demand for copper is expected to continue to increase in country’s biggest exports, after a significant price slump in 2016. the coming years, not least because of its use in electric vehicles and Resource nationalism may also be motivated by political factors, renewable energy technologies, declining ore grades and scarcity of often in response to populist demands or electoral cycles. Key high quality copper assets mean that there remains uncertainty as to examples include Tanzania and Zambia where policy changes were the ability of the industry to grow. This concern persists despite in response to specific events. favourable commodity prices. Where issues arise, the industry has generally sought to engage in a process of dialogue with the government to resolve these matters. Acknowledgments Some mining companies have also resorted to entering into a social The authors would like to thank associate Yulia Zaytseva, fellow compact with the government and mine affected communities to partners Neil Blake, Peter Leon and Sian Newnham, of counsel ensure mutual benefit to try to prevent these issues from occurring. Gareth Sykes and associates Alec Milne and Ernst Muller for their The model Private Sector Compact prepared alongside UNECA’s contributions to this chapter. Africa Mining Vision, adopted by the African Union’s Heads of State in 2009, is an example of such an agreement.

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Greg Mulley is a corporate partner and heads the firm’s mining practice in the UK and EMEA. He advises companies and investment banks on public and private mergers and acquisitions, corporate finance transactions, corporate governance issues, joint ventures, ECM transactions and other aspects of corporate law. He also advises boards on a range of critical issues, including shareholder activist matters, financial distress and crisis management. Greg has worked on mining transactions across the UK, Africa, Latin America, FSU, Australia, Asia, Europe and North America. He has recently served a term as an elected member of the firm’s global board and is currently a member of the firm’s Crisis Management steering group. Greg studied and worked in Australia prior to moving to London, where he has worked and been based for the last 22 years. He is admitted in England and Wales.

Herbert Smith Freehills Tel: +44 207 466 2771 Exchange House, Primrose Street Email: [email protected] London, EC2A 2EG URL: www.herbertsmithfreehills.com United Kingdom

Jay Leary is a partner and the global head of mining at Herbert Smith Freehills. Jay’s energy and resources experience includes acquisitions and sales (private M&A), joint ventures, project development (including EPC and EPCM agreements and procurement contracts), operation and maintenance (including O&M agreements, contract mining agreements and gas transportation agreements), commodity sales agreements and agency agreements. His port and rail experience includes acquisitions and sales (private M&A), access regimes, state agreements, rail and port agreements, infrastructure leases, rail and port development and expansion, rail connection agreements, rail user funding arrangements, rail haulage agreements, supply chain coordination arrangements, port authority rules and marine and channel arrangements. Jay is considered one of the leading resources and infrastructure lawyers. Several industry bodies have profiled him as a leading lawyer, including Chambers and Partners (Band 1 category), The Legal 500 (Leading individual), Doyle’s Guide (Pre-Eminent category) and Best Lawyers from 2009 to 2019.

Herbert Smith Freehills Tel: +61 8 9211 7877 Level 36, QV1 Building Email: [email protected] 250 St Georges Terrace URL: www.herbertsmithfreehills.com Perth, WA, 6000 Australia

Herbert Smith Freehills is one of the world’s leading professional services busi- to mine closure and throughout every stage of a project’s life-cycle, the firm nesses, bringing together the best people across our 27 offices, to meet provides an in-depth perspective on the complexities of deals and a strong clients’ global legal service needs. The firm offers a top-tier seamless service understanding of the global mining market overall. across a single global platform and an unparalleled depth of expertise. It It is a combination of civil and common law skills in these areas coupled with provides access to market-leading dispute resolution, mergers and acquisi- our understanding of culture, language and legal systems of major mining tions, projects and other transactional legal advice, combined with expertise countries that make our mining team unique. in a number of industry sectors, including mining, construction and infrastruc- www.herbertsmithfreehills.com ture, energy, technology and financial services. The firm’s international network of specialist mining lawyers is one of the largest in the world, offering the full spectrum of legal services, in both developed and emerging markets. We are the trusted adviser to leading mining majors through to juniors, and cover all aspects of listed company, corporate governance and regulatory compliance advice. In addition, having acted for parties from exploration

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World Association of Mining Lawyers (WAOML): An Overview

World Association of Mining Lawyers (WAOML) Poupak Bahamin

In 2014, leading lawyers in the natural resources sector from Europe conference programme was dedicated to the topic of artisanal and and the Americas came together to found the World Association of small-scale mining (ASM). It is estimated that more than 40 million Mining Lawyers (WAOML). Established as a membership organi- people worldwide are engaged in artisanal and small-scale mining sation, WAOML aims to advance its members’ knowledge of activities, with numbers increasing rapidly year on year. This growth, mineral regulation worldwide by providing a global forum for the attributed in part to rising poverty levels and declining opportunities discussion and debate of legal issues faced by today’s mining to gain sufficient income from agricultural activities, has resulted in industry. WAOML is currently managed by an Advisory Council, a increased efforts to formalise the ASM sector, attempts to address 17-member body with diverse geographic distribution, which the array of social, environmental and economic questions raised in includes in-house counsel from international mining companies such connection with ASM activities, and to find workable solutions for as AngloAmerican, AngloGold Ashanti, Eurasian Resources Group, large scale mines (LSM) and ASM to co-exist. Delegates at the Endeavour Mining, Glencore, IAMGOLD, Navoi Mining, conference were able to hear, on the one hand, from leading subject Newmont and Nordgold, as well as partners from well-known law matter experts from the OECD, Alliance for Responsible Mining firms such as Carey, Chammas & Marcheteau, Fasken, Kimathi & and Solidaridad and, on the other hand, from in-house counsel with Partners, Lawson Lundell, Norton Rose Fulbright, Simmons & LSM companies, whose operations coexist with artisanal miners. Simmons and Vieira de Almeida. Together, they provided insight on the ASM sector, the daily chal- In pursuit of its aim to stimulate discussion and debate around lenges posed by the interaction between ASM and LSM, and the role the increasing regulatory and policy challenges that are faced in the that companies involved in LSM can play in this complex area. The global natural resources sector, WAOML hosts a two-day conference President of CONAPEM, Burkina Faso’s corporation of artisanal each year. The Annual WAOML Conference brings together leading and small-scale miners, also addressed the conference audience, professionals, academics and policy makers, allowing delegates to making an invaluable contribution to the discussion from the exchange ideas and discuss the range of legal matters relevant to perspective of those engaged in ASM. mineral exploration and mining, whilst forming and strengthening As part of this discussion on ASM, WAOML also took the oppor- professional relationships across a global network. To date, the event tunity to release for consultation the WAOML Draft Small-Scale has taken place in various cities throughout Europe and North Mining Regulations (SSM Regulations) – contributing to the work Africa including London (UK), Chantilly (France), Toledo (Spain), around the formalisation and regulation of ASM. The main princi- Sintra (Portugal) and, most recently, Marrakech (Morocco) where ples and objectives of the SSM Regulations include: the provision 117 delegates from more than 35 different countries participated in of incentives for ASM participants to formalise; the creation of the event. effective systems for reporting and discouraging the harmful effects As part of WAOML’s mission to enhance the understanding of of ASM activities; and methods for the upstream and downstream legal matters in the global natural resources space, the Association tracing of minerals. The draft SSM Regulations will remain open for aims to engage young professionals in the early stages of their public comment for a 12-month period, with WAOML working careers, allowing them to gain insight from senior industry experts. towards producing a final form of Model SSM Regulations by June This is primarily achieved via the provision of financial support for 2020. Those interested in providing input on this topic are invited students from mineral law and policy programmes to attend the to contact the Association directly. Association’s conference. Since WAOML’s inaugural conference in The SSM Regulations are actually the latest in a series of model 2015, students from the University of Dundee’s Mineral Law and mineral regulations prepared and presented by WAOML. This is Policy LL.M. have attended the two-day event and in 2019 WAOML part of a concerted effort by the Association to stimulate debate and expanded its student programme further, providing support for indi- discussion with policy makers and industry stakeholders, in order to viduals studying at Queen Mary, University of London, who joined structure a healthy mining industry, where communities, the envi- their peers from Dundee at the conference in Marrakech. In the ronment, government and mining companies are treated fairly and future, WAOML’s Student Committee, with the generous support the appropriate regulatory tools are used to secure investor, govern- of conference sponsors, is committed to expanding student engagement and community interests. In 2015, at WAOML’s inaugural ment still further by collaborating with other universities and conference, delegates engaged with the Association’s Advisory institutions in Canada, US, South America, Australia and South Council to discuss the potential for a model piece of legislation and Africa. in 2016 WAOML released the first draft of what would later become As noted, the 2019 Annual WAOML Conference took place in the WAOML Miners’ and Investors’ Modern Model Mining Code Marrakech, Morocco, where subjects such as modern slavery, mining (MMC). The law was structured around 12 key principles, including: deal trends, occupational health and safety, streaming finance, exec- appropriate licence allocation; the right to mine after exploration; a utive reflections, transfer restrictions and mine closure and social licence to operate; balanced environmental approvals; state reclamation featured on the agenda. The opening morning of the encouragement of mine development; unfettered priority to land

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and surface rights; and fiscal stability. In 2017, at the third Annual natural resources sector, both in terms of mineral demand and in WAOML Conference, additional draft provisions for the MMC were terms of increased scrutiny on sustainability and environmentally proposed which focused specifically on anti-corruption and trans- responsible practices. International organisations have already begun parency measures. Following extensive engagement over a two-year to focus on addressing sustainability and climate change in relation period with a wide range of industry participants, who intelligently to the mining industry, with the World Bank recently launching its critiqued and commented on the MMC, the model law has devel- ‘Climate-Smart Mining’ Initiative, with a facility established to help oped into a workable piece of legislation which limits the role of resource-rich developing countries gain the benefits from increasing discretion and provides a strong template for governments to use to demand for key minerals, whilst minimising the environmental foot- inform their own mining laws and regulations. To date, it has been print of mining. It is inevitable that over the course of the next few used by stakeholders in countries such as Malawi, Papua New years, laws and regulations will start to emerge to provide regulatory Guinea, Australia and Brazil in order to engage with authorities on frameworks in this field. As a result, WAOML will look to discuss the drafting of new laws and regulations for their mineral resource climate change and sustainability and its impact on our industry at industries. It is hoped that the SSM Regulations will prove to be a the 2020 Conference and provide attendees with leading insight on similarly useful tool and a strong starting point from which to initiate this critical, fast-developing area. Other subjects of focus for the conversations around the regulation of ASM activities. organisation over the course of 2020 and beyond are likely to include Looking to the future, 2020 will see the hosting of the sixth mining in space, deep sea mining, government relations, tax struc- Annual WAOML Conference, which is due to take place in Croatia turing and emerging mining jurisdictions. A newly formed in early June. WAOML prides itself on its rich programme content Publications Committee will also work to provide relevant content and the Association’s Programme Committee strives to address those on legal issues in the mining sector throughout the year. topics which are of greatest relevance to the modern mining WAOML is a not-for-profit organisation, the work of which industry. There is perhaps no subject more topical, both at the would not be possible without the generous, ongoing support of its industry level and generally speaking, than that of climate change sponsors, the continued efforts of the Association’s Advisory and sustainability. With the world facing a climate crisis, there is Council, the commitment of its members and the contributions of growing pressure on governments and industries to take action to those who share their expertise each year as speakers at the WAOML reduce the negative impact of human activity on our planet and to Conference. WAOML membership is open to all those in the legal implement sustainable policies and practices which mitigate emis- profession, whether working in private practice or in-house with a sions, drive the transition to a lower carbon economy and focus on mining or service company, as well as those involved in policy, cleaner energy. Such measures will have a significant impact on the consultancy and civil society with a focus on the mining sector.

Poupak Bahamin is a partner and Co-Head of Mining US at Norton Rose Fulbright and the current Chair of the World Association of Mining Lawyers. She is a corporate lawyer with an international background, currently based in Washington, D.C., having previously practised in Canada and France. She regularly advises companies involved in mining and on corporate and regulatory matters, the establishment of joint ventures, partnerships, mining conventions, PSAs, and the sale and ﬁnancing of assets. She has been recognised by Chambers Global as a DRC Foreign Expert for general business law and corporate and M&A work. Poupak regularly contributes to mining journals, publications and conferences. She is fluent in English and French and speaks Farsi.

World Association of Mining Lawyers (WAOML) Tel: +44 20 7947 4416 125 Old Broad Street Email: [email protected] London, EC2N 1AR URL: www.waoml.com United Kingdom

The World Association of Mining Lawyers (WAOML) was established in 2014 in order to provide a forum for the exchange of ideas, discussion and debate of mineral law and policy so as to develop and form sensible regulatory guidance for the natural resources sector. Through the global participation of leading law professionals, policy makers, governments, civil society organisations and researchers, WAOML provides a platform for informed discussions and debates aimed at addressing the increasing regulatory challenges faced in the global raw materials industry. The Association is a membership organisation, open to all in the legal profession, whether in private practice or in-house with a mining or service company. www.waoml.com

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Advocating for the Employment, Retention and Promotion of Women in the Mining Industry

Women in Mining UK Alex Buck

This year, the Geological Society of London celebrates its 100th mining courses and mining organisations are stating that HR issues anniversary of female Fellowship, since the first eight women were will be the single biggest obstacle to mining companies’ competi- admitted in 1919, while the London Metal Exchange has just tiveness.3 The dwindling talent pool is not helped by the current appointed its first female chair. Such milestones are clearly a cause negative public perceptions of the mining industry, concerns for celebration, as well as offering “can do” inspiration to future around safety, environmental impact and responding effectively to generations of women. climate change. Whilst the industry rarely gets accolades for its The global mining industry has come a long way (since 1919). efforts to earn social licence, adopt new mining technologies Women are contributing across the full spectrum of mining roles, and/or align itself with the new reality of ESG investment, we do be they operational, commercial, social, financial, technical or not make life any easier for ourselves when we fail at something as other. Women can now work legally underground in most coun- simple as having a more diverse workforce. tries around the world (although still not all), participate in Founded in 2006, Women in Mining UK (WIM) is a non-profit fly-in-fly-out shift work and are offered roles that were traditionally volunteer organisation dedicated to promoting the employment, taken by men (such as driving trucks, running rigs and fixing the retention and progression of women in the global mining industry, electrics). There are also growing numbers of female General as well as raising awareness of the sector as a great career choice Managers, CEOs and Board Directors across the mining world, for women. indeed the chair of one of the world’s largest gold companies, Over the past decade, the WIM has grown substantially and now Newmont Goldcorp, is a woman. has over 2,000 members across the globe, is operated by a 40- How did we get here? It comes down to hard work, a refusal to strong volunteer base, and has a wide network of affiliations with accept the status quo and a desire to change the industry, from the other international women-in-mining organisations. Membership inside-out, by both men and women for the benefit of all. is free thanks to the generous support of our Foundation and Pro- The conversation about female contributions at all levels of Bono Partners and, most importantly, membership is open to both business is far from new. In the past decade alone, we have seen a men and women, in line with our commitment to diversity. number of initiatives aimed at improving gender diversity and To support our mission, we undertake a range of initiatives, inclusion in the workplace, including the launch of the UN activities and events: Sustainable Development Goals; Gender Pay Gap reporting ■ Through partnerships with leading mining companies and requirements; the UK Hampton Alexander Report championing consultancy groups, WIM provides thought leadership, anal- female leadership and most recently, the #metoo movement, to ysis and research on the business case for diversity, inclusion mention but a few significant calls to action to redress the historical and the economic advancement of women in the sector, as imbalance. well as the opportunities and challenges women face. The business case for gender diversity and inclusion is undeni- ■ WIM celebrates and shares female success stories with its able. The Conference Board of Canada found that boards with much-admired 100 Global Inspirational Women in Mining three or more women displayed different governance behaviours publications. Published every two years, these editions show- to those with all male boards. The more gender-balanced boards case and celebrate the important contributions women are were more likely to ensure better communication, adhere to a code making and their activities to empower others, including being of conduct, identify criteria for measuring strategy and monitoring a voice and role model for diversity and inclusion, across all its implementation. They were also more likely to focus on diver- roles and levels of seniority to the industry. Many of the sity, employee satisfaction and corporate social responsibility.1 women featured in the publications have also been publicly As Blackrock CEO Larry Fink wrote in his seminal letter to celebrated by their employers, appearing in annual reports and shareholders in 2018, a diverse Board is “less likely to succumb to social media campaigns, so this has been a tremendous way to groupthink or miss new threats to a company’s business model”.2 promote women. Yet progress remains too slow in the mining sector compared to ■ WIM maintains a strong international network which other industries. enables our membership to exchange ideas and information, Worryingly, only three out of the world’s top 10 mining compa- create connections and raise the profile of women in the nies (by market capitalisation) even mention the sourcing of talent mining sector, both locally and globally through our affiliations as a current and future business risk even though universities are with other WIM groups worldwide. crying out about the difficulties in attracting more students into

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■ WIM hosts regular networking events for our members to To support the development of female talent, we are planning meet other women and men in the mining community and to launch a Global Diversity Index with EY in 2020 to provide build their horizontal and vertical networks. much needed insight into the progression of women beyond the ■ WIM promotes greater visibility for women in mining by Boardroom and senior management and across all levels within the working closely with leading global conference and event mining industry. We feel this will be a great resource, providing organisers to encourage more female speaker representations some concrete measurement on progress within the industry over through our initiative #WIMvoice, which aims to showcase the coming years. the breadth and depth of female professional talent and Appointing senior women to leadership positions will not have experts. the required effect if there are no women to succeed them. ■ WIM offers a range of opportunities to progress profes- Nurturing a strong pipeline of female talent is essential, from grad- sional goals and career aspirations. Initiatives include a uates all the way through to the organisation’s top leadership partnership with Women on Boards UK for non-executive structures, and vital for a sustainable future for the industry. This director aspirants and speed mentoring evenings for women to requires comprehensive career development paths for women, as meet multiple mentors in an informal setting for advice and well as female-friendly policies to support working women, guidance on how to progress their careers and extend their including flexible working, parental leave and full support for a network. work-life balance culture. ■ WIM holds monthly educational events on issues and topics If the industry does not change its ways, then not only will its our members want to know more about; these usually take the talent be impacted, but also its access to capital markets. form of panel sessions with an interactive Q&A and are live Increasingly, investors are looking for a “total package” of elite streamed via Facebook in order to reach our regional and inter- performance metrics: beyond just solid financial performance, but national members and affiliates. also strongly embedded cultural values, good corporate gover- ■ WIM also works with universities and other organisations to nance, innovative thinking and sustained community trust. raise awareness of mining as a career choice for women. WIM Encouraging more women into the industry is low-hanging fruit proudly sponsors a scholarship for female students pursuing a that would benefit the industry’s optics but, more importantly, as Master’s degree in Mining Engineering at the world-renowned Mr. Fink wrote, gender diversity helps companies “identify oppor- Cambourne School of Mines and most recently organised a tunities that promote long-term growth” – and this is exactly what successful six-week paid summer internship for two female grad- the mining industry needs in these challenging times. uates at Anglo American. The goal for 2020 is to roll out this internship programme across a number of other companies. Endnotes We fear the mining industry will be left behind unless the 1. Mining for Talent – A study of boards in the mining industry industry’s board and executive management teams continue to take by Women in Mining (UK) and PwC, January 2013 https:// deliberate action to attract a diverse future talent pool. In our view, www.pwc.com/gr/en/publications/assets/mining-for- for diversity and inclusion to be successful, it has to be embedded talent.pdf. into the culture of the organisation and fully supported from the 2. https://www.blackrock.com/corporate/investor- top down. Women must feel welcomed into the industry, from the relations/larry-fink-ceo-letter. most basic starting points, including female-friendly personal 3. https://www.relocatemagazine.com/articles/enterprise-hr- protective equipment and operating environments, separate and au18-mining-for-talent. safe ablution facilities, especially underground, as well as feeling safe and appreciated for their contributions in the workplace.

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Alex Buck, Managing Director, Women in Mining UK Alex Buck is a communications specialist with over 15 years of investor relations, corporate communications and crisis management experience in the global mining industry. During her career, Alex has worked at Brunswick Group, the well-known global ﬁnancial communications agency, AngloGold Ashanti and co-founded BuckBias, specialist mining communications consultancy, advising a number of AIM, TSX and ASX-listed clients, including LionOre Mining, Aquarius Platinum and Mantra Resources. More recently, she was Head of Communications at Asanko Gold before joining Endeavour Mining to focus on ESG communications. Alex is also a Trustee of the award-winning orchestra, Arcangelo.

Women in Mining UK Tel: +44 7932 740 452 55 Baker Street Email: [email protected] London W1U 7EU URL: www.womeninmining.org.uk United Kingdom

Women in Mining UK (WIM) is a non-proﬁt volunteer organisation dedicated to promoting the employment, retention and advancement of women in the mining industry. Alongside promoting the business case for gender diversity, WIM holds regular networking and education events, has a strong international network and provides professional development opportunities, such as mentoring, internships and scholarships. Membership is free and open to both women and men. To join, please visit our website. #WIMadvocate #WIMinspire #WIMvoice #WIM100 www.womeninmining.org.uk.

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Angola Angola

João Afonso Fialho

VdA Ângela Viana

1 Relevant Authorities and Legislation ferrous and non-ferrous metals); and (c) SODIAM – Sociedade de Comercialização de Diamantes de Angola, E.P. (“SODIAM” – single channel for marketing of all diamond productions extracted from 1.1 What regulates mining law? Angola). The Market Regulatory Agency for Gold (Agência Reguladora do Mercado do Ouro), established in 2014 as the State entity entrusted The Mining Code, approved by Law 31/11, of 23 September 2011 with the organisation, regulation and supervision of the gold Mining Code (“ ”), is the cornerstone of the Angolan legal frame- market was recently extinguished, with all its powers and authority work for the mining industry. This statute regulates the activities now vested in the MMRP. This amendment falls within the of exploration, evaluation, reconnaissance, mining and the ongoing reform of Angola’s mining sector launched by the marketing of mineral resources in general. Government in 2018, which includes, among others, the setting- In addition to the Mining Code, other statutory and regulatory up of the National Agency of Mineral Resources, a new body of acts must be considered, including, inter alia: the MMRP expected to take up certain roles of the national ■ Presidential Decree 85/19, of 21 March 2019, which approves concessionaires for the mining industry (the former Market the regulations for semi-industrial mining of diamonds. Regulation Agency for Gold, Endiama and Ferrangol). The ■ Presidential Decree 35/19, of 31 January 2019, which National Agency of Mineral Resources is yet to be incorporated. approves the technical regulations for marketing of rough diamonds. ■ Presidential Decree 175/18, of 27 July 2018, which approves 1.3 Describe any other sources of law affecting the mining the new rough diamonds marketing policy. industry. ■ Executive Decree 346/17, of 14 July 2017, which sets forth the criteria for delimitation of concession areas for exploita- There are many other miscellaneous statutes applicable to the tion of construction materials. mining industry, notably the Private Investment Law (Law 10/18, ■ Joint Executive Decree 316/17, of 27 June 2017, which of 26 June 2018) and the regulations thereof (Presidential Decree approves the list of equipment for use in exploration and 250/18, of 30 October 2018), the General Labour Law (Law 7/15, mining activities exempted from customs duties and fees. of 15 June 2015), the Foreign Exchange Law (Law 5/97, of 27 ■ Presidential Decree 231/16, of 8 December 2016, which clas- June 1997) and the Environmental Law (Law 5/98, of 19 June sifies rare metals and rare earth elements as strategic minerals. 1998), among others. ■ Presidential Decree 158/16, of 10 August 2016, which approves the mineral administrative offences and relevant 2 Recent Political Developments penalties regime. ■ Order 255/14, of 28 January 2014, of the Ministry of Geology and Mines, on monitoring of posting of bonds and payments 2.1 Are there any recent political developments affecting of surface fee and royalties under the Mining Code. the mining industry? ■ Order 2/03, of 28 February 2003 of the National Bank of Angola, which establishes the foreign exchange regime for diamond and other minerals producers. Aside from the ongoing reform in the petroleum sector which caught much of the public’s attention in 2018, the Angolan mining sector has also been subject to significant changes, most of them 1.2 Which Government body/ies administer the mining aimed at enhancing the performance, transparency and potential industry? for growth within the mining sector. Despite the Government’s efforts in diversifying and promoting The main regulatory bodies within the mining industry are the investment within the mining sector, the focus still lies in the Head of the Government (“HOG”), the Ministry of Mineral diamond subsector, as evidenced by the approval of a new Resources and Petroleum (“MMRP”), the Ministry of Finance and diamond marketing policy, technical regulations for the marketing the Angolan Central Bank (“BNA”). of diamonds, and the new semi-industrial mining of diamonds Brief reference should also be made to: (a) Empresa Nacional de regulations. This focus has clearly resulted from the recently Diamantes de Angola – Endiama E.P. (“Endiama” – the national enacted 2018–2022 National Development Plan that forecasts a concessionaire for diamonds, rare metals and rare earth elements); substantial increase in diamond production. The Government is (b) Empresa Nacional de Ferro de Angola – Ferrangol E.P. also keen to promote and attract more investments in local cutting (“Ferrangol” – the national concessionaire for noble materials, and polishing facilities.

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From an institutional standpoint, the National Agency of strategic minerals in the Mining Code. Presidential Decree 231/16, Mineral Resources is expected to be set up and become fully oper- of 8 December 2016 classified rare metals and rare earth elements ational in 2019 and we look forward to seeing what changes the as strategic minerals. National Agency of Mineral Resources will effectively cause to the In the absence of a mandatory public tender procedure, mineral existing supervision and governance over mineral resources. rights may be granted on a “first-come first-served” basis to the applicant who evidences the technical and financial capability 2.2 Are there any specific steps the mining industry is required to carry out the relevant mineral activities. Although all mineral rights (from exploration to marketing) are taking in light of these developments? formally granted from the outset by means of a MIC, the holder of the mineral rights must obtain an exploration title – to be issued The Angolan mining sector has been benefiting from a significant upon the approval of the MIC – and, subsequently, a mining title, re-boot under the current political environment, which has been in order to commence the relevant mineral activities. marked by a more “investor friendly” approach from the govern- The transition from the exploration phase to the mining phase ment and the national concessionaires. As a result, leading mining depends on the submission and approval of a technical, economic companies have started increasing their activities in the country. and financial feasibility study (which must include an environ- The recently enacted rough diamond marketing policy is mental impact study). Upon approval of this study by the MMRP, expected to cause a huge impact on the sale of rough diamonds a mining title should be issued. extracted from the country, and on the establishment of local diamond cutting and jewellery industries. 3.3 What rights are required to conduct mining?

3 Mechanics of Acquisition of Rights Please see question 3.2 above.

3.1 What rights are required to conduct reconnaissance? 3.4 Are different procedures applicable to different minerals and on different types of land? There is no specific title to carry out isolated reconnaissance activities (please see our comments in question 3.2 below). Depending on the geological potential of the relevant area and/or However, under the Mining Code, private entities may carry out the qualification of the mineral to be exploited, the mineral rights geological mineral investigations and produce geological informa- may be granted further to either (i) spontaneous applications, or tion under a public-private partnership structure and under the (ii) public tenders. The type of land is not a criterion to take into methodological supervision of the Public Geological-Mineral consideration for this purpose. Services, provided that: (i) such public-private partnership is duly justified (since, as a rule, the Government is the entity responsible for this activity); and (ii) a proper authorisation is obtained from 3.5 Are different procedures applicable to natural oil and the MMRP. gas?

3.2 What rights are required to conduct exploration? Yes. The award of mineral rights for oil and gas exploitation is subject to a specific and comprehensive statutory framework. The most relevant legal statute in this respect is the Petroleum Activities As a rule, to carry out exploration activities, the investor is required Law approved by Law 10/04, of 12 November 2004 and amended to negotiate and enter into a mineral investment contract (“MIC”) by Law 5/19, of 18 April 2019. with the MMRP and/or a national concessionaire. However, with

regard to the exploration of mineral resources used in civil construction and public works, a mineral permit suffices. In 4 Foreign Ownership and Indigenous Ownership respect of artisanal activities, only a mineral ticket is required. Requirements and Restrictions Focusing now on industrial mining, the Mining Code adopted a single-contract model (the MIC) under which mineral rights are granted, from the outset, for the whole mineral process (explo- 4.1 What types of entity can own reconnaissance, ration, evaluation, reconnaissance, mining and marketing). The exploration and mining rights? Mining Code divides the mineral activities into three phases (reconnaissance and exploration stage, appraisal stage and mining stage), Mineral rights may be granted to any form of association permitted although explicitly stating that the rules, rights and obligations by law (i.e. incorporated or unincorporated JVs), provided that the covering the three phases are to be set forth in the relevant MIC. following requirements are met: (a) the associates satisfy the condi- MICs may be entered into further to either (i) a spontaneous tions established in the Mining Code to access mineral rights; and application, or (ii) a public tender. Public tenders may be optional (b) the associates are jointly and severally liable for compliance with or compulsory, depending on the geological potential of the rele- the mineral obligations. vant area and/or the qualification of the mineral to be exploited as strategic or non-strategic. Minerals may be classified as strategic 4.2 Can the entity owning the rights be a foreign entity or by the Government depending on their economic relevance, use for strategic purposes or other specific technical mining aspects. owned (directly or indirectly) by a foreign entity and are Other relevant criteria to qualify a mineral as strategic are its rarity, there special rules for foreign applicants? its impact on economic development, the demand on the international market, the impact on its exploitation on job creation, its As a rule, mineral rights may be owned directly or indirectly by a technological relevance, the impact of its exploitation on the foreign entity. However, the latter are required to either register a balance of payments and/or its relevance for the military industry. branch or incorporate a company in the country to carry out their Diamonds, gold and radioactive minerals are expressly qualified as business activities.

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There are no special rules for foreign applicants. All the above 5.2 Are there restrictions on the export of minerals and apply to both national and foreign applicants. However, there are levies payable in respect thereof? certain rights that may only be granted to Angolan citizens/entities (please see our comments in question 4.4 below) and foreign applicants may be required to engage national entities in their activities. The exportation of minerals is subject to licensing/clearance by Preference shall, nevertheless, be given to national partners or the relevant body of the Ministry of Commerce and the Customs companies when setting up a business partnership. National Service, as well as notification to the MMRP. Prior to their export, strategic minerals must be valued and sorted using, whenever the circumstances or the nature of the 4.3 Are there any change of control restrictions applicable? minerals so require, an internationally renowned evaluation entity retained for such purpose. The producer has the right to use its No express change of control restrictions are provided for in the own evaluator in all stages of the valuation process. law. However, the assignment, transfer, or more broadly, the All minerals extracted in and exported from Angola must have disposal of mineral rights, is subject to a number of restrictions a certificate of origin issued by the relevant authorities. (please see our comments in question 6.1 below). The exportation of minerals legally extracted and processed is not, in principle, subject to payment of duties or other customs 4.4 Are there requirements for ownership by indigenous charges, except for stamp duty and the customs officers’ personal persons or entities? fees. However, mineral resources that are exported without being processed are subject to a 5% custom duty of their market value.

As a rule, no local content requirements apply to the mining industry. However, semi-industrial and artisanal mining of 6 Transfer and Encumbrance diamonds and construction minerals are exceptions to such rule: only Angolan citizens are allowed to carry out diamond artisanal 6.1 Are there restrictions on the transfer of rights to mining operations and only Angolan citizens or legal persons conduct reconnaissance, exploration and mining? whose share capital is majority-held (two-thirds, to be exact) by Angolan citizens may be awarded minerals rights for semi-industrial mining of diamonds, exploration and mining of construction Mineral rights may be transferred to third parties, provided such minerals and mining rights of mineral-medicinal waters. transfer is previously authorised by the MMRP or the HOG, as the In respect of diamonds, Endiama has been acting as the national case may be. Transfer of mineral rights may only be authorised if concessionaire and is consistently engaged in projects as both a the prospective assignee meets the same technical and financial member of unincorporated joint ventures for the exploration stage requirements of the assignor, and is subject to the payment of fees and shareholder of the companies incorporated for the mining and charges. stage, either directly (prior to the enactment of the Mining Code) The transfer of mineral titles (i) must be recorded in the relevant or through an Angolan subsidiary company wholly owned by exploration and/or mining title, with an express reference to the Endiama. new holder and the transfer authorisation, and (ii) is subject to the Ferrangol is a State-owned company and the national concession- same publication requirements as the original rights award. aire for noble materials, ferrous and non-ferrous metals. Ferrangol usually associates itself with both national and foreign partners, 6.2 Are the rights to conduct reconnaissance, exploration through either unincorporated or incorporated joint ventures. and mining capable of being mortgaged or otherwise

secured to raise finance? 4.5 Does the State have free carry rights or options to acquire shareholdings? Mining rights may only be pledged to secure loans taken by the concessionaire to fund geological mineral activities covered by the As a consideration for the granting of mineral rights for mining concession title. and marketing, the State is entitled to: (i) participate in mineral production through a State-owned company holding an equity of 7 Dealing in Rights by Means of Transferring at least 10% in the company to be set up for the mining phase; Subdivisions, Ceding Undivided Shares and and/or (ii) receiving a share of the production in kind, in terms to be negotiated and defined, taking into consideration the produc- Mining of Mixed Minerals tion cycles (as a rule, the State’s share should increase along with the increase of the internal rate of return of the project). 7.1 Are rights to conduct reconnaissance, exploration and

5 Processing, Refining, Beneficiation and mining capable of being subdivided? Export No, they are not.

5.1 Are there special regulatory provisions relating to 7.2 Are rights to conduct reconnaissance, exploration and processing, refining and further beneficiation of mined mining capable of being held in undivided shares? minerals? No, they are not. The Mining Code adopts a specific regime to diamond cutting and beneficiation (e.g. rules for acquisition and importation of rough 7.3 Is the holder of rights to explore for or mine a primary diamonds, restrictions to access for cutting and beneficiation mineral entitled to explore or mine for secondary minerals? activity, etc.).

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Rights over accessory minerals must be expressly included in the 8.3 What rights of expropriation exist? MIC and relevant titles. Otherwise, the holder of the mineral rights does not have the right to exploit them. An exception applies to strategic minerals or minerals subject to a special frame- Please see our comments in question 8.1 above. work, which are always subject to a new award procedure. It is also worth noting that primary and secondary diamond 9 Environmental deposits are deemed, from a legal standpoint, as different minerals and therefore, mineral rights over each one of these types of 9.1 What environmental authorisations are required in deposits must be expressly granted under the relevant MICs and mineral licences. order to conduct reconnaissance, exploration and mining operations? 7.4 Is the holder of a right to conduct reconnaissance, exploration and mining entitled to exercise rights also over All projects that by nature, dimension or location may have an residue deposits on the land concerned? impact on the environment and social balance and harmony are subject to an environmental impact assessment (“EIA”), made on a case-by-case basis. In the case of the mining industry, holders Mineral rights cover a specific mineral or minerals (main and/or of mineral rights are required to complete and obtain approval of accessory) discovered within a specific area. If the residue a mandatory EIA prior to transitioning into the mining phase. deposits, cumulatively, are related to one of the minerals covered by the title and are located within the relevant area, the holder is 9.2 What provisions need to be made for storage of tailings allowed to exploit them. and other waste products and for the closure of mines? 7.5 Are there any special rules relating to offshore exploration and mining? The mandatory EIA must contain, among other information, a waste management plan and an abandonment plan. Mining companies are also required to create a legal reserve in an amount Yes. The Mining Code contains specific rules for mineral activities of 5% of the capital invested in the relevant project for mine in the sea. closure and environmental restoration. Mining companies are also subject to the requirements provided 8 Rights to Use Surface of Land for in the general environmental statutes applicable to all industries, such as, without limitation, the waste management regulations, approved by Presidential Decree 190/12, of 24 August 2012. 8.1 Does the holder of a right to conduct reconnaissance, exploration or mining automatically own the right to use the 9.3 What are the closure obligations of the holder of a surface of land? reconnaissance right, exploration right or mining right?

The granting of mineral rights does not imply the transfer of Upon completion of the works, the holders of mineral rights must ownership over the areas awarded for geological mineral investiga- restore the land and landscape in the terms approved under the tion or over the land where mineral occurrences are located, but EIA. Prior to the definitive abandonment of the concession area, grants the holder of the relevant mineral rights the right to use and holders of mineral rights must request the MMRP to inspect the exploit such land against payment of surface fees. mineral operations area. This inspection must be carried out in In the case of privately owned land and areas in the private accordance with the plan for closure and abandonment of the domain of the State or a public entity, the holder of mineral rights mineral operations approved by the MMRP as provided for in the may only use the land upon obtaining the consent of the owners Mining Code and the EIA. and/or possessors, in terms to be agreed between the holder of mineral rights and the owners and/or possessors (consent is deemed to be granted upon deposit of the annual rent and the 9.4 Are there any zoning or planning requirements posting of a provisional bond). applicable to the exercise of a reconnaissance, exploration In case the concessionaire fails to reach an agreement with the or mining right? owners and/or possessors during the mining phase, operations may not commence until the land is acquired by the holder of Areas subject to reconnaissance and exploration operations are mineral rights or expropriated by the State on grounds of public subject to demarcation by the MMRP. Holders of mining rights interest. are required to demarcate the area with easily identifiable concrete Holders of mineral rights are entitled to request the creation of markers, no later than 90 days as from the mineral title being issued easements required for the full exercise of their rights, rights of or any change to the area being made. Mineral production areas way included. are divided into (i) restricted areas, (ii) protection areas, and (iii) reserve areas, as follows: 8.2 What obligations does the holder of a reconnaissance (i) Restricted areas comprise mining areas, including deposits or right, exploration right or mining right have vis-à-vis the beds and the respective dressing facilities in a radius of up to landowner or lawful occupier? 1,000 metres. (ii) Protection areas comprise: (a) the areas corresponding to the strips of land around restricted areas in a radius of up to 5 Please see our comments in question 8.1 above.

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kilometres, to be established at the prudent discretion of the 12.2 Is there a system of appeals against administrative relevant body, as from the outer limits of the deposits decisions in terms of the relevant mining legislation? protected by mineral demarcation; and (b) the areas corresponding to mineral occurrences discovered under an exploration title, plus a surrounding strip of up to 5 kilometres, There is a system of administrative appeals provided for in the to be established at the prudent discretion of the relevant general administrative law, which also applies to mineral activities. body, as from the outer limits of the protected beds or The Mining Code also contains some specific rules on this matter deposits, during the period from the discovery of the occur- (namely, without limitation, for the exercise of the rights of opposi- rences to the granting of mining rights. tion and/or challenge to the requests for the award of mineral rights). (iii) Mineral reserve areas are areas within the national territory in relation to which no mineral rights have been previously 13 Constitutional Law awarded, but are already allocated to future mining development. Each type of area is subject to different rules concerning the 13.1 Is there a constitution which has an impact upon movement of persons or goods, allowed business activities and rights to conduct reconnaissance, exploration and mining? residency rules. Yes. The Constitution of the Republic of Angola sets forth that 10 Native Title and Land Rights natural resources are exclusively owned by the State, which determines the terms under which they may be exploited.

10.1 Does the holding of native title or other statutory 13.2 Are there any State investment treaties which are surface use rights have an impact upon reconnaissance, applicable? exploration or mining operations?

The Angolan National Assembly has approved bilateral investment No. The impact of land rights is as mentioned in question 8.1 treaties between Angola and various countries, such as Cape Verde, above. Cuba, France, Germany, Italy, Mozambique, Namibia, Portugal, Russia, South Africa, Spain, Switzerland, the United Kingdom and 11 Health and Safety the United States.

11.1 What legislation governs health and safety in 14 Taxes and Royalties mining? 14.1 Are there any special rules applicable to taxation of Although specially regulated in the Mining Code, health and safety exploration and mining entities? requirements for mineral activities are also subject to the general statutes applicable to other activities, such as the General Labour The Mining Code provides for special rules on the taxation of Law (approved by Law 7/15, of 15 June 2015). mineral activities, from which we highlight the following: a) an industry-specific industrial tax rate of 25% (lower than the 11.2 Are there obligations imposed upon owners, general industrial tax rate of 30%); employers, managers and employees in relation to health b) a number of additional costs and expenses may be deductible and safety? to determine the taxable income, such as all the authorised exploration, evaluation and reconnaissance costs; c) a surface fee (ranging from US$2 to US$40 per square kilo- Yes. The Mining Code contains a broad provision requiring metre). These figures are doubled if the exploration period is holders of mineral rights to adopt measures to ensure hygiene, extended; and health and safety at work, as well as to prevent occupational d) royalties (see below). hazards and accidents at work, as set forth in specific regulations Special customs rules are also included in the Mining Code. issued by the relevant bodies and approved by the MMRP, the Ministry of Public Administration, Employment and Social Security and the Ministry of Health. 14.2 Are there royalties payable to the State over and above any taxes? 12 Administrative Aspects A royalty to be levied on the value of extracted mineral resources is due at the following rates: strategic minerals and precious 12.1 Is there a central titles registration office? metallic minerals and stones – 5%; semi-precious stones – 4%; non-precious metallic minerals – 3%; semi-industrial and artisanal Yes. The award, modification, transfer and expiry of mineral rights diamonds – 3%; and construction materials of mining origin and must be recorded with the Public Geological-Mineral Service. other minerals – 2%.

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15 Regional and Local Rules and Laws The abandonment of any area pursuant to the preceding paragraphs does not release the holder from: (a) paying taxes, charges, fines or any compensation due up to the date of the abandonment 15.1 Are there any local provincial or municipal laws that formally acknowledged by the MMRP; (b) complying with all obligations relating to environmental matters; and (c) complying with need to be taken account of by a mining company over and any obligations imposed by law or by the MIC until the effective above National Legislation? date of the abandonment.

No, there are not. 16.2 Are there obligations upon the holder of an

exploration right or a mining right to relinquish a part 15.2 Are there any regional rules, protocols, policies or thereof after a certain period of time? laws relating to several countries in the particular region that need to be taken account of by an exploration or mining At the term of the initial five-year exploration period, the holder company? of the mineral rights must relinquish 50% of the concession area and, at the end of each extension, an area to be defined by the No, there are not. MMRP upon assessment of the results obtained during the relevant extension period. The holder of mineral rights may oppose 16 Cancellation, Abandonment and the relinquishment rule and keep the whole area against the payment of an aggravated surface fee. Relinquishment 16.3 Are there any entitlements in the law for the State 16.1 Are there any provisions in mining laws entitling the to cancel an exploration or mining right on the basis of holder of a right to abandon it either totally or partially? failure to comply with conditions?

Without prejudice to the terms and conditions provided for in the Failure to comply with all the obligations deriving from the law or relevant MICs, the holder of the mining rights may abandon the the MIC allows the State or the national concessionaire company, mineral area, in whole or in part, at any time with a prior notice of as the case may be, to terminate the MIC and cancel the relevant no less than 180 days to the MMRP. title. However, (i) failure by concessionaires to comply with their The abandonment only becomes effective on the date it is obligations under the law or the MIC may only be invoked as approved by the MMRP and may not take place in less than three grounds for termination in case of repeated default, and (ii) unilat- months or after the prior notice period has expired. eral termination by the State must be preceded by notice to the In case the mineral area is abandoned entirely, the mining title concessionaire, stating the legal and factual grounds for termina- expires. In case the mineral area is abandoned only in part, the tion and granting the holders of the mineral rights a minimum holder must update the boundaries of the newly reduced area and 60-day period to exercise their right of defence and oppose the promote the registration of such reduction and update the mining termination. title.

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João Afonso Fialho joined VdA in 2015 and is the head of VdA’s Oil & Gas and Mining practice. In the last 20 years, João has been involved in all sorts of oil & gas and mining projects and transactions in various jurisdictions, such as Timor-Leste, Angola, Portugal, Mozambique, Republic of Congo, DRC, Guinea Bissau and São Tomé and Príncipe. He is mainly focused on the energy (oil & gas upstream/downstream and power projects) and mining industries. He assisted the negotiation, structuring and implementation of several mining projects in Angola, Mozambique, Timor-Leste, Republic of Congo and DRC. A frequent guest speaker in international mining and oil & gas upstream and downstream events, João has a detailed and comprehensive understanding of all typical projects and transactions of both industries.

VdA Tel: +351 21 311 3400 Rua Dom Luís I, 28 Fax: +351 21 311 3406 1200-151 Lisbon Email: [email protected] Portugal URL: www.vda.pt/en

Ângela Viana joined VdA in 2015. She is Senior Associate of the Oil & Gas and Mining practice where she has been involved in several global transactions with a particular focus on energy, mining, investment, corporate and commercial law. She has been particularly active in providing assistance to several mining projects in Angola, Portugal and Timor-Leste, notably in the negotiation/renegotiation of mining investment contracts, structuring/restructuring of joint ventures, farm-ins and farm-outs, assisting some of the world leaders of the mining sector.

VdA Tel: +351 21 311 3400 Rua Dom Luís I, 28 Fax: +351 21 311 3406 1200-151 Lisbon Email: [email protected] Portugal URL: www.vda.pt/en

Over 40 years in the making, Vieira de Almeida (VdA) is an international Through VdA Legal Partners clients have access to a team of lawyers across leading law firm, notable for cutting-edge innovation and top-quality legal 13 jurisdictions, ensuring wide sectoral coverage, including all African advice. A profound business know-how coupled with a highly specialised members of the Community of Portuguese-Speaking Countries (CPLP), and cross-sector legal practice enable the firm to effectively meet the increasingly several francophone African countries, as well as Timor-Leste. complex challenges faced by clients, notably in the aerospace, distribution, Angola – Cabo Verde – Cameroon – Chad – Congo – Democratic Republic economy of the sea, green economy, energy, finance, real estate, industry, of the Congo – Equatorial Guinea – Gabon – Guinea-Bissau – Mozambique infrastructure, healthcare, public, professional services, information tech- – Portugal – Sao Tome and Principe – Timor-Leste. nology, emerging technologies, telecoms, the third, transport and tourism www.vda.pt/en sectors. VdA offer robust solutions based on consistent standards of excellence, ethics and professionalism. The recognition of VdA as a leading provider of legal services is shared with our team and clients and is frequently acknowledged by the major law publications, professional organisations and research institutions. VdA has consistently and consecutively received the industry’s most prestigious awards and nominations.

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Argentina Argentina

Marval O’Farrell & Mairal Luis E. Lucero

1 Relevant Authorities and Legislation Argentina is a civil law jurisdiction; thus, the mandatory law is derived from decisions of legislative powers at National, Provincial and local levels and international treaties, where those treaties are 1.1 What regulates mining law? ratified by an act of Congress and regulating rules are issued (if necessary). Court decisions are sources of law on very rare occa- sions so it is fair to say that they are not source of law. As in any Mining law in Argentina is mainly contained in two sets of rules: the other industry, mining is affected by a wide variety of statutes and National Code of Mining (NCOM) that has been passed by the regulations in areas as varied as tax, labour, safety, environmental, National Congress as provided for by the National Constitution; and and others. A law of particular interest to the mining industry is a the Provincial Codes of Procedures (PCPs) passed by each Province. National act that created a Mining Investment Regime that provides The NCOM mainly regulates: (i) the ways to acquire minerals’ explo- for a set of tax benefits for the industry, the most remarkable being ration and mining rights; (ii) the contents of such exploration rights a tax and foreign exchange regime stability guarantee for the life of (characterised as “exploration permits”) and of such mining rights a mining project of up to 30 years. This guarantee is acquired by the (characterised as “mining concessions”); (iii) a limited number of filing with the relevant National authority of the Feasibility Study contractual rules as to mining concessions dealing with leasing, (FS) for the project, which must follow the guidelines of the usufruct and liens that allow mining concessions to serve as collat- authority – any FS prepared following industry standard would eral; and (iv) environmental obligations and procedures that apply to comfortably comply with those guidelines. all stages of minerals exploration and mining, including sanctions that apply where those obligations are violated. The PCPs regulate the procedures that are followed before the Provincial mining 2 Recent Political Developments authorities. This dual set of rules is the consequence of two Constitutional provisions whereby (i) on the one hand, the National 2.1 Are there any recent political developments affecting the Congress was to pass the NCOM, and (ii) on the other hand, the mining industry? mineral resources belong to the Provincial states and therefore they administer the application of the NCOM through their own administrative or judicial Provincial branches of power. In October 2019 (and potentially also in November if a second round of voting is required), Argentina will undergo Presidential 1.2 Which Government body/ies administer the mining elections. The current president, Mr. Macri, will stand for re-election and his main opponent is Mr. Alberto Fernandez, a former chief of industry? staff of former president Cristina Fernandez-Kirchner, who is the candidate for vice-president in Mr. Fernandez’s ballot. As to the Because of the Federal nature of the political division adopted by mining industry itself, it is reasonable to expect support from either the National Constitution, there is a dual regulation of the mining administration. That said, Provincial governments play a significant industry; both National (or Federal) and Provincial, regulation role in the day-to-day business life of the industry. derived from the fact (see question 1.1 above) that as per Section 124 of the Argentine Constitution, “Provinces have the original domain 2.2 Are there any speciﬁc steps the mining industry is taking of natural resources located in their territory”, hence each Province in light of these developments? has the power to administer, grant rights and regulate the mining industry in their territory. The industry then has to follow regulations issued by the National Government and also by Provincial We do not perceive any particular or specific steps being taken by the Governments. mining industry in respect of the presidential elections. The Rights are granted by Provincial authorities following the NCOM industry’s chamber, however, has been developing actions enhancing provisions and the Provincial procedural regulations. Permits to the industry’s public perception; the most important of which is the develop and operate a mine are also granted by National and joining of the initiative of the Mining Association of Canada Provincial authorities and, in certain areas, also by local authorities “Towards Sustainable Mining” (TSM). This initiative established (municipalities or city councils). international quality and control standards to guarantee a responsible, trustworthy and transparent mining activity. The TSM initiative 1.3 Describe any other sources of law affecting the mining consists of a set of tools and indicators to drive good performance and ensure that the main risks of mining are managed properly. industry. In addition, the TSM initiative allows mining companies to turn high-level environmental and social commitments into action on the

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ground, providing communities with valuable information on how to identify any particular substance in an EP. The application must operations are faring in important areas, such as community naturally comply with all procedural rules in the relevant Province. outreach, tailings management and biodiversity. The chamber An exploration fee must normally be paid at the time the application encourages the participation of its members in the TSM initiative. is filed, and be of relatively unsubstantial importance. EPs include the right to request to the mining authority the granting of all ease- 3 Mechanics of Acquisition of Rights ments necessary to undertake an appropriate exploration work.

3.3 What rights are required to conduct mining? 3.1 What rights are required to conduct reconnaissance?

We have already indicated that to be able to request a mining conces- The NCOM provides in Section 31 rules that apply to airborne sion (MC) it is not necessary to make the discovery under the reconnaissance that is thereby governed differently than exploration umbrella of an EP. The NCOM allows for the existence of MCs carried out with on-the-ground methods. In airborne exploration with complete disregard of the actual existence of a feasible mining permits under Section 31, the maximum surface the permit may deposit; if the applicant complies with the requirements of the 2 cover is up to 40,000 km and the maximum term is of 120 days. NCOM, the State must grant the requested MC. The application is dealt with by the mining authority in a fast-track Under the NCOM, to apply for an MC the applicant is required to procedure that includes a filing with the aeronautical authority; file with the mining authority a “statement of discovery” (SOD). failure of such implies automatic denial of the application. NCOM, Sections 28, 29 and 30. A SOD is the starting point of the proceedings leading to the granting of the MC: the intended benefi- 3.2 What rights are required to conduct exploration? ciary must make a filing with the mining authority indicating, among other data, the place where minerals have been discovered. A sample Exploration permits (EPs) are granted following a complex and of the respective mineral substances must be attached to the filing. somehow impractical regime under which the applicant is granted by However, under the NCOM, evidence of the actual existence of the a provincial mining authority the exclusive right to explore a certain mineral substance referred to in the SOD may only be required by area to be identified in the application. The area of the EP is granted the authority in case third parties oppose the granting of the MC. on the basis of “units”. A unit, in turn, is a 500 hectare block. Each The SOD must be registered by the mining authority in a specific EP may be composed of a maximum of 20 units. The maximum area ledger. Mining rights are exclusive, and granted on a “first come, first which can be covered by an EP is, hence, 10,000 hectares. The served” basis. Following the filing of the request, the main steps maximum EPs that any person (individual or corporate) may hold in towards the creation and registration of the MC are the following: one Province are 20. Therefore, any mining company may hold, at ■ The carrying-out of certain exploration works – actually, a any given time, up to 200,000 hectares per Province. EPs are granted trench – (Labor Legal) the purpose of which is to determine the for a limited period, which is determined under the NCOM depending direction and inclination of the vein. The NCOM still provides on the number of units the respective EP is composed of. The time for this Labor Legal to have a length of 10 metres. scale starts with 150 days for an EP composed of a single unit. Such ■ The determination of the number of units the concession will be term is increased on a basis of 50 days per each additional unit composed of. While EPs are divided in units, MCs are, instead, granted. Consequently, the maximum period for a 20-unit EP is of organised on the basis of “exploitation units” (pertenencias). An 1,100 days. Furthermore, the NCOM determines that upon the expi- MC, therefore, is formed by the number of pertenencias, which basi- ration of a 300-day term following the granting of the EP, the holder cally depends on the number of individuals claiming the discovery. of the EP must “release” half of the respective area, excluding four At the same time, the NCOM provides for pertenencias of several units. Upon the expiration of a term of 700 days following the sizes, depending on the mineral substances which are involved granting of the EP, an area equal to half of the remaining area – (e.g., pertenencias for the mining of coal are larger than those for excluding, again, four units – must be released. The areas to be the mining of gold) as well as the type of mineralisation (vein or released can therefore be calculated pursuant to the following formula: porphyry). The basic pertenencia is determined on the basis of a ■ RA1 = (TA – 4)/2 RA2 = ((TA-RA1) – 4)/2 rectangle of 200 metres by 300 metres. Consequently, in the Where: granting of the MC the mining authority is called to make a deter- ■ RA1 (Released Area 1) is the area to be released 300 days after mination of the size and number of pertenencias. the granting of the EP. ■ The carrying-out of a survey of the area of the future MC, which ■ TA is the Total Area granted in the EPs. is to be completed under the supervision of the mining authority. ■ RA2 (Released Area 2) is the area to be released 700 days after ■ The registration, with the mining authority, of the abovementioned the granting of the EP. survey. A copy of the registration of this survey serves as title- The specific areas to be released are determined by the holder of deed. the EP, who must identify them with the respective mining authority. Failure of the holder to do so entitles the mining authority to deter- 3.4 Are different procedures applicable to different minerals mine the released areas itself. It is important to note that the and on different types of land? existence of an EP is not a condition precedent to the granting of a mining concession. In other words, a mining concession may be The NCOM classifies minerals into three categories: obtained whether or not the miner made the discovery under the (i) First category minerals, which belong exclusively to the govern- protection of an EP, provided that the discovery is made on land ment in whose territory they are located, which the land is only that is neither subject to an EP nor covered by another mining an accessory to and which can only be exploited by means of concession. Because the EPs grant exclusive rights, discoveries made mining concessions (NCOM, Section 2). by third parties in areas covered by EPs benefit only the holder of (ii) Second category minerals are those which, due to their lesser impor- the EP. As to the exploration activities themselves, the NCOM does tance, belong to the landowner, and are considered “substances not contain indications or directions about the way the exploration subject to concessions preferably granted to landowners”. This is to be carried out. However, a minimum exploration plan must be category also includes minerals which, due to the conditions of included in the application and must be complied with by the respec- their deposits, are of common use, called “common use tive explorer. The EP covers all mineral substances; there is no need substances” (NCOM, Section 2).

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(iii) Third category minerals belong solely to the landowner; no one else There are no special regulatory provisions relating to processing, may exploit these without the landowner’s consent, except where refining and further beneficiation other than those permitting those minerals were deemed to be of public use (NCOM, Section requirements that are common to all industries, which vary 2). Productions of stony or earthy nature and, in general, all minerals depending on the relevant domestic Provincial jurisdiction. used as construction and ornamental materials which form quarries, are classified as third category minerals (NCOM, Section 5). 5.2 Are there restrictions on the export of minerals and

levies payable in respect thereof? 3.5 Are different procedures applicable to natural oil and gas? There are no restrictions on the export of minerals, except for restrictions that apply to uranium and thorium. Under NCOM Yes, Argentina has a very well-developed statute regulating oil and Sections 209, 210 domestic sales of both minerals are subject to right gas exploration and exploitation. Since 1887, the first set of rules of first refusal vested upon the National nuclear agency (the Comisión to regulate oil and gas has been the NCOM. Once oil was found in Nacional de Energía Atómica) and exports of both minerals are subject Argentina in 1907, some tax reserves laws and decrees have also to approval by the same agency provided that such authorisation been applicable to oil exploration and exploitation. In 1935, by law shall be subject to the prior satisfaction of domestic needs. No. 12,161, a new chapter was included in the NCOM to regulate Additionally, the exports of certain minerals are currently subject the legal regime of petroleum and fluid hydrocarbons. In 1967 law to an export duty that is set at 12 per cent of FOB value with a cap No. 17,319 (currently in force) was enacted, setting an independent of AR$4 or AR$3 per USD of FOB value. statute regulating oil and gas in Argentina. 6 Transfer and Encumbrance 4 Foreign Ownership and Indigenous Ownership Requirements and Restrictions 6.1 Are there restrictions on the transfer of rights to conduct reconnaissance, exploration and mining? 4.1 What types of entity can own reconnaissance, exploration and mining rights? Although the NCOM does not expressly allow the transfer of EPs, there is no legal impediment for the transfer thereof (either direct – According to Section 7 of the NCOM, individuals and legal entities for example, through the sale of the EP, or indirect – for example, are entitled to be granted EPs, operate MCs and dispose of MCs as through the change of control of the title holder) and no owners under the provisions of such code. Governmental consent is required to proceed with the transfer. The transfer instrument must be filed with the mining authority if there is a change of title holder but not in case of a change of control, in 4.2 Can the entity owning the rights be a foreign entity or order for the transfer to be enforceable vis-à-vis third parties. owned (directly or indirectly) by a foreign entity and are there special rules for foreign applicants? 6.2 Are the rights to conduct reconnaissance, exploration and mining capable of being mortgaged or otherwise secured Yes. Foreigners, as well as legal entities created and organised to raise ﬁnance? abroad, are entitled to own explorations and mining rights as much as nationals are. Yes. There are no restrictions to use those rights as collateral as any other legal right. In particular, mining concessions are deemed by 4.3 Are there any change of control restrictions applicable? the NCOM to be real estate property (Section 12) and, as such, they are subject to the creation of mortgages as many sections in the code No, there are no control restrictions. so provide (v.g.: Sections 218, 219 among many others).

4.4 Are there requirements for ownership by indigenous 7 Dealing in Rights by Means of Transferring persons or entities? Subdivisions, Ceding Undivided Shares and Mining of Mixed Minerals No, there are no requirements for ownership by indigenous peoples or entities. 7.1 Are rights to conduct reconnaissance, exploration and 4.5 Does the State have free carry rights or options to mining capable of being subdivided? acquire shareholdings? Neither the exploration permits nor the mining concessions can be divided below the minimum surface set forth in the NCOM. No, the State does not have any free carry rights or options to However, if the total surface of either an EP or an MC is such that acquire shareholdings. after their division the resulting properties meet the minimum

surface, the division is possible. 5 Processing, Refining, Beneficiation and Export 7.2 Are rights to conduct reconnaissance, exploration and mining capable of being held in undivided shares? 5.1 Are there special regulatory provisions relating to processing, refining and further beneficiation of mined Yes. Both exploration permits and mining concessions can be held minerals? by two or more individuals in condominium. However, the rules of

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such condominium are set forth in the NCOM under the structure of and agreeing to have the easement or right-of-way governed by the a compañía de minas. NCOM, Sections 286 through to 316. CCC rather than by the NCOM. Under this scenario, the participation of the mining authority may not be necessary. Note, however, 7.3 Is the holder of rights to explore for or mine a primary that this legal structure is predicated on obtaining the full agreement of the parties. Under the CCC, the power to create the easement mineral entitled to explore or mine for secondary minerals? corresponds to the owner, whereas under the NCOM the power to create the easement belongs to the mining authority. Other legal Yes. The exploration permits and the mining concessions entitle the statutes might also become relevant; for instance, National Law holder to explore and potentially mine all minerals of the category 19552, which sets forth a complete regime for easements necessary applied for (see question 3.4 above). for the construction and operation of power lines.

7.4 Is the holder of a right to conduct reconnaissance, 8.2 What obligations does the holder of a reconnaissance exploration and mining entitled to exercise rights also over right, exploration right or mining right have vis-à-vis the residue deposits on the land concerned? landowner or lawful occupier?

Assuming the area where a residue deposit is located is free of any The holder of an EP or of an MC must compensate the landowner, rights, the holder of an EP or the holder of a MC shall have the or provide sufficient guarantee that compensation shall be paid. The rights the EP and the MC grant over such residue deposit. However, NCOM includes a very brief rule whereby the landowner must be note that wastes from mines are included in the second category. compensated for “the value of the pieces of land” subject to occupation by the miner. As mining occurs in areas where the land has 7.5 Are there any special rules relating to offshore a relatively insignificant value, arguments about the value of the exploration and mining? compensation are common. The actual payment of the compensation may not defer the exercise of the right to use the land provided the miner produces a There are no specific rules that apply to offshore mining. If there guarantee that compensation shall be paid when fixed. If an agree- were such kind of operations – of which Argentina has had none so ment is not reached by the landowner and the miner, a judge would far – regular rules in the NCOM would apply. Because of rules resolve the conflict. applying to Provincial territorial limits, depending on how far from the coast the operations were to be carried out, the right to explore or to mine would have to be applied for to Provincial or to National 8.3 What rights of expropriation exist? authorities. The MC gives the mine owner the right to force the surface 8 Rights to Use Surface of Land landowner to sell such land. The right is subject to no requirements other than the decision of the mine owner to proceed with the acquisition but limited to an area equal to one pertenencia of 200 8.1 Does the holder of a right to conduct reconnaissance, metres by 300 metres. If the needs of the operation require that the exploration or mining automatically own the right to use the area to be acquired be expanded, such a need or convenience must surface of land? be alleged by the beneficiary of the MC and sufficient proof must be filed to the satisfaction of the specific mining authority. As in the case of easements, if an agreement is not reached by the No, the holder of an EP or of an MIC does not own the surface landowner and the miner over the value to be paid, a judge would land. resolve the conflict. However, EPs include the right to request to the mining authority the granting of all easements necessary to undertake appropriate 9 Environmental exploration work. Likewise, MCs provide for the granting of easements and rights- of-way as they may be required to establish the infrastructure to 9.1 What environmental authorisations are required in order develop the operation. Consequently, easements are the most effec- to conduct reconnaissance, exploration and mining tive way to secure access to the land necessary to build the processing facilities, construction and permanent camps, housing operations? and recreation facilities, etc. Easements may also be used to secure access to water fields. In addition to the MC, miners might also Section 41 of the Argentine Constitution provides that: “the Federal resort to other statutes to look for protection; in fact, easements may Government shall issue rules on minimum environmental protection also be established under the general rules of the Civil and standards”, and “all Provinces, shall issue the provisions necessary Commercial Code (CCC) which, in certain situations, could be of to supplement such rules without affecting local jurisdictions.” help since, under the NCOM, two different standards apply to an Mining prospecting, exploration, exploitation, development, prepa- easement application: (i) if the easement area sought by the applica- ration, extraction and storage of minerals, including all activities tion is located within the EC, the application shall be granted subject related to the closure of the mine, the processes of grinding, only to the satisfaction of the compensation payments to the respec- milling, benefit, pelletisation, sinterisation, briquetting, primary elab- tive land-owner; however (ii), if the area sought by the easement oration, burning, foundry, refining, sawing, engraving, polishing and application is located – or expands beyond – the limits of the EC, other processes that may arise from new technologies and the the applicant must prove to the mining authority that the granting disposal of waste of any kind shall comply with minimum environ- of the easement is necessary to conduct a business-sound exploita- mental standards applicable throughout Argentina included in Title tion of the mine. 2 of the NCOM (Section 249, NCOM). Considering the foregoing, in certain given situations it may be Provinces issue supplementary rules and proceedings with the useful to obtain easements or rights-of-way directly from the affected purpose of applying such minimum standards. These Provincial landowner, settling with him the price to be paid as compensation, regulations (or Municipal, as the case may be) shall not diminish the

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standards set by the NCOM but may establish more demanding 9.2 What provisions need to be made for storage of tailings requirements. and other waste products and for the closure of mines? The following are the main requirements to conduct reconnaissance, exploration and mining operations in Argentina: (i) Environmental Impact Declaration (EID): No mining activities Storage of tailings and waste products must comply with general may be conducted without prior approval by the competent environmental rules, the NCOM and the rules set by the Province authority, the Environmental Impact Report (EIR) by means of where the storage or transport of such waste takes place. Hazardous the EID. The EID must be updated every two years. wastes are regulated by Law No. 24051 and by Decree No. 831/9. The national mining rules are supplemented by the San Carlos This legislation provides a strict control over the life cycle of waste de Bariloche Act, approved by the Mining Federal Council on by means of surveillance to all parties involved in the activities at 08/16/1996 (“MFC Act”). This act sets forth the minimum hand, following the principles of “The Basel Convention on the technical requirements that EIRs must contain according to the Control of Transboundary Movements of Hazardous Wastes and corresponding stage of the project, as well as the standards of Their Disposal”, approved by Law No. 23922. the quality of water, soil and air. Since the MFC Act is not a Tailings and waste resulting from excavation and mineral extrac- regulation passed by the Argentine Congress, the Provinces are tion stages involving earth and rock movements are not considered not bound to comply with those standards. However, in prac- hazardous. However, in the mineral processing stage which may tice, most Provinces follow the MFC Act as minimum standards. involve activities of casting, refining, or certain chemical procedures (ii) Environmental Insurance: Mining activities have been consid- for separating metal from rocks, among others, waste listed as ered risky activities for the environment by Resolution No. hazardous waste may be generated. In this case, the individual in 177/2007 (Section 2 and Exhibit I) issued by the former charge of the undertaking must comply with the requirements stated Secretariat of Environment and Sustainable Development. by this law. Thus, all human or legal entities performing activities which are hazardous or risky for the environment and their ecosystems 9.3 What are the closure obligations of the holder of a shall contract an insurance for an adequate amount to guarantee reconnaissance right, exploration right or mining right? the financing of possible repair works to comply with Section 22 of the General Environmental Act. This insurance can be: (a) bonding insurance for Environmental Damage of Collective The environmental aspects involving the closure of mines are Incidence; (b) Insurance Policies with Risk Transfer; or (c) other focused on guaranteeing the health and safety of the population and financial instruments or insurance plans approved by the minimising possible environmental damages. Thus, it is necessary Secretary of the Environment and Development Government to perform activities that will prevent such unwanted consequences, of the General Secretariat of the Presidency of the Nation and and that are convenient to implement, in terms of reduction of the Insurance Superintendence of the Nation. waste, efficient use of chemical substances, the partial and progres- (iii) Public Hearings: Pursuant to Section 268 of the NCOM, the sive restoration of the sites and their re-forestation, and the creation competent authority is bound to provide information of funds allowing the performance of reparatory activities upon concerning the application of the environmental provisions, but termination of the operations, among other measures. it does not set forth the mechanisms for public hearings and Even though neither the environmental system of the NCOM, inquiries within the framework of the approval of the EIR. nor the provincial legislation specifically regulates environmental Nevertheless, the General Environmental Act provides for a matters related to the closure of mines, there are several regulations mandatory (non-binding) public participation stage in the that impose the need for a plan for mine closure in order to avoid process of approval of projects that could affect the environ- or mitigate any environmental impact that the termination of the ment (Law No. 25675 Section 20) and most of the Provinces mining activities may cause. have adopted some initiative in this regard following the require- As mine closure is another important stage of the mining project, ments of the General Environmental Act. In sum, depending it is part of the environmental approval and auditing process set on the type of project at issue and its possible impact on the forth in the NCOM, and therefore, it is subject to the environmental environment, a public hearing must be called. protection rules described previously (see question 9.1 above). Although the conclusions of public hearings in most jurisdic- Additionally, the MFC Act establishes rules regarding the content of tions are not binding on the enforcement authority when issuing the EIR regarding termination of the exploitation and “[c]ontrol the EID, in general, it must be considered that the approval of after the termination of the operations”. the mining projects against the will of the population may Similarly, the Mining Investments Law, Section XXIII, chapter usually imply problems for their effective execution. VII, regarding “Environmental Conservation” states that: “In order (iv) Other Environmental Regulations: (a) National rules regarding to prevent and restore environmental impacts, the company must the protection of archaeological and paleontological heritage have special reserves to such extent. The amount of the annual (Law No. 25743 and Decree No. 1022/2004); (b) Provincial reserve depends on the criteria of the company; however, an amount rules on effluents, use of toxic substances, soil protection, of up to 5% of the aggregated costs of the operation is deductible among others; (c) Law No. 26331 on “minimum requirements from income tax.” for the protection of native forests”; (d) Law No. 25688 which states the minimum environmental requirements for water 9.4 Are there any zoning or planning requirements applicable preservation and rational use thereof; (e) Law No. 26639 on to the exercise of a reconnaissance, exploration or mining Minimum Standards for the Protection of Glaciers; and (f) it is right? also important to mention that some Provinces, under the heading of mining environmental regulation, have enacted legislation to prohibit metalliferous mining in a direct manner, or, in All the lands in Argentina are available to perform mining explo- an indirect manner, by means of the prohibition of the use of ration and exploitation. However, there are some exceptions to this cyanide and other chemical substances in metal mining. rule. National Parks Law No. 22,351, and Decree No. 2,148/1990 create reserve areas where mining exploitation is not allowed.

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Similar rules, related to the protection of provincial natural areas and implies that the presumed author of the offensive event, in order to their wild environments, have been enacted by some Provinces espe- be exempted from liability, must prove not only the fault of the cially to control metalliferous mining, such as: (i) the Province of victim or third party for whom they have no responsibility, but they Santa Cruz; (ii) the Province of Buenos Aires; (iii) the Province of must also prove the adoption of all measures leading to the avoid- Chubut; and (iv) Province of Neuquén. ance of damage. In turn, the NCOM provides that people who conduct mining 10 Native Title and Land Rights activities are liable for “any environmental damage that may arise due to the non-compliance” with the mining environmental system set forth by therein, regardless of whether such damage is caused 10.1 Does the holding of native title or other statutory directly by the person in-charge, his dependants, contractors or surface use rights have an impact upon reconnaissance, subcontractors, or that such damage is caused by the risk or defect exploration or mining operations? of the thing. In the event the person conducting the activity is not the holder of the mining right, this person will be severally liable for the damages caused by those persons authorised by him to perform The National Constitution acknowledges the possession and prop- the activity within the limits of the mining area (Section 248). erty of the land traditionally occupied by aboriginal communities or Regardless of the foregoing, the principle of strict liability for indigenous people (Section 75, subsection 17 of the National environmental damages is applicable to damages caused by the risk Constitution). Additionally, in 2000, Argentina ratified the or failure of the thing, in which case the miner may be exempted International Labor Organization (ILO) Convention No. 169 by from liability evidencing the negligence of the damaged party or a National Law No. 24071, which recognises indigenous and tribal third party for which the miner is not bound to be liable. people’s rights in independent countries. Pursuant to Section 15 of Liability arising from environmental damage caused by mining is the ILO Convention No. 169, “the rights of the peoples concerned not limited to the compensation to the damaged party. It also to the natural resources pertaining to their lands shall be specially includes the obligation to mitigate the damage and “rehabilitate, safeguarded. These rights include the right of these peoples to restore or repair the damage, as the case may be” (NCOM, Section participate in the use, management and conservation of these 263) according to Section 41 of the Argentine Constitution that resources”. Furthermore, if the subsoil resources belong to the establishes that environmental damage “entails the obligation to State, as is the case in Argentina, the government must establish repair”. consulting procedures for those interested communities before Regarding civil liability, pursuant to Section 161 of the NCOM, “undertaking or permitting any programs for the exploration or the owner of a mine is responsible for the damage caused to third exploitation of such resources pertaining to their lands”. Aboriginal parties even when the damage is caused by accidents or an act of communities must participate (whenever possible) in the benefits God. generated by the activities and receive a fair compensation for any damages caused as a consequence of such activities. 12 Administrative Aspects In this regard, National Law No. 23302 (regulated by National Decree No. 155/89), established that: (i) aboriginal communities must be awarded with the lands they inhabit or in nearby areas that 12.1 Is there a central titles registration ofﬁce? are appropriate to conduct their economic activity and enhance development; (ii) allocation of lands to aboriginal communities shall be without charge and over state-owned lands; and (iii) to be Yes, there is a central titles registration office at Provincial level. awarded with land pursuant to Law No. 23,302, communities must There is no such central titles registration office for the whole be previously registered to be recognised as aboriginal communities. Argentine territory. National Law 26160 (as amended) has declared an emergency status – until the year 2021 – in connection with the lands of aborig- 12.2 Is there a system of appeals against administrative inal communities, and ordered that surveys be conducted to correctly decisions in terms of the relevant mining legislation? identify the lands occupied by aboriginal communities. In the meantime, all eviction processes of members of aboriginal communities Yes. All administrative decisions (whether relating to mining or have been suspended. otherwise) are subject to control by the judicial system. Requirements to take decisions by administrative agents to the court 11 Health and Safety system vary from Province to Province and from Provincial systems to the National system, but the review of such decisions is a valid principle country-wide. 11.1 What legislation governs health and safety in

mining? 13 Constitutional Law

Health and safety in mining is governed by: (i) the NCOM; (ii) labour legislation; and (iii) applicable provincial legislation. 13.1 Is there a constitution which has an impact upon rights to conduct reconnaissance, exploration and mining? 11.2 Are there obligations imposed upon owners, employers, managers and employees in relation to health and Yes. In fact, the rights provided by the NCOM and the Provincial safety? procedural rules must comply with both the Provincial constitution of the Province host of the relevant project or operation and also with the rules of the National constitution. In turn, Provincial The amendment of the constitution in 1994 created a supra-legal constitutions must all be in harmony with the National constitution. obligation to repair the environment affected upon the occurrence The ultimate authorities to interpret what a Provincial constitution of environmental damage (Section 41 of the Argentine says are the Provincial Supreme Courts; as for the National consti- Constitution). The General Environmental Act provides for a tution, the National Supreme Court is such authority. system of aggravated strict environmental liability. Strict liability

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13.2 Are there any State investment treaties which are The only case is the Mining Integration Treaty that Argentina and Chile executed in 1997, whereby the countries agreed to implement applicable? in their territories measures to facilitate the development and operation of mines within a certain area next to the border that both Yes, the Argentine Government has executed 61 Bilateral Investment countries share, the third-longest in the world with over 5,000 km. Treaties (BITs) with other countries. These international treaties were signed by the Executive Branch and most of them have been 16 Cancellation, Abandonment and expressly ratified by laws enacted by the National Congress. Currently, 49 of those BITs are in force. In addition, Argentina Relinquishment executed the “Convention on the Settlement of Investment Disputes between States and Nationals of Other States” and the “Protocol of 16.1 Are there any provisions in mining laws entitling the Colonia for the Promotion and Reciprocal Protection of Investments in MERCOSUR” (Law No. 24,891). holder of a right to abandon it either totally or partially?

14 Taxes and Royalties Yes. As per Section 222 of the Mining Code, mining concessions can be withdrawn by the concessionaire through a direct and spontaneous act which demonstrates to the Mining Authority the decision 14.1 Are there any special rules applicable to taxation of not to pursue the mining works. A written declaration must be filed exploration and mining entities? with the Mining Authority, 20 days before the abandonment, indicating the mine’s name, the mineral, the substance exploited and the stage of the work. Under Section 213 of the NCOM, mines are awarded through the The petition will be registered and published so as to allow payment of an annual fee per “pertenencia”, established by the preferred creditors and mortgagees to request the public sale of the National Congress and paid to the National Government or the mine in order to recover their debt or the adjudication of the mine. Provinces, according to the location of the mines. The fee must be Notwithstanding, the concessionaire must comply with certain obli- paid in advance in two equal parts, in two semesters: on June 30; and gations to maintain his right, such as the payment of the Annual Fee December 31 of every year. Furthermore, the fee must be paid from and the compliance with the investment plan. the day that the mine is registered, with or without the survey being

performed (Section 216 of the NCOM). However, Section 224 of the NCOM establishes that the discoverer is exempted from the 16.2 Are there obligations upon the holder of an payment of Annual Fees for a three-year term. exploration right or a mining right to relinquish a part thereof after a certain period of time? 14.2 Are there royalties payable to the State over and above any taxes? Please see a detailed explanation of the obligation to partially relinquish EPs in question 3.2 above. As for MCs, they are awarded for unlimited Additionally, Provinces are entitled (and almost all do so) to impose time and there is no obligation to relinquish any part of them. royalties, that are set forth through a Provincial act of Congress and collected by either the mining authority or the Provincial internal 16.3 Are there any entitlements in the law for the State to revenues authority. The royalties are based on the value of ores actu- cancel an exploration or mining right on the basis of failure to ally mined and are set at rates that vary from zero per cent to three comply with conditions? per cent. At the time, the rates are applied to the “pit-head” value of the minerals, calculated starting from the sales price and applying deductions for costs incurred in all steps of beneficiation, storage, Yes, that is the case for MCs. The NCOM sets forth a set of obli- transportation and marketing. Provinces that have adhered to the gations or requirements to be met in order for an MC to be Mining Investment Regime referred to in question 1.3 above have maintained on a perpetual basis. This set of conditions is known as: adopted a maximum rate of three per cent of “pit-head” value. amparo minero (amparo is Spanish for “protection”. Therefore, the amparo minero is the set of conditions which “protect” the concession 15 Regional and Local Rules and Laws (hereinafter, “amparo”). The amparo regime has changed since the enactment of the NCOM. The original regime was basically structured on the basis of the obligation to work the mine during a 15.1 Are there any local provincial or municipal laws that minimum number of 230 days per calendar year, with a crew composed of a given minimum of four workers. The system, need to be taken account of by a mining company over and however, evolved. The main change was introduced in 1919. It was above National Legislation? further materially amended both in 1980, and in 1995. As a result of the amendments, the amparo is now composed of two obligations: Yes, there is a large number of Provincial and even municipal rules (a) Payment to the Provincial mining authority of the annual fee and laws that need to be taken into account in planning explorations described in question 14.1 above. The amounts involved are and, mostly, construction and operation activities. Permitting is a generally not material. This obligation is deemed to evidence complicated process and it involves dealing with a wide variety of the mine owner’s will to continue its operation rather than statutes and the respective enforcement agencies, at the three levels evidence its financial or economic substance. of government. (b) The making, in developing the deposit, of a minimum investment pursuant to a plan which must be filed by the MC holder 15.2 Are there any regional rules, protocols, policies or laws within one year from the filing of the petition to proceed with the survey of the MC. The amount to be invested may not be relating to several countries in the particular region that need to less than 300 times the amount of the annual fee applicable to be taken account of by an exploration or mining company? the concession. A hundred per cent of the investment must be made in the first five years of the investment plan. Furthermore,

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20 per cent must be invested in the first year and 20 per cent in fulfilment of the obligations under the investment plan or to the the second year. There are no specific requirements with respect breach of the reporting obligations. In these cases, the forfeiture to the remaining 60 per cent, which could be invested in the fifth requires a 30-day prior written notice from the mining authority and year. A follow-up report must be filed with the mining authority a 15-day period to file whatever allegations the title owner may think within three months following the end of each of the annual appropriate to excuse himself from the non-performance of which periods covered by the respective investment plan. he is accused. In two specific sections (Section 216, last paragraph, and Section If none of the opportunities given to an MC owner to remedy his 218), the NCOM defines the situations which may result in the default under the amparo are duly used and the forfeiture of the EC forfeiture of an MC. The first one is default in the obligation to pay is declared by the mining authority, the consequence is that the MC the mining annual fee. In such case, the forfeiture occurs if the is declared vacant. payments are in arrears upon the expiration of a 45-day period An MC declared vacant by the mining authority is registered as counted as from the delivery of a notice by the mining authority, such. The consequence is that any interested party may apply for it, which notice may be issued only if the MC is in arrears at the expi- provided that: (i) all registered secured creditors are given priority ration of a two-month period following the end of the relevant over other parties; (ii) the requesting party must pay the defaulted annual period in which the annual fee is due. annual fee, if due; and (iii) the defaulting miner may not apply for As to the obligations arising from the investment plan, forfeiture the vacant MC until a year has elapsed since the registration of its may be declared by the mining authority in eight different situations vacancy. which are set forth in Section 218. All of them are related to the

Luis E. Lucero is a partner at Marval, O’Farrell & Mairal, where he heads the Mining Group. He is also an expert in project finance, complex litigation, arbitration and corporate matters. With a law degree from the Universidad de Buenos Aires in 1983, and a postgraduate course in Business Law from the Universidad Argentina de la Empresa, Luis has taken many more specialised courses such as the Program of Instruction for Lawyers, Harvard Law School; the Global Issues in Corporate Mining Strategy and Government Policy at the University of Dundee; and the Lex Mundi Institute Business Management Program at the University of Cambridge Judge Business School. He led workshops at the Center for Energy, Petroleum, Mineral Law and Policy, University of Dundee, UK, where he was an Honorary Lecturer. He is a member of the International Bar Association, the American Bar Association and the World Initiative of Mining Lawyers.

Marval O’Farrell & Mairal Tel: +54 11 4310 0240 Av. Leandro N. Alem 882 Email: [email protected] (C1001AAQ) Buenos Aires URL: www.marval.com Argentina

Marval, O’Farrell & Mairal is the largest and most prestigious, full-service law firm in Argentina. Founded in 1923, it has over 300 lawyers covering legal services ranging from corporate, banking, tax, natural resources, energy, compliance, white-collar crime and others to a trademarks and patents agency. It is the Argentine member of Lex Mundi, the highest regarded and largest network of international law firms. It has a representative office in New York, New York, USA. It has received an impressive number of international awards for the excellence of its professionals and services. www.marval.com

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Australia Australia

Jay Leary

Herbert Smith Freehills Geoff Kerrigan

1 Relevant Authorities and Legislation ■ a wide range of ancillary legislation with respect to particular aspects of mining operations (such as dangerous goods, contaminated sites and employee entitlements legislation). 1.1 What regulates mining law? In certain States, proponents of significant mining developments may negotiate agreements with the State covering the development and operation of mining projects (referred to as ‘State Agreements’). The default legal position in Australia is that all title to minerals is State Agreements are ratified by Acts of Parliament. vested in the State or Territory in which they are located. Each of

the States and Territories has therefore enacted its own laws relating to the exploration and development of mining operations. While 2 Recent Political Developments there has been little effort to standardise these laws, they have many common features, and generally Australia has a relatively uniform 2.1 Are there any recent political developments affecting the legal approach to mining. The government of each State and Territory is responsible for granting and administering all tenements mining industry? to explore for and produce minerals within its borders. Depending on its nature, a tenement holder is entitled to an exclusive right to Government policy at all levels aims to provide a relatively well- explore, maintain or extract minerals within the tenement boundaries. defined system of laws and procedures governing the development All the various legislative regimes have at least two common stages – of mining projects, and a proactive foreign investment regime. exploration and mining – with some including a third retention stage, In February 2019, the Federal government released a ‘National which allows a tenement holder to retain rights over a prospective Resources Statement’, outlining its policy approach and five-point area after a discovery until commercial production is feasible. reform agenda for the resources sector (including enhancing Australia’s competitiveness in the resources sector and opening up 1.2 Which Government body/ies administer the mining new industries and resource regions). In August 2019, the Productivity Commission (the Federal industry? government’s independent research and advisory body on a range of economic, social and environmental issues) announced that it The administration of the mining laws of each State and Territory would carry out a year-long inquiry into regulation affecting the ultimately rests with a minister, who is in turn assisted by a depart- resources sector, with view to streamlining approvals and reducing ment of the public service. The department has primary the regulatory burden on business in the sector. responsibility for the day-to-day administration of the mining laws. These steps have been taken in response to industry concerns The activities of the mining industry are separately regulated by a regarding the time required to obtain development approvals for multitude of government bodies which are responsible for laws that mining projects and are aimed at supporting new mine development. have general application (as outlined below). ‘Scope 3’ emissions (i.e. indirect carbon emissions through supply chains and end users) have had increased prominence when regula- 1.3 Describe any other sources of law affecting the mining tors are assessing development proposals (most notably in Western industry. Australia and New South Wales).

2.2 Are there any speciﬁc steps the mining industry is taking All mining activities in Australia must be carried out according to the mining laws of the relevant jurisdiction, as well as any State, Territory in light of these developments? or Federal laws that regulate the activity being undertaken. Some of the key sources of law affecting mining activities in Australia include: The mining industry has welcomed the Federal government’s efforts to ■ environmental legislation (see section 9 below); reduce the regulatory burden in the resources sector and is continuing ■ native title legislation (see section 10 below); to engage in law and policy reform efforts in the mining space and ancil- ■ cultural heritage legislation, directed at the protection of lary areas, such as environmental regulation and workplace relations. Aboriginal and Torres Strait Islander heritage sites and objects A proposed requirement that all new major projects in Western of archaeological and/or cultural significance; Australia include an 100% carbon offset was withdrawn by the envi- ■ occupational health and safety legislation, regulating health and ronmental regulator following a consultation between the industry safety at mining workplaces (see section 11 below); and the government. The industry continues to consult with the ■ industrial relations legislation; and government at all levels regarding the extent to which ‘Scope 3’ emissions should be factored into environmental assessments.

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3 Mechanics of Acquisition of Rights licences applicable for most mining developments include environmental permits, planning and development approvals, health and safety permits, and rights to use water, electricity and other utilities. 3.1 What rights are required to conduct reconnaissance? Consents and compensation agreements with landowners and traditional owner groups are also usually required.

The position on what rights (if any) are required to conduct reconnaissance varies in each State. In some States (e.g. Western 3.4 Are different procedures applicable to different minerals Australia), reconnaissance not requiring land access, such as aerial and on different types of land? surveys, can be undertaken without holding a permit under the mining legislation. While there has been a shift away from the regulation of specific Notably, Federal and State government authorities (e.g. Geoscience minerals to the regulation of minerals as an all-inclusive category Australia) carry out publicly funded geophysical surveys, which are within the general mining law, separate legislative regimes continue intended to help identify new areas for private minerals exploration. to apply to particular minerals (most notably coal, gold, iron and radioactive minerals) in certain jurisdictions. These distinct regimes 3.2 What rights are required to conduct exploration? typically provide for either separate mineral rights over particular minerals or, where separate mineral rights are not provided for, Most State and Territory mining law regimes make provision for the unique application or regulation regimes for particular minerals grant of an exclusive right to prospect (variously called ‘miner’s rights’ (most notably the rates for government royalties, which are usually or ‘prospecting permits’ or ‘licences’). These rights are usually granted specific to particular minerals). There is also a moratorium on for a limited period of time (usually less than five years) and allow the uranium mining in the States of Western Australia (subject to excep- right-holder to carry out small-scale mineral exploration activities on the tions), Victoria, New South Wales, Tasmania and Queensland. surface of the land covered by the right, including searching for minerals and collecting samples (subject to the consent of the owner or occupier 3.5 Are different procedures applicable to natural oil and of private land). Prospecting licences generally restrict the amount of gas? materials permitted to be used, the technology able to be used to search for minerals (usually only the use of non-mechanical hand-held equip- Separate legislative regimes apply to the regulation of onshore oil ment is permitted) and the area over which the right subsists. and gas in each State (excluding Tasmania) and the Northern Large-scale exploration requires an exploration licence. An explo- Territory. The States regulate onshore activities within the bound- ration licence grants the holder the exclusive right to carry out aries of the relevant State and offshore activities within three nautical exploration and assessment activities to determine potential prospec- miles of the coast. The State-based regimes in respect of offshore tivity within the tenement area. Exploration licences are usually oil and gas are essentially uniform, and divide title into three broad granted for an initial term of five years (with the right to renew), and categories: exploration; production; and titles relating to pipelines. are often subject to compulsory surrender or relinquishment require- Conversely, the Federal government regulates offshore activities ments each year during the term. occurring beyond the three nautical mile limit of each State to the The holder of an exploration licence will usually have the right to outer limits of the continental shelf. enter onto land to carry out exploration operations (subject to agreement with landowners), to extract certain quantities of minerals for assessment, and to apply to convert of the licence into a retention 4 Foreign Ownership and Indigenous Ownership licence or mining lease. Conversely, exploration licences often impose Requirements and Restrictions minimum annual exploration expenditure commitments, intended to ensure proper appraisal and analysis, and yearly rental payments must be made to keep the tenement in good standing. 4.1 What types of entity can own reconnaissance, Exploration licences usually include reporting conditions, which exploration and mining rights? require exploration results to be provided to the relevant authority. Those reports are usually available for public inspection, with the There are no restrictions on the type of entity that can own recon- intention of facilitating further regional exploration activity. naissance, exploration and mining rights. However, in practice, it is most common for a company to hold reconnaissance, exploration 3.3 What rights are required to conduct mining? and mining rights. Mining projects in Australia are often conducted through joint ventures. A joint venture may be incorporated (i.e., a special purpose company is incorporated by the joint venture partic- A mining lease is required to conduct development and commercial ipants to hold the joint venture property and conduct the joint extraction operations and disposal of minerals from the tenement venture operations) or unincorporated (i.e., where the participants area. The typical term of a mining lease varies depending on the enter into a contractual arrangement and retain ownership of the jurisdiction in which the lease is obtained (e.g. a 21-year initial term joint venture assets as tenants in common in agreed proportions). in Western Australia and for a variable period in Queensland, usually determined by the mine life). A mining lease typically grants the holder the right to exclusive posses- 4.2 Can the entity owning the rights be a foreign entity or sion of the tenement area for mining operations, the right to construct owned (directly or indirectly) by a foreign entity and are there and operate production facilities (subject to additional approvals) and the special rules for foreign applicants? right to extract commercial quantities of minerals for sale or export. In return, the holder will usually have an obligation to pay royalties to the State government based on minerals extracted and to make yearly rental Provided the requisite foreign investment approval is obtained, there payments and environmental rehabilitation bond payments. are no express restrictions on foreign entities (or an Australian There are numerous other permits and licences required at each subsidiary of a foreign entity) owning mining rights. stage of the mining cycle in Australia. The major permits and Direct and indirect foreign investment is overseen by the Foreign Investment Review Board (FIRB), a Federal government body

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responsible for administering the Foreign Acquisitions and Takeovers Act In addition, notification may be required for acquiring an interest 1975 (Cth) (the Act) and examining proposals by foreign persons to in an Australian land corporation (a company having more than 50 invest in Australia above certain monetary thresholds. The FIRB is per cent of its assets consisting of ‘Australian land’). As interests in responsible for reviewing such proposals and making recommendations Australian land include interests in mining and production tenure, to the Australian Treasurer on whether they should be approved in these interests must be taken into account in considering if an entity accordance with the Act; however, the Treasurer has the ultimate in which a foreign investor is proposing to acquire securities is an decision to approve or reject a proposal (and does not have to accept Australian land corporation. the FIRB’s recommendation). In addition, if the proposed acquisition is by a foreign govern- In considering proposals, the FIRB assesses whether it is ‘contrary ment investor, the acquisition of an interest in an operational mine to the national interest’; however, the Act does not define ‘national will require FIRB notification, irrespective of the value of the invest- interest’. This is intentional and allows proposals to be assessed ment. For agreement country investors and other foreign persons, the case-by-case, recognising that national interests change over time and threshold for notification of acquisitions of interests in operational flexibility is necessary to account for variable economic and industry mines is higher (A$1,154 million for agreement country investors and conditions. A$58 million for foreign persons). The lower thresholds for agree- Generally, when considering whether a proposal is in the ‘national ment country investors can only be relied upon if the entity making interest’, regard is given to broad topics contained in Australia’s the investment is an ‘enterprise’ or ‘national’ of the relevant agreement foreign investment policy (such as national security, data protection, country (e.g. the higher threshold does not apply if the investment is competition, and other government policies (e.g., tax or environ- made through an Australian wholly owned subsidiary). ment) that affect the economy and broader community) and the Generally speaking, an application for a new mining tenement (or ‘character’ of the proposed investor. a transition from an exploration to a mining tenement) will not Under Australia’s foreign investment framework, certain foreign trigger any FIRB notification requirements, as the granting of prop- investment proposals require a FIRB notification irrespective of erty rights by a government does not constitute an ‘acquisition’ for their value. All direct investment in Australia by foreign govern- the purposes of the Act. The only exception to this is in the case ments and their related entities, including State-owned enterprises of a foreign government investor, who must notify FIRB before and sovereign wealth funds, require FIRB notification. converting any tenements from exploration to mining, to acquire an Acquisitions by other foreign persons that are valued at or above interest in tenements directly from the Australian government or to the relevant monetary thresholds also require FIRB notification. acquire an interest of at least 10 per cent in the securities of a The table below sets out the relevant thresholds for acquisitions by mining, production or exploration entity. foreign government investors, all non-government foreign investors There are also requirements for foreign persons to register any other than investors from certain countries (including Canada, Chile, acquisition or divestment of an interest in agricultural land with the China, Japan, Mexico, New Zealand, Singapore, South Korea, Australian Taxation Office. Thailand, United States, and Vietnam) to which Australia has agreed different thresholds pursuant to free trade and other agreements 4.3 Are there any change of control restrictions applicable? (‘agreement country investors’) and all other foreign investors (‘foreign persons’). Under the mining law, in most jurisdictions (excluding New South Wales and South Australia), there is no requirement to obtain minis- Investor Relevant threshold for terial consent to a change in control of an entity that holds a mining acquisition (indexed, as at 1 January) tenement. Foreign Exploration tenure: Increases in control of Australian public companies with more persons Approval generally not required than 50 members are regulated under the Corporations Act 2001 (Cth). Mining or production tenure: Increases in control of Australian companies by foreign persons may A$0 also require a FIRB notification. Acquisitions in operational or producing mining projects: 4.4 Are there requirements for ownership by indigenous A$58 million persons or entities? Agreement Exploration tenure: country Approval generally not required There are no indigenous ownership requirements or entitlements in Mining or production tenure investors : Australia. United States, New Zealand and Chile – A$1,154 million; all others – A$0 Acquisitions in operational or producing 4.5 Does the State have free carry rights or options to mining projects: acquire shareholdings? A$1,154 million Foreign Exploration tenure: The States and Territories do not have free carry rights or options government A$0 to acquire shareholdings in mining companies. investors Mining or production tenure: A$0 5 Processing, Reﬁning, Beneﬁciation and Export Acquisitions in operational or producing mining projects:

A$0 5.1 Are there special regulatory provisions relating to processing, reﬁning and further beneﬁciation of mined

minerals?

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There are no regulatory provisions specifically addressing the Mining legislation does not typically specifically address the subdivi- processing, refining and further beneficiation of mined minerals in sion of rights to conduct reconnaissance, exploration and mining Australia. However, processing, refining and further beneficiation (although New South Wales and Victoria do contain a statutory must comply with any applicable environmental and health and mechanism that facilitates subdivision). However, tenements can safety laws (such as dangerous goods legislation). usually be jointly held and the right to explore for secondary minerals can usually be divested contractually (see below). 5.2 Are there restrictions on the export of minerals and levies payable in respect thereof? 7.2 Are rights to conduct reconnaissance, exploration and mining capable of being held in undivided shares? There are generally very few legislative restrictions in place in relation to the exporting or sale of Australian minerals, other than an overarching Rights to conduct reconnaissance, exploration and mining are usually requirement to have export clearance. As a signatory to the Nuclear capable of being granted to two or more parties, and if so granted, Non-Proliferation Treaty, Australia has generally sought to restrict the may be held by the parties as tenants in common. One context in sale of Australian uranium to countries who are also signatories to that which the ability to hold mining-related rights in undivided shares is treaty (although India is an exception to this general rule). particularly relevant is that of the unincorporated joint venture. Where Australian uranium is exported, Australia has required Unincorporated joint ventures are commonly used for mining purchasers to track the material (more closely than is required by the projects in Australia. In essence, they involve a contractual arrange- International Atomic Energy Agency) to ensure it is used only for ment between participants pursuant to which the participants agree peaceful purposes. to engage in a common undertaking. An unincorporated joint There are no export-specific levies payable in respect of the venture is not a separate legal entity, and the participants usually own export of minerals from Australia (but noting State royalties are typi- the assets of the joint venture as tenants in common (in their respec- cally payable on mineral production). tive percentages).

6 Transfer and Encumbrance 7.3 Is the holder of rights to explore for or mine a primary mineral entitled to explore or mine for secondary minerals? 6.1 Are there restrictions on the transfer of rights to conduct reconnaissance, exploration and mining? In most States and territories, tenement holders are entitled to conduct exploration or mining activities solely in respect of the minerals specified in the relevant tenement. Western Australia is an The transfer of a mining tenement (or of an interest in a mining tene- exception – in that State, rights to conduct exploration and mining ment) is generally permitted under Australian mining legislation. activities are granted over minerals generally (with the exception of However, in most jurisdictions, strict controls apply to the transfer of iron ore, which is generally excluded from mining tenements). As a tenements: common regulatory requirements include ministerial general rule, a tenement holder may sub-licence the right to explore approval and registration of transfers. Where ministerial consent to a or mine secondary minerals to a third party (subject to any ministe- transfer is required, the minister will usually consider the proposed trans- rial consent and registration requirements). feree’s technical and financial capacity to carry out the approved mining work programme for the tenement and its compliance record (if any) in reaching a decision as to whether or not to consent to the transfer. 7.4 Is the holder of a right to conduct reconnaissance, Additionally, transfers may be required to comply with certain formal- exploration and mining entitled to exercise rights also over ities and transfers to foreign persons may require a FIRB notification. residue deposits on the land concerned?

6.2 Are the rights to conduct reconnaissance, exploration As a general rule, the holder of a right to conduct exploration or and mining capable of being mortgaged or otherwise secured mining is entitled to exercise its right over minerals that remain in to raise ﬁnance? the land and over residue deposits on the land covered by the right.

As a general rule, an interest in a mining tenement is capable of 7.5 Are there any special rules relating to offshore being mortgaged or otherwise secured to raise finance (subject to exploration and mining? compliance with any statutory requirements relating to dealings in tenements, such as registration or ministerial consent). Offshore exploration and mining is regulated by State, Territory and It should also be noted that, while mining tenements are personal Commonwealth legislation. Under the Offshore Constitutional property, they are specifically excluded from the Personal Property Settlement between the States and the Commonwealth, the States Securities Act 2009 (Cth). This means that, where a financier has taken and Territories regulate offshore activities from the territorial sea a mortgage or charge over a mining tenement, the mortgage or charge baseline seaward to three nautical miles. The Commonwealth regu- may need to be registered with the State or Territory authority lates all other offshore exploration and mining activities. responsible for the administration of mining titles to be effective. 8 Rights to Use Surface of Land 7 Dealing in Rights by Means of Transferring Subdivisions, Ceding Undivided Shares and 8.1 Does the holder of a right to conduct reconnaissance, Mining of Mixed Minerals exploration or mining automatically own the right to use the surface of land? 7.1 Are rights to conduct reconnaissance, exploration and mining capable of being subdivided? A tenement holder’s rights to carry out mining activities on the land surface usually depend upon the particular mining operations in

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question, but typically include rights to access water and public roads, In addition to obtaining State or Territory government approval for to construct buildings, plants, roads and railways, and to conduct a project, assessment and approval under the Commonwealth primary treatment operations and other ancillary acts. However, the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) is right to use the surface of land for these purposes will require prior required to take an action that will affect ‘a matter of national envi- agreement with relevant landowners (see below). ronmental significance’. Generally speaking, ‘matters of national environmental significance’ involve sensitive areas or species, but 8.2 What obligations does the holder of a reconnaissance matters that affect Federal lands, waters, protected flora and fauna and other politically sensitive actions, such as large-scale mining projects right, exploration right or mining right have vis-à-vis the (particularly uranium projects), are also caught by the legislation. landowner or lawful occupier? While there is provision for the Federal government to delegate authority to the States/Territories in certain circumstances, in prac- If a tenement holder seeks to engage in mining or exploration activities tice this rarely occurs – especially in relation to large-scale or on private land, there is an obligation to consult with the private high-value projects. This potential duplication of environmental landowner and agree terms governing access and compensation. approvals between State and Federal regulators is a key issue for Consultation usually commences after the initial reconnaissance mining companies to navigate and one that causes significant delays activities not requiring land access are completed (such as detailed in some projects. geological and geophysical surveys), leading to an access agreement or arrangement being entered into to enable the pursuit of an appli- 9.2 What provisions need to be made for storage of tailings cation and grant of an exploration or mining right. and other waste products and for the closure of mines? Generally, exploration or mining rights will not be granted over privately held land unless some form of access or compensation arrangement has been agreed with the relevant landowner. The Matters relating to the storage of tailings and other waste products mining law usually provides for disputes regarding access and are typically addressed in the environmental management plans for compensation to be resolved by a court process if the parties are mining projects prepared as part of the environmental approvals unable to agree. process described in question 9.1 above, rather than by way of prescriptive regulation. Commitments made in environmental management plans will 8.3 What rights of expropriation exist? become legally binding obligations once they are imposed as conditions on the relevant tenement. Additionally, in some jurisdictions, The State, Territory and Federal governments have the power to the mining regulator has issued guidelines regarding tailings manage- compulsorily acquire land for public purposes (but not on behalf of ment which (while of no legislative force unless incorporated in tenement holders for private mining purposes). conditions of approval) serve as a framework to ensure that mine Tenement holders do not have the power to expropriate land for operators do not leave themselves, subsequent landowners or the mining purposes (although they may have the right to exclusive government with ongoing liability. In other jurisdictions, such as possession during mining operations). However, tenement holders New South Wales, specific legislation addresses tailings storage safety have the right to negotiate access with landowners, and where access and management. and compensation cannot be agreed, there is generally an ability to The mining laws in most States and Territories require mining have the dispute determined by a court or tribunal. lease holders to provide a rehabilitation bond to the mining regulator, which is returned to the holder once the mined land is fully 9 Environmental rehabilitated. However, Western Australia has replaced the requirement to provide a rehabilitation bond with a mine rehabilitation fund model and in Queensland a hybrid rehabilitation fund and surety bond 9.1 What environmental authorisations are required in order scheme is used. to conduct reconnaissance, exploration and mining Additionally, most regimes require a mining lease holder to put in operations? place a detailed rehabilitation plan, which generally requires complete costings of full rehabilitation activities to be submitted to the mining regulator and regular updates if the scope of operations changes. Environmental assessment, approvals and compliance with legisla- The purpose of rehabilitation is to ensure that mine sites are restored tive requirements are mandatory for the commissioning and to a sufficiently safe and environmentally stable condition and are able operation of all mining projects in Australia. to sustain a post-mining land use. Mining regulators in Australia are Environmental assessments and approvals are governed by both vigilant in their assessment and clarification of rehabilitation plans, Federal and State/Territory legislation. Depending on the size, and have the power to require changes or adjustments, as well as call significance and impact of the mining project in question, the regu- for additional funds to be added to the rehabilitation bond if they lator may require an environmental assessment to be undertaken in deem it insufficient to repair the land in question after mining ceases. respect of: Mine rehabilitation has also become an increasing focus as a number (a) minimisation of the effects on flora, fauna and land or habitat; of projects reach the end of their intended mining life and have been (b) environmental pollution and contamination of land; and sold to smaller companies for a nominal consideration and assumption (c) management and use of water resources, including protections of rehabilitation obligations. against contamination of groundwater.

Companies wishing to commission mining projects must prepare (sometimes in conjunction with the relevant environmental regula- 9.3 What are the closure obligations of the holder of a tory body) an assessment of the anticipated environmental impact reconnaissance right, exploration right or mining right? of their project. That assessment is generally opened for public consultation or comment. A determination is then made by the rele- The holder of a mining right is responsible for the rehabilitation of vant environment minister. the land covered by that right, and rehabilitation bonds are returned The grant of environmental approval is generally subject to condi- only once the tenement holder has discharged its regulatory obligations that aim to minimise the overall environmental impact of the tions with respect to closure. mining project.

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Environmental offences may be committed by holders of mining tene- tory bodies with wide-ranging powers. The structure of the legisla- ments for failing to properly rehabilitate and ‘make good’ land following tive framework differs across Australia. mine closure in accordance with applicable statutory provisions. Many States regulate health and safety at mine sites through a specific piece of legislation that differs from the legislation applicable 9.4 Are there any zoning or planning requirements applicable to to industry more broadly. Mine operators should also be aware of the myriad other pieces of health and safety legislation that may the exercise of a reconnaissance, exploration or mining right? regulate certain parts of their operations. Separate statutory regimes exist to govern (among other things) the safe operation of rail infras- In Queensland and Western Australia, land that falls within a mining tructure, aerodromes, the transport of goods by road, electricity, tenement is not subject to the planning controls contained in State dangerous goods and explosives. planning and development legislation. However, ancillary activities Notwithstanding this, the fundamental principles of each piece of carried on outside of the tenement perimeter may require zoning or health and safety legislation are broadly similar. Each piece of legis- planning approval. lation requires the duty holder to take a risk-based approach to safety In other States, zoning or planning approvals for mining must be by identifying hazards, assessing the risks that arise from those obtained in addition to reconnaissance, exploration or mining rights. hazards and taking reasonably practicable steps to control those risks. The process for obtaining those approvals depends on the nature and scale of the proposed activities. 11.2 Are there obligations imposed upon owners, employers,

10 Native Title and Land Rights managers and employees in relation to health and safety?

A primary duty of care is imposed on the mine operator to manage 10.1 Does the holding of native title or other statutory and control work sites, and to ensure the health and safety of its surface use rights have an impact upon reconnaissance, workers (which includes contractors and other indirect employees). exploration or mining operations? Directors and officers of mining companies also have a personal duty to exercise due diligence to ensure their company is compliant with all applicable workplace health and safety laws. In addition, Native title law in Australia is complex, but generally speaking, the often quite onerous duties are imposed on the most senior person key provisions in respect of native title rights are set out in the Native at a mine to take responsibility for the implementation of the mine’s Title Act 1993 (Cth) (NTA), which aims to: safety management system. (a) protect and recognise native title rights; (b) provide for the validation of past acts and intermediate past acts; 12 Administrative Aspects (c) establish ways in which future acts affecting native title may proceed; and (d) establish a mechanism for determining competing interests. 12.1 Is there a central titles registration ofﬁce? The NTA also confirms that certain grants (mainly freehold grants and leases conferring rights of exclusive possession) have extinguished native title rights. Where native title is not extinguished, the NTA As responsibility for the grant of tenements lies with the States and protects those rights by imposing a firm regime, which governs any ‘act’ Territories, there is no single Australian titles registration office. (i.e., the grant of a mining tenement) occurring after 1 January 1994. However, the States and Territories maintain registers of mining Generally speaking, any grant of a mining tenement after 1 interests which typically provide details in respect of applications for January 1994 will be valid provided that it complies with the NTA and grants of tenements, encumbrances over tenements and certain regime. In most cases, the proposed grant triggers a ‘right-to-nego- dealings with tenements. tiate’ process, whereby the mining regulator, the proposed tenure-holder and the native title-holder are required to negotiate in 12.2 Is there a system of appeals against administrative good faith the process by which a mining tenement can be granted. decisions in terms of the relevant mining legislation? These agreements commonly include compensation to the indigenous community, provision of employment or community benefits, The authority to make administrative decisions under mining legis- and protection for areas of cultural heritage significance. If the lation typically rests with the minister or relevant department of the parties cannot reach an agreement, there is an adjudicated process public service in each State or Territory. that can be accessed under the NTA. Persons who are aggrieved by an administrative action taken under Crucially, in most cases, a right of veto by native title-holders does those laws may seek judicial review of that action, in accordance with not arise; however, the native title process can be time-consuming and the principles of administrative law. costly, and depending on the proposed area, certain projects cannot Additionally, the position of ‘warden’ exists in South Australia, proceed without an agreement with the native title-holder (this is Victoria and Western Australia to deal with certain mining-related usually dictated by State/Territory legislation rather than the NTA). disputes. The Warden’s decisions can be reviewed in courts, in accor- There are also Aboriginal cultural heritage rights that may exist in dance with the principles of administrative law. respect of certain land independent of any native title rights that may arise, and there are defined mechanisms (usually enshrined in State/Territory legislation) that govern this. 13 Constitutional Law

11 Health and Safety 13.1 Is there a constitution which has an impact upon rights to conduct reconnaissance, exploration and mining? 11.1 What legislation governs health and safety in mining? Australia’s Constitution establishes a centralised federal government Health and safety issues are governed by occupational health and (known as the Commonwealth government) and various State and safety legislation administered by each State/Territory through statu- Territory governments. The Constitution also reserves exclusive responsibility for certain matters (i.e., trade, commerce and defence) to the

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Commonwealth government, and allocates law-making responsibilities approval requirements prior to the construction of infrastructure at among the Commonwealth and the States and Territories. mine sites and the granting of mining tenure. Additionally, some Under Australia’s constitutional framework, the States and local government laws may be relevant to the environmental aspects Territories have law-making responsibilities in relation to reconnais- of mining projects (such as noise regulations). sance, exploration and mining. However, the carrying out of mining-related activities requires 15.2 Are there any regional rules, protocols, policies or laws compliance with a range of Commonwealth laws (including Federal relating to several countries in the particular region that need to taxes, environmental, employment, foreign ownership and native title laws) and certain State and Territory laws of general application (e.g., be taken account of by an exploration or mining company? States taxes and transfer duty). Australia is a signatory to a number of bilateral and multilateral free 13.2 Are there any State investment treaties which are trade agreements with countries in the Asia-Pacific region which are relevant to the operations of exploration and mining companies. applicable? However, these agreements do not impose obligations on exploration or mining companies operating in Australia directly (as they Australia is a party to numerous State investment treaties and free operate at a state-to-state level). trade agreements which promote and protect foreign investment in These treaties are intended to reduce governmental barriers to Australia. These agreements typically include provisions to ensure international trade and investment, and promote investment by elim- non-discrimination, restrictions on expropriation of an investor’s inating tariffs, prohibiting expropriation without compensation and property and equitable treatment for foreign investments in Australia. guaranteeing foreign investors no less favourable treatment than Additionally, Australia is a party to various international security domestic investors. arrangements and export control regimes (including in respect of the export of radioactive materials), international tax agreements and 16 Cancellation, Abandonment and sanction measures which may impact upon mining activities undertaken in Australia. Relinquishment

14 Taxes and Royalties 16.1 Are there any provisions in mining laws entitling the holder of a right to abandon it either totally or partially? 14.1 Are there any special rules applicable to taxation of exploration and mining entities? The State and Territory legislative regimes permit the holder of a mining tenement to surrender a tenement in whole or in part. In some jurisdictions, partial surrender of a tenement requires ministerial approval. General duties and taxes – such as local government rates and fees, Importantly, surrender of a tenement does not discharge the stamp duty, goods and services tax, capital gains tax or income tax liability of the tenement holder in respect of obligations incurred or – are payable by exploration and mining entities in the same manner conditions required to be performed on or before the date of as for any other business within Australia. surrender of the tenement (particularly in relation to rehabilitation). A Junior Mineral Exploration Tax Credit is available, which allows

tax losses from greenfield exploration to be distributed as a refund- able tax credit to Australian resident tax shareholders who 16.2 Are there obligations upon the holder of an subscribed for shares in the entity during the relevant income year. exploration right or a mining right to relinquish a part thereof The total exploration credits available for issue during the scheme is after a certain period of time? capped at A$100 million over a four-year period. The scheme has been oversubscribed every year it has been offered. In most jurisdictions, the mining legislation requires that part of the area

covered by an exploration licence be relinquished at specified intervals 14.2 Are there royalties payable to the State over and during the term of the licence and/or on renewal of the licence. above any taxes? In contrast, compulsory relinquishment does not apply in respect of mining leases in Australia. Royalties are payable to the relevant State/Territory on extraction of minerals, although the amount and calculation varies depending on 16.3 Are there any entitlements in the law for the State to the location and the mineral. Typically, royalties are either flat-rate cancel an exploration or mining right on the basis of failure to (i.e., the cost per tonne), ad valorem (a percentage of the value of comply with conditions? minerals recovered) or profit-based. Royalties are payable in addition to any other applicable taxes. A forfeiture system applies to mining tenements under State and 15 Regional and Local Rules and Laws Territory mining legislation. The purpose of the forfeiture system is to ensure that tenement holders actively exploit the land which is the subject of a tenement (by carrying out a minimum level of expen- 15.1 Are there any local provincial or municipal laws that diture on the tenement). As a general rule, the relevant minister or the warden may make an need to be taken account of by a mining company over and order for forfeiture of a tenement for non-compliance with appli- above National Legislation? cable mining legislation or with conditions on the particular tenement, or for non-payment of monies owing to the State or Territory. Most mining activities undertaken in Australia are regulated at the Additionally, in Western Australia, third parties may apply for State or Territory level. Local law considerations will be most forfeiture of a tenement on specified grounds. commonly encountered in the context of planning and land use

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Herbert Smith Freehills Tel: +61 8 9211 7877 Level 36, QV1 Building Email: [email protected] 250 St Georges Terrace URL: www.herbertsmithfreehills.com Perth, WA, 6000 Australia

Geoff Kerrigan is a senior associate in Herbert Smith Freehills’ corporate group and has broad experience in mining and resources transactions, including domestic and international acquisitions and divestments, joint ventures and offtake agreements. He is also experienced in advising on a varied range of project and development agreements, including construction and procurement contracts, state agreements, port access and transportation agreements, infrastructure use agreements and commodity marketing agreements.

Herbert Smith Freehills Tel: +61 8 9211 7777 Level 36, QV1 Building Email: [email protected] 250 St Georges Terrace URL: www.herbertsmithfreehills.com Perth, WA, 6000 Australia

Herbert Smith Freehills is one of the world’s leading professional services busi- from exploration to mine closure and throughout every stage of a project’s life- nesses, bringing together the best people across our 27 offices, to meet cycle, the firm provides an in-depth perspective on the complexities of deals and clients’ global legal service needs. The firm offers a top-tier seamless service a strong understanding of the global mining market overall. across a single global platform and an unparalleled depth of expertise. It It is a combination of civil and common law skills in these areas coupled with provides access to market-leading dispute resolution, mergers and acquisi- our understanding of culture, language and legal systems of major mining tions, projects and other transactional legal advice, combined with expertise countries that make our mining team unique. in a number of industry sectors, including mining, construction and infrastruc- www.herbertsmithfreehills.com ture, energy, technology and financial services. The firm’s international network of specialist mining lawyers is one of the largest in the world, offering the full spectrum of legal services, in both developed and emerging markets. We are the trusted advisers in leading mining majors through to juniors, and cover all aspects of listed company, corporate governance and regulatory compliance advice. In addition, having acted for parties

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Brazil Brazil

WILLIAM FREIRE Advogados William Freire

1 Relevant Authorities and Legislation i. Sovereignty of the Union over known or potential mineral wealth. ii. Mining carried out in the national interest. iii. Legal separation of real property from the mineral wealth 1.1 What regulates mining law? contained therein. iv. Public utility of mining. v. Guarantee that the Development (Exploitation) Concession will Mining in Brazil is regulated in the Federal Constitution (1988), in be granted to the explorer that invested, assumed risks and iden- the Mining Code (Decree-Law 227/1967) and its Regulation (Decree tified the mineral reserve (or its successor). 9.406/2018), and in laws that regulate the different legal regimes vi. Guarantee of ownership of the product of mining to the holder governing the development of mineral wealth. There are also a of the mining right. variety of legal rules issued by the Ministry of Mines and Energy vii. Guarantee of the Right of Priority. Ministério de Minas e Energia MME ( ) (“ ”) and by the National Mining viii. Administrative mining proceeding formed by binding adminis- ANM Agency (Agência Nacional de Mineração) (“ ”). trative acts. The following rules not contained in the Mining Code deserve ix. Mineral activity requires the consent of the Union (Federal emphasis: Government). ■ Law 6.567, of 1978, which deals with the development of x. Payment of a share of the mining results to the landowner. mineral substances for immediate use in civil construction. xi. Transmissibility of the mining right. ■ Law 7.805, of 1989, which deals with mineral substances that are xii. Single holder for each mining right. mined on a small scale, called the Permissão de Lavra Garimpeira xiii. Right to prior and fair indemnification in the event of revocation system. of the mining right, or in cases in which the Government There are special regulations that govern mineral activity measures hinder mineral development or render it unfeasible. conducted in border zones (Law 6.634/1979). xiv. Form of acquisition, modification and termination (or loss) of The National Congress analyses the regulation of mining activity the mining right. on indigenous lands. xv. Environmentally sustainable mining. Other laws regulate deposits of mineral substances that constitute There are several recognised Mining Law principles: a state monopoly, mineral or fossil substances of archeological i. Principle of legal certainty. interest and mineral or fossil specimens to be sent to museums, ii. Principle of sovereignty of the country over its mineral resources. teaching institutions and other scientific purposes. iii. Principle of conducting mining in the national interest. Mineral waters also have their own Code (Decree-Law 7.841/1945). iv. Principle of public utility of mining. The authority to legislate on deposits, mines and metallurgy v. Principle of continuity of mining activity. belongs solely to the Union (federal level). The states, municipalities vi. Principle of environmentally sustainable mining. or indigenous communities do not have any normative authority in Brazilian legal scholars seek to expand the scope of the concept the area of Mining Law. of security of tenure to go beyond the simple security of holding Mineral exploration can only be conducted by Brazilians (indi- the mining right. The goal is to include the right of miners to vidual citizens, whether they have birthright citizenship or were demand compliance with the rules and principles applicable to the naturalised); mining can only be done by legal entities, through a administrative mining proceeding, such as administrative efficiency. company established in accordance with Brazilian laws, with headquarters and administration in the country. 1.2 Which Government body/ies administer the mining industry? Mixed development regime The legal regime for development of mineral substances in Brazil is Mining activity is managed by the Ministry of Mines and Energy mixed. It includes the priority system (first come, first served basis), (“MME”) and by the National Mining Agency (“ANM”). availabilities (bidding system that is specific for mining, with some According to the Mining Code Regulation (Federal Decree differences from the general bidding regime) and the National Reserves 9.406/2018), mineral activity includes exploration, mining, mine (areas in which the Government can impose differentiated rules for development, the use of tailings or waste and mine closings. the development of certain substances). The MME has the authority to grant development concessions under the authorisation-concession regime. The ANM has the Core of the legal regime of mining authority to grant the other mining titles. Independent to the rule applied to the development of the different Importance of mining for Brazil mineral substances, there is a core composed of principles and rules Brazil is a global player in Niobium, Iron ore, Tantalite, Bauxite, that apply to all the regimes: Graphite and Vermiculite.

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It is an exporter of Gold, Nickel, Tin, Manganese, Chromium, The land exploration phase begins with the exploration applica- Copper, Vanadium, Kaolin, Magnesite and Ornamental Stones. tion at the ANM. Brazil produces approximately 50 mineral substances. There are around 7,000 mining companies, which account for 4% 3.2 What rights are required to conduct exploration? of the Gross Domestic Product and a relevant share of the Trade Balance and job creation. Mineral exploration is part of the administrative mining proceeding called authorisation-concession. 1.3 Describe any other sources of law affecting the mining Nevertheless, in Brazilian Mining Law, the terms authorisation and industry. concession do not have the same meaning they have under classic Administrative Law. For Mining Law, exploration authorisations are In addition to the regulation and monitoring by the MME and not as discretionary or precarious as administrative acts. They are ANM, mining is also subject to environmental, fiscal, labour and binding administrative acts, which can be defined simply as admin- corporate regulations, etc., as are all areas of economic activity. istrative consent to perform mineral exploration. However, there are some specific characteristics that apply only to The priority system (first come, first served) is the general rule in mining activities. effect in Brazil. Many of the safety standards, especially in regard to tailings dams The right to conduct mineral exploration can be applied for and and environmental protection, are being edited and there is a forecast granted to individuals (Brazilians with birthright citizenship or natu- for new rules for the coming months. ralised) or Brazilian legal entities. With the priority exploration application, the following rights are created for miners: 2 Recent Political Developments i. the exclusive priority right to explore; ii. the exclusive right to conduct mineral activity in the area, for all substances existing within the polygon of that mineral right. 2.1 Are there any recent political developments affecting the Even if the initial application only refers to one substance, the mining industry? others may be added to the title later; and iii. if the exploration is successful and mineral resources are found, the holder of the mining right will be entitled to the Development Since early 2019, Brazil has begun to experience a period of political (Exploitation) Concession and to the product of the mining if and economic stability. he complies with the legal obligations. Under the current Government, there is intensive political movement to modernise the economy in order to create a business-friendly 3.3 What rights are required to conduct mining? environment that is favourable to investors. Brazil is now moving forward with a focus on liberalisation of the economy, legal certainty and eliminating unnecessary bureaucracy. The concession regime is the natural consequence of successful exploration. 2.2 Are there any speciﬁc steps the mining industry is taking The authorisation-concession regime can only be used by legal entities founded under Brazilian laws, and these entities must have in light of these developments? their headquarters and management in Brazil. The development (exploitation) concession is granted for an There is visible economic dynamism in the country. Below are some undetermined period of time, and it is only linked to the exhaustion factors that will influence the development of the Brazilian mining of the deposit. industry at the moment: The interested party must show financial capacity to implement i. the new Government, with a liberal and developmental outlook, the Economic Development Plan proposed to the Government. who are aware of the need to ensure the compliance of Mineral concessions have a legal nature and attributes that are contracts and to preserve legal certainty for investors; specific to Mining Law and are not to be confused with the classic ii. the creation of the ANM, which has replaced the former concessions of Administrative Law. In Brazil, mining concessions National Department of Mineral Production; and are granted for an undetermined period of time (linked to exhaus- iii. significant alteration in economic policy, with a clear perception tion of the deposit), they do not depend on bidding (as the result of of mining as a strategic sector for the country. the regime of priority of exploration authorisation) and are not This new Government included mining among its priority projects. formalised by an administrative contract. They are recognised as There is an awareness that if the country does not develop its mining, legally valid upon publication of an administrative act – the mineral it will become weakened and dependent on external sources for raw concession – in the Official Gazette. mineral materials. The ability to meet its own mineral needs is related The holder of a Development Concession will have the full right to maintaining national sovereignty and security. to the product of mining, in accordance with the Constitution (Art. The intensive and efficient work by the MME and the ANM, 176, heading). beginning in 2019, based on a different structure from the former National Department of Mineral Production, constitutes a deter- 3.4 Are different procedures applicable to different minerals mining factor to move the development of mining forward in the and on different types of land? country.

3 Mechanics of Acquisition of Rights There are different administrative procedures, depending on the mineral substance and its intended use. There is no differentiation in the legal regime of mining as a result 3.1 What rights are required to conduct reconnaissance? of different types of real property or location, except in relation to environmental issues. Mineral activity can begin with geological recognition through aerial Around 95% of Brazilian mineral production has its origin in the prospecting, provided that the company shows it has the technical authorisation-concession regime. However, there are three other capacity for this work. regimes that deserve mention:

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a. Regime of mineral licensing, which applies to the sands, gravel, rocks 4.3 Are there any change of control restrictions applicable? and clay for immediate use in civil construction, in the preparation of aggregate materials and mortar, provided that they are not submitted to industrial beneficiation processes, nor intended There are no restrictions in regard to changes in control of companies, for use as a raw material for industry. provided that the status as a Brazilian company is maintained. It has the characteristic of not requiring prior exploration works Mining companies must keep the ANM updated regarding their reported to the National Mining Agency. statutory conditions by updating the Registry and filing their articles Those same substances can also be developed by the authorisa- of incorporation/organisation and amendments at the ANM. tion-concession regime. b. Regime of Small-scale Mining Consent (Permissão de Lavra Garimpeira). 4.4 Are there requirements for ownership by indigenous Some minerals that occur in the alluvial, eluvial and colluvial forms persons or entities? are subject to prospecting. This regime also has the characteristic of not requiring prior exploration works reported to the ANM. There are no specific rules governing mineral activity by indigenous Those same substances can also be developed by the authorisa- peoples or entities that represent them. tion-concession regime. According to the Federal Constitution (Art. 176, §1) the National c. Claim-stake Mines. There are still some mining rights in effect Congress shall establish, by law, rules governing mineral activities on that are called Claim-stake Mines. These are remnants of an old indigenous lands. access regime, which was in effect from 1891 to 1934, during More than 30 years after the promulgation of the Constitution, which time the owner of the real property was also the owner this law has still not been drafted. As a result, mining on indigenous of the mineral substances contained therein. From 1934 lands is not currently allowed. onwards, the mineral resources stopped being linked to the There is a consensus that many indigenous lands were demarcated ownership of the real property. without the proper technical criteria, thus burying important mineral Claim-stake Mines are becoming extinct, since this regime has deposits, some of which may have the potential to become world- not been applied to any new discoveries since 1934. class deposits. There is a type of administrative consent, which does not rise to Many of these improper demarcations have been re-examined. the level of a mineral development regime for substances for immediate use in civil construction, which is called Extraction Registration, which may be requested by political entities (Union, 4.5 Does the State have free carry rights or options to Federal District, States and Municipalities) for public works. acquire shareholdings? This registration is limited to five hectares and must comply with the rights of priority existing over the area. The Government does not have the right to opt to acquire shareholding in mining companies. 3.5 Are different procedures applicable to natural oil and gas? Funds linked to publicly-owned companies may purchase shares in mining companies on the market, without any benefit or preference. The oil and gas industry is regulated outside the Mining Code with different legislation and procedures. 5 Processing, Reﬁning, Beneﬁciation and Export

4 Foreign Ownership and Indigenous Ownership 5.1 Are there special regulatory provisions relating to Requirements and Restrictions processing, reﬁning and further beneﬁciation of mined minerals?

4.1 What types of entity can own reconnaissance, There are no specific regulations on the processing, beneficiation or exploration and mining rights? industrialisation of mineral substances, except in regard to the exploration, mining, enrichment, reprocessing, industrialisation and sale of nuclear minerals and their by-products. Mining can be conducted by individuals (with birthright citizenship or naturalised) or by legal entities established under Brazilian laws, with headquarters and administration in the country. There are no 5.2 Are there restrictions on the export of minerals and restrictions with regard to the capital. levies payable in respect thereof? All individuals and legal entities must be registered at the National Mining Agency and mining must be one of the company purposes There are only special provisions regarding the export of mineral listed in their Articles of Incorporation or Bylaws. substances from ores and nuclear minerals and their by-products.

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6.2 Are the rights to conduct reconnaissance, exploration With technical support from its National Geological Service (“CPRM”), Brazil participates in the South Atlantic Geology and mining capable of being mortgaged or otherwise secured Project, designed to be conducted under the general coordination of to raise ﬁnance? the International Seabed Authority and in cooperation with different institutions. The objective is to collect, bring together, integrate and Brazilian legislation establishes the possibility of giving mining rights provide all the data and information available about the geology and to guarantee financing and for obligations in general. mineral resources in the South Atlantic Ocean. Contracts establishing encumbrances on mining rights must be As of 2020, there was no extraction of mineral substances on and registered at the ANM. below the ocean floor, outside the limits of Brazilian jurisdiction (in the “Area”). 7 Dealing in Rights by Means of Transferring There is a great expectation in regard to the potential development Subdivisions, Ceding Undivided Shares and of the mineral substances contained in the oceans. The principal foci of interest at this time in the Exclusive Economic Zone are the Mining of Mixed Minerals phosphorites, coal, evaporites, and polymetallic nodules and crusts. Among the mineral resources in the ocean for which mining is 7.1 Are rights to conduct reconnaissance, exploration and already operational are bioclastic and siliciclastic granular deposits and potassium salts. mining capable of being subdivided? There are currently around 600 mining rights in effect over the Brazilian continental platform. Mining rights can be divided. The requirement is that each part must be technically, economically and environmentally feasible. 8 Rights to Use Surface of Land Divisions must be applied for and be processed by the ANM.

7.2 Are rights to conduct reconnaissance, exploration and 8.1 Does the holder of a right to conduct reconnaissance, mining capable of being held in undivided shares? exploration or mining automatically own the right to use the surface of land? In Brazil, the general system of unicity of the holder of the mining right is in effect. Miners do not have the automatic right to enter the real property of In some cases of specific bidding for mining rights, it is possible third parties to perform mineral activity. for consortia to participate, but only one company will be respon- Just as the legislation protects mineral activity, the Constitution sible for the legal obligations. protects the right of property. However, mining is considered an activity of public interest 7.3 Is the holder of rights to explore for or mine a primary (Decree-Law 3.365/1941), so the public interest has priority over the landowner’s private interest. mineral entitled to explore or mine for secondary minerals? In the event the owner or possessor of the real property resists, there are legal mechanisms that allow the miner to enter the real The holder of a mining right is entitled to develop all the mineral property after depositing a guarantee for indemnification of possible substances contained within the polygon of his mining right. damages, and payment of income for occupying the real property. The requirement is that prior to developing the second substance, The instruments available for this purpose are mineral easements the mining company must register the mining right for this new and expropriation. substance on the mineral right, and must also obtain prior environ- Exploration work conducted exclusively with drones does not mental licensing for developing the second substance. create a right to indemnification to the owner of the real property. In general, resistance by landowners or possessors is easily 7.4 Is the holder of a right to conduct reconnaissance, surmounted through a court-ordered mineral easement as a result exploration and mining entitled to exercise rights also over of the public utility of mining, recognised by law.

residue deposits on the land concerned? 8.2 What obligations does the holder of a reconnaissance right, exploration right or mining right have vis-à-vis the The holder of a mining right is the owner and is responsible for the waste and tailings that are generated. landowner or lawful occupier? The waste and tailings may be later used if there is a technical and economic viability for the development of useful mineral substances If there is no specific agreement, the obligations of the holder of still contained therein. the mining right to the landowner or possessor are generally: (i) to provide a guarantee to cover any possible damage caused to the real 7.5 Are there any special rules relating to offshore estate; (ii) pay income for occupation of the real estate during the exploration and mining? exploration and exploitation work; (iii) not cause pollution in the real property, beyond anything that is inherent to the mineral activity, and within the legal limits of tolerability; and (iv) to recover the area after There are no specific rules in the Mining Code governing the devel- the end of the mineral activity. opment of mineral resources in the Atlantic Ocean. To conduct offshore mining, miners must not only comply with the 8.3 What rights of expropriation exist? Mining Code, but also with the United Nations Convention on Sea Law, which the Brazilian Government has ratified, and the rules of the different entities related to the development of natural ocean resources. The right of expropriation in favour of mining was included in the Brazilian companies explore the ocean floor and below the seabed legislation in 2017. in the Exclusive Economic Zone.

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9 Environmental 11 Health and Safety

9.1 What environmental authorisations are required in order 11.1 What legislation governs health and safety in mining? to conduct reconnaissance, exploration and mining operations? In addition to the general rules governing health and occupational safety, mining is subject to its own specific regulations established in Any mining activity must be preceded by environmental licensing. the mineral legislation. The Brazilian environmental licensing system is generally tri-phasic, and is composed of the prior licence, installation licence and oper- 11.2 Are there obligations imposed upon owners, ating licence. employers, managers and employees in relation to health and In some cases, these licences can be requested at the same time, safety? facilitating the process to obtain the licence. An environmental problem that Brazil faces is that environmental conservation units are created without appropriate technical criteria, There are strict occupational health and safety requirements that often creating restrictions on the development of important mineral companies must follow. Rules of governance and environmental deposits. The new Government is aware of this problem. compliance do not only cover owners, but also directors, managers and employees.

9.2 What provisions need to be made for storage of tailings 12 Administrative Aspects and other waste products and for the closure of mines?

Environmental legislation establishes specific licences for waste piles 12.1 Is there a central titles registration ofﬁce? and tailing dams. In all cases, a Mine Closure Plan is required, which must be periodically updated. All mining rights are registered at the ANM, which is headquartered Recently, legislation was passed prohibiting the use of the in the capital, Brasília, with state regional representation offices and upstream method of construction. Dams built using the upstream smaller offices in some cities that are located in important mining method should be deactivated by 2021. hubs. As a result, many companies are already altering the mining Some procedures are computerised, and the expectation is for the method used, and now dry process the ore, avoiding the construc- entire system to be electronic in a few months. tion of tailings dams (whatever raising method is used) using a system for drying the tailings (dry stacking method). 12.2 Is there a system of appeals against administrative

decisions in terms of the relevant mining legislation? 9.3 What are the closure obligations of the holder of a reconnaissance right, exploration right or mining right? The legal regime of mining establishes the possibility of filing appeals, as well as the dual level of administrative jurisdiction. Mining companies must implement their Mine Closing Plans before In addition to the appeals defined in the Mining Code, there is a ending their mining proceeding. Among the principal obligations is general law (Law 9.784/1999) that governs all federal administrative to recover the area where the work occurred and to exercise special proceedings, and it requires that the Public Administration comply care with facilities, piles and dams that will require monitoring. with certain principles, including legality, purpose, grounds, reason- ableness, proportionality, morality, broad defence, adversarial system, 9.4 Are there any zoning or planning requirements applicable legal certainty, public interest and efficiency. to the exercise of a reconnaissance, exploration or mining Miners can also turn to the Judiciary if they do not agree with the decision in the administrative sphere. right? Administrative mining acts are binding administrative acts and there is no margin for discretionary decisions. Mineral activity must comply with Municipal Master Plans. In general, the Municipal Master Plans establish rules governing 13 Constitutional Law mineral activity within the limits of the municipality and environmental zoning. 13.1 Is there a constitution which has an impact upon 10 Native Title and Land Rights rights to conduct reconnaissance, exploration and mining?

10.1 Does the holding of native title or other statutory Brazil follows the Civil Law system, and many areas of law are codified. The Brazilian Constitution contains several provisions dedicated to surface use rights have an impact upon reconnaissance, mining (Art. 176), which contains the master guidelines for its legal exploration or mining operations? regime. Among the most relevant principles are that of sovereignty of the country over its mineral resources, the performance of mining in The Constitution recognises the need for special rules for mining in the national interest, the principle of administrative efficiency and the indigenous lands. In addition, areas occupied by communities who principle of legal certainty. are descendants of enslaved Africans (quilombolas) require specific The Brazilian Constitution contains a provision that is not found in analysis before mining rights are granted in these lands. foreign legislation: a small sharing in the mining results by the landowner.

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This means that even without contributing any investment, and even 15.2 Are there any regional rules, protocols, policies or receiving remuneration for the easement over his real property, the laws relating to several countries in the particular region that landowner will be entitled to a share in the mining results. This is a left- over protection that the landowner has that goes back to the 1940s. need to be taken account of by an exploration or mining It can be said that this is an example of the incongruence of Brazilian company? legislation. If the mineral wealth belongs to the Union, and not to the landowner, there is no reason for landowners to receive even a small There are no specific regional agreements, protocols, conventions or share of the mining results if he did not contribute to the investment. international laws that apply exclusively to mining. Brazil is a signatory of several international agreements with 13.2 Are there any State investment treaties which are consequences on the mineral industry, such as the United Nations applicable? Convention on the Law of the Sea.

There are no specific treaties governing mining investments. 16 Cancellation, Abandonment and However, there are non-specific treaties that apply to economic Relinquishment activities in general, which have ramifications for mining, such as Convention 169 of the International Labor Organization. 16.1 Are there any provisions in mining laws entitling the

14 Taxes and Royalties holder of a right to abandon it either totally or partially?

When the miner receives the mining right, he acquires and submits 14.1 Are there any special rules applicable to taxation of to a variety of rights and obligations. Among these obligations is to exploration and mining entities? not abandon the mine. Mining rights can be waived, upon compliance with all the mining Mining companies are subject to the general rules governing taxa- and environmental obligations owed up to the point of the waiver. tion, with certain applicable specific rules. 16.2 Are there obligations upon the holder of an 14.2 Are there royalties payable to the State over and exploration right or a mining right to relinquish a part thereof above any taxes? after a certain period of time?

In Brazil there is a fee called the Financial Compensation for Development There is no obligation to relinquish areas and there is no limit on the of Mineral Resources (“CFEM”), the percentage of which varies number of areas each company can have. according to the mineral substance. These rates apply to a specific calculation base and are defined in accordance with the substances: 16.3 Are there any entitlements in the law for the State to ■ 1% for rock, sand, gravel, clay and other mineral substances when cancel an exploration or mining right on the basis of failure to they are for immediate use in civil construction; ornamental comply with conditions? stones; mineral and thermal waters. ■ 1.5% for gold. ■ 2% for diamonds and other mineral substances. Miners that violate the Mining Code and its complementary rules are ■ 3% for bauxite, manganese, niobium and rock salt. subject to a variety of sanctions, ranging from a warning to forfeiture ■ 3.5 for iron ore. of the mining right. ■ There is an occupation fee during the exploration phase. In all cases, due legal process is respected, as is the right to a broad ■ There is no occupation fee during the mining phase. defence.

15 Regional and Local Rules and Laws

15.1 Are there any local provincial or municipal laws that need to be taken account of by a mining company over and above National Legislation?

Although the authority to legislate on geology, mines and metallurgy belongs exclusively to the Union (federal level), there are a variety of regulations that must be complied with. These are rules related to municipal standards, environmental zoning, etc.

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William Freire is an attorney, professor of Mining Law and the author of several books on Mining Law and Environmental Law applied to mining, including Brazilian Environmental Law, Annotated Mining Code, Comments on the Mining Code, Environmental Law Applied to Mining, Legal Nature of Consent for Mineral Exploration, Consent for Mining and the Claim stake in Brazilian Law, Fundamentals of Mining Law (in English), Crisis Management and Environmental Negotiations, Legal Risks of Mining and Mining Law: access to third-party property for exploration and mining. He has published over one hundred articles and given more than a hundred presentations, some in other countries. He is an Arbitrator at the Chamber of Business Mediation and Arbitration of Brazil (“CAMARB”) and a Director of the Department of Mining Law of the Institute of Attorneys of Minas Gerais. He is the founder of the Brazilian Institute of Mining Law (“IBDM”). He has been considered one of the most respected consultants in the field of Mining Law, by several institutes for many years.

WILLIAM FREIRE Advogados Tel: +55 31 3261 7747 Rua Paraíba, 476 4º floor Email: [email protected] Belo Horizonte, MG URL: www.williamfreire.com.br CEP 30130-141 Brazil

WILLIAM FREIRE Advogados is currently the largest boutique firm in the area of Natural Resources Law in Brazil. The Firm works in Regulatory Law, Environmental Law, Tax Law, Corporate Law, Mineral and Environmental, Criminal Law, Silviculture, Ocean Mining and Institutional Relations. With 30 years of experience exclusively in the mineral industry and its economic chain, WILLIAM FREIRE Advogados has worked on some of the most important cases involving mining in Brazil. The firm’s portfolio includes most of the largest mining and steelmaking companies with activities in Brazil. WILLIAM FREIRE Advogados has been constantly recognised as a leading law firm in Natural Resources Law by Chambers, The Legal 500, Análise 500 and Who’s Who Legal. www.williamfreire.com.br

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Canada Canada

Khaled Abdel-Barr

Lawson Lundell LLP Karen MacMillan

1 Relevant Authorities and Legislation the final disposal of reactor and mine waste), mineral activities related to federal Crown corporations, and mineral activities on federal lands and in offshore areas. The manufacture, sale, use, 1.1 What regulates mining law? storage and transportation of explosives used in exploration and mining also all fall within federal jurisdiction. These are regulated under the Explosives Act (Canada). Federal jurisdiction also covers Canada is a constitutional monarchy, a parliamentary democracy the export, import and transit across Canada of rough diamonds, and a federation comprised of 10 provinces and three territories. which is regulated under the Export and Import of Rough Diamonds Canada’s judiciary is independent of the legislative and executive Act. The federal Extractive Sector Transparency Measures Act creates branches of government. Responsibilities and functions under this stringent reporting standards for Canadian oil, gas and mining democratic structure are distributed through a federal system of companies, in order to implement Canada’s international commit- parliamentary government whereby the federal or central governments in combatting domestic and foreign corruption. All: (i) ment shares governing responsibilities and functions with the entities that are listed on a stock exchange in Canada; and (ii) enti- provincial and territorial governments pursuant to the division of ties that have a place of business in Canada, do business in Canada powers under the Constitution Act, 1867 (see question 13.1). The or have assets in Canada and that meet certain thresholds must Prime Minister, elected by the public, is the head of Government report payments including taxes, royalties, fees, production entitle- in Canada. ments, bonuses, dividends and infrastructure improvement Certain areas within the federal government’s jurisdiction may payments of 100,000 Canadian dollars or more, in the aggregate, affect a mining project, for example: Aboriginal rights; trade and to local and foreign governments, and as of 2017 this includes commerce; railways; nuclear energy; and environmental matters sums paid to Aboriginal governments. that involve matters of federal jurisdiction, such as fisheries. Any mining disclosure (whether oral or written, and including However, most of the areas which will affect a mining project are presentations to investors and disclosure on a mining company’s within the provincial governments’ jurisdiction. website) made available to the public in Canada is governed by National Instrument 43 101, Standards for Disclosure in Mineral 1.2 Which Government body/ies administer the mining Projects. This instrument was developed by the Canadian industry? Securities Administrators and is administered by the relevant provincial and territorial securities commissions. Pursuant to the division of powers under the Constitution Act, 1867, both the federal government and the provincial or territorial 1.3 Describe any other sources of law affecting the mining governments regulate mining activity in Canada (see question 13.1). industry. Exploration, development and extraction of mineral resources, and the construction, management, reclamation and closure of mine The areas of contract law and tort law are generally regulated by sites are all primarily within the jurisdiction of the provinces of the provinces pursuant to their “property and civil rights” powers Canada, the Yukon and the Northwest Territories (with some delineated under the Constitution Act, 1867. These bodies of law exceptions). In Nunavut and certain areas of the Northwest are mostly “common law” (i.e., “judge-made” law, rather than law Territories, public lands and natural resources are governed and created under legislation by Parliament or legislatures). Common administered by the federal government. Other than Nunavut, law can be superseded or changed by subsequent legislation. each province and territory has its own mining legislation and Québec, unlike the other provinces, is governed by civil law. Civil mineral tenure system, though certain mineral rights in the law is a codified law that is written into statutes (ex. Civil Code of Northwest Territories are administered by the federal government. Québec) which are then strictly interpreted by the courts. The provinces and territories (other than Nunavut) own the majority of the mineral rights in Canada, though mineral rights may also be held by private entities, by Aboriginal groups and by 2 Recent Political Developments the federal government. In Nunavut, mineral rights are owned by the federal government, by Aboriginal groups or by private enti- 2.1 Are there any recent political developments affecting ties. the mining industry? Federal government involvement in the regulation of mining operations is limited to those undertakings that fall within federal jurisdiction. These specific undertakings include uranium in the In March 2019, the Government of Canada announced the release context of the nuclear fuel cycle (i.e., from exploration through to of the Canadian Minerals and Metals Plan (CMMP), which is a

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forward-looking framework that was jointly authored by mining Prospectors’ licence requirements differ from jurisdiction to ministers across the country. The CMMP aims to address system- jurisdiction. In general, the government does not have the discre- atic challenges and issues in the mining industry, with a focus on: tion to refuse to issue a licence; prospector’s licences are granted competitiveness; the participation of Indigenous Peoples; commu- automatically if the applicant meets the statutory criteria. nity benefits; respect of the environment; scientific and However, it should be noted that a prospector’s licence can be technological innovation; and global leadership. The CMMP will cancelled or suspended for a contravention of applicable mining be followed by a series of “Action Plans” designed to opera- legislation. tionalise the CMMP. The first of the Action Plans will be In the Northwest Territories and Nunavut, a prospector may cooperatively developed by governments across the country, and also obtain a “prospecting permit”, which grants the holder exclu- is expected to be released in 2020. As of the date of its release, sive rights to explore and have mineral claims recorded within the the CMMP was endorsed by all of Canada’s mining ministers with assigned boundaries of a given permit area for a specified period the exception of the ministers from Ontario and Saskatchewan. of time. Similarly, in Saskatchewan, holders of permits issued by In June 2019, the federal government passed a new federal Impact the Minister of Environment are granted the exclusive right to Assessment Act to replace the existing Canadian Environmental explore the lands in question and subsequently can convert the Assessment Act, 2012, but the new Act will not come into force until permit into a mineral claim. the federal government has prepared and issued associated regula- Reconnaissance right requirements are less stringent in the tions (see question 9). Consequently, the new Act is not expected Yukon, Alberta, Saskatchewan and Newfoundland and Labrador, to come into force until after the federal election to be held in as one can conduct certain prospecting activities without a licence October 2019. In the past, changes in government at the federal or other formal registration. level have resulted in significant shifts in approaches to environmental assessment legislation in Canada. It remains to be seen 3.2 What rights are required to conduct exploration? whether the upcoming federal election will have an effect on environmental assessment legislation moving forward. A recent trend in many Canadian jurisdictions has been the In Canada, any significant exploration by a prospector will require movement away from traditional ground-staking regimes towards that prospector to hold the mineral rights to the area of interest. more modern electronic mineral tenure registries. Provinces such Mineral rights are obtained by “staking” a mineral claim, or as British Columbia, Ontario, Saskatchewan and New Brunswick “licence” or “permit” in some jurisdictions. The permitted have replaced their respective requirements for physical staking of methods for staking a claim vary from jurisdiction to jurisdiction, mineral claims with electronic registration regimes. In Nunavut and include physically staking a claim on the ground, on a map or and the Northwest Territories, mining legislation amendments have through an online computer registration system. Applicable fees been proposed to allow for the introduction of online mining and documents are often required to complete the staking and rights administration systems. These developments have had the recordation process and in some jurisdictions (for example, the effect of reducing the cost of staking mineral claims in these juris- Yukon), there may be a requirement to notify or engage with dictions, which may indicate a willingness to allow for more Aboriginal groups prior to recordation or prior to conducting speculative staking of claims. exploration programmes on recorded claims. The provinces and territories (other than Nunavut) each have their own mineral tenure system, though certain mineral rights in 2.2 Are there any specific steps the mining industry is the Northwest Territories are administered by the federal govern- taking in light of these developments? ment. Nunavut (except with respect to Inuit-owned lands) utilises a mineral titles system administered by the federal government. The mining industry is a significant stakeholder and has been an With respect to federally owned lands within the provinces, the active participant in consultations regarding the development of federal Public Lands Mineral Regulations regulate the issuance of the new environmental assessment regime. exploration and mining rights (in the form of a lease). The federal regulations differ from the provincial systems in that they provide 3 Mechanics of Acquisition of Rights for a competitive bidding process for mineral claims. In order to retain a mineral claim, prescribed amounts of work must be conducted thereon. In addition to exploration, an “assess- 3.1 What rights are required to conduct reconnaissance? ment report” describing the exploration and its costs must be filed each year with the relevant mining recorder. If the prescribed exploration costs are not incurred, most jurisdictions permit a Reconnaissance right requirements in Canada vary by jurisdiction. claim holder to pay an amount of money in lieu of incurring explo- In the Northwest Territories, Nunavut, British Columbia, ration costs. If the assessment report is not filed, or if money is Manitoba, New Brunswick and Prince Edward Island, both indi- not paid in lieu, the claim will be forfeited by the holder. viduals and companies are required to obtain a prospector’s licence The duration of a claim will differ from jurisdiction to jurisdic- from the applicable provincial or territorial government in order tion. In some jurisdictions (such as British Columbia), a mineral to engage in prospecting for minerals, subject to certain exceptions. claim may be renewed indefinitely. In other jurisdictions, a mineral There are similar requirements in Ontario and Québec, though claim may only be held for a limited period of time. For example, those provinces do not directly issue prospector’s licences to in the Northwest Territories and Nunavut, a mineral claim may be corporations. In Nova Scotia, individuals and companies are held for a maximum of 10 years and after such time, it will expire, required to register as a prospector and pay the prescribed fees, but unless it has been converted into a lease or an extension has been no “licence” is required for preliminary exploration with no granted by the relevant mining recorder. ground disturbance. In general, a mineral claim or licence only entitles the holder to Prospector’s licences (or their equivalent) can be obtained in the the right to conduct exploration and not any additional mining majority of jurisdictions by contacting the applicable provincial or operations, subject to certain exceptions. The Yukon is an excep- territorial governmental authority, completing the requisite form tion to this general proposition. and paying a small fee. In most cases, prospector’s licences expire A mineral claim holder will generally have rights of access to after a period of time (for example, one year in British Columbia), explore the claim; however, if the surface is privately owned, a but can be renewed.

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notice to, or an agreement with the surface owner will usually be of rough diamonds across Canada, and for a certification scheme required. The legislation in most provinces and territories provides for the export of rough diamonds, which was established to meet for some form of tribunal or other dispute resolution mechanism Canada’s obligations under the Kimberley Process adopted by the to resolve disputes between the holders of mineral claims and United Nations General Assembly in 2000. The regulation of surface rights owners (see question 8.2). If there are parties who uranium and thorium includes additional rules with respect to their hold other rights to the land, notice to such parties may also be production, refinement and treatment. These rules are within required. federal jurisdiction for purposes of national security and to fulfil The above describes the situation where minerals are held by the Canada’s international obligations in respect of such minerals. applicable government. However, minerals may also be held by There are also varying regimes depending on the owner of the private entities and originate from either Crown grants, patents or land under which the minerals are located. The surface land may freehold tenures that were issued as part and parcel of another type be owned by a private entity, by Aboriginal groups, or by the of grant, such as historic railway grants. The owner of such Crown and may be subject to Aboriginal rights. privately held minerals is entitled to conduct reconnaissance and Where there is private ownership of the land, the recorded exploration activities and develop those minerals, provided that he holder of the mineral claim will usually be required either to: (i) or she obtains the necessary surface access (in cases where the issue a notice of access to the surface owner; (ii) come to an agree- surface is separately held). ment for access with the landowner; or (iii) obtain an order from In some cases, Aboriginal groups may hold the surface rights the provincial or territorial authority. Generally, the recorded and/or mineral rights, in which case it is necessary to negotiate holder of the mineral claim will also be required to compensate the with the applicable Aboriginal group, the terms on which one can surface rights owner for the access granted. Depending on the access the lands and conduct exploration activities thereon. jurisdiction, where the parties cannot agree, compensation may be Surface access may take the form of a licence or exploration lease determined either by a dispute resolution mechanism provided for and exploration activities may be governed by an exploration agree- in the legislation, by reference to the competent tribunal, or by ment. application to court. Exceptionally, in Québec, where an agreement cannot be reached, the holder of mining rights will then have 3.3 What rights are required to conduct mining? to resort directly to expropriation procedures. Aboriginal groups may also own the land over which the minerals are found. Where this is the case, permission for access Generally, mineral claims must be replaced by mining leases prior must be acquired from the Aboriginal group. For example, Inuit- to commencing mining activities, the Yukon being an exception. owned lands in Nunavut require that surface access be obtained A mining lease is a longer term and more secure form of tenure from the Regional Inuit Association and may require a licence or than a mineral claim. lease. Mining leases permit full exploitation of the resource (subject With respect to Crown-owned land, a recorded holder of the to obtaining other required permits and authorisations for mining mineral claim or lease will generally be permitted to access the activities) and, depending on the jurisdiction, generally have a term surface of the land for the purposes of mining activities, though of 10 to 30 years and provide that rent is payable annually to the land-use permits or leases may be required in some instances. government that issued the lease. Mining leases are renewable for However, where land is subject to Aboriginal rights, Crown consul- further periods, provided annual rent is paid and the terms and tation and accommodation of the affected Aboriginal groups will conditions of the lease are complied with. dictate access rights and requirements of mining proponents. The The same comment as set forth above regarding privately held extent of consultation and accommodation will vary depending on minerals is applicable to mining activities. the affected groups and their recognised rights. While consultation A mineral operator must acquire a government permit and accommodation is a Crown obligation, it is often the practice approving the proposed mining project. For a major mining oper- of mining companies to negotiate impact and benefit agreements ation, the mineral operator will be required to submit a detailed with Aboriginal groups in order to obtain community support of mining plan and reclamation plan and may also be required to the project. submit an environmental assessment (see question 9.1). Where Aboriginal groups hold the surface rights and/or mineral rights, land tenure may take the form of a lease and the right to 3.5 Are different procedures applicable to natural oil and develop the minerals may take the form of a production lease. The gas? Aboriginal group and mining company will frequently negotiate another agreement in parallel with these agreements: an impact and In Canada, oil and gas licences or leases, which provide the holder benefit agreement. This agreement offers a negotiated means to with the right to produce oil and gas, are issued by the provinces mitigate detrimental impacts of the project and to provide and territories (and the federal government, with respect to economic benefits for the Aboriginal group and its members. It Nunavut) through a competitive bidding process. This differs documents the basis on which the mining company has acquired from the first-come, first-served basis on which mineral rights are its “social licence to operate”. obtained.

3.4 Are different procedures applicable to different 4 Foreign Ownership and Indigenous Ownership minerals and on different types of land? Requirements and Restrictions

Generally speaking, there are different sets of rules depending on 4.1 What types of entity can own reconnaissance, the type of substances being mined, and there are varying requirements depending on the type of land under which the minerals are exploration and mining rights? located. The rules governing hard rock minerals (including precious In jurisdictions where a prospector’s licence is required, individuals metals), placer minerals, coal and industrial minerals are often set who have reached the age of majority, and corporations, may out in different legislation. The federal Export and Import of Rough generally apply for and hold such a licence. Ontario and Québec Diamonds Act provides for controls on the export, import or transit

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are exceptions, in that they do not directly issue prospector’s 4.3 Are there any change of control restrictions applicable? licences to corporations. Some jurisdictions, such as British Columbia and Prince Edward Island, specify that partnerships may also hold a licence. The “net benefit review” and “national security review” rules discussed in question 4.2 apply in all instances where a non- Canadian acquires control, directly or indirectly, of a Canadian 4.2 Can the entity owning the rights be a foreign entity or business. owned (directly or indirectly) by a foreign entity and are In addition, proposed foreign investment may be subject to there special rules for foreign applicants? review by the Canadian Competition Bureau under the federal Competition Act. Where each of certain thresholds are met, a proposed investment requires pre-merger notification and either Individuals and corporations are generally entitled to hold mining approval or expiry of a statutory waiting period before the trans- rights. In some jurisdictions, however, such as the Northwest action may go forward. The Canadian Competition Bureau also Territories and Nunavut, partnerships and limited partnerships are has jurisdiction to review and challenge all mergers within one year not permitted to acquire mineral claims or mining leases in their of completion on the grounds that the transaction will result in a name. substantial lessening or prevention of competition. Generally, there are few restrictions on mining rights being

directly or indirectly owned by a foreign entity. Most jurisdictions require corporations to be registered or otherwise authorised to 4.4 Are there requirements for ownership by indigenous carry on business in the jurisdiction in order to acquire a persons or entities? prospector’s licence (or the equivalent). The Northwest Territories previously imposed Canadian citizenship and ownership require- Please see question 10.1 regarding Aboriginal and treaty rights of ments on the grant of mining leases, but these restrictions no the Aboriginal peoples of Canada. longer exist. If an acquisition of an operating Canadian mining business exceeds certain financial thresholds, it will be subject to govern- 4.5 Does the State have free carry rights or options to ment review under the Investment Canada Act (ICA). The review acquire shareholdings? threshold is approximately 1.5 billion Canadian dollars in enterprise value for investments to directly acquire control of a Canadian No, it does not. business by trade agreement investors that are non-state owned enterprises. The review threshold is approximately 1.0 billion for 5 Processing, Refining, Beneficiation and WTO investors that are non-state owned enterprises. The review threshold is approximately 400 million in asset value for direct Export investments by WTO investors that are state-owned enterprises. The threshold for review is much lower for investors or vendors 5.1 Are there special regulatory provisions relating to residing in non-WTO member countries (5 million Canadian dollars in asset value for direct investments and 50 million processing, refining and further beneficiation of mined Canadian dollars in asset value for indirect transactions). In minerals? general, a proposed transaction that meets the review threshold cannot be completed until the federal Minister of Industry has Mineral processing, refining and further beneficiation will generally made a determination that the proposed transaction is likely to be be subject to the same legislative regimes that apply to mineral of net benefit to Canada. This ministerial review requirement does exploration and mineral extraction, as the provincial, territorial and not apply to acquisitions of exploration properties or non- federal statutes regulate all stages of the mining process. If producing mines. In addition, the Canadian government has mineral processing will be undertaken at the mine site, it will have reserved the right to review any transaction if it considers that the been approved through the mine permit application and the envi- investment could be injurious to national security. ronmental assessment process, where applicable. There are special rules applicable to uranium mining. Federal The majority of jurisdictions do not require mineral processing government policy (the Non-Resident Ownership Policy in the to occur within the province or territory of extraction. Nova Uranium Mining Sector) requires a minimum of 51% Canadian Scotia is an exception to that general proposition, in that under ownership in uranium mining properties which are at the first stage Nova Scotia law no person can remove ore to a place for of production, with exemptions from the policy if the project is de processing outside of Canada unless an exemption is obtained facto Canadian controlled or if Canadian partners cannot be found. from the appropriate Minister. Similarly, the Ontario Mining Act In 2015, the federal government granted the first exemption provides that, unless an exemption has been obtained, ores and since the policy was implemented in 1987. An Australian company minerals extracted in that province must be treated and refined in was allowed majority ownership of a uranium mine in Canada. In New Brunswick and Newfoundland and Labrador, the Newfoundland and Labrador. The company was able to demon- government may make an order requiring minerals to be processed strate that there were no Canadian partners interested in within the province. In Saskatchewan, lease holders may not developing a proposed mining project. export quarriable minerals in their natural or unprocessed state Canada is a party to the Canada and European Union Comprehensive without the written permission of the Minister of Mineral Economic and Trade Agreement (CETA) and the new Comprehensive and Resources, and diamonds must be presented for valuation at facil- Progressive Agreement for Trans-Pacific Partnership (CPTPP). ities located in Saskatchewan before they are removed from the Notwithstanding the terms of these treaties, the Non-Resident processing facility or sold. Some jurisdictions, such as Manitoba, Ownership Policy in the Uranium Mining Sector will continue to encourage the beneficiation of minerals inside the province by apply. Canada has lodged reservations under both treaties such providing tax deductions that are permitted only for the processing that exemptions from the Non-Resident Ownership Policy in the of minerals within the province. Uranium Mining Sector are only available where Canadian partici- Other than as noted above, there is no general prohibition on pants in the ownership of the property are unavailable. the export of un-beneficiated minerals. However, there are

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mineral-specific exceptions. Pursuant to the Nuclear Non- 6.2 Are the rights to conduct reconnaissance, exploration Proliferation Import and Export Control Regulations, uranium may not and mining capable of being mortgaged or otherwise be exported unless the Canadian Nuclear Safety Commission grants a licence. Similarly, diamonds may not be exported unless secured to raise finance? they have been issued a Kimberley Process Certificate and the transaction has been reported to the federal Minister of Natural Generally speaking, in Canada, indebtedness may be secured by all Resources. types of real and personal property under the real and personal property security regimes of each of the provinces and territories 5.2 Are there restrictions on the export of minerals and and by virtue of the common law. The nature of the charge granted to secure such indebtedness, for example, whether a mort- levies payable in respect thereof? gage, charge, pledge or other, will need to be considered in each circumstance. Canada is party to a number of international agreements relating There is some uncertainty as to whether a prospector’s licence to wastes and recyclable materials, pursuant to which it has various can be charged as security for indebtedness. obligations on trans-boundary movements of hazardous wastes It is possible to create a charge against a mineral claim or mining and hazardous recyclable materials. lease. In some jurisdictions, consent of the applicable govern- In addition to Canada’s international obligations, the federal mental authority will be required, however, such as in Ontario, Export and Import Permits Act provides permitting requirements and where a mining lease cannot be mortgaged, charged, or made associated fees for the export of goods listed on the Export subject to a debenture, unless the applicable Minister consents in Control List (a list of controlled goods). The Export and Import writing to the transaction. Permits Act provides authority to the Governor in Council to estab- Security documents granting such a charge are typically regis- lish and amend the Export Control List for certain prescribed tered in the applicable mining registries against the mineral claims purposes. Notably, one such purpose is to ensure that actions or mining leases, whose registration will serve as notice to third taken to promote the processing in Canada of a natural resource parties of the grant of the charge. In many jurisdictions, registra- produced in Canada are not rendered ineffective by unrestricted tion of documents purporting to charge mineral claims or mining exportation. Currently, uranium is a controlled substance on the leases is permissive while in other jurisdictions, registration is Export Control List where certain characteristics are present. It is mandatory in order to be given effect. Generally, the applicable important to refer to the Guide to Canada’s Export Controls and legislation does not set a scheme of priorities for registered and to the Export Control List for any amendments that may affect the unregistered charges or as between them. Whether the security products being exported. document validly and effectively creates a mortgage or charge is a Further, the Export and Import of Rough Diamonds Act restricts the matter determined by the common law. export, import and transit across Canada of rough diamonds, while the Nuclear Non-Proliferation Import and Export Control Regulations 7 Dealing in Rights by Means of Transferring require a licence issued by the Canadian Nuclear Safety Commission for the export of uranium. Subdivisions, Ceding Undivided Shares and Mining of Mixed Minerals 6 Transfer and Encumbrance 7.1 Are rights to conduct reconnaissance, exploration and 6.1 Are there restrictions on the transfer of rights to mining capable of being subdivided? conduct reconnaissance, exploration and mining? A prospector’s licence cannot be subdivided. In general, prospectors’ licences are not transferable. In some jurisdictions, a mineral claim may be subdivided. For Mineral claims are transferable, though the transfer is often example, in British Columbia, which uses electronic mapping for subject to provincial, territorial, and federal legislative require- mineral claims, claims made up of two or more mineral “cells” can ments. A general precondition to the transfer of a mineral claim be subdivided into claims that are no less than one cell in size. is that it be in writing and executed by the holder of the claim. With respect to the subdivision of mining leases, the state of the Several jurisdictions are more stringent and require the use of a law is not uniform across Canada. Subdivision of mining leases is prescribed form to validate a transfer, and in Nova Scotia, the not possible in British Columbia; however, an application can be transfer of an exploration licence (akin to a mineral claim) is also made to reduce the land area subject to the lease, which will reduce contingent upon the consent of the mining registrar. Transfers of the lease rental payments. Where subdivision of mining leases is mineral claims in British Columbia are completed by the transferor permitted, the rules governing the subdivision vary by province and transferee through the online mineral title system. and territory. Mining leases are generally transferable. The transferability of the lease will be governed by the terms of the lease in question and 7.2 Are rights to conduct reconnaissance, exploration and applicable legislation. A common requirement is that the transfer mining capable of being held in undivided shares? agreement be in writing and signed by the holder of the interest. In addition, in some jurisdictions, including, for example, Ontario Mining activity in Canada can be structured in a variety of ways. and Nova Scotia, government consent is required in order to A common structure is through a joint venture. Joint ventures can transfer a mining lease. be formed through a variety of legal vehicles, including partner- Another general requirement related to the transfer of a mineral ships, corporations and unincorporated joint ventures. claim or mining lease is that the transfer must be recorded in a Partnerships are governed by provincial and territorial legisla- prescribed office. In some jurisdictions, recordation of the mining tion. General partnerships are generally defined as the relationship lease is not required but is permitted. between two or more persons carrying on a business in common

with a view to profit. Limited partnerships are a type of partnership created amongst partners of different classes: limited partners,

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who typically are not engaged in the management or control of the exploit the mineral resources of the continental shelf (the area business and who, subject to certain exceptions, have limited extending beyond the territorial sea to the outer edge of the conti- liability in respect of the debts and liabilities of the partnership; nental margin, or to a distance of 200 nautical miles from the low and general partners, who operate and manage the business of the water line, whichever distance is greater). Canada has made partial partnership and have unlimited liability. In some jurisdictions, such submissions to the Commission on the Limits of the Continental as the Northwest Territories and Nunavut, partnerships and Shelf, pursuant to Section 76(8) of the United Nations Convention on limited partnerships are not permitted to acquire mineral claims or the Law of the Sea, and in 2018 established a joint task force with mining leases in their name. Denmark and Greenland to explore boundary issues including the Parties may incorporate a corporation to conduct a joint venture delineation of an extended continental shelf beyond the 200- project. Usually, the joint venture property and assets are trans- nautical-mile limit in the Arctic. ferred to, and held by, the corporation and a shareholders’ The Oceans Act (Canada) provides that provincial laws do not agreement will govern the conduct and management of the joint apply to the territorial sea or the continental shelf with respect to venture corporation. Joint venture corporations are governed by minerals or other non-living natural resources, unless regulations the provincial, territorial or federal legislation under which the are enacted to make provincial laws apply. corporation was incorporated. Unlike in the oil and gas sector, there is no federal legislation Unincorporated joint ventures are formed and governed by a currently in place that provides for the issuance of offshore mining contract. A benefit of the unincorporated joint venture is that rights. parties to the contract have considerable flexibility in setting out the terms of an agreement. Typically, the joint venture property is 8 Rights to Use Surface of Land held by one of the joint venture parties on behalf of the joint venture and operations are managed by one of the joint venture parties or in some cases, a third party. In some cases, depending 8.1 Does the holder of a right to conduct reconnaissance, on the applicable legislation, the property and/or assets may be exploration or mining automatically own the right to use the held as tenants in common. Income and losses of the mining surface of land? activity conducted by unincorporated joint ventures are computed and taxed in the hands of the individual joint venture parties. Most often, pursuant to the applicable mining legislation, the holder of a prospecting permit will automatically be permitted to 7.3 Is the holder of rights to explore for or mine a primary access the surface where the Crown holds the underlying mineral mineral entitled to explore or mine for secondary minerals? rights. Where the surface rights are privately held, the miner will either be required to issue a notice of access, come to an agree- The applicable legislation under which the mineral tenure in ques- ment with the surface owner or seek a court order. A right to tion has been obtained will often circumscribe the minerals that compensation for entry and damage caused to the property is the tenure covers (e.g. hard rock minerals, placer minerals, coal, generally provided for in the applicable mining or surface rights industrial minerals). For example, in British Columbia, the Mineral legislation. The applicable legislation usually contains dispute-reso- Tenure Act regulates the exploration and, in part, the development lution provisions to resolve disputes between a mineral rights and mining of hard rock minerals and placer minerals, and the defi- holder and the surface owner. nition of what constitutes “minerals” is very broad. Similarly, a In Prince Edward Island, Nova Scotia, Saskatchewan, the holder of a placer claim is entitled to explore for placer minerals. Northwest Territories and Nunavut (other than Inuit-owned Other examples include the British Columbia Coal Act that regu- lands), surface rights are not automatically granted as part of a lates the exploration and production of coal, and the British mineral claim or lease. A land-use permit may be required for any Columbia Land Act that regulates earth, soil, sand, gravel, rock and work under a mineral claim. Work conducted on a lease will also other natural substances used for a construction purpose. require a land-use permit or a surface lease. On Inuit-owned lands, a licence or lease may be required to gain access to the surface. 7.4 Is the holder of a right to conduct reconnaissance, exploration and mining entitled to exercise rights also over 8.2 What obligations does the holder of a reconnaissance vis-à-vis residue deposits on the land concerned? right, exploration right or mining right have the landowner or lawful occupier? The entitlement to tailings and waste dumps depends on a determination of whether such materials belong to the mineral owner As most mining activity in Canada occurs outside of population or the surface owner. Some provinces expressly address the rights settlements, mineral operators usually deal primarily with the over tailings and waste dumps in legislation. For example, in Crown, rather than with private owners. In situations where a British Columbia, tailings and waste dumps become part of the mineral operator wants to enter privately held land, the operator’s rights to a mineral or placer claim. obligations are set out in applicable legislation and the common In provinces and territories where residue deposits such as tail- law (and civil law in Québec). Generally, a mineral operator must ings and waste dumps are not explicitly dealt with in legislation, the either obtain the permission of the owner to enter their land, often instrument that separates mineral rights from surface rights must in the form of a lease, or obtain an order from the prescribed be interpreted in order to determine the rights over such materials. authority allowing the operator to proceed without the owner’s permission. However, in British Columbia, permission from the 7.5 Are there any special rules relating to offshore owner is not a necessary requirement. Under the Mineral Tenure Act, an operator cannot begin mining activity unless the operator exploration and mining? first serves notice to the owner of the surface. The general common law rule requires the mineral owner to use Pursuant to international law, Canada has exclusive sovereignty his or her property so as not to injure his or her neighbour, the over the territorial sea (12 nautical miles seaward from the low surface owner. Legislation also addresses the rights as between water line along the coast) and the exclusive right to explore and mineral owners and surface owners. For example, in British

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Columbia, an operator is liable to compensate the owner of a For example, following the failure of a tailings storage facility in surface area for loss or damage caused by a mining operation. 2014, British Columbia updated its Health, Safety and Reclamation Code for Mines in British Columbia to require mines to develop and 8.3 What rights of expropriation exist? maintain a tailings management system that includes regular audits. Managers are required to retain an engineer of record to ensure that the mine’s tailings storage facility has been designed and In every Canadian jurisdiction, pursuant to the applicable legisla- constructed in accordance with the applicable guidelines, standards tion, the Crown is authorised to expropriate lands or interests in and regulations. The manager and engineer of record must report land. Depending on the legislation of the relevant jurisdiction, this any unresolved safety issues to the Chief Inspector of Mines. authority of the Crown may enable a mineral owner to acquire At the federal level, the Government of Canada may be respon- surface rights. For example, under the British Columbia Mining sible for regulatory decisions specific to tailings management if they Right of Way Act, a miner has a right to expropriate private land for involve uranium tailings, navigable waters, fish-bearing waters and access to a mine site where the owner of the land, or a person with fisheries, environmental matters of international and inter-provin- an interest in the land, does not grant a right of way. cial concern or federal lands. The Minister of the Environment and In exceptional circumstances, mineral rights have been effec- Climate Change is required by the Canadian Environmental Protection tively expropriated by the Crown, though, in such cases, Act to establish and publish a national inventory of releases of compensation has generally been paid. pollutants, including substances that are transported to waste rock storage areas and tailings-impoundment areas. 9 Environmental The approval of mine closure plans to rehabilitate and restore properties after the completion of mining operations is provided for in the mining legislation of most Canadian jurisdictions. Most 9.1 What environmental authorisations are required in jurisdictions require financial security or a guarantee and an order to conduct reconnaissance, exploration and mining approved closure plan to be filed prior to the mine production. operations? Certain jurisdictions require the closure plan to be filed prior to any exploration activities being undertaken. In most Canadian jurisdictions, there are statutorily prescribed environmental assessment requirements that apply to certain 9.3 What are the closure obligations of the holder of a classes of projects that are over a certain threshold size. Most reconnaissance right, exploration right or mining right? major mining projects trigger the impact assessment requirements. For example, the British Columbia Environmental Assessment Act Generally, the provincial government will need to approve rehabili- requires an environmental assessment of any proposed new mine tation, restoration, reclamation or closure plan submissions prior to that will have a production capacity equal to or greater than 75,000 any mining activities, pursuant to provincial mining laws and regula- tonnes per year of mineral ore. tions. Upon the closure of operations, the approved plans must be While the process is not uniform across Canada, in some juris- executed so as to restore the site to an acceptable condition. dictions there may be a requirement for a public hearing. Other Additionally, in certain jurisdictions, the closure of mining activ- environmental authorisations or permits issued by provincial or ities may be subject to contaminated site remediation obligations. territorial governments may be required.

In addition to the aforementioned potential environmental assessment, the federal government may also conduct an environ- 9.4 Are there any zoning or planning requirements mental assessment if a proposed project is of a prescribed type or applicable to the exercise of a reconnaissance, exploration size. In certain circumstances, the current federal legislation allows or mining right? the Minister of Environment and Climate Change to make a decision on a project based upon a provincial assessment process, thus In most jurisdictions, the development of a mine will require mine making it possible to avoid redundant assessments. plans to be submitted and approved. In some jurisdictions, this is In June 2019, the Government of Canada passed a new federal done in conjunction with the environmental assessment process, Impact Assessment Act to replace existing federal environmental but in others mine planning and permitting requires a separate assessment legislation. The new Act will come into force on order process under a separate regulator. of the federal cabinet once all of the associated regulations have In some jurisdictions, specific reserves for areas of land, such as been developed and issued. The new Act will create a single agricultural or environmental reserves, will require additional Impact Assessment Agency with the mandate to conduct and authorisations or approvals for proposed undertakings that fall decide upon environmental assessments on behalf of the federal outside the specified uses. In circumstances where a mining government. A wider range of effects will also be considered in project is located within the boundaries of a municipality or other the impact assessment and final approval process – including local government, the applicable municipal laws such as zoning impacts to health, society, gender, climate change, Aboriginal bylaws will need to be adhered to. peoples, jobs, and the economy. Further, there is a reduction in the time limit for panel-reviewed projects. It is anticipated that projects will be reviewed by a panel within 600 days, as opposed to 10 Native Title and Land Rights the current turnaround time of 24 months. Smaller projects with fewer assessment requirements will be reviewed within 300 days. 10.1 Does the holding of native title or other statutory

surface use rights have an impact upon reconnaissance, 9.2 What provisions need to be made for storage of tailings exploration or mining operations? and other waste products and for the closure of mines?

In Canada, the Constitution Act, 1982 protects Aboriginal and treaty Mining projects must comply with both provincial and federal rights of the Aboriginal peoples of Canada. Aboriginal rights environmental legislation. Generally, provincial legislation will set themselves are not strictly defined. The Supreme Court of Canada requirements for the storage of tailings and other waste products.

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has defined these rights in relation to a spectrum dependent on the 11.2 Are there obligations imposed upon owners, degree of connection with the land, the highest level of right being employers, managers and employees in relation to health Aboriginal title. Aboriginal rights can also be defined by treaty. Where Aboriginal rights remain undefined, they can continue to and safety? exist until a treaty is reached with the Crown or until they are proven by claimants and defined by the Courts. Generally, the governing health and safety legislation of the A 2014 Supreme Court of Canada decision, Tsilhqot’in Nation v. province or territory where the work is conducted will impose obli- British Columbia, provided the first declaration of Aboriginal title in gations on owners, supervisors and employees. While these Canada, over a limited area of land. The potential impact of the obligations are not uniform across the country, in general, mine decision on mining companies remains unclear, given the very owners are obligated to ensure that applicable laws and regulations specific facts on which the decision was based. are followed, and to take all reasonable precautions to ensure the In certain circumstances the Crown owes a duty to consult with health and safety of employees. Supervisors generally have a duty the Aboriginal peoples and to accommodate them where appro- to ensure that proper training is given to employees on site and to priate, even where Aboriginal rights have not been proven. The ensure the safety and well-being of employees. Employees have extent of consultation and accommodation required of the Crown an obligation to inform supervisors of any potential risks or will vary depending on the circumstances. The impact of consul- dangers on the worksite as well as to protect their own personal tation obligations and Aboriginal rights with respect to health and safety (see question 11.1). reconnaissance, exploration and mining operations rights will thus depend on the individual circumstances of a given case. 12 Administrative Aspects In May 2016, Canada officially removed its objector status to the UN Declaration on the Rights of Indigenous Peoples and announced its intent to adopt and implement the Declaration in 12.1 Is there a central titles registration office? accordance with the Canadian Constitution. Partly in recognition of the UN Declaration on the Rights of Indigenous Peoples, the There is no central titles registration office in Canada. With the Canadian government recently launched a national engagement exception of Nunavut, which is primarily regulated by the Federal with Canada’s Aboriginal peoples to help develop a Recognition Department of Aboriginal Affairs and Northern Development and Implementation of (Indigenous) Rights Framework. This Canada, and the Northwest Territories, which is regulated by both framework, if and when implemented, would help ensure that the the federal and territorial governments, each of the provinces and starting premise for all federal government action is the recognition territories is responsible for issuing prospectors’ permits (if appli- of Indigenous rights. cable) and registering mineral titles.

11 Health and Safety 12.2 Is there a system of appeals against administrative decisions in terms of the relevant mining legislation? 11.1 What legislation governs health and safety in mining? All provinces and territories provide for some form of a dispute- In general, worker health and safety falls within provincial jurisdic- resolution mechanism in their respective mining legislation. In tion unless the subject matter of the undertaking falls within general, all decisions made by a tribunal or official carrying out a federal jurisdiction. For example, federal government employees statutory function are subject to judicial review by the courts in the are governed under the Government Employees Compensation Act. relevant jurisdiction. Generally, this Act is administered by provincial and territorial Certain provinces, including Manitoba, Ontario, Newfoundland workers’ compensation boards and commissions. and Labrador, and New Brunswick, have created distinct tribunals The federal government also has jurisdiction over competency that are separate from the department in charge of administering of workers dealing with uranium and thorium. The qualifications the mining legislation. Other provinces (including British and training of certain workers who deal with uranium and Columbia) have internal dispute resolution systems with appeals to thorium are governed by the federal Nuclear Safety and Control the courts. Act. The Act also creates offences relating to inadequate staffing and work practices at a uranium or thorium mine. 13 Constitutional Law Each province and territory in Canada has its own workers’ compensation board or commission, although the Northwest Territories and Nunavut have a combined workers’ compensation 13.1 Is there a constitution which has an impact upon board. These boards or commissions generally provide a preven- rights to conduct reconnaissance, exploration and mining? tative function by administering occupational health and safety laws, and an administrative function by administering insurance The jurisdictional powers of both levels of government, provincial schemes for injured workers. and federal, are set out in the Constitution Act, 1867. The Constitution Some provinces and territories also have legislation and regula- Act, 1867 provides the federal government with the power to tions that specifically apply to the mining industry in addition to create laws in relation to trade and commerce, banking, navigation workers’ compensation legislation. For example, British Columbia and shipping, sea coasts and inland fisheries as well as other has the Health, Safety and Reclamation Code for Mines in British Columbia matters. On the other hand, the provincial legislatures have the (Code), which applies to both exploration and production mine power to create laws in relation to property and civil rights sites in British Columbia. The Code sets out obligations for (including laws relating to property, contracts and torts), natural owners to develop a health and safety programme, and to establish resources, and local works and undertakings, among other matters. a joint management worker health and safety committee. In addi- There are, however, some matters that fall within the purview of tion, the Code prescribes reporting requirements for accidents, both federal and provincial jurisdictions. In such a case, each level deaths and dangerous occurrences and the maximum hours of of government may create laws in respect of a particular subject work at a mine site.

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matter insofar as it relates to their jurisdiction. For example, both taken to meet a legal or informal requirement to obtain a permit the federal and provincial governments have their own form of are eligible for treatment as CEE. environmental legislation. The federal government may regulate approvals for a proposed mine in an effort to protect fish, and the 14.2 Are there royalties payable to the State over and province may regulate that same proposed mine for reasons relating above any taxes? to emissions that could pollute the environment. Federal and provincial statutes which deal with the same subject matter may coexist, though if there is conflict or inconsistency between federal There are a range of additional taxes imposed by the provinces and and provincial law, in the sense of impossibility of dual compliance territories on mining operations within their boundaries. Ontario, or frustration of federal purpose, the federal statute prevails. Québec, Manitoba and Newfoundland and Labrador impose a Canada’s three territories, the Yukon, Northwest Territories and profits tax ranging generally from 5% to 20%. British Columbia, Nunavut, do not yet have provincial status and are at different Alberta, Saskatchewan, Nova Scotia and New Brunswick generally stages in terms of devolution of powers to their territorial govern- impose taxes based on a combination of net revenue, net profits, ment from the federal government. Their legislative powers are or production from mining operations. The remaining jurisdic- enumerated in specific federal statutes (the Yukon Act, the Northwest tions, other than Prince Edward Island, impose graduated royalties Territories Act and the Nunavut Act). From a practical perspective, where the royalty rate increases with revenue, running as high as the territorial legislative powers are quite similar to those of the 14%. The foregoing is applicable to most minerals, but taxes or provinces under the Constitution Act, 1867, but the relevant statute royalties on certain minerals, including coal, potash and uranium, must be consulted in each case. are sometimes dealt with differently.

13.2 Are there any State investment treaties which are 15 Regional and Local Rules and Laws applicable? 15.1 Are there any local provincial or municipal laws that Please refer to question 4.2 with regard to the Investment Canada Act. need to be taken account of by a mining company over and above National Legislation? 14 Taxes and Royalties Generally speaking, a mining company will be governed by federal 14.1 Are there any special rules applicable to taxation of and provincial laws in respect of its projects. Provincial legislation that should be considered by mining companies has been discussed exploration and mining entities? in several of the above sections. There may also be circumstances where municipal laws can affect a proposed mining project. For In Canada, there are both federal and provincial statutes that example, if a proposed operation is located within municipal provide a number of deductions, allowances, and credits to a boundaries, applicable municipal laws such as zoning laws and taxpayer engaged in qualifying mining activities and to a taxpayer property taxes will need to be adhered to. who invests in certain mining companies. A specific tax incentive It should be noted that Québec has amended its Mining Act and that is unique to the resource sector in Canada, found in the Income related regulations in order to provide municipalities with more Tax Act (Canada) (ITA), is the use of flow-through shares which legislatively prescribed powers in relation to mining exploration and enables junior mining companies to raise money for exploration projects. If a mining company has acquired a right on municipal and development by providing the investor with tax relief in land, the amendments provide that a claim holder must notify the exchange for their investment. Costs incurred for the purpose of relevant municipality before beginning exploration work on the determining the existence, location, extent or quality of an oil, gas claim, and satisfy additional public consultation requirements before or mineral resource in Canada are characterised as “Canadian applying for a mining lease, subject to certain conditions. They also exploration expenses” or “CEE” under the ITA. A taxpayer can require mining lease holders to establish a monitoring committee in deduct from their reported income up to 100% of its cumulative order to foster the involvement of the local community. CEE. However, accordingly, they are left with CEE deductions However, other jurisdictions have not followed suit in adopting which they are unable to use. Flow-through shares allow corpora- similar laws and developments in British Columbia have taken a tions to monetise expenses that they are unable to use by entering different direction. In a 2013 British Columbia Court of Appeal into an agreement with an investor, whereby the investor decision, municipal laws were found to be subordinate to subscribes for shares of the company and the company agrees to conflicting mining legislation. The court held that municipal use the subscription proceeds to incur qualifying CEE which it bylaws that frustrated the terms of the British Columbia Mines Act then renounces to the investor. Under the ITA, the CEE are permits, issued by the British Columbia Ministry of Energy, Mines deemed to have been incurred by the holder of the flow-through and Petroleum Resources, were invalid. shares rather than the mining company, so the investor is able to deduct the CEE from the investor’s income for tax purposes. 15.2 Are there any regional rules, protocols, policies or Additionally, the ITA and certain provincial statutes offer other investment tax credits to taxpayers for certain types of mining- laws relating to several countries in the particular region related expenditures. The Mineral Exploration Tax Credit (METC) that need to be taken account of by an exploration or mining is a 15% credit in flow-through shares that can be claimed on spec- company? ified CEE. While the METC was initially intended to be temporary, it has recently been announced that eligibility will be Canada’s free trade agreements reduce the costs of exporting extended until March 2024. In January 2017, the Canada Revenue Canadian mined minerals and related value-added products. Such Agency updated its “Guidelines for determining the tax treatment agreements should be taken into account by exploration or mining of certain exploration expenses” to confirm that costs associated with environmental studies and community consultations under-

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companies, as they can result in incentives for establishing produc- which the area shall be reduced, and the requirements for a reduction in Canada. tion, vary by province and territory. For example, in British Canada has entered into a number of bilateral Foreign Investment Columbia the reduced claim area must comply with the following Promotion and Protection Agreements (FIPAs) aimed at encouraging requirements: (i) it must consist of at least one cell; (ii) if there are reciprocal investment in each country that is party to the agree- two or more cells they must be adjoining; and (iii) the reduced area ment. For example, under the Canada-China FIPA, both countries cannot result in open areas within the cell claim. In Saskatchewan agree to a most-favoured-nation commitment, which ensures there is also a requirement that the reduced area’s total length not investors from both countries are not discriminated against relative exceed six times its total width. to other foreign investors. The effect of this agreement in Canada Upon abandonment or surrender, all minerals covered by the is that Chinese State Owned Enterprises (SOE) seeking investment mineral claim or lease revert back to the government or the holder in Canada will be treated on a merit basis, with considerations of of the underlying rights. The recorded holder may remove chattels business orientation and the extent of political influence over its and fixtures from the land abandoned or surrendered; however, affairs as significant factors. authorisation to do so is required in certain jurisdictions, including The FIPA also provides for protections to both prospective and Prince Edward Island. Further, timelines may be imposed for the existing investments by allowing investors to benefit from protec- removal of such property, such as in British Columbia, where the tions found in their home country. Under the FIPA, Canadian last recorded holder must remove all property within one year after investments will benefit from Canadian protection measures the abandonment. against risks of investor discrimination, expropriation without compensation and arbitrary decisions from the government, 16.2 Are there obligations upon the holder of an among others. exploration right or a mining right to relinquish a part As well, the FIPA provides that disputes that affect foreign investment, including those concerning resource development and thereof after a certain period of time? environmental issues, will be dealt with through international arbitration as opposed to domestic courts. In most jurisdictions, mineral claims may be renewed indefinitely However, the FIPA does not affect the Government of Canada’s from term to term until a lease is obtained or the claim is aban- ability to review or reject investments from China for reasons of doned. However, in certain jurisdictions, mineral claims extinguish national interest. “Net benefit” decisions under the Investment upon the expiration of a defined term. In Nunavut and the Canada Act are expressly excluded from the FIPA. Northwest Territories, for example, the duration of a mineral claim Canada has now ratified the Comprehensive and Progressive Agreement is 10 years from the date it is recorded unless it is converted into a for Trans-Pacific Partnership (CPTPP), a multilateral trade agreement lease (subject to certain rights of extension). that currently includes 10 other countries: Australia; Brunei Darussalam; Chile; Japan; Malaysia; Mexico; New Zealand; Peru; 16.3 Are there any entitlements in the law for the State Singapore; and Vietnam. In January 2017, the U.S. withdrew from to cancel an exploration or mining right on the basis of the predecessor to the CPTPP, the Trans-Pacific Partnership (TPP). The remaining signatories to the TPP agreed in November failure to comply with conditions? 2017 on core elements of the CPTPP. The CPTPP, the text of which was finalised in January 2018, will gradually eliminate tariffs Relevant provincial and territorial mining ministries may cancel on Canadian mineral exports, and in general, increase certainty, mineral claims and mining leases where a recorded holder is in transparency, and foreign investment protections for Canadian breach of an obligation under the applicable legislation. mining companies. Mineral claims and mining leases are most commonly cancelled Some legislation in Canada allows compliance with similar legis- where recorded holders either fail to complete the required assess- lation in foreign jurisdictions to substitute for compliance in ment work, fail to make payments in lieu of assessment work, fail Canada. For example, the recent federal Extractive Sector to submit reports respecting the assessment work completed, or Transparency Measures Act allows payment reporting requirements fail to make annual lease rental payments. Generally, the cancella- of certain other jurisdictions to be satisfied in lieu of compliance tion of the mineral claim will take effect immediately upon the with the Canadian statute, at the discretion of the Minister of failure of the recorded holder to comply with the completion of, Natural Resources. the reporting on, or the payment in lieu of, assessment work. With respect to mining leases, the provincial or territorial authority will 16 Cancellation, Abandonment and more commonly issue a notice of cancellation, either affording the Relinquishment recorded holder a grace period to comply with the requirement or to enquire into the grounds for cancellation. Additionally, mineral claims and mining leases may also be 16.1 Are there any provisions in mining laws entitling the cancelled for breach of the provincial or territorial mining legisla- holder of a right to abandon it either totally or partially? tion, and on various grounds set out in such legislation. A common ground for cancellation is the misrepresentation of the assessment work performed on the claim, though additional Generally, recorded holders may abandon mineral claims and grounds may be found in different jurisdictions. For example, in surrender mining leases upon notice or application to the provin- Saskatchewan, there is a further ground for cancellation of a cial or territorial governing body. The procedure by which a mineral claim or mining lease where an environmental assessment recorded holder may do so differs among each province and terri- determines that the development should not proceed. In such cases, tory. For example, in British Columbia, the recorded holder the legislation itself often provides a procedure for cancellation and wishing to abandon a claim or surrender a lease must register a review of the decision. In most instances, a notice of breach will be discharge with the chief gold commissioner, while in Manitoba a issued first, providing the recorded holder with a grace period to notice of abandonment must be filed along with reports, plans and comply with the requirement, following which the provincial or terri- statistical data. torial authority may order the cancellation where the recorded holder Further, recorded holders may also apply for a reduction of has not complied. However, in some instances, mineral claims may claim areas, effectively entitling them to partially abandon their be cancelled without prior notice to the recorded holder. For claim or lease. Where such reduction is permitted, the method by example, in Manitoba the provincial authority may cancel a mineral

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claim or mining lease without prior notice if it is satisfied the claim Acknowledgments was recorded as a result of a material misrepresentation in the application to record the claim or lease. The authors would like to acknowledge the assistance of their Cancellation proceedings are subject to judicial review by the colleagues Steven Catania and Patrick Thomson in the preparation courts. Please refer to question 12.2 for further discussion on of this chapter. reviewing ministerial decisions.

Note This chapter is not a compendium of Canadian mining law, as the topic is simply too large for the scope of this chapter. Canadian mining law is location-dependent, and there are many, many locations: 10 provinces and three territories, each with its own laws, and within each province or territory areas within Aboriginal land claim settlement areas or reserves; areas in which the surface is owned by the Crown or by Aboriginal groups or privately; and areas in which the minerals are owned by the Crown or by Aboriginal groups or privately. Canadian mining law is also commodity-dependent, with different laws applicable to hard rock minerals, coal, industrial minerals, petroleum and natural gas, uranium, etc. As a cautionary note, all of what is set forth above is intended to be indicative only. Even where topics are discussed in some detail they are not intended to be complete, and nothing in this chapter should be relied upon as legal advice.

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Khaled Abdel-Barr practises corporate/commercial and mining law, advising on a broad range of mining-related matters both domestically and internationally, including mergers and acquisitions, debt and equity ﬁnancings, corporate structuring and reorganisations, the negotiation of commercial arrangements such as earn-in, joint venture, strategic alliance and royalty agreements, mineral title review and providing legal support to clients throughout all phases of the mining cycle from exploration, development, operations, production and expansion, to reclamation and mine closure. Khaled also advises clients in the energy sector, having signiﬁcant experience dealing with contractual issues in connection with the purchase and sale of energy and other energy-related transactions.

Lawson Lundell LLP Tel: +1 604 631 9233 Suite 1600 Cathedral Place Email: [email protected] 925 West Georgia Street URL: www.lawsonlundell.com Vancouver Canada

Karen MacMillan practises corporate and commercial law with an emphasis on asset level purchase and sale transactions and commercial arrangements in the mining sector including procurement, construction and engineering, joint ventures and other strategic arrangements. She has represented domestic and foreign-based clients in the mining industry on general business law matters involving domestic and cross-border transactions. Karen’s experience includes advising on licensing arrangements, corporate and contractual joint venture arrangements, negotiating debt and equity ﬁnancings and negotiating and documenting major resource project-development agreements as well as asset and share- purchase-and-sale transactions. She also regularly advises clients in the energy sector in connection with major power generation projects and a variety of related commercial/contracting matters.

Lawson Lundell LLP Tel: +1 604 631 9160 Suite 1600 Cathedral Place Email: [email protected] 925 West Georgia Street URL: www.lawsonlundell.com Vancouver Canada

Lawson Lundell LLP is a leading Canadian business law firm known for our We are widely ranked by international legal publications, including being recog- practical, strategic approach to legal and business problems. With offices in nised as the top regional law firm in Canada by Chambers Canada and as the Vancouver, Calgary, Yellowknife and Kelowna, we reside in the key access top firm in British Columbia, Alberta and the North by Canadian Lawyer maga- points to the rich natural resources of western and northern Canada. Lawson zine for three consecutive voting periods. Our mining group and its lawyers Lundell has a long-established Canadian and international mining practice are also ranked in Chambers Canada and Chambers Global in the area of that spans the range of legal services required by mining companies around Natural Resources: Mining (Canada). the world. Our clients range from junior companies carrying on early stage www.lawsonlundell.com exploration to international companies with investments and projects spread across the globe. We have an experienced project development team that is actively involved from early stage exploration and tenure acquisition through development, permitting, operations and closure of projects. Our experienced mining finance team is focused on raising capital and on mergers and acquisitions activity.

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Chile Chile

Claro & Cia. Nicolás Eyzaguirre

1 Relevant Authorities and Legislation ■ The Mining Sites and Facilities Closing Act No. 20,551, which regulates the concessionaire obligations related to the closure of the mine and its facilities. 1.1 What regulates mining law? ■ The Mining Activity Royalty Act No. 20,026 and No. 20,469, which establishes a special tax over mining sales. ■ The Environmental Act No. 19,300, which establishes that The mining industry in Chile is mainly regulated by three legal certain projects must undergo an environmental impact assess- bodies, which are: ment process (please refer to section 9). i) The Chilean Constitution, which establishes the exclusive owner- ■ Environmental Impact Assessment System Regulation, Decree ship of the State over all mines in the Chilean territory and No. 40/2013, which regulates all the environmental obligations provides a strong protection of property rights of the private that the owner of the mining project must comply with in order concessionaire over its concession. to execute the project. ii) The Mining Concessions Act No. 18,097, which regulates Also, regarding the other commonly related aspects of this mining concessions, their constitution, acquisition, extinction activity, some other regulations that apply are health and safety regu- and the obligations and rights of the mining concessionaire. lations, labour law, tax law and indigenous law. Also, this act states which kinds of substances cannot be granted in concession. iii) The Mining Code (“MC”) (Law No. 18,248), and its Regulation 2 Recent Political Developments (Decree No. 1/1989), which establishes the regulation of the mining activity and, in particular, minerals exploration, exploita- 2.1 Are there any recent political developments affecting the tion and benefit. mining industry?

1.2 Which Government body/ies administer the mining According to different studies, Chile is one of the countries which industry? will be severely affected by water shortages in the next 20 years. This has been reflected mainly in the northern and central areas of our The Government institution related to mining activities is the country, where in recent years droughts have increased and rainfall Ministry of Mining. Its mission is to lead the development of public has progressively decreased. Due to this situation, fresh water care policies aimed at increasing the contribution of mining activity to and promotion of its efficient use are priority public policies in Chile. national development, diversifying the activity to take advantage of Due to the foregoing: (i) two bills of law to amend the Water available resources under sustainable conditions. Code are under discussion in Congress; (ii) the protection of glaciers Furthermore, under the supervision of the Ministry of Mining, it has acquired great importance in our country, and there are bills of is the National Geology and Mining Service (“SERNAGEOMIN”, law under discussion to provide them with a higher level of protec- its Spanish acronym) which approves the technical and safety issues tion; (iii) new infrastructure projects shall be developed to of mining projects and supervises their accomplishment. SERNA- accumulate water or transport water from the south of Chile to its GEOMIN is also commanded to perform geological studies of the central and northern areas; and (iv) the mining industry is facing lots Chilean territory in order to provide essential information and of pressure to reduce its consumption of fresh water and use desali- promote investment. nated water from the ocean. In this regard, the bills of law to amend the Water Code seek to 1.3 Describe any other sources of law affecting the mining limit the use of certain water rights in scenarios of scarcity, as well as industry. to forbid granting new water rights in protected areas and glaciers. In addition, they propose that new water rights can only be granted for a maximum term of 30 years (extendable, unless the water authority Besides the three legal bodies mentioned in question 1.1, there are in Chile (“DGA”) proves they have not been used); and to amend the some other important regulations that may directly affect the mining so-called “miner’s waters”, in order to establish higher standards and industry, such as: a prior authorisation from the DGA for their granting and use. ■ Mining Safety Regulation, Decree No. 132/2004. There is also a bill of law filed in connection with desalination ■ Design, Construction, Operation and Closure Regulations for plants to regulate them. Tailings Deposits Projects, Supreme Decree No. 248/2007.

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Regarding glaciers, since July 2018 a bill for the protection of strong system of mining easements, which grants the necessary glaciers, the periglacial environment and permafrost has been under rights to expedite the mining exploration and exploitation over discussion in Chile. This bill grants glaciers the status of national surface land. public property, preventing any private property over them. In addi- At the same time, the MC protects the property rights of the tion, it prevents any activity that could affect or destroy the glaciers surface land’s owner by stating that the mining concessionaire shall and establishes sanctions, including imprisonment, in case of viola- pay compensation in order to obtain the easement. tions to the law. These bills are at an initial stage of discussion. Finally, it may be necessary to obtain the relevant environmental authorisations, as referred to in question 9.1. 2.2 Are there any speciﬁc steps the mining industry is taking in light of these developments? 3.3 What rights are required to conduct mining?

One of the main measures that the mining industry has taken to face An exploitation concession is required to pursue mining exploitation water scarcity is to increase the recirculation of waste water, and the activities. The exploitation mining concession has indefinite duration use of seawater in their production process to, on the other hand, and it will last as long as the concessionaire pays a mandatory licence reduce its fresh water consumption. In that sense, there are several and accomplishes all requirements according to the MC. mining companies which are currently working with seawater or Furthermore, mining easements will be required, and environmental developing desalination plants and pipeline projects. authorisation may be necessary.

3 Mechanics of Acquisition of Rights 3.4 Are different procedures applicable to different minerals and on different types of land?

3.1 What rights are required to conduct reconnaissance? Questions 3.1, 3.2 and 3.3 above are the general applicable rules for reconnaissance, exploration or exploitation of minerals. Nevertheless, According to the MC, every natural person or legal entity, foreign or there are some substances that are considered minerals which cannot national, has the right to conduct reconnaissance on any lands, be granted in concession. This is the case for natural oil, gas, lithium, regardless of who the owner of the surface land is, except within the deposits placed in maritime waters under national jurisdiction, or limits of an existing mining concession. substances of any kind located in areas that, by law, have been classi- Despite that, there are some circumstances stated in the law under fied as important to national security. These substances may only be which reconnaissance is limited (regulated reconnaissance) or exploited by State-owned companies, through administrative conces- forbidden (prohibited reconnaissance). sions, or by entering into special operational agreements. Lands of regulated reconnaissance are those fenced or cultivated, Additionally, thorium and uranium receive special treatment. where the landowner’s authorisation is needed but can be replaced These substances can be granted in concession, but because of their by a court order. Also, certain specially qualified lands, e.g., national potential nuclear use, the State will always have a first purchase parks, border areas, areas of scientific interest and beaches of autho- option over them. rised harbours may also need other approvals from the corresponding authorities. On the other hand, prohibited reconnaissance occurs over lands 3.5 Are different procedures applicable to natural oil and which have houses, facilities or have been planted with trees or vines, gas? where it is not possible to overrule the landowner’s will. To conduct reconnaissance, the right holder may impose tempo- As mentioned above, they can only be explored or exploited by rary easements on surface lands. The easement’s duration in this case State-owned companies or through special operational contracts or cannot exceed six months. It will not be necessary to constitute ease- administrative concessions. ments to develop reconnaissance activities over state or municipal surface lands not fenced or cultivated in which there are no third 4 Foreign Ownership and Indigenous Ownership parties’ exploration or exploitation concessions constituted. Requirements and Restrictions 3.2 What rights are required to conduct exploration? 4.1 What types of entity can own reconnaissance, In order to conduct exploration activities that would require more exploration and mining rights? invasive measures (e.g. bigger excavations, ground movements), a mining concession is required. As mentioned in question 1.1, in There is no restriction regarding the types of entity that can pursue Chile the State owns all mines and the exploration and/or exploita- reconnaissance or own exploration or exploitation rights. In this tion of those mines must be granted by a mining concession. sense, there are no differences between national and foreign, natural Mining concessions are granted through a process before the rele- persons and legal entities, with only a few exceptions as referred to vant court. Once granted, the mining concession is a right in rem. in question 4.2. The exploration concession is temporary. Its duration is limited to two years (extendable for up to two years if the owner – prior to 4.2 Can the entity owning the rights be a foreign entity or its expiration – requests an extension, upon waiver of at least half of the area originally granted). Its purpose is only to study the exis- owned (directly or indirectly) by a foreign entity and are there tence of minerals in a certain area, so it does not allow the special rules for foreign applicants? concessionaire to exploit the minerals. In addition, the holder of the mining concession shall require As mentioned, anyone can own mining rights in Chile, with only very mining easements over the surface land, which are essentially tran- few restrictions. In this sense, there are limitations for foreign enti- sitory: they are constituted only for specific mining purposes and ties and persons to acquire State-owned lands located 10 kilometres terminate once the mining activity finishes. The MC regulates a from the country borderline or five kilometres from the coast.

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These lands cannot be sold, rented or granted with any other right As reconnaissance can be pursued by any person, no transfer or to foreign entities or persons. registration is necessary in connection with this right. On the other hand, mining exploration and exploitation concessions shall be trans- 4.3 Are there any change of control restrictions applicable? ferred through a regulated and formal process. These concessions can be transferred without any restriction. However, compliance with all the formal requirements established In Chilean Mining Law, the general rule is that there are no appli- by law is necessary. In this sense, the transfer of exploration and cable specific change-of-control regulations. However, there is also exploitation concessions must be conducted through the execution no restriction to agree to them through Change of Control of a public deed, which shall be recorded in the Mining Property Agreement provisions. Registry of the corresponding Mining Registrar. Also, there is a legal exception in connection with mining property that belongs to “CODELCO”, the State-owned mining company. Its concessions and mining rights are subject to restrictions to be sold, 6.2 Are the rights to conduct reconnaissance, exploration transferred, seized, encumbered or assigned to third parties. and mining capable of being mortgaged or otherwise secured to raise finance? 4.4 Are there requirements for ownership by indigenous persons or entities? Exploration and exploitation concessions can be mortgaged in the same way as any other right in rem. It is also possible to grant other There are no requirements for ownership of mining concessions by encumbrances over these concessions, such as easements, usufructs indigenous persons or entities. Nevertheless, there are limitations or options. regarding indigenous lands, as referred to in question 10.1. All mortgages and encumbrances constituted on these concessions must be recorded in the registry of Mortgages and Encumbrances of the corresponding Mining Registrar. 4.5 Does the State have free carry rights or options to acquire shareholdings? 7 Dealing in Rights by Means of Transferring Subdivisions, Ceding Undivided Shares and No, there are no special rules that entitle the Chilean State to acquire Mining of Mixed Minerals shareholdings (please see question 3.4 above in connection with the State option to acquire thorium and uranium). 7.1 Are rights to conduct reconnaissance, exploration and 5 Processing, Refining, Beneficiation and Export mining capable of being subdivided?

5.1 Are there special regulatory provisions relating to According to the MC, exploration and exploitation concessions are processing, reﬁning and further beneﬁciation of mined minerals? capable of being subdivided prior to authorisation of SERNA- GEOMIN, which shall state that all the resulting parts of the subdivided concession fulfil the minimum legal requirements that For Chilean law, processing, refining and further beneficiation of every single concession must comply, such as the minimum surface mined minerals are also mining activities and are regulated by its legal size, shape and orientation. Once the subdivision has been framework. The MC expressly recognises the right of the conces- approved, each of the resulting parts will be considered as indepen- sionaire to constitute easements over the surface land in order to dent mining concessions. develop a benefit plant. As previously stated, every person is entitled to pursue reconnais- However, note that processing, refining and beneficiation facilities sance. As it is not a formal right, it is not possible to subdivide it. would require safety, health and eventually environmental authorisations (please refer to sections 9 and 11 below). 7.2 Are rights to conduct reconnaissance, exploration and

mining capable of being held in undivided shares? 5.2 Are there restrictions on the export of minerals and levies payable in respect thereof? In Chile, when two or more persons jointly constitute or acquire an exploration or exploitation mining concession, a legal entity called For most substances, there are no special restrictions on exportation. the Legal Mining Company is formed by the sole effect of the law, However, approval from the Chilean Nuclear Energy Commission which will own the concession. This legal entity can be transformed is required to perform any act regarding nuclear substances such as into a mining corporation at any time, through the agreement of its lithium, thorium and uranium. Thereby, this approval is required to members or shareholders. export these substances. Also, note that export minerals where exploitation is reserved to 7.3 Is the holder of rights to explore for or mine a primary the State, as mentioned in question 3.4 above, will be limited by the provisions of the special operation contract or administrative mineral entitled to explore or mine for secondary minerals? concession that authorises its exploitation. Following the Chilean Constitution and the Mining Concessions Act 6 Transfer and Encumbrance No. 18,097, the holders of exploration and exploitation concessions are entitled to explore and mine all the metallic and non-metallic substances that are in the concession area, except those reserved for 6.1 Are there restrictions on the transfer of rights to conduct the Chilean State as indicated in question 3.4. reconnaissance, exploration and mining?

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7.4 Is the holder of a right to conduct reconnaissance, The exploration and exploitation concessionaires do not have any expropriation rights over the surface lands in order to develop their exploration and mining entitled to exercise rights also over mining operations. However, as mentioned in the answer to ques- residue deposits on the land concerned? tion 3.2, the MC regulates a strong system of mining easements which grants the necessary rights to expedite mining exploration and The MC establishes that minerals substances located in residue exploitation over the surface land. deposits may be granted in concession once a prior mining concession has expired or when the owner of those mining facilities has 9 Environmental abandoned them. Therefore, only with a new concession over the area where these mineral substances are located will a concessionaire be entitled to exercise its rights of exploration and exploitation over 9.1 What environmental authorisations are required in order to residue deposits that exist on the relevant land. conduct reconnaissance, exploration and mining operations? In any case, the holder of these rights would not be able to explore or exploit the deposits without the relevant easement over The Environmental Act and its Regulation distinguish between explo- the surface land, as mentioned in question 3.2. ration, prospection and exploitation for the purposes of any

environmental assessments of mining activities. According to this 7.5 Are there any special rules relating to offshore regulation, exploration does not require an environmental assessment. exploration and mining? However, note that prospection requires such assessment. The difference between one and the other is that prospections are works and As referred to above, according to Chilean law, minerals located in actions performed with the purpose of reducing geological uncertain- maritime waters of national jurisdiction can only be granted in ties related to mineral concentrations in a mining project and which concessions when they are reachable by tunnels from the coast. To require more than 40 platforms (or 20 platforms in certain regions). explore and exploit these substances, the general regime of authori- Explorations, on the other hand, need fewer platforms than prospec- sations, as stated in the answers above, is applicable. tions. Finally, mining exploitation would require an environmental On the other hand, mineral substances under waters of national assessment when its purpose is to mine one or more deposits the jurisdiction that are not reachable by tunnels cannot be granted in mineral extraction capacity of which is over 5,000 tonnes per month. concession. They can only be exploited by State-owned companies Also, mining waste and tailings disposals of mining exploitation or through administrative concessions or special operational agree- projects that need environmental authorisation will need to undergo ments (please refer to question 3.4). In these cases, it could be an environmental assessment (tailing dams will also require an envi- necessary to obtain a maritime concession from the Ministry of ronmental assessment due to their capacity or dam size, as stated in Defence. In addition, other relevant authorisations according to question 9.2 below). environmental, health and labour laws shall be applicable. It should also be considered that after a project obtains its environmental authorisation, it must obtain all other necessary legal 8 Rights to Use Surface of Land authorisations from sectorial authorities, such as authorisations for construction, waste management, water treatment, exploitation of native forest, wildlife capture, excavation in archaeological sites, etc. 8.1 Does the holder of a right to conduct reconnaissance, Note that the relevant authorities cannot deny such authorisations for environmental reasons. exploration or mining automatically own the right to use the For those projects or activities that do not require an environ- surface of land? mental assessment, each specific authorisation or permit must be requested directly before the corresponding sectorial authority. No, the property rights over exploration or exploitation concessions are different from the property rights over the surface lands where the 9.2 What provisions need to be made for storage of tailings mining concessions are located. Those concessions do not grant any and other waste products and for the closure of mines? right to use the surface land, but it is possible to constitute and impose mining easements over the surface land to exercise these rights. Note that the Chilean Constitution states that surface lands shall In addition to what it is mentioned in question 9.1 above, Decree No. be subject to the obligations and limitations that the law may 248/2007, with regard to approval, design, construction, operation and provide, with the purpose of expediting the exploration and closure of tailings deposits, states that an approval from SERNA- exploitation of mines (please refer to question 3.2). GEOMIN is needed to build and operate any waste or tailing dump. Also, any amendment to the approved project during construction or operation has to be authorised by SERNAGEOMIN before its imple- 8.2 What obligations does the holder of a reconnaissance mentation. vis-à-vis right, exploration right or mining right have the Tailing dumps need the authorisation of the General Water landowner or lawful occupier? Bureau, when their capacity is of 5,000 m³ or more, or their walls are taller than 5m. In the event that it is necessary to constitute an easement over the Finally, to shut down tailings or waste deposits, a Closure Plan, surface land in order to perform the mining activities, the holder of including safety and environmental measures, must be filed and the exploration or exploitation concession will be compelled to approved by SERNAGEOMIN. compensate the owner of the surface land for the damages caused by its mining activities. The amount of this compensation must be 9.3 What are the closure obligations of the holder of a determined before the constitution of the easement by the relevant reconnaissance right, exploration right or mining right? parties or by the relevant court if such agreement is not reached.

The Mining Sites and Facilities Closing Act No. 20,551 and its 8.3 What rights of expropriation exist? Regulation, which specifically regulates the process and requirements for the closure of a mining exploration or exploitation site, and their

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facilities, compels any person who wants to develop exploitation 11 Health and Safety (and in certain cases, exploration) mining activities, to have a Closure Plan approved by SERNAGEOMIN before starting such mining operations. The Closure Plan shall also be periodically updated as 11.1 What legislation governs health and safety in mining? the mining exploration or exploitation project is executed. A Closure Plan is a document that contains all the actions and measures that shall be taken in order to mitigate the negative effects Decree No. 132/2004 and Decree No. 248/2007 are the relevant generated during the closure of the mine. It has to consider every facility regulations regarding health and safety matters in mining. The aim of the mining operation in order to ensure physical and chemical of these regulations is to protect the life and health of those who stability in accordance with applicable environmental regulations. The work in and are related to the mining activities, and to safeguard the execution of these actions and measures has to safeguard life, health, facilities and infrastructure of the mining projects. the population’s safety and the environment. Additionally, there are other relevant regulations regarding this Mining companies must provide a warranty to ensure the subject that are compulsory for the mining industry, such as the Labour complete and timely fulfilment of the obligations stated in the Code, the Sanitary Code and Decree No. 594/1999 that establishes the approved Closure Plan. The amount of the warranty shall be esti- necessary sanitary and safety conditions for working places. mated according to the criteria stated in the law. 11.2 Are there obligations imposed upon owners, employers, 9.4 Are there any zoning or planning requirements applicable to managers and employees in relation to health and safety? the exercise of a reconnaissance, exploration or mining right? Applicable regulations impose several relevant obligations on mining The MC establishes that to pursue mining activities, some authori- employers regarding health and safety. For example, the obligation sations will be required under certain circumstances due to zoning to: train the workers to safely operate the mining machinery and reasons. For example, pursuing mining activities: equipment; inform them of the risks associated with the work they ■ within cities or towns, cemeteries, beaches of habilitated perform and the preventive measures they must observe; provide the harbours and potable water extraction points requires the autho- necessary personal protection equipment to their workers; and risation of the corresponding Governor; permanently maintain a first aid kit and provide transportation for ■ within national parks, national reservoirs or natural monuments, the injured workers. Generally, the mining company as a direct or requires the authorisation of the corresponding “Intendente”; indirect employer shall pursue every action to guarantee the safety ■ within zones declared as border areas for mining purposes, and physical integrity of its workers, its facilities, equipment and requires the authorisation of the Border and Limits Department machinery. of the Foreign Affairs Ministry; On the other hand, there are obligations imposed upon workers, ■ within military zones and facilities like harbours and aerodromes, such as following the rules and internal regulations regarding health requires the authorisation of the Defence Ministry; and and safety, checking the good condition and proper functioning of ■ within zones declared as of scientific interest for mining machinery and equipment, permanent use of personal protection purposes, requires the authorisation of the President of the equipment, etc. Republic granted through the Ministry of Mining. Furthermore, there are also obligations imposed upon managers, Also, according to the Urbanism and Construction General Law such as supervising the workers and enforcing the safety rules. (Decree No. 458/1976), every activity (including mining activities) has to be performed in accordance with zoning and territory planning 12 Administrative Aspects regulations. Mining reconnaissance, exploration and exploitation activities are subject to these regulations. 12.1 Is there a central titles registration ofﬁce?

10 Native Title and Land Rights Chile has local Mining Registrars where exploration and exploitation mining concessions are registered. According to the MC, the judg- 10.1 Does the holding of native title or other statutory ment granting a mining concession shall be registered with the surface use rights have an impact upon reconnaissance, corresponding Mining Registrar. In addition, such Registrar shall note concessions transfers, incorporation of mining corporations, exploration or mining operations? share transfers, mortgages, liens, interdictions, prohibitions and lawsuits related to the mining concessions registered on its registries. Native property is protected by the Indigenous Act (No. 19,253). In addition, certain acts, agreements and contracts related to mining According to this regulation, no indigenous land can be transferred, concessions shall also be registered. seized, encumbered, nor subjected to a statute of limitations, except between indigenous people or communities of the same ethnicity. 12.2 Is there a system of appeals against administrative Nonetheless, the National Corporation for Indigenous Development (“CONADI” for its Spanish acronym) may authorise its encum- decisions in terms of the relevant mining legislation? brance when it does not include the family’s house and necessary land for their livelihood. According to Chilean public law rules, all the administrative decisions In this sense, it is possible to have mining exploration or exploita- are subject to review before the authority which issued the decision tion concessions located within indigenous lands; but, as mentioned or before its superior (in the case that it exists) and after this, they in the answer to question 3.2, the concessionaire shall obtain a may be claimed before the ordinary courts. mining easement over such surface land, for which purpose the approval of CONADI is needed.

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13 Constitutional Law The tax rate of this “mining royalty” may vary from exempt to 14% for companies with annual sales exceeding 50,000 metric tonnes of fine copper. For the purposes of calculating the annual sales, the 13.1 Is there a constitution which has an impact upon ones made by related entities must be considered. This “mining royalty” is a deductible expense for Corporate Tax rights to conduct reconnaissance, exploration and mining? purposes. The taxable base is determined upon the net taxable income of As stated in the answer to question 1.1, the Chilean Constitution the company (according to the general provisions of the Chilean provides the legal grounds for mining regulation. Income Tax Law), with some specific adjustments. The Constitution states that all mines belong exclusively to the State of Chile, and any person or company may be granted explo- 15 Regional and Local Rules and Laws ration and exploitation rights over minerals and substances through mining concessions. These mining concessions must be granted through a judicial proceeding. The Constitution grants the conces- 15.1 Are there any local provincial or municipal laws that sionaire with property rights over them. need to be taken account of by a mining company over and Also, as mentioned in the answer to question 8.2, the Chilean above National Legislation? Constitution states that surface land is subject to the obligations and limitations that the law may provide with the purpose of expediting the exploration and exploitation of mines. Despite specific regulations regarding territory zoning and planning that were referred to in question 9.4 above, there are no regional, 13.2 Are there any State investment treaties which are provincial or municipal laws to be taken into account.

applicable? 15.2 Are there any regional rules, protocols, policies or laws relating to several countries in the particular region that Chile has signed several bilateral and multilateral free trade agreements with other countries, such as the United States, Canada, need to be taken account of by an exploration or mining Mexico, China and the European Union. In addition, Chile is part company? of the Trans-Pacific Partnership treaty and has signed numerous double taxation treaties. To consult a specific treaty, please visit the No, there are not. following link: https://www.leychile.cl/consulta/tratados_por_pais. 16 Cancellation, Abandonment and 14 Taxes and Royalties Relinquishment

14.1 Are there any special rules applicable to taxation of 16.1 Are there any provisions in mining laws entitling the exploration and mining entities? holder of a right to abandon it either totally or partially?

As a general rule, mining activity in Chile is subject to the general The concessionaire has the right to abandon by unilaterally relin- tax regime applicable to all companies. Therefore, Corporate Tax is quishing, totally or partially, its exploration and exploitation mining applied on profits, after acquittal of the specific mining tax (see the concessions. Nevertheless, it shall never affect third-party rights. answer to question 14.2 below), and a Withholding Tax of 35% shall The abandonment must be performed by public deed, and will only be deemed to any distributions or dividends remitted abroad. Please produce its effects with the cancellation of the registration of the note that the Corporate Tax paid may be partially or totally deducted mining concession. from the Withholding Tax, depending on the tax regime elected and However, this possibility of abandonment must be addressed the domicile of the person/legal entity receiving the distribution. considering the possible mining projects that may be running in the In special cases, mining companies may apply for special Value- concession, since, in relation to them, there is an obligation to imple- Added Tax exemptions. ment closure measures and there are associated sanctions in the case In addition, an annual payment of a mining licence is required to of abandonment without their implementation. keep the mining concessions in good standing.

Also, holders of a Foreign Investment Contract signed before December 1st, 2004, are protected by a general tax stability and/or a 16.2 Are there obligations upon the holder of an stability pact under the Foreign Investment Statute, and shall not be exploration right or a mining right to relinquish a part thereof affected by this specific mining tax for as long as their stability pact lasts. after a certain period of time?

14.2 Are there royalties payable to the State over and Our law establishes a case of mandatory relinquishment of mining above any taxes? concessions only in connection with exploration concessions. It settles that the exploration concession is granted for two years and Mining companies are subject to additional taxation (locally referred that at the end of this period, the concession’s owner is entitled to to as “mining royalty”) depending on the annual sales amount. This request an extension for two more years. If such extension is tax is applicable for mining companies with sales of minerals over requested, the concessionaire will be forced to abandon at least half which concessions may be granted and for sales of over 12,000 of the original concession area. The exploration concession will be metric tonnes of fine copper. The value of a metric tonne of fine extinguished in the relinquished part and extended only for the copper is used as a measure to determine the amount of the tax. remaining area.

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16.3 Are there any entitlements in the law for the State to In addition, the exploration concession has a special rule regarding these matters, which establishes that a judge must declare the expi- cancel an exploration or mining right on the basis of failure to ration of an exploration concession when the concessionaire starts comply with conditions? mining within the limits of the concession. As it can be noted, in both cases the cancellation process is The holder of a mining right or concession is bound to an annual conducted before a judge and not before the administration, thus payment for either exploration or exploitation concessions. Non- ensuring a process without arbitrariness or discrimination. payments or partial or late payment enables the Treasury Department to initiate a process before the courts in order to sell the mining concession at a public auction. Only in the event that there is no bidder will the judge declare the concession extinct, ordering the cancellation of its registration.

Nicolás Eyzaguirre has extensive experience in various areas, which include Mining, Natural Resources and Environmental law, Litigation, Mergers and Acquisitions, Regulatory practice and Energy law. As head of the Natural Resources Group of Claro & Cia., he has represented local and foreign companies developing projects in mining, energy, water, forestry and oil sectors, and has a thorough knowledge of the local regulations and its markets. This broad array of practice areas and expertise has allowed him to advice both local and international clients, building longstanding relationships with them.

Claro & Cia. Tel: +562 2367 3000 Av. Apoquindo No. 3721, 14th floor Email: [email protected] Las Condes URL: www.claro.cl Santiago Chile

Since its founding in 1880, Claro & Cia. has been one of the most prestigious Claro & Cia. is an undisputed leader in the Chilean legal market and has set law firms in Chile. Our seal is an innovative approach, reliable and highly qual- itself apart for its high legal and ethical standards with which it renders ified service. With a sophisticated group of lawyers, Claro & Cia. is services in the most complex business transactions and in judicial and arbi- well-prepared to take part in all areas requiring legal advice, offering clients tration disputes. Our client’s loyalty proves this, as do the international complete support to achieve their goals. Claro & Cia.’s practice in Banking and recognitions that the firm and our lawyers have obtained, such as Law Firm Finance, Corporate Law, Restructuring and M&A, Capital Markets (both in Chile of the Year Chile granted in 2015, 2012 and 2010 (Chambers & Partners); and abroad), as well as its reputed experience in Litigation and Arbitration, are Corporate Finance Deal of The Year, 2013 (Latin Lawyer); M&A Deal of The Year particularly worth noting. In all these areas, in addition to those offered in 2012 (Latin Lawyer); M&A Deal of The Year 2012 (IFLR); and National Firm Of other fields as part of its integral service, Claro & Cia.’s professionalism, The Year 2012 (IFLR). creativity and strength show through. Experience, reliability, excellence and leadership are the principles that guide Claro Claro & Cia. represents clients with interests in highly diverse areas of the law, & Cia., in a strict framework of ethics and social responsibility with the people. such as Administrative and Constitutional, Transportation, Antitrust, www.claro.cl Arbitration, Litigation, Banking, Project Finance, Mining, Bankruptcy and Reorganization, Mergers and Acquisitions, Capital Markets, Energy and Natural Resources, Environmental, Insurance, Employment, Criminal and Administrative Penalties, Intellectual Property and New Technologies, International Trade, Economic Regulation, Taxation, Telecommunications, Sports and Entertainment, and Real Estate Development, among others.

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China China

Guohua Wu

Jincheng Tongda & Neal Law Firm Yingnan Li

1 Relevant Authorities and Legislation Guan Fu. To implement the Fang Guan Fu policy in the mining industry, the government must be committed to facilitating the investment process, modernising its management system and 1.1 What regulates mining law? ensuring freedom in trade of mining products, all of which are expected to further open up the Chinese mining industry and boost its development. The Mineral Resources Law (“MRL”) is the national law governing On the institutional side, a new state-level department – the the prospection for and extraction from mines in China and the Ministry of Natural Resources – was formed in March, 2018, which registration of mining rights. The MRL was promulgated by the is delegated with all or part of the powers of eight governmental Standing Committee of the National People’s Congress on March bodies, including the Ministry of Land and Resources, the National 19, 1986 and amended in 1996 and 2009, respectively. Development and Reform Commission, the Ministry of Housing and Urban-Rural Development, the Ministry of Water Resources, 1.2 Which Government body/ies administer the mining the Ministry of Agriculture, the National Forestry Administration, industry? the State Oceanic Administration, the National Bureau of Surveying and Mapping Geographic Information. The Ministry of Natural The Ministry of Natural Resources (“MNR”) and its local bureau Resources is responsible for supervision of extraction and protec- are the primary governmental bodies administering the mining tion of natural resources, mining rights registration, and planning of industry together with other ministries and departments that regulate space development and mining and prospection and other matters other aspects of the mining industry. For example, the Ministry of specifically provided by law. Ecology and Environment (“MEE”) is responsible for environmental protection, and the Ministry of Commerce is responsible for 2.2 Are there any speciﬁc steps the mining industry is taking regulating the import and export of mineral products. in light of these developments?

1.3 Describe any other sources of law affecting the mining To implement the “Fang Guan Fu” reform, the following measures industry. have been taken since 2015: 1. establishment of a new state-level institution – the Ministry of Other sources of law affecting the mining industry include: rules, Natural Resources; regulations and guidelines by the State Council, for example, the 2. reform of the mining rights assignment system and establish- Measures for the Administration of Transfer of Mineral Exploration ment of a new occupying fee system; Rights and Mining Rights; by local People’s Congresses and their 3. reform of the mining rights approval and registration system; standing committees at various governmental levels, for example, the and Administrative Regulations on Mineral Resources in Beijing; and by 4. replacement of the environmental restoration bond system with central-level ministries, commissions, and agencies under the direct a more convenient and unifying environmental restoration fund supervision of the State Council, for example, the Administrative system. Rules on Shanghai Mining Rights Market. 3 Mechanics of Acquisition of Rights 2 Recent Political Developments 3.1 What rights are required to conduct reconnaissance? 2.1 Are there any recent political developments affecting the mining industry? In China, mining rights are divided into prospection rights and extraction rights. Under Chinese law, prospection rights are similar to the concepts of reconnaissance and exploration rights. In China, The State Council has reiterated the government’s focus on “reforms mining rights are, in most cases, assigned to applicants through a to delegate power, streamline administration, and optimise govern- public bidding or tender offer process. According to the Draft 放管服 ment services” (“Fang Guan Fu” or “ ”) in its video Mining Rights Assignment Management Regulation publicised by conference on improving investment quality in June, 2019. This has the Ministry of Natural Resources in March 2019, except for the become one of the major tasks of the Chinese government since following three special cases, assignment of mining rights must be 2015 when Premier Li Keqiang first brought up the notion of Fang conducted through a public bidding or tender offer process:

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1. the State Council has selected a specific entity to prospect and 4.2 Can the entity owning the rights be a foreign entity or explore the mine, in which case, the natural resources depart- owned (directly or indirectly) by a foreign entity and are there ment is allowed to assign the mining rights by contract; 2. the cost for prospection is wholly covered by governmental special rules for foreign applicants? expenditure; and 3. a prospector applies for the mining rights for the same mine. Yes, to both questions. A foreign entity can own mining rights in China. However, foreign investors are prohibited from investing 3.2 What rights are required to conduct exploration? directly or indirectly in prospecting for or extracting tungsten, molybdenum, tin, stibonium, fluorite, and rare earth and radioactive minerals. They are allowed to invest in prospecting for and See question 3.1. extracting oil and natural gas (including coalbed gas but excluding kerogen shale, oil sands and shale gas) only in the form of equity or 3.3 What rights are required to conduct mining? co-operative joint ventures with Chinese entities (there are no restrictions on equity ratios for foreign investors). The extraction right is required to conduct mining. 4.3 Are there any change of control restrictions applicable? 3.4 Are different procedures applicable to different minerals and on different types of land? Except for the restrictions mentioned in question 4.2, there are no other restrictions on foreign ownership.

Yes. For example, procedures for prospecting for and extracting oil and natural gas are different from those for solid minerals. Such 4.4 Are there requirements for ownership by indigenous differences are elaborated under question 3.5. persons or entities? Procedures differ depending on whether the land used for mining is urban land or agricultural land. This is not applicable in China. On a very high level, for example, the procedures for applying to use land for mining are as follows: For urban land, a holder of mining rights must submit an appli- 4.5 Does the State have free carry rights or options to cation to the local land resources administrative body for a land use acquire shareholdings? permit. After a preliminary review, the local land resources administrative body will forward the application to the local government Ownership of mineral resources is vested in the State. for consideration and approval. Once the local government approves the application, it will issue a land use permit. 5 Processing, Refining, Beneficiation and Export For agricultural land, a holder of mining rights must submit an application to the local land resources administrative body. Then the administrative body will formulate a land conversion plan (to convert 5.1 Are there special regulatory provisions relating to agricultural land into construction land because agricultural land in processing, refining and further beneficiation of mined China cannot be directly expropriated by the government), a land minerals? expropriation plan, a land supply plan, and a farmland provision plan. All these plans must be approved by the local government. After such approvals are issued, the local government will issue a There are certain restrictions on the extraction and processing of land use permit. mineral resources, which are primarily set out in the 2011 Industrial Structure Adjustment Catalogue (the “Catalogue”). This Catalogue 3.5 Are different procedures applicable to natural oil and categorises various construction projects into three categories: encouraged projects; restricted projects; and obsolete projects. According to gas? the Catalogue, no investment is allowed in new restricted projects. Restricted projects include but are not limited to: (i) production of Yes. In addition to the materials necessary for prospecting for and certain petrochemical products, such as certain pesticides and nitrogen extracting solid minerals, an applicant that wants to extract oil and fertilisers; (ii) extracting and smelting tungsten, tin and antimony; and natural gas must obtain approval from the State Council for the (iii) smelting of gold ores by pyrometallurgy with a daily processing establishment of an oil company or for prospecting for or extracting amount below 100 metric tonnes. oil and gas. The applicant must also have the legal person certificate. In addition, mining rights for oil and gas can only be granted by the 5.2 Are there restrictions on the export of minerals and MNR as opposed to local land resources bureau for other types of levies payable in respect thereof? minerals.

4 Foreign Ownership and Indigenous Ownership According to the 2019 Export License Catalogue, an exporter of phos- Requirements and Restrictions phorus ore, coal, crude oil, and refined oil (excluding lubricating oil) must first apply to the Quota & License Administrative Bureau of Commerce (the “Bureau”) for an export quota and then apply to the 4.1 What types of entity can own reconnaissance, Bureau for an export licence after the export quota is approved; an exporter of rare earth minerals, tin and tin products, tungsten and tung- exploration and mining rights? sten products, molybdenum and molybdenum products, antimony and antimony products, indium and indium products, coke, lubricating oil, Mining rights can only be owned by corporate entities. and fluorspar must apply to the Bureau for an export licence. Generally, customs duties apply to the export of mineral resources. Consignors of exported goods must pay customs duties.

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6 Transfer and Encumbrance 7.2 Are rights to conduct reconnaissance, exploration and mining capable of being held in undivided shares?

6.1 Are there restrictions on the transfer of rights to conduct Mining rights cannot be held in undivided shares in China. reconnaissance, exploration and mining? 7.3 Is the holder of rights to explore for or mine a primary The following conditions must be met before transferring a prospec- mineral entitled to explore or mine for secondary minerals? tion permit: 1. Two years have passed since the permit was granted, or mineral resources were found. Currently, there are no laws or regulations on the exploration or 2. A certain level of minimum investment has been made. mining of secondary minerals. 3. There is no dispute over transfer rights. 4. Consideration for the rights has been paid. 7.4 Is the holder of a right to conduct reconnaissance, 5. Any other conditions stipulated by the MNR. exploration and mining entitled to exercise rights also over The following conditions must be met before transferring an residue deposits on the land concerned? extraction permit: 1. One year has passed since extraction was commenced. 2. There are no disputes over transfer rights. A mining rights holder has more of an obligation than a right to deal 3. Consideration for the extraction right has been paid. with residue deposits, tailings and mine dumps. A mining rights holder 4. Any other conditions stipulated by the MNR. must register with the local environmental protection bureau for pollu- Additionally, the transferee must meet the same qualification tion discharge, formulate a pollution control plan, and install certain requirements that the applicant for the prospecting for or extraction facilities in order to ensure that residue deposits, tailings, and mine of the mineral resources is subject to. dumps do not pose considerable risks to the public and the environment. A mining rights holder failing to comply with these obligations 6.2 Are the rights to conduct reconnaissance, exploration may be fined or forced to temporarily shut down the mine.

and mining capable of being mortgaged or otherwise secured 7.5 Are there any special rules relating to offshore to raise ﬁnance? exploration and mining?

Yes, mining rights can be mortgaged. According to the Tentative Regulations on the Administration of Assignment and Transfer of Yes. The Law on the Exploration and Development of Deep Mining Right (the “Tentative Regulations”), to set a mortgage on Seabed Resources regulates the prospecting for and extraction of mining rights, mining rights holders must submit application mate- resources located at the seabed, ocean floor and subsoil outside the rials, including but not limited to, the mortgage contract and mining jurisdiction of China and other countries. The Regulations on Sino- permits, to the permit issuance bureau and go through certain record Foreign Cooperation in the Exploration of Offshore Petroleum filing procedures. Resources regulate the exploration and extraction of offshore It should be noted, however, that the Tentative Regulations do not petroleum resources through cooperation between China National specify the record filing procedures and requirements, which leaves Offshore Oil Corporation and foreign entities. a gap for interpretations by local authorities. We recommend that foreign investors pay special attention to local implementation rules 8 Rights to Use Surface of Land and policies in the provinces where their mining projects are located. For example, Gansu Province and Shandong Province do not 8.1 Does the holder of a right to conduct reconnaissance, accept applications for record filings of mortgages for the benefit of third parties, which means that mortgagors must be mining rights exploration or mining automatically own the right to use the holders in these two provinces. In addition, in certain provinces, surface of land? mortgagees must be banks (in Shandong Province, mortgagees must be state-owned banks) or other qualified financial institutions. No, a mining rights holder does not automatically own the right to Finally, requirements for application materials also differ significantly use the land’s surface. In fact, mining rights and the right to own from region to region. and use land are two separate and independent rights and are regulated under different legal regimes. 7 Dealing in Rights by Means of Transferring Subdivisions, Ceding Undivided Shares and 8.2 What obligations does the holder of a reconnaissance Mining of Mixed Minerals right, exploration right or mining right have vis-à-vis the landowner or lawful occupier? 7.1 Are rights to conduct reconnaissance, exploration and mining capable of being subdivided? A mining rights holder cannot encroach on the rights of the landowner or lawful occupier.

Mining rights cannot be subdivided in China.

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8.3 What rights of expropriation exist? 9.4 Are there any zoning or planning requirements applicable to the exercise of a reconnaissance, exploration or mining right? As mentioned under question 3.4, if a piece of land used for mining is agricultural land, the mining rights holder must apply to the local There are zoning and planning requirements for the prospecting for government for the expropriation of that piece of land. and extraction of mineral resources at the national, provincial, municipal and county levels. The exercise of mining rights must 9 Environmental comply with the zoning and planning requirements at all levels.

10 Native Title and Land Rights 9.1 What environmental authorisations are required in order to conduct reconnaissance, exploration and mining operations? 10.1 Does the holding of native title or other statutory An environmental impact assessment (“EIA”) must be conducted surface use rights have an impact upon reconnaissance, for construction projects affecting the environment. An EIA is exploration or mining operations? subject to approval or filing procedures from local bureau of MEE. One notable change that the Standing Committee of the National This is not applicable in China. Congress has made to the EIA Law in December 2018 is that the constructors are allowed to prepare the EIA forms and reports by themselves if they are fully capable of doing so. In the past, 11 Health and Safety constructors have been required to engage a qualified EIA institution to prepare the forms and reports for them. This move is believed 11.1 What legislation governs health and safety in to prompt the EIA institutions in the market to improve their service mining? quality and further lighten the burden of constructors.

9.2 What provisions need to be made for storage of tailings Health in mining is mainly regulated under the Mine Safety Law and Regulations for the Implementation of Mine Safety Law. Safety in and other waste products and for the closure of mines? mining is mainly regulated under the Law on the Prevention and Control of Occupational Diseases. China implemented a restoration fund system in November 2017. A holder of mining rights may use the fund at its own discretion in 11.2 Are there obligations imposed upon owners, accordance with the restoration plan formulated prior to the issuance employers, managers and employees in relation to health and of the mining permit. The new system is expected to give holders of mining rights more safety? discretion on how to use the funds and reduce their financial burdens. In the meantime, the government has: strengthened Yes. As to safety, holders of mining rights must have in place facilities enforcement of the supervision and inspection of the restoration that can ensure safety in production, establish a system of safety of the mine’s geological environment; those who do not comply management, take effective measures to improve working conditions with these regulations will face more stringent consequences. for workers and staff, and strengthen safety control in mines. Consequences for failing to comply with environment restoration Managers must be responsible for safe production in mines and must obligations include but are not limited to: fines; rejections for exten- have special knowledge and the capability to ensure safe production sions of mining permits; being black-listed on the “Credit China” and handle accidents. Employees must possess specialised knowledge website; and environmental public interest lawsuits. of and experience in work safety. As to health, employers must ensure that working conditions meet 9.3 What are the closure obligations of the holder of a national standards and requirements for occupational health and take reconnaissance right, exploration right or mining right? measures to ensure that workers are protected from occupational diseases.

The following procedures must be completed: 12 Administrative Aspects 1. filing an application for closing the mine with the same governmental authority which originally approved the establishment of the mine (“Approving Authority”); 12.1 Is there a central titles registration ofﬁce? 2. submitting for approval the geological report of the mine to be closed to Approving Authority; and 3. after the geological report is approved, preparing, compiling and The MNR is the central titles registration authority. submitting a mine closing report to Approving Authority. After the mine closing report is approved, the following work 12.2 Is there a system of appeals against administrative must be completed: decisions in terms of the relevant mining legislation? 1. classifying and sorting out the geological survey, and mining information, and submitting the geological report and mine There is no appeals system specifically promulgated for mining closing report and other related materials; and matters only. Those wishing to challenge administrative decisions 2. completing the remaining work related to labour safety, water can either seek an administrative review or an administrative lawsuit and soil conservation, land reclamation and environmental in the usual manner where an actionable cause of action arises. protection pursuant to the approved mine closing report, and paying in full any outstanding charges.

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However, according to the Law of Administrative Review, if the 15 Regional and Local Rules and Laws subject matter is about ownership of natural resources or the right to use natural resources, an administrative review must first be initiated. 15.1 Are there any local provincial or municipal laws that 13 Constitutional Law need to be taken account of by a mining company over and above National Legislation? 13.1 Is there a constitution which has an impact upon rights to conduct reconnaissance, exploration and mining? Yes. Local legislatures have the authority to stipulate special rules and regulations governing local activities. See also the discussion in question 1.3. The Mineral Resources Law covers all of these rights.

15.2 Are there any regional rules, protocols, policies or 13.2 Are there any State investment treaties which are laws relating to several countries in the particular region that applicable? need to be taken account of by an exploration or mining company? No. As of the publication of this article, we are not aware of any investment treaties that China has joined which specifically address mining investment matters. However, there are a few bilateral invest- This is not applicable in China. ment treaties between China and other countries covering mining activities and investments in the mining industry, such as the 16 Cancellation, Abandonment and Agreement on the Promotion and Mutual Protection of Investment Relinquishment between China and Canada, the Free Trade Agreement between China and the Republic of Chile, and the Free Trade Agreement between China and the Republic of Peru. 16.1 Are there any provisions in mining laws entitling the holder of a right to abandon it either totally or partially? 14 Taxes and Royalties We are not aware of any provisions in Chinese mining laws entitling 14.1 Are there any special rules applicable to taxation of rights holders to surrender these rights in part or in their entirety. Having said that, under Chinese law, any rights, unless otherwise prohib- exploration and mining entities? ited by law, can be abandoned in part or in their entirety. Therefore, we are of the view that mining rights can be surrendered, provided that the Basic resource tax rates for certain mineral resources are as follows: surrender of rights does not result in a failure to fulfil the obligations ■ crude oil: 6% of gross sales; assumed at the time such rights are granted. Additionally, a holder of ■ natural gas: 6% of gross sales; mining rights intending to abandon those rights or close a mine must ■ coking coal and other coal: 2%–10% of gross sales; follow the procedures discussed in question 9.3. ■ iron (concentrate): 1%–6% of gross sales; ■ gold (bullion): 1%–4% of gross sales; 16.2 Are there obligations upon the holder of an ■ copper (concentrate): 2%–8% of gross sales; ■ nickel (concentrate): 2%–6% of gross sales; exploration right or a mining right to relinquish a part thereof ■ graphite (concentrate): 3%–10%; after a certain period of time? ■ diatomite (concentrate): 1%–6%; and ■ kaolin (ore): 1%–6%. Please see our answers under questions 9.3 and 16.1.

14.2 Are there royalties payable to the State over and 16.3 Are there any entitlements in the law for the State to above any taxes? cancel an exploration or mining right on the basis of failure to comply with conditions? According to the Mineral Royalties Reform Plan promulgated on April 20, 2017, an applicant for mining rights must pay mineral royal- Yes. Among others, any of the following circumstances may lead to ties to the State. the revocation of exploration or extraction permits: (i) a failure to Royalties are calculated as follows: pay royalties or register changes to the range of mines or major (i) the price offered by the winning bidder if the mining rights are minerals or name of the mining entity; (ii) refusal to cooperate with assigned by auction; governmental authorities on supervision and inspection; or (iii) acts (ii) the price (not necessarily the highest) offered by the winning of fraud. tenderer if the mining rights are assigned by tender; or (iii) the valuation of the mining rights or the market benchmark price for mining rights of similar conditions (whichever is higher) if the mining rights are assigned by written agreements between the permit holder and government authorities.

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Ms Guohua (Annie) Wu is a Senior Partner and heads up JT&N’s Outbound Investment practice. Experienced in a variety of corporate legal matters, Ms Wu is a recognised authority on cross-border mergers & acquisitions, corporate finance, joint ventures and private equity transactions. She is widely regarded for the extraordinary breadth of experience and commercial acumen which define her practice. Ms Wu works directly with the client’s leadership, providing critical insights and advice that enables her clients to obtain substantially improved commercial terms and legal protections. Ms Wu has deep expertise in a broad range of industrial sectors, including Energy, Projects, Natural Resources, and Mining. Her recent transactional experience encompasses a variety of energy and natural resources industry sectors, including upstream, transportation and midstream, coal and other natural resource mining, renewables and clean energy, and power generation. Ms Wu’s clients include some of the largest funds and industrial companies in China and the world.

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Congo – D.R. Congo – D.R.

Matthieu Le Roux

VdA Olivier Bustin

1 Relevant Authorities and Legislation tion principles, and various other laws dealing with contractual and corporate matters (i.e., the OHADA Uniform Acts).

1.1 What regulates mining law? 2 Recent Political Developments

The main national legislation governing the mining industry in the 2.1 Are there any recent political developments affecting the DRC is (i) Law no. 007/2002 of 11 July 2002 as amended by Law mining industry? no. 18/001, dated 9 March 2018 (the “2002 Mining Code”), and (ii) the Mining Regulation (kindly note that the answers to the question- naire have been drafted before the adoption of the revised Mining The newly elected President, who was sworn in on 24 January 2019, Regulation, by Decree no. 18/24, of 8 June 2018) enacted by Decree offered support to the new Mining legislation dated 2018, and clearly no. 038/2003, of 26 March 2003 (the “2003 Mining Regulation”). stated, in different meetings, that he will apply such legislation. In addition, there is a set of Decrees and Ministerial Orders to be Hence, it seems the mining industry should not be impacted by those considered. recent political developments, even though nobody can predict whether new regulations related to the sector will or will not be 1.2 Which Government body/ies administer the mining adopted on short notice.

industry? 2.2 Are there any speciﬁc steps the mining industry is taking in light of these developments? The mining industry is administered by the following public representatives/bodies: ■ The President of the Republic, who notably exercises classifica- Chairmen of the main mining companies active in the Democratic tion and declassification authority in relation to minerals and Republic of Congo (DRC) have already met with the newly elected prohibited areas for mining activities. President. In a meeting at the US Chamber of Commerce in ■ The Minister of Mines, who has, inter alia, powers and jurisdic- Washington held in April 2019, the President confirmed DRC’s tion over the granting, refusal and cancellation of mining rights. commitment to develop the mining industry in the country with the ■ The Mining Registry, supervised by the Minister of Mines and support of foreign investment. the Minister of Finance, which has the main goal of conducting administrative proceedings in relation to the application for and 3 Mechanics of Acquisition of Rights registration of mining rights, as well as their cancellation and expiry. ■ The Congolese Environmental Agency, the main role of which 3.1 What rights are required to conduct reconnaissance? is to handle the evaluation and approval of environmental and social studies, also follows up on their implementation, by taking The carrying out of reconnaissance (prospection in French) allows into account the environmental protection during the mining anyone to investigate and to take samples in order to find out about project. the existence of a mineral deposit. Before the 2018 reform, any ■ The Directorate of Geology, the Directorate of Mines and the person or entity planning to engage in a reconnaissance process had Directorate of Protection of the Mining Environment. The to submit a prior declaration to the Mining Registry. A Mining Regulation will determine the functions of these entities. Reconnaissance Certificate (attestation de prospection in French) was ■ The Provincial Governor, who has the authority to issue trading subsequently granted by the Mining Registry within five days and is cards with respect to artisanal mining production. valid for a non-renewable period of two years. From now on, a declaration to the Directorate of Geology must be made, and the 1.3 Describe any other sources of law affecting the mining result of the prospection must be transferred to said entity. industry. 3.2 What rights are required to conduct exploration? In addition to the 2002 Mining Code, the mining industry is also regulated by the country’s tax legislation, notably regarding VAT, An exploration permit (permis de recherche in French) is required in Customs Code, the Labour and Immigration legislations, Law no. order to conduct exploration in the DRC. 11/009 of 9 July 2011, establishing the basic environmental protec-

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3.3 What rights are required to conduct mining? 4.5 Does the State have free carry rights or options to acquire shareholdings? To conduct mining operations, a particular permit category is required, depending on the nature of the operations envisioned and The State has free carry rights and mining companies, who wish to may be a production permit (permis d’exploitation in French), a small acquire a production permit, must transfer 10% of their share capital mine permit (permis d’exploitation de petite mine in French), or a waste for free. Furthermore, 5% of the mining company’s share capital management licence (permis d’exploitation des rejets in French). must be transferred to the State for free at each renewal of the exploitation permit. 3.4 Are different procedures applicable to different minerals and on different types of land? 5 Processing, Reﬁning, Beneﬁciation and Export

Specific procedures apply to minerals formally declared and classified as 5.1 Are there special regulatory provisions relating to “reserved substances”. In that sense, Decree no. 18/042 dated 24 processing, reﬁning and further beneﬁciation of mined November 2018, declared cobalt geranium and columbite-tantalite “coltan” as strategic minerals. The specific procedures applicable are yet minerals? to be adopted by decree of the Ministers in charge of Mines and Finance. Yes, there are special regulatory provisions relating to processing and 3.5 Are different procedures applicable to natural oil and refining performed not by a mineral permit holder, but by another gas? entity dedicated to those activities. Additionally, the construction and operation of processing plants are subject to environmental regulatory provisions. Yes, different procedures are applicable to natural oil and gas, as set out in Law no. 15/012, of 1 August 2015, establishing a general legal 5.2 Are there restrictions on the export of minerals and framework for hydrocarbons, and Decree no. 16/010, of 19 April 2016, which establishes the hydrocarbons regulations. levies payable in respect thereof?

4 Foreign Ownership and Indigenous Ownership The export of raw minerals is closely controlled and can only be Requirements and Restrictions performed under strict conditions. For instance, the export or sale of minerals is subject to the State’s right to determine the production quotas to be exported according to the needs of local industry. The 4.1 What types of entity can own reconnaissance, export of tradeable mining commodities (i.e., processed minerals) exploration and mining rights? must also comply with several legal requirements (e.g., minimum humidity rate, full traceability and certification). The export of certain concentrates may be restricted or prohibited. As a final note, Please see the answer to question 3.2. the export of minerals is subject to 10% taxation, pursuant to the Customs Code. 4.2 Can the entity owning the rights be a foreign entity or owned (directly or indirectly) by a foreign entity and are there 6 Transfer and Encumbrance special rules for foreign applicants?

6.1 Are there restrictions on the transfer of rights to conduct Under the 2002 Mining Code, as revised in 2018, no distinction is reconnaissance, exploration and mining? made between mineral rights that may be acquired by (i) Congolese legal persons, and (ii) foreign legal persons. However, artisanal digging and trading can only be performed by nationals. Exploration and production permits can be wholly or partially Furthermore, before engaging in the DRC’s mining industry, foreign assigned, subject to the conditions attached to the assignment, such companies must fulfil certain administrative obligations (e.g. elect a as the transferee’s obligation to assume all of the permit holder’s domicile with an authorised Congolese mining agent, acting as such obligations to the State, and also the obligation to register any company’s intermediary; and incorporate locally). transfer at the Mining Registry, among others.

4.3 Are there any change of control restrictions applicable? 6.2 Are the rights to conduct reconnaissance, exploration and mining capable of being mortgaged or otherwise secured Any direct or indirect change of control of a mining company is to raise ﬁnance? subject to the prior approval of the Congolese State. Production permits can be mortgaged, once a positive cadastral and 4.4 Are there requirements for ownership by indigenous technical evaluation has been issued by the Directorate of Mines, persons or entities? followed by the approval of the Ministry of Mines.

Since the 2018 revision, 10% of the mining company’s share capital must be held by Congolese natural persons.

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7 Dealing in Rights by Means of Transferring 8.2 What obligations does the holder of a reconnaissance Subdivisions, Ceding Undivided Shares and right, exploration right or mining right have vis-à-vis the Mining of Mixed Minerals landowner or lawful occupier?

Pursuant to Article 279 of the 2002 Mining Code (Restrictions on 7.1 Are rights to conduct reconnaissance, exploration and occupation of the land), the holder of an exploration or production mining capable of being subdivided? permit must obtain the authorisation of the landowner or lawful occupier in order to occupy land located less than 1,000 metres from Exploration permits are automatically subdivided when renewed. houses, 800 metres from tilled lands, or 800 metres from farms with Production permits may be subdivided when partially waived or cattle, a water tank, dam or private water reserve. Furthermore, any assigned by their holders. land occupation by the holder of exploration or production permit, preventing its use by those entitled to enjoy said land, gives the latter the right to receive compensation. 7.2 Are rights to conduct reconnaissance, exploration and

mining capable of being held in undivided shares? 8.3 What rights of expropriation exist?

The Mining Code does not provide for jointly-owned exploration Expropriation rights can only be granted by the State under excep- and production permits. tional circumstances and for reasons of public interest, but are

always subject to fair compensation. 7.3 Is the holder of rights to explore for or mine a primary mineral entitled to explore or mine for secondary minerals? 9 Environmental

The holder of rights to explore for or mine a primary mineral is entitled to explore or mine for secondary minerals, provided that such 9.1 What environmental authorisations are required in order to permit holders, when applying for an extension of their initial rights, conduct reconnaissance, exploration and mining operations? also include secondary minerals in the application form. Many environmental requirements apply to exploration and produc- 7.4 Is the holder of a right to conduct reconnaissance, tion operations, as outlined in the numerous annexes of the Mining exploration and mining entitled to exercise rights also over Regulation dedicated to environmental issues. With respect to exploration, we highlight the need to submit for the approval of the residue deposits on the land concerned? relevant authorities a mitigation and rehabilitation plan describing the measures taken to limit and remedy any environmental damage The holder of a right to conduct mining operations is entitled to also caused by exploration works. Furthermore, anyone applying for a exercise rights over any residue deposits on the land concerned, production permit is required to submit an environmental impact provided that this is not explicitly prohibited in the respective study and a draft environmental management plan, which must production permit, and subject to the holder having specifically contain a description of the “greenfield” ecosystem and of the applied for such additional right. measures envisioned to limit and remedy any damage caused to the environment throughout the duration of the project. Also, the right 7.5 Are there any special rules relating to offshore holder must declare any archaeological discoveries and publish safety exploration and mining? warnings. Furthermore, the importation, marketing, transportation, storage and use of explosives are all subject to special rules.

To the best of our knowledge, there are no such special rules in force, except in relation to operations regarding mine waste. 9.2 What provisions need to be made for storage of tailings and other waste products and for the closure of mines? 8 Rights to Use Surface of Land In order to close and remediate a mining project, production permit applicants are requested, when applying, to submit to the relevant 8.1 Does the holder of a right to conduct reconnaissance, authorities a draft rehabilitation plan for the site post-closure, along- exploration or mining automatically own the right to use the side the application form. Later, the decision to close a mining site surface of land? must be promptly notified to the relevant authorities.

Exploration or production permits do not grant their holders an 9.3 What are the closure obligations of the holder of a automatic right to use the surface of the land. However, the reconnaissance right, exploration right or mining right? Governor of the relevant province, further to an opinion issued by the Mines Administration, may grant the right to the permit holders Holders of exploration or production permits are required to to occupy the land necessary for their activities within their mining provide a financial guarantee in an amount sufficient to cover any perimeter. Under specific circumstances, the consent of the respec- necessary environmental rehabilitation. The terms and conditions tive landowner or lawful occupier may also be required. according to which this guarantee must be set up are detailed in Annex II to the Mining Regulation.

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9.4 Are there any zoning or planning requirements applicable 13 Constitutional Law to the exercise of a reconnaissance, exploration or mining right? 13.1 Is there a constitution which has an impact upon rights to conduct reconnaissance, exploration and mining? To the best of our knowledge, there are no zoning or planning requirements applicable to the exercise of a reconnaissance, exploration or mining right. The DRC’s constitution expressly provides that the State has unlimited sovereign powers over its soils and subsoil. 10 Native Title and Land Rights 13.2 Are there any State investment treaties which are applicable? 10.1 Does the holding of native title or other statutory surface use rights have an impact upon reconnaissance, The DRC has entered into bilateral investment treaties with several exploration or mining operations? countries and also ratified treaties for the avoidance of double taxation, namely with the Kingdom of Belgium and the Republic of Subject to the answer to question 7.2, the holding of native title or South Africa. other statutory surface use rights does not have any direct impact on the rights granted under an exploration or production permit. That 14 Taxes and Royalties being said, we emphasise that artisanal mining production is reserved solely to Congolese individuals by law. 14.1 Are there any special rules applicable to taxation of 11 Health and Safety exploration and mining entities?

The Mining Code provides for an exhaustive tax and customs regime 11.1 What legislation governs health and safety in applicable to mineral permit holders’ activities. This regime is exclu- mining? sive of any other present or future taxation, except more favourable ones. The Mining Code establishes that mining operations are subject to hygiene, security and protection measures enacted by special regula- 14.2 Are there royalties payable to the State over and tions. Mineral permit holders must also comply with all measures above any taxes? ordered by the Administration to prevent or eliminate the causes of dangers to public health and safety. The Mining Code sets a mining royalty which is owed from the date on which the mining operations effectively start and is calculated 11.2 Are there obligations imposed upon owners, employers, based on the value of the sales made. The rate of the mining royalty managers and employees in relation to health and safety? varies according to the mineral substances in question (e.g., 1% for iron or ferrous metals, 3.5% for non-ferrous metals, 3.5% for The Mining Code provides that mineral permit holders must publish precious metals, 6% for precious and colour stones, 1% for industrial safety regulations with regard to their mining operations. These minerals, etc.) and 10% for strategic substance. The Mining regulations are disclosed to the relevant authorities, as well as to all Regulation or complementary additional ministerial orders deter- employees. Any other persons having access to the site must also be mines the elements that will be considered as “strategic substance” duly informed. Moreover, as previously mentioned under the answer (see question 3.4). to question 8.1 above, activities related to explosives are subject to special regulations. 15 Regional and Local Rules and Laws

12 Administrative Aspects 15.1 Are there any local provincial or municipal laws that need to be taken account of by a mining company over and 12.1 Is there a central titles registration ofﬁce? above National Legislation?

The Mining Registry is the central office in charge of registering Yes, depending on the province and, without prejudice to the stabil- mineral permits. It notably processes the applications for such titles, isation clause provided by the Mining Code regarding taxes and grants the related rights and keeps records thereof. customs duties, this is applicable to permit holders. This clause, which used to provide a 10-year warranty, has been modified. The 12.2 Is there a system of appeals against administrative stability clause is now valid for only five years. decisions in terms of the relevant mining legislation? 15.2 Are there any regional rules, protocols, policies or To challenge administrative decisions relating to mining activities, the laws relating to several countries in the particular region that 2002 Mining Code makes reference to the resources provided by the need to be taken account of by an exploration or mining ordinary laws governing the judicial system and court proceedings, company? except for the applicable time limits, which are reduced.

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The DRC has been implementing the EITI Standard since 2007 and the territory covered by said permit. Furthermore, the holder of a became a full member in 2014. The DRC is also a State Party to the mining right must transfer 5% of its shares to the state for free at Kimberley Process, as well as to the Pact on Security, Stability and each renewal of its mining right. Development in the Great Lakes, which includes its Protocol against the Illegal Exploitation of Natural Resources. 16.3 Are there any entitlements in the law for the State to

cancel an exploration or mining right on the basis of failure to 16 Cancellation, Abandonment and comply with conditions? Relinquishment Subject to compliance with the formal procedures established by the 16.1 Are there any provisions in mining laws entitling the 2002 Mining Code, the State is empowered to cancel an exploration holder of a right to abandon it either totally or partially? or production permit: (i) if the holder does not fulfil its obligation to start exploration or construction within one year from the date on which the permit was issued; (ii) when the permit holder fails to The Mining Code provides for the total or partial abandonment of pay the applicable surface duty (droit superficiaire par carré in French) mining exploration or production permits, performed by means of on time; (iii) when the permit holder fails to correct a formal notice a declaration sent to the competent Minister. The permit holder within 60 days; and (iv) when a permit holder fails to comply with does not have any right to compensation and remains liable to the social obligations set out in the Mining Regulations. local community for any environmental damage and/or any breach of its obligations. Acknowledgment

The authors would like to acknowledge Pierrick Ferrero’s invaluable 16.2 Are there obligations upon the holder of an assistance in preparing this chapter. exploration right or a mining right to relinquish a part thereof after a certain period of time?

When the holder of an exploration right applies for the renewal of the respective permit, the holder automatically relinquishes 50% of

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Matthieu Le Roux joined VdA in 2015. He is currently the head partner of the OHADA Jurisdictions practice. He has an in-depth understanding of the complex legal, regulatory and practical challenges facing the oil industry in several Francophone African countries, including Cameroon, Gabon, the Republic of Congo and the Democratic Republic of Congo. For close to 18 years, his practice has focused on tax and legal services to the oil industry in Francophone Africa. Prior to joining VdA, he was Of Counsel to the Oil & Gas practice at Miranda Correia Amendoeira & Associados where he advised on tax and legal matters to oil & gas companies and service contractors. Matthieu was also Tax and Legal Senior Manager/Director at PwC Gabon (April 2007– December 2009), Tax and Legal Manager at Deloitte Gabon (July 2005–March 2007), Tax and Legal Consultant / Manager at PwC Chad (February 2001–June 2005), Consultant for International Assignment Services at Landwell & Partners (January 2000–January 2001) and a Trainee at Norton Rose (October 1999–December 1999). Law degree – University of Rennes, France. LL.M. in International Legal Studies – University of Exeter, United Kingdom. Postgraduate degree (DJCE) in Business and Tax Law – University of Rennes, France.

VdA Tel: +351 21 311 3400 Rua Dom Luís I, 28 Fax: +351 21 311 3406 1200-151 Lisboa Email: [email protected] Portugal URL: www.vda.pt/en

Olivier Bustin joined VdA in 2015. He is the managing international adviser of the OHADA Jurisdictions practice where he has been involved in several transactions. His practice is focused on Production Sharing Contract Negotiations, M&A, Finance, Public-Private Partnerships and Infrastructure Projects, mainly in connection with the Energy and Natural Resources Sector in Francophone Africa. Before joining the Firm he was of counsel at Miranda, Correia, Amendoeira & Associados. Olivier is a DRC-qualified attorney (Kinshasa/Matete) and has been a visiting professor in the postgraduate study on OHADA Law, jointly organised by the Paris 2 and Paris 13 Universities, where he has been providing courses on various supranational legal frameworks applicable in Africa, such as the Central African Economic and Monetary Community (CEMAC) Law, the West African Economic and Monetary Union (UEMOA) Law, the Common Market for Eastern and Southern Africa (COMESA) Law, the Economic Community of West African States (ECOWAS) Law, the Inter- African Conference on Insurance Markets (CIMA) Law and the African Intellectual Property Organization (OAPI) Law. He has also been a visiting professor at the Bel Campus University in Kinshasa, where he has been teaching the debt recovery procedures and enforcement procedures. Previously, and for eight years, Olivier taught contract law, European business law, sureties and security interests, probate and property law in several French Universities (Paris II, Paris XIII, Sciences-Po Paris). He is the author and co-author of various articles in French law reviews, on African business laws (Oil & Gas, Mining, PPP, Insurance, Subcontracting, Agribusiness, etc.), IP law and contract law. He is also a member of the editorial board of a French law review focused on business law in Africa, i.e. L’Essentiel Droits Africains des Affaires.

VdA Tel: +351 21 311 3400 Rua Dom Luís I, 28 Fax: +351 21 311 3406 1200-151 Lisboa Email: [email protected] Portugal URL: www.vda.pt/en

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Ethiopia Ethiopia

Dempsey Law Firm Christopher Dempsey

1 Relevant Authorities and Legislation In this regard, attention has focused on the underdeveloped mining and oil sector, with cuts in taxes and other incentives being brought in order to attract global mining investment into the country. 1.1 What regulates mining law? 2.2 Are there any speciﬁc steps the mining industry is taking The mining sector in Ethiopia is principally regulated by the in light of these developments? following legal texts: ■ the 1995 Constitution of the Federal Republic of Ethiopia Against a background of reform, specific measures include the (which places the ownership of all natural resources in the State reduction of the corporate rate of income tax for miners to 25% a and people of Ethiopia); few years ago (from 35%) and the reduction of the precious metals ■ the Federal Income Tax Proclamation n°979/2016; royalty rate to 7% from 8%. Whilst the government is keen to reap ■ Proclamation n°678-2010 to promote sustainable development its share of mining revenues, it appears that more incentives are of mineral resources dated 4th August 2010, amended by the planned to jump start the mining industry. Mining Operation (Amendment) Proclamation n°816/2013 (“Proclamation n°678-2010”); and 3 Mechanics of Acquisition of Rights ■ the Council of Ministers’ Regulations on Mining Operations n°182-1994 amended by Regulation n°27/1998 and Regulation n°124-2006 (“Regulation n°182/1994”). 3.1 What rights are required to conduct reconnaissance?

1.2 Which Government body/ies administer the mining In order to conduct reconnaissance, a reconnaissance licence is industry? required. The Licensing Authority may grant a reconnaissance licence, which is not renewable, for a period that shall not exceed 18 The principal body that administers the mining industry is the months (article 16 of the Proclamation n°678-2010). Ministry of Mines and Energy. Procedure An application must be submitted to the Licensing Authority. Where 1.3 Describe any other sources of law affecting the mining the latter is satisfied with the application, it registers the application industry. and gives a receipt to the applicant. The Licensing Authority, after registering the application, publishes it to third parties through Other sources of law affecting the mining industry include the widely accessible mass media: Environmental Impact Assessment Proclamation n°299-2002 (which ■ If a person objects to the granting of the licence within seven provides that an environmental impact assessment has to be carried days as from the date of publicity, the Licensing Authority initi- out for activities that may have adverse consequences on the envi- ates negotiations between the parties concerned in order to ronment – i.e. including mining), the Labour Proclamation resolve the objection. If the parties fail to resolve the objection, n°377-2003 (which, inter alia, obliges employers to take health and the Licensing Authority hears the presentations of both parties safety measures in work places and employees to comply with health and decides on the upholding or rejection of the objection and safety rules), and the Commercial Registration and Business within 15 working days. Licensing Proclamation n°686-2010 (which is applicable to any ■ If no objection to the application has been filed at its office, the person who intends to engage in the mining sector). Licensing Authority, following verification of all information submitted in connection with the application, and upon payment 2 Recent Political Developments of the fees and rentals, grants the licence to the applicant.

3.2 What rights are required to conduct exploration? 2.1 Are there any recent political developments affecting the mining industry? The Licensing Authority may grant an exploration licence to an applicant (i) who has demonstrated that it has the financial resources The government has been working to reform different key sectors and technical ability to conduct the exploration operations in ques- in Ethiopia with a view (inter alia) to attract more foreign investment. tion in accordance with the work programme, (ii) whose estimated

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exploration expenditure is in accordance with the prescribed Rights and obligations minimum exploration expenditure and the exploration work The holder of an artisanal mining licence shall have, inter alia, programme, (iii) whose environmental impact plan has been the following rights and obligations: approved, and (iv) who is not in breach of any obligation to the ■ to undertake mining operations in accordance with environ- reconnaissance licence (article 17 of the Proclamation n°678-2010). ment, health and safety standards; An exploration licence is granted for a period that cannot exceed ■ to comply with the terms and obligations of the licensee; three years, and is renewable twice for a period not exceeding one and year each. It is to be noted that the Licensing Authority may allow ■ to have a preferential treatment regarding the licensee where further extensions of renewal if the licensee proves the necessity to the latter shows that it has the necessary technical and finan- undertake exploration activity beyond the initial work programme. cial resources to engage in advanced exploration and mining. However, such period shall not exceed five years. ■ Retention licence The Licensing Authority can grant an exclusive retention licence Procedure to the applicant if: The applicable procedure is the same as that described in question ■ the latter has demonstrated that the discovery of a mineral 3.1 above. deposit within the exploration area is potentially of commercial significance; and 3.3 What rights are required to conduct mining? ■ the mineral deposit cannot be developed immediately because of adverse market conditions, other economic factors, or unavailable processing technologies, which are of In order to conduct mining, the holder of an exploration licence a temporary character. must apply for a mining licence. There are two types of mining The retention licence is granted for the period specified in the licence: the large-scale mining licence; and the small-scale mining licence but cannot exceed three years. The licence can be renewed licence. once for a period not exceeding three years where the licensee ■ Large-scale mining licence demonstrates that the above-mentioned conditions still prevail. The large-scale mining licence regime applies to any mining Procedure operation for which the annual run-of-mine ore exceeds, inter The applicable procedure is the same as that described in ques- alia, the following limits: tion 2.1 above. For gold, platinum, silver and other precious and semi-precious Rights and obligations minerals: 3 The holder of a retention licence shall have, inter alia, the ■ 100,000 m for placer operation; and following rights and obligations: ■ 75,000 tonnes for primary deposit mining. ■ the right to be granted a mining licence in respect of the For metallic minerals such as iron, lead, copper and nickel: retention area a mineral in question prior to expiry of the ■ 150,000 tonnes for open pit mining; and licence; and ■ 75,000 tonnes for an underground mining operation. ■ to submit an annual progress report to the Licensing A large-scale mining licence shall not exceed 20 years, and is Authority indicating: renewable provided that the new period does not exceed 10 ■ the prevailing market conditions and technical factors, years (article 27 of the Proclamation n°678-2010). the effect thereof and the need to hold such retention Procedure licence over the mineral and land in question; and The applicable procedure is the same as that described in ques- ■ efforts undertaken by it to ensure that mining operations tion 2.1 above. commence before the expiry of the duration of the ■ Small-scale mining licence licence. The small-scale mining licence regime applies to any mining operation of which the annual run-of-mine ore does not exceed the above-mentioned limits. 3.4 Are different procedures applicable to different minerals The small-scale mining licence shall not exceed 10 years, and is and on different types of land? renewable provided that the new period does not exceed five years (article 29 of the Proclamation n°678-2010). Please see question 3.3 above. Procedure The applicable proceeding is the same as that described in ques- 3.5 Are different procedures applicable to natural oil and tion 2.1 above. Rights and obligations gas? The holder of a small-scale or large-scale mining licence shall have, inter alia, the following rights and obligations: Procedures regarding natural oil and gas are not covered by the ■ the right to market and sell minerals produced; Proclamation n°678-2010 and Regulation n°182/1994 but are over- ■ to commence mining operations within two years as from seen by the same governmental body; namely, the Ministry of Mines. the date of the licence; and ■ to comply with the terms and conditions of the licence. 4 Foreign Ownership and Indigenous Ownership ■ Artisanal mining licence Requirements and Restrictions The artisanal mining regime applies to any mining operation carried out by individuals or small and micro enterprises that are mostly of a manual nature and does not involve the engagement 4.1 What types of entity can own reconnaissance, of employed workers. exploration and mining rights? The licence is granted for a period specified in the licence that shall not exceed two years and may not be renewed. Procedure Foreign entities cannot hold reconnaissance rights. Only Ethiopian The applicable proceeding is that described in question 2.1 above. nationals can apply for and hold artisanal mining licences.

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Article 40 of the Proclamation n°678-2010 provides that in order to 6.2 Are the rights to conduct reconnaissance, exploration transfer a large-scale mining licence, the prior consent of the Licensing Authority is required. The application to transfer or assign and mining capable of being mortgaged or otherwise secured a large-scale mining licence must include specific information and to raise ﬁnance? documents listed under article 40 as, for example, the nature, nationality, legal form, and capital of the proposed transferee, etc. Other This is not covered under the Proclamation n°678-2010 and than that, there is no change of restriction control applicable under Regulation n°182/1994. However, as mentioned under question 5.1 the mining laws. above, the transfer of any licence is possible, subject to the prior consent of the Licensing Authority. We are therefore of the view 4.4 Are there requirements for ownership by indigenous that these rights may be mortgaged, subject to the prior consent of persons or entities? the Licensing Authority, except for a reconnaissance licence which may not be mortgaged.

See above. 7 Dealing in Rights by Means of Transferring 4.5 Does the State have free carry rights or options to Subdivisions, Ceding Undivided Shares and acquire shareholdings? Mining of Mixed Minerals

It is to be noted that the government may acquire a free participation 7.1 Are rights to conduct reconnaissance, exploration and interest of 5% of any large-scale or small-scale mining investment. mining capable of being subdivided? An additional equity participation from the government may also be provided by agreement. The latter will specify the percentage, the These rights may be subdivided except for reconnaissance or reten- timing, the financing, the resulting rights and obligation, and any tion licences, and provided that this is approved and registered by other details of the government participation. the competent government authority.

other areas outside his licensed area where he believes that the 5.2 Are there restrictions on the export of minerals and licensed area does not include the entire deposit of minerals (article levies payable in respect thereof? 33 of the Proclamation n°678-2010).

The holder of an exploration licence must obtain the prior consent 7.4 Is the holder of a right to conduct reconnaissance, of the Ministry of Mines to export samples of minerals for testing, exploration and mining entitled to exercise rights also over and it is to be noted that such minerals remain the property of the residue deposits on the land concerned? Government of Ethiopia (article 42 of the Proclamation n°678- 2010). The holder of a mining licence has the right to sell locally or to It is to be noted that before being able to conduct reconnaissance, export the minerals in relation to which he obtained a title specified exploration or mining over residue deposits, a new licence will be in the licence upon their extraction. In order to export, however, it required (and following the termination, revocation or expiry of the is necessary to obtain a competency certificate from the Ministry of previous licence over the land in question). Mines as well as a business licence from the Ethiopian Ministry of Trade.

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7.5 Are there any special rules relating to offshore licence area or abandonment of the mine (article 61 of the Proclamation n°678-2010). exploration and mining?

9.3 What are the closure obligations of the holder of a Ethiopia is a landlocked country and there is therefore no specific legislation governing offshore exploration and mining. reconnaissance right, exploration right or mining right?

8 Rights to Use Surface of Land The owner of any solid waste disposal shall be liable for any damage caused to the environment, human health or property in the course of its operation and after its closure within two years as from the 8.1 Does the holder of a right to conduct reconnaissance, date on which the damage was known. An exemption from this exploration or mining automatically own the right to use the liability is granted when it is either the victim himself, or a third party surface of land? for whom the owner of the solid waste disposal site is not responsible who has caused the damage (article 16 of the Proclamation n°678- 2010). The holder of a licence has the right to: (i) bring into the licensed area any plant, machinery or equipment and build and construct any surface or underground infrastructure required for the purposes of 9.4 Are there any zoning or planning requirements applicable the envisaged mining operations; (ii) use, subject to the relevant to the exercise of a reconnaissance, exploration or mining water laws, water from any water body, situated on, or flowing right? through, such land or sink a well or borehole required for mining operations; and (iii) subject to the applicable law regarding the Whilst, in principle, any land in Ethiopia is available for mining, and cutting of timber and reforestation, cut and use, within the licensed unless the national interest is not served, it is to be noted that explo- area and the area of lease, timber which is necessary for mining oper- ration, retention and mining licences will not be issued for certain ations (article 33 of the Proclamation n°678-2010). areas that are specifically reserved, such as religious sites and cemeteries, or national parks. 8.2 What obligations does the holder of a reconnaissance right, exploration right or mining right have vis-à-vis the 10 Native Title and Land Rights landowner or lawful occupier?

10.1 Does the holding of native title or other statutory The holder of a mining licence must take proper precautions not to surface use rights have an impact upon reconnaissance, interfere with other legitimate occupants of the licensed area, the land covered by a lease and the adjacent land (article 34 of the exploration or mining operations? Proclamation n°678-2010). No, it does not, except with regard to the issue of property located 8.3 What rights of expropriation exist? on the area that is required for the mining activity (where procedures for expropriation and the payment of consideration will apply).

Article 59 of the Proclamation n°678-2010, as amended, provides that the Licensing Authority may expropriate any immoveable prop- 11 Health and Safety erty on any land. However, in return for this expropriation, the licence holder will be entitled to receive fair compensation. 11.1 What legislation governs health and safety in mining?

9 Environmental There is no specific legislation which governs health and safety in mining. That being said, however, it is to be noted that the Labour 9.1 What environmental authorisations are required in order to Proclamation n°377/2003 obliges employers to take measures to ensure occupational health and safety in the workplace. See the conduct reconnaissance, exploration and mining operations? answer to question 10.2 below.

In order to conduct reconnaissance, exploration and mining opera- 11.2 Are there obligations imposed upon owners, employers, tions, the applicant must: (i) obtain, from the Environmental Protection Authority, a permit regarding the management of waste (article 3 of managers and employees in relation to health and safety? the Proclamation n°300-2002); (ii) have the environmental impact study report approved by the Environmental Protection Authority; As a general obligation, the holder of a mining licence must conduct and (iii) have authorisation from the concerned body of an urban mining operations in such manner as to ensure the health and safety administration engaging in collection, transportation, use or disposal of his agents, employees and other persons, and comply with the of solid waste (article 4 of the Proclamation n°513/2007). applicable laws pertaining to environmental protection (article 34 of the Proclamation n°678-2010). 9.2 What provisions need to be made for storage of tailings and other waste products and for the closure of mines? 12 Administrative Aspects

The holder of a small-scale or large-scale mining licence must apply 12.1 Is there a central titles registration ofﬁce? to the Licencing Authority for a mine closure certificate within 180 days prior to revocation of the licence, termination of the mining The Licensing Authority establishes and maintains a Registry of operations, relinquishment of the whole or any portion of the Licences and Leases (article 15 of the Proclamation n°678-2010).

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12.2 Is there a system of appeals against administrative 15 Regional and Local Rules and Laws decisions in terms of the relevant mining legislation?

15.1 Are there any local provincial or municipal laws that In accordance with the Proclamation n°678-2010, administrative remedies are to be used up first before applying to a competent court need to be taken account of by a mining company over and for a review of the decision that has been made. In addition, the above National Legislation? Proclamation n°678-2010 provides that any disputes are first to be referred to negotiation. If that fails, the matter will then go to arbi- Yes. It is to be noted that regional state governments are empowered tration and, from there, an appeal against the decision of the to administer the land and natural resources in accordance with the arbitrators may be submitted before the competent court. federal laws of the country. Artisanal and small-scale mining are usually governed by regional laws. 13 Constitutional Law 15.2 Are there any regional rules, protocols, policies or laws 13.1 Is there a constitution which has an impact upon rights relating to several countries in the particular region that need to to conduct reconnaissance, exploration and mining? be taken account of by an exploration or mining company?

The 1995 Constitution does not restrict the right to carry out mining No, there are not. provided that the exercise of such right does not bring into operation the expropriation and compensation provisions of the Constitution. 16 Cancellation, Abandonment and Relinquishment 13.2 Are there any State investment treaties which are applicable? 16.1 Are there any provisions in mining laws entitling the holder of a right to abandon it either totally or partially? It is to be noted that Ethiopia has signed Bilateral Investment Treaties (“BITs”) with 29 countries: Algeria; Austria; Belgium- Luxembourg Economic Union; China; Denmark; Egypt; Equatorial The holder of a mining licence may relinquish all or part of the Guinea; Finland; France; Germany; India; Iran; Israel; Italy; Kuwait; licence area by giving prior written notice (of at least 12 months) to Libya; Malaysia; the Netherlands; Nigeria; Russian Federation; South the Licensing Authority and upon fulfilment of all obligations of the Africa; Spain; Sudan; Sweden; Switzerland; Tunisia; Turkey; the licence (article 33 of the Proclamation n°678-2010). United Kingdom; and Yemen. Investors that come to Ethiopia from one of the aforementioned countries will have favourable treatment 16.2 Are there obligations upon the holder of an exploration in accordance with the terms of their respective BITs. right or a mining right to relinquish a part thereof after a certain period of time? 14 Taxes and Royalties Upon the renewal of an exploration licence, it is to be noted that the 14.1 Are there any special rules applicable to taxation of holder is obliged to relinquish a portion of not less than one quarter of the licensed area. exploration and mining entities?

16.3 Are there any entitlements in the law for the State to It is to be noted that the Federal Income Tax Proclamation n°979- 2016, provides, inter alia, that a business income tax rate of 25% is cancel an exploration or mining right on the basis of failure to applicable to licensees (article 37). Further, a licensee effecting comply with conditions? payment to a non-resident subcontractor shall withhold and transfer to the tax authority 10% of the payment. The Licensing Authority may partially or fully suspend mineral rights where it believes that the activity of the licensee is likely to become 14.2 Are there royalties payable to the State over and above an imminent danger to the local community, the environment or its any taxes? employees (provided that such suspension is the only remedy under the prevailing circumstances), and it may revoke the licence altogether in the following circumstances: Yes. The rate depends on the different kind of minerals. Thus, for ■ the licensee fails to comply with the financial obligations prescribed precious minerals the rate is 8%, for semi-precious minerals 6%, for in the Proclamation n°678-2010, regulations or directives; metallic minerals 5%, for industrial minerals 4%, for construction ■ the licensee conducts mining operations in a grossly negligent minerals 3%, for salt 4%, and for geothermal 2%. or wilfully improper manner;

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■ the licensee breaches any material term or condition of his licence; fails to file reports or other documents or fails to give notices ■ the licensee is not conducting his mining operations in accor- required; or dance with the work programme; ■ the licensee fails to grant a duly authorised official of the ■ the licensee is in breach of the approved environmental impact Licensing Authority access into the licensed area, the area assessment, and safety and health standards; covered by a lease or to any other site or premises of the mining ■ the licensee has submitted false or fraudulent information in operations or to his books, records, other documents or mate- connection with any matter required to be submitted under the rials, or fails to carry out a lawful order or instruction of such proclamation, regulations or directives; official (article 44 of the Proclamation n°678-2010). ■ the licensee fails to maintain complete, accurate and current books and records or other documents or materials required or

Christopher Dempsey is the partner and founder of Dempsey Law Firm. He is responsible for the firm’s energy and natural resources department. His practice includes, notably, large-scale energy and natural resources projects, with a particular emphasis on the mining sector in Africa (both Anglophone and Francophone Africa), where he has been active for over 25 years.

Dempsey Law Firm Tel: +33 6 75 91 29 99 1, rue Eugène Manuel Email: christopher.dempsey@dempseylawﬁrm.fr 75016, Paris France

Dempsey Law Firm was founded in 2017. It is an independent French law ﬁrm that covers all areas of French law with a domestic and international clientele. The ﬁrm has an entrepreneurial style and seeks to build long-term relationships with its clients through an in-depth understanding of their needs and objectives.

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Gabon Gabon

Project Lawyers Jean-Pierre Bozec

1 Relevant Authorities and Legislation 1.3 Describe any other sources of law affecting the mining industry.

1.1 What regulates mining law? Obviously, other additional sets of Gabonese legislation will have to be combined with the 2019 Mining Code when dealing with a Since July 2019, mining law in Gabon has been regulated by a 2019 mining project, such as environmental law, sustainable development Mining Code enacted by Law No. 37/2018, replacing the former 2015 law, land law, general business law, labour law, companies law, foreign Mining Code. This law provides for the legal, institutional, technical, exchange regulations and administrative law. economic, customs and tax regimes of the Gabonese mining sector. This 2019 Code is aimed at, notably: 2 Recent Political Developments ■ promoting good governance and transparency in the mining industry; ■ equally granting and managing licences according to strategic 2.1 Are there any recent political developments affecting the objectives and to earth planning; mining industry? ■ granting absolute protection of valid mining licences; ■ ensuring automatic State participation in the share capital of mining companies in production; Since June 2019, a new Minister of Mines (also in charge of Energy ■ promoting international good practice in the mining industry; and hydraulic resources), Mr. Tony Ondo Mba, has been appointed. ■ promoting industrial responsibility and indemnification of damages caused by the mining industry; 2.2 Are there any speciﬁc steps the mining industry is taking ■ promoting social responsibility; in light of these developments? ■ the sharing of production in its exploitation phase; ■ offering a tax incentive and warranty; Gabon announced its willingness to return to the EITI, which may ■ ensuring traceability and optimisation of mining revenues; explain why the new Mining Code notably insists on good gover- ■ developing abandoned mines and rehabilitating mining sites; nance, transparency, equality of treatment, QHSE, revenues sharing ■ ensuring compliance with health, safety and environment rules; and local content. ■ ensuring compliance with human rights;

■ promoting local content and local mining investors; ■ ensuring non-discrimination between operators; and 3 Mechanics of Acquisition of Rights ■ promoting and protecting mining investments. This 2019 Mining Code will be completed by implementation 3.1 What rights are required to conduct reconnaissance? decrees that are yet to be adopted, but some of its provisions are sufficiently detailed to be already implemented thanks to, in particular, a mining convention to be negotiated with the State. Under the 2019 Mining Code, nobody can begin prospecting, exploration, promotion, exploitation, transformation, holding, detention, transportation, storage or marketing of mineral substances if he has 1.2 Which Government body/ies administer the mining industry? not been authorised beforehand by the State. Each step of the different mining activity is therefore subject to Under the 2019 Mining Code, several State actors may be involved the prior authorisation or the granting of appropriate mining in the mining industry: permits from the State to a person who has shown to have sufficient ■ The Ministry of Mines. technical and financial capabilities. ■ The Regulatory Authority. Reconnaissance rights over mines correspond under Gabonese ■ The National Operator, Société Equatoriale des Mines law to prospection authorisation, which is granted by the Minister in (SEM). Charge of Mines for one year, is non-renewable and applies to a ■ Consulting bodies. maximum of 3,000 km2. This prospection authorisation can be Special commissions and committees to be established by regula- granted to a Gabonese branch of a foreign company. tory texts may also assist the State in the implementation of its This authorisation is not considered a mining title and cannot be mining policy. assigned and transferred. No priority rights benefit a holder, save if Their specific roles are, however, detailed in specific regulations, he applied for an exploration permit before the end of his if needs be. prospecting authorisation.

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3.2 What rights are required to conduct exploration? 4 Foreign Ownership and Indigenous Ownership Requirements and Restrictions Exploration of mines is allowed in Gabon by any Gabonese company holding an exploration permit granted by Order of the Minister in Charge of Mines for a three-year period, renewable twice 4.1 What types of entity can own reconnaissance, for further three-year periods. exploration and mining rights? Any exploration permit holder can only hold four exploration permits, save for in the case of diamonds where it is limited to two Any person who can demonstrate his technical and financial capa- diamond exploration permits. bilities is entitled to apply for mining authorisation and titles. Exploration permits are limited to a surface of 1,500 km2 each, However, an applicant for a mining title (exploration permit or but can be up to 5,000 km2 for diamonds. exploitation permit) needs to have a local entity registered in Gabon, If some deposits are known, the State may decide that the which can be a branch of a foreign company for a prospection granting of the exploration permit will be after a tendering process. authorisation or to incorporate a local subsidiary in Gabon, a public The exploration permit has to be completed within the year of its company by shares as far as an exploitation permit is concerned. granting by a mining convention, providing for, notably: technical, legal, tax, economic, customs and financial conditions; commitments of parties regarding, in particular, minimum work; and budget 4.2 Can the entity owning the rights be a foreign entity or commitments and restoration of sites, according to a model of the owned (directly or indirectly) by a foreign entity and are there mining convention complying with the 2019 Mining Code. special rules for foreign applicants? In the event of commercial discovery of mineral substances within the scope of the exploration permit, only its holder can be Big mines are offered to any applicant who can demonstrate his granted an exploitation permit. technical and financial capabilities, bearing in mind that the State has

the right to a 10% participation in any exploitation permit and a 25% 3.3 What rights are required to conduct mining? option at the going market price. Any foreign investor controlling a mining company is requested The exploitation of mines in Gabon is done according to a mining to apply for an investment authorisation to be granted by the title, which duration differs according to the size of the mines Gabonese Minister in Charge of Finances, as well as submit a prior discovered and the expected duration of the mine’s operation: declaration for foreign investment according to foreign exchange ■ exploitation permit for 10 years of exploitation, renewable for regulations applicable in Gabon. a period of five years; and ■ exploitation permit for 20 years of exploitation, renewable for 4.3 Are there any change of control restrictions applicable? a period of 10 years. Each of these exploitation titles is granted to a Gabonese affiliated Change of control is subject to a prior authorisation from the public company by shares by a Presidential Decree for a bloc of Ministry of Mines as well as to a State preemptive right, save if deposits in conditions to be detailed within implementation decrees shares are transferred to an affiliated company. (yet to be adopted) and in any case after feasibility and environmental Regulations on foreign investment provide in any case that the impact studies. direct or indirect change of control of a mining company for the The exploitation permit has to be completed within a year of its benefit of a foreign investor is subject to a prior authorisation from granting by a mining convention providing for, notably: technical, the Minister in Charge of Finances. legal, tax, economic, customs and financial conditions; commitments of parties regarding, in particular, minimum work and budgets commitments; and restoration of sites, according to a model of 4.4 Are there requirements for ownership by indigenous mining convention complying with the 2019 Mining Code. persons or entities? Effective exploitation of the mine has to begin within three years following the granting of its mining title, save if an extension is Requirements for ownership by indigenous persons or entities does granted by the Mines Administration. not apply to big mines. However, if a mining operator is subcontracting a portion of its activities, such subcontractor should be 3.4 Are different procedures applicable to different minerals controlled by at least 51% of nationals, if such local company can and on different types of land? offer a similar price and services conditions.

The above process may be completed by additional modalities for 4.5 Does the State have free carry rights or options to exploration and exploitation when mineral substances are qualified acquire shareholdings? as precious, radioactive or strategic resources according to the Mining Code. According to the 2019 Mining Code, natural resources, in particular any mineral substances contained in the ground, the continental 3.5 Are different procedures applicable to natural oil and waters and in the marine domain of the national territory, remain gas? the property of the State. As such, the State benefits from a free automatic participation of 10% in the share capital, free from all encumbrances and which cannot be diluted, of any mining company Natural oil and gas is out of the scope of the 2019 Mining Code and in the exploitation phase, save for the State’s right to waive its rights. is regulated by a new law No. 02/2019 of 16 July 2019 (please refer The State also benefits from an optional participation for cash to the Gabon chapter of The ICLG to: Oil & Gas Regulation 2019 and consideration in the share capital of up to 25%. 2020). In the event where mining titles are transferred to a third party,

the State also has a pre-emptive right.

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5 Processing, Reﬁning, Beneﬁciation and Export 7.2 Are rights to conduct reconnaissance, exploration and mining capable of being held in undivided shares?

5.1 Are there special regulatory provisions relating to As any mining title is granted to a legal entity or several legal entities processing, reﬁning and further beneﬁciation of mined forming an incorporated entity, the direct undivided holding of a minerals? mining title by several entities seems to be prohibited, while the undivided holding of shares of a mining company holding a mining title The 2019 Mining Code provides that any holder of an exploitation is not. licence has to locally process mineral resources according to the going rate, to be listed in the mining conventions, and be signed by the State. 7.3 Is the holder of rights to explore for or mine a primary mineral entitled to explore or mine for secondary minerals? 5.2 Are there restrictions on the export of minerals and levies payable in respect thereof? Reconnaissance/prospection authorisations, exploration and exploitation permits are granted for specific mineral resources provided The 2019 Mining Code provides that, in order to promote the local within the relevant authorisation or the mining title in question. If content and processing of mineral substances, the export of some some secondary minerals not listed in the authorisation or the processed mineral resources are exempted from the proportional mining title are found during exploration and/or exploitation, they mining royalties and that an additional tax incentive could be need to be declared to the Mining Administration and a new appli- provided in the mining convention (such as the reduction of export cation for such substances may be submitted by the person who duties, which is generally capped at 1%). found them. Residue deposits can also be exploited.

6 Transfer and Encumbrance 7.4 Is the holder of a right to conduct reconnaissance, exploration and mining entitled to exercise rights also over residue deposits on the land concerned? 6.1 Are there restrictions on the transfer of rights to conduct reconnaissance, exploration and mining? Only the holder of an exploitation mining title can also exploit residue deposits. If he does not want to exploit them, he needs to Reconnaissance/prospection authorisations are not transferable. waive the right on such exploitation by notifying such a waiver to the Exploration and production permits may be assigned with the prior Minister in Charge of Mines. Exploitation of such residue deposits authorisation of the Ministry in charge of mines. The transfer of will be possible by signing an exploitation of residue deposits exploitation permits is also subject to a State preemptive right, save convention between the holder of the exploitation mining title and if it is transferred to an affiliated company. the interested person for the exploitation of residue deposits. This convention is subject to a five-year authorisation by the Minister in 6.2 Are the rights to conduct reconnaissance, exploration Charge of Mines and the signature of a specific mining convention and mining capable of being mortgaged or otherwise secured with an entity in which 25% of the share capital is held by nationals. to raise ﬁnance? 7.5 Are there any special rules relating to offshore According to the 2019 Mining Code, exploitation permits are consid- exploration and mining? ered a real estate property, as well as any assets used for the mining exploitation. They can therefore be mortgaged. The 2019 Mining Code remains silent on specific rules regarding Residue deposits and products coming from the processing of offshore exploration and mining. mineral resources can also be pledged. 8 Rights to Use Surface of Land 7 Dealing in Rights by Means of Transferring Subdivisions, Ceding Undivided Shares and 8.1 Does the holder of a right to conduct reconnaissance, Mining of Mixed Minerals exploration or mining automatically own the right to use the surface of land? 7.1 Are rights to conduct reconnaissance, exploration and mining capable of being subdivided? Under the Mining Code, the holder of an exploration or mining title is authorised to use the surface of lands for the purpose of its Reconnaissance/prospection authorisations, exploration and exploita- mining operations by using forestry products, raw materials he found tion permits are granted for specific mineral resources provided within on the land and constructing facilities, bridges and roads, subject to the relevant authorisation or the mining title in question. applicable law. They cannot be legally subdivided and the superposition of mining titles is prohibited. However, as there is a general require- 8.2 What obligations does the holder of a reconnaissance ment for a prior authorisation from the Ministry of Mines for any right, exploration right or mining right have vis-à-vis the agreement, protocol or contract whereby the holder of a mining title landowner or lawful occupier? undertakes to merge, transform, lease, farm, transfer or sell totally or partially its rights and obligations, we could imagine that certain leases and/or farm-out agreements of certain areas and/or When the holder of an exploration or mining title is using products substances could theoretically be allowed by the Minister in Charge or infrastructures or facilities of a landowner or lawful occupier, it of Mines. needs to negotiate with him conditions of use and inform the

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Minister in Charge of Mines if specific rights of way are necessary. It is prohibited to undertake, within a 200-metre radius of If he creates damages to a lawful occupier, he needs to indemnify it. dwellings, places of burial, sacred places and religious buildings, an A specific mediation commission is provided within the Mining exploration, mining gallery or surface work without the consent of Code to solve such types of disputes. the holder of the property or occupant in good faith. If the mining area is within a national park, specific requirements 8.3 What rights of expropriation exist? may also apply.

As some facilities to be erected by a mining title holder may be 10 Native Title and Land Rights declared of public utility according to the 2019 Mining Code, expropriation could be facilitated under Gabonese expropriation rules, if 10.1 Does the holding of native title or other statutory needs be. surface use rights have an impact upon reconnaissance,

9 Environmental exploration or mining operations?

The holder of a mining title who, in the process of mining activity, 9.1 What environmental authorisations are required in order to causes damage to the holder of the land, is required to compensate conduct reconnaissance, exploration and mining operations? them. However, the Constitution provides that property is an inviolable and sacred right and, therefore, no-one can be deprived except Prior to undertaking a mining activity, the investor must draft an where public necessity, legally ascertained, obviously requires it, and environmental impact assessment (E.I.A.) of the project (exploration with the condition of a just and prior indemnity. or mining of a mineral deposit) and wait for the technical approval To comply with this requirement, the Government has instituted of the Environmental Committee. The E.I.A. shall present the main several laws governing expropriation for public utility and a mediation aspects of the project and its impact on the environment and local commission to solve any dispute regarding damages made to neigh- population. It may also be considered a classified installation which bours. needs to be authorised, in particular during the mining phase. 11 Health and Safety 9.2 What provisions need to be made for storage of tailings and other waste products and for the closure of mines? 11.1 What legislation governs health and safety in mining?

Under the Mining Code, an environmental management plan needs The Mining Code provides for general principles of QHSE and also to be established by any holder of a mining authorisation or title. refers to international practices. It is also supplemented by the We assume therefore, in the absence of implementations decrees Labour Code and the Decree establishing the general rules of health issued as of today, that it is a management plan which should and safety in the workplace and other regulations, such as protection provide the terms and conditions of the storage of tailings and other against ionising radiation. waste products. Under the Mining Code and the legislation on classified installa- 11.2 Are there obligations imposed upon owners, tions, mines need to be dismantled. employers, managers and employees in relation to health and In order to take account of the obligations resulting from the rehabilitation of sites and the protection of the environment, mining safety? companies are allowed to deduct from their net operating income, as a result of the balance sheet, a provision for environmental protection. Every holder of a mining licence shall continue research diligently Procedures for the establishment of this provision, not subject to and according to the rules of the art used in the international mining time restriction, are specified in the Mining Convention. industry. The mining agreement also lays down specific duties and obligations of the holder of the mining title and determines which 9.3 What are the closure obligations of the holder of a steps must be taken to protect the environment during and after reconnaissance right, exploration right or mining right? completion of the development of the mining title.

12 Administrative Aspects The holder of a mining licence may undertake early rehabilitation and development of site security. General rehabilitation of the operating site must begin progressively during the production phase or immediately 12.1 Is there a central titles registration ofﬁce? after the end of mining according to the initial closure programme established for the application of the production mining title. The 2019 Mining Code provides for a centralised mining title regis- The holder of a mining title also has to prepare a plan for the follow- tration office (“cadastre minier ”) to which any authorisation and up and the control of quality of rehabilitation of the production site. mining titles regularly granted have to be transmitted and registered.

9.4 Are there any zoning or planning requirements applicable 12.2 Is there a system of appeals against administrative to the exercise of a reconnaissance, exploration or mining decisions in terms of the relevant mining legislation? right?

Appeals against mining administrative decisions follows the general When the public interest requires it, a Decree of the President of rules of filing claims against any administrative decision: a prior the Republic, upon proposal of the Minister in Charge of Mines, claim needs to be filed in front of the issuing administration or its may prohibit or authorise exploration or mining within and around upper authority before any claims can be made in front of the certain specific areas under such mining titles. competent administrative court.

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13 Constitutional Law 15 Regional and Local Rules and Laws

13.2 Are there any State investment treaties which are 15.2 Are there any regional rules, protocols, policies or laws applicable? relating to several countries in the particular region that need to be taken account of by an exploration or mining company? The CEMAC Investment Charter regulates direct foreign investment and direct investment abroad in the CEMAC zone. CEMAC Mining Code Through the Gabonese Investment Charter, the Gabonese At the end of 2017, the Economic and Monetary Commission of Government guarantees to every person, whose investment is Central African States (CEMAC) officially drafted the CEMAC presented or performed in accordance with current legislation, the Mining Code, but it has not been approved and is not in force yet. protection of investments. We do not know at the moment whether such draft will be directly Depending on the origin of the investor, some bilateral invest- applicable to each of the six Member States of the CEMAC ment treaties may also be applicable. (including Gabon) or whether it will be just be a directive used by each CEMAC Member State to elaborate their own Mining Code, 14 Taxes and Royalties but the Gabonese Minister of Mines, when introducing the new 2019 Mining Code, indicated that some aspects of this draft have already been anticipated in the new code. 14.1 Are there any special rules applicable to taxation of

exploration and mining entities? Other regional regulations applicable to mining projects Other regional rules may apply to certain aspects of a mining project Mining companies carrying on mining activities in Gabon are subject in Gabon. to both specific mining fixed rate fees and royalties and duties which For the purpose of their mining activities, mining companies may may vary in accordance with the mining activity phase and types of import certain equipment that is usually unavailable in the local mineral resources in question. market, and benefit from the special customs regime provided by the Mining companies are also liable to the common tax regime regional CEMAC Customs Code applicable in Gabon. (corporate income tax, withholding tax, distribution tax, VAT, land The customs regime applicable under the exploration title refers contributions, tax on wages, stamp and registration duties, harbour to the normal temporary admission customs regime (Admission fees, etc.), although the Mining Code may provide specific rules and Temporaire Normale – ATN) that applies to duty-free importations of may provide for certain tax holiday periods in particular for local plant, material, supplies, machinery and equipment, and commercial processing and critical mining projects. vehicles (except vehicles used for staff transportation) imported by Some specific mining taxes apply to both exploration and mining the mining company and its subcontractors, subject to be re- titles (fixed fees and surface royalty payments), while others apply only exported at the end of their local utilisation. to mining titles (proportional mining tax) according to rates which The customs regime applicable under the mining title provides that vary with the substances in question and the period in question. companies carrying out activities under the exploitation phase may benefit from (i) the Special Temporary Admission Regime (ATS), 14.2 Are there royalties payable to the State over and allowing the partial payment of customs duties for the machinery, equipment and commercial vehicles (except for vehicles used for staff above any taxes? transportation) used for the implementation of the exploitation until the first sale, which are used and imported into Gabon, and (ii) the 5% Due to social responsibility and local content requirements, the 2019 reduced customs duty applicable to definite imports of goods, equip- Mining Code also requires a mining title holder to contribute to ment and their spare parts destined for the exploitation of the deposit certain funds: while this is no longer provided within the 2015 Mining Code. ■ mines support funded notably by mining royalties; Some goods and consumables needed for local processing may be ■ local communities funded notably by mining royalties; fully exempted from customs duties. Other materials and equip- ■ provision for rehabilitation of sites which need to be put in a ment, including those used directly and definitely for the mining local bank account according to conditions to be set forth in the exploitation and consumables destined for exportation, are subject mining convention; and to the common customs duties. ■ 1% of the net profit for provisions for industrial responsibility, The new 2018 CEMAC Act on foreign exchange regulations also if no proper insurance can be provided. need to be considered for any financial flux and investment within and towards Gabon, in particular when they provide for certain

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restrictions on the opening of foreign and local foreign currencies 16.2 Are there obligations upon the holder of an accounts and require the repatriation of export proceeds through exploration right or a mining right to relinquish a part thereof local bank account(s). OHADA regulations, common to 17 Sub-Saharan African States after a certain period of time? (including Gabon), may also impact mining projects as far as, notably, the incorporation of mining companies, business law, arbi- The 2019 Mining Code does not provide for any minimum period tration and mediation law, security instruments, accounting and of time for activities before a holder of a mining title may decide to transportation by roads are concerned. relinquish his rights.

16 Cancellation, Abandonment and 16.3 Are there any entitlements in the law for the State to Relinquishment cancel an exploration or mining right on the basis of failure to comply with conditions? 16.1 Are there any provisions in mining laws entitling the holder of a right to abandon it either totally or partially? Non-compliance by a mining title holder with his obligations may lead to sanctions which vary from mere penalties to withdrawal of the title in question, in conditions listed in the 2019 Mining Code. The holder of an exploration permit or an exploitation permit is The withdrawal is, however, effective only after the failure of the entitled to totally or partially abandon his rights, provided it is done mining title holder to comply with obligations in question in a 45- before the end of the term of the title in question and is notified to day period as far as prospection authorisation is concerned, a 60-day the State at least: period as far as exploration permits are concerned, and a 120-day ■ three months before the end of the activities for an exploration period as far as exploitation permits are concerned. permit; and ■ 12 months before the end of the activities for an exploitation permit.

Jean-Pierre Bozec is an authorised and registered legal advisor in Gabon and remains registered as an “avocat” at the Paris Bar (France) with 25 years’ experience in African transactions. Jean-Pierre has extensive experience of projects and project financing throughout North, West and Central Africa, in particular as far as energy and mineral resources are concerned. Over the course of his career, he has developed a strong expertise in negotiation and drafting State contracts (production sharing contracts, establishment convention, mining conventions, BOT and concession agreements), in legal and tax structuring of projects in Africa, in particular for utilities, transportation infrastructures, mines and oil and gas. He graduated from Exeter University (UK) with an LL.M. in international business transactions and from Rennes University (France) with a postgraduate degree in business law. The leading experience of Jean-Pierre Bozec in Gabon has been consistently recognised by Chambers Global, the World’s Leading Lawyers, the International Who’s Who of Mining Lawyers, and the International Who’s Who of Business Lawyers.

Project Lawyers Tel: +241 77 51 48 26 Batterie IV Email: [email protected] BP 11656 [email protected] Libreville URL: www.project-lawyers.com Gabon

Project Lawyers is an independent and registered Gabonese law firm, established in 2011 by Jean-Pierre Bozec, a legal advisor registered in Gabon and Avocat at the Paris Bar in France. Project Lawyers is committed to providing high quality and innovative legal services to international major corporations and financial institutions in Central Africa, especially in the energy and mineral resources projects and project financings sectors. Established in January 2011 in Gabon, Project Lawyers has been consistently ranked as the Business Law Firm of the Year in Gabon by Chambers & Partners, Corporate INTL, International Who’s Who of Mining Lawyers 2019 and others. www.project-lawyers.com

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Ghana Ghana

Fui S. Tsikata

Reindorf Chambers Dominic Dziewornu Quashigah

1 Relevant Authorities and Legislation Multilateral Integrated Mining Approach which hinges on three pillars – the Law, Enforcement and Technology”. The expressed objectives of the project included: (1) regulating and assisting Artisanal and Small-Scale Miners 1.1 What regulates mining law? (ASMs) to improve the efficiency of their operations; and (2) ensuring the use of appropriate, safe and affordable technology in small-scale mining. Arising from the concerns, the Government placed a mora- The Minerals and Mining Act, 2006 (Act 703) (as amended by the torium on all forms of small-scale mining from March 2017 to Minerals and Mining (Amendment) Act, 2015 (Act 900) and the December 2018. After the ban was lifted, those whose operations had Minerals Commission Act, 1993 (Act 450) are the principal enact- been validated and approved were permitted to continue mining. ments setting out the framework of mining law. They express the basic position that minerals in their natural state are owned by the Infrastructure development state. They also outline the licensing scheme for mineral operations, The rehabilitation of Ghana’s rail sector announced by the the incidents of the various mineral rights and the powers of the prin- Government has the potential to make a positive impact on mineral cipal regulatory institutions. The following pieces of subordinate operations. It has been reported that the Western Rail Line which runs legislation add detail in specific areas to the regime set out in the prin- from the Takoradi Port to Kumasi with a branch line from Dunkwa cipal legislation: (a) Minerals and Mining (General) Regulations, 2012 to Awaso (total of 339km) is being redeveloped. Further, the Ministry (L.I. 2173); (b) Minerals and Mining (Support Services) Regulations, of Railways Development has indicated that it is looking to develop 2012 (L.I. 2174); (c) Minerals and Mining (Compensation and the Accra – Kumasi (Eastern) Line which will also assist various Settlement) Regulations (L.I. 2175); (d) Minerals and Mining mining companies transport their equipment and minerals to the Tema (Licensing) Regulations, 2012 (L.I. 2176); (e) Minerals and Mining Port. The Ghana Manganese Mine at Nsuta and a bauxite mine at (Explosives) Regulations, 2012 (L.I. 2177); and (f) Minerals and Mining Awaso which are along the proposed railway routes as well as other (Health, Safety and Technical) Regulations, 2012 (L.I. 2182). mining companies within the Western and Ashanti regions would benefit from this development. 1.2 Which Government body/ies administer the mining industry? Minerals Development Fund The Board of the Minerals Development Fund established under the The sector Minister, currently the Minister for Lands and Natural Minerals Development Fund Act, 2016 (Act 912) to provide financial Resources, and the Minerals Commission are the government bodies resources for the benefit of, among others, mining communities was with primary responsibility for administering the mining industry. inaugurated in April 2019 to oversee the full implementation of the Fund. Act 912 provides for the creation of a Mining Community Development Scheme for each mining community which is intended 1.3 Describe any other sources of law affecting the mining to facilitate the socio-economic development of communities in which industry. mining activities are undertaken and that are affected by mining operations. Environmental legislation, including that relating to forest protection, water bodies and water use, tax legislation, customary law relating to Ghana Integrated Aluminium Development Corporation land tenure, the law of corporations, contract law and administrative The Ghana Integrated Aluminium Development Corporation law principles concerning the exercise of governmental power, are all (GIADEC) was established under an Act of Parliament in 2018. Its relevant to the mining industry. board was sworn in in March 2019. The GIADEC is mandated to promote and develop an integrated aluminium industry from the 2 Recent Political Developments mining of bauxite through to the refining, smelting, and marketing of finished products.

2.1 Are there any recent political developments affecting the Local content mining industry? Further to the provisions of the Minerals and Mining Act, 2006 (Act 703), a number of specific provisions relating to local content were introduced in the Minerals and Mining (General) Regulations, 2012 Ban on small scale mining (L.I. 2173). L.I. 2173 requires, among other things, that mine support In response to concerns about the small-scale mining sector, accused service providers, holders of mineral rights or licences to export or of causing major pollution of water bodies in the country, the Ministry deal in minerals make provision for the recruitment of Ghanaians and of Lands and National Resources launched a project dubbed “The timelines for their training to replace expatriates. It also requires these

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entities to procure their goods and services from local sources. To this 3.4 Are different procedures applicable to different minerals end, the Minerals Commission publishes a Local Procurement List and on different types of land? which, among others, identifies items which must be sourced locally from wholly Ghanaian owned companies whose directors are all Ghanaians. In recent years, the Minerals Commission is strictly No, although there are different eligibility criteria for different rights. enforcing these regulations on pain of sanction for those entities In particular, non-Ghanaians are prohibited from engaging in small- which do not comply. scale mining. The threshold for engaging in industrial mineral operations is higher for non-Ghanaians than for Ghanaians.

2.2 Are there any speciﬁc steps the mining industry is taking 3.5 Are different procedures applicable to natural oil and gas? in light of these developments?

Infrastructure development Yes, there are. A major mining company in Ghana has, through a development arrangement with the Government, pre-financed the reconstruction 4 Foreign Ownership and Indigenous Ownership and asphalting of a 33km road from Tarkwa to Damang. Such pre- Requirements and Restrictions financed projects are being discussed with other mines to fix the roads in the Tarkwa area, the cost of which would be captured as part of the production cost of such mining entities. 4.1 What types of entity can own reconnaissance, exploration and mining rights? Environmentally sustainable small-scale mining Upon the lifting of the ban on small scale mining, the Ghana National Save for small-scale mining rights which can be granted to individual Association of Small-Scale Miners has, through a series of Ghanaians, only corporate bodies incorporated in Ghana under programmes, sought to sensitise its members on sustainable mining Ghanaian law can hold mineral rights. and mineral processing practices. It also signed a memorandum of understanding with the University of Mines and Technology, Tarkwa with the broad objective of fostering industry-university collaboration 4.2 Can the entity owning the rights be a foreign entity or in order to promote sustainable small-scale mining in Ghana by owned (directly or indirectly) by a foreign entity and are there adopting best mining and processing practices, and protecting the special rules for foreign applicants? environment and the well-being of all stakeholders. Foreign entities cannot directly hold mineral rights, though entities Local content they incorporate in Ghana can hold mineral rights. The Ghana Increasingly, mining companies are developing policies aimed at Investment Promotion Centre Act, 2013 (Act 865) has minimum complying with local content regulations. To this end, a major mining investment requirements for non-Ghanaians. Where the foreign company, Anglo Gold Ashanti, has expressed an intention to increase investor has a Ghanaian partner, the foreign investor is required to recruitment from its local area of operations, Obuasi, on the resump- contribute at least US$200,000 to the equity of the entity and the tion of full-scale operations at its Obuasi mine. The company Ghanaian partner must hold not less than 10% of the equity. A indicates that it has submitted its labour plan to the Minerals foreign investor in a business that it solely owns is required under Act Commission clearly spelling out its plans to train more youth to help 865 to invest a minimum of US$500,000. The minimum capital grow and develop Ghanaians, including people from Obuasi. requirement may be met in cash or capital goods relevant to the investment. A foreign investor cannot engage in operations relating to 3 Mechanics of Acquisition of Rights industrial minerals unless it commits in its proposed programme to invest at least US$10 million in the operations.

3.1 What rights are required to conduct reconnaissance? 4.3 Are there any change of control restrictions applicable? The rights required are: (a) a reconnaissance licence; and (b) a restricted reconnaissance licence to engage in reconnaissance in rela- A person who intends to become the controller of an entity which tion to an “industrial mineral”, i.e. “basalt, clay, granite, gravel, gypsum, directly or indirectly holds mineral rights is required to obtain a “no laterite, limestone, marble, rock, sand, sandstone, slate talc, salt and objection” notice from the Minister of Lands and Natural Resources other minerals as the Minister may from time to time declare, by notice before becoming such controller. A controller is defined to mean “a published in the Gazette, to be industrial minerals”. person who, either alone or with an associate or associates, is entitled to exercise, or control the exercise of more than twenty per cent of the voting power at any general meeting of the mining company or of 3.2 What rights are required to conduct exploration? another company of which it is a subsidiary”. The entity and the exiting shareholder are also required to notify the Minister, respectively, The rights required are: (a) a prospecting licence; and (b) a restricted of the change in control of the company or of ceasing to be prospecting licence to engage in prospecting for industrial minerals. controller.

3.3 What rights are required to conduct mining? 4.4 Are there requirements for ownership by indigenous persons or entities? The rights required to conduct mining are: (a) a mining lease; (b) a restricted mining lease to engage in mining for an industrial mineral; A small-scale mining licence may only be granted to a citizen of and (c) a small-scale mining licence for the conduct of small-scale Ghana who is at least 18 years old, and is registered by the office of mining. The mining lease permits its holder to engage in reconnais- the Minerals Commission in an area designated as a small-scale mining sance and prospecting. area.

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A person who is not a citizen may not apply for a mineral right in 6.2 Are the rights to conduct reconnaissance, exploration and respect of industrial minerals unless the proposed investment in the mining capable of being mortgaged or otherwise secured to mineral operations is US$10 million or above. raise ﬁnance? 4.5 Does the State have free carry rights or options to acquire A reconnaissance, prospecting or mining right may be mortgaged or shareholdings? secured, subject to the approval of the Minister. If the mortgagor defaults and the mortgagee forecloses, the mortgagee acquires the The State is entitled to 10% free carried interest in an entity engaged mineral rights subject to the approval of the Minister. in mining. This does not preclude the Government from any other or further participation in mineral operations that may be agreed with 7 Dealing in Rights by Means of Transferring the holder of the mineral. Additionally, the Minister may by notice in writing to a mining Subdivisions, Ceding Undivided Shares and company require the company to issue to the State a “special share” Mining of Mixed Minerals in the company for no consideration. The special share is meant to give the Government, inter alia, the power to veto decisions relating to the liquidation of the company or disposal of the whole or a material 7.1 Are rights to conduct reconnaissance, exploration and part of its assets. To the best of our knowledge, since this provision mining capable of being subdivided? was first introduced, the special share has only been taken on one occasion in the context of the state reducing its interest in a company Reconnaissance, prospecting and mining rights may be subdivided in which it previously held majority shares. with the approval of the Minister.

5 Processing, Refining, Beneficiation and Export 7.2 Are rights to conduct reconnaissance, exploration and mining capable of being held in undivided shares? 5.1 Are there special regulatory provisions relating to processing, refining and further beneficiation of mined Mineral rights may be held in undivided shares. However, given the minerals? requirement of local incorporation referred to in response to question 3.1 above, the general practice is for those jointly involved in the venture to be allotted shares in the corporate entity which holds the The Minerals and Mining Act requires a licence from the Minister for mineral rights. the sale, export or other disposal of a mineral. Under the Minerals and Mining (General) Regulations, 2012 (L.I. 2173), an application by a 7.3 Is the holder of rights to explore for or mine a primary holder of a mining lease for a licence to export, sell or dispose of gold or other precious minerals produced by the holder must be accompa- mineral entitled to explore or mine for secondary minerals? nied by a refining contract and a sales and marketing agreement. Holders of small-scale licences for mining precious minerals are A holder of a mineral right cannot explore for or mine a mineral that required to export their minerals through the Precious Minerals is not the subject of the mineral right. If the holder desires to explore Marketing Company (PMMC) or any other licensed exporter. for or mine any other mineral, the person must apply to the Minister An application by a person other than a holder of a mining lease, to amend the right to include such other mineral. to purchase and export, sell or dispose of gold or other precious minerals, requires the applicant to satisfy the Minister that the minerals 7.4 Is the holder of a right to conduct reconnaissance, will be refined or polished in Ghana or that only refined or polished exploration and mining entitled to exercise rights also over minerals will be purchased for export, or that a percentage of the minerals will be supplied to local users. In practice, as there is very residue deposits on the land concerned? little refinery capacity in Ghana, this requirement is hardly enforced. A mineral right holder is only entitled to exercise rights in respect of 5.2 Are there restrictions on the export of minerals and levies the minerals to which its licence relates. To exercise rights over residue payable in respect thereof? deposits (tailings), additional rights are required.

7.5 Are there any special rules relating to offshore exploration Shipment of diamonds is subject to certification under the Kimberley Process Certificate Act, 2003 (Act 652). and mining?

6 Transfer and Encumbrance No, there are not.

8 Rights to Use Surface of Land 6.1 Are there restrictions on the transfer of rights to conduct reconnaissance, exploration and mining? 8.1 Does the holder of a right to conduct reconnaissance, A transfer, assignment, mortgage, or encumbrance of a mineral right exploration or mining automatically own the right to use the or any dealing in relation to a mineral right requires the prior written surface of land? approval of the Minister. The approval should not be unreasonably withheld or given subject to unreasonable conditions. Further, the The holder of a mineral right is entitled to enter onto the land for the Minister is required to communicate a decision on the application conduct of the mineral operations. However, it is required to exercise within 30 days of receipt of the application; otherwise, the Minister its rights subject to the surface rights of the owner or occupier of the upon request from the applicant must give reasons for failing to do so. land.

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8.2 What obligations does the holder of a reconnaissance the closed mine site; (b) submit a mine closure plan to the Inspectorate Division of the Minerals Commission for approval; and (c) within 12 right, exploration right or mining right have vis-à-vis the months after the closure of the mine, rehabilitate mining areas which landowner or lawful occupier? are no longer required for the mining operations.

The holder of a mineral right is required to exercise the rights granted 9.4 Are there any zoning or planning requirements applicable subject to the surface rights of the owner or occupier of the land. The to the exercise of a reconnaissance, exploration or mining owner or lawful occupier of land retains the right to graze livestock upon or to cultivate the surface of the land if the grazing or cultivation right? does not interfere with the mineral operations in the area. The holder of a mineral right is also required to compensate the In respect of mining, the Local Governance Act, 2016 (Act 936) owner or lawful occupier for the disturbance of the surface rights of prohibits the carrying out of any physical development without a the owner or lawful occupier. The compensation may be monetary or permit granted by the District Planning Authority. A “physical devel- by way of resettlement, the cost of which shall be borne by the opment” is defined under Act 936 as “carrying out of building, mineral right holder. Where people have to be displaced, there is a engineering, mining or other operations on, in, under or over land, or constitutional obligation to resettle them. the material change in the existing use of land or building and includes sub-division of land, the disposal of waste on land including the 8.3 What rights of expropriation exist? discharge of effluent into a body of still or running water and the erec- tion of advertisement or other hoarding”. In the standard mineral right agreement, the holder is prohibited Where land is required to secure the development or utilisation of a from conducting any operations in a sacred area. It further requires mineral resource, the President may acquire the land or authorise its the written consent of the Minister to conduct its operations: (a) occupation and use subject to the prompt payment of fair and within 100 metres of any forest reserve, river, stream, building, instal- adequate compensation. lation, reservoir or dam, public road, railway or area appropriated for Act 703 also gives the Minister the power of pre-emption in respect a railway; (b) within 30 metres of a pylon; and (c) in an area occupied of all minerals raised, won or obtained in Ghana. The exercise of this by a market, burial ground, cemetery or Government office, or situ- power is subject to the constitutional provisions regulating expropria- ated within a town or village or set apart for, used, appropriated or tion and to the terms of agreements entered into with mineral rights dedicated to a public purpose. holders. In any case, that power has not, to the best of our knowledge, been exercised in more than 30 years. 10 Native Title and Land Rights 9 Environmental 10.1 Does the holding of native title or other statutory surface use rights have an impact upon reconnaissance, 9.1 What environmental authorisations are required in order exploration or mining operations? to conduct reconnaissance, exploration and mining operations? In Ghana, land is mostly owned by individuals, extended families and communities presided over by chiefs who hold the land in trust for An environmental permit is required in order to undertake reconnais- their members. These members are entitled to exercise surface rights sance, exploration and mineral operations. over and appropriate portions of these lands in accordance with customary law. They must be compensated by the mineral rights 9.2 What provisions need to be made for storage of tailings holder for interference with their rights. The right to compensation and other waste products and for the closure of mines? includes compensation for: (a) deprivation of the use or particular use of the natural surface of the land or part of the land; (b) loss of or The manager of a mine is required to comply with the provisions of damage to property; (c) loss of earnings or sustenance suffered by the L.I. 2182. These contain obligations relating to the construction and owner or lawful occupier of land under cultivation having due regard location of tailings and waste product storage facilities. to the nature of their interest in the land; and (d) loss of expected L.I. 2182 contains provisions relating to mine closure. These income, depending on the nature of crops on the land and their life include obligations to ensure that tailings storage facilities are stabilised expectancy. But no claim for compensation lies in respect of the value in the long term. of a mineral. The Environmental Assessment Regulations, 1999 (L.I. 1652) require that there be (a) a reclamation plan, and (b) a bond to secure 11 Health and Safety implementation of the work plan approved by the Environmental Protection Agency. 11.1 What legislation governs health and safety in mining?

9.3 What are the closure obligations of the holder of a The Minerals and Mining (Health, Safety and Technical) Regulations, reconnaissance right, exploration right or mining right? 2012 (L.I. 2182).

A reconnaissance or prospecting licence requires the holder to comply 11.2 Are there obligations imposed upon owners, with terms which typically include an obligation to rehabilitate the employers, managers and employees in relation to health and land. In respect of a mining lease, the holder is required, before closing a mine site, to satisfy the Chief Inspector of Mines that each safety? source of potential pollution and component of the mining operation that is to be closed is designed to be stable in the long term. Yes. Some of their obligations are summarised below: The holder of a mining lease is required to: (a) ensure that (1) The owner of a mine, manager of a mine or a holder of a small- discharge/emission of polluted water, air or dust does not occur from scale mining licence is required to ensure that changing rooms are

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provided: (a) near to man riding shafts on the surface of an under- Grants of rights to exploit minerals are subject to ratification by ground mine; (b) at locations near to a work area of a surface Parliament and have been held by the Supreme Court in the recent mine, with separate provisions for males and females; and (c) are unreported case of The Republic V. High Court, General Jurisdiction (6), proportionate in size to the number of persons employed in the Accra; Ex Parte Attorney-General (Exton Cubic Group Ltd, Interested Party mine. The holder of a mining or restricted mining lease is also [Civil Motion Number J5/40/2018] to be void and of no legal effect required to, with the approval of the Chief Inspector and prior to unless and until ratified by Parliament. the commencement of mining operations, appoint a certified manager for the mine. 13.2 Are there any State investment treaties which are (2) Persons working in a mine are required to co-operate with the applicable? manager of the mine or the holder of a small-scale mining licence in respect of the mine in the discharge of the relevant obligations under L.I. 2182. However, an employee is not liable for a contra- Ghana has signed and ratified investment treaties with China, vention of L.I. 2182 where the employee acts at the direction of Denmark, Germany, Malaysia, the Netherlands, Switzerland and the a supervisor. United Kingdom. Generally, these provide protection to the invest- (3) Employees are also required to remove other persons whom they ments of persons from the contracting parties. are aware of having been unknowingly exposed to excessive amounts of toxic gas or fumes, dust or harmful temperatures and 14 Taxes and Royalties immediately inform the manager of the mine of the circumstances of the exposure. The manager is required to take further steps necessary to ensure the safety and health of each person 14.1 Are there any special rules applicable to taxation of who has been or may subsequently be exposed to the conditions exploration and mining entities? specified and to rectify and prevent a recurrence of those conditions. Yes, these rules are provided under sections 77 to 86 of the Income Tax Act, 2015 (Act 896). Act 896 treats income from mineral opera- 12 Administrative Aspects tions separately from other sources of income and imposes a mineral income tax at the rate of 35% on profits from mineral operations. In ascertaining the assessable income of a person from mineral opera- 12.1 Is there a central titles registration ofﬁce? tions, (a) each separate mineral operation is treated as an independent business, and (b) the tax liability for the business is required to be The Minerals Commission is required to and does maintain a register calculated independently for each year of assessment. For income tax of mineral rights in which it records applications, grants, variations purposes, a mineral operation pertaining to each mine and a mineral and dealings in assignments, transfers, suspensions and cancellations operation with a shared processing facility constitute separate mineral of mineral rights. The register is open to public inspection on operations which are required to be taxed separately. payment of a prescribed fee and members of the public may, upon request to the Commission and on payment of the prescribed fee, be 14.2 Are there royalties payable to the State over and provided a copy of the records. above any taxes? Further, the interest in minerals conveyed by a grant is required to be stamped and registered within 21 days of being granted with either the Land Registry or the Land Title Registry (depending on the area in which Yes, royalties are payable at the rate of 5% of gross revenue. the mineral right is located). Copies of the stamped and registered documents are required to be provided to the Minerals Commission. 15 Regional and Local Rules and Laws

12.2 Is there a system of appeals against administrative 15.1 Are there any local provincial or municipal laws that decisions in terms of the relevant mining legislation? need to be taken account of by a mining company over and above National Legislation? The prerogative remedies known to the administrative law of common law jurisdictions are available under Ghanaian law. These are available to enforce constitutional duties of candour and fairness Property rates are chargeable by local government bodies under the imposed on public officers. Local Governance Act, 2016 (Act 936). In addition, there are specific statutory appeal mechanisms applicable in defined circumstances. 15.2 Are there any regional rules, protocols, policies or laws relating to several countries in the particular region that 13 Constitutional Law need to be taken account of by an exploration or mining company? 13.1 Is there a constitution which has an impact upon rights to conduct reconnaissance, exploration and mining? The ECOWAS Directive on the Harmonisation of Guiding Principles and Policies in the Mining Sector prescribes a set of rules and guiding principles to Member States of the Economic Community of West Yes. Under the Constitution, 1992, “every mineral in its natural state African States. Further, the ECOWAS Common External Tariff, in, under or upon any land in Ghana, rivers, streams, water courses which is scheduled to the Customs Act, 2015 (Act 891) as amended throughout Ghana, the exclusive economic zone and any area covered by the Customs (Amendment) Act, 2015 (Act 905) exempts by the territorial sea or continental shelf is the property of the machinery, appliances and apparatus designed for use in mining and Republic of Ghana…” and is vested in the President who holds them dredging from the payment of Value Added Tax on importation. on behalf of, and in trust for the people of Ghana.

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16 Cancellation, Abandonment and blocks form not more than three discrete areas, each consisting of (a) a single block, or (b) a number of blocks each having a side in Relinquishment common with at least one other block in that area. Relief may be granted either in whole or in part against this requirement if the holder of the prospecting licence satisfies the Minister that delay by a govern- 16.1 Are there any provisions in mining laws entitling the ment institution or agency in the issuance of permits or in carrying holder of a right to abandon it either totally or partially? out a lawful activity resulted in delay by the holder in the discharge of an obligation under the prospecting licence. The period of the relief There is provision for the surrender (abandonment) of a mineral right shall not exceed 12 months and shall be subject to such other condi- whether in whole or in part. A holder of a mineral right who wishes tions that the Minister thinks fit. to surrender the land subject to the mineral right is required to apply A block is equivalent to 21 hectares or 0.21 square kilometres. to the Minister for a certificate of surrender no later than two months before the date on which the holder wishes the surrender to take 16.3 Are there any entitlements in the law for the State to inter alia effect. A certificate will not be granted, , if the holder (a) is in cancel an exploration or mining right on the basis of failure to default of its obligations, or (b) does not satisfy the Minister that it will surrender the area in a condition which is “safe and accords with good comply with conditions? mining practice”. The State has a right to cancel or suspend a mineral right for the 16.2 Are there obligations upon the holder of an exploration holder’s non-compliance with law or obligations under the agreement granting the mineral right. Prior to exercising a right to suspend or right or a mining right to relinquish a part thereof after a cancel a mineral right, the Minister is required to give notice to the certain period of time? holder requiring the holder to remedy the breach complained of within a reasonable period, not being less than 120 days in the case of In respect of an exploration or prospecting licence, the holder is a mining lease or restricted mining lease or 60 days in the case of required, prior to or at the expiration of the initial term, to surrender another mineral right. Where the breach cannot be remedied, the no less than half the number of blocks of the prospecting area so long holder is required to show cause to the reasonable satisfaction of the as a minimum of 125 blocks remain subject to the licence and the Minister why the mineral right should not be suspended or cancelled.

Fui S. Tsikata is Senior Partner at Reindorf Chambers and plays an active supervisory role in much of the firm’s work. He has been a practising lawyer for over 40 years. He has significant experience working on mineral law and policy issues in Africa. He regularly advises clients on the regulatory regime applicable to their investments in Ghana. He taught at the Faculty of Law of the University of Ghana, Legon for almost 30 years.

Reindorf Chambers Tel: +233 302 24 95 64 /+233 302 22 56 74 20 Jones Nelson Road Email: [email protected] Adabraka, Accra URL: www.reindorfchambers.com Ghana

Dominic Dziewornu Quashigah is a Senior Associate at Reindorf Chambers and has been a practising lawyer with the firm since 2010. He has in his years at the firm been involved in advising local and international clients on matters of Ghanaian law. He works on transactions and dispute resolution.

Reindorf Chambers Tel: +233 244 815 981 20 Jones Nelson Road Email: [email protected] Adabraka Accra URL: www.reindorfchambers.com Ghana

Reindorf Chambers, based in Accra, Ghana, advises and represents a wide range of clients mainly in the areas of mining, energy, corporate/commercial law, infrastructure, project ﬁnance, banking, tax, employment law/labour relations and dispute resolution. It is a member of the DLA Piper Africa Group, which is a part of the DLA Piper Group, an alliance of legal practices operating across Africa, Asia, Europe, the Middle East and the United States of America. www.reindorfchambers.com

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Japan Japan

Anderson, Môri & Tomotsune Hiroaki Takahashi

1 Relevant Authorities and Legislation Further, other general statutes such as the Electricity Business Act (Act No. 170 of 1964), the Industrial Safety and Health Act (Act No. 57 of 1972), the Air Pollution Act (Act No. 97 of 1968), the Water 1.1 What regulates mining law? Pollution Prevention Act (Act No. 138 of 1970), the Soil Contamination Countermeasures Act (Act No. 53 of 2002), the Noise Regulations Act (Act No. 98 of 1968), etc. may apply to a The basic statute regulating mining activities is the Mining Act (Act mining business depending on the situation. No. 289 of 1950) (the “Act”), the purpose of which is to provide a basis for a system of mining which can contribute to the improvement of public welfare through the development of mineral 2 Recent Political Developments resources in a reasonable manner (Article 1 of the Act). Given that mineral resources are deemed to be critical materials for the national 2.1 Are there any recent political developments affecting the economy, the rights to prospect for and extract them should belong mining industry? to the most appropriate persons eligible to do so rather than the land owners, the Act grants mining rights to certain eligible persons (separate to the land owners) whereby holders of mining rights are The most important political developments affecting the mining granted the exclusive privilege of developing mineral resources industry manifested in an amendment to the Act in 2011 (which has whilst being obliged to immediately commence relevant mining gone into effect in 2012) (the “Amendment Act”) which is the only activities and to prevent associated pollution. amendment in the Act’s 61-year history. The rapidly increasing Further, with respect to mining and exploration on or below the demand for global energy in both emerging and developed ocean floor in the high seas not subject to the sovereignty of any economies has created unprecedented international competition for country, the Act on Interim Measures for Deep Seabed Mining (Act natural resources in recent years. Among other examples, as No. 64 of 1982) (the “DSM Act”) will apply and the DSM Act observed in China’s restriction on its rare-earth exports since 2010, requires persons who wish to engage in such deep seabed mining the so-called rise in “resource-nationalism” and the resulting diffi- process (including exploration) to obtain approval (“kyoka”) from culties in maintaining supplies of certain minerals are of a national the Minister of Economy, Trade and Industry (the “METI”). concern in Japan. Also, recent innovation in mining techniques has enabled new types of mining to be undertaken deep underground 1.2 Which Government body/ies administer the mining industry? or within the ocean floor. Accordingly, the Government and the METI amended the Act with the objective of maintaining domestic resources amid the fiercely competitive environment for resource The Act and the DSM Act provide the Minister of the METI with development in and outside the country and to ensure that resource the authority to conduct administrative functions such as granting development is conducted by the appropriate and qualified persons. mining rights or approving the disposal of the same, organising bidding procedures for choosing specific developers for specified 2.2 Are there any speciﬁc steps the mining industry is taking minerals and generally supervising holders of mining rights. The Act provides for the delegation of such authority to each local in light of these developments? bureau of the METI where applications regarding mining rights should be made. Since the Amendment Act enforced (i) a specific requirement of technical capability and financial credibility for the grant of mining 1.3 Describe any other sources of law affecting the mining rights, (ii) a new public bidding procedure rather than a “first-to-file” industry. policy with respect to “Specified Minerals” such as oil, natural gas, certain ocean floor minerals and asphalt, and (iii) a new approval system for exploration programmes using any seismic or other spec- Generally, to operate mining businesses, the Mine Safety Act (Act ified methods, the number of applications for granting mining rights No. 70 of 1949) (the “MS Act”) can be applied in terms of has reduced by approximately 20% compared to the period before preventing both injuries to employees and mining pollution. In addi- the Amendment Act (according to the public material of the METI). tion, with respect to metal mining businesses, the Act on Special This trend is generally believed to be a positive indication that only Measures for Pollution Caused by the Metal Mining Industry, etc. appropriate persons having sufficient technical and financial capa- (Act No. 26 of 1973) applies to prevent pollution caused by metal bility can apply for mining rights. mining businesses specifically.

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3 Mechanics of Acquisition of Rights sten, molybdenum, nickel, cobalt, uranium, thorium and barite); (ii) sedimentary deposits ores on or below the ocean floor (copper, lead, zinc, iron, manganese, tungsten, molybdenum, nickel and cobalt); 3.1 What rights are required to conduct reconnaissance? and (iii) asphalt), given that these minerals are deemed to be particularly important for the national economy, a stable supply is critically required. Thus, the Amendment Act has introduced a new applica- The Act provides for “mining rights” (“kogyo-ken”), “mining lease tion procedure, whereby the METI will designate “Specified Areas” rights” (“soko-ken”) and “exploration” (“tansa”) conducted by where Specified Minerals can be found, solicit applications for prescribed methods only. Conducting “reconnaissance” will not be mining rights for the Specified Minerals, and grant mining rights to subject to the regulations under the Act unless it also constitutes the applicant the METI determines is most appropriate (by assessing “exploration” as described in question 3.2 below. the approval criteria requirements). Once applicants are granted mining rights under the foregoing process, the same process as Non- 3.2 What rights are required to conduct exploration? Specified Minerals for registration, operational plan filing and the commencement of mining activities, apply. Initially, the Act did not specifically regulate “exploration” itself. There are no different procedures applicable to different types of However, given the recent (and disorderly) exploration which has land under the Act. taken place, especially of the ocean floor by foreign entities equipped with innovative exploration techniques, the Amendment Act has 3.5 Are different procedures applicable to natural oil and established a new exploration approval system whereby those who gas? desire to undertake “exploration for minerals without digging” by “continuously using seismic methods, electronic or magnetic methods or intensive sampling methods within the exclusive As detailed in question 3.4 above, oil and combustible natural gases economic zone (“EEZ”), a sea area relating to a continental shelf or are Specified Minerals and are therefore subject to a distinct proce- territorial waters or inland waters” will be required to apply for dure for the grant of mining rights. approval to do so in advance. However, even if exploration by certain methods is permitted, the Act does not recognise such status 4 Foreign Ownership and Indigenous Ownership as a specific right as it does for mining rights. Requirements and Restrictions

3.3 What rights are required to conduct mining? 4.1 What types of entity can own reconnaissance, exploration and mining rights? To conduct mining, mining rights are required. The Act defines mining rights as “prospecting rights” (“shikutsu-ken”) and “digging rights” (“saikutsu-ken”). Prospecting rights are generally regarded to The Act provides that no legal person other than individuals of be the rights to dig a mining area as a trial to determine the existence, Japanese nationality or corporations incorporated under Japanese the quality and the possibility for digging minerals, whereas digging law may hold mining rights. rights are rights to dig a mining area on a commercial basis. On the other hand, to conduct mining in a mining area where 4.2 Can the entity owning the rights be a foreign entity or others hold mining rights, mining lease rights are required. owned (directly or indirectly) by a foreign entity and are there Both mining rights (prospecting rights and digging rights) and special rules for foreign applicants? mining lease rights are deemed “property rights” under the Act and are subject to the approval of the METI as stated below. Other than the regulation stated in question 4.1 above, there are no further provisions concerning the nationality of a shareholder. 3.4 Are different procedures applicable to different minerals Thus, a foreign entity is generally able to set up a wholly-owned and on different types of land? subsidiary or a jointly-owned subsidiary with other entities under Japanese law to hold the requisite mining rights and in practice we As stated above in question 2.2, the Amendment Act provides for have seen a number of foreign mining companies do so successfully. distinct procedures for “specified minerals” (“Specified Minerals”) and minerals other than Specified Minerals (“Non-Specified 4.3 Are there any change of control restrictions applicable? Minerals”). With respect to Non-Specified Minerals, those who wish to No. As stated in question 4.2 above, there are no restrictions on ulti- conduct mining are required to apply to the METI for approval, and mate shareholders so long as the holder of the mining right is a approval shall be granted on a “first-to-file” basis, to applicants who corporation incorporated under Japanese law. meet the eligibility requirements including having sufficient financial and technical capability. Applicants who are granted approval for the creation of mining rights are required to (i) register the rights at 4.4 Are there requirements for ownership by indigenous the mining registry for those rights to become effective, (ii) file an persons or entities? operational plan with the METI for its authorisation prior to commencing mining activities, and (iii) commence mining activities No, this is not applicable. within six months after the registration. On the other hand, for Specified Minerals (which are defined as “oil, combustible natural gases and other materials important for the 4.5 Does the State have free carry rights or options to national economy” and “other materials important for the national acquire shareholdings? economy” are defined in three categories: (i) hydrothermal polymetallic ores on or below the ocean floor (gold, copper, lead, No, this is not applicable. bismuth, tin, antimony, zinc, iron, iron sulphide, manganese, tung-

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5 Processing, Reﬁning, Beneﬁciation and Export 7.2 Are rights to conduct reconnaissance, exploration and mining capable of being held in undivided shares?

5.1 Are there special regulatory provisions relating to Yes, this is possible in respect of mining rights. If two or more processing, reﬁning and further beneﬁciation of mined persons jointly apply for a grant of mining rights, each person will minerals? be granted an undivided portion of one mining right. In addition, if one holder of a mining right transfers a portion thereof to a third No, this is not applicable. party, such third party may acquire the undivided portion of the mining right if the transfer is approved by METI.

5.2 Are there restrictions on the export of minerals and 7.3 Is the holder of rights to explore for or mine a primary levies payable in respect thereof? mineral entitled to explore or mine for secondary minerals? For the purpose of national security, the Foreign Exchange and Foreign Trade Control Act (Act No. 228 of 1949) and the Export Those who wish to mine two or more kinds of minerals in the same Trade Control Order (Cabinet No. 378 of 1949) have required mining area are required to apply for mining rights in respect of each potential exporters to seek and receive the approval (“kyoka”) or the mineral under the Act. Holders of mining rights are only entitled to authorisation (“shonin”) of the METI for the export of stipulated mine for secondary minerals if they have also been granted mining goods, materials and products including minerals listed in the sepa- rights for those minerals. rate tables of that Order. Accordingly, those who intend to export minerals should confirm whether those minerals are listed. 7.4 Is the holder of a right to conduct reconnaissance, exploration and mining entitled to exercise rights also over 6 Transfer and Encumbrance residue deposits on the land concerned?

6.1 Are there restrictions on the transfer of rights to conduct Yes. The holder of mining rights is entitled to exercise them over reconnaissance, exploration and mining? residue deposits on the relevant land so long as such residue deposits are the same mineral on which the METI approval is granted.

Mining rights may not be transferred without the approval of the 7.5 Are there any special rules relating to offshore METI. The same approval requirements as for the grant of mining rights, including the financial and technical capability of the trans- exploration and mining? feree, will apply to transferees. Further, a transfer of mining rights will not become effective until registration of transfer is completed. As stated in question 3.2 above, the Amendment Act provides for a As stated in question 3.2 above, certain types of exploration are new approval system for mineral exploration without mining by subject to the approval of the METI. However, the Act does not specific methods within the EEZ, a sea area relating to a continental recognise approved exploration to be akin to a grant of property shelf or territorial waters. rights, and therefore there is no system of transfer or registration of Further, as stated in question 1.1 above, with respect to mining that approved exploration status. and exploration on or below the ocean floor in the high seas not subject to the sovereignty of any country, the DSM Act applies and 6.2 Are the rights to conduct reconnaissance, exploration requires persons who wish to conduct deep seabed mining or explo- and mining capable of being mortgaged or otherwise secured ration to obtain the approval of the METI.

to raise ﬁnance? 8 Rights to Use Surface of Land It is possible that digging rights (“saikutsu-ken”) of Specified or Non- Specified Resources can be mortgaged to secure financial 8.1 Does the holder of a right to conduct reconnaissance, obligations, whereas prospecting rights (“shikutsu-ken”) cannot be exploration or mining automatically own the right to use the mortgaged in this manner. Creation of a mortgage will not become surface of land? effective until such mortgage is registered.

7 Dealing in Rights by Means of Transferring No. Since mining rights are categorised separately from rights to use the surface of the land, the holder of the rights will need to sepa- Subdivisions, Ceding Undivided Shares and rately obtain the rights to use the surface of the relevant mining area, Mining of Mixed Minerals such as ownership rights (“syoyu-ken”), superficies right (“chijo-ken”) or leasehold rights (“chinshayu-ken”).

7.1 Are rights to conduct reconnaissance, exploration and 8.2 What obligations does the holder of a reconnaissance mining capable of being subdivided? right, exploration right or mining right have vis-à-vis the landowner or lawful occupier? The Act prohibits two or more mining rights from being created in the same mining area. However, holders of digging rights (“saikutsu- ken”) for Non-Specified Minerals may apply for approval to divide As stated in question 8.1 above, since holders of mining rights need up a certain mining area. to obtain rights to use the surface of the mining area, they need to acquire the ownership rights from or be granted superficies right or a leasehold right by the relevant landowner.

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The Act provides for the following obligations of the mining right 9.2 What provisions need to be made for storage of tailings holders: and other waste products and for the closure of mines? (i) When an application for the grant of mining rights is made, if the exercise of mining rights causes any inconvenience to the use of the relevant land, the METI will be required to notify the No specific procedures are required to be taken under the Act. land owner of such application for approval and to give the owner an opportunity (within a reasonable time frame) to submit 9.3 What are the closure obligations of the holder of a a written opinion. If so ordered by the METI, the applicant is reconnaissance right, exploration right or mining right? required to submit a document setting out the name and address of the land owner. (ii) Applicants for mining rights or holders of mining rights or The holder of the mining right is required to register the extinction mining lease rights may access land owned by others upon of such mining right due to relinquishment. Upon the registration, obtaining the approval of the METI. The METI will be the extinction of the mining right becomes effective. required to notify the land owner of such application for access and to give the owner an opportunity (within a reasonable time 9.4 Are there any zoning or planning requirements applicable to frame) to submit a written opinion. If applicants obtain such the exercise of a reconnaissance, exploration or mining right? approval and wish to access the land, they are required to notify the landowner or the lawful occupier in advance. The Act provides the following requirements for the mining area: (iii) Holders of mining rights may compulsorily use or acquire the ■ Boundaries of mining areas shall be established by straight lines, land owned by others for certain specific purposes, such as to and outer limits shall be directly below the boundaries on the open a pithead or well, install machinery for mining, open a rail- surface of the Earth. road or a track, etc., if approval of the METI is received. The ■ The total surface area of a coal, oil, asphalt or combustible METI will be required to notify the landowner or the lawful natural gas mining area shall not be less than 15 hectares, that occupier of such application for approval and to provide such of limestone, dolomite, silica, feldspar, agalmatolite, talc or fire- owner or occupier with the opportunity to attend and present clay mining area shall not be less than one hectare, and mining its opinion in a public process. areas for other minerals shall not be less than three hectares.

However, this shall not apply to placer mining. 8.3 What rights of expropriation exist? ■ The total surface area of a mining area shall not exceed 350 hectares. However, this shall not apply where the total surface Expropriation under the Act is limited to expropriation “without area must unavoidably be larger to allow for the reasonable digging” using seismic methods, electronic or magnetic methods or development of minerals. intensive sampling methods. Thus, permitted expropriation does ■ In areas where the Environmental Dispute Coordination not automatically include rights to use the land. Commission finds it is not appropriate to mine minerals due to the public interest in general, or agriculture, forestry and other indus- 9 Environmental tries, and the creation of a mining right of specified minerals is prohibited (hereinafter referred to as a “mining prohibition area”), no mining area can be established for the specified minerals. 9.1 What environmental authorisations are required in order to ■ In the case of a prohibition pursuant to the preceding para- conduct reconnaissance, exploration and mining operations? graph, if the Environmental Dispute Coordination Commission finds that the mining of the minerals specified by the preceding paragraph in a mining prohibition area has become substantially The Mine Safety Act (the “MS Act”) is the main statute to prevent adverse to public welfare, the commission may recommend that both harm to mine employees and mining pollution. In order to the Minister of the METI should dispose of the mining right by enforce the MS Act, “Mine/Explosives Supervisors” (“Kozan- which such mining takes place in the mining prohibition area, Kayaku-rui-Kanrikan-zuke”) are placed in the Headquarters of the pursuant to the provision of Article 53 of the Act. METI and nine Industrial Security Supervisory Departments ■ More than two mining rights shall not be created in the same (“Sangyo-Hoan-Kantoku-bu”) (the “ISSD”) have been created as local mining area; provided, however, that this shall not apply where divisions to administer the MS Act. the subject minerals are minerals that occur in different types of In addition, the MS Act has placed mining supervisors (“komu- ore deposits or as specified in Article 46. kansakan”) in the METI and each local ISSD, who have the authority to require holders of mining rights or other related parties to provide 10 Native Title and Land Rights information required for the supervision of security, to access mines or any ancillary facilities and to act as judicial police (“shiho-keisatsu- in”) for purposes of criminal procedures under the Act. 10.1 Does the holding of native title or other statutory Further, Mine Safety Councils are located in the Headquarters of the surface use rights have an impact upon reconnaissance, METI and local ISSDs to investigate and consider important matters regarding mining safety. “Mine Safety System Review Subcommittee” exploration or mining operations? is set up separately from “Mine Safety Councils”. Further, the Mine Safety System Review Subcommittee was established to investigate and Generally, no native title or other statutory surface use rights have consider technical policies for mine safety. any impact on exploration or mining operations. However, the Act General environmental statutes such as the Industrial Safety and empowers the METI to reject an application on the following Health Act, the Air Pollution Act, the Water Pollution Prevention Act, grounds: “When the mining of minerals in mining application areas the Soil Contamination Countermeasures Act, etc. are enforced by super- is found to … disrupt the protection of cultural properties, parks or visory authorities such as the Labour Minister, the Prefectural Labour hot spring resources, or impair the interests of agriculture, forestry Directors, the Environment Minister and the Prefectural Governors. and other industries, and be extremely adverse to public welfare.”

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11 Health and Safety 12 Administrative Aspects

11.1 What legislation governs health and safety in mining? 12.1 Is there a central titles registration ofﬁce?

The MS Act governs health and safety for employees in mining. Yes. Each prefecture maintains a mining registry where each of the (i) digging rights register, (ii) prospecting rights register, and (iii) 11.2 Are there obligations imposed upon owners, employers, mining area maps are disclosed to the public.

managers and employees in relation to health and safety? 12.2 Is there a system of appeals against administrative The MS Act imposes the following obligations upon holders of decisions in terms of the relevant mining legislation? mining rights and mining lease rights: ■ take necessary measures to prevent harm to persons in mines Yes. The Act provides for administrative procedures to appeal any with regard to (i) cave-ins, collapse, flood, protrusion of gas, disposition by the Director of a Regional Bureau of the METI. Any explosion of gas or coal dust, spontaneous ignition, and under- judicial action for rescission of a disposition pursuant to the Act may ground fire, (ii) treatment of gas, dust, rock dump, slag, mine not be filed before the determination of such an administrative appeal. water, wastewater, and mineral smoke, and (iii) use of machinery, appliances (excluding sanitary protective equipment; the same 13 Constitutional Law shall apply hereinafter) and structures, and handling of explosives and other materials, power and fire; ■ to take necessary measures for ensuring aeration related to 13.1 Is there a constitution which has an impact upon hygiene and rescue in the event of a disaster; rights to conduct reconnaissance, exploration and mining? ■ to take necessary measures to protect mineral resources from sinking, collapse, flooding, protrusion of gas, explosion of gas No, there is no specific provision of the Constitution which has any or coal dust, spontaneous ignition, and mine fires; impact on rights to conduct exploration or mining. ■ to take necessary measures for the maintenance of machines,

appliances, buildings, structures and other facilities in accordance with the classification of workplaces in and outside the mine; 13.2 Are there any State investment treaties which are ■ to take necessary measures for the prevention of mine pollution applicable? with regard to the treatment of gas, dust, rock dump, slag, mine water, wastewater, and mineral smoke and excavation of land; There are no State investment treaties other than the treaties between ■ to provide mining workers with safety education necessary for Japan and South Korea regarding the joint development of the their work; continental shelf between those countries. ■ not to use or install machinery, equipment, explosives or other materials that are highly dangerous; 14 Taxes and Royalties ■ to ensure the safety of mining rights holders, buildings, structures and other facilities used in mining must be maintained; ■ to notify the Director-General of the ISSD of the construction plan 14.1 Are there any special rules applicable to taxation of when they intend to carry out construction work for the installation exploration and mining entities? or alteration of buildings, structures or other facilities used in mining; ■ to take certain prescribed measures with respect to the waste stone or slag accumulated and mine tunnels, etc. even after they The following taxes are payable on mining activities: have transferred or renounced them; (i) Application Fees and Registration Tax ■ to investigate the current status of the mine and record and Prescribed application fees are levied upon the application for the preserve the results when commencing mining or other cases; creation, transfer or amendment of mining rights. Also, a separate ■ to establish safety regulations with regard to the measures neces- registration tax is levied upon the application for registration of the sary for safety to be taken in accordance with the current state creation, transfer or amendment of mining rights. of the mine and notify the METI; (ii) Mining Area Tax (“Koku-zei”) ■ to appoint a safety supervisor and a work supervisor and notify The following local tax is levied: the ISSD thereof; ■ Mining area for prospecting rights: 200 Yen per annum per ■ to establish a safety committee for mines in order to investigate 10,000 m2. and deliberate important safety matters, to cooperate with the ■ Mining area for digging rights: 400 Yen per annum per 10,000 m2. safety supervisor and the safety manager in the execution of ■ Sand mining area (both for prospecting and digging rights): safety duties, and to have them make recommendations; and 200 Yen per annum per 10,000 m2. ■ not to dismiss or otherwise disadvantageously treat mining ■ Mining area for oil and combustible natural gas: two-thirds employees on the grounds that they exercise their statutory right of the above fees. to take necessary measures including the suspension of the work (iii) Mining Tax (“Kosan-zei”): to be levied by each municipality upon to avoid the hazard based on his/her judgment. holders of mining rights The MS Act imposes upon mine employees the obligation to ■ A Mine earning more than two million Yen per month: 1% observe the matters necessary for (i) the prevention of harm to (standard rate) of the sale price of minerals extracted (1.2% persons in mines, and (ii) the maintenance of facilities, in accordance maximum rate). with the measures taken by the holders of the mining right.

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■ A Mine earning two million Yen or less per month: 0.7% 16.2 Are there obligations upon the holder of an (standard rate) of the sale price of minerals extracted (0.9% exploration right or a mining right to relinquish a part thereof maximum rate). after a certain period of time? 14.2 Are there royalties payable to the State over and The Act provides that a holder of a mining lease right with fees above any taxes? attached may not relinquish such right unless he/she gives six months’ notice or pays six months’ lease fees unless the purpose of There are no royalties other than the taxes noted in question 14.1. such mining lease right cannot be pursued due to a natural disaster or any other unavoidable reason. 15 Regional and Local Rules and Laws 16.3 Are there any entitlements in the law for the State to cancel an exploration or mining right on the basis of failure to 15.1 Are there any local provincial or municipal laws that comply with conditions? need to be taken account of by a mining company over and above National Legislation? Yes. The Minister of the METI is required to decrease the relevant portion of the mining area or rescind the mining rights if either of Generally, there are no local provincial or municipal laws that specif- the following events occur: ically need to be taken into account. However, there may be local ■ the mining of minerals is found to be harmful to health, destroy ordinance (“jorei”) to be considered when conducting mining facilities for public use (or any equivalent facility), hinder the depending on the municipality. protection of cultural properties, parks or hot spring resources, or impair the interests of agriculture, forestry and other indus- 15.2 Are there any regional rules, protocols, policies or tries, and be extremely adverse to the public welfare; or laws relating to several countries in the particular region that ■ the mining of certain minerals significantly interferes with the need to be taken account of by an exploration or mining mining of others and there is no other way to eliminate such interference. company? Further, the Minister of the METI is entitled to rescind the mining rights if any of the following events occur: There are no specific regional rules, protocols, policies or laws ■ a holder of a mining right or a director of the corporation relating to several countries in the particular region that need to be having a mining right commit certain crimes under the Act or taken account of by an exploration or mining company. the MS Act and two years have not passed since the enforcement of any criminal sanction was completed; 16 Cancellation, Abandonment and ■ a holder of a mining right does not comply with certain orders Relinquishment of the METI for the increase/decrease of a mining area or for the application of digging rights; ■ a person who has acquired a mining right due to inheritance, etc. 16.1 Are there any provisions in mining laws entitling the does not file with the METI within three months thereafter; holder of a right to abandon it either totally or partially? ■ a person who has acquired a mining right due to inheritance, etc. but is notified by the METI that he/she fails to fulfil eligibility requirements does not transfer such mining right; Yes. The Act assumes that a holder of mining rights may abandon ■ a holder of a mining right does not commence activities within or waive them and has certain provisions such as procedures for six months after the registration; protection of a mortgagee and holders of mining lease rights once ■ a holder of a mining right conducts mining activities not in the holder does so. accordance with his/her filed operational plan; or ■ a holder of a mining right does not comply with an order of the METI to suspend its mining pursuant to the Act or a certain order of the ISSD under the MS Act.

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Hiroaki Takahashi is a partner at Anderson, Môri & Tomotsune. Hiroaki practises corporate/commercial/finance and mining law, advising on a broad range of mining-related transactions both domestically and internationally, including mergers and acquisitions, debt and equity financings, mineral title review and providing legal support to clients throughout all phases of the mining cycle. He has deep expertise in a broad range of industrial sectors including Energy, Projects, Natural Resources and Mining.

Anderson, Môri & Tomotsune Tel: +81 3 6775 1032 Otemachi Park Building, 1-1-1 Otemachi, Chiyoda-ku Email: [email protected] Tokyo 100-8136 URL: www.amt-law.com Japan

Anderson Môri & Tomotsune is a full-service law firm and one of the largest Our main office in Tokyo is supported by our offices in Osaka, Nagoya, Beijing, international firms in Japan which was best known for serving overseas Shanghai, Singapore, Ho Chi Minh City and Bangkok, as well as a Jakarta companies doing business in Japan since the early 1950s. Desk. Our firm provides an extraordinarily powerful value proposition. Housing all www.amt-law.com of these synergistic practices under one roof, our combined expertise enables us to deliver comprehensive advice on virtually all legal issues that may arise from a corporate transaction, including those related to mining law, developments of various mines, mining companies’ M&A, joint-venture and reorganisation, finance for mining companies, capital markets and restructuring/insolvency for them, and litigation/arbitration. The majority of our lawyers are bi-lingual and experienced with communicating, drafting and negotiating across borders and around the globe.

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Mauritania Mauritania

Dempsey Law Firm Christopher Dempsey

1 Relevant Authorities and Legislation 2 Recent Political Developments

1.1 What regulates mining law? 2.1 Are there any recent political developments affecting the mining industry? The Islamic Republic of Mauritania (hereafter “Mauritania”) is not a member of the West African Economic and Monetary Union There are no specific political developments that have affected the (hereafter “WAEMU”) and the WAEMU Mining Code does not mining industry in Mauritania. therefore apply in Mauritania. The principal laws regulating mining in Mauritania are: 2.2 Are there any speciﬁc steps the mining industry is taking ■ Law n°2008-011 dated 27 April 2008 enacting the Mining Code, as amended by Law n°2009-026 dated 7 April 2009, Law n°2012- in light of these developments? 014 dated 22 February 2012 and Law n°2014-088 dated 29 April 2014 (hereafter referred to together as the “Mining Code”); Please see question 2.1. ■ Decree n°2008-158 dated 4 November 2008, on taxes and mining royalties; 3 Mechanics of Acquisition of Rights ■ Decree n°2008-159 dated 4 November 2008 (hereafter the “Decree”), on mining and quarry titles; ■ Decree n°2009-051 dated 4 February 2009 (amending certain 3.1 What rights are required to conduct reconnaissance? provisions of the Decree); and ■ Law n°2012-012 dated 12 February 2012, on mining conven- If works are to be carried out that involve going deeper than 10 feet tions and approving the Model Mining Convention (hereafter below the surface of the ground then a prior declaration must be the “Model Mining Convention”). made to the Ministry of Mines. Similarly, the taking of geophysical measuring, geochemical prospection or studies of minerals must be 1.2 Which Government body/ies administer the mining declared first to the Ministry of Mines. industry? The information and documents collected may not, unless so authorised by the entity/person carrying out the prospection works, be made public or disclosed to third parties by the Ministry of Mines The mining industry in Mauritania is administered by the Ministry before the expiry of a period of three years as from the date on of Mines and the following departments: which they were obtained. ■ The Department of Mines and Geology. The authorisation for prospection grants to its holder the non- ■ The Department of Industrial Development. exclusive right of prospection within the perimeter for all types of ■ The Department of Mine Police. minerals. ■ The Department of Standardisation and Quality Promotion. The authorisation of prospection is granted by order of the ■ The Mining Registry. Minister of Mines to any individual or legal entity who applies for it

in order to carry out prospection works and who justifies possessing 1.3 Describe any other sources of law affecting the mining industry. the requisite technical and financial capabilities. The authorisation is delivered for a period of four months following the date of signa- The following sources of law affects the mining industry: ture of the letter of receipt of the authorisation. ■ Order n°89-126 dated 14 September 1989, enacting the Code of Obligations and Contracts. 3.2 What rights are required to conduct exploration? ■ Law n°2005-05 dated 18 January 2000 (as amended), enacting the Commercial Code. In order to be entitled to conduct exploration activities, an applica- ■ Law n°2004-42 dated 25 July 2004, on the financial relations tion must be lodged with the Mining Registry. with foreign countries.

■ Law n°2000-045 dated 26 July 2000, enacting the Environment Procedure Code. After checking the admissibility of the application, the Mining ■ Bilateral and multilateral conventions to which Mauritania is a Registry assigns an identification code to the exploration permit that party. has been requested and enters the name of the applicant and the

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date (and time) of the presentation of the application in a register, (i) Mining permit which is jointly signed by the applicant (or its representative) and the Procedure: The applicant must submit an application (at the person in charge of the Mining Registry. A signed copy of the form latest) six months prior to the date of expiry of the exploration is given to the applicant by way of a receipt. permit. If the application complies with the Mining Code, the The processing of the application cannot exceed 15 days as from Mining Registry makes a provisional registration. After a the date of registration. favourable examination of the application, the Mining Registry If the application complies with the provisions of the Mining prepares a draft decree and submits it to the Minister of Mines, Code and the Decree of application, the Mining Registry proceeds who presents it to the Council of Ministers, for approval. with its provisional registration on the map of the mining registry, The Mining Registry notifies the applicant of the permit (within which is valid for the duration of the investigation. Until a final deci- six months as from the date of registration of the application), sion is taken, any new application for an exploration permit covering as well as the amounts payable. The applicant must present a all or part of the requested perimeter will be refused. receipt of payment of such amounts, within 15 days of receiving The Mining Registry prepares the draft decree granting the permit, notification. The applicant signs the letter of receipt, which is or a letter which refuses the application (giving reasons for such the date of the validity of the permit. The Mining Registry refusal), as appropriate. If approved, the Minister of Mines will removes the provisional registration and records the permit on submit the draft decree to the Council of Ministers, for the latter’s the map of the registry and the registry of permits. The approval. Once the decree has been signed, it is sent to the Mining Department of Mines and Geology is informed of the permit. Registry, which will notify the applicant within a period of four The mining permit is granted for a period of 30 years. It can be months as from the date of registration of the application. In case renewed several times, each time for a period of 10 years. of refusal, the letter signed by the Minister is returned to the Mining Registry for transmission to the applicant and the provisional regis- Rights given by virtue of holding a mining permit tration of the application is cancelled. ■ Exclusive right of prospection, exploration and mining for The Mining Registry informs the applicant of the amounts of a defined group of minerals for which evidence of a duties and the surface royalty that must be paid, as well as the fact commercially viable deposit has been provided. that such amounts must be paid within seven days of notification. ■ Right to carry out all activities of concentration, enrich- Further, in the letter of notification, the Mining Registry informs the ment and sale (assimilated to mining operations). applicant of (i) the amount of the performance banking guarantee, ■ The rights and obligations of an owner (subject to restric- and (ii) the deadline of 14 days within which to present to the tions provided under the Mining Code). Mining Registry the documentary proof of the performance ■ Right of ownership of the minerals extracted within the banking guarantee. perimeter of the permit. Following presentation of the receipt (within the abovementioned time limit) proving that the required amounts have been Obligations paid, the applicant signs the letter of receipt, which is then the date ■ The title holder is required to commence mining works from which the exploration permit is valid. within 24 months of the granting of the permit. The exploration permit is delivered for a period of three years, ■ The title holder must possess the financial and technical and it may be renewed twice (and each time for a maximum period capacity to carry out the mining works (assessed by the of three years). Department of Mines and Geology prior to the commencement of works). If it does not, the title holder’s Rights given by virtue of holding an exploration permit include ability to start mining would be subject to either: the following a) association with a legal entity that does comply with the ■ Right of access to the land covered by the exploration permit. technical and financial capacity criteria referred to ■ Exclusive right to explore and research all substances within the above, within a new Mauritanian company, to which the scope of what has been authorised by the permit. mining permits would be transferred; or ■ Right to use sand and gravel on land belonging to the State b) the mining permit is transferred to an existing Mauritanian (except if the land is subject to a quarry title held by a third legal entity that complies with the technical and financial party). capacity criteria. ■ Right to remove and ship out mineral samples. ■ Payment of duties, taxes and royalties. ■ Submission of quarterly and annual reports on mining Obligations of the title holder activities to the Ministry of Mines. ■ Within 90 days of the date of the granting of the permit the title ■ Declaration to be made in the event of cessation of holder must commence the works. mining activities. ■ The minimum cost of the works carried out will be 15,000 ■ Declaration regarding the closure of the mine (approved), UM/km² during the first period of validity of the permit, 20,000 including measures to be put in place – the title holder is UM/km² during the period of the first renewal and 30,000 obliged to guarantee the restoration of the site to its UM/km² during the period of the second renewal. previous state. ■ Submission of an annual report on activities to the Ministry of (ii) Small-scale mining exploitation permit Mines. Procedure: Application process similar to that for a mining permit. Granted for a period of three years (renewable). 3.3 What rights are required to conduct mining? Rights: Gives the title holder the exclusive right to prospection, research, mining and sale of the extracted product, within its perimeter, up to a depth of 150 metres. Mines may only be operated in accordance with the terms of (i) a mining permit, or (ii) a small-scale mining permit. Obligations: The mining permit may only be issued to a legal entity incorpo- ■ The title holder must commence mining works within 12 rated under Mauritanian law, in which the State is entitled to have a months. 10% free participation. The State is entitled to acquire a further 10% participation, for consideration.

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■ As soon as mining operations commence, the title holder As provided in question 4.1, in the context of mining activities, the must notify the Ministry of Mines of the forecast minimum legal entity must be incorporated under Mauritanian law. However, annual production. the entity can be directly or indirectly owned by a foreign entity.

3.4 Are different procedures applicable to different minerals 4.3 Are there any change of control restrictions applicable? and on different types of land? In the event of a new majority shareholder, the change in the capital There are different procedures applicable for industrial and artisanal structure of the title holder will be viewed (under the new mining quarries. In accordance with article 6 of the 2008 Mining Code (as regime) as corresponding to a transfer of the mining title as far as amended), the following are examples of those substances that are the Mauritanian mining authorities are concerned (and as may be subject to the regime applicable to quarries: sand; silica sand; gravel; inferred from article 69 of the 2012 Model Mining Convention and limestone; calcite; dolomite; common clay and argillaceous rocks article 97 of Decree n°159/2008). used for the manufacture of clay products; and other minerals found In accordance with article 97 of Decree n°159/2008, prior autho- in their natural state as a loose deposit. risation from the Mining Registry is required. Whereas under article It is to be noted that there are different procedures applicable to 69 of the 2012 Model Mining Convention the prior consent of the different types of land. In this respect, article 7 of the 2008 Mining Minister of Mines is not specifically required, if the transfer leads to Code (as amended) provides that minerals found in the continental a change of more than 10% in the title holder, the Minister of Mines shelf and in the exclusive economic zone are subject to the 2008 may limit the amount of the transfer, or oppose it altogether. Mining Code (as amended). In other cases, the minerals found are subject to the regime applicable to quarries, or to the mining regime 4.4 Are there requirements for ownership by indigenous in accordance with articles 5 and 6 of the 2008 Mining Code (as persons or entities? amended).

There are no requirements for indigenous persons. However, as 3.5 Are different procedures applicable to natural oil and regards legal entities, see question 4.1 above. gas? 4.5 Does the State have free carry rights or options to There is quite a different procedure applicable to oil and gas, as acquire shareholdings? provided by Law n°2010-033 (as amended), dated 20 July 2010, enacting the Crude Hydrocarbons Code. Research and/or production of hydrocarbons are carried out upon the basis of Under article 38(2) of the Mining Code (as amended), the mining exploration-production contracts with the State. permit may only be granted to a legal entity incorporated under The State is entitled to a 10% participation in the rights and obli- Mauritanian law in which the State possesses a 10% free participa- gations of the contractor in the research perimeter and reserves the tion. Moreover, the State reserves the right to exercise an option for right to have a participation of 10% in the rights and obligations of additional participation, for consideration, of up to a further 10% in the contractor in the production perimeter. the operating company. Procedure: The exploration and production contract results from an invitation to tender. A multidisciplinary technical committee is set 5 Processing, Refining, Beneficiation and Export up for each invitation to tender to assist the Minister in the evaluation of offers submitted. The exploration and production contract is 5.1 Are there special regulatory provisions relating to signed by the Minister on behalf of the State and by the contractor and approved by decree issued by the Council of Ministers. processing, refining and further beneficiation of mined Rights: The contractor has the exclusive right to carry out minerals? research activities within the perimeter, as defined by the contract, as well as production in the event of a commercially viable discovery Processing and beneficiation are considered under Mauritanian that has been declared and following approval by the Ministry of the mining law as being included within “mining operations” and are development plan for the discovery. not, therefore, treated separately.

4 Foreign Ownership and Indigenous Ownership 5.2 Are there restrictions on the export of minerals and Requirements and Restrictions levies payable in respect thereof?

4.1 What types of entity can own reconnaissance, In accordance with article 56(6) of the 2012 Model Mining exploration and mining rights? Convention, the State guarantees the title holder the right to export mineral substances that have been mined, produced or transformed, and to freely sell such substances. However, it is to be noted that, The Mining Code does not provide the type of entity than can carry in accordance with article 5 of Law n°2004-42 dated 25 July 2004, out prospection or exploration activities. However, only legal entities relating to financial relations with foreign countries, the exportation incorporated under Mauritanian law can carry out mining activities. of gold and other precious substances is subject to prior authorisation from the Central Bank of Mauritania. 4.2 Can the entity owning the rights be a foreign entity or As regards the payments of royalties, article 108 of the 2008 owned (directly or indirectly) by a foreign entity and are there Mining Code (as amended) provides that the title holder pays the special rules for foreign applicants? royalty on all sales or exports made. The rate of the royalty is set

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according to substance groups, as detailed in this article. For 7 Dealing in Rights by Means of Transferring example, if iron is exported, the rate depends on the price per tonne and varies between 2.5% and 4%. As far as gold is concerned, the Subdivisions, Ceding Undivided Shares and rate varies between 4% and 6.5% and depends on the price per ounce. Mining of Mixed Minerals We would point out that these rates do not apply to sales or exports that are part of a bulk sample. Further, and as regards industrial quarries and small-scale mining, the above rates are subject 7.1 Are rights to conduct reconnaissance, exploration and to certain reductions. mining capable of being subdivided?

6 Transfer and Encumbrance ■ Exploration permit: In accordance with article 17 of the Mining Code and article 33 of the Decree, exploration permits are indivisible. That being 6.1 Are there restrictions on the transfer of rights to conduct said, article 33 of the Decree provides that during the validity of reconnaissance, exploration and mining? the exploration permit, the perimeter of the latter is divisible, since the title holder is the sole holder of the different perime- ■ Exploration permit: ters that may be issued from the original permit. The title holder A request for the transfer must be lodged with the Mining may ask for the division of its perimeter into several polygons Registry. The examination procedure of the application for a at least six months prior to the renewal date. transfer is the same as that for the grant of the initial permit, As regards the procedure, the title holder submits the application except that the Mining Registry will check the date of signature form to the Mining Registry. After checking the admissibility of of the deed of transfer, and the date of grant. Indeed, the the application, the Mining Registry registers the applicant’s request for transfer must be made within 30 days of the date of name and the date of submission. If the application complies signature of the deed of transfer. If the outcome of the exam- with the provisions in force, the Mining Registry will proceed ination is favourable, the Mining Registry prepares the draft with the provisional registration of the perimeters requested on decree authorising the transfer and submits it to the Minister of the official map of the Mining Registry, which is valid for the Mines for signature. After notification of the order by the duration of the investigation. Thereafter, the procedure is the Mining Registry and upon signing the registration form of the same as that for the application of the exploration permit. A decree authorising the transfer, the Mining Registry informs the new independent permit will be granted for each of the perime- transferee of the fees to be paid and the delay within which ters. Surface area royalties and duration will be the same as for payment is to be made (i.e., 10 days). After presentation of the the initial permit. receipt of payment, the transferee signs the letter of receipt, ■ Mining permit: whose date shall be the date of the transfer of the permit. In accordance with article 17(3) of the Mining Code (as amended), ■ Mining permit: the real property rights conferred by the mining permit are divis- A request for the transfer is lodged with the Mining Registry at ible. The title holder of the permit can ask the Mining Registry least one year prior to the expiry of the permit. The examina- at least six months prior to the renewal date for the division of its tion procedure for the application for a transfer is the same as perimeters into several polygons. The procedure that applies is that for the granting of the initial permit, the difference being the same as that for the exploration permit. that the Mining Registry must check the date of signature of the deed of transfer and the date on which it is granted. The 7.2 Are rights to conduct reconnaissance, exploration and transfer request must be made within 30 days of the date of mining capable of being held in undivided shares? signature of the deed of transfer. If the outcome of the examination is favourable, the Mining Registry prepares the draft decree authorising the transfer and submits it to the Minister for Mining rights are divided into two categories: presentation to the Council of Ministers for their approval. ■ moveable rights which are indivisible; and Once the decree has been signed, the Mining Registry notifies ■ real property rights which are divisible. the transferee of the fees to be paid and the period within which Both categories of rights may be brought into a company. to do so (i.e., 15 days). After presentation of the receipt of Undivided shares may be held by a joint venture. payment of the fees, the transferee signs the letter of receipt, which date shall be the date of the transfer of the permit. 7.3 Is the holder of rights to explore for or mine a primary mineral entitled to explore or mine for secondary minerals? 6.2 Are the rights to conduct reconnaissance, exploration and mining capable of being mortgaged or otherwise secured The title holder is entitled to explore or mine for the group of to raise ﬁnance? substances that has been identified in the permit and only for those substances. Otherwise, separate permits will have to be applied for. In accordance with article 17(3) of the Mining Code (as amended), In accordance with article 17(1) of the Mining Code, the rights it is possible to have overlapping exploration permits where the conferred by an exploration permit and a small-scale mining permit substances concern different groups of substances. No overlapping are rights of limited duration, which are indivisible and may not be of mining permits is allowed (even if the substances are from farmed out. Exploration permits cannot be mortgaged or made different groups), except if the holder of the first permit gives its subject to a pledge. consent. Pursuant to article 17(3) of the Mining Code (as amended), the rights conferred by the mining permit are real property rights, which are divisible and may be farmed out. A mining permit may therefore be mortgaged but it may not be made subject to a pledge.

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7.4 Is the holder of a right to conduct reconnaissance, 9 Environmental exploration and mining entitled to exercise rights also over residue deposits on the land concerned? 9.1 What environmental authorisations are required in order to conduct reconnaissance, exploration and mining Residue deposits belong to the holder of the mining title. operations? 7.5 Are there any special rules relating to offshore For the purposes of conducting mining operations, authorisation is exploration and mining? given on the basis of an environmental impact study.

There are no specific provisions relating to offshore exploration and 9.2 What provisions need to be made for storage of tailings mining. and other waste products and for the closure of mines? 8 Rights to Use Surface of Land In the event of the closure of a mine, the title holder is under an obligation to restore the site to its previous state. For this purpose, provision 8.1 Does the holder of a right to conduct reconnaissance, may be made at the outset of operations. The provision is deductible exploration or mining automatically own the right to use the in the year that it is made, provided that the amount corresponding to surface of land? the provision is paid into an account that has been specifically opened for the purpose, in the same year or within two months of the end of the year in which the provision is made. This provision may be First, please refer to the answers under questions 2.2 and 2.3 above. supported by a guarantee or a bank guarantee and the fees for obtaining In addition, the title holder has the following rights: the guarantee will be deductible in the year in which it is made. ■ Establishment and operation of power plants, substations and power lines. 9.3 What are the closure obligations of the holder of a ■ Safety works. ■ Preparation, washing, concentration, and the mechanical, chem- reconnaissance right, exploration right or mining right? ical or metallurgical processing of extracted minerals, distillation, and the gasification of fuels. Upon the cessation of exploration works or at the end of mining ■ Storage and deposit of products and waste. operations, the title holder must declare the measures that it intends ■ Buildings for the housing and health of personnel. to take in order to comply with its obligations under the ■ Establishment of all forms of communication channels. Environment Code and with a view to the restoration of the site to its previous state. 8.2 What obligations does the holder of a reconnaissance Where a mine is being closed, the title holder must draw up a right, exploration right or mining right have vis-à-vis the detailed plan outlining what is going to be done – approval is given by the Minister of Mines following reports/opinions from different landowner or lawful occupier? authorities, including from the Ministry of the Environment. The title holder guarantees the due performance of the works to restore The obligations of the title holder include: the site. Such due performance is recorded in an Order issued by ■ obtaining the consent of the landowner (except in specified the Minister of Mines. The mine will then be deemed to be closed. cases); ■ purchasing the land if easements (i.e., rights of way) render 9.4 Are there any zoning or planning requirements applicable to normal use impossible; and the exercise of a reconnaissance, exploration or mining right? ■ compensation to be given to the landowner if the works cause damage. The Mining Code provides for the creation of the following zones: 8.3 What rights of expropriation exist? ■ “Promotional zone”: where a national public operator will conduct reconnaissance and exploration to promote the development of the mining industry, with a maximum area of 5,000 km2 As regards the title holder, and in general terms (in accordance with and a maximum duration of three years. the 2012 Model Mining Convention), the State guarantees that it will ■ “Special zone”: an area with demonstrated interest arising out of take no measures of expropriation or seize assets, except in circum- terminated, expired, cancelled, surrendered or matured mining titles. stances where it is justified and in which case the State will first pay ■ “Reserved zones”: where no mining activities are possible. the title holder a fair compensation. Notwithstanding the above, both exploration and mining permits 10 Native Title and Land Rights may be cancelled in circumstances specifically provided for in the Mining Code. As regards landowners, where the title holder and a landowner are 10.1 Does the holding of native title or other statutory unable to reach an agreement regarding either the amount of surface use rights have an impact upon reconnaissance, compensation to be paid or a proposal to buy the land in question, the State may expropriate the land, provided that fair compensation exploration or mining operations? is first paid to the landowner. No (other than the rights of landowners referred to above).

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11 Health and Safety ■ Remuneratory tax: 2,000,000 ouguiyas – exploration permit; 10,000,000 ouguiyas – mining permit. ■ Exoneration from the BIC tax for 36 months as from the 11.1 What legislation governs health and safety in preliminary production phase (and then no more than 25%). ■ Exoneration from the fixed minimum tax on any sale or export for mining? 36 months as from the beginning of the preliminary production phase (and then at half the rate of the fixed minimum tax for the The following legislation governs health and safety in mining: accounting period with a ceiling of 1.75%). ■ The Labour Code. ■ The Public Health Code. 14.2 Are there royalties payable to the State over and

above any taxes? 11.2 Are there obligations imposed upon owners, employers, managers and employees in relation to health and An annual surface royalty (not deductible) is payable: safety? ■ for exploration permits, at 2,000 ouguiyas per km² for the first year, and 24,000 ouguiyas per km² for the ninth year; and The obligations imposed include the following: ■ for mining permits, at 50,000 ouguiyas per km². ■ Informing the Labour Inspector of all accidents that occur at A mining royalty is payable at an escalating amount (based upon sale work, or of all work-related diseases. price): this being 6.5% where the price is more than $1,800 per ounce. ■ Making medical services available to employees. ■ Use of machinery that has appropriate safety standards. 15 Regional and Local Rules and Laws ■ Indicating on unsafe products the nature and level of danger. ■ Compliance with provisions relating to specific diseases. 15.1 Are there any local provincial or municipal laws that 12 Administrative Aspects need to be taken account of by a mining company over and above National Legislation?

12.1 Is there a central titles registration ofﬁce? Laws are national. However, in the execution of such laws, local town councils can adopt regulations relating to the administration Yes – the Mining Registry in Nouakchott. of their respective municipalities, which should be taken into account by mining operators that operate in the territory of these 12.2 Is there a system of appeals against administrative municipalities. decisions in terms of the relevant mining legislation? 15.2 Are there any regional rules, protocols, policies or The administrative chamber of the Supreme Court hears, at first and laws relating to several countries in the particular region that last instance, appeals on grounds of abuse of power, or on the need to be taken account of by an exploration or mining legality of decisions as regards individual or regulatory acts but also company? on interpretation and disputes relating to exploration permits.

13 Constitutional Law No, there are not.

16 Cancellation, Abandonment and 13.1 Is there a constitution which has an impact upon Relinquishment rights to conduct reconnaissance, exploration and mining?

16.1 Are there any provisions in mining laws entitling the The Mauritanian Constitution has both a direct and indirect impact on mining activities. holder of a right to abandon it either totally or partially?

13.2 Are there any State investment treaties which are The holder of an exploration permit can abandon its rights in the applicable? following situations: ■ Pursuant to article 55 of the 2008 Decree, the exploration permit may be terminated at the request of the title holder. The request Mauritania has signed investment treaties with countries such as (which is sent to the Mining Registry) will only be valid if the Switzerland, Algeria, Tunisia and Belgium. acknowledgment of receipt for the payment of duty is attached. ■ In accordance with article 33 of the 2008 Mining Code (as 14 Taxes and Royalties amended), the holder of an exploration permit can abandon its rights provided it has paid any fees due and provided it has sent a written notice to the competent authority. The exploration 14.1 Are there any special rules applicable to taxation of permit is deemed abandoned as from the day the abandonment exploration and mining entities? is registered in the public register of mining titles. The notice of the abandonment is published in the Official Journal. Yes – as provided for under the mining legislation (and the Model ■ The holder of an exploration permit can ask the Mining Registry Mining Convention), including: for the reduction of its permit at least six months before the date of the renewal of the latter (article 32 of the 2008 Decree).

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The holder of a mining permit can abandon its rights in the ■ If the works carried out within the perimeter of the permits are following cases: less than the minimum costs provided for in article 26 of the ■ In accordance with article 109 of the 2008 Decree, the mining 2008 Decree (i.e., 15,000 UM/km2 for the first period of validity, permit may be terminated if the holder sends a request to the 20,000 UM/km2 during the first renewal and 30,000 UM/km2 Mining Registry at least 18 months before the expiry date. during the second renewal). Pursuant to article 48 of the 2008 Mining Code (as amended), ■ If the annual surface royalty is not paid within the prescribed period. the holder of a mining permit may abandon its rights if it has ■ If mining activities are carried out in an area covered by an sent a written notice to that effect to the Ministry of Mines and exploration permit. it has met the conditions provided by the Mining Code. The A mining permit can be cancelled in the following situations: mining permit is considered abandoned as from the date of the ■ If the title holder does not possess the financial and technical order issued by the Minister of Mines. capacity to carry out the mining works, it will have to regularise ■ The title holder can ask the Mining Registry for the reduction the situation by one of the two solutions described in question of its permit at least six months prior to the date of the renewal 2.3, within a period of six months following the notification by of the latter (article 94 of the 2008 Decree). the Minister of Mines that it does not in fact meet the criteria required. Once these six months have been exceeded the mining 16.2 Are there obligations upon the holder of an permit may then be revoked. ■ If the applicant for a mining title does not appear before the exploration right or a mining right to relinquish a part thereof Mining Registry within 15 days of receipt of the letter of noti- after a certain period of time? fication with proof that the taxes owed have been paid (article 85 of the 2008 Decree). No, there are not. ■ In cases of serious breaches of the provisions of the Mining Code by the title holder, the Minister of Mines can, based upon the 16.3 Are there any entitlements in the law for the State to recommendation of his technical departments, suspend activities within the area of the permit. Further, if the breaches are not cancel an exploration or mining right on the basis of failure to remedied within the prescribed period of time, the permit may be comply with conditions? definitively withdrawn (article 115 of the 2008 Decree). ■ If the title holder of a small-scale mining permit consistently In accordance with article 24 of the 2008 Mining Code (as amended) fails to comply with the health and safety obligations relating to and article 60 of the 2008 Decree, an exploration permit can be personnel, and this notwithstanding, measures will be prescribed cancelled in the following situations: by the authorities. ■ In the event of a serious breach of the provisions of the Mining ■ Finally, the permit will be revoked if the holder of a small-scale Code by the title holder, the Minister of Mines may, upon the mining permit has not begun mining activities within a period basis of the recommendation of his technical departments, of 12 months. suspend activities within the perimeter of the permit. If the breaches are not remedied within the prescribed period of time, the permit may be definitively withdrawn.

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Mexico Mexico

RBMexico-Law-Abogados Enrique Rodríguez del Bosque

1 Relevant Authorities and Legislation 1.3 Describe any other sources of law affecting the mining industry.

1.1 What regulates mining law? All laws and other norms and regulations are mentioned in question 1.1 above. These laws affect the industry as they regulate the activities The Mexican Mining Law, its Regulation (collectively, the Mining the mining companies conduct in order to stake, maintain, explore Law) and Article 27 of the Mexican Constitution regulate mining and exploit mining concessions and to process and commercialise issues, in particular the exploration, exploitation and beneficiation minerals; they also regulate environmental aspects in connection with of minerals or substances which in veins, strata, masses or beds the exploration and exploitation of the mining concessions. Other constitute deposits of which the nature is different from the compo- sources of law affecting the mining industry are: international treaties; nents of land. The Mining Law and Mexican Constitution also administrative regulations on Federal Laws; and Court Resolutions. provide for the mining of: salt directly formed by marine waters from actual seas – surface or underground, naturally or artificially – 2 Recent Political Developments and salts and by-products thereof, except petroleum and other solid hydrocarbons, liquid or gaseous, which are also found underground; radioactive minerals; substances contained in suspension or dissolu- 2.1 Are there any recent political developments affecting the tion by groundwater, provided they do not come from a mineral mining industry? deposit different from the components of the land; rocks or decom- posed products that can only be used for the manufacturing of construction materials or are intended for this purpose; and products The new President has not shown a significant interest in the mining derived from the decomposition of rocks when their exploitation is industry. The President is concerned about the damage that mining through opencast work, and the salt comes from salt formed in activity could cause to the environment, therefore we believe that an endorheic basins. environmental survey into mining activity will be more prevalent. The application of the Mining Law and its Regulations is the responsibility of the Federal Executive (President’s Office) through 2.2 Are there any speciﬁc steps the mining industry is taking the Ministry of Economy. The following laws govern all ancillary in light of these developments? activities to the mining activities: the Mexican Constitution; the Federal Environmental Law; the Federal Water Law; the Federal Participants of the mining industry are acting through the Mexican Agrarian Law (social tenure of most of the lands where mining Chamber of Mines and other organisations to build a stronger rela- projects are located); Federal Tax Code, State Civil Codes applicable tionship with the Government and Congress, the aim being to get on lands tenure; the Federal Commercial Code; Federal Army better conditions for the industry and support from the Regulations for the storage, transport and use of explosives; Federal Government, such as: (i) reducing the insecurity that some areas of Labour Laws; Municipal regulations for the use of the lands; and the country have experienced and that have affected mining activity; Federal Environmental Norms. (ii) promoting an immediate deduction of investment in mining; and

(iii) prompting tax authorities to refund value-added tax; etc. 1.2 Which Government body/ies administer the mining industry? 3 Mechanics of Acquisition of Rights

The Dirección General de Minas (Mexican Mines Bureau), formed under the Ministry of Economy administers the mining industry in Mexico. 3.1 What rights are required to conduct reconnaissance? Notwithstanding the foregoing, there are other Government bodies that can also administer regulatory regimes relating to mining activ- Understanding reconnaissance as the preceding stage to conducting ities: Secretaría del Medio Ambiente y Recursos Naturales (Environmental mining minimum exploration activities prior to the issuance of a Ministry); Comisión Nacional del Agua (Waters Commission); Secretaría mining concession, an informal permission from the landowner de la Defensa Nacional (Army Ministry); Secretaría del Trabajo y Previsión where the mining concession is located, or where the area is Social (Ministry of Labour and Social Welfare); and the States’ Public proposed to be located, is required to conduct such activities. In the Registries of Real Estate and the National Agrarian Registry. case that the areas of reconnaissance are already covered by an existing mining concession, the permission of the existing mining concessionary is also needed.

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3.2 What rights are required to conduct exploration? Also, social entities which are not commercial Companies and which do not allow foreign investment participation can own mining rights, such as Communities and Ejidos (social land granted to a In order to conduct exploration activities, a mining concession is group of individuals or communities). required to cover the proposed exploration area; or a written agreement executed with the recorded owner of the mining concession before the Public Registry of Mining (“PRM”) (formalised before a 4.2 Can the entity owning the rights be a foreign entity or Mexican public notary and registered at the PRM) to explore the area owned (directly or indirectly) by a foreign entity and are there is needed. In addition, permission or an agreement executed with special rules for foreign applicants? the owner or possessor of the lands where the mining concession is located, and an Environmental Impact Manifest authorised by the Foreign entities cannot directly own mining concessions – this must Environmental Authority, are needed. be done through their Mexican subsidiaries. As mentioned above, A mining concession allows its holder to conduct exploration, the mining industry has no limits for foreigners to participate in the exploitation, mining and development activities. ownership of Mexican mining companies; Mexican mining compa-

nies may be owned 100% by foreign investors, which can be either 3.3 What rights are required to conduct mining? individuals or entities. Mexican mining companies that are 100% (or less) owned by foreigners are considered Mexican entities and have In order to conduct exploitation activities, a mining concession is the same rights as a Mexican doing business. required to cover the proposed exploration area; or a written agreement Mexican companies with foreign investment shall be registered in executed with the recorded owner of the mining concession before the the Foreign Investment Registry, notify to the Mexican Foreign PRM (formalised before a Mexican public notary and registered at the Investment Authority of changes in the company capital, as well as PRM) to exploit the area is needed. In addition, permission or an agree- to provide periodical reports (this is mainly for statistics purposes); ment executed with the owner or possessor of the lands where the this has no impact on an application for a mining concession. mining concession is located, an Environmental Impact Manifest authorised by the relevant Environmental Authority and permission from the 4.3 Are there any change of control restrictions applicable? Army Ministry to store, transport and use explosives are needed. If the mining concessions are located in a forest reserve, a change No, there are not. of use of the land is required.

A water concession is needed for activities beyond the extraction of minerals activities, such as for a processing plant, and a permit 4.4 Are there requirements for ownership by indigenous for the discharge of water is also required in case such processing persons or entities? activities are conducted in the mine. In the acquisition of mining concessions, if there are simultaneous 3.4 Are different procedures applicable to different minerals applications for the acquisition of a mining concession, indigenous and on different types of land? communities living where the relevant mining concession is located have preferred rights to acquire the mining concession. The Mexican Government has subscribed, among other treaties, Different procedures are applicable for radioactive minerals, which the Convention for Protection of the Indigenous and Tribal People are reserved for exploration and exploitation by the Mexican Federal (Convention No. 169 – ILO). In accordance with this Convention Government. Please also refer to question 3.5 below. and other treaties, Mexico recognises the human rights of indige- Radioactive minerals are reserved for exploration and exploitation nous people grouped in communities. Some of these treaties state by the Federal State. Regarding the types of lands, in Mexico there that the issuance of mining concessions is subject to a “Consultation are: private lands; Government-owned lands (Federal, Estate and with Indigenous Peoples and Communities”. However, there are no Municipal); and social lands (Ejido and Communal lands). Please local laws or local rules (“legislation”) that include the mechanisms refer to question 8.1 hereinbelow. to implement the consultation, therefore the Mines Bureau has not

implemented the consultation while granting mining concessions. 3.5 Are different procedures applicable to natural oil and gas? Notwithstanding the foregoing, recently, a constitutional rights protection claim (amparo) was filed by a communal land (Ejido) inte- Gas derived from the exploitation of mineral coal, oil and solid or grated by members of an indigenous community located in the State liquid or gaseous hydrocarbons are reserved for the exclusive of Puebla, against the Mines Bureau, the Ministry of Economy, the exploitation of the Mexican Federal Government. President demanding the cancellation of mining concessions granted to a mining Company for not conducting a previous consultation, 4 Foreign Ownership and Indigenous Ownership using as grounds for the demanded cancelation that the beforemen- tioned treaties were signed by Mexico and then ratified by the Senate, Requirements and Restrictions converting them as enforceable applicable laws, as provided in the Mexican Constitution and demanded the Mexican Congress to 4.1 What types of entity can own reconnaissance, exploration amend the Mexican Mining Law to include the indigenous consultation as a requirement to grant mining concessions. A District and mining rights? Court on Civil, Administrative and Labour Amparo Proceedings and Federal Lawsuits in the State of Puebla, Mexico, resolved that: the Only Mexican Companies registered before the RPM can own mining Mexican Federal Congress shall amend Mining Law to incorporate rights to explore and exploit mining concessions. In the capital of provisions on the right to consultation and to obtain the free and the aforementioned Companies foreign investment can participate up informed consent of indigenous people and communities. to 100%. These Companies must be incorporated under Mexican Additionally, the Mexican Mines Bureau, the Economy Ministry law and have their corporate domicile within the country. and the President were ordered to cancel two mining concession titles

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that they granted in 2003 and 2009, respectively, whose surface areas are For the exportation of iron, exporters are required to be the partially located on land owned by Ejidos, who have self-determined as owners or the operators of the mining concession from where the an indigenous community. A recurso de revision proceeding can be applied minerals are extracted. In the event the exporters are the operators to the abovementioned indigenous community’s Amparo filed by the of a mining concession, they must have an exploitation agreement Mines Bureau, the Economy Ministry and the mining Company affected, duly recorded before the PRM. in order to revert the Amparo resolution. The Mexican Government has subscribed to some international 6 Transfer and Encumbrance conventions in which rights to indigenous communities are contained, including the following: ■ Indigenous and Tribal Peoples Convention (No. 169 – 6.1 Are there restrictions on the transfer of rights to conduct International Organization of Labor). reconnaissance, exploration and mining? ■ Fund for the Development of Tribal Peoples in Latin America and the Caribbean. There are no restrictions whatsoever on the transfer of mining ■ Performance Standards on Social and Environmental concessions and rights thereto. Agreements assigning or generating Sustainability of the International Financing Corporation. rights over mining concessions must be notarised. The transfer of ■ Equator Principles. mining concessions or rights thereunder shall produce legal effects

against third parties, the Ministry of Economy and other govern- 4.5 Does the State have free carry rights or options to mental authorities upon their registration before the PRM. Owners acquire shareholdings? of mining concessions shall be only recognised as so once they are recorded as concessionaires before the PRM. No, it does not. A transfer or assignment will be null and void when made to an unqualified person under the Mining Law. However, the Mining Law 5 Processing, Refining, Beneficiation and Export provides that a transfer to an unqualified person will not be null and void when it derives from an adjudication in payment of credits or inheritance, and provided further that the rights are then transferred 5.1 Are there special regulatory provisions relating to to a capable party within 365 calendar days after such adjudication. Government consent is not required in order to transfer a mining processing, refining and further beneficiation of mined concession, or in the event of a change of control of its holder or parent. minerals? 6.2 Are the rights to conduct reconnaissance, exploration There are environmental laws, rules and Technical Norms (“NOMS”) and mining capable of being mortgaged or otherwise secured to comply with in order to build and operate plants for the processing and beneficiation of mined minerals. The Mexican Official Standard to raise finance? NOM-141-SEMARNAT-2003, sets the procedure for preparation, design, construction, operation and post-operation of mine tailings Mining concessions and rights can be pledged and even mortgaged dams. as a guarantee to raise money. All guarantees over rights of mining For the exploration and exploitation of tailings, no mining conces- concessions must be registered at the PRM in order to have full effect sion is required. before third parties. Creditors often require the registration of the There are no specific rules under the Mining Law for the owner- guarantees over mining concessions at the Movable Guarantees ship of tailings. If tailings result from the ore beneficiated by the Registry (Registro Unico de Garantías Mobiliarias). mining concession holder, they belong to the mining concession holder. In the case of tailings derived from the beneficiation of ore 7 Dealing in Rights by Means of Transferring in a third parties’ beneficiation plant, it usually belongs to the owner Subdivisions, Ceding Undivided Shares and of the beneficiation plant. In Mexico there are ancient mining works that produced tailings. Mining of Mixed Minerals Those tailings have no relationship with today’s mining concessions; for these, in accordance with civil law (Código Civil Federal), they 7.1 Are rights to conduct reconnaissance, exploration and belong to the owner of the lands where such tailings are located. Furthermore, dumps (terreros), in accordance with the Mexican mining capable of being subdivided? Mining Law, belong to the mining concession holder, unless it is evident that a particular terrero comes from another mining conces- Yes. The co-ownership of a mining concession (the co-ownership sion. granting different percentages to the co-holders) may exist. A There are no restrictions on the beneficiation of minerals in a percentage of a mining concession may be transferred to a third different location from where the minerals were extracted. party through an Assignment Agreement. Co-holders shall have the There are no provisions which prohibit the export of unbenefici- right of first refusal to acquire the transferable interest. ated minerals. Local beneficiators do not have pre-emptive rights to A mining concession may also be subdivided through an admin- beneficiate minerals. istrative proceeding conducted before the Mexican Mines Bureau.

5.2 Are there restrictions on the export of minerals and 7.2 Are rights to conduct reconnaissance, exploration and levies payable in respect thereof? mining capable of being held in undivided shares?

In general terms there are no restrictions. All import and export If a mining concession is held by two or more parties through a joint processes require a permit. However, in order to export iron, gold, venture, the rules of the joint venture shall apply. If no joint venture silver and copper minerals, the producing-exporting company or rules exist, the right is undivided. individual must be registered in a Mining Sectorial Registry for the The co-ownership of a mining concession may be owned by: Mexican Exportation of such minerals. Commercial Companies; Mexican individuals; and social entities.

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7.3 Is the holder of rights to explore for or mine a primary In accordance with Mexican Mining Law, the mining activities should be preferred over any other use or exploitation of the land where mineral entitled to explore or mine for secondary minerals? the mining concessions are located (except in the case of exploration and exploitation of oil and other hydrocarbons and the performance A mining concession holder may explore and exploit all minerals of power generation activities in which activities shall be preferred and/or substances specified in the Article 4 of the Mining Law, over the mining activities; and in case a mining concession and an except for those reserved to be exploited by the Mexican Federal assignation for the exploitation of oil and a mining concession Government as mentioned in questions 3.4 and 3.5 above. coexist, the mining concession holder must comply with certain technical specifications), therefore the Mining Law provides the rules 7.4 Is the holder of a right to conduct reconnaissance, under which a mining concession holder may require the expropri- exploration and mining entitled to exercise rights also over ation or the temporary occupation of the land when it does not reach an agreement with the land owner. In case of expropriation, residue deposits on the land concerned? the consideration is payable based on an appraisal made by an agency of the Mexican Government. Please refer to the answer to question 5.1 above. The company has the right to explore and exploit the minerals underground because of the mining claim rights granted by the 7.5 Are there any special rules relating to offshore Federal Government (underground rights); surface rights are exploration and mining? honoured to third parties as explained in question 8.1. Under the Mining Law, there is no obligation for the holder of a mining right to share any rights over the exploration or exploitation with the Yes, there are special rules. It is necessary to comply with all rules landowners or lawful occupier, but somehow a legal consent should governing shores, lake shores, water deposits and rivers. exist between the two of them to be able to prove legally to the Regarding mining activities in the exclusive economic zones and Environmental Authorities that the company has the legal occupancy the continental shelf, Mexico is party to several international treaties of the surface rights and the legal use of the land. It is also impor- which determine, together with the Mexican Constitution, the limits tant to have a licence in order to develop the project in harmony of exclusive economic zones, which mining activities shall be with the community. governed in accordance with Mexican laws, and activities in the Please also consider that the Ministry of Economy may revoke continental shelf to be conducted in accordance with international the temporary occupation agreement or to revert the surface expro- treaties. priated in the following cases: (i) if the mining works to develop are not started within the 365 8 Rights to Use Surface of Land days following the issuance of the relevant resolution; (ii) if the mining works are suspended for a year or more; (iii) if the surface granted is destined to a use other than mining activity; 8.1 Does the holder of a right to conduct reconnaissance, (iv) if the concessions holders do not pay the consideration deter- exploration or mining automatically own the right to use the mined in the relevant resolution of temporary occupation or surface of land? expropriation; (v) if the mining concession is nullified or cancelled; and The mining rights covered under a concession do not include direct (vi) by a Court resolution. ownership or possession rights over the surface where a mining concession is located. 8.3 What rights of expropriation exist? The use of the lands may be obtained through direct ownership or possession of lands (e.g. lease agreements/temporary occupation In accordance with Mexican mining legislation, the owner of a agreements/easement agreements, expropriation through an admin- mining concession or the operator of it with an agreement duly istrative proceeding). recorded before the PRM, may require the expropriation of the The Mexican Constitution recognises the following surface rights: surface where the mining concession is located under the rules stated A. Bienes Comunales (social land granted to aborigines). in the Mexican Expropriation Law. If the expropriation is of lands B. Ejidos (social land granted to a group of individuals or commu- owned by Ejidos or Agrarian Communities, the process is carried out nities). before the Agrarian Authorities and under the rules of the Mexican C. National Lands. Agrarian Law. Please also refer to question 8.2 above. D. Zonas Federales (federal areas, beaches and river courses). E. Private Property. 9 Environmental The Agrarian Law governs the property rights mentioned in sections A through to C above. Said lands can be legally occupied or acquired by private parties as provided in the Agrarian Law. 9.1 What environmental authorisations are required in order A concession holder may acquire all property rights mentioned to conduct reconnaissance, exploration and mining above. Typically, the consideration payable for the lands is agreed between the parties. The Mining Law provides the rules under operations? which a mining concession holder may require the expropriation or the temporary occupation of the land when it does not reach an Each stage requires an authorisation and is subject to different agreement with the landowner. In case of expropriation by the requirements. Mexican Government, the consideration is payable based on an The prospective and exploration stage requires a Preventive appraisal made by an agency of the Mexican Government. Report where it is justified that activities undertaken comply with the Mexican official standard number 120-SEMARNAT-2010, which 8.2 What obligations does the holder of a reconnaissance establishes the specifications for environmental protection for direct mining exploration activities. right, exploration right or mining right have vis-à-vis the The operation stage requires the submission of an Environmental landowner or lawful occupier? Impact Statement (“MIA”) and a request for authorisation for the

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Change of Use on Forest Land (“CUSTF”), or the requirement to hazardous substances are used; (ii) if hazardous waste is generated; qualify for the benefit of the Secretarial Agreement which establishes and (iii) another, contained in the resolutions of the environmental the possibility of the unified process through the presentation of the impact authorisation, for the fulfilment of obligations. Unified Technical Paper (“DTU”). In any case, the MIA or the DTU must contain a risk assessment 9.4 Are there any zoning or planning requirements applicable because the operation stage is considered a high-risk activity. Also, to the exercise of a reconnaissance, exploration or mining it is necessary to prove compliance with the Official Norm, NOM- 141. In case of the leaching of gold, silver and copper, it is right? necessary to prove compliance with the NOM-155 and -159. For the operation stage it is also necessary to register as a Yes, there are zoning requirements for nature-protected areas. hazardous waste generator, and to register a Hazardous Waste Management Plan according to the NOM-157 and a Programme for 10 Native Title and Land Rights the Prevention of Accidents (“PPA”). For air emissions issues, a Single Environmental License (“LAU”) and a Report on Releases and Transfers of Pollutants (“COA”) is required. It is also necessary to 10.1 Does the holding of native title or other statutory prove compliance with the Emissions Standards (NOM-043 for surface use rights have an impact upon reconnaissance, particular matters; and NOM-085 for combustion and other matters). exploration or mining operations?

9.2 What provisions need to be made for storage of tailings Please refer to the answer to question 4.4. and other waste products and for the closure of mines? The land native titles are described in question 8.1, and for each title there are different types of rights over the land use, such as Regarding the restrictions for storage of tailings or waste dams, there common land use, parcel land (lots), human settlement or land squat- is an Official Mexican Rules (Norma Oficial Mexicana) NOM-141- ters (possessors). SEMARNAT-2003, which establishes the procedure for characterising All of the land native titles and surface rights have to be legally the tailings, as well as the specifications and criteria for the charac- acquired or occupied to have access to the land for exploration terisation and preparation of the site, project, construction, and/or exploitation for mining purposes when the activities are operation and post-operation of tailings dams. conducted by a different entity than one of those mentioned in These facilities are inspected by authorities quite often; there are points A and B of question 8.1 above. no specific periods for such inspections. The possession by Communities and Ejidos groups of the surface In addition, there is an obligation to get a permit from the where a mining concession is located may be transferred to private authority Programme for the Prevention of Accidents (“PPA”); in entities. The consent of those groups is needed to conduct mining certain cases, to submit a Risk Assessment, to register the Hazardous activities where those groups own or possess the lands where mining Waste Management Plan, to have environmental insurance and to activities will be conducted. provide notice to the authority in case of emergencies, accidents or loss of hazardous waste. 11 Health and Safety For the closure of mines, there are two different forms of closure: 1. Closure notification for hazardous waste control. 2. Closing Programme for the operation of the mine. 11.1 What legislation governs health and safety in The first one needs the authorisation of the Contaminated Soil mining? Remediation Programme. The second needs the authorisation of the Closure and Closing Programme. The principal health, safety and labour laws pertaining to the mining industry are: 9.3 What are the closure obligations of the holder of a ■ Federal Labour Law. reconnaissance right, exploration right or mining right? ■ Federal Social Security Law. ■ Federal Regulations on Safety, Health and Work Environment. ■ There are a number of obligations to comply with for the closure Official Regulation NOM-023-STPS-2012, Underground and of a mine. However, the specifications depend on the Closing Open Pit Mines – Safety and Health Conditions at Work. ■ Programme authorised by the Environmental Authority for the Official Regulation NOM-032-STPS-2008, Security for under- specific mine. Basically, the obligations relate to: safety (stability of ground coal mines. the lands where mining activities were conducted); the closing of all The principal regulatory entity is the Ministry of Labour and the entrances to underground mines; and control of hazardous Social Welfare. material and waste. Remediation works are performed in Mexico just in case there is 11.2 Are there obligations imposed upon owners, employers, soil contamination. Otherwise, a refurbishing process must be managers and employees in relation to health and safety? performed. Those responsible for activities that involve generation and management of hazardous materials and waste that cause The main obligations fall on the operator of the mining project. contamination of sites, are required to carry out remediation works. Usually, the operator is a Mexican mining company which, through If hazardous substances considered highly risky activities are used the management, must comply with safety and health dispositions. during the exploitation phase, it is necessary to have an environmental In case of negligence of the management to provide safe and healthy risk insurance, that will be required in the corresponding resolution of conditions as provided by law, the Board Members may be personally the Environmental Impact Assessment, as a condition to start oper- responsible for the damages suffered by workers or third parties in ating activities. Three insurance or guarantees may be required: (i) if the mine. This responsibility may result in criminal charges.

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12 Administrative Aspects i) NAFTA. The purpose of NAFTA and other Commercial Treaties was to eliminate most of the duties imposed on the exportation and importation of goods. 12.1 Is there a central titles registration ofﬁce? The Government of the United States of America (the USA), the Mexican Government and the Government of Canada have resolved to replace the NAFTA. The new Agreement between Yes. The central titles registration office is the PRM, which depends the USA, Mexico and Canada (the “USMCA”) has not yet entered on the Mexican Mines Bureau. into force between the Parties to it. Each Party shall notify the In accordance with the Mining Law, all acts, agreements and other Parties, in writing, once it has completed the internal proce- contracts related to the transmission of mining concessions and dures required for the entry into force of this new Agreement. rights thereto shall be registered before the PRM. Promises to The new wording of this Agreement does not contemplate taxes execute an agreement, liens, contractual obligations, royalties to be imposed to the exportation and importation of the affecting mining concessions, etc., must also be registered before this minerals provided in the Mining Law. Registry. ii) Mexico and Japan Free Trade Agreement: With this agreement, In addition, certain agreements for use of the lands where mining Mexican companies will have zero rate for the exportation of concessions are located (temporary occupation agreements/easements up to 95% of the goods exported to Japan, including, among agreements, etc.) may be registered before the PRM. The surface others, minerals. covered by such agreements shall be entirely covered by a mining Mexico will reduce duties in the upcoming years for up to 44% concession in order for these kind of agreements to be registered of goods imported from Japan, and among others, goods with before this Registry. electronic and steel components. Any person may consult the PRM and request, at their expense, iii) Mexico and Chile Free Trade Agreement. The agreement certified copies of their entries and documents that relate to them, provides the opportunity to participate as a supplier of mining and of the absence of a registration or subsequent entries in relation industry inputs with a tax rate of 0% between the parties for to a particular entry. chemical products for the flotation of minerals, and other processes performed in the mining industry including leachates, 12.2 Is there a system of appeals against administrative depressants, foaming agents, flocculants, sodium cyanide, decisions in terms of the relevant mining legislation? sodium pentasulfide, among others.

The concessionaires have a Review Action (an administrative appeal) 14 Taxes and Royalties against the resolutions of the relevant authorities that they may consider illegal. Also, concessionaires have the right to appeal any 14.1 Are there any special rules applicable to taxation of unlawful act made by the authority before the courts. In the case that an action was brought to the Mexican Mines exploration and mining entities? Bureau, the Bureau may rule ratifying, revoking or modifying the resolution appealed through the Review Action. This proceeding Yes, a special mining duty is payable in accordance with the Mining shall be conducted in terms of the Federal Law of Administrative Law and the Federal Duties Law. Mining concessionaires must pay, Procedure (Ley Federal del Procedimiento Administrativo). on a semi-annual basis, governmental mining duties, the payable In the case of proceedings brought by concessionaires through amounts of which depend on: (i) the date on which the title docu- courts, the court is the institution that shall rule about the action ment of a mining concession was registered before the PRM (the made by the authority. A court proceeding is feasible against the older the mining concession, the more expensive the governmental resolution of the Mines Bureau of the Review Action. mining duties); and (ii) the surface (number of hectares) of the mining concession (the “Governmental Mining Duties”). 13 Constitutional Law Furthermore, in accordance with Article 268 of the Federal Duties Law, holders of mining concessions shall pay, on a yearly basis, the 7.5% of the positive difference that results from the 13.1 Is there a constitution which has an impact upon income of the sale of the minerals extracted from a mining conces- rights to conduct reconnaissance, exploration and mining? sion minus the authorised deductions (the “Governmental Royalty”). Payment of this Governmental Royalty must be made before 31 Article 27, paragraphs 4 and 6, of the Mexican Constitution states that March of the following year in which the sale of minerals happened. the Mexican Nation is the owner of minerals and substances that, in In accordance with Article 270 of the Federal Duties Law, in addi- veins, ledges, masses or beds, constitute deposits, the nature of which tion to the abovementioned Governmental Royalty, mining are different from the components of the earth. The use and exploita- concessions holders that commercialise gold, silver or platinum shall tion of these minerals and substances specified in the Mexican pay, on a yearly basis, 0.5% of the income for the sale of such Constitution and in the Mining Law, in its Article 4, as we mentioned minerals (the “Extraordinary Governmental Royalty”). before, may be granted through a mining concession to Mexican indi- Finally, the mining concessions holders that do not perform and viduals and companies organised under the laws of Mexico. verify exploration and/or exploitation works during two consecutive The Mexican Constitution protects the owners of mining conces- years, during the first 11 years of seniority counted from their sions, for all Mexican Authorities, from unlawful acts which may issuance, shall pay on a semiannual basis, an additional 50% of the harm the rights of a legal owner of a mining concession. corresponding Governmental Mining Duties in accordance with the quotas stated in the Federal Duties Law or 100% if the concession’s seniority is over 11 years. 13.2 Are there any State investment treaties which are applicable? 14.2 Are there royalties payable to the State over and above any taxes? The Mexican state has several bilateral agreements with other countries that contemplate certain matters related to the mining industry: Please refer to question 14.1 above.

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Likewise, in accordance with the Mining Law, mining concessions may 16 Cancellation, Abandonment and be granted exclusively to Mexican persons or to Mexican companies, and through assignations (for mining concessions, held by the Government, Relinquishment which, once they are explored, are sold to private entities by way of auctions) from the Mexican Geological Service (“SGM”), the owner of 16.1 Are there any provisions in mining laws entitling the assignations which depends on the Mexican Federal Government. Once a title document for a mining concession acquired from the SGM holder of a right to abandon it either totally or partially? is issued, this title document shall state the royalty amount payable to the Mexican Government as consideration for the exploration activities and Yes; in accordance with Article 19 of the Federal Mining Law, a discoveries made by the SGM. This royalty is payable to the SGM. mining concession holder is entitled either to abandon its mining Concessionaires that own mining concessions derived from assig- concession or to reduce it. In each case, an administrative nations of the SGM must submit semiannual reports containing works proceeding should be conducted before the Mexican Mines Bureau. and production in the mining lot covered by the mining concession, and these affect the payment of the royalties payable to the SGM. 16.2 Are there obligations upon the holder of an

exploration right or a mining right to relinquish a part thereof 15 Regional and Local Rules and Laws after a certain period of time?

15.1 Are there any local provincial or municipal laws that No, there are not. need to be taken account of by a mining company over and above National Legislation? 16.3 Are there any entitlements in the law for the State to cancel an exploration or mining right on the basis of failure to No, there are not. Exploration, exploitation, and beneficiation of comply with conditions? ore activities ruled by the Mexican Mining Law, which is Federal, likewise all mining activities are listed in the catalogue of activities ruled The State may only cancel a mining concession through the corre- by the Federal Environmental Law; however, ancillary activities of sponding administrative proceeding in the following cases: (i) in case mining companies which are not under the aforementioned cata- a concession holder exploits minerals or substances not specified in logue are ruled by local legislations. Article 4 of the Federal Mining Law; (ii) in case it does not pay the Notwithstanding the foregoing, an ecological tax approved in consideration and the royalties payable to the SGM if it acquired its 2016 by the State Congress of Zacatecas started its application in mining concession from the SGM (please refer to question 14.2); (iii) 2017. The ecological tax affects, among others, the Mining in case a mining concession holder is no longer entitled to own Companies conducting exploration and exploitation activities. mining concessions (i.e. a Mexican Company becomes a Foreign Zacatecas State is the largest silver producer in Mexico. The Mining Company); (iv) in case the concession holder does not properly Activities and the Environmental Laws are governed by Federal laws; comply with the surface fees payable in accordance with the Federal therefore, the Zacatecas environmental tax has been challenged by Mining Law and the Federal Duties Law; or (v) in case it does not Companies, Unions and the same Federal Mexican Government, perform and verify exploration and/or exploitation works through however, the Mexican Supreme Court (Suprema Corte de Justicia de la the filing of work assessment reports. Also, please be informed that Nación) has validated the legality of the Zacatecas State ecology tax. the concessions holders that conduct the exploitation of coal shall comply with certain additional rules and in case of incompliance of 15.2 Are there any regional rules, protocols, policies or them, the Mexican Mines Bureau may be entitled to cancel such laws relating to several countries in the particular region that mining concessions. need to be taken account of by an exploration or mining A judicial resolution may also order the cancellation of mining concessions. Please refer to the answer to question 4.4. company?

No, there are not. However, please refer to question 4.4 regarding the consultation with Indigenous Peoples and Communities.

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Enrique Rodríguez del Bosque. Born: Mexico City. Education: Law Degree, Instituto Tecnológico Autónomo de México (“ITAM”) 1985. Training NAFTA Diploma at ITAM in collaboration with the Ministry of Economy. Tax Law Diploma at Universidad Nacional Autonoma de Mexico. Negotiation and Leadership Program at Harvard Law School 2013. Work positions: Luismin, Mexico. Law student, 1982–1985. Practising General Corporate and Finance Law, Mining Law and Transactions. Creel Abogados: Associate Lawyer 1986–1993. Practising General Corporate and Finance Law, Mining Law, Transactions and Joint Ventures. RBMexico-Law-Abogados, Mexico: Founding Partner 1993–to date. Practising: Corporate and Business Law; Mining Law; Transactions Law; Mergers and Acquisitions, Joint Ventures; and Banking and Securities Law. Academic Career: Professor at ITAM Law School “Corporations” (1987–1995). Professor “Corporate Law” at ITAM MBA School. Professor at ITAM Law Master’s Degree “Corporate and Transactions Law” 2002– to date. Professor at the M&A programme by KPMG, Universidad Anahuac, Grupo Expansión, Neo training 2019. Languages: Spanish and English.

RBMexico-Law-Abogados Tel: +52 55 5682 0303 Insurgentes Sur 1787 Floor 6 Email: [email protected] Colonia Guadalupe Inn URL: www.rbmexicolaw.com Delegación Álvaro Obregón Mexico City, Z.P. 01020 Mexico

RBMexico-Law-Abogados was founded in 1993 by Enrique Rodríguez del become very experienced transactional lawyers focused on. mining transac- Bosque, who had previously worked for four years at the Mexican mining tions. The rest of the lawyers worked in law firms focused on commercial group, Luismin, which was subsequently sold to Silver Wheaton and then to transactions, foreign investment, corporate law, etc. All of our lawyers speak Goldcorp. For eight years, Enrique worked as a Corporate and Transactional fluent English and have English writing skills. lawyer at one of the largest Mexican law firms. Our main objective is to provide legal security to investors participating in the Since its foundation, RBMexico-Law-Abogados has focused on counselling Mexican mining industry (i.e., controlling Mexican subsidiaries, shareholders mining transactions mainly conducted by Canadian mining companies, whilst to the Mexican subsidiaries’ parent companies, and banks and financial insti- also specialising in: incorporating Mexican companies to be able to acquire tutions as lenders/investors). mining properties; conducting due diligences of properties and/or mining www.rbmexicolaw.com companies; structuring deals to acquire mining properties/mining concessions/lands/assets, and/or mining companies or joint ventures (M&A of the mining industry); and structuring credit transactions including granting guarantees to finance projects or raise funds at TSX and NYSE. The firm also focuses on mining obligations compliance. RBMexico-Law-Abogados’ lawyers studied at the most recognised Mexican Universities. Many of them started at the law firm as students, and now have

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North Macedonia North North Macedonia

Katarina Ginoska

Georgi Dimitrov Attorneys Marija Jankuloska

1 Relevant Authorities and Legislation In terms of ecology, mining companies turn to more eco-friendly processing technologies, refraining from the use of cyanide.

1.1 What regulates mining law? 3 Mechanics of Acquisition of Rights

The general liabilities and obligations of both the concessionaire and 3.1 What rights are required to conduct reconnaissance? the conceding authority are governed by the Law on minerals as lex specialis. It regulates the types of concession (for exploration and exploitation) of different types of minerals, the processes for Reconnaissance may be conducted upon prospective exploration obtaining each of the required concessions and permits, and their concessions granted by the Government. Such right is granted revocation. pursuant to a public bidding procedure, for the purpose of determining areas for possible detailed explorations.

1.2 Which Government body/ies administer the mining 3.2 What rights are required to conduct exploration? industry?

Exploration may be conducted upon detailed explorations’ conces- The mining industry is primarily administered by the Ministry of sion granted by the Government. Such right may be granted Economy, but the Ministry of Environment is also greatly involved. pursuant to a public bidding procedure or – in cases of potential The formal grant of concession is done by the Government of the expanding of an existing exploitation concession – immediately to Republic of North Macedonia pursuant to a formal Decision and an actual concessionaire. by means of signing a concession agreement.

3.3 What rights are required to conduct mining? 1.3 Describe any other sources of law affecting the mining industry. Mining may be conducted upon exploitation concession granted by the Government and an exploitation permit issued by the Ministry Alongside general legislation referring to administrative procedures, of Economy. Such right may be granted pursuant to a public taxes and trading companies, the mining industry is also directly bidding procedure or immediately to the entity that holds the right regulated by the Law on environment, the Law on waters, the Law over the results from conducted detailed geological explorations. on construction, the Law on physical and urban planning, the Law on concessions and public-private partnerships and the Law on 3.4 Are different procedures applicable to different minerals waste management. and on different types of land? 2 Recent Political Developments There is no strict differentiation in the procedural milestones and general permits, plans and studies regarding different types of 2.1 Are there any recent political developments affecting the mineral or land; however, there are differences in the deadlines, areas, mining industry? certain geological documentation and other specific terms of the concession that depend on the type of mineral. Although there have not been any major amendments in the legislation this year, there has been a distinct change of attitude of the 3.5 Are different procedures applicable to natural oil and political establishment in North Macedonia. This change especially gas? refers to the greater attention that the authorities pay to ecology, green farming and sustainability in comparison to industrial devel- There is no explicitly diverse procedure prescribed for natural oil and opment. gas exploitation (referred to in the law as energetic minerals);

however, certain elements, such as deadlines, areas, geological docu- 2.2 Are there any speciﬁc steps the mining industry is taking mentation and other terms of the concession differ for energetic in light of these developments? minerals in comparison to other types.

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4 Foreign Ownership and Indigenous Ownership processes need to be provided for and pre-approved by the Ministry of Environment pursuant to the applicable integrated ecological Requirements and Restrictions permit.

4.1 What types of entity can own reconnaissance, 5.2 Are there restrictions on the export of minerals and exploration and mining rights? levies payable in respect thereof?

Mineral concession rights may be granted to any legal entity that There are no restrictions on the export of mineral ore and concen- fulfils all conditions of corporate and financial “good standing” set trate. Levies, on the other hand, are part of the concession fee and forth in the Law on minerals, including foreign companies. are calculated as a percentage of the market price of the mineral at hand applied to the quantities of sold concentrate.

4.2 Can the entity owning the rights be a foreign entity or 6 Transfer and Encumbrance owned (directly or indirectly) by a foreign entity and are there special rules for foreign applicants? 6.1 Are there restrictions on the transfer of rights to conduct Yes, any of the said entities may be granted a concession. If the reconnaissance, exploration and mining? entity applying for concession has a registered office outside Macedonia, it would need to establish and register its subsidiary The transfer of a mining concession is conditioned by prior written locally. No additional conditions are imposed on foreign entities as consent of the State Government and payment of a transfer fee opposed to indigenous companies. amounting to seven per cent of the appraised value of the concession. The law is silent on the transfer of reconnaissance and detailed explo- 4.3 Are there any change of control restrictions applicable? ration concessions, but, by means of analogy, it could be argued that such transfer is permissible but also subject to prior governmental The transfer of control directly over the entity that has conducted consent. Notwithstanding the above, there is an explicit possibility to the detailed geological explorations and applied for a exploitation transfer ownership of the results of the detailed explorations without concession, as well as over the entity holding a exploitation conces- the necessity of prior governmental consent. sion, cannot be made without a prior written consent of the State Government unless the right of ownership of the share with the 6.2 Are the rights to conduct reconnaissance, exploration concessionaire is acquired by inheritance or the concessionaire is a and mining capable of being mortgaged or otherwise secured company listed on the stock market. An acquisition fee of seven per to raise ﬁnance? cent of the appraised value of the concession applies.

The reconnaissance, exploration and mining concession may be 4.4 Are there requirements for ownership by indigenous provided as security to raise finance; there is no explicit interdiction persons or entities? thereto. However, the enforcement of such security would be subject to prior approval by the Government and may, especially in The only requirement relates to foreign entities applying for conces- the case of a mining concession, be liable to pay the seven per cent sion, arguing that they need to establish a subsidiary in Macedonia acquisition fee. in order to perform any mining activities on its territory. It should be noted that this requirement is not specific only to mining, but it 7 Dealing in Rights by Means of Transferring represents a rather general rule of direct business of foreign entities Subdivisions, Ceding Undivided Shares and in Macedonia, also prescribed under the Law on trading companies. Mining of Mixed Minerals

4.5 Does the State have free carry rights or options to acquire shareholdings? 7.1 Are rights to conduct reconnaissance, exploration and mining capable of being subdivided? No, the State has no carry rights or options, nor may it forcibly or ex lege acquire shareholding in the concessionaire. No, such rights may be granted, executed, transferred or revoked as a whole and cannot be subdivided. 5 Processing, Refining, Beneficiation and Export 7.2 Are rights to conduct reconnaissance, exploration and mining capable of being held in undivided shares? 5.1 Are there special regulatory provisions relating to processing, refining and further beneficiation of mined As provided under the law, only one entity may hold a certain minerals? concession granted to a certain territory and in reference to certain minerals, with exception to concessions over springs of mineral Except general legislation regarding protection of the environment water that may be used for medical purposes by multiple entities and customs, there are no special regulations concerning processing, simultaneously. Moreover, such concessionaire has a favourable refining and further beneficiation of mined minerals. However, it position regarding further exploration in areas bordering the terri- should be noted that all such activities need to be included and tory of its concession. described in the main (and additional) mining plans and are thus subject to the prior consent of the Ministry of Economy. Also, all

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7.3 Is the holder of rights to explore for or mine a primary 8.3 What rights of expropriation exist? mineral entitled to explore or mine for secondary minerals? The Law on expropriation provides the possibility for two types of Yes, the law provides for two possibilities in this instance: (i) the expropriation: (i) complete expropriation upon which the State concessionaire may exploit secondary ore as an additional, second acquires full ownership over the expropriated property; and (ii) product, in which case it would need to obtain a second concession incomplete expropriation which only entitles the State or the munic- for such ore under the general terms and procedure; or (ii) if the ipality to the right of easement. other ore is found in low quantities in the primary mineral without it being separated and processed, there is no legal requirement for 9 Environmental obtaining separate concession, but the concessionaire would be obliged to pay a concession fee calculated at a percentage of the market price of the secondary ore as per the actual proportion of 9.1 What environmental authorisations are required in order such ore in the sold primary mineral. to conduct reconnaissance, exploration and mining operations? 7.4 Is the holder of a right to conduct reconnaissance, exploration and mining entitled to exercise rights also over The permits for reconnaissance, exploration and mining are granted residue deposits on the land concerned? pursuant to a formal consent of the Ministry of Environment based on a revised Environmental Impact Study. Such study refers to the environmental impact and protection measures to be undertaken by The concessionaire is able to exercise any rights over residue the concessionaire throughout performing each separate activity of deposits as far as such rights are provided for in the concession exploration or mining. agreement, the exploitation permit, any of the mining plan or waste Alongside the said studies, prior to engaging in any operation, a management plans and the A-integrated ecological permit. concessionaire must also obtain an A-integrated ecological permit,

also issued by the Ministry of Environment, that regulates the 7.5 Are there any special rules relating to offshore complete operation of the mining facilities, their output and emis- exploration and mining? sions, waste management as well as the manner of re-cultivation of the mine upon expiry of the concession. Macedonia is a continental State so the use of any waters for mining purposes, alongside the necessary exploration/exploitation conces- 9.2 What provisions need to be made for storage of tailings sion and permit, is also subject to a specific water management and other waste products and for the closure of mines? permit and an integrated ecological permit, both issued by the Ministry of Environment. The storage of waste is subject to a specific Waste Management

Plan, which is prepared by authorised waste management experts. 8 Rights to Use Surface of Land Such plan provides for the construction and technical characteristics of the pit or tailings facility, whichever is most appropriate for the mineral at hand. The construction of such facilities is also to be 8.1 Does the holder of a right to conduct reconnaissance, approved by the Ministry of Environment by means of approval of exploration or mining automatically own the right to use the the Environmental Impact Study prepared regarding the facility and surface of land? to be based on an appropriate construction permit. The law enables the concessionaire to seek enlargement of the concession field for Yes, the concessionaire holds the right to use the surface of the land the purpose of constructing waste storage facilities, if necessary. to which the concession has been granted. It should be noted that, The closure of the mine, on the other hand, implies secure closure prior to any use of agricultural land for mining or construction activ- of the tailings facility/pit and the revitalisation of the area. The ities, such land needs to be converted into construction land by activities thereto are provided for in the A-integrated ecological means of consent by the public enterprise that manages the land at permit and are to be done on the expense of the concessionaire. If hand and pursuant to an agreement with the concessionaire for the concessionaire fails to undertake all prescribed measures, the payment of all related costs. Also, prior to using the land, the authorities should activate the bank guarantee provided for this concessionaire is obliged to resolve all title issues with the owner or purpose prior to the issuance of the exploitation permit. lawful occupier of the plots. 9.3 What are the closure obligations of the holder of a 8.2 What obligations does the holder of a reconnaissance reconnaissance right, exploration right or mining right? right, exploration right or mining right have vis-à-vis the landowner or lawful occupier? The concessionaire is obliged to undertake all technical measures prescribed in the A-Integrated Ecological Permit and the Waste Management Plan regarding the closure of any waste storage pits or If the land is owned by a private person, the concessionaire may tailing facilities, to reinstate the excavated land to the pits if possible purchase the land from its owner under commercial terms or may and to re-cultivate the site restoring it to its state prior to mining, if request expropriation if no purchase could be agreed; if the land is possible. All costs hereto are borne by the concessionaire. owned by the State, it shall merely register its entitlement to use the

land for exploitation purposes in the public cadastre. If there has been a lease agreement in place concerning a certain land plot owned 9.4 Are there any zoning or planning requirements applicable by the State, the costs of terminating such agreement would be to the exercise of a reconnaissance, exploration or mining borne by the concessionaire. right?

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Pursuant to the laws on physical planning and construction, a mine 13 Constitutional Law may only be located and may operate on an area in which heavy industry is permitted to be built pursuant to the regional Physical Planning Documentation. Such documentation is prepared and 13.1 Is there a constitution which has an impact upon adopted by the State, on the grounds of prior consent of the compe- rights to conduct reconnaissance, exploration and mining? tent municipality. No zoning or planning requirements apply to activities of prospective or detailed explorations. Notwithstanding the general principles of free market economy and 10 Native Title and Land Rights entrepreneurship, protection of private ownership, protection of foreign investors and the principle of State ownership and protection over all natural wealth of the country, the Constitution does not 10.1 Does the holding of native title or other statutory contain provisions that apply to mining and concessions directly and surface use rights have an impact upon reconnaissance, explicitly.

exploration or mining operations? 13.2 Are there any State investment treaties which are applicable? There is no native title recognised in Macedonia. As to other statutory surface rights, their existence does not impede the realisation of the concession entitlement over the land to any further extent than it Yes, the country has entered into several investment protection would be required for such land to be purchased by the concessionaire treaties with foreign States, which warrant the mutual protection of or expropriated for the purpose of the mining activities. investments and free capital flow.

11 Health and Safety 14 Taxes and Royalties

11.1 What legislation governs health and safety in mining? 14.1 Are there any special rules applicable to taxation of exploration and mining entities? Such issues are regulated under the Law on health and safety at work and the applicable by-laws. Of course, general legislation on No, general rules on taxation apply, meaning that the concessionaire pension, disability insurance and working ability applies. would be subject to regular charges of VAT, profit tax and property tax, and to all applicable exemptions thereto. The former does not 11.2 Are there obligations imposed upon owners, refer to the concession fees payable by the concessionaire in addition employers, managers and employees in relation to health and to and regardless of the regular taxes, which are also calculated and collected by the State Revenue Office. safety?

14.2 Are there royalties payable to the State over and All employees, including managers, are obliged to act under the above any taxes? safety requirements set forth in the internal rules of the company, to take care of their own safety, the safety of others and the safety of the property and to undergo regular annual medical examinations. Yes, each type of concession is subject to a specific concession fee: The law requires that one person for each 20 workers be designated ■ A fee of MKD 60,000–120,000 is payable upon obtaining as responsible for issues of safety and health as the employees’ detailed geological explorations (the amount depends on the representative. Owners (not employed in the company), as well as type of mineral ore in question). any other person on-site, when visiting the company’s premises, are ■ An exploitation concession fee, comprised of two portions: obliged to act under the rules for the safety of visitors. (i) a fee concerning the exploited quantities of ore, calculated on a quarterly basis as a certain percentage of the market 12 Administrative Aspects value of the ore at hand; and (ii) a fixed fee, varying from MKD 100,000–240,000 depending on the type of ore and per square kilometre of 12.1 Is there a central titles registration ofﬁce? land under concession, payable annually.

Yes, all granted concessions are inscribed in the concessions registry kept 15 Regional and Local Rules and Laws with the Ministry of Economy. Further, all land titles are inscribed in the Agency of cadastre whereas all company-connected details are regis- 15.1 Are there any local provincial or municipal laws that tered with the Central Registry of Republic of North Macedonia. Both the inscriptions in the cadastre and in the Central Registry have consti- need to be taken account of by a mining company over and tutional effect so that title rights and corporate activities are deemed above National Legislation? acquired/executed upon their registration. Local self-governing units have no legislation that may have an effect 12.2 Is there a system of appeals against administrative over or above the national legislation. However, the municipality is decisions in terms of the relevant mining legislation? involved in certain procedures regarding granting concessions, obtaining integrated permits, planning and similar, mostly by means of rendering prior consent or opinion. Such involvement may also Yes, depending on the decision that has been reached, it may either be influenced by regional referendums and public consultations. be subject to a two-tier system of remedies (appeal and, further on, an administrative lawsuit) or a one-instance legal remedy directly through an administrative dispute initiated by a lawsuit.

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15.2 Are there any regional rules, protocols, policies or 16.2 Are there obligations upon the holder of an laws relating to several countries in the particular region that exploration right or a mining right to relinquish a part thereof need to be taken account of by an exploration or mining after a certain period of time? company? No, there are no such legal obligations; the concessionaire is entitled There are no regional rules or protocols relating to this issue. to exercise its concession right for the whole period of its duration However, the Macedonian Law on minerals provides an obligation and on the whole territory for which it has been granted. for the Macedonian authorities to enable a neighbouring country’s authorities and concerned public to review the terms under which 16.3 Are there any entitlements in the law for the State to an exploitation permit is required, in cases when the mining or waste cancel an exploration or mining right on the basis of failure to storage facilities has/have over-border impact. comply with conditions?

16 Cancellation, Abandonment and The Law on minerals sets forth quite a general possibility for the State Relinquishment to revoke the granted concession due to failure of the concessionaire to comply with conditions. Such incompliance refers to some of the 16.1 Are there any provisions in mining laws entitling the terms of the Law on minerals and the concession agreement, such as the obligation for payment of a concession fee, the obligations to holder of a right to abandon it either totally or partially? obtain and act under the exploitation permit, the obligations to prepare geodetic surveys, the duties to submit true and accurate Pursuant to the Law, the concessionaire may, following a request reports and similar. Any incompliance with environmental legislation from the Ministry of Economy, unilaterally terminate the concession may also present a basis for the termination of the concession. agreement if the economic interest in the exploitation activities ceases to exist. If the concessionaire does abandon the concession without appropriate resolution by the State Government, the concessionaire would be liable for compensation of all damages occurring due to such action, including loss of monetary means, any environmental damages, costs, etc.

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Katarina Ginoska was born in 1981 in Skopje, Republic of Macedonia. She attended the University of St. Cyril and Methodius, Skopje and later received an LL.M. in Commercial Law with honours from the University of Glasgow, Scotland. She joined Georgi Dimitrov attorneys in 2007 and became a Partner in 2011. As a Partner in the company, Katarina is involved in most complex M&A arrangements in the country, leading a team with a vast experience in Legal Due Diligence procedures over entities operating in highly regulated areas. In the last couple of years, Katarina has completed the largest M&A project in the private sector in the country, representing the foreign investor in the procedure for obtaining government approval for transfer of shares with a concessionaire. Katarina is fluent in English and has a basic knowledge of the German language. She believes that a close relationship with their clients gives an attorney a better insight into their needs and especially their expectations of the outcome of a case.

Georgi Dimitrov Attorneys Tel: +389 70 225 623 Ivo Lola Ribar Str. No. 57/1-6 Email: [email protected] 1000 Skopje URL: www.georgidimitrov.com.mk Macedonia

Marija Jankuloska was born in 1988 in Prilep, Republic of Macedonia. She graduated at the Faculty of Law “Iustinianus Primus” in Skopje with honours, becoming a Frank Manning Award Alumni for the academic year of 2009/2010. She later received an LL.M. in Civil Law from the same faculty. Marija joined Georgi Dimitrov Attorneys in 2011 and has since acquired a vast experience in commercial and property law, mining and concessions. Skilled in providing overall transaction support and counselling, Marija completed a number of acquisition procedures, with a portfolio value of more than 1 billion USD. She has thus also gained experience in relations with the National Bank and other governmental bodies. Marija is fluent in English and has a certain understanding of German and Italian. Alongside the Managing Partner, Marija was a member of the experts’ team drafting the Policy Paper, and henceforth, the new Law on general administrative procedure in Macedonia.

Georgi Dimitrov Attorneys Tel: +389 75 405 393 Ivo Lola Ribar No. 57/1-6 Email: [email protected] 1000 Skopje URL: www.georgidimitrov.com.mk Macedonia

Georgi Dimitrov Attorneys was founded in 1996 by the Managing Partner Partners, Halk Bank, Pro Credit Bank, Volvo, Samsung, Philips, Wiebe, UPS, Georgi Dimitrov. Today, the office has 20 employees and it is located in the Microsoft, Deutsche Telekom, SOL Hydropower, Macedonian Telecommunications, Skopje city centre. Mermeren Kombinat AD Prilep. The firm is highly qualified in providing legal services to companies and interna- www.georgidimitrov.com.mk tional investors with a complex organisational structure. The investment portfolio of the company’s clients in the country amounts to over 650 million EUR. Their expertise is most expressed in the field of mining and concessions, international M&A, competition and commercial law and real estate. Georgi Dimitrov Attorneys work with a number of clients whom they dedicate all their resources and knowledge to the maximum extent. Hence their long list of satisfied clients, among which are Arcelor, Orion Mines, Traxys Capital

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Oman Oman

Mansoor Jamal Malik

Al Busaidy Mansoor Jamal & Co. Henry Mitchell

1 Relevant Authorities and Legislation 1.3 Describe any other sources of law affecting the mining industry.

1.1 What regulates mining law? The Commercial Companies Law of Oman issued by Royal Decree 18/2019 (“CCL”) and the Foreign Capital Investment Law issued by The mining industry in Oman is governed by the Law of Mineral Royal Decree 102/1994 (the “FCIL”) are relevant to the extent that Wealth (the “New Mining Law”) issued by Royal Decree 19/2019 they govern the establishment of entities with foreign shareholding on 13th February 2019 and effective from 14th March 2019. or control. Generally, a foreign entity wishing to conduct business Executive regulations governing how the New Mining Law is to be in Oman will need to establish a legal presence. A new Foreign implemented will be issued by or before 13th February 2020. Until Capital Investment Law (issued by Royal Decree 50/2019) will come the issuance of the new executive regulations, the regulations issued into effect on 7th January 2020 (six months after its publication). The in 2010 as amended (the “2010 Regulations”) and ministerial deci- Ministry of Commerce and Industry is expected to publish its sions will continue to apply to the extent they are not inconsistent Implementing Regulations by 7th July 2020. with the New Mining Law. Other laws of particular relevance to the mining industry include: ■ the Law of Conservation of Environment and Prevention of 1.2 Which Government body/ies administer the mining Pollution issued by the Royal Decree no. 114/2001; and industry? ■ the Labour Law issued by the Royal Decree no. 35/2003 which includes the requirement for an employer to provide safe site working conditions for employees. The Public Authority for Mining (“PAM”) was established by Royal Decree 49/2014 to administer the mining industry. The New Mining Law has broadened and clarified the scope of 2 Recent Political Developments PAM’s duties and powers. These include but are not limited to: ■ Issuance of licences and the conclusion concession agreements. 2.1 Are there any recent political developments affecting the ■ Maintenance of a register of licences and concessions and mining industry? geological data relating to prospective mining regions. ■ Preparation of data and co-ordination with competent authorities in respect of the following: The development of the mining sector has been identified as a key ■ recognition and division of prospective (“economically pillar of the Oman’s economic diversification strategy as set out in feasible”) areas with particular regard to sites near land the ninth five-year plan for 2016–2020. borders, critical infrastructure, archaeological sites and military/security facilities; 2.2 Are there any speciﬁc steps the mining industry is taking ■ provision and development of utilities and infrastructure to in light of these developments? mining regions; and ■ establishing locations of infrastructure and utilities present in prospective areas. The New Mining Law was issued to encourage further investment ■ Liaison with competent entities to provide opinions in relation in Oman’s mining industry. to construction, planning, housing, environment, health and The New Mining Law provides, inter alia, longer licence tenures safety, and security and defence. over larger areas of land, flexible royalties, certainty with regard to ■ Auctioning mining sites as it deems appropriate. the performance guarantee, clarity in relation to PAM’s revised role ■ Expropriation of real estate is considered important to the as the single point of contact for the licensing process (including the mining industry, and arranging compensation for landowners requirement for competent authorities to provide PAM with opin- (but without having to account for the value of any potential ions required to grant the licence within 60 days) and set mineral wealth in such real estate). contributions required from the mining company for community ■ Conducting audits and inspections of mining sites and compa- development. nies to ensure compliance with the New Mining Law. Furthermore, the Oman government is investing in the development of its heavy-haul rail infrastructure to connect mining regions with its ports.

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3 Mechanics of Acquisition of Rights 3.5 Are different procedures applicable to natural oil and gas?

3.1 What rights are required to conduct reconnaissance? Yes. Although the New Mining Law covers a broad range of raw materials the hydrocarbon sector (oil and gas) is subject to the Oil Reconnaissance activities requires an exploration licence granted and Gas Law issued by Royal Decree 08/2011 and administered by under Article 14 of the New Mining Law. Reconnaissance is not the Ministry of Oil and Gas. specifically defined in the New Mining Law but would be covered under the definition of “Exploration”, namely, “preliminary exami- 4 Foreign Ownership and Indigenous Ownership nation of the surface or bottom of the earth to find out the presence of mineral ores, quarry ores and salt mines therein”. Requirements and Restrictions

3.2 What rights are required to conduct exploration? 4.1 What types of entity can own reconnaissance, exploration and mining rights? As above, exploration and/or drilling (drilling is defined as the “comprehensive search for mineral ores, quarry ores and salt mines, A licensee can be either a natural or juristic person provided PAM is including the process of testing the features of the content of the satisfied such person meets the application criteria, is able to satisfy ores, to determine and fix their size, shape, form and quality grade the conditions of the licence and perform the activities for which and to estimate the extent to which they can be exploited economi- the licence is intended. Typically, a licensee would be either a limited cally”) activities require either an exploration or drilling licence liability company (“LLC”) or a closed joint stock company granted under Article 14 of the New Mining Law. (“SAOC”).

3.3 What rights are required to conduct mining? 4.2 Can the entity owning the rights be a foreign entity or owned (directly or indirectly) by a foreign entity and are there Extraction activities require the grant of an “Exploitation” licence special rules for foreign applicants? (granted for periods of five years and renewable for further five-year periods with no maximum limit under Article 39 of the New Mining Law) or the grant of a concession (granted for periods of between Both LLCs and SOACs can be foreign owned (up to 70% equity 20 and 30 years for larger resources and resources with longer participation). This can be increased to 100% but only in excep- production lifespans under Article 44 of the New Mining Law). tional circumstances and subject to obtaining approval from the Exploitation is defined as “the process of extracting mineral ores, Council of Ministers and only if it can be demonstrated that such quarry ores and salt mines for the purpose of processing them to entity is in need of foreign technical know-how or expertise which make them fit for use”. is not readily available in Oman and/or the entity is participating in It should be noted that, under Article 60 of the New Mining Law, developing the national economy and is investing substantial capital the extraction of mineral ores without a licence or a concession in the country. agreement is punishable by imprisonment for not less than one year The new FCIL provides that 100% foreign ownership will be and up to three years and a fine of not less than RO. 20,000 and up permitted in companies incorporated in Oman for the conduct of to RO. 100,000. permitted activities subject only to the approval of and registration with the “Investment Services Center” – a department to be formed within the Ministry of Commerce and Industry (“MOCI”). 3.4 Are different procedures applicable to different minerals

and on different types of land? 4.3 Are there any change of control restrictions applicable?

The New Mining Law (and the licensing regime introduced by it) Article 21 of the New Mining Law requires that a licensee notifies does not make reference to specific minerals and applies to a very PAM of any change to its structure or ownership by way of sale or broad range of raw materials under the categories of “mineral ores” transfer of its shares, and any change in the contributions of its (“minerals and their ores, rocks, layers, mineral and chemical participants or to distributions. Upon receipt of such notification, deposits, precious stones and the like and mineral water extracted PAM has the ability to take the action it deems appropriate in the from underneath the earth”) and “quarry ores” (“stone, gravel, sand, circumstances. The New Mining Law does not specify the action(s) dry clay, barking sand, marble, granite and other material used in except that it includes the potential revocation of the licence. The construction, road building and road paving”). specific terms of a licence agreed with PAM may also include an The New Mining Law applies to such raw materials located on additional change of control restrictions. land in the Sultanate of Oman, in land-locked water, in territorial waters (including the continental shelf ) and in waters under the control of special economic zones. Where prospective land is within 4.4 Are there requirements for ownership by indigenous six kilometres of the national border or located in the vicinity of persons or entities? defence, government, conservation areas or archaeological sites or hosts infrastructure assets such as dams, reservoirs, falajs, oil and gas Other than the foreign ownership requirements under the FCIL pipelines, utilities and resident accommodation, PAM is required to mentioned in question 4.2 above, there are no other indigenous co-ordinate with competent authorities to formulate its approach ownership requirements. (please refer to Article 9 of the New Mining Law).

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4.5 Does the State have free carry rights or options to benefit of the resources in question. Licences and concessions are granted subject to numerous conditions including the commence- acquire shareholdings? ment of operations within a certain time from the grant of the licence or concession, minimum works requirements, the payment The Oman government (acting through PAM or otherwise) has no of fees and royalties, and evidence of the transferee’s financial and free carry rights or options to acquire shareholdings in a licensee technical ability to manage and operate the project as contemplated entity. In case of revocation of a licence, the licence will be handed when the licence or concession was granted. back to PAM for redistribution or auction. 7 Dealing in Rights by Means of Transferring 5 Processing, Refining, Beneficiation and Export Subdivisions, Ceding Undivided Shares and Mining of Mixed Minerals 5.1 Are there special regulatory provisions relating to processing, refining and further beneficiation of mined 7.1 Are rights to conduct reconnaissance, exploration and minerals? mining capable of being subdivided?

There are no specific regulatory provisions in this regard, however, There is no provision in the New Mining Law that would permit the PAM has broad discretion to impose conditions on the grant of subdivision of licences or concessions. exploitation licences (exploitation includes processing under the

New Mining Law) and these will typically be included in the terms of the licence itself. 7.2 Are rights to conduct reconnaissance, exploration and mining capable of being held in undivided shares? 5.2 Are there restrictions on the export of minerals and levies payable in respect thereof? As above, the New Mining Law does not provide for such a structure.

PAM’s approval is required for the export of any materials covered 7.3 Is the holder of rights to explore for or mine a primary by the New Mining Law (Article 12). PAM may also ban the export mineral entitled to explore or mine for secondary minerals? of specific materials and prescribe the manner in which such materials are to be exploited in the local market to the greatest extent PAM has discretion under the 2010 Regulations (Articles 9 and 19) possible. to impose conditions on the grant of exploration or drilling licences Levies may attach to the export of certain materials. The Royal which could include limiting activities to specific minerals. However, Oman Police is responsible for implementing levies and information in the absence of such conditions, a licensee could feasibly conduct regarding specific levies should be obtained directly from the Royal exploration or drilling activities in relation to secondary minerals Oman Police. provided it notifies PAM upon their discovery in accordance with Articles 11 and 21. 6 Transfer and Encumbrance Under Article 28 of the 2010 Regulations, exploitation licences are granted under the following categories: 1. mining of metallic ore; 6.1 Are there restrictions on the transfer of rights to conduct 2. mining of non-metallic ore; reconnaissance, exploration and mining? 3. quarrying of building materials; 4. quarrying of filling materials; Under Article 20 of the New Mining Law, subletting and “waiver” 5. quarrying of marble or decorative stone; and of licences (exploration, drilling or exploitation) to third parties is 6. extraction of filling material for government projects. subject to PAM’s approval and the payment of prescribed fees Theoretically, a mining entity could mine secondary minerals that (Article 20). fall within the licence category, however, as above, PAM has discre- Under Article 50 of the New Mining Law, subject to a limited tion to impose conditions on the grant of an exploitation licence that exception in relation to “financial rights” arising from the concession will typically include the extraction of only specific minerals. (and subject to PAM’s approval), a concessionaire may not “waive” It should also be noted that a licensee may be further restricted in any of its rights under a concession agreement. terms of the minerals it can explore or extract by virtue of the commercial activities it has registered at the MOCI. The categories of registered commercial activities in respect of mining can be 6.2 Are the rights to conduct reconnaissance, exploration narrower than the categories of licence under the 2010 Regulations. and mining capable of being mortgaged or otherwise secured Such categories may also be revised when the new implementing to raise ﬁnance? regulations are issued.

As above, financial rights in a concession (rights to income derived 7.4 Is the holder of a right to conduct reconnaissance, from the concession) can only be waived or transferred subject to exploration and mining entitled to exercise rights also over PAM’s approval under Article 50 of the New Mining Law. Waiver residue deposits on the land concerned? or transfer of such rights in a mining licence (exploration, drilling or exploitation) is not expressly addressed in the New Mining Law or the 2010 Regulations. Although this scenario is not specifically addressed in the relevant However, we consider it unlikely that either the mining licence or legislation, we would advise that licensee’s obtain PAM’s consent as concession itself could be mortgaged. Mining licences and conces- such activities (for example, the reprocessing of tailings) could fall sions in Oman do not confer unconditional rights to the economic

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under the definition of exploitation, in which case a separate licence licence of a result of such activities. Similarly, the 2010 Regulations would be required. require that a licensee pays the landowner fair and reasonable compensation for any damage or loss of use caused by the mining 7.5 Are there any special rules relating to offshore activities. Again, the terms of a specific licence agreed with PAM may exploration and mining? confer additional rights and/or impose additional obligations on the licensee. There are no specific rules relating to offshore mineral exploration and mining activities but environmental law (as set out in section 9 8.3 What rights of expropriation exist? below) would be particularly relevant to marine activities.

8 Rights to Use Surface of Land Land considered to be prospective for mineral exploitation by PAM may be expropriated by the state in accordance with the procedures set out in the Law of Expropriation of Property in Public Interest 8.1 Does the holder of a right to conduct reconnaissance, (issued by the Royal Decree no. 64/78) under Article 11 of the New exploration or mining automatically own the right to use the Mining Law. The landowner will be compensated accordingly but such compensation will not account for any mineral wealth in the surface of land? expropriated land.

The New Mining Law and the 2010 Regulations do not make a 9 Environmental distinction between surface activities required to support the exploration or mining activities (for example, construction of buildings and plants) and the exploration and mining activities themselves. A 9.1 What environmental authorisations are required in order licensee would be entitled to use the land in support of the activities to conduct reconnaissance, exploration and mining it is licensed to conduct and under Article 33 of the 2010 operations? Regulations, the holder of a mining licence is required to establish installations necessary to optimise the utilisation of the mineral resource. The construction of such installations would be subject The New Mining Law establishes PAM as the sole point of contact to the same consenting regime as any other industrial installation. In for licence applicants and will act on their behalf in relation to addition, it would not be permissible for a licensee to use the land obtaining the consents, permits and authorisations required from the surface to conduct activities that are not contemplated by the licence relevant authorities for the activities contemplated in the licence (for example, tourism or agriculture). application. Under Article 17 of the New Mining Law, PAM is specifically required to co-ordinate with and seek approval from the relevant authorities, including the Ministry of Environment and 8.2 What obligations does the holder of a reconnaissance Climatic Affairs (“MECA”) in relation to environmental authorisa- vis-à-vis right, exploration right or mining right have the tions, for the required mining activities. This represents a departure landowner or lawful occupier? from the 2010 Regulations. Building works and installations on the licensed area will still Article 66 of the 2010 Regulations sets out the obligations of the require environmental permits from MECA if not covered in the licensee or concessionaire which include obtaining the landowner’s licence application procedure. Typically, MECA will issue environ- (the state or an individual’s) consent and not damaging features and mental permits on the basis of an environment impact assessment structures on the licensed area, such as places of worship, historical prepared by the licensee. and archaeological sites, public installations, houses, agricultural land, irrigation canals and dams and flood outlets. Further, under Article 9.2 What provisions need to be made for storage of tailings 67 of the 2010 Regulations, a landowner will retain the right to graze and other waste products and for the closure of mines? cattle and the right to cultivate the land, provided such grazing or agricultural activities do not interfere with the mining activities. Article 68 of the 2010 Regulations stipulates that a concession can Articles 34 and 56 of the New Mining Law require that a licensee only be granted over state-owned land given the longer tenure of a and concessionaire (respectively) must restore the area, remove concession (20–30 years). excess extracted materials and ores (except where PAM considers On the other hand, under Article 69 of the 2010 Regulations, a such materials and ores need to be kept and handed over to it) and mining licence may be granted over privately owned land provided remove any “unsightliness” upon termination or cancellation of the the licence applicant and the landowner have entered into an agree- licence or concession at the licensee’s or concessionaire’s expense (as ment conferring the right to use the land and specifying the the case may be). In the case of concessions, this requirement runs compensation payable to the landowner (including the payment in parallel to the compulsory transfer to PAM (without compensa- method) and the area to be covered by the licence. Licensees and tion) of all facilities, plants, machinery, buildings and equipment concessionaires are also required to pay rent to PAM in respect of required to perform the mining activities under Article 56. the licensed area (Articles 16 and 48 of the New Mining Law, respec- Articles 33 and 52 of the 2010 Regulations sets out a number of tively). Although it is not clear whether this would apply to a licence requirements a licensee must fulfil during the performance of its granted over privately owned land, we consider that rent would only mining activities. Subsection 14 of Article 33 for licensees and be payable to the owner and not PAM in such circumstances. subsection 16 of Article 52 for concessionaires set out specific A licensee who is also the owner of the land over which the requirements in relation to the management of tailings and other licence is granted will not have to pay rent to PAM. waste and mine closure. Accordingly, licensees are required to Under the New Mining Law, a licensee has full responsibility to submit a programme to PAM for the restoration and rehabilitation third parties (including landowners) for any damage caused by the of the areas once mining activities have concluded. This programme licensed activities including damage incurred outside the area of the must include the following:

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(a) appropriate topographic plans of the mining site before and 11 Health and Safety after the implementation of the mining programme; (b) plans showing the whereabouts of waste from the mining operations; 11.1 What legislation governs health and safety in mining? (c) plans showing infill areas after the completion of the mining operations; (d) plans showing the mining site after the implementation of the The New Mining Law imposes general health and safety obligations preparatory operations; to the extent that licensees and concessionaires are required to (e) methods of control of mining sites, waste sites and infill areas comply with all applicable laws and regulations relating to health and to ensure aquatic resources are not impacted; and safety in Oman. (f) a certificate from the Royal Oman Police stating that the site is Additionally, the New Mining Law requires that PAM obtains clear of any explosive materials. opinions from the relevant competent authorities in relation to Further, and in addition to the Law on Conservation of the health and safety requirements that may be imposed as a condition Environment and Prevention of Pollution issued by Royal Decree of a licence or concession. 114/01 (“Environmental Law”), the following regulations would PAM also has the ability to inspect mining operations to evaluate apply to mining activities: the measures taken by the licensee or concessionaire to safeguard the (a) the Regulations for the Management of Solid Non-hazardous health and safety of its employees. Waste (issued by Ministerial Decision 17/93) which imposes obligations on operators of solid non-hazardous waste treat- 11.2 Are there obligations imposed upon owners, ment facilities and sanitary landfills; regulate the disposal of employers, managers and employees in relation to health and hazardous waste, including any waste arising from commercial, safety? industrial or any other activities, which due to its nature, composition, quantity or for any other reason is hazardous or potentially hazardous to the environment. Storage facilities for Under the Oman Labour Law (Royal Decree 35/03 as amended) an hazardous waste must be licensed by the MECA; employer must ensure safe site working conditions for employees. (b) the Regulations for Wastewater Re-Use and Discharge (issued Further specific HSE requirements are set out in Ministerial by Ministerial Decision 145/93) which requires that a permit is Decision 686/08. obtained from MECA for the discharge of wastewater or sludge into the environment; and 12 Administrative Aspects (c) the Marine Pollution Law (issued by Royal Decree 34/74) which prohibits the discharge of pollutants in a pollution-free zone 12.1 Is there a central titles registration ofﬁce? from a ship, shore location or oil transport facility.

9.3 What are the closure obligations of the holder of a A register of licences, concessions, applications and entities participating in the industry is maintained at PAM. reconnaissance right, exploration right or mining right?

12.2 Is there a system of appeals against administrative Please refer to question 9.2 above. decisions in terms of the relevant mining legislation?

9.4 Are there any zoning or planning requirements applicable to There is no appeals system specific to the mining sector. Where the the exercise of a reconnaissance, exploration or mining right? grant of a licence or concession (or renewal) has been refused, under the 2010 Regulations, an applicant can appeal to PAM within 60 days We are not aware of any general zoning requirements that would be of the applicant becoming aware of the decision. applicable to the exercise of a mining right, however, PAM would co-ordinate with local authorities in relation to any zoning rights that 13 Constitutional Law may be applicable in specific localities. The Supreme Council for Planning of Oman (“SCP”) oversees all planning in Oman pursuant to the powers vested in it by Royal 13.1 Is there a constitution which has an impact upon Decree 15/07. SCP issues planning regulations in the form of rights to conduct reconnaissance, exploration and mining? Ministerial Decisions. Again, PAM co-ordinates with the relevant authorities to establish the existence of any planning requirements. Article 11 of the Basic Law (issued by Royal Decree 101/96 and amended by Royal Decree 99/2011) states that all natural resources 10 Native Title and Land Rights and revenues derived from them shall be the property of the State and that no concession in any natural resources may be granted 10.1 Does the holding of native title or other statutory except in accordance with the law and for a limited period. This position is reflected in Article 2 of the New Mining Law. surface use rights have an impact upon reconnaissance,

exploration or mining operations? 13.2 Are there any State investment treaties which are applicable? An owner of land cannot conduct mining or exploration activities without PAM’s approval. Rent will not be payable to PAM but the landowner will still be required to pay royalties and taxes. Oman has entered into a number of free trade agreements and bilat- Please refer to question 8.2 above in relation to licences granted eral treaties with other countries and these should be reviewed on a over privately owned land and the licensee’s obligations to the case-by-case basis for their application to proposed mining opera- landowner. tions.

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For example, the free trade agreement between the Oman govern- 16 Cancellation, Abandonment and ment and the government of the United States of America (ratified by Royal Decree 109/06) allows 100% owned American corporate Relinquishment entities or American individuals to incorporate a company with another 100% American corporate entity or U.S. individual to form 16.1 Are there any provisions in mining laws entitling the a company in Oman with 100% American shareholding. holder of a right to abandon it either totally or partially? 14 Taxes and Royalties A licensee or concessionaire can relinquish all or part of a licence or concession by giving formal notice to PAM in accordance with 14.1 Are there any special rules applicable to taxation of Article 72 of the 2010 Regulations. The repeal or alteration of the exploration and mining entities? licence or concession will be subject to PAM’s approval.

Under the amended Income Tax Law (issued by Royal Decree 16.2 Are there obligations upon the holder of an 28/09) mining entities are no longer exempt from paying corpora- exploration right or a mining right to relinquish a part thereof tion tax in addition to any royalty agreed as a condition of the licence after a certain period of time? or concession.

A mining licence or concession will only conclude upon termination 14.2 Are there royalties payable to the State over and by PAM or expiry without renewal. above any taxes? 16.3 Are there any entitlements in the law for the State to As above, royalties will be payable in addition to corporation tax. cancel an exploration or mining right on the basis of failure to PAM may set royalty levels on a case-by-case basis as part of the comply with conditions? licence or concession application procedure subject to royalties being no less than 5% of annual output (Articles 16 and 48 of the New Mining Law). PAM may cancel a licence for any of the reasons set out in Articles 31 and 21 of the New Mining Law. Similarly, the grounds on which 15 Regional and Local Rules and Laws PAM may terminate a concession agreement are set out in Article 57 of the New Mining Law. Under the 2010 Regulations, PAM may also cancel a licence or 15.1 Are there any local provincial or municipal laws that concession for failure of a licensee or concessionaire to fulfil their need to be taken account of by a mining company over and obligations set out in Articles 33 and 52, respectively. Further cancellation grounds under the 2010 Regulations include wasteful above National Legislation? use of resources and damage to the environment. PAM has broad discretion to impose additional rights of cancel- Under Article 17 of the New Mining Law, PAM will coordinate with lation and these will be set out in the terms of a specific licence. municipalities in relation to any local regulations that may be applicable to a particular project in a specific location.

15.2 Are there any regional rules, protocols, policies or laws relating to several countries in the particular region that need to be taken account of by an exploration or mining company?

The Standard Industrial Management Regulations Law of the AGCC (issued by Royal Decree 61/2008) and the accompanying Executive Regulations (issued by Ministerial Decision 46/2009) would apply to entities conducting mineral extraction and processing.

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Mansoor Jamal Malik is the Founder and Managing Partner of AMJ. He is a senior projects, energy, banking and finance specialist who has been involved in most ground-breaking and innovative projects in Oman over the past 35 years. His close familiarity with the regulatory framework allows him to provide valuable advice to lenders, developers, and their advisers. Clients also value Mansoor’s extensive network and relationships with government and regulatory bodies, industry professionals and the wider business community which gives him a critical advantage in identifying and dealing with any complexity or uncertainty that may arise in structuring, financing and developing large-scale projects in Oman’s evolving legal environment. His technical expertise, industry knowledge and in-depth local know-how has won him ‘star performer’ ranking in Chambers Global for the past eight years.

Al Busaidy Mansoor Jamal & Co. Tel: +968 2481 4466 P.O. Box 686, Ruwi Email: [email protected] Postal Code 112 URL: www.amjoman.com Sultanate of Oman

Henry Mitchell is a Senior Associate in the commercial team and has over eight years of post-qualification experience. Henry has advised sponsors, lenders, developers and contractors in relation to large-scale industrial, infrastructure and residential projects, mining projects, medical facilities and renewable power projects. Henry’s industry experience includes four years spent establishing a green-field gold mining project in Nigeria.

Al Busaidy Mansoor Jamal & Co. Tel: +968 2482 9200 P.O. Box 686, Ruwi Email: [email protected] Postal Code 112 URL: www.amjoman.com Sultanate of Oman

Al Busaidy Mansoor Jamal & Co. (AMJ) is a top-tier, full-service law firm of international quality established in Oman for over 30 years. It has been described as a rarity in the Middle East to be an independent, national firm that tops the legal rankings and is widely considered the strongest adviser in the market. It has expanded to become the largest law firm in Oman providing clients with significant in-country expertise. Eight teams of experienced UK, US and commonwealth-trained solicitors, barristers, Arab law specialists and Omani advocates serve a large portfolio of international and regional corpo- rates, financial institutions, government bodies, trading houses, and high-net-worth individuals. AMJ has the most elite and ranked lawyers in the jurisdiction, known for their involvement in innovative, ‘first of a kind’ deals and landmark projects in Oman and the region. www.amjoman.com

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Peru Peru

Rebaza, Alcázar & De Las Casas Luis Miguel Elias

1 Relevant Authorities and Legislation 2.2 Are there any specific steps the mining industry is taking in light of these developments?

1.1 What regulates mining law? After the announcement made by the President, the mining industry players and experts are currently discussing the possible The General Mining Law is the primary national law that regulates scope, feasibility, effects and timing for a new mining legal frame- the mining industry in Peru. Said law, its regulations and ancillary work in Peru. In general, the mining industry considers that it is rules apply in light of the Peruvian Constitution in a civil law- unlikely to have a new legal framework coming into effect in the based system. short run, especially considering other political developments (i.e. President’s proposal for early presidential and legislative elections 1.2 Which Government body/ies administer the mining to be held in April 2020) and other relevant legal reforms that are industry? still pending to be approved by the Government.

The Ministry of Energy and Mines (MINEM) is the main govern- 3 Mechanics of Acquisition of Rights ment body that administers the mining industry. Other relevant bodies include the Geological, Mining and Metallurgical Institute 3.1 What rights are required to conduct reconnaissance? (INGEMMET), the Ministry of Environment (MINAM), the National Environmental Certification Authority (SENACE), the Supervisory Agency for Investment in Energy and Mining (OSIN- All natural resources within the Peruvian territory are owned by ERGMIN) and the Agency for Environmental Assessment and the Peruvian State, which has sovereignty on the use and deploy- Enforcement (OEFA). ment of such resources. In respect of mineral resources, the General Mining Law regulates a system based on mining concessions. The Peruvian State retains the ownership of all mineral 1.3 Describe any other sources of law affecting the mining resources; however, the ownership of extracted minerals is vested industry. in the holders of mining concessions. Any person (including individuals and entities) is entitled to Other sources of law affecting the mining industry include, among request before INGEMMET the granting of mining concession others: rights. These rights are independent from surface and real estate ■ The Peruvian Constitution. property rights located over the premises of such mining conces- ■ The Peruvian Civil Code. sions. INGEMMET is the government body that consolidates a ■ The General Environmental Law. nationwide publicly available database with all mining concessions ■ The Law that Regulates Environmental Liabilities for Mining. for metallic and non-metallic minerals. ■ The Hydric Resources Law. Mining concessions are granted on a “first come, first served” ■ The General Law of Local Communities. basis. If simultaneous requests are made, an auction among the ■ The General Corporations Law. interested parties settles such requests. A mining concession ■ The General Law of the Public Registries. provides its holder with the exclusive right to undertake mining activity within a determined area. 2 Recent Political Developments All holders of mining concessions are required to pay good standing fees, called validity fees. These fees are calculated based on the concession area and paid on an annual basis to 2.1 Are there any recent political developments affecting INGEMMET. Reduced fees apply for artisanal and small mining the mining industry? producers. Failure to pay validity fees for two years will result in the cancellation of the mining concession.

In July 2019, the President of Peru publicly announced its plan to submit for Congress approval for an update to the General Mining 3.2 What rights are required to conduct exploration? Law. However, as of the date of this submission (August 12, 2019), it is unclear what will be the scope of any such update or All holders of mining concessions have the right to perform explo- new legal framework. ration and conduct mining activities. Hence, no proceeding to convert the exploration rights into operation rights applies. The

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same mining concession is valid for exploration and to conduct 4 Foreign Ownership and Indigenous Ownership mining activity in Peru. Requirements and Restrictions 3.3 What rights are required to conduct mining? 4.1 What types of entity can own reconnaissance, The following mining rights, as applicable, are required to conduct exploration and mining rights? mining operations: Individuals and entities, whether national or foreign, are entitled Mining Scope to apply for and hold mining rights. The latter is based on the Rights Peruvian Constitution, which acknowledges the same rights to all Mining Performance of exploration and conduct of national and foreign individuals and entities. concession metallic or non-metallic mining activities in The foregoing general rule is subject to an exception. a determined area. Foreigners are restricted from requiring property rights over real estate and/or mining concessions located 50km within Peru’s Beneficiation Performance of physical and/or chemical proc- country boundaries, unless prior authorisation is obtained via a concession edures required for extraction, concentration, Supreme Decree. smelting and/or refining. Public officers and officials, such as the President, Congress, General Auxiliary activities or complementary services, judges, ministers, prosecutors, among others, cannot participate in works such as ventilation, drainage, lifting or extract- mining while holding office. concession ion for two or more mining concessions. Mineral Required for massive and continuous transport- 4.2 Can the entity owning the rights be a foreign entity or transport ation of minerals via unconventional methods, owned (directly or indirectly) by a foreign entity and are concession such as conveyor belts, pipelines or aerial tramways. there special rules for foreign applicants?

Any foreign entity or foreign-owned entity, whether direct or indi- All holders of mining concessions are required under the General rect, is entitled to request and hold mining rights in Peru. No Mining Law to move into production and comply with the appli- special rules apply for foreign applicants, save for the restriction cable minimum annual production thresholds. As of 2019, the on acquisition of rights within 50km of the country’s borders minimum annual production threshold is of one Peruvian tax unit (refer to question 4.1 above). (PEN 4,200.00 or approximately USD 1,272.00) per hectare of the

mining concession. Failure to meet the minimum annual production threshold after 4.3 Are there any change of control restrictions applicable? 10 years from when the concession was granted will result in the application of penalty fees each year up to the 30th anniversary of No regulatory change of control restrictions apply in Peru for the the date when the concession was granted. Nonetheless, the mining industry. However, it is expected that sometime in late penalty will not apply if the investment made is 10 times more 2020 a new antitrust law and regulations will enter into effect. Said than the penalties incurred. Upon the 30th anniversary, and if the new framework would apply to all industries, including the mining holder cannot reach the minimum annual production threshold, industry. The National Institute for the Defense of Free the mining concession will automatically lapse and expire. Competition and the Protection of Intellectual Property (INDE- Other rights required to conduct mining activities in Peru COPI) will be the competent agency for all antitrust filings and the include the acquisition of surface and access rights to the area of requisite approval of market concentration acts or transactions. As interest (see section 8), environmental certification and permitting of the date of this submission, the new antitrust law and regula- (see section 9), and, as applicable, authorisations, permits and tions have not yet been promulgated. licences for the construction of facilities, use of explosives, use of water resources, use of controlled substances and chemicals, fuel 4.4 Are there requirements for ownership by indigenous storage, management and disposal of waste or hazardous materials, persons or entities? among others.

3.4 Are different procedures applicable to different There are no requirements for ownership of mining rights by indigenous persons, groups or entities. minerals and on different types of land?

4.5 Does the State have free carry rights or options to The same procedures to request and obtain mining rights apply to acquire shareholdings? all metallic and non-metallic concessions. Land-based mining concessions are granted in areas that range from 100 hectares to 1,000 hectares per concession. In marine zones, the concession The Peruvian State does not have free carry rights or options to may reach an area of up to 10,000 hectares. acquire shareholdings in mining companies or other entities that conduct mining in Peru. 3.5 Are different procedures applicable to natural oil and The Peruvian Constitution provides for the government to have a promotional role in the development of private investment. The gas? government may participate in any business only in a subsidiary manner, provided that, however, a special law is issued and Yes, different procedures and specific legislation applies for such approved by Congress. activities.

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5 Processing, Refining, Beneficiation and 7 Dealing in Rights by Means of Transferring Export Subdivisions, Ceding Undivided Shares and Mining of Mixed Minerals 5.1 Are there special regulatory provisions relating to processing, refining and further beneficiation of mined 7.1 Are rights to conduct reconnaissance, exploration and minerals? mining capable of being subdivided?

The General Mining Law and its regulations include special provi- The holder of a mining concession is entitled to file a subdivision sions for beneficiation rights and related processing and refining request before INGEMMET to separate the mining concession procedures. The law defines beneficiation as the conjunction of into two or more concessions. If the mining concession is mort- physical, chemical and/or chemical-physical processes required for gaged or encumbered, the authorisation and consent of the extraction or concentration in order to purify, smelt or refine creditor or holder of any such creditor rights is required. minerals. Beneficiation includes the following stages: 1. Mechanical preparation process, whereby a mineral is down- 7.2 Are rights to conduct reconnaissance, exploration and sized, classified and cleansed. mining capable of being held in undivided shares? 2. Metallurgy, whereby chemical and/or physical processes are performed to concentrate and extract minerals or their valuable compounds. A mining concession may be held by multiple parties or holders in 3. Refining process to purify the mineral products from prior undivided interests or shares. The undivided interests of multiple metallurgical processes. holders to a mining concession are of similar legal nature to the A holder of a beneficiation concession has the right to perform rights held by multiple owners of a single real estate property. extraction and/or concentration processes to purify, smelt and/or When multiple parties hold rights to a mining concession, they refine metals. must appoint a common representative.

In general, the commercialisation of minerals in Peru is unre- Mining concessions grant the right to explore for or mine metallic stricted. There are no restrictions on the export of minerals. or non-metallic minerals. Hence, a mining concession granted for Mining producers may freely export their production and no metallic minerals allows the holder of rights to explore for or mine authorisation or licence is required for such purposes. In the case primary and secondary metallic minerals. of gold, all individuals and entities that trade and/or refine such metal are required to be registered in the Special Registry of Gold 7.4 Is the holder of a right to conduct reconnaissance, Traders and Producers. exploration and mining entitled to exercise rights also over

residue deposits on the land concerned? 6 Transfer and Encumbrance Mining concessions are independent and differ from all surface 6.1 Are there restrictions on the transfer of rights to rights, facilities or residue deposits on the land concerned. In conduct reconnaissance, exploration and mining? order to exercise surface rights, access rights or other rights over the area of interest, the holder of the mining concession is required to acquire or obtain such rights or authorisation from There are no restrictions on the transfer of mining rights in Peru. their owners or holders (see section 8). Mining rights may be freely transferred among parties via agreements and no authorisation or consent is required from government bodies. 7.5 Are there any special rules relating to offshore The transfer, encumbrance or other disposition of mining rights exploration and mining? agreed among parties or pursued by creditors (such as injunctions) against holders of such mining rights, are all acts that may be regis- The General Mining Law and its regulations do not impose special tered before the Public Registries. Registration provides publicity rules for offshore exploration and mining. to the holder of such rights and enforceability priority of such rights against third parties. 8 Rights to Use Surface of Land

6.2 Are the rights to conduct reconnaissance, exploration and mining capable of being mortgaged or otherwise 8.1 Does the holder of a right to conduct reconnaissance, secured to raise finance? exploration or mining automatically own the right to use the surface of land? Mining rights are capable of being mortgaged, encumbered or otherwise granted as collateral to secure obligations, whether finan- Mining rights are independent from surface rights located on the cial or other. In case of mortgages, said security interests are same premises of land. Hence, the holders of mining rights may constituted upon their registration in the Public Registries. be different parties to those holders or owners of the lands where such mining rights are confined.

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There is no restriction for mining concession holders to acquire ■ Mining Operation Certificate. or purchase lands, real estate properties, easements, rights of way ■ Approval of the Mine Closure Plan and related guaranty to the and/or other surface rights owned or held by third parties. benefit of MINEM. If the owner of such properties is the government, then a regulated acquisition process would need to be initiated by the mining 9.2 What provisions need to be made for storage of tailings concession holder before the National Agency of State-owned and other waste products and for the closure of mines? Properties. If the owner or holder of such properties or rights is a local community, then such community’s approval is required and, Peruvian regulation imposes certain restrictions and obligations for generally, an agreement must be negotiated and agreed with the the storage of tailings and other waste products. Among others, community addressing their expectative in respect of the mining policies for the control and management of emissions, hazardous investment. materials and reagents are required to be implemented. On an Only in case of mining concessions granted over unclaimed and ongoing basis, OEFA monitors compliance with the applicable unoccupied lands, shall the holder of the mining rights automati- regulation, environmental certifications and authorisations. OEFA cally have the right to use the surface for mining purposes, without is entitled to carry on inspections and pursue investigations to additional authorisation and free of charge. audit compliance of environmental regulation and for the prevention of environmental risk and/or liabilities. The plan for the closure of a mine is subject to the approval of 8.2 What obligations does the holder of a reconnaissance MINEM. The holder of the mining concession is required to put vis-à-vis right, exploration right or mining right have the in place a guaranty to secure its obligations before MINEM, as landowner or lawful occupier? approved under the mine closure plan.

The holder of a mining concession has to respect the landowner’s 9.3 What are the closure obligations of the holder of a property or rights of an occupier. A holder of mining rights reconnaissance right, exploration right or mining right? cannot trespass such property or use surface lands without the landowner’s or occupier’s consent. The mine closure plan sets forth all actions, studies and obligations to be conducted by the holder of the mining rights in order to 8.3 What rights of expropriation exist? mitigate, reduce and/or eliminate the adverse effects that the mining operations may have on the environment, including the Expropriation rights of the government are limited to events of local population and ecosystems within the area of interest. The national security, or in case of public interest and necessity, as plan needs to address the technical and legal obligations to be specifically declared by law. In case of expropriation, the Peruvian performed progressively during the life of the mine. State is required to make a compensation payment to the former owner based on fair valuation of the expropriated property. 9.4 Are there any zoning or planning requirements

applicable to the exercise of a reconnaissance, exploration 9 Environmental or mining right?

9.1 What environmental authorisations are required in Mining rights are not subject to specific zoning or planning order to conduct reconnaissance, exploration and mining requirements; however, such rights will not be available or granted operations? on the premises of protected areas or other restricted and regulated areas.

The following environmental certification and related authorisa- 10 Native Title and Land Rights tions are required, as applicable, for mining: ■ A statement of environmental impact is required for projects or activities that have no or a minor impact on the environ- 10.1 Does the holding of native title or other statutory ment. surface use rights have an impact upon reconnaissance, ■ A semi-detailed environmental impact study is required for projects or activities that have a moderate adverse impact on exploration or mining operations? the environment. ■ A detailed environmental impact study is required for projects The government of Peru ratified the International Labour or activities that have a significant adverse impact on the envi- Organization Convention No. 169 and adopted its principles into ronment. domestic legislation. Hence, prior consultation to native or indige- ■ Water permits, which may include the licence to use certain nous communities is required for new projects within an area of hydric resources, authorisation to discharge wastewaters or interest. authorisation to reuse and/or treat water. In case of a negative response from native communities, such ■ Certification on the absence of archaeological remains and event does not cancel or terminate the mining rights. As construction authorisation required for the construction and mentioned in section 8, mining rights are independent and differ implementation of the project’s facilities. from surface rights or other rights to land, such as native titles or ■ Authorisation to use explosives for construction and mining. others. ■ Registry and authorisation for the use of controlled substances and chemicals. ■ Approval of the Mining Plan.

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11 Health and Safety The Constitution acknowledges the ownership of the Peruvian State over natural resources and provides that concessions grant their holders real rights in a civil law system and subject to their 11.1 What legislation governs health and safety in applicable laws. Likewise, the Constitution acknowledges that property is an inviolable right. mining?

13.2 Are there any State investment treaties which are Health and safety in mining is governed by the following main laws and regulations: applicable? ■ General Mining Law and its regulations. ■ Law of Safety and Health in Employment. The government of Peru promotes foreign investment and has ■ Regulations for Occupational Health and Safety for Mining. more than 30 bilateral agreements with countries from the ■ Law of Productivity and Competitiveness and its regulations. Americas, Asia and Europe. Further, Peru is signatory to: ■ The Convention on the Recognition and Enforcement of 11.2 Are there obligations imposed upon owners, Foreign Arbitral Awards. ■ The International Centre for Settlement of Investment employers, managers and employees in relation to health Disputes, a World Bank group international arbitration insti- and safety? tution for dispute resolution between international investors. ■ The Multilateral Investment Guarantee Agency, a World Bank Health and safety regulations in mining impose general and group organisation which offers political risk insurance and specific obligations to all stakeholders, including holders of mining credit enhancement guarantees. rights, employers, managers and employees. Among others, the following main obligations apply: 14 Taxes and Royalties ■ Specific safety requirements for construction, operation and other mining activities. ■ Medical exams are required for occupational safety and health. 14.1 Are there any special rules applicable to taxation of ■ Minimum salary regulations are in place for mining employees. exploration and mining entities? ■ Special holiday is acknowledged for mining employees. ■ Special retirement law and regulations apply to mining The following special taxation rules apply: employees. ■ Mining royalties levy the quarterly sales revenues from metallic ■ Contractual obligations under collective bargaining agreements and non-metallic mineral resources at a minimum rate of 1% or other agreements with mining employees may address addi- and up to 12%. tional health and safety rights and obligations. ■ Special mining tax levies the operating profit of metallic Minem, Osinergmin, the Ministry of Labor and Employment, resources at a tax rate that ranges from 2% to 8.4%. and the Agency of Labor Inspection (SUNAFIL) are the regula- ■ Special mining contribution applies to entities that have tory bodies that supervise the compliance of health and safety entered into tax stability agreements with the government. obligations in mining. This contribution is calculated over and ranges between 4% to

13.12% of the operating profit of metallic mineral resources. 12 Administrative Aspects All payments of mining royalties, special mining taxes and special mining contributions are deductible expenses for income tax purposes. 12.1 Is there a central titles registration office? Further, as an incentive for a mining investment, an early recovery regime of VAT applies for mining entities in the explo- Mining rights are registered before the Mining Registry of the ration stage, as well as special tax depreciation for all mining Peruvian Public Registries and recorded before INGEMMET in a companies with a stability agreement or in general for mining public nationwide database that reflects the regulatory status on equipment and machinery. validity fee payments.

14.2 Are there royalties payable to the State over and 12.2 Is there a system of appeals against administrative above any taxes? decisions in terms of the relevant mining legislation? See question 14.1. Peruvian law provides that all administrative decisions, whether related to mining or not, are to be subject to a dual administrative 15 Regional and Local Rules and Laws instance. A decision from a first instance may be appealed for review by the second administrative instance which is of a higher level. Further, a decision of the second administrative instance 15.1 Are there any local provincial or municipal laws that may be challenged in a judicial process before Peruvian courts and need to be taken account of by a mining company over and tribunals. above National Legislation?

13 Constitutional Law National legislation prevails over local, provincial or municipal regulation. Local provincial and municipal rules cannot go against 13.1 Is there a constitution which has an impact upon the Constitution, and laws are required to be issued subject to the rights to conduct reconnaissance, exploration and mining? national legal framework.

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15.2 Are there any regional rules, protocols, policies or 16.2 Are there obligations upon the holder of an laws relating to several countries in the particular region exploration right or a mining right to relinquish a part that need to be taken account of by an exploration or mining thereof after a certain period of time? company? Mining concessions are irrevocable so long as all legal obligations International treaties and conventions that Peru is party to are to maintain such rights are being met by its holder. Only if such adopted by and apply as domestic legislation. Peru has ratified: holder fails to meet its obligations (refer to the second paragraph ■ The ILO Convention 169 (see question 9.1). of question 15.1) or expressly files a request for the extinction of ■ The International Covenant on Economic, Social and Cultural such right, may such person relinquish their mining right. Rights. ■ The Convention of Technical Cooperation with the Inter- 16.3 Are there any entitlements in the law for the State American Development Bank. to cancel an exploration or mining right on the basis of ■ The International Technical Law ISO 2,600 providing guide- failure to comply with conditions? lines on social responsibility. See question 13.2. Refer to question 16.2. Further, the Peruvian State may cancel 16 Cancellation, Abandonment and mining rights in the following cases: ■ if the mining concession overlaps with other rights having Relinquishment statutory preference or priority; ■ if the mining rights are inaccessible; or 16.1 Are there any provisions in mining laws entitling the ■ if they are declared null and void due to restrictions of the holder of such rights. holder of a right to abandon it either totally or partially?

The General Mining Law provides that petitions for mining rights shall fall in an abandonment event if the petitioner does not comply with the obligations and requirements to be filed within the applicable request proceeding. In case a holder of a mining right fails to pay the validity fees and/or penalties (for not reaching the minimum annual production threshold) for two years, whether consecutive or not, such mining right will lapse and expire.

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Luis Miguel Elias leads the mining, natural resources and infrastructure practice of Rebaza, Alcázar & De Las Casas. He has vast experience in cross-border and local mining transactions, including M&A, metal streaming, acquisition financing, joint ventures, mining royalties, off-takes and other commercial agreements. He regularly advises Peruvian and international stakeholders in the purchase or sale of mining assets and rights, financing of mining, energy and other industrial projects, as well as on general corporate matters. In 2012–2013, Luis Miguel was an international associate at Simpson Thacher & Bartlett LLP in New York, focusing on capital markets and project finance transactions in Latin America.

Rebaza, Alcázar & De Las Casas Tel: +51 1442 5100 Av. Víctor Andrés Belaúnde 147 Email: [email protected] Vía Principal 133, Floors 2–3 URL: www.rebaza-alcazar.com San Isidro, Lima 27 Peru

Rebaza, Alcázar & De Las Casas is a leading law firm in Peru with over 15 years of noted commitment to client service. The strength of our firm relies on the platform we built for developing talent within our organisation which has helped to inspire our clients to efficiently reach their goals. Professional excellence is the main driver of our firm. We strongly believe that our firm’s distinctive and passionate approach to the practice of law plays a key role in our success. Our transactional track record and achievements are evidence of the business oriented and added value approach of our lawyers. The most prestigious publications, professional organisations and research institutions that evaluate the legal market in Peru and Latin America, acknowledge our firm as an innovative and cutting-edge force. www.rebaza-alcazar.com

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Philippines Philippines

Patricia A. O. Bunye

Cruz Marcelo & Tenefrancia Alpheus D. Macalalad

1 Relevant Authorities and Legislation (ii) imposed a moratorium against the issuance of mineral agreements (“MAs”) until the enactment of legislation rationalising existing revenue sharing schemes and mechanisms; and (iii) consti- 1.1 What regulates mining law? tuted the Mining Industry Coordinating Council (“MICC”), the body tasked to implement EO 79, ensure continuing dialogue and coordination among all stakeholders in the mining industry and Philippine mining law is primarily regulated by the Philippine conduct and facilitate the necessary capacity and institutional Constitution, which provides that all natural resources are owned by building programme. Philippine the state. National laws, i.e. Republic Act No. 7942 (the “ Currently, there are a number of bills pending in Congress which Mining Act IRR ”) and its implementing rules and regulations (“ ”) may affect the mining industry, including: House Bill No. 00288 (An [as contained in the Department of Environment and Natural Act Establishing the Fiscal Regime for the Mining Industry); DENR Resources (“ ”) Administrative Order No. 2010-21], local House Bill No. 00113 (An Act Prescribing Standards for ordinances and executive issuances governing mining must be Responsible Mining); House Bill No. 01455 (An Act Creating a consistent with the Philippine Constitution. Joint Congressional Oversight Committee on Mining); House Bill No. 01470 (An Act Regulating the Practice of Mining 1.2 Which Government body/ies administer the mining Engineering in the Philippines); and Senate Bill No. 313 (An Act industry? Establishing the Fiscal Regime for the Mining Industry).

The DENR is the primary government agency responsible for the 2 Recent Political Developments conservation, management, development and proper use of the country’s environment and natural resources. Line bureaus under 2.1 Are there any recent political developments affecting the the DENR, particularly, the Mines and Geosciences Bureau (“MGB”) and the Environmental Management Bureau (“EMB”), mining industry? are respectively responsible for the proper management and disposition of mineral lands and mineral resources and the The current administration has taken a conservative position on implementation of environmental laws. Further, local government mining and continues to implement the moratorium on new MAs. units (“LGUs”) also exercise powers that affect the mining industry Further, the DENR Administrative Order No. 2017-10, which pursuant to their mandate to promote the general welfare within imposes a ban on open-pit mining, remains effective. their territorial jurisdictions, provided they do not contravene the Philippine Constitution and the Philippine Mining Act. 2.2 Are there any speciﬁc steps the mining industry is taking

in light of these developments? 1.3 Describe any other sources of law affecting the mining industry. The Chamber of Mines of the Philippines, which is a professional association of the country’s largest mining, quarrying and mineral Republic Act No. 6969 (the “Toxic Substance and Hazardous processing companies, formed with the aim of promoting the and Nuclear Wastes Control Act”) regulates the importation, responsible exploration, development and utilisation of minerals, has manufacture, processing, distribution, use and disposal of chemical been working to lift the ban on open-pit mining, considering that substances and mixtures. Republic Act No. 8749 (the “Clean Air most of the deposits are low grade and are situated near the surface. Act”) outlines measures to reduce air pollution. Republic Act No. Local mining companies have agreed to commit to the Mining 9003 (the “Ecological Solid Waste Management Act”) provides Association of Canada’s Towards Sustainable Mining initiative, which for a systematic ecological solid waste management program. advocates responsible mining. Republic Act No. 8371 (the “Indigenous Peoples’ Rights Act”) recognises and promotes the rights of indigenous communities by 3 Mechanics of Acquisition of Rights requiring their free, prior and informed consent (“FPIC”) in specified instances relating to mining activities, among others. Executive Order No. 79 (“EO 79”), Series of 2012, was issued to 3.1 What rights are required to conduct reconnaissance? institutionalise reforms in the Philippine Mining Sector and, among others: (i) required the review of the performance of existing mining Under the Philippine Mining Act, reconnaissance is subsumed under operations and the cleansing of non-moving mining rights holders; exploration, which requires an exploration permit (“EP”). A holder

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of an EP is granted the right to conduct exploration for all minerals 3.5 Are different procedures applicable to natural oil and in specified areas. Mandatory requirements for EPs include: gas? 1. Location map/sketch plan. 2. Two-year exploration work programme. 3. Certificate of Environmental Management and Community Presidential Decree No. 1857 (the Oil Exploration and Relations Record or Certificate of Exemption. Development Act of 1972) governs the procedure for natural oil 4. Environmental Work Program (“EWP”). and gas exploration. It provides that such contracts shall be executed with the Department of Energy (“DOE”), with the approval of the President, and only after due public notice, pre-qual- 3.2 What rights are required to conduct exploration? ification and public bidding. In case bids are requested and no bid is submitted, or the bids submitted are rejected by the DOE for See question 3.1. being disadvantageous to the Government, the contract may be concluded through negotiation. 3.3 What rights are required to conduct mining? 4 Foreign Ownership and Indigenous Ownership Generally, the right to conduct mining is granted under MAs or Requirements and Restrictions Financial or Technical Assistance Agreements (“FTAAs”). MAs are agreements between a contractor and the government wherein the government grants to the contractor the exclusive right 4.1 What types of entity can own reconnaissance, to conduct mining operations within, but not title over, the contract exploration and mining rights? area. The requirements for MAs include: 1. Location map/sketch plan. Natural and juridical persons may own exploration and mining 2. Three-year development/utilisation work programme. rights. The latter may be in the form of a corporation, partnership, 3. Mining Project Feasibility Study. association, or cooperative. 4. Complete and final exploration report. 5. Certification that mining claims are subsisting. 4.2 Can the entity owning the rights be a foreign entity or 6. Environmental report. 7. Environmental Compliance Certificate (“ECC”). owned (directly or indirectly) by a foreign entity and are there 8. Approved survey plan. special rules for foreign applicants? 9. Environmental Protection and Enhancement Program (“EPEP”). 10. Certificate of Environmental Management and Community Mining is considered a nationalised industry and is limited by the Relations Record or Certificate of Exemption. Philippine Constitution to Philippine citizens or corporations at least 11. Certificate Precondition from the National Commission on 60% of whose capital is owned by such citizens. Hence, only Indigenous Peoples (“NCIP”). Philippine citizens or such corporations may be granted MAs. FTAAs may be entered into between a Contractor and the Nevertheless, non-Philippine nationals or corporations that are Government for the large-scale exploration, development and utili- 100% foreign-owned may still apply for EPs and enter into FTAAs. sation of gold, copper, nickel, chromite, lead, zinc and other minerals, except for cement raw materials, marble, granite, sand and gravel and construction aggregates. 4.3 Are there any change of control restrictions applicable? Requirements for FTAAs include: 1. Location map/sketch plan. Yes, transfer of the rights and obligations under MAs are subject to 2. Two-year exploration work programme. approval of the DENR Secretary. 3. Posting of bond. 4. Certificate of Environmental Management and Community 4.4 Are there requirements for ownership by indigenous Relations Record or Certificate of Exemption. persons or entities? 5. EWP. 6. Approved survey plan. 7. ECC. There are none. 8. EPEP. 9. Social Development and Management Program. 4.5 Does the State have free carry rights or options to 10. Mining Project Feasibility Study. acquire shareholdings? 11. Three-year development/utilisation work programme.

There are none. 3.4 Are different procedures applicable to different minerals and on different types of land? 5 Processing, Reﬁning, Beneﬁciation and Export

Generally, the procedures for different minerals and different types of land are the same. FTAAs, however, may not be entered into with 5.1 Are there special regulatory provisions relating to respect to cement raw materials, marble, granite, sand and gravel and processing, reﬁning and further beneﬁciation of mined construction aggregates. The Philippine Mining Act also allows qual- minerals? ified persons to apply for quarry permits for building and construction materials located within a maximum area of five hectares. A Minerals Processing Permit (“MPP”) is necessary before engaging For procedures relating to ancestral lands, please see question 10.1. in the processing of minerals. MPPs shall be renewable for a period There are also additional requirements for offshore exploration of five years, but cannot exceed a total term of 25 years. However, permit (“OEP”) applications. in the case of contractors, holders of Quarry Permits and Industrial

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Sand and Gravel Permits, and the approved Work Program for the and are not held in undivided shares by those who compose the production period is sufficient to process minerals in lieu of MPPs. corporation or partnership.

Parties engaged in mineral trading either domestically or internation- The Philippine Mining Act is silent as to a permit holder’s right to ally must be registered with the Department of Trade and Industry explore or mine for secondary minerals. However, the MGB and accredited by the DENR. Marketing contracts and sales agree- requires permittees and permit holders to indicate in their Annual ments involving commercial disposition of minerals and by-products Mineral Resource/Ore Reserve Inventory Report both primary and are subject to approval by the DENR Secretary upon the recommen- secondary or accessory minerals. dation of the MGB Director. The approved marketing contracts and sales agreements shall be registered with the MGB. Further, the 7.4 Is the holder of a right to conduct reconnaissance, sale must be made at the highest commercially achievable market exploration and mining entitled to exercise rights also over price and lowest commercially achievable fees under prevailing circumstances. The parties must also negotiate sales terms and residue deposits on the land concerned? conditions compatible with world market conditions. For exportation of ores, a permit must be secured from the MGB. Yes. Permit holders are allowed to manage mine wastes and mill tail- There are no tax or duty restrictions on the export of minerals. ings produced by operations provided that they acquire an ECC Under the National Internal Revenue Code, export sales, which from the DENR and an Authority to Construct and Operate include export of minerals, are subject to 0% value-added tax. (“ACO”) from the concerned EMB Regional Office of the DENR.

6 Transfer and Encumbrance 7.5 Are there any special rules relating to offshore exploration and mining? 6.1 Are there restrictions on the transfer of rights to conduct reconnaissance, exploration and mining? Offshore exploration activities shall be carried out in accordance with the United Nations Convention on the Law of the Sea and in a manner that will not adversely affect the safety of navigation at sea EPs, MAs, and FTAAs may be transferred with the approval of the and will ensure accommodation with other marine activities such as MGB Director (for EP transfer) and the MGB Regional Director fishing, aquaculture, transportation, etc. (for MAs and FTAAs). The IRR of the Philippine Mining Act also provides for additional requirements for obtaining an OEP. Further, the following offshore 6.2 Are the rights to conduct reconnaissance, exploration areas are considered closed to mining applications: and mining capable of being mortgaged or otherwise secured 1. offshore areas within 500 metres from the mean low tide level and to raise ﬁnance? onshore areas within 200 metres from the mean low tide level along the coast are considered areas closed to mining applications; and 2. in case of seabed/marine aggregate quarrying, offshore areas Yes. These rights are usually expressly stated in the necessary written less than 1,500 metres from the mean low tide level of land or agreement embodying the right to conduct exploration and mining. island(s) and where the seabed depth is less than 30 metres measured at mean sea level. 7 Dealing in Rights by Means of Transferring With regard to MAs, the maximum area that a qualified person Subdivisions, Ceding Undivided Shares and may apply for or hold at any one time are as follows: Mining of Mixed Minerals Offshore, in the entire Philippines, beyond 500 metres from the mean low tide level: 1. for individuals – 50 blocks or approximately 4,050 hectares; 7.1 Are rights to conduct reconnaissance, exploration and 2. for corporations, partnerships, associations, or cooperatives – mining capable of being subdivided? 500 blocks or approximately 40,500 hectares; and 3. for the Exclusive Economic Zone – a larger area to be determined by the Secretary upon the recommendation of the MGB Director. Yes. While the Philippine Mining Act contemplates that a single Some of the specific provisions established with regard to the qualified person may apply for exploration and mining permits, it conduct of offshore mining are: also sanctions the partial transfer or assignment of these rights to 1. drilling platform(s) shall be enclosed with an oil spill contain- other qualified persons. The transferee may further assign or ment boom; transfer its rights to others likewise qualified. This results in the 2. only water-based drilling mud/additives shall be used; subdivision of rights to conduct exploration and mining. 3. the Contractor shall utilise the appropriate and efficient mining method with minimal adverse impact(s) to the marine environ- 7.2 Are rights to conduct reconnaissance, exploration and ment. The use of a high-pressure water jet in the extraction of mining capable of being held in undivided shares? materials shall be prohibited; 4. on-board mineral processing and laboratory testing/analysis requiring the use of chemicals shall not be allowed; and In cases where the permittees or contractors are corporations or 5. size reduction processes, such as crushing and grinding, shall be partnerships, the rights granted under the permit or contract belong prohibited. exclusively to the corporation or partnership to which they are given

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8 Rights to Use Surface of Land ment systems, quarry sites and other mining-disturbed landforms, including those disturbed during exploration, must be progressively rehabilitated as prescribed in the ECC and/or EPEP. Additionally, 8.1 Does the holder of a right to conduct reconnaissance, mine site decommissioning and rehabilitation shall aim to establish a land use capability that is functional and proximate to the land use exploration or mining automatically own the right to use the prior to the disturbance of the mine area, unless other more benefi- surface of land? cial land uses are predetermined and agreed in partnership with local communities and LGUs. No. The ownership over the surface areas of the land remains with the landowners. However, permit holders and contractors may 9.4 Are there any zoning or planning requirements applicable to enter, occupy, and explore mining areas or lands after notifying and the exercise of a reconnaissance, exploration or mining right? paying just compensation to landowners.

There are areas under the Philippine Mining Act and its IRR where 8.2 What obligations does the holder of a reconnaissance applications for MAs or FTAAs are not allowed: vis-à-vis right, exploration right or mining right have the a. in military and other government reservations, except upon prior landowner or lawful occupier? written clearance by the government agency concerned; b. near or under public or private buildings, cemeteries, archeological The holder of a mining right is responsible for any damage to the and historic sites, bridges, highways, waterways, railroads, reservoirs, property of the landowner, occupant or concessionaire because of dams or other infrastructure projects, public or private works, the mining operations. The amount of compensation may be based including plantations or valuable crops, except upon written on the agreement between the parties or the determination of the consent of the government agency or private entity concerned; Panel of Arbitrators. To guarantee the payment of proper and just c. in areas covered by valid and existing mining rights; compensation, the holder of the right shall post a bond with the d. in areas expressly prohibited by law; concerned Regional Office. e. in areas covered by small-scale miners as defined by law, unless they have the prior consent of the small-scale miners, in which case a royalty payment upon the utilisation of minerals shall be agreed 8.3 What rights of expropriation exist? upon by the parties, said royalty forming a trust fund for the socioeconomic development of the community concerned; and The Philippine Mining Act provides that contractors’ properties are f. old growth or virgin forests, proclaimed watershed forest generally free from expropriation. However, the government may reserves, wilderness areas, mangrove forests, mossy forests, expropriate when the purpose is for public use or in the interest of national parks, provincial/municipal forests, parks, greenbelts, national welfare or defence. In such cases, foreign investors or enter- game refuge and bird sanctuaries as defined by law and in areas prises shall have the right to remit sums received as compensation expressly prohibited under the National Integrated Protected for the expropriated property in the currency in which the invest- Areas System. ment was originally made and at the exchange rate prevailing at the In addition, the following areas were declared closed for mineral time of remittance. contracts, concessions, and agreements under EO 79: a. prime agricultural lands, in addition to lands covered by the 9 Environmental Comprehensive Agrarian Reform Law, including plantations and areas devoted to valuable crops, and strategic agriculture and fisheries development zones and fish refuge and sanctuaries 9.1 What environmental authorisations are required in order declared as such by the Secretary of the Department of to conduct reconnaissance, exploration and mining Agriculture; operations? b. tourism development areas, as identified in the National Tourism Development Plan; and c. other critical areas, island ecosystems, and impact areas of An EWP is required prior to the approval of an application for an mining as determined by current and existing mapping technolo- EP. gies, that the DENR may identify pursuant to existing laws, An ECC is required prior to the approval of MAs or FTAAs. rules, and regulations.

9.2 What provisions need to be made for storage of tailings 10 Native Title and Land Rights and other waste products and for the closure of mines?

Permittees must first secure clearance from the MGB, without prej- 10.1 Does the holding of native title or other statutory udice to other required permits from other DENR agencies, before surface use rights have an impact upon reconnaissance, constructing and operating building tailings or waste dams. exploration or mining operations? Permittees are required to establish contingency and emergency preparedness plans to deal with significant events, which are assessed Yes. Indigenous Cultural Communities (“ICCs”) and Indigenous by the MGB prior to issuing the said clearance. Peoples (“IPs”) are given priority rights in the harvesting, extraction, development or exploitation of natural resources within their ances- 9.3 What are the closure obligations of the holder of a tral domains. No ancestral land shall be opened for mining reconnaissance right, exploration right or mining right? operations without the FPIC of the ICCs and IPs concerned. The parties must enter into an agreement with ICCs and IPs indicating the royalty payment, which may not be less than 1% of the gross After the termination stage of a mining operation, all open-pit work output. The said royalty shall form part of a trust fund for the areas, underground workplaces, mine waste and tailings impound- socio-economic well-being of the ICCs and IPs.

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Further, no MAs, FTAAs, or mining permits shall be granted in 13 Constitutional Law areas subject to certificates of ancestral domains or ancestral land claims or in areas verified by the Regional Office or other office or agency of the government authorised by law for such purpose as 13.1 Is there a constitution which has an impact upon actually occupied by the ICCs under a claim of time-immemorial rights to conduct reconnaissance, exploration and mining? possession except with their FPIC.

11 Health and Safety Under the Philippine Constitution, the state owns all natural resources, including minerals. Thus, the exploration, development and utilisation of mineral resources are under the full control and 11.1 What legislation governs health and safety in supervision of the state. Nevertheless, mining rights may be mining? acquired by private parties through an FTAA, an EP or an MA. Further, mining rights are protected by the Philippine Constitution under the non-impairment clause, which states that no law impairing The Philippine Mining Act and its IRR are the principal health and the obligation of contracts shall be passed. safety laws for the mining industry. Other health and safety regulations which are also applicable to the mining industry may be found 13.2 Are there any State investment treaties which are in the Philippine Labour Code. applicable? 11.2 Are there obligations imposed upon owners, employers, managers and employees in relation to health and The Philippines has entered into bilateral investment treaties (“BITs”) that generally apply to investments made by foreign nationals of states safety? that are parties to the BITs. There is currently no treaty specifically applicable to the mining industry. Employers are required, among others, to: 1. establish a safety and health office; 14 Taxes and Royalties 2. make available personal protective equipment in accordance with the type of work performed at no cost to the employee; 3. provide training of employees in first-aid, mine rescue, fire- 14.1 Are there any special rules applicable to taxation of fighting and other safety and health measures and proper job exploration and mining entities? procedures; 4. provide hospitalisation and medical facilities, including the transportation to the hospital and provide full treatment to employees Aside from the payment of income tax, mining entities are also liable injured and those suffering from occupational-related diseases for excise tax and value-added tax on mineral products, which are during the performance of their work; and national taxes, and for customs duties. They are also liable for local 5. submit to the MGB Director a Safety and Health Program. business taxes and real property taxes which are local taxes. Contractors in MAs and FTAAs are also granted fiscal and non- fiscal incentives. 12 Administrative Aspects 14.2 Are there royalties payable to the State over and 12.1 Is there a central titles registration ofﬁce? above any taxes?

The MGB and its regional and other offices have a Mining Recorder Mining operations within mineral reservations are subject to a royalty Unit in their respective offices. The Mining Recorder is required to paid to the MGB that shall not be less than 5% of the market value maintain registers for permits. of the gross output of the minerals or mineral products extracted The MGB regularly publishes this data through its official website or produced from the mineral reservations exclusive of all other (www.mgb.gov.ph). The information published includes details on taxes. existing EPs, MAs, FTAAs, MPPs, pending mining applications, and pending cases with the Mines Adjudication Board (“MAB”) and 15 Regional and Local Rules and Laws Panel of Arbitrators.

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15.2 Are there any regional rules, protocols, policies or period, the Contractor shall finally relinquish to the Government any portion of the contract area which shall not be necessary for mining laws relating to several countries in the particular region that operations and not covered by any declaration of mining feasibility need to be taken account of by an exploration or mining provided that each mining area after final relinquishment shall not company? be more than 5,000 hectares; and (iii) the Contractor may, at its discretion, submit to the concerned DENR Regional Office a decla- There are none. ration of mining project feasibility over any portion of its contract area prior to the lapse of exploration or prefeasibility period. In 16 Cancellation, Abandonment and such an event, the Contractor shall have the right to continue its mineral exploration or feasibility studies during the exploration and Relinquishment feasibility periods, respectively, in respect to the remaining contract area. 16.1 Are there any provisions in mining laws entitling the holder of a right to abandon it either totally or partially? 16.3 Are there any entitlements in the law for the State to cancel an exploration or mining right on the basis of failure to Abandonment of mining rights is allowed by the Philippine Mining comply with conditions? Act if the holder deems the mining project to be economically unvi- able even after exerting reasonable diligence to remedy the cause of Yes. With regard to an EP, the DENR Secretary, MGB Director, or the problem. However, abandonment of the right does not release MGB Regional Director concerned may cancel the EP for violations the holder from his financial, environmental, legal and fiscal obliga- by the permittee of the terms and conditions thereof, including the tions arising from his exercise of the right. failure to secure the required proof of consultation with or project presentation to the legislative body of the LGU concerned. 16.2 Are there obligations upon the holder of an MAs may be cancelled, revoked or terminated for the failure of exploration right or a mining right to relinquish a part thereof the contractor to comply with the terms and conditions thereof. FTAAs may be cancelled, revoked or terminated, after due after a certain period of time? process, under any of the grounds for the cancellation of an EP, MA, or FTAA. The holder of an EP must annually relinquish at least 20% of the The grounds for the cancellation, revocation and termination of permit area during the first two years of exploration and at least 10% an EP, MA, or FTAA are: considered falsehoods or omission of of the remaining permit area annually during the extended explo- facts in the application for the above permits which may alter, ration period. However, if the permit area is less than 5,000 change or affect substantially the facts set forth in said statements; hectares, the permittee need not relinquish any part thereof. non-payment of taxes and fees due to the government for two An FTAA is also subject to relinquishment as follows: (i) at least consecutive years; failure to perform all other obligations, including 25% of the original contract area during the first two years of the abandonment, under the permits or agreements; violation of any of exploration period and at least 10% of the remaining contract area the terms and conditions of the permits or agreements; and viola- annually during the extended exploration period and pre-feasibility tion of existing laws, policies and rules and regulations. study period; (ii) during the exploration or pre-feasibility study

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Patricia A. O. Bunye heads Cruz Marcelo & Tenefrancia’s Mining & Natural Resources Department and Energy practice group and is also a Partner in its Intellectual Property Department. She is the Founding President of Diwata-Women in Resource Development, Inc., a non-government organisation advocating the responsible development of the Philippines’ wealth in resources, principally, through industries such as mining, oil and gas, quarrying and other mineral resources from the earth for processing. She writes a regular column in Philippine Resources Journal, a Mining, Petroleum and Energy publication.

Cruz Marcelo & Tenefrancia Tel: +632 8810 5858 9th, 10th, 11th & 12th Floors, One Orion Email: [email protected] 11th Avenue corner University Parkway URL: www.cruzmarcelo.com Bonifacio Global City Metro Manila Philippines

Alpheus D. Macalalad is a Senior Associate in the Mining and Natural Resources and Energy Departments of Cruz Marcelo & Tenefrancia. His practice encompasses a broad scope of legal topics involving the Philippine resources sector, ranging from general matters to complex legal issues. Mr. Macalalad consistently provides comprehensive advice to clients regarding corporate restructuring, immigration, labour, indigenous peoples, land acquisition, local government, administrative regulation, intellectual property, and environment, among others, and frequently collab- orates with members of the firm’s other departments. He has conducted legal reviews of corporations involved in high stakes transactions and has been part of the team’s handling of controversial cases in the Supreme Court. He regularly attends local and international mining and energy events and conferences, such as the Mining Philippines Conference and Exhibition, Annual Mine Safety and Environment Conference, Power and Electricity Conference, Asian Development Bank Annual Clean Energy Forum, Mines and Money Asia, and the Asia Mining Conference.

Cruz Marcelo & Tenefrancia is a top-tier law firm in the Philippines recognised honed from a keen understanding of the needs of foreign companies doing for, among others, its conscientious, proactive, and highly skilled mining and business in the Philippines. The group also possesses unique proficiencies natural resources team. and partnerships that allow it to have strategic collaborations with significant It provides excellent legal assistance to mining and exploration companies in all industry organisations and agencies. levels of development involving complex and multifaceted legal issues, such as www.cruzmarcelo.com foreign ownership, partnerships and joint ventures, contracts, compliance and permitting, land acquisition, environment, and ancestral domains. It has also represented clients in both administrative and judicial cases. A multi-disciplinary approach, often involving collaboration with the firm’s other departments, allows the team to effectively service all of its clients’ business needs. The mining and natural resources team has been consistently cited in various international publications for offering concise, relevant and insightful advice

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Poland Poland

Jacek Michalski

Wolf Theiss Izabela Podleśna

1 Relevant Authorities and Legislation ■ the Act on preservation of the national character of the strategic natural resources of the country of 6 July 2001 which specifies Polish strategic natural resources; 1.1 What regulates mining law? ■ the Ordinance of the Minister of Environment of 24 April 2012 on the detailed requirements for projects for the development of deposits which specifies what should be included in projects Mining law in Poland is regulated primarily by the Geological and for the development of deposits; and Mining Law of 9 June 2011 and by the Ordinance of the Council of ■ the Act on the function of hard coal mining of 7 September 2007 Ministers of 10 January 2012 on the tender for the establishment of which sets out the principles for financial restructuring of mining Ordinance a mining usufruct (the “ ”). The Geological and Mining enterprises, rules for liquidation of mines, rules for employment Law sets out the rules and conditions for undertaking, pursuing, and restructuring in liquidated mines, conditions for obtaining initial concluding: geological works; extraction of minerals from deposits; investment subsidies, and principles of corporate governance. underground tankless storage of substances; underground storage of waste; and geological carbon dioxide storage as well as the requirements for the protection of mineral deposits; groundwater; 2 Recent Political Developments and other aspects of the environment. The Ordinance sets out tender details and the procedure for organising and conducting a 2.1 Are there any recent political developments affecting the tender. mining industry?

1.2 Which Government body/ies administer the mining From today’s perspective it is safe to assume that no such develop- industry? ments may occur or may affect the mining industry.

Geological administration authorities include: the Minister of the 2.2 Are there any speciﬁc steps the mining industry is taking Environment; marshals of voivodships; and heads of poviats. in light of these developments? State geological services are performed by the Polish Geological Institute – National Research Institute, which: initiates, coordinates, and fulfils responsibilities aimed at exploring the geological structure Please see question 2.1 above. of the country; maintains a central geological archive; gathers and makes available geological information; maintains geological 3 Mechanics of Acquisition of Rights databases; draws up a national assessment of mineral deposit reserves; coordinates and performs geological cartography works (and performs related pilot works); maintains a register of mining 3.1 What rights are required to conduct reconnaissance? districts and closed geological carbon dioxide repositories; and identifies and monitors geological risks. The following activities require a concession under the Polish Geological Mining supervisory authorities are: the President of the State and Mining Law: (i) prospecting for or exploration of mineral deposits Mining Authority; directors of local mining authorities; and the covered by mining ownership (other than hydrocarbon deposits); (ii) Director of the Specialist Mining Authority. The President of the prospecting for or exploration of a geological carbon dioxide storage State Mining Authority is a government administration authority, complex; (iii) extraction of minerals from deposits; (iv) prospecting for acting under the supervision of the Minister of Energy. or exploration of hydrocarbon deposits and extraction of hydrocarbons from deposits; (v) underground tankless storage of substances; 1.3 Describe any other sources of law affecting the mining (vi) underground storage of waste; and (vii) geological storage of industry. carbon dioxide. The catalogue of specified activities is closed, meaning that the performance of other regulated activities (e.g., the search and recognition of therapeutic waters, brine and thermal waters) is exempt The mining industry is affected by: from the obligation to obtain a concession. ■ the Environmental Protection Law of 27 April 2001 which sets out the principles governing environmental protection and the use of environmental resources with regard to sustainable devel- 3.2 What rights are required to conduct exploration? opment requirements; Please refer to question 3.1 above.

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3.3 What rights are required to conduct mining? 3.5 Are different procedures applicable to natural oil and gas? The rights required for conducting mining (i.e., extraction of minerals from deposits, underground tankless storage of substances, under- In order to assess the ability of an interested entity to carry out the ground landfilling of waste, and underground carbon dioxide storage) activities in the scope of prospecting for and exploration of hydro- depend on the legal status of the deposit. carbon deposits and extraction of hydrocarbons from deposits, the Minister of the Environment conducts an eligibility procedure. In Mining usufruct contract the course of the eligibility procedure, it is ascertained whether the In the case of deposits covered by mining ownership, apart from entity intending: (i) is under corporate control of a third-party state, obtaining a concession, it is necessary to conclude a written agree- entity or citizen of a third-party state, and, if so, whether such ment with the State Treasury. control can pose a threat to Polish national security; and (ii) has expe- Mining ownership applies to deposits of certain minerals, which rience in prospecting for and exploration of hydrocarbon deposits are always owned by the State Treasury, irrespective of their location. or extraction of hydrocarbons from deposits. The experience These deposits are: hydrocarbons; hard coal; methane existing as an should be documented and consist of exploration of at least one accompanying mineral; brown coal; metal ores, with the exception hydrocarbon deposit or continuously carrying out, for a period of of bog meadow iron ores and native metals; ores of radioactive at least three years, the extraction of hydrocarbons from deposits. elements; native sulphur; rock salt; potassium salt; magnesium-potassium salt; gypsum and anhydrite; and precious stones. In the case 4 Foreign Ownership and Indigenous Ownership of these deposits, it is necessary to conclude a written contract on the establishment of a mining usufruct. The establishment of a Requirements and Restrictions mining usufruct may be preceded by tendering, in particular if more than one interested party applies for it. 4.1 What types of entity can own reconnaissance,

Concession exploration and mining rights? In the case of every deposit, in order to conduct mining, a concession is required. The concession is granted by: Any type of legal entity (any legal form) can own a concession for ■ the Minister of the Environment in the case of extraction of reconnaissance, exploration, and mining. minerals from deposits covered by mining ownership, extraction of minerals from deposits situated within the boundaries of the 4.2 Can the entity owning the rights be a foreign entity or maritime areas of the Republic of Poland, underground tankless owned (directly or indirectly) by a foreign entity and are there storage of substances, underground landfilling of waste, and underground carbon dioxide storage; special rules for foreign applicants? ■ starosta (a representative of a local authority, for example, of a city), if the area of a documented deposit which is not covered by Yes, a foreign entity or an entity owned by a foreign entity may be mining ownership does not exceed two hectares, annual extraction the holder of the rights. However, when an application refers to of the mineral from the deposit does not exceed 20,000 cubic hydrocarbons, the Minister of the Environment will assess whether metres per calendar year, and the activity will be carried out by the direct or indirect foreign ownership of a concession applicant open-cast mining and without the use of blasting agents; and would endanger Polish national security (see question 3.5). ■ the marshal of a voivodship (a regional self-governing authority) for any other cases. 4.3 Are there any change of control restrictions applicable? A concession is granted for a definite period of time, no less than three years and no more than 50 years (subject to certain exceptions) and details the scope of the permitted activities. Yes, in the case of a change of control, the entity has to apply to undergo the qualification proceedings again, as described in question 3.5. If the Minister of the Environment gains knowledge of such a 3.4 Are different procedures applicable to different minerals change, the qualification proceedings will be initiated ex officio. and on different types of land? 4.4 Are there requirements for ownership by indigenous Yes, there are some differences. The authority granting a concession persons or entities? may be different, depending on the types of mineral and in the location, e.g., in the case of maritime areas. Moreover, certain minerals and different types of land require No, there are not. special approvals, in particular: ■ prospecting, exploring and extraction of ores of radioactive 4.5 Does the State have free carry rights or options to elements (the President of the National Atomic Energy acquire shareholdings? Agency); ■ prospecting, exploring and extraction of hydrocarbons in marine No, it does not. areas (the President of the Higher Mining Authority); ■ extraction of minerals from land under inland waters (the authority competent for issuing water law permits); and 5 Processing, Refining, Beneficiation and Export ■ extraction of minerals covered by mining ownership and underground storage of substances or carbon dioxide (the minister 5.1 Are there special regulatory provisions relating to competent for the environment and, in the case of storage of processing, refining and further beneficiation of mined substances or carbon dioxide, also of the European Commission). Finally, in the case of a concession for underground storage of minerals? carbon dioxide, the establishment of collateral granted by the entrepreneur to the government is obligatory.

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Extracting minerals from deposits requires a concession. The Polish 7.3 Is the holder of rights to explore for or mine a primary Geological and Mining Law does not directly cover processing, mineral entitled to explore or mine for secondary minerals? refining, and further beneficiation of mined minerals; however, such activities are likely to be addressed in the text of the concession and are also subject to the general provisions of Polish law (e.g., the Generally, the scope of a concession determines what types of Labour Code). deposits may be explored or mined. However, the holder of rights to explore for or mine a primary mineral is also entitled – and obliged – to make use of the secondary minerals that are necessary 5.2 Are there restrictions on the export of minerals and to mine in order to use the primary minerals. levies payable in respect thereof? 7.4 Is the holder of a right to conduct reconnaissance, There are no restrictions or special levies on the export (to non-EU exploration and mining entitled to exercise rights also over members) or intercommunity trading of underground resources from Poland. residue deposits on the land concerned?

6 Transfer and Encumbrance As mentioned in question 7.3, the scope of a concession determines what types of deposits may be explored or mined. An entrepreneur is required to make use of the deposits that are necessary to mine 6.1 Are there restrictions on the transfer of rights to conduct the main deposit. In practice, if the residue deposit is unusable for reconnaissance, exploration and mining? the holder of a right, due to its lower value or commercial character, it may be disposed of as waste.

The transfer of rights to conduct reconnaissance, exploration and mining is possible, but would essentially involve going through the 7.5 Are there any special rules relating to offshore entire concession process again. The transferee must meet all the exploration and mining? statutory requirements. Contrary to the usual rules of the general succession of rights Decisions concerning offshore exploration and mining will require from one entrepreneur to another, a concession concerning recon- a consultation with the director of one of three Polish governmental naissance, exploration, and mining does not transfer automatically offices with various jurisdictions over inland waters and the territorial in the case of: sea or with the Ministry of Maritime Affairs and Inland Waterways 1) transformation of the company (by merger, division, takeover, as regards the exclusive economic zone which includes up to 200 sea etc.); miles of the Baltic Sea from the shore. More restrictive assessments 2) acquisition of a bankrupt entrepreneurship; or and procedures are implemented with respect to offshore explo- 3) acquisition of an entrepreneurship by way of a composition of ration and mining of hydrocarbons. In such cases there are assets. numerous consultations and safety obligations during the process of granting, changing, extending, and making use of the rights to 6.2 Are the rights to conduct reconnaissance, exploration offshore reconnaissance, exploration, and mining. and mining capable of being mortgaged or otherwise secured to raise ﬁnance? 8 Rights to Use Surface of Land

The rights cannot be mortgaged or otherwise encumbered for collat- 8.1 Does the holder of a right to conduct reconnaissance, eral purposes. exploration or mining automatically own the right to use the

7 Dealing in Rights by Means of Transferring surface of land? Subdivisions, Ceding Undivided Shares and The holder of a right to conduct reconnaissance, exploration or Mining of Mixed Minerals mining acquires the right to use the surface of land upon obtaining a concession. The decision on granting a concession indicates the 7.1 Are rights to conduct reconnaissance, exploration and area (geodesic plots of land) on which the reconnaissance, exploration, or mining may take place. However, before filing a motion mining capable of being subdivided? for a concession, a future holder should secure the right to the relevant real estate by way of definitive agreement (or promise to use A joint concession is possible provided that each member of the the land) with the native title holder (this obligation does not pertain group is qualified and party to a cooperation agreement. Consortium to mining lignite). members are jointly and severally liable to the contracting authority In addition, for the purpose of exploitation of deposits which are under the concession. Any changes to the group will essentially subject to mining ownership of the government (i.e., hydrocarbons, involve going through the entire concession process again. black coal, methane existing as a secondary deposit, lignite, metals except turf iron ore, radiating elements, native sulphur, rock salt, 7.2 Are rights to conduct reconnaissance, exploration and potassium salt, potassium magnesium salt, gypsum and anhydrite, precious stones, therapeutic waters, thermal waters and brine) and mining capable of being held in undivided shares? which are separate from the land ownership, the future holder of rights should also conclude a mining usufruct agreement with the The rights cannot be mortgaged or otherwise encumbered for collat- State Treasury. When an agreement is in place and a concession is eral purposes. granted, the holder of both may exclusively use the area of the usufruct.

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8.2 What obligations does the holder of a reconnaissance A liquidation fund must be prepared by each entrepreneur who right, exploration right or mining right have vis-à-vis the acquires a concession for mining or underground waste storage. The fund may only be used to cover the cost of liquidation of a mining landowner or lawful occupier? facility or redundant parts of the operation or particular assets.

In the exploitation of its rights, the holder has the obligation to avoid 9.3 What are the closure obligations of the holder of a unnecessarily harming the interests of the landowner or lawful occu- reconnaissance right, exploration right or mining right? pier or impeding the lawful exercise of their own rights.

In the case of a liquidation of a mining facility, in whole or part, the 8.3 What rights of expropriation exist? concession holder is obliged to: 1) secure or liquidate the excavations, devices, and objects; If a third party’s real estate becomes necessary to conduct an in- 2) undertake measures securing neighbouring deposits and neigh- scope activity, the concession holder may demand to be granted use bouring excavations; and for a limited period of time, in exchange for remuneration. If, as a 3) undertake measures to protect the environment and cause the consequence, the property is no longer fit for its previous purpose, re-cultivation of land. the owner (or perpetual usufructuary) may demand that the conces- Exploitation and closure of underground storage should be done sion holder buys the property. Under more limited and unusual in a way that guarantees public security and in a way which guaran- circumstances, the concession holder may demand that the owner tees the prevention of a negative impact on the environment. (or perpetual usufructuary) sell the land to the holder. If a usufruct agreement does not provide otherwise, the holder, before the expiration of the mining right, should secure or liquidate 9 Environmental objects, devices, and installations erected in the space subject to the usufruct.

9.1 What environmental authorisations are required in order 9.4 Are there any zoning or planning requirements applicable to conduct reconnaissance, exploration and mining to the exercise of a reconnaissance, exploration or mining operations? right?

If concession may have a significant impact on the environment, Exercising a right of reconnaissance, exploration, or mining is only then an environmental decision will always be required. If an envi- possible if it does not infringe upon the permitted use of a property ronmental decision is not required, an applicant for a concession has as set forth in a local zoning plan (or preparatory studies for such a to submit a list of all associated protected natural areas so as to facil- plan). itate the authorities’ confirmation of that conclusion. An application

for a concession for reconnaissance, exploration or mining operation rights must also contain proposed countermeasures for any negative 10 Native Title and Land Rights impacts on the environment of a planned activity. The concession authority may also impose particular obligations in a concession 10.1 Does the holding of native title or other statutory decision itself, including but not limited to: requiring specialised safety equipment; conducting work only during certain times of the surface use rights have an impact upon reconnaissance, year; or re-cultivation. exploration or mining operations?

9.2 What provisions need to be made for storage of tailings Provided that the licensed activity is conducted legally, the native title and other waste products and for the closure of mines? holder or surface rights holder should not have an impact on reconnaissance, exploration or mining operations.

Storage of tailings requires compliance with a number of general legal requirements, such as minimising the production of waste, 11 Health and Safety minimising the impact on health and the environment and reusing the waste whenever possible. The waste must be selected, pressed, 11.1 What legislation governs health and safety in and divided and different types of waste should be stored separately. mining? The storage holder is required to have a plan of waste management approved by a local authority and to update it every five years. Waste that may not be reused without delay must be transferred to the The Constitution of the Republic of Poland is the basic legal act closest disposal facility. If the holder of the right to conduct recon- which provides for the right to safe and healthy working conditions. naissance, exploration and mining operations wishes to conduct its The means of implementing this right is defined by the Polish own disposal facility, it should comply with a number of additional Labour Code. requirements, including preparation of a formalised risk assessment, However, health and safety in the mining sector is also ruled by acquisition of consent from the local authority and appointing staff additional and more specific regulations for the operation of under- with necessary qualifications. The marshal of the voivodship may ground mining plants issued by the Minister of Energy. Certain allow exceptions from these procedures with regard to non- regulations of the Minister of Economy are also applicable. These dangerous waste. regulations list the specific requirements for health and safety, traffic A concession for reconnaissance, exploration and mining opera- safety, and fire protection in mines (“Mining Regulations”), e.g., tions may itself set forth special storage rules. the Regulation of the Minister of Economy of 28 June, 2002 on A concession is also required for underground waste storage. occupational safety and hygiene, traffic and fire protection services Such concession should set forth the types and amounts of waste in mining operations for the extraction of common minerals. allowed to be stored, and the method of the monitoring of storage.

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11.2 Are there obligations imposed upon owners, employers, national character of the strategic natural resources of the country of 6 July 2001, which lists mineral deposits which are owned by the managers and employees in relation to health and safety? State Treasury and are not generally subject to private ownership. Public authorities managing natural resources are obliged to use According to Polish Labour Law, employers are responsible for mineral deposits in accordance with the principle of sustainable health and safety at work. It is the employers’ duty to ensure safe development. working conditions, including measures to prevent accidents at work, occupational diseases, and other work-related diseases. 13.2 Are there any State investment treaties which are Employers are required to evaluate and document occupational risk associated with work performed, apply necessary preventative applicable? measures to minimise risks, and inform employees about occupational risks and the guidelines on protection against such risks. Poland has concluded 54 treaties with different countries on the Additionally, employers must provide employees with free personal promotion and mutual protection of investments. According to the protection equipment if it is necessary to protect them against general rule of such treaties, each contracting party must promote dangers in the working environment. The Mining Regulations on its territory investments by investors of the other contracting impose a wide range of additional duties and obligations on party, and must allow the performance of such investments in accor- managers, operators, owners, employers, employees and workers dance with its internal legislation. A number of these treaties refer relating to health and safety in mines. to the right to explore and extract natural resources. For example, the treaties with Greece, dated 14 October 1992, with Denmark of 12 Administrative Aspects 1 May 1990, with North Macedonia of 28 November 1996, as well as the treaty with Sweden of 13 October 1989 list concessions for the exploration, cultivation, extraction and utilisation of natural 12.1 Is there a central titles registration ofﬁce? resources as an investment.

The Polish Geological Institute – National Research Institute main- 14 Taxes and Royalties tains the information system ‘Geoinfonet’ which includes information about: geological data and samples, and results of their examination; submitted geological studies; granted concessions for prospecting or 14.1 Are there any special rules applicable to taxation of exploration of mineral deposits; concessions for prospecting and exploration and mining entities? exploration of hydrocarbon deposits and extraction of hydrocarbons from deposits; investment decisions; and concessions for the extraction There are several specific taxes in Poland which are applicable to of minerals from deposits; as well as approved or submitted geological exploration and mining entities. operations plans; mining districts and mining areas; and parameters regarding the extraction of hydrocarbons from a deposit. Tax on extraction of some minerals Starting from 18 April 2012, extraction of copper and silver in 12.2 Is there a system of appeals against administrative Poland is subject to tax. Starting from 1 January 2020, extraction of decisions in terms of the relevant mining legislation? petroleum and natural gas in Poland will also be subject to this tax (entities extracting petroleum and natural gas in Poland have been subject to certain evidencing requirements since 1 January 2016). The appellate proceeding described in the Code of Administrative In general, the taxpayers are the entities (notwithstanding their Proceeding applies to all administrative decisions, including admin- legal form) extracting the minerals – i.e., copper, silver, petroleum istrative mining law decisions. According to the Code of Administrative or natural gas – in the course of their business activities. Proceeding, a public administration authority is competent to In the case of copper and silver, the tax base is the amount of consider an appeal if it is of a higher level administratively than the copper (tonnes) or silver (kilograms) within the produced concentrate, authority which issued a decision. An appeal must be submitted to or, where a taxpayer does not produce concentrate, the amount of the competent appellate authority via the authority which issued the copper and silver within the ore output. The tax rate depends on the decision within 14 days of the day the decision was served upon a monthly average price of copper on the London Metal Exchange and party, or if the decision was announced orally, within 14 days of the of silver as announced by the London Bullion Market Association. day the decision has been announced to the parties. The appeal In the case of petroleum and natural gas, the tax base is the value requires no detailed substantiation. It is sufficient if it is evident of the petroleum or natural gas extracts. The tax due is a product from the appeal that the party is dissatisfied with the decision issued. of the rate and the value of petroleum (tonnes) and natural gas With some exceptions, the marshal of the voivodship is a geological (megawatt hours), in the case of petroleum, based on the average administration authority of first instance to whom, within the monthly price set by OPEC, and, in the case of natural gas, based meaning of the Administrative Procedure Code, the minister in on the monthly price on the Polish Power Exchange. The rates of charge of the environment is a superior authority. the tax vary depending on the type of the deposits. Extraction of natural gas and petroleum from low-productivity wells is tax exempt. 13 Constitutional Law The taxes are payable on a monthly basis.

Special hydrocarbon tax 13.1 Is there a constitution which has an impact upon Starting from 1 January 2020, income resulting from the extraction rights to conduct reconnaissance, exploration and mining? of certain hydrocarbons (i.e., petroleum, natural gas and their natural derivatives, except from methane found in hard coal deposits and The Polish Constitution has an indirect impact on mining by refer- methane found as an accompanying mineral) within the territory of ring to other acts in its art. 86: “Everyone is obligated to care for the Poland will be subject to a special hydrocarbon tax. The special quality of the environment and shall be held responsible for causing hydrocarbon tax act has been in force since 1 January 2016. Since its degradation. The principles of such responsibility shall be spec- then, there are now certain evidencing obligations for taxpayers; ified by acts.” Such acts include the Act on preservation of the however, the tax will only be payable starting from 1 January 2020.

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Taxpayers of the special hydrocarbon tax are, in general, the enti- Storage fee ties (notwithstanding their legal form) extracting, exploring, and An entity granted a concession for: (i) underground tankless storage prospecting hydrocarbons in Poland in the course of their business of substances; (ii) underground carbon dioxide storage; or (iii) activities. underground waste storage, is obliged to pay a fee which is a product The special hydrocarbon tax is payable on a yearly basis (with of the amount of the substance introduced into the ground and a monthly tax advances) and the tax year corresponds with the tax year rate which varies depending on the type of material introduced into for the taxpayer’s corporate income tax (“CIT”), or for personal the ground within a half-year settlement period. income tax (“PIT”). The tax base is the income resulting from extracting, exploring and Remuneration for establishment of mining usufruct prospecting of the hydrocarbons, which is calculated as a difference A mining usufruct fee will also be payable. The amount of this between revenues from extracting, exploring and prospecting of the remuneration is defined within the contract between the State hydrocarbons and the qualified costs. The revenue is the amount of Treasury and the extracting entity, is payable on a yearly basis, and cash or other benefits obtained as remuneration for the sale of hydro- consists of a fixed amount (which depends on the value of the carbons. Qualified costs are expenses incurred by the taxpayer for deposit of the minerals and type of the minerals extracted) and a the purpose of earning revenue or retaining or securing a source of variable amount (which is a fraction of the extraction fee payable in revenue (which are not expressly excluded as non-tax deductibles), the previous year). including expenses resulting from, for example: prospecting; There is also a necessity to pay varying amounts of remuneration exploring; extracting; storage; and delivery of the extracted hydrocar- for the establishment of a mining usufruct for activities such as: (i) bons and termination of the activity. Furthermore, certain public law prospecting and exploring of the mineral deposits; (ii) underground obligations, such as the amount of CIT/PIT payable (in connection tankless storage of substances; and (iii) underground waste storage. with extracting, exploring or prospecting of the hydrocarbons), the amount of the tax on extraction of some minerals, etc., also consti- 15 Regional and Local Rules and Laws tute qualified costs. Any tax loss resulting from extracting, exploring and prospecting of the hydrocarbons may be deducted in the next tax year. 15.1 Are there any local provincial or municipal laws that The tax rate varies from 0% to 25% of the tax base and depends need to be taken account of by a mining company over and on the profitability of the business activity. above National Legislation?

Excise tax Entities selling certain minerals (e.g., coal, natural gas) to a non-final Yes. Carrying out a mining activity specified by the Polish buyer have an obligation to impose the required excise tax on the Geological and Mining Law is only allowed if it does not violate the sale price. Verification of whether there is a necessity to impose an purpose of the land specified in the local zoning plan. This is an act excise amount on the sale price is on the seller’s side. Excise tax rates of local law adopted in the form of a resolution, specifying condi- vary by product type. tions of land development.

Other taxes 15.2 Are there any regional rules, protocols, policies or Entities extracting minerals are also taxpayers of regular taxes laws relating to several countries in the particular region that resulting from business activities – CIT (or PIT), value-added tax need to be taken account of by an exploration or mining (“VAT”), and real estate tax (“RET”). company?

14.2 Are there royalties payable to the State over and Yes. As Poland is a Member State of the European Union, legisla- above any taxes? tion from the European Union may be applicable with regard to environmental concerns and health and safety standards. There are several royalties which are payable by exploration and mining entities. 16 Cancellation, Abandonment and

Concession fee Relinquishment The entity which was granted with a concession for: ■ prospecting and exploring of mineral deposits; 16.1 Are there any provisions in mining laws entitling the ■ prospecting and exploring of an underground carbon dioxide holder of a right to abandon it either totally or partially? storage complex; and ■ prospecting, exploring and extraction of hydrocarbons, is obliged to pay a one-time fee for the concession, which is a Yes, according to art. 38 of the Polish Geological and Mining Law, product of the rate and the land area covered by a concession. The the holder of a concession has a right to renounce the concession. rate varies and depends on the type of minerals and scope of activ- In such case, the concession-granting authority declares a lapse of ities covered by a concession. the concession by decision.

Extraction fee 16.2 Are there obligations upon the holder of an An entity granted a concession for extraction of mineral deposits or exploration right or a mining right to relinquish a part thereof for prospecting, exploring and extraction of hydrocarbons, is obliged after a certain period of time? to pay, on a half-year basis, an extraction fee which is a product of the rate and amount of the minerals extracted within the settlement period. The rate of the extraction fee varies and depends on the Provided the holder is honouring the terms and conditions of the type of minerals extracted. concession, there is no relinquishment obligation before the end of

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the concession’s term (usually no less than three years and no more 16.3 Are there any entitlements in the law for the State to than 50 years). cancel an exploration or mining right on the basis of failure to A concession for the prospecting for and exploration of a hydrocarbon deposit and extraction of hydrocarbons from a deposit is comply with conditions? granted on the condition that a security deposit is established for non-performance or undue performance of the conditions specified Yes, according to art. 37 of the Polish Geological and Mining Law, if an in the concession, as well as the funding of decommissioning of entrepreneur violates the requirements of the act, or fails to satisfy the works if the concession expires, is revoked, or loses its binding force. conditions of the concession, the concession-granting authority may call The deposit is established from the day on which the concession is for the removal of infringements and, in the case of failure, to comply granted to the day on which the stage of prospecting and explo- with the command, also withdraw the concession. ration is completed. If the entrepreneur fails to present to the concession-granting authority proof of the establishment of the deposits, the concession expires.

Jacek Michalski is a Partner and the head of the Corporate and M&A practice group of Wolf Theiss in Poland. He has over 28 years of experience and has led many ground-breaking transactions in Poland, the CEE region, and Africa. He focuses on counselling and representing clients in M&A, capital markets, corporate governance, and financial sector regulatory matters. Jacek also advises on the creation of new banks, acquisitions of existing banks and mergers between large local banks and international banks. He has been listed by major legal directories as one of the leading corporate lawyers in Poland for many years. Prior to joining Wolf Theiss, Jacek was a partner at Allen & Overy. He graduated from the University of Warsaw and is a member of the Warsaw Bar of Legal Advisors. Jacek speaks Polish and English.

Wolf Theiss Tel: +48 22 3788 958 ul. Mokotowska 49 Email: [email protected] 00-542 Warsaw URL: www.wolftheiss.com Poland

Izabela Podleśna is an associate and a member of the Corporate and M&A practice group of Wolf Theiss in Poland. She advises and supports Polish and international corporate clients, ensuring compliance and drafting opinions and other documentation. She has extensive experience in corporate governance supporting corporate clients. Izabela also supports the corporate and M&A practice by participating in due diligence exercises. She graduated from Łazarski University in Warsaw. Izabela completed the International Legal Skills Program of the University of Salzburg and was an Erasmus student at Mykolio Romerio University in Lithuania. She is a trainee attorney-at-law of the Bar Association of Attorneys-at- Law in Warsaw. She speaks Polish and English.

Wolf Theiss Tel: +48 22 3788 954 ul. Mokotowska 49 Email: [email protected] 00-542 Warsaw URL: www.wolftheiss.com Poland

With offices in 13 countries in Central, Eastern and Southeastern Europe and three regional desks, Wolf Theiss is ideally positioned to handle regional, as well as local work. As the only law firm to have an energy practice dedicated to the CEE and SEE region, we are well placed to keep up with this complex and fast changing market. Our team members have the necessary local legal expertise, contacts and experience to handle all issues that may arise during the life cycle of large- scale projects, including their development, financing, construction and operation, as well as acquisitions and disposals. We advise mining companies, exploration services companies, drilling services companies, investment houses and individual investors on a wide range of fields, including mining operations, legislation concerning mining and exploration, exploration licences and mining concessions, and environmental issues, as well as funding mining ventures and projects. www.wolftheiss.com

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Portugal Portugal

Manuel Protásio

VdA Catarina Coimbra

1 Relevant Authorities and Legislation Deposits’ Exploitation (approved by Decree-Law 10/2010, of February 4), the Regulations on Manufacture, Storage, Trade and Use of Explosive Products (approved by Decree-Law 376/84, of 30 1.1 What regulates mining law? November 1984, as amended) and the Regulation on Social Security for Employees in Mines (approved by Decree-Law 195/95, of July 28). Furthermore, the legislative framework is complemented by The Portuguese legal system is integrated in the civil/continental law several circulars enacted by the General Directorate of Energy and system, which means that the majority of the legal provisions are Geology (“DGEG”), regarding, for instance, the authorisation for comprised and enacted by statutes, written law being its primary the acquisition and use of explosive products on mines and quarries source. The legal system is structured hierarchically and the (Circular no. 9/2018, 1 April 2018). Constitution is the leading legal instrument. The political bodies empowered to pass legislation are Parliament and the Government. The Government has the power to legislate on all subjects that are 1.2 Which Government body/ies administer the mining not reserved for Parliament and enacts legislation under the form of industry? Decree-Laws. Until 2015, Mining Law was regulated by the Decree-Law 90/90 The competences in mining matters are centralised with the Minister of March 16, which established the General Regime for the of Economy and under direct supervision of DGEG (Direção Geral Discovery and Use of Geological Resources and by specific de Energia e Geologia). Some geological resources are, by virtue of its Regulations for each type of mineral resource (Decree-Law 84/90, specific characteristics, namely the geological resources located in of March 16, which established the Spring Waters Regulation; the national maritime space, supervised by the General Directorate Decree-Law 85/90, of March 16, which established the Heavy of Natural Resources, Security and Maritime Services. Waters Regulation; Decree-Law 86/90, of March 16, which estab- Notwithstanding the above, specific matters governed by different lished the Mineral Waters Regulation; Decree-Law 87/90, of March authorities regarding health and safety, environmental protection and 16, which established the Geothermic Resources Regulation; Decree- social issues and cultural heritage, may also apply. Law 88/90 of March 16, which established the Mineral Deposits At a local level, the municipalities also play an important role in Regulation and Decree-Law 270/2001, of October 6, which estab- the implementation of mining projects within the municipal terri- lished the Quarries Regulation). tory. In June 2015, the Legal Framework for the Discovery and Use of The Autonomous Regions of Azores and Madeira are responsible the Geological Resources Located in Portugal (including National for the granting of rights over geological resources located in those Maritime Space) – Law 54/2015 of 22 June – was enacted (the territories. “Geological Resources Law”). The Geological Resources Law Finally, although not having an administrative role, the Mineral revoked Decree-Law 90/90 of March 16. Resources and Geophysics Research Unit (“MRGRU”), an institute The creation of this new legal regime derived from the National under supervision of LNEG (National Laboratory of Energy and Strategy for Geological Resources (“ENRG-RM”) – Council of Geology) undertakes research on the genesis of mineral deposits and Ministers Resolution 78/2012 – which envisaged the establishment the use of the methodologies applied to prospecting, inventory and of a new – more efficient – legal and institutional framework. valorisation of the national geological resources. The Portuguese Government should have approved all complementary legislation within three months from the entry into force 1.3 Describe any other sources of law affecting the mining of the Geological Resources Law, notably the new mineral deposits legal framework. The passing of complementary legislation has, industry. however, been delayed, taking into consideration (inter alia) that general elections took place and a new Government has been in As a Member State of the European Union, Portugal is subject to office since the last quarter of 2015. In the meantime, the specific European legislation (please refer to question 14.2 below). In the Regulations for each type of mineral resources mentioned above mining sector, European environmental legislation is particularly remain in force regarding everything which is not incompatible with relevant. the Geological Resources Law. Mining activity must also take into account environmental, tax, Other key statutes include the General Health and Safety at Work waste management, social security, territorial planning, health and on Mines and Quarries Regulation (approved by Decree-Law safety regulations and special regulations for hazardous activities. 162/90, of May 22), the Regulation on Environmental Recovery of Legislation with a regional scope further applies in connection with Deteriorated Mining Sites (approved by Decree-Law 198-A/2001, mining activities in the Azores and Madeira autonomous regions. of July 6), the Regulation on Waste Management of Mineral

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2 Recent Political Developments A prospecting and research title gives the right to develop activities aimed at the discovery of resources and the definition of their characteristics, until the determination of the economic value of any 2.1 Are there any recent political developments affecting the resources found. If the discovered resources fail to have the necessary conditions to mining industry? initiate their immediate and effective exploitation, the interested parties may submit an application for experimental exploitation rights. These The lithium exploration has been playing an increasingly significant role rights are granted through an administrative contract, with a maximum in the geological resources scene in Portugal. In fact, in the past two legal term of five years, and entitle their holder to perform the same years nearly 40 lithium prospecting licences were granted to both activities as those entrusted to a holder of an exploitation title. national and foreign investors, and some mining concessions were awarded to them. The Portuguese Government has assumed an active 3.3 What rights are required to conduct mining? role in promoting the development of lithium exploration, having approved, by means of a Decision issued by the Council of Ministers, the Strategic Guidelines of Enhancing of Lithium in Portugal. The right to exploit geological resources (mining) is granted by This scenario will certainly contribute to enhance considerable invest- means of a concession (with a maximum term of 90 years), ment opportunities in this strategic sector, Portugal being positioned to following a prior evaluation/prospecting and research/experimental take the lead on the production and export of lithium in Europe. exploitation agreement (if resources have been discovered) or, in case no such prior agreement exists, granted in respect of (i) available areas, or (ii) areas covered by prior evaluation, prospecting and 2.2 Are there any speciﬁc steps the mining industry is taking research, experimental exploitation rights, in case these relate to in light of these developments? different mineral resources and the different mining activities are compatible. The text of the exploitation concession agreement shall In November 2018, a road located between two quarries in Borba, be published in the Official Gazette. This concession entitles its Portugal, collapsed, entailing tragic consequences. This casualty holder to the right of exploitation for economic use of resources. emphasised the need to ascertain the current situation of the existing quarries in Portugal, in order to assess whether such quarries are in 3.4 Are different procedures applicable to different minerals need of intervention, aiming to protect people, assets and the envi- and on different types of land? ronment. In this regard, the Portuguese Government established a plan to take action for the quarries that are considered to be in a critical condition – “Plano de Intervenção nas Pedreiras em Situação Crítica”. Complementary legislation to be enacted shall regulate the legal framework for the discovery and use of mineral deposits, as well as 3 Mechanics of Acquisition of Rights other geological resources, as mentioned in section 1. To date, no different procedures have been applicable to the different mineral deposits or different types of land under the mining law. 3.1 What rights are required to conduct reconnaissance? 3.5 Are different procedures applicable to natural oil and gas? The Geological Resources Law acknowledges and regulates the concept of reconnaissance. To conduct reconnaissance, an entity Yes. Oil and gas are expressly excluded from the Geological must hold a prior evaluation right over an area or areas designed for Resources Law (in line with the previous framework) and are regu- the exercise of activities for the use of metallic mineral deposits. lated by specific laws, the main legal framework being set out in Such right is granted under an administrative contract (with a Decree-Law 109/94 of 26 April 1994, as amended by Law 82/2017, maximum non-renewable term of one year) and may be requested of 18 August 2017. to DGEG by any entity with recognised technical, economic and financial suitability. Prior evaluation rights entitle the holder of such 4 Foreign Ownership and Indigenous Ownership rights to develop studies to allow a better knowledge of the geological potential of the envisaged area, namely through the analysis of Requirements and Restrictions available information and samples taken from the area. 4.1 What types of entity can own reconnaissance, 3.2 What rights are required to conduct exploration? exploration and mining rights?

To conduct exploration of mineral deposits, one must hold a Exploration concessions may only be granted to legal persons giving prospecting and research right or an experimental exploitation right. proof of technical, economic and financial suitability. Other than The procedure for obtaining prospecting and research rights may be that, the law does not impose restrictions on the type of persons at initiated by the interested parties through the submission of an appli- stake. The Companies Code contemplates two forms of limited cation, or by the Portuguese State through a tender procedure liability companies that are normally used for the purpose of devel- (subject to the provisions of the Public Procurement Code), while oping mining projects in Portugal. Those corporate forms are the the experimental exploration rights are granted at the request of the sociedade anónima (“SA”) and the sociedade por quotas. interested parties. These rights may only be granted over available areas (except if there is no incompatibility between the concessions 4.2 Can the entity owning the rights be a foreign entity or granted, or to be granted, and the prospecting and research rights) and to legal entities who give proof of suitability and financial and owned (directly or indirectly) by a foreign entity and are there technical capacity to perform these activities. The contract for special rules for foreign applicants? prospecting and research activities and for experimental exploitation rights has a maximum term of five years.

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Yes, foreign entities or entities owned by a foreign entity can hold The export, sale or any other means of transfer (even if free of mining rights; there are no special rules for foreign applicants charge) of any products which do not come from authorised applying. Notwithstanding, under Portuguese corporate law, any exploitations, or which were not legally imported, is forbidden. The foreign company not legally domiciled in Portugal that aims to under- export of minerals or land samples may be made under a take activity in Portugal for more than one year must create a prospecting and research agreement for industrial analysis and tests permanent establishment in the Portuguese territory. Moreover, in if previously authorised by the Ministry of Economy. what concerns tax representation before the Portuguese Tax Although no restrictions arise from mining law, the export of ore Authorities, the Portuguese Corporate Income Tax Code establishes or minerals must, at all times, be made in compliance with the terms that an entity that has neither its head office or (place of) effective of international treaties that Portugal is a party to, which may intro- management in Portuguese territory, nor a permanent establishment duce restrictions thereto. situated therein, shall be required to appoint a person or entity with residence, head office or (place of) effective management in that territory 6 Transfer and Encumbrance as its tax representative before the Portuguese Tax Authorities, in case it generates income in this territory. As an exception, companies resident for tax purposes in a Member State of the European Union, or a 6.1 Are there restrictions on the transfer of rights to conduct Member State of the European Economic Area (in the latter case, the reconnaissance, exploration and mining? exception applies insofar as there is an administrative cooperation agreement in force between Portugal and the relevant EEA Member Pursuant to the Geological Resources Law, the contractual position State) are not required to appoint a tax representative. under prospecting and research, experimental exploitation and Foreign direct investment is not restricted under general exploitation agreements may be transferred with the express autho- Portuguese law. In respect of repatriation of profits and investment, risation of the Ministry of Economy. Rights to conduct there are no currency controls under Portuguese law and money can reconnaissance may not be transferred. be freely transferred into or out of Portugal. Also, there are no

restrictions on the remittance of profits or investments abroad. 6.2 Are the rights to conduct reconnaissance, exploration 4.3 Are there any change of control restrictions applicable? and mining capable of being mortgaged or otherwise secured to raise ﬁnance? No change of control restrictions are expressly provided for in mining law. However, there are rules on the assignment of contrac- In accordance with the Geological Resources Law, the creation of tual positions in prior evaluation, prospecting and research, mortgages is only authorised over rights arising from a concession experimental exploitation and exploitation agreements (please refer for exploitation – and over the physical facilities created for support to question 5.1 below). of mining activities – as security of credits/loans for the exploitation works, and shall be previously communicated to DGEG. 4.4 Are there requirements for ownership by indigenous The enforcement of said mortgage shall follow the rules of the Code of Tax Procedure and Proceedings and of the Civil Procedure persons or entities? Code until the moment of the auction, which shall be executed by DGEG through public tender. No, there are not any requirements for ownership by indigenous persons or entities. 7 Dealing in Rights by Means of Transferring Subdivisions, Ceding Undivided Shares and 4.5 Does the State have free carry rights or options to Mining of Mixed Minerals acquire shareholdings?

There are no free carry or similar rights under the law. However, the 7.1 Are rights to conduct reconnaissance, exploration and State may control or impose conditions on the exploitation of mining capable of being subdivided? mineral rights in certain circumstances, notably for reasons of national or regional interest. Also, for public interest reasons, the The option to subdivide rights to conduct reconnaissance, explo- Ministry of Economy may exercise preferential rights in the acqui- ration and mining is not provided for, nor forbidden, in the mining sition of mineral deposits. laws.

neighbourhood or contiguity, ownership by the same economic 5.2 Are there restrictions on the export of minerals and group, the similarity or complementarity of the exploited geological levies payable in respect thereof? resources and/or the benefits for the commercialisation or preparation of products.

7.3 Is the holder of rights to explore for or mine a primary and implement the relevant security, environmental protection and landscape recovery measures, even after the end of the activities. mineral entitled to explore or mine for secondary minerals? The holders of experimental exploitation and concession exploitation rights shall compensate any third parties for the damages In general, yes, to the extent that concession agreements are usually resulting from exploitation, and shall implement environmental not entered into for a specific type of mineral, but for the minerals protection and landscape recovery measures. available in the concession area. If the contract is granted for a The temporary use of the necessary land by holders of experimental specific mineral, the mining of a new mineral may only be made exploitation rights entails the payment of compensation to the pursuant to an amendment to the concession agreement, which owners of the land. would be subject to approval by the competent authorities. Also, the creation of administrative easements may give rise to the payment of compensation. 7.4 Is the holder of a right to conduct reconnaissance, exploration and mining entitled to exercise rights also over 8.3 What rights of expropriation exist? residue deposits on the land concerned? The holders of a concession exploitation agreement may request the The law does not establish any specific rights over the residue urgent expropriation, by reasons of public utility, of the land neces- deposits and they may generally be explored if they have an sary for the performance of works and installation of facilities, even economic value. There is, however, a legal obligation to adequately if it is located outside the covered area. manage and ensure that the waste generated is treated at the site – by means of a specific licensing procedure – or alternatively, is sent 9 Environmental to a duly licensed facility for final destination and treatment. A waste management plan, in order to guarantee that waste is adequately managed, must be drawn up. 9.1 What environmental authorisations are required in order to conduct reconnaissance, exploration and mining operations? 7.5 Are there any special rules relating to offshore exploration and mining? The main environmental authorisations applicable to mining activities are: (i) a favourable environmental impact assessment declaration – issued under the environmental impact assessment legislation; or The Geological Resources Law is applicable to all discoveries and (ii) a favourable (more simplified) environmental assessment decla- use of geological resources located within the national territory, ration – issued according to Natura 2000 legislation. The type of including those located in the Portuguese National Maritime Space authorisation shall depend on the size, location and area occupied (which is defined under Law 17/2014 of April 10 and comprises the by the operation at stake. seashore, territorial waters, exclusive economic zone and continental Specific authorisations, such as the licensing for the use of water platform beyond the 200 maritime miles). In the maritime space, resources, shall also be necessary. mining activities shall be subject to the granting of a use licence.

8 Rights to Use Surface of Land 9.2 What provisions need to be made for storage of tailings and other waste products and for the closure of mines?

8.1 Does the holder of a right to conduct reconnaissance, Pursuant to the Geological Resources Law, a financial guarantee shall exploration or mining automatically own the right to use the be delivered together with the prospecting and research, experimental surface of land? exploitation and exploitation agreements in order to ensure compliance with the contract, the landscape recovery and the closure of mines. Prospecting and research and experimental exploitation right holders In accordance with the Regulation on Waste Management of Mineral have the right to temporarily use the land necessary for the perfor- Deposits’ Exploitation, the holder of the mining right must submit a mance of works (and establishment of the facilities) and the granting waste management plan, which must be reviewed every five years. The of those rights is accompanied by the creation of an administrative facilities for the storage of tailings or other waste products are subject easement over the relevant area. The holders of a concession agree- to a licensing procedure with DGEG or the Regional Directorate or ment (exploitation right) may obtain, by means of an administrative Economy, depending on the type of the facility. act, the necessary administrative easements for the exploitation of resources. In certain circumstances, neighbouring land may be 9.3 What are the closure obligations of the holder of a subject to said easement. reconnaissance right, exploration right or mining right? These administrative easements have the maximum legal term of seven years, without prejudice to the possibility of continuing occu- Closure obligations include the removal of all constructions and pying land with the consent of the owner of the land. installations, the removal and delivery of all waste to a final destina- Also, the holders of a concession agreement have preference rights tion in a duly licensed facility and the environmental recovery of the in the acquisition or transfer in lieu of the land located in the concession area according to an environmental and landscape recovery plan area, as long as the acquisition is necessary for the exploitation. previously approved by the authorities.

8.2 What obligations does the holder of a reconnaissance 9.4 Are there any zoning or planning requirements applicable to right, exploration right or mining right have vis-à-vis the the exercise of a reconnaissance, exploration or mining right? landowner or lawful occupier? Mining operations may only be carried out in areas designated for The holder of a prospecting and research right must compensate any these activities in the applicable municipal zoning plans or in areas third parties for all damages directly caused by the research activities

where mining is considered compatible with the use foreseen in the The Portuguese Constitution determines which assets are to be municipal zoning plan. In some cases, the municipal plan may not considered public domain assets. Ordinary law regulates the terms be completely updated in relation to special zoning plans approved and conditions and the limits for the use of such goods. by the Government determining legal restrictions for environmental Under the Geological Resources Law, geological resources are purposes and, therefore, said plans and restrictions must also be divided into public domain goods (mineral deposits, mineral waters, taken into account. mineral industrial waters, geothermic resources, geological resources located in the seabed and subsoil of the national maritime space) and 10 Native Title and Land Rights private assets (quarries and spring waters). The granting of rights over the public domain goods is subject to the award of a concession contract, while the granting of rights over the private domain goods 10.1 Does the holding of native title or other statutory is subject to a licensing procedure. surface use rights have an impact upon reconnaissance, exploration or mining operations? 13.2 Are there any State investment treaties which are applicable? No, a native title will not have an impact on the reconnaissance, exploration or mining operations. As mentioned above, Portugal is a Member State of the European Union and is subject to European legislation. 11 Health and Safety 14 Taxes and Royalties

11.1 What legislation governs health and safety in mining? 14.1 Are there any special rules applicable to taxation of Health and safety in mining is governed by Decree-Law 162/90 of exploration and mining entities? May 22, which approves the General Health and Safety at Work in Mines and Quarries Regulation, establishing several rules regarding, No, there are not. Companies carrying out exploration and mining namely, the access, circulation and safety measures applicable to the activities in Portugal will be subject to the general provisions fore- handling of mining equipment. seen in the Corporate Income Tax Code. However, pursuant to the Company Tax Code, the provisions made 11.2 Are there obligations imposed upon owners, employers, retained against the costs in connection with the environmental managers and employees in relation to health and safety? damage of the mining site are tax deductible.

Both employers and employees shall comply with health and safety 14.2 Are there royalties payable to the State over and conditions set out in article 2 and 3 of Decree-Law 162/90 of May above any taxes? 22. The main obligations are imposed on the employer who is required to inform the employee (and in certain situations to publi- No, there are no specific rules in mining law concerning royalties cise or make available easily accessible information) on all health and payable to the Portuguese State. However, licensing fees, royalties, safety measures imposed by law. premia and other considerations are nevertheless usually negotiated and established in concession agreements, on a case-by-case basis. 12 Administrative Aspects 15 Regional and Local Rules and Laws 12.1 Is there a central titles registration ofﬁce? 15.1 Are there any local provincial or municipal laws that Yes. DGEG is the competent authority for this purpose. need to be taken account of by a mining company over and above National Legislation? 12.2 Is there a system of appeals against administrative decisions in terms of the relevant mining legislation? Please note that municipal planning requirements form the basis of planning and zoning regulations (which, once adopted, constitute The general law applies, which means that depending on the admin- national law). In any case, the granting of rights regarding istration body and decision, administrative decisions may be subject prospecting and research/experimental exploitation/exploitation to a claim or opposition against the public body that has taken the shall occur following mandatory consultation with the relevant decision, in certain cases to a hierarchic appeal (within the public municipalities, which will be promoted by DGEG and the answers administration) and is generally subject to administrative appeals published on the DGEG website. before judicial courts. 15.2 Are there any regional rules, protocols, policies or laws 13 Constitutional Law relating to several countries in the particular region that need to be taken account of by an exploration or mining company? 13.1 Is there a constitution which has an impact upon rights to conduct reconnaissance, exploration and mining? Yes, there are. Portugal has been a member of the European Union since 1986, and has been integrated into the eurozone since its

implementation. Therefore, it is subject to European legislation. area or request the granting of prospecting and research/exploration Accordingly, national law is in line with the European applicable rights, experimental exploitation rights or mining/exploitation rights. common norms (principle of primacy of European law over internal At each extension of the contract for prospecting and research activ- law), and European Community laws are directly applicable without ities, the holder of the title shall be required to make available part the need to be ratified by Parliament. of the area initially covered by that title, pursuant to the terms and conditions set out in each administrative contract. 16 Cancellation, Abandonment and Relinquishment 16.3 Are there any entitlements in the law for the State to cancel an exploration or mining right on the basis of failure to comply with conditions? 16.1 Are there any provisions in mining laws entitling the holder of a right to abandon it either totally or partially? Prospecting and research, experimental exploitation or exploitation agreements may be terminated by the State on the basis of failure to The suspension of exploitation may be authorised by DGEG due comply with legal and contractual obligations. On the other hand, to force majeure reasons or when it refers to resources considered to the holder of such rights may also terminate the agreements, be an adequate reserve of other resources in exploitation by the provided that the works are concluded, based on the technical unfea- concessionaire. The suspension is valid for one year and cannot be sibility of revelation of natural resources in the area covered by the extended for more than five years. agreement.

16.2 Are there obligations upon the holder of an exploration right or a mining right to relinquish a part thereof after a certain period of time?

The holder of prior entitlement rights must, upon expiry of the administrative contract, inform DGEG if it wishes to relinquish the

Manuel Protásio joined VdA in 1991 and is the Group Executive Partner of the Infrastructure, Energy & Natural Resources and head of Energy & Natural Resources Practice. In such capacity, he has participated in or led the teams involved in the most relevant transactions carried out in Portugal to date in the power (including the renewable energies), oil and gas, road, transport, water and wastes sector. He has also actively worked in regulation and public procurement procedures in these sectors. Manuel is also a member of the UNACE Project Team on The Model Law for PPP/Concessions.

VdA Tel: +351 21 311 3400 Rua Dom Luís I, 28 Email: [email protected] 1200-151 Lisboa URL: www.vda.pt/en Portugal

Catarina Coimbra joined VdA in 2016. She is an associate at the Infrastructure, Energy & Natural Resources Practice. In such capacity, she has participated in the teams involved in transactions carried out in Portugal in the oil and gas, mining, road, transport, water and wastes sector.

VdA Tel: +351 21 311 3400 Rua Dom Luís I, 28 Email: [email protected] 1200-151 Lisboa URL: www.vda.pt/en Portugal

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Russia Russia

Andrey Zharskiy

ALRUD Law Firm Timur Akhundov

1 Relevant Authorities and Legislation In addition to the main laws as stated above, mining issues are also regulated by a number of regulations issued by the executive authorities of the Russian Federation. 1.1 What regulates mining law? Thus, the Government of the Russian Federation determines the procedure for establishing and changing the boundaries of subsoil plots granted for use, as well as regulating the provision of prepara- The main legislation acts regulating mining law are: tion, alignment and approval of technical projects for the ■ The law of the Russian Federation No. 2395-1, dated (ed. from development of mineral deposits. The Minprirody determines the 03.08.2018) “On subsoil” (the “Subsoil Law”). procedure for issuing licences for the use of subsoil resources, and ■ Federal law on precious metals and precious stones. determines the lists of subsoil allotments to be transferred for explo- ■ Federal law on gas export. ration purposes. Rosnedra establishes administrative regulations in ■ Federal law on continental shelf of the Russian Federation. certain areas related to the mining industry, for example, regulation ■ Federal law on production sharing agreements. on the issuance and registration of licences for the use of subsoil, ■ Federal law on the Procedure for Making Foreign Investments the renewal of licences and regulation on the changing boundaries in Business Entities of Strategic Importance for the National of subsoil allotments, etc. Defence and Security of the Russian Federation (the “Strategic Law”). 2 Recent Political Developments 1.2 Which Government body/ies administer the mining industry? 2.1 Are there any recent political developments affecting the mining industry? The principal authorities with regulatory oversight over the Russian mining industry include the following: From the point of view of internal political development, the polit- ■ The Ministry of Natural Resources and Ecology (the ical situation is stable, and there are no recent political developments “Minprirody”), administers the licensing regime applicable to which primarily affect the mining industry. At the same time, mining operations and supervises the work of the agencies and existing international sanctions against Russia as well as the unpre- other authorities regulating mining industry. dictability of new sanctions to be issued in general in respect to ■ The Federal Agency for Subsoil Use (the “Rosnedra”) organises Russia and, in particular, in respect to some activities related to the state geological studies, the tenders and auctions for the right mining and/or Russian mining companies controlled by some to use subsoil, issues and revokes subsoil licences, maintains the Russian oligarchs, create certain risks for foreign companies with state cadaster of deposits the federal and territorial funds of respect to any dealings with Russian mining companies. geological data on the subsoil. ■ The Federal Supervisory Service for Nature Management (the 2.2 Are there any speciﬁc steps the mining industry is taking “Rosprirodnadzor”) supervises the compliance by subsoil in light of these developments? licence-holders with the terms of subsoil licences, monitors the environmental protection and the rational use of the subsoil, and performs regular audits of subsoil licence holders. Given the introduction of the new sanctions from the USA and/or ■ The Federal Service for Ecological, Technological and Nuclear the EU, some major Russian mining groups are procuring restruc- Supervision (the “Rostekhnadzor”) oversees compliance with turing of their holding structures with the aim to move their direct the industrial safety, and ecological standards in the area of holding companies to Russia. subsoil use, conducts ecological expert reviews at federal level and performs regular audits of subsoil licence-holders. 3 Mechanics of Acquisition of Rights Besides the above, the executive authorities of the constituent entities of the Russian Federation, as well as local authorities, also take part in regulating the relations of subsoil use within the scope 3.1 What rights are required to conduct reconnaissance? of their competence. Mining activities require a special subsoil licence which is issued by 1.3 Describe any other sources of law affecting the mining Rosnedra (the “Subsoil Licence”). Considering this, to conduct industry. reconnaissance activities the companies shall obtain a Subsoil Licence

for geological survey, including a search and evaluation of mineral If such amounts of extractable minerals as mentioned above are deposits (the “Survey Licence”). revealed at some time during the exploitation stage, a licence user Survey Licences may be granted for a maximum period of five with foreign participation shall obtain a clearance from the special years (up to seven years for survey operations carried out in certain Governmental Committee, which may refuse to give permission for regions of Russia, and up to 10 years for off-shore fields) and can further development of the mineral deposit for Licence Users be extended if needed for completion of the works. controlled by a foreign entity. The plan, volumes and terms of the geological survey within the licence terms must be approved by a separate project or technical project, 3.5 Are different procedures applicable to natural oil and gas? which is developed by the licence user and approved by Rosnedra. As a general rule, Survey Licences are issued without a tender or auction based on the application of the candidate. In Russian legislation, there is no significant difference in Subsoil Licences issued for the development of oil and gas deposits. However, it should be kept in mind that each gas or oil Subsoil 3.2 What rights are required to conduct exploration? Licence shall have technical projects for field development which set specific deadlines, methods and types of work to be performed for To conduct exploration it is required to either receive a separate each stage of subsoil activities. Technical projects for field develop- licence for exploration and the production of minerals (the ment differ from other development projects (for example, “Production Licence”), or to have the combined licence for both exploration project, well trial operation project, field conservation geological survey, exploration and production (the “Combined project) by having a more difficult approval procedure and poten- Licence”) and proceed to exploration once the geological survey has tially stricter liability for non-compliance. been completed. Production Licences and Combined Licences can be issued for a 4 Foreign Ownership and Indigenous Ownership term equal to the life of the project, however, in practice they are Requirements and Restrictions usually granted for 20- or 25-year terms and can generally be extended provided there are no violations of the licence terms and conditions by the licence holder. Production Licences and Combined Licences 4.1 What types of entity can own reconnaissance, exploration can be granted only through a tender or auction, except for specific and mining rights? cases, e.g. for licences in relation to strategic deposits included by the Russian Government into a list of strategic deposits that are to be licensed by a decision of the Government without a tender/auction. There is a general provision in Subsoil Law that entrepreneurs, Exploration must be conducted in accordance with the project or including participants of a simple partnership, as well as foreign citi- technical project for exploration. zens and legal entities, can obtain the Subsoil Licence, and thereby acquire the right to conduct mining activities (the “subsoil user”). However, due to ancillary requirements for subsoil users, in practice 3.3 What rights are required to conduct mining? the vast majority of subsoil users are Russian companies.

The Production Licence or the Combined Licence is required. In 4.2 Can the entity owning the rights be a foreign entity or addition, the legal entity intending to conduct mining activities shall obtain a number of supplementary permits and licences to practi- owned (directly or indirectly) by a foreign entity and are there cally carry out mining activities (for example, a mining allotment, special rules for foreign applicants? environmental assessment and permits, project development documentation, licences for conducting hazardous activities, and a mine As mentioned above, in practice, subsoil users are usually Russian surveying licence, etc.). companies, although foreign individuals and entities can be their shareholders, subject to a number of restrictions. 3.4 Are different procedures applicable to different minerals Federal Significance Plots may only be operated by Russian legal and on different types of land? entities. Besides that, if Federal Significance Plots are located on the continental shelf, then the subsoil user shall have at least five years of experience in implementing similar offshore projects, and the Russian legislation does not provide any specific procedures for charter capital of such Russian companies shall be more than 50% different types of minerals. However, the legislation identifies owned by the state or state corporations. certain types of subsoil plots, for which some restrictions apply. If, during the geological study, a deposit is revealed, and it meets The subsoil plots of federal significance (the “Federal Significance the Federal Significance Plots criteria, the subsoil user controlled by Plots”) are the subsoil plots: a foreign investor must obtain the prior approval of the Russian ■ containing occurrences of uranium, diamonds, nickel, cobalt, Government for further development of the deposit. If approval tantalum and other; is denied, the foreign investor has the right to be compensated by ■ containing reserves of the following minerals within stated the state for certain costs of the geological survey. thresholds: ■ oil – extractable amounts starting from 70 million tons; ■ natural gas – starting from 50 billion m3; 4.3 Are there any change of control restrictions applicable? ■ native gold – starting from 50 tons; and ■ copper – starting from 500,000 tons; As envisaged by the Strategic Law, a transaction, as a result of which ■ located in internal sea waters, territorial sea waters or on the a foreign private investor (other than a foreign SOE or foreign state) continental shelf of the Russian Federation; or will gain control either directly or indirectly over a Russian company ■ subsoil plots that can only be developed using land designated that has a Subsoil Licence for the Federal Significance Plot (the for defence and security purposes. “Strategic Company”), must obtain prior consent from the Under Russian law, only a Production Licence or Combined Government Commission on Monitoring Foreign Investment. In Licence can be issued for Federal Significance Plots. Survey Licences this matter, the right to exercise 25% or more voting rights – directly cannot be issued for such plots.

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or indirectly – in the subsoil, the user will constitute existence of 6 Transfer and Encumbrance foreign control. If the investors are controlled by foreign states or are established in certain offshore jurisdictions, the prior approval of the 6.1 Are there restrictions on the transfer of rights to conduct Governmental Commission is required for transaction if such reconnaissance, exploration and mining? investors – directly or indirectly – obtain control over 5% of the voting shares in the Strategic Companies. State-owned foreign investors are not allowed to own – directly or indirectly – 25% or Subsoil rights cannot be freely sold or otherwise transferred to more shares in the Strategic Company (subject to limited excep- another entity except in certain limited circumstances specified by tions). the Subsoil Law. Those instances comprise of, inter alia: ■ the transfer of subsoil rights from a parent company to its subsidiary and vice versa and transfer between the subsidiaries of 4.4 Are there requirements for ownership by indigenous the same parent company; persons or entities? ■ transfer following a merger or consolidation of the licence holder with and into another company; or There are no such special requirements for indigenous persons or ■ transfer following a spin-off or split-off of a new company. entities in Russia. Nevertheless, a special decision by Rosnedra is required for such transfer. 4.5 Does the State have free carry rights or options to acquire shareholdings? 6.2 Are the rights to conduct reconnaissance, exploration and mining capable of being mortgaged or otherwise secured In the ordinary course of business, the state may acquire shares in to raise finance? the charter capital of mining companies as well as control over them through various state-owned companies. Legislation does not None of the rights to conduct any mining activities can be subject envisage any special instrument for the state. to the pledge or any other encumbrance. In practice, any encumbrance (if necessary) is implemented in respect to shareholdings in 5 Processing, Refining, Beneficiation and Export the company holding a Subsoil Licence.

7 Dealing in Rights by Means of Transferring 5.1 Are there special regulatory provisions relating to Subdivisions, Ceding Undivided Shares and processing, reﬁning and further beneﬁciation of mined Mining of Mixed Minerals minerals?

In general, no special licences are applicable, however any subsoil 7.1 Are rights to conduct reconnaissance, exploration and activities require project documentation which has to be approved mining capable of being subdivided? by Rosnedra. Russian legislation provides for a number of restrictions Given the limited list of reasons for the transfer of the Subsoil concerning the processing of precious metals. For example, refining Licence, any such subdivision or ceding of the mining is not envis- of precious metals can only be carried out by organisations included aged by the Russian law. in the list approved by the Government of the Russian Federation.

7.2 Are rights to conduct reconnaissance, exploration and 5.2 Are there restrictions on the export of minerals and mining capable of being held in undivided shares? levies payable in respect thereof?

Russian law does not provide such possibility. With a few exceptions, there are no restrictions on the export of minerals. There are no export duties on minerals, although there are several exceptions (for example: oil; oil products; gas, etc.) 7.3 Is the holder of rights to explore for or mine a primary The export of gas is licensed and only special state-controlled enti- mineral entitled to explore or mine for secondary minerals? ties hold such licences. Under the legislation of the Russian Federation the export of As a general rule, the subsoil user is only entitled to explore for or precious metals (raw or processed) from the territory of the mine the primary mineral in respect to which he was provided with Eurasian Economic Union shall be made on the basis of the export the Subsoil Licence. Therefore, the right to explore or mine secondary licence issued by the Ministry of Industry and Trade. minerals should be indicated in the Subsoil Licence. Otherwise, a The state (i.e., its federal or regional authorities) has the preemp- separate licence is to be obtained for the secondary minerals. tive right to purchase precious metals and gems from subsoil users. The authorised state bodies acquire precious metals and gems for 7.4 Is the holder of a right to conduct reconnaissance, the State Fund of Precious Metals and Precious Stones or respective funds of constituting entities of the Russian Federation. In order exploration and mining entitled to exercise rights also over to exercise such right, state authorities must enter into a preliminary residue deposits on the land concerned? agreement with a subsoil user at least three months prior to the respective purchase and to therefore provide an advance payment.

Conducting reconnaissance, exploration and mining activities over tive impact on the environment (for example, an air pollution permit, residue deposits requires a separate Subsoil Licence, unless directly a water pollution permit or a unified environmental permit, as appli- indicated in the Subsoil Licence. cable).

7.5 Are there any special rules relating to offshore 9.2 What provisions need to be made for storage of tailings exploration and mining? and other waste products and for the closure of mines?

Special requirements are established for the exploration and mining Storage of tailings and other waste products requires obtaining a of subsoil areas located on the continental shelf or in the territorial separate Subsoil Licence. As for the closure of mines, respective seas: the subsoil user must have a five-year experience of operating provisions shall be stipulated in the Subsoil Licence. subsoil areas on the Russian continental shelf, and the Russian Federation must have (an indirect/direct) control over 50% in the 9.3 What are the closure obligations of the holder of a share capital of the subsoil user. reconnaissance right, exploration right or mining right?

8 Rights to Use Surface of Land In practice, the closure obligations are stipulated in a special technical project and include the obligation of decommissioning by the end 8.1 Does the holder of a right to conduct reconnaissance, of the licence term and subsequent land reclamation. exploration or mining automatically own the right to use the surface of land? 9.4 Are there any zoning or planning requirements applicable to the exercise of a reconnaissance, exploration or mining No, the right to use the surface of land shall be obtained by the right? subsoil user separately form the Subsoil Licence, although the subsoil user does enjoy the priority right to request the provision of The requirements are contained in the decommissioning technical land or forest plots. Land or forest plots owned by the state are project. provided to the subsoil user in a lease without an auction, as long as it is located within licence borders. The terms of use of privately- 10 Native Title and Land Rights owned land plots should be agreed with the owners, but the owner should not unreasonably withhold such use of land plots. 10.1 Does the holding of native title or other statutory 8.2 What obligations does the holder of a reconnaissance surface use rights have an impact upon reconnaissance, right, exploration right or mining right have vis-à-vis the exploration or mining operations? landowner or lawful occupier? With regard to areas of traditional residence and traditional economic Obligations may vary in accordance with precise terms of agree- activity where the minority of indigenous people and other ethnic ments, on the basis of which the land or forest plot is provided for communities in Russia reside, a special legal regime may be established use (rent agreement, servitude). In general, the obligations depend for the use of land. In addition, in some cases it may be necessary to on a number of factors such as (i) terms of the agreement compensate for the losses suffered by indigenous peoples. concluded between the parties, (ii) terms of servitude, (iii) term of license, (iv) parties of the relationship (private parties, public parties 11 Health and Safety or both), (v) type of the relationship (lease, sublease, easement or division of the area), and (vi) type of the land parcel, etc. 11.1 What legislation governs health and safety in mining? 8.3 What rights of expropriation exist? All major aspects of mining operations are considered by Russian law to be hazardous industrial operations and are, therefore, regulated by Russian legislation provides for the possibility of state withdrawal Federal Law on Industrial Safety at Hazardous Industrial Facilities. of both land and forest plots from the private ownership for the Among other legislation concerning hazardous production and tech- purpose of performing any subsoil-related works. The owners of nical regulation, the Federal Law on Environmental Protection, the land plots shall receive corresponding compensation. Technical Regulation Law and Federal Law on Radiation Security of

the population can be highlighted. In addition to that, the Russian 9 Environmental Labour Code regulates the general health and safety rules.

9.1 What environmental authorisations are required in order 11.2 Are there obligations imposed upon owners, to conduct reconnaissance, exploration and mining employers, managers and employees in relation to health and operations? safety?

Among other authorisations, in order to perform mining activity a Employers shall follow safety regulations and instructions, and company must obtain a favourable environmental assessment. managers must receive special training. As for the owners, their main According to Russian legislation, any activity that may have an obligation is to insure their liability for causing damage to third adverse impact on the environment (including mining operations) is parties, along with the holding briefing, ensuring safe working condi- subject to special permitting or licensing to allow the specific nega- tions, etc.

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12 Administrative Aspects 15 Regional and Local Rules and Laws

12.1 Is there a central titles registration ofﬁce? 15.1 Are there any local provincial or municipal laws that need to be taken account of by a mining company over and The main issuer of Subsoil Licences is Rosnedra, alongside its local above National Legislation? bodies. Regions of the Russian Federation may enact their own laws and 12.2 Is there a system of appeals against administrative administrative acts on the matter. However, they only regulate local decisions in terms of the relevant mining legislation? subsoil plots, whereas federal subsoil plots remain under federal legislation. As an example, certain Russian regions enact their own Depending on the type of dispute, they can be resolved by the next subsoil laws (e.g., Moscow region, Nizhny Novgorod region, higher state authority, arbitrazh court (state commercial courts) and Republic of Tatarstan, Republic of Komi). In most cases, the courts of general jurisdiction. There is a system of courts, which regional legislation simply adds details to the federal laws rather than are entitled to decide on appeal. In general, arbitrazh courts and introducing entirely new region-specific regulations. general jurisdiction appeal courts are authorised to review in appellate proceedings the legality of judicial acts. 15.2 Are there any regional rules, protocols, policies or laws relating to several countries in the particular region that 13 Constitutional Law need to be taken account of by an exploration or mining company? 13.1 Is there a constitution which has an impact upon rights to conduct reconnaissance, exploration and mining? Given that Russia is a party to the Eurasian Economic Union (“EAEU”) and the Commonwealth of Independent States (“CIS”), respective rules established within these organisations or by its party- The Constitution is the fundamental law of the Russian Federation, members will apply. These are primarily rules set in the Customs forming the basis of its legal order. The Constitution has supreme Code of the EAEU, the Single Commodity Nomenclature of legal force and is directly applicable throughout the Russian Foreign Economic Activity, separate legal acts enacted by the CIS Federation. In addition, the Constitution establishes that issues of party-members, etc. possession, use and disposal of land, subsoil, water and other natural resources and legislation on subsoil and environmental protection 16 Cancellation, Abandonment and are in joint jurisdiction of the Russian Federation and the subjects of the Russian Federation. Relinquishment

13.2 Are there any State investment treaties which are 16.1 Are there any provisions in mining laws entitling the applicable? holder of a right to abandon it either totally or partially?

At the moment, the Russian Federation is not a party to any specific Under the Subsoil Law, the subsoil user may give up the Subsoil state investment treaties applicable to the mining industry. However, Licence. In this case, the licence is fully revoked, and the subsoil Russia is a party to more than 80 bilateral international treaties on deposit shall be returned to the state. The licence holder shall the encouragement and mutual protection of investments. submit a notice of relinquishment of his right for the use of subsoil in writing to the Rosnedra no later than six months prior to the spec- 14 Taxes and Royalties ified date of relinquishment. The legislation does not envisage a partial waiver of a licence. However, in some cases, it is possible to amend the terms of the 14.1 Are there any special rules applicable to taxation of Subsoil Licence as long as specifically agreed by Rosnedra. exploration and mining entities? 16.2 Are there obligations upon the holder of an Under the general rule, organisations and individual entrepreneurs exploration right or a mining right to relinquish a part thereof recognised as users of subsoil under Russian law are obliged to pay after a certain period of time? mineral extraction tax which is federal tax in addition to other taxes (profit tax, VAT and so on). The Russian legislation directly prescribes cases where the holder of a Survey Licence or Production Licence is obliged to relinquish a 14.2 Are there royalties payable to the State over and part thereof after a certain period of time. However, if in order to above any taxes? sustain the rational use and protection of subsoil resources it is impossible or not feasible to suspend the extraction of mineral prod- Despite the taxation, the fiscal regime for the use of subsoil includes: ucts, the bodies which have ordered the early termination of the ■ a bid fee to participate in a tender or auction; right to use a corresponding subsoil plot may grant the right to ■ a signing bonus for the award of the Subsoil Licence; short-term (up to one year) use of such a subsoil plot to another ■ one-time payments provided for the Subsoil Licence; legal entity (the operator) until a new subsoil user is appointed. ■ regular payments for the use of the subsoil; ■ an environmental impact fee; and ■ rent under land or forest lease agreements.

16.3 Are there any entitlements in the law for the State to cancel an exploration or mining right on the basis of failure to comply with conditions?

Rosnedra may cancel the licence on several grounds, e.g. when the subsoil user fails to satisfy or violates material terms of the Subsoil Licence. In practice, this measure is applied in cases where the subsoil user has failed to eliminate the identified violations. Material terms, violation of which may result in revocation of the Subsoil Licence, are directly listed in the text of the licence itself. In practice, the material terms are the deadlines for completing the various stages of the project, the deadlines for the development of technical documentation, the deadlines for deposits to become operational, etc.

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Andrey Zharskiy is a Partner at ALRUD. He is the Head of Energy, Natural Resources and Infrastructure Industry Group, and he also heads the Real Estate Practice. Andrey has more than 20 years of experience in legal support of M&A/JV, commercial and infrastructure projects within energy and mining sectors advising leading international and Russian companies in respect to their high profile and large-scale transactions and JVs in Russia and abroad. His expertise includes oil & gas downstream and upstream projects, LNG projects, mining projects in Russia and Africa, infrastructure projects and financing matters. Andrey assists clients with all legal issues arising during a project’s implementation, including on regulatory issues related to subsoil use and environment. Chambers Global and Europe, and The Legal 500 rank Andrey in top bands for Energy & natural resources practice. The Legal 500 recommends Andrey in PPP and Infrastructure projects, real estate, construction and dispute resolution, and arbitration and mediation.

ALRUD Law Firm Tel: +7 495 234 96 92 17 Skakovaya Street, Building 2, 6th floor Email: [email protected] Moscow, 125040 URL: www.alrud.com Russia

Timur Akhundov is a Senior Associate in the Energy, Natural Resources and Infrastructure Practice. Timur has experience in conducting due diligence, structuring and support with the M&A transactions, particularly in the oil & gas and mining sectors. Timur also has a deep expertise in production-related regulatory issues, environment, industrial safety and licensing, and he has crucial experience of consulting clients on the regulatory issues for natural resources and infrastructure industries. Clients praise Timur for his diligence, wide knowledge in many areas of law, his mastery of various foreign languages and his ease of communication.

ALRUD Law Firm Tel: +7 495 234 96 92 17 Skakovaya Street, Building 2, 6th floor Email: [email protected] Moscow, 125040 URL: www.alrud.com Russia

ALRUD is one of the leading full-service Russian law ﬁrms, serving domestic and international clients. We stand for high quality advice, excellent service and rigorous ethical standards. Established in 1991, ALRUD is widely recognised as one of the leading and most reputable Russian law ﬁrms. ALRUD serves clients across a range of industries including energy and natural resources, and mining. The team regularly advise international and Russian clients on corporate (M&A, JV), commercial and infrastructure projects within these industries (including oil & gas, downstream and upstream projects, LNG projects, mining projects and infrastructure projects) assisting the clients with all complicated legal issues arising during a project’s implementation. Among ALRUD’s clients are major international and Russian oil and mining companies, leading oil service companies and global commodity traders, engineering and construction companies who were assisted by ALRUD in respect to their oil, gas (including LNG), metal, coal, platinum, gold and other non-ferrous and precious metals projects in Russia. www.alrud.com

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Senegal Senegal

Dempsey Law Firm Christopher Dempsey

1 Relevant Authorities and Legislation 2 Recent Political Developments

1.1 What regulates mining law? 2.1 Are there any recent political developments affecting the mining industry? First, it is to be noted that, after a number of years of work in progress, the Senegalese Mining Code has been amended. In line It is to be noted that the latest amendments to the Mining Code with trends observed in the region, the new Mining Code provides reflect the work that has been in progress since 2012 when Macky an increase in transparency, local development provisions, control by Sall was elected President. He made reform of the mining industry the State, an increase in taxes and a reduced scope for exemption a key priority for his administration and the changes referred to with a bigger share of the profits for the State, whilst at the same above reflect the latter’s concerns, as well as the trends currently time providing new advantages for investors. being followed elsewhere in Africa. The new Mining Code applies to mining titles acquired after 8th November 2016. 2.2 Are there any speciﬁc steps the mining industry is taking It is also to be noted that Senegal is a member of WAEMU (the West African Economic and Monetary Union). in light of these developments? The principal laws regulating the mining sector in Senegal are the following: See above question 2.1. ■ Law n°2016-32 dated 8th November 2016 enacting the Mining Code (hereinafter the “Mining Code”). 3 Mechanics of Acquisition of Rights ■ Decree n°2017-459 dated 20th March 2017 implementing the Mining Code (hereinafter the “Decree”). ■ Regulation n°18/2003/CM/WAEMU dated 22nd December 3.1 What rights are required to conduct reconnaissance? 2003 enacting the WAEMU Mining Code. Any legal entity may carry out prospection activities on all or part of 1.2 Which Government body/ies administer the mining the territory of Senegal subject to the granting of a prior authorisa- industry? tion of prospection.

Procedure The following bodies administer the mining industry in Senegal: The application for a permit for prospection is sent in three original ■ The Ministry of Industry and of Mines. copies to the Administration of Mines (which acknowledges receipt). ■ The Mines Authorities. The authorisation is granted by the Administration of Mines for a ■ Regional mines departments. period that may not exceed six months, renewable once, provided

that the applicant has complied with its obligations. 1.3 Describe any other sources of law affecting the mining industry. Rights ■ Non-exclusive right of prospection within the authorised They are as follows: perimeter for the minerals specified in the permit. ■ The Civil Code. ■ The permit for prospection may not be transferred and may not ■ The revised Uniform Act relating to general commercial law be the object of any form of pledge or guarantee. dated 15th December 2010. ■ Law n°2001-01 enacting the Environmental Code, dated 12th Obligations April 2001. ■ The holder of the permit must send a report setting out the ■ Law n°98/03 dated 8th January 1998, enacting the Forest Code results of the investigations to the mining authorities, and any and its implementing decree, dated 20th February 1998. other documents that enable a more in-depth knowledge of the site.

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3.2 What rights are required to conduct exploration? 3.3 What rights are required to conduct mining?

The exploration permit may be held by an individual or legal entity, ■ Mining permit: whether or not incorporated under Senegalese law. The mining permit must be held by a company incorporated under Senegalese law. Procedure The application for an exploration permit is sent in three original Procedure copies to the Ministry of Mines (that acknowledges receipt). Within The application for a mining permit is sent in three original a maximum period of 15 days, as from the date of the notification copies to the Ministry of Mines (which acknowledges receipt). of admissibility, the applicant is summoned to the Mining The application must be made at least four months prior to the Department for a joint study of the application. A mining conven- termination of the exploration permit. If all is in order, the tion is negotiated with the Mines Authorities for a period which mining permit will be granted by decree. cannot exceed three months as from the notification of the admis- Mining titles (replacing the previously existing concession sibility of the file for the granting of the mining title. In the event regime) are granted for a minimum period of five years and up of conclusive negotiations, the mining convention is sent to the to 20 years (renewable). Mines Authorities for consent. The mining convention can be signed by the applicant and by the Minister of Mines within a dead- Rights line of 21 days as from the receipt of the consent of the Minister The mining permit confers on the holder, inter alia: of Finance, or upon the expiry of a period of 21 days without any ■ The exclusive right to mine, and dispose of minerals for response from the latter. In the event of inconclusive negotiations, which the mining permit has been granted within the the application is rejected. After a period of 21 days as from the perimeter that has been attributed and to an indefinite depth. signature of the mining title, the exploration permit is granted by ■ The right to renewal. order. The exploration permit is granted, subject to the payment of ■ The right to extend the rights and obligations attached to the fixed duties, for a duration of no more than four years (as opposed mining title to other substances (where the request is made to three years under the previous mining regime), renewable twice within six months). for periods that may not exceed three years, and upon each renewal ■ The right to occupy the land necessary for carrying out the surface area of the perimeter is reduced by half. mining activities. ■ A real property right (distinct from the ownership of the Rights land) registered as such and which may be mortgaged. The exploration permit confers on its holder, inter alia: ■ The right to assign, transfer or farm-out the mining permit. ■ Within its perimeter, surface and to an indefinite depth, the ■ The right to waive in whole, or in part, its rights subject to exclusive right to explore for the minerals for which it is granted. the provision of notice of one year and the provisions of the ■ The right to take samples of minerals extracted during the Mining Convention. exploration. ■ The right to transport the extracted substances to the point ■ The right to a mining permit if it has proven the existence of a of storage, processing or shipment and to dispose of them commercially viable deposit during the period of the validity of either within Senegal, or in foreign markets. the exploration permit. ■ The right to the stability of the legal, administrative, financial ■ Priority for the granting of an exploration permit for any other and fiscal conditions of the mining operations. substances than those included in its own mining title, and which are discovered within the scope of its own exploration permit. Obligations ■ To mine the deposit. Obligations ■ To regularly inform the Minister of Mines of the methods The exploration permit confers upon its holder the following obli- and results of the mining, the results of exploration, and of gations, inter alia: additional proven and potential deposits, as well as their spec- ■ To carry out during the initial period of the permit (and during ifications. any periods of renewal) the annual exploration works that are ■ To begin mining operations as soon as possible, and within approved by the Minister of Mines. one year, failing which a penalty of 50 million FCFA per ■ To spend the minimum amount that has been approved for the month for the first three months, which will be increased by authorised works. 15% per month from the previous month starting from the ■ To commence the exploration within six months as from the fourth month and lasting for 12 months. If the mining oper- date of notification of the granting of the exploration permit. ations are not carried out within two years following the ■ To regularly inform the mining authorities of the works and granting of the permit, the latter can be cancelled. results obtained. ■ To notify the Minister of Mines of the discovery of new ■ Production sharing contract: deposits. Production sharing contracts can only be granted for promo- ■ To carry out assessments, where a discovery has been made, to tional zones, except if the titleholder of a mining title on a determine whether or not the deposit is commercially viable. perimeter situated outside the promotional areas decides to carry ■ To request a mining permit, or a mining concession, as soon as out mining works by a production sharing contract. The bene- the existence of a commercially viable deposit has been estab- ficiary of a production sharing contract is not subject to the lished. payment of a royalty. ■ To submit for approval to the Minister of Mines all contracts/documents in which the titleholder promises to assign, Procedure transfer, or transmit the rights and obligations arising under the On the basis of a model drawn up by the Mines Authorities, the exploration permit. production sharing contract is negotiated between the contractor and the Minister of Mines during a period that cannot exceed

three months. Once negotiated, the contract is sent to the ■ Artisanal mining: Minister of Finance for assent. The Minister has 21 days Artisanal mining is granted to any individual who cannot ask for following receipt of the assent to render his opinion. The exclusivity. contract is then signed by the contractor and the Minister of Mines within 21 days as from the notice of the Minister of Procedure Finance. The contract is granted by a decree. The authorisation is granted by the Mine Authorities after consulting the administrative authorities and the local munici- ■ Small mine: pality. The authorisation is granted for a period that cannot Small mine applies to substances coming from primary or exceed five years (renewable). secondary flush or sub-flush deposits. The perimeter of a small mine cannot exceed 500. Obligations ■ To pay a fixed duty to the territorial communities. Procedure ■ To comply with the environmental obligations. Application for a small mine is addressed in three original copies ■ To personally carry out the artisanal mining activity. to the Ministry of Mines (which acknowledges receipt). If everything is in order, the authorisation will be granted by 3.4 Are different procedures applicable to different minerals order of the Minister of Mines for a period that cannot exceed and on different types of land? five years (renewable).

Rights There is a different procedure for quarries. The exclusive right to carry out prospection and mining operations. Private and public quarries can be temporary if the exploitation does not exceed one year. Obligations ■ Private quarries The holder has, inter alia, the following obligations: ■ Permanent private quarry ■ To delimit the area within two months as from the grant The application for opening and operating a permanent of the authorisation. private quarry is addressed in three original copies to the ■ To respect the environment. Ministry of Mines (which acknowledges receipt). If every- ■ To rehabilitate the site. thing is in order, the authorisation will be granted by order ■ To compensate third parties. of the Minister of Mines for a period that cannot exceed ■ To commence the exploration within three months as three years (renewable). The Mines Administration from the granting of the authorisation. proceeds with the recognition of the perimeter in the pres- ■ To notify the Minister of Mines of any new, more impor- ence of the applicant and the owner of the quarries tant deposits found inside the area within a maximum concerned. If the applicant does not participate, a formal period of one month, failing which the authorisation can notice is sent to the latter by the Mines Administration. If be cancelled. during 15 days, the formal notice remains without effect, ■ Semi-automatic mining: the Mines Administration will reject the application. Small mine applies to substances coming from primary or The authorisation is given by order of the Minister of secondary flush or sub-flush deposits. Mines for a period that cannot exceed five years (renew- The perimeter of a semi-automatic mining cannot exceed 50 able). Three months following the granting of the hectares. authorisation to open and to mine the permanent private quarry, the holder must limit the perimeter. Procedure ■ Temporary private quarry Applications for a semi-automatic mining are addressed in three The application for opening and operating a temporary original copies to the Ministry of Mines (which acknowledges private quarry is addressed in three original copies to the receipt). Mines’ Administration. The authorisation is granted for a If everything is in order, the authorisation will be granted by period that cannot exceed one year (renewable). If the order of the Minister of Mines for a period that cannot exceed application complies with the conditions of the Decree it three years (renewable). will then be submitted for the opinion of the authorities in charge of the registry, land, water and forests, environ- Rights ment and the local authority concerned by the application. The exclusive right to mine minerals for which the authorisation The Director of Mines and Geology (or his representative) has been granted within the perimeter that has been attributed may, during the examination of the application, carry out and to a maximal depth of 15 metres. an inspection of the area concerned. The permit is granted by way of an order from the Minister of Mines Obligations for a period of five years (renewable once). The holder has, inter alia, the following obligations: ■ Public quarries ■ To delimit the area within two months following the The authorisation to mine is taken within seven days after granting of the authorisation. consulting the administrative authorities after notice given ■ To commence the exploration within two months as from to the local communities concerned. The authorisation is the granting of the authorisation. given for a period that cannot exceed five years (renewable). ■ To rehabilitate the site. ■ Rock piles, rock dumps and process release ■ To compensate third parties. The application for the granting of the authorisation for ■ To notify the Minister of Mines of any new, more impor- the exploitation of rock piles, rock dumps and process tant deposits found inside the area within a maximum release is addressed in three original copies to the Minister delay of one month, failing which the authorisation can be of Mines (which acknowledges receipt). The authorisation cancelled. is granted by an order of the Minister of Mines.

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3.5 Are different procedures applicable to natural oil and gas? No. Such processes are included within the definition of “mining operations” in the Mining Code.

The prospection, exploration and mining for hydrocarbons are governed by law n°98-05 enacting the Petroleum Code dated 8th 5.2 Are there restrictions on the export of minerals and January 1998. levies payable in respect thereof? Prospection: An authorisation for up to two years to carry out prospection for hydrocarbons may be granted by order of the The titleholder can freely export extracted mineral substances, their Minister in relation to those zones not covered by hydrocarbons concentrates, their primary products and other derivatives (subject mining titles, or by a service agreement. to completion of legal formalities). Exploration: The exploration permit is granted by way of a decree for a maximum period of four years. 6 Transfer and Encumbrance Exploitation: Hydrocarbon deposits may only be operated under either a temporary operating licence, or under a concession. 6.1 Are there restrictions on the transfer of rights to conduct 4 Foreign Ownership and Indigenous Ownership reconnaissance, exploration and mining? Requirements and Restrictions A prospection permit, a small mine authorisation, a semi-automatic mining authorisation and an artisanal mining authorisation may not 4.1 What types of entity can own reconnaissance, exploration be transferred. and mining rights? On the other hand, an exploration permit may be transferred, subject to the prior approval of the Minister of Mines. Similarly, a Any legal entity can own reconnaissance and exploration rights, mining permit may be transferred but again, subject to the approval whether or not incorporated under Senegalese law. Mining rights, of the Minister of Mines and payment of fixed amounts. on the other hand, must be held by a company incorporated under Senegalese law. 6.2 Are the rights to conduct reconnaissance, exploration

and mining capable of being mortgaged or otherwise secured 4.2 Can the entity owning the rights be a foreign entity or to raise ﬁnance? owned (directly or indirectly) by a foreign entity and are there special rules for foreign applicants? It is only possible to mortgage a mining permit.

As regards reconnaissance and exploration rights, these may be held 7 Dealing in Rights by Means of Transferring by a foreign entity or an entity owned (directly or indirectly) by a Subdivisions, Ceding Undivided Shares and foreign entity. There are no special rules for foreign applicants. Mining of Mixed Minerals 4.3 Are there any change of control restrictions applicable? 7.1 Are rights to conduct reconnaissance, exploration and Where there is a total change in the control of the titleholder, prior mining capable of being subdivided? authorisation must be obtained. Where there is a partial change in control, it will be necessary to at least inform the mining authorities These are not provided for. of the change.

7.2 Are rights to conduct reconnaissance, exploration and 4.4 Are there requirements for ownership by indigenous mining capable of being held in undivided shares? persons or entities?

The rights under the mining permit and exploration permit are indi- As indicated above, mining rights must be held by an entity incor- visible (article 19). porated under Senegalese law.

7.3 Is the holder of rights to explore for or mine a primary 4.5 Does the State have free carry rights or options to mineral entitled to explore or mine for secondary minerals? acquire shareholdings?

Mining permit: The titleholder can ask for an extension of its The State has a 10% free participation in the mining company and permit so as to include other minerals. This extension is granted in may negotiate for itself an additional participation in the capital of accordance with the same conditions as for the initial mining title the mining company which cannot exceed 25% of the share capital (article 25). of the mining company (article 31). Small mine: The titleholder can ask for an extension of its permit to a secondary mineral if the minerals are not subject to another 5 Processing, Reﬁning, Beneﬁciation and Export mining authorisation or mining permit.

5.1 Are there special regulatory provisions relating to 7.4 Is the holder of a right to conduct reconnaissance, processing, reﬁning and further beneﬁciation of mined exploration and mining entitled to exercise rights also over minerals? residue deposits on the land concerned?

According to article 27 of the Mining Code, the titleholder has the There is an obligation to restore the site to its previous state upon exclusive right to dispose of the minerals for which the mining the expiry of a mining title. In this regard, the holder of a mining permit has been granted. title must open an account in a public institution designated by the State into which funds are to be paid to cover the costs of the imple- 7.5 Are there any special rules relating to offshore mentation of the environmental management plan.

exploration and mining? 9.3 What are the closure obligations of the holder of a No, there are not. reconnaissance right, exploration right or mining right?

8 Rights to Use Surface of Land Please see the answer to question 9.2 above.

9.4 Are there any zoning or planning requirements applicable 8.1 Does the holder of a right to conduct reconnaissance, to the exercise of a reconnaissance, exploration or mining exploration or mining automatically own the right to use the right? surface of land?

Protected areas The rights include the following: Protected areas may be created by order of the Minister of Mines, ■ The right to occupy the land necessary for the carrying out of within which prospection, exploration and mining of mineral the exploration and mining works, the realisation of related substances are prohibited. This may be in order to protect, for activities and the construction of housing for personnel assigned example, buildings, and where it is in the general public interest. to construction activities. In addition, it is to be noted that there are reserved zones within ■ The right to proceed with infrastructure works necessary for the which only small-scale mining activities and artisanal mining activities realisation of operations relating to research and operations may be authorised. including the transportation of supplies, materials, equipment and products extracted. Promotional areas ■ The right to carry out surveys and works required for the supply The State can create all or part of the country as promotional areas of water for the personnel. within which sufficient data and results are obtained and which have ■ The right to explore and extract building materials needed for a mining interest that justifies a competition procedure in order to operations. promote investment. ■ The right to cut wood needed for the works. Exploration permits or exploitation permits are granted in promo- ■ The right to use unused or unprotected waterfalls. tional areas according to the rules on competition.

8.2 What obligations does the holder of a reconnaissance 10 Native Title and Land Rights right, exploration right or mining right have vis-à-vis the landowner or lawful occupier? 10.1 Does the holding of native title or other statutory surface use rights have an impact upon reconnaissance, The titleholder is under an obligation to compensate the landowner in the event that the titleholder’s activities cause damage to the exploration or mining operations? landowner (article 93). A person does not need to acquire an interest in land in order to 8.3 What rights of expropriation exist? apply for a mining permit. However, it is to be noted that the titleholder must compensate any individual or legal entity for any damage caused. The State guarantees that installations and infrastructures built or acquired during the course of the mining operations may not be subject to any measures of expropriation, except in circumstances 11 Health and Safety of “Force Majeure” or public necessity. In such a case, the State must pay fair compensation. 11.1 What legislation governs health and safety in

mining? 9 Environmental The Mining Code and law n°97-17 dated 1st December 1997, 9.1 What environmental authorisations are required in order enacting the Labour Code. to conduct reconnaissance, exploration and mining operations? 11.2 Are there obligations imposed upon owners, employers, managers and employees in relation to health and For mining, or small mine, an environmental impact study (or safety? “EIS”) is required. The titleholder must inform the Minister of Mines, as well as the 9.2 What provisions need to be made for storage of tailings competent administrative authority, the regional labour inspector, the and other waste products and for the closure of mines? social security and the public prosecutor of any accident or any identified danger that occurs during mining activities.

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12 Administrative Aspects ■ Exoneration from export tax regarding products derived from their mining operations.

12.1 Is there a central titles registration ofﬁce? 14.2 Are there royalties payable to the State over and above any taxes? The Mines Authorities keeps data regarding the soil and basement (article 7 of the decree). The titleholder must pay: ■ Fixed fees for the granting, renewal, extension, prorogation, 12.2 Is there a system of appeals against administrative processing, transfer or farming-out of exploration and mining decisions in terms of the relevant mining legislation? titles: ■ For an exploration permit: 2,500,000 FCFA. ■ For a mining permit: 10,000,000 FCFA. Subject to specific provisions contained in a mining convention, all ■ Annual mining royalty: disputes relating to the implementation and the interpretation of the ■ For an exploration permit: Mining Code are for the Courts of Senegal. ■ First period of validity: 5,000 FCFA/km2/year. ■ First period of renewal: 6,500 FCFA/km2/year. 13 Constitutional Law ■ Second period of renewal: 8,000 FCFA/km2/year. ■ For a mining permit: 250,000 FCFA/km2/year. ■ A quarterly mining royalty on the market value of the marketed 13.1 Is there a constitution which has an impact upon mineral or on the value of the FOB value of the exported rights to conduct reconnaissance, exploration and mining? mineral: ■ Cement: 1%. The Senegalese Constitution has both a direct and an indirect impact ■ Raw gold: 5%. on mining activities. ■ Gold refined in Senegal: 3.5%. ■ Gold refined outside Senegal: 5%. 13.2 Are there any State investment treaties which are applicable? 15 Regional and Local Rules and Laws

State investment treaties apply to the Mining Code. Senegal has 15.1 Are there any local provincial or municipal laws that signed such treaties with: Argentina; Egypt; Germany; India; need to be taken account of by a mining company over and Morocco; the Netherlands; Romania; South Korea; Sweden; above National Legislation? Switzerland; Tunisia; the United Kingdom; and the United States of America. No, there are not. 14 Taxes and Royalties 15.2 Are there any regional rules, protocols, policies or laws relating to several countries in the particular region that 14.1 Are there any special rules applicable to taxation of need to be taken account of by an exploration or mining exploration and mining entities? company?

Exploration phase An exploration or a mining company should take into account: Exoneration from custom duties, VAT and “COSEC” (COSEC: ■ the West African Economic and Monetary Union regulation Senegalese Shippers’ Council) duties and taxes for, inter alia, the 18/2003/CM/UEMOA dated 23rd December 2003 enacting the following: Mining Community Code; and ■ Equipment, materials, supplies, machines, as well as spare parts, ■ Directive C/DIR3/05/09 dated 26th–27th May 2009 relating to neither produced, nor manufactured in Senegal, and specific the harmonisation of guidelines and policies in the mining materials required for exploration activities. sector. ■ Fuel.

■ Oil products. ■ Materials and spare parts and components required for explo- 16 Cancellation, Abandonment and ration activities. Relinquishment ■ Temporary admission to full exoneration from import and export taxes and duties in relation to, inter alia, materials, machines, equipment which, once used, may be re-exported or 16.1 Are there any provisions in mining laws entitling the transferred. holder of a right to abandon it either totally or partially?

Mining phase The holder of an exploration permit can abandon all or part of its Total exoneration from all taxes and duties charged upon entry into rights if it has satisfied all its obligations and provided it has given Senegal, including COSEC relating to, inter alia, the following: one month’s notice addressed to the Minister of Mines. ■ Materials, machines, equipment required for the mining opera- The holder of a mining permit can abandon all or part of its tions. rights after giving one year’s notice addressed to the Minister of ■ Fuel to be used for the mining operations. Mines and subject to the provision of the mining convention. ■ Oil products to be used to produce energy for the purposes of the mining operations. ■ Spare parts and components required for the mining operations.

16.2 Are there obligations upon the holder of an holder within three months. This withdrawal is pronounced, inter alia, in the following situations: exploration right or a mining right to relinquish a part thereof ■ persistent inactivity; after a certain period of time? ■ suspension or serious restriction of the exploitation without a valid reason; Not to our knowledge. ■ non-compliance with the obligations and commitments provided in the mining convention and its potential addendum; 16.3 Are there any entitlements in the law for the State to ■ non-payment of the rent and royalties due; ■ non-fulfilment, without reason, of the work programme and cancel an exploration or mining right on the basis of failure to annual budgets; comply with conditions? ■ the titleholder does not hold its operating records, sales and shipping regularly and does not comply with standards set by the The Minister of Mines can cancel an exploration permit in the event regulations; and that a formal demand has not been complied with within three months. ■ assignment, or leasehold of the rights conferred by mining title The withdrawal is not subject to any compensation from the State. without the prior approval of the Minister for Mines. The mining title can be revoked by a decree after a formal demand from the Minister of Mines has not been complied with by the title-

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South Africa South Africa

Peter Leon

Patrick Leyden

Herbert Smith Freehills Matthew Burnell

1 Relevant Authorities and Legislation 1.3 Describe any other sources of law affecting the mining industry.

1.1 What regulates mining law? The Constitution of the Republic of South Africa, 1996 is the supreme law of the Republic. Law or conduct inconsistent with it The mineral resources sector is primarily regulated by statute and is invalid. The common law will apply to the extent that the in terms of the Mineral and Petroleum Resources Development MPRDA does not regulate a specific issue but the provisions of Act, 28 of 2002 (MPRDA). the MPRDA will prevail to the extent of any inconsistency. Other Black economic empowerment (BEE) in the mining industry is relevant statutes include: regulated under the Broad-Based Socio-Economic Empowerment ■ the National Environmental Management Act, 1998 (NEMA); Charter for the Mining and Minerals Industry, 2018 (Mining ■ the National Environmental Management: Waste Act, 2008 Charter III). Mining Charter III came into force on 1 March 2019 (NEMWA); and significantly increased BEE threshold requirements in respect ■ the National Environmental Management: Air Quality Act, of ownership, procurement and employment equity. To under- 2004 (NEMAQA); stand the extent of the BEE obligations for South Africa’s mining ■ the National Water Act, 1998 (NWA); industry, regard must also be had to the Implementation ■ the National Environmental Management: Protected Areas Guidelines for the Broad-Based Socio-Economic Empowerment Act, 2003 (NEMPAA); Charter for the Mining and Minerals Industry, 2018 (Guidelines), ■ the National Environmental Management: Biodiversity Act, which the Minister of Mineral Resources and Energy (Minister) 2003 (NEMBA) (and the relevant provincial conservation published on 19 December 2018. ordinances and statutes); In addition, prospecting and mining activities are regulated by ■ the National Heritage Resources Act, 1999 (NHRA); various environmental and health and safety laws which are consid- ■ the Mineral and Petroleum Resources Royalty Act, 2008; ered in more detail in section 9. ■ the Labour Relations Act, 1995; and ■ the Mine Health and Safety Act, 1996 (MHSA). 1.2 Which Government body/ies administer the mining industry? 2 Recent Political Developments

The state is the custodian of South Africa’s mineral and petroleum 2.1 Are there any recent political developments affecting resources and has a duty to administer these resources for the the mining industry? benefit of all South Africans. The Minister is authorised to grant or refuse applications for rights under the MPRDA. The mining industry is regulated at a national level by the The most recent political developments in the mining industry Department of Mineral Resources and Energy (DME) (previously include the consolidation of the previously separate portfolios of the Department of Mineral Resources) which, through its regional mining and energy into the DME. Gwede Mantashe, who was offices, implements and administers the MPRDA. appointed as the Minister of Mineral Resources in 2018, was reap- In respect of environmental matters, the Department of pointed as the Minister of the DME after the departments were Environment, Forestry and Fisheries is responsible for drafting all merged in May 2019. relevant legislation and regulations governing mining and environ- Significant regulatory changes include the lapsing of the mental issues. The DME, in turn, is responsible for implementing MPRDA Amendment Bill on the last sitting day of Parliament in these laws or regulations insofar as the laws/regulations pertain to February 2019 and the commencement of Mining Charter III on the mining sector. 1 March 2019. Recently, the DME also indicated that it intends to publish a Petroleum Resources Development Bill (to regulate the oil and gas sector separately).

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2.2 Are there any specific steps the mining industry is 3.5 Are different procedures applicable to natural oil and taking in light of these developments? gas?

While the private sector welcomed the lapsing of the MPRDA The MPRDA distinguishes between mineral resources and Amendment Bill, the obligations imposed under Mining Charter III petroleum resources (which includes natural oil and gas). The oil remain a source of contention. On 27 March 2019, the Minerals and gas sector is regulated by the Petroleum Agency of South Council of South Africa instituted judicial review proceedings against Africa which acts as the custodian of the national petroleum explo- the Minister and the DME and requested the High Court to review ration and production database. and set aside certain onerous provisions of Mining Charter III such In July 2019 the Minister announced that work had begun on a as: (i) the ownership obligations in respect of the renewal and transfer Petroleum Resources Development Bill which will result in the oil of existing mining rights; (ii) the obligations imposed on applicants and gas industry being regulated separately from mining. for new mining rights to have a minimum of 30 per cent BEE shareholding comprising: a minimum of 5 per cent non-transferable carried 4 Foreign Ownership and Indigenous Ownership interest to each of the Qualifying Employees and Host Communities; Requirements and Restrictions and (iii) 20 per cent effective ownership to BEE entrepreneurs (5 per cent of which must preferably be owned by women). The Minerals Council has also requested the High Court to review and set aside the 4.1 What types of entity can own reconnaissance, provisions which would empower the DME to invoke the enforce- exploration and mining rights? ment mechanisms provided for under the MPRDA if a mining right holder fails to comply with the obligations imposed by the Charter. Under the MPRDA, any person (natural or juristic, foreign or local) 3 Mechanics of Acquisition of Rights may apply for and be granted a prospecting right, a mining right, a retention permit or a mining permit.

3.1 What rights are required to conduct reconnaissance? 4.2 Can the entity owning the rights be a foreign entity or owned (directly or indirectly) by a foreign entity and are Any person that wishes to conduct reconnaissance operations must there special rules for foreign applicants? first apply for and obtain a reconnaissance permission under the MPRDA. A reconnaissance permission is valid for one year and The MPRDA does not draw a distinction between local and foreign cannot be renewed or transferred. applicants. Irrespective of the nationality of the applicant, all appli-

cants for mining rights must comply with the requirements of the 3.2 What rights are required to conduct exploration? MPRDA, which includes compliance with Mining Charter III.

Any person that wishes to conduct prospecting (exploration) activ- 4.3 Are there any change of control restrictions applicable? ities must first apply for and obtain a prospecting right under the MPRDA. A prospecting right grants the holder the exclusive right The Minister’s prior written consent is required for the transfer of to prospect for prescribed minerals over a prescribed area of land. a controlling interest (both direct and indirect) in a company that The holder of a prospecting right also has the exclusive right to holds a mining or prospecting right. The transfer of any interest apply for and be granted a mining right in relation to the minerals in a company listed on a recognised stock exchange is exempt from and land to which the prospecting right relates. A prospecting having to obtain the Minister’s consent. The Minister’s consent right may be granted for a period of up to five years and may be must be granted if the transferee is capable of carrying out and renewed once for a period not exceeding three years. complying with the obligations and the terms and conditions of

the right in question, and if it satisfies the requirements for the 3.3 What rights are required to conduct mining? initial granting of such right.

Any person that wishes to conduct mining activities must first apply for 4.4 Are there requirements for ownership by indigenous and obtain a mining right under the MPRDA. A mining right entitles the persons or entities? holder to the exclusive right to mine for prescribed minerals over a prescribed area of land. A mining right may be granted for a period of up to 30 years and may be renewed for further periods, each of which may Mining companies which hold mining rights granted under the not exceed 30 years. MPRDA must comply with the requirements imposed under A mining permit may also be granted for small-scale mining operations Mining Charter III. Existing mining right holders that achieved a in relation to mineral deposits that do not exceed five hectares in extent minimum of 26 per cent BEE shareholding will be recognised as and which can be mined optimally within a period of two years. A mining compliant for the duration of the mining right. This is so irrespec- permit is valid for a period of up to two years and may be renewed for tive of their current BEE shareholding. three further periods, each of which may not exceed one year. Applicants for new mining rights must have a minimum of 30 per cent BEE shareholding comprising: a minimum of 5 per cent non-transferable carried interest to each of qualifying employees; 3.4 Are different procedures applicable to different host communities; and a 20 per cent effective ownership to BEE minerals and on different types of land? entrepreneurs (5 per cent of which must preferably be owned by women). The minimum level of BEE shareholding may be met at The procedures set out in the MPRDA apply to all minerals holding company level, mining right level, on units of production, equally. shares or assets. Where the BEE shareholding is met at any level other than mining right level, the flow-through principle will apply.

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4.5 Does the State have free carry rights or options to the Minister’s consent is required for the transfer of a prospecting or mining right by the holder to a third party and for the transfer acquire shareholdings? of a controlling interest (both direct and indirect) in a company that holds a mining or prospecting right. Accordingly, the No, the state has no free carry rights or options to acquire share- Minister’s consent will generally be required for lenders to enforce holdings. their security. Foreign lenders (i.e. other than a bank as defined in the Banks Act, 1990) may require the Minister’s consent to enter 5 Processing, Refining, Beneficiation and into the security arrangements and to enforce their security. Export 7 Dealing in Rights by Means of Transferring Subdivisions, Ceding Undivided Shares and 5.1 Are there special regulatory provisions relating to Mining of Mixed Minerals processing, refining and further beneficiation of mined minerals? 7.1 Are rights to conduct reconnaissance, exploration and Section 26 of the MPRDA provides that the Minister may initiate mining capable of being subdivided? or promote the beneficiation of minerals in the country. Historically, only the precious metal and diamond industries have A reconnaissance right may not be sub-divided. Prospecting and been the subject of local beneficiation requirements in accordance mining rights may be sub-divided on condition that the Minister with the obligations imposed by the Precious Metals Act, 2005 consents to this in writing. (PMA) and the Diamonds Act, 1986 (Diamonds Act). In terms of the PMA and Diamonds Act, persons that wish to 7.2 Are rights to conduct reconnaissance, exploration and process, refine, beneficiate, sell, import or export precious metals (in unwrought or semi-fabricated form) and unpolished diamonds mining capable of being held in undivided shares? must first obtain the relevant licence or permit in terms of such legislation. The MPRDA and the Mining Titles Registration Act, 1967 both provide that reconnaissance, prospecting and mining rights are 5.2 Are there restrictions on the export of minerals and capable of being held in undivided shares. levies payable in respect thereof? 7.3 Is the holder of rights to explore for or mine a primary In terms of the MPRDA, persons who intend to beneficiate any mineral entitled to explore or mine for secondary minerals? mineral mined in the Republic outside the Republic may only do so after written notice and in consultation with the Minister. The holder of a mining right may only mine the minerals identified In addition, the PMA and Diamonds Act require any person in its mining right. If the holder wishes to mine any secondary who intends to export precious metals (in unwrought or semi- minerals it must first obtain the Minister’s consent to amend the fabricated form) and unpolished diamonds to obtain the necessary existing mining right to include the right to mine the secondary permit under such legislation. minerals.

6 Transfer and Encumbrance 7.4 Is the holder of a right to conduct reconnaissance, exploration and mining entitled to exercise rights also over 6.1 Are there restrictions on the transfer of rights to residue deposits on the land concerned? conduct reconnaissance, exploration and mining? Tailings dumps or residue deposits created pursuant to mining A reconnaissance permission may not be transferred. Prospecting operations conducted prior to the MPRDA (which came into force rights and mining rights may only be transferred with the prior on 1 May 2004) are not subject to the provisions of the MPRDA. written consent of the Minister. These tailings dumps are movable assets and are capable of private ownership. The holder of a mining right granted under the MPRDA may 6.2 Are the rights to conduct reconnaissance, exploration process any tailings dumps or residue stockpiles created under such and mining capable of being mortgaged or otherwise right but only for so long as the right subsists. secured to raise finance? 7.5 Are there any special rules relating to offshore It is fairly common for lenders to take security over mining assets exploration and mining? in South Africa. This security generally takes the form of share pledges, mortgages over mining rights and general and special The MPRDA does not distinguish between onshore and offshore notarial bonds over mining equipment. However, lenders should exploration and mining. carefully consider the provisions of section 11 of the MPRDA before taking security over any mining assets. As mentioned above,

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8 Rights to Use Surface of Land read with the Environmental Impact Assessment Regulations, 2014. A number of other permits/licences may be required depending 8.1 Does the holder of a right to conduct reconnaissance, on the nature of the activities undertaken and the receiving environment. These permits/licences include: exploration or mining automatically own the right to use the ■ a water use licence in terms of the NWA; surface of land? ■ a waste management licence in terms of the NEMWA; ■ an atmospheric emissions licence in terms of the NEMAQA; In terms of the MPRDA, the holder of a mining or prospecting ■ permits relating to protected fauna/floral species in terms of right has a statutory right to access land. The holder of a the NEMBA and/or the relevant provincial ordinances or prospecting or mining right may enter the land to which such right legislation; relates together with his or her employees and bring onto that land ■ permits relating to the exhumation and relocation of graves any plant, machinery, or equipment and build, construct or lay not contained in a cemetery in terms of the NHRA; down any surface, underground, or under sea infrastructure that ■ permits for the collection, removal and/or destruction of may be required for the purpose of mining. heritage resources in terms of the NHRA; ■ permits for the destruction, alteration or damage to buildings 8.2 What obligations does the holder of a reconnaissance older than 60 years in terms of the NHRA; and ■ re-zoning approval in terms of the relevant municipal laws. right, exploration right or mining right have vis-à-vis the

landowner or lawful occupier? 9.2 What provisions need to be made for storage of tailings and other waste products and for the closure of mines? Both the holder of the prospecting or mining right and the owner of the surface rights must exercise their rights with due regard for the rights and entitlements of the other party. The owner of the Prior to 2 September 2014, financial provisioning was regulated by surface rights may not unlawfully or unreasonably refuse the holder section 41 of the MPRDA read with regulations 53 and 54 of the of the prospecting or mining right access to the property or inter- MPRDA Regulations. These sections and regulations required that fere with the holder’s ability to carry on the prospecting or mining a mining right applicant make financial provision for rehabilitation activity on the land. of negative environmental impacts arising from their mining activ- Despite the mining or prospecting right holder’s statutory right of ities. Should the mining right holder fail to fulfil their remediation access to the property, it is common (although not a legal requirement) obligations, the DME could implement these obligations using this for mining companies to enter into access and compensation agree- financial provision. ments with landowners. The reason for this is to mitigate the potential Financial provision could be secured by way of a financial guar- for disputes and disruptions to mining operations, particularly in circum- antee, contributing money to a rehabilitation trust or depositing stances where the land is owned or occupied by rural communities. money into an account managed by the Minister. Also, see the response to question 10.1 below. The initial quantum and subsequent increases thereof were determined in accordance with the DME’s Guideline Document for the Evaluation of the Quantum of closure-related Financial Provision Provided 8.3 What rights of expropriation exist? by a Mine (the DME Guideline). In terms of the DME Guideline and the MPRDA Regulations, the selected financial provision must Section 25 of the Constitution stipulates that no one may be arbi- cater for the actual costs associated with the premature closing, trarily deprived of their property (including a limited real right such decommissioning and final closure and post-closure management as a prospecting or mining right) except in terms of a law of of residual and latent environmental impacts. general application, for a public purpose or in the public interest. With effect from 2 September 2014, section 41 of the MPRDA If the right holder is deprived of its property, the Constitution was deleted and replaced with section 24P of NEMA. Like section further provides that s/he is entitled to just and equitable compen- 41, section 24P states that the holder of a mining right must annu- sation. The compensation must reflect an equitable balance ally assess their environmental liability in the prescribed manner between the public interest and the interests of those affected, and increase the financial provision to the satisfaction of the having regard to all relevant circumstances. Minister. Separately, in terms of the MPRDA, the Minister may, in accor- The only material difference between section 41 and section 24P is dance with section 25 of the Constitution, expropriate any land or that, in terms of the latter, the holder is required to maintain financial any right for the purposes of providing equitable access to the provision notwithstanding the issuing of a closure certificate by the nation’s resources, stimulating economic growth, advancing Minister while the former stated that the holder would be absolved of employment and promoting the sustainable and ecological devel- environmental liability once the closure certificate was issued. opment of mineral and petroleum resources. From 2 September 2014 until 20 November 2015, the quantum of financial provision was calculated in accordance with the DME 9 Environmental Guideline. On 20 November 2015, the Minister of Environmental Affairs (as she was then known) published the Financial Provision Regulations, 2015 (the FP Regulations). The FP Regulations 9.1 What environmental authorisations are required in order to revolutionised financial provisioning in South Africa and were conduct reconnaissance, exploration and mining operations? viewed by the mining industry as burdensome and prohibitive. Unlike the MPRDA and the MPRDA Regulations, the FP Reconnaissance, exploration, prospecting and mining operations Regulations require that financial provision must be made for require an environmental authorisation in terms of the NEMA “annual rehabilitation, as reflected in the annual rehabilitation

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plan…final rehabilitation, decommissioning and closure of the… 10 Native Title and Land Rights mining operations at the end of the life of operations, as reflected in the final rehabilitation, decommissioning and mine closure plan…and…remediation of latent or residual environmental 10.1 Does the holding of native title or other statutory impacts…as reflected in the environmental risk assessment report”. surface use rights have an impact upon reconnaissance, The “applicant” or “holder of a right or permit” must ensure that the financial provision provided is equal to the sum of the actual exploration or mining operations? costs of implementing the plans and reports contemplated above for a period of 10 years. Where financial provision is provided The MPRDA provides that the applicant for a prospecting right, using a rehabilitation trust, these funds may not be used for finan- mining right or mining permit must notify and consult with the cial provision required for annual rehabilitation or final relevant landowner or lawful occupier and any other affected party. rehabilitation, decommissioning and closure of the mining opera- In circumstances where the holder of a reconnaissance permission, tions. That is, money held in a trust fund may only be used for prospecting right, mining right or mining permit is prevented from latent and residual environmental impacts. The effect of this commencing or conducting any reconnaissance, prospecting or restriction on the use of trust funds (when read with section 37A mining operations because of the actions of the landowner or of the Income Tax Act) is that monies held in trust funds could not lawful occupier, the MPRDA provides various dispute settlement be withdrawn to fund other forms of financial provision permitted mechanisms. in terms of the FP Regulations for annual or on-going rehabilitation In addition, recent judicial decisions on the MPRDA and the without suffering significant tax penalties in terms of section 37A Interim Protection of Informal Land Rights Act, 1996 (IPILRA) on the basis that the funds were not being distributed for the have indicated that informal land rights holders must be consulted prescribed purposes set out in the Income Tax Act. and in some instances may need to consent to the mining opera- In terms of the Regulations, the financial provisioning must be tions before a mining right is granted. The definition of an audited on an annual basis and adjusted by providing for the short- informal right to land includes, amongst other things, the use of, fall within 90 days of the audit. If the financial provision is in occupation of or access to land in terms of any tribal, customary excess of the amount, such amount must be deferred against or indigenous law or practice of a tribe. future assessments. These restrictions, however, only apply to financial provision 11 Health and Safety contemplated in terms of the FP Regulations. Under the transi- tional provisions of the FP Regulations, financial provision that was already in place at the time the FP Regulations came into effect 11.1 What legislation governs health and safety in mining? needs to be converted in accordance with the FP Regulations by February 2020. However, given the apparent difficulties with the Health and safety in mining is governed by the MHSA and the FP Regulations there have been various draft amendments to the regulations promulgated in terms of that Act. FP Regulations published for comment. It is anticipated that the February 2020 date will be extended or new regulations will come 11.2 Are there obligations imposed upon owners, into effect before February 2020 in order to correct the defects identified above. The drafts published for comment, however, employers, managers and employees in relation to health have also been riddled with problems. and safety?

9.3 What are the closure obligations of the holder of a Owners of mines are responsible for ensuring the health and safety reconnaissance right, exploration right or mining right? of employees at a mine. The chief executive officer (or similar person) is responsible for ensuring that the owner complies with the requirements set out in the MHSA. The chief executive officer The MPRDA provides that the holder of a prospecting right or a can delegate these responsibilities to other parties to fulfil these mining right must apply to the relevant Regional Manager for a closure obligations. Such delegations, however, do not absolve the chief certificate within 180 days of (i) the lapsing, abandonment or cancella- executive officer (and the owner) of their obligations in terms of tion of the right, (ii) the cessation of the prospecting or mining the MHSA. operation, (iii) the relinquishment of any portion of the prospecting of the land to which a right, permit or permission relate, or (iv) the completion of the prescribed closing plan to which the right relates. 12 Administrative Aspects The application must be accompanied by all information, programmes, plans and reports prescribed by the MPRDA and NEMA. 12.1 Is there a central titles registration office? The holder of a prospecting right or mining right must implement and ensure compliance with the relevant procedures and requirements on mine closure, especially as they relate to compli- The Mineral and Petroleum Titles Registration Office (MPTRO) ance with the conditions of an environmental authorisation. acts as a central registry for all rights granted in terms of the MPRDA which must be registered with the MPTRO within a certain period after such rights have been granted. 9.4 Are there any zoning or planning requirements

applicable to the exercise of a reconnaissance, exploration 12.2 Is there a system of appeals against administrative or mining right? decisions in terms of the relevant mining legislation?

Depending on the area in which the prospecting or mining operations are intended to be undertaken, there may be zoning Any person whose rights or legitimate expectations are materially requirements which require re-zoning applications in line with a and adversely affected, or who is aggrieved by any administrative town planning scheme. decision made in terms of the MPRDA, may appeal that decision within 30 days of becoming aware of it.

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This internal appeal process must be exhausted before a person 14.2 Are there royalties payable to the State over and may apply to a court to have an administrative decision reviewed. above any taxes? Appeals in respect of matters governed under NEMA must be lodged with the Minister of Environment, Forestry and Fisheries. Royalties are payable in accordance with the obligations imposed under the Mineral and Petroleum Resources Royalty Act, 2008. The 13 Constitutional Law payment of royalties is triggered once a mineral resource is “transferred” (i.e. disposed of, consumed, stolen, destroyed or lost). Royalties are calculated on the value of the minerals and the royalty 13.1 Is there a constitution which has an impact upon percentage rate, which is applied to the base amount. The aforemen- rights to conduct reconnaissance, exploration and mining? tioned royalty percentage is capped at 5 per cent for refined mineral resources and 7 per cent for unrefined mineral resources.

Yes; see the response to question 1.3. 15 Regional and Local Rules and Laws Section 25 [Property] of the Constitution is particularly important as it prohibits expropriation, unless it takes place in terms of a law of general application. In this regard see the response to 15.1 Are there any local provincial or municipal laws that question 8.3. need to be taken account of by a mining company over and

above National Legislation? 13.2 Are there any State investment treaties which are applicable? Depending on the region in which exploration or mining activities are undertaken, exploration and mining companies will need to South Africa is party to various bilateral investment treaties (BITs), comply with various local provincial and municipal laws. These many of which include clauses aimed at protecting investments and may include, for example, the Land Use Planning Ordinance 15 of restricting the South African government’s ability to expropriate 1985 which applies in the Western Cape and parts of the Eastern the property of foreign investors in South Africa. It should, Cape and North-West, and which prescribes that land needs to be however, be noted that South Africa has terminated many BITs in re-zoned for mining and prospecting purposes. recent years on the basis that the protection offered to investors under them is also provided under the Protection of Investment 15.2 Are there any regional rules, protocols, policies or laws Act, 2015. In addition to the BITs, South Africa is also party to several rele- relating to several countries in the particular region that need to vant international treaties which play an important role in foreign be taken account of by an exploration or mining company? investment, including: ■ Treaty of the Southern African Development Community and Exploration and mining companies may take cognisance of the its Protocols, including the Protocol on Finance and SADC Treaty (including the Protocol on Mining and the Protocol Investment (SADC Treaty). on Finance and Investment). The Protocol on Mining, among ■ The Economic Partnership Agreement between the European other things, imposes regional standards for the mining industry, Union and the Southern African Development Community encourages information exchange and promotes sustainable devel- EPA Group. opment, whereas the Protocol on Finance and Investment provides ■ Southern African Customs Agreement between the govern- selected investment protection mechanisms. ments of the Republic of Botswana, the Kingdom of Lesotho, the Republic of Namibia, the Republic of South Africa and the 16 Cancellation, Abandonment and Kingdom of Swaziland (SACU). ■ Memorandum of Understanding between the Government of Relinquishment the Republic of South Africa and the Government of the People’s Republic of China promoting Bilateral Trade and 16.1 Are there any provisions in mining laws entitling the Economic Co-operation. ■ African Continental Free Trade Area Agreement. holder of a right to abandon it either totally or partially?

14 Taxes and Royalties A prospecting or mining right holder may abandon such right totally or partially, subject to, amongst others, obtaining a closure certificate from the DME. 14.1 Are there any special rules applicable to taxation of exploration and mining entities? 16.2 Are there obligations upon the holder of an exploration right or a mining right to relinquish a part Mining and prospecting companies are subject to various rules on thereof after a certain period of time? taxation in terms of the Income Tax Act, 1962. In particular, there are certain capital expenditure deductions available in specific No, there are no obligations upon the holder of an exploration or circumstances. mining right to relinquish their part.

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16.3 Are there any entitlements in the law for the State to cancel an exploration or mining right on the basis of failure to comply with conditions?

The Minister may cancel or suspend a right, permission or permit where the holder: ■ conducts prospecting or mining operations in contravention of the MPRDA; ■ breaches any term or condition of such right, permit or permission; ■ contravenes any condition in the environmental authorisation; or ■ has submitted inaccurate, false, fraudulent, incorrect or misleading information for the purposes of the application or in connection with any matter required to be submitted under the MPRDA. Before acting upon these contraventions, the Minister must notify the holder of his intention to suspend or cancel the right, permission or permit and allow him or her a reasonable opportunity to remedy the contravention.

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Peter Leon is one of the world’s pre-eminent mining lawyers according to various peer reviewed global legal directories. His areas of expertise include crisis management, mineral and petroleum regulation in developing countries (including international best practice), resource nationalism, black economic empowerment and indigenisation law, international investment law and investment protection. Peter regularly advises clients on major mine development agreements and resources regulatory issues across Anglophone Africa. He also has significant experience in contentious matters involving states in sub-Saharan Africa. He is particularly skilled in crisis management and has provided expert advice on an urgent basis to clients to assist them in managing and mitigating significant country risks. Peter is well versed in the sub-Saharan African geopolitical climate and provides strategic advice not only on issues related to the mineral regulatory framework but also how to navigate the framework within the prevailing economic and political conditions in key African mining jurisdictions.

Herbert Smith Freehills Tel: +27 10 500 2620 Rosebank Towers – 4th Floor, 15 Biermann Avenue Email: [email protected] Rosebank, Johannesburg, 2196 URL: www.herbertsmithfreehills.com South Africa

Patrick Leyden is a corporate lawyer practising across a number of industry sectors but specialising in the mining and energy sectors within Sub- Saharan Africa. His experience includes domestic and cross-border M&A transactions, corporate restructurings, capital markets, and black economic empowerment and indigenisation transactions. Patrick regularly advises JSE-listed mining companies on compliance with domestic mining legislation and has acted for a number of domestic and multinational banks in relation to precious metals transactions with refineries. Patrick is an accomplished domestic and international speaker on the topic of mining law and has been recognised in legal directories as a leading lawyer in mining in South Africa.

Herbert Smith Freehills Tel: +27 10 500 2625 Rosebank Towers – 4th Floor, 15 Biermann Avenue Email: [email protected] Rosebank, Johannesburg, 2196 URL: www.herbertsmithfreehills.com South Africa

Matthew Burnell’s practice focuses on environmental and climate change law. He has advised and assisted clients in various sectors including mining, infrastructure, manufacturing, banking and ﬁnance, transportation and agriculture by providing operational regulatory and compliance advice, as well advising on the regulatory compliance requirements and risks within the context of complex transactions and projects. His experience extends across the entire spectrum of environmental regulatory advice from the application phases, operational compliance, administrative appeals and judicial reviews.

Herbert Smith Freehills Tel: +27 10 500 2641 Rosebank Towers – 4th Floor, 15 Biermann Avenue Email: [email protected] Rosebank, Johannesburg, 2196 URL: www.herbertsmithfreehills.com South Africa

Herbert Smith Freehills is one of the world’s leading professional services busi- project’s life-cycle, the firm provides an in-depth perspective on the complex- nesses, bringing together the best people across our 27 offices, to meet ities of deals and a strong understanding of the global mining market overall. clients’ global legal service needs. The firm offers a top-tier seamless service It is a combination of civil and common law skills in these areas coupled with across a single global platform and an unparalleled depth of expertise. It our understanding of culture, language and legal systems of major mining provides access to market-leading dispute resolution, mergers and acquisi- countries that make our mining team unique. tions, projects and other transactional legal advice, combined with expertise www.herbertsmithfreehills.com in a number of industry sectors, including mining, construction and infrastructure, energy, technology and financial services. The firm’s international network of specialist mining lawyers is one of the largest in the world, offering the full spectrum of legal services, in both developed and emerging markets. We are the trusted adviser to leading mining majors through to juniors, and cover all aspects of listed company, corporate governance and regulatory compliance advice. In addition, having acted for parties from exploration to mine closure and throughout every stage of a

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Turkey Turkey

Değer Boden

Boden Law Ceren Akkur

1 Relevant Authorities and Legislation 1.3 Describe any other sources of law affecting the mining industry.

1.1 What regulates mining law? The mining industry, by nature, has a close relationship with other areas of law such as forestry law, environmental law, labour law, occu- Under Turkish Law, mines are under the authority and disposition of pational health and safety law, criminal and misdemeanour law and tax the State and are not considered as a part of the land where they are law. Also, depending on the characteristic of the land subject to the located. Subject to a royalty payment (namely “State Right”), the mining activity, other legislation regulating municipalities, zoning plans, State may grant certain rights concerning the mining activities to coasts, public lands, pasture areas or wetlands may affect the mining natural or legal persons for a specific period of time by issuing licences. industry. The principles and procedures regarding the reconnaissance, exploration, mining/operation of mines along with the right to have 2 Recent Political Developments possession of or abandon the mines are regulated under the Mining Law No. 3213 published on 15 June 1985 (“Mining Law”). Aside from this primary legislation, which sets out the framework, there are several regu- 2.1 Are there any recent political developments affecting the lations including the Mining Regulation published on 21 September 2017 mining industry? (“Mining Regulation”) and the Mining Activities Permit Regulation published on 21 June 2005 (“Mining Activities Permit Regulation”). th Other legal arrangements which constitute the secondary legislation The 11 Development Plan of the Republic of Turkey has been regulating this area as of the date of this report are, including without recently published (in the Official Gazette dated 23 July 2019) for the limitation, the following: period between 2019 and 2023, which mainly demonstrates the polit- ■ The Regulation on Mining Regions and Transmission of Licences ical developments and plans of Turkey. Accordingly, the main purpose published on 23 May 2018. of the government regarding mining is to increase mining activities ■ The Regulation on Implementation of Group I (A) Minerals of and mineral export volume in Turkey by expediting the administrative the Mining Law published on 3 February 2005. investment procedures and by developing a mechanism to decrease ■ The Regulation on the Tender of Mine Sites published on 21 the financial risks and costs of exploration activities. In order to September 2017. ensure investment safety, there is also a plan to improve the relevant ■ The Regulation on Regaining to Nature the Lands Disrupted by mining laws and regulations in Turkey in line with international mining Mining Activities published on 23 January 2010. standards and environmental and occupational safety laws. ■ The Regulation on Mine Wastes published on 15 July 2015. Along with the special interest on increasing the raw material supply and decreasing foreign-source dependency on energy, Turkey aims to increase the exploration activities of boron and other high economic 1.2 Which Government body/ies administer the mining industry? value minerals and natural energy resources such as lignite, coal and geothermal. Foreign investment in the mining sector is also highly The General Directorate of Mining and Petroleum Affairs (“GDMPA”), encouraged and supported with incentive policies by the government. a unit of the Ministry of Energy and Natural Resources (“MENR”) is the principal authority which is responsible for administration of the 2.2 Are there any speciﬁc steps the mining industry is taking mining industry and issuance of mining licences. There are also other in light of these developments? affiliated and related institutions established by the MENR for specific purposes in the mining industry, namely the General Directorate of Mineral Research and Exploration (“GDMRE”), the Turkish Coal In line with the Development Plan, there have been some institutional Enterprises Institution and the Turkish Hard Coal Authority. re-organisations in order to expedite bureaucratic procedures (e.g. re- In addition, it should be noted that the permission or approval of organising the GDMPA, establishment of a Mining Coordination other relevant administrations might be necessary, if the mining area Committee, etc.) and an electronic platform called “e-Maden (e- subject to licence is included in the scope of other areas such as forest Mining)” has been established for certain processes to increase the lands, agricultural areas, national parks, specially protected environment quality of the mining sector. A geochemistry map of Turkey has been areas, wildlife protection and development areas, pasture areas, coastal prepared for providing efficiency when it comes to mineral exploration areas, protected cultural and natural properties, tourism areas or activities. “Mining Investment Guides” have been prepared in several prohibited military zones. languages in order to increase foreign investments in the sector.

Also, there have been massive changes made to Mining Law in Depending on the type/group of mines, the operation licence February 2019 and June 2019, some of which can be referred as periods may be between 10 years and 50 years. However, the operation follows: licence for the Group V mines and Group I/(a) mines can only be (i) GDMRE has been authorised to conclude operation activities issued for five years. These periods may be extended upon request. in addition to its exploration activities; In addition to the operation licence, an operation permit is required (ii) the “apparent reserve development right” has been included for starting the production activities. The term of the operation permit in the “mining rights” definition in addition to mining recon- shall be limited with the operation licence period. naissance, exploration and operation rights; (iii) commercial and industrial activities other than mining are 3.4 Are different procedures applicable to different minerals restricted in licensed mining areas; and on different types of land? (iv) registration of operation licences to land registries has been allowed in order to ensure publicity of such existing licences and mining activities over the related sites; The Mining Law regulates five different groups of mine according to (v) registration (within the Mining Registry) of the reconnaissance their mineralogical, physical and chemical properties and areas of rights and the apparent reserve development rights has been usage that are mainly categorised as follows: allowed; ■ Group I (sand and gravel, certain types of clays). (vi) licence fees and royalty payment ratios have been amended; ■ Group II (stones and rocks). (vii) certain changes have been made to the discount rates regarding ■ Group III (some sort of salts, gases and waters). investment incentives; and ■ Group IV (industrial, energy and metal minerals). (viii) certain administrative fines have been increased. ■ Group V (precious and semi-precious minerals). The types of licences and the relevant procedures change depending 3 Mechanics of Acquisition of Rights on the mine groups. According to Article 16 of the Mining Law, Group II (specific paragraphs), III, IV and V mines can be explored with an exploration licence. For the rest of the group, an operation 3.1 What rights are required to conduct reconnaissance? licence is directly issued. Furthermore, an approval of the relevant authorities for conducting mining activities in the special protection areas specified under Article According to Article 15 of the Mining Law, the exploration and/or 7 of the Mining Law (specifically protected environment areas, operation licence holders during their licence periods may ask for the national parks, wildlife protection areas, forests, coastal areas, first right of reconnaissance/discovery activities. If the mines are reported degree protected areas or power plants, organised industrial zones, oil, as “resources or reserve” by technical reports and approved by the natural gas and geothermal pipelines which are allocated for purposes GDMPA, the licence holder shall be deemed as the “finder” and a docu- other than mining purposes and provided with favourable opinion by ment of reconnaissance shall be granted. the GDMPA) is required to be obtained before the licence applica- The right of reconnaissance is a right which is totally independent tions. from the licence right and may be transferred with or without the

licence. The holder of the reconnaissance right shall be entitled to receive a payment if its mine is operated by another person or entity. 3.5 Are different procedures applicable to natural oil and gas? The reconnaissance activities can be in question only for certain mine groups. The Mining Law does not apply to oil and gas. Oil activities are In addition to the reconnaissance right, the Mining Law, with its governed by the Turkish Petroleum Law No. 6491 and the Petroleum recent amendments, introduces a new definition as the “apparent Market Law No. 5015, whereas gas activities are governed by the reserve development right” through which the holder of such right Natural Gas Market Law No. 4646 and their implementation regula- finds out the apparent reserve (mineable parts of the reserve) of a tions. licence holder in return for its share. As per the amended Article 6 of the Mining Law, the reconnaissance rights and the apparent reserve 4 Foreign Ownership and Indigenous Ownership development rights shall be registered to the mine registry for infor- mational purposes. Requirements and Restrictions

3.2 What rights are required to conduct exploration? 4.1 What types of entity can own reconnaissance, exploration and mining rights? Natural or legal persons willing to conduct exploration activities on the mine reserves must be granted an exploration licence by the GDMPA. Pursuant to Article 6 of the Mining Law, mining rights may only be With the licence, the holders are entitled to conduct exploration activ- granted to: Turkish citizens; companies established under Turkish Law; ities on a certain region for a specific period of time. The exploration and authorised state economic enterprises, subsidiaries and affiliates activities consist of pre-search, general search, detail search, and, if and other public bodies, utilities and administrations. appropriate, feasibility periods. Depending on the type/group of mines, the exploration licence periods may be between three and seven 4.2 Can the entity owning the rights be a foreign entity or years. These periods may be extended upon request. owned (directly or indirectly) by a foreign entity and are there 3.3 What rights are required to conduct mining? special rules for foreign applicants?

The exploration licence holders may apply to the GDMPA for a Foreign legal entities cannot directly own mining rights; however, mining/operation licence in order to conduct operating activities consisting foreign capital companies established in Turkey can be entitled to have of preparatory studies for production over the mine reserve fields that mining rights as they are deemed Turkish companies. have been found as apparent and/or probable during the exploration activities. Please note that it is possible to apply directly for an opera- 4.3 Are there any change of control restrictions applicable? tion licence to operate a certain type/group of mines.

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According to Article 82/11 of the Mining Regulation, the share 6.2 Are the rights to conduct reconnaissance, exploration and transfer transactions resulting in more than 10% change in the share- mining capable of being mortgaged or otherwise secured to holding structure of the mining licence holder is subject to approval from the MENR. raise ﬁnance?

4.4 Are there requirements for ownership by indigenous Pursuant to Article 39 of the Mining Law, upon the request of the licence holders, ores extracted from the mine can be pledged and the persons or entities? pledge must be registered with the Mine Registry. Also, Article 42 of the Mining Law regulates that a mortgage can There are no specific requirements provided under Turkish Law for be established on the mine in various degrees and levels for securing the ownership by indigenous persons or entities. the debts of the operation licence holder in connection with the mining operations or for securing its future borrowings for this 4.5 Does the State have free carry rights or options to acquire purpose. shareholdings? 7 Dealing in Rights by Means of Transferring As per Article 16/12 of the Mining Law, the holders having a Subdivisions, Ceding Undivided Shares and coccolith, sapropel and hydrogen sulphur licence which can be Mining of Mixed Minerals obtained from the seas are required to transfer at least 10% of its shares without any capital contribution requirement and to grant the right to appoint at least one board of directors member and one 7.1 Are rights to conduct reconnaissance, exploration and auditor member to the Turkish Petroleum Joint Stock Company mining capable of being subdivided? (“TPJSC”), fully owned by the State or one of its affiliates, within one year starting from the enforceability date of the exploration licence. In case the necessary mining activities are not completed and the reports are not prepared as required by law, the mine reserve fields 5 Processing, Reﬁning, Beneﬁciation and Export subject to the licence may be minimised/subdivided.

5.1 Are there special regulatory provisions relating to 7.2 Are rights to conduct reconnaissance, exploration and processing, reﬁning and further beneﬁciation of mined mining capable of being held in undivided shares? minerals? According to Article 5 of the Mining Law, the reconnaissance rights, apparent reserve development rights, exploration and operation Under the Mining Law, mineral processing, refining and further bene- licences cannot be divided into shares and each shall be treated as ficiation activities are listed under the definition of “mining activities”. whole. However, there may be exceptions for licences held by public The licence holder can establish processing or beneficiation facilities institutions who obtain approval from the MENR. on the land where they have a licence right.

7.3 Is the holder of rights to explore for or mine a primary 5.2 Are there restrictions on the export of minerals and levies mineral entitled to explore or mine for secondary minerals? payable in respect thereof?

The Mining Law categorises minerals in 5 (five) different groups and There is no specific restriction on the export of mines. This only such categorisation determines the types of licences. According to applies to the boron mineral, where there are some specific export Article 16/10 of the Mining Law, a licence granted for one of the principles and procedures which have to be specifically determined by groups will not grant rights for mines in the other groups. However, the President of the Republic according to Article 49 of the Mining for the production of mines subject to the licence, other groups of Law. minerals extracted as a result of inevitable consequence of the opera-

tional activity may be disposed by obtaining permission from the 6 Transfer and Encumbrance GDMPA.

6.1 Are there restrictions on the transfer of rights to conduct 7.4 Is the holder of a right to conduct reconnaissance, reconnaissance, exploration and mining? exploration and mining entitled to exercise rights also over residue deposits on the land concerned? As per Article 5 of the Mining Law, mining (exploration and operation) licences, reconnaissance rights and apparent reserve development There is no specific provision entitling licence holders to exercise rights rights can be transferred to third parties who meet the conditions for over the residue deposits. using mining rights. The transfer takes place with the approval of the MENR and must be registered to the mine registry held by the 7.5 Are there any special rules relating to offshore exploration GDMPA (“Mine Registry”). On the other hand, an operation and mining? permit cannot be transferred. Other than transferring the mining rights, the licence holders may also execute a royalty agreement with third parties in which the oper- Offshore exploration and operation activities are subject to the general ation right of the mine is granted for a certain period of time and in principles and procedures of the Mining Law and the Mining return for a royalty fee. The royalty agreements are subject to the Regulation. It may be required to obtain specific permissions from the approval of the GDMPA and must be registered with the Mine relevant authorities for such activities. Special requirements depend Registry. on the type/group of the mine and where the mine reserve field is located.

8 Rights to Use Surface of Land Environmental Impact Assessment published on 25 November 2014 (“EIA Regulation”). Accordingly, unless an “EIA Positive Decision” (affirming that the project does not have negative effects 8.1 Does the holder of a right to conduct reconnaissance, on the environment) or “EIA Not Necessary Decision” (subject to the election-elimination criteria meaning that the concerned project is exploration or mining automatically own the right to use the initially reviewed and then a decision is made whether the project will surface of land? be subject to an EIA Report obligation) is obtained, the required approvals, permits and licences for the relevant activities and projects Under Turkish Law, the reconnaissance, exploration or operation will not be granted. In addition to the EIA Regulation, the Mining rights do not constitute automatic ownership or usage rights to the Activities Permit Regulation provides specific criteria for the determi- license holder over the land where the mine is located. According to nation of which mining projects affecting the environment are subject Article 46 of the Mining Law, if the land is subject to private property, to the EIA. the licence holder is required to obtain a usufruct or easement right from the GDMPA in return for remuneration. The same procedure 9.2 What provisions need to be made for storage of tailings also applies for the State-owned lands; however, for such lands the and other waste products and for the closure of mines? licence holder is not required to pay any amount to the State in return for its usage right. The Regulation on Mine Wastes provides certain measures for storage of tailings and other waste products resulting from the search, extrac- 8.2 What obligations does the holder of a reconnaissance tion, preparation/enrichment or storage of mines. The most vis-à-vis right, exploration right or mining right have the nature-friendly and least harmful methods should be preferred while landowner or lawful occupier? performing these operations. It is forbidden to pollute the environment by pouring mine wastes into the soil, seas, lakes, rivers and similar If the subject land is privately-owned property, the mutual obligations receiving environments, directly filling and storing. The most devel- of the licence holder and the landowner or lawful occupier shall be oped technological methods should be followed. determined by an agreement and the obligations of the parties depend on the type of contract between the parties (whether it is a sale or lease 9.3 What are the closure obligations of the holder of a contract) and the special terms and conditions of the contract. Mainly, reconnaissance right, exploration right or mining right? the licence holder is required to pay the sale price (in sale contracts) or rental (in lease contracts) or any amount needed to be paid in return for the usage right arising from the usufruct or easement rights. On Pursuant to the Regulation on Regaining to Nature the Lands the other hand, the main obligation of the landowner or lawful occu- Disrupted by Mining Activities, before the closure of a mine reserve pier is to transfer the ownership (in sale contracts) or provide usage field, the licence holder is required to follow a procedure to regain rights (in other contracts) to the licence holder. nature in the area. Closure obligations include the removal of all construction and installations, the removal and delivery of all waste to a final destination in a duly licenced facility and the environmental 8.3 What rights of expropriation exist? recovery of the area according to an environmental landscape recovery plan. Pursuant to Article 46 of the Mining Law, during the operation licence period, if the parties cannot reach a consensus on the immovable 9.4 Are there any zoning or planning requirements applicable property subject to private ownership and if such property is essential to the exercise of a reconnaissance, exploration or mining for operating activities, such property can be expropriated upon the licence holder’s application and provided that the MENR decides that right? there is a public interest. The expropriation procedure shall be carried out according to the provisions of the Expropriation Law No. 2942. Pursuant to Article 7/12 of the Mining Law, if mining activities are to The expropriation price and costs shall be paid by the licence holder. be conducted within the zoning areas (i.e. areas with zoning plans), a The expropriated immovable shall be registered to the title deed in the permit shall be obtained from the local authorities. However, this name of the treasury and shall be allocated to the licence holder in provision shall not apply to the mine fields the zoning area decision order for usage in mining activities. of which are issued following the issuance of the licence. No zoning plan is required (i) if the mining activities to be conducted or tempo- 9 Environmental rary facilities (in connection with these mining activities) are to be built on an area without a zoning plan, or (ii) if the mining activities are to be conducted on a forest area and necessary permit for usage of this 9.1 What environmental authorisations are required in order forest area is obtained from the forest administration. Moreover, the to conduct reconnaissance, exploration and mining temporary facilities required for mining activities to be constructed on operations? areas without a zoning plan shall not be subject to a construction and occupancy permit.

Article 7/11 of the Mining Law dictates that environmental require- 10 Native Title and Land Rights ments (namely environmental impact assessment) need to be fulfilled for mining activities affecting the environment and the necessary approvals of the Ministry of Environment and Urbanisation 10.1 Does the holding of native title or other statutory (“MEU”) shall be obtained in line with environmental legislation. surface use rights have an impact upon reconnaissance, As per Article 10 of the Environmental Law No. 2872, activities which may result in environmentally negative effects are required to exploration or mining operations? obtain an environmental impact assessment report (“EIA Report”). The procedures and criteria along with the activities and projects There is no concept of native title and no other statutory surface use subject to such a requirement are determined under the Regulation on right holder, other than the State, is available in Turkey.

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11 Health and Safety 14 Taxes and Royalties

11.1 What legislation governs health and safety in mining? 14.1 Are there any special rules applicable to taxation of exploration and mining entities? The Occupational Health and Safety Law No. 6331 is the main legislation which regulates the provisions of occupational health and safety Under Article 13 of the Mining Law, it is obligatory for the exploration of the employees along with the Labour Law No. 4857. The and operation licence holders to pay licence fees every year. The fees Regulation on Occupational Health and Safety in Mine Workplaces are determined by the State in every year depending on the type/group also regulates the rights and obligations of the employees’ working in of the mine and the reserve field size. mining workplaces and the conditions of the working environment.

14.2 Are there royalties payable to the State over and above 11.2 Are there obligations imposed upon owners, any taxes? employers, managers and employees in relation to health and safety? In addition to the licence fees, the licence holders shall also pay the royalty payment, namely State Right, to be made to the State for the According to the Regulation on Occupational Health and Safety in Mine extracted mine. As per Article 14 of the Mining Law, the State Right Workplaces, the employer is the party primarily responsible for organ- is imposed on the sales price of the mine extracted at the pit and the ising, managing, using and curing the workplace and equipment in a rate of the State Right varies according to the different types/groups manner which does not cause danger for employees’ safety and health, of mines. and to ensure all works are conducted under the surveillance and liability of the authorised persons. Specific health and safety regulations to be 15 Regional and Local Rules and Laws applied in a mining workplace are individually regulated for each mining type. These regulations must be followed by all parties (employers, managers and employees) and also by the royalty holder, if any. 15.1 Are there any local provincial or municipal laws that need to be taken account of by a mining company over and 12 Administrative Aspects above National Legislation?

12.1 Is there a central titles registration ofﬁce? The mining legislation referred hereby with this document is applicable to the whole country.

The Mine Registry containing all the technical and financial issues regarding mining rights and activities shall be kept by the GDMPA. 15.2 Are there any regional rules, protocols, policies or laws The Registry is open to the public and the transfer, pledge and mort- relating to several countries in the particular region that need gage or termination status of the mines shall be registered at this to be taken account of by an exploration or mining company? Registry. The relevant rights shall become effective once they are registered to the Mine Registry. There are no such regional rules and protocols in any particular region.

12.2 Is there a system of appeals against administrative 16 Cancellation, Abandonment and decisions in terms of the relevant mining legislation? Relinquishment

Any kind of actions or decisions taken by the administrative bodies regarding the implementation of the mining legislation shall be subject 16.1 Are there any provisions in mining laws entitling the to judicial review and administrative lawsuits may be filed against the holder of a right to abandon it either totally or partially? relevant administrative body. Article 32 of the Mining Law enables licence holders to apply for 13 Constitutional Law abandonment. In such circumstances, the licence holder willing to abandon the mine is obliged to take the required security measures at the field and submit the necessary technical documentation regarding 13.1 Is there a constitution which has an impact upon the field to the GDMPA within one year. rights to conduct reconnaissance, exploration and mining? 16.2 Are there obligations upon the holder of an exploration The authority and disposition of the State over the mines originates right or a mining right to relinquish a part thereof after a from Article 168 of the Constitution of the Republic of Turkey. certain period of time? Accordingly, the rights for exploration and operation of the natural resources belong to the State and it may transfer these rights to the natural or legal persons for a specific time period by issuing licences. No, there are no obligations upon the holder of an exploration right or a mining right to relinquish a part thereof after a certain period of 13.2 Are there any State investment treaties which are time. However, as per Article 32 of the Mining Law, licence holders whose licences have been relinquished for any reason are also obliged applicable? to take the required security measures and to submit to the GDMPA the technical documents showing the latest status of the field. Yes, there are a number of bilateral agreements signed by the Republic of Turkey for the promotion and protection of investments.

16.3 Are there any entitlements in the law for the State to cancel an exploration or mining right on the basis of failure to comply with conditions?

Under the Mining Law, the State is entitled to cancel exploration or operation licences in case of a failure to comply with the terms and conditions specified in the legislation, such as the necessary approvals or permits have not been obtained or the required reports are not submitted or the licence fees are not paid within the given time period, etc.

Değer Boden Managing Partner, Boden Law Değer Boden has significant experience in energy, infrastructure and mining and arbitration matters. She assists clients in avoiding or resolving disputes and regulatory issues (including energy regulations) through negotiation, arbitration and litigation. Her experience embraces international commercial and investment treaty arbitration. She also acts as arbitrator in disputes arising from energy contracts. She publishes, teaches and speaks extensively on arbitration and energy matters. She received her law degree (LL.B.) from Galatasaray University, School of Law (2000). She has been a member of the Istanbul Bar since 2001. She holds an LL.M. degree in International Business Law from the University of Minnesota, School of Law (2005) and another LL.M. degree in Economics Law from Istanbul Bilgi University, School of Law (2004). She speaks Turkish, English and French.

Boden Law Tel: +90 212 251 1500 / +90 532 666 79 05 Maslak Mah., İz Plaza Giz No:9 Email: [email protected] Bağımsız Bölüm 77 URL: www.boden-law.com 34398 Sarıyer / İstanbul Turkey

Ceren Akkur Senior Associate, Boden Law Ceren Akkur is a Senior Associate at Boden Law and she has been with the firm since 2014. She has extensive experience in a wide range of corporate and commercial transactions including mergers and acquisitions, privatisations, joint ventures, and project agreements with special emphasis on the energy and mining sectors. She spent three months on secondment to the European Federation of Energy Traders’ (EFET) Brussel offices from October 2017 to January 2018. She received her law degree (LL.B.) from Yeditepe University, School of Law (2011). She has been a member of the Istanbul Bar since 2012. She holds an LL.M. degree in Private Law from the Yeditepe University, School of Law (2018). She speaks Turkish and English.

Boden Law Tel: +90 212 251 1500 / +90 535 207 85 23 Maslak Mah., İz Plaza Giz No:9 Email: [email protected] Bağımsız Bölüm 77 URL: www.boden-law.com 34398 Sarıyer / İstanbul Turkey

Boden Law is a top tier law firm providing advice and representation particularly with respect to cross-border transactions, project development and finance transactions, mergers and acquisitions, joint ventures, alliances, and dispute resolution with special emphasis on arbitration, and restructuring and creditor rights. Energy, infrastructure and mining and metals are the core industries that the firm is focused on. The firm differentiates itself with its industry specific expertise in energy, infrastructure and mining sectors. With its understanding of complex dependencies between and within the Energy and Natural Resources sectors, the firm offers a unique energy practice. www.boden-law.com

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United Kingdom United Kingdom

Greg Mulley

Julie Vaughan

Herbert Smith Freehills LLP Yulia Zaytseva

1 Relevant Authorities and Legislation operations, the administering of coal mining subsidence damage claims, and bearing the liability for contaminated mine water caused by historic coal workings. The Coal Authority sometimes owns non- 1.1 What regulates mining law? coal mines and minerals in coal mining areas. The exploitation of gold and silver is overseen by the Crown Estate and, in Scotland, the Crown Estate Scotland (together, TCE) The regulation of the mining industry follows the devolution of through Wardell Armstrong, the Crown Estate Mineral Agent. TCE certain powers relating to mining from the government of the also manages the seabed to the 12-nautical mile territorial limit and United Kingdom to the governments of Scotland, Wales and other rights including non-energy mineral rights out to 200 nautical Northern Ireland. As such, some law applies to the whole of the miles in all parts of the UK. In this capacity, TCE grants licences UK, while some applies only to a particular part of the UK. for the extraction of marine sand and gravel resources from the The principal sources of law in the UK are Acts of Parliament seabed, as well as such minerals as salt, potash and polyhalite occur- and associated statutory instruments, common law (essentially case ring beneath the seabed. law) and European Union law with effect in UK domestic law (some The Oil and Gas Authority (OGA), created in 2015 and later re- of which will be replaced by new domestic law following the UK’s registered as a state-owned company limited by shares, is responsible withdrawal from the EU). Mineral leases, planning consents and for the licensing of offshore and onshore oil and gas operations in environmental consents will also contain terms and conditions which the UK, including exploration, production, decommissioning and mine operators need to comply with and many of these will be abandonment. tailored to the particular project and nature and location of the oper- In Northern Ireland, the Mineral Development Act (Northern ations, imposing, for example, restrictions on traffic movements, Ireland) 1969 vested most minerals in Northern Ireland in the limits on air and noise emissions and the need to decontaminate and Department of the Economy. This enables the government of restore the site after closure. Northern Ireland (when functioning) to grant exploration and The UK regulatory regime for mining also varies according to the production licences in its own name. The main exceptions to this mineral in question. right are (a) offshore oil and gas deposits which are administered by the OGA, (b) gold and silver which vest in the Crown, (c) “common” 1.2 Which Government body/ies administer the mining substances (including aggregates, sand and gravel), and (d) minerals industry? which were being worked at the time of the 1969 Act. As well as a licence to exploit minerals, planning consent is The Government and to some extent local authorities set the policy required to authorise any development works from the local mineral framework within which the mining industry operates. The general planning authority (MPA). position under the law of property is that landowners own the The Health and Safety Executive (HSE) enforces health and safety minerals beneath their land and are able to license the right to exploit regulation in England, Wales and Scotland, together with local them to third parties. However, in some cases, all rights to search authorities and other authorised bodies. In Northern Ireland, health for and exploit minerals have been reserved for the Crown, for and safety regulation is enforced by the Health and Safety Executive example, all naturally occurring gold and silver vest with the Crown, for Northern Ireland. as well as oil and gas and all minerals occurring on and beneath the Environmental regulation is undertaken by the national environ- seabed within 200 nautical miles of the coast. Licensing of explo- mental regulators and in some respects the local authorities. The ration and exploitation of these minerals is either conducted on principal environmental regulator for England (and in some subject behalf of the Crown or by governmental bodies established for this areas across the UK nations) is the Environment Agency (EA), for purpose. devolved matters in Scotland it is the Scottish Environmental The ownership of the majority of unworked coal and coal mines Agency (SEPA), in Wales it is Natural Resources Wales (NRW) and in the UK (excluding Northern Ireland) belongs to the Coal in Northern Ireland it is the Northern Ireland Environment Agency Authority. The Coal Authority, established under the Coal Industry (NIEA). Natural England additionally issues licences under the Act 1994, is an executive, non-departmental public body whose wildlife and habitats conservation regime as well as providing responsibilities include, amongst others, the licensing of coal mining specialist input to other bodies.

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1.3 Describe any other sources of law affecting the mining 1980s, with more new applications underway. However, the UK Government remains committed to achieving its commitments in industry. the Paris Agreement on climate change and legally binding UK domestic climate change targets for emissions reduction, which have The principal legislation affecting the mining industry in the UK recently been increased with the ambition of achieving a 100% includes: reduction – compared to the 1990 figures – by 2050. (a) the Coal Industry Act 1994 establishing the Coal Authority and Foreign Investment: The UK’s public interest intervention regime setting out the framework within which the coal industry allows the Government to intervene in the merger control process currently operates; (usually confined to competition review by the CMA or European (b) the Mines and Quarries Act 1954 governing the management Commission) when strictly defined public interest considerations arise and control of mines and quarries; in relation to specified categories of transaction. In July 2018, the (c) the Mining Regulations 2014 replacing and consolidating the Government published the National Security and Investment White previous mine-specific health and safety regulations into a single Paper setting out proposals for a new national security review regime set that are based around major hazards within the underground and initiated a consultation which ran until mid-October 2018. It is mining sector; expected that the Government will produce a response in the consul- (d) the Health and Safety at Work etc. Act 1974 and a large body of tation exercise and introduce draft legislation later in 2019. health and safety regulations of general application across all The non-petroleum extractive sector is currently not specifically sectors which includes: referenced in the UK’s public interest interventions regime and is not ■ Explosives Regulations 2014; listed in the Policy Statement attached to the White Paper as one of ■ Control of Substances Hazardous to Health Regulations the core areas likely to be covered by the new foreign direct invest- 2002; ment (FDI) regime if it comes into force. However, as an area where ■ Dangerous Substances and Explosive Atmospheres concerns for public interest have been identified, mining remains an Regulations 2002; and industry which might in the future be brought within this regime. ■ Provision and Use of Work Equipment Regulations 1998; (e) the Environmental Permitting (England and Wales) Regulations 2.2 Are there any speciﬁc steps the mining industry is taking 2016 and equivalents in the devolved regions; and (f) the Town and Country Planning Act 1990. in light of these developments? At the time of writing for this guide in August 2019, the UK’s withdrawal from the EU is still pending. Whilst the UK remains Coal: The industry has been quick to applaud what it interprets as a member of the EU, EU law regarding the regulation of mining changing attitudes towards coal mining in the UK and there have will apply. As a result of section 3 of the European Union been hopeful voices from the industry commentators that this could (Withdrawal) Act 2018, the EU Regulations (a form of directly signify a reversal of the Government’s policy towards coal. This was applicable EU legislation) will also continue in force post-with- further reinforced by the periods of surges in the wholesale price of drawal, unless and until they are replaced with new domestic less-polluting gas which made it cheaper for utility companies to laws, and domestic law implementing EU Directives will be generate power from coal, as well as the continuing domestic retained on the UK statute book (subject to necessary amend- demand for coking coal used in the steel making process. ments to ensure its continued efficacy). The extent of legislative Large-scale projects: Outside of fossil fuels, the mining industry has and policy changes occurring post-Brexit is yet to be seen. With been given impetus with new projects, such as the Woodsmith mine respect to health and safety and environmental regulation in in North Yorkshire. The Woodsmith mine is considered to be the particular, the current expectation is that those provisions largest known high-grade resource of polyhalite (a multi-nutrient deriving from EU law are unlikely to change substantially in the fertilizer which combines calcium, magnesium, potassium and short term as a result of Brexit, and the UK may be obliged in sulphur) in the world. Sirius Minerals plc which is developing the the terms of a subsequent trade deal with the EU to maintain mine announced its plans to make it fully operational from the end equivalent standards. of 2021. However, the availability of funding for capital intensive projects remains the key challenge for the non-fossil fuel sector in 2 Recent Political Developments the UK and is cited as the main reason for the present suspension of operations at the Drakelands mine in Devon, host to the fourth largest tin-tungsten deposit in the world, with its operating company 2.1 Are there any recent political developments affecting the – Wolf Minerals (UK) Limited – already in liquidation. mining industry? 3 Mechanics of Acquisition of Rights Brexit: The impact on the mining industry of the UK’s withdrawal from the EU (expected on 31 October 2019) remains to be seen. 3.1 What rights are required to conduct reconnaissance? The industry on average does not expect any significant changes, although some also hope for some relaxation of the regulatory regime and other measures aimed at supporting local mineral Please refer to question 3.2 below. producers. Coal: An industry which may benefit the most in conjunction with, 3.2 What rights are required to conduct exploration? if not as a direct result of, Brexit, is coal mining. Despite the Government’s previously announced plans to shut down the The rights required for reconnaissance and exploration will depend remaining coal-fired power stations in the country by 2025, as part on the type of mineral and its ownership. All minerals in the UK of the country’s commitment to reduce its carbon footprint, several are owned privately, apart from those expressly reserved for the new coal licences and planning permissions have been granted since Crown or a specific public authority (such as coal, gold, silver, and the beginning of 2019, including the Woodhouse Colliery site in the mineral resources on and beneath the seabed within 200 nautical West Cumbria – the first deep coal mine to be opened since the miles of the coast).

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For State-owned minerals, the licensing requirements and proce- rights to petroleum including the rights to “search and bore for, and dures will be set out by the competent government authority or get” petroleum, are vested in the Crown. Any exploration or public body and are applicable to all prospective licensees in the production of petroleum therefore requires a licence from the OGA. same way. The process will culminate in the decision to grant (or to A separate regime applies to onshore oil and gas in Northern refuse the grant of) an option, lease or licence for a specified period Ireland, established under the powers devolved to the Northern of time and usually subject to certain conditions that the licensee will Ireland Assembly. undertake to fulfil during the term of the grant. The terms of coal The OGA issues production licences through competitive licences and oil and gas licences in particular have long been stan- licensing rounds. A requirement for offshore licences is that the dardised and are set out in model form documents which can be bidder must promise to maximise the economic recovery of the accessed on the Coal Authority and OGA websites. In contrast to UK’s oil and gas resources. The OGA can only accept licence appli- this, the terms on which privately-owned minerals can be exploited cations in response to a formal invitation to apply. The process will will be determined by, and agreed with, the landowners directly, and usually start with publication of the invitation in the Official Journal are not subject to any country-wide regulations (save for health and of the European Union (which will change on the UK’s withdrawal safety and environmental regulations which apply to the exploration from the EU) with applications only being submitted at least 90 days of State- and privately-owned minerals in the same way). later. There may be exceptional circumstances where it would be Having the right to conduct reconnaissance or exploration works reasonable for a company not to have to wait for the next licensing does not automatically grant the right to access the land where the round to get a licence, so the OGA also has an out-of-round appli- relevant deposit is located. Such rights can only be obtained directly cation process. It can only be used if justified by exceptional from the landowner, generally in the form of a lease. Alternatively, circumstances, and is not a routine alternative to licensing rounds. the freehold title to the land can be acquired, but this happens rela- Petroleum licences can be held by a single company or by several tively rarely in practice, for economic reasons. companies working together, though in legal terms there is only ever Unless categorised as a permitted development, exploration works a single licensee, however, it may comprise many companies. All would typically also require a planning permission which will need to companies on a licence share joint and several liability for obligations be obtained from a local MPA. In some cases, an exploration licence and liabilities that arise under it. Each licence takes the form of a will be issued which is conditional on the licensee obtaining such plan- deed, which binds the licensee to obey the licence conditions, regard- ning permission. Obtaining planning permission will likely require the less of whether or not it is using the licence at any given moment. applicant undertaking an environmental impact assessment. Additional requirements apply to onshore high-volume hydraulic As well as planning permission, the operator may also need one or fracturing (or fracking) operations. In particular, operators are more environmental permits from the relevant environmental regu- required to undertake detailed geological studies and submit a lator. Hydraulic Fracture Plan (HFP) to the OGA (and also the EA) setting out how they propose to control and monitor the fracturing process 3.3 What rights are required to conduct mining? and assess the risk of induced seismic activity. The HFP must then be approved independently by both regulators, with the HSE having had the opportunity to comment. A consent from the Department Once exploration works are completed, extraction will require a for Business, Energy & Industrial Strategy (BEIS) will also be production-type licence from the owner of the mineral resource. required to commence hydraulic fracturing operations. The applicable requirements will depend on the mineral in question and whether it is Crown or privately-owned (as described in question 3.3 above). 4 Foreign Ownership and Indigenous Ownership The licensee will also require continued access to land and plan- Requirements and Restrictions ning permission for the extraction works. Any environmental permits obtained at the exploration stage are likely to require varia- 4.1 What types of entity can own reconnaissance, exploration tion (see section 9 for more detail on this). and mining rights? 3.4 Are different procedures applicable to different minerals and on different types of land? There are no formal requirements as to the type of entity which can be granted reconnaissance, exploration and mining rights.

Different procedures, as established and enforced by the relevant 4.2 Can the entity owning the rights be a foreign entity or government agency or other public body, will apply to different publicly-owned minerals, including coal, gold and silver. Even when owned (directly or indirectly) by a foreign entity and are there dealing with the same mineral, the procedure may also vary depending special rules for foreign applicants? on whether the licence is sought for onshore or offshore operations. Privately-owned minerals will be accessed on the terms agreed Presently, there are no general restrictions on foreign investment in with the relevant landowners and are not subject to any specific the mining sector. (For the current proposal with respect to the procedural requirements. Regardless of the ownership of the regulation of FDI on an economy-wide basis, please refer to the mineral in question, all extractive companies must, however, comply National Security and Investment White Paper, announced in July with all applicable laws concerning health and safety, environmental 2018.) Applicable licensing requirements will, however, need to be protection and planning when conducting their operations. studied for applicants’ residency criteria which may, for example, require that the applicant is registered as a UK company, has a 3.5 Are different procedures applicable to natural oil and branch of a foreign company registered at Companies House (which gas? is the registrar for companies in the UK) or has a staffed presence in the UK.

The regulatory regime applicable to oil and gas exploration and production in the UK (with the exception of the onshore territory 4.3 Are there any change of control restrictions applicable? of Northern Ireland) and on the UK Continental Shelf (UKCS) is set out in the Petroleum Act 1998. Under the Petroleum Act, all

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Whether there are any restrictions applicable to change of control gas, crude oil and coal that they produce occur in nature and are not will be determined under the terms of the licence. For example, the chemically modified. Otherwise, a registration is mandatory in order model clauses for coal licences issued by the Coal Authority require to place any of the above on the EU market. the licensee to notify the Coal Authority of any change of control Importantly, after the UK’s withdrawal from the EU, EU legisla- of the licensee. Such notification will contain the details of the tion will no longer apply to the UK. Although it will be replaced by financial standing and controlling persons of the intended transferee, a UK REACH regime, current EU REACH authorisations granted the experience and expertise of the transferee and its controlling to UK-based companies will no longer exist. In order to be able to persons, as well as the proposals of the transferee with regard to the continue to export substances subject to REACH to customers in carrying out of future coal mining operations within the licensed the EU/EEA area, UK-based producers have the option of area. On receipt of the notification, the Coal Authority may impose appointing a representative located in the EU to register on their such conditions as it thinks fit to ensure the terms of the licence will behalf, or EU-based customers may register as importers. be complied with. In the unlikely scenario that the item is listed on the UK Strategic If certain turnover/share of supply thresholds are exceeded, the Export Controls List (e.g., as a dual-use item which can be used for acquisition of a mining company will be caught by the UK’s general both civilian and military applications), an export licence will be merger control regime and may be reviewed by the UK’s required, which will be issued by the Export Control Joint Unit. Competition and Markets Authority (CMA) or, if higher turnover There are no export levies due to the Government. Levies thresholds are exceeded, be required to be notified to the European payable in third countries will depend on the destination country, the Commission. (Following the date of Brexit or (if applicable) the end type of goods, their origin and value. of the transition period, the CMA will also have jurisdiction to review larger transactions which are currently notifiable to the 6 Transfer and Encumbrance European Commission.) If the proposed acquisition raises any national security concerns, a national security assessment may also be undertaken at this stage, although as noted in question 2.1 above, 6.1 Are there restrictions on the transfer of rights to conduct the mining sector is not specifically referenced in the UK’s public reconnaissance, exploration and mining? interest interventions regime and is not listed in the Policy Statement attached to the Government’s National Security and Investment For publicly-owned mineral resources, there will generally be a White Paper as one of the core areas likely to be covered by the new formal process to arrange for the licence to be transferred or FDI regime if it comes into force and so transactions in respect of assigned to another entity, in full or in part, administered by the purely mining companies as a rule seem unlikely to raise such competent government authority or other public body. concerns under the FDI regime. Where the rights to conduct reconnaissance, exploration or

mining were granted by a private landowner, the terms on which 4.4 Are there requirements for ownership by indigenous such rights were granted will need to be consulted for any restric- persons or entities? tions on their assignment.

There are no indigenous ownership entitlements in the UK. 6.2 Are the rights to conduct reconnaissance, exploration and mining capable of being mortgaged or otherwise secured 4.5 Does the State have free carry rights or options to to raise finance? acquire shareholdings? Under the Law of Property Act 1925, the definition of “Land” The Government does not have free carry rights or options to includes mines and minerals on or under the land. This means that acquire equity interests in mining projects. an interest in mines and minerals can be mortgaged or otherwise secured to raise finance (subject to any restrictions conferred by the 5 Processing, Refining, Beneficiation and Export right on which such interest is held). The interest in mines and minerals should, however, be distinguished from the rights to conduct reconnaissance, exploration and 5.1 Are there special regulatory provisions relating to mining works which generally take the form of a licence. The ability processing, refining and further beneficiation of mined to use the latter as security will depend on the terms of the instrument conferring such rights. minerals?

7 Dealing in Rights by Means of Transferring Beneficiation of mined minerals must comply with all applicable environmental and health and safety requirements (see sections 9 Subdivisions, Ceding Undivided Shares and and 11 for more detail), including restrictions on the manufacture Mining of Mixed Minerals and use of certain dangerous substances, such as asbestos.

7.1 Are rights to conduct reconnaissance, exploration and 5.2 Are there restrictions on the export of minerals and mining capable of being subdivided? levies payable in respect thereof?

There are no specific rules relating to subdivision of the rights to For sales within the EU, including in the domestic market, mineral conduct reconnaissance, exploration and mining. However, a producers currently have specific obligations under the EU legisla- licensee will often be able to transfer (by way of sale or assignment) tion governing the registration, evaluation, authorisation and a part of the licence to another person, with the licensor’s consent. restriction of chemicals (REACH). An important exemption allows In such cases, it will be important to establish the liability regime as producers to avoid registration provisions under REACH, provided between the old and the new licensees and whether they would be that the minerals, ores, ore concentrates, raw and processed natural jointly and severally liable for any violation of the terms of the licence.

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Any transfer of a licence (or any part thereof) will also raise ques- to be applied for separately. This can be particularly cumbersome on tions concerning the continued use of (i) the land where the relevant the prospective licensee where the landowner is not the same as the operations are being conducted, and (ii) the permits obtained prior to Government authority or other public body which granted the licence. transfer, which will need to be addressed with the relevant third parties. As an exception, holders of licences to conduct high volume hydraulic fracturing do have a statutory right under the Petroleum 7.2 Are rights to conduct reconnaissance, exploration and Act 1998 to access reserves located deep under neighbouring land over which the licensee does not have a private right of access. In mining capable of being held in undivided shares? other cases, attempts to access without landowner permission will constitute a trespass and may lead to court action for damages This will depend on the licence sought. For example, licences issued and/or an injunction. by the Coal Authority can be held by a single company or by several working together. Importantly, all companies named on such licence 8.2 What obligations does the holder of a reconnaissance will share joint and several liability for obligations and liabilities that vis-à-vis arise under it. right, exploration right or mining right have the landowner or lawful occupier? 7.3 Is the holder of rights to explore for or mine a primary mineral entitled to explore or mine for secondary minerals? The lease or other document pursuant to which the licensee was granted access to the land will specify the obligations owed to the landowner as agreed between the parties. These obligations will typi- There is no presumption that the holder of rights to explore for or cally include the payment of rent or royalties, the obligation to mine a primary mineral will be entitled to the same in respect of ensure adequate support for the surface and make good any damage secondary minerals found in the same area. Unless specifically caused to the surface, and others. included in the terms of the original licence (which is not common), General principles of the law of nuisance will also apply to the a separate grant from the owner of the secondary mineral (whether use of land as a mine or quarry. Examples of mining activities private or public) will therefore need to be sought. For example, capable of creating a nuisance include the emission of dust or holders of coal licences can obtain further licences from the Coal noxious fumes, the discharge of polluting effluents into a river, the Authority for adjacent activities such as coal bed methane extraction, creation of noise and vibration, and the projection of debris by abandoned mine methane extraction, mine water heat recovery and blasting. Affected landowners may in these circumstances bring a deep energy exploitation. claim for an injunction and in some cases damages against the mine operator. Complaints of noise and dust emissions may also cause 7.4 Is the holder of a right to conduct reconnaissance, the relevant environmental regulator to investigate whether permit exploration and mining entitled to exercise rights also over conditions have been breached. residue deposits on the land concerned? The emission of smoke or fumes and the lack of proper fencing of abandoned and disused mines and quarries are in certain circumstances a statutory nuisance in relation to which the local authority Similarly, the holder of a right to conduct reconnaissance, explo- may issue an abatement notice requiring the nuisance to cease. If ration and mining will not be automatically entitled to exercise these the impacts of the nuisance affect several people in the vicinity the rights over any residue deposits and other residue stockpiles. While nuisance may also constitute a public nuisance. such rights can in principle be provided in the terms of a licence, this would not be common. 8.3 What rights of expropriation exist? 7.5 Are there any special rules relating to offshore It is possible for land, and rights for mining and extraction, to be exploration and mining? obtained using compulsory acquisition. In each case, landowners whose land has been acquired, or who have suffered as a result of Offshore operations in UK territorial waters and on the UKCS are the acquisition, may be entitled to be paid compensation, as assessed subject to additional requirements with a view to preserving the by a specialist tribunal. marine environment. In England and Wales, rights over land (but not freehold interests) Oil and gas operators are required to submit and implement a can be acquired under the Mines (Working Facilities and Support) “safety case” document to the OGA in accordance with the require- Act 1966. To do so, an application must be submitted to the ments of the EU Offshore Safety Directive 2013 and implementing Government, who in turn will instigate proceedings in the High UK regulations for offshore installations and wells. Court. The court will not grant rights under the 1966 Act unless it TCE is the body responsible for licensing the extraction of marine can be proven that to do so would be “expedient in the national sand and gravel resources which are widely used in construction interest”. projects as well as for coastal protection and land reclamation, The Opencast Coal Act 1958 grants the Coal Authority the power whereas coal deposits are managed by the Coal Authority (both to compulsorily purchase the temporary right to land containing onshore and offshore). mineral deposits, although it has been rare for it to do so. Under the Acquisition of Land Act 1981, it is possible for a Compulsory 8 Rights to Use Surface of Land Purchase Order to include provision for the digging and carrying away of minerals by statutory undertakers, where this is necessary for construction work. 8.1 Does the holder of a right to conduct reconnaissance, Where it is necessary in order to carry out a development (which exploration or mining automatically own the right to use the includes mining), redevelopment, or improvement, the local planning surface of land? authority may acquire land compulsorily, if it is uncertain that the land could be acquired by way of agreement. It may only do so if the proposed development would contribute to the economic, social, The right to use the surface of land is to be distinguished from the or environmental wellbeing of its area. right to conduct reconnaissance, exploration or mining and will need

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9 Environmental A mining waste environmental permit is required to cover all waste streams generated by the mining operation with the exception of waste unrelated to extraction such as domestic waste from onsite 9.1 What environmental authorisations are required in order worker facilities. A permit may also be necessary for any wastes accumulated or stored at the site which contain naturally occurring to conduct reconnaissance, exploration and mining radioactivity above a minimum level (NORMS). operations? The requirements for both types of permit are set out in the Environmental Permitting (England and Wales) Regulations 2016. Onshore, a number of activities carried out as part of mining oper- Higher requirements apply to mining waste facilities categorised as ations will require an environmental permit. The Environmental posing a high-level hazard (Category A) or which involve hazardous Permitting (England and Wales) Regulations 2016 (EPR) requires a as opposed to non-hazardous or inert waste. permit to crush, grind or reduce minerals, except for the cutting of Operators must as part of their permit application prepare a waste stone, or the grading, screening or heating of clay, sand or any other management plan including classification of all extractive waste naturally occurring mineral other than coal, or where it is unlikely to streams in accordance with EU methods and including a closure plan result in the release of particulate matter into the air or underground. for the facility. Operators must also use best available techniques A permit will also be required to discharge any pollutants to the (BAT) for the minimisation of environmental impacts from their water environment, manage radioactive materials, operate combus- operations, which may change over time due to technological tion facilities or discharge to groundwater and importantly an progress. Guidance on BAT for mining waste facilities is set out in environmental permit for a mining waste operation will be required the EU BAT Reference Document (BREF), which is periodically in order to manage extractive waste, as outlined in question 9.2 revised and may result in permits being updated. below. Under the Mines Regulations 2014, there is also an obligation to These permits will cover emissions to the air, water, energy effi- build tips in such a way as to avoid instability or movement that ciency and the need to have in place proper environmental could risk the health and safety of any person. This requires the management systems. Permits are only awarded to applicants who mine operator to ensure that a competent person carries out an can satisfy the regulator that they are a suitable person to hold and appraisal at appropriate intervals. If, following this, there is deemed comply with the ongoing requirements of such a licence. There are to be a risk, a geotechnical specialist is required to carry out an annual subsistence fees and the environmental regulator will conduct assessment. inspections and has powers to prosecute or take a range of other actions for breach, which in some cases involves the right to suspend 9.3 What are the closure obligations of the holder of a operations and/or revoke a permit. reconnaissance right, exploration right or mining right? Conservation legislation protects certain species and habitats, which a mine may need a licence in order to disturb. This legislation includes the Wildlife and Countryside Act 1981, the Conservation There is no statutory framework which is generally applicable. of Habitats and Species Regulations 2017 (which consolidated and Rather, this is addressed through a combination of the conditions updated the Conservation of Habitats and Species Regulations of the relevant consents and permits held and any provisions within 2010), the Protection of Badgers Act 1992 and the Offshore Marine property agreements. Conservation (Natural Habitats, & c.) Regulations 2017 (which Planning permissions are likely to include site restoration consolidated and updated the Offshore Marine Conservation programmes that need to be complied with. (Natural Habitats, & c.) Regulations 2007). To surrender certain environmental permits, including those for Abstraction of surface and/or groundwater, including as part of mining waste operations, the operator will need to satisfy the regu- dewatering the mine, will require an abstraction licence under the lator that necessary measures have been taken to avoid a risk of Water Resources Act 1991. Separate consents must be obtained pollution and to return the site to a satisfactory state. The procedure from the local sewerage undertaker for liquid effluents disposed of for this will be outlined in a detailed closure plan agreed by the envi- to the sewage network. A permit under the EU emissions trading ronmental regulator dealing with rehabilitation, after-closure system (or any UK replacement after Brexit) could also be necessary. procedures and monitoring. The storage of certain hazardous substances on site will additionally require planning hazardous substances consents to be obtained 9.4 Are there any zoning or planning requirements applicable from the local planning authority. to the exercise of a reconnaissance, exploration or mining Planning consents may contain additional requirements and right? restrictions with regard to environmental impacts such as noise and dust levels. For offshore oil and gas operations there are some differences to In England and Wales, planning permission is required for the the permitting regime which, for example, require permits from carrying out of mining operations. Express planning permission is BEIS for discharges of oil or chemicals to the marine environment granted by the local MPA. In England, the MPA is the county plan- and to vent or flare natural gas. ning authority in respect of a site in a non-metropolitan county and the local planning authority in respect of a site in a metropolitan 9.2 What provisions need to be made for storage of tailings district or London borough. In Wales, the local planning authority is also the MPA. and other waste products and for the closure of mines? Applications for planning permission must be taken in accordance with the relevant development plan unless (amongst other things) Most mining operations will require a permit to manage extractive there are material considerations that indicate otherwise. There is waste as a waste management operation and some will include oper- no definition of “material considerations” and the MPA has a wide ating a mining waste facility. The need for a permit stems from the discretion in determining this. Guidance published by the Ministry EU Mining Waste Directive (2006/21/EC) under which operators of Housing, Communities and Local Government confirms that must take necessary measures to ensure that extractive waste is planning is concerned with land use in the public interest, so that the managed in a controlled manner without endangering human health protection of purely private interests (e.g. impact on the value of or harming the environment. neighbouring property or loss of private rights to light) could not be

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material considerations. In England, the National Planning Policy The entity in day-to-day control of safety at the mine will most likely Framework, which sets out the Government’s planning policy and be the entity acting as the mine operator. Where this is a different has a section on facilitating the sustainable use of minerals, is a mate- entity from the mine owner, the mine owner is responsible under rial consideration that must be taken into account where it is relevant health and safety regulation to take care to appoint a suitable oper- to a planning application. ator and to exercise a degree of continuing oversight of health and In planning for mineral extraction, MPAs are encouraged to desig- safety management by that operator. This may, for example, entail nate (i) “Specific Sites”, where viable resources are known to exist, periodic meetings with the operator and the provision of reports and landowners are supportive of minerals development and the proposal notification to the owner where issues or incidents arise. is likely to be acceptable in planning terms, (ii) “Preferred Areas”, which The QR place most duties on the “operator”, being the person are areas of known resources where planning permission might reason- with overall control of the working of a quarry. However, the ably be anticipated, and (iii) “Areas of Search”, where knowledge of quarry owner must not permit another person to be the operator of mineral resources may be less certain but within which planning the quarry unless that person is suitable and has sufficient resources permission may be granted. Such areas may also include adjacent land to be able to operate the quarry safely. The operator then has for the essential operations associated with mineral extraction. general duties to ensure health and safety at the quarry, including Planning permissions granted for the working of minerals will producing a “health and safety document”. usually include conditions, which can regulate how the development An employer also owes its employees a duty of care in employ- is carried out and which will usually impose restoration and aftercare ment law, which means that it should take all steps which are requirements. Conditions will, crucially, determine the life of the reasonably possible to ensure the health, safety and wellbeing of its mineral planning permission by imposing a time limit. If permission employees. The requirements under an employer’s duty of care are is refused, there is a right of appeal to central Government, which wide-ranging and include in particular: also has the power to recover jurisdiction of certain applications and ■ clearly defining jobs and undertaking risk assessments; appeals where it considers them to conflict with national policy in ■ ensuring a safe work environment; important ways or be nationally significant. ■ providing adequate training and feedback on performance; Separate rules apply in Scotland and Northern Ireland. ■ ensuring that staff do not work excessive hours; ■ providing areas for rest and relaxation; 10 Native Title and Land Rights ■ providing communication channels for employees to raise concerns; and ■ consulting employees on issues which concern them. 10.1 Does the holding of native title or other statutory The failure of an employer to properly discharge its duties to surface use rights have an impact upon reconnaissance, employees may result in liability for negligence, vicarious liability or exploration or mining operations? strict liability for the employer, as well as criminal prosecution by the HSE and/or the issue of a prohibition or improvement notice (failure to comply with which may itself result in fines and prosecu- There is no concept of native title in English law. Other grounds tion). Since the entry into force of the Corporate Manslaughter and may exist, however, on which third parties will be able to claim Corporate Homicide Act 2007, companies can also be held crimi- access to the surface of land, such as rights of way (public or nally liable for serious failures in the management of health and private), easements and agreements of the landowner with electricity safety which result in a fatality. and other utility providers. 12 Administrative Aspects 11 Health and Safety

12.1 Is there a central titles registration ofﬁce? 11.1 What legislation governs health and safety in mining? A register of interests in land in England and Wales, including any The Mines Regulations 2014 and the Quarries Regulations 1999 registered interests acquired or granted for mining purposes, is kept (QR) constitute the primary legislation governing health and safety by the Land Registry, which is the central title registration office in in mining operations. the UK. Importantly, however, the registration of mines and minerals The legislation governing health and safety in the workplace held apart from the surface is not compulsory, and so, unless the applies to mining operations. The principal legislation is the Health minerals constitute the surface or outcrop (which would trigger the and Safety at Work etc. Act 1974, and beneath it are several sets of usual rules regarding compulsory registration that apply to the regulations governing individual aspects of worker health and safety surface), they can be transferred or leased without any registration such as handing work equipment, hazardous substances and explo- implications. According to proposals by The Law Commission sives, managing the risk of fire, explosion and other incidents. published in July 2018, that may be about to change. Following a Breach of health and safety regulations is a criminal offence for thorough review of this area of law over the past two years, The Law which mine operators may face prosecution. Commission has advocated in favour of making the registration of Under the 1974 Act, every employer has a duty to ensure that, so all mines and minerals compulsory. This reflects the desire for the far as is reasonably practicable, the health, safety and welfare of register to reveal a complete picture of land ownership. employees and others in the employer’s workplace are protected. All Some mineral owners have already pursued voluntary registration employers with five or more employees must have a written health of their interests and it is not uncommon to encounter separate titles and safety policy, which must be brought to the notice of all for underground mines and minerals. In granting such titles, the employees. Criminal liability arises for breach of regulation and may Land Registry will not necessarily notify the owner of the surface result in prosecution. title that the separate mines and minerals title has been created. Registration of minerals can often be problematic as the conven- 11.2 Are there obligations imposed upon owners, tional conveyancing procedure for surface land will rarely be employers, managers and employees in relation to health and sufficient to allow the grant of an absolute title to mines and safety? minerals. Specialist advice will usually be sought.

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Information about individual licences and other rights granted by or private landowners. In particular, the rights to extract minerals the Government authorities and other public bodies can often be from the seabed within the 12-nautical mile territorial limit are found on their respective websites or obtained by making an enquiry. granted by TCE subject to the payment of royalties. The British Geological Survey, through its “BritPits” database, also holds extensive information on mines and quarries in the UK. 15 Regional and Local Rules and Laws This information includes details of the name of the mines and quarries, their location and address, the geology and mineral commodities produced, the name of the operator and the respon- 15.1 Are there any local provincial or municipal laws that sible MPA. need to be taken account of by a mining company over and above National Legislation? 12.2 Is there a system of appeals against administrative decisions in terms of the relevant mining legislation? Scotland, Wales and Northern Ireland can pass their own laws and further regulations within the powers devolved to their respective Available appeal routes will depend on the type of administrative parliamentary assemblies. These powers generally include the decision and the public authority that adopted it. In each case, appli- licensing and oversight of exploration and mining activities onshore cable legislation will first need to be checked for any statutory in the respective territories and will need to be consulted. provisions providing for appeals. Otherwise, judicial review is gener- County councils’ and other local authorities’ roles will typically be ally available in respect of public law decisions (although as a remedy limited to preparing development plans for the relevant area and of last resort any statutory appeal right may need to be exercised reviewing and granting planning permissions. first). 15.2 Are there any regional rules, protocols, policies or 13 Constitutional Law laws relating to several countries in the particular region that need to be taken account of by an exploration or mining 13.1 Is there a constitution which has an impact upon company? rights to conduct reconnaissance, exploration and mining? For as long as the UK remains in the EU and until such a time when The UK does not have a formally-adopted written constitution. Its domestic laws are passed to replace the EU legislation transposed constitutional framework is formed around a number of fundamental into the UK legal systems, all of the EU legislation applicable to acts and principles which formulate the country’s body politic. The exploration and mining activities will continue to apply. framework governing the rights of reconnaissance, exploration and The UK is also a party to the regional Convention for the mining is set out in the mining legislation and case law. Protection of the Marine Environment of the North-East Atlantic (OSPAR Convention), which was adopted in 1992 together with a Final Declaration and an Action Plan. The OSPAR Convention 13.2 Are there any State investment treaties which are deals with such areas as prevention and elimination of pollution applicable? from various sources, assessment of the quality of the marine environment and protection and conservation of the ecosystems and The UK is a party to 150 bilateral and multilateral investment treaties biological diversity of the marine area. with other States which provide protections to foreign investors operating in the UK. These treaties are governed by public interna- 16 Cancellation, Abandonment and tional law and provide companies with additional protections that Relinquishment are independent of any protections afforded by domestic laws and contractual relationships. Full texts of the UK’s current investment treaties are available 16.1 Are there any provisions in mining laws entitling the online and can be accessed from multiple sources, including the holder of a right to abandon it either totally or partially? Foreign & Commonwealth Office website.

While there is no general prohibition on surrendering the right to 14 Taxes and Royalties explore for or mine minerals, the exact procedure will depend on the type of licence and the authority which granted the right in question 14.1 Are there any special rules applicable to taxation of in the first place. Surrender of coal licences for exploration and mining, for exploration and mining entities? example, is provided for under the model licence documents and requires a month’s notice from the licensee. Within the UK’s taxation regime, there are no special rules applicable Environmental permits received in connection with mining oper- to mining companies (in contrast to the oil and gas sector which is ations can also be surrendered in full or in part. In some cases, subject to a distinct taxation regime). however, a fee will be payable to process a surrender application.

14.2 Are there royalties payable to the State over and 16.2 Are there obligations upon the holder of an above any taxes? exploration right or a mining right to relinquish a part thereof after a certain period of time? There are no royalties payable to the Government over and above any taxes. Royalties in the form of payment for the right to work Generally, there is no legal requirement or practice for the holder of the minerals may, however, be specified in the agreements with TCE an exploration or mining right to surrender a part thereof (other

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than in petroleum licences for offshore exploration which are Termination is usually not automatic but requires a notice from the outside the scope of this review). In case of a privately granted competent authority or other public body to remedy the breach licence, its terms will need to be consulted, however, for any unusual within a specific period of time, failing which the licence can be or onerous requirements. revoked without further compensation. Planning, environmental and other permits obtained in connec- 16.3 Are there any entitlements in the law for the State to tion with exploration and mining operations will also be subject to various conditions, and non-compliance with those conditions will cancel an exploration or mining right on the basis of failure to be a ground for cancellation of the relevant permits. comply with conditions?

Failure to comply with the licence conditions is a ground for revocation of the licence or refusal to extend it for a new term.

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Herbert Smith Freehills LLP Tel: +44 207 466 2771 Exchange House, Primrose Street Email: [email protected] London, EC2A 2EG URL: www.herbertsmithfreehills.com United Kingdom

Julie Vaughan is a senior environmental associate with over 20 years’ experience in projects, transactions, litigation and regulatory. Julie has an unusually broad base of experience gained from working across practice areas in multiple sectors. This allows her to understand the wider commercial backdrop to environmental issues. Time spent in-house with clients has also been invaluable to understanding the client perspective and she is praised by clients for insight and being very capable.

Herbert Smith Freehills LLP Tel: +44 207 466 2745 Exchange House, Primrose Street Email: [email protected] London, EC2A 2EG URL: www.herbertsmithfreehills.com United Kingdom

Yulia Zaytseva is a senior associate in the corporate division. She is qualified to practise law in England and Wales and in Russia (advocate). Yulia specialises in cross-border M&A with a particular focus on the EMEA region. Her experience also includes advising on joint ventures, private equity transactions and complex corporate restructurings. Yulia’s professional interests are focused on the following industries: mining; industrial manufacturing; healthcare; and pharmaceuticals. After several years in the Moscow office of Herbert Smith Freehills, Yulia moved to London and has been based there since 2016. Yulia has full professional proficiency in English and an intermediate knowledge of German and Spanish. Her native tongue is Russian.

Herbert Smith Freehills LLP Tel: +44 207 466 2756 Exchange House, Primrose Street Email: [email protected] London, EC2A 2EG URL: www.herbertsmithfreehills.com United Kingdom

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USA USA

Holland & Hart LLP Karol L. Kahalley

1 Relevant Authorities and Legislation 1.3 Describe any other sources of law affecting the mining industry.

1.1 What regulates mining law? The Federal Land Policy and Management Act of 1976, (FLPMA), 43 U.S.C. §§ 1701–1787, governs federal land use, including access to, and The US legal system consists of many levels of codified and uncod- exercise of, mining rights on lands administered by the BLM and the ified federal, state, and local laws. The Government’s regulatory US Forest Service (USFS). FLPMA recognises ‘the Nation’s need for authority at each level may originate from constitutions, statutes, domestic sources of minerals’, 43 U.S.C. § 1701(a)(12), and provides administrative regulations or ordinances, and judicial common law. that FLPMA shall not impair GML rights, including, but not limited to, The US Constitution and federal laws are the supreme law of the rights of ingress and egress. 43 U.S.C. § 1732(b). However, FLPMA land, generally pre-empting conflicting state and local laws. In many also provides that mining authorisations must not ‘result in unnecessary legal areas, the different authorities have concurrent jurisdiction, or undue degradation of public lands’. 43 C.F.R. § 3809.411(d)(3)(iii); requiring regulated entities to comply with multiple levels of regula- see also 43 U.S.C. § 1732(b). BLM and USFS have promulgated exten- tion. Mining on federal lands, for example, is generally subject to sive FLPMA mining regulations. See, e.g., 36 C.F.R. §§ 228.1-228.116, multiple layers of concurrent federal, state, and local statutes and 43 C.F.R. §§ 3000.0-5-3936.40. The National Environmental Policy Act administrative regulations. Increasingly, the executive branch of the (NEPA), 42 U.S.C. §§ 4321–4370m-12, requires federal agencies to federal government has made use of Presidential Executive Orders prepare an environmental impact statement (EIS) for all major federal to impact mining policy and procedure. actions significantly affecting the quality of the human environment. Mining operations on federal lands or with a federal nexus generally 1.2 Which Government body/ies administer the mining will involve an EIS or a less intensive environmental assessment (EA) industry? examining environmental impacts. The NEPA process involves consideration of other substantive environmental statutes. Other Government statutes affect mining with regard to the following: solid Federal and state Governments have developed comprehensive and hazardous disposal and transportation, reclamation, clean water mining regulatory schemes. Although the US is a common law and air, toxic substances, historic and cultural preservation, and endan- nation, practising US mining law often resembles practising mining gered species. law in civil law countries because the regulatory schemes are set out The US Securities and Exchange Commission (SEC) regulates in detailed codifications. See, e.g., 43 C.F.R. §§ 3000.0-5-3936.40 (US mineral resources and reserves reporting by entities subject to SEC Bureau of Land Management (BLM) minerals management regula- filing and reporting requirements. The SEC’s reporting classification tions). However, these mining law codifications are subject to system is based on the SEC’s 1992 Industry Guide 7, which provides precedential interpretation by courts pursuant to common law prin- for declaration only of proven and probable reserves. On October 31, ciples (and in some situations by quasi-judicial administrative bodies). 2018, the SEC adopted amendments to modernise the property disclo- US mining law may originate from federal, state, and local laws, sure requirements for mining registrants which more closely align with including constitutions, statutes, administrative regulations or ordi- current industry and global regulatory practices and standards, including nances, and judicial and administrative body common law. the committee for Reserves International Reporting Standards. Under Determining which level of Government has jurisdiction over the new rules, Guide 7 has been replaced with a new subpart of mining activities largely depends on surface and mineral ownership. Regulation S-K which, among other new requirements aimed at A substantial amount of mining in the US occurs on federal lands protecting investors, requires mining registrants to disclose both mineral where the federal Government owns both the surface and mineral resources and mineral reserves and to support all disclosures with a estates. Federal law primarily governs mineral ownership, operations, technical report prepared by qualified persons with mining expertise. and environmental compliance, with state and local Governments The SEC adopted a two-year transition period with the initial compli- having concurrent or independent authority over certain aspects of ance year beginning on or after January 1, 2021, but registrants may federal land mining projects (e.g. permitting, water rights and access voluntarily comply immediately. authorisations). If the resource occurs on private land, estate ownership is a matter of state contract law, but operations and environmental compliance are still regulated by applicable federal 2 Recent Political Developments and state laws. Estate ownership on state-owned land is regulated by state law, and operations and environmental compliance are regu- 2.1 Are there any recent political developments affecting the lated by applicable federal and state laws, and in some cases local mining industry? zoning ordinances.

Notable developments in the legal and regulatory landscape for the 3.4 Are different procedures applicable to different minerals US mining industry include President Trump’s efforts to repeal and and on different types of land? replace the prior administration’s ‘Clean Power Plan’ with the ‘Affordable Clean Energy’ (ACE) rule, which directs US states to take the initiative as to how to regulate power plant emissions, but The General Mining Law of 1872 (GML), 30 U.S.C. §§ 21–54, 611– establishes emissions guidelines for states to limit carbon dioxide at 615, as amended, is the principal law governing locatable minerals coal-fired power plants. This, along with the Trump administration’s on federal lands. The GML affords US citizens the opportunity to recent decision to lift a moratorium on coal sales from public lands, explore for, discover and purchase certain valuable mineral deposits could result in a long-range increase in coal mining activity. The on federal lands open for mineral entry. Locatable minerals include Trump administration has continued efforts to define critical non-metallic minerals (fluorspar, mica, certain limestones and minerals, which began in 2017 through Executive Order 13807 in an gypsum, tantalum, heavy minerals in placer form, and gemstones) effort to reduce US vulnerability to critical mineral supply disrup- and metallic minerals including gold, silver, lead, copper, zinc, and tions. The US also saw an increase in tariffs imposed on significant nickel. Locating these mineral deposits entitles the locator to certain Chinese imports in 2018 and early 2019, and, in turn, China imposed possessory interests: unpatented mining claims, which provide the increased tariffs on US exports, with many mineral commodities locator an exclusive possessory interest in surface and subsurface subject to these increases. A 25 per cent tariff on imported steel and lands and the right to develop the minerals; and patented mining 10 per cent on imported aluminium has seen winners and losers with claims, which pass title from the federal Government to the locator, a temporary boost for domestic producers, but supply chain disrup- converting the property to private land. However, a mining patent tions and increased prices for metals consumers. moratorium has been in place since 1994 and no new patents are being issued. The GML affords US citizens the opportunity to explore for, discover and purchase certain valuable mineral deposits 2.2 Are there any speciﬁc steps the mining industry is taking on federal lands open for mineral entry. The process for developing in light of these developments? locatable mineral rights on federal lands involves: a. discovery of a ‘valuable mineral deposit’, which under federal law The minerals industry will continue to experience volatility related means that a prudent person would be justified in developing the to tariffs and trade policies pursued by the Trump administration. deposit with a reasonable prospect of developing a successful The mining industry closely monitors attempts by the US Congress mine, and that the claims can be mined and marketed at a profit; to overhaul the GML to impose federal royalties on locatable b. physically locating mining claims by posting notice and marking minerals and to transform the location system to a leasing system. claim boundaries; c. recording mining claims by filing a location certificate with the 3 Mechanics of Acquisition of Rights proper BLM state office within 90 days of the location date and recording pursuant to county requirements; d. maintaining the claim through assessment work, paying an annual 3.1 What rights are required to conduct reconnaissance? maintenance fee, and filing of affidavits; and e. additional requirements for mineral patents (as mentioned above, In order to conduct reconnaissance, miners must demonstrate that there is a moratorium on patents). they hold a right to access the minerals. Such rights may be based The Materials Disposal Act of 1947, 30 U.S.C. §§ 601–615, as on fee ownership, lease or contracting of privately owned minerals, amended, provides for the disposal of common minerals found on or through locations, leases, or contracts of federal and/or state- federal lands, including, but not limited to, cinders, clay, gravel, owned minerals. Where the surface and minerals have been severed, pumice, sand or stone, or other materials used for agriculture, animal surface access rights may need to be demonstrated as well. husbandry, building, abrasion, construction, landscaping and similar Depending on the proposed level of mining activity, permits and uses. These minerals may be sold through competitive bids, non- licences required to conduct mining activities may include: competitive bids in certain circumstances or through free use by a. a mine plan of operations; Government entities and non-profit entities. b. a reclamation plan, bonding and permits; The Mineral Lands Leasing Act of 1920, 30 U.S.C. §§ 181–287, as c. air quality permits; amended, establishes a prospecting permit and leasing system for all d. water pollution permits (pollutant discharge elimination system deposits of coal, phosphate, sodium, potassium, oil, gas, oil shale, discharge permit, storm water pollution prevention plan, spill and gilsonite on lands owned by the United States, including national prevention control and countermeasure plan); forests. In addition, sulphur deposits found on public lands in e. dam safety permits; Louisiana and New Mexico are leasable, as are geothermal steam and f. artificial pond permits; associated geothermal resources, uranium, and hardrock mineral g. hazardous waste materials storage and transfer permits; resources. These same deposits found in some acquired federal h. well drilling permits; lands, including acquired forest lands, are leasable. i. road use and access authorisations, right-of-way authorisations; Acquired lands are those obtained by the federal government and from private owners through purchase, condemnation, or gift, or by j. water rights. exchange. These lands are not subject to location. However, the Mineral Leasing Act for Acquired Lands of 1947, 30 U.S.C. §§ 351– 360, authorises the leasing of coal, phosphate, oil and gas, oil shale, 3.2 What rights are required to conduct exploration? sodium, potassium, and sulphur found in acquired lands. Leasing is also allowed for those minerals that would be considered locatable See the response to question 3.1. if found on the public domain, as well as geothermal resources. Areas designated as national parks, national monuments, most 3.3 What rights are required to conduct mining? Reclamation Act project areas, military reservations, wilderness areas, and wild and scenic river corridors are generally not open to mining locations and leases. Project proponents should research mineral See the response to question 3.1. access when considering exploration activities on federal lands.

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Prospecting and mining are prohibited after an area is incorpo- The GML requires that mine claimants, permittees and lessees must be rated into the National Park System; rights acquired prior to an area’s US citizens. A ‘citizen’ can include a US-incorporated entity that is inclusion into the system may remain valid if properly located and wholly owned by non-US entities or corporations. There generally are maintained, but will be subject to control of the National Park no restrictions on foreign acquisition of these types of US mining Service which regulates the use of privately owned, reserved and rights through parent-subsidiary corporate structures. The Mineral other mineral interests on lands within the boundaries of the Lands Leasing Act, Mineral Leasing Act for Acquired Lands and National Park System in addition to controlling surface and subsur- Reorganization Plan No. 3, require that the holder of a mineral lease face uses of both patented and unpatented claims. or prospecting permit must be a citizen of the United States. 30 U.S.C. National Recreation Areas are generally closed to mineral loca- § 181, 352; 43 C.F.R. § 3502.10(a). Corporations organised under the tions and leasing surface coal mining operations are prohibited in laws of the United States or any state or territory of the US may qualify these areas. to hold leases or prospecting permits. While foreign persons are States have the authority to lease, sell, exchange, or otherwise permitted to be shareholders, the citizenship of the shareholders is manage state-owned mineral lands pursuant to constitutional or significant. The country of citizenship of each shareholder must be a statutory provisions, and as regulated by state boards or officers, country that does not deny similar or like privileges to U.S. citizens. 30 through either a single agency or a combination of agencies. Leasing U.S.C. § 181 (such countries are referred to as ‘non-reciprocal coun- is the most common method of obtaining mining rights on state tries’). Disclosure of foreign ownership is not required unless it meets mineral land. A few states provide for both mining claims and the 10% threshold. 43 C.F.R. § 3502.30(b). Therefore, even foreign permits, while others allow prospecting rights under mineral leases. stockholders from non-reciprocal countries may own less than 10%. Some require neither. The purpose is to generally allow the applicant While the GML does not specifically mention corporate eligibility, to obtain an exclusive right to explore untested or undeveloped the requirement of proof of citizenship refers to a corporation organ- ground while giving the state some control over mineral activities. ised under the laws of the United States or any State or Territory Once minerals of value are located and described, the applicant typi- thereof and an association of persons unincorporated. These require- cally obtains a preferred right to a mineral lease. In some instances, ments have generally been interpreted to mean that for a corporation, competitive bidding is required. it is the jurisdiction of formation that determines its citizenship, but Rights to privately-owned minerals may be obtained through for unincorporated associations such as partnerships and limited purchase, lease or contract. liability companies the entity is disregarded, and the association’s members need to satisfy the citizenship requirement. The interest in 3.5 Are different procedures applicable to natural oil and mining claims by a person or entity not qualified by citizenship is void- able by the United States, rather than void, and such defects may be gas? corrected by conveying the interest to a qualified holder. Foreign investments are subject to US national security laws. The The Mineral Lands Leasing Act of 1920, 30 U.S.C. §§ 181–287, as Committee on Foreign Investment in the US, for example, is an amended, provides US citizens the opportunity to obtain a inter-agency committee chaired by the Secretary of the Treasury that prospecting permit or lease for coal, gas, gilsonite, oil, oil shale, phos- has authority to review foreign investments to protect national secu- phate, potassium, and sodium deposits on federal lands. The process rity and make recommendations to the President to block the same. for obtaining a permit or lease involves filing an application with the 50 U.S.C. § 4565. The President may exercise this authority if the federal agency office with jurisdiction over the affected land. President finds that the foreign interest might take action impairing Depending on the type of permit or lease applied for, applicants may national security and other provisions of the law do not provide the be required to: President with appropriate authority to act to protect national secu- a. pay rental payments; rity. 50 U.S.C. § 4565(d)(4). b. file an exploration plan; Foreign employees are governed by general US immigration laws c. pay royalty payments based on production; or and are required to obtain a work visa or other authorisation. A d. furnish a bond covering closure and reclamation costs. limited number of visas are available for skilled workers, profes- These permits and leases are often subject to conditions and stip- sionals and non-skilled workers, but these workers must be ulations directed at protecting resource values. performing work for which qualified US workers are not available. States have separate statutory and regulatory requirements for oil 8 U.S.C. § 1153(b)(3)(C). and gas leasing. Oil and gas mineral rights may be held privately and rights to such 4.3 Are there any change of control restrictions applicable? interest are typically available by purchase or lease.

4 Foreign Ownership and Indigenous Ownership The GML does not contain change of control restrictions. Mineral leases and contracts may contain change of control restrictions by Requirements and Restrictions their terms. A change of control in the holder of a lease, licence or permit may require federal and state agency approval depending on 4.1 What types of entity can own reconnaissance, the type of right involved.

exploration and mining rights? 4.4 Are there requirements for ownership by indigenous persons or entities? The GML and Mineral Lands Leasing Act require mine claimants, permittees and lessees be US citizens. A ‘citizen’ can include a US- incorporated entity, incorporated in any state in the US. See the response to question 10.1.

4.2 Can the entity owning the rights be a foreign entity or 4.5 Does the State have free carry rights or options to owned (directly or indirectly) by a foreign entity and are there acquire shareholdings? special rules for foreign applicants? There are no carry rights or shareholding options under US law.

5 Processing, Refining, Beneficiation and Export secondary minerals which may be economically recovered along with the primary mineral(s), unless the Government or private mineral interest owner has expressly reserved such minerals to itself. 5.1 Are there special regulatory provisions relating to processing, refining and further beneficiation of mined 7.4 Is the holder of a right to conduct reconnaissance, minerals? exploration and mining entitled to exercise rights also over residue deposits on the land concerned? There are no specific provisions relating to processing or benefici- ating mined minerals in US law except for general environmental Generally, the holder of a mining claim or lease may exercise rights laws and applicable permitting requirements. over residue deposits on the land concerned. However, certain residue deposits may be subject to ownership by another party and 5.2 Are there restrictions on the export of minerals and may not be contemplated by a mining lease or other mineral rights instrument. levies payable in respect thereof?

7.5 Are there any special rules relating to offshore There are no restrictions or limitations on the sale, import, or export of extracted or processed minerals, unless such minerals are deemed exploration and mining? a national security risk by the US Department of Homeland Security or State Department. For example, projects involving the export of Yes. There are special federal and state rules relating to offshore particular minerals, such as uranium or rare earth elements, can be exploration and mining, depending on whether exploration and subject to greater scrutiny when foreign companies are involved. mining are taking place in state-owned or federal waters. Generally, the Outer Continental Shelf Lands Act, 43 U.S.C. § 1331, et seq., 6 Transfer and Encumbrance provides the US Bureau of Ocean Energy Management (BOEM) with authority to manage minerals on the US outer continental shelf. Minerals may be offered for lease by the BOEM in accordance with 6.1 Are there restrictions on the transfer of rights to conduct federal regulations at 30 C.F.R. Parts 580–582. reconnaissance, exploration and mining? 8 Rights to Use Surface of Land The transferee must be qualified to hold the interest. See the responses to questions 4.1 and 4.2. 8.1 Does the holder of a right to conduct reconnaissance,

exploration or mining automatically own the right to use the 6.2 Are the rights to conduct reconnaissance, exploration surface of land? and mining capable of being mortgaged or otherwise secured to raise ﬁnance? Upon making a discovery of valuable minerals, the locator of a federal mining claim receives the ‘exclusive right of possession and Yes, subject to the underlying mineral ownership rights of the enjoyment’ of all ‘veins, lodes, and ledges throughout their entire Government or private owner mineral interests owner. depth’ which have apexes within the mining claim. The locator also receives the exclusive right to possess all surface areas within the 7 Dealing in Rights by Means of Transferring claim for mining purposes, but the United States retains the right to Subdivisions, Ceding Undivided Shares and manage the surface of the property for other purposes. A locator’s Mining of Mixed Minerals possessory rights are considered vested property rights in real property with full attributes and benefits of ownership exercisable against third parties, and these rights may be sold, transferred and mort- 7.1 Are rights to conduct reconnaissance, exploration and gaged. mining capable of being subdivided? Holders of federal and state mineral leases and contracts may obtain surface access rights under the terms of the instrument, but in some instances additional access rights may have to be obtained Privately held mineral rights and the rights to conduct reconnais- through rights-of-way regulations. sance, exploration and mining on such rights may be subdivided Split-estate lands are lands where the ownership of the surface among numerous parties. Rights to conduct such operations on estate and mineral estate have been severed. In such instances, federal and state mineral interests are governed by the instruments surface rights may have been granted to private parties, with the conveying such rights and may or may not permit subdivision. minerals reserved to the United States. Even where surface and mineral interests are in private ownership, these interests may be held 7.2 Are rights to conduct reconnaissance, exploration and by different parties. When surface rights and mineral rights are mining capable of being held in undivided shares? owned by different parties, the mineral rights owner (or lessee or locator) has the legal right to use as much of the surface as is reasonably necessary to mineral development. However, the mineral estate Yes, such rights may be held in undivided shares. owner must show due regard for the interest of the surface estate owner. In such cases, the mineral rights holder must comply with 7.3 Is the holder of rights to explore for or mine a primary notice requirements and other state and federal requirements that mineral entitled to explore or mine for secondary minerals? protect the surface owner, including submission of an adequate bond for reclamation. Generally, the holder of a mining claim or lease for a primary mineral is entitled to extract from a claim/lease those ‘associated minerals’ or

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8.2 What obligations does the holder of a reconnaissance had a rational basis for the decisions made based on the facts found. right, exploration right or mining right have vis-à-vis the Prosecuting the litigation would extend the project approval time, and if the agency loses, additional time would be required for the landowner or lawful occupier? agency to redo its flawed NEPA analysis. In some instances where mines were proposed in especially sensitive areas, it has taken Those projects that require a NEPA review will be subject to public decades to obtain approval. notice and comment requirements and the review will involve The Clean Air Act regulates air emissions from stationary and consideration of the project’s cultural, societal and economic mobile sources. The Clean Air Act is administered by the impacts. State and local permitting process also may require appli- Environmental Protection Agency and states with delegated authority. cants to secure public input. State laws may impose a ‘public interest’ The Clean Water Act regulates pollutant discharges into the ‘waters of standard for projects requiring state approval. For example, mining the US, including the territorial seas’. 33 U.S.C. § 1311(a). The Clean operations that require state water rights may need to show that the Water Act is administered by the Environmental Protection Agency, use of the water is in the ‘public interest’, which may include consid- US Army Corps of Engineers, and states with delegated authority. eration of wildlife, fisheries and aquatic habitat values. The Endangered Species Act requires federal agencies to ensure their As discussed in question 8.1, the law governing split estates actions are not likely to jeopardise the continued existence of any requires both the mineral estate owner and the surface estate owner threatened or endangered species or destroy or adversely modify a to proceed with ‘due regard’ for the other, and to ‘accommodate’ the designated critical habitat and prohibits the unauthorised taking of use of the other. The mineral rights owner is generally entitled to such species. The US Fish and Wildlife Service and National Marine use as much of the surface and subsurface as is ‘reasonably neces- Fisheries Service administer the Endangered Species Act. sary’ to exploit its interest in the minerals, but this entitlement must Additional environmental statutes that may impact mining are be balanced against the surface owner’s right to use his property. identified in question 1.3 above. States also have a wide range of Federal and state legislation has granted additional protections to environmental laws that govern permitting and reclamation on surface owners, which may include notice and consent requirements, mining projects. bonding for reclamation, and the payment of damages for surface destruction. 9.2 What provisions need to be made for storage of tailings

and other waste products and for the closure of mines? 8.3 What rights of expropriation exist? A variety of federal and state laws govern the storage of tailings and There is little risk of expropriation of mining operations by other waste products on mining operations and for the closure of Government seizure or political unrest. Rights may only be expro- mines. In general, a mine plan must provide a detailed description priated following due process and payment of due compensation to of how the mine operations will comply with such requirements. the holder.

9.3 What are the closure obligations of the holder of a 9 Environmental reconnaissance right, exploration right or mining right?

9.1 What environmental authorisations are required in order FLPMA requires BLM and USFS to prevent ‘unnecessary or undue to conduct reconnaissance, exploration and mining degradation’ of public lands. 43 U.S.C. § 1732(b). Casual use operations? hardrock mining operations on BLM lands that will result in no, or negligible, surface disturbance do not require any reclamation planning. Notice-level exploration operations requiring less than five NEPA is the principal environmental law implicated by mining on acres of surface disturbance must meet BLM reclamation standards federal lands. NEPA requires federal agencies to take a ‘hard look’ at and provide financial guarantees that the reclamation will occur. 43 the environmental consequences of its projects before action is taken. C.F.R. §§ 3809.320, 3809.500(b). Plan-level operations require a plan An agency must prepare an EIS for all major federal actions signifi- of operations that includes a detailed reclamation plan for closure. cantly affecting the quality of the human environment. An agency 43 C.F.R. §§ 3809.11, 3809.401. BLM reclamation standards for may first prepare an EA to determine whether the effects are signif- closure generally include saving topsoil for reshaping disturbed areas, icant. If the effects are significant, the agency must prepare the more erosion and water control measures, toxic materials measures, comprehensive EIS. If the effects are insignificant, the agency gener- reshaping and re-vegetation where reasonably practicable, and reha- ally will issue a finding of no significant impact, ending the process. bilitation of fish and wildlife habitat. 43 C.F.R. § 3809.420. Mining NEPA does not dictate a substantive outcome, however, the analysis in BLM wilderness study areas additionally requires surface distur- generally requires consideration of other substantive environmental bances be ‘reclaimed to the point of being substantially unnoticeable statutes and regulations, such as those identified in question 1.3 above. in the area as a whole’. 43 C.F.R. § 3802.0-5(d). NEPA is administered by the federal agency making the decision that Mining activities on National Forest lands must be conducted ‘so may significantly affect the environment. as to minimise adverse environmental impacts on National Forest Mining projects on federal lands, or that otherwise have a federal System surface resources’. 36 C.F.R. § 228.1. Operators must take nexus, will likely have to go through some level of NEPA environ- measures that will ‘prevent or control on-site and off-site damage to mental review. State laws may also require environmental analysis. the environment and forest surface resources’, including erosion Where analysis is required by different agencies, it may be possible control, water run-off control, toxic materials control, reshaping and to pursue an agreement among the agencies to allow the operator to re-vegetation where reasonably practicable, and rehabilitation of fish produce one comprehensive environmental review document that and wildlife habitat. 36 C.F.R. § 228.8(g). State laws may also include all agencies can rely on. closure and reclamation requirements, including, for example, water There is no statutory deadline for federal agencies to complete and air pollution controls, re-contouring and re-vegetation, fish and their NEPA review. Small mine project reviews may take in excess wildlife protections, and reclamation bonding requirements. Mining of a year to complete. Larger project reviews are likely to take projects can often address both federal and state requirements longer. Third parties may sue the federal agency completing the through a single closure and reclamation plan and financial guarantee. review to ensure that the agency considered all relevant factors and

Federal and state laws generally require financial guarantees prior ments. 30 U.S.C. § 813. MSHA is prohibited from giving advance to commencing operations to cover closure and reclamation costs. notice of an inspection, and may enter mine property without a These reclamation bonds ensure that the regulatory authorities will warrant. 30 U.S.C. § 813. MSHA regulations set out detailed safety have sufficient funds to reclaim the mine site if the permittee fails and health standards for preventing hazardous and unhealthy condi- to complete the reclamation plan approved in the permit. tions, including measures addressing fire prevention, air quality, explosives, aerial tramways, electricity use, personal protection, illu- 9.4 Are there any zoning or planning requirements applicable mination and others. See, e.g., 30 C.F.R. §§ 56.1-56.20014 (safety and health standards for surface metal and non-metal mines). MSHA to the exercise of a reconnaissance, exploration or mining regulations also establish requirements for: testing, evaluating, and right? approving mining products; miner and rescue team training programmes; and notification of accidents, injuries, and illnesses at Individual counties and municipalities may impose certain zoning the mine. 30 C.F.R. §§ 5.10-36.50, 46.1-49.60, 50.10. requirements on lands subject to their jurisdiction, including prohibitions on mining in certain areas and designations of specific areas 11.2 Are there obligations imposed upon owners, employers, for mining. managers and employees in relation to health and safety?

10 Native Title and Land Rights Yes. Owners, employers, managers and employees all have obligations under the laws described in question 11.1. 10.1 Does the holding of native title or other statutory surface use rights have an impact upon reconnaissance, 12 Administrative Aspects exploration or mining operations? 12.1 Is there a central titles registration ofﬁce? The US contains numerous ‘reservations’ comprised of federal lands set aside by treaty, Congressional Act or administrative directive for No. Land and mineral title records are kept in the Government office specific Native American tribes or Alaska natives. Tribal reservation having jurisdiction over the mining rights (e.g., the BLM) and in the title generally is held by the US in trust for the tribes, and the US real property records of each county in which the property is located. Bureau of Indian Affairs administers the reservations. Alaska native All relevant sources must be consulted to determine the title. lands are owned and administered by Alaska native corporations. Mineral development within the tribal reservations and Alaska native lands requires negotiation with the appropriate administrator, leases 12.2 Is there a system of appeals against administrative with tribes for tribally-owned mineral rights and tribal consent for decisions in terms of the relevant mining legislation? access rights. Tribes also may acquire land in fee by purchase as any private party. Reservations may contain inholdings of private or Yes. Appeals may be made to administrative tribunals having juris- Government-owned surface and mineral interests. Therefore, title diction over a particular agency’s order or decision and ultimately to to a particular parcel of lands within reservation boundaries is the judicial system. important to understanding the complex jurisdictional issues that may impact mining. 13 Constitutional Law Tribal cultural interests are considered through NEPA and two specific laws. The National Historic Preservation Act (NHPA), 54 U.S.C. § 300101, et seq., requires an analysis that includes social and 13.1 Is there a constitution which has an impact upon rights cultural impacts, and may require tribal consultation. Section 106 of to conduct reconnaissance, exploration and mining? NHPA requires federal agencies to inventorise historic properties on federal lands and lands subject to federal permitting, and to consult with interested parties and the State Historic Preservation Office. 54 The US Constitution and federal laws are the supreme law of the U.S.C. § 306108. The Native Graves Protection and Repatriation land, generally pre-empting conflicting state and local laws. In many Act, 25 U.S.C. §§ 3001–3013, imposes procedural requirements that legal areas, the different authorities have concurrent jurisdiction, apply to inadvertent discovery and intentional excavation of tribal requiring regulated entities to comply with multiple levels of regula- graves and cultural items on federal or tribal lands. Locatable tion. Mining on federal lands, for example, is generally subject to minerals found on American Indian reservations are subject to lease multiple layers of concurrent federal, state, and local statutes and only. Under the Indian Mineral Development Act of 1982, 25 U.S.C. administrative regulations. §§ 2101–2108, tribes may enter private negotiations with mineral developers for the exploration and extraction, subject to the Interior 13.2 Are there any State investment treaties which are Secretary’s approval. Tribes also may assert off-reservation rights applicable? for fishing and hunting if such rights have been granted by treaty or otherwise, and such rights may impact mining even where operations Many international treaties of general application apply to mining are not on tribally-owned lands. industry investment by foreign persons into the United States, but

none specifically address investment in the mining industry or 11 Health and Safety trading in various minerals. See the response to question 15.2.

11.1 What legislation governs health and safety in mining? 14 Taxes and Royalties

The Federal Mine Safety and Health Act, 30 U.S.C. § 801–966, 14.1 Are there any special rules applicable to taxation of requires the Mine Safety and Health Administration (MSHA) to exploration and mining entities? inspect all mines each year to ensure safe and healthy work environ-

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There are no federal taxes specific to minerals extraction. General federal, that function like a royalty on all lands, such as severance taxes, mine state, county and municipal taxes apply to mining companies, including licence taxes, or resource excise taxes. Local zoning laws may income taxes, payroll taxes, sales taxes, property taxes and use taxes. prohibit or limit mining in certain areas. Federal tax laws generally do not distinguish between domestic and foreign mining operators. However, if a non-US citizen acquires real 15.2 Are there any regional rules, protocols, policies or laws property, the buyer must deposit 10% of the sale’s price in cash with relating to several countries in the particular region that need the US Internal Revenue Service as insurance against the seller’s income tax liability. The cash requirement can be problematic for a cash- to be taken account of by an exploration or mining company? strapped buyer that may have purchased the mine property with stock. There are no federal tax advantages or incentives specific to The North American Free Trade Agreement (NAFTA) among the mining. US, Canada and Mexico, in Chapter 11, requires equal treatment There are no federal duties on minerals extraction. between the NAFTA country’s own citizens and those from another Locatable minerals claimants must pay an annual maintenance fee NAFTA countries, and requires that the NAFTA country protect of $165 per claim in lieu of performing assessment work required those investors and their investments. Among the most important pursuant to GML and FLPMA. 43 C.F.R. §§ 3834.11(a), 3830.21. protections are the broad prohibitions on ‘expropriation’ of the Failure to perform assessment work or pay a maintenance fee will open investor’s rights, including a prohibition on the NAFTA country the claim to relocation by a rival claimant as if no location had been implementing measures ‘tantamount to expropriation’ except in made. 43 C.F.R. § 3836.15. Certain waivers and deferments apply. accordance with approved criteria, and requiring compensation Leasable minerals permittees and lessees must pay annual rent resulting from losses incurred by the investor. In November 2018, based on acreage. The rental rates differ by mineral and some rates the three countries executed a new agreement, called United States- increase over time. 43 C.F.R. § 3504.15. Prospecting permits auto- Mexico-Canada Agreement (USMCA) to replace NAFTA. USMCA matically terminate if rent is not paid on time; the BLM will notify includes more enforceable labour and environmental standards, late lessees that they have 30 days to pay. 43 C.F.R. § 3504.17. State intellectual property protections and a new chapter on the digital laws may also include closure and reclamation requirements, economy, but to date, it has only been ratified by Mexico. including, water and air pollution controls, re-contouring and re- vegetation, fish and wildlife protections, and reclamation bonding 16 Cancellation, Abandonment and requirements. Mining projects often can address both federal and Relinquishment state requirements through a single closure and reclamation plan and financial guarantee. Local government may require transfer taxes be paid upon the recording of a conveyance of mining properties. 16.1 Are there any provisions in mining laws entitling the holder of a right to abandon it either totally or partially? 14.2 Are there royalties payable to the State over and above any taxes? Under the GML, rights in unpatented mining claims can be abandoned voluntarily or by non-payment of annual maintenance fees. There are generally no royalties levied on the extraction of federally Minerals leased under Federal law (energy minerals such as coal), owned locatable minerals under the GLO. However, mineral leases minerals owned by States, and minerals owned by private entities can generally carry royalty obligations. Many states, however, charge only be abandoned in accordance with the terms of the lease or royalties on mineral operations on state-owned lands and taxes that other grant from the mineral owner to the holder of the right to function like a royalty on all lands, such as severance taxes, mine develop the minerals. All such abandonments are subject to recla- licence taxes, or resource excise taxes. These functional royalties can mation and closure requirements. differ depending on land ownership and the minerals extracted. 16.2 Are there obligations upon the holder of an exploration 15 Regional and Local Rules and Laws right or a mining right to relinquish a part thereof after a certain period of time? 15.1 Are there any local provincial or municipal laws that need to be taken account of by a mining company over and Under the GML, there is no obligation to relinquish an exploration above National Legislation? or mining right after a certain period of time. The terms of Federal mineral leases, State mineral leases or private leases generally set the term limits of mining rights, but may permit rights to continue past As noted above, state and local Governments have concurrent or an initial or extended term as long as minerals are continuing to be independent authority over certain aspects of mining projects (e.g. produced and sold. permitting, water rights and access authorisations). Ownership of state-owned land and minerals is controlled by state law and varies 16.3 Are there any entitlements in the law for the State to by state. State laws generally are similar to federal laws in that title remains with the state until the minerals are severed pursuant to cancel an exploration or mining right on the basis of failure to statutory procedures. State and local laws may impose a ‘public comply with conditions? interest’ standard for projects requiring state approval. State laws also include permitting requirements and closure and reclamation Under the GML, unpatented mining claims may be cancelled for requirements, including, for example, water and air pollution failure to pay annual maintenance fees, or, in some instances, the controls, re-contouring and re-vegetation, fish and wildlife protec- Federal government can challenge the validity of unpatented mining tions, and reclamation bonding requirements. Local permits may be claims for failure to make a valid discovery of a valuable mineral. required for certain operations, e.g., truck haulage. Many state laws The terms of Federal, State and private leases often contain default require financial guarantees prior to commencing operations to cover provisions allowing cancellation upon failure to comply with condi- closure and reclamation costs. In addition, some states charge royal- tions of the lease. ties on mineral operations on state-owned lands and impose taxes

Karol Kahalley has been an attorney with the firm of Holland & Hart LLP in Denver, Colorado for over 20 years, and serves as a leader of the firm’s mining team. As a leading expert on US mining law, mineral royalties and tribal law, Ms Kahalley has successfully represented clients in acquiring mineral properties and developing mining operations throughout the United States, including on federal, state, private and tribal lands. Her work includes hard rock minerals, oil and gas, oil shale, potash, uranium, coal, rare earth minerals, aggregates, and geothermal resources. She is a recognised expert on the creation and interpretation of mineral royalties. Ms Kahalley has been a lecturer and has published numerous articles for the Rocky Mountain Mineral Law Foundation. She is an adjunct professor at the University of Denver College of Law in international mining law and policy.

Holland & Hart LLP Tel: +1 303 290 1060 6380 South Fiddlers Green Circle Email: [email protected] Suite 500 URL: www.hollandhart.com Greenwood Village, Colorado 80111 USA

Holland & Hart lawyers have worked alongside mining companies for more than 60 years. Our specialised, multi-disciplinary team helps mining companies at every stage of the mining lifecycle. From complex debt and equity ﬁnancing options to mergers, acquisitions, and joint ventures, to title matters, to regulatory approvals for ﬁnal reclamation – even responding to mine accidents and emergencies with our Workplace Safety Emergency Response Team – we have a deep understanding of the business, regulatory, and environmental challenges faced by mining industry stakeholders. To learn more about Holland & Hart, please visit www.hollandhart.com.

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Zambia Zambia

Joseph Alexander Jalasi, Jr.

Eric Silwamba, Jalasi and Linyama Legal Practitioners Eric Suwilanji Silwamba, S.C.

1 Relevant Authorities and Legislation Statutory Instrument No. 31 of 2000, the Mines and Minerals Development (General) Regulations Statutory Instrument No. 84 of 2008, the Mines and Minerals Development (Prospecting, Mining 1.1 What regulates mining law? and Milling of Uranium Ores and other Radioactive Minerals Ores) Regulations Statutory Instrument No. 85 of 2008, the Mines and Minerals Development (Mining Rights and Non-Mining Rights) The primary law governing the mining sector in Zambia is the Mines Order, Statutory Instrument No. 27 of 2009, the Mines and and Minerals Development Act No. 11 of 2015 of the Laws of Minerals Development (Remission of Mineral Royalties) (Luanshya Zambia (MMDA) as read together with the Mines and Minerals Copper Mines Plc) Regulations Statutory Instrument No. 66 of Development (Amendment) Act No. 14 of 2016. The MMDA st th 2009, the Mines and Minerals Development (Mining Rights and became effective on 1 July, 2015 although the date of assent is 14 Non-Mining Rights) Order Statutory Instrument No. 26 of 2010, August, 2015. It repealed and replaced the Mines and Minerals the Mines and Minerals Development (General) (Amendment) Development Act No. 7 of 2008. The MMDA deals with mining Regulations Statutory Instrument No. 34 of 2012, the Mines and rights, licences, large-scale mining in Zambia, gemstone mining, Minerals Development (General) (Amendment) Regulations health and safety, environmental protection, and geological services Statutory Instrument No. 17 of 2013, the Mines and Minerals on analysis, royalties and charges. Other pieces of legislation, other Development (General) Regulations Statutory Instrument No. 7 of than the Mines and Minerals Development Act, include: the Mines 2016, Income Tax, the Value Added Tax Act, the Environmental Acquisition (Special Provisions) Act, Chapter 218, Volume 13 of the Management Act No. 12 of 2011, the Zambia Development Agency Laws of Zambia; and the Mines Acquisition (Special Provisions) Act 2006, Pneumoconiosis Act Chapter 217, Volume 13 of the Laws (No. 2) Act Chapter 219, Volume 13 of the Laws of Zambia. of Zambia, the Medical Examination of Young Persons (underground work) Act Chapter 216, Volume 13 of the Laws of Zambia, 1.2 Which Government body/ies administer the mining Workers Compensation Act No. 10 of 1999, the National Pension industry? Scheme (Amendment) Act No. 7 of 2015, Industrial and Labour Relations Act Chapter 269, Volume 15 of the Laws of Zambia, The mining industry is administered by the Ministry of Mines and Ironising Radiation Protection Act No. 16 of 2005, the National Minerals Development previously called Ministry of Mines, Energy Health Services Act No. 17 of 2005, the Factories Act Chapter 441, and Water Development, specifically by the office of the Director Volume 24 of the Laws of Zambia, the Fire Arms Act Chapter 110, of Mines. The MMDA gives primary power to the Director of Volume 8 of the Laws of Zambia, Explosives Act Chapter 115, Mines, Director of Mines Safety, Director of Mining Cadastre and Volume 9 of the Laws of Zambia, the Employment Act Chapter Director of Geological Survey, while the Minister enjoys an appellate 268, Volume 15 of the Laws of Zambia as read with Employment and supervisory role over the respective Directors’ actions. Act No. 15 of 2015, the Apprenticeship Act Chapter 275, Volume The aforementioned departments all have their head offices situ- 15 of the Laws of Zambia, the Citizenship Empowerment Act 2006 ated in Lusaka, except the Department of Mine Safety which is as read with the Citizen Empowerment (Amendment) Act No. 44 situated in Kitwe in the Copperbelt Province. of 2010, the Zambia Revenue Authority Act, the Zambia Wild Life Act 2015, the Lands Act, the Land and Deeds Act, and the Arbitration Act. In the event of a dispute, the courts also apply the 1.3 Describe any other sources of law affecting the mining English principles of Common Law and Equity. industry. English common law and doctrines of equity are applicable in this jurisdiction. When it gained independence in 1964, Zambia inher- Other than the Mines and Minerals Development Act, the Zambian ited the English legal system and certain pieces of English legislation mining industry is also affected by the provisions of the Mines and are still applicable to Zambia through the English Law (Extent of Minerals (Trading in Reserved Minerals) Regulations Statutory Application) Act, Chapter 11, Volume 2, of the Laws of Zambia. th Instrument No. 110 of 1995, the Mines and Minerals (Application The statutes that were in force in England on 17 August, 1911, as for Mining Rights) Regulations Statutory Instrument No. 123 of well as the Northern Rhodesia Order in Council, 1911 and the 1996, the Mines and Minerals (Application for Mining Rights) British Acts (Extension) Act, Chapter 10, Volume 2 of the Laws of th (Amendment) Regulations No. 29 of 1997, the Mines and Minerals Zambia which are statutes passed after 17 August, 1911, are (Environmental Protection Fund) Regulations Statutory Instrument contained in the schedule. In applying common law to mining, No. 102 of 1998, the Mines and Minerals (Royalty) (Remission) Zambian courts have replicated decisions from Commonwealth and Order, 2000 Statutory Instrument No. 18 of 2000, the Mines and foreign countries with similar socio-economic conditions. For Minerals (Environmental) (Exemption) (Amendment) Order, 2000 example, Zambia has looked more frequently to Commonwealth

countries like England and Australia which have an equally active 3.4 Are different procedures applicable to different minerals mining industry. and on different types of land? Customary law has some influence with respect to surface rights on land held under customary law tenure. The procedure is the same for all other types of minerals and land 2 Recent Political Developments held under either state land or customary land.

3.5 Are different procedures applicable to natural oil and 2.1 Are there any recent political developments affecting the gas? mining industry? The legal regime regulating natural oil and gas is different. The There have been no political developments per se. However, one exploration and production of natural oil and gas is regulated by a recent development is that the minority shareholder in one of the separate piece of legislation known as the Petroleum (Exploration major mines has petitioned against the Lusaka High Court for and Production) Act No. 10 of 2008, which repealed and replaced winding-up – the minority shareholder being a fully-owned state the Petroleum (Exploration and Production) Act No. 13 of 1985. enterprise. There has been a general international perception that the winding-up is a camouflage of expropriation. 4 Foreign Ownership and Indigenous Ownership Requirements and Restrictions 2.2 Are there any speciﬁc steps the mining industry is taking in light of these developments? 4.1 What types of entity can own reconnaissance, There are no specific steps being taken since the action has been exploration and mining rights? understood to be a mere shareholder dispute peculiar to only the mining company in question. Both foreign and indigenous entities can own reconnaissance, exploration and mining rights. 3 Mechanics of Acquisition of Rights 4.2 Can the entity owning the rights be a foreign entity or owned (directly or indirectly) by a foreign entity and are there 3.1 What rights are required to conduct reconnaissance? special rules for foreign applicants? In order to conduct reconnaissance, a person must apply to the Director of Mining Cadastre. Section 12 of the MMDA prohibits any A prospecting permit, small-scale mining licence, small-scale person from undertaking any reconnaissance activity without a mining gemstone licence and an artisan’s mining right cannot be granted to right, a mineral processing licence or a gold panning certificate. Section a person who is not a citizen of Zambia or a company which is not 18(2) of the MMDA provides that a holder of a mining right or a a citizen-owned company. According to the MMDA, a citizen- mineral processing licence shall, within 180 days of the grant of the owned company refers to a company where at least 50.1% of its licence, survey and demarcate the area covered by the licence in the equity is owned by Zambian citizens, and in which the Zambian citi- prescribed manner and register a pegging certificate at the Mining zens have significant control of the management of the company. Cadastre Office. It is important to note that there are no restrictions with respect to foreign ownership with regard to holders of large-scale mining licences. 3.2 What rights are required to conduct exploration?

4.3 Are there any change of control restrictions applicable? In order to acquire prospecting rights, the applicant has to apply for an exploration licence to the Director of the Mining Cadastre in the prescribed form upon payment of the prescribed fee. The Mining The MMDA prohibits the transfer or assignment of any mining Licence Committee in the Ministry of Mines, which includes all the right without the approval of the Minister of Mines through the directors mentioned in question 1.2 above, grants an exploration licence office of the Director. In addition, the MMDA requires that any to the applicant, within 60 days of the receipt of an application, in the change in the controlling interest in the holder of a mining licence prescribed form, if the application complies with the provisions of the must be notified to the Minister not less than 30 days before the date MMDA. An exploration licence confers on the holder exclusive rights of the effective transfer. to carry on exploration in the exploration area for the minerals specified Section 67 of MMDA further requires that a holder of a mining in the licence and to do all such other acts and things as are necessary right or mineral processing licence shall not, after the date of the for, or incidental to, the carrying on of those operations. grant of the right or licence, without the prior written approval of the Minister: register the transfer of any share or shares in the company to any person, or that person’s nominee, if the effect of 3.3 What rights are required to conduct mining? doing so would give that person control of the company; or enter into an agreement with any person, if the effect of doing so would A person wishing to conduct mining and dispose of minerals is required be to give that person control of the company. to first acquire a mining right or a mining licence granted under the MMDA. In order to acquire mining rights, the applicant has to apply 4.4 Are there requirements for ownership by indigenous for a mining right. The applicant is required to address the application to the Mining Cadastre Office. The Director of Mining Cadastre may, persons or entities? before issuing a mining right or mining licence, require that the land over which the mining right or mining licence is to be issued be properly Section 29 of the MMDA provides restrictive requirements; surveyed in accordance with the provisions of the MMDA. however, these restrictions only apply to artisanal mining, small-scale

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mining, mineral trading permit under Section 45(1) and gold panning rights requires the prior consent of the Minister of Mines and the certificate under Section 42(1). These cannot be granted to a person production of a tax clearance certificate. Upon satisfaction of the who is not a citizen of Zambia or a company which is not a citizen- provided criteria in Section 66, the Minister is obliged to grant such owned company. Artisanal mining shall only be undertaken by a consent unless the transferee is disqualified from holding a mining citizen or a co-operative wholly composed of citizens. Small-scale right or a non-mining right under the general provisions of the mining shall only be undertaken by a citizen-owned, citizen-influ- MMDA. enced or citizen-empowered company. An applicant for artisanal In addition, we must point out that a change of control of the mining or small-scale mining shall not be granted a mining licence in company, either by way of shares or an agreement whose effect is to respect of radioactive minerals. A mining right over an area between change control, is subject to approval by the Minister of Mines. a minimum of two cadastre units and a maximum of 120 cadastre units in extent shall only be granted to the following companies: 6.2 Are the rights to conduct reconnaissance, exploration (a) a citizen-influenced company, which has its meaning assigned to and mining capable of being mortgaged or otherwise secured it in the Citizens Economic Empowerment Act 2006; (b) a citizen-empowered company, meaning a company where 25– to raise ﬁnance? 50% of its equity is owned by a citizen; and (c) a citizen-owned company has its meaning assigned to it in the The MMDA does not make specific provision for this; however, Citizens Economic Empowerment Act 2006. rights may be assigned to a financial institution subject to approval There are no restrictions for exploration, large-scale mining, by the Minister, under the provisions of Section 66 of the MMDA, mineral processing and mineral import and export permits. who has to approve any assignment or encumbrance of any mining or mineral processing licence. 4.5 Does the State have free carry rights or options to acquire shareholdings? 7 Dealing in Rights by Means of Transferring Subdivisions, Ceding Undivided Shares and Free carry rights or options to acquire do not exist. However, mines Mining of Mixed Minerals that have been previously owned by the Government but sold to international mining houses feature what is referred to as ‘a golden share’. This is in respect to the minority shares the state continues 7.1 Are rights to conduct reconnaissance, exploration and to hold in these mines. Under the provisions of Section 27 of the mining capable of being subdivided? Zambia Development Agency Act No. 11 of 2006, the Minister of Finance may retain a golden share in a state-owned enterprise. No, they are not.

A licence is required for any person who wishes to undertake the 7.3 Is the holder of rights to explore for or mine a primary processing of any minerals under Section 38. In addition, under Section mineral entitled to explore or mine for secondary minerals? 13(2), a person may apply for a mineral trading permit, a mineral import permit, a mineral export permit and a gold panning certificate. No, they are not.

5.2 Are there restrictions on the export of minerals and 7.4 Is the holder of a right to conduct reconnaissance, levies payable in respect thereof? exploration and mining entitled to exercise rights also over residue deposits on the land concerned? Approval is required from the Director of Mines under the provisions of Section 47 for the export or import of minerals upon No, they are not. payment of statutory fees. Additional approval is required for the export of radioactive minerals. A mineral export permit requires a mineral analysis and evaluation certificate issued by the Director of 7.5 Are there any special rules relating to offshore the Geological Survey, a verification report from the Commissioner exploration and mining? General of the Zambia Revenue Authority for the payment of mineral royalties, security clearance by the police, production returns No, they are not. and mineral right or mineral processing certificate of the source of the mineral, or the mineral product. 8 Rights to Use Surface of Land 6 Transfer and Encumbrance 8.1 Does the holder of a right to conduct reconnaissance, exploration or mining automatically own the right to use the 6.1 Are there restrictions on the transfer of rights to conduct surface of land? reconnaissance, exploration and mining?

The holder of a right to conduct reconnaissance, exploration or The MMDA provides for restrictions on the ability to transfer recon- mining does not automatically own the right to use the surface of naissance, exploration and mining rights. The transfer of these

land. However, the holder may have the following rights to use the 9 Environmental surface of land: (i) To enter the mining area and take reasonable measures on or under the surface for the purpose of mining operations. 9.1 What environmental authorisations are required in order (ii) To carry on mining operations and to do all such other acts and to conduct reconnaissance, exploration and mining things as are necessary for carrying on of those operations. (iii) To dispose of any mineral products recovered. operations? (iv) To stack or dump any mineral or waste product. (v) To erect the necessary equipment, plant and buildings for the The holder of a mining right is required to have approved environmental purpose of mining, transporting, dressing or treating the authorisation from the Zambia Environmental Management Agency minerals recovered in the course of the mining operations. (ZEMA).

8.2 What obligations does the holder of a reconnaissance 9.2 What provisions need to be made for storage of tailings right, exploration right or mining right have vis-à-vis the and other waste products and for the closure of mines? landowner or lawful occupier? The Environmental Management Act No. 12 of 2011 provides for The holder of a reconnaissance, exploration or mining right has an the issuance of a waste management licence. obligation towards the landowner or the lawful occupier, subject to Section 55(2) of the Environmental Management Act provides as the mining right, to pay fair and reasonable compensation for any follows: disturbance of the rights of the occupier, including any damage The Agency may, upon application, issue a hazardous waste done to the surface of the land by the operations. licence to a person to allow the person to: Where the holder requires exclusive or other use of the whole or (a) generate, pre-treat or treat hazardous waste; any portion of the prospecting or mining area, he has an obligation (b) handle, transport or store hazardous waste; to acquire a lease to use the same as agreed between such holder and (c) dispose of hazardous waste; or the landowner or lawful occupier. This is referred to as an access (d) transit, trade in or export hazardous waste. agreement. Section 57 of the MMDA, however, provides for excep- A mine can only be closed upon the issue of a certificate of aban- tions to the above statement. Any dispute with respect to donment by the mining rights holder. The certificate will state the compensation between the surface rights holder and holder of a conditions to be satisfied for the mine to be closed. However, it is mining right with the consent of the parties, may be resolved by the important to note that any liability incurred before the date on which Director of Mining Cadastre, or the Director may require the parties the abandonment was effected in respect of the land, and any legal to submit to arbitration in accordance with the provisions of the proceedings that might have been commenced or continued in Arbitration Act. respect of any liability against the holder of a mining licence for the certificate, may be commenced or continued against that applicant. It is important that insurance and indemnities be identified prior 8.3 What rights of expropriation exist? to closure of the mine.

The Lands (Compulsory Acquisition) Act allows the President of 9.3 What are the closure obligations of the holder of a the Republic of Zambia to compulsorily acquire any real property (land), interest and personal property for the public benefit. reconnaissance right, exploration right or mining right? Appropriation under the Constitution is subject to the granting of fair and reasonable compensation. There is also a provision for an The mining rights holder is expected to give notice of the discovery Investment Protection Agreement. of any minerals of possible commercial value, keep a full and accu- The Constitution of Zambia (Amendment) Act No. 2 of 2016 has rate record of the prospecting operations and preserve records for made special provision with regards to protection of international the protection of the environment. The removal of any minerals investment. In addition, Zambia has, through the provisions of the without written permission is prohibited. Investments Disputes Convention Act Chapter 42, Volume 4 of the Laws of Zambia, domesticated into National Law the Convention 9.4 Are there any zoning or planning requirements applicable to on the Settlement of Investment Disputes between states and the exercise of a reconnaissance, exploration or mining right? nationals (multinationals) of other states. Zambia has also ratified the SADC Protocol on Finance and Investment, the COMESA treaty and the investment agreement for the COMESA Common A zoning map of the abandoned or closed mine is required by the Investment Area (CCIA) Agreement. Zambia has bilateral invest- Director of the Geological Survey. This is a prerequisite to the issue ment treaties with the United Kingdom (2009), Mauritius (2015), the of a certificate of abandonment. Netherlands (2003), the Belgium-Luxembourg Economic Union (2001), China (1996), France (2002), Germany (1996), Egypt (2000), 10 Native Title and Land Rights Cuba (2000), and Switzerland (1994). Under Section 69, the Director of Mines may consider the nature of mining operations if it is in the best interests of the Republic that 10.1 Does the holding of native title or other statutory the holders of artisanal or small-scale mining operations covering a surface use rights have an impact upon reconnaissance, neighbouring area will be improved by the coordination of the exploration or mining operations? mining operations. This is only with respect to artisanal and small- scale mining operations. Yes; to the extent that permission is required from appropriate

authorities; for example, if the land is a traditional burial site, is a

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village with land held under customary tenure, is a national heritage Rights of the Constitution provides for the protection of property site, is located within 90 metres of Government buildings or areas from being deprived without just cause. Property includes regulated by the Aviation Act, is a National Park or Game Protected prospecting rights or mining rights. In addition, the recent amend- Area by the Zambia Wildlife Authority, Railway Administration, etc. ments to the Constitution in Article 10 (3) have made special provision reconfirming the protection of investment in Zambia to 11 Health and Safety promote foreign investment and to protect and guarantee such investments through agreement with investors and other countries and any compulsory acquirement of an investment may only be 11.1 What legislation governs health and safety in done under customary international law and is subject to Article mining? 16(1) of the Constitution (Bill of Rights) of 1996 Constitution Amendment.

The 1969 Mines and Mineral Act gave way for the Government to introduce the Mining Regulations 1971 and the Mining Regulations 13.2 Are there any State investment treaties which are 1973. Further, these two regulations have been amalgamated to applicable? transform the Guide into the Mining Regulations booklet currently being used in the copper mining industry. There is a provision for treaties and for bilateral agreements to be The other Acts referred to also include the Medical Examination of signed and Zambia has entered into a number of multilateral and Young Persons (Underground Work) Act, Chapter 216 of the Laws of bilateral treaties. Zambia, as stated earlier in question 7.3 on expro- Zambia, Pneumoconiosis Act, Chapter 217 of the Laws of Zambia, priation, has entered into a number of bilateral and multilateral Occupational Health and Safety Act, Act 36 of 2010, the Workers’ treaties which include: the Convention on the Settlement of Compensation Act No. 10 of 1999 and either environmental-related Investment Disputes between states and nationals (multinationals) or general medicine. of other states; the SADC Protocol on Finance and Investment and the COMESA treaty; and the investment agreement for the 11.2 Are there obligations imposed upon owners, employers, COMESA Common Investment Area (CCIA) Agreement. managers and employees in relation to health and safety? Zambia has bilateral investment treaties with the United Kingdom (2009), Mauritius (2015), the Netherlands (2003), the Belgium- Luxembourg Economic Union (2001), China (1996), France (2002), The Guide to the Mining Regulations has imposed obligations upon Germany (1996), Egypt (2000), Cuba (2000), and Switzerland (1994). owners, employers, managers and employees regarding health and safety. The Chief Inspector of Mines, under the Mines Safety Department 14 Taxes and Royalties (MSD), ensures that the regulations are being followed. Note that any deviations from the regulations call for penalties such as fines or 14.1 Are there any special rules applicable to taxation of closure of the mines. exploration and mining entities? 12 Administrative Aspects Under the Income Tax Act, the corporate income tax rate applicable to companies carrying out mining operations will be 30%. Variable 12.1 Is there a central titles registration ofﬁce? profits tax of up to 15% no longer applies; however, there is a limitation on the deduction of losses to 50% of taxable income. There is a Central Mining Cadastre Office which is responsible for Withholding tax on dividends declared by a company carrying out receiving and processing applications for mining rights. mining operations is charged at the rate of 0%.

12.2 Is there a system of appeals against administrative 14.2 Are there royalties payable to the State over and decisions in terms of the relevant mining legislation? above any taxes?

There is a system of appeals against administrative decisions in terms Mineral royalties for holders of mining rights are payable at the rate of the relevant mining legislation. An aggrieved person may appeal of 5% on base metals (except copper) and energy and industrial to the Minister of Mines against the decision of the Director of minerals, and 6% for gemstones and precious metals. Where the Mining Cadastre, Director of Mines Safety, Director of Mines, mineral is copper, the mineral royalty rate will be: 4% when the price Director of Geological Survey or the Mining Licence Committee of copper is less than US$4,500 per tonne; 5% where the price of under MMDA. If said person is not satisfied with the decision made copper is more than US$4,500 but less than US$6,000 per tonne; and by the Minister, he can appeal to the Mining Appeals Tribunal. A 6% where the price of copper is more than US$6,000 per tonne. person aggrieved with the decision of the Mining Appeals Tribunal can appeal to the High Court. 15 Regional and Local Rules and Laws

13 Constitutional Law 15.1 Are there any local provincial or municipal laws that need to be taken account of by a mining company over and 13.1 Is there a constitution which has an impact upon above National Legislation? rights to conduct reconnaissance, exploration and mining? Yes; the Common Market for Eastern and Southern Africa The Zambian Constitution has an impact upon the rights to conduct (COMESA) and the Southern African Development Community reconnaissance, exploration and mining. Article 16 of the Bill of (SADC).

15.2 Are there any regional rules, protocols, policies or 16.3 Are there any entitlements in the law for the State to laws relating to several countries in the particular region that cancel an exploration or mining right on the basis of failure to need to be taken account of by an exploration or mining comply with conditions? company? Under the MMDA, the State has vested powers to the Mining Yes; the Common Market for Eastern and Southern Africa Licensing Committee which consists of the Director of Mines, (COMESA) and the Southern African Development Community Director of the Geological Survey, Director of Mines Safety, (SADC). Director of Mining Cadastre and other representatives to cancel an exploration or mining right on the basis of failure to comply with 16 Cancellation, Abandonment and conditions relating to mining rights or non-mining rights. A mining right may be cancelled in the following circumstances, if: Relinquishment (a) it contravenes a condition of the mining right or non-mining right; 16.1 Are there any provisions in mining laws entitling the (b) it fails to comply with any requirement of the MMDA relating to the mining right or non-mining right; holder of a right to abandon it either totally or partially? (c) it fails to comply with a direction lawfully given under the MMDA; The Mines and Minerals Development Act contains a provision enti- (d) it fails to comply with a condition on which any certificate of tling the holder of a right to abandon it either totally or partially, abandonment is issued or on which any exemption or consent subject to the licence or permit, upon application to the Director of is given under the MMDA; Mining Cadastre for a certificate of abandonment, not later than 90 (e) there is a conviction on account of safety, health or environmental days before the date on which the holder wishes the abandonment matters; to have effect. (f) in the case of a large-scale mining licence or large-scale gemstone licence, the holder has failed to carry on mining operations in 16.2 Are there obligations upon the holder of an accordance with the proposed plan of mining operations, and the exploration right or a mining right to relinquish a part thereof gross proceeds of the sale of a mineral from an area subject to such licence in each of any three successive years is less than half after a certain period of time? of the deemed turnover application to that licence in each of those years; and Yes, an exploration licence is valid for a period of four years. It may (g) there is conviction on the giving of false information on be renewed for two further periods not exceeding three years each recovery of ores and mineral products, production costs or sale. but the maximum period from the initial grant of the licence shall not exceed 10 years. A holder of an exploration licence shall relinquish 50% of the exploration at each renewal. However, an exploration licence for small-scale exploration and gemstones, other than diamonds, is not renewable.

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Joseph Alexander Jalasi, Jr. is the Head of the Tax, Mining, Corporate, Banking and Finance Department. He has several years in public litigation as Principal State Advocate in the Attorney General’s Chambers. He is a former Registrar of the Tax Appeals Tribunal. He has several reported cases to his credit in the Zambian Law Reports. Mr. Jalasi served as Chief Policy Analyst Legal Affairs at State House under the late President Levy Mwanawasa and he served as legal advisor to former President Rupiah Banda. He is a member of the Chartered Institute of Arbitrators of the United Kingdom and also a qualified legal drafts person.

Eric Silwamba, Jalasi and Linyama Legal Practitioners Tel: +260 211 256 530 Plot No. 12 at William Burton Place Fax: +260 211 256 372 Chilekwa Mwamba Road Email: [email protected] Off Lubu/Saise Roads, Longacres URL: www.ericsilwambaandco.com Lusaka Zambia

Eric Suwilanji Silwamba, S.C. is the Principal Partner and is a vastly experienced Practitioner who has been conferred with rank and dignity of State Counsel with 30 years at the Zambian Bar. He has several years’ experience in both Private Practice and has held various public offices. He is the former Minister of Presidential Affairs and Minister of Justice and Government Chief Whip. Mr. Silwamba has had the opportunity of handling some of the most complex and high-profile litigation in Zambia that relates to mining, commercial law, tax, administrative, criminal and constitutional law. He is also a member of the Chartered Institute of Arbitrators of the United Kingdom and a qualified legal drafts person.

Eric Silwamba, Jalasi and Linyama Legal Practitioners is a Zambian law firm. holder agreements. Market observers say: “They have a solid practice and repre- The firm has been in existence for over 30 years as Eric Silwamba and sent several multinational clients.” Company. In 2013 it was rebranded to Eric Silwamba, Jalasi and Linyama The World Legal 500 describes the firm as follows: Legal Practitioners following the admission to partnership of Joseph Jalasi “‘Heavyweight litigation’ firm Eric Silwamba, Jalasi and Linyama Legal Practitioners and Lubinda Linyama. It has over the years developed to the level of being is strong in administrative, constitutional and tax-related matters. ‘Noted practi- among the top law firms in Zambia. The renowned Chambers and Partners tioner’ Eric Silwamba is ‘well known for his court skills’. The firm also has expertise (www.chamberandpartners.com) describes the firm as follows: in commercial, mining, banking and finance work.” “This well-known team maintains a solid foothold in the Zambian market, and www.ericsilwambaandco.com continues to be a popular choice for dispute resolution. Key areas of focus include public law litigation, IP matters, commercial agreements and shareholder agreements. It has experience in advising clients from the mining, construction, agricultural and retail sectors. Sources say: “It’s a very professional firm with grav- itas in the market.” “This firm enjoys a highly regarded reputation in public law litigation. Other key areas of expertise include intellectual property, commercial agreements and share-

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Zimbabwe Zimbabwe

Wintertons Nikita Madya

1 Relevant Authorities and Legislation status on growth points, municipalities and towns; the declaration of local government areas and the administration of local government areas by local boards; to confer functions and 1.1 What regulates mining law? powers and impose duties upon municipal and town councils and local boards; and to provide for the establishment of the Local Government Board and to provide for the functions Mining law is regulated mostly by legislation in the form of the thereof; Mines and Minerals Act (Chapter 21:05) and various regulations that ■ the Forest Act (Chapter 19:05) – provides for the setting aside stem therefrom, such as: of State forests and for the protection of private forests, trees ■ the Mining (General) Regulations; and forest produce; establishes a Mining Timber Permit Board ■ the Mining (Managements and Safety) Regulations; to control the cutting and taking of timber for mining purposes; ■ the Mining (Health and Sanitation) Regulations; and provides for the conservation of timber resources and the ■ the Mines and Minerals (Custom Milling Plants) Regulations. compulsory afforestation of private land; and regulates and controls the burning of vegetation; 1.2 Which Government body/ies administer the mining ■ the Roads Act (Chapter 13:18) – provides for the planning, industry? development, construction, rehabilitation and management of the roads network of Zimbabwe and to provide for the regula- According to the Mines and Minerals Act, the mining industry is tion of the standards applicable in the planning, design, administered by: construction, maintenance and rehabilitation of roads with due ■ the Ministry of Mines and Mining Development; regard to safety and environmental considerations; ■ the Mining Affairs Board; and ■ the Communal Land Act (Chapter 20:04) – alters and regulates ■ Mining Commissioners who are now being referred to as the occupation and use of Communal Land; Provincial Mining Directors. The Mines and Minerals Act has ■ the District Development Fund Act (Chapter 29:06) – provides not yet been amended to record the change in title. for the control and application of a fund to be used for the purpose of developing Communal Land and such other areas as may be declared by the Minister; 1.3 Describe any other sources of law affecting the mining ■ the Exchange Control Act (Chapter 22:05) – confers powers and industry. imposes duties and restrictions in relation to gold, currency, securities, exchange transactions, payments and debts, and the The Labour Act (Chapter 28:01) – regulates the relationship between import, export, transfer and settlement of property; employers and their employees as well as their rights thereto: ■ the Land Acquisition Act (Chapter 20:10) – empowers the ■ the Environmental Management Act (Chapter 20:27) – ensures President and other authorities to acquire land and other the protection of the environment; immovable property compulsorily in certain circumstances; and ■ the Explosives Act (Chapter 10:08) – regulates the importation, to make special provision for the compensation payable for agri- transportation and use of explosives; cultural land required for resettlement purposes; ■ the Gold Trade Act (Chapter 21:03) – prohibits the possession ■ the Minerals Marketing Corporation of Zimbabwe Act (Chapter of gold by unauthorised persons and regulates dealings in gold; 21:04) – regulates the Corporation which is mandated to sell the ■ the Water Act (Chapter 20:24) – deals with the use and control minerals in Zimbabwe; of water bodies and the requirements for a water permit; ■ the Zimbabwe Mining Development Corporation Act (Chapter ■ the Precious Stones Trade Act (Chapter 21:06) – regulates the 21:08) – provides for the establishment, constitution, functions, possession of and dealings in precious stones; powers and duties of the Mining Development Board and regulates ■ the Chamber of Mines of the Zimbabwe Incorporation the financial affairs of the Zimbabwe Mining Development (Private) Act (Chapter 21:02) – provides for the incorporation Corporation; of the Chamber of Mines of Zimbabwe, and for the dissolution ■ the Base Minerals Export Control Act (Chapter 21:01) – of the previous entity which was the Rhodesia Chamber of prohibits or regulates and controls the export of base minerals Mines and of the Chamber of Mines; from Zimbabwe; ■ the Urban Councils Act (Chapter 29:15) – provides for the ■ the Indigenisation and Economic Empowerment Act (Chapter establishment of municipalities and towns and the administra- 14:33) – provides for support measures for the economic tion of municipalities and towns by local boards, municipal and empowerment of indigenous Zimbabweans; town councils; to provide for the conferring of town and city ■ the Mining (General) Regulations;

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■ the Mining (Managements and Safety) Regulations; 3.3 What rights are required to conduct mining? ■ the Mining (Health and Sanitation) Regulations; ■ the Mines and Minerals (Custom Milling Plants) Regulations; and The rights to conduct mining are conferred by having a mining ■ the Zimbabwe Investment Authority Act – deals with invest- claim(s) or a special grant issued to the holder of the mining rights. ment coming into the country and the necessary permits that For ease of administration, several claims forming a block can be investors need to work in the country. transformed into a mining lease through an application made in terms of the Act. A mining lease and a special grant generally confers longer term rights which are renewable in terms of the Act. 2 Recent Political Developments 3.4 Are different procedures applicable to different minerals 2.1 Are there any recent political developments affecting the and on different types of land? mining industry? Yes. The mining of coal, mineral oils, natural gas and nuclear energy The government has whittled down the indigenous shareholding source minerals have different rules to each other. thresholds in the mining of platinum and diamonds as it has allowed foreign owned firms to hold more than 49% of shareholding in 3.5 Are different procedures applicable to natural oil and some diamond mining ventures. The amendments to the gas? Indigenisation and Economic Empowerment Act in 2018 had restricted foreign ownership in diamond and platinum sectors to 49%. The formal amendments to the Indigenisation and Economic Different rules apply to the mining of natural oil and gas. According Empowerment Act are likely to follow soon. There is also a push to section 299 of the Mines and Minerals Act, any person wishing to on the political front to increase the level of beneficiation of most mine for oil or gas has to apply for a special lease which is granted only of the minerals. by the President or a Minister authorised by the president to do so.

2.2 Are there any speciﬁc steps the mining industry is taking 4 Foreign Ownership and Indigenous Ownership in light of these developments? Requirements and Restrictions

The sector has been able to attract foreign investment in the 4.1 What types of entity can own reconnaissance, exploration diamond sector as a result of this relaxation of the indigenisation and mining rights? threshold. Companies operating in the industry are looking at investing in beneficiation in response to these calls with some having already Any person can own these rights. Person refers to: started with some plants to process some of the minerals to some ■ any company incorporated or registered as such under an enactment; level before exportation. ■ any body of persons, corporate or unincorporated; or ■ any local or other similar authority. 3 Mechanics of Acquisition of Rights 4.2 Can the entity owning the rights be a foreign entity or owned (directly or indirectly) by a foreign entity and are there 3.1 What rights are required to conduct reconnaissance? special rules for foreign applicants?

Reconnaissance – a preliminary survey to gain information. There The amendment to the Indigenisation and Economic Empowerment is no legislation that deals with this in Zimbabwe. Act in 2018 allowed foreign entities to own 100% mining rights except for platinum and diamond. Recent development saw the 3.2 What rights are required to conduct exploration? government authorising a foreign investor in the diamond mining sector to own more than 49% in the diamond company. This is likely Rights are required for prospecting. Rights to conduct exploration to be followed up by an amendment to the law which the Minister of are conferred by a prospecting licence/licences upon payment of Finance and Economic Development intimated in his Mid Term the appropriate fee prescribed in respect of each such licence to the Budget Review Statement to Parliament. Mining Commissioner. The holder can exercise these rights or All new foreign investment into Zimbabwe would ideally require appoint an agent to exercise them on his behalf. The prospecting an investment licence issued by the Zimbabwe Investment Authority licence is valid for two years. The prospectors’ licence itself is valid in terms of the Zimbabwe Investment Authority Act. for five years. Both are renewable. The licence confers the right of Residence and Work Permits issued by Immigration are also prospecting and searching for any minerals, mineral oils and natural required for foreigners. gases on land open to prospecting, but not of removing or disposing Investment into an existing company requires Exchange Control of any mineral discovered save for the bona fide purpose of having it Authority of RBZ’s approval. assayed or of determining the nature thereof or with the permission in writing of the Mining Commissioner and pegging. The licence 4.3 Are there any change of control restrictions applicable? entitles the holder to prospect, peg and register claims in terms of the Act. A registered claim is a mining location where mining activ- When any registered mining location or any interest therein is sold ities can take place. or otherwise alienated, the seller or person who so alienates shall An exclusive prospecting order confers exclusive rights to notify the Commissioner of the transaction within 60 days of the prospect for specified minerals in any identified location within date of the transaction. The seller shall provide the following infor- Zimbabwe. Exclusive prospective orders are issued for a maximum mation to the Mining Commissioner: of six years, being renewable for a period of three years.

■ the name of the person to whom such location or interest is sold Corporation may impose. A commission is payable to the Corporation or otherwise alienated; for its services promulgated by the Minister of Mines and Mining ■ the amount of the valuable consideration, if any, agreed upon; Development from time to time in statutory instruments. and ■ the date of the transaction. 6 Transfer and Encumbrance The agreement should be registered with the Mining Commissioner. A transfer duty is payable by the purchaser on the sale at a fee prescribed by parliament. This duty should be paid 6.1 Are there restrictions on the transfer of rights to conduct within six months. If payment is partly in cash and partly in shares reconnaissance, exploration and mining? of a company, the nominal value of the shares shall be used. In the case where payment is contingent upon some future event, the The transfer of mineral rights is restricted in the circumstances purchaser shall give security to the satisfaction of the Mining referred to above. The consent of the relevant officials is required, Commissioner that he will pay the transfer duty at a fixed rate when and, in some cases, a transfer is not possible as the rights are char- the consideration becomes due. acterised as personal to the holder. No transfer is possible if:

■ the mining location is liable for forfeiture or under attachment; ■ duties, fees, royalties, rentals and other payments in respect of 6.2 Are the rights to conduct reconnaissance, exploration the mining location are outstanding with the Mining and mining capable of being mortgaged or otherwise secured Commissioner’s office; and/or to raise ﬁnance? ■ there are outstanding payments due to the Rural District Council. Yes. However, as mentioned above, the consent of the Mining Transfers can only be made to permanent residents of Zimbabwe. Commissioners or the Minister is required before this can be done. In the case where transfer is to be made to non-residents, the Mining Where the approval of the Minister or government is required to Commissioner has to receive assurance from the Reserve Bank of alienate mining rights, the use of the rights as security to raise capital Zimbabwe that all exchange Control requirements have been fully becomes substantially reduced. Therefore, there is a lack of easy complied with. marketability, transferability and “mortgage ability” of mining assets. On receipt of the fee, the Mining Commissioner will then issue

the new owner with a new certificate of registration. Where the mining title is held in the form of a Special Grant, 7 Dealing in Rights by Means of Transferring transfer is restricted. The Special Grant is issued personally to the Subdivisions, Ceding Undivided Shares and holder and cannot be transferred. Mining of Mixed Minerals

4.4 Are there requirements for ownership by indigenous 7.1 Are rights to conduct reconnaissance, exploration and persons or entities? mining capable of being subdivided?

The policy on indigenous ownership in the mining sector is being scrapped in order to attract investment in the mining sector. It had already Yes. However, as mentioned above, the consent of the Minister is been confined to diamond and platinum sectors since March 2018. required before this can be done. Where the approval of the Minister or government is required to alienate mining rights, the use of the rights as security to raise capital becomes substantially 4.5 Does the State have free carry rights or options to reduced. Therefore, there is a lack of easy marketability, transfer- acquire shareholdings? ability and “mortgage ability” of mining assets.

This is not provided for in the legislation. 7.2 Are rights to conduct reconnaissance, exploration and mining capable of being held in undivided shares? 5 Processing, Reﬁning, Beneﬁciation and Export Yes, they are. This is normally the case with mining syndicates that 5.1 Are there special regulatory provisions relating to are common in the acquisition of mining rights in Zimbabwe.

processing, reﬁning and further beneﬁciation of mined 7.3 Is the holder of rights to explore for or mine a primary minerals? mineral entitled to explore or mine for secondary minerals? Beneficiation is encouraged and the government has imposed taxes on the export of certain unbeneficiated minerals such as diamonds, Yes, unless it is coal, gas or oil. In these cases, there is a need to platinum and lithium. This is aimed at pushing the mining industry apply for a special lease. players to invest in beneficiation. 7.4 Is the holder of a right to conduct reconnaissance, 5.2 Are there restrictions on the export of minerals and exploration and mining entitled to exercise rights also over levies payable in respect thereof? residue deposits on the land concerned?

According to the Minerals Marketing Corporation of Zimbabwe Act, Yes, unless it is coal, gas or oil. In these cases, there is a need to no person other than the Corporation shall export any mineral from apply for a special lease. Zimbabwe except in terms of a contract negotiated by the Corporation on behalf of the seller, or when authorised to do so by the Corporation subject to such terms and conditions as the

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7.5 Are there any special rules relating to offshore 9 Environmental exploration and mining?

9.1 What environmental authorisations are required in order There is no legislation covering that aspect as Zimbabwe is landlocked. to conduct reconnaissance, exploration and mining 8 Rights to Use Surface of Land operations?

The following authorisations are required: 8.1 Does the holder of a right to conduct reconnaissance, ■ Environmental Impact Assessment Certificate; exploration or mining automatically own the right to use the ■ Waste Disposal Licence; surface of land? ■ Effluent Discharge Licence; ■ Emission Licence; and ■ import/export for controlled substances. Holders of these rights have the right, subject to any existing rights:

■ to the use of any surface within the boundaries thereof for all necessary mining purposes of their location; and as against the 9.2 What provisions need to be made for storage of tailings holder of a prospecting licence or of any other mining location and other waste products and for the closure of mines? the right, except as in section 357 provided, to the use of all surface within such boundaries; One has to include a decommissioning plan in the Environmental ■ to use, free of charge, soil, waste rock or indigenous grass situ- Impact Assessment Report outlining how the area will be rehabili- ated within his location for all necessary mining purposes of tated and returned to its original state. such location; ■ to sell or otherwise dispose of waste rock recovered by him from his location in the course of bona fide mining operations; 9.3 What are the closure obligations of the holder of a ■ the same right of taking water for primary purposes as is reconnaissance right, exploration right or mining right? possessed by the holder of a prospecting licence; and ■ subject to the Forest Act [Chapter 19:05] and to such conditions Restoring the land to its original state which is inclusive of: as may be prescribed and on payment to the occupier or, where ■ filling up any pits; there is no occupier, the owner of the land in advance of such ■ removing any unsafe structures, equipment, disused surface tariff rate as may be prescribed, the right to take and use for fire- pipes, pump stations and facilities from the site; and wood or for the purposes of his mining location any indigenous ■ re-vegetation which will be commenced during the operational wood or timber from land open to prospecting, which is neither stage, etc. Communal Land nor land in regard to which a reservation has been made under section 36/37. Provided that nothing in this 9.4 Are there any zoning or planning requirements applicable to paragraph shall be construed so as to permit a miner to use any wood or timber taken by him for firewood elsewhere than on the exercise of a reconnaissance, exploration or mining right? his location or, where his location is a block forming part of a property, on that property. Yes, this is governed by the: ■ Regional, Town and Country Planning Act; 8.2 What obligations does the holder of a reconnaissance ■ Urban Councils Act; and ■ Rural District Councils Act. right, exploration right or mining right have vis-à-vis the

landowner or lawful occupier? 10 Native Title and Land Rights

The holder of a right: ■ should give notice to the occupier of his intention to exercise 10.1 Does the holding of native title or other statutory his rights; surface use rights have an impact upon reconnaissance, ■ cannot interfere with the use of water for primary purposes by exploration or mining operations? the owner or occupier of the land; ■ should pay the occupier for taking and using any wood; ■ has to remove any structures that have been erected on the land Yes. The same rules that apply to privately owned land which is after the expiration of the lease; occupied or being used would generally apply in rural areas. In addi- ■ should compensate the occupier who is injuriously affected by tion, there are some payments made to the local authorities so that the exercise of any such rights; one can exercise his/her mining rights in a particular area. ■ should notify the occupier of the intention to house/accommodate employees on the land; and 11 Health and Safety ■ should allow the occupier to let his livestock graze and to cultivate his crops. 11.1 What legislation governs health and safety in mining? 8.3 What rights of expropriation exist?

The legislation that governs health and safety is: Although the Constitution provides for the protection of private ■ the Environmental Management Act; property, this also leaves too much room for when such property can ■ the Pneumoconiosis Act; and also be expropriated. However, when such land is being expropri- ■ the Public Health Act; ated, the owner of such property should be given notice and also be and the regulations stemming from these. compensated.

11.2 Are there obligations imposed upon owners, Income tax on mining operations is levied at a flat rate of 15% for all minerals, and all capital expenditure incurred exclusively for employers, managers and employees in relation to health and mining operations is deductible at a rate of 100%. safety? ■ Mining companies enjoy an indefinite carry forward of their tax losses. There are various such obligations especially as encapsulated in the ■ Investors are allowed to borrow locally for working capital Mining (Management & Safety) Regulations S.I. 109 of 1990, and purposes. Offshore borrowings require Reserve Bank approval, the Mining (Health & Sanitation) Regulations S.I. 185 of 1995. and interest paid on borrowings of a debt-to-equity ratio of up to a maximum of three to one is tax deductible. 12 Administrative Aspects ■ A rebate of duty shall be granted to a holder of a mining location in respect of specified goods which, during a specified period, are imported by a holder for use solely and exclusively 12.1 Is there a central titles registration ofﬁce? for mining development operations by the holder. ■ A rebate on duty is granted on all capital goods imported for Yes, there is. Much of the information on title is, however, located mining development operations and during the exploration at the provincial offices under the control of the Mining phase of a mining project. Commissioners now called Provincial Mining Directors. 14.2 Are there royalties payable to the State over and 12.2 Is there a system of appeals against administrative above any taxes? decisions in terms of the relevant mining legislation? There are royalties payable to the State calculated as a percentage of There is a system of appeals. Anyone aggrieved by the decision of the gross fair market value of minerals produced and sold as follows: the Mining Commissioner may appeal internally to the Secretary and ■ Precious Stones – 10%. thereafter may appeal to the Minister of Mines. Where the Mining ■ Precious Metals – 3.5%. Commissioner has decided the matter as the Mining Commissioner’s ■ Base Metals – 2%. Court, an appeal lies with the Administrative Court and thereafter ■ Industrial Minerals – 2%. with the Supreme Court. ■ Coal Bed Methane Gas – 2%. ■ Coal – 1%. 13 Constitutional Law 15 Regional and Local Rules and Laws

13.1 Is there a constitution which has an impact upon 15.1 Are there any local provincial or municipal laws that rights to conduct reconnaissance, exploration and mining? need to be taken account of by a mining company over and above National Legislation? Yes. The Constitution of Zimbabwe protects the right to property. It guarantees the right of every person to acquire, hold, occupy, use, transfer, hypothecate, lease or dispose of all forms of property, Yes. There are local laws that would need to be taken into account either individually or in association with others. Property is defined depending on the location of the mine. The Rural District Councils to include any right in property. Act [Chapter 29:13] allows rural district councils to charge land The Constitution also deals with environmental rights and development levies on mining location in their locality. Mining oper- provides that every person has the right to an environment that is ations would therefore be expected to comply with the local by-laws not harmful to their health or well-being, to have the environment of the local authorities. protected against pollution and to secure ecologically sustainable development and use of natural resources while promoting 15.2 Are there any regional rules, protocols, policies or economic and social development. The constitutionally protected laws relating to several countries in the particular region that environmental rights would serve to ensure that mining operations are conducted in a manner that does not affect the rights of other need to be taken account of by an exploration or mining citizens. company?

There are none. Regional rules, protocols and policies only have the 13.2 Are there any State investment treaties which are force of law in Zimbabwe if incorporated into domestic laws. applicable?

16 Cancellation, Abandonment and The Constitution of Zimbabwe has an impact on mining rights. It allows for the right to private property and the right to a clean envi- Relinquishment ronment.

16.1 Are there any provisions in mining laws entitling the 14 Taxes and Royalties holder of a right to abandon it either totally or partially?

14.1 Are there any special rules applicable to taxation of Yes. A holder may abandon his rights upon written application to exploration and mining entities? the Board through the Mining Commissioner.

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16.2 Are there obligations upon the holder of an If a Mining Commissioner has reason to believe that the holder of a registered mining location is using wasteful mining methods or exploration right or a mining right to relinquish a part thereof metallurgical processes, he shall inspect the registered mining loca- after a certain period of time? tion forthwith and report to the Board accordingly, which can cancel such mining rights. There are none. Cancellation of rights may also occur, if the Minister has reason to believe that a miner: 16.3 Are there any entitlements in the law for the State to ■ has failed, within a reasonable period after commencing mining operations, to declare any output from his mining location; cancel an exploration or mining right on the basis of failure to ■ has knowingly rendered a false return or declaration regarding comply with conditions? the output from his mining location; or ■ has, in relation to his mining location or the output thereof, Yes. There are a number of circumstances under which the State contravened the Gold Trade Act [Chapter 21:03]; or the Precious will be entitled to do this. Principally, where there is no compliance Stones Trade Act [Chapter 21:06], or the Minerals Marketing with the conditions set out in a special grant or mining lease, the Corporation of Zimbabwe Act [Chapter 21:04], whether or not Mining Commissioner of the Mining Affairs may take action to he has been convicted thereof by a court, cancel. then the Minister may cause the cancellation of the mining rights.

Nikita Madya joined the firm on 1 July 2000 and became a partner on 1 July 2003. He heads the firm’s Energy, Infrastructure and Natural Resources Department. He has a large commercial practice and advises several listed and unlisted companies in relation to acquisitions, mergers, disposals and various types of contracts. He is currently involved in greenfield projects in the energy sector with work covering all aspects including the construction elements involved in such projects. He has handled several completed transactions for companies listed on the Zimbabwe Stock Exchange, including share option schemes, rights issues, mandatory offers to minorities, Zimbabwe Stock Exchange Rules compliance and related matters. He has acted and continues to act as local counsel for a number of international law firms handling investment transactions into Zimbabwe. He is also involved in advising local, regional and international financial institutions in various loan transactions.

Wintertons Tel: +263 242 250113 26 Beverly Corner, 11 Selous Avenue Email: [email protected] Harare URL: www.wintertons.co.zw Zimbabwe

Wintertons – formerly Winterton, Holmes and Hill – was founded in 1902 and provides a full array of legal services. Our commitment is to deliver the highest quality legal services for our clients. We understand the importance of accurately interpreting our clients’ needs and delivering quick, reliable and cost-effective legal advisory and representation services to our clients. We pride ourselves on being a modern, full-service, commercial law ﬁrm. Our mixture of youth and experience enables us to maintain stability whilst creating innovative solutions for our customers’ needs. Wintertons has been highly recommended as a Leading Firm in General Business Law and its Partners have been rated consistently as Leading Lawyers by Chambers Global over the past decade. www.wintertons.co.zw

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