It came to the attention of the Rwandan authorities that many investors who were granted mining concessions left them unexploited, thus wasting potential exploitations. The reasons behind this behaviour reside in the current legislation, which allows potential investors to temporarily stop exploration activities after duly giving notice to the competent ministry.
The Government therefore decided to introduce a new mining bill.
The initial version of the mining bill was highly controversial. The bill notably required permit holders to spend minimum expenditure and, upon failure to do so without justification, that sum would be deemed to be a debt due to the Government (former article 16). Moreover, under this initial version of the mining bill the duration of valid prospecting permits was reduced to six (6) months when in other countries, such as Kenya and Uganda, prospecting permits are awarded for one (1) year (former article 22). Finally, this initial version of the mining bill confirmed the “Royalty Tax”, a tax with a rate equal to 4% of the value of basic metals and 6% of the value of gold and diamonds.
This initial version of the bill was heavily criticized by mining companies, such as Rogi Mining Rwanda, who argued that articles 16 and 22 would discourage investments in the mining sector. Mining operators also argued that the Royalty Tax was an unnecessary cost during the crisis.
This criticism was heard by the Government, who recently removed article 22 and replaced article 16 of the initial version of the bill. According to the new article 24 1) c) “the Minister may suspend or cancel a mineral license if the holder [...] fails to meet the holder’s minimum work or expenditure obligations”. Instead of imposing a financial burden, the new version of the bill provides a strong incentive for operators to abide by the minimum expenditure requirements. In case of default, mining operators would not be subject to a financial burden but might loose their mineral license. Furthermore, under the new version of the mining bill each concessionaire will have to sign a contract with the Government, by which he will agree to a number of conditions designed to avoid idle investments.
With regard to the Royalty Tax provision, it is currently being reviewed by the Ministry of Finance, which will adopt a separate legal text on it. We will have to wait for this new text to know whether or not the initial provision of the mining bill on this tax will be maintained or amended.
The mining bill was finally adopted by the Cabinet on 6 February 2013, and is scheduled to be discussed and voted by Parliament by June 2013.