Mining law survey 2015

MINING LAW SURVEYFirst published 2015 Copyright Notice The content of this handbook is subject to copyright protection. Reproduction of the content, or any part of the content, is prohibited without prior consent from Webber Wentzel. Disclaimer The information contained in this handbook is provided for general information purposes only. It does not constitute legal or other professional advice. Whilst reasonable steps were taken to ensure the accuracy and integrity of the information contained in this handbook (as at date of printing), we accept no liability or responsibility whatsoever if any information is, for whatever reason, incorrect or corrupted. We further accept no responsibility for any loss or damage that may arise on reliance on the information contained in this handbook. TABLE OF CONTENTS Angola 2 Botswana 12 Republic of the Congo 22 Cote D’ Ivoire 30 Democratic Republic of Congo (DRC) 42 Ethiopia 50 Gabon 58 The Republic of Ghana 66 Kenya 76 Liberia 84 Madagascar 94 Mozambique 102 Namibia 114 Republic of Guinea 124 Senegal 132 South Africa 140 United Republic of Tanzania 158 Zambia 168 Zimbabwe 1762 3 ANGOLA 1.1 Mining Title Natural resources, either in solid, liquid or gas state, found in the soil, subsoil, territorial sea, exclusive economic zone and continental shelf under the jurisdiction of Angola are the property of the Angolan State, which shall determine the conditions for granting of rights, research and exploration, pursuant to the Constitution, domestic and international Law. Furthermore, geological information belongs to the State and entities carrying out survey operations without holding a mining right are obliged to comNatural resources, either in solid, liquid or gas state, found in the soil, subsoil, territorial sea, exclusive economic zone and continental shelf under the jurisdiction of Angola are the property of the Angolan State, which shall determine the conditions for granting of rights, research and exploration, pursuant to the Constitutmunicate such activities to the State and hand over all collected information to the latter. All geological information collected is to remain strictly confidential. 1.2 Regulatory authority • ENDIAMA - The National Concessionaire for Diamonds. • Ministry of Geology, Mines and Industry (MGMI). 1.3 Exploration and Mining Laws and Regulations • Law 31/11 of 23 September - Mining Code (MC). OBS: The MC came into force on 22 December 2011 compiling all previous legislation that applied to mining activities thus facilitating the access and the comprehension of the rules and procedures that apply to particular mining activities. 1.4 Restrictions related to: 1.4.1 Foreign Investments Mining is subject to a specific investment regime under the MC (Mining activities are not subject to the general Private Investment Law - which is applicable to any other economic, 1. MINING LAW ISSUES commercial or industrial activity/sector with no special legal regimes; by rule; in Civil Law jurisdictions a Special Law derogates the General Law). Investments must be carried out under an investment contract which must be approved by the MGMI. Where the projected investment exceeds USD25 million, the approval must be given by the Cabinet. Only persons/ entities with presence and tax registration in Angola may be eligible for exploration or mining rights. 1.4.2 Commodities Mining title holders have the right to freely trade products resulting from their mining activities, subject to compliance with rules governing the sales of minerals and purchase and sale agreements. Nevertheless, import and export of minerals require specific authorization according to the mining code, which compiles all previous legislation that applied to mining activities thus facilitating the access and the comprehension of the rules and procedures that apply to particular mining activities. For strategic minerals, a specific, more stringent regime applies, including, for diamonds, certification in accordance with the Kimberly Process and sale through a State-appointed agency. Gold, diamonds and radioactive minerals (the State can designate others) can be allocated exclusively to a specific public entity that can exercise these rights on a nation-wide basis. 1.5 Licence holder Corporate entity (joint ventures permissible) Joint ventures are permitted. 4 5 Any type of partnership is allowed (incorporated or unincorporated JV), nevertheless it is important to mention that, either partnership agreement has to be previously approved by the competent authority. In establishing such partnerships, preference must be given to national entities/ persons subject to the applicable laws. Moreover, partners have to express in the contract their responsibility to comply with all obligations related to the performance of mining rights. Jurisdiction in which incorporated The licence holder must be incorporated and registered for tax purposes in Angola. Local participation (BEE / indigenisation) No local participation requirement. Nevertheless, the holder of mining rights shall give preference to the hiring of national employees living in the surroundings of the concession areas and ensure they are granted with proper training. Provided that the prices are not 10% higher and that the same products are provided in a timely manner (up to eight working days), preference shall be given to the acquisition of goods and services from local suppliers to the extent the quality is compatible with the economics, safety and overall efficiency of the project. State ownership In consideration for granting mining rights, the Angolan State shall be entitled to compensation in the form of (a) equity participation of not less than 10% in the company that conducts the relevant activities; and/or (b) in-kind allocations of the minerals to be extracted. A combination of these two modalities may also be used. 2. LICENSING SCHEME Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Authorisation required Yes. Yes. Yes. Validity of Licence 5 Years 5 Years 35 years. Renewable Yes Yes Yes Exclusivity of Licence No No Yes Transfer of Licence Yes. An authorisation from the MGMI is required Yes. An authorisation from the MGMI is required. Yes. An authorisation from the MGMI is required. NOTE: It is mandatory to establish communication/ consultancy channels with local communities every time the mining activities have a potential detrimental effect to the communities’ material, cultural or historical assets. The holders of mining rights have the obligation to resettle local communities in case mining activities cause any habitation damage. In such resettlement cases the communities’ habits, traditions and other cultural aspects need to be taken into account by the holder of the mining rights. (Social Licence to Operate).6 7 3.1 Exclusive rights from exploration to mining Yes. 3.2 Documentation/ Reports required for approval Exploration/mining plans, work reports required for each of the mining titles. 3.3 Approval time for grant of mining licence 271 days. 4.1 Applicable Laws and Regulations • Law 5/98 of 19 June – Environment Law “EL”. • Decree 59/07 0f 13 July – Regulation on Environmental. • Licensing. • Decree 51/04 of 23 July – Regulation on Environmental. • Impact Assessment. • Decree 01/10 of 13 January – Regulation on Environmental. • Audits. • Mining Code. 4.2 Environmental Impact Assessment Yes. The approval, by the Ministry of Environment, of an Environmental Impact Assessment prepared by the mining operator is a pre-condition for the obtaining of exploration rights 4.3 Community Consultation Yes 3. SECURITY OF TENURE 4. ENVIRONMENT REGULATION 4.4 Rehabilitation Fund / Closure Fund In addition to the statutory reserves required under commercial legislation, mining companies are required to create a legal reserve of 5% of the invested capital to cover the costs for mine closure and environmental rehabilitation. 5. TAXES / EQUITY 5.1 Corporate tax rate 25% of the annual net income. 5.2 Dividend tax 10% 5.3 Royalties Between 2% to 5%, depending on the type of mineral. 5.4 Capital Gains tax • For corporate tax purposes, worldwide capital gains are treated as ordinary business income. • Capital gains from the sale of shares, quotas and other corporate rights do not attract investment income tax. • Sale of fixed Assets: 35%. • Sale of Shares or other instruments generating investment income not taxable for Industrial Tax or personal tax purposes (e.g. certificates of deposit of securities, the ballots of debentures, coupons, rights, subscription receipts and split certificates relating to securities, trade notes): 10%.8 9 6. FOREIGN INVESTMENT INCENTIVES 6.1 Do they exist Yes 6.2 Governing Legislation • Mining Code. • Law 20/11 of 20 May – Law on Private Investment (subsidiary legislation). • Law 1/99 of 23 April – Foreign Exchange Law. (Subsidiary legislation). 6.3 Authority • Ministry of Geology, Mines and Industry in coordination with the Ministry of Finance. • National Authority for Private Investment. 6.4 Incentives Provided Investment guarantees: • No expropriation, save for public interest and against fair compensation in accordance with applicable laws; and • No cancellation of licences without a due administrative or judicial process. Customs duties: The importation of equipment intended exclusively for prospecting, exploration, reconnaissance, mining and beneficiation is exempted from customs duties, provided that such equipment is not manufactured in Angola or, if available, the same does not have the recommended quality or costs 10% more than the imported equipment. Fiscal incentives and other customs incentives: Obtainable upon request to the Ministry of Finance during the negotiations of an investment project, provided that the interested party undertakes to make certain notable contributions to the national economy, e.g.: purchase of local goods and services, increase in the country’s exports, skills transfer, local beneficiation, among others. Foreign exchange: Investors are allowed to repatriate capital, subject to an authorisation from the Angolan Central Bank. This is subject to a general condition that each investor must make a minimum investment (see section 6.4 below). However, commencement of repatriation of capital can be delayed up to three years from the implementation of investment projects if the amounts invested do not fall within a certain threshold defined for each of the various “development zones” created for purposes of the granting of incentives. Nevertheless, mining companies are subject to the following foreign exchange control rules: • Payment of import/export operations must be entirely made through an authorized local bank; • All export related proceeds must be deposited in local bank accounts; and • Guarantees or escrow - type accounts with foreign financial institutions may only be held for the purpose of debt servicing relating to loans previously approved by BNA (Banco Nacional de Angola). 6.5 Minimum Investment Required Despite that the MC provides for a specific foreign investment regime, the applicable thresholds are in fact established under the general investment regime. The minimum investment amount is USD 1,000,000.00.10 11 7. LABOUR LAWS Restrictions on employment of foreign workers Titleholders are required to ensure the employment and technical training of Angolans, subject to the applicable labour laws. Employment of foreigners is only permitted where there are no nationals qualified for the position in question. Furthermore, companies may only employ non-resident foreigners, albeit unpaid, where their total staff, if comprised of more than five employees, consists of at least 70% of Angolan nationals. Therefore, only 30% of a company’s employees can be non-resident foreigners. This is the so-called “principle of Angolanisation”. Nevertheless, when recruiting specialised staff, or certain type of skilled staff that are normally unavailable in the Angolan market, the employer may request an authorisation from the Labour Administration to hire non-resident foreigners in a number greater than the above mentioned quota. Resource Nationalism Trends The current mining legislation and regulations do not provide any extreme resource nationalism trend. Resource Nationalism describes a government’s effort to gain greater benefit from its natural resources sometimes to the detriment of private companies; however, the provisions on the mining legal framework in Angola only protect its national interest not to the extreme of prejudicing private companies’ interests. 8. RESOURCE NATIONALISM12 13 BOTSWANA 1.1 Mining Title The right of ownership in minerals is vested in the Republic of Botswana. 1.2 Regulatory authority Ministry of Mineral, Energy and Water Resources. 1.3 Exploration and Mining Laws and Regulations • Mines and Minerals Act of 1999; • Unwrought Precious Metals Act; • Precious and semi-precious stones (Protection) Act [CAP 66.03]; • Petroleum (Exploration and Production Act) [CAP 67.01]; • Mines, Quarries, Works and Machinery Act [CAP 44:02]; • Explosives Act and Regulations [CAP 24:02]; • National Monuments and Relics Act [CAP 59:03]; • Mines and Minerals (Prospecting and Leasing Charges) Regulations [CAP 66:01]; • Mines and Minerals (Health, Mortality and Labour Returns) Regulations [CAP 66:01]; and • Mines and Minerals (Demarcation of Mining Lease Areas) Regulations [CAP 66:01]. 1.4 Restrictions related to: 1.4.1 Foreign Investments No. 1. MINING LAW ISSUES 1.4.2 Commodities The Mines and Minerals Act does not apply to petroleum. 1.4.3 Licence holder Corporate entity Subject to certain requirements contained in the Mines and Minerals Act, the licence holder may be a corporate entity, individual or joint venture. Jurisdiction in which incorporated A corporate entity must be incorporated in Botswana. An individual must be a citizen of Botswana or ordinarily resident in Botswana for a period of four years or such other period as may be prescribed. Local participation (BEE/ indigenisation) There is no legislated requirement regarding BEE or indigenisation. However, the holder of a mineral concession is required to give preference to materials and products made in Botswana, service agencies located in Botswana and owned by Botswana. There is a citizen empowerment policy which has not yet been legislated. State ownership The Botswanan Government has the option of acquiring up to 15% working interest participation in a proposed mine. The percentage of government ownership in respect of a diamond mine is negotiated with the prospective licence holder.14 15 2. LICENSING SCHEME Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Authorisation required N/A. • Prospecting licence: yes. • Retention licence: yes. Yes. Validity of Licence N/A. • Prospecting licence: 3 years. • Retention licence: 3 years. 25 years. Renewable N/A. • Prospecting licence: yes. • Retention licence: yes – a retention licence may only be renewed once, for a period not exceeding 3 years, at any time not later than 3 months before expiry. • During the renewable period third parties can be authorized upon request to have access to the area for the purposes for collecting samples and data required for the purposes for a mining licence. Yes. Renew period not exceeding 25 years. Exclusivity of Licence N/A. • Prospecting licence: yes. • Retention licence: yes. Yes. Transfer of Licence N/A. • Prospecting licence: yes, with the consent of the Minister. • Retention licence: yes, with the consent of the Minister. Yes. With the consent of the Minister. Change of control/ shareholding N/A. • Prospecting licence: yes, with the consent of the Minister. • Retention licence: yes, with the consent of the Minister. Yes. With the consent of the Minister. Community Consulta - tion N/A. No. No. Mineral Permit N/A. N/A. Up to 5 years of scale mining operations for over an area not exceeding 0.5 sqkm per permit (“small scale mining” means the international mining of minerals other than diamonds in operations involving the mining and processing of less than 50 000 tonnes of raw ore per annum and in which the overall investment in fixed assets does not exceed R1 million). Diamond Cutting Licence (DCL) Up to 10 years. Allows holder to cut and polish rough diamonds in Botswana.16 17 Diamond Toolmakers Licence Up to 10 years. Entitles holder to get rough or uncut diamond not suitable for polishing, in tools or to crush or alter such diamond for that purpose or purpose of trade. Precious Stones Deal - ers Licence (PSDL) Up to 5 years. Entitles holder to deal in rough or uncut precious stones as a buyer, seller, importer or exporter. Semi-Precious Stones Up to 1 year. Allows holder to buy or sell semiprecious stones. Export Permit Permit required to export rough diamonds and it must be issued together with a Kimberly Process Certificate (KP Certificate). Process semiprecious stones also require export permits. 3. SECURITY OF TENURE 4. ENVIRONMENT REGULATION 3.1 Exclusive rights from exploration to mining Yes. However, where the President considers that any land is required to secure the development or utilization of the mineral resources of Botswana, he may compulsorily acquire that land. 3.2 Documentation/ Reports required for approval Yes. The forms to be completed for a licence or renewal application contain details regarding the documentation and/or reports to be submitted for approval. 3.3 Approval time for grant of mining Licence Law does not provide a timeframe. According to common practice, the proposed timeframe is four months for any mineral except diamonds which takes approximately six months or more if timeframe is extended by the Minister. The government’s target time frames, however, indicate that prospecting licences should be granted or rejected within 60 days, diamond export permits within two days, small-scale mining concessions within 15 days, and large-scale mining concessions within 20 days. 4.1 Applicable Laws and Regulations • The Environmental Impact Assessment Act, 2011; • The Mines and Minerals Act [CAP 66:01]; • Botswana National Water Master Plan, 1992; • Water Act, 1968; • Atmospheric Pollution Prevention Act, 1971; • Waste Management Act, 1998; • Forest Act, 1981;18 19 • Wildlife Conservation and National Parks Act, 2002; • Mines, Quarries, Works and Machinery Act, 1978; • Agricultural Resources Conservation Act, 1974; • Noxious Weeds Act, 1916; and • Monuments and Relics Act, 2001. 4.2 Environmental Impact Assessment Yes, the applicant for a mining licence or a retention licence or any renewal of either is required to prepare and submit a comprehensive Environmental Impact Assessment as part of the Project Feasibility Study Report. 4.3 Community Consultation A notification in the Gazzette and in a newspaper circulating at least once a week for four consecutive weeks, inviting comments or objections from persons who are most likely to be affected by the proposed activity. The competent authority may hold a public hearing if after examining the environmental impact statement, the competent authority is of the opinion that the activity is of such a nature that the public should have the opportunity to make submissions or comments at a public hearing or the public concern over the activity is that the activity may have a significant adverse impact on the environment. 4.4 Rehabilitation Fund/ Closure Fund The ‘Guideline for Preparing Environmental Impact Assessment Reports for Mining Projects’ provides that an environmental management plan for mining operations must be approved by the competent authority and must set out how financial provision is made for the decommissioning and closure phases of the mining operation. 5.1 Corporate tax rate 22% for a resident company; 30% for a non-resident company. Mining taxable income (excluding diamonds) for a resident company can range between 22% to 55%, or the tax rate derived from the formula 70-1500/x, where x (%) = taxable income/gross income. (VITR is for non-diamond mineral, diamond tax regime is negotiated and VITR can be applied if there is an agreement). 5.2 Dividend tax A withholding tax of 7.5% is levied on all dividends paid by a resident company to a resident or non-resident; dividends received from outside Botswana are subject to a flat 15% tax. 5.3 Withholding Tax Payment of residents of Dividend Interest Royalties Management/ Consultancy/ Technical Fees France 5% if beneficial owner is a company and holds 25% or more of shares. 12% in all other cases. 10% 10% 7.5% Mauritius 5% if beneficial owner is a company and holds 25% or more of shares. 10% in all other cases. 12% 12,5% 15% Namibia 10% 10% 10% 15% South Africa 10% if beneficial owner is a company and holds 25% or more of shares. 15% in all other cases. 10% 10% 10% Sweden 15% 15% 15% 15% 5. TAXES / EQUITY20 21 UK 5% if beneficial owner is a company and holds 25% or more of shares. 12% in all other cases. 10% 10% 7.5% Seychelles 5% if beneficial owner is a company and holds 25% or more of shares. 10% in all other cases 7.5% 10% 10% Barbados 5% if beneficial owner is a company and holds 25% or more of shares. 12% in all other cases 10% 10% 10% Zimbabwe Same as Seychelles 10% 10% 10% India 7,5% beneficial owner is a company and holds 25% of more of shares. 10% otherwise 10% 10% 10% 5.4 Mine Rehabilitation Tax Resident and Non-resident companies 10%. 5.5 Royalties Payable on the percentages of gross market value as follows: • 10% on precious stones; • 5% on precious metals; • 3% on other minerals or mineral products. Capital Allowances 100% depreciation of capital expenditures. Import Duty Mining equipment and spared are zero-rated items, otherwise duties are payable. Value Added Tax 12% applies to all but zero-rated items, which includes export of minerals, VAT refunds are available upon re-export of items within six months of being brought into the country. Taxation for Downstream processing (cutting, polishing and refining of minerals) 15% tax rate (basic rate of 5% and an additional company tax rate of 10%). Development Order 0-15% for downstream activities, mineral beneficiation projects such as refineries. Deductions allowable Deductions are allowable: • in expenditure wholly, exclusively and necessarily incurred, amongst others, (i) in Botswana, during the tax year by that person or any associated person in the production of his or her assessable income from mining operations, (ii) outside Botswana, during the tax year by that person or any associated person in the production of his or her assessable income from mining operations to the extent specified in the Twelfth Schedule, and (iii) during the tax year by that person on prospecting operations carried on by him or her in Botswana. • any liabilities to pay royalties under the Mines and Minerals Act and under the Petroleum Act which arose during that tax year. • For the tax year in which that person commences mining operations, an amount equal to any assessed loss incurred by him or her in respect of prospecting operations carried out prior to the commencement of his or her mining operations. • •22 23 REPUBLIC OF CONGO 1.1 Mining Title Mining rights, even when granted to the owners of the surface land, are separate rights from surface land ownership. The Congolese government protects and guarantees the use of the national mining assets defined in the Mining Code in the interest of national development. The Constitution of the Republic of Congo provides that minerals and fossils in the soil and sub-soil of the country are the property of the State and it is the State who grants certificates, and grants authorisation for transfer or leasing out. 1.2 Regulatory authority Ministry of Mining (Ministère des Mines). 1.3 Exploration and Mining Laws and Regulations Code Minier Loi n° 4-2005 du 11 avril 2005 (Mining Code Law n° 4-2005 of 11 April 2005) Décret n° 2007-274 du 21 mai 2007 fixant les conditions de prospection, de recherché et d’exploitation des substances minerals et celles d’exercice de la surveillance administrative (Decree n° 2007-274 of 21 May 2007 setting the conditions for reconnaissance, prospecting and exploitation of mineral substances and the conditions for the exercise of administrative surveillance) Décret n° 2007-293 du 31 mai 2007 fixant les règles techniques d’exploitation des carrières de géomatériaux (Decree n° 2007-293 of 31 May 2007 establishing technical guidelines for quarries and geomaterials mining) 1. MINING LAW ISSUES Loi n° 24-2010 du 30 décembre 2010 fixant le taux et les modalités de paiement des redevances (Law n° 24-2010 of 30 December 2010 setting out the rates and conditions for payment of royalties). 1.4 Restrictions related to: 1.4.1 Foreign Investments No. 1.4.2 Commodities No. 1.5 Licence holder Corporate entity Joint ventures are permissible and will be recognised in the Mining Investment Agreement between the government and investor(s). Jurisdiction in which incorporated The Mining Code does not prescribe the nationality or place of incorporation of applicants. Local participation (BEE / indigenisation) None. State ownership The State is entitled to at least 10% shareholding in the mining permit holder, governed by the contractual arrangements between the State and the licence holder.24 25 2. LICENSING SCHEME Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Authorisation required Yes. “Prospecting authorisation” (“autorisation de prospection”) Note, however, that “general interest reconnaissance work and general cartography work” are performed by the State. Yes. “Mining exploration permit” (“permis de recherche minières”) Yes . “Mining authorisation” (“autorisation d’exploitation”) or “industrial mining authorisation” (“autorisation d’exploitation industrielle”) in respect of small mines / quarries Yes “mining permit” (“permis d’exploitation”) in respect of large mines Validity of Licence One year Three years Small mines/ quarries: Five years Large mines: up to 25 years Renewable Yes. Once for one year Yes. Twice for two years each Yes. Small mines/ quarries: five years each Yes: Large mines: 15 years each Exclusivity of Licence No Yes Yes Transfer of Licence No Yes (Ministry approval required) Yes (Ministry approval required) Change of control/ shareholding Yes (notification to Minister required) Yes (prior approval from Minister required) Yes (prior approval from Minister required) 3.1 Exclusive rights from exploration to mining Not exclusivity, but “priority”. 3.2 Documentation/ Reports required for approval Yes (including various corporate documents; technical-economic feasibility study; environmental impact study) 3.3 Approval time for grant of mining Licence Not specified. 4.1 Applicable Laws and Regulations • Code Minier Loi n° 4-2005 du 11 avril 2005 (Mining Code Law n° 4-2005 of11 April 2005) • Loi n° 003/91 du 23 avril 1991 sur la protection de l’Environnement (Environmental Protection Law no 003/91 of 23 April 1991) • Décret n° 86/775 du 7/06/86 rendant obligatoires les Etudes d’Impact sur l’Environnement en République Populaire du Congo (Decree n° 86/775 of 7/06/86 making Environmental Impact Studies obligatory in the People’s Republic of Congo) • Décret n° 2009-415 du 20 novembre 2009 fixant le champ d’application, le contenu et les procédures de l’étude et de la notice d’impact environnemental et social (Decree n° 2009-415 of 20 November 2009 setting the field of application, the content and the procedure of the environmental and social impact studies and notice) • Décret n° 2009-1335 du 30 novembre 2009 portant création et fixant les modalités d’alimentation et de fonctionnement du Fonds de réhabilitation des sites 3. SECURITY OF TENURE 4. ENVIRONMENT REGULATION26 27 5. TAXES / EQUITY 5.1 Corporate tax rate 33% (30% for mining companies) 5.2 Dividend tax 20% 5.3 Royalties 20% 5.4 Capital Gains tax 33% miniers (Decree n° 2009-1335 of 30 November 2009 concerning the creation, and setting the methods of payment and functioning, of the Rehabilitation Funds of mining sites) 4.2 Environmental Impact Assessment Yes (mining permit) 4.3 Community Consultation Yes. 4.4 Rehabilitation Fund / Closure Fund Yes. 6.1 Governing Legislation • Loi n°6-2003 du 18 janvier 2003 portant Charte des Investissements (Law n° 6-2003 of 18 January 2003 Investment Code) • Décret n° 2004-30 du 18 février 2004 Modalités d’agrément des entreprises aux avantages de la Charte des Investissements (Decree n° 2004-30 of 18 February 2004 relating to the procedure for approval of the benefits provided by the Investment Code) • Décret n° 2003-57 du 22 avril 2003 portant création, attributions et composition de la Commission nationale des investissements (Decree n° 2003 – 57 of 22 April 2003 on the creation, attributions and composition of the National Investment Commission) • CEMAC Charte des Investissements Règlement n° 17/99/CEMAC-20-CM-03 du 17 décembre 1999 (CEMAC Investment Code n° 17/99/CEMAC-20 - CM-03 of 17 December 1999) 6.2 Authority Minister of Economy and Finance 6.3 Incentives Provided Investment Regime G For establishment period and first three operational years: • the CEMAC customs code regarding the setting up of activities oriented towards export; • customs duties exemptions; and • reduction of 50% of the registration duties for setting up and capital increases, mergers and transfer of shares. 6. FOREIGN INVESTMENT INCENTIVES28 29 7. LABOUR LAWS Restrictions on employment of foreign workers • Foreign workers must first obtain a 3 month business visa; then, once in the ROC, must apply for a work permit. • Preference must be given to local employees with the same qualifications and skills; a training program must be set up for local employees; promotion of the use of local products and services when available under equal conditions. Resource Nationalism Trends • The State is entitled to at least 10% shareholding (participation in kind) in the licence holder, and may purchase additional shares. • Preference must be given to local employees and local products and services (when comparable to foreign employees, products and services); employees must be trained. 8. RESOURCE NATIONALISM For first three operational years: • exemption or reduction of 50% of corporate income tax; • authorisation to use the declining balance depreciation method; • authorisation to carry forward losses for the following three years; and • 0% VAT on exports Investment Regime S In addition to benefits of Investment Regime G, the Investment Code provides incentives for export, reinvestment of profits, setting up operations in less developed areas and investments of a social & cultural nature. Tax benefits include exemption or reduction of 50% of corporate income tax. 6.4 Minimum Investment Required • Investment Regime G: FCFA100 000 000.00 • Investment Regime S: FCFA30 000.00 – FCFA99 999 999.0030 31 CÔTE D’ IVOIRE 1.1 Mining Title Mineral substances, mineral waters and geothermal deposits contained in the subsoil or on the surface of Côte d’Ivoire belong to the State. 1.2 Regulatory authority The Ministry of Mines, Petroleum and Energy and the Directorate General of Mines and Geology are tasked with the implementation of the Mining Code of Côte d’Ivoire. 1.3 Exploration and Mining Laws and Regulations • Law no 2014-138 of 24 March 2014 constituting the mining code in Côte d’Ivoire (Loi n° 2014-138 du 24 mars 2014 portant Code Minier) (the Mining Code); • Mining Decree no 2014-397 of 25 June 2014 (the Mining Decree) ( Décret n° 2014-397 du 25 Juin 2014 déterminant les modalités d’application de la loi n° 2014-138 du 24 mars 2014 portant Code minier); and • Ordinance no 96-600 of 9 August 1996 setting out the tax and mining fees (Décret n°96-600 du 9 août 1996 fixant les droits fixes, les redevances superficiaires, les taxes proportionnelles relatifs aux activités régies par le Code Minier). 1.4 Restrictions related to: 1.4.1 Foreign Investments - No. 1.4.2 Commodities No. However all holders of mineral substances useful for research or operations related to atomic energy must declare this to the Minister of Mines. 1. MINING LAW ISSUES 1.5 Licence holder Corporate entity (joint venture permissible) - Yes. Jurisdiction in which incorporated Prior to being granted a mining permit, a foreign incorporated licence holder need not register as a company under the law of Cote d’Ivoire. However once it is granted a mining permit a company must, within 90 days, incorporate a company under the law of Cote d’Ivoire and request the transfer of the mining licence to said entity, the mining permit will then be transferred to this entity. Local participation (BEE / indigenisation) The State can require that the grant of a mining licence be subject to the mining company setting aside a minimum of 5% of its shareholding for Ivorian citizens, only where the underlying exploration licence was granted in terms of article 37 of the Mining Code and the State contributed to the financing of the exploration phase. State ownership The State is entitled to an equity interest of 10% in the companies holding a ‘permis d’exploitation’ (mining licence). This state participation is a free carry percentage that must remain at 10% and thus cannot be diluted per article 7 of the Mining Code. A further equity interest may be agreed upon by way of negotiation, however this additional participation of the State cannot exceed 15% (although the shareholding of state enterprises and companies that are majority owned by the state are not included in calculating the percentage of state ownership.)32 33 2. LICENSING SCHEME Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase (Exploitation permit and Concession) Authorisation required Yes Yes Yes Validity of Licence One year. Fixed term of four years. Twenty years maximum term. Renewable Yes, for a further one year term. Yes. Renewable twice for three years per renewal. An additional renewal may be granted for a period not exceeding two years if needed for the completion of the feasibility study. Yes. Renewable for ten year periods. Exclusivity of Licence No Yes Yes Pre-approval of any change in control Yes (change of control is defined as a majority, i.e. over 50%, of the share capital of the title holder). The acquisition of between 5% and 50% of share capital must be notified to the Ministry of Mines. Yes (change of control is defined as a majority, i.e. over 50%, of the share capital of the title holder). The acquisition of between 5% and 50% of share capital must be notified to the Ministry of Mines. Yes (change of control is defined as a majority, i.e. over 50%, of the share capital of the title holder). The acquisition of between 5% and 50% of share capital must be notified to the Ministry of Mines. Transfer of Licence Not permitted. Yes. With the prior approval of the Minister of Mines. Yes. With the prior approval of the Minister of Mines. 3.1 Exclusive rights from exploration to mining Yes. 3.2 Documentation/ Reports required for approval An applicant for an exploration permit must show proof of having: • carried out at least to mining exploration projects in the 10 years previous to the application. Projects where the applicant held 35% or more of the share capital in the exploration company or has more than 12 years’ experience in the mining sector are attributed to the applicant; • a Technical Manager with at least 7 years professional experience in mining exploration and having conducted at least two mining exploration projects. Any change in the technical manager must be approved by the Ministry of Mines; and • sufficient financial resources to carry out the work programme associated with the mining exploration, as proved by the creation of bank reserves in a first tier bank in Cote d’Ivoire. • An applicant for a mining licence must show proof of having: • an exploration licence; • a feasibility study showing proof of a deposit existing in the licence area. The feasibility study thus comprises: • an evaluation of the size and quality of exploitable reserves; 3. SECURITY OF TENURE34 35 4.1 Applicable Laws and Regulations The Mining Code and Law no 96-766 of 3 October 1996 constituting the environmental code (the Environmental Code). 4.2 Environmental Impact Assessment Yes, any applicant for a mining licence, industrial mining licence or semi-industrial mining licence must submit an Environmental and Social Impact Assessment per article 141 of the Mining Code. 4.3 Community Consultation Yes, a public inquiry is required for carrying out an Environmental Impact Assessment. 4. ENVIRONMENT REGULATION 5. TAXES / EQUITY 5.1 Corporate tax rate 25% 5.2 Dividend tax 12% generally and 10% for listed companies. 5.3 Royalties • 2.5% of the value of production for base metals; and • 3% of the value of production for precious metals, precious stones, diamonds and gold. • a determination of whether the deposit would need to undergo metallurgical treatment; • a programme outlining the construction plan for the mine as well as associated costs; • a socio-economic impact assessment report; • the complete financial projections for the mining period; • the community development plan; • An Environmental and Social Impact Assessment; and • any additional information as required by the relevant authority. 3.3 Approval time for grant of mining Licence Not specified in the Mining Code (but in practice it may take around six months). 4.4 Rehabilitation Fund / Closure Fund Yes, a tax is payable by mining companies into the Environmental National Fund (Additionally every mining licence must set up a rehabilitation fund, held in an escrow account at the Autonomous Amortization Fund, the ‘Caisse Autonome d’Amortissement’. 6. FOREIGN INVESTMENT INCENTIVES 6.1 Governing Legislation The Investment Code no 2012-487 of 7 June 2012, supplemented by the Mining Code, which together provide foreign investment incentives. 6.2 Authority The Centre for Investment Promotion and the Ministry of Mines. 6.3 Incentives Provided • All pre-approved materials, machines and equipment required at the exploration phase that are imported by the holder of an exploration licence and its approved sub-36 37 contractors are exonerated from customs duties as well as VAT. This exemption also applies to spare parts, but the value of spare parts cannot exceed 30% of the total CIF value of the imported machines and equipment. • Mining licence holders benefit from the following incentives: • All pre-approved materials, machines and equipment required at the exploration phase that are imported by the holder of an exploration licence are exonerated from all customs duties as well as VAT. This exemption also applies to spare parts, but the value of spare parts cannot exceed 30% of the total CIF value of the imported machines and equipment; • A mining licence holder is also exonerated from VAT until the date of commencement of commercial production. • The expatriate staff of the holder of a mining licence and of its approved sub-contractors are, with regards to their personal effects, exonerated from taxes for a period of one year from their entry into Cote d’Ivoire. • Exoneration from property tax on built and unbuilt land (excepting property revenue tax), as well as on refuse collection tax, for the validity period of the mining licence; • Exoneration from water use tax on operations conducted in the mining area, for the validity period of the mining licence; and • Exoneration from “patentes” tax for the extraction and sale of extracted material (excepting the transformation of material). • Exoneration from corporate income tax and Minimum Tax for a period of five years after the date of commencement of commercial production; • Exoneration from special equipment tax • Investment Code incentives • An investor can, at the investment (pre - mining stage) enjoy 40% -50% reduction on custom duties for all equipment and materials and first lot of spare parts (depending on the whether the investment is less or at least equal to the minimum investment figure and this after obtaining the approval of the Center for Investment Promotion). • In addition to this any investor at the investment stage, depending on the categorization of the area where he will make his investment (namely whether it is in A, B or C Zone), can be exempted, after agreement from the Center for Investment Promotion, from the following. • Zone A (exemption granted for the period of the agreement): • payment of commercial profit tax and noncommercial profit tax; • payment of business licence fees and other contributions; and • 50% of all taxes required to be paid by employers, excluding skills training tax and the additional tax for continued professional training. • Zone B (exemption granted for the period of the agreement): • payment of commercial profit tax and noncommercial profit tax; • payment of business licence fees and other contributions; and38 39 • 75% of all taxes required to be paid by employers, excluding skills training tax and the additional tax for continued professional training. • Zone C (exemption granted for fifteen years): • payment of commercial profit tax and noncommercial profit tax; • payment of business licence fees and other contributions; • 90% of all taxes required to be paid by employers, excluding skills training tax and the additional tax for continued professional training; • payment of property tax; and • payment of filing costs in case the company increases its share capital. [additional incentives are granted if the investment amount exceeds the higher threshold of FCFA 2 billion]: • After the investment stage, the investor may at the mining/ exploitation stage, depending on the categorization of the area where he will make his investment, be exempted from the following (after obtaining the approval of the Center for Investment Promotion). • Zone A (exemption granted for five years): • payment of commercial profit tax and noncommercial profit tax; • payment of business licence fees and other contributions; • payment of commercial profit tax and noncommercial profit tax; • payment of business licence fees and other contributions; • 90% of all taxes required to be paid by employers, excluding skills training tax and the additional tax for continued professional training; • payment of property tax; and • payment of filing costs in case the company increases its share capital. 6.4 Minimum Investment Required None for the exploitation/mining stage incentives set out in article 37 of the Investment Code. However a minimum investment of FCFA 500,000,000 is required to obtain the investment stage incentives set out in article 46 and FCFA 2,000,000,000 for those set out in article 47 of the Investment Code. 7. LABOUR LAWS Restrictions on employment of foreign workers • Preference to Ivorian workers within a minimum portion of 80% of the total workforce and a plan for the recruitment of Ivorians (‘l’ivoirisation’) must be submitted as soon as a mining licence is granted (both per article 42 of the Mining Decree). • Training programme and budget for training Ivorian workers must be set up as soon as mining operations begin, setting out training plan for Ivorian workers from exploration (including preliminary studies) to production (article 43 of the Mining Decree). • Foreigners require both a work permit and a residence permit (settlement visa for work purposes).40 41 Resource Nationalism Trends The new Mining Code that came into force on the 24th of March 2014 includes a new requirement for applicants for mining licences to submit a community development plan, which must include an investment plan. On the other hand the 10% free carry interest required to be reserved for the State under the previous mining code, has not been increased and additional tax incentives have been included in the new Mining Code. This is indicative of a balanced approach to resource nationalism that is emerging in many mining jurisdictions aiming to balance commercial realities (such as falling prices and demand for commodities) with the demands of their citizens for an increased share in mineral wealth. 8. RESOURCE NATIONALISM42 43 DEMOCRATIC REPUBLIC OF CONGO (DRC) 1.1 Mining Title The deposits of mineral substances, including artificial deposits, underground water and geothermal deposits on the surface or in the sub-soil or in water systems of the national territory, are the exclusive, inalienable and imprescriptible property of the State. 1.2 Regulatory authority Minister of Mines, Mining Registry (Cadastre Minier). 1.3 Exploration and Mining Laws and Regulations • Loi n°007/2002 du 11 juillet 2002 portant Code Minier (Law n° 007/2002 of 11 July 2002 establishing the Mining Code). • Décret n°038/2003 du 26 mars 2003 portant Règlement Minier (Decree n° 038/2003 of 26 March 2003 establishing the Mining Regulations). • Arrêté Ministériel n°0144/CAB.MIN/01/2013 du 17 avril 2013 portant sous-traitance des activités minières directes, connexes ou annexes des entreprises minières en République Démocratique du Congo (Ministerial Decree n°0144/CAB.MIN/01/2013 of 17 April 2013 regarding the subcontracting of direct mining activities, related or ancillary activities of mining companies in the Democratic Republic of Congo). • Arrêté Interministériel n°0122/CAB.MIN/MINES/01/2013 et n°782/CAB.MIN/Finances/2013 du 05 avril 2013 portant règlementation des exportations des produits miniers marchands (Inter-Ministerial Decree n°0122/CAB.MIN/ MINES/01/2013 and n°782/CAB.MIN/Finances/2013 of 1. MINING LAW ISSUES 05 April 2013, on the regulation of export of mining merchant products). • Arrêté Interministériel n°0327/CAB.MIN/MINES/01/2013 et n°855/CAB.MIN/FINANCES/2013 du 4 juillet 2013 modifiant et complétant l’Arrêté Interministériel n°0122/CAB.MIN/MINES/01/2013 et n°782/CAB.MIN/ Finances/2013 du 05 avril 2013 portant règlementation des exportations des produits miniers marchands. (InterMinisterial Decrees n° 0327/CAB.MIN/MINES/01/2013 and n° 855/CAB.MIN/FINANCES/2013 of 4 July, 2013 (“new Decree”) that amends and supplements the InterMinisterial Decree n°0122/CAB.MIN/MINES/01/2013 and n°782/CAB.MIN/Finances/2013 of 05 April 2013 on the regulation of export of mining merchant products). • Arrêté Interministériel n°0630/CAB.MIN/MINES/01/2013 et 1078/CAB.MIN/FINANCES/2013 modifiant l’arrêté interministériel 0122/CAB.MIN/MINES/01/2013 et 782/CAB.MIN/Finances/2013 du 5 avril 2013 portant règlementation des exportations des produits miniers marchands (Inter-Ministerial Decrees n°0630/CAB.MIN/ MINES/01/2013 and 1078/CAB.MIN/FINANCES/2013 amending interminsterial decree 0122/CAB.MIN/ MINES/01/2013 and 782/CAB.MIN/Finances/2013 of 5 April 2013, on the regulation of export of mining merchant products). • Arrêté Interministériel n°0027/CAB.MIN/MINES/01/2014 et 043/CAB.MIN/IPME/2014 portant réglementation de prestation des services de fourniture et d’approvisionnement des sociétés minières en République Démocratique du Congo (Inter-Ministerial Decree n°0027/ CAB.MIN/MINES/01/2014 and 043/CAB.MIN/IPME/2014 44 45 concerning the regulation of service provision and supply to mining companies in the Democratic Republic of Congo). 1.4 Restrictions related to: 1.4.1 Foreign Investments No. 1.4.2 Commodities No. 1.5 Licence holder Corporate entity Corporate entities and joint ventures are permissible. Jurisdiction in which incorporated Legal entities incorporated in the DRC; except for reconnaissance licence for which legal entities may be incorporated in another country. Local participation (BEE / indigenisation) No local participation requirement State ownership 5% state ownership in exploitation phase. 2. LICENSING SCHEME Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase (Exploitation permit and Concession) Authorisation required Yes. Reconnaissance certificate (attestation de prospection) Yes. Prospecting permit (permis de recherche) Yes. Exploitation permit (permis d’exploitation) Validity of Licence 2 years 4 years for diamond and other precious metals 5 years for other mineral substances. 30 years Renewable No Yes: • two times, for a duration of 2 years for diamonds and other precious metals • two times, for duration of 5 years for other mineral substances. Yes. Several times, for a duration of 15 years Exclusivity of Licence No Yes Yes Transfer of Licence Not provided Yes. Approval by Mining Registry required Yes. Approval by Mining Registry required Change of control/ shareholding Yes. No approvals needed. Yes. No approvals needed. Yes. No approvals needed. Community Consultation No No Yes46 47 3.1 Exclusive rights from exploration to mining Yes. 3.2 Documentation/ Reports required for approval Application forms and, for exploitation permits only, report on the findings during prospecting phase, feasibility study, technical development plan, environmental impact assessment, environmental management plan and results of public inquiry. 3.3 Approval time for grant of Mining Licence 30 working days. 4.1 Applicable Laws and Regulations • Mining Code and Mining Regulations; and • Loi n°11-009 du 9 juillet 2011 portant principes fondamentaux relatifs à la protection de l’environnement (Law n° 11-009 of 9 July 2011 regarding the fundamental principles for the protection of the environment). 4.2 Environmental Impact Assessment Yes, for exploitation licence only. 4.3 Community Consultation Yes, when applying for exploitation licence. 4.4 Rehabilitation Fund / Closure Fund Yes. 3. SECURITY OF TENURE 4. ENVIRONMENT REGULATION 6. FOREIGN INVESTMENT INCENTIVES 5. TAXES / EQUITY 5.1 Corporate tax rate 30% (this is a reduced rate for mining companies – since 1 January 2013 the general corporate tax rate is 35%). 5.2 Dividend tax 10% (this is a reduced rate for mining companies - the general rate on dividends to residents or non-residents is 20%). 5.3 Royalties Yes: 0,5% for iron or ferrous metals, 2% for non-ferrous metals, 2,5% for precious metals, 4% for precious stones, 1% for industrial minerals. 5.4 Capital Gains tax Gains on capital are taxed as part of corporate income at the applicable corporate tax rates. 6.1 Governing Legislation The Investment Code does not provide for foreign investment incentives in the mining sector. Those are provided by the Mining Code. 6.2 Authority Minister of Mines 6.3 Incentives Provided Reduced tax rate for mining companies: • Corporate income tax rate: 30% • Dividend withholding tax: 10 % • Exemption of withholding tax on interest paid on loans contracted abroad48 49 7. LABOUR LAWS Restrictions on employment of foreign workers • Requirement of work permit; • Special tax on salary of foreign workers; • Preference to be given to DRC citizens; and • Foreign workers may not constitute more than 2 - 2,5% of the labour force, depending on the category of the workers. Resource Nationalism Trends • The DRC is in the process of revising its 2002 Mining Code. In February 2013, a draft bill providing amendments to the Mining Code was circulated to the mining industry. From what has transpired so far, it seems that the new mining code, once adopted, will be resource nationalism inspired. Initial reports in preparation of the drafting of the new mining code mention increased state participation and substantially increased taxation among the key features of the new legislation. As at November 2014, no new mining code has been promulgated. • In April 2013, a new Ministerial Decree established a ban on the export of copper and cobalt concentrates, however: • a moratorium has been given to mining operators who already produce copper and cobalt concentrates, in order to give them time to comply with the ban. The moratorium is valid up to 31 December 2014; • during the moratorium period, mining operators producing copper and cobalt concentrates can transform minerals either in the DRC or outside the DRC; and • for transformation outside of the DRC, the approval from the Minister of Mines must be obtained. A copy of the contract with the foreign processing entity must be filed along with the approval request. • In June 2013, a Ministerial Decree granted exclusivity to DRC companies when mining companies established in the DRC subcontract their mining activities, related or ancillary activities. • A Ministerial Decree of February 2014 further provides that all mining companies established in the DRC are obliged to turn to the Congolese industries, small and medium enterprises for the provision of services, inputs and other consumables in the form of lime, its derivatives and cement. If a mining company’s requirements surpass Congolese entities’ capacity to provide sufficient goods and services, the mining company is authorized to import what is necessary to make up the shortfall. 8. RESOURCE NATIONALISM50 51 ETHIOPIA 1.1 Mining Title Minerals are the property of the Government and all the peoples of Ethiopia. 1.2 Regulatory authority Ministry of Mines and Energy or a state organ in charge of the mining sector, as appropriate. 1.3 Exploration and Mining Laws and Regulations • Mining Operations Proclamation No. 678/2010; • Mining Operations Council of Ministers Regulations No. 182/1994, as amended by Council of Ministers Regulation No. 27/1998; and • Mining Income Tax Proclamation No. 53/1993, as amended. 1.4 Restrictions related to: 1.4.1 Foreign Investment Yes, artisanal mining of minerals such as stone, sand, gravel, clay and other non-metallic minerals is restricted to Ethiopian nationals only. 1.4.2 Commodities Yes, artisanal mining of minerals such as stone, sand, gravel, clay and other non-metallic minerals is restricted to Ethiopian nationals only. 1.4.3 Licence Holder Corporate entity (joint venture permissible) Registered entity or joint venture. 1. MINING LAW ISSUES Jurisdiction in which incorporated A foreign company wishing to invest in the mining sector may be required to establish either a branch of the parent company or a subsidiary in Ethiopia. State ownership No, except large-scale and small-scale mining companies, in which the government shall acquire, without cost, a participation interest of 5% of the operation. Additional equity participation may also be provided for by agreement with Government. Local participation (BEE/indigenisation) No legislative requirement.52 53 2. LICENSING SCHEME Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Authorisation required Yes. However any Ethiopian may conduct reconnaissance without having a license provided that he does not interfere with the rights of a license holder or any other person. Yes. However, an Ethiopian citizen may prospect without holding a prospecting licence, provided /he does not interfere in any way with the rights of a licence-holder or any other person. Yes. Validity of Licence 18 months. Three years. Small-scale mining licence – a maximum of 10 years or the lifespan of the deposit, whichever is shorter. Largescale mining licence - a maximum of 20 years or the lifespan of the deposit, whichever is shorter. Renewable No. Yes. Twice for a period not exceeding one year per renewal. Yes. Small-scale mining licence – a maximum of five years subject to fulfilment of obligations set out under the prior licence. Large-scale mining licence – a maximum of 10 years, subject to the fulfilment of the licence conditions. Exclusivity of Licence No. Yes. Yes. Transfer of Licence No. Yes. The prior approval of the licensing authority is required. Any transfer of license shall have no effect unless registered by the Licensing Authority. Yes. The prior approval of the licensing authority is required. Any transfer of license shall have no effect unless registered by the Licensing Authority. Change of control/ shareholding Not provided for. Not provided for. Not provided for. Community Consultation The Licensing Authority shall after registering a license application, publicise it to third parties through widely accessible mass media and any person may object to the granting of the license within 7 days from the date of publication. The Licensing Authority shall after registering a license application, publicise it to third parties through widely accessible mass media and any person may object to the granting of the license within 7days from the date of publication. The Licensing Authority shall after registering a license application, publicise it to third parties through widely accessible mass media and any person may object to the granting of the license within 7days from the date of publication.54 55 5.1 Corporate tax rate 30% 5.2 Dividend tax 10% 5.3 Royalties 8% - Precious minerals 6% - Semi precious minerals 5% - Metallic minerals 4% - Industrial minerals 3% - Construction minerals 4% - Salt 2% - Geothermal deposits and mineral water 5.4 Capital Gains Tax Yes. It is, however, calculated as income. If a licence holder transfers an interest in their licence, the consideration received for such transfer shall be taxable income to the extent that such consideration exceeds the amount of unrecovered expenditure on the interest transferred. 3.1 Exclusive rights from exploration to mining Yes. 3.2 Documentation/ Reports required for approval Inter alia, • records of mining operations; • financial employment and commercial records; • Environmental Impact Assessment; • inventory of all equipment, machinery and other physical assets; and • other reports and documentation as may be required by the licensing authority. 3.3 Approval time for grant of mining Licence Approximately 2 - 3 weeks. 4.1 Applicable Laws and Regulations • Environmental Protection Authority Establishment Proclamation No. 9/1995; • Institute of Biodiversity Conservation and Research Establishment Proclamation No. 120/1998; • Environmental Impact Assessment Proclamation No. 299/2002; and • Environmental Pollution Control Proclamation No. 300/2002. 4.2 Environmental Impact Assessment Yes. 4.3 Community Consultation Yes 4.4 Rehabilitation Fund/ Closure Fund Funds must be paid into a rehabilitation fund. 3. SECURITY OF TENURE 4. ENVIRONMENT REGULATION 5. TAXES / EQUITY56 57 6.1 Do they exist Yes. 6.2 Governing Legislation Mining Proclamation No. 52/1993. 6.3 Authority Mining Proclamation No. 52/1993. 6.4 Incentives Provided The rates of royalty and rentals to be determined under the Mining Proclamation are determined in such a manner as to encourage investment given the priority of development and mineral development areas. Exemption from customs duty and taxes on equipment, vehicles and machinery necessary for the mineral operations is also offered as an incentive. The government also allows the opening and operation of a foreign currency account in Ethiopia, as well as the retention of a portion of the foreign currency earnings and remittance of profits, dividends and interest on foreign loans. Losses are also permitted to be carried forward for 10 years. 7.1 Restrictions on employment of foreign workers Yes, permanent foreign workers require a work permit. Shortterm service providers (less than three months) such as external experts or consultants do not require work permits. As soon as a foreign worker is involved in permanent work or is in a position that requires a continuous presence in Ethiopia, a work permit is required. Preference must be given to Ethiopian nationals who are appropriately qualified. 6. SECURITY OF TENURE 7. LABOUR LAWS58 59 GABON 1.1 Mining Title Minerals belong to the State of Gabon. Per article 4 of the Mining Code. 1.2 Regulatory authority The Ministry of Mining and the Mining and Geology Department. 1.3 Exploration and Mining Laws and Regulations • Law no 05 -2000 of 12 October 2000 establishing the mining code in Gabon (the Mining Code) duly amended by law no 008/2005. On 4 April 2013, the Council of Ministers of Gabon adopted a new draft mining law, which has not been promulgated as yet. • Decree putting into application law no 05 -2000 of 12 October 2000 establishing the mining code in Gabon (the Mining Decree). • Ordinance no 003/2002/PR of 26 February 2002 and the ratification law no 007/2002 of 22 August 2002 relating to the tax rate, fixed fee on the mining titles, authorisations of the mining and carrying activities. 1.4 Restrictions related to: 1.4.1 Foreign Investments No restrictions. 1.4.2 Licence holder Corporate entity (joint venture permissible)? Yes, joint venture are permissible. 1. MINING LAW ISSUES Jurisdiction in which incorporated No legal restriction, but in practice a company must be incorporated in Gabon in order to obtain a mining title. Local participation (BEE/ indigenisation) • Exploitation of precious minerals is reserved for Gabonese citizens or companies with a minimum of 51% Gabonese shareholding. • At least 15% of small size exploitation should be owned by Gabonese. State ownership The Mining Code allows the Government to directly or indirectly (though a state enterprise), in association with a mining title holder, participate in all or part of certain mining operations based on modalities set forth in the mining agreement. There is no provision in the laws to the amount and form that this participation can take and it is a usually agreed in contractual negotiations between the mining company and the Government of Gabon when concluding the mining agreement at the exploration phase. The trend has been for the government to take a stake of between 15% -25%.60 61 3. SECURITY OF TENURE 4. ENVIRONMENT REGULATION 2. LICENSING SCHEME Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Authorisation required Yes. Yes. Yes. Validity of Licence Maximum term of 2 years. Fixed term of three years. Ten years for exploitation permit, 25 years for a concession. Renewable Yes. Yes. Renewable for 2 further 3 year terms. Yes. A Mining Licence is renewable as necessary for 5 year periods each and Mining concessions are renewable for one or more periods of 10 years each. Exclusivity of Licence Yes per article 9 of the Mining Decree and article 34 of the Mining Code. Yes. Yes. Transfer of Licence Not permitted, per article 24 of the Mining Code. Yes. Upon prior approval of the Ministry of Mines upon favourable opinion of the Mines and Geology Department. Yes. Upon prior approval of the Ministry of Mines upon favourable opinion of the Mines and Geology Department. 3.1 Exclusive rights from exploration to mining Yes. 3.2 Documentation/ Reports required for approval The holder of an exploration licence must present, their work program for the year (within two months after obtaining the licence), the annual programme for the following year (before the December of the current year) and the annual account of expenditure made during the preceding year (at the beginning of the year) per article 177 of the Mining Decree. All other mining title holders must provide a quarterly report and annual report to the Administration in charge of mines at the Ministry of Mines. Mining licence holders must provide their quarterly and annual reports on the basis of the contents of their work programs, risk and risk mitigation matrix, work accidents, geological and environmental impact data (per articles 200 to 204 of the Mining Decree). 3.3 Approval time for grant of mining Licence According to statute the grant of a mining licence should occur within six months of the receipt of completed application. 4.1 Applicable Laws and Regulations • Mining Code: • the Law no. 16/93 of 26 August, 1993 Relating to the Improvement and Protection of the Environment (the “Environmental Code”); • Law no. 16-01 of 31 December 2001 (the “Forestry Code”); • Order no. 0002 Fixing the Method for the Granting of Approvals for the Conduct of Environmental Impact Assessments (the “EIA Order”); and62 63 6. FOREIGN INVESTMENT INCENTIVES 6.1 Do they exist The Mining Code provides for some incentives, notably in respect of prospecting operations. 6.2 Governing Legislation The Investment Charter of 1998 provides a general framework for foreign investment into Gabon, some foreign investment incentives. 6.3 Authority Business Development Centre and the Ministry of Mining. 6.4 Incentives Provided • The incentives are provided in respect of the holder of a prospecting licence who is exempted from the following taxes: • tax on natural persons and companies; • Minimum default tax on companies; • All taxes on the income from transferable securities paid at a fixed interest rate, including tax on income from debts, deposits and guaranties; and • Contributions on’ patentes’ (trading licence tax), real estate contributions on built and unbuilt property, as well as local taxes charged as such. • The equipment imported for prospecting operations can be declared tax free by the administration if certain conditions are met. • The holder of an exploitation permit can be reimbursed VAT for certain expenditure related to its activities and, and VAT exemptions on the importation of equipment used for its operations if such equipment cannot be obtained in the domestic Gabonese market. • Decree 539 regulating Environmental Impact Assessments (the “EIA Decree”). • Law No 7/201 of 1 August 2014 Relating to the Protection of the Environment in the Republic of Gabon. • Law No 2/2014 of 1 August 2014 Relating to Sustainable Development in the Republic of Gabon. 4.2 Environmental Impact Assessment Yes, for an exploitation licence and a mining concession. 4.3 Community Consultation Yes, when carrying out an Environmental Impact Assessment the applicant for an exploitation licence or a mining concession must present the project to the affected population, organise public consultations and have the minutes of said consultation signed off by the relevant officials. 4.4 Rehabilitation Fund/ Closure Fund Money is payable into a rehabilitation fund, as determined by a mining convention. 5.1 Corporate tax rate 35%. 5.2 Dividend tax 20%. 5.3 Royalties • 3% to 5% of the value of production for metals and others minerals. • 4% to 6% of the value of production for precious metals. • 8% to 10% of the value of production for precious stones. 5. TAXES / EQUITY64 65 6.5 Minimum Investment Required • Minimum work expenditure required by the Mining Code for prospecting licences is: • 200.000.000 FCFA per year for the first three year period; • 400.000.000 FCFA per year for the second three year period;  and • 600.000.000 FCFA per year for the last three year period. 6.6 Restrictions on employment of foreign workers The Mining Code requires the holder of a mining title to give preference to local employees with the same qualifications and experiences as foreign prospective employees and to set up a yearly training program for local employees in accordance with terms set out in the mining agreement. The proportion of foreign workers cannot exceed 10% of the overall national workforce of the company or 15% of the national workers classified as employees or skilled workers, and in the higher classes (but derogations to this may be negotiated with the Government). 7. RESOURCE NATIONALISM TRENDS Currently the State has the right to participate in any mining project with the extent of such participation to be agreed upon contractually. However the Gabonese State is exhibiting a greater willingness to obtain a higher stake in projects. This has been manifested in new draft mining law’s reserving for the Gabonese State a 10% non-dilutable free carry interest in mining operators with the possibility of acquiring an additional 25% interest on commercial terms. 8. RESOURCES NATIONALISM66 67 THE REPUBLIC OF GHANA 1.1 Mining Title Minerals in their natural state in, under or upon land, rivers, streams, water-courses throughout the country, the exclusive economic zone and an area covered by the territorial sea or continental shelf are the property of the Republic, vested in the President who holds them in trust for the citizens. 1.2 Regulatory authority • Mining and Minerals Minister; • Ministry of Lands and Natural Resources; • Minerals Commission; • Environmental Protection Agency (“EPA”); • Forestry Commission; and • Geological Survey Department. 1.3 Exploration and Mining Laws and Regulations • Minerals and Mining Act 2006; • Minerals and Mining Licensing Regulations, 2012 (LI 2176); and • Water Resources Commission Act 1996. 1.4 Restrictions related to: 1.4.1 Foreign Investments • Yes, in the case of joint ventures with Ghanaian partners, the foreign investment must be an amount of at least USD 200 000. In the case of a wholly foreign-owned 1. MINING LAW ISSUES enterprise, the foreign investment must be a minimum of USD 500 000. • Additionally, small-scale mining is reserved for Ghanaian citizens. 1.4.2 Commodities No 1.5 Licence holder Corporate entity Corporate entities and joint ventures are permissible. Jurisdiction in which incorporated The holder of a mining exploitation permit shall be a legal entity incorporated under the Companies Code 1963 (Act 179), the Incorporated Private Partnerships Act 1962 (Act 1952) or an enactment in force. Local participation (BEE / indigenisation) Where a joint venture between a Ghanaian and a foreign investor is formed, the Ghanaian partner must have a minimum of 10% equity participation in the venture. State ownership • The Minister of Minerals and Mines (“Minister”) has the right of pre-emption in respect of all minerals raised, won or obtained in Ghana and from any area covered by territorial waters, the exclusive economic zone or the continental shelf and products derived from the refining or treatment of these minerals.68 69 • In instances where a mineral right is granted for mining or exploitation, the Government has a 10% free carried interest in the rights and obligations of the mineral operations in respect of which financial contribution shall not be paid by the Government. • The Minister may on written notice to a mining company, require that the mining company issue to the Republic, a special share by whatever name called in the company for no consideration. Such share shall constitute a separate class of shares and have rights that shall be agreed between the Minister and the company-failing such, an agreement, the Minerals and Mines Act, 2006 provides for rights which are to attach to the special share. Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Authorisation required Yes. The Minister may on application by a qualified person and on the recommendation of the Minerals Commission, grant a reconnaissance licence. Yes. The Minister may on application by a qualified person and on the recommendation of the Minerals Commission, grant a prospecting licence. Yes. A holder of a reconnaissance and/or prospecting licence may (prior to the expiration of the licence held) apply (in the prescribed form) for one or more “mining leases” in respect of all or any of the minerals which are the subject of the licence held and in respect of all or any one or more of the blocks which constitute the reconnaissance or prospecting area except that the blocks shall form not more than three discrete areas, with each consisting of: • a single block; or • a number of blocks each having a side in common with at least one other block in that area; and • each of which could be the subject of a separate mining lease application. Validity of Licence Up to one year. Three years - for a maximum area of 750 contiguous blocks each having a side in common with at least one other block which is the subject of the application. A mining lease shall be for an initial term of thirty years or a lesser period that may be agreed on with the applicant. 2. LICENSING SCHEME70 71 3.1 Exclusive rights from exploration to mining Yes, subject to compliance with the legal provisions in force and proof of a commercially exploitable deposit. 3.2 Documentation/ Reports required for approval • particulars of financial and technical resources available to the applicant • estimate of the amount of money proposed to be spent • particulars of the programme for proposed mineral operations • particulars of the applicant’s proposals with respect to the employment and training in the mining industry of Ghanaians Renewable Yes. Renewable once only, on application (to be made no later than three months before the expiration of the initial term of the licence) to the Ministry of Lands and Natural Resources. Reconnaissance term is extended for a period not exceeding 12 months. Yes. Renewable for three year periods; when the initial term expires, the holder of such licence is required to surrender not less than half the number of blocks of the prospecting area provided that a minimum of 125 blocks remain subject to the licence. Yes. A holder of a mining lease may no later than three months before the expiration of the initial term of the mining lease or a shorter period allowed by the Minister, apply for an extension of the term of the lease for a further period of up to thirty years in respect of all or any of the minerals the lease is subject to. Exclusivity of Licence Yes Yes Yes Transfer of Licence Yes Yes. With prior written approval of the Minister. Yes. With prior written approval of the Minister. 3. SECURITY OF TENURE 4.1 Applicable Laws and Regulations • Minerals and Mining Act, 2006; • Environmental Protection Agency Act, 1994; • National Environmental Action Plan (NEAP), 1998; and • National Environmental Policy (NEP) 1995. 4.2 Environmental Impact Assessment Yes, companies engaged in reconnaissance, exploration and mining are required to obtain an environmental permit (valid for 18 months) from the EPA before commencing operations. Companies granted environmental permits are required to submit an environmental impact report every 12 months after the commencement of operations. 4.3 Community Consultation Not specifically provided for in the Minerals and Mining Act, 2006. 4.4 Rehabilitation Fund / Closure Fund Yes, mining companies have to submit reclamation plans to the EPA. These plans are normally included in a mining company’s environmental impact statement. Additionally, mining companies have to provide security for any default in reclamation or rehabilitation of disturbed land. Security is in the form of a performance bond, rehabilitation bond, mining bond or funds set aside in a reputable bank. 4. ENVIRONMENT REGULATION 3.3 Approval time for grant of mining Licence The Minister on the recommendation of the Commission, shall within 60 days of an application for a mining lease, grant the applicant a mining lease (subject to all obligations having been satisfied) on the conditions specified therein.72 73 5.1 Corporate tax rate • 25% standard corporate income tax rate; • 35% mining companies; • 22% companies listed on the Ghana Stock Exchange. 5.2 Dividend tax 8% withholding tax (final) 5.3 Royalties • 15% (generally)withholding tax; • 5% (mineral royalty) of the total mineral revenue earned, payable on a monthly basis. 5.4 Capital Gains tax 15% 5. TAXES / EQUITY 6. FOREIGN INVESTMENT INCENTIVES 6.1 Governing Legislation Ghana Investment Promotion Centre Act, 2013 (the “GIPC Act”). 6.2 Authority Ghana Investment Promotion Centre-through its Board. 6.3 Incentives Provided The GIPC Act provides for the following incentives: • guarantee against expropriation, nationalization or compulsory purchase; • guaranteed assistance and guidance on investment laws and regulations; • entitlement to an initial automatic maximum expatriate quota as follows: • where the paid-up capital is between USD 50,000 and USD 250,000: one expatriate; • where the paid-up capital is between USD 250,000 and USD 500,000: two expatriates; • where the paid-up capital is between USD 500,000 and USD 700,000: three expatriates; and • where the paid-up capital exceeds USD 700,000: four expatriates. • guaranteed unconditional transferability, through an authorized dealer bank, subject to foreign exchange regulations and notices, of: • dividends or net profits attributable to the investment; • payments in respect of loan servicing, where a foreign loan has been obtained; • fees and charges in respect of any technology transfer agreement registered under the GIPC Act; and • the remittance of proceeds (net of all taxes and other obligations) in the event of the sale or liquidation of the enterprise or of any interest attributable to the investment. 6.4 Minimum Investment Required Yes, in the case of joint ventures with Ghanaian partners, the foreign investment must be an amount of at least USD 200 000. In the case of a wholly foreign-owned enterprise, the foreign investment must be a minimum of USD 500 000. 74 75 7.1 Restrictions on employment of foreign workers • Companies wishing to employ expatriates may apply to the Ghana Immigration Service for work permits. Applications may be granted if, amongst other things, they are within the limits of the “authorized immigrant quota” (i.e. the number of non-Ghanaians an enterprise may employ in Ghana). • Work permits are granted for 24 months, but are renewable. Dependants of an expatriate are issued with residence permits. 7. LABOUR LAWS 8. RESOURCES NATIONALISM 8.1 Resource Nationalism Trends Not applicable. 76 77 KENYA 1.1 Mining Title • All unextracted minerals (other than common minerals) under or upon any land (in Kenya) are vested in the Government of Kenya. • Common minerals include clay, murram, limestone, sandstone or common mineral substances as declared by the Minister by notice in the Gazette. 1.2 Regulatory Authority Mines and Geological Department under the leadership of the Commissioner of Mines and Geology (“Commission”). 1.3 Exploration and Mining Laws and Regulations • Mining Act (Cap. 306); • Mining (Safety) Regulations; • Environmental Management and Co-ordination Act No. 8 of 1999; • Mining (Local Equity Participation) Regulations; • Explosives Act (Cap. 115); • Trading in Unwrought Precious Metals Act (Cap. 309); and • Diamond Industry and Protection Act (Cap. 310). [Note: there is a draft Geology Minerals and Mining Bill which currently undergoing Internal Review and Stakeholder Consultations.] 1.4 Restrictions related to: 1. MINING LAW ISSUES 1.4.1 Foreign Investments Foreign entities may establish themselves in Kenya, but must have at least 35% local ownership. 1.4.2 Commodities Not specifically provided for in the Mining Act (Cap 306). 1.4.3 Strategic Minerals Not provided for in the Mining Act (Cap 306). 1.4.4 Licence holder • A prospecting right may not be granted to a company, body of persons or partnership as such, but may be granted to an individual as an agent of the company, body of persons or partnership. • The application for the prospecting right must be made by the individual in person, who must either be the lawfully constituted attorney of the company, body of persons or partnership or produce an application in writing, for the grant of the prospecting right to the individual as agent of said company, body of persons or partnership. Corporate entity (joint venture permissible)? Yes Jurisdiction in which incorporated No Local participation (BEE/ indigenization) • The Mining (Local Equity Participation) Regulations provide that a mining licence is conditional on the mineral 78 79 right in respect of which the licence is issued having a component of at least 35% local equity participation of the mineral right. • The draft Geology Minerals and Mining Bill (awaiting cabinet approval) states that the Cabinet Secretary may from time to time gazette different minimum levels of local equity participation for certain minerals. State ownership N/A Prospecting Phase Mining Phase Authorisation required Authorisation required Yes, Prospecting Right (which may or may not be an exclusive prospecting licence (“EPL”). Mining Lease or a Special Mining Lease Validity of Licence One year. 5-21 years. Renewable May be renewed for a period of one year after expiration of the previous period up to a maximum of 5 years • May be renewed for a further 21 years save for a special mining lease. • Special Mining Leases are renewable on terms and conditions that the Commissioner deems fit. Exclusivity of Licence The Commissioner may grant a holder of a prospecting right an exclusive prospecting right. Not specifically provided for in the Mining Act (Cap. 306). Transfer of Licence A prospecting right is not transferable. An exclusive prospecting right is transferable; however consent from the Commissioner is required. A lessee may not transfer or assign his lease or any part thereof without the consent in writing of the Commissioner signified by endorsement thereon. Change of control / shareholding Not specifically provided for in the Mining Act (Cap. 306). Not specifically provided for in the Mining Act (Cap. 306). Community Consultation Not specifically provided for in the Mining Act (Cap. 306), however, fair and reasonable compensation is payable to land owners. Not specifically provided for in the Mining Act (Cap. 306), however, fair and reasonable compensation is payable to land owners. 3. SECURITY OF TENURE 4. ENVIRONMENT REGULATION 3.1 Exclusive rights from exploration to mining Only holders of prospecting rights and exclusive prospecting right may apply for a Mining Lease. 3.2 Documentation/ Reports required for approval • Mine Feasibility Report; • Environmental Impact Assessment Study; • Cadastral survey of the area applied for/ deposit; and • Submitting a formal application for a mining lease. 3.3 Approval time for grant of Mining Lease Maximum processing time is within a year or more. 4.1 Applicable Laws and Regulations • Environmental Management And Co-Ordination Act; • Environmental Impact Assessment and Audit Regulations, 2009 (Cap 387); and • Water Quality Regulations. 4.2 Environmental Impact Assessment Yes. 4.3 Community Consultation Yes. 2. LICENSING SCHEME80 81 4.4 Rehabilitation Fund/ Closure Fund Upon the expiration of a lease, the leasee entities have up to six months from the date of expiry to treat or remove any tailings or ore. Upon application for a prospecting, retention or mining licence bond or other financial security, an environmental protection bond, must be provided. The bond must be able to cover costs associated with the implementation of rehabilitation obligations that belong to the holder of the licence. Successful rehabilitation will result in the complete releasing of the bond. 5.1 Corporate tax rate 30% for resident entities and 37.5% for non-resident entities. 5.2 Dividend tax 10% [Note: This rate applies to dividends paid to nonresidents. A 5% rate applies to dividends paid to residents and citizens of other states in the East African Community.] 5.3 Royalties Royalty on extracted minerals are the following percentages of gross sales value for the relevant minerals: • 12% for diamonds; • 10% for rare earth elements and radioactive minerals; • 10% for niobium; • 10% for titanium ores and zircon; • 8% for coal; • 5 % for gold, silver, platinum and other platinoid group metals; • 5% for gemstones; 5. TAXES / EQUITY • 8% for metallic ores - iron ore, manganese ore, chromium ore, nickel ore, bauxite and other ores; • 5% for fluorspar, diatomite, natural carbon dioxide gas, and all other minerals, unless another rate of royalty is prescribed; • 2% for gold exported by dealers; and • 1% for industrial minerals - gypsum, limestone and silica sand. Exports of the above minerals will, however, attract a royalty of 5%; 2 % gross sales value for construction materials. Royalty on dealership in gemstones mineral dealers shall pay royalty at a rate of 5% on exports of raw gemstones and 1% on value added gemstones. 6. FOREIGN INVESTMENT INCENTIVES 6.1 Do they exist Yes. 6.2 Governing Legislation Investment Promotion Act No. 6 of 2004 6.3 Authority Kenya Investment Authority with the Ministry of Finance 6.4 Incentives Provided There are tax based incentives available in Kenya, mainly covering exemptions from duty and VAT on capital equipment and machinery to be used in the investment project. 6.5 Minimum Investment Required Foreign investors require a minimum of $100 000 or the equivalent in any currency. Local investors require a minimum of Sh1 million.82 83 7.1 Restrictions on employment of foreign workers Work permits are required for all foreign nationals wishing to work in Kenya and the Kenyan government requires foreign employees to be key senior managers or have special skills not available locally. An entity, whether local or foreign, may recruit expatriates for any category of skilled labour if Kenyans are not available. 7. LABOUR LAWS84 85 LIBERIA 1.1 Mining Title Minerals on the surface of the ground or in the soil or subsoil, rivers, streams, watercourses, territorial waters and continental shelf of Liberia are the property of the Republic of Liberia. 1.2 Regulatory authority Ministry of Lands, Mines & Energy. 1.3 Exploration and Mining Laws and Regulations • Minerals and Mining Law (2000) [Note: this Act is currently being updated.]; • Mineral Policy of Liberia; • Revenue Code of the Government of Liberia Act of 2000; • Regulations governing exploration under a mineral exploration license (Exploration Regulations), 2010; • Mining Regulations (currently being drafted); • Public Procurement and Concessions Act, 2005; and • Public Procurement and Concessions Regulations. 1.4 Restrictions related to: 1.4.1 Foreign Investments No restrictions. There are legal registrations for a holder of Class A exploration licence, Class A mining licence and diamond and gold licences. Foreigners may only mine for diamonds with the consent of 1. MINING LAW ISSUES the Minister of Minerals and Energy (the Minister), and may only sell diamonds if 50% of the mine is owned by Liberian Nationals. 1.4.2 Commodities Iron Ore, Gold and Diamond 1.4.3 Strategic Minerals Iron Ore, Gold and Diamond 1.4.4 Licence holder Corporate entity (joint venture permissible)? Yes, joint ventures are permissible. Jurisdiction in which incorporated No Local participation (BEE/ indigenization) Class A mining licence may be 100% foreign-owned; class B mining licence requires a minimum of 60% local ownership and a maximum of 40% foreign ownership; class C mining licence restricted to 100% local ownership, but may be supported by foreign investment through separate commercial arrangements between the holder of the class C mining licence and the foreign investor. State ownership Equity participation of the government in Class A mining rights is a minimum of 10% and maximum of 15%.86 87 2. LICENSING SCHEME Reconnais - sance Phase Prospecting Phase Exploration Phase Mining Phase Author - isation required Yes. Yes. Yes. Yes. Validity of Licence Six months. Six months Initial period of three years Class A Mining Licence - twenty five years Class B Mining Licence - five years Class C Mining Licence - one year Renewa - ble Yes. It is renewable once for a further six month period. Yes. It is renewable once for a further six month period Yes. The licence is renewable for one period of two years. Class A Mining Licence - is renewable for additional terms of twenty five years each, upon showing that reserves exist and upon submission of a revised and updated feasibility report. Class B Mining Licence - renewals are for not more than five years each Class C Mining Licence - is renewable for further terms of one year each Exclu - sivity of Licence Not provided for. Yes. The holder of the prospecting license will have the exclusive right during its term to conduct prospecting over the granted area and to apply for a Class B or Class C mining licence with respect to any part of the granted area. Yes The holder of the exploration licence will have the exclusive right to conduct exploration work in the area granted and covered under the terms of the exploration licence. Yes Class A, B and C: Mining Licence - the holder will have the exclusive rights to mine in the production area covered by the mining licence. Transfer of Licence Yes. Upon approval of Government, except for an assignment to an affiliate of the holder of a mineral right, which shall not require the approval of Government so long as the holder remains jointly and severally liable with the affiliate for all obligations assumed under the mineral right. Yes. Upon approval of Government, except for an assignment to an affiliate of the holder of a mineral right, which shall not require the approval of Government so long as the holder remains jointly and severally liable with the affiliate for all obligations assumed under the mineral right. Yes. Upon approval of Government, except for an assignment to an affiliate of the holder of a mineral right, which shall not require the approval of Government so long as the holder remains jointly and severally liable with the affiliate for all obligations assumed under the mineral right. Yes. Upon approval of Government, except for an assignment to an affiliate of the holder of a mineral right, which shall not require the approval of Government so long as the holder remains jointly and severally liable with the affiliate for all obligations assumed under the mineral right.88 89 Change of control/ shareholding No change of control of a licensee is permitted unless it has received the prior written consent of the Minister or is otherwise permitted in terms of section 15.5 or 15.6 of the Exploration Regulations. Not provided for. Not provided for. Not provided for. Community Consultation Land owner’s consent must be obtained, failing which the Minister’s consent must be obtained. Yes. Yes. Yes. 3.1 Exclusive rights from exploration to mining Yes 3.2 Documentation/ Reports required for approval Applications shall include such information, and be in such form as may be specified in the Regulations. Individuals - ID Card/Passport/Proof of citizenship and evidence verifying the financial status of the applicant Companies - Evidence verifying the financial status of the applicant, business registration certificate, article of Incorporation and the company ownership details 3.3 Approval time for grant of Mining Licence 30 days. 3. SECURITY OF TENURE 4.1 Applicable Laws and Regulations Environmental Protection and Management Law, 2003. Environmental Protection Regulations 4.2 Environmental Impact Assessment Required. An Environmental Impact Assessment licence or permit is required for certain specified projects, which include mining and quarrying. In order to obtain an Environmental Impact Assessment Licence, an applicant must submit a comprehensive environmental review of the project. In the event that the competent authority requires further information, an environmental impact assessment must be submitted to the competent authority for consideration. 4.3 Community Consultation Yes, following the submission of an application for an Environmental Impact Assessment permit, the applicant shall publish a notice of intent to allow a stakeholder or interested party to identify its interest in the proposed project or activity. The competent authority must also make public the environmental impact assessment report for review by interested parties and stakeholders. Based on the comments submitted by stakeholders and interested parties, the competent authority may also direct that public hearings in respect of the project must be held. 4.4 Rehabilitation Fund/ Closure Fund Whilst rehabilitation is not addressed in legislation, it is, however, noted that conditions of a mining permit, a prospecting permit or an Environmental Impact Assessment permit may require that a rehabilitation fund or closure fund be put in place. 4. ENVIRONMENT REGULATION90 91 5.1 Corporate tax rate The basic rate is 25%, however for mining and petroleum companies it is 30%. Note that certain mining companies have concessionary tax rates agreed to with the Government. 5.2 Dividend tax 15% 5.3 Royalties 15% on both resident and non-resident companies on all income regardless of source. 5.4 Capital Gains Tax No separate Capital Gains Tax regime. However, capital gains arising from the disposal of property used in a business or held as investment are included in taxable income and subject to income tax except for gains from the sale of property held for personal use below L$1.6 million. 5. TAXES / EQUITY 6.1 Do they exist Yes, parties must enter into an Investment Incentive Contract with the Government of Liberia (Minter of Finance) [Note: incentives are granted in the mining sector if there are Approved Investment Projects in place (as such term is defined in the Code).] Certain incentives are granted for a period not exceeding 5 years, whilst other incentives are valid for the duration of the Investment Incentive Contract. 6.2 Governing Legislation Investment Incentive Code of the Republic of Liberia (Code). 6. FOREIGN INVESTMENT INCENTIVES 6.3 Authority National Investment Commission (Commission). 6.4 Incentives Provided Reduction of: • withholding taxes; and • corporate income tax (not normally granted). Reduction or waiver of: • import duty on capital goods and equipment; • import duty on non-capital materials and other supplies used in production; and • reduction or waiver of fees. Profits reinvested into fixed assets shall be exempt from income tax. All remaining profit shall be exempt from -50% income tax that would otherwise be payable. Enterprises that are granted Investment Incentive Contracts shall be entitled to: • full rebates on import duty and income tax/ excise tax paid in respect of manufactured goods that have been exported; and • the additional benefits listed in the Code. 6.5 Conditions for the grant of the incentives No incentives shall be granted unless the investor satisfies the following conditions: • falls within the overall priority as established by the National Planning Council; • ensures the permanent employment of Liberians at all levels and carries out appropriate training schemes 92 93 7.1 Restrictions on employment of foreign workers Foreigners require both a work permit and a resident permit (settlement visa for work purposes). In addition to a resident permit, if a person travels in and out of Liberia, he/ she must also apply for a re-entry permit, which allows unlimited trips to and from Liberia without additional cost or procedure. No foreigners may be employed for the purpose of unskilled labour. As far as possible, Liberian nationals must be employed in skilled management positions. A work permit will not be issued unless the Ministry of Labour is satisfied that there is no suitable Liberian to perform the work required by the employer. 7. LABOUR LAWS and, in case of expansion increase, employment and augment training activities in harmony with the volume of expansion; • leaves an option for Liberians to contribute to the enterprises by purchasing shares or otherwise participating in the ownership; • produces a local value added amounting to not less than 25% of the value of gross output; and • takes its raw materials and other supplies of Liberian origin and imports only such items of which the local product is not available in sufficient quantity and/or its quality or price is not approximately equal with the intended imports as determined by the Government. 6.6 Minimum Investment Required Capital invested must be at least US$ 1 million for foreign owned businesses. Enterprises with 100% Liberian ownership require a minimum capital investment of US$ 300,000. 94 95 MADAGASCAR 1.1 Mining Title All mineral deposits situated on the surface, in the subsoil, as well as in underground waters on the national territory belong to the State. 1.2 Regulatory authority • Minister of Mines; • Bureau du Cadastre Minier de Madagascar (the BCMM), (the Malagasy Mining Cadastre); • Mining department of the Ministry of Mines; and • Office des Mines Nationales et des Industries Stratégiques (OMNIS): the Malagasy state entity responsible for strategic minerals (which includes uranium). 1.3 Exploration and Mining Laws and Regulations • Loi n°99-022 du 19 août 1999 portant Code Minier modifiée par Loi n° 2005 - 021 du 17 octobre 2005 (Law n° 99-022 dated 30 August 1999 establishing the mining code modified by Law n° 2005-021 dated 17 October 2005) (“the Mining Code”); • Décret n°2000-170 du 20 février 2000 fixant les conditions d’application de la Loi n° 99-022 du 19 août 1999 portant Code minier modifiée par le Décret n°2006-910 du 19 décembre 2006 (Decree n° 2000-170 dated 20 February 2000 implementing the Mining Code duly modified by Decree n° 2006-910 dated 19 December 2006) (“the Mining Decree”); and 1. MINING LAW ISSUES • Arrêté n°5 470/”2012 fixant le modèle de rapport d’activités pour chaque type de permis minier (Order n°5 470/2012 setting the form of the activity report for each type of mining permit). 1.4 Restrictions related to: 1.4.1 Foreign Investments No restrictions. 1.4.2 Commodities Restriction regarding strategic minerals (uranium). 1.5 Licence holder Corporate entity Corporate entities and joint-ventures are permissible. Jurisdiction in which incorporated If a company, the permit holder is required to be incorporated under the Malagasy company law. Local participation (BEE/ indigenisation) There is no legislated local participation required. State ownership Any project exploring or mining for uranium must form a joint venture company with OMNIS. The promoter must enter into a shareholders’ agreement, which typically gives OMNIS a 20% free carry up to USD 1 million, followed by pari-passu contributions or dilution up to a minimum of 10%.96 97 2. LICENSING SCHEME Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Authorisation required Yes. There are two types of authorisation in respect of the reconnaissance: • a declaration of prospecting approved by the BCMM upon request of the applicant; and • an exclusive authorisation to reserve a perimeter (AERP) (authorisation exclusive de réservation de périmètre) issued by the BCMM. Yes. A prospecting permit (permis de recherche) is required. The prospecting permit shall be issued by order of the Minister of Mines. Yes, An exploitation permit (permis d’exploitation) is required. The exploitation permit is issued by order of the Minister of Mines. Validity of Licence • Declaration of prospecting one year from the date of approval of the BCMM. • AERP: three months. Five years. 40 years. Renewable • Declaration of prospecting: is not renewable. • AERP is not renewable. Yes. Twice for three years each. Yes. Renewable in increments of 20 years. Exclusivity of Licence • Declaration of prospecting: yes. • AERP: yes. Yes. Yes. Note: Since 29 November 2010, due to the ongoing political crisis in Madagascar, the Bureau du Cadastre Minier de Madagascar (the Mining Bureau of Madagascar) has suspended the acceptance of all applications (filings) for mining permits and requests for Autorisations Exclusives de Réservation de Périmètres (AERP) (Exclusive Authorisations for the Reservation of Perimeters). No changes were made to the mining and environmental legislation in the course of 2014. However, in early 2015, a new Protected Area Act (Loi n°2015-005 portant refonte du Code de Gestion des Aires Protégées) and Environmental Charter (Loi n°2015- 003 portant Charte de l’Environnement Malagasy actualisée) were adopted. We note that these laws, while voted by the National Assembly, were not yet promulgated nor published in the Official Gazette as at the beginning of February 2015. Transfer of Licence • Declaration of prospecting: not provided for by the Mining Code, but permissible in practice. • AERP: not provided for by the Mining Code, but permissible in practice. Yes. The prospecting permit is transferable without the requirement for regulatory approval. However, for purposes of enforceability of the transfer against the mining authority, the transfer of the prospecting permit should be registered at the BCMM. Yes. The exploitation permit is transferable without requirement for regulatory approval. However, for purposes of enforceability of the transfer against the mining authority, the transfer of the exploitation permit should be registered at the BCMM.98 99 5. TAXES / EQUITY 5.1 Corporate tax rate 20% of the annual net income. 5.2 Dividend tax The 2012 General Tax Code of Madagascar does not provide for a dividend tax. 5.3 Royalties 10% in general; 2% of the first sale value of the mining product. 5.4 Capital Gains Tax 20%; Capital Gains Tax is applicable to the sale of immovable property under the General Tax Code of Madagascar. 4.1 Applicable Laws and Regulations • Arrêté Interministeriel n°12032/2000 sur la réglementation du secteur minier en matière de protection de l’environnement (Inter-Ministerial Order n° 12032/2000 of 6 November 2000 relating to the regulation of mining areas in relation to environmental protection) (“the Environmental Order”). • Décret n° 99-954 du 15 décembre 1999 modifié par le décret n° 2004-167 du 03 février 2004 relatif à la mise en compatibilité des investissements avec l’environnement (MECIE) (Decree n° 99-954 of 15 December 1999 amended by Decree n° 2004-167 of 3 February 2004 relating to the compatibility of investments with the environment (MECIE)). 4.2 Environmental Impact Assessment • Yes, an environmental impact assessment is required for an exploitation permit. 4. ENVIRONMENT REGULATION 3. SECURITY OF TENURE 3.1 Exclusive rights from exploration to mining The holder of a prospecting permit is not exclusively entitled to apply for an exploitation permit but has a priority right to do so. 3.2 Documentation/ Reports required for approval Yes. The holder of a mining permit (prospecting or exploitation permit) shall provide an activity report, in triplicate, in the format provided under Order n°5 470/2012 setting the form of the activity report for each type of mining permit, within one month following the end of each financial year. 3.3 Approval time for grant of mining Licence 30 working days from the application of the prospecting permit and/or the exploitation permit at the BCMM. • A prospecting permit shall require a plan d’engagement environnemental (environmental commitment plan). 4.3 Community Consultation Yes, for an Environmental Impact Assessment. 4.4 Rehabilitation Fund/ Closure Fund Yes, rehabilitation funds to be funded by the holder of the mining permit.100 101 6.4 Incentives Provided Stability regime if the holder of the permit applies to the stability regime provided by the Mining Code, and tax, customs, and exchange incentive measures if the holder of an exploitation permit applies for eligibility to the LGIM. 6.5 Minimum Investment Required The Mining Code provides incentive measures with respect to an investment amount of approximately 2 500 000 000 Malagasy Francs to 1 000 000 000 000 Malagasy Francs. Investments over 1 000 000 000 000 Malagasy Francs will be eligible for benefits under the LGIM. 7. LABOUR LAWS 7.1 Restrictions on employment of foreign workers • Preference to be given to local employees. • Mandatory training program for Malagasy employees. • The employment of foreign workers is free. • The Mining Code or the Labour Code does not contain any restriction regarding the employment of foreign workers. 8.1 Resources Nationalism Trend The current mining legislation and regulations do not provide any resource nationalism trends. Amendment of the legislation was discussed in 2011, however, in order to implement some resource nationalism provisions. Notably, there are concerted efforts at present to change the Mining Code (by, inter alia, merging the Mining Code and Loi no. 2005-022, the Large Mining Investment Law (LGIM)) and the Petroleum Code. A law on public-private partnerships is also in the works. 8. RESOURCES NATIONALISM 6.1 Do they exist Yes 6.2 Governing Legislation • The Mining Code. • Loi n° 2005-022 du 27 juillet 2005 portant modification de certaines dispositions de la Loi n° 2001-031 du 08 octobre 2002 établissant un Régime Spécial pour les grands investissements dans le Secteur Minier malagasy (LGIM) (Law n° 2005-022 of 7 July 2005 amending certain provisions of Law n° 2001-031 of 8 October 2002 establishing a Special Regime for large mining investments in the Malagasy Mining Sector (LGIM)). • Loi n° 2001-031 du 08 octobre 2002 établissant un Régime Spécial pour les grands investissements dans le Secteur Minier Malagasy (LGIM) (Law n° 2001-031 of 8 October 2002 establishing a Special Regime for the large investments in the Malagasy Mining Sector (LGIM)). • Décret n° 2003-784 du 8 avril 2003 fixant les conditions d’application de la loi n°2001-031 établissant un Régime Spécial pour les Grands Investissements dans le Secteur Minier Malagasy (Decree n° 2003-784 of 8 April 2003 establishing the conditions of application of the Law n° 2001-031 establishing a Special Regime for Large Investments in the Malagasy Mining Sector). 6.3 Authority The President of the Republic of Madagascar, Minister of Mines and the Commission Nationale des Grands Investissements, as the case may be. 6. FOREIGN INVESTMENT INCENTIVES102 103 MOZAMBIQUE 1.1 Mining Title Mineral resources found in the soil, subsoil, internal waters, territorial sea, continental shelf and in the exclusive zone are property of the State. 1.2 Regulatory authority National Institute of Mines: is established as the regulator of mining activities, supervised by the Ministry responsible for supervising natural resources, Ministry of Energy and Mineral Recources, responsible for the guidelines for the participation of the public and private sectors in exploration, processing, import and export for mining products and derivatives. 1.3 Exploration and Mining Laws and Regulations • Law No 20/2014 - Mining Law; • Decree No 63/2006 - Mining Law Regulation (awaiting for new regulation); • Law No 8/2014 - Mining Tax Regime and Fiscal Incentives; • Decree No 26/2004 - Environmental Regulation for Mining Activities; • Decree No 61/2006 - Regulation of Health and Technical Security in Geological Activities; • Decree No 11/2006 - Environmental Inspection Regulation; • Decree No 13/2006 - Waste Management Regulation; and • Decree 63/2011 - Hiring of Foreign Citizens in the Extractive Industry. 1. MINING LAW ISSUES Mozambique has approved its latest Mining Law on August 18, 2014 and in terms of its Article 87, the Government is responsible for Regulating all matters in the present Law within 90 days, meanwhile, the previous regulation may be used for interpretation provided that it doesn’t contradict the New Law. 1.4 Restrictions related to: 1.4.1 Foreign Investments No restrictions. 1.4.2 Commodities No restrictions. 1.5 Licence holder No restrictions. Corporate entity (joint ventures permissible)? Joint-venture is permissible. The Mining Law does not restrict the type of legal entities that can hold the licences; they can be individuals or any corporate entity. Jurisdiction in which incorporated Exploration licences and mining concessions can only be granted to legal entities incorporated in accordance with Mozambican Laws. Local participation (BEE/ indigenisation) • The mining contract must contain rules concerning the participation of the State in the mining venture, local content minimum standards, employment and training 104 105 Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Authorisation required According to the new Mining Law, the Reconnaissance licence/ Phase is removed and absorbed by the Prospecting and Research Licence/Phase. Yes. A prospecting permit is required. The prospecting permit shall be issued by order of the minister in charge of mines. Yes. An exploitation licence/ concession is required. The exploitation permit is issued by order of the minister in charge of mines. Holders of an exploration or mining concession may have the right or be under an obligation to negotiate a mining contract with the Government; these contracts must contain certain mandatory clauses, including the State participation, obligations on local employment ratios and professional training or local content, communities and incentives for the licence holder. Validity of Licence N/A 1. Two years, for mineral resources for building materials (renewable once for the same period of time). 2. Five years, for the other mineral resources, including, mineral water (renewable once, for three years). 25 years. of Mozambicans and a memorandum of understanding between the Government, the relevant company and the local communities. • A percentage of State revenues generated by mining activities is allocated to the development of the communities established in the areas where mining activities take place to be defined annually. State ownership Mineral resources found in the soil, subsoil, internal waters, territorial sea, and continental shelf and in the exclusive zone are property of the State. 2. LICENSING SCHEME106 107 Renewable N/A 1. Renewable once for the same period (Two years) of time. 2. Renewable once, for three years. Yes. May be extended for 25 years, based on the economic life of the mine and compliance with the legal duties by the concession holder. Exclusivity of Licence N/A Yes. Yes. Transfer of Licence N/A Yes. The transfer of rights and obligations conferred under mining permits and/mining rights to an affiliated or a third party, including direct and indirect transfers of shares, must be made in accordance with Mozambican Law and is subject to approval by the government. Such transfer may only occur after two years from the beginning of the activity for which the holder was authorized and the request must comprise the activity report as well as certificate of tax discharged by the tax administration. Yes. The transfer of rights and obligations conferred under mining permits and/ mining rights to an affiliated or a third party, including direct and indirect transfers of shares must be made in accordance with Mozambican Law and is subject to approval by the government. Such transfer may only occur after two years from the beginning of the activity for which the holder was authorized and the request must comprise the activity report as well as certificate of tax discharged by the tax administration. Note: the new Mining Law seeks to ensure fair earnings for Mozambique and increase the control over mining activities, therefore, any transfer of control whether direct or indirect in mining holding permits is now subject to the consent of Mozambican Government. 3. SECURITY OF TENURE 3.1 Exclusive rights from exploration to mining Despite the fact that Prospecting and Research Licence gives its holder in the concession area the right to access and exclusively carry out the prospection and research activities there’s no provision on the Mining Law that clearly grants exclusive/ priority rights in applying for an exploitation licence afterwards. Mozambique has approved its latest Mining Law on August 18, 2014 and in terms of its Article 87, the Government is responsible for regulating all matters in the present Law within 90 days, meanwhile, the previous regulation may be used for interpretation provided that it doesn’t contradict the New Law. 3.2 Documentation/ Reports required for approval Yes. The holder of a Prospecting and Research Licence has the obligation to provide information to the government regarding the investments made and annual reports on prospecting and research operations. 3.3 Approval time for grant of mining Licence The licensing authority shall decide on the license application within 30 working days from the date of receipt thereof. Mozambique has approved its latest Mining Law on August 18, 2014 and in terms of its Article 87, the Government is responsible for regulating all matters in the present Law within 90 days.108 109 6. FOREIGN INVESTMENT INCENTIVES 5. TAXES / EQUITY 6.1 Do they exist Yes. The Central Incentive Scheme - Centro de Promoção de Investimentos CPI. 6.2 Governing Legislation • Law No 20/2014 - Mining Law; • Decree No 63/2006 - Mining Law Regulation; and • Law No 28/2014 - Mining Tax Regime and Fiscal Incentives. 6.3 Authority Ministry of Energy and Mineral Resources - Council of Ministers. 5.1 Corporate tax rate 32% of the annual net income. 5.2 Dividend tax 20% and exempt if paid to another local company in which the shareholding is at least 20% for a period of at least 2 years. 5.3 Royalties A reduction of 50% is allowed when the production of minerals is to be used by the local industry. Diamonds: 10% to 8% Coal and precious metals: 3% and 6% respectfully Semi precious metals: 5% to 3% 5.4 Capital Gains Tax Straight 32% tax on capital gain. 4.1 Applicable Laws and Regulations • Decree No 13/2006 - Waste Management Regulation; • Decree No 11/2006 - Environmental Inspection Regulation; and • Decree No 26/2004 - Environmental Regulation for Mining Activities. 4.2 Environmental Impact Assessment • The fundamental environmental tools 1. Environmental Impact assessment; 2. Simplified Environmental impact assessment; and 3. Environmental Management Programme. 4.3 Community Consultation Yes, for an Environmental Impact Assessment communities must be previously consulted before the granting of authorizations for the beginning of the exploration. Communities must be heard throughout the process of implementation of the environmental management tools until the closure of the mine. 4.4 Rehabilitation Fund/ Closure Fund Yes, rehabilitation funds to be funded by the holder of the mining permit. Moreover, the licence holders have the obligation to perform environmental restoration of the area and closure of the mine in accordance with the approved plans. In cases in which the law requires holders to provide a performance bond to cover the cost of rehabilitation and mine closure, its value shall be reviewed every two years by the sector that oversees the mineral resources field. 4. ENVIRONMENT REGULATION110 111 6.4 Incentives Provided • New mining projects are exempt for the period of five years from the commencement of the mining activities, from: 1. Customs duties payable on importation of equipment whether for exploration or for mining that is classified as class K goods of the Customs Schedule; 2. Customs duties payable on importation of certain specific equipment that is not so classified but is considered analogous to class K goods; and 3. The new tax law no longer grants VAT exemption. • The State ensures the transfer of funds abroad upon presentation by the holder of the discharge documents issued by the respective tax area of: 1. exportable profits resulting from eligible investments for export earnings; 2. royalties and other payments of indirect investments compensations associated with the assignment or transfer of technology or other rights in the terms of the applicable law; 3. repayment and loan interest contracted in the international financial market and applied in investment made in the country; 4. foreign capital invested; and 5. sums related to the payment of obligations to nonresident entities. • The State assures the safety and legal protection of the ownership of goods and rights, including industrial property rights covered by the authorised and carried out investments under the mining permit issued in accordance with this Law and other applicable legislation. • The expropriation of private property goods and rights covered by a mining permit may only occur in exceptional circumstances and if justified by public interest and is subject to the payment of fair compensation. 6.5 Minimum Investment Required There’s no explicit Minimum Investment Required. However, the mining law establishes that, to ensure the observance of the terms and conditions established in the mining permits and/ or mining contracts, mining holders/ or their operators are subject to the provision of financial guarantee, under regulatory terms. 7. LABOUR LAWS 7.1 Restrictions on employment of foreign workers • Preference to be given to local employees. • Mandatory training program for Mozambican employees. • Employers, whether national or foreign may employ a foreigner by authorisation of the Minister of labour or an agency that s/he delegates powers. • Employers may also hire by simple communication to the Minister of Labour or an agency to which she delegates powers, up to the permitted number of foreigners under following quotas: 1. In large firms (more than 100 employees), up to 5% of the total number of workers; 2. In medium firms (more than 10 up to 100 employees), up to 8% of the total number of workers; and 3. In small firms (up to 10 employees), up to 10% of the total number of workers.112 113 8.1 Resource Nationalism Trends The current mining legislation and regulations do not provide any extreme resource nationalism trend. Resource nationalism describes a government’s effort to gain greater benefit from its natural resources sometimes to the detriment of private companies; however, the provisions on the mining legal framework in Mozambique only protect its national interest not to the extreme of prejudicing private companies’ 8. RESOURCES NATIONALISM interests.114 115 NAMIBIA 1.1 Mining Title (state-owned or private) The right to prospect and mine vests in the State, but may be granted to private persons under licence by the Ministry of Mines and Energy, which is the custodian of Namibia’s mineral, energy and other land-based resources. 1.2 Regulatory authority Ministry of Mines and Energy. 1.3 Exploration and Mining Laws and Regulations (what are the act/ laws/ regulations that apply) • Minerals (Prospecting and Mining) Act 33 of 1992; • Constitution of the Republic of Namibia (1990); • Diamonds Act 13 of 1999; • Petroleum (Exploration and Production) Act 2 of 1991; • Petroleum Products and Energy Act 13 of 1990; • Petroleum (Taxation) Act 3 of 1991; • The Mines, Works and Minerals Ordinance, No. 20 of 1968 (repealed, except in so far as it relates to the appointment and powers, duties and functions of the Chief Inspector of mines, and the safety and health of persons employed in or in connection with mines and works); • Regulations promulgated under the Minerals (Prospecting and Mining) Amendment Act, 1997, relating to the Health, Safety and Welfare of Persons Employed or otherwise present in or at Mines; • Geoscience Professions Act 3 of 2012; 1. MINING LAW ISSUES • Foreign Investment Act 27 of 1990; • Minerals Development Fund of Namibia Act 19 of 1996; and • Minerals Policy of Namibia. 1.4 Restrictions related to: 1.4.1 Foreign Investments Yes, pursuant to an announcement by the Mines and Energy Minister in April 2011, which has yet to be incorporated into the relevant mining legislation, licences for strategic minerals (uranium, gold, copper, coal, diamonds and rare earth metals) are only to be issued to a state owned company (Epangelo Mining Company has been incorporated for such purpose). The state owned company may enter into joint ventures with private persons. There are various similar policies discussed below under “state ownership” below. 1.4.2 Commodities It is government policy that licences to exploit strategic mineral deposits (as listed above) should only be granted to state-owned mining companies, or to a joint venture which includes as a party, a state-owned mining company. The government intends to amend the mining legislation to reflect this policy, as discussed in greater detail below. 1.4.3 Licence holder Corporate entity (joint venture permissible)? Corporate entities can hold licences, subject to some restrictions with regard to non-exclusive prospecting rights and mining claims. Joint ventures are also permissible, save for nonexclusive prospecting licences and reconnaissance licences.116 117 2. LICENSING SCHEME Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Authorisation required Yes, for a reconnaissance licence. Yes, for a: • exclusive prospecting licence; • mineral deposit retention licence (MDRL); • non-exclusive prospecting licence; and • mining claim. Yes, for a: • mining licence; and • mining claim. Validity of Licence 6 months. • exclusive prospecting licence: three years. • MDRL: five years. • non-exclusive prospecting licence: one year. • mining claim: six months. • mining licence: 25 years. • mining claim: three years. Renewable No, subject to an exception that the Minister may grant a renewal in the event that the holder is prevented, through no fault of his or her own, from carrying out the operations authorised under the licence. • exclusive prospecting licence: yes. • MDRL: yes. • non-exclusive prospecting licence: no. • mining claim: yes. • mining licence: yes. • mining claim: yes. Exclusivity of Licence No, but exclusivity may be granted by Minister in certain circumstances. • exclusive prospecting licence: yes. • MDRL: yes. • non-exclusive prospecting licence: no. • mining licence: yes. • mining claim: not specified. Jurisdiction in which incorporated Licence holders must be incorporated or registered under the laws of Namibia. This includes external companies registered under Namibian law. Local participation (BEE/ indigenisation) Indigenisation and BEE are under discussion, but are not yet mandated. A Transformation, Economic and Social Empowerment Framework was also designed in 2006, but is not yet in force and it is uncertain whether and/or when it will be enacted. State ownership • In April 2011, the Mines and Energy Minister announced in Parliament that certain minerals would be declared strategic minerals and which would be mined exclusively by the State-owned mining company, Epangelo Mining. It is intended that the mining legislation will be amended to reflect this policy. The policy provides that: • new licences for strategic minerals should only be issued to a state- owned mining company, which can enter joint ventures with private persons; • exclusive prospecting licences and mining licences for strategic minerals which are currently in the application stage may be subject to a condition, on the basis of existing procedures, that the licence holder grants a first right over refusal of its shareholding in the entity to a State-owned mining company should the licensee seek to transfer shares/raise capital; and • the new policy does not affect existing licences.118 119 Transfer of Licence No. • exclusive prospecting licence: yes, but only to a Namibian citizen, a company, which includes an external company, under the laws of Namibia, or another juristic person established by or under the laws of Namibia. • MDRL: as above. • non-exclusive prospecting licence: no. • mining claim: yes, see details in “Mining/ Exploration Phase”. • mining licence: yes, but only to a Namibian citizen, a company, which includes an external company, under the laws of Namibia, or another juristic person established by or under the laws of Namibia. • mining claim: yes, but only to a Namibian citizen(s), a company, including an external company, under the laws of Namibia in which only Namibian citizens may own shares, or another juristic person established by or under the laws of Namibia. Change of control/ shareholding Yes, but the licence-holder must notify the Mining Commissioner of any change in the directors or the share capital of the company, or of any change in relation to a beneficial owner of more than 5% of the shares issued by the company. • prospecting licence: yes, but the licence holder must notify the Mining Commissioner of any change in the directors or the share capital of the company, or of any change in relation to a beneficial owner of more than 5% of the shares issued by the company. • MDRL: as above. • non-exclusive prospecting licence: no. • mining claim: yes, see details in “Mining/ Exploration Phase”. • mining licence: yes, but the licence holder must notify the Mining Commissioner of any change in the directors or the share capital of the company, or of any change in relation to a beneficial owner of more than 5% of the shares issued by the company. • mining claim: as above. 3.1 Applicable Laws and Regulations • Environmental Management Act 7 of 2007; • Atomic Energy and Radiation Protection Act 5 of 2005; • Atmospheric Pollution Prevention Ordinance No. 11 of 1976; • Hazardous Substances Ordinance No. 14 of 1974; • Nature Conservation Ordinance No. 4 of 1975; • Environmental Investment Fund of Namibia Act 13 of 2001; • Forestry Act 27 of 2004; • National Heritage Act 27 of 2004; • Water Act 54 of 1956; • Water Resources Management Act 24 of 2004 (yet to come into force); • Policy for Prospecting and Mining in Protected Areas and National Monuments (1999); • Pollution Control and Waste Management Bill (in preparation); 3. SECURITY OF TENURE Community Consultation • The holder of the licences referred to above shall not exercise the rights conferred upon them on any private land, until the licence holder has entered into an agreement in writing with the owner of the land relating to the payment of compensation, or under which the owner waives the right to compensation. This agreement must be submitted to the Mining Commissioner. • Further, such licence holders also require the prior written consent to exercise their rights under the relevant licence if the licence area is within 300 meters from any point on the boundary of any erf, as defined in section 1 of the Townships and Division of Land Ordinance, 1963.120 121 4. TAXES / EQUITY • Public Health Act, 36 of 1919; • National Monuments Act, 28 of 1969; and • Policy for the Conservation of Biotic Diversity and Habitat Protection (1994). 3.2 Environmental Impact Assessment Yes, this is mandatory for, inter alia, prospecting and mining operations. 3.3 Community Consultation Yes, in terms of the Act which governs environmental regulation in Namibia, the person conducting a public consultation process must give notice to all potential interested and affected parties of the application by way of notice boards, advertisements, and written notice to the owners and occupiers of land adjacent to the site where the activity is or is to be undertaken or to any alternative site, the local authority council, regional council and traditional authority, as the case may be, in which the site or alternative site is situated, and any other organ of state having jurisdiction in respect of any aspect of the activity. The consultation process must take place within a 21 day period of the lodging of the application in terms of which consultation is required. Rehabilitation Fund/ Closure Fund • Licence holders are obliged to remedy any spillage, pollution or environmental damage they have caused. • The Minister may, on the expiry, cancellation or abandonment of a licence, direct the licence holder to remedy any surface or environmental damage caused. • During 2003, a Minerals Policy aimed at amending the Minerals Act was published. Although not yet promulgated, it makes provision for mandatory mechanisms for the funding of final closure. The Minerals Policy states that before a mining licence is granted, there should be a Final Mine Closure Plan together with a funding mechanism that describes how the company will deal with matters like groundwater pollution, soil degradation, wind pollution and infrastructure. The Minerals Policy does not elaborate and merely provides that “Government will investigate the establishment of mandatory mechanisms for the funding of Final Mine Closure Plans.” No indication has been given as to when the Minerals Policy, and the mandatory mechanism, will be promulgated. 4.1 Corporate tax rate • Mining companies (excluding diamond mining companies) are subject to a 37.5% tax rate. • Diamond mining companies are subject to a 55% tax rate. • Petroleum companies are subject to a 35% tax rate. 4.2 Dividend tax • None for Namibian residents. • Dividends paid to a non-resident shareholder that holds 25% or more of the Namibian taxpayer company are subject to non-resident shareholders tax (NRST) at 10%, and dividends paid to a non-resident shareholder that holds less than 25% of the Namibian taxpayer company are subject to a 20% NRST. Both taxes apply unless the rate is reduced under a tax treaty. 4.3 Royalties • Royalties are levied as a percentage on the market value of the minerals. Market value is determined in accordance with any term or condition of the licence of the holder concerned or, in the absence of such term or condition, 122 123 is determined by the Minister with reference to the actual price paid and the price paid in international markets. • The percentage payable on the market value is determined by the Minister in a notice in the Government Gazette No. 45 of 2009 on any other minerals won or mined by a licence-holder. Currently, these percentages are: • 3% on the market value of precious metals, base and rare metals, nuclear fuel minerals; • 10% on the market value for rough diamonds, rubies, sapphires and emeralds; • 2% on the market value of semi-precious stones, industrial metals, non-nuclear fuel minerals; and • 5% on the market value of oil and gas. • The Minister also has the discretion to levy a windfall royalty on the disposal of minerals if he or she is of the opinion that market prices or new technology has made the mining operations of a licence holder significantly more profitable. The licence holder must be notified in writing and be given an opportunity to make representations regarding the royalty payment. 4.4 Capital Gains Tax With effect from 1 March 2012, all gains made on the sale of shares in a company holding a mining or exploration license, or gains made on the sale of a mining or exploration license, are included in the gross income of the taxpayer and thus subject to tax at the marginal rate of tax that applies to the taxpayer. 5. LABOUR LAWS 5.1 Restrictions on employment of foreign workers An employment permit is required.124 125 REPUBLIC OF GUINEA 1.1 Mining Title Mineral or fossil substances contained in the subsoil or on the surface, as well as underground waters and geothermal deposits on the territory of the Republic of Guinea and its exclusive economic zone, belong to the State and cannot be the object of any form of private appropriation, save as provided in the Mining Code and the Land Code. 1.2 Regulatory authority The Minister of Mines, the National Directorate of Mines, the National Directorate of Geology and the Centre for Mining Promotion and Development (the CPDM). 1.3 Exploration and Mining Laws and Regulations Law no. L/2011/006/CNT of 9 September 2011 establishing the mining code of the Republic of Guinea (the Mining Code). 1.4 Restrictions related to: 1.4.1 Foreign Investments No restrictions. 1.4.2 Commodities No. 1.4.3 Licence holder Corporate entity (joint venture permissible) Yes. Jurisdiction in which incorporated Legal entities incorporated in Guinea. 1. MINING LAW ISSUES Local participation (BEE / indigenisation) No local participation required. State ownership The state has the right to 15% (free carry) of a mining title holder’s shore equity, which cannot be diluted in case of a capital increase and the right to acquire an additional 20% shareholding for consideration. Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Authorisation required Yes. Reconnaissance authorisation is issued by the Mines National Directorate (Direction Nationale des Mines), upon proposition of the CPDM, after favourable opinion of the National Directorate of Geology. Yes. Prospecting permit (permis de recherche) is issued by an order of the Minister of Mines on recommendation of the CPDM, after favourable opinion of the Comité Technique des Titres (Titles Technical Committee). Yes, Either exploitation permit (permis d’exploitation) or mining concession (concession minière) The exploitation permit (large scale or small scale), and the mining concession are issued to a Guineanincorporated company, by decree adopted by the Council of the Minister on the recommendation of the Minister of Mines, after favourable opinion of the Commission Nationale des Mines. 2. LICENSING SCHEME126 127 Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Validity of Licence 6 months. • Three years for prospecting on an industrial scale. • 2 years for prospecting on a semi-industrial scale. • Large-scale mining exploitation permit: 15 years. • Small-scale mining exploitation permit: 5 years. • Mining concession: 25 years. Renewable Yes. Once for a period of 6 months. Yes. • The prospecting permit is renewable twice for maximum periods of two years each time, at the request of the holder and under the same conditions as the original permit. • The term of a semi- industrial prospecting permit is only renewed once for a year. • A relinquishment of the mining area is required at renewal of a prospecting permit or a semi-industrial prospecting permit. Yes • The term of an exploitation permit is renewable for several periods of five years or more, upon application of the holders and under the same conditions as its original grant. • The term of a mining concession is renewable for several periods of 10 years or more, upon application of the holders and under the same conditions as its original grant. Exclusivity of Licence No. Yes. Yes. For both (exploitation permit and mining concession). Transfer of Licence Law unclear. No. The prospecting permit is not transferrable. Yes. Approval of Minister of Mines Required. 3. SECURITY OF TENURE 4. ENVIRONMENT REGULATION 3.1 Exclusive rights from exploration to mining Yes. 3.2 Documentation/ Reports required for approval Yes. • Prospecting permit: management and financial reports approved by the mining authority pursuant to the work activities at least three days by a geologist hired by the holder of the research permit, deposit of the environmental impact notice approved by the CPDM, and the transmission of this environmental impact notice to the local authority for information. • Mining title (exploitation permit or mining concession): reports shall be submitted to the CPDM. 3.3 Approval time for grant of mining Licence Not stipulated. 4.1 Applicable Laws and Regulations Mining Code and Environmental Code and its Regulations. 4.2 Environmental Impact Assessment • Yes, environmental impact assessment is to be submitted with application for exploitation permit or mining concession. • An Environmental Impact Notice is required for a prospecting permit. 4.3 Community Consultation Yes, when applying for exploitation permit or mining concession. 4.4 Rehabilitation Fund/ Closure Fund - Yes.128 129 5.1 Corporate tax rate 35%. 5.2 Dividend tax 10%. 5.3 Royalties Yes. 5.4 Capital Gains Tax Capital gains on transfers of shares are taxed at a rate of 10%. 5. TAXES / EQUITY 6. FOREIGN INVESTMENT INCENTIVES 6.1 Do they exist Yes. 6.2 Governing Legislation The Investment Code does not provide for foreign investment incentives in the mining sector. Those are provided by the Mining Code. 6.3 Authority Minister of Mines. 6.4 Incentives Provided • Tax benefits for each mining phase as follows: • Prospecting phase: exoneration from VAT, IMF fixed minimum tax, corporate income tax; registration fee and stamp duty; business tax; professional training fee; real estate fee; tax on income from securities, and benefit from the temporary importation procedure for the equipment required during the research phase. • Construction phase of the mine: exoneration from VAT and those provided above without exceeding the estimated duration provided in the feasibility study. • Exploitation phase: the holder of mining titles at the exploitation phase benefit, for a period of three years from the date of first production, from exoneration of the IM fixed minimum tax, the professional training fee; the real estate fee and apprenticeship tax. • The exploitation permit and the mining concession benefit from the stability of the tax and customs regime for a period of five years. The stability regime for the mining concession can be extended for a period of five years by payment of an annual premium of stabilisation regime. 6.5 Minimum Investment Required • There is no minimum investment required for a research permit and exploitation permit. • However, a minimum investment of USD 1 billion is required for a mining concession. 7.1 Restrictions on employment of foreign workers • Preference to be given to Guinean executives with requisite skills and Guinean residents of the community where mining takes place. • Specific quotas per phase of the mining project and per category of employment. • Mandatory training program for Guinean executives. • Within five years after the start of the exploitation, the General Manager has to be Guinean. • From start of project Deputy Manager has to be Guinean. 7. LABOUR LAWS130 131 8.1 Resources Nationalism Trend • Apart from the increase in the participation of the State in a mining project and the restriction of employment of foreign workers aforementioned, the Mining Code provides also the following: • Companies that process minerals in-country pay 6% on all imports while those that export without processing must pay 8%; • Preference to Guinean companies for construction, supply or services contracts if they provide comparable prices, quantities, quality and delivery terms; • Minimum quota for Guinean SMEs and SMIs depending on the phase of project; • Empowerment programs for Guinean SMEs and SMIs; and • Mandatory conclusion of a community development agreement setting out the conditions of the implementation of the local development. • Contribution payment for local community development as follows: • 0.5% of the company’s turnover achieved on the mining title of the area for bauxite and iron ore; and • 1% of such turnover for the other mineral substances. 8. RESOURCES NATIONALISM132 133 SENEGAL 1.1 Mining Title Minerals in the soil belong to the State of Senegal, although minerals extracted by mining (exploitation) title holders become the latter’s property. 1.2 Regulatory authority Minister of Mines; National Department of Mines; Department of Mines in each of the 14 administrative districts in the country. 1.3 Exploration and Mining Laws and Regulations Loi n° 2003-36 du 24 novembre 2003 portant Code Minier (Law n° 2003-36 of 24 November 2003 Mining Code). Décret n° 2004-647 du 17 mai 2004 fixant les modalites d’application de la Loi n° 2003-36 du 24 novembre 2003 portant Code Minier (Law Mining Decree n° 2003-36 of 24 November 2003). UEMOA Code Minier Communautaire Règlement n° 18/2003/ CM/UEMOA du 23 décembre 2003 (WAEMU Community Mining Code Regulation n° 18/2003/CM/WAEMU of 23 December 2003). Notably, Senegal is in the process of updating its Mining Code. This law has not yet been passed or promulgated, however. 1.4 Restrictions related to: 1.4.1 Foreign Investments No. 1. MINING LAW ISSUES 1.4.2 Commodities No. 1.5 Licence holder Corporate entity Corporate entities and joint ventures are permissible. Jurisdiction in which incorporated The holder of a mining exploitation permit shall be a legal entity incorporated under Senegalese law. All mining title holders, lessees and persons on whom have been conferred usage rights flowing from mining rights must elect domicile in Senegal and notify the Minister of this. Local participation (BEE / indigenisation) None. State ownership • The State may, directly or through an intermediary enterprise or association with third parties, be engaged in all mining operations. • The State has 10% free participation in all exploitation/ concession mining works; over and above this, the State may negotiate participation by itself and/or the private sector in the capital of the exploitation company.134 135 2. LICENSING SCHEME Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase (Exploitation permit and Concession) Authorisation required Yes “prospecting authorisation” (“autorisation de prospection”) Yes “exploration permit” (“permis de recherché”) “prospecting authorisation” (“autorisation de prospection”) Yes “exploitation permit” and “mining concession” (“permis d’exploitation” and “concession minière”) Validity of Licence Up to six months Up to three years Exploitation permit: Five years Concession: 5 - 25 years Renewable Yes. Renewable once for up to 6 months Yes. Renewable twice for up to three years each; extension also permitted for up to three years Yes (until deposit is exhausted): Exploitation permit: renewable for multiple periods of up to 5 years each Concession: renewable for multiple periods of up to 25 years each Extension of either permit may also be requested Exclusivity of Licence No Yes Yes Transfer of Licence No Yes. With prior approval of the Minister of Mines Yes. With prior approval of the Minister of Mines 3.1 Exclusive rights from exploration to mining Yes, subject to compliance with the legal provisions in force and proof of a commercially exploitable deposit. 3.2 Documentation/ Reports required for approval Proof of commercially exploitable deposit. Agreement between two or more indivisible co-title holders. 3.3 Approval time for grant of Mining Licence Not specified. 4.1 Applicable Laws and Regulations • Mining Code; • Loi n° 2001-01 du 15 janvier 2001 portant code de l’environnement (Law n° 2001-01 of 15 January 2001 Environmental Code); and • Décret n° 2001 – 282 du 12 avril 2001 portant application du code de l’environnement (Decree n° 2001-282 of 12 April 2011 applying the Environmental Code). 4.2 Environmental Impact Assessment Yes, required for an applicant for an exploitation permit or mining concession. 4.3 Community Consultation • Mining Decree: yes • Environmental Code: yes 4.4 Rehabilitation Fund / Closure Fund Yes 3. SECURITY OF TENURE 4. ENVIRONMENT REGULATION136 137 5. TAXES / EQUITY 6. FOREIGN INVESTMENT INCENTIVES 5.1 Corporate tax rate 30% 5.2 Dividend tax 10% withholding tax. 5.3 Royalties 20% withholding tax. 5.4 Capital Gains tax 30% (regarded as operating profits and included in the corporate income tax base). 6.1 Governing Legislation Mining Code Note: benefits under the Loi n° 2004-06 du 6 février 2004 Code des investissements (Law n° 2004- 06 of 6 February 2004 Investment Code) and Décret n° 2004-627 du 7 mai 2004 Décret d’application du Code des investissements (Decree n° 2004-627/7 May 2004 Investment Decree) do not apply to the Mining Code or mining sector. 6.2 Authority • Ministry of Mining (Mining Code). • National Agency for the Promotion of Investment and Major Projects (l’Agence nationale chargée de la Promotion de l’Investissement et des Grands Travaux (APIX). 6.3 Incentives Provided Mining Code advantages include the following: • Exploration phase: exemption from all taxes (including VAT) on various input materials; exemption from import and export taxes/duties and most customs duties. • Exploitation phase: exemption from all taxes (including VAT) on various input materials in the production process (including fuel); exemption from various export taxes (for three years for exploitation licences; seven years for concessions; for the loan repayment period, up to a maximum of 15 years, for large exploitation projects). • All title holders benefit from “stabilisation” of the fiscal and customs regimes for the duration of their titles. • All title holders may freely open a foreign currency bank account in Senegal; may, for the most part, import and export funds freely; import and export goods, services and extracted minerals freely. 6.4 Minimum Investment Required No minimum specified. Restrictions on employment of foreign workers There are no work permits specifically but an approval of the labour contract by the Labour Authorities is required. The non-resident employee must obtain an identity card issued by the resident alien’s police service. His employment contract as an expatriate is then referred to the Directorate of Labour in order to be approved and sealed by this authority. The visa stamp will allow him to work regularly in Senegal. 7. LABOUR LAWS138 139 8. RESOURCE NATIONALISM Resource Nationalism Trends • The State has 10% free participation in all exploitation/ concession mining works; over and above this, the State may negotiate participation by itself and/or the private sector in the capital of the exploitation company. • Part of the fiscal resources coming from mining operations must be paid into an “equalisation fund” for local communities (still to be detailed in a decree). • Expropriation by the State of mining infrastructure and plants may take place pursuant to force majeure or public necessity. • Mining title holders, their suppliers and contractors must, as far as possible, use services originating in Senegal and products made or sold in Senegal to the extent that the services and products available are of competitive prices, quality, guarantee and delivery times. • The establishment and use of infrastructure, particularly transport and communication networks, shall be agreed between the State and title holder, and may be used by local communities at an agreed fee, and eventually opened to the public.140 141 SOUTH AFRICA 1.1 Mining Title A system of State custodianship in relation to mineral and petroleum resources applies. The State, acting through the Minister of Mineral Resources (“the Minister”), may grant, issue, refuse, control, administer and manage any reconnaissance permission, prospecting right, mining right, mining permit, retention permit, technical co-operation permit, reconnaissance permit, exploration right and production right. 1.2 Regulatory authority The Department of Minerals and Resources (“the DMR”). 1.3 Exploration and Mining Laws and Regulations • The Mineral and Petroleum Resources Development Act, No. 28 of 2002. (“the MPRDA”); • The Mineral and Petroleum Resources Development Amendment Act, No. 49 of 2008 ( partly came into effect on 7 June 2013) (“MPRDA Amendment Act”)); • The Mineral and Petroleum Resources Royalty Act, No. 28 of 2008 (“the Royalty Act”); • The Broad-Based Socio-Economic Empowerment Charter for the South • African Mining Industry (published in Government Gazette No. 26661 on 13 August 2004) (“the original Mining Charter”); • The Amendment of the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry of 2002 (published in Government Gazette 1. MINING LAW ISSUES No. 33573 on 20 September 2010) (“the revised Mining Charter”); • The Broad-Based Black Economic Empowerment Act, No. 53 of 2003; The Broad-Based Black Economic Empowerment Amendment Act, No. 46 of 2013; The Codes of Good Practice for the South African Minerals Industry (published 29 April 2009); • Mining Titles Registration Act, No. 16 of 1967; • The Precious Metals Act, No. 37 of 2005; • The Diamonds Act, No. 56 of 1986; The National Environmental Management Act, No. 107 of 1998; • The National Environmental Management: Protected Areas Act, No. 57 of 2003 (NEMPAA); • The Mine Health and Safety Act, No. 29 of 1996; • The Mine Health and Safety Amendment Act, No. 74 of 2008; • The Occupational Health and Safety Act, No. 85 of 1993; and • other legislation and regulations promulgated in terms thereof. Note: The Mineral and Petroleum Resources Development Amendment Bill (“MPRDA Bill”) is not yet an act of Parliament. On 31 May 2013, the Notice of Introduction of a Bill into Parliament, indicating that the Minister intended to introduce the MPRDA Bill to Parliament, was published in the Government Gazette.142 143 The MPRDA Bill was introduced to the National Assembly on 21 June 2013. Interested and affected parties were invited to furnish the Portfolio Committee on Mineral Resources (“the Portfolio Committee”) with comments by 6 September 2013. The Portfolio Committee received in excess of 80 written submissions on the MPRDA Bill, and on 11, 12, 13 and 18 September 2013, heard over forty oral presentations on the Bill The MPRDA Bill was passed by the National Assembly in 2014 and referred to President Jacob Zuma for assent and signing into law. 1.3 Exploration and Mining Laws and Regulations On 16 January 2015, President Jacob Zuma referred the MPRDA Bill back to the National Assembly for reconsideration. After careful consideration of the Bill and the submissions received, the President was of the view that the Bill would not pass constitutional muster. The Constitution requires that the President must assent to and sign the Bill referred to him by the National Assembly. However, in terms of section 79(1) of the Constitution, if the President has reservations about the constitutionality of the Bill, he may refer it back to the National Assembly for reconsideration. 1.4 Restrictions related to: 1.4.1 Foreign Investments Yes. Exchange control approval must be obtained from the Financial Surveillance Department (“FinSurv”) for: • outward capital transfers by residents falling outside the designated limits; • outward loan transfers by corporations to non-residents; • loans from non-residents to residents which do not meet the inward foreign loan criteria; • local financial assistance to foreign controlled companies falling outside certain designated limits; • dividend payments by foreign controlled companies in circumstances where such a distribution would lead to over borrowing; • loans by South African corporations to non-residents; and • inward foreign loans and trade finance facilities from nonresidents, which do not meet certain criteria. 1.4.2 Commodities No restrictions. 1.4.3 Licence holder corporate entity Corporate entities and joint ventures (incorporated or unincorporated) are permissible. jurisdiction in which incorporated There are no restrictions in relation to the jurisdiction in which the licence holder must be incorporated. local participation (BEE /indigenisation) The revised Mining Charter reiterates the original Mining Charter’s requirement that mining companies commit to “[a]chieve a minimum target of 26per cent ownership to enable meaningful economic participation of [Historically Disadvantaged South African (HDSAs) by [December] 2014]. Mining companies may, however, offset their HDSA ownership requirements against the value of their beneficiation activities. state ownership Currently there is no requirement that the State must be awarded an equity interest in mining companies.144 145 2. LICENSING SCHEME Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase (Exploitation permit and Concession) Authorisation required Yes (reconnaissance permission). Yes (prospecting right). Yes (mining right or a mining permit where the mining area does not exceed 5 hectares). Validity of Licence One year. Valid for the period specified in the right. This period may not exceed five years. Mining Right: Valid for the period specified in the right. This period may not exceed 30 years. Mining Permit: Valid for the period specified in the permit. This period may not exceed 2 years. Renewable No. Yes once, for a period not to exceed three years. Yes. Mining Right: Each renewal may not exceed a 30 year period. Mining Permit: May be renewed for 3 periods not exceeding one year each. Exclusivity of Licence Yes, as long as it relates to the same mineral and area of land. Yes, as long as it relates to the same mineral and area of land. Yes, as long as it is in relation to the same mineral and area of land. Transfer of Licence A reconnaissance permission may not be transferred, ceded, let, sublet, alienated, disposed of or encumbered by mortgage. Yes, but only with the Minister’s written consent. Mining Right: Yes, but only with the Minister’s written consent. Mining Permit: A mining permit may not be transferred, ceded, let, sublet, alienated, disposed of or encumbered by mortgage. Change of control/ shareholding See above. Yes, the “disposal” of a controlling interest is permissible, but only with the Minister’s written consent. An exception is the case of a controlling interest in a listed company. Mining Right: Yes, the “disposal” of a controlling interest is permissible, but only with the Minister’s written consent. An exception is the case of a controlling interest in a listed company. Mining Permit: See above. Community Consultation Section 10 of the MPRDA does not require consultation with interested and affected parties to take place in relation to an application for a reconnaissance permission. Yes. Prospecting right applicants must consult with interested and affected parties. As part of their licence application, applicants must submit the results of these consultations. Further, the holder of a prospecting right must notify and consult with the relevant landowner or lawful occupier of the land in question before commencing activities. Yes. Mining right and mining permit applicants must consult with interested and affected parties. As part of their licence application, applicants must submit the results of these consultations. Further, the holder of a mining right must notify and consult with the relevant landowner or lawful occupier of the land in question before commencing activities.146 147 3.1 Exclusive rights from exploration to mining Yes. Note, however, that the successful grant of a reconnaissance permission does not entitle the holder to an exclusive right to apply for or be granted a prospecting right or miningor mining permit. 3.2 Documentation/ Reports required for approval Various requirements and reports required. 3.3 Approval time for grant of mining Licence Variable. The MPRDA provides that a mining right and prospecting right come into effect on the date that they are executed. 4.1 Applicable Laws and Regulations The National Environmental Management Act, No. 107 of 1998 (“NEMA”); The MPRDA; The National Water Act, No. 36 of 1998; The National Environmental Management: Air Quality Act, No. 39 of 2004; The Environment Conservation Act, No. 73 of 1989; The National Environmental Management: Waste Act, No. 59 of 2008; The National Heritage Resources Act, No. 25 of 1999; The Hazardous Substances Act, No. 15 of 1973; The Health Act, No 61 of 2003 3. SECURITY OF TENURE 4. ENVIRONMENT REGULATION The National Environment Management: Protected Areas Act, No. 57 of 2003; and The National Environmental Management: Biodiversity Act, No. 10 of 2004. 4.2 Environmental Impact Assessment Mining right applicants must apply for and obtain an environmental authorisation under NEMA before mining activities may be lawfully conducted. Similarly, reconnaissance permission, prospecting right or mining permit applicants must also apply for and obtain an environmental authorisation under NEMA before the underlying activities may be lawfully conducted. Previously, all applicants were required to submit an environmental management programme or plan in terms of the MPRDA for approval. The recent shift to the NEMA environmental authorisation system was brought into effect from 8 December 2014 as a result of the implementation of ‘One Environmental System’ in terms of which the Department of Mineral Resources has become the regulator of most environmental aspects on mining and other areas. The Minister of Mineral Resources is now empowered to issue environmental authorisations, and certain other authorisations, in respect of certain activities which are to take place on these areas. In transitioning to this new system, any environmental management plans or programmes approved prior to the coming into force of the ‘One Environmental System’, is considered to be an environmental authorisation going forward.148 149 4.3 Community Consultation Yes. Mining and prospecting right applicants must consult with interested and affected parties. As part of their licence application and environmental authorisation application, applicants must submit the results of these consultations to the Department of Mineral Resources. Further, the holder of a prospecting or mining right must notify and consult with the relevant landowner or lawful occupier of the land in question before commencing activities. 4.4 Rehabilitation Fund/ Closure Fund Before the Minister of Mineral Resources issues an environmental authorisation, an applicant for a prospecting right, mining right or mining permit must make the requisite financial provision to ensure the management or rehabilitation of any negative environmental consequences. Should a prospecting right, mining right or mining permit holder fail or be unable to rehabilitate or manage any negative environmental consequences, the Minister may utilise, on written notice, all or part of the funds mentioned above to remedy the situation. The holder of a prospecting right, mining right or mining permit must annually assess his or her environmental liability and increase, subject to ministerial approval, his or her financial provision. In addition, recent amendments to NEMA further require that an annual audit report, prepared by an independent auditor, in respect of the adequacy of the financial provision is to be submitted to the Minister of Mineral Resources in addition to the holder’s assessment. A mineral rights holder is responsible for any environmental damage, pollution or ecological degradation and the management thereof as a result of his or her operations until the Minister has issued a closure certificate to the holder concerned. The MPRDA Bill seeks to impose such liability indefinitely, despite the issuing of a closure certificate. 4.5 Transfer of the environmental regulations The MPRDA Amendment Act read with the National Environmental Management Amendment Act, No.62 of 2008, implements a three-phase scheme for the shift of environmental regulation from the MPRDA to NEMA: Phase one: has been implemented (7 June 2013-6 December 2014); Phase two: lasts from months nineteen to thirty six within which environmental regulation on mines would be regulated by NEMA with the Minister being afforded competency within this period to administer NEMA (the Minister of Environmental Affairs would be the appeal authority) (7 December 2014- 6 June 2015); and Phase three: would start at the beginning of month thirty seven when the interim competency of the Minister to administer NEMA would end and the Minister of Environmental Affairs would be given exclusive competency to administer NEMA (both on mines and elsewhere) (7 June 2015- onwards). 5.1 Corporate Taxes Tax residency in South Africa South Africa applies a residence-based (or world-wide) system of taxation. A person other than a natural person will be subject to tax in South Africa if it is incorporated, established or formed in South Africa, or has its place of effective management in South Africa. 5. TAXES / EQUITY150 151 Non-residents will be taxed on only receipts derived from sources within or deemed to be within South Africa are subject to tax in South Africa, with certain exceptions. Taxes applicable to juristic persons Corporate Income Tax (“CIT”) South African and non-resident corporates are taxed at a rate of 28% Capital Gains Tax (“CGT”) The “net capital gain” on the disposal (actual or deemed) by a resident or a non-resident of certain assets is subject to a tax. Non-residents are subject to capital gains tax in South Africa in respect of the disposal of the following assets: • immoveable property situated in South Africa or any right of whatever nature to or in such immoveable property, including equity shares where at least 80% of the market value of those shares are attributable to immoveable property and the shareholder directly or indirectly holds at least 20% of the equity share capital in the company; and • assets of a permanent establishment of that person in South Africa Juristic persons such as corporations and trusts are required to include 66,6% of their capital gain in their taxable income. The maximum effective CGT tax rates as a result of these inclusions are as follows - • trusts – 26,6%; • companies – 18,6%; and • branches of non-resident companies – 18,6%. Mineral Taxes The Mineral and Petroleum Resources Royalty Act, 2008 Act requires that a person who “transfers” a mineral resource extracted in South Africa to pay royalties for the benefit of the National Revenue Fund. A fluctuating rate applies according to the following calculations: • 0.5 + [earnings before interest and taxes/ (gross sales in respect of refined mineral resources x 12.5)] x 100 = refined mineral royalty rate. This must not exceed 5 %. • 0.5 + [earnings before interest and taxes/ (gross sales in respect of unrefined mineral resources x 9)] x 100 = unrefined mineral royalty rate. This must not exceed 7%. All royalties become payable once the mineral is “transferred”. Income Tax provisions specific to mining operations There are specific provisions in the Act for mining operations. Some of these are discussed below: • There shall be allowed to be deducted from the income derived by the taxpayer from mining operations any expenditure incurred by the taxpayer during the year of assessment on prospecting operations (prospecting work preliminary to the establishment of a mine) in respect of any area within the South Africa together with any other expenditure which is incidental to such operations (section 15(b) of the Act). • Section 15(a) read with section 36(11)(b) of the Act allows that the costs incurred be capitalised as “unredeemed capital expenditure” to be deducted against mining income once the mine is operational. • There shall be allowed to be deducted from the income derived by the taxpayer from mining operations expenditure on development, general administration and 152 153 management (including any interest and other charges payable on loans utilised for mining purposes) prior to the commencement of production or during any period of non-production (section 15(a) read with section 36(11) (b) of the Act). • There shall be deducted from income derived from the working of any producing mine the amount of capital expenditure incurred (section 15(a) read with section 36(11)(b) of the Act). Acquisition, erection, construction, improvement or laying out of housing and furniture for employees, infrastructure for residential areas developed for sale to employees, recreational buildings and facilities owned and operated by the taxpayer mainly for use by employees and railway or similar function for transport of minerals from mine to nearest public transport system or outlet will all be deducted over 10 years (partial annual redemption assets) (section36(11)(d) of the Act). • Acquisition costs of motor vehicles for private or partly private use of employees will be deducted over 5 years (partial annual redemption assets) (section36(11)(d) of the Act). Further, a deduction is allowed in terms of section 36(e) and (f) in respect of certain expenditures pertaining to the mineral right and low cost residential units. 5.2 Withholding Taxes Dividends Generally dividends are subject to a 15% withholding tax on dividends (“DWT”), subject to certain exemptions. Royalties Royalties are subject to a 15% withholding tax as from 1 March 2015. Interest Withholding tax on interest at a rate of 15% as from 1 March 2015. Services Withholding tax on cross border services at a rate of 15% from 1 January 2016. Double Taxation Agreements (“DTA”) The provisions of a DTA between South Africa and another country may in certain circumstances reduce the above mentioned withholding taxes. Transfer Pricing / Thin Capitalisation Where supplies are made between “connected persons” as defined in section 1 of the Act, the South African transfer pricing provisions would need to be considered. The provisions apply to the supply of goods and services, to any affected transaction, that will result in any tax benefit being derived by a person that is a party to the affected transaction. An “affected transaction” means, inter alia: • any transaction, operation, scheme, agreement or understanding, essentially between affiliated entities; and • any terms or condition of the transaction is different from what would have existed had it taken place between independent persons dealing at arm’s length; and • the parties to the transaction are connected. Where the above described requirements are met, the taxable income or tax payable by any person that is party to such a transaction, operation or scheme and derives a tax benefit must be calculated as if that transaction had been conducted between independent parties at arm’s length. To the extent 154 155 Capital Gains Tax Any “net capital gain” which arises from any disposal (actual or deemed) by a resident or a non-resident of certain assets is subject to a tax. The net capital gain is commonly referred to as capital gains tax (“CGT”) but in actual fact is not treated separately and falls under the umbrella of income tax. In relation to non-residents, only the disposal of relevant assets situated in South Africa (including rights or interests, directly or, occasionally, indirectly held) and those attributable to a permanent establishment of the non-resident, are subject to CGT. Any applicable net capital gain is multiplied by the relevant inclusion rate; this amount is then added to the total amount of taxable income. The taxpayer is then required to pay normal tax at the applicable rate. Current inclusion rates: • unit trust funds and untaxed policy holder funds: 0%; • natural persons, special trusts and individual policy holder funds: 33.3%; • for all other taxable entities, including permanent establishments: 66.6%. Capital losses may be deducted from capital gains. Please note that certain double taxation agreement provisions may be relevant. that there is a difference between this amount (that would have resulted in an arm’s length transaction) and the actual amount, this discrepancy will be deemed to be an in specie dividend by the South African taxpayer to the non-resident connected person. South Africa has specific thin capitalisation rules which apply where financial assistance was granted directly or indirectly by a foreign company to its local subsidiary and SARS was of the opinion that the value of the financial assistance was excessive in relation to the equity capital of the subsidiary, and SARS would disallow the deduction of any interest payable in respect of that portion of the financial assistance which SARS found excessive. The interest disallowed was deemed to be a dividend declared to the foreign parent company. The thin capitalisation rules now form part of the transfer pricing provisions of the Income Tax Act. Accordingly, interest between connected parties should only be deductible to the extent that the underlying debt finance would have been granted had the funding been arranged between unconnected parties at an arm’s length. Limitations on the deductibility of loans There is a limitation on the amount of interest which can be deducted on loans sourced from a person that is in a ‘controlling relationship’ with the debtor where the interest is not subject to tax in the hands of the person to which it accrues.156 157 6. FOREIGN INVESTMENT INCENTIVES 6.1 Do they exist Yes. 6.2 Governing Legislation The Income Tax Act, No. 58 of 1962 (“South African Income Tax Act”). 6.3 Authority The Department of Trade and Industry (DTI); The Industrial Development Corporation of South Africa (IDC) and its Strategic Business Units (SBUs); The South African Revenue Service. 6.4 Incentives Provided The Mining and Beneficiation SBU under the IDC focuses on the development of small- and medium scale mining and beneficiation. It provides, inter alia, medium-term financing (for example, loans, suspensive sales, equity and quasi-equity participation) in order to establish or expand junior mining houses and to enable HDSAs to acquire mining assets. In relation to exchange control, incentives include: • funds held in “non-resident” accounts are freely transferable; • foreign companies, governments and institutions may list instruments, including derivatives based on foreign reference assets, on South Africa’s security exchanges; • any foreign entity wishing to list inward listed instruments on the JSE Limited requires the prior approval from FinSurvt • foreign dividends repatriated to South Africa after 26 October 2004 may be retransferred offshore without restriction; • international headquarter companies that meet certain shareholding and asset criteria may apply for approval to invest offshore without restriction; • the repatriation of capital investments by non-residents is permitted; and • South African companies, with at least 75% of their voting powers, capital or earning held or controlled (directly or indirectly) by a non-resident, may rely on local financial assistance facilities is restricted. Certain tax deduction and allowances are available under the South African Income Tax Act. South Africa also has 83 double taxation agreements which may apply to reduce tax liability. 6.5 Minimum Investment Required In relation to the Mining and Beneficiation SBU, a project should have a finance requirement from the IDC of more than ZAR 1 million in debt and/or more than ZAR 5 million in equity. 7. LABOUR LAWS 7.1 Restrictions on employment of foreign workers Non-South African citizens or permanent residents must obtain a valid work permit from the Department of Home Affairs. Categories of work permits include general work permits; intra-company transfer work permits; and critical work permits. Each permit category has specific requirements which must be fulfilled.158 159 UNITED REPUBLIC OF TANZANIA 1.1 Mining Title (state-owned or private) The entire property and control over minerals on, in or under the land on the territory of Tanzania is vested in the United Republic. 1.2 Regulatory authority • Minister of Energy and Minerals; • Commissioner for Minerals; • Mining Advisory Board; • Geological Survey Agency of Tanzania; and • Chief Inspector of Mines. 1.3 Exploration and Mining Laws and Regulations (what are the act/ laws/ regulations that apply) • Mining Act, 2010 (the Mining Act); • The Mining Mineral Rights Regulations, 2010 (containing the Model Development Agreement); • The Mining (Environmental Protection for Small Scale Mining) Regulations, 2010; • The Mining (Mineral Beneficiation) Regulations, 2010; • The Mining (Mineral Trading) Regulations, 2010; and • The Mining (Radioactive Minerals Regulations), 2010. 1.4 Restrictions related to: 1.4.1 Foreign Investments No. 1. MINING LAW ISSUES 1.4.2 Commodities (yes/ no, which ones) Yes (Gemstones - see 1.4.3). 1.4.3 Licence holder State ownership • Mineral rights can be granted to individuals and bodies corporate, subject to the following restrictions: • an individual should not be under the age of eighteen years and should not be an un-discharged bankrupt, having been adjudged or, otherwise declared bankrupt under any written law or having entered into any agreement or scheme of composition with his creditors, or taken advantage of any law for the benefit of debtors; • a body corporate should not be in liquidation, made a composition or arrangement with its creditors or having been made an order against by a court of competent jurisdiction for its winding up or dissolution; • licenses for small scale mining operations, whose capital investment is less than USD 100,000, shall only be granted to citizens of Tanzania and companies with an exclusive Tanzanian shareholding and board and the control of which is exercised from within Tanzania by persons all of whom are citizens of Tanzania; • licenses for mining gemstones shall only granted to applicants who are Tanzanians; • mineral rights shall not be granted to individuals or bodies corporate which are in default under other 160 161 mineral rights; and • prospecting licenses shall not be granted to individuals and bodies corporate already owning more than twenty other valid prospecting rights, unless the cumulative prospective areas of such other prospecting licenses do not exceed 2,000 square kilometres. • Holders of licenses for large scale mining operations, whose capital investment is not less than USD 100,000,000 may be required to enter into a development agreement with the United Republic pursuant the terms of which free carried interest in the license holder is granted to the government and further state participation in the license holder is required. • The Mining Act provides that the Minister in charge of Mines shall make regulations prescribing the minimum shareholding requirements and procedure for selling shares to Tanzanian public through listing with the Dar es Salaam Stock Exchange. Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Authorisation required The Mining Code does not provide for a reconnaissance licence. A prospecting licence is required. Prospecting licences are granted by the Commissioner for Minerals. • A mining licence is required for medium scale mining operations whose capital investment is between USD100,000 and USD1,000,000. • A special mining licence is required for large scale mining operations whose capital investment is not less than USD100,000,000. Both licenses are granted by the minister in charge of mines. Validity of Licence Not applicable. Period for which the applicant has applied, not exceeding four years. • For mining licences: ten years. • For special mining licences: estimated life of the ore body as indicated in the feasibility study or such period as the applicant may request whichever period is shorter. 2. LICENSING SCHEME162 163 Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Renewable (yes/ no) Not applicable. Yes. For a first period not exceeding three years and a second period not exceeding two years. If the holder is not in default and at the end of the second period of renewal a further period is required to complete a feasibility study already commenced by the holder, further renewal is possible for such further period as may be reasonably required for that purpose but not exceeding two years. Yes: • Mining licences: renewable for the period for which application has been made but not exceeding ten years; and • special mining licences: renewable for a period not exceeding the estimated life of the remaining ore body. Exclusivity of Licence Not applicable. Yes. Yes. Transfer of Licence (yes/ no and which approvals are needed) Not applicable. Yes. The written consent of the Commissioner for Minerals. Yes. The written consent of the Minister of Energy and Minerals is required. Change of control/ shareholding (yes/no and which approvals are needed) Not applicable. Yes, the Commissioner for Minerals written approval is required. Yes. The Minister of Energy and Mineral’s written approval is required. Community Consultation Not applicable. No specific requirements. Yes. 3. SECURITY OF TENURE 3.1 Exclusive rights from exploration to mining No exclusivity, but, the holder of a prospecting licence has priority to apply for a (special) mining licence. 3.2 Documentation/ Reports required for approval • For mining licences: • description of the area and mineral deposits; • feasibility study; • plan on employment and training of Tanzanians and succession plan on expatriate employees; • particulars of financial and technical resources available; and • procurement plan of goods and services available in Tanzania. • For special mining licences: • statement of period, area and mineral deposits; • proposed programme for mining operations, including a forecast of capital investment, the estimated recovery rate or ore and mineral products and the proposed treatment and disposal of ore and minerals recovered; • proposed plan for relocation, resettlement and compensation of people within the mining areas; • environmental certificate; • details of expected infrastructure requirements; • procurement plan of goods and services available in Tanzania; and164 165 5.1 Corporate tax rate 30%. 5.2 Dividend tax The 2011 General Tax Code of Madagascar does not provide for a dividend tax. 5. TAXES / EQUITY • plan on employment and training of Tanzanians and succession plan on expatriate employees. 3.3 Approval time for grant of mining Licence Not specified. 4.1 Applicable Laws and Regulations • Environmental Management Act, 2004; • Mining (Environment Management and Protection) Regulations, 1999; and • The Mining (Environmental Protection for Small Scale Mining) Regulations, 2010. 4.2 Environmental Impact Assessment An environmental impact assessment is required for a special mining licence. 4.3 Community Consultation (yes/ no) Yes, for special mining licences. 4.4 Rehabilitation Fund/ Closure Fund Yes, for special mining licences. 4. ENVIRONMENT REGULATION 6. FOREIGN INVESTMENT INCENTIVES 5.3 Royalties • Uranium: 5%. • Gemstone and diamond: 5%. • Metallic minerals and platinum group minerals: 4%. • Gem: 1%. • All other minerals: 3%. 5.4 Capital Gains Tax Capital Gains Tax is applicable. 6.1 Do they exist (yes/no) Yes but not applicable to the mining sector. 6.2 Governing Legislation • Tanzania Investment Act [Cap 38 R.E. 2002]; and • Income Tax Act, 2004. 6.3 Authority Tanzania Investment Centre and National Investment Steering Committee. 6.4 Incentives Provided The general incentives provided for by the Tanzania Investment Act do not apply to entities conducting reconnaissance, prospecting or mining operations under the Mining Act. Specific incentives can be requested from the National Investment Steering Committee. 6.5 Minimum Investment Required Not applicable to the mining sector.166 167 8. RESOURCES NATIONALISM 7.1 Restrictions on employment of foreign workers Expatriates who want to work in Tanzania are required to obtain a work permit. The policy and practice of the Tanzanian labour and immigration authorities is to decline applications for residence permits where local skills are available to meet the requirements. 8.1 Resources Nationalism Trend As mentioned at 1.4.3 it is expected that regulations prescribing the minimum shareholding requirements and procedure for selling shares to the Tanzanian public through listing with the Dar es Salaam Stock Exchange will be issued, as provided for by the Mining Act. 7. LABOUR LAWS168 169 ZAMBIA 1.1 Mining Title All rights of ownership in searching for, mining and disposing of minerals wherever they may be located in Zambia are vested in the President on behalf of the Republic of Zambia and effective notwithstanding any right, title or interest that may be possessed by any person over the soil in or under which the mineral is found. 1.2 Regulatory authority Ministry of Mines and Minerals Development. 1.3 Exploration and Mining Laws and Regulations Mines and Minerals Development Act No. 7 of 2008. 1.4 Restrictions related to: 1.4.1 Foreign Investments Yes, artisan’s mining rights are strictly for Zambian citizens. Prospecting permits, small-scale mining licences, smallscale gemstone licences, and mining rights for industrial minerals must be held by Zambian citizens or citizen owned companies. 1.4.2 Commodities No restrictions. 1.4.3 Licence holder Corporate entity (joint venture permissible)? No, subject to 1.4.1. 1. MINING LAW ISSUES Jurisdiction in which incorporated Yes, a licence holder must be incorporated in Zambia and must have a registered office in Zambia. Local participation (BEE/ indigenisation) Yes, (see 1.4.1). State ownership No. Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Authorisation required N/A. Yes. Prospecting permit, prospecting licence and large-scale gemstone licence (for prospecting operations). Yes. Small-scale mining licence, large-scale mining licence, smallscale gem stone licence, largescale gemstone licence (for mining operations) and artisanal mining right. Validity of Licence N/A. • prospecting permit: 5 years; • prospecting licence: 2 years; • large-scale gemstone licence: 10 years. • small-scale mining licence: 10 years; • large-scale mining licence: 25 years; • small-scale gemstone licence: 10 years; • large-scale gemstone licence: 10 years; • artisanal mining right: 2 years. 2. LICENSING SCHEME170 171 Reconnaissance Phase Prospecting Phase Mining/ Exploitation Phase Renewable N/A. • prospecting permit: No; • prospecting licence: Yes • large-scale gemstone licence: Yes. • small-scale mining licence: Yes; • large-scale mining licence: Yes. • small-scale mining licence: Yes; • large-scale mining licence: Yes; • small-scale gemstone licence: Yes; • large-scale gemstone licence: Yes; • artisanal mining right: Yes. Exclusivity of Licence N/A. • prospecting permit: Yes, except gemstones; • prospecting licence: Yes, except gemstones; • large-scale gemstones licence: Yes. • small-scale mining licence: Yes, except gemstones; • large-scale mining licence: Yes, except gemstones; • small-scale gemstone licence: Yes, but only in relation to gemstones; • large-scale gemstone licence: Yes; • artisanal mining right permit: Yes. Transfer of Licence N/A. • prospecting permit: Yes, require approval of Director of Geological Survey. • prospecting licence: Yes, must notify Minister not less than 30 days before the intended transfer. Transfer will be approved once the Minister is satisfied that transferee not disqualified under the Mines and Mineral Development Act No. 7 of 2008; • large-scale gemstone licence: Yes, require approval of the Minister. • small-scale mining licence: Yes, require approval of Director of Mines; • large-scale mining licence: Yes, require approval of the Minister; • small-scale gemstone licence: Yes, require approval of the Director of Mines; • large-scale gemstone licence: Yes, require approval of the Minister.172 173 Change of control/ share-holding N/A. • prospecting permit: Yes, require approval of Director of Ge - ological Survey. • prospecting licence: Yes, must notify the Minister not less than 30 days before the intended transfer. Transfer will be approved once the Minister satisfied that transferee not disqualified under the Mines and Mineral Develop - ment Act No. 7 of 2008; • large-scale gemstone licence: Yes, require approval of the Minister, addi - tionally, there is a general restriction that a company which holds a mining right shall not, without the written consent of the Minister, register any transfer of shares in that company to any person, or give another person control of the company, after the date of granting of the mining right. • small-scale mining licence: Yes, require approval of Director of Mines; • large-scale mining licence: Yes, require written consent of the Minister; • small-scale gemstone licence: Yes, need the approval of the Director of Mines; • large-scale gemstone licence: Yes, require approval of the Minister, additionally, there is a general restriction that a company which holds a mining right shall not, without the written consent of the Minister, register any transfer of shares in that company to any person, or give another person control of the company, after the dtate of granting of the mining right. Community Consultation N/A. Require written consent from relevant owner or authority. Require written consent from relevant owner or authority. 3. SECURITY OF TENURE 4. ENVIRONMENT REGULATION 3.1 Exclusive rights from exploration to mining Yes. 3.2 Documentation / Reports required for approval Yes. 3.3 Approval time for grant of a license or permit If all statutory requirements are met, prospecting licences, large scale mining licence, large-scale gemstone licences, shall be granted within 60 days from the date of receipt of the application. If all statutory requirements are met, prospecting permits, small scale mining licences, small-scale gemstone licences and artisanal mining rights, approval shall be given within 30 days from the date of receipt of the application. 4.1 Applicable Laws and Regulations • Mines and Minerals Development Act, 2008; • Environmental Management Act, 2011; • Environmental Protection and Pollution Control Act, 1990; • Air Pollution Control (Licensing and Emission Standards) Regulations, Statutory Instrument, 1996; • Environmental Protection and Pollution Control (Environmental Impact Assessment) Regulations, Statutory Instrument, 1997; • The Forests Act No. 7 of 1999; • Forest Regulations; • Hazardous Waste Management Regulations, Statutory Instrument, 2001;174 175 • Ozone Depleting Substances Regulations, Statutory Instrument, 2001; • Pesticides and Toxic Waste Regulations, Statutory Instrument, 1994; • Water Resources Management Act No. 21 of 2011; • The Mines and Minerals Environmental Regulations, 1997; • Waste Management (Licensing of Transporters of Wastes and Waste Disposal Sites) Regulations, Statutory Instrument, 1993; • Water Pollution Control (Effluent and Waste Water) Regulations, Statutory Instrument, 1993; • The Water Act Chapter 1998; • Water Supply and Sanitation Act No. 28 of 1997; and • Water Supply and Sanitation (Licensing of Utilities and Service Providers) Regulations, 2000. 4.2 Environmental Impact Assessment Yes. An environmental impact assessment is required prior to obtaining any approval under the Environmental Management Act, 4.3 Rehabilitation Fund/Closure Fund A person may be directed to carry out rehabilitation works if such person is responsible for land contamination, within a reasonable specified time. If immediate correction is required, the Inspectorate may carry out rehabilitation works and may charge all or part of the cost of those works to the person responsible for causing the dereliction or contamination, which costs are to be paid within a specified reasonable time. 4.4 Community Consultation Yes. A notification in the Gazette , circulated at least 28 (twenty-eight) days inviting representations from any interested person affected by the grant of the licence or permit is required. 176 177 ZIMBABWE 1.1 Mining title (state-owned or private) The dominium in and the right of searching and mining for and disposing of all minerals, mineral oils and natural gases is vested in the President of Zimbabwe. 1.2 Regulatory authority • Ministry of Mines and Mining Development; • Ministry of Energy and Power Development; • Ministry of Water Resources; • Development, Mining Affairs Board; • Minerals Marketing Corporations of Zimbabwe; • The Chamber of Mines of Zimbabwe. 1.3 Exploration and mining laws and regulations • Mines and Minerals Act [CAP 21:05]; • Gold Trade Act [CAP 21:03]; • Base Minerals Export Control Act [CAP 21:01]; • Environmental Management Act [CAP 20:27]; • Indigenisation and Economic Empowerment Act [CAP 14:33]; • Indigenisation and Economic Empowerment Regulations, 2010; • Indigenisation and Economic Empowerment Regulations for the Zimbabwean Mining Sector, 2011; • Zimbabwe Investment Authority Act, 2006 [CAP 14:30]; 1. MINING LAW ISSUES • Mining (Mangement and Safety) Sl 109 0f 1990; • Mining (General) Regulations Government Notice 247 of 1977; • Mining (Health and Sanitation) Regulation Sl 182 of 1995; • Mines and Minerals (Custom Milling Plants) Regulations Sl 239 of 20; • Mines and Minerals (Contracted Inspector) Regulations Sl 249 of 2006; • Mines and Minerals (Mineral Unit) Regulations Sl 82 of 2008; • Mines and Mineral (Declaration of Minerals) Notice Sl 91 of 1990 Regulations; • Copper Control Act [CAP 14:06]; • Explosives Act [CAP 10:08]; • Atmospheric Pollution Prevention Act [CAP 20:03]; • Harzadous Subsatance and Articles Act [CAP 15:05], • pheumoconiosis Act [CAP 15:08]; • Precious Stone Trade Act Chapter 21:06; • Water Act Chapter 20:22; • Zimbabwe National Water Authority Act Chapter 20:25; • Companies Act Chapter 24:03.178 179 1.4 Restrictions related to: 1.4.1 Foreign investments • Under the Zimbabwe Investment Authority Act, any person who wishes to obtain the approval of the Zimbabwe Investment Authority (“the Authority”) to invest in Zimbabwe or wishes his or her business activity to be approved by the Authority is required to submit an application to the Authority for an investment licence. An investment under the Zimbabwe Investment Authority Act means an investment in Zimbabwe or a proposal therefor which will necessitate the expenditure of convertible foreign currency. (The Minister of Industry and International Trade may also specify a class of investment to be included under this definition.) This in effect means that all new foreign investment into Zimbabwe requires an investment licence issued by the Authority upon successful approval of a project proposal submitted to the Authority. • A completed application form (ZIA 1) acts as the project proposal. The application forms are available and can be collected from the ZIA offices or downloaded from the ZIA website (www.zia.co.zw). • An Investment licence is subject to the following: • it is valid for a definite period fixed by the Board at the date of issue; • if a licenced investor wishes to renew its investment licence, it must do so before expiration of the period fixed by the Board; • a licenced investor may not, except with the prior approval of the Authority, assign, cede or otherwise transfer its investment licence. 2. LICENSING SCHEME • The International Monetary Fund has imposed restrictions on engagement with Zimbabwe for failing to keep up with repayments on its loan which Zimbabwe has owed since 2001. However, steps are being taken to ease the imposed restrictions. • Under United States and European Union sanctions, transactions with certain specifically designated nationals and linked entities are prohibited. 1.4.2 Commodities • Diamonds • The government has reportedly approved a policy enforcing 100% government ownership of diamond mines and it may choose to partner investors though it retains its controlling stake. The policy acknowledges sovereign ownership of diamonds by the Zimbabwean people through the state. The government has also approved the Diamond Exploration Act, which prohibits the export of unpolished or uncut diamonds. It is not, however, clear when these laws and policies will be implemented. The policy states that all rough diamonds shall be sold through a Government appointed agency and that the sale of all rough diamonds shall either be by tender or auction or negotiation or by any other system approved by government. The Diamond Board shall be appointed by the Minister of Mines and Mining Development. The role of the Board is to advise the Minister of Mines and Mining Development on issues relating to the diamond industry. The policy makes provision for a department within the Ministry of Mines to be headed by a Precious Stones Commissioner who is to be appointed by the Public Service Commission.180 181 • Coal, mineral oils, natural gases or nuclear energy source material • No rights to mine coal, mineral oils, natural gases or nuclear energy source material may be acquired except under a special grant (a special licence granted on land reserved by the Minister against prospecting or pegging). This does not apply to a holder of a block of coal, mineral oil or natural gas claims, which was registered under the Mines and Minerals Act [CAP 195:1939]. 1.4.3 Licence holder Corporate entity Individuals, juristic person and joint ventures may hold prospecting and mining rights (however, only natural persons who are permanent residents of Zimbabwe and older than 18 years may hold (non-exclusive) prospecting licences). Jurisdiction in which incorporated Not specified. Licences available (Non-exclusive) prospecting licence; exclusive prospecting order; registered mining location; mining lease (a joined block of registered mining locations); special mining lease (a mining lease which is funded wholly or mainly by investment in foreign currency, which investment will exceed US$ 100 million, and where the mines output is intended principally for export); special grant (a special licence granted on land reserved by the Minister against prospecting or pegging); and a special grant for coal, mineral oils, natural gases and nuclear energy source material. State ownership As mentioned in 1.4.2 above, the government has reportedly approved a policy for enforcing 100% government ownership of diamonds. Furthermore, the indigenisation requirements discussed in paragraph 1.4.4 below may also be of relevance, as the designated entities include state enterprises. 1.4.4 Indigenisation The indigenisation policy of Zimbabwe requires, amongst other things, that the government should endeavour to secure that at least 51% of the shares of every public company and other business must be owned by indigenous Zimbabweans. An indigenous Zimbabwean is any person who, before 18 April 1980, was disadvantaged by unfair discrimination on the grounds of his or her race, and any descendant of such person (including any company, association, syndicate or partnership of which indigenous Zimbabweans form the majority of the members or hold the controlling interest). Every non-indigenous mining business in Zimbabwe must achieve the minimum indigenisation and empowerment quota by the disposal of its shares or interests to a designated entity (that being the National Indigenisation and Economic Empowerment Fund; the Zimbabwe Mining Development Corporation; any company or other entity incorporated by the Zimbabwe Mining Development Corporation or the Fund; a statutory sovereign wealth fund that may be created by law; or an employee share scheme or trust, management share ownership scheme or trust or community share ownership scheme or trust). The minimum indigenisation and empowerment quota means a controlling interest of 51% of the shares or interest required to be held by indigenous Zimbabwean in the non-indigenous mining business concerned.182 183 Recon - naissance Phase Prospecting Phase Mining/ Exploitation Phase Authorisation required Not applicable. Yes. Yes. Validity of Licence Not applicable. • (Non-exclusive) prospecting licence: two years. • Exclusive prospecting order: three years. • Special grant: Subject to the terms and conditions of the special grant. • Registered mining location: Indefinite. • Mining lease: Indefinite. • Special mining lease: Subject to terms and conditions of lease, but not exceeding 25 years. • Special grant: Subject to the terms and con - ditions of the special grant or, if not specified, indefinite. • Special grant for coal, mineral oils, natural gases and nuclear energy source material: Subject to the terms and conditions of the special grant. Renewable Not applicable. • (Non-exclusive) prospecting licence: no. • Exclusive prospecting order: yes. • Special grant: subject to the terms and conditions of the special grant. • Registered mining location: Not applicable. • Mining lease: not applicable. • Special mining lease: yes. • Special grant: subject to the terms and con - ditions of the special grant. • Special grant for coal, mineral oils, natural gases and nuclear energy source material: Subject to the terms and conditions of the special grant. 2. LICENSING SCHEME Exclusivity of Licence Not applicable. • (Non-exclusive) prospecting licence: no, but a prospecting licence can, on the satisfaction of certain requirements, be made exclusive by applying for an exclusive prospecting order. • Exclusive prospecting order: yes. • Special grant: Yes. • Registered mining location: yes. • Mining lease: yes. • Special mining lease: yes. • Special grant: yes. • Special grant for coal, mineral oils, natural gases and nuclear energy source material: yes. Transfer of Licence Not applicable. • (Non-exclusive) Prospecting licence: no. • Exclusive prospecting order: yes, but only on recommendation by the Mining Affairs Board in special circumstances and subject to such terms and conditions it imposes. If a company holds the licence, the requirements contained in the Indigenisation Act must also be met. • Special grant: subject to the terms and conditions of the special grant. • Registered mining location, mining lease and special mining lease: Yes, subject to notification 60 days prior to the transfer to the Mining Commissioner, payment of transfer duty by the purchaser, submission of an application to, and registration of the transfer by, the Mining Commissioner. Transfer is also subject to the requirements of the Indigenisation Act. • Special grant: Subject to the terms and conditions of the special grant or, if not specified, as above. • Special grant for coal, mineral oils, natural gases and nuclear energy source material: no.184 185 3. SECURITY OF TENURE 3.1 Exclusive rights from exploration to mining Yes. 3.2 Documentation/ reports required for approval Yes, these are set out in detail in the Mines and Minerals Act. This varies depending on the licence or order for which approval is sought. 3.3 Approval time for grant of mining licence This is not stipulated in the Mines and Minerals Act. Change of control/ shareholding Not applicable. • (Non-exclusive) Prospecting licence: no. • Exclusive prospecting order: Yes. If a company holds the licence, the requirements contained in the Indigenisation Act must also be met. • Special grant: subject to the terms and conditions of the special grant. •Registered mining location, mining lease and special mining lease: yes, subject to the provisions of the Indigenisation Act. • Special grant: Subject to the terms and conditions of the special grant or, if not specified, as above. • Special grant for coal, mineral oils, natural gases and nuclear energy source material: subject to the terms and conditions of the special grant. Community consultation Not applicable. The licence holder must get consent in writing from the owner of private land or an occupier of a portion of communal land before carrying out prospecting operations. Where consent is unreasonably withheld, the Minister can authorise the licence holder to exercise his or her rights under the licence regardless of the lack of consent, subject to any conditions the Minister imposes. Where the licence falls on any communal land occupied as a village, written consent from the rural district council for the area concerned must be obtained. • Private landowners are entitled to the payment of an appropriate sum by the mining licence holder, as determined by the Mineral Affairs Board, in compensation for the mining operations on their land. • Where the licence holder conducts mining operations on communal land in the jurisdiction of a single rural district council, compensation, in an amount determined by the Mineral Affairs Board, shall be paid to the District Development Fund referred to in section 3 of the District Development Fund Act [Chapter 29:06]. 4.1 Applicable laws and regulations • Mines and Minerals Act; • Environmental Management Act. 4.2 Environmental impact assessment Yes. The Environmental Management Act requires that an environmental impact assessment be acquired for, amongst other things, mineral prospecting, mineral mining, quarrying, and ore processing and concentrating. The Mines and Minerals Act requires that a report on the anticipated impact of mining operations on the environment be submitted as part of the plan for the development and operation of a proposed mine when a special lease is sought. 4.3 Community consultation Yes. 4.4 Rehabilitation fund / closure fund The Environmental Management Act provides for the establishment of the Environment Fund, of which the objects include, amongst other things, rehabilitation of degraded environments and cleaning up polluted environments. 4. ENVIRONMENT REGULATION186 187 5.1 Corporate tax rate 25%, although lower rates may apply under incentive schemes. 5.2 Dividend tax Dividends from securities listed on the Zimbabwe stock exchange are taxed at a rate of 10%; otherwise, the rate is 15%. The rate may be reduced under a tax treaty. 5.3 Royalties Royalties paid to a non-resident are subject to a 15% withholding tax. The rate may be reduced under a tax treaty. Mining companies are required to pay royalties on the fair market value of minerals. 5.4 Capital gains tax The capital gains tax rate on gains from the sale or disposal of a marketable security and immovable property acquired before 1 February 2009 is 5%. A sale of a marketable security (excluding listed shares) and immovable property acquired after that date is taxed at 20% after allowing for deductions. An inflation allowance equal to 2.5% of the cost, alterations and additions of the asset is granted. A capital gains withholding tax of 15% applies on the sales proceeds of immovable property, and of 1% on the sales proceeds of marketable securities. 5. TAXES / EQUITY 6. FOREIGN INVESTMENT INCENTIVES 6.1 Do they exist Yes. 6.2 Governing legislation This is dealt with in several pieces of legislation, including the Zimbabwe Investment Authority Act and the Income Tax Act [CAP 23:06]. 6.3 Authority The main administrators are the Zimbabwe Revenue Authority for tax incentives; and the Ministry of International Trade, the Industrial Development Corporation and the Zimbabwe Investment Authority for non-tax incentives. 6.4 Incentives provided Most incentives in Zimbabwe apply equally to both domestic and foreign investors. For instance, in terms of the Build Own Operate and Transfer (BOOT) and BOT Arrangements, contractors may enter into contracts with the state or statutory corporation under which the contractor undertakes to construct infrastructure for the state or statutory corporation which will be in consideration for the right to operate or control for a specified period. Thereafter, the contractor will transfer ownership or control of the item to the state or statutory corporation. The contractor enjoys a tax exemption for the first 5 years, and is then taxed at 15% for the second 5 years. Furthermore, for mining companies, all capital expenditure on exploration, development and operating incurred wholly and exclusively for mining operations is allowed in full. Under the Zimbabwe Investment Authority Act, it is contemplated that the Minister of Industry and International Trade, in consultation with the Minister of Finance, shall publish guidelines for investment which shall mention 188 189 7.1 Restrictions on employment of foreign workers Neither the Labour Act [CAP 28:01] nor the Mines and Minerals Act imposes any such restrictions on foreign workers. 7. LABOUR LAWS (i) general incentives that may be applicable to licensed investors, whether foreign or domestic; (ii) special incentives that may be applicable to specific categories of licensed investors, whether foreign or domestic; and (iii) any other incentives and conditions that may be applicable to investors, whether foreign or domestic. The Minister of Industry and International Trade may, however, specify different incentives for domestic and foreign licensed investors. 6.5 Minimum investment required N/A.