Mining rights and title in Mozambique

Mining rights and title

To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?

Mozambique’s Constitution establishes the fundamental principle that all mineral resources found in the soil, subsoil or water are the sole property of the state. This same principle is reproduced in the Mining Law. Holders of surface rights may, under no circumstances, be vested with title to minerals found in the subsoil, except if special mining rights are obtained from the state. Private prospecting, and the exploration and mining of mineral resources, is only permitted under mining licences awarded by the government (Ministry of Mineral Resources and Energy).

What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?

Several sets of mining data, including geological and geochemical data, are available for consultation at the National Directorate for Geology and Mines by private entities considering investments in the mining sector. A detailed registry of mining areas and existing mining licences is also available. Nevertheless, mining data derived from prospecting and exploration activities may only be disclosed 90 days after the termination date of the respective mining title.

Mozambique has the Mining Registry Site, which is part of the Ministry of Mineral Resources and Energy. This online tool was created to ensure compliance with the standards set by the Extractive Industries Transparency Initiative and is essentially aimed at improving transparency in the mining sector. In addition, it has proved useful in promoting and boosting investment given that it provides potential investors with immediate and clear information on the areas open to mineral activities. It also provides a reference list of the various prospecting and exploration licences and mining concessions awarded. The Portal is regularly updated and can be viewed at http:/portals.fiexicadastre.com/Mozambique/en/.

What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?

Seven types of mineral rights or licences are available:

• prospecting and exploration licences;
• mining concessions;
• mining certificates;
• mining passes;
• mineral handling licences;
• mineral processing licences; and
• marketing licences.

Only one type of mineral right can exist over an area of land at any one time. The acquisition, modification, transfer and termination of mineral licences are subject to registration.

The most important licences for medium and large-scale projects are the prospecting and exploration licences (for the exploration phase) and the mining concessions (for the mining and production phase).

Prospecting and exploration licences

Prospecting and exploration licences are initially granted for two years in the case of construction minerals (renewable for an additional two-year period) and five years for all other minerals (renewable for an additional three-year period), for areas of up to 198 and 19,998 hectares respectively. These licences allow their holders to access the licensed area and to carry out all activities ancillary to prospecting and exploration, such as the construction of temporary structures and the removal or sale of samples and specimens.

Holders of prospecting and exploration licences must submit an annual report by 28 February of each year, summarising the activities undertaken during the previous year, as well as a work programme and budget for the forthcoming year, until 30 March.

Mining concessions

Mining concessions are granted for up to 25 years, allowing the holder to extract minerals from the concession area and to carry out all activities ancillary to extraction, such as the construction of structures and the marketing of minerals. Applications for mining concessions must be addressed to the Minister of Mineral Resources and Energy and filed with the National Institute of Mines. Furthermore, these applications are always subject to prior opinion issued by the government of the relevant province.

Mining concessions are granted on an exclusive basis and may be extended once, for the same 25-year period. Before commencing extraction activities, the holder of the mining concession must obtain an environmental licence and a land-concession form (DUAT), as well as prepare a resettlement and compensation plan for the communities affected by the mining activities. These activities must then be launched within two years, and production within four years, of the awarding of the mining concession.

The mining production plan must include, among other elements:

• details of the ore deposit;
• design of the mine site;
• the operations schedule;
• the necessary infrastructure;
• expected dates for the start of development and commercial production; and
• environmental and health and safety plans.

Mineral processing licences

In Mozambique’s Mining Law, mineral processing is defined as the mineral operations carried out to obtain mining ore, spanning the entire extractive industry chain. Mineral processing licences are granted for a period of 25 years and may be extended once for an equivalent period. Applications for this licence must be addressed to the Minister of Mineral Resources and Energy and filed with the National Institute of Mines.

Mineral handling licences

The Mining Law defines mineral handling as mineral operations carried out to recover useful ore components in order to then transform these into useful or profitable minerals using physical processes, excluding industrial transformation. Mineral handling licences are granted for a period of 25 years and may be extended once for an equivalent period. Applications for this licence must be addressed to the Minister of Mineral Resources and Energy and filed with the National Institute of Mines.

Marketing licences

When the entity selling or exporting minerals is not the same as that which produced or mined these minerals, a marketing licence is required. See question 33.

What is the regime for the renewal and transfer of mineral licences?

Prospecting and exploration licences are valid for up to two years in the case of construction minerals (renewable for an additional two-year period) and five years for all other minerals (renewable for an additional three-year period). In order to be granted an extension, an extension fee must be paid and the following documents must be submitted to the Ministry of Mineral Resources and Energy, at least 60 days prior to the termination date of the licence:

• a tax clearance certificate confirming that all mining taxes have been paid;
• a report detailing the activities carried out during the initial phase (including the investments made); and
• a work programme covering the extension period (with mention of the respective projected investment).

Provided that the above requirements have been met and that the licence holder has complied with all its obligations under the existing prospecting and exploration licence, the Ministry of Mineral Resources and Energy may, subject to the opinion of the National Institute of Mines, approve extension of the licence for the time period requested (ie, the Minister is not legally granted discretion to refuse the awarding of extensions for other reasons). In accordance with the Mining Law and the Mining Regulations, the transfer of prospecting and exploration licences from one company to another, as well as the direct or indirect transfer of the licence holder’s shares, may be requested only two years after the start of the respective mineral activities and is subject to prior approval by the Ministry of Mineral Resources and Energy. The Ministry’s approval is, in turn, conditional on compliance with certain requirements, such as the payment of a transfer fee and clear demonstration of the assignee’s technical and financial capacity.

What is the typical duration of mining rights?

The duration of mining rights depends on the mining right in question (see questions 10 and 11).

Pursuant to Mozambique’s Mining Law, a mining right can be revoked when its holder fails to remediate, within 60 days of the government’s prior notification, the following situations:

• failure to pay specific taxes;
• failure to comply with any provision or regulation set out in the mining contract that foresees the revocation of the mining right;
• bankruptcy, agreement or composition with the creditors (except if a guarantee has been registered over the mining facilities);
• transformation or dissolution of the mining company without the government’s prior approval; or
• indebtedness to the state.

The Mining Regulations also allow for the immediate revocation of mining rights in the following situations:

• failure to pay the surface or production tax, for more than 90 days past the due date;
• failure to carry out mining activities or to file the respective annual works report within 24 months following the issuance of the prospecting and exploration licence; or
• failure to start the mining production within 48 months following the granting of the mining concession, or 24 months following the issuance of the mining certificate, as applicable.

Additionally, the Mining Law establishes other grounds for the revocation of each specific mining right.

Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?

The mining rights that may be acquired by Mozambican nationals are distinct from those that may be acquired by foreign parties:

• mining passes (for more basic, artisanal mining activities) and marketing licences may only be granted to Mozambican nationals or to Mozambican companies wholly owned by Mozambican individuals;
• mining certificates (for small-scale mining operations) may only be granted to Mozambican nationals or to Mozambican companies majority-owned by Mozambican individuals; and
• mineral processing and handling licences, prospecting and exploration licences, and mining concessions may only be granted to companies incorporated under the laws of Mozambique; however, these companies can be foreign-held, subject to the mandatory participation of Mozambican nationals, as detailed ahead.

How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?

Mozambique has an independent judicial system and observes the fundamental principles of rule of law and due process. The protection and enforcement of mining rights can be effected through the local courts, although these courts often lack the necessary expertise of technical mining issues. Litigation in Mozambican courts has the additional problem of being expensive and time-consuming.

International arbitration represents a viable alternative to the local courts. Mozambique is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (New York Convention), having deposited its instrument of accession with the United Nations Secretary-General on 10 June 1998. As is permitted by the New York Convention, when Mozambique acceded to it, it declared that it would only apply the Convention to the recognition and enforcement of awards made in the territory of another contracting state, based on reciprocity. As such, only arbitral awards made in contracting states benefit from the more favourable recognition and enforcement regime set out in the New York Convention. Awards made in non-contracting states will be subject to a (more burdensome) judicial review and confirmation process before they can be enforced.

What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests?

Under Mozambican law, all land belongs to the state. Investors in mining activities cannot, therefore, buy or own land being used for the implementation of a mining project. They may, however, be granted the right to use and exploit that land (through the means of a DUAT). A DUAT provides its holder with legal certainty that it will be authorised to use a certain area of land for the purposes for which the DUAT was granted, such as mining. DUAT holders may also be owners of any buildings, facilities or other immovable assets built on the land covered by their DUAT.

When mining rights are granted in relation to an area of land subject to an existing DUAT, the holder of the granted rights must pay compensation to the respective DUAT holder. In cases where a DUAT is awarded over a populated area and the population must be resettled, a relocation plan must be drawn up and due compensation paid to those affected.

Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?

The state’s right to participate in mining projects is not provided for in Mozambique’s mining legislation, but rather in Law No. 15/2011, of 10 August 2011 (the Law on Public-Private Partnerships, Large-Scale Enterprises and Business Concessions, also commonly known as the Mega-Projects Law) and Decree 16/2012, of 4 July 2012 (the Regulations on Public-Private Partnerships, Large-Scale Enterprises and Business Concessions, also commonly known as the Mega-Projects Regulations).

Pursuant to the Mega-Projects Law, contracts must permit the participation of public or private Mozambican corporate persons in the share capital of the project in question or in the capital of the consortium, according to terms to be negotiated and agreed upon by the parties. The Mega-Projects Regulations goes a step further, setting out that as consideration for the granting of exploitation rights over natural resources, the state reserves the right to negotiate a gratuitous participation of no less than 5 per cent of the share capital, during any of the project’s phases.

With regard to the listing of project companies, and in accordance with the Mega-Projects Law, contracts must provide for a participation in the project or consortium’s share capital which is to be reserved, through the Stock Exchange and on commercial market terms, for the economic inclusion of Mozambican nationals, regardless of whether foreign investment is involved. The participation rate should range between 5 and 20 per cent of said capital. Participation may be guaranteed by the state or by another public entity designated by the state, meaning that at an initial stage the relevant participation is transferred to the state or to other such entity. Alternatively, participation may be guaranteed by the project vehicle, which unconditionally undertakes to then dispose of it at a later date.

Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?

Mozambique’s Mining Law establishes, as a general principle, that expropriation can only take place for justified public interest reasons and that the expropriated party will always be entitled to receive fair compensation.

Are any areas designated as protected areas within your jurisdiction and which are off-limits or specially regulated?

Mozambique’s Land Law (Law No. 19/97, of 1 October 1997) establishes the existence of fully protected areas and partially protected areas. Fully protected areas are reserved for nature conservation and state military activities, whereas partially protected areas include:

• sea and river beds;
• the continental shelf;
• an area of 100 metres from the coastline or river banks, or both;
• an area of 250 metres bordering dams and man-made lakes, as well as railways and an area of 50 metres adjacent to it;
• highways and an area of 50 metres adjacent to it;
• a two-kilometre wide band along the country’s borders;
• airports and an area of 100 metres adjacent to it; and
• military facilities and an area of 100 metres adjacent to it.

No rights may be awarded over fully or partially protected areas, but special licences can be obtained for specific and limited activities.