Written by Cobus Mulder and Eugene Viljoen
Stringent legislation governs mining activities in West Africa. Access to both rail and port infrastructure also pose its own challenges. Therefore, prior to investing in a mining project in West Africa, companies should take cognisance of all applicable legislation as failure to do so will in no doubt result in extensive financial, license to operate and reputational damage.
In this edition we will provide a brief overview of the specific Mining legislation which is applicable to mining projects in the Republic of Congo (“RoC”). More information on the legal framework for mining projects in the RoC will follow in due course.
Legal and regulatory framework governing mining activities
Mining activities in the RoC are governed by the following main legislation:
• The Mining Code – Law no 4-2005 dated 11 April 2005 (“Mining Code”)
• Decree no 2007-274 dated 21 May 2007, establishing the conditions for the prospecting, research and exploitation of minerals and the conditions applying to the administrative supervision thereof (“Mining Decree”)
Mining operations subject to the provisions of the Mining Code are classified into the following phases:
1. Phase 1 – general geological cartography work;
2. Phase 2 – general prospecting work;
3. Phase 3 – mining research work;
4. Phase 4 – work to develop the mine site;
5. Phase 5 – covers the mining period.
Mining titles granted in terms of this law includes the following (the granting of which cannot be mortgaged):
1. Prospecting authorisation;
2. Mining Research (exploration) permit;
Following types of exploitation titles are applicable namely:
1. Artisan mining authorisation. This type of authorisation may only be granted to natural persons. Artisanal exploitation means the exploitation of alluvial or eluvial deposits through artisanal means ;
2. Industrial mining authorisation. May be granted to natural persons as well as legal entities and relates to quarries and exploitation of small mines only;
3. Mining (exploitation) permit. An exploitation permit is granted for large scale mining.
A prospecting authorisation is issued by way of a decree (order) of the Minister of Mines for a period of 1 year and renewable only once for the same period. A prospecting authorisation grants the holder the right to undertake prospecting works concurrent with other holders of prospecting authorisations that are simultaneously valid for the same substance in the same areas. Such authorisations are neither transferrable nor can they be sublet.
Mining Research (exploration) permits are granted by decree from the Council of Ministers based on the report from the Minister of Mines. This title grants the holder thereof the exclusive right to explore for the material for which it was issued within the specific perimeter for an unlimited depth. Exploration permits are granted for periods of 3 years renewable twice for 2 year periods upon request from its holder. It is important to note that each renewal shall include a reduction of the surface area (which will not exceed half of the previous surface area).
Having regard to mining permits, and with specific emphasis on an exploitation permit (granted for large scale mining), it is granted by decree issued by the Council of Ministers, based on a proposal from the Minister of Mines following a public interest investigation. An exploitation permit is valid for a period of 25 years and can be renewed for periods which will not exceed 15 years each under the same conditions as it were granted. It is important to note that the holder of an exploitation permit must commence the development works related to the deposit within 12 months following the issuance of the permit, failing which the permit may be withdrawn.
Conclusion of a Mining Agreement
The Mining Agreement (also known as a mining convention) is concluded between the RoC Government and the holder of the exploration/exploitation permit. Article 98 of the Mining Code stipulates that the Mining Agreement shall be entered into upon the issue of a research or exploitation permit. This provision suggests that negotiations relating to the Mining Agreement should take place prior to the issue of the exploitation or exploration permit (as the case may be). Article 99 of the Mining Code states that the Mining Agreement may include provisions such as the works schedule, minimum expenses, participation by the RoC Government, technical and financial guarantees and a specific tax regime.
Incorporation of a mining company
In accordance with the Mining Code, the holder of a mining title has to elect a domicile in the RoC pending the creation of a specific Congolese company which will conduct the mining operations.
Having regard to exploitation, article 100 of the Mining Code determines that the RoC Government shall have the right to a 10% free carried participation in the issued share capital of the mining company. Further, the RoC Government shall be entitled to purchase additional shares.
As stated above, the aforementioned is merely a brief overview of the specific Mining legislation which is applicable to mining projects in the RoC. Should you require any further information or assistance in respect of the regulatory framework applicable to mining activities in the RoC, please feel free to contact the writers hereof.
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