Mozambique’s New Mining Law (20/2014) came into force on 18 August 2014 and is subject to further regulation by the government within 90 days of its publication. The law provides that mineral resources found in the soil and subsoil, in interior waters, in the territorial sea, on the continental shelf and in the exclusive economic zone is the property of the State.
Mining permits (Títulos Mineiros):
The rights to undertake mining activities are acquired in terms of the following mining permits:
- Prospecting and Research License (Licença de Prospecção e Pesquisa);
- Mining Concession (Concessão Mineira);
- Mining Certificate (Certificado Mineiro);
- Mining Pass (Senha Licença);
- Mining Treatment Licence (Licença de Tratamento Mineiro);
- Mining Processing Licence (Licença de Processamento Mineiro); and
- Licence for the Commercialisation of Mining Products (Licença de Comercialização de Produtos Mineiros).
The last three licences are new. The Reconnaissance Licence (Licença de Reconhecimento) granted under the revoked 2002 Mining Law has been abolished.
Local content
Mining contracts must contain clauses dealing with State participation in mining operations and minimum local content. This ties up with the proviso of the recently enacted Mega Project Law which established the guiding rules for the process of contracting, implementing and monitoring public private partnerships, large-scale projects and business concessions. The Mega Project Law requires the granting of financial and economic benefits to include:
- Mozambican public participation (preferably natural persons) of between 5% and 20% in the project company’s share capital via the Mozambican stock exchange; and
- An opportunity for the State to take equity of at least 5% (free carry) in the project company’s share capital.
Mining contracts must deal with local employment, training of Mozambicans according to the relevant legislation, and how the local community where the mining takes place will be benefitted. A memorandum of understanding between the government, the holder of the mining licence and the local community must be concluded.
A percentage of the revenue generated by mining activities is to be channelled in the State budget towards the development of the local communities in the areas where the mining activities are located.
The law requires foreign suppliers of services to mining operations to have local partners. Holders of mining licences must give preference to local goods and services.
Transfer of rights
Any transfer of rights and obligations conferred under mining permits or mining rights to an affiliate or to a third party must take place in accordance with local laws and subject to government approval. This requirement is also applicable to other direct and indirect transfers of participation interests in a mining permit or mining rights, including the transfer of shares or other forms of shareholdings which determine control of the entity holding rights in terms of a concession contract. Transfers may only occur 2 years after the issuance of the mining permit and the holder must present its tax clearance certificate.
Transition
Transitional provisions state that rights acquired under pre-existing contracts (including pre-existing concession contracts) executed under the revoked 2002 Mining Law are maintained. However, mining concessionaires and parties to a mining contract have the option to request that their contracts or concessions be governed by the new law. This must be done within 12 months from the date of the entry into force of the new law. After the expiry of the term of the pre-existing contracts or the pre-existing concession agreements, new mining contracts and concession agreements must be concluded in terms of the new law.