LONDON (Mineweb.com) -- Geology and tectonics may be what it is all about fundamentally -- but legal frameworks are as important in defining what developments might occur.
At this week’s London conference organised by Omega Conferences and The Mineral Corporation, Professor Laurence Robb explained that the whole of the African continent lies in the middle of the “Africa” tectonic plate. This means, according to, that since there are no plate boundaries underlying the continent there is very little geological activity. The plate is starting to break, however, which explains the start of some volcanic activity in rift valleys towards the north east of the continent, but as he pointed out we do not have to worry about that for another 50 million years. This is a comparatively short time horizon given that latest estimates suggest that the earth, in common with the rest of the solar system is 4,536 million years old (well, about that give or take a century or two).
Setting the geological context, Professor Robb pointed out that Africa is almost unique in the extent to which ancient rocks have developed. In common with parts of Canada and Russia, Africa is essentially pre-Cambrian, i.e. on rock formations in excess of 543 million years. Zambia’s geological formation includes the Zambian CopperBelt, which runs into the Katanga Basin in the DRC. Katanga is host rock to rich copper-cobalt, copper-gold and iron-ore/copper/gold deposits, akin to Olympic Dam and Ernest Henry in Australia. Professor Robb contends that these rich rock formations extend at depth and that it will not be long before Congo in particular will be home to any number of explorers.
Meanwhile Howard Barrie of law firm Denton Wilde Sapte, who, inter alia, advise bankers to mining developments in Africa, and Elias C Chipimo Jr., senior partner of Corpus Globe Advocates, presented on the legal and logistical matters concerning mining in DRC and Zambia respectively. Barrie effectively embraced Francophone nations, of which DRC is one, while Zambia is Anglophone and the approaches differ slightly between the two.
Francophone countries have a long history of mining codes supported by conventions – i.e. agreements between the mining company and the government with respect to tax, etc on a transaction-by-transaction basis. Generally speaking, Francophone countries now have a unified system of security documents -i.e. those documents that govern security over assets. This is particularly important when developing something like a mining project as its assets will grow (e.g. inventory) and security over “future assets” is important.
Barrie drew up a series of comparisons between the mining codes of Ghana, Sierra Leone and the DRC. These date from 1986, 1994 and 2003 respectively, and each is bigger than the last – although by comparison with some environmental impact statements they looked positively slender. The DRC code is virtually all encompassing and leaves little room for flexibility.
Key issues
With respect to licences, Ghana allows for reconnaissance (one year renewable), prospecting (three years renewable) and a mining lease for 30 years. Sierra Leone allows for two years’ renewable non-exclusive prospecting, one-year renewable exclusive prospecting licence, three years’ renewable exploration while the mining lease is 25 years or life-of-mine, whichever is the shorter and artisanal mining for three years renewable. In the DRC, meanwhile, exploration licences now extend to five years while the exploitation licence is similar to Ghana’s at 30 years renewable along with small-scale exploitation for up to ten years. There is provision for tailings exploitations for five years renewable, and quarry exploitation for one year, renewable for one further year.
In Ghana, mining rights are non-transferable while in the other two countries rights may be transferred. With respect to government stakes, the Ghanaian government takes 10 percent of the mining rights, although this can be increased to 30 percent. In Sierra Leone the government’s stake is not specified, while in DRC the holding is only 5 percent although some quasi-government bodies may want to take additional holdings.
In the DRC specifically, the new mining code was developed by the World Bank (as it was in Zambia). Unlike other Francophone countries, technically it eliminates the use of conventions. Only DRC entities can have exploitation rights so an international company would need a local utility. Environmental requirements are stringent; not only are there annual reporting obligations on environmental management, but also a biennial environmental audit, and if this does not pass muster then the company can lose its licence. Rehabilitation requirements are less stringent than income countries, but this is predicated on the very tight environmental controls in place over life-of-mine.
There is an exhaustive tax and customs regime applicable equally to all licences. There are some concessions on customs for imported equipment, but the government has to approve the equipment. Mortgages can be taken out on fixtures and certain movables and exploitation titles, but here again, government consent is necessary. One significant advance has been the implementation of “step-in” rights in the even of default. Lenders now no longer need to go to court to exercise their rights.
In Zambia, meanwhile, the position is also evolving. In the past direct legislative approval was necessary to give “comfort and certainty”; a statutory framework is now falling into place with private deals done within that framework, involving the use of a Development Agreement. These Agreements are not yet widely tested, but experience is already showing that they need to be drawn up in minute detail to cover all possible eventualities as, so far, they can fall foul of bureaucracy if an unforeseen problem arises.
One of the appealing elements of these Agreements is that they are legally binding on the “Republic” rather than just the government; this incorporates all three elements of government (legislative, judicial and executive), as well as the People and this gives them added weight. Provisions within a Development Agreement can override the existing law, although their practical implementation may require co-ordination and legislative amendments. There are a number of negotiating committees in the country that have been working on Agreements for some time and they are well known to the Government; this is instrumental in smoothing the procedure.
Zambia Mining Laws, as befits a World Bank exercise, focus on the environment as well as the mining process itself, while other important legislation covers immigration, given that Zambia currently lacks sufficient indigenous mining expertise for efficient resource exploitation.
The regime for fiscal incentives is derived from the original negotiations with Anglo American and include a corporate tax rate of 25 percent (this can be negotiated downwards but this would have to go before Parliament), tax losses that can be carried forward for between two and five years, and zero percent customs duty up to a defined value. At present VAT tends to be zero-rated, but this can be complicated in terms of what needs to be paid or reclaimed it is hoped that from now onwards, new mining projects will be exempt. All exchange controls were lifted in 1994, which is beneficial to financiers, although the registration of security interests requires the consent of the Minister.
A final illustration of how Zambian mining law is evolving is that purchasers of brownfields projects have to give up a proportion of the equity to the government, whereas purchasers of greenfields prospects do not have to.
With its vast potential for mineral wealth and a new mining code, the DRF is setting the scene for future exploitation with as few grey areas in the code as possible. Meanwhile Zambia’s mining code is more flexible than that of the DRC, but both countries are looking to evolve and attract future investment.
LONDON (Mineweb.com) -- Geology and tectonics may be what it is all about fundamentally -- but legal frameworks are as important in defining what developments might occur.
At this week’s London conference organised by Omega Conferences and The Mineral Corporation, Professor Laurence Robb explained that the whole of the African continent lies in the middle of the “Africa” tectonic plate. This means, according to, that since there are no plate boundaries underlying the continent there is very little geological activity. The plate is starting to break, however, which explains the start of some volcanic activity in rift valleys towards the north east of the continent, but as he pointed out we do not have to worry about that for another 50 million years. This is a comparatively short time horizon given that latest estimates suggest that the earth, in common with the rest of the solar system is 4,536 million years old (well, about that give or take a century or two).
Setting the geological context, Professor Robb pointed out that Africa is almost unique in the extent to which ancient rocks have developed. In common with parts of Canada and Russia, Africa is essentially pre-Cambrian, i.e. on rock formations in excess of 543 million years. Zambia’s geological formation includes the Zambian CopperBelt, which runs into the Katanga Basin in the DRC. Katanga is host rock to rich copper-cobalt, copper-gold and iron-ore/copper/gold deposits, akin to Olympic Dam and Ernest Henry in Australia. Professor Robb contends that these rich rock formations extend at depth and that it will not be long before Congo in particular will be home to any number of explorers.
Meanwhile Howard Barrie of law firm Denton Wilde Sapte, who, inter alia, advise bankers to mining developments in Africa, and Elias C Chipimo Jr., senior partner of Corpus Globe Advocates, presented on the legal and logistical matters concerning mining in DRC and Zambia respectively. Barrie effectively embraced Francophone nations, of which DRC is one, while Zambia is Anglophone and the approaches differ slightly between the two.
Francophone countries have a long history of mining codes supported by conventions – i.e. agreements between the mining company and the government with respect to tax, etc on a transaction-by-transaction basis. Generally speaking, Francophone countries now have a unified system of security documents -i.e. those documents that govern security over assets. This is particularly important when developing something like a mining project as its assets will grow (e.g. inventory) and security over “future assets” is important.
Barrie drew up a series of comparisons between the mining codes of Ghana, Sierra Leone and the DRC. These date from 1986, 1994 and 2003 respectively, and each is bigger than the last – although by comparison with some environmental impact statements they looked positively slender. The DRC code is virtually all encompassing and leaves little room for flexibility.
Key issues
With respect to licences, Ghana allows for reconnaissance (one year renewable), prospecting (three years renewable) and a mining lease for 30 years. Sierra Leone allows for two years’ renewable non-exclusive prospecting, one-year renewable exclusive prospecting licence, three years’ renewable exploration while the mining lease is 25 years or life-of-mine, whichever is the shorter and artisanal mining for three years renewable. In the DRC, meanwhile, exploration licences now extend to five years while the exploitation licence is similar to Ghana’s at 30 years renewable along with small-scale exploitation for up to ten years. There is provision for tailings exploitations for five years renewable, and quarry exploitation for one year, renewable for one further year.
In Ghana, mining rights are non-transferable while in the other two countries rights may be transferred. With respect to government stakes, the Ghanaian government takes 10 percent of the mining rights, although this can be increased to 30 percent. In Sierra Leone the government’s stake is not specified, while in DRC the holding is only 5 percent although some quasi-government bodies may want to take additional holdings.
In the DRC specifically, the new mining code was developed by the World Bank (as it was in Zambia). Unlike other Francophone countries, technically it eliminates the use of conventions. Only DRC entities can have exploitation rights so an international company would need a local utility. Environmental requirements are stringent; not only are there annual reporting obligations on environmental management, but also a biennial environmental audit, and if this does not pass muster then the company can lose its licence. Rehabilitation requirements are less stringent than income countries, but this is predicated on the very tight environmental controls in place over life-of-mine.
There is an exhaustive tax and customs regime applicable equally to all licences. There are some concessions on customs for imported equipment, but the government has to approve the equipment. Mortgages can be taken out on fixtures and certain movables and exploitation titles, but here again, government consent is necessary. One significant advance has been the implementation of “step-in” rights in the even of default. Lenders now no longer need to go to court to exercise their rights.
In Zambia, meanwhile, the position is also evolving. In the past direct legislative approval was necessary to give “comfort and certainty”; a statutory framework is now falling into place with private deals done within that framework, involving the use of a Development Agreement. These Agreements are not yet widely tested, but experience is already showing that they need to be drawn up in minute detail to cover all possible eventualities as, so far, they can fall foul of bureaucracy if an unforeseen problem arises.
One of the appealing elements of these Agreements is that they are legally binding on the “Republic” rather than just the government; this incorporates all three elements of government (legislative, judicial and executive), as well as the People and this gives them added weight. Provisions within a Development Agreement can override the existing law, although their practical implementation may require co-ordination and legislative amendments. There are a number of negotiating committees in the country that have been working on Agreements for some time and they are well known to the Government; this is instrumental in smoothing the procedure.
Zambia Mining Laws, as befits a World Bank exercise, focus on the environment as well as the mining process itself, while other important legislation covers immigration, given that Zambia currently lacks sufficient indigenous mining expertise for efficient resource exploitation.
The regime for fiscal incentives is derived from the original negotiations with Anglo American and include a corporate tax rate of 25 percent (this can be negotiated downwards but this would have to go before Parliament), tax losses that can be carried forward for between two and five years, and zero percent customs duty up to a defined value. At present VAT tends to be zero-rated, but this can be complicated in terms of what needs to be paid or reclaimed it is hoped that from now onwards, new mining projects will be exempt. All exchange controls were lifted in 1994, which is beneficial to financiers, although the registration of security interests requires the consent of the Minister.
A final illustration of how Zambian mining law is evolving is that purchasers of brownfields projects have to give up a proportion of the equity to the government, whereas purchasers of greenfields prospects do not have to.
With its vast potential for mineral wealth and a new mining code, the DRF is setting the scene for future exploitation with as few grey areas in the code as possible. Meanwhile Zambia’s mining code is more flexible than that of the DRC, but both countries are looking to evolve and attract future investment.
LONDON (Mineweb.com) -- Geology and tectonics may be what it is all about fundamentally -- but legal frameworks are as important in defining what developments might occur.
At this week’s London conference organised by Omega Conferences and The Mineral Corporation, Professor Laurence Robb explained that the whole of the African continent lies in the middle of the “Africa” tectonic plate. This means, according to, that since there are no plate boundaries underlying the continent there is very little geological activity. The plate is starting to break, however, which explains the start of some volcanic activity in rift valleys towards the north east of the continent, but as he pointed out we do not have to worry about that for another 50 million years. This is a comparatively short time horizon given that latest estimates suggest that the earth, in common with the rest of the solar system is 4,536 million years old (well, about that give or take a century or two).
Setting the geological context, Professor Robb pointed out that Africa is almost unique in the extent to which ancient rocks have developed. In common with parts of Canada and Russia, Africa is essentially pre-Cambrian, i.e. on rock formations in excess of 543 million years. Zambia’s geological formation includes the Zambian CopperBelt, which runs into the Katanga Basin in the DRC. Katanga is host rock to rich copper-cobalt, copper-gold and iron-ore/copper/gold deposits, akin to Olympic Dam and Ernest Henry in Australia. Professor Robb contends that these rich rock formations extend at depth and that it will not be long before Congo in particular will be home to any number of explorers.
Meanwhile Howard Barrie of law firm Denton Wilde Sapte, who, inter alia, advise bankers to mining developments in Africa, and Elias C Chipimo Jr., senior partner of Corpus Globe Advocates, presented on the legal and logistical matters concerning mining in DRC and Zambia respectively. Barrie effectively embraced Francophone nations, of which DRC is one, while Zambia is Anglophone and the approaches differ slightly between the two.
Francophone countries have a long history of mining codes supported by conventions – i.e. agreements between the mining company and the government with respect to tax, etc on a transaction-by-transaction basis. Generally speaking, Francophone countries now have a unified system of security documents -i.e. those documents that govern security over assets. This is particularly important when developing something like a mining project as its assets will grow (e.g. inventory) and security over “future assets” is important.
Barrie drew up a series of comparisons between the mining codes of Ghana, Sierra Leone and the DRC. These date from 1986, 1994 and 2003 respectively, and each is bigger than the last – although by comparison with some environmental impact statements they looked positively slender. The DRC code is virtually all encompassing and leaves little room for flexibility.
Key issues
With respect to licences, Ghana allows for reconnaissance (one year renewable), prospecting (three years renewable) and a mining lease for 30 years. Sierra Leone allows for two years’ renewable non-exclusive prospecting, one-year renewable exclusive prospecting licence, three years’ renewable exploration while the mining lease is 25 years or life-of-mine, whichever is the shorter and artisanal mining for three years renewable. In the DRC, meanwhile, exploration licences now extend to five years while the exploitation licence is similar to Ghana’s at 30 years renewable along with small-scale exploitation for up to ten years. There is provision for tailings exploitations for five years renewable, and quarry exploitation for one year, renewable for one further year.
In Ghana, mining rights are non-transferable while in the other two countries rights may be transferred. With respect to government stakes, the Ghanaian government takes 10 percent of the mining rights, although this can be increased to 30 percent. In Sierra Leone the government’s stake is not specified, while in DRC the holding is only 5 percent although some quasi-government bodies may want to take additional holdings.
In the DRC specifically, the new mining code was developed by the World Bank (as it was in Zambia). Unlike other Francophone countries, technically it eliminates the use of conventions. Only DRC entities can have exploitation rights so an international company would need a local utility. Environmental requirements are stringent; not only are there annual reporting obligations on environmental management, but also a biennial environmental audit, and if this does not pass muster then the company can lose its licence. Rehabilitation requirements are less stringent than income countries, but this is predicated on the very tight environmental controls in place over life-of-mine.
There is an exhaustive tax and customs regime applicable equally to all licences. There are some concessions on customs for imported equipment, but the government has to approve the equipment. Mortgages can be taken out on fixtures and certain movables and exploitation titles, but here again, government consent is necessary. One significant advance has been the implementation of “step-in” rights in the even of default. Lenders now no longer need to go to court to exercise their rights.
In Zambia, meanwhile, the position is also evolving. In the past direct legislative approval was necessary to give “comfort and certainty”; a statutory framework is now falling into place with private deals done within that framework, involving the use of a Development Agreement. These Agreements are not yet widely tested, but experience is already showing that they need to be drawn up in minute detail to cover all possible eventualities as, so far, they can fall foul of bureaucracy if an unforeseen problem arises.
One of the appealing elements of these Agreements is that they are legally binding on the “Republic” rather than just the government; this incorporates all three elements of government (legislative, judicial and executive), as well as the People and this gives them added weight. Provisions within a Development Agreement can override the existing law, although their practical implementation may require co-ordination and legislative amendments. There are a number of negotiating committees in the country that have been working on Agreements for some time and they are well known to the Government; this is instrumental in smoothing the procedure.
Zambia Mining Laws, as befits a World Bank exercise, focus on the environment as well as the mining process itself, while other important legislation covers immigration, given that Zambia currently lacks sufficient indigenous mining expertise for efficient resource exploitation.
The regime for fiscal incentives is derived from the original negotiations with Anglo American and include a corporate tax rate of 25 percent (this can be negotiated downwards but this would have to go before Parliament), tax losses that can be carried forward for between two and five years, and zero percent customs duty up to a defined value. At present VAT tends to be zero-rated, but this can be complicated in terms of what needs to be paid or reclaimed it is hoped that from now onwards, new mining projects will be exempt. All exchange controls were lifted in 1994, which is beneficial to financiers, although the registration of security interests requires the consent of the Minister.
A final illustration of how Zambian mining law is evolving is that purchasers of brownfields projects have to give up a proportion of the equity to the government, whereas purchasers of greenfields prospects do not have to.
With its vast potential for mineral wealth and a new mining code, the DRF is setting the scene for future exploitation with as few grey areas in the code as possible. Meanwhile Zambia’s mining code is more flexible than that of the DRC, but both countries are looking to evolve and attract future investment.
LONDON (Mineweb.com) -- Geology and tectonics may be what it is all about fundamentally -- but legal frameworks are as important in defining what developments might occur.
At this week’s London conference organised by Omega Conferences and The Mineral Corporation, Professor Laurence Robb explained that the whole of the African continent lies in the middle of the “Africa” tectonic plate. This means, according to, that since there are no plate boundaries underlying the continent there is very little geological activity. The plate is starting to break, however, which explains the start of some volcanic activity in rift valleys towards the north east of the continent, but as he pointed out we do not have to worry about that for another 50 million years. This is a comparatively short time horizon given that latest estimates suggest that the earth, in common with the rest of the solar system is 4,536 million years old (well, about that give or take a century or two).
Setting the geological context, Professor Robb pointed out that Africa is almost unique in the extent to which ancient rocks have developed. In common with parts of Canada and Russia, Africa is essentially pre-Cambrian, i.e. on rock formations in excess of 543 million years. Zambia’s geological formation includes the Zambian CopperBelt, which runs into the Katanga Basin in the DRC. Katanga is host rock to rich copper-cobalt, copper-gold and iron-ore/copper/gold deposits, akin to Olympic Dam and Ernest Henry in Australia. Professor Robb contends that these rich rock formations extend at depth and that it will not be long before Congo in particular will be home to any number of explorers.
Meanwhile Howard Barrie of law firm Denton Wilde Sapte, who, inter alia, advise bankers to mining developments in Africa, and Elias C Chipimo Jr., senior partner of Corpus Globe Advocates, presented on the legal and logistical matters concerning mining in DRC and Zambia respectively. Barrie effectively embraced Francophone nations, of which DRC is one, while Zambia is Anglophone and the approaches differ slightly between the two.
Francophone countries have a long history of mining codes supported by conventions – i.e. agreements between the mining company and the government with respect to tax, etc on a transaction-by-transaction basis. Generally speaking, Francophone countries now have a unified system of security documents -i.e. those documents that govern security over assets. This is particularly important when developing something like a mining project as its assets will grow (e.g. inventory) and security over “future assets” is important.
Barrie drew up a series of comparisons between the mining codes of Ghana, Sierra Leone and the DRC. These date from 1986, 1994 and 2003 respectively, and each is bigger than the last – although by comparison with some environmental impact statements they looked positively slender. The DRC code is virtually all encompassing and leaves little room for flexibility.
Key issues
With respect to licences, Ghana allows for reconnaissance (one year renewable), prospecting (three years renewable) and a mining lease for 30 years. Sierra Leone allows for two years’ renewable non-exclusive prospecting, one-year renewable exclusive prospecting licence, three years’ renewable exploration while the mining lease is 25 years or life-of-mine, whichever is the shorter and artisanal mining for three years renewable. In the DRC, meanwhile, exploration licences now extend to five years while the exploitation licence is similar to Ghana’s at 30 years renewable along with small-scale exploitation for up to ten years. There is provision for tailings exploitations for five years renewable, and quarry exploitation for one year, renewable for one further year.
In Ghana, mining rights are non-transferable while in the other two countries rights may be transferred. With respect to government stakes, the Ghanaian government takes 10 percent of the mining rights, although this can be increased to 30 percent. In Sierra Leone the government’s stake is not specified, while in DRC the holding is only 5 percent although some quasi-government bodies may want to take additional holdings.
In the DRC specifically, the new mining code was developed by the World Bank (as it was in Zambia). Unlike other Francophone countries, technically it eliminates the use of conventions. Only DRC entities can have exploitation rights so an international company would need a local utility. Environmental requirements are stringent; not only are there annual reporting obligations on environmental management, but also a biennial environmental audit, and if this does not pass muster then the company can lose its licence. Rehabilitation requirements are less stringent than income countries, but this is predicated on the very tight environmental controls in place over life-of-mine.
There is an exhaustive tax and customs regime applicable equally to all licences. There are some concessions on customs for imported equipment, but the government has to approve the equipment. Mortgages can be taken out on fixtures and certain movables and exploitation titles, but here again, government consent is necessary. One significant advance has been the implementation of “step-in” rights in the even of default. Lenders now no longer need to go to court to exercise their rights.
In Zambia, meanwhile, the position is also evolving. In the past direct legislative approval was necessary to give “comfort and certainty”; a statutory framework is now falling into place with private deals done within that framework, involving the use of a Development Agreement. These Agreements are not yet widely tested, but experience is already showing that they need to be drawn up in minute detail to cover all possible eventualities as, so far, they can fall foul of bureaucracy if an unforeseen problem arises.
One of the appealing elements of these Agreements is that they are legally binding on the “Republic” rather than just the government; this incorporates all three elements of government (legislative, judicial and executive), as well as the People and this gives them added weight. Provisions within a Development Agreement can override the existing law, although their practical implementation may require co-ordination and legislative amendments. There are a number of negotiating committees in the country that have been working on Agreements for some time and they are well known to the Government; this is instrumental in smoothing the procedure.
Zambia Mining Laws, as befits a World Bank exercise, focus on the environment as well as the mining process itself, while other important legislation covers immigration, given that Zambia currently lacks sufficient indigenous mining expertise for efficient resource exploitation.
The regime for fiscal incentives is derived from the original negotiations with Anglo American and include a corporate tax rate of 25 percent (this can be negotiated downwards but this would have to go before Parliament), tax losses that can be carried forward for between two and five years, and zero percent customs duty up to a defined value. At present VAT tends to be zero-rated, but this can be complicated in terms of what needs to be paid or reclaimed it is hoped that from now onwards, new mining projects will be exempt. All exchange controls were lifted in 1994, which is beneficial to financiers, although the registration of security interests requires the consent of the Minister.
A final illustration of how Zambian mining law is evolving is that purchasers of brownfields projects have to give up a proportion of the equity to the government, whereas purchasers of greenfields prospects do not have to.
With its vast potential for mineral wealth and a new mining code, the DRF is setting the scene for future exploitation with as few grey areas in the code as possible. Meanwhile Zambia’s mining code is more flexible than that of the DRC, but both countries are looking to evolve and attract future investment.
LONDON (Mineweb.com) -- Geology and tectonics may be what it is all about fundamentally -- but legal frameworks are as important in defining what developments might occur.
At this week’s London conference organised by Omega Conferences and The Mineral Corporation, Professor Laurence Robb explained that the whole of the African continent lies in the middle of the “Africa” tectonic plate. This means, according to, that since there are no plate boundaries underlying the continent there is very little geological activity. The plate is starting to break, however, which explains the start of some volcanic activity in rift valleys towards the north east of the continent, but as he pointed out we do not have to worry about that for another 50 million years. This is a comparatively short time horizon given that latest estimates suggest that the earth, in common with the rest of the solar system is 4,536 million years old (well, about that give or take a century or two).
Setting the geological context, Professor Robb pointed out that Africa is almost unique in the extent to which ancient rocks have developed. In common with parts of Canada and Russia, Africa is essentially pre-Cambrian, i.e. on rock formations in excess of 543 million years. Zambia’s geological formation includes the Zambian CopperBelt, which runs into the Katanga Basin in the DRC. Katanga is host rock to rich copper-cobalt, copper-gold and iron-ore/copper/gold deposits, akin to Olympic Dam and Ernest Henry in Australia. Professor Robb contends that these rich rock formations extend at depth and that it will not be long before Congo in particular will be home to any number of explorers.
Meanwhile Howard Barrie of law firm Denton Wilde Sapte, who, inter alia, advise bankers to mining developments in Africa, and Elias C Chipimo Jr., senior partner of Corpus Globe Advocates, presented on the legal and logistical matters concerning mining in DRC and Zambia respectively. Barrie effectively embraced Francophone nations, of which DRC is one, while Zambia is Anglophone and the approaches differ slightly between the two.
Francophone countries have a long history of mining codes supported by conventions – i.e. agreements between the mining company and the government with respect to tax, etc on a transaction-by-transaction basis. Generally speaking, Francophone countries now have a unified system of security documents -i.e. those documents that govern security over assets. This is particularly important when developing something like a mining project as its assets will grow (e.g. inventory) and security over “future assets” is important.
Barrie drew up a series of comparisons between the mining codes of Ghana, Sierra Leone and the DRC. These date from 1986, 1994 and 2003 respectively, and each is bigger than the last – although by comparison with some environmental impact statements they looked positively slender. The DRC code is virtually all encompassing and leaves little room for flexibility.
Key issues
With respect to licences, Ghana allows for reconnaissance (one year renewable), prospecting (three years renewable) and a mining lease for 30 years. Sierra Leone allows for two years’ renewable non-exclusive prospecting, one-year renewable exclusive prospecting licence, three years’ renewable exploration while the mining lease is 25 years or life-of-mine, whichever is the shorter and artisanal mining for three years renewable. In the DRC, meanwhile, exploration licences now extend to five years while the exploitation licence is similar to Ghana’s at 30 years renewable along with small-scale exploitation for up to ten years. There is provision for tailings exploitations for five years renewable, and quarry exploitation for one year, renewable for one further year.
In Ghana, mining rights are non-transferable while in the other two countries rights may be transferred. With respect to government stakes, the Ghanaian government takes 10 percent of the mining rights, although this can be increased to 30 percent. In Sierra Leone the government’s stake is not specified, while in DRC the holding is only 5 percent although some quasi-government bodies may want to take additional holdings.
In the DRC specifically, the new mining code was developed by the World Bank (as it was in Zambia). Unlike other Francophone countries, technically it eliminates the use of conventions. Only DRC entities can have exploitation rights so an international company would need a local utility. Environmental requirements are stringent; not only are there annual reporting obligations on environmental management, but also a biennial environmental audit, and if this does not pass muster then the company can lose its licence. Rehabilitation requirements are less stringent than income countries, but this is predicated on the very tight environmental controls in place over life-of-mine.
There is an exhaustive tax and customs regime applicable equally to all licences. There are some concessions on customs for imported equipment, but the government has to approve the equipment. Mortgages can be taken out on fixtures and certain movables and exploitation titles, but here again, government consent is necessary. One significant advance has been the implementation of “step-in” rights in the even of default. Lenders now no longer need to go to court to exercise their rights.
In Zambia, meanwhile, the position is also evolving. In the past direct legislative approval was necessary to give “comfort and certainty”; a statutory framework is now falling into place with private deals done within that framework, involving the use of a Development Agreement. These Agreements are not yet widely tested, but experience is already showing that they need to be drawn up in minute detail to cover all possible eventualities as, so far, they can fall foul of bureaucracy if an unforeseen problem arises.
One of the appealing elements of these Agreements is that they are legally binding on the “Republic” rather than just the government; this incorporates all three elements of government (legislative, judicial and executive), as well as the People and this gives them added weight. Provisions within a Development Agreement can override the existing law, although their practical implementation may require co-ordination and legislative amendments. There are a number of negotiating committees in the country that have been working on Agreements for some time and they are well known to the Government; this is instrumental in smoothing the procedure.
Zambia Mining Laws, as befits a World Bank exercise, focus on the environment as well as the mining process itself, while other important legislation covers immigration, given that Zambia currently lacks sufficient indigenous mining expertise for efficient resource exploitation.
The regime for fiscal incentives is derived from the original negotiations with Anglo American and include a corporate tax rate of 25 percent (this can be negotiated downwards but this would have to go before Parliament), tax losses that can be carried forward for between two and five years, and zero percent customs duty up to a defined value. At present VAT tends to be zero-rated, but this can be complicated in terms of what needs to be paid or reclaimed it is hoped that from now onwards, new mining projects will be exempt. All exchange controls were lifted in 1994, which is beneficial to financiers, although the registration of security interests requires the consent of the Minister.
A final illustration of how Zambian mining law is evolving is that purchasers of brownfields projects have to give up a proportion of the equity to the government, whereas purchasers of greenfields prospects do not have to.
With its vast potential for mineral wealth and a new mining code, the DRF is setting the scene for future exploitation with as few grey areas in the code as possible. Meanwhile Zambia’s mining code is more flexible than that of the DRC, but both countries are looking to evolve and attract future investment.
LONDON (Mineweb.com) -- Geology and tectonics may be what it is all about fundamentally -- but legal frameworks are as important in defining what developments might occur.
At this week’s London conference organised by Omega Conferences and The Mineral Corporation, Professor Laurence Robb explained that the whole of the African continent lies in the middle of the “Africa” tectonic plate. This means, according to, that since there are no plate boundaries underlying the continent there is very little geological activity. The plate is starting to break, however, which explains the start of some volcanic activity in rift valleys towards the north east of the continent, but as he pointed out we do not have to worry about that for another 50 million years. This is a comparatively short time horizon given that latest estimates suggest that the earth, in common with the rest of the solar system is 4,536 million years old (well, about that give or take a century or two).
Setting the geological context, Professor Robb pointed out that Africa is almost unique in the extent to which ancient rocks have developed. In common with parts of Canada and Russia, Africa is essentially pre-Cambrian, i.e. on rock formations in excess of 543 million years. Zambia’s geological formation includes the Zambian CopperBelt, which runs into the Katanga Basin in the DRC. Katanga is host rock to rich copper-cobalt, copper-gold and iron-ore/copper/gold deposits, akin to Olympic Dam and Ernest Henry in Australia. Professor Robb contends that these rich rock formations extend at depth and that it will not be long before Congo in particular will be home to any number of explorers.
Meanwhile Howard Barrie of law firm Denton Wilde Sapte, who, inter alia, advise bankers to mining developments in Africa, and Elias C Chipimo Jr., senior partner of Corpus Globe Advocates, presented on the legal and logistical matters concerning mining in DRC and Zambia respectively. Barrie effectively embraced Francophone nations, of which DRC is one, while Zambia is Anglophone and the approaches differ slightly between the two.
Francophone countries have a long history of mining codes supported by conventions – i.e. agreements between the mining company and the government with respect to tax, etc on a transaction-by-transaction basis. Generally speaking, Francophone countries now have a unified system of security documents -i.e. those documents that govern security over assets. This is particularly important when developing something like a mining project as its assets will grow (e.g. inventory) and security over “future assets” is important.
Barrie drew up a series of comparisons between the mining codes of Ghana, Sierra Leone and the DRC. These date from 1986, 1994 and 2003 respectively, and each is bigger than the last – although by comparison with some environmental impact statements they looked positively slender. The DRC code is virtually all encompassing and leaves little room for flexibility.
Key issues
With respect to licences, Ghana allows for reconnaissance (one year renewable), prospecting (three years renewable) and a mining lease for 30 years. Sierra Leone allows for two years’ renewable non-exclusive prospecting, one-year renewable exclusive prospecting licence, three years’ renewable exploration while the mining lease is 25 years or life-of-mine, whichever is the shorter and artisanal mining for three years renewable. In the DRC, meanwhile, exploration licences now extend to five years while the exploitation licence is similar to Ghana’s at 30 years renewable along with small-scale exploitation for up to ten years. There is provision for tailings exploitations for five years renewable, and quarry exploitation for one year, renewable for one further year.
In Ghana, mining rights are non-transferable while in the other two countries rights may be transferred. With respect to government stakes, the Ghanaian government takes 10 percent of the mining rights, although this can be increased to 30 percent. In Sierra Leone the government’s stake is not specified, while in DRC the holding is only 5 percent although some quasi-government bodies may want to take additional holdings.
In the DRC specifically, the new mining code was developed by the World Bank (as it was in Zambia). Unlike other Francophone countries, technically it eliminates the use of conventions. Only DRC entities can have exploitation rights so an international company would need a local utility. Environmental requirements are stringent; not only are there annual reporting obligations on environmental management, but also a biennial environmental audit, and if this does not pass muster then the company can lose its licence. Rehabilitation requirements are less stringent than income countries, but this is predicated on the very tight environmental controls in place over life-of-mine.
There is an exhaustive tax and customs regime applicable equally to all licences. There are some concessions on customs for imported equipment, but the government has to approve the equipment. Mortgages can be taken out on fixtures and certain movables and exploitation titles, but here again, government consent is necessary. One significant advance has been the implementation of “step-in” rights in the even of default. Lenders now no longer need to go to court to exercise their rights.
In Zambia, meanwhile, the position is also evolving. In the past direct legislative approval was necessary to give “comfort and certainty”; a statutory framework is now falling into place with private deals done within that framework, involving the use of a Development Agreement. These Agreements are not yet widely tested, but experience is already showing that they need to be drawn up in minute detail to cover all possible eventualities as, so far, they can fall foul of bureaucracy if an unforeseen problem arises.
One of the appealing elements of these Agreements is that they are legally binding on the “Republic” rather than just the government; this incorporates all three elements of government (legislative, judicial and executive), as well as the People and this gives them added weight. Provisions within a Development Agreement can override the existing law, although their practical implementation may require co-ordination and legislative amendments. There are a number of negotiating committees in the country that have been working on Agreements for some time and they are well known to the Government; this is instrumental in smoothing the procedure.
Zambia Mining Laws, as befits a World Bank exercise, focus on the environment as well as the mining process itself, while other important legislation covers immigration, given that Zambia currently lacks sufficient indigenous mining expertise for efficient resource exploitation.
The regime for fiscal incentives is derived from the original negotiations with Anglo American and include a corporate tax rate of 25 percent (this can be negotiated downwards but this would have to go before Parliament), tax losses that can be carried forward for between two and five years, and zero percent customs duty up to a defined value. At present VAT tends to be zero-rated, but this can be complicated in terms of what needs to be paid or reclaimed it is hoped that from now onwards, new mining projects will be exempt. All exchange controls were lifted in 1994, which is beneficial to financiers, although the registration of security interests requires the consent of the Minister.
A final illustration of how Zambian mining law is evolving is that purchasers of brownfields projects have to give up a proportion of the equity to the government, whereas purchasers of greenfields prospects do not have to.
With its vast potential for mineral wealth and a new mining code, the DRF is setting the scene for future exploitation with as few grey areas in the code as possible. Meanwhile Zambia’s mining code is more flexible than that of the DRC, but both countries are looking to evolve and attract future investment.
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