sharing in governance of extractive industries
By David Adetona
The Minister of Mines and Energy, Isak Katali, this week tried to ease tension in the mining sector after a number of mining companies raised their concerns over government’s recent announcement that the state-owned mining company, Epangelo, will now hold exclusive exploration and mining rights to uranium, gold, copper, coal, diamonds and rare earth metals, which was declared as “strategic minerals.”
“To implement the government decision, a change in legislation shall be effected. The Minerals Prospecting and Mining Act, 33 of 1992 is currently being drafted and when finalised, it will inform the licence holders and the general public on the operating modalities,” Katali said at a media briefing on Tuesday this week.
The minister also pointed out that the future expansions of existing exclusive prospecting licences (EPLs), by addition of size or commodity will be affected by the new proposed exploration and mining status.
“To add size to an existing licence practically means a new application covering a new area. This is similarly the same when one applies to amend a licence to include minerals not originally on the existing licence. These should be treated as new applications and would thus be affected by the government decision,” the minister added.
Katali stated that the renewal of existing explorations and mining licenses will not be affected.
He, however, told mining license holders who made no progress at their developments to accelerate the development of resources under such licences. “...it will be in the interest of both government and licence holders to look at a joint development arrangement without negatively impacting the rights of the existing holder, but in the interest of the development of the resource,” he said.
With regard to explorations and mining licences applications submitted currently to the Ministry, Katali said the applications will be considered under the existing procedure on own merit.
“Importantly, each application will have to be considered on its strength without prejudice. It should also be clear that an application remains an application, where there is no guarantee that it will be successful until it has been assessed and has been determined to have satisfied the minister,” Katali explained.
According to the minister, it is well known that the licence holders often do not have the full technical and financial resources to develop a mine once a mining licence is granted. They often seek capital funds in exchange of shareholding from investors or bank loans to finance the development. As a result, the minister said it might require that the conditions of the licence include one that subjects the licence holder to give the first right of refusal of shareholding to the government before they can approach other parties.
Katali further said that application for future expansion of mining operations by conversion of adjacent existing EPLs into existing mining licences will not be affected by the new policy.
“The fact that the EPLs already exist places them in a similar category as existing operations. However, where a licence holder cannot demonstrate capacity to develop the expansion, a joint development could be an option for both government and licence holder to effectively and optimally develop the resource,” he said.
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