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Legal Alert | New Mining Act Alert Series | The Immediate Impact of the Mines Support Services Regulations

 

The Mining Act, 2016 (the Act) and the recently gazetted Mining (Mines support services) Regulations, 2017 (the Regulations) provide for the licensing of entities providing mines support services. The Regulations apply to any person who intends to provide mines support services for any period of more than six months and for a contract sum of more than KES 50,000,000 in aggregate. In this email, we examine the immediate impact of the Regulations on providers of Mines Support Services (MSS providers).

(a) Definition of Mines Support Services
The Act has a broad definition of “Mines Support Services” which includes the following contract mining services:

  1. top soil and waste removal, excavating and haulage of ore to plants on a turnkey basis;
  2. assay laboratory services;
  3. drilling and blasting services;
  4. mineral exploration services;
  5. contract mining services for small scale and artisanal mining, which include mining and processing of ore, reclamation, revegetation and management of mining operations; and
  6. any other services specifically and exclusively related to mining, which the Cabinet Secretary (the CS) considers necessary for the effective and sustainable development of the mining industry

MSS providers providing any of the above services for a period of longer than six months for a contract value in excess of KES 50,000,000 will require a mines support services licence. Mineral rights holders who have entered into contracts with MSS providers would need to evaluate their existing contracts and engage with the MSS providers to confirm that their MSS providers are compliant with the Regulations.

Any person who engages in providing mines support services without a licence or who otherwise contravenes the Regulations is liable, on conviction, to imprisonment for a term not exceeding two years or to a fine of not less than KES 2,000,000 or to both.

(b) Application for Grant, Renewal, Suspension or Revocation of a Licence
An application for a licence must be made online and may only be registered on the Cadastre when complete and after payment of the prescribed fee. As at the date of this email, the fees payable are yet to be published.
The CS will approve or reject an application for a licence within 30 days from the date of submission of the application after which the CS will notify the applicant to accept or reject the grant of the licence within 14 days. If the applicant does not respond within 14 days, the approval lapses. Where an applicant accepts the grant of the licence, the CS will issue the licence valid for a period not exceeding three years.
MSS providers may apply for renewals of such licences. The term for renewal will also not exceed three years but there is currently no limit to the number of renewals that may be granted except that any renewal is subject to compliance with the terms and conditions of the initial licence and the Regulations. Where an MSS provider has applied for the renewal of its licence and has not received the renewal by the expiry date of the initial licence, the expired licence continues in force until the application is determined.

(c) Reporting Obligations
MSS providers are required to submit a quarterly report (the Report) to the Ministry on their activities or operations under their licence. The Report must be submitted not later than 30 days from the month following the end of each quarter in the format set out under the Regulations. It must also contain a signed declaration by the Chief Executive Officer or an authorised  representative that the particulars contained in the Report are accurate and complete. The making of any false statements would subject the declarant to criminal penalties and run the risk of suspension or revocation of the licence. The CS has broad powers to request further information on any matter relating to prior Reports or “any other matter” that the CS may consider necessary for purposes of the Regulations. We would recommend that MSS providers engage with the Ministry of Mining to confirm the contents required in the reports as the format provided lacks substantive detail.

(d) Mines support services Contract
MSS providers must submit to the CS a copy of any mines support services contract or agreement entered into with a mineral rights holder. The contract should include (i) the parties to the agreement or contract (ii) the types of mines support services to be provided under the contract (iii) the duration of the contract (iv) the value of the contract and (v) the number of employees including expatriates, if any. It is not clear whether the number of employees required relates to the licence holder as a whole or to the employees required to provide the relevant support services.
MSS providers should evaluate their contracts to ensure compliance with the Regulations.

(e) Environmental Concerns
MSS providers are required to comply with the conditions and obligations of any licences or authorizations issued to their clients under the Environmental Coordination and Management Act. To this end, it will be important for an MSS provider to obtain a copy of the conditions of the licence issued to the holder of a mineral right to identify the relevant terms and conditions and scope of environmental obligations thereunder. MSS providers may also need to consider obtaining insurance to cover any liability relating to the environmental conditions under a mineral right or obtain indemnities from their clients in this regard.

If you have any questions regarding this legal alert or require more information on the impact of these new laws, please contact Dominic Rebelo.

 
Dominic Rebelo
Partner
djr@africalegalnetwork.com

The content of this alert is intended to be of general use only and should not be relied upon without seeking specific legal advice on any matter.