The licensing requirements under the new Regulations have far reaching effects on existing operators as well as new entrants. The Mining Act expanded the scope of minerals which are covered by the regulatory regime to include various construction and industrial minerals that were previously classified as “common minerals” and generally exempted from the provisions of old Act except in relation to mine safety. We examine the impact of the Licencing Regulations on existing mineral rights holders as well as new licencees under the Act.
THE IMMEDIATE IMPACT OF THE NEW REGULATIONS: NEW LICENSES
The Mining Act created a variety of new licences including reconnaissance, prospecting, retention and mining licences for large scale operators. The Licencing Regulations clarify the requirements in relation to these licences, but contain some significant gaps. However, following the recent inauguration of the Mineral Rights Board (MRB) licences may now be issued under the new Act.
Licences required for mining “common minerals”
Because industrial and construction minerals are now classified as minerals that require mining licences under the First Schedule of the Act, persons mining soda ash, limestone, sand, phosphate, gypsum and other minerals formerly classified as “common minerals” will now be required to apply for mining permits or mining licences, depending on the scale of their operations, and to comply with the expanded procurement, employment, and local content obligations in addition to existing environmental compliance requirements.
Transparency and accountability
New entrants may enter the market through green field projects or acquisition of existing operators. In either case, MRB approval is required.
The MRB was inaugurated on 17 July 2017. However, the online Mining Cadastre is currently undergoing maintenance and currently cannot does not appear to accept licence applications and the licence application fees have not yet been gazetted.
We would note that the Licencing Regulations permit the MRB to vote on and permit any member of the Board who discloses an interest in any matter under discussion by the Board to participate in deliberations and to also vote on such matter. This would appear to be a significant breach of transparency and accountability in relation to the MRB and potentially hampers its credibility as an independent organ with respect to its recommendations in relation to licences or other matters that are under its purview.
Assignment, transfer and mortgage of mineral rights
Section 51 of the Mining Act requires the prior consent from the Cabinet Secretary (CS) (on recommendation of the MRB) for the assignment, transfer, mortgage or trade of a mineral right. The CS’s decision is to be notified to the mineral rights holder within 30 days of receipt of the application to assign, transfer, mortgage or trade the mineral right. However, the Licencing Regulations prescribe a 90 day notification time frame for large scale operations and a 60 day notification time frame for small scale or artisanal permits. This ambiguity needs to be addressed urgently as the negative impact on transaction timelines will be significant for market entrants.
Market entry considerations: Consent of land owners
Applications for mineral rights will only be granted with the consent of the land owner to which the mineral rights relate. Consent is defined specifically in the Licencing Regulations and appears broader in scope than a lease or a licence over the land in question. Consent entails a three-way process of engagement between the land owner(s), the licence applicant, and the county government. The Licencing Regulations do not distinguish between leases over private land and other types of consent, making them broader in scope than the Mining Act, which requires a legally binding agreement between the licence applicant and a private land owner. Instead the Licencing Regulations require mandatory consultation between the licence applicant, the county government and the community which is likely to make the consent process for applicants particularly onerous where private land is concerned.
If you have any questions regarding this legal alert or require more information on the impact of these new laws, please contact Dominic Rebelo.
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.