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Part B: Mineral Rights - Part B-3: Large Scale Exploitation - 26. Large Scale Exploitation Licensing | 26.1 Eligibility

A mining law will generally restrict what legal entities can receive a licence or authorization to conduct mineral exploitation activities, either by defining who may or may not apply for the right or to what type of entity the right may be granted, or by defining prior conditions that must be met before a person or entity can be considered eligible or qualified to apply.

Most mining laws provide that if an exploration licence is currently in effect for a particular area, then only the holder of that exploration licence is eligible to apply for an exploitation licence for all or any part of the area covered by the exploration licence. This is considered to be an important incentive to motivate investors to invest in high risk minerals exploration and mine planning and is therefore an investor-friendly approach. A state may still opt for an approach that allows for a competitive tender for such exploitation licence with fair compensation to the entity that carried out the exploration work if the law allows for it and if deemed appropriate for the circumstance. Most mining laws also require that the applicant for a large scale exploitation licence be a company organized under local law specifically for the purpose of conducting mining activities. Individuals or foreign companies that may have been eligible to hold an exploration licence are therefore required to form such a company under the law of the jurisdiction where the deposit is located, which local company will then be eligible to receive the exploitation licence. This assures the State that the holder of the exploitation licence will be subject to local law and taxation and that it is not a company organized for purposes other than mining and that might take advantage of certain incentives granted to mineral rights holders for other business purposes that are not entitled to such incentives. This requirement also facilitates the implementation of any State equity participation requirements that the country may have. In addition, the mining law typically requires that the exploration licence holder be in compliance with conditions of its exploration licence in order to be eligible to apply for an exploitation licence.

In the case of areas that are reserved pursuant to the mining law for the grant of a large scale exploitation licence by a tender process, the rules for that tender process will specify the eligibility requirements for potential bidders. The eligibility requirements in such cases may require an upfront payment or the making of certain commitments.

Finally, many mining laws specify certain types or classes of persons or entities that are ineligible to receive the grant of an exploitation licence. These would include, for example: any person or entity whose mineral licence has been revoked by the regulatory authority within the last 5 years, who is insolvent or in bankruptcy, who is found guilty of tax fraud, or members of the Mining Administration acting directly or indirectly and members of the Government.

26.1. Example 1:

Article [_]

(1) Mines may be operated only under an operating licence or a small-scale mining licence.

(2 An operating licence may only be allocated to a juristic person under Mauritanian law, and in accordance with the terms provided for in the present Act. It may only apply within the area for its existing prospecting licence and shall be granted automatically if the holder of the prospecting licence has fulfilled their obligations.

(3) Once the operating licence has been allocated, the prospecting licence shall remain valid outside the area for the operating licence.

Article [_]

(1) No person may engage in mining activities if they do not have the technical and financial ability required to meet the provisions of Articles [_] (on the duty to comply with best practices for a going concern and the duty to respect obligations relating to workers' health and safety, public health and safety, and respect for the essential features of the surrounding environment) of the present Act and to meet the environmental requirements provided for in the implementing regulations.

(2) Any prospecting licence holder, insofar as they have fulfilled their obligations, shall be granted an operating licence.

(3) Once the operating licence has been granted, [the Regulatory Authority] shall evaluate the financial and technical capacity of the holder before giving authorisation for operations to commence.

(4) In the event that the operating licence holder does not meet the required criteria for operating, the operating right may be subject to:

(a) the holder forming a partnership with a legal entity which meets the required criteria for operating, in a new entity under Mauritanian law, to which the operating licence shall be transferred;

(b) the assignment of the operating licence to a juristic person under Mauritanian law which meets the required criteria for operating

(5) One of these solutions must be implemented within six (6) months from when [the Regulatory Authority] notifies the operating licence holder that they do not meet the required criteria. During this period, the operating licence shall remain valid.


Drawn from Mauritania’s mining law (2008, as modified), the first of these articles states that a large scale or small scale exploitation licence can only be granted, in accordance with the conditions provided in the Mining Code, to a company organized under the law of Mauritania. It also makes clear that the exploitation area must lie within the boundaries of an exploration licence and that the holder of the latter is entitled to receive the exploitation licence if it has fulfilled its obligations. Thus, this provision is consistent with the principle of security of tenure by providing that only the holder of the exploration licence, or a local company formed by the holder, is eligible to receive an exploitation licence for an area within the area covered by the exploration licence. The provision also clarifies that the exploration licence continues in effect in the areas covered by it that are outside of the area for which the exploitation licence is issued.

The second article provides that the applicant who receives an exploitation licence must establish its technical and financial capacities before mining operations will be authorized under the exploitation licence. In other words, obtaining the exploitation licence is a necessary condition for mining, but it is not sufficient by itself to authorize mining activity. If the exploitation licence holder’s technical and financial capabilities are inadequate, the holder must do one of two things within 6 months of notification by the Ministry: Either (1) form a local corporate joint venture with another company that satisfies the criteria, or (2) transfer the exploitation licence to a Mauritanian company that satisfies the technical and financial capacity requirements.

This is one way of encouraging junior mining companies to engage in exploration - by making it possible for them to obtain valuable exploitation licences and giving them alternatives if they are unable to satisfy the technical and financial capability requirements.

26.1. Example 2:

Article [_]

(1) The following may mine or quarry in terms of the present Act:

(a) any natural person, or public or private sector juristic person under Guinean law which demonstrates their financial and technical ability to undertake the requested operations;

(2) A decree of the [Head of Government] shall specify what is meant by "technical and financial ability".

(3) Persons or companies which are subject to international sanctions or criminal investigations related to fraud, corruption or money laundering may not obtain Mining Titles or Permits.

Article [_]

(1) No natural person may obtain or hold a Mining Title or Permit in the event that:

(a) their status is incompatible with carrying out business activities;

(b) they have received a prison sentence for violating the provisions of the present [Code][Act][Law] and its implementing regulations;

(c) their application does not comply with the requirements of the of the present [Code][Act][Law] and its implementing regulations.

Article [_]

During the period in which a Prospecting Licence is valid, only the holder has the right to apply for an Operating Licence or a Mining Concession for Deposits which are revealed within the area for the Prospecting Licence. This right comes into effect once the holder has produced the complete results as from the date of the Prospecting, reassigned half of the original area to the State, and has produced the file of relevant documents in accordance with Article [_] (on the allocation of an Operating Licence) and Article [_] (on the allocation of a mining concession) of the present [Code][Act][Law].

Article [_]

(1) As regards a company under Guinean law, a Mining Concession shall be given automatically, to the holder of a Prospecting Licence which has complied with their obligations under the Mining Code, by decree of the Cabinet, on a proposal from [the Regulatory Authority], after receiving approval from [the Advisory Commission]. This application must be submitted at least three months before the end of the period of validity for the Prospecting Licence in respect of which it is brought.

(2) The following shall be eligible for the Mining Concession system established by the present [Code][Act][Law]: investments of an amount equal to or greater than a billion (1,000,000,000) USD for substances in categories 1 (bauxite) and 5 (radioactive materials).

(3) This threshold shall be set at five hundred million (500,000,000) USD for substances in categories 2 (precious materials), 3 (metallic materials), 4 (non-metallic materials and rare earths) and 6 (mineral water and thermal springs).

Article [_]

(1) For a deposit which has been revealed, where there is no valid Prospecting Licence, a Mining Concession shall be granted following the procedure for a competitive and transparent invitation to tender according to rules to be defined in the regulations.

(2) The invitation to tender shall be implemented by the [relevant technical committee] together with the [Advisory Commission].


Drawn from Guinea’s mining law (2011, as amended in 2013), these five articles establish the rules of eligibility for large scale exploitation concessions. They include (A) general rules of eligibility applicable to all applicants, (B) the rule and conditions of eligibility of the exploration licence holder in the target area, and (B) provisions for eligibility rules to be set by regulation in the case of licence areas awarded by competitive bidding.

The general rules of eligibility applicable to all applicants include positive standards that an applicant must meet and negative standards that exclude certain categories of potential applicants, as follows:

(1)The applicant must be a citizen of Guinea or a company organized under the laws of Guinea;

(2)The applicant must meet the required technical and financial capability standard established by regulation (in the form of a Presidential decree);

(3)The applicant must not be subject to international sanctions or criminal investigations relating to fraud, corruption or money laundering;

(4)In the case of an applicant who is an individual:

(a)The applicant’s status must not be incompatible with the conduct of commercial activities;

(b)The applicant must not have been sentenced to jail for breaches of the provisions of the Mining Code or its implementing regulations; and

(c)The individual’s application must meet the requirements of the Mining Code and its implementing regulations.

The rule and conditions of eligibility of the exploration licence holder in the target area blend considerations of eligibility and requirements for the grant of the exploitation licence or mining concession.

If the deposits for which the large scale exploitation concession is sought are subject to an exploration licence, the Mining Code of Guinea provides that only the holder of that exploration licence has the right to obtain the exploitation concession. It further provides that such right becomes operative when the holder has complied with the following requirements:

a)Submitted the complete exploration results,

b)Surrendered half of the initial exploration licence area back to the State, and

c)Produced the requisite filing in accordance with articles 30 and 37 of the Mining Code.

This provision includes three key elements that together provide essential security of tenure to investors in mineral exploration. First, it establishes that only the exploration licence holder has the right to obtain an exploitation licence or mining concession for deposits discovered within the exploration licence area. That right is exclusive. No one else may obtain an exploitation right within the exploration area. Second, it provides the exploration licence holder with a right to obtain the exploitation licence or mining concession if it meets the requisite conditions. This exclusive right to obtain the exploitation licence or mining concession is more than a priority and stronger than an exclusive right to apply for the licence or concession. Third, the provision states and references all of the objective conditions that the exploration licence holder must meet in order to obtain the exploitation licence or mining concession. Thus, in addition to complying with the requirements listed above, the applicant who is the holder of the exploration licence for the area must:

d)Have met its obligations under the Mining Code,

e)Have filed an application for the exploitation concession in accordance with the regulations, at least three months prior to the date of the exploration licence, and

f)Demonstrate its intent and ability to invest at least USD 1 billion in developing a bauxite or iron ore deposit, or at least USD 500 million in developing a deposit of a different mineral. (For smaller investments, Guinea provides an exploitation permit that has a shorter term than the mining concession but is subject to the same eligibility requirements except as to the amount of the investment.)

If the area for which the large scale exploitation concession is sought is not subject to an exploration licence and is offered by a tender process, Guinea’s Mining Code provides that the eligibility rules and other requirements for that process set forth in the regulations will apply, and that the bidding procedure is carried out by the technical committee on licences together with the national mining commission.