Govt. to have 10% shares in large mining ventures

By Gloria Mbwana

Government will take up 10% free equity in large-scale mining operations without obligating itself to give any concessions on any item in the fiscal regime, this is according to the New Mines and Minerals Act.

The Act explains that government will have a limited-time option to exercise its right to a free equity ownership interest in a mining project commencing at the time that a large-scale mining licence application is submitted and terminating on the date that the mininglicence application is granted or denied.

It says: “At the time that the Mineral Resources Committee considers a large-scale mining licence          application but before it decides the application it shall recommend in a notice to the Minister whether the Government should elect to require a ten percent free equity ownership interest in the associated mining project.”

“The Minister shall, within twenty eight days of a notice decide, in consultation with the Minister responsible for finance, and notify the Mineral Resources Committee whether the Government shall exercise its right for up to a ten percent free equity ownership interest in the mining project, and if so, the percentage.”

The Act also introduces a new licence called Retention Licence, which is granted to holders of valid exploration license to maintain the exclusive right to apply for a mining license, over an exploration area when exploration has been completed but prevailing conditions do not justify mine development at that particular time.

The Law says that Retention Licence applicant shall be a holder of a valid exploration licence, whose            exploration licence area includes the entire area to which the retention licence application relates.

It says a Retention Licence holder shall be a company duly incorporated, or registered as an external company under the Companies Act, 2013 that has the technical competence and financial ability to fulfill the licenceobligations.

In addition, the New Law has introduced a small scale mining licence which is valid for two years            replacing the one year mining claim in the previous 1981 Act for regulating small scale mining operations, such as lime production and gemstone mining.

“Malawian citizens only are eligible for this licence and it is granted by the Commissioner,” says the Act.

The Law also introduces a provision for mining   companies to sign community development agreements stating that a holder of an exploration licence, retention licence, medium-scale mining licence or large-scale mining licence shall develop a community engagement plan in collaboration with local government authorities, traditional leaders, communities, organizations, women and minority groups in the area in proximity to the tenement.

“Where more than one tenement is held by the same tenement holder in a localized area, the tenement holder may register a single community engagement plan that provides for community engagement in that area,” it says.

Speaking when he tabled the Bill in Parliament, Minister of Natural Resources, Energy and Mining, AggreyMasi, said it was important for the Members of Parliament to pass the long awaited bill to allow the government address challenges in the sector notably illegal mining by artisanal and small-scale miners.

Opposition parliamentarians who spoke before the Bill was passed said though the Bill had some areas which needs improvement or rectification, it was important to pass it into Law to allow that things move in the sector, and make amendments later.

The enactment of the new Law is a respite to a number of stakeholders in the minerals sector including the private sector and civil society organisations, who have been advocating for the new law saying the 1981 law was archaic and not in tandem with modern developments in the sector.

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