13 September 2024
Review of the Minerals Regulation Commission Bill
Introduction
The Zambian government is set to usher in a new era of mineral resource management with the introduction of the Minerals Regulation Commission Bill of 2024 (the “Bill”). This legislation is poised to repeal and replace the Mines and Minerals Development Act of 2015 (the “Existing Act”). The Bill aims to regulate the exploration, mining, processing, and trading of minerals, with a particular emphasis on promoting citizen participation within the industry.
This article highlights key provisions of the Bill and considers its potential impact on the current mining regime.
Provisions Promoting Zambian Participation
From the outset, it is important to note that in terms of local content provisions, the Bill does not differ significantly from the Existing Act. The Bill does not include provisions requiring Zambian shareholding in large-scale mining or exploration licenses but maintains this requirement for artisanal and small-scale mining licenses.
However, the Bill introduces several provisions aimed at enhancing citizen participation in Zambia’s mineral resources. The salient provisions of the Bill are discussed below.
Establishment of the Minerals Regulation Commission
Part II of the Bill introduces the creation of the Minerals Regulation Commission (the “Commission”). Section 5 establishes the Commission as a corporate body with perpetual succession, meaning it can sue and be sued in its own name, making it legally accountable as an independent entity.
According to Section 6, the Commission is tasked with regulating and overseeing the mining industry in Zambia. Its functions include ensuring compliance with the Bill and associated regulations, granting, suspending, and revoking mining and non-mining rights, and monitoring industry operations. The Commission will also regulate mineral marketing, provide laboratory services for mineral analysis, and collaborate with other authorities on safety, health, and environmental issues.
Section 7 of the Bill states that the Commission’s governance will be managed by a Board, responsible for implementing the Bill and providing strategic policy direction. The establishment of the Commission is expected to streamline and expedite the licensing process, ensuring a specialized focus on mining regulation and leading to more effective oversight and tailored policies.
Increase in Range for Which a Mining Right Can Be Granted
Section 11(3) of the Bill increases the range for which a mining right can be granted to a citizen-influenced, citizen-empowered, and citizen-owned company. The Existing Act allows for a range of 2 to 120 cadastre units (6.68 hectares to 400.8 hectares), but the Bill proposes to increase this range from 6.68 hectares to a maximum of 1000 hectares.
This change effectively limits the size of mining rights available to foreign-owned companies.
Partnerships with Local Artisanal Miners
Section 21(5) allows a company or foreign national to work in partnership or enter into agreements with holders of artisanal mining rights, provided they obtain prior written approval from the Commission and written consent from the artisanal miner. This provision facilitates partnerships between large-scale or foreign investors and local artisanal miners, potentially improving the technical and financial capabilities of artisanal operations.
For foreign investors, this provision provides a structured way to engage with the artisanal sector, opening new avenues for investment and resource extraction.
Employment of Citizens
Section 22(3)(f)(ii) requires applicants for mining rights to employ and train citizens and promote local content. However, the Bill does not specify the number of citizens to be employed or define “promotion of local content.” It is likely that these specifics will be clarified in the conditions attached to the mining license.
Mandatory Insurance Requirements
Section 44 of the Bill mandates that holders of mining or mineral processing licenses obtain and maintain insurance coverage in amounts and against risks prescribed by regulations. This requirement also applies to contractors hired by the license holder. The statutory instrument outlining these requirements has not yet been passed, leaving uncertainty regarding the thresholds and periods applicable to license holders under the new Bill.
Priority of Applications for Mining or Non-Mining Rights
Section 13(2) introduces the possibility for the Commission to deviate from processing mining and non-mining right applications strictly in the order of their receipt, under prescribed conditions. This flexibility introduces uncertainty for applicants but allows the Commission to prioritize applications based on factors beyond the time of submission. The prescribed conditions are yet to be defined, which adds a layer of ambiguity to the application process.
Minister’s Right to Hold an Interest in a Mining Licence
Section 15 allows the Minister of Finance, in consultation with the Minister of Mines, to acquire an interest in a proposed exploration area before granting an exploration license. Once minerals are discovered, the Minister of Finance may maintain the interest in the exploration area.
The Bill, however, does not define what is meant by “interest” in a mining right, nor does it specify the extent of this interest or the rights it entails. Additionally, the Minister can reserve specific areas for government investment, which could limit opportunities for private investors.
Validity of an Exploration Licence
Section 18(1) shortens the validity of an exploration license from a maximum of 10 years to a maximum of 7 years. This change may affect foreign investors, as it reduces the timeframe for developing exploration projects and realizing returns. Investors may need to expedite their activities or seek extensions, which could impact their strategies.
Mineral Royalties and Charges
The Bill provides detailed mechanisms for assessing and collecting mineral royalties, including specific rates for various minerals. For instance, the Bill imposes a 5 percent royalty on base metals (excluding copper, cobalt, and vanadium) and energy minerals, a 6 percent royalty on gemstones and precious metals, and an incremental royalty for copper based on its norm price.
Appointment of Inspectors
Sections 76-78 introduce the appointment of inspectors to ensure compliance with the Bill. Inspectors are granted broad powers to inspect, audit, and seize assets, which could lead to more robust oversight and enforcement of regulations.
Restriction on Number of Mining Rights
Section 88 limits the number of mining rights a person can hold to five, though exceptions are allowed for those who meet financial and compliance requirements. This provision aims to prevent the over-concentration of mining rights and promote broader participation in the sector.
Conclusion
The Minerals Regulation Commission Bill introduces several important changes to Zambia’s mining sector, though it retains much of the structure of the Existing Act. While the Bill establishes the Minerals Regulation Commission, increases the range of mining rights for Zambian entities, and facilitates partnerships with artisanal miners, it does not drastically alter local content requirements or citizen employment obligations. In essence, the Bill introduces targeted adjustments designed to refine and enhance the current mining framework.
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