CENTRAL AFRICAN REPUBLIC – MINING OVERVIEW COMMENTARY
The Central African Republic (CAR) has extensive mineral resources, including copper, diamonds, gold, graphite, ilmenite, iron ore, kaolin, manganese, rutile, tin and uranium, though the economy is heavily dependent on subsistence farming. The agricultural sector accounts for over 50% of CAR’s GDP, while rough diamonds and timber are CAR’s leading exports. Prior to 2013, exploitation of gold and diamonds was conducted exclusively by artisanal mining. AXMIN Inc., of Canada, is currently among the international companies exploring for gold in the CAR, and Asquith Resources has discovered a high-grade iron deposit.
Despite significant mineral deposits, CAR remains one of the poorest countries in the world and, for the most part, security of tenure and stability of fiscal terms have been insufficient to justify investment on a large scale. Other factors impeding the development of the mining industry (and the economy as a whole) include: insufficient infrastructure and transportation systems; a primarily unskilled workforce; failed economic policies; and the country’s landlocked geographical position. Sectarian violence has persisted following a coup d’état in 2013, which ousted President François Bozize.
PRINCIPAL LEGISLATION AND REGULATOR
The principal minerals legislation in the Central African Republic is the Mining Code (Loi no. 09-005 du 29 avril 2009 portant Code Minier) and the Mining Decree (Décret No. 09-126 du 30 avril 2009 fixant les conditions d’application de la Loi no. 09-005 du 29 avril 2009 portant Code Minier de la République Centrafricaine). The Mining Code divides mineral substances into seven categories, and Article 6 provides that all natural mineral deposits in the soil and subsoil are the property of the state. The state may conduct activity under the Mining Code both with third parties and alone, subject to the same rights and obligations as private parties under the Mining Code.
Both small- and large-scale mining permit applications must be accompanied by a dossier which includes the following: feasibility study; environmental and social impact study; profitability study with a financial model describing the basic assumptions certified by a reputable local firm; certified estimate of the reserves and the duration of the project; environmental compliance certificate; social compliance certificate; mitigation and rehabilitation plan; environmental and social management plan; program for training and recruitment of CAR nationals; community development plan; a mining plan with an EIS, including the results of a public inquiry; and proof of a request to open a local bank account at a bank approved by the Minister.
The Minister of Mines, Energy and Water, along with its Directorate General of Mines, are responsible for the implementation of the Mining Code and promotion of the mining sector, subject to tax, customs and environmental issues, which are governed by the Ministries of Finance, Environment, Labour and Social Security. The Mining Code also creates an independent agency, the Office of Geological Research and Mining (ORGEM, in French), to improve the geological knowledge and promote the development of geological and mineral resources in CAR. Records of mining titles and authorizations are maintained by the Registrar of Mining Heritage (Conservateur du Patrimoine Minier) within the Ministry of Mines.
GRANT AND FORMS OF MINERAL TITLE
The Mining Code provides for several types of mining titles, including:
- Reconnaissance Licence: This authorization is issued by the Minister of Mines to natural persons or legal entities of any nationality. It confers the non-exclusive right to conduct reconnaissance for all mineral substances in a maximum perimeter of 5000 km2. The licence is a prerequisite for obtaining an exploration permit. The authorization is valid for one year, and is renewable provided that the holder has upheld its obligations. The right is personal and nominative, and cannot be assigned or transferred.
- Exploration (or Research) Permit: This permit confers the exclusive right to explore for the relevant mineral substances and to dispose of extracted substances for testing purposes. Applications to extend the permit to include other mineral substances are made with the Conservateur du Patrimoine Minier and the Minister of Mines. This request is granted as of right provided the exploration permit is valid and the titleholder describes the information indicating the presence of the relevant minerals. Extensions are subject to the same rights and obligations linked to the delivery of a permit of the same type. The exploration permit also confers the exclusive right to request a Mining Permit upon discovery of exploitable deposits, provided the mining titleholder has upheld its obligations. Applicants must provide proof of financial capacity. This permit is granted by a Decree of the Council of Ministers on the advice of the Minister of Mines to any legal person under CAR law with a minimum social capital of 10 millions CFA francs ($16,665 USD as of Dec 2015), who makes a request and satisfies all the conditions in the mining regulations. The permit is a movable, indivisible right that can be assigned or transferred, but cannot be leased. It is valid for three years, renewable twice for three-year periods, provided the licence holder has fulfilled his obligations under the mining regulations, and the holder must commence work within six months. Any assignment or transfer must be conditioned on the approval of the Minister of Mines, and does not take effect until the relevant Decree by the Council of Ministers based on the report of the Minister of Mines is issued. The permit can be granted for a maximum of 500 km2, with the surface area decreasing by half after the first renewal, and reducing by a quarter at the second renewal (the titleholder defines the remaining area). If the area is reduced to less than 62 km2, the titleholder will not be subject to further reductions. A titleholder can hold a maximum of five exploration permits.
- Mining (or Exploitation) Permit: Both large- and small-scale mining permits are granted by Decree of the Council of Ministers on the report of the Minister of Mines, with the approval of the Ministers of Environment, Labour, Internal Administration, Commerce and Finance, to exploration permit holders who have upheld their obligations under the Mining Code. Legal entities in receipt of a mining permit must conform to the Uniform OHADA Act and have their headquarters in CAR. Mining titleholders must elect domicile in CAR and have a representative whose identity and qualifications were submitted to the Ministry of Mines. A Mining Convention, signed by the Minister of Mines, defines the specific rights and obligations between the state and the mining titleholder. The Mining Convention includes clauses governing the following: the State’s 15% ownership free of all charges, which cannot be diluted; granting 5% of the capital to private CAR citizens; granting of at least 15% of the production to the state during the mining phase; assurance that the state does not intend to expropriate the investment (and international law providing for just reparation would apply); applicable law or arbitral tribunal; reporting obligations; the right of the state to verify the holder’s finances, etc. The Mining Convention cannot subject the parties to more onerous obligations than those listed in the Mining Code. The mining permit confers the exclusive right to conduct exploration and mining of deposits for the substances the holder finds and for those for which the permit was granted on the surface and to any depth. The permit grants the right to hold, transport and dispose of these substances or their concentrates or primary derivatives, and to sell them in domestic or foreign markets. It also confers the right to construct mining treatment and refinement facilities. The permit is an immovable right, which can be mortgaged or pledged on the condition that the borrowed funds are secured and used for mining operations. The permit can only be transferred to an entity constituted under the OHADA Uniform Acts with its headquarters in CAR, upon application to the Minister of Mines. A large-scale mining permit is valid for 25 years, renewable for consecutive five-year periods for the life of the mine; a Mining Convention is also valid for a minimum of 25 years, but renewable for 10-year periods. An industrial mining permit holder must begin work within two years, though holders can obtain an order from the Minister of Mines delaying work for two years, renewable for two additional two-year periods, in the event of adverse market conditions.
- Small-Scale Mining Permit: [See above for rules governing the issuance and revocation of a Small-Scale Mining Permit]. Small-scale mining permits are valid for a period of 10 years, renewable for consecutive five-year periods for the life of the mine.
- Semi-mechanized Artisanal Mining Permit: This permit is issued by order of the Minister of Mines in consultation with the relevant administrative authorities and local communities. It grants the exclusive right to exploit, hold, transport and dispose of mineral substances within the perimeter. The right can be mortgaged or pledged, provided the borrowed funds are used for mining activities. The permit is valid for a period of three years, renewable for three-year periods provided the titleholder has respected its obligations under the mining regulations. The maximum area for a licence is 1 km2. The holder may not, except with the consent of the relevant farmer, engage in work on cultivated land or hinder normal irrigation; the holder must repair any damage sustained by farmers. This right is a real, immovable right that can be pledged or mortgaged. Transfer is allowed subject to approval by the Minister of Mines, and the permit can be revoked for Mining Code violations.
Mining titles cannot overlap, in whole or in part, except with the accord of the pre-existing mining title/authorization holder. Renewal of mining titles is of right provided the holder has satisfied its obligations, and mining titles are assignable, transferable and leasable under the conditions provided in the Mining Decree. The holder must submit the contract transferring its interest in whole or in part to the Minister of Mines. The Mining Code also details the revocation of mining titles. Mining titles can be withdrawn without compensation or restitution after 60 days notice for reasons including: delay or suspension of exploration activity without cause for more than one year; delay or suspension of development or mining operations without authorization for more than two years; unauthorized transfer; non-payment of taxes or duties; failure to fulfil EIA obligations; serious public health and work safety violations; and failure to sign the Mining Convention within the allotted time.
Mining title applicants undertaking activity that could harm the environment must conform to Articles 89 et seq. of the Environment Code, including completion of an EIS and a social and environmental management plan. Any subsequent modification of the environmental plans must be authorized by the Minister of Environment. The EIA process includes a public hearing. Mining titleholders are also subject to relevant regulations regarding labour, social security, environmental preservation and management, nuisance, and protection of forests and cultural heritage sites. An ordinance of the Ministry of Mines established a Technical Committee responsible for the monitoring and inspection of the Environmental and Social Impact Assessments, and the Mining Code provides that mining activities must be conducted in a manner that ensures the protection, preservation, and management of the environment, as well as the rehabilitation of mining sites.
The occupation of surface land necessary to conduct prospecting, exploration and mining both inside and outside the perimeter, as well as passage over these lands for the same purposes, is governed by regulations. Any damage resulting from such occupation or use of the surface lands entitles the owner, traditional occupant, or customary use rights holder to compensation. Simple passage and use, without damage, does not give rise to compensation. The occupation of surface land includes, where applicable, the right to cut necessary timber and use spring water, surface and groundwater within the perimeter. The mining titleholder determines, through agreement with the holder of a forest title, the operations necessary to implement a right of way, including the logging of wood in the relevant areas. Disputes are subject to mediation by the Ministry of Mines.
See Central African Republic – Environmental Overview Commentary.