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  • GDP, US$bn: 71.7
  • GDP per capita, US$: 6,730.7
  • Population, mn: 10.5
  • Inflation, CPI ave: 1.6
  • FX, LCY/US$: 46.0
  • Budget Balance, % of GDP: -2.4
  • Mining GVA, US$bn: 1.4
  • Mining Industry Value, US$bn: 0.9
Regulatory Risk Rating
70
0
100
Score: 70
Low Risk
Written in the 1970s (or possibly the late 1960s) under (we suspect) heavy US influence, the law of the Dominican Republic is a strong model for development. Aside from the discretionary nature of the ultimate mining concession award, which is the Achilles heel of the legislation (and may prove to haunt those who ignore it), all of its other parts support development and help to ensure the retention of just rewards from the making of a discovery.

Corruption Potential Index

Score: 75
Low Corruption Potential

Corruption Risk Index

Score: 83
Very Low Corruption Risk

Regulatory Risk Rating

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Environmental Overview Commentary plus sign

DOMINICAN REPUBLIC – ENVIRONMENTAL REGULATION

GENERAL

The Dominican Republic is a nation formed on Hispaniola island, part of the Greater Antilles archipelago in the Caribbean region. The western part of the island is occupied by the nation of Haiti. Dominican Republic is the second largest Caribbean nation by both area and population, with 48,445 square kilometres and nearly 10 million people. This mountainous land includes Pico Duarte, the highest point in the Caribbean. The array of plant life is understandably impressive in a country with both the highest and lowest points in the Caribbean, where some areas never experience rain and others rarely experience a reprieve from it.

Most of the country is subtropical forest, which is found in lowland areas and on the floors and slopes of most valleys. It is characterised by royal palms, coconut palms, Hispaniola mahogany, West Indian cedar, wild olive, American musk wood and others. The Dominican coastline has red, white and button mangroves. In the highland regions, there are mountain forests with palms, pines (the Creolean pine is the most common), ferns and hundreds of different species of orchid. The desert regions are in the southwest of the Dominican Republic. The country also has the most diverse animal life in the entire Antilles region. There are 254 species of birds, 22 of which are endangered; there are also 1,411 species of reptile, including the American crocodile, the Ricord iguana and the endangered hutia and solenodon (also found in Cuba). In addition, there are nearly 60 species of amphibians and mammals, including the Antilles manatee and the humpback whale.

The loss of biodiversity is particularly acute in the country given its diversity and the stresses upon its habitat caused by the invasion of non-native species, the loss of forest and pollution. The loss of forest to agriculture occurred quite persistently in the last century, motivated by the profitability of this sector. Today, only national parks and appropriate land use restrictions can protect what remains against this profitable undertaking. It is more difficult to protect against forest fires, often caused by human activity, and often aimed at achieving conversion of land use.

PRINCIPAL LEGISLATION AND REGULATOR

The environmental legislation in the Dominican Republic consists of the Environmental and General Resources (Law No. 64); the Environmental Assessment Regulation (EAR), which regulates the environmental authorisation process stated by Law No. 64; and the Environmental Assessment Procedure Regulation (EAP). The Environmental Ministry (Ministry) is responsible for administering these laws. The Technical Evaluation Committee and the Validation Committee are the responsible bodies for issuing an environmental permit and an environmental licence, respectively. These decisions are subject to review by the Ministry, which can make a final decision.

EIA PROCESS

The EAP regulates the approval of exploration, mining and processing activities. Pursuant to Annex A of the EAP, prospecting and exploration activities are Category B projects, while mining and processing activities are Category A projects. A mining operator must request approval for an environmental assessment from the Ministry, which has 125 and 190 days to respond in the case of Category B and A projects, respectively. In the case of rejection, the applicant may ask for a review. If approved, the Environmental Assessment Bureau issues terms of reference, which must be followed by the both the mining operator and the environmental team of the Ministry, in the environmental assessment process.

Category A projects are subject to an Environmental Impact Study (EIA), while Category B projects (exploration) are subject to an Environmental Impact Statement (EIS). Once the assessments are concluded, the mining operator submits the EIA or EIS to the Environmental Assessment Bureau. In the case of Category A (mining projects), the responsible body for issuing the environmental licence is the Validation Committee; in the case of Category B projects (exploration), the Technical Evaluation Committee is responsible for issuing the environmental permit. The assessment is completed when the Ministry issues its final decision. Environmental permits and licences are required to be reviewed, as stated in Article 8 of the EAR, after the first 5 years, 12 years, 22 years and, thereafter, every 10 years. The environmental permit or licence holder must comply with the Environmental Management and Application Program, and submit regular environmental compliance reports.

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Mining Overview Commentary plus sign

DOMINICAN REPUBLIC MINING REGULATION

GENERAL

Occupying the eastern two-thirds of Hispaniola, the Dominican Republic is the second largest country, after Cuba, in the Caribbean. The remaining portion of the island is Haiti. The island was divided by the Spanish and French in the 17th century, a quirk of history given that the English overtook Tortuga in 1660 and then made the mistake of appointing a Frenchman as Governor. Following a very tumultuous history of governance and substantial US (direct and indirect) influence, the World Bank now reports the Dominican Republic to be “a middle-income country, with the largest economy of Central America and the Caribbean, [which has] weathered the global economic crisis well and in 2010 experienced one of the highest growth rates in the region.”

Dominican Republic has the second largest population in the Caribbean, with nearly 10 million people, one million of which reside in the capital city, Santo Domingo. The country is primarily dependent on natural resources and government services. Agriculture remains the most important sector to GDP, while mining is the most important in terms of export earnings. Dominican Republic has gold, silver, ferronickel, bauxite, coal, tin and gemstones. The country also produces varying amounts of iron, limestone, copper, gypsum, mercury, salt, sulphur, marble, onyx, travertine, and a variety of industrial minerals, mainly for the construction industry.

PRINCIPAL LEGISLATION AND REGULATOR

The Mining Law 146 of 1971 (Code) and its Regulation 207-98 (Reg.) are the main source of regulation in Dominican Republic. In 2013, pursuant to Decree No. 100-13 the Ministry of Energy and Mines (Ministry) was created as a response to increased activity and growth of the minerals industry. According to Article 19 of Law No. 100-13 the Ministry will take on all the responsibilities previously held by the Ministry of Industry and Commerce under the Code (see also Art.3, Law No. 100-13). As such, the Minister of Energy and Mines, through the Mining Directorate, is now responsible for granting exploration and mining concessions.

Any individual or legal entity, national or foreign, is entitled to acquire mineral rights. Mineral substances of every nature that are found in the soil of the national territory, as well as in the underwater soil and subsoil of the territorial sea, belong to the state. Radioactive minerals, petroleum and other hydrocarbons, mineral waters, and aggregates are excluded from the provisions of the Code (see Art. 4, Reg.).

TITLE GRANTS AND FORMS

Article 141 of the Code states that first come/first serve basis applies in the acquisition of mineral titles. A mining concession does not grant surface rights, but does confer the exclusive right to access the minerals within an area, with the obligation to compensate a landowner for any injury or damage caused as a result of the development activities. Concessions and mining rights may be transferred.

The Law distinguishes between the following activities and concessions:

  • Reconnaissance: These activities can be carried out freely within the territory, with the exception of the areas where there exists exploration and exploitation concessions, subject to prior permission from the landowner. Reconnaissance may be surface or aerial (which needs a special permit). In the event that a mineral is found, the interested party may report it to the Mining Directorate. This grants a right of priority for 30 days to request an exploration or exploitation concession. However, according to Article 36 of the Code, it is not necessary to make a discovery in order to obtain an exploration concession.

 

  • Exploration: An exploration concession gives the holder an exclusive right to explore for mineral substances for a period of three years within an area that shall not exceed 30,000 hectares. The exploration titleholder may apply for an extension of up to one year at a time, with a maximum of two renewals. Article 16 of the Regulation states that a new exploration concession may be granted where justification for a mining concession has not been met in the five-year period. The titleholder has the exclusive option to obtain a mining concession within the exploration area. Activities must start within six months after the date of the granting, and may not be suspended for more than six months.

 

  • Mining: An exploitation concession grants the exclusive right to mine, process, melt, refine and otherwise exploit the minerals for a period of 75 years, within an area that shall not exceed 20,000 hectares. Activities must start within one year from the granting date, and may not be suspended for more than two years.

 

Concessions may be freely transferred and confer extensive rights with respect to surface areas both within and outside of the concession areas.

DEVELOPMENT CONSIDERATIONS

The exploration and mining concession entitles the holder to the use of the land for its purposes, subject to compensation to landowners (Arts. 37 and 51, Code). Pursuant to Articles 181 and 182, compensation is limited to damages caused. As well, the titleholder may request the expropriation of lands for mining (Arts. 66 and 86, Code) and the use of neighbouring lands via an easement with prior agreement with the landowners. If agreement is not reached, titleholders map apply for expropriation (Arts. 64-67 and 86, Code). Where land conflict arises, the Mining Directorate is to intervene (Art. 39, Code). The law also permits the use of water flowing through the concession for mining purposes (Art. 134, ML), subject to downstream community use.

Pursuant to Article 41.9 of the Environmental and Natural Resources Law (No. 63), an environmental impact study / assessment is mandatory to engage in reconnaissance, exploration, mining and other related activities. The law requires a lesser environmental impact statement for exploration activities. Pursuant to Article 42 of the Regulation, the application for a mining concession should also include a detailed environmental plan, a contingency plan and a closure plan.

Exploration and mining operators are subject to a payment of an annual surface fee stated in Article 116 of the Code. Furthermore, they are obliged to the payment of a royalty / export fee of 5%, which does not apply to smelters and refineries. The law provides fiscal stability for periods of 25 years (Art. 48, Code) and indicates that no authority may suspend mining operations, unless necessary for public order (Art. 63, Code). Mining concessionaires and owners of processing plants may only export their production after meeting the demands of the Dominican Republic market (Art. 122, Code). Exploration and mining concession titleholders are also obliged to render to the Mining Directorate a semi-annual progress report and an annual operation report.

ENVIRONMENTAL REGULATION

See Dominican Republic Environmental Regulation.

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