GUINEA MINING REGULATION
The minerals industry in Guinea has faced challenges despite the country’s substantial mineral resources. Guinea is the world’s second largest producer of bauxite with the largest bauxite reserves, estimated at 29 billion tons. It also hosts world-class iron ore resources that have been the subject of competition among the worlds leading mining companies. Other minerals include gold and diamond deposits. Guinea has been unable to profit from these resources due to corruption, poor infrastructure and political uncertainty, which have forestalled investment. Political instability remains a challenge for Guinea’s economy. The Fraser Institute ranked Guinea 97th out of 109 countries in 2015.
PRINCIPAL LEGISLATION AND REGULATOR
The primary minerals legislation in Guinea is the Mining Code of 2011 (Loi 2011/006/CNT de 9 septembre 2011), as amended by Loi 2013/053/CNT adopted by the National Transitory Parliament (Conseil National de Transition) in 2013. This law applies without prejudice to the relevant provisions of the OHADA Uniform Acts and other national laws. The regulation of mining is carried out by, among other agencies, the National Mines Authority (Direction Nationale des Mines), the Bureau National d’Expertise des Diamants, Or et autres Matières Précieuses (BNE), the Mining Promotion and Development Centre (MPDC), the National Geology Authority, the Directorate General for Mining Projects Authority, the Inspectorate General for Mines and Geology, the Geo Services Authority and the Managers and Assistant Managers of Mining Projects. The Minister of Mines is responsible for the decision to approve or reject mining titles.
The Mining Code provides that all mineral substances or fossil substances in the subsoil or on the surface, as well as groundwaters and geothermal deposits in Guinea and in the exclusive economic zone, are the property of the state. Mining titleholders acquire ownership of any substances only upon extraction. Several categories of minerals are contemplated, namely:
Category 1 – bauxite and iron ore;
Category 2 – diamonds, gems, platinum group metals and precious metals;
Category 3 – all other base metals;
Category 4 – non-metalic substances;
Category 5 – radioactive substances; and
Category 6 – mineral water and geothermal deposits.
One can secure a mining concession (as opposed to an exploitation permit) for Category 1 and 5 minerals where the investment is anticipated to exceed US$1 billion; in other cases, the threshold is US$500 million. All individuals or legal entities with the necessary technical and financial capability can undertake staking for indications, or exploring for mine or quarry substances. The state reserves the right to negotiate production sharing contracts, the terms and conditions of which are set out and appended to the Exploration Permit. Any non-resident mining title or authorization holder must elect domicile and have a representative in Guinea whose identity and qualifications are provided to the Mining Administration.
Mining concessions and exploitation permits are issued in conjunction with a Mining Convention (Convention minière), which establishes the parties’ rights and obligations. The Mining Convention is valid for a maximum period corresponding to the term of the title to which it relates, renewable for 10-year periods for a mining concession, and five year periods for an exploitation permit. The Minister has authority to sign the mining convention upon receiving the National Mining Commission’s approval and with the authorization of the Council of Ministers. The signed mining convention is submitted to the Supreme Court within seven business days for a legal opinion, and forwarded to the National Assembly for ratification.
GRANT AND FORMS OF MINERAL TITLE
The mining code provides for several mining titles, namely:
Exploration Permit: This permit confers the exclusive right to prospect for the type of mineral substance(s) for which the permit is issued. For the term of the permit, only the permit holder is entitled to an Exploitation Permit or Mining Concession for deposits found within the perimeter. Any technical partnerships to raise the necessary capital must be approved by the Minister, and cannot consist of a direct or indirect transfer of the Exploration Permit. A person can hold a maximum of three permits for bauxite and iron ore (max area of 1500 km2) and a maximum of five permits for other substances (maximum area of 500 km2 for industrial and semi-industrial operations). The permit is granted by order of the Minister, on the recommendation of the MPCD, after receiving the approval of the Technical Committee of Titles, to applicants with sufficient technical and financial capacity, as well as acceptable work and expenses commitments. The permit is a movable property right that is an undivided, not-assignable right that may not be pledged or mortgaged. For areas without geological information or with geological information that does not identify a deposit, title is granted on a first come, first served basis. For areas containing a known deposit that has attracted interest from several companies, the granting procedure is by competitive and transparent tender offers, which must be completed within one year of Minister’s order reserving that deposit for tenders. Industrial Exploration Permits are granted for an initial period of three years, renewable twice for two-year periods at the request of the holder and on the same conditions as those on which the permit was granted. Renewals for both industrial and semi-industrial permits are automatic if the holder has met all its obligations under the granting order and the Mining Code and submits a minimum work program adapted to the results of the preceding period and representing a financial outlay at least equal to that set out in the granting order. For each renewal, the permit area is reduced by half.
Exploitation Permits: These permits confer the exclusive right to search, prospect, develop, mine and freely dispose of the mine substances for which it was granted. It is a moveable and divisible right that can be sub-leased or pledged to secure loans for operations. If the exploitation permit is issued to anyone other than the finder of the deposit, the permit holder must pay the latter fair compensation. The permit is granted for a maximum period of fifteen years, renewable for five year periods, provided the holder has upheld its obligations. Development work must commence within one year and, where the holder has not started work after 18 months, the State reserves the right to revoke or cancel the title.
Mining Concession: This title is similar to the exploitation permit, except that the concession is granted for a maximum period of 25 years, and can be renewed for 10-year periods under the same conditions as the original grant (must file a new feasibility study) and the state may revoke or cancel the title if work does not begin within two years. Only projects involving investments of US$500,000,000 (or US$1 billion in the case of bauxite, iron ore and radioactive minerals) are eligible for the grant of a mining concession.
Other permits, such as Semi-Industrial Exploration and Exploitation Permits, as well as Artisanal Exploitation Permits, are granted only to Guinean nationals, wholly Guinean-owned companies, or foreign nationals of countries who grant reciprocity to Guinean nationals. These are small-scale licences of little interest to foreign investors.
The superimposition of Exploration Permits and Authorizations for exploration or staking for different substances belonging to different categories and to different holders is authorized. Mining title and authorizations may be revoked due to suspension or serious restriction of exploration or mining operations, and for violations of the mining code. Revocation can only occur after a warning notice from the Minister requiring proof of compliance within one month for Exploration Permits and Authorizations, and 45 days for Exploitation Permits and Mining Concessions.
Any change in the direct or indirect control of any holder of an interest in a Mining Title must be submitted for approval or ratification by the Minister in charge of Mines. The grant of a mining operation title immediately gives the state an ownership interest of up to a maximum of 15% in the capital of the company. The state has the right to acquire supplementary participation, in cash, according to terms agreed with the relevant mining company in the Mining Agreement. The total participation may not exceed 35%. The shareholders of the company must sign a shareholder’s agreement that defines decisions which cannot be made without the prior agreement of the state.
Applications for mining operation titles must include an Environmental and Social Impact Study (ESIS) in accordance with the Environmental Code and its implementing regulations. The requirements depend on the scale of the work, ranging from an Environmental Impact Notice for an Exploration Permit to a detailed ESIS including a hazard study, a risk management plan, a hygiene, health and safety plan, a rehabilitation plan, a resettlement plan, and measures to mitigate negative impacts and optimize positive impacts for an Exploitation Permit or a Mining Concession. Mining operation permit holders must open and fund an environmental rehabilitation and trust account, in accordance with the Environmental and Social Management Plan, to guarantee the rehabilitation and closure of the mining site. The terms of its operation will be determined by a joint order of the Ministers in charge of Mines, Environment and Finance.
The Mining Code provides that mining title holders must give preference to Guinean companies regarding any contract, provided they offer comparable prices, quantities, qualities and delivery schedules. The portion of SMEs, SMIs and companies owned or controlled by Guinean nationals must be progressively increased according to minimum thresholds set in the Mining Code. They must also promote the private sector development and implement the support plan for building and/or strengthening the capacities of SMEs, SMIs and Guinean-owned companies. Mining titleholders must also give preference to Guinean managers with the required skills in its recruitment process, and must file a training plan for Guinean managers. Further, titleholders must exclusively employ Guineans for all unskilled positions, and the code sets quotas for Guinean employees for each phase of the project.
No prospecting, exploration or exploitation of a mine can begin on a surface within 100 meters around walled properties, villages, settlements, wells, religious buildings, cemeteries and sacred sites without the consent of the owner, or on either side of communication channels, water lines, and public utilities or works of art. No mines are allowed along the seashore. Mining title holders may install facilities and construct buildings, but must apply for specific authorization from the Minister in charge of Mines for the following: uprooting of all trees and shrubs other than obstacles, and logging; exploitation of used and not reserved waterfalls; setting up facilities for the preparation, concentration or chemical or metallurgical treatment; creation or improvement of roads, canals, pipelines, pipes, conveyors or other surface structures; creation and development of railways, sea or river ports and airports. The Mining Code includes provisions regarding mine closure, with a plan required to eliminate risks to health and safety, rehabilitate the site to a level acceptable to the local community, and restore vegetation. The code also provides occupational health and safety requirements.
Mining rights do not extinguish property rights, and no right to prospect or operate is valid without the consent of the landowner regarding activities that affect the surface. However, the titleholder may occupy the land required for its activities if so authorized in its title or authorization or by order of the Minister. The titleholder must compensate lawful occupants for any disturbance of enjoyment. In the absence of consent, the state may impose an adequate compensation in advance and the obligation to permit work to be carried out on the property without obstruction. The mining titleholder may undertake to expropriate buildings and land necessary for mining work and facilities when public interest so requires.
Mining Operation titleholders must enter into a Local Development Agreement (LDA) with the local community under the terms established in a joint order by the Minister in charge of Mines and the Minister in charge of Decentralization. The LDA must include provisions for training the local community, environmental protection and health measures, and social projects. The amount of the Contribution to Local Development, the financial contribution paid by the Mining Operation Permit holder is set at 0.5% of the turnover of the company for category 1 substances, and 1% for all other substances.
See Guinea - Environmental Overview Commentary.