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Mineral Investment Law 1988

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  • GDP, US$bn: 169.3
  • GDP per capita, US$: 4,551.8
  • Population, mn: 36.4
  • Inflation, CPI ave: 0.4
  • FX, LCY/US$: 1,182.0
  • Budget Balance, % of GDP: -12.1
  • Mining GVA, US$bn: 103.6
  • Mining Industry Value, US$bn: 16.0
Regulatory Risk Rating
24
0
100
Score: 24
Critical Risk
One has to take notice of a country whose constitution begins: "We, the people of Mesopotamia, the homeland of the apostles and prophets, resting place of the virtuous imams, cradle of civilization, crafters of writing, and home of numeration. Upon our land the first law made by man was passed, and the oldest pact of just governance was inscribed, and upon our soil the saints and companions of the Prophet prayed, philosophers and scientists theorized, and writers and poets excelled." The Mining Code itself was a piece of legislation passed by Saddam Hussein and, like him, should perhaps be replaced; no investor (properly informed) would make an investment in reliance up on this law.

Corruption Potential Index

Score: 10
Extremely High Corruption Potential

Corruption Risk Index

Score: 32
Very High Corruption Risk

Regulatory Risk Rating

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Environmental Overview Commentary plus sign

IRAQ ENVIRONMENTAL REGULATION

GENERAL

The Republic of Iraq sits in the centre of the Middle East, separating Turkey (to the north) from Saudi Arabia (to the south), and Syria (to the west) from Iran (to the east). It is a large country that features the Tigris-Euphrates alluvial plains and deserts that cover about two-fifths of the country. The two rivers of Tigris and Euphrates both drain into Iraq, fed by melting winter snow in Turkey that supports a fertile area for agriculture, which is a major component of the economy. The country sits at the same latitude as the southern United States with a hot and mostly dry climate. Its climate is not conducive to wildlife, nor vegetation. Common animals are birds and small mammals, such as badgers, otters, and muskrats. Gazelles and wild camels, pigs, jackals, foxes and rabbits are also found, as well as water buffalo.

 PRINCIPAL LEGISLATION AND REGULATOR

The Constitution of Iraq indicates that every individual has the right to live in a healthy environment and requires the State to undertake the protection and preservation of the environment and its biological diversity (Art. 33). The principle environmental legislation consists of the Law of Environmental Protection and Improvement (Law No. 27 of 2009), which requires an environmental license before any activity is carried out that may affect the environment. Within the semi-autonomous region of Kurdistan, a separate law exists containing very similar provisions (the Law of Environmental Protection and Improvement (Law No. 8 of 2008)).

Under the Law of Environmental Protection and Improvement (Law No. 27 of 2009), operators are prohibited from emitting waste and must conduct operations with the aim of mitigating environmental impacts. As well, the law provides for an environmental impact assessment (EIA) before any project is undertaken that might impact on the environment. Where a technical or feasibility study is required, the study is required to include a draft EIA report (Arts. 11 and 12). The law in Kurdistan is to the same effect (see Law of Environmental Protection and Improvement (Law No. 8 of 2008), Art. 12).

 EIA PROCESS

Under the relevant mining legislation, nothing is said in respect of the need for an environmental licence or an EIA. In this regard, Iraq’s environmental legislation dates from 2009, while its mining legislation dates from 1988. Under the environmental law, an environmental licence is needed from the Ministry of Environment in order to undertake any project that may affect the environment. Presumably this would include both advanced exploration as well as mining activities. Since there is such little in the way of a mining industry in Iraq, not much attention is paid in the legislation in respect of this industry sector; oil is, by far, the most important industry that interfaces with the EIA process.

The EIA is required to “estimate the positive and the negative effects of the project on the environment and the impact on the surrounding environment”, examine “the proposed means to prevent and treat the causes of pollution in order to achieve compliance with environmental regulations and directives”, consider “possible alternatives and the use of technology less damaging to the environment and the rationalize the use of resources”, and “estimate the environmental feasibility of the project and estimate the ratio between costs of pollution to production.” There are no further provisions providing a proper test for approval of projects, appeals form negative decisions or administrative processes that suggest a competent regime.

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Mining Overview Commentary plus sign

Iraq Mining Regulation

General

 The Republic of Iraq sits in the centre of the Middle East separating Turkey (to the north) from Saudi Arabia (to the south), and Syria (to the west) from Iran (to the east). The Republic of Iraq has not had a recent legacy of mining minerals. It produces some industrial minerals for local consumption, such as bentonite, cement, clay, gypsum, limestone, nitrogen and phosphate fertilizers, phosphate rock, salt, aggregates and sulphur; in 2012, it produced no metals at all (USGS, 2012 Minerals Yearbook: Iraq, p. 49.1). Whilst the Government would like to see greater development of its non-hydrocarbon, mineral resources, the Government has not yet provided the regulatory platform to attract such investment.

 Principal Legislation and Regulator

The principal mining legislation in Iraq is the Mineral Investment Law, No. 91 of 1988. It is a somewhat primitive piece of legislation and contemplates public and private sector development activities. The concept of a tiered system of title development (reconnaissance, exploration, exploitation, etc.) is lacking and an investor will be reliant upon a bespoke investment agreement. No doubt, under the right circumstances, a bespoke investment agreement may serve as a reliable form of tenure, however, the law itself offers no comfort as to the terms of an investment in the sector. The law is supervised by the Ministry of Industry and Minerals.

 Grants and Forms and Mineral Title

There is only one form of mineral title in Iraq, namely, the Investment Contract. The Investment Contract will regulate all aspects of the relationship between the miner and the State, including the investment amount. Whilst little is found in the Mineral Investment Law, No. 91 of 1988, as to what the State will actually accept from an investor, the marketing of the Kirkuk Cement Plant offers some guidance. In this process, the tender documentation indicated that the evaluation criteria for selecting the investor would consider, among other things:

 

  • The share of the production offered by the investor to the state;
  • The investment size;
  • The minimum period needed by the investor to obtain a sufficient return;
  • The financial capacity of the investor; and
  • The technical capacity of the investor.

One can expect these criteria to be applied in any negotiation of an Investment Contract.

 Development Considerations

The proponent of a project or activity must not undertake or continue the activity unless it has obtained an environmental licence (Art. 11 of the Law of Protection and Improvement of the Environment). In order to obtain such a licence, the equivalent of an environmental impact assessment is required (Art. 10). Access to land may be secured through a lease under the Investment Law No. 13 of 2006 and several other benefits are guaranteed under the law, including the right to repatriate profits in hard currency, visa permissions for permitted foreign workers, prohibition on expropriation, and exemptions from fees and taxes for a period of ten years.

 Environment Regulation

 See Iraq Environment Regulation.

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