GROUP 2

COMPARE AND CONTRAST THE LICENSIING REGIME IN

GHANA’S MINING SECTOR WITH THOSE OF THE
FOLLOWING COUNTRIES S.A, AUSTRALIA AND BRAZIL

1. Magdalene Kouakey
2. John Getor
3. Kwodwo Filson
4. Enyonam Klu
5. Charles-Borromeo Seeninyin

Introduction

1
Licensing can be seen as a way of imposing a legal framework for the allocation of scarce
resources and for balancing competing interests and claims in a way that, ideally, honors the
rights and interests of investors and protects the rights of communities and individuals in a
fair handed way, while also recognizing the overall national interest in developing a country’s
mineral wealth.1

Mining is an important component of the economies of most developing and developed

nations. It contributes to their total export earnings, national income and serves as a major
source of employment. It contributes a significant percentage of the GDP of these nations and
has the potential of stimulating the socio-economic development of the mineral-rich nations if
the attendant windfall is well managed.

The mining sector is unique because of the high capital investment required vis-à-vis the long
period of development and payback period. The mining sector is also special because it is
very destructive to the environment during the exploitation and depletion of the non-
renewable resource. The mining sector shares similar features with the Oil and Gas industry
as well as the forestry sector. This special and unique nature of the mining sector has resulted
in a global drive at regulating and managing the exploitation of these non-renewable
resources.

In most countries such as Ghana, mineral resources are declared to be the property of the
state even though the industry is dominated by private investments and operations. In
countries where individuals can own mineral deposits and rights, the state still retains a stake
in the sector by acting as the custodian, regulator and distributor.

This report compares the licensing regime in Ghana’s mining sector with those of Brazil,
South Africa and Australia. It will identify some best practices in each of the said countries
and also look at existing or potential problems in respect of their mineral licensing regime.

Eligibility for Grant of Mineral Rights

1
Dr. Stephen Rimmer and Charles Krakoff, Global Business Operations Product Line, Sector Licensing
Studies, Mining Sector(2009)

2
In Ghana, a mineral right shall not be granted to a person unless the person is a body
incorporated under the Companies Code 1963 (Act 179), under the Incorporated Private
Partnerships Act 1962 (Act 152) or under an enactment in force2.

The Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) as amended 3
abolished the system of private ownership of mineral rights and replaced it with a system of
state licensing. Under the new mining regime, Historically Disadvantaged South Africans
(HDSAs) have been empowered to significantly participate in the industry. Stakeholders have
committed to achieve a minimum target of 26 percent ownership to enable meaningful
economic participation of HDSA by 20144.Foreign participants are welcomed to participate
in the mining industry in partnership with the HDSAs.

Article 176 of the Brazilian Mining Code5 states that the mineral resources, including those
in the subsoil, are property of the Federal Government, and the prospecting and mining of
Mineral resources should be done under the best national interest. Application for exploration
license is opened to Brazilian citizens or legally authorized companies incorporated under the
laws of Brazil. The company must have its main office and administration in Brazil 6.

A distinguishing feature of Australia’s Mining regime is that the individual states or

territories own virtually all the mineral resources of the state and these individual states or
territories are also responsible for licensing. Foreign participation is allowed in the Mining
Sector of Australia. This may be by way of joint ventures or of a company structure. The
joint venture may either be incorporated or unincorporated7.

Typical License in the Mining Sector

2
Minerals and Mining act,2006.(Act 703)
3
Act 28 of 2002,as amended by Act 49 of 2008
4
AMENDMENT OF THE BROAD-BASED SOCIO-ECONOMIC EMPOWERMENT CHARTER FOR THE
SOUTH AFRICAN MINING AND MINERALS INDUSTRY, September 2010.
5
Brazilian Mining Code, Decree-law No. 227 of 28 February 1967.
6
National Department of Mineral Production (DNPM)
7
Blake Dawson, Mining in Australia, an introduction for investors.

3
Globally, there are typically two or more licenses in the mining sector. Each license has its
own associated fees and conditions such as validity period that must be fulfilled before it is
granted. Typical licenses include the reconnaissance license, the prospecting or exploratory
license and the mining or production license. Some jurisdictions such as Ghana have small-
scale mining license as well.
A summary explanation of the major licenses is as follows:
 Reconnaissance License confers on the holder the right to search for a specific
mineral (or commodity) within the licence area by, geophysical, geochemical and
photo-geological surveys or other remote sensing techniques. This does not
involve drilling, excavation or other sub-surface techniques however the use of
sensing instruments as well as sampling of soils, waters, and bedrock etc. for analysis
in a mobile or fixed lab is allowed.
 A Prospecting Licence is a permit, issued by the State, which allows the holder (the
licensee) the exclusive right to prospect for minerals within the license area to
determine the extent of and economic value of a mineral deposit. Drilling,
excavation or other sub-surface techniques are permitted under the prospecting
licence.
 Mining License grants a company the exclusive right to extract minerals from a
defined area for a specified period. A production license generally covers a much
smaller area that a prospecting license, but is granted for a longer duration.

Other licenses include,

 Small Scale Mining license is a license granted in respect of mining which is
undertaken in a subsistence and independent manner with little technological no how.
It involves the winning, mining and production of minerals. This type of mining has
the tendency to destroy the environment especially the various water bodies if not
well regulated. Regulation of the sector is therefore undertaken to encourage informal
miners to enter the formal sector. Another name for small scale mining is artisanal
mining.
 Retention license allows the holder to postpone the mining or production of mineral
resources after discovery for various reasons. These include the following,
 The identified mineral resource is uneconomic or subject to marketing
problems, although that resource may reasonably be expected to become

4
 economic or marketable in the future;
 The identified mineral resource is required to sustain the future operations of
an existing or proposed mining operation; or
 There are existing political, environmental or other difficulties in obtaining
requisite approvals.8

 General purpose lease is usually granted for the purpose of erecting, placing and
operating machinery related to mining operations, depositing or treating minerals, or
other specified purposes directly connected with mining operations; and9

 Miscellaneous Licenses is generally granted for the purposes of providing

infrastructure in support of mining operations10

In Ghana, there are other licenses such as the restricted reconnaissance license, the
restricted prospecting license and restricted mining license which are granted in respect of
industrial minerals such as salt, clay, lime etc. It is a restricted license because it is generally
reserved for Ghanaians, however foreigners may be allowed to participate with an investment
of USD 10 million and above.

Licensing Regime in Ghana

There are three (3) main stages or types of mineral rights in Ghana
 Reconnaissance Licence(RL) (s:31-32)11 allows the holder to search for minerals
through the use of geophysical, geochemical & other remote-sensing techniques that
do not involve drilling or excavation.
 The minister on the recommendation of the MC grants RL on an application by a
person in respect of a mineral specified. s31(1)
 It is granted for an initial period of 12 months. s31(2)
 The land size for reconnaissance licence may be one block or not more than 5000
contiguous blocks. s31(3)
8
Robin H Chambers, an Overview of the Australian Legal Framework for Mining Projects in Australia, page
12 found at http://www.chamberslawyers.com/wp-content/uploads/downloads/2013/10/060518-Presentation-
Eng.pdf.
9
Ibid, page 8
10
Ibid, page 8
11
Mineral and Mining Act,2006,Act 703

5
  Reconnaissance Licence does not allow the holder to undertake drilling or excavation
activity.s32(3)
 Reconnaissance operations must start within one (1) month after the grant or period of
time as may be specified in the licence. (r:10(a) of LI 217312)
 Holder to submit quarterly financial, geological or other reports to the MC. (r10 (c )
of LI 2173)
 Comply with the terms of the environmental permit that may be granted pursuant to
the RL. (r10 (d ) of LI 2173)
 Must report to the MC mineral discovery within 30 days after discovery(r10 (e) of LI
2173)
 And within 90 days repair damage caused to the surface. (r10 (g) of LI 2173)
 Holder of RL is not allow to conduct prospecting or mining operations in the covered
areas of the licence
 Holder is to keep accurate record of mineral discovered, result of geological analysis,
financial statement etc.
 An application for extension of the licence may be made not less than 3 months
before expiration.s33(1)
 The extension may be granted once and for not more than 12 months s33(5)
 Minerals obtained in the course of reconnaissance operations shall remain the
property of the Republic. (r11 of LI 2173)

1. Prospecting Licence (PL) (s: 34 – 38) 13 allows for intentional search for
minerals to determine the extent of & economic value of a mineral deposit.
 Prospecting licence is granted by the minister on the recommendation by the MC
upon an application by a person.
 The initial period for the grant of PL is 3 years. s34(2)
 The land size is for a block or 750 contiguous blocks s34(3)
 PL allows the holder to dig a borehole, make excavations, and erect camps or any
temporary structures necessary for prospecting purposes. s37
 Prospecting must start within 3 months after the issuance of the licence or time
period specified therein. (r14(a) of LI 2173)

12
Minerals and Mining (General) Regulations, 2012, LI 2173
13
Mineral and Mining Act,2006.Act 703

6
 Notify the minister through the MC of the discovery of the mineral within 30 days
of discovery. (r14(c) of LI 2173)
 Notify the minister through the Commission of the discovery of any other mineral
of economic value within 30 days after discovery. (r14(d) of LI 2173)
 To backfill any excavation made during the prospecting operations. (r14(e) of LI
2173)
 Holder to keep full & accurate records of the prospecting operation. (r16(1) LI
2173)
 PL must be accompanied by a proposed programme of mineral operations. s36 (1)
 The programme of prospecting operation may be amended upon notification to the
minister and which shall come into effect within 2 months of the receipt of the
notice unless the amendment is rejected by the minister on reasonable grounds.
s36(2)
 Application for amendment to an approved programme of prospecting operations
may be allowed by the minister upon satisfaction that: (r15(2) of LI 2173)
 There is a demonstration by the licensee of a secured financial resources, technical
competence & experience to be able to carry out the proposed revised programme
of prospecting operations.
 Proposed amendment will cover the proposed prospecting area needed under the
amendment.
 Proposed amendment result in efficient prospecting of the mineral resources in the
area.
 The minister may upon an application limit/suspend the obligation of prospecting
operations by the licensee under reasonable terms & conditions. s36(3)
 The licensee is obliged to keep and report accurately on records concerning the
prospecting operations including boreholes drilled, No. of persons employed,
geological interpretation of records maintained, result of geochemical or
geophysical analysis etc. ( r16(1) of LI 2173)
 There is also the requirement of submission to the MC on a half-yearly basis or
not later than 30 days after the half-year; a summary report on the outcome of the
prospecting operations carried out during the period. (r16(4) of LI 2173)
 And a submission to the Commission at the end of the financial year & not less
than 30 days after the end of the financial year a summary report of the result of

7
 prospecting operations during the financial year & when necessary the proposed
operations for the following year. (r16(5) of LI 2173)
 Violation of the record keeping and reporting requirements is an offence. s106 of
Act 703 and r16(6) of LI 2173
 Penalties are provided for under Sec 108 of Act 703
 The licensee is obliged to surrender prior to or at the expiration of the initial term,
at least half the No. of blocks of the prospecting area provided a minimum of 125
blocks remain. s38(1)

2. Production/Mining Lease (S: 39-61)14: is a product of negotiations between the state

and the mining company.
 A mining lease may be granted for an initial period of 30 years or less and for
land size of one block or more than 300 contiguous blocks. s41(1)
 provides that upon the grant of the lease, the holder should within 30 days paint
and keep painted on notice board of the relevant beacon & the number assigned to
the lease by the MC. (R 18 of 2173)
 A mining lease entitles the holder to enter upon the land which is the subject of
mining lease to undertake mineral operations for the purpose of mining the
specified minerals. s46(a)
 The holder also has the right to erect equipment, structures which are necessary
for the transportation, treating, refining and treating of the specified mineral. s
46(b)
 Dump mineral waste as approved by EPA in an EIS. s 46 (d)
 Right to undertake any incidental activity. s 46(e)
 The minister should be notified of any intention to amend the programme of
mining operations which unless such amendment is rejected by the minister on
reasonable grounds shall come to effect 2 months after the notification. s 45(1)
(compare with Reg. 19 notification to MC and s:45 notification to the Minister
 Approval by the minister is subject to the same requirements under prospecting
licence. s 36(3)
 Mining operations must also be in compliance with the approved programme.(r
20(b) of 2173)
14
Mineral and Mining Act,2006.Act 703

8
  Demarcate the mining area. (r 20(c) of 2173)
 Comply with the conditions of the lease & any Development Agreement pursuant
to the lease. (R 20(d) of 2173)
 Comply with requests & directives by the MC and other agencies/divisions under
it. (R 20(e) of 2173)

Licensing Regime in South Africa

South Africa has similar licensing regime as Ghana with a few differences. They have the
main mining license with details as follows
1. Reconnaissance permission (s 13–15)15
 Application must be made to the Minister through the office of the
regional manager in whose region the land is situated and must be in the
prescribed form. s13(1)
 Regional Manager must reject the application and notify the applicant in
writing within 14 days of the receipt of the application with written
reasons for such decision if application not in conformity with the
requirement of the section. s13(3)
 The applicant must have the financial and technical ability to perform in
accordance with the work programme. s14 (1)(a)
 The programme must be achievable with realistic estimated expenditure.
s14 (1)(b)
 Reconnaissance in respect of petroleum must not damage the environment
in any unacceptable way. s14(1) c
 If the Minister refuses to grant a reconnaissance permission, the Minister
must, within 30 days of the decision, notify the applicant in writing with
reasons for such decision. s14(3)
 The reconnaissance permission is valid for one year. s14(4)
 Reconnaissance permission is neither renewable nor transferable. s14(5)
 Reconnaissance permission entitles the holder to enter the land upon the
necessary consultation and notification of at least 14 days to the land
owner for the purposes of conducting reconnaissance operations. s15(1)

15
Mineral and Petroleum Resources Development Act ,2002(Act no 28 of 2002) as amended under Act 49 of
2008

9
  The reconnaissance permission does not give the holder of it the exclusive
right to conduct prospecting or mining operations or apply for a
prospecting or any other right mentioned in the Act.s15 (2)

2. Prospecting Permit(s 13–15)16

 Any person who wishes to apply to the Minister for a prospecting right must
simultaneously apply for an environmental authorisation and the application
must be done in the regional office in which the land is situated in the right
form and at the right fee. s16 (1)(a)(b)(c)
 If the application does not comply with the requirements of this section, the
Regional Manager must notify the applicant in writing within 14 days of the
receipt of the application. s16(3)
 If application is accepted the Regional Manager must within 14 days from the
date of acceptance, notify the applicant in writing to submit relevant
environmental reports (after consultation with landowner or affected parties)
required in terms of Chapter 5 of the National Environmental Management
Act, 1998 within 60 days of the date of notice. s16 (4)
 The applicant must have the financial and technical ability to conduct the
proposed prospecting operation in accordance with the work programme. s17
(1)(a)
 The programme must be achievable with realistic estimated expenditure. s17
(1)(b)
 The prospecting must not result in unacceptable pollution, ecological
degradation or damage to the environment and an environmental authorisation
is issued s17 (1)(c)
 The applicant must have the ability to comply with the relevant Health and
Safety Act, 1996 as amended. (Act No 29,1996) S 17(1)(e)
 If the Minister refuses to grant a prospecting right, the Minister must, within
30 days notify the applicant in writing with reasons for such a decision. s17(3)
 If the application relates to land occupied by a community, the Minister may
impose such conditions as are necessary to promote the rights and interests of

16
Mineral and Petroleum Resources Development Act ,2002(Act no 28 of 2002) as amended under Act 49 of
2008

10
 the community, including conditions requiring the participation of the
community. s 17(4A)
 A prospecting right granted in terms of subsection (1) comes into effect on the
effective date of issue. s17 (5)
 A prospecting licensing may be renewed once for a period not exceeding 3
years. s 18(4)
 The holder of a prospecting licence must commence with operations within
120 days from the effective date in terms of s17 (5) or such other time that the
minister may specify. s19 (2) (b)
 Submit progress reports and data of prospecting operations to the Regional
Manager within 30 days from the date of submission thereof to the Council for
Geoscience. s19(2)(g)
 The holder of a prospecting right must obtain the Minister’s written
permission to remove and dispose for such holder’s own account of diamonds
and bulk samples of any other minerals found by such holder in the course of
prospecting operations. s20 (2)
 The holder of a prospecting or reconnaissance permit must keep proper
records, at the registered office or place of business of the holder, of
reconnaissance or prospecting operations and the results and expenditure
connected therewith, as well as borehole core data and core-log data, where
appropriate. s21(1)
 The Regional Manager must, submit progress reports and data contemplated in
subsection (1)(b) within 30 days from the date of receipt thereof to the Council
for Geoscience. s21(1A)17
 The Council for Geoscience must advise the Minister on all prospecting
information as contemplated in this section. s21(1B)18
 No person may dispose of or destroy any record, borehole core data or core-
log data contemplated in subsection (1)(a) except in accordance with written
directions of the relevant Regional Manager in consultation with the Council
for Geoscience. s21(2)

17
Mineral and Petroleum Resources Development Act ,(Act 49 of 2008)
18
ibid

11
 3. Mining Right (s 22-27)19
The Minister must grant a mining right if
 The mineral can be mined optimally in accordance with the mining work
programme. s 23(1)(a)
 The applicant has access to financial resources and has the technical ability
to conduct the proposed mining operations optimally. s23(1)(b)
 The financing plan is compatible with the intended mining operation and
the duration thereof. s23(1)(c)
 The mining will not result in unacceptable pollution, ecological
degradation or damage to the environment and an environmental
authorisation is issued. s23(1)(d)
 the applicant has provided for the prescribed social and labour plan s23(1)
(e)
 The applicant must have the ability to comply with the relevant Health and
Safety Act, 1996 as amended. (Act No 29,1996) s23(1)(e)
 If the application relates to the land occupied by a community, the
Minister may impose such conditions as are necessary to promote the
rights and interests of the community, including conditions requiring the
participation of the community. s23(2A)
 A mining right may not exceed 30 years. s23(6)
 A mining right may be renewed for further periods each of which must not
exceed 30 years at a time. s24(4)
 Commence with mining operations within one year from the effective
mining date. s25(2)(b)
 Pay the state royalties. s25(2)(g)
 Submit annual reports. s25(2)(h)
In addition to the above licenses, South Africa Mineral and Petroleum development Act also
makes provision for a Retention License20.
Other requirements set out in the Mining Act of South Africa can generally be classified
under general purpose and miscellaneous licenses as explained in the preceding chapters.

19
Mineral and Petroleum Resources Development Act ,2002(Act no 28 of 2002) as amended under Act 49 of
2008
20
s 31-36 of Mineral and Petroleum Resources Development Act ,2002(Act no 28 of 2002) as amended under
Act 49 of 2008

12
Licensing Regime in Australia
Mining tenements
The mining tenements available under the Mining Act 1978 are:
 Prospecting Licences (sections 40-56)
 Special Prospecting Licences for Gold (sections 56A, 70 and 85B)
 Exploration Licences (sections 57-69E)
 Retention Licences (sections 70A – 70M)
 Mining Leases (sections 70O-85A)
 General Purpose Leases (sections 86-90)
 Miscellaneous Licences (sections 91-94).

Some of the basic features of these tenements are outlined in the following paragraphs.

1. Prospecting Licence (sections 40-56)

• The maximum area for a prospecting licence is 200 hectares.
• Prospecting licences must be marked out unless otherwise specified.
• An application may be made at any Mining Registrar’s office; or lodged
electronically via the department’s website using Mineral Titles Online
(MTO).
• An application fee and rental is payable.
• There is no limit to the number of licences a person or company may hold, but
a security ($5000) is required in respect of each licence.
• The term of a prospecting licence is four years, with the provision to extend
for one further four year period.
• The holder of a prospecting licence may, in accordance with the licence
conditions, extract or disturb up to 500 tonnes of material from the ground,
including overburden, and the Minister may approve extraction of larger
tonnages.
2. Special Prospecting for Gold (SPL) (sections 56A, 70 and 85B)
• An SPL is limited in area to 10 hectares.
• A person may have an interest in no more than 10 SPLs at the same time.

13
 • An SPL may be marked out in respect of land within an existing prospecting
licence or exploration licence (viz. ‘the primary tenement’) that has been in
force for one year.
• With the consent of the lease holder an SPL may be marked out in respect of
land within an existing mining lease (viz. ‘the primary tenement’).
• An SPL on a prospecting or exploration licence may be granted if it is
considered that activities could be carried on without undue detriment to the
activities of the ‘primary tenement’ holder.
• Other information and restrictions apply in respect of SPLs and these are
outlined in the Information pamphlet titled ‘Special Prospecting Licence (for
Gold)’.
3. Exploration Licence (sections 57-69E)
• On 28 June 1991 a graticular boundary (or block) system was introduced for
Exploration Licences.
• The minimum size of an Exploration Licence is one block, and the maximum
size is 70 blocks, except in areas not designated as mineralized areas, where
the maximum size is 200 blocks.
• An Exploration Licence is not marked out.
• An application may be made at any Mining Registrar’s office; or lodged
electronically via the department’s website using MTO.
• An application fee and rental is payable.
• There is no limit to the number of licences a person or company may hold but
a security ($5,000) is required in respect of each licence.

Term and Compulsory Surrender:

 For licences applied for prior to 10 February 2006, the term is five years plus two
possible extensions of two years and further periods of one year thereafter. At the
end of both the third and fourth year of its term, the licensee is required to
surrender 50 per cent of the licence.
 For licences applied after 10 February 2006, the term is five years plus possible
extension of five years and further periods of two years thereafter, 40 per cent of
ground to be surrendered at the end of year six. BASIC PROVISIONS 5 of 10

14
 • The holder of an Exploration Licence may in accordance with the licence
conditions, extract or disturb up to 1000 tons of material from the ground,
including overburden, and the Minister may approve extraction of larger
tonnages.
4. Retention Licence (sections 70A – 70M)
• A Retention Licence is a ‘holding’ title for a mineral resource that has been
identified but is not able to be further explored or mined.
• A Retention Licence may be granted in respect of the whole or any part of
land within the boundaries of a primary tenement (ie prospecting licence,
exploration licence or mining lease or combination of such tenements).
• An application may be made at any Mining Registrar’s office; or lodged
electronically via the department’s website using MTO.
• An application fee and rental is payable.
• The term of a Retention Licence cannot exceed five years and is renewable for
further periods not exceeding five years.
• There is no maximum area.
• Effective from the 10 February 2006 the holder of a prospecting licence or
exploration licence that was applied for and granted after this date may apply
for ‘retention status’ for that licence, and not a separate retention licence.
(Sections 53 to 55B – Prospecting Licence, sections 69A to 69E – Exploration
Licence) 14. Mining Lease
• The maximum area for a Mining Lease applied for before 10 February 2006 is
1000 hectares. Thereafter the area applied for is to relate to an identified
orebody as well as an area for infrastructure requirements.

5. Mining Leases (sections 70O-85A)

An application may be made at any Mining Registrar’s office or lodged electronically via
the department’s website using MTO.
• An application fee and rental is payable.
• Pursuant to section 74(1)(ca), an application for a mining lease shall be
accompanied by:

15
 1. A mining proposal completed in accordance with the Mining Proposal
Guidelines published by the department; or
2. A statement of mining operations and a mineralisation report that has been
prepared by a qualified person; or
3. A statement of mining operations and a resource report that complies with the
JORC Code and that has been made to the Australian Securities Exchange Ltd.
A statement of mining operations shall set out information regarding the
mining operation likely to be carried out including:
– When mining is likely to commence;
– The most likely method of mining; and
– The location, and the area of the land that is likely to be required for the
operation of the plant, machinery and equipment and for the other activities
associated with those mining operations. The JORC Code means the
Australasian code for reporting of exploration results, mineral resources and
ore reserves prepared by the joint ore reserves committee of the Australasian
Institute of Mining and Metallurgy, the Australian Institute of Geoscientists
and the Minerals Council of Australia as in force from time to time.
• There is no limit to the number of Mining Leases a person or company may hold.
• The term of a Mining Lease is 21 years and may be renewed for further terms.
• The leasee of a Mining Lease may work and mine the land, take and remove
minerals and do all things necessary to effectually carry out mining operations in,
on or under the land, subject to conditions of title.
6. General Purpose Lease (sections 86-90)
• The maximum area is 10 hectares, unless the Minister approves a greater area.
• General Purpose Leases must be marked out and are limited to a depth of 15
meters or such other depth that may be specified.
• A General Purpose Lease is for purposes such as operating machinery, depositing
or treating tailings etc.
• An application may be made at any Mining Registrar’s office; or lodged
electronically via the department’s website using MTO.
• An application fee and rental is payable.

16
 • A statement must accompany the application to include either a development and
construction proposal or a statement setting out specific intentions for the lease
(section 87 and 90)
• There is no limit to the number of General Purpose Leases a person or company
may hold.
• The term of a General Purpose Lease is 21 years, and may be renewed for further
terms.
7. Miscellaneous Licences (sections 91-94).
• There is no maximum area for a Miscellaneous Licence.
• A miscellaneous licence is for purposes such as a road, pipeline, and water, as
prescribed in the Regulations.
• An application may be made at any Mining Registrar’s Office; or lodged
electronically via the department’s website using MTO.
• An application fee and rental is payable.
• There is no limit to the number of licences a person or company may hold.
• The term of a Miscellaneous Licence is 21 years, and may be renewed for further
terms.
• A Miscellaneous Licence can be applied for over (and can ‘co-exist’ with) other
mining tenements.

Licensing Regime of Brazil

21
Summary of Brazilian Mining Legislation
The main sources of mining legislation in Brazil are the Federal Constitution and the Mining
Code (Decree-law No. 227 of 28 February 1967).
 The Federal Constitution establishes that:
 Mining legislation can only be enacted at the federal level;
 Property over minerals differ from the property of the land where mineral are located;
 Minerals on the ground are the property of the Federal Government;
 Exploration can be carried out by Brazilian individuals or legal entities incorporated
in Brazil under the authorization of the Federal Government;

21
Lago Dourado Minerals Ltd, Summary of Brazilian Mining Legislation.

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  Mining can be carried out by legal entities incorporated in Brazil under the concession
of the Federal Government;
 Exploration and mining are considered activities of national interest;
 The mining concession holder has ownership of the extracted minerals;
 Landowners, local, state and federal governments are entitled to a royalty;
 Mining is subject to environmental licensing; and
 Holders of mining concessions are obligated to restore the areas degraded by mining
activities.

There are two main legal regimes under the Mining Code regulating exploration and mining,
i.e. the “authorization” for exploration and the “concession” for mining.

Exploration License
 Exploration is defined by the Mining Code as the work required in locating and
defining a deposit and determination of the economic feasibility thereof, can be
carried out through an authorization from the Federal Government.
 The exploration authorization is granted through a licence issued by the Director
General of the National Department of Mineral Production (DNPM).
 The DNPM is the federal agency in charge of implementing the country’s exploration
and mining, fostering the mining industry, granting and managing exploration and
mining titles and monitoring the activities of exploration and mining companies.
 Exploration licences are granted on a priority rights basis, which works on a “first
come, first served” basis, provided that the application covers areas considered to be
“free” (i.e. not previously staked by third parties with mineral rights in force) and all
information and documents required for the application are submitted to the Brazilian
mining authority, including an exploration plan and budget with maps and geographic
coordinates signed off by a qualified Brazilian geologist or mining engineer.
 The maximum area of an exploration licence may vary from 50 hectares to 10,000
hectares, depending on the mineral to be explored and the area within Brazil where
exploration will take place, and can be granted for a period of one (1) to three (3)
years.
 The term can be renewed once, at the discretion of the DNPM, upon its review of an
interim report of the licence holder regarding exploration to date which justifies

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 further exploration work.
 The holder of an exploration licence has the exclusive right to carry out exploration
within the licence area.
The holder of an exploration licence must inter alia
 Perform work only within the area specified in the licence;
 Notify the DNPM of the discovery of a mineral substance not included in the granted
licence;
 Perform the work in accordance with the applicable environmental legislation;
 Compensate the surface owner or possessor for occupation of the land and for losses
caused by the work;
 Report yearly to the DNPM on exploration expenditures;
 Report the results of the work to the DNPM before the termination of the validity date
of the licence; and
 Pay an annual exploration fee to the DNPM. Exploration licences may be
transferred (in whole or in part) to Brazilian individuals and legal entities
incorporated in Brazil. The transfer is subject to the approval of and registration by
the DNPM. Within the validity period of the exploration licence or its renewal, its
holder must submit a report on the results of the work to the DNPM.
The DNPM may then decide to,
 approve the report, when it shows the existence of a resource which can be both
technically and financially developed;
 dismiss the report, when the exploration work undertaken was insufficient or due to
technical deficiencies in the report;
 file the report, when it has been proved that there was no deposit which may be both
technically and/or financially developed
 Postpone a decision on the report in the event the existence of a resource has been
demonstrated, but for technical and/or financial reasons development of the property
is not feasible at the time.

The holder of the licence will have one year to apply for a mining concession. If the licence
holder does not apply for the mining concession within the time period mentioned above, the
mineral rights over the property will lapse and the area becomes available for tender offers
for 60 days, during which period any interested parties, including the previous licence holder,

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may submit their offers for an exploration licence or mining concession.

Mining License22

Brazilian mining legislation defines mining as a set of connected operations with the
principal aim to commercially develop and utilize a deposit, from extraction of the useful
mineral substances to their processing. A mining concession is granted through an ordinance
of the Ministry of Mines and Energy. The area of the mining concession will be limited to
(and can be smaller than) the area of the exploration licence from which it derives. Mining
concessions are valid up to the depletion of the mineral deposit.

The holder of a mining concession must inter alia,

 commence development within 180 days from the granting of the concession, subject
to obtaining all required environmental licences and authorizations;
 Refrain from suspending development and mining operations for more than 6 months
without the prior approval of the DNPM;
 Mine according to the mining plan approved by the DNPM;
 Compensate the land owner for occupation of the property;
 Pay a royalty to the landowner;
 Pay a royalty to be distributed among the local, state and federal governments;
 Obtain all required environmental licences and authorizations;
 Restore the areas degraded by mining and processing operations and infrastructure;
 Report annually to the DNPM on activities, production and sales. Producing mines
must pay a royalty to the government, which is shared between the local (65%), state
(23%) and federal (12%) governments. The royalty rate varies from 0.2% to 3%,
depending on the mineral.

Mining concessions may be transferred (in whole or in part) to legal entities incorporated in
Brazil, as long as the transferee demonstrates technical and financial capability to the DNPM.
The transfer is subject to the approval of and registration by the DNPM.

In general, mining projects must undergo a three stage environmental licensing process. The

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Lago Dourado Minerals Ltd, Summary of Brazilian Mining Legislation.

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State environmental authority is in charge of licensing a mining project, as opposed to the
Federal environmental authority.
 A Preliminary Licence (LP)- Environment Impact Assessment (EIA) is prepared at
this stage
 Installation Licence (LI) stage- Environmental Control Plan (PCA) is required at
this stage. The mining company may start construction of the mine, plant and
infrastructure.
 Operation Licence (LO)- The LO authorizes a mining company to mine, process and
sell (as well as other ancillary activities that may be described in the licence), from an
environmental viewpoint.

Although the Brazilian legal system provides for two types of titles, one for exploration and
one for mining, it does grant security that the holder of an exploration licence can mine the
ore body it has eventually discovered. The government is obligated to grant a mining
concession to a person that has explored, identified a resource, obtained the approval of the
exploration report by the DNPM, filed applications for a mining concession in a timely
manner and obtained the LI.

Geological reconnaissance is however permitted by the DNPM, provided that a prior

approval from the National Security Council is issued. Pursuant to article 91 of the Mining
Code and articles 39 to 44 of the Regulation of the Mining Code, geological reconnaissance
is made by aerial prospection, through photography, geophysical equipment and remote
sensors to the extension of 12,000 km2.
The holder of the reconnaissance title must carry out its works within 90 days, in order to
obtain the priority right over the researched area. After raising data, the permit holder must
submit a report with its findings, even if the area proves to be geologically unprofitable.
The reconnaissance is allowed even during the exploration phase, but it is not a mandatory
requirement to claim priority over available areas. Most of the time, the prospective miner
requests the exploration permit without having carried out reconnaissance works.23

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Luiz Fernando, Eduardo Serafini Fernandes and Tozzini Freire Advogados Visconti, The International
Comparative Legal Guide To Mining Law 2014

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