Angola: The Mining Codes Of Angola

Last Updated: 9 October 2012
Article by Gonçalo Falcão

Keywords: Angola, mining code, natural resources, environmental protection

Through Law 31/11, of September 21st, 2011, Angola approved a new Mining Code. The aim of the new Mining Code was to provide the Angola mining sector with a modern set of rules regarding the exploration of its vast mining resources whilst simultaneously unifying in a single document a framework that was previously fragmented in numerous cumbersome and outdated statutes.

This modernization, simplification and clarification of the mining framework reflects the increasing international competition among African countries and therefore the need to attract foreign investment in this sector. Conceptually, the Mining Code endeavours to establish a compromise between the acquisition of rights for the exploration of mining resources by both national and foreign investors vis-à-vis the public interest, and the State-domain principle of natural resources.

Local communities

It is worth pointing out the right that local communities have under the code to be actively engaged in the discussions pertaining to the development of mining activities in their territory. It is mandatory to establish communication/consultancy channels with local communities every time the mining activities have a potential detrimental effect to the communities material, cultural or historical assets. The holders of mining rights have the obligation to resettle local communities in case mining activities cause any habitation damage. In such resettlement cases the communities habits, traditions and other cultural aspects need to be taken into account by the holder of the mining rights.

Environmental protection

While performing mining activities, the holder of mining rights shall comply with all general and specific mining -oriented environmental legislation and act with the aim of preserve nature and the environment. In particular, compliance is required in respect of:

  • The mandatory environmental impact study each mining operator is obliged to seek and file with the mining authorities;
  • Reducing dust, polluting wastes and radiations;
  • Avoid or eliminate water and soil contaminations;
  • Secure population water supply;
  • Reduce noise pollution and vibration;
  • Not dropping polluted wastes on the sea, rivers and water streams;
  • Inform local authorities upon any event that have or may cause environmental damage;
  • Grant local population access to the environmental impact study if the study outlines any potential detrimental effect may arise for that population;
  • Protection of wild fauna and flora;
  • Protection of water resources;
  • Rules on urban and territorial occupation, soil utilization, landscape and abandonment.

State Participation – The State participates in the mining activities by collecting part of the production whether by (i) a direct participation of a State Company in a given concession (with a minimum 10% participating interest) or (ii) by sharing the production of the produced minerals with the entities engaged in such production.

Local Content – The holder of mining rights shall give preference to the hiring of national employees living in the surroundings of the concession areas and secure they get are granted with proper training. Provided that the prices are not 10% higher and that same are provided in a timely manner (up to 8 working days), preference shall be given to the acquisition of goods and services from local suppliers to the extent the quality is compatible with the economics, safety and overall efficiency of the project.

Geological information – This information belongs to the State and any entity hired to collect such information shall not use it from any other ends than those contractually established with the State. Entities carrying out survey operations without holding a mining right are obliged to communicate such activities to the State and hand over all collected information to the later. All geological information collected is to remain strictly confidential.

Property of Mineral Resources – Mineral resources belong to the State. Mineral production belongs to the holders of mining rights.

Mining rights – Mining rights are provided through the issuance of one of the following titles:

  • Types of mining titles

    • Prospection title - for the prospection, reconnaissance, exploration and appraisal of the mineral resources; 
      These titles are granted for a total period of 7 years. By the end of the initial 5 year period, concessionaire must release 50% of the area and upon each extension it shall release the area to be determined by the Mines and Geology Ministry. If concessionaire wish to keep all areas it must pay a surfice tax of USD 105/km2
    • Production title – for the production of mineral products;
      Production titles subsequent to a process of prospection and appraisal are always granted except if there is any breach of law or contract or when there are public interest sound reasons. Attribution of these rights is dependent on the previous filing of a business/technical plan, environmental impact study and of the production plan. Rules applicable to the mining activities under this title will be the ones provided by the Mining Contract. These rights are granted for a 35 year period, including the prospection and appraisal period, and are subject to 10 year extensions subject to Ministerial approval.
    • Mining license – for the production of mineral products used in construction works;
    • Mining pass – for the handicraft mining activities.

  • Acquisition of mining rights – public tender
    The acquisition of mining rights is made upon request or after public tender. Strategic mining locations are always granted through public tender.
  • Mining Contract
    Private investment in the mining sector is subject to authorization by the Mines and Geology Ministry or the Counsil of Ministries, depending on the whether or not strategic minerals are at stake. The investment framework applicable of the 3 stages of the mining activity (i) reconnaissance and prospection, (ii) study and appraisal, and (iii) production will be set by a mining contract. Mining rights for the trading of the minerals is also subject to this contract which is negotiated by a special Negotiation Committee.
  • Land ownership
    When mining rights are granted on land owned by individuals, authorization from the latter will have to be obtained. These individuals will be entitled to a rent and a security (bail) to cover potential damages.

    Concession Area – Maximum up to 10.000,00km2 except if a larger area is required in which case the Mines and Geology Ministry may have to provide a special authorization.

    Assignment and pledge of mining rights – Mining rights are transferable to third partied provided by the Mines and Geology Ministry. Mining rights can be provided as a credit security and be subject to judicial enforcement. Mining rights may only be pledge to secure concessionaire loans obtained to finance the mining activities. Mining rights cannot be seized.

    Guarantee – The private holders of mining rights are obliged to provide a guarantee to cover their investment contractual obligations. During the reconnaissance, exploration and appraisal stages, the guarantee shall cover 2% of the investment obligations. During the production stage 4% of the investment obligations. Mining companies shall have a legal reserve corresponding to 5% of the invested capital to be used on the abandonment or environmental restore.

Taxes

Corporate Income Tax – 25%

Royalty on production – 5%

Surface Tax - USD 7,00/km2 on Year 1 up to USD 35,00/km2 on year 5.

Investment Income Tax – 10% on dividends distributed, 15% on interest payments.

Customs duties – Exemption on the definitive or temporary importation of listed equipments for the exclusive use of mining operations.

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Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

© Copyright 2012. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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