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Africa’s Legal Frameworks for Mining Green Minerals

The drive towards sustainability has made ‘green’ minerals hot property. LEX Africa looks at the regulatory regimes governing this in seven key African nations.

The worldwide movement towards clean and sustainable energy has caused a surge in the demand for battery minerals, requiring those countries with exploitable reserves to re-evaluate their legal systems governing the mining of these minerals. LEX Africa, a legal Alliance of leading African law firms, asked members around the continent to describe the key legal challenges to be overcome, and positive steps to be introduced, to help mines capitalise on the Just Energy Transition (JET). LEX Africa chairperson Pieter Steyn says: “LEX Africa has focused on mining law since it was formed in 1993 because mining is a key sector in the African economy. It is also heavily regulated so sound legal advice is essential. ”In this article, we consider the legal frameworks in six key African nations producing some of the world’s most in-demand green minerals.

ANGOLA

João Bravo da Costa, a partner at FBL Advogados, notes that Angola has huge potential in terms of battery minerals, but that this creates a challenge in terms of Angolan mining legislation and procedures. “Nonetheless, the government has announced its openness towards investments in this specific sub-sector, in order to execute the transition of the country from its dependence on oil and gas – and to export and transform its power resources into ‘clean’ energy,” he says. “To ensure that the Just Energy Transition is executed by means of an environmentally friendly approach, government needs to review the tax regime applicable to these explorations. In this way, it can create tax incentives that will help to assure that exploration can be executed into environmentally friendly, yet competitive, standards.”

MOROCCO

Ghiyta Iraqi, a partner at I&I Law Firm, says Morocco attracts global investment due to its valuable mining resources, including lithium, manganese and cobalt. Despite this, the current regulatory framework, authorisation process, transparency, governance and institutional capacity of mining organisations may not be conducive to attracting significant investment flows. “We need to enable greater clarity and certainty of rights and obligations, fair and competitive licensing, and tax and permit regimes. We also feel transparent and open access to industry data – through digitalisation – as well as compliance with well-established and known standards of resource information, will encourage more and better investment in the sector,” she says. “In July 2021, changes were made to the law aimed mainly at simplifying mining authorisation procedures and improving the attractiveness of the mining sector for national and international private investors. This bill is the backbone of the kingdom’s new mining strategy.”

MOZAMBIQUE

Zara Jamal, partner at JLA Advogados, indicates that Mozambique hosts half the world’s known graphite resources. Several international mining companies are now taking advantage of Mozambique’s rich deposits located in the northern part of the country, although these projects have been impacted by the insurgency problems that have arisen in this region. “In addition, the lack of funding greatly anchored in international investors and banks is also stalling the progress of this industry. Finally, the scarce or almost non-existent legislative policy that rewards projects that excel in the extraction of battery minerals – namely by granting greater tax incentives – is also an important challenge for mining companies in this field,” she says. “The Mozambican government is determined to improve and enhance the business environment and attract foreign investment. As such, important legislative amendments have been approved in recent months, from which we would highlight the new foreign exchange law, which establishes a more relaxed foreign exchange regime for the extractive industry.”

REPUBLIC OF GUINEA

Amadou Barry, a lawyer at Thiam & Associés, explains that the fast-growing investment in battery minerals has revealed the need to revamp mining legislation in order to cope with the reality of the new mining industry landscape. “The environmental challenges that come with the development of battery minerals stress the need to adapt the environmental legislation. For example, lithium poses environmental challenges both in the extraction phase and in the recycling phase, and could lead to water supply contamination,” he says. “To streamline mining operations in general, Guinea has already implemented measures to simplify the application process for permits and licences. A one- stop shop – at the Ministry of Mines and Geology – was established, aiming to cut through bureaucracy and enhance efficiency. In addition, government has introduced measures to attract investors and foster the mining sector’s development.”

ZAMBIA 

Charles Mkokweza, senior partner at Corpus Legal Practitioners, points out that the mining of minerals for rechargeable batteries, such as lithium, cobalt, manganese, nickel, graphite and copper, is currently regulated and promoted in the same manner as other non-battery minerals under Zambian law.“As such, these miners face the same challenges affecting the mining industry as a whole, including a licensing regime that needs improvement, and an unstable tax regime,” he says. “The 2022 National Mineral Resources Development Policy has proposed reforms – to be implemented in 2024 – aimed at improving efficiency, effectiveness, transparency, accountability, and integrity in licence management and issuance. “These reforms include the use of information and communication technologies, the development of integrated management information systems and enhancing transparency and accountability in the mining cadastral system.”

ZIMBABWE

Fidelis Manyuchi, a partner at Scanlan & Holderness, notes that Zimbabwe has huge deposits of lithium and other battery minerals, with mining companies eager to participate in the value chain. “A key challenge for us is the change in regulation. For example, until around November 2022, companies could mine and export raw lithium from the country. In December 2022, a ban on the exportation of raw lithium, without approval, was imposed,” he says. “Nonetheless, the legislative regime has undertaken major regulatory reforms that are aimed at enhancing the ease of conducting mining operations, such as the creation of the Zimbabwe Investment and Development Agency.” This is a “one-stop investment centre”, he says, housing representatives of most of the departments that play a role in issuing permits, licences and approvals that are required to get a battery mine operational.

SOUTH AFRICA

Chris Stevens, head of the Mining Law Department at Werksmans Inc in South Africa, notes that South Africa also has vast deposits of lithium, copper, manganese and other battery minerals. The much-publicised infrastructure constraints as a result of the issues with Eskom and Transnet and the insufficiency of the rail transport and port networks cause the industry not to thrive to the extent it should. The licensing system in South Africa has also come in for some criticism because of the length of time to obtain, for example, prospecting rights and mining rights for all minerals including battery minerals. There are no special provisions applicable to battery minerals, nor at this stage any tax incentives in regard to the exploitation of battery minerals. “Nevertheless, there are moves afoot to address the infrastructure problems in South Africa and the Department of Mineral Resources and Energy is implementing in the short term a new cadastral system, all of which should help to streamline the process and boost the industry.”

Article courtesy of SA Mining – www.samining.co.za

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