MINING PERMIT IN CAMEROON

MINING PERMIT IN CAMEROON

A mining permit in Cameroon is governed by the law No. 2016/017 of 14^th December 2016 instituting the mining code of Cameroon. This law has repealed the provisions of law No. 001 of 16^th April 2001 which established the mining code and was amended and supplemented by law No. 2010/11 of 29^th July 2010. A mining permit in Cameroon is administered by the Ministry of Mines which is a government body in charge of the implementation of the mining law in Cameroon. A mining permit in Cameroon is subject to rights and modes of acquisition as established by the mining code of Cameroon. The scope of a mining permit in Cameroon encompass the following aspects; Non-Industrial license and Non-Industrial Miner’s Card, Reconnaissance Permit, Exploration Permit, License for Semi-Mechanized non-industrial mining of precious and semi-precious substances, Mining Agreement, Mining Permit regime, Oil and Gaz. A look at the scope of a mining permit in Cameroon as illustrated by the mining code of Cameroon brings into mind several questions to wit;

• Are there any requirements put in place for the indigenous population?
• Does the state of Cameroon have any rights to equity in mining projects?
• Are there any special rules applicable to foreign applicants?
• What are the requirements to benefit from minerals already mined?
• What are the conditions to export minerals?
• Can rights and controlling interest in mining titles be disposed of?
• What is the scope of usage of surface land involved in prospecting and mining activities?
• What are the environmental protection norms applicable to mining activities in Cameroon?
• What are the benefits to native land owners in Cameroon?
• What is the health and safety framework for mining activities in Cameroon?
• What royalties and taxes are applicable to a mining activity in Cameroon?

RIGHTS AND MODES OF ACQUISITION

Rights granted to conduct reconnaissance, exploration and mining operations in Cameroon.

A mining permit in Cameroon encompass certain rights being awarded to the holder of the permit. According to the Mining Law of 14^th December 2016 instituting the Mining Code of Cameroon, its Article 15 provides that “Any natural or legal person may undertake or carryout an activity governed by this law on State public land or State Private land, national land or private individual land.

All mining activities, except reconnaissance, shall be subject to prior issuance of a mining title.

Reconnaissance activities shall be subject to issuance of a reconnaissance permit.

The granting of a reconnaissance permit or a mining title shall be subject, under conditions laid down by regulation, to proof technical and financial capacity required for all operations relating to such permit or title.

Only legal persons under Cameroonian law operating in mining sector shall be granted a mining title”

LICENSE FOR SEMI-MECHANIZED NON-INDUSTRIAL MINING OF PRECIOUS AND SEMI-PRECIOUS SUBSTANCES

The grant of the license for semi-mechanized non-industrial mining of precious and semi-precious substances in accordance with the mining law of Cameroon is granted for a period of 2 (two) years renewable by the minister in charge of mines to any legal person governed by Cameroon Law or company where the share of Cameroonians makes at least 51% (fifty-one percent) of the shareholding. The exploration permit is subject to prior approval of the President of the Republic. A 25% (twenty-five percent) combined flat-rate mining tax is deducted by the state of Cameroon from the gross production of every semi-mechanized non-industrial mining site.

NON-INDUSTRIAL LICENSE AND MINER’S CARD

Only natural persons of Cameroonian nationality can engage in the collection of mineral substances. This activity is subject to the prior issuance of an individual non-industrial miner’s card and a non-industrial mining license by the authority in charge of mines for a renewable period of 2 (two) years. This license can be granted within an awarded exploration mining permit in Cameroon.

RECONNAISSANCE PERMIT

The regime of a mining permit in Cameroon also entail the grant of a reconnaissance permit. A reconnaissance permit is a permit issued to legal persons governed by Cameroonian law to conduct systematic and mobile surface surveys using geological, geophysical or other methods covering vast areas of land for the purpose of detecting traces and concentrations of useful mineral substances. The reconnaissance permit is valid for a period of 1 (one) year. The total surface area for which a reconnaissance permit is granted shall not exceed 1000km2 (one thousand squares kilometers). The holder of a reconnaissance permit is conferred a non-exclusive and non-transferable right to carry out the activity within the reconnaissance perimeter, the right to enter and set up appropriate facilities within the reconnaissance perimeter subject to land, property, environmental and forestry law in force.

EXPLORATION PERMIT

An exploration permit is granted to a legal person subject to Cameroon law by the minister in charge of mines for the purpose of conducting exploration works, to locate and evaluate mineral deposit and to determine conditions for the commercial mining. This permit is issued for an initial maximum period of 3 (three) years and may be renewed no more than 3 (three) times with each renewal not exceeding 2 (two) years. A person cannot be issued more than 5 (five) exploration permits. The surface area over which an exploration permit is issued cannot exceed 500km2 (five hundred square kilometers). The minister in charge of mine is to approve the work schedule and proposed budget by the applicants for an exploration permit. The awarded applicant shall have a maximum period of 9 (nine) months with effect from the date of notification to commence exploration works. The exploration permit confers on the holder the following rights;

• Access and occupy the surface area covered by the exploration permit,
• Extract, remove and dispose of rocks, earth, soil or mineral substances, excluding precious and semi-precious substances in quantities allowed by the approved as per the work schedule,
• Collect and use water situate on or flowing through the said activity,
• Carry any works deemed necessary for exploration of the surface area etc.

MINING AGREEMENT

A mining agreement is signed between the state of Cameroon represented by the minister in charge of mines and an exploration permit holder with a view to developing, mining or financing a new mineral deposit. An exploration permit deemed admissible upon the foundation of a mining agreement. It is the mining agreement which grants a small-scale or industrial mining permit to the holder.

MINING PERMIT REGIME

Upon the provision of evidence of the existence of a deposit within the perimeter of the holder, a non-industrial or industrial mining permit is granted. The grant of a non-industrial or industrial mining permit entails the cancellation of the exploration permit within the same perimeter on which the mining permit is granted. The holder of the mining permit may benefit from special incentives when he undertakes to build a processing plant for all or part of the mining production.

OIL AND GAZ EXPLORATION IN CAMEROON

Rights granted to conduct oil and gas exploration and production in Cameroon

Oil and Gas exploration in Cameroon are subject to Law No. 99-013 of 22^nd December 1999 instituting the petroleum code and law No.2012-006 of 19^th April 2012 instituting the gas code and decree No. 2014/3438/PM of October 27^th, 2014 setting the terms of application of Law No. 2012/006 of April 19^th, 2012 on the gas code. According to these legislations, the following rights are granted to conduct oil and gas exploration and production in Cameroon.

OIL

• Concession contract: This is a contract concluded prior to the grant of a Research Permit for Hydrocarbons. It sets the rights and obligations of the state and holder during the period of validity of the Research Permit and in case of discovery a hydrocarbon deposit commercially exploitable during the validity of the associated exploitation concession.
• Production sharing contract: According to the production sharing agreement, the state directly or through a duly mandated public body or unit contracts for the services of a Holder for the purposes of carrying out, on its behalf and in an exclusive manner, within a specific area of exploration activities and in the event of a discovery of a commercial hydrocarbons, exploitation activities.
• Authorization for prospection: Authorization for prospection deals with areas not covered by the Petroleum Contract and may be granted to a natural person or a legal entity by decision of the minister in charge of Hydrocarbons who shall prescribe the terms.
• Research authorization: This authorization is attached to a petroleum contract may be granted for hydrocarbons exploration permit in the case of a concession contract or an exclusive exploration authorization in the case of a production sharing contract. This authorization confers on the holder the exclusive rights to carry out his risk and expense all hydrocarbons prospection and exploration work within the limits of the relevant area and to an indefinite depth except as may be otherwise provided for in the petroleum contract.
• Exploitation authorization: This authorization is attached to a petroleum contract as either a Concession in the case of a Concession contract or an exclusive authorization of operations in the case of a Production Sharing Contract. The exploitation authorization covers the surface projection of commercial hydrocarbons deposit. The granting of an exploitation authorization does not confer ownership of the deposits, it creates a right of limited duration which is not mortgageable and is distinct from the ownership of the surface area said right which is assignable transferable. The initial term of the exploitation authorization cannot exceed 25 (twenty-five) years for liquid hydrocarbons and (30) thirty years for gaseous hydrocarbons.
• Authorization for Inland Transport: The domestic transportation authorization is granted by decree upon an application by a holder during the term of a valid petroleum contract. In Cameroon a domestic transportation authorization confers upon its holder the right to transport, using its facilities as well as those belonging to a third party while maintaining ownership rights, the products of exploitation activities or its share thereof to major centers of collection, consumption, processing, storage or loading.
• Provisional authorization to exploit: This authorization confers upon its holder the right to operate productive wells on a provisional basis for a maximum period of two years during which the holder is required to carry out the appraisal and delineation of the relevant deposit.

GAS

• Gas Agreement: The gas agreement is concluded between the state directly or through a public body duly authorized for that purpose, and or one or more gas companies. It shall specify the rights and obligations of the parties relating in particular to the legal, economic and financial, tax, social, technical and environmental arrangements applicable to one or more gas exploitation operations during its validity period. The gas agreement is negotiated and signed on behalf of the state by the minister in charge of the downstream gas sector or by any establishment duly authorized to do so and by the legal representatives of the other party. The initial duration of the agreement is 25(twenty-five) years.
• Concession: All activity of transportation and distribution of gas is subject to obtaining a concession. The concession is granted by the minister in charge of the downstream gas sector for a maximum period of 25 (twenty-five) years renewable. The concession is valid only within the area for which it is granted.
• License: The license system governs the processing, storage, import and export of gas. A license is granted for a renewable period of 25 (twenty-five) years maximum for gas storage and processing as well as production of liquified natural gas, and five years maximum for importation and exportation license.
• Processing License: The processing license confers upon its holder the right to undertake gas processing activities in accordance with the provision contained in its license and specifications.
• Storage License: The storage license confers upon its holder the right to build and operate storage facilities in accordance with provisions contained in its license and in the specifications. The minister in charge of downstream gas sector may waive the obligation for a processing license holder to have storage license for storage facilities associated with its processing activity.
• Authorization: The authorization governs the following activities; sale of gas, importation and installation of materials and equipment for setting up gas transportation and distribution networks, gas storage centers as well as measuring the safety devices to be used by operators and customers.

REQUIREMENTS FOR INDIGENES

Are indigenous people entitled to any compensation or equity holding in exploration and mining projects?

The indigenous population living around a small-scale or industrial mine shall be entitled to a compensation which shall be deducted from the ad valorem tax as per the mining law.

The development of mining resources and industrial quarries must include a “local content” component which shall specify the spin-offs of the selected mining and quarry projects on Cameroon’s economic, social, cultural, industrial and technological development.

The population living next to semi-mechanized non-industrial quarry or an industrial quarry shall be entitled to compensation on the quarry product extraction.

Mining companies shall give priority to the recruitment of Cameroonians in majority with required skills and 90% (ninety percent) of the positions that do not require special skills shall be reserved to Cameroonians.

Rights of the state to equity in mining projects

The state shall hold 10% (ten percent) of the total share capital of the small-scale mining company. The state shall be entitled of such shares free of charge without any encumbrance. These shares shall not be subject to dilution in the event of share capital increase. The state may increase its shares in the capital for profit purpose, by mutual consent of the parties in proportions not exceeding 10% (ten percent) and the remaining shares shall be open to subscription by national foreign investors.

PROCESSING AND BENEFITS OF MINERALS

What are the requirements to benefit from minerals already mined?

Spring water, mineral and thermo-mineral water as well as geothermal deposits can only be extracted subject to prior issuance of a permit by the minister in charge of mines. The issuance of this permit is subject to preliminary hydro-geological, geophysical, physic-chemical and bacteriological studies to determine the operating conditions and water table vulnerability studies in view to determine the protection and security perimeters. This permit is issued for a period of 5 (five) years renewable in periods of 3 (three) years.

Export of Minerals

Mineral substance extracted from Cameroon’s subsoil intended for export purpose shall be submitted to the expertise of the laboratory of the minister in charge of mines or any other approved laboratory by the minister. All export transactions regarding gold shall be done on alloyed gold.

DISPOSAL OF RIGHTS AND INTERESTS

Can rights to explore and mine be disposed of?

Any right on a mining title may result in any form of transaction such as a cession, pledge, conveyance etc. the cession and conveyance of a mining title to any eligible person shall be free. However, any direct or indirect transaction on a mining title shall be subject to the prior approval of the minister in charge of mines who shall decide in 45 (forty-five) days. The cessions, conveyance, farm-out, pledge, or mortgage instrument must be entered into the registry. At the time of registration, a new permit is issued and the rights and obligations attached to the initial permit shall be transferred to the new holder.

Permits issued for non-industrial mineral substance and reconnaissance activities shall be personal and not open to cession, conveyance, farm-out or pledge in accordance with Article 98 and 99 of the mining codes.

Industrial and small-scale mining permits shall confer on the holder a movable real right on the substance and an immovable real right on the perimeter during the period of the permit. Such rights shall be open to farm-out and maybe pledged or mortgaged.

Restrictions

Small scale and industrial mining permit are subject to capital contributions. In the event of a cession, the transferee and transferor of a mining interest shall seek the opinion of the competent authorities. Any direct or indirect transaction on a mining title with exception to the ordinary stock exchange shall be liable to capital gains tax.

ENVIRONMENTAL PROTECTION

What legislation governs environmental protection of mining activities?

Chapter V of the mining code instituted by law No.2016/017 of 14 December 2016 has established rules on protection of the environment by mining companies in Cameroon in its article 135 to article 140. Sustainable environmental protection and management regulations in accordance with Law No. 96/12 of August 5^th 1996 relating to the management of the environment must be at the center of all mining and quarry operations in Cameroon. Also, mining titles, quarry licenses and permits are awarded subject to the prior conduct of an environmental and social impact assessment, hazard and risk assessment and an environmental management plan must be provided.

IMPACT OF NATIVE TITLES AND RIGHTS

Do native titles have any impact on an exploration and mining title awarded?

The existence of a mining title shall not stop the land owner from using the various materials on his land, or inhibit the use of the various materials within the perimeter of the title. The operator shall be entitled only to the reimbursement of expenses incurred by him or rendered useless by the mining of various materials, and shall be compensated if need be. The land owner, traditional ruler or council shall be entitled to an allowance for the occupation of their land by the holder of a mining title.

The operator shall be bound to repair damages which mining works may cause to the owner. An operator shall also be bound to repair damages caused to neighbouring structures. He shall be liable to pay compensation corresponding to the damage caused.

HEALTH AND SAFETY COMPLIANCE

A framework in relation to health, safety and hygiene is provided by chapter IV of Law No. 2016/017 of 14^th December 2016. By this law, any natural or legal person carrying out exploitation and mining works shall be bound to do so according to standard practice and in accordance with the laws in force in view to safeguard the health and safety of persons and workers of the mine.

ROYALTIES AND TAXES

Royalties payable to the state by holders of titles and authorization for mining activities are area royalty or state land concession right. This payment is done at the beginning of each financial year. A holder of a mining title or quarry permit shall be entitled to a value-based royalty including the ad valorem tax on mining substances and extraction. These payments are done on a monthly basis