A draft proclamation meant to govern the mining sector shortens the duration of exploration and mining licenses granted to investors.
The validity period for small-scale mining permits has been reduced from 10 to five years, while the time limit for large-scale mining licenses has been cut in half to ten years.
The exploration period permitted for mining firms is also reduced from 10 to seven years in the proposed legislation.
On April 10, 2023, the Council of Ministers passed the Mining Resource Development Proclamation. It has been forwarded to the parliament. The standing committee of Industrial and Mining Development is expected to gather inputs from stakeholders before final approval.
Investors can obtain two one-year extensions for exploration permits and a third two-year maximum extension for further examination. The explanatory document that supports the proclamation states that the total number of years that may be granted for exploration license cannot exceed seven.
The document explains that the revision is necessary to stop some investors from delaying after obtaining permits. “Administrative measures regarding the delay in operation after acquiring a license are vulnerable to legal consequences,” it states.
The federal government will hold a five percent ownership in large-scale mining operations across the country, while the regional states will be able to obtain a two percent stake without making any financial contributions.
Small-scale mining projects are required to give regional states seven percent of their stake, again with no financial contributions.
The draft proclamation intends to reduce royalty fees on large-scale mining from the current seven to five percent. The royalty rate for precious minerals will be five percent, while the royalty fee for semi-precious, metal, chemical, industrial, construction, and salt minerals will be four percent.
The royalty rate currently ranges from five to seven percent for all minerals sold except construction minerals, which is three percent. Chemical minerals are the newest group for which royalty fees are charged.