Mining firms contest new prospecting period
The mining fraternity has raised objection to several key clauses in the draft law on mines and quarries during discussions with government officials.
Article 22 of the draft law which was unanimously resisted by the mining firms, states that prospecting licenses issued to willing investors will be valid for six months and cannot be extended.
Six months is a very short time to prospect a mine’s potential;
The current law gives them a prospecting licence of two years.
“Six months is a very short time to prospect a mine’s potential; looking at regional countries, Zimbabwe gives a two-year renewable license, whereas Uganda and Kenya give one renewable year each,” David Bensusan, the Chief Executive of Minerals Supply Africa, said in the meeting that attracted close to 100 participants in Kigali on Wednesday.
He said that for them to remain competitive, the period should be harmonised with that offered in regional countries, or at least be extended to one year which is favourable for investors.
However, officials from the Ministry of Natural Resources argued that private investors do not need a lot of time to prospect mines because unlike in other countries, most of the prospecting activities for mineral potential sites in Rwanda were done by the government.
This was countered by miners who said that Rwanda’s geological structure is complex and not all its mineral potential had been discovered.
“Rwanda is not exploited effectively because of its complex geology; the minerals that are easy to find are ones that are mined, but more complex ones lie further beneath. Therefore, the time for prospecting must be extended,” another private investor said.
The investors further urged the government to amend article 13 of the draft law which requires them to seek for authorization from the Minister of Natural Resources if they desire to mortgage or rent their mining licenses.
The requirement according to the head of the department of geology and mines, Michael Biryabarema, is to ensure that Rwanda gets credible investors who will not fail to pay their loans and thus force banks to auction off mines at low prices.
“We want to enter agreements with investors we trust to be credible in financial dealings. That is why the draft law proposes that the minister has the last word on mortgaging mine licenses after reviewing the investor’s credibility,” Biryabarema said.
“However the deliberations with investors have been positive and all ideas will be discussed and incorporated before the law is adopted.”
According to the new draft law, three licenses are offered to investors; first the prospecting license, then the exploration license and finally the mining license.
Licenses for exploitation of large scale mines are granted for a period not exceeding 30 years and it can be renewed if the holder proves that the mine still contains more profitable deposits.
Investors can also get licenses for medium scale mines for a period of 5 years but not exceeding 15 years.
Small scale mines which are usually covered by local investors will be exploited on a renewable five year license.
The law which is still under review is expected to be tabled before cabinet in the coming weeks and is anticipated to be a clearer version of the old law with an aim of streamlining the sector’s operations.
Contact email: ivan.mugisha[at]newtimes.co.rw