16 January 2013

Rwanda: Investors Call for Review of Mining Draft Law

The government should amend part of the mining draft law that requires investors to spend a certain minimum amount of monies on exploration activities, mining firms have urged.

According the draft law, if a company does not spend the stipulated amount, the balance is considered a debt to the government. In the new law, a company is granted an exploration licence when it agrees with the government on the minimum monies it must inject into exploration activities, among other requirements.

According to Article 16, Chapter 3 of the draft law on mines and quarries exploitation: "Any monies required to be spent under the provisions of the licence and which are not spent shall, on failure to give justifiable reasons for the shortfall, be a debt due to the government, recoverable in a court of competent jurisdiction."

The miners, however, said if the article is not revised, it will discourage investments into the sector.

"When companies agree on a minimum investment, sometimes they inject half of it after realising the concession has no tangible minerals," Oleg Moiseev, the Rogi Mining Rwanda managing director, said during a stakeholders' meeting yesterday.

The meeting attracted over 50 participants from the mining sector and government officials.

"The law should insulate investors so that, once a firm finds no mineral quantities of commercial value, it does not have to spend more money on it," Moiseev added.

However, mining authorities said the provision was designed to protect the industry from 'idle' investors, who acquire concessions but carry out no activities.

"We have several cases of investors, who get mining concessions but leave them idle," Michael Biryabarema, the director general of the geology and mines department, said.

"The law, therefore, is trying to prevent companies from sitting on potential exploits, yet they have licences to hold them for over years."

John Gara, the chairman of the National Law Reform Commission, explained that the law allows potential investors to temporarily stop exploration activities once they inform the minister on time, with justifiable reasons.

"The law is flexible and friendly to investors, that is why an investor isn't required to spend all the minimum cash once they inform the line minister, with genuine reasons," he said.

"We also have to keep in mind that minerals are an important national asset that must be protected. That is why we want credible investors."

According to the law, an exploring company shall submit to the minister an audited statement of expenditure incurred under the licence in respect to acceptable exploration activities prescribed. This should be within three months at the end of each year of the licence. Biryabarema said the draft law would be adopted this year.

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