Rwanda's mining industry has long been a pillar of its economic growth, and recent figures underscore its significance. In 2023, the sector generated more than $1.1 billion, up from $772 million in 2022.
As global demand for minerals crucial to 21st-century technology rises, the country has the potential to unlock even higher revenues. However, realising this potential hinges on more than just global market trends; it requires a robust legal and regulatory framework that can support responsible mining practices, curtail illegal activities, and foster investor confidence.
On July 24, 2024, a new mining law (N°072/2024 of 26/06/2024) came into force, addressing key gaps left by the repealed Mining Law of 2018. One of the most pressing challenges under the previous legal framework was the inadequate penalties for illegal mining and mineral trading.
These offenses were previously considered petty, with imprisonment terms under six months and fines of less than Rwf 1 million. Such leniency failed to deter illegal operators who profited handsomely at the expense of the state and the environment.
The new law represents a paradigm shift. Offenses like illegal mining now carry penalties of up to five years in prison and fines as high as Rwf80 million, while illegal mineral trading could lead to imprisonment of up to 10 years and fines reaching Rwf150 million. This steep increase in penalties signals the government's commitment to stamping out illegal activity in the sector. Furthermore, possession of illegally extracted minerals and allowing unauthorised mining activities on one's land now also carry severe consequences, including up to three years in prison and fines of up to Rwf80 million.
One notable addition to the legal framework is the government's right to dissolve companies found guilty of illegal mining activities. This provision could be a game-changer in holding companies accountable, ensuring that corporate actors cannot continue operations after flouting the law. It raises the stakes for mining companies, pushing them towards responsible practices or face severe consequences.
The law also introduces provisions around "critical minerals" -- minerals vital for modern technologies such as batteries, renewable energy systems, and electronics. As countries worldwide rush to secure these minerals for economic and strategic reasons, Rwanda is positioning itself by granting the government exclusive rights over designated strategic minerals. This move ensures that Rwanda can protect its national interests while navigating an increasingly competitive global market.
In addition, the new law reinforces the government's ability to acquire shares in mining operations and introduces provisions allowing for free carry interest in certain cases. This means the government could, in specific circumstances, own a stake in mining operations without having to invest upfront. Such measures reflect a balance between securing national interests and promoting international investment, adhering to the international legal principle of permanent sovereignty over natural resources.
The law also emphasises social and environmental responsibility, mandating compliance with social welfare, environmental protection, and gender equality principles. These additions align Rwanda's mining sector with global best practices, ensuring that its growth does not come at the expense of local communities or the environment. Moreover, the new requirement to process mining licenses through a one-stop centre could streamline the licensing process, boosting efficiency and transparency.
However, as with any law, its effectiveness will hinge on its implementation. Rwanda Mines, Petroleum and Gas Board now faces the crucial task of developing clear and comprehensive regulations to enforce these new provisions. While the institutional framework in Rwanda is adequate, implementing these regulations will require sustained commitment and collaboration between the government, private sector, and local communities.
In recent months, the government has made commendable strides in combating illegal mining and mineral trading. To maintain this momentum, public awareness, and education campaigns are necessary to ensure that all stakeholders understand the law and their responsibilities under it. The new mining law represents a significant step forward, but the real test will be in how well it is enforced.
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The global race for critical minerals is accelerating, and Rwanda's new mining law positions the country to thrive in this high-stakes arena. With stronger penalties for illegal activities, a focus on responsible and sustainable practices, and provisions to protect national interests, Rwanda is set to harness the full potential of its mineral wealth. But as always, the success of this law will be determined not by its text, but by its implementation. The future of Rwanda's mining sector -- and the prosperity it can bring -- depends on it.
The writer is the General Counsel & Chief Compliance Officer at Trinity Metals.
Tristan.minyati@trinity-metals.com
The views expressed in this article are of the author.
DICLAIMER: This article does not constitute legal advice. Please seek legal or other professional advice in relation to any particular matter you may have.
