Regulation of Mining in Mozambique

Activities in the field of geological exploration, exploration and extraction of minerals have a significant impact on the state of the economy of many African countries, including the Republic of Mozambique. The sale of mined minerals forms a significant revenue component of the state budget. Consequently, the creation of an effective system of legal regulation of these relations is one of the most important areas for improving legislation in the field of environmental management.

Legal landscape

The set of norms governing relations in the field of prospecting and exploration of minerals in Mozambique, as well as in the field of mining, are integrated into the system of Mining law and are its main institutions. 

The content of these institutions is made up of norms governing the behavior of participants in public relations in the search, exploration and production of minerals, the establishment of their rights and obligations, including the regulation of the grounds and procedure for the emergence, change and termination of these legal relations.

The Mining Law provides for the administrative procedure for granting permits and licenses, regulates the issues of state admission of mining operations and permanent state mining supervision, establishes requirements for persons in charge at a mining enterprise.

Legislation in the field of legal regulation of mining operations is at the stage of active improvement. According to experts, the rights and obligations of subsoil users should be regulated in more detail with regard to prospecting for minerals.

When improving Mozambican subsoil legislation, the following are taken into account:

• assignment of certain works in the field of mining in Mozambique, carried out at the expense of private funds, to the category of works carried out in public needs;
• development of general legal requirements for the types and amounts of compensation in the provision of land plots for geological exploration, exploration and production of minerals in Mozambique;
• joint planning of activities by various subsoil users so that this activity is consistent with the work,
• not related to geological research, exploration and extraction of minerals carried out by third parties (construction and operation of public communications, roads, etc.).

Key regulators

Functions of a number of ministries include the regulation of the industry: The Ministry of Mineral Resources and Energy, the Directorate of Geology and Mining, and the State Institute of Mining to name just a few. Regulators do not always coordinate their work with each other, which introduces some confusion. In order to unify the regulation of the industry, it is soon planned to create a new "umbrella" body, which will oversee the entire mining industry in the country. This is good news for those planning to set up a mining business in Mozambique.

Obtaining a license for exploration and production of minerals in Mozambique

The investor can receive the following types of concession agreements:

1. License for Mineral Exploration in Mozambique. It gives the right for exploration and prospecting activities. Exploration licenses will be valid for:
   1. 2 years for the supply of minerals for the construction industry;
   2. 5 years for other minerals, including mineral water, and can be renewed once for an additional 3 years.
2. License for mining in Mozambique. In cases where the investor does not have a valid mining concession, a mining certificate in Mozambique or a mining permit permitting such actions, mining licenses regulate the mining processes by which mineral ore and its derivatives are converted to valuable products of the mining industry. The processing of radioactive minerals will require additional permits in accordance with the legislation on nuclear energy and radioactive materials. The mining license is provided for 25 years and can be renewed once.
3. A license to buy and sell mining products in Mozambique gives the right to buy and sell mineral products coming from outside Mozambique.

Royalties and taxes on mining operations in Mozambique

The country has a special regime of taxation and tax incentives for mining enterprises, which provides additional privileges in relation to specific taxes in the mining sector. So, the tax on the extraction of minerals in Mozambique applies to the extracted mineral product after processing, if processing is not required, then the tax is levied on the extracted mineral product.