Mozambican mining law dates back to 2002 and is presently under review. Its revision is well overdue in addressing the developments in the sector and the changing dynamics of the mining industry.
The major changes of the draft mining Bill include:
- Granting of exploration licences only to legal entities registered in terms of local laws.
- Reducing the period of exploration licences from 10 to 8 years.
- Mining concessionaires starting mining operations within 12 months from the date of concession and production within 48 months (periods may be extended due to force majeure events or a justified decision of the government).
- Publication of the terms of mining contracts in the Government Gazette (Boletim da República), except for strategic and competition clauses, which remain confidential.
- Obtaining ministerial approval on transfers of shares or quotas in companies holding mining titles whether or not the transfers result in change of control.
- Foreign suppliers of goods and services to the mining sector being required to have local partners.
Certain requirements of the Mega Projects Law are applicable to the mining sector, particularly to the granting of financial and economic benefits, such as:
- Mozambican public participation (preferably natural persons) of between 5% and 20% in the project company’s share capital via the Mozambican stock exchange.
- The opportunity for the State to take equity of at least 5% (free carry) in the project company’s share capital.
- The opportunity for State owned companies or private companies to participate in the project company’s share capital, the terms to be negotiated and agreed between the parties.
- The equitable sharing of the benefits, under contractually agreed terms, in one or a combination of the following ways:
> reinvestment in the country;
> creation of reserves for additional investments or to cover extraordinary losses; or
> financial investments made and maintained in the country.
- The payment of an award fee or signing bonus of between 0.5% to 5% of the fair value of the assets granted by the State in respect of public-private partnerships and business concession undertakings which includes the concession for use of national resources.
Separately, Mozambican Corporate Income Tax (IRPC) has been amended. From 2014 onwards, all gains resulting from a direct or indirect, gratuitous or onerous transfer of shares and other interests or rights involving assets located in Mozambique, will be considered income generated in Mozambique and will attract a Capital Gains Tax of 32%. The capital gain is taxed regardless of the tax residence of the transferee, the holding period of the asset or the place of the execution of the sale. This change came about because of the tax structuring of recent Mozambican natural resource transactions.