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The New Mineral Resources Law

The New Mineral Resources Law
In December 2014, the new Mineral Resources Law, one of the most important economic laws to be introduced in recent years, was issued by a Presidential Decree (the "Law").[1] The Law is of critical importance for many reasons: firstly, it introduces fundamental changes to an important economic sector and paves the way for new investments; secondly, it amends and rectifies a legal system that has remained intact since the 1950s; and finally, it raises questions as to how developing countries should use their natural resources, as well as the relationship between these countries and multinational corporations. The contrast between the accumulated expertise of the Egyptian authorities in dealing with oil exploration and exploitation agreements, and their inadequate expertise in dealing with other forms of mineral and natural resources attests to the importance of the new Law. In dealing with the latter type of resources, the Egyptian authorities have so far been forced to rely on standards and tools that have remained unchanged for sixty years. Thus, despite our criticism of some aspects of the Law, as detailed below, this may still be considered a positive and necessary development which may encourage investments in a vital sector and increase its utility for the national economy.
How was the sector organized before?
The legal organization of the exploration of mineral resources began in the early 20th Century. In 1947, Law No. 29 of 1947 was issued, regulating public utilities’ concessions (the "1947 Law").[2] However, the 1947 Law did not state any specific rules other than that concessions shall not last for more than thirty years, and that each minister shall be responsible for public utilities under his/her ministry’s jurisdiction. It is to be noted that the lack of any specific rules in the 1947 Law was not atypical, given that public utilities’ concessions were regulated in detail under the Civil Code. Following the 1952 Revolution, one of the first laws to be promulgated by the new republican regime in February 1953 was Law No. 66 of 1953 regulating Mines and Quarries (the "1953 Law").[3] Notably, the 1953 Law did not only deal with mining and quarrying as its name suggests, but also dealt with “fuel ores” including petroleum. The 1953 Law stipulated the Ministry of Trade and Industry as the responsible authority for all activities related to mines, quarries and fuel ores. The 1953 Law also listed several principles that remained intact for a long period, including that licenses for exploitation shall be given on a first-come, first-served basis, except for mines and quarries that are certain to contain mineral wealth. Other long-standing principles were that concessions shall not exceed thirty years, and that the holder of the license must pay an annual rent in addition to a levy equal to 5% of the annual value of production. In 1956, a new law was issued, Law No. 86 of 1956 regulating Mines and Quarries (the "1956 Law").[4] The 1956 Law only dealt with mines and quarries without dealing with fuel ores, and repealed Law No 66/1953 except for sections dealing with fuel exploration. Other than that, the 1956 Law maintained the same legal framework of the previous law, considering mineral resources in mines and quarries on Egyptian soil and waters to be state property. The Law also assigned the Ministry of Trade and Industry with regulatory and supervisory powers over all matters relating to the production and storage of mineral resources. The 1956 Law also permitted the Ministry to search and explore mineral resources in mines and quarries and exploit it by itself or assign its exploitation to others. In regulating the matter, the 1956 Law created the Egyptian Mineral Resources Authority ("EMRA") and tasked it with licensing exploration and exploitation efforts, with separate licenses required for each activity. In this respect, the Law held that priority shall be given to Egyptians over foreigners with respect to licenses for the exploitation of quarries. Practically, the legal framework remained unchanged until the new Law was released a few weeks ago. However, it is worth noting that many laws relating to various aspects of the exploitation of mines and quarries were issued in previous years, such as Law No. 27 of 1981 regulating employment at mines and quarries,[5] Law No. 143 of 1981 related to new desert lands,[6] and Law No. 7 of 2010 regulating nuclear activities and radiation.[7]
The New Legal Framework
Since the new Law deals with a variety of issues, we will consider them separately, starting with the scope of the law; its definitions; the general application provisions; the regulation of licenses for mines, quarries and salt pans; followed by the provisions dealing with the suspension and cancellation of licenses; supervision over relevant activities; and finally penalties for violation of the Law’s provisions. Scope An important characteristic of the new legal framework is that it does not only deal with mines and quarries, but rather with the broader concept of mineral resources in general. This is translated in the fact that the law stipulates particular provisions and rules for mines, quarries and salt pans. The new Law also provides detailed definitions of key terms and determines particular and clearer roles for the relevant Minister, EMRA, and the governorate containing the mines, quarries, or salt pans. As for the time frame, the new Law repeals the preceding law, Law No 86/1956, and stipulates that its provisions will enter into force on the day following its publication in the Official Gazette, namely 10 December 2014. Nonetheless, the new Law also stipulates that the relevant Minister – now the Minister of Petroleum – must publish the Executive Regulations of the Law within six months of its entry into force, namely before 10 June 2015. In practice, this means that it will be difficult to implement the new Law before the latter date, since many of the provisions contained in the Law will need to be clarified in the Executive Regulations. Definitions The Law commences with providing key definitions, such as the definition of the relevant or competent minister, which is defined as the minister in charge of mineral resources. This means that it is not necessary that the competent minister will always be the Minister of Petroleum. Rather, this will depend on the presidential classification of mineral resources and the President’s determination of whether such sector will be administered by the Ministry of Petroleum or the Ministry of Trade and Industry or a different ministry. The definitions section also contains a clarification of technical terms used in the Law, such as mining ores, minerals, quarries, precious metals, gemstones and salt pans. The Law also stipulates that “nuclear materials and radioactive isotopes” are removed from its scope. Finally, the Law states that EMRA shall be the competent authority in dealing with mineral resources related activities. Provisions The Law contains a number of main provisions of general application, the most important of which are:
  • That ores from mines, quarries, and salt pans in Egypt or in its territorial waters are considered the property of the people. The State commits to maintain these ores and use them in a beneficial manner.
  • EMRA is the sole authority responsible for regulating the exploration and exploitation of mining ores and supervising their extraction. Insofar as quarries and salt pans are concerned, EMRA maintains this authority in coordination with the relevant governorate.
  • Licenses are issued in two phases: an exploration license and an exploitation license. For new areas, licenses are issued in accordance with the priority of receiving license applications.
  • The license for exploration and exploitation of minerals from mines, quarries, or salt pans shall be issued by a decision by EMRA or the relevant governorate, which must be approved in turn either by the relevant minister in the case of mines or the relevant governor in the case of quarries and salt pans. EMRA shall have the right to establish or participate in exploration, exploitation, or mining companies. It is to be noted that exploration and exploitation of minerals on lands under the jurisdiction of the Ministry of Defense may only be done by that Ministry’s affiliates.
  • Offerings of areas for exploration and exploitation shall only be made through a decision by EMRA, after the approval of the relevant minister or governorate. It is to be noted that the Law stipulates that such offerings shall be made on the basis of a special charter issued by the relevant minister, which will be exempt from the provisions contained in the Bids and Tenders Law, but will need to abide by conditions required by the Ministry of Defense. Nonetheless, the Law permits the relevant Minister to assign exploration and exploitation activities of mines to specific entities (whether such entity is a company, an association or an institution), without being bound by the licensing requirements contained in the Law. The same permission is given to governorates with respect to quarries and salt pans.
  • EMRA or the relevant governorate shall, through a public bid, offer for exploitation those areas which may still be exploited despite that fact that their exploitation licenses have expired.
Licensing of Mines An application for an exploration license for a mine must be presented to EMRA along with certain documents that will be determined by the Executive Regulations and a fee not exceeding EGP 50,000. The license is issued by a ministerial decision after the approval of the board of directors of EMRA and is valid for a period of two years that may only be renewed once. Crude samples (raw material) may only be taken for study purposes. If the license is for a mine the area of which is under one square kilometer, it shall be issued directly by the board of directors of EMRA, on the condition that not more than one license be issued to the same person. If the license relates to precious metals and gemstones, it must be issued by virtue of a special law, which is also applicable if the license is sought for an area exceeding sixteen square kilometers. A license for the exploitation of a mine must be preceded by an exploration license for the same area or for part of it. A technical report indicating the presence of the mineral to be exploited and a feasibility study must also be presented. If EMRA refuses to issue an exploitation license for the holder of an exploration license, it may exploit the area itself or through one of its corporations. If EMRA ascertains that the area contains crude minerals, it may issue a license for exploitation via public bid. The duration of a license as well as renewal periods may not exceed fifteen years, except if the license or renewal is through a special law. The new Law stipulates that its Executive Regulations will regulate the procedures for the issuance of exploitation licenses. As for the cost, the new Law stipulates that the holder of a license must pay three different sums: an annual rent, a royalty, and contribution to the social development of the relevant governorate. The annual rent for the mines is determined by the Executive Regulations and is paid annually in advance, and may be amended every four years with the approval of the Prime Minister. The royalty is also determined by the Executive Regulations, but the Law stipulates that it may not be less than 5% of the annual value of the mine’s production. Both the annual rent and the royalty are paid to the public treasury, while the social development contribution, which is valued at 1% of the annual production value, is paid directly to the governorate. Licensing of Quarries In contrast to the licensing of mines, the exploitation license of quarries does not require a preceding exploration license. The exploitation license is issued by the governorate based on the fulfillment of certain technical requirements determined by EMRA, which are in turn based on provisions of the Executive Regulations. The duration of the license and its renewal may not exceed 15 years, except if the license or the renewal is issued by a special law. The new Law stipulates that quarries on agricultural lands may not be used. Furthermore, a governorate may replace one quarry with another if it is proven that the original quarry is needed by the State for public benefit purposes or for military purposes, or if it contains artifacts. As to the cost, the holder of a license must also pay three different sums: an annual rent, a royalty, and contribution to the social development of the relevant governorate. The annual rent for the quarry is determined by the Executive Regulations and is paid annually in advance, and may be amended every four years with the approval of the Prime Minister. The royalty is also determined by the Executive Regulations, but the Law stipulates that it may not be less than 5% of the annual value of the mine’s production. Both the annual rent and the royalty are paid to the public treasury, while the social development contribution, which is valued at 1% of the annual production value, is paid directly to the governorate. Licensing Salt Pans According to the new Law, licenses for the exploitation of salt pans shall be issued by the governorate after the approval of EMRA, based on conditions and requirements contained in the Executive Regulations. The Law only stipulates that the duration of licenses may not exceed fifteen years, and that it may only be renewed for a longer period if done by a special law. Transfer, Temporary Suspension, and Cancellation of Licenses The holder of an exploration or exploitation license for mines, quarries, and salt pans may not relinquish such license or assign it to a different person, unless such person fulfills all the conditions that are required to be present in the original applicant. Such transfer may only be done after the approval of the relevant minister or governor. The original holder of the license shall still be required to pay double the annual rent to EMRA or the relevant governorate. As for temporary suspension, the Law distinguishes between suspension by a decision of the state and suspension at the request of the license holder. Both the Minister and the relevant governor are permitted –each within their own jurisdiction- to temporarily suspend exploration or exploitation licenses if the continuation of such activities presents a grave threat to the work, the employees or the relevant area, or if EMRA presents a report showing the existence of violations. The Executive Regulations will regulate the conditions and requirements of suspension as well as the reinstatement of the license. The license holder, on the other hand, may request temporary suspension for technical reasons, after obtaining the approval of EMRA or the governorate, depending on the situation. Finally, the new Law lists a number of cases in which the Minister is permitted to cancel mining licenses, most importantly the failure to pay rent or royalty, the violation of the new Law’s provisions or the provisions of its Executive Regulations or license requirements, the bankruptcy or liquidation of the license holder, the failure to commence the project for more than one month after delivery of the site to the license holder, a lack of seriousness in carrying out the licensed activities for a period of six months, or relinquishing the license without the approval of EMRA, or if the license holder pollutes the area or provides false information to EMRA. It is to be noted that the new Law did not contain any provisions relating to cancellation of licenses of mines or quarries by the State. Supervision
  • The Executive Regulations stipulate the raw material that may not be exported.
  • Seizing tools and equipment used for the exploitation of mines, quarries or salt pans is prohibited, as long as the license is still valid.
  • The license holder may not establish utilities for the operation of the mine, quarry, or salt pan except after the approval of EMRA or the relevant governorate is attained.
  • The license holder must be insured for a value equivalent to the value of the annual rent due to EMRA or the governorate, in order to secure compliance with the conditions of the license.
  • The license holder is obliged to submit quarterly reports about the workflow to EMRA or the relevant governorate. The Executive Regulations will determine the required content of such reports.
  • If, during the operations, the license holder finds artifacts or excavations, all activities must be seized immediately. EMRA or the relevant governorate must be informed immediately of such findings.
Penalties The new Law penalizes anyone who extracts raw material from mines, quarries or salt pans without license with a one year prison term and a fine ranging between 250,000 and 5 million Egyptian pounds. The penalty for the issuance of a license over agricultural land is imprisonment up to three years and a fine not exceeding one million EGP. The new Law also imposes a penalty on the license holder who fails to submit quarterly reports ranging between EGP 100,000 – 300,000.
Conclusion
It is imperative to reiterate that the new Law is a very welcome positive development. The Law, which will reorganize a sector of vital economic importance, comes after sixty years of legislative stagnation. Nonetheless, the new Law raises several issues and complications, including the following:
  • There is a relative overlap between the jurisdiction and powers of the relevant minister and the relevant governor. While the first is responsible for mines and the second is responsible for quarries and salt pans, the authority which follows the Minister, EMRA, has a supervisory role in all cases. This can mean that the roles of the two parties may overlap. It would have been better if supervision over the entire sector would have been undertaken by EMRA alone, and not the governorates, so that investors would only have to deal with one supervisory entity.
  • Although it is normal for a law to include general provisions and leave it to the Executive Regulations to determine some of the details and procedures, the new Law referred all procedures and conditions to the Executive Regulations. This does not provide sufficient clarity and stability in the legislative text. It would have been better to cement some of the rules and conditions in the Law so it would not constantly be subject to change.
  • The same comment applies to the amounts which the investors will be obliged to pay. When this matter is left to the Executive Regulations, it fails to provide the transparency and stability needed in such legislation.
Finally, Article 3 of the Issuance Articles stipulates that licenses issued before this Law enters into force will continue to be valid until the end of its term, and that the license holder will only be liable for fees and royalties determined in such license. This is the correct position because the legislation should apply to actions that follow its proclamation. However, Sub-article Three of Article Three states that EMRA and the governorates – each in accordance with their own jurisdiction- may invite the license holder to negotiate and agree on the implementation of the rental and royalty value and license fees detailed in the new Law. This opens the door for interpretation and introduces unnecessary vagueness to the issue. Questions remain as to what is meant by “the invitation of EMRA” and whether such invitation is optional, whether it can be rejected by the license holder, what the consequences for the rejection of an invitation might be, etc. It would have been better to leave the fees and other previously mentioned amounts as they were in the past, and apply the new Law to actions and contracts that follow its enactment.   [1] Presidential Decree-Law No. 198/2014 on Mineral Resources, Official Gazette, Issue No. 49 bis (a), 9 December 2014. [2] Law No. 29/1947 on Public Utilities’ Concessions , Egyptian Gazette, Issue No. 69, 24 July 1947. [3] Law No. 66/1953 on Mines and Quarries, Egyptian Gazette, Issue No. 16 bis (irregular), 19 February 1953. [4] Law No. 86/1956 on Mines and Quarries, Egyptian Gazette, Issue No. 22 bis (a) (irregular), 15 March 1956. [5] Law No. 27/1981 on Employment at Mines and Quarries, Official Gazette, Issue No. 17, 23 April 1981. [6] Law No. 143/1981 on New Desert Lands, Official Gazette, Issue No. 35 bis, 31 August 1981. [7] Law No. 7/2010 on Nuclear Activities and Radiation, Official Gazette, Issue No. 12 bis (a), 30 March 2010.
In December 2014, the new Mineral Resources Law, one of the most important economic laws to be introduced in recent years, was issued by a Presidential Decree (the "Law").[1] The Law is of critical importance for many reasons: firstly, it introduces fundamental changes to an important economic sector and paves the way for new investments; secondly, it amends and rectifies a legal system that has remained intact since the 1950s; and finally, it raises questions as to how developing countries should use their natural resources, as well as the relationship between these countries and multinational corporations. The contrast between the accumulated expertise of the Egyptian authorities in dealing with oil exploration and exploitation agreements, and their inadequate expertise in dealing with other forms of mineral and natural resources attests to the importance of the new Law. In dealing with the latter type of resources, the Egyptian authorities have so far been forced to rely on standards and tools that have remained unchanged for sixty years. Thus, despite our criticism of some aspects of the Law, as detailed below, this may still be considered a positive and necessary development which may encourage investments in a vital sector and increase its utility for the national economy.
How was the sector organized before?
The legal organization of the exploration of mineral resources began in the early 20th Century. In 1947, Law No. 29 of 1947 was issued, regulating public utilities’ concessions (the "1947 Law").[2] However, the 1947 Law did not state any specific rules other than that concessions shall not last for more than thirty years, and that each minister shall be responsible for public utilities under his/her ministry’s jurisdiction. It is to be noted that the lack of any specific rules in the 1947 Law was not atypical, given that public utilities’ concessions were regulated in detail under the Civil Code. Following the 1952 Revolution, one of the first laws to be promulgated by the new republican regime in February 1953 was Law No. 66 of 1953 regulating Mines and Quarries (the "1953 Law").[3] Notably, the 1953 Law did not only deal with mining and quarrying as its name suggests, but also dealt with “fuel ores” including petroleum. The 1953 Law stipulated the Ministry of Trade and Industry as the responsible authority for all activities related to mines, quarries and fuel ores. The 1953 Law also listed several principles that remained intact for a long period, including that licenses for exploitation shall be given on a first-come, first-served basis, except for mines and quarries that are certain to contain mineral wealth. Other long-standing principles were that concessions shall not exceed thirty years, and that the holder of the license must pay an annual rent in addition to a levy equal to 5% of the annual value of production. In 1956, a new law was issued, Law No. 86 of 1956 regulating Mines and Quarries (the "1956 Law").[4] The 1956 Law only dealt with mines and quarries without dealing with fuel ores, and repealed Law No 66/1953 except for sections dealing with fuel exploration. Other than that, the 1956 Law maintained the same legal framework of the previous law, considering mineral resources in mines and quarries on Egyptian soil and waters to be state property. The Law also assigned the Ministry of Trade and Industry with regulatory and supervisory powers over all matters relating to the production and storage of mineral resources. The 1956 Law also permitted the Ministry to search and explore mineral resources in mines and quarries and exploit it by itself or assign its exploitation to others. In regulating the matter, the 1956 Law created the Egyptian Mineral Resources Authority ("EMRA") and tasked it with licensing exploration and exploitation efforts, with separate licenses required for each activity. In this respect, the Law held that priority shall be given to Egyptians over foreigners with respect to licenses for the exploitation of quarries. Practically, the legal framework remained unchanged until the new Law was released a few weeks ago. However, it is worth noting that many laws relating to various aspects of the exploitation of mines and quarries were issued in previous years, such as Law No. 27 of 1981 regulating employment at mines and quarries,[5] Law No. 143 of 1981 related to new desert lands,[6] and Law No. 7 of 2010 regulating nuclear activities and radiation.[7]
The New Legal Framework
Since the new Law deals with a variety of issues, we will consider them separately, starting with the scope of the law; its definitions; the general application provisions; the regulation of licenses for mines, quarries and salt pans; followed by the provisions dealing with the suspension and cancellation of licenses; supervision over relevant activities; and finally penalties for violation of the Law’s provisions. Scope An important characteristic of the new legal framework is that it does not only deal with mines and quarries, but rather with the broader concept of mineral resources in general. This is translated in the fact that the law stipulates particular provisions and rules for mines, quarries and salt pans. The new Law also provides detailed definitions of key terms and determines particular and clearer roles for the relevant Minister, EMRA, and the governorate containing the mines, quarries, or salt pans. As for the time frame, the new Law repeals the preceding law, Law No 86/1956, and stipulates that its provisions will enter into force on the day following its publication in the Official Gazette, namely 10 December 2014. Nonetheless, the new Law also stipulates that the relevant Minister – now the Minister of Petroleum – must publish the Executive Regulations of the Law within six months of its entry into force, namely before 10 June 2015. In practice, this means that it will be difficult to implement the new Law before the latter date, since many of the provisions contained in the Law will need to be clarified in the Executive Regulations. Definitions The Law commences with providing key definitions, such as the definition of the relevant or competent minister, which is defined as the minister in charge of mineral resources. This means that it is not necessary that the competent minister will always be the Minister of Petroleum. Rather, this will depend on the presidential classification of mineral resources and the President’s determination of whether such sector will be administered by the Ministry of Petroleum or the Ministry of Trade and Industry or a different ministry. The definitions section also contains a clarification of technical terms used in the Law, such as mining ores, minerals, quarries, precious metals, gemstones and salt pans. The Law also stipulates that “nuclear materials and radioactive isotopes” are removed from its scope. Finally, the Law states that EMRA shall be the competent authority in dealing with mineral resources related activities. Provisions The Law contains a number of main provisions of general application, the most important of which are:
  • That ores from mines, quarries, and salt pans in Egypt or in its territorial waters are considered the property of the people. The State commits to maintain these ores and use them in a beneficial manner.
  • EMRA is the sole authority responsible for regulating the exploration and exploitation of mining ores and supervising their extraction. Insofar as quarries and salt pans are concerned, EMRA maintains this authority in coordination with the relevant governorate.
  • Licenses are issued in two phases: an exploration license and an exploitation license. For new areas, licenses are issued in accordance with the priority of receiving license applications.
  • The license for exploration and exploitation of minerals from mines, quarries, or salt pans shall be issued by a decision by EMRA or the relevant governorate, which must be approved in turn either by the relevant minister in the case of mines or the relevant governor in the case of quarries and salt pans. EMRA shall have the right to establish or participate in exploration, exploitation, or mining companies. It is to be noted that exploration and exploitation of minerals on lands under the jurisdiction of the Ministry of Defense may only be done by that Ministry’s affiliates.
  • Offerings of areas for exploration and exploitation shall only be made through a decision by EMRA, after the approval of the relevant minister or governorate. It is to be noted that the Law stipulates that such offerings shall be made on the basis of a special charter issued by the relevant minister, which will be exempt from the provisions contained in the Bids and Tenders Law, but will need to abide by conditions required by the Ministry of Defense. Nonetheless, the Law permits the relevant Minister to assign exploration and exploitation activities of mines to specific entities (whether such entity is a company, an association or an institution), without being bound by the licensing requirements contained in the Law. The same permission is given to governorates with respect to quarries and salt pans.
  • EMRA or the relevant governorate shall, through a public bid, offer for exploitation those areas which may still be exploited despite that fact that their exploitation licenses have expired.
Licensing of Mines An application for an exploration license for a mine must be presented to EMRA along with certain documents that will be determined by the Executive Regulations and a fee not exceeding EGP 50,000. The license is issued by a ministerial decision after the approval of the board of directors of EMRA and is valid for a period of two years that may only be renewed once. Crude samples (raw material) may only be taken for study purposes. If the license is for a mine the area of which is under one square kilometer, it shall be issued directly by the board of directors of EMRA, on the condition that not more than one license be issued to the same person. If the license relates to precious metals and gemstones, it must be issued by virtue of a special law, which is also applicable if the license is sought for an area exceeding sixteen square kilometers. A license for the exploitation of a mine must be preceded by an exploration license for the same area or for part of it. A technical report indicating the presence of the mineral to be exploited and a feasibility study must also be presented. If EMRA refuses to issue an exploitation license for the holder of an exploration license, it may exploit the area itself or through one of its corporations. If EMRA ascertains that the area contains crude minerals, it may issue a license for exploitation via public bid. The duration of a license as well as renewal periods may not exceed fifteen years, except if the license or renewal is through a special law. The new Law stipulates that its Executive Regulations will regulate the procedures for the issuance of exploitation licenses. As for the cost, the new Law stipulates that the holder of a license must pay three different sums: an annual rent, a royalty, and contribution to the social development of the relevant governorate. The annual rent for the mines is determined by the Executive Regulations and is paid annually in advance, and may be amended every four years with the approval of the Prime Minister. The royalty is also determined by the Executive Regulations, but the Law stipulates that it may not be less than 5% of the annual value of the mine’s production. Both the annual rent and the royalty are paid to the public treasury, while the social development contribution, which is valued at 1% of the annual production value, is paid directly to the governorate. Licensing of Quarries In contrast to the licensing of mines, the exploitation license of quarries does not require a preceding exploration license. The exploitation license is issued by the governorate based on the fulfillment of certain technical requirements determined by EMRA, which are in turn based on provisions of the Executive Regulations. The duration of the license and its renewal may not exceed 15 years, except if the license or the renewal is issued by a special law. The new Law stipulates that quarries on agricultural lands may not be used. Furthermore, a governorate may replace one quarry with another if it is proven that the original quarry is needed by the State for public benefit purposes or for military purposes, or if it contains artifacts. As to the cost, the holder of a license must also pay three different sums: an annual rent, a royalty, and contribution to the social development of the relevant governorate. The annual rent for the quarry is determined by the Executive Regulations and is paid annually in advance, and may be amended every four years with the approval of the Prime Minister. The royalty is also determined by the Executive Regulations, but the Law stipulates that it may not be less than 5% of the annual value of the mine’s production. Both the annual rent and the royalty are paid to the public treasury, while the social development contribution, which is valued at 1% of the annual production value, is paid directly to the governorate. Licensing Salt Pans According to the new Law, licenses for the exploitation of salt pans shall be issued by the governorate after the approval of EMRA, based on conditions and requirements contained in the Executive Regulations. The Law only stipulates that the duration of licenses may not exceed fifteen years, and that it may only be renewed for a longer period if done by a special law. Transfer, Temporary Suspension, and Cancellation of Licenses The holder of an exploration or exploitation license for mines, quarries, and salt pans may not relinquish such license or assign it to a different person, unless such person fulfills all the conditions that are required to be present in the original applicant. Such transfer may only be done after the approval of the relevant minister or governor. The original holder of the license shall still be required to pay double the annual rent to EMRA or the relevant governorate. As for temporary suspension, the Law distinguishes between suspension by a decision of the state and suspension at the request of the license holder. Both the Minister and the relevant governor are permitted –each within their own jurisdiction- to temporarily suspend exploration or exploitation licenses if the continuation of such activities presents a grave threat to the work, the employees or the relevant area, or if EMRA presents a report showing the existence of violations. The Executive Regulations will regulate the conditions and requirements of suspension as well as the reinstatement of the license. The license holder, on the other hand, may request temporary suspension for technical reasons, after obtaining the approval of EMRA or the governorate, depending on the situation. Finally, the new Law lists a number of cases in which the Minister is permitted to cancel mining licenses, most importantly the failure to pay rent or royalty, the violation of the new Law’s provisions or the provisions of its Executive Regulations or license requirements, the bankruptcy or liquidation of the license holder, the failure to commence the project for more than one month after delivery of the site to the license holder, a lack of seriousness in carrying out the licensed activities for a period of six months, or relinquishing the license without the approval of EMRA, or if the license holder pollutes the area or provides false information to EMRA. It is to be noted that the new Law did not contain any provisions relating to cancellation of licenses of mines or quarries by the State. Supervision
  • The Executive Regulations stipulate the raw material that may not be exported.
  • Seizing tools and equipment used for the exploitation of mines, quarries or salt pans is prohibited, as long as the license is still valid.
  • The license holder may not establish utilities for the operation of the mine, quarry, or salt pan except after the approval of EMRA or the relevant governorate is attained.
  • The license holder must be insured for a value equivalent to the value of the annual rent due to EMRA or the governorate, in order to secure compliance with the conditions of the license.
  • The license holder is obliged to submit quarterly reports about the workflow to EMRA or the relevant governorate. The Executive Regulations will determine the required content of such reports.
  • If, during the operations, the license holder finds artifacts or excavations, all activities must be seized immediately. EMRA or the relevant governorate must be informed immediately of such findings.
Penalties The new Law penalizes anyone who extracts raw material from mines, quarries or salt pans without license with a one year prison term and a fine ranging between 250,000 and 5 million Egyptian pounds. The penalty for the issuance of a license over agricultural land is imprisonment up to three years and a fine not exceeding one million EGP. The new Law also imposes a penalty on the license holder who fails to submit quarterly reports ranging between EGP 100,000 – 300,000.
Conclusion
It is imperative to reiterate that the new Law is a very welcome positive development. The Law, which will reorganize a sector of vital economic importance, comes after sixty years of legislative stagnation. Nonetheless, the new Law raises several issues and complications, including the following:
  • There is a relative overlap between the jurisdiction and powers of the relevant minister and the relevant governor. While the first is responsible for mines and the second is responsible for quarries and salt pans, the authority which follows the Minister, EMRA, has a supervisory role in all cases. This can mean that the roles of the two parties may overlap. It would have been better if supervision over the entire sector would have been undertaken by EMRA alone, and not the governorates, so that investors would only have to deal with one supervisory entity.
  • Although it is normal for a law to include general provisions and leave it to the Executive Regulations to determine some of the details and procedures, the new Law referred all procedures and conditions to the Executive Regulations. This does not provide sufficient clarity and stability in the legislative text. It would have been better to cement some of the rules and conditions in the Law so it would not constantly be subject to change.
  • The same comment applies to the amounts which the investors will be obliged to pay. When this matter is left to the Executive Regulations, it fails to provide the transparency and stability needed in such legislation.
Finally, Article 3 of the Issuance Articles stipulates that licenses issued before this Law enters into force will continue to be valid until the end of its term, and that the license holder will only be liable for fees and royalties determined in such license. This is the correct position because the legislation should apply to actions that follow its proclamation. However, Sub-article Three of Article Three states that EMRA and the governorates – each in accordance with their own jurisdiction- may invite the license holder to negotiate and agree on the implementation of the rental and royalty value and license fees detailed in the new Law. This opens the door for interpretation and introduces unnecessary vagueness to the issue. Questions remain as to what is meant by “the invitation of EMRA” and whether such invitation is optional, whether it can be rejected by the license holder, what the consequences for the rejection of an invitation might be, etc. It would have been better to leave the fees and other previously mentioned amounts as they were in the past, and apply the new Law to actions and contracts that follow its enactment.   [1] Presidential Decree-Law No. 198/2014 on Mineral Resources, Official Gazette, Issue No. 49 bis (a), 9 December 2014. [2] Law No. 29/1947 on Public Utilities’ Concessions , Egyptian Gazette, Issue No. 69, 24 July 1947. [3] Law No. 66/1953 on Mines and Quarries, Egyptian Gazette, Issue No. 16 bis (irregular), 19 February 1953. [4] Law No. 86/1956 on Mines and Quarries, Egyptian Gazette, Issue No. 22 bis (a) (irregular), 15 March 1956. [5] Law No. 27/1981 on Employment at Mines and Quarries, Official Gazette, Issue No. 17, 23 April 1981. [6] Law No. 143/1981 on New Desert Lands, Official Gazette, Issue No. 35 bis, 31 August 1981. [7] Law No. 7/2010 on Nuclear Activities and Radiation, Official Gazette, Issue No. 12 bis (a), 30 March 2010.