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Model Mining Agreements and International Best PracticeSADC Law Association Annual Conference – 23 August 2014Alexander Keepin, Global Co-head of MiningBerwin Leighton Paisner, LLP
What is a Model Mining Agreement
• Long term contract for the exploration and development of a mining project
• Agreement between the state and a mining company
• Supplements legislation / mining code
• In 2011 IBA published the MMDA 1.0 a model mine development agreement
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Parties to a Model Mining Agreement
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• Role of the state
State Mining company
Local communiti
es
• Free prior informed consent of local communities
Areas covered by Model Mining Agreements (clause references are to IBA MMDA 1.O)
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Framework to promote economic development of a project
Areas covered by Model Mining Agreements (clause references are to IBA MMDA 1.O)
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Framework to promote economic development of a project
Areas covered by Model Mining Agreements (clause references are to IBA MMDA I.O)
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Framework to promote economic development of a project
Stabilisation 13
Disputes/Arbitration
32
ABC 10.4
Transparency
30
Free Carry
Right to acquire
Local ownership
Annual rental
3
Royalty 4
Taxation 7
Customs Duties
5
Foreign currency
8.3
IFC/Equator 10
Closure Obligations
26
Local content
21
Employment
16
Community development
22
Local Employment
24
Title 2.3
Health programmes
23
Permitting 2.5
Commencement
Expenditure
CPs
Infrastructure access
17
Resource Nationalisation - areas of focus
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Free Carry
Option to increase
BBBEE
Expropriation
New Mining CodesReview of mining agreementsCancellation of contracts
New royalty regime
Corporate taxes
Windfall taxes
Import/export taxes
Employ/train locals
Local goods/services
Local beneficiation
Recent criticisms of Model Mining agreements
• Inequality of bargaining power/experience
• Corruption / transparency
• Inequality of economic benefits
• Investor friendly
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Future for Model Mining Agreements and International Best Practice
• MDAs/Legislation
• Role of the regional economic communities
• Understand parties objectives
• Focus on sharing of economic benefit with more flexibility
• Necessary for complex multi billion dollar developments and protection of the interests of all stakeholders
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Model Mining Agreements and International Best PracticeSADC Law Association Annual Conference – 23 August 2014This document provides a general summary only and is not intended to be comprehensive. Specific legal advice should always be sought in relation to the particular facts of a given situation.
