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Are the Mining Permits Issued by the Mining Cadastre Office (MCO) Under Nigeria’s Minerals Mining Act 2007 Valid? Some Suggestions for Foreign Investors January 2009 Vol. 22 Issue # 1
Following the recent revision of the 1999 National Policy Initiative on mining, the Federal Government of Nigeria has issued a new set of guidelines on mining. A key innovation in the new guidelines is the Mining Cadastre Bill which seeks to incorporate the Mining Cadastre Office as an independent legal entity. Under the old regime, the Mining Cadastre Office (MCO) was ostensibly established by the Ministry of Solid Minerals Development as an autonomous body with exclusive responsibility to administer mining titles with integrity and on a “first come, first served” basis. Notwithstanding the good intensions of the Ministry of Solid Minerals Development, appropriate steps were not taken to establish the MCO as an independent legal entity. The MCO did not have its own legal personality in law. Thus, it would appear that between 1999 and the first quarter of 2007, the MCO purported to discharge its enormous functions without the appropriate legal foundation. The MCO has exclusive responsibility to:

CONSIDER, ISSUE, SUSPEND, REVOKE Applications/Mining Titles and Permits, and to Receive and dispose of applications for the TRANSFER, RENEWAL, MODIFICATION, RELINQUISHMENT, MODIFICATION of mining titles or EXTENSION of areas.

Under the provisions of the Mining Act of 2007, the Mining Cadastre Office (MCO) issued various types of licenses and permits including: • • • • • • Reconnaissance permits; Exploration permits; Small-scale mining lease; Mining lease; Quarry lease; and Water use permit.

The key question that arises with the proposed rectification of the anomalous status of the MCO is the legal status of the various licenses and permits issued by the MCO. More worrisome is that until the second quarter of 2007, the MCO operated without any mining regulations. Thus, in addition to its questionable legal status, it would appear that the MCO exercised whatever power it believed it possessed without recourse to any mining regulations. The Ministry of Solid Minerals has however approved an integrated mining regulation. Prima facie, it would appear that the licenses

©Blackfriars LLP 2008. All rights reserved. This document is for general guidance only. Definitive advice should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative office in Toronto, Canada.

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issued by the MCO were done ultra vires and such may be void in law. However, considering the huge investment of time and resources by several reputable foreign investors in Nigeria’s nascent solid minerals sector, the Ministry of Solid Minerals has wisely decided to avoid a doctrinaire attitude towards the consequences of the lapses in the legal status of the MCO. Rather than pursue a blanket invalidation of the permits and licenses already issued by the MCO, the new regulation adopts a revalidation programme. The revalidation programme would entail a case-by-case reassessment of the various permits and licenses already issued by the MCO. The revalidation exercise will throw up three major challenges. First, entities with permits and licenses who have already added value to the titles they have taken will be asked to continue. Their licenses and permits will simply be re-validated by the MCO as properly constituted under law. Second, entities whose licences and permits are flawed under the new mining regulations would be given a stipulated time within which to cure those defects. Once the defects are remedied, the licenses will be re-validated. The third category deals with those without mining background or interests but who nonetheless obtained permits and licenses with a view to re-selling same to genuine mining companies. This category of license holders will lose their permits.

The revalidation process is headed by a bureaucrat, a Permanent Secretary in the Ministry of Solid Minerals Development. For further inquiries, please contact:

Ms. Nkeiru Onyeaso Tel: +234 808 718 0833 Email: Nkay@blackfriars-law.com Fax: +234 1 2694781

Ms. Clara Ndive Email: Clara@blackfriars-law.com Tel: +234 803 323 1868 Fax: +234 1 2694781

Dr. Pius Okoronkwo Tel: +647 831 7487 Email: pius@blackfriars-law.com Fax: +234 1 2694781

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©Blackfriars LLP 2008. All rights reserved. This document is for general guidance only. Definitive advice should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative office in Toronto, Canada.

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