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Opinion: Mozambique needs to improve its investment procedures – Mining

Approximate reading time: 5 minutes

The special attention that the Mozambican Government has given to the natural resources sector, in recent years, implies, among other things, the adoption/progressive application of a series of efficient administrative measures and the improvement of regulatory processes and procedures, in order to provide an increasingly favorable environment for the flourishing of the mineral resources industry.

However, it’s noted that the often-excessive bureaucracy installed in the public administration, coupled with some behavior (from public officials), has been harming these efforts of the Executive and, perhaps, is eliminating the expectation that natural resources might become a ramp of economic momentum for Mozambique, especially at this time, that the national economy is going through challenging times. Therefore, there are practices and behaviors in the Public Administration with potential to retract investments in the area of natural resources.

This article aims to be a gentle call for attention to the effects or negative impact that excessive bureaucracy rooted in public administration may have on the attractiveness of new investments and the consolidation of existing investments, especially in the mining sector, and the need to adopt effective measures to minimize this situation.

The efforts of the Mozambican Government regarding the introduction of reforms aimed at boosting the mining sector, including measures to promote transparency in the sector, are irrefutable. For example, the creation of an online portal containing data from the Mining Cadastre; the obligation to publish concession contracts (mines and petroleum), due to the last legislative package of the sector, in force since 2014, and the Mozambican State obtaining the by-laws in accordance with the Extractive Industry Transparency Initiative (” EITI “) since October 2012; among other important measures for the efficiency of public service in this sector.

Despite all the measures introduced to improve services in the sector, companies (“applicants”) that go to the National Institute of Mines – Mining Registry, in order to make applications for mining titles, have still experienced frequent mishaps regarding the satisfaction of their requests. Among the list of concerns normally presented by the applicants, everything is summarized in procedures, time and costs.

Regarding the procedures

it’s recurrent, in the National Institute of Mines, that the applicant must send several times the same documents. Also, notifications regarding the submitted application files usually arrive in the applicant’s hands weeks or even months after their issuance (although we recognize some improvement in this aspect) – which contributes to the delay of decision time

Regarding time

there are applicants who, even having presented all the legal requirements for the application of a certain mineral, as mentioned above, spend years waiting (sometimes because the signature of a responsible person is missing, or because the Provincial Directorate hasn’t yet sent a specific opinion to the National Institute of Mines, or simply because the “process is being processed”).

Regarding costs

Applicants often complain of irregularities, since excessive delay in the issuance of permits can result in additional costs, as they often have to bear expenses such as the payment of technicians (lawyers or geologists) who, while waiting for the request, still charge their fees.

The Regulation of the Mining Law in force (approved by Decree No. 31/2015 of December 31) expressly provides for time limits for the decision on applications for mining titles, as indicated below:

  • 90 days for the Exploration License.
  • 180 days for the Mining Concession.
  • 180 days for the Mining Treatment License.
  • 180 days for the Mining Processing License.

Therefore, the law foresees timeframes for issuing decisions on applications, which means that the competent authority must make every effort to issue its decision within the established period. It’s a matter of law, and the authorities are also bound by the law. It may be understood that there is a slight delay in a procedure, but when breaching the legal deadlines becomes a rule, it skews the full scope and effect of the deadlines set by the legislator. Incidentally, there are cases in which a mining title is issued in only two months, which shows that after all it’s possible respond in a reasonable time to the application for mining titles.

Faced with this scenario, some foreign investors lately have been shrinking. In fact, the dynamics of the business world doesn’t match the delays that have been registered. It’s well known that many of the investors resort to financing to develop their mining operations, and the disbursement of such financing is dependent on the issuance of mining bonds, all of which is done within a given time frame. It so happens that a certain investor may have, for example, a year to acquire the mining title, and from there obtain financing to start his project. However, given the excessive delay that has occurred in the issuance of the securities, the expectations of the investors are eliminated, having to desist from their requests and consequently, from their projects in Mozambique.

Unfortunately, the reality is that there are investors who may be deleting Mozambique from their investing map and channeling their investments in other countries in the region, where the procedures for issuing mining licenses are likely to be much more flexible and efficient.

Therefore, the scenario described above, silent but worrying, is a black stain on the good international image of Mozambique as a destination for large investments. We believe that the Government’s efforts to improve the mining sector aren’t enough, it’s also fundamental that the employees themselves assume the role of contributing to the development of the mining sector through the simplification of bureaucratic processes and the efficient and speedy delivery of their services.

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