Sudan mining policy still needs work, says law firm

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Sudan has come to light as a jurisdiction that is more open to mining investment since the lifting of US sanctions in 2017, with 160 concession blocks available, of which 64 contain gold.

The country’s government, however, still has a long way to go to attract meaningful investment, says law firm Herbert Smith Freehills (HSF).

The US in October 2017 lifted a 20-year-long raft of sanctions on Sudan, in response to attempts to address concerns relating to terrorism and human rights abuses against civilians in the country’s Darfur region.

By lifting the sanctions and bringing an end to the economic embargo, the US reinstated Sudan’s ability to market itself as an attractive mining investment hub.

While Sudan already ranks as the third-largest gold producing country in Africa, its mineral resources and oil reserves remain largely under-explored and untapped.

The country’s mineral wealth includes gold, silver, platinum and iron-ore and, therefore, presents exciting opportunities to international mining companies if the right investment climate is established.

HSF says the country remains a challenging jurisdiction, notwithstanding the removal of the embargo.

According to the World Bank’s ‘2020 Doing Business’ report, Sudan ranked 171st out of 190 countries surveyed and obtained an economic score of 44.8 out of 100, scoring particularly poorly on access to electricity and investors’ ability to obtain credit.

The government will, therefore, need to address various issues before the mining sector attracts meaningful foreign investment, HSF states.

The law firm points out that the laws governing the industry, namely the Mineral Wealth and Mining Development Act of 2015 and the Mineral Resources and Mining Development Act of 2007, have some issues, including that neither Act provides for an effective environmental law or regulation that properly governs matters related to the environment, rehabilitation, mine closure, affected communities or mine occupational health and safety.

The Sudanese government needs to develop a comprehensive environment, social and governance framework to address this lacuna, HSF suggests.

It adds that a mining code ought to stipulate clearly the requirements that applicants for the various licences and contracts must comply with, as well as identify the rights which vest in obligations – which are imposed on the licensees once an application is granted.

However, the law firm explains that Sudanese legislation falls short in that it does not provide a comprehensive list of requirements that applicants must satisfy and rather provides a generic list of six requirements that apply to all applications, irrespective of the licence being applied for.

HSF adds that the 2015 Act also does not stipulate the process which the technical committee must follow when it considers an application or the substantive requirements that it must comply with during this process.

This while the Act does not prescribe time periods within which the application must be processed.

“The regulatory framework created by the 2015 Act does not establish a comprehensive set of rights and obligations. Uncertainty concerning the administration, interpretation or enforcement of the Act is not conducive to investment,” the firm notes.

HSF suggests that the Act be amended to clearly stipulate the substantive requirements that applicants for licences must satisfy, as well as the procedures they must follow when submitting applications.

The Act must also clearly indicate how the technical committee must go about its work in making recommendations to the Minister, as well as related time periods within which decisions must be made.

Among HSF’s other suggestions are that administrative discretion must be limited in the decision-making process and that the rights which vest in licensees and the obligations which are imposed on them must be stated.

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