NEW EXTENSION OF THE DEADLINE TO COMPLY WITH THE NEW CEMAC REGULATION

On November 5th, the Governor of the Central Bank for Central African States (the “BEAC”) issued a decision to extend the moratorium period granted to extractive companies to comply with CEMAC Regulation No. 02/18/CEMAC/UMAC/CM relating to foreign exchange (the “New CEMAC Regulation”) until 31 December 2021.

This is rather good news for mining and petroleum companies, which were bound to comply with the New CEMAC Regulation from early next year, although this concession from the BEAC should not necessarily be construed as evidence that the BEAC is giving up its intention to fully enforce the New CEMAC Regulation towards extractives companies.

The New CEMAC Regulation was adopted on 21 December 2018 and entered into force on 1 March 2019. Companies were originally granted a six month period (starting from the New CEMAC Regulation’s effective date) in order to comply with the New CEMAC Regulation.

Following the expression of various concerns by the extractive companies relating to the impacts of the regulation on the conduct and financing of their operations (especially with regards to the restrictions on the opening of offshore accounts), as well as lobbying initiatives at BEAC level, the BEAC agreed to enter into discussions with the extractive companies regarding the postponement of the date for compliance with the New CEMAC Regulation.

As a result, the Governor of the BEAC issued a decision, dated 12 November 2019, whereby it granted to extractive companies a moratorium period up to 30 December 2020 in order to comply with the New CEMAC Regulation. The rationale of that decision was to allow the BEAC and extractive companies to discuss the conditions in which the New CEMAC Regulation would be applied to extractive companies.

The decision also provided for the extractive companies’ obligation to share sensitive information with the BEAC no later than 31 January 2020, including but not limited to:

  • information on their onshore and offshore accounts and agreements thereto related;
  • loans, borrowings and other agreements entered into with banks located outside of the CEMAC area; and
  • contracts entered into with CEMAC Member States (including oil and mining contracts).

The discussions reached a dead end in the first quarter of 2020, as BEAC representatives and extractive companies were having difficulties to hold meetings due to the COVID-19 pandemic and, consequently, the Governor of the BEAC issued a decision to extend the moratorium period granted to extractive companies, thus giving them additional time to comply with the New CEMAC Regulation.

Interestingly, this decision expressly provides in its preamble that the extension is granted for the purposes of allowing the BEAC and extractive companies to resume workshops relating to the enforcement of the New CEMAC Regulations which could not be convened due to COVID-19.

This approach suggests that the BEAC has not given up its intention to enforce the New CEMAC Regulation towards extractive companies. The following also seem to be strong indications which further suggest that the BEAC intends to pursue a strict application of the regulation:

  • the new decision, unlike the previous one, expressly provides that extractive companies will lose the benefit of this new extension and will be subject to the New CEMAC Regulation with immediate effect if they fail to send to the BEAC the information referred to above before 30 April 2021; and
  • the new decision includes an additional provision (in comparison with the previous one) whereby, upon the expiry of the moratorium period, extractive companies will be bound by the obligation to regularise the situation of their accounts as well as all operations which were performed before the entry into force of the New CEMAC Regulation and during the moratorium period by complying with all the relevant obligations and formalities set out under the New CEMAC Regulation.

For more information, please contact Bertrand Montembault, Louis de Longeaux and Sina Abadie or your usual Herbert Smith Freehills contact:

Bertrand Montembault

Bertrand Montembault
Partner, Paris
+33 1 53 57 74 19

Louis de Longeaux

Louis de Longeaux
Partner, Paris
+33 1 53 57 74 07

Sina Abadie

Sina Abadie
Associate, Paris
+33 1 53 57 78 50

THE UNREGULATED TERRAIN OF HISTORIC MINE DUMPS IN SOUTH AFRICA

Authors: Patrick Leyden and Aobakwe Mametse

The term ‘mine dump’ is usually used to refer to waste that is consequential to mining operations and comprises of tailing, slimes, waste rock, sand or other residue that is produced during the course of conducting mining operations. In recent times mine dumps have become more than just the by-product of mining operations, due to the fact that such dumps may contain untreated minerals that are of significant economic value. With the advancement of mining technology and machinery the practice of mining such dumps is not just an economically viable practice but has added environmental advantages.

The promulgation of the Minerals and Petroleum Resources Development Act (MPRDA) was a significant legislative shift in mining in South Africa. This is so as one of the overarching purposes of the act was to vest all of South Africa’s mineral and petroleum resources under the custodianship of the state. By virtue of the state assuming custodianship of the all the mineral and petroleum resources in the country it could ensure the equitable access to South Africa’s abundance of mineral resources to all the people of the country.

Continue reading

“RESOURCE NATIONALISM IS BOTH CYCLICAL AND CONTAGIOUS”

Author: OLIVIER BINYINGO 

Interview with Olivier Binyingo, Director, Herbert Smith Freehills LLP, SA. At the upcoming DRC Mining Week in Lubumbashi from 17-19 June 2020, Mr Binyingo will address the conference on “An asserted Rule-of-law for a conducive investment climate” which will be followed by a panel discussion. The company is also a bronze sponsor at the event.

Let’s start with some background on Herbert Smith Freehills – there is a proud history there.

HSF is one of the world’s leading professional services businesses, bringing together the best people across our global network of offices, including Johannesburg, to meet all of our clients’ legal services needs globally.

We have a solid understanding of the African market derived from a deep track record acting on matters in Africa for over 40 years across all practice groups and industry sectors.

Continue reading

CHAMBERS GLOBAL 2020 AFRICA-WIDE

Author: REBECCA DONOVAN

Herbert Smith Freehills is pleased to announce that we have maintained our top tier rankings in five Africa-wide practice areas in the new edition of Chambers Global 2020:

  • Africa-wide: Projects & Energy (for the 12th consecutive year)
  • Africa-wide: Projects & Energy: Mining & Minerals (for the 9th consecutive year)
  • Africa-wide: Dispute Resolution (for the 7th consecutive year)
  • Africa-wide: Corporate/Commercial – OHADA Specialists (for the 5th consecutive year)
  • Africa-wide: TMT (for the 5th consecutive year)

Six HSF partners are individually ranked for Africa-wide Projects & Energy, more than any other law firm, and a several of our lawyers are also singled out for their expertise in relation to Nigeria, Sierra Leone, Gabon and the DRC.

Clients appreciate the firm’s “attention to detail and pragmatic advice. They have an excellent knowledge of market practice for power project agreements in West Africa.”

One client added: “It was very effective and very much client-oriented legal advice that takes into account our practical needs.”

One client enthuses about the firm’s activity in sub-Saharan Africa: “One of the firms we like to work with whenever there is a capital raise or a transaction that involves various exchanges and countries.”

Sources endorse the firm for its “team of very good quality” who are “well known for its expertise in the natural resources and mining sectors.”

Sources highlight the firm’s high client service levels: “They make themselves available when needed,” and “are good at thinking about their advice, and what they can do to make my job easier when I have a lot on my plate.”

Others champion the group’s strengths at “dealing with complexity,” adding that “responsiveness is always 100%.”

One client described the team as “great litigators,” adding: “They have a good marriage of international and local knowledge combined with business acumen to execute our needs.”

Another client agreed, stating: “They are responsive, pragmatic and reasonable,” and going on to comment: “They understand the needs of the client.”


For more information, please contact Rebecca Donovan or your usual Herbert Smith Freehills contact:

Rebecca Donovan

Rebecca Donovan
Business Development & Central Management Executive
+33 1 53 57 70 90

PETROLEUM BILL — OLD WINE IN A NEW BOTTLE

Author: Peter Leon

Regulatory scheme remains modelled on mining principles 

Much anticipation awaited the release of the draft Upstream Petroleum Resources Development Bill on Christmas Eve after a one-year gestation by the department of mineral resources & energy. The long-awaited bill is intended to create a new regulatory framework for the exploration and extraction of both onshore and offshore oil and gas.

This underdeveloped sector has long been viewed by the government as a potential economic destiny-changer. In 2014, during the Zuma administration’s Operation Phakisa (Sotho for “hurry up”), it was estimated that SA’s territorial waters sit atop 9-billion barrels of oil (40 years’ worth of national consumption) and 11-billion barrels of natural gas (375 years’ worth of consumption).

Drilling 30 exploration wells in 10 years could see SA producing 370,000 barrels of oil and gas a day in the subsequent 10 years — reducing the country’s reliance on oil imports (by up to 80%), as well as the energy grid’s dependence on coal; creating 130,000 jobs; and adding $2.2bn (R32.5bn) to GDP annually.

Continue reading

PROMOTING HUMAN RIGHTS THROUGH THE EXTRACTIVE INDUSTRY

Author: Stéphane Brabant

The hereunder presentation is adapted from a speech given during a seminar on ‘Mining and Oil and Gas Law: Transactions and Dispute Resolution’, jointly organised by the International Association of Lawyers and the Senegalese Bar Association in February 2017.

A few years ago, it was still unrealistic to raise the topic of compliance with human rights with companies, and particularly with mining and oil & gas companies. This area was still largely perceived as States’ exclusive realm while the primary purpose of companies was to generate profit. This is true. But should it be at all costs? Can companies operate at the expense of fundamental rights?

The idea that companies must also promote fundamental human rights is new. It is an idea of a new century – the 21st century. We owe this awareness to the late Kofi Annan, a man from the African continent, and probably amongst, if not the greatest man of the 21st century.

This wake-up call was brought about thanks to Kofi Annan’s efforts, then UN Secretary-General, and John Ruggie, Professor at Harvard Kennedy School, appointed in 2005 as Mr. Annan’s UN Special Representative on human rights and transnational corporations and other business enterprises. Together, they elaborated principles and procedures to ensure that companies embrace this new mindset and acknowledge that going forward they will have to reconcile their activities with the respect for fundamental human rights of all affected stakeholders such as workers, local communities or even consumers.

Promotion of fundamental rights is indeed the most important element for a project to be sustainable and profitable, for banks to be reimbursed, for insurers to be spared, for shareholders to obtain return on investment, for the State to find a balanced source of income and for local communities to be respected.

No one is mistaken in that respect. Nowadays, even banks, especially banks in fact, agree that a sustainable mining or hydrocarbons project must be a project that complies with all fundamental rights. How can we concede that a mining project could lead to the pollution of waterways? How can we accept that a mining project will result in the expropriation of entire local communities without fair compensation and relocation for each community member, and especially the most vulnerable?

All this is no longer acceptable and it is this 21st century idea that now prevails. This paradigm shift has extra territorial legal consequences. It is interesting to note that recently, a Canadian mining company was brought before Canadian courts with regard to allegations of slavery, forced labour, torture and crimes against humanity. Harsh words for a 21st century mining company. The applicants claim that the company aided and abetted abuses perpetrated in Africa by its local subcontractors, controlled by the State and the army.

Today, mining activities can only be viable and acceptable if they are indeed socially responsible. Yet the above-mentioned case reflects a grim reality: according to the International Labour Organization, 21 million people worldwide are victims of forced labour, trafficking or modern slavery and the illegal profits from their exploitation are estimated at 150 billion dollars.1

It is against this bitter background that the new trend that companies shall be compelled to promote human dignity emerged. Through a number of texts, amongst which the United Nations Guidelines on Business and Human Rights adopted unanimously by the Human Rights Council in 2011, procedures and tools are now in place to ensure that projects are compliant with human rights.

Thanks to the adoption of these Principles – some of them having been incorporated into positive law – globalization, which was primarily economic and financial, now extends to social and human concerns. As a matter of fact, these issues are not evolving in a legal vacuum but we must go even further than positive law.

These new principles apply to everyone and in all countries. They affect not only all companies, whatever their size, but also every human being in every country of the world. These are principles without borders as they embody universal rights. These principles are in issue before international arbitration tribunals in investment disputes. They are even increasingly incorporated in investment treaties, constitutions and laws. In Senegal, the 2016 Mining Code states this very clearly with the obligation to respect and protect human rights,2 in accordance with the 2009 Ecowas Directive on the Harmonization of Guiding Principles and Policies in the Mining Sector.3

Nowadays, companies are being challenged to think further, to assess risks, not only to themselves, but also henceforth, to any potential victims. The mindset of companies must indeed change. In our modern world, our approach must be not only to identify where tax or commercial risks lie, but also to pay attention to human rights risks generated from or even simply related to their activities and track, prevent, mitigate or provide remedies in relation to those risks to women and men involved in any project.

Time has come for companies to get involved in more than just philanthropy. The construction of a hospital is satisfactory, but is no longer sufficient. It is also necessary to anticipate any adverse impacts that business activities may have on humans. We must therefore go further in our way of thinking the law, our way of thinking projects or companies, and at the end of the day, our way of thinking the role of corporate lawyers as promoters of fundamental rights.

Mr. Kofi Annan with Professor John Ruggie, by inviting us to reconsider the law, may have also invited us to re-evaluate a part of the legal profession. Corporate lawyers’ role is to advise and to defend. This defence is very important and it is twofold. It first concerns companies, and through them, local communities and the fundamental rights of those who take part in the projects of these companies.

Lawyers therefore have a role that goes beyond the traditional but essential role of reading the law. This role must indeed address something new that is no longer just hard law but also incorporates soft law. Whether the expression “hard law” and “soft law” is used, they both contain and refer to the term “law”. Albeit hard law is enforced by the courts, soft law – which is subject to principles that must be respected but not necessarily incorporated into positive law – is enforced by “new judges”.

New judges are the ones that companies face. Companies face serious or hard sanctions when these judges raise their voices against them, for example when a company’s name is on the front page of a newspaper for failing to respect local communities’ or workers’ rights. These sanctions are final. Hence, as the scope of the law expands, so too do the possibilities for action and the role of lawyers. Lawyers must now advise and assist companies to ensure that their clients do not incur the sanctions of these new judges.

All this compels lawyers to expand their advisory role. This ongoing movement may even lead to new accountability for lawyers. Lawyers are expected to handle the expansion of the law, especially as this expansion may disrupt the hierarchy of norms and the international public order. These new rules and international standards now taken into account in international arbitration proceedings, by banks for financing, are perhaps indeed in the process of integrating the international public order without even the need for positive law.

In this perspective, lawyers and bar associations – which remain lawyers’ regulators – are invited to engage with the IBA Practical Guide on Business and Human Rights for Business Lawyers and to integrate these rules in order to pursue this important role, this essence and soul of the legal profession that is the promotion of fundamental rights.


1. https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_243295/lang–fr/index.htm 

2. See Article 94 of the Law no. 2016-32 dated 8 November 2016 enacting the Mining Code.

3. See Article 15 of the Ecowas Directive on the Harmonization of Guiding Principles and Policies in the Mining Sector dated 27 May 2009.

For more information, please contact Stéphane Brabant or your usual Herbert Smith Freehills contact.

Stéphane Brabant

Stéphane Brabant
Co-chair of Africa Group, Paris
+33 1 53 57 78 32

MINES AND ENERGY MERGER: TOO MUCH ON GWEDE MANTASHE’S PLATE? – LEYDEN

Author: Patrick Leyden

In a move that is likely to be welcomed by the mining industry, President Ramaphosa has appointed Gwede Mantashe as the Minister of Minerals and Energy (which now combines the Ministries of Mineral Resources and Energy).

During his short erstwhile tenure as Minister of Mineral Resources, Mantashe made significant progress in addressing several fundamental issues that have hampered investment into the South Africa mining industry over the last five years. His decisive action in addressing corruption and maladministration within his Department as well as taking steps to promote regulatory certainty were positively received by both domestic and international investors alike. As a result, South Africa gained twenty seven places under the Policy Perception Index and also made considerable gains under the overall Investment Attractiveness Index in the Fraser Institute’s most recent Mining Investment Survey.

Continue reading

TANZANIA’S NEW INTEGRITY PLEDGE FOR MINING COMPANIES: DOES IT MEET INTERNATIONAL BEST PRACTICE?

Authors: Peter Leon, Olivier Binyingo, Paul Morton and Ernst Müller  

Since July 2017, the Government of Tanzania has introduced significant regulatory reforms to the mining industry (as well as the nascent upstream oil and gas industry). See our previous notes on these reforms here, here and here.

Among the first of these changes was the enactment of important amendments to the Mining Act, 2010 (“the Act”),1 including (among other things):

  • establishing a new Mining Commission to regulate the industry;2
  • requiring mining companies to divest between 16 and 50 per cent of their equity to the Government;3 and
  • introducing a chapter on “local content, corporate social responsibility, and integrity pledge”,4 and mandating the Minister for Minerals (“the Minister”) to issue regulations setting out the “principles and procedures” relating to each of these.5

Continue reading

AFRICAN NATIONS MUST RESIST SIREN SONG OF RESOURCE NATIONALISM

Author: Peter Leon, Co-Chair of Africa Practice Group 

Countries that shun populist moves appear more attractive as commodity prices fall

In South Africa, President Cyril Ramaphosa announced the ANC would amend the country’s constitution to allow land expropriation without compensation ©Reuters

The spectre of resource nationalism is again rearing its head across Africa, leading to significant regulatory intrusions in Tanzania, the Democratic Republic of Congo and South Africa — all major mining jurisdictions.

Unlike the outright nationalisations undertaken by many postcolonial African (as well as Latin American) governments in the 1960s and 1970s, resource nationalism refers to the more modern trend of governments adopting fiscal and regulatory measures to exert greater control.

In July 2017, Tanzania enacted three laws asserting “permanent sovereignty” over its natural resources including oil and gas while drastically amending the country’s mining code.

Continue reading

UPHEAVAL AND UNCERTAINTY IN MINERAL REGULATION IN PARTS OF AFRICA: RESURGENCE OF RESOURCE NATIONALISM HIGHLIGHTS THE IMPORTANCE OF INVESTMENT TREATY PROTECTIONS

Author: Peter Leon, Andrew Cannon, Iain Maxwell and Hannah Ambrose  

The last few months have seen significant changes to mining regulations in various African states, giving rise to a concern that a regional trend of resource nationalism may be (re-)emerging. In this context it is important for companies associated with the mining sector to be aware of the protection international investment treaties may provide against the impact of resource nationalism on their assets, and how to maximise that protection before risks materialise. This bulletin briefly considers some of the last few months’ developments, before discussing how companies can use investment treaties to protect themselves against the risks they pose.

Recent developments in Tanzania, the Democratic Republic of Congo (“DRC”), Kenya, Zambia and South Africa

Recent changes to Tanzania’s mineral law regime are at one extreme of the developing trend. In July 2017, Tanzania enacted drastic amendments to the 2010 Mining Act, as well as two new laws asserting the Government’s “permanent sovereignty” over its natural resources (not only minerals but oil and gas as well) (see here for more details). Among other changes, the Government:

  • empowered itself to renegotiate terms in mining contracts which Parliament considers “unconscionable”. “Unconscionable” terms are defined to include those providing for foreign laws or dispute resolution mechanisms;
  • immediately banned the exportation of unprocessed minerals;
  • raised royalty rates; and
  • increased Government shareholding rights.

Continue reading