Introduction
As recent as 2022, Uganda streamlined the legal process for dealing in minerals by enacting a principal law that offers detailed guidance to persons interested in acquisition of mineral rights and obtaining rights of dealership in mineral rights in Uganda. The Mining and Minerals Act, 2022 together with the Mining and Minerals (Licencing) Regulations not only provide the scope of minerals one may deal in but also provides the detailed process for acquisition of different licences under the current Mining Legal regime.
This article takes stock of a detailed process for the acquisition of a mineral dealer’s licence (MDL), detailed requirements and documents, regulatory compliance requirements and everything else one needs to know before buying, selling and dealing in minerals in Uganda.
Prohibition of buying or selling of minerals without a licence
Unlike many businesses that are done in Uganda without strict requirement for a special licence, Section 140 of the Mining and Minerals Act enacted in 2022 prohibits any individual or company from engaging in the activity of buying and selling of minerals without a licence. The section further places a burden on the dealer in minerals to ensure that he/she buys minerals only from sellers who lawfully acquired their minerals.
Detailed requirements for applying for a mineral dealers Licence in Uganda
The requirements for applying for the Mineral dealer’s licence are contained in both the Act and the regulations made under the Act and are as follows: –
Registration on the Mining Cadastre
Section 34 of the Mining and Minerals Act establishes the Mining Cadastre for the management of applications for mineral rights and other licences and permits issued under the Act. The Mining and minerals (Licencing) Regulations prescribe that the cadastre shall contain a system for among others, prospecting licences, explorations licences, retention licences, mining licences, artisanal mining licences and all other licences and permits issued under the Act.
As such, before applying for the mineral dealer’s licence, one must process documents required for registration on the cadastre. The regulations require that all existing and prospective mineral rights holders and applicants for mineral rights shall register as cadastre portal users by submitting accreditation documents to the minister for verification before being granted access to the system. Accreditation documents include: –
- Cadastre Form
- Certified certificate of incorporation
- Certified Memorandum and Articles of incorporation
- Board Resolution specifically appointing an agent for purposes of applying for a mineral dealer’s licence.
- Power of attorney specifically giving power to an individual or director to process the MDL (This applies to situations when the owners of the Company are not in the Country).
- Postal address Notice, and
- Beneficial owners form
Proof of adequate financial competence
The Regulations prescribe the thresholds for consideration as evidence of financial competence. For the applicants for the Mineral dealer’s licence with intention to deal in precious metals or precious stones, they should have a certified bank statement either in the name of the Company or one of its shareholders which should have a minimum balance of Ugx 50,000,000/= (Fifty Million) at the time of the application.
For a foreign investor, it is sufficient if the account is maintained in his or her Country even if it is in a different currency if the equivalent is equal to or above the threshold provided by the Regulations.
If the bank account is not in the company name in Uganda, it shall be accompanied by a guarantor’s letter confirming that the funds contained in the personal account will be available to support the Company activities.
Certificate of Good Conduct
The Applicant is required to furnish the minister with a certificate of good conduct from Interpol. For a foreign investor, this certificate can be obtained from Uganda if the applicant can appear before the international police in their country for registration of fingerprints and the said fingerprints are sealed and sent via registered post to Uganda and presented to the local Interpol office for issuance of a certificate.
Some Countries however do not have a structure for issuing a certificate of good conduct. Some of such countries issue what they call a certificate of criminal Record which should suffice for this purpose.
Tax identification number and Tax clearance from URA
The rules require that before any entity is issued (URA) under the Tax Procedures Code Act and obtain a Tax registration certificate and tax identification number.
The tax registration certificate is forwarded directly to the tax payer’s registered email address. Upon receipt of the tax registration certificate the tax payer can now apply for a transactional tax clearance certificate to be mandatorily submitted together with other documents for the mineral dealer’s licence.
Strategy and marketing plan of the Company
The applicant for a mineral dealer’s licence is required to demonstrate commitment to the requirements of anti-money laundering, value addition, staffing requirements and responsible minerals sourcing through its set of policies.
As such the applicant should come up with a strategy and marketing policy to be submitted along with other documents for application for the MDL.
Work Permit for purposes of issuance of MDL
The Regulations provide that a mineral dealer’s licence shall not be issued to an individual who is not a citizen of Uganda or foreigner who does not have a valid work permit.
For a foreign national who wishes to commence the application for the MDL before obtaining a work permit may donate a power of attorney to a local national preferably his/her transaction lawyer or agent.
Fees associated to the issuance of MDL
The Regulations require that upon complete registration on the Ministry Cadastre, the applicant for the MDL is issued with an assessment for payment of Ugx 500,000/= being processing fees for the MDL.
Upon completion of processing and confirmation that all documents are in order, the Ministry issues an assessment for Ugx 10,000,000/= if the MDL is for precious metals or Ugx 6,000,000 if MDL is for precious stones in line with Schedule 2 of Minerals and Mining (licencing) Regulations.
It is important to note that all issued MDL’s expire on 31st December of the year they are issued.
Regulatory compliance requirements to the holder of an MDL
A holder of a mineral dealer’s licence must understand that issuance of the said licence is not absolute in nature. The holder must comply with all regulatory compliance requirements outlined in the Mining and minerals Act. These requirements among others include: –
- Maintaining a register for all purchases and sales of minerals, the nature and weight of the minerals, prices paid and received, name of vendor, and details of origin of the minerals.
- Submission of a quarterly report to the minister with a declaration to the correctness of the same.
- Payment of all loyalties associated with the minerals bought, received or exported in accordance with the Act.
Concluding remarks
For sustainable dealings in minerals, it is crucial that the intending party carefully selects the applicable licence that will enable him/her execute the intended business intention while ensuring compliance with its licence and permits.
