MINES and Minerals Development Minister Paul Kabuswe says government will soon issue an SI which will restrict the number of active mining rights one can hold at a given time, revealing that some people are owning more than 50 licenses.
Addressing the media, Monday, Kabuswe said initial audit findings had confirmed that some companies owned many mining rights using either a single, or multiple companies with the same beneficial owners.
“We called you colleagues to give an update on the moratorium placed on the issuance or renewal of mining rights by the cadastre department. The process audit that was commissioned to deal with the concerns that were raised by the public about the department has revealed a number of issues that we will address. The initial indications are that the Ministry of Mines from as far back as 2008 identified key tenements that were reserved for use by the government for investment in the mining sector. The real intention was that with such areas locked off in the cadastre system, key investors in the sector could participate in an auction or competitive bidding for tenements in a transparent way. There are a total of 40 such tenements on the system under the ministry,” he said.
“Initial process audit findings have confirmed our initial fears that some companies own too many mining rights using either a single or multiple companies with the same beneficial owners. This is an issue that I have talked about several times that we have people that are owning more than 50 licenses. This has been proved from the audit system. What they have been doing is that some are using not one company, maybe they own various companies which now those licenses are attached to. This has ended up promoting speculation in the mining sector instead of investment.”
Kabuswe said government would soon issue an SI which would restrict the number of active mining rights that one could hold at a given time to cure the problem.
“To cure this problem, very soon we will be issuing a statutory instrument (SI) that will restrict the number of active mining rights that the same beneficial owners can hold at a given time. I think that we have promised that we will be making those restrictions and in consultations with the Ministry of Justice and Attorney General. I think we will be doing an SI so that we can restrict the number. We cannot have a scenario where one person is holding so many licenses and probably they are just holding them for speculative purposes. Like we had promised that the new dawn government is bringing sanity to the mining sector, this is what we are actually doing. We want to bring order and also fairness because no human being should own so many licenses alone depriving other Zambians of owning mining rights,” he said.
Kabuswe said the audit also indicated that some firms on the system with mining rights had never been registered with PACRA.
“The process audit has indicated that some firms on the system with mining rights have never been registered with PACRA. Now that is very sad. We have a scenario where a company is not registered with PACRA yet it is registered with us and it has a mining license. It is very sad that people could behave in such a way and I want to say that this is pure fraud and corruption and also making the government lose revenue. Because it’s like you just get some name from the streets and give it a mining license. I want to let you know that the ministry will not sit idle, we are going to get to the bottom of it, for people who could give a mining license to a company that is not registered with PACRA, very sad,” he said.
“To cure this problem the ministry will conduct a Know Your Customer (KYC) to clean up the system and improve system integrity. We will further, with the support of Smart Zambia, link the cadastre system to other authentic government databases in order to avoid fraud. The process audit revealed that most transfer applications are not compliant. Going forward all transfers will be subjected to a rigorous audit process that includes an aspect of beneficial ownership in collaboration with PACRA. Further, transfer approval will be restricted to assignors or assignees whose mining rights are compliant with the provisions of the act.”
Meanwhile, Kabuswe called for seriousness among those that applied for mining licenses.
“Again there were concerns that some applications were never processed. This problem is receiving due attention and all outstanding applications whether new or renewals will be processed within the time provided for by the law. For large-scale exploration licenses at least 50% relinquishment on renewal is mandatory. And all those with offer letters should note that an offer is valid for thirty days, if no payment is made the offer lapses,” he said.
“So as the ministry, we have decided to say we are not going to spend unnecessary time as far as processing of licenses is concerned. We are going to stick to time through this process, we know where these bottlenecks are or where the challenges are and we will be able to deal with them and process licenses in time. At the same time, we are going to have strict adherence to the law so that if your time lapses in which an offer was made, which is 30 days, there will be no extension. So people must be serious when they apply for these things.”
Kabuswe said initial findings indicate that not all records in the emerald areas of Lufwanyama district and Mapatizya in Zimba district were digitized.
“The initial findings indicate that not all records in the emerald areas of Lufwanyama district and Mapatizya in Zimba district were digitized. The non digitization of all records raises the risk of manipulation by officers. If we do not have a digital system where records are kept like in the case of Lufwanyama, it is very easy for people to manipulate. So what we are doing is going to make sure that that is done so that we remove issues of corruption and also there be transparency in the manner that licenses are currently being administered. Going forward I think there will be a continuous process of making the system digital on all the plots and regular data update of the system,” said Kabuswe.
“In order to address the key weaknesses in the cadastre system that have led to a damaged reputation for the department, a business process reengineering exercise is currently underway spearheaded by the Smart Zambia institute. This exercise involves the redesign of core business processes to achieve dramatic improvements in productivity, cycle times and service quality. It is basically a rethink of existing processes to deliver more value to our clients in order to reclaim the department’s credibility and rebuild the damaged reputation in order to cut down on the reputational risk.”