International and Comparative

Mineral Law and Policy

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Introduction

Objectives
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Learning outcomes
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Contents
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Mineral sector overview

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STAGE ACTIVITIES DURATION EXPENSE

(yrs) ($USm)
Ownership of Usually no activity involved. - -
mineral Law will specify who is the
owner of minerals in the
ground
Reconnaissance Documentary research; 0-2 0.25-1.5 There will be activities
review available geological for the miner before
data; initial Àeld inspections; 'reconnaissance', involving
airborne surveys; possibly study of the potential
obtain (non-exclusive) mineral's demand, supply
reconnaissance rights; and prices; exploration
limited sampling & surveys costs; budgeting etc (eg.
Evans 1995, 12).
Preliminary Detailed mapping; limited 0-2 0.25-1.5
exploration drilling & analysis
Obtaining exploration
rights; potential contact
with other land users about
land access & use; potential
environmental assessment
and planning (including
baseline studies)
Detailed After initial Ànd has been 2-3 2.5-50
exploration identiÀed - obtainstrengthen
exploration rights; more
detailed drilling and
analysis; bulk sampling
This does not include
Feasibility Environmental baseline 1-5 0.5-15 the cost of building the
studies; mine planning mine, but is simply the
& design (incl. the mine cost of studies & research
and all assoc. activities to determine whether
eg. infrastructure, the mine should be built.
accommodation, utilities); One commentary says 'a
Ànancial analysis. feasibility study...can run
Development Finalise arrangements 5-10 100-200 into the tens of millions of
with other land users dollars...and may take...
about mining; further decades to complete':
drilling to better identify Johnson & Angell 2004,
deposit; proMect Ànancing; 18-7.
construction of mine,
processing plant &
infrastructure; Ànalise
environmental management
arrangements, possibly
include establishing Mine life varies
environmental bonds considerably according to
the type of mineral and
Mining Will likely include further 3-30 price; gold mines average
brownÀelds exploration to 8 years, copper around 30
identify and delineate new years, and some diamond
stages of deposit prior to mines over 100: MJ ud.
mining
Removing 'overburden' (ie.
soil that does not contain the
desired mineral), extracting
the rock that contains the
ore, storage of waste rock.


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STAGE ACTIVITIES DURATION EXPENSE

(yrs) ($USm)
Primary Crushing, initial stages to per mine life
processing extract the mineral from
the rock removed from the
ground
Transport Transporting partly
processed product to
customer (depending
on mineral, will be
responsibility of miner or
customer); may involve
operating road, rail &
shipping facilities
Mine closure Rehabilitation; bond release per mine life
Establish any ongoing
remediation required.
Tenement Relinquish tenure to the
relinquishment government

Table 1: Stages of mining

Compiled using information from Evans 1995, 11-12; Aus Gov 2007a, 160-162; MJ
ud; Reed 2004, 2,2; PDAC & o'rs 2006, 5-6 & 28; Johnson & o'rs 1996, 13-8 to 13-
10; Kelly 2007, 387-390; Johnson & Angell 2004, 18-6.
Note: the above are 'averages' only, and the figures will vary considerably depending on
the type of and extent of mineral deposit and associated operations.

Study the table above and list the legal issues

that may arise in each stage of the mining
'cycle'. Compare your list with the table of
contents for this course and with the diagram
'Approvals required for mining/exploration'
(in Unit 4, the section on Government
Approvals). Looking at your list of legal issues
- are these all particular to mining or are some
of them legal issues that any activity/business
will encounter?

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stopped the renewal of
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classifying minerals eg.
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sometimes referred to as
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they may be a group within
base metals; construction
minerals are sometimes
termed 'aggregates';
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uses four groups (1) energy
minerals, (2) industrial
& construction minerals,
(3) diamonds & precious
gems, and (4) 'metalliferous
minerals' which covers
everything else;
‡ another classiÀcation
divides into three groups
according to the mineral's
trading characteristics (1)
global commodities (eg.
gold, copper, aluminium),
Figure 1: Mineral types and uses (2) regional commodities
Source: UNCTAD 2007, 84. (eg. steel, some grade
of coal), and (3) local
commodities (eg. sand,
Study the table above - think about the end stone): MMSD 2002a, 35.
uses and (from your own knowledge) how
much processing would be involved to change
each product from what is removed from
the ground to its end use. Do you think all
minerals will be subject to exactly the same
laws and government policies, or might there
be differences for some minerals?

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Otto 2000, 4-2; Eggert 2000,
JRYHUQPHQWUROHEHLQJDQHXWUDOUHJXODWRURIWKHLQGXVWU\6WDWHV 2-9; Bebbington & o'rs 2008,
KDYHPRYHGIURPEHLQJSURGXFHUWREHLQJWKHOHVVRURIULJKWV 896. Remy observes that
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mining in many developing
E\SULYDWHLQGXVWU\LVWKHFXUUHQWSDUDGLJPHVSRXVHGE\PRVW countries in the 1960s but
FRPPHQWDWRUVDQGLQWHUQDWLRQDODJHQFLHV,QPRVWGHYHORSLQJ that private enterprise is
FRXQWULHVWKLVPHDQVWKHPLQLQJLQGXVWU\LVJHDUHGWRZDUGH[SRUW more efÀcient, and 'it has
RIWKHSURGXFWIRULQFRPHDQGWKHUHDUHQXPHURXVZULWLQJVRYHU been proven that private
sector investors can be
WKHEHQHILW RURWKHUZLVH RIPLQLQJIRUGHYHORSLQJQDWLRQV encouraged and regulated
to act responsibly and
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nation through appropriate
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ZLWKLQPRUHGHWDLOLQ$UWLVDQDODQG6PDOO6FDOH0LQLQJ and efÀcient legal and
+RZHYHUWKHPDMRULW\RIWKLVFRXUVHIRFXVHVRQPLQLQJDVD administrative procedures':
Remy 2003, 18 (emphasis
SURFHVVXQGHUWDNHQE\EXVLQHVVIRUSURILW 7KHPDQQHULQZKLFK added). A cynical response
FRPPHUFLDOPLQLQJLVUHJXODWHGDQGDFFRPPRGDWHGZLWKLQD to this might ask which
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reÁected by some of the
VKRXOGEHDGGUHVVHGZKLFKLVLQFOXGHGLQLWVVSHFLILFVHFWLRQ 1990's mining law reforms
- the host countries or
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multinational majors?


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Rank Company Country % of $ world cumulative %

(non-fuel)
mineral
production
1 CVRD ( = Vale) Brazil 5.6 5.6
2 BHP Billiton Australia 5.1 10.7
3 Anglo UK 3.8 14.5
American
4 Rio Tinto UK 3.8 18.3
5 Freeport USA 3.3 21.6
McMoran
6 Norilsk Nickel Russia 2.9 24.5
7 Codelco Chile 2.9 27.4
8 Xstrata Switzerland 2.9 30.2
9 Barrick Gold Canada 1.6 31.8
10 Grupo Mexico Mexico 1.6 33.4
11 State of China China 1.5 34.9
12 Teck Cominco Canada 1.1 36.0
13 Newmont USA 1.0 36.9
Mining
14 Anglogold S. Africa 0.9 37.8
Ashanti
15 KGHM Polska Poland 0.8 38.6
Miedz
16 Antofagasta UK 0.8 39.4
17 Glencore Switzerland 0.7 40.2
International
18 Impala S. Africa 0.7 40.9
Platinum
19 Vedanta UK 0.7 41.6
Resources
20 Gold Fields S. Africa 0.7 42.2

Table 2: 'Top 20' mining companies, 2007

Source: RMG 2009. RMG notes the data is 'approximate...Figures for transitional
states such as China and Russia are uncertain due to the lack of ownership data
and limited precise reporting of production volumes. ...[C]oal and uranium are not
included in the value calculations'. It has also been suggested that the data does not
include most industrial minerals.


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Rank Country % of $ world Rank Country % of $ world

(non-fuel) (non-fuel)
mineral mineral
production production
1 Chile 8.1 11 Poland 0.8
2 Australia 6.4 12 Mexico 0.6
3 Brazil 4.3 13 India 0.5
4 South 3.9 14 Botswana 0.5
Africa
5 USA 3.9 15 Zambia 0.4
6 Canada 2.7 16 Argentina 0.3
7 Peru 2.6 17 Ghana 0.3
8 Russia 2.5 18 Colombia 0.3
9 Indonesia 1.7 19 Kazakhstan 0.2
10 China 1.3 20 Dom. 0.2
Republic
Table 3: 'Top 20' mined countries, 2007
Source: RMG 2009. See reservations expressed in relation to table 2

Rank Mine Country % of $ world Mine's

(non-fuel) total
mineral production
production (wght)
1 Hamersley Iron Ore Mines Australia 1.15 95
2 Carajas Iron Ore Mine Brazil 1.11 92
3 Escondida Copper Mine Chile 1.04 1247
4 MBR Iron Ore Mines Brazil 0.83 68
5 Codelco Norte Copper Chile 0.73 500
Mines
6 GrasbergErtsberg Mine Indonesia 0.70 482
7 Inco Sudbury & Thompson Canada 0.62 113
Mines
8 El Teniente Copper Mine Chile 0.59 405
9 Codelco Norte SXEW Mine Chile 0.58 400
10 Itabira Iron Ore Mines Brazil 0.57 47
11 Escondida Copper Mine Chile 0.54 1247
12 Yandi Iron Ore Mine Australia 0.54 44
13 Oktyabrsky NickelCopper Russia 0.52 95
Mine
14 Mount Newman Iron Ore Australia 0.44 36
Mines
15 Morenci Copper (SX-EW) USA 0.43 350
Mine
16 Los Pelambres Copper Chile 0.42 290
Mine
17 Minas Centrais Iron Ore Brazil 0.41 34
Mines
18 Mariana Iron Ore Mines Brazil 0.40 33
19 Taimyrsky NickelCopper Russia 0.38 70
Mine
20 Oktyabrsky NickelCopper Russia 0.38 260
Mine
Table 4: 'Top 20' mines, 2007
Source: RMG 2009. See reservations expressed in relation to table 2


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2006b, 557. The hazard
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WKDWPXFK VRPHWLPHVPRVW RIWKHHFRQRPLFDQGVRFLDOEHQHILWV volatile) revenue deriving
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REVROHVFLQJEDUJDLQ DUHRIWHQXVHGLQMXVWLI\LQJUHJXODWRU\ & o'rs 2003, 84; Ebrahim-
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have been the most
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[of mining law] has been
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'the extent to which they contribute to the achievement of the

following objectives:
Productivity (of jobs, Àscal revenues, and foreign exchange);
Diversity (of industry participants and products);
Sustainability (of investment Áows and proÀtability);
Compatibility (with regulatory capabilities, with the local
community, and with the environment);
Objectivity (or rules and their enforcement);
Accessibility (in terms of clarity and simplicity); and
Popularity (in terms of general political support).'
2001 WORLD BANK REPORT

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Public international law LVWKHODZEHWZHHQQDWLRQV$FHQWUDO
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Box 1: National -v- international law: South

African mineral law changes post-apartheid
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Do you think there is a lot of internationa law

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RIHDFKFRXQWU\DQGXQGHULWVVRYHUHLJQFRQWURO:KLOH treaty (1997); see Bauni
2005, 769.
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There are different levels of law, and generally

it is easier to change a law the lower down it
is located (a constituion may only be able to be
changed by national referendum, statutory law
by parliament, and subsidiary legislation by
Ministers). Where should law about mining
be located? 3erhaps not all in one level? ,f in
different levels, what subjects about mining
should be covered in each level?

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This is commonly done
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this way, eg. UN Security
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DGGUHVVHGE\LQWHUQDWLRQDOODZ 0RVWLQWHUQDWLRQDOODZLVQRW made part of domestic law
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WKLVFRXUVH outside the jurisdiction.

Comparative law
What can we learn from the mining law of one
country (eg. Canada?) if you are dealing with
a legal issue about mining in your country,
is there any relevance in how matters are
regulated in Canada? ,f no, why not? if you
think some aspects of Canadian mining law/
regulation can be relevant, how do you decide
what relevance they have?


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The concept of sustainable development is now engaging the

attention of governments. The frameworks which evolve in response
to such concerns are likely to have a major impact on the future
of mining and mineral processing activities... Issues such as the
optimal rate of resource depletion, environmental degradation
rehabilitation, land access and energy efÀciency limiting
greenhouse warming are therefore likely to increasingly shape the
policies of governments towards mining in the future.
AUS GOV 1991C, 218

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GHYHORSPHQWDQGDGMXVWHGWKHLUDSSURDFKWREHPRUHFRQVLVWHQW
ZLWKWKLVHJ

The [minerals] industry has recognised... that corporate social

responsibility is not an adjunct to our business, it is our business
– our core function is to convert natural endowment to societal
capital, and that can only be achieved sustainably when there are
real mutually beneÀcial considerations of the environment, our host
communities, and the rights and interests of Indigenous peoples...
MCA 2007B, 5 (A STATEMENT MADE BY THE MINERALS COUNCIL OF AUSTRALIA
SUPPORTED BY THE CHAMBER OF MINERALS AND ENERGY OF WESTERN AUSTRALIA,
NSW MINERALS COUNCIL, QUEENSLAND RESOURCES COUNCIL, TASMANIAN
MINERALS COUNCIL, AND THE VICTORIAN DIVISION OF THE MINERALS COUNCIL).

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RYHULWVDPELJXLW\DQGODFNRIVSHFLILFGLUHFWLRQIRUH[DPSOH

The concept of 'sustainable development' is probably suffering

from its success as a buzzword. So frequently adopted by so many
groups with wildly varying agendas - from [environmental groups]
to the coal industry - the term might seem to be well on its way to
becoming meaningless.
NELSON 2004, 215.

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'Mining is Àrst, and foremost, an economic activity. As in any other

economic sector, mining companies are in business to earn proÀts,
and that is their basic justiÀcation and objective. ... It recent years
it has become fashionable to talk of a "triple bottom line"...meaning
that companies have to meet social and environmental objectives
as well as Ànancial ones. ... There can only be one "bottom line",
which is proÀtability, and to pretend otherwise is essentially self-
deluding.'
CROWSON 2008, 405

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 8QLW,QWURGXFWLRQ

SUHYHQWHGLWILQGLQJLWVZD\LQWRODZVDQGDJUHHPHQWVUHJXODWLQJ Sometimes sustainable

PLQLQJ7KHWHUP VIOH[LELOLW\GRHVFDXWLRQKRZHYH WKDW development is explicitly
described in mining law
WKHUHQHHGVWREHFDUHIXOFRQVLGHUDWLRQRIZKDWLWPHDQVDQG whereas in other countries
UHTXLUHV$SDUWLFXODUGLIILFXOW\LVGHWHUPLQLQJWKHOHYHODWZKLFK sustainable development
VXVWDLQDELOLW\ FDQRUVKRXOGEHPHDVXUHG HJORFDOUHJLRQDO objectives are sought
through broader means:
QDWLRQDOLQWHUQDWLRQDOO\ :KLOHVRPHFRPPHQWDU\HQWKXVHV Otto 2000, 4-7. Particular
WKDWWKLVLVSRVVLEOHDWDQ\OHYHOWKHUHPD\EHRFFDVLRQV examples include:
ZKHUHLQWHUHVWVDWDEURDGHUVFDOHPD\ZHLJKDJDLQVWORFDO ‡ in Canada, the Mines
LQWHUHVWV7KHUHDUHGLIIHUHQWDSSURDFKHVRQWKHH[WHQWWR Act (CAN), s2(1) ('the
ZKLFKVXVWDLQDEOHGHYHORSPHQWREMHFWLYHVLQPLQLQJVKRXOG object and purpose of
this Act is to ...facilitate
EHDFKLHYHGWKURXJKUHJXODWLRQRUYROXQWDU\LQLWLDWLYHVEXW [mineral] exploration...and
HYHQWKRVHDGYRFDWLQJYROXQWDU\DSSURDFKHVDFNQRZOHGJH production...consistent with
WKDWUHJXODWLRQZLOOLQFUHDVHXQWLOWKHPLQLQJLQGXVWU\PRYHV the principles of sustainable
development' - the law
FORVHUWRVRFLHW\ VH[SHFWDWLRQVRIWUDQVSDUHQWO\PDQDJLQJWKH also deÀnes sustainable
WULSOHERWWRPOLQH,WVKRXOGEHQRWHGKRZHYHUWKHUHDUHDOVR development in s2(1));
VWURQJYRLFHVRIFRQFHUQDERXWZKDWXVHLVPDGHRIVXVWDLQDEOH ‡ South Africa's Mineral Act
GHYHORSPHQWLQPLQLQJ (ZAF), s2(h) ('The objects
of this Act are to...ensur[e]
that the nation’s mineral...
6XVWDLQDEOHGHYHORSPHQWFDQSURYLGHDXVHIXOWRROWRFRQVLGHU resources are developed in
LVVXHVLQPLQLQJDQGHYHQWRIUDPHUHJXODWLRQDIIHFWLQJPLQHUV an orderly and ecologically
DQGRWKHUSDUWLHV+RZHYHULWLVSUXGHQWWREHDULQPLQGD sustainable manner while
GLVWLQFWLRQEHWZHHQDQLGHDODQGWKHSRVVLEOH0LQLQJVKRXOGQRW promoting justiÀable social
and economic development');
EHH[SHFWHGWRSURYLGHDVXVWDLQDEOHGHYHORSPHQWIXWXUHIRUDQ
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8QLW,QWURGXFWLRQ

Overview of mining regulation

What are the main areas/subjects that should

be addressed in the mining law of a country
(Think back to your earlier consideration of
what legal issues arise in the mining cycle)?
Are there some subjects/areas that should
not be in the mining law but should be in a
country's constitution?

:KDWVKRXOGEHXQGHUVWRRGE\WKHWHUP PLQHUDOODZ RU PLQLQJ

ODZ " 0LQLQJ DQG PLQH KDYHQRXQLYHUVDOOHJDOPHDQLQJ
DQGFDQGLIIHUDFFRUGLQJWRWKHFRQWH[WZLWKLQZKLFKWKH\DUH 'Mine' may be deÀned
XVHG6RPHMXULVGLFWLRQ V PLQLQJODZ RQO\DGGUHVVHVKRZ as only the area where
excavation is occurring, or
PLQLQJULJKWVFDQEHREWDLQHGXVHGDQGWHUPLQDWH,QRWKHU may also include associated
MXULVGLFWLRQVWKHPLQLQJODZFRYHUVZLGHULVVXHVOLNHUHJXODWLRQ land and buildings (so
RIPLQLQJ VLPSDFWVGLVSXWHUHVROXWLRQ EHWZHHQPLQHUVDQG that the rights and
EHWZHHQPLQHUVDQGQRQPLQLQJSDUWLHV DQGILVFDOPDWWHUV obligations cover not only
the excavation but its
0LQLQJODZUDUHO\UHJXODWHVGRZQVWUHDPSURFHVVHVOLNHVPHOWLQJ associated areas) or, 'mine'
RUUHILQLQJ $:RUOG%DQNVWXG\UHFRPPHQGHGWKDWD may even include railways
FRXQWU\ VPLQLQJODZVKRXOGDGGUHVVILYHDUHDV that service the project (eg.
Mines Act (GBR), s180(5)).
Historically, 'mine' also
Government authorityRZQHUVKLSRIPLQHUDOVDJHQFLHV  meant the physical deposit
SRZHUVHQIRUFHPHQWSHQDOWLHVDQGILQHVDQGWKHDXWKRULW\ in the ground even where
there had been no work
WRQHJRWLDWHFRQWUDFWV to access or remove that
deposit (eg. Wade -v- NSW
Conditions of land accessSURFHGXUHVDQGFULWHULD Rutile (1969) per Windeyer
IRUODQGDFFHVV XVHIRUPLQLQJQRWHDQ\VSHFLILF J at [24]).
DUUDQJHPHQWVIRUSDUWLFXODUPLQHUDOVGLVSXWHUHVROXWLRQ
SURFHVVHVIRUODQGFRQIOLFWV

Exploration and mining rights & obligationsSURFHGXUHV

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KROGLQJIHHVRUUHQWDOVDQGUR\DOWLHV

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GXWLHVLQFRPHWD[UDWHVDQGEDVHFXVWRPVGXWLHVDQG
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Environmental protectionHQYLURQPHQWDOLPSDFW
DVVHVVPHQWDQGPLWLJDWLRQVRFLDORUFRPPXQLW\LPSDFW
PRQLWRULQJDQGUHSRUWLQJUHFODPDWLRQDQGSRVWFORVXUH
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RILVVXHVWKDWWKHVHVWDWHVFRQVLGHUDVLPSRUWDQWLQPLQLQJODZ

– PLQHUDOVDVVWDWHUHVRXUFHV

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For full detail one ach of these issues

read Harmonization Principles (2009).
Economic Community of West African States,
Harmonization of Guiding Principles and
Policies in the Mining Sector, Directive C/
D,5./0/09 (2 May 2009). Available
online. 12 Oct 2009.

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7KHUHLVDOVRLQFUHDVHGLQYROYHPHQWRILQWHUQDWLRQDOFRPPXQLW\ operate' issues from those
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on the company: FMG Agt,
clause 7. The Agreement
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agreement's terms: FMG
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