Written by:
Tobenna Nnamani
Partner, PUNUKA Attorneys & Solicitors
Lagos, Nigeria
t.nnamani@punuka.com
www.punuka.com
Introduction
The 1999 Constitution (as amended) has established the relationship and boundary between the Federal Government and the State Government primarily giving mineral rights to the Federal Government and surface rights to the State Government. The Land Use Act recognizes the Governor of each State as the Trustee of the state land on behalf of the state. The critical issue, therefore, is to assess the effectiveness of this relationship and determine the key issues for policy makers and investors with respect to land access in the Nigerian mining sector.
The primary objective of this article is to review the legal framework of Access to Land in the Nigerian mining sector particularly in view of harmonization of laws and policy reforms to address the land disputes in the sector and assist the sector achieve its goal by 2025.
Land Access Under the Mining Act
The Nigerian Minerals and Mining Act 2007 (the Mining Act) and Nigerian Minerals and Mining Regulations 2011 are the primary sectoral legislations governing the Nigerian mining sector. The laws expressly provide that the entire property in and control of all mineral resources in, under or upon any land in Nigeria shall be vested in the Government of the Federation for and on behalf of the people, and any land in which minerals have been found in commercial quantities shall be acquired by the Government of the Federation in accordance with the provisions of the Land Use Act. Section 3 of the Mining Act however excludes some lands from minerals exploration and exploitation and they include: any land set apart for, or dedicated to any military purpose except with the prior approval of the President, any land within fifty metres of an oil pipeline licence area granted under the Oil Pipeline Act, any land occupied by any town, village, market, burial ground or cemetery, ancestral, sacred or archaeological site, appropriated for a railway or situated within fifty metres of a railway, any land that is subject to the provisions of the National Commission for Museums and Monuments Act or National Parks Service Act, and any land which a Mineral title has previously been granted by the Mining Cadastre Office and where such Mineral title is subsisting.
By virtue of Section 22 of the Mining Act, the use of land for mining operations has priority over other uses of land for the purpose of access, use and occupation of land and shall be treated as constituting an overriding public interest within the meaning of the Land Use Act. This provision is also in tandem with Section 28 of the Land Use Act. Thus, the Governor of the State is expected to revoke any right of occupancy within 60 days commencing from the moment a mining lease is granted over land subject to an existing and valid statutory or customary right of occupancy, and the lease holder is expected to compensate the owners, or lawful occupiers of the land, for the revocation of their right to use the land as provided in Section 70(j) of the Mining Act.
It is however not in dispute that one of the clogs in the Nigerian mining sector is the relationship between the Federal Government and State Government regarding access to land despite the express provisions of the law. It is worse when the investors are also pulled into the web of legal chaos particularly when before the lease was granted, the proof of consent of the owner or occupier of land ought to have been obtained and attached to its application for the Mineral title.
The issue that would therefore arise is whether the provisions of the law are adequate to address the challenges or perhaps whether though the literal provisions of the law are adequate, the baton may have dropped during the implementation of the law?
Land Access Pre-Conditions to Commencement of Development
As earlier noted, one of the preconditions to commencement of development is that the holder of the Mineral title has duly notified, compensated, or offered compensation to all the users of land within the mining lease area. Section 72 of the Mining Act provides that the lawful occupier of any land within an area subject of mining lease shall retain the right to graze livestock upon or to cultivate the surface of the land in so far as the grazing or cultivation does not interfere with the mining operations in the mining lease area.
Generally, when an application is made for a Mineral title in respect of an area which includes any private land or land occupied under a state lease or right of occupancy, the notice of application is expected to be given to the owner of the land and consent obtained before the Mineral title is granted, otherwise the Mineral title may be granted with the exclusion of the private land in question. In other words, although the literal interpretation of Section 71 may imply that an application may be made even when only an offer of compensation has been made to the owner, Section 100 of the Mining Act expressly provides that the consent must have been obtained before any Mineral title can be issued in respect of the said private land.
To buttress this position, the law places some responsibility on the Minister before granting a Mineral title on any private land or any state land which essentially provides that the Minister shall cause the owner or occupier of the land to be informed of the intention to grant the Mineral title and require the owner or occupier of the land to state in writing the rate of annual surface rent which the owner desires should be paid to him by the Mineral title holder and if the Minister is satisfied that the rent is fair and reasonable, the amount shall be communicated to the Mineral title holder subject to revision by the Minister at intervals of five years. The Minister shall also direct the Mineral title holder to reimburse the Government for any compensation paid to the occupier in respect of the land on which title for minerals is given.
When the land is eventually revoked, the Mineral title holder (being the lessee) shall pay to the Government the amount of compensation to the holder of the certificate of occupancy or the State by reason of the revocation or resumption of possession. In addition to any other amount payable, Section 107 of the Mining Act provides that the Mineral title holder may pay to the occupier of land reasonable compensation for damage done to the surface of the land and also pay to the owner of any crop, economic tree, building damaged, removed or destroyed and the amount payable under this provision shall be determined by the Mining Cadestre Office after consultation with the State Minerals Resource, Environmental Management Committee and a Government Licensed Valuer.
The importance of fully engaging the community regarding land access in the mining sector cannot be over-emphasized particularly in view of the award in Beer Creek Mining Corporation v Republic of Peru (ICSID Case No. ARB/14/21) which may be summarized as follows: The Claimant, Beer Creek Mining Corporation, decided it wished to mine silver ore deposits located in an area of Peru known as Santa Ana in the Puno department. In accordance with Article 71 of the Peruvian Constitution, the location meant the Claimant was obliged to obtain a “public necessity” along with a multitude of other permitting requirements. In November 2007, the Council of Ministers declared Santa Ana Project to be a public necessity which enabled the Claimant to acquire seven mining rights in the Santa Ana area of Puno. Three years and six months later, in June 2011, the Council of Ministers revoked the decree thereby ending the Claimant’s right to operate its Santa Ana concessions and the dispute was determined via arbitration. In between those years-November 2007 and June 2011- there were protests and considerable social unrest caused in part by the project. In other words, the community was not comfortable with the project and perhaps decided to express their opposition through the protest.
In resolving the dispute, it is worthy to note that on the issue of damages, the Tribunal held that the project was still at an early stage, and it had not received many of the government approvals and environmental permits it needed to proceed. The Tribunal therefore concluded that there was little prospect for the project to obtain the necessary licenses and there was no similar project in the same area to support track record of profitability in the future and therefore held that the project remained too speculative and limited the measure of damages to the amount invested by the Claimant.
In applying the award to resolving a dispute in Nigeria over access to land where there is social unrest by the community during the early stages of the project, it could be argued that the investors claim should be limited to the amount invested particularly where the letters of the Act have not been adopted.
Land Access Dispute Resolution Mechanism
Section 109 of the Mining Act provides that in the event that a holder is unable to pay the compensation six months after the grant of the Mineral title, the Minister may suspend the Mineral title until the amount is paid and deposit for any further sum is paid to the Government; and where the holder does not make the payment within 30 days after the suspension, the Minister may revoke the Mineral title.
By virtue of Section 103 of the Mining Act, any question arising as to the extent of the land occupied by the Mineral title holder, or the date on which lessee ceased to occupy the land or the proportion of the surface rent payable to the persons entitled to receive any portion of the surface rent shall be referred to the Land Use and Allocation Committee of the relevant State for determination, and the report of the Land Use Allocation Committee shall be taken into consideration by the Minister in making a decision.
Conclusion
The letter of the law seems to have envisioned the challenges of land access in the mining sector and made reasonable provisions to establish a reliable structure that would address the challenges particularly the establishment of the Mineral Resources and Environmental Management Committee regarding land access.
Section 19 of the Mining Act establishes the Mineral Resources and Environmental Management Committee for each state of the Federation. The Committee, which consists of a representative of the Ministry for land matters or mineral related matters in the State, a representative of the Surveyor General in the State, a representative of the local government council affecting the area to be considered, a representative of the Mines Environmental Compliance Department etc. was mandated to, among other functions, consider issues affecting compensation and make necessary recommendations to the Minister, advise the Minister on issues affecting the grants of Mineral titles, advise Mineral title holders in their interactions with state governments, local government councils, communities etc. The Committee is expected to meet at least once every three months and forward its report to the Minister after each meeting.
The letter and spirit of this provision is where the success or failure of land access to mining in Nigeria lies. There is no doubt that the provision can be strengthened, not with the enactment of another law or rules, but with the training of the members of the Committee to understand and fulfil their mandate, for it is in fulfilling this mandate that fresh breath can be breathed into land access in the Nigerian mining sector.
Author:
Tobenna is the team lead of the Mining Practice Group in the firm and currently serves as the International Bar Association (IBA) Reginal Representative Africa of the Mining Law Committee.
The content of this article is the view of the author and not necessarily that of the firm; and intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
