Project Case Study
Developing a mining tax regulatory framework for South Sudan’s Ministry of Energy and Mining
Effects of civil war on the mining community
The effects of civil war and political uncertainty in South Sudan had been causing difficulty in the country’s mining sector.
Government institutions at various levels had been issuing mining titles to private companies regardless of whether they had the legal authority to do so, which eventually led to the announcement of a moratorium on mining licenses in 2010.
To help regulate the industry, in 2011 we were asked to work with the Ministry of Energy and Mining in South Sudan to draft a Mining Act and make recommendations for the mining tax framework and related regulations. The project aimed to foster economic and social development by facilitating private sector investment and development of the mining industry, in order to generate jobs and revenue and also offer marketable skills to local people.
The project also focused on building institutional capacity to enable transparent and effective sector governance in the Ministry.
We successfully drafted the 2012 Mining Act, which would end the moratorium and allow licenses to be granted to foreign firms to explore South Sudan’s mineral deposits and will the way for foreign investment.
To protect the interests of the citizens of South Sudan, we proposed a fiscal framework for the minerals sector, and the Mining Act allows the government an optional equity stake of up to 15% in large scale mining operations. It also officially establishes the Ministry of Petroleum and Mining as the regulator for the sector and establishes a mining cadastre to issue and manage mining licenses. These measures will provide the government a managed revenue stream, contributing significantly to GDP and help the country move away from its over-dependence on oil revenue which before the blocking of the pipeline provided 98% of GDP.