TT’s Mining Sector: A Brighter Future
Head, TTEITI Secretariat
Sherwin Long has served as TTEITI head since 2015. Previously, Mr. Long held the positions of Senior Research Specialist, Energy and Chairman of the Energy Efficiency and Alternate Energy Committee at the Energy Chamber of Trinidad and Tobago.
The Minerals (General) Regulations 2015 document laid in Parliament in June 2015 has not garnered much column space or airtime, having slipped under the radar at a time when the Tenth Parliament was winding down and the country was anticipating the announcement of the date for the upcoming general elections.
However, the nation stands to benefit from the enforcement of these regulations, especially given the well-publicised shortcomings which have affected the mining sector over the past decade.
These problems include illegal quarrying, royalty payment shortfalls, environmental impact on watercourses/watershed zones, land degradation and an outdated policy and regulatory framework.
On paper, the regulations aim to correct these shortcomings while also improving revenue collection, state oversight and administrative and regulatory efficiency in order to maximise the benefits citizens gain from mining operations.
The regulations focus on the procedures and conditions for obtaining quarry licences, the duties and expectations of licensees after licences have been granted and financial obligations.
The duties relate, inter alia, to the conduct of mining operations, disposal of waste water, reporting requirements, training of employees and even site maintenance.
While the Regulations 2015 will increase the royalty rate quarry operators will have to pay, in weighing the advantages of the new regulations over the old, the Regulations’ 2015 rates and the old rates must be compared and an analysis done of what payments would have been due to Government in the past and what payments will be due Government in the future.
The use in such analysis of publicly available data from the Ministry of Energy and Energy Affairs’ Green Paper on Minerals Policy 2014 produced some interesting results.
The Green Paper on Minerals Policy 2014 also alludes to a potential gross underreporting of production and royalty payments between 2001 and 2013 and notes that only 10 percent of royalties were collected in this period.
The paper stated, “This represents a loss of revenue to the State of approximately TT $120 million in royalty payments, and does not include loss of revenue from royalties for production not accounted for and from illegal mining (quarrying) as well as revenues from other sources such as: taxes, Business Levy, and Green Fund levy, over the period 2001 to 2013”.
To illustrate the mismatch, the graph below shows that there was no correlation between royalties paid and volume of minerals produced for the period in question, although royalties are charged per cubic yard and the two should therefore correlate directly.
This highlights the importance of the changes being introduced by Regulations 2015 and, more importantly, the need for their strict enforcement.
Perhaps the most significant benefit that can be expected from the new rates under the Regulations 2015 is the change to the Rehabilitation Bonds posted.
A Rehabilitation Bond is deposited before a Mining Licence is issued or renewed and is returned to the licensee only if the land for which the licence was granted had been rehabilitated in accordance with the Minerals Act (2001), the Minerals (General) Regulations 2015 or the terms and conditions of the licence.
Should the licensee fail to carry out the requisite rehabilitation, the State may do so, with the costs paid out of the forfeited Rehabilitation Bond.
The Rehabilitation Bond under the Minerals Act (2001) was $3,000 per acre. Under Regulations 2015, Mining Licence applicants will be required to post a Rehabilitation Bond of $60,000 per hectare (or $24,281.18 per acre) of Licensed Area.
That will result in an eightfold increase in funds available for the State to undertake rehabilitation work, if licensees fail to do this themselves. With proper enforcement of Regulations 2015, one can expect that all abandoned state quarry lands will be properly rehabilitated.
There was also a marginal increase in the Annual Mining Licence Fee from $100 per acre ($247 per hectare) to $250 per hectare of Licensed Area.
Based on the current list of licensed quarry operators provided by the Ministry of Energy and Energy Affairs, mining license fees for the first year of operating Regulations 2015 would be $260,369 compared to $257,355 under the old rates.
The introduction of the 2015 Mining Regulations is an important first step toward improving the regulation of the mining sector, reducing its negative environmental impacts and increasing the revenue collected from it, but this is not enough.
The Trinidad and Tobago Extractive Industries Transparency Initiative (EITI) Steering Committee has held several capacity building workshops with mining sector companies with the intention of including the sector in Trinidad and Tobago’s future EITI Reports.
This will ensure greater transparency in the reporting of payments made to Government by mining license holders.
The TTEITI Steering Committee recognises the introduction of Regulations 2015 as a step in the right direction and believes that enforcement of the regulations coupled with mining companies reporting of their payments through the EITI process will bring greater resource revenue transparency to the mining sector, give citizens greater assurance that the sector is being managed sustainably and satisfy them that they are getting value for money from the extraction of their natural resources.
This article was co-authored by Garik Joseph, Project Officer, TTEITI Secretariat
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