The commercialization of diamonds, precious metals and gemstones is regulated by Decree no. 25/2015, of 20 November, which approves the Regulation on Commercialization of Diamonds, Precious Metals and Gemstones (Decree no. 25/2015 or "Regulation"). It also partially amends Decree no. 20/2011, of 1 June, which regulates the commercialization of mineral products in general.

Due to the growing discoveries and exploration of precious stones and metals, the Government of Mozambique enacted the Decree no. 25/2015, in order to regulate and establish the conditions for their commercialization, export, import, control, transit and circulation, as well as mechanisms for certification in accordance with the Kimberley Process.

The performance of any transaction involving rough diamonds, precious metals and gemstones requires, prior to initiating the activity, obtaining a Commercialization License, and registering with the Ministry of Mineral Resources and Energy (MIREME) as a Commercialization Operator.

The Commercialization License

The commercialization of rough diamonds, precious metals and gemstones, not resulting from mining activity, can only be carried out by a person holding a Commercialization License and only a national, natural or legal person, incorporated by nationals and registered in accordance with the laws in force in the Republic of Mozambique are permitted to carry out this activity. However, it is possible that the commercialization can be carried out by a company with foreign partners, provided that the equity capital is held in majority by national shareholders (50+1 percent) and that this company holds a Mining Concession or a Mining Certificate.

The application process to obtain a Commercialization License must contain the following documents:

  • An application letter addressed to the MIREME
  • A certified copy of the identification document
  • Power of Attorney that confers powers of representation in the process of submission of applications and registration
  • A Criminal Record Certificate
  • A Tax Quitclaim Certificate
  • A Copy of the Official Gazette where the Articles of Association were published or proof of payment of the respective publication
  • A Commercialization program
  • An Identification document of the Commercialization Operator
  • Terms of responsibility for each Commercialization Operator

Upon receipt of positive notification from the MIREME, the applicant shall pay the required fees, taxes and the fee for publication of the order granting the license. The Commercialization License confers on its holder the right to engage in the commercialization of mineral products (as specified in the license), and is valid for five years and renewable for an equal period, provided that the requirements are met and that the applicant applies for the extension within the period established by Law.

The Commercialization License may be transferred in accordance with the conditions specified by the Regulation, and its transfer is subject to prior authorization from the MIREME. The termination of the Commercialization License can occur by expiry, revocation and relinquishment, but its cessation does not exempt the holder from complying with its obligations with respect to the State or third parties.

The Commercialization of Diamonds, Precious Metals and Gemstones

The start of commercialization of diamonds, precious metals and gemstones by the holder of the Commercialization License is subject to a previous registration as a Commercialization Operator with the MIREME, and the same must obtain an Operator Card that identifies him as a person authorized to carry out purchase and sale transactions of diamonds, precious metals and gemstones under the corresponding license.

The Operator Card is valid for 12 months, which can be extended for equal periods, and cannot exceed the validity of the Commercialization License. This card is non-transferable and can be terminated by expiry, seizure due to illegal exercise, relinquishment, death or termination of the respective license.

The commercialization of diamonds, precious metals and gemstones is made only in trading ports previously approved by the Government, and under the aegis of a state company, appointed by the Government to act as facilitator.

In this context, Resolution No. 31/2016, of 31 October approved the creation of the first Trading Ports for Diamonds, Precious Metals and Gemstones in the cities of Maputo and Nacala, and appointed Empresa Moçambicana de Exploração Mineira, S.A, as the facilitating entity in the export or import, responsible for managing the trading ports and providing the necessary infrastructure.

The Import and Export of Diamonds

Only rough diamonds from countries participating in the Kimberley Process can be exported and imported, and to that end, it is necessary to present the Kimberley Process Certificate as well as requesting authorization from the KPMU . It should be noted that this authorization is also required in cases of import and export of precious metals and gemstones.

The application process shall be accompanied by the following requirements:

  • Identification of the exporter and importer
  • Origin and/or source of rough diamonds, precious metals and gemstones
  • The carat weight of consignments and their value
  • An exporter's license
  • NUIT (Tax Registration Number)
  • A Tax Quitclaim Certificate
  • A declaration on oath by the exporter, or his representative, that the rough diamonds do not come from conflict zones
  • Microscopic signature elements of the lot (only for rough diamonds)

Exporters, importers or their representatives shall keep a written and electronic database for a period of five years, containing the names of the buyers or sellers, their mining title numbers, the quantity and value of the products sold, exported or imported.

Failure to comply with the provisions of the Regulation subjects the applicant to penalties, which include the penalty of seizure of the product, confiscation of the equipment and means used for its transportation, and fines ranging from MT250,000.00 (US$4,166) up to twice the value of the confiscated product.

It should be noted that Mozambique's application to the Kimberley Process is still awaiting the final decision, since, following a visit to Mozambique in 2016, the Kimberley Process Committee concluded that all requirements for that purpose were not met, and Mozambique is currently in the process of gathering all the missing requirements in order to have their application authorized. Thus, for as long as the Mozambican membership application is unauthorized, the diamonds mined in the country cannot be commercialized.

 

Originally published in the SAL & Caldeira Advogados LDA client newsletter, No 30. It is reproduced with permission from SAL & Caldeira.

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