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Minister of Energy and Mineral Resources Regulation No. 34 of 2009

The purpose of the Minister of Energy and Mineral Resources Regulation No. 34 of 2009 is to overcome and prevent any reduction of minerals and coal needed for the interests of the domestic market.

The regulation is explicit and straight forward, and therefore not particularly onerous in terms of understanding the provisions and matters of compliance. Article 2, for example, states that mineral and coal companies must prioritize the supply of minerals and coal to satisfy domestic demand needs.

In this context, minerals and coal are defined as including metals, non-metals, and ore. The government is to further regulate the obligation on producers to sell minerals and coal to users. It is expected that this obligation will be set out in an agreement between the producers and the users under the guidance of the minister. “Users” are defined in Article 4.

For example, users can include those that use minerals and coal as a raw material, as a fuel, manufacturing, construction, and coal liquefaction, among others. The minister is required to plan and prepare for the domestic demand at least one year in advance.

The plan is to be implemented by the relevant director general. This will require the minister to have some knowledge of the expected production capacity of minerals and coal miners. The minister will garner this knowledge based on the work and budget plans of the relevant producers.

The price of minerals and coal is to be set according to the 'spot' and 'term' prices. Nevertheless, there is an expectation that the minister will issue further regulations in order to provide greater legal certainty and clarification on this issue.

Breaches of the provisions will attract administrative sanctions. These sanctions include written warnings, reduction of production quotas by a maximum of 50% for the following year, and reductions in allocations up to a maximum of 50%.

The regulation has been in force since 31 December 2009.

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