OIL, GAS AND MINING IN MOZAMBIQUE ZAMBIA, ABRIL DE 2012

LOCALIZAÇÃO GEOGRÁFICA DE MOÇAMBIQUE 2

STRUCTURE OF PRESENTATION 1. MINING SECTOR 1.1 characterization 1.2 specific legislation 1.3 fiscal contribution 1. Oil/Petroleum sector 2.1 characterization 2.2 specific Legislation 2.3 fiscal contribution 3. Ongoing activities 4. Challenges 3

1. Mining Sector 1.1 Characterization Mineral resources that are found in soil and subsoil, in interior waters, along the territorial sea, exclusive economic zone and in the continental of Mozambique, are state property. The rights and obligations regarding the use and exploitation of mineral resources with respect for the environment, with view to their rational utilization and benefit the national economy Maputo4

1. Mining Sector 1.1 Characterization The mining industry subdivides into: Small operators – holders of mining (73). Medium and large operators – holders of mining titles, consisting of: mining certificates (127); – mining concession (215); – Prospecting and miningexploration (761); - License of recognition (11) Maputo5

1. Mining Sector 1.1 Characterization Licenses Maputo6

1. Mining Sector 1.2 Specific legislation  Law n.º 14/2002, of 26 June, approving the mining law.  Decree n.º 62/2006, of 26 of December, approving the Regulation of the Mining Law.  Law n.º 11/2007, of 27 of June, updating the tax laws relating to mining  Law n.º 13/2007, of 27 de June, regards the revision of the system of tax incentives for mining and oil companies. 7

1. SECTOR MINEIRO 1.2 LEGISLAÇÃO ESPECÍFICA Maputo8 Decree n.º 16/2005, of 24 of June, approving the Regulation of Marketing of Mineral Products Decrete n.º 26/2004, of 20 of August, approving the Environmental Regulation for Mining Activities. Government diploma n.º 189/2006, of 14 of December, adopting the Basic Standards for Environmental Management for Mining activity. Government diploma n.º 92/2007, of 11 de June, adopting rules and procedures governing the registration of eligible techniques for the preparation of reports and programs of work prospecting mining projects.

1. Mining Sector 1.2 specific Legislation Mining activities fees - Tax Tax on Production Persuant to Law.º 11/2007, of 27 de June, the rates of Mining Production Tax, are:  10% for diamond  10% for precious metal (gold, silver andplatinum) and precious stones  6% for semi-precious stones  5% for basic minerals  3% for coaland other mineral products The tax base for the Mining Production is the value of the quantity of product extracted from the mining land. 9

1. Mining Sector 1.2 Specific legislation Fees applicable for the mining activities - Taxes on the surface According to Law n.º 11/2007, of 27 June, taxes on surface are the following: License Recognition  For diamand…………….……….10,00MT/Km 2  For other minerals………………25,00MT/Km 2 Search and Prospecting License for all minerals  1st and 2nd year………….…………..250,00MT/Km 2  3rd ………….……………..….625,00MT/Km 2  4th and 5th year…………...……….1.300,00MT/Km 2  6thyear…………….….……… ,00MT/Km 2  7th year…………….…………….2.000,00MT/Km 2  8th…………….…………….2.500,00MT/Km 2  9th and 10th……….………… ,00MT/Km Maputo 10

1. Mining Sector 1.2 Specific legislation Fees applicable for the mining activities - Taxes on the surface Mining concession  For mineral water………………………70.000,00MT for each title  For other mineral resources: From 1st to 5th year………………………….2.500,00MT/Km 2 For 6th ygear onwards ………… ,00MT/Km 2 Mining certificate  20 – 100 hectare…………………………… ,00MT  101 – 200 hectare…………………………… ,00MT  201 – 300 hectare……………… ,00MT  301 – 400 hectare……………… ,00MT  401 – 500 hectare……………… ,00MT Maputo11

1. Mining Sector 1.2 Specific legislation FISCAL INCENTIVES – Law n. 13/2007  The projects carried out under the Mining Law, benefit for 5 years from the date of commencement of mining, and exempt from. i. Customs duties payable on imports of equipment for the exploration or mining in class "K" of the Customs Tariff Book; i. Custos duties payable on imports of goods listed in annex I to this Law, comparable to the class “K” of the Customs Tariff Book for the purpose of this Act  The imports referred to in the preceding paragraph also benefit from VAT exemption and ICE Maputo12

1. Mining Sector 1.3 FISCAL CONTRIBUTION Maputo13 Million in MT Description Nominal GDP fiscal Contribuição in mining sector AT total Revenue fiscal Ratio16.30%17.66%19.61%21.83% GDP weight in Mining Sector0.91%1.11%1.49%4.48% Peso do sector mineiro na receita da AT5.56%6.28%7.58%20.52% Fonte: Adaptado de DNEAP-MPD e AT-MF Câmbio: 27,95 MT/USD - Fonte: Banco de Moçambique, Jornal Notícias 16/04/2012

2. Oil/Petroleum 2.1Characterization The activities of prospecting, exploration, development and production of oil shall be exercised by means of a concession, granted sa result of public tender or direct negotiation. The realization of petroleum operations are subject to prior conclusion of a contract that may be:  Of Recognition - on an exclusive basis, a maximum of two years;  Research and production - exclusive right to exploration and production of oil for a period not exceeding 30 years;  Of oil or gas pipeline - the right to form and operate pipelines for the transportation of crude oil or natural gas, where these operations are not covered by a contract research and manufacturing 14

2. Oil/Petroleum Sector 2.2 Specific Legislation Law n. 12/2007 The Tax on Oil Production falls upon on oil produced in Mozambique, from the area of ​​ development and production. It is considered oil- crude oil, natural gas or other hydrocarbons produced or capable of being produced from crude oil, natural gas, oil sands or clays. The rates of Tax on Oil are as follow: – 10% for crude oil; – 6% for natural gas. 15

2. Oil/petroleum sector 2.2 Specific legislation FISCAL INCENTIVES – Law n. 13/2007  The projects carried out under the Mining Law, benefit for 5 years from the date of commencement of mining, and exempt from. i. Customs duties payable on imports of equipment for the exploration or mining in class "K" of the Customs Tariff Book; i. Custos duties payable on imports of goods listed in annex I to this Law, comparable to the class “K” of the Customs Tariff Book for the purpose of this Act  The imports referred to in the preceding paragraph also benefit from VAT exemption and ICE Maputo16

2. Oil/Petroleum Sector 2.3 FISCAL CONTRIBUTION Lusaka17 Million in Mts DescriPTION Nominal GDP fiscal Contribuição in oil sector AT total Revenue fiscal Ratio16.30%17.66%19.61%21.83% GDP weight in oil Sector0.70%0.74%0.48%1.27% Peso do sector petrolífero na receita da AT4.27%4.17%2.43%5.84% Fonte: Adaptado de DNEAP-MPD e AT-MF Câmbio: 27,95 MT/USD - Fonte: Banco de Moçambique, Jornal Notícias 16/04/2012

3. Ongoing Activities Induction to the AT Stuff of the technical activities carried out in the industry and oil train specialists in the various areas of this sector, through visits to the Mega Projects and other sectors of the mining industry. Megaprojects Monitoring on the sectors of Mining and Petroleum. Participation in rounds of negotiation of concession contracts, Mining and Petroleum. Induction of AT Stuff of the technical activities carried out in the industry and oil Maputo18

4. Challenges In relation to licenses granted, develop joint activities with MIREM in order to control the Tax rate on surface; In order to combat tax evasion define mechanisms of control and revenue collection to the miners( mine diggers ); Training of stuff in the area of customs and border guards in order to recognize the mine product when crossing borders; To standardize procedures in the taxation of Mega projects compared to other African countries and the rest of the world; Include stuff from MIREM in the Audit work conducted by AT. 19

MUITO OBRIGADO 20