REPUBLIC OF IRAQ Ministry of Industry and Minerals The State Company of Geological Survey and Mining.

REPUBLIC OF IRAQREPUBLIC OF IRAQMinistry of Industry Ministry of Industry

and Mineralsand MineralsThe State Company The State Company

of Geologicalof GeologicalSurvey and MiningSurvey and Mining

Iraqi Legislations in the Iraqi Legislations in the Mineral Investment Mineral Investment

SectorSector

Iraq is rich in mineral Iraq is rich in mineral resources which required resources which required

legislations and legal legislations and legal instruction to organize instruction to organize

investment and exploitation investment and exploitation of these resourcesof these resources..

The Quarries Investment law No. (139) The Quarries Investment law No. (139) for the year 1981 was issued. After for the year 1981 was issued. After

seven years the Law was updated by seven years the Law was updated by the presently valid Law no. 91 for the the presently valid Law no. 91 for the

year 1988 to achieve better monitoring, year 1988 to achieve better monitoring, preserve natural resources, activate preserve natural resources, activate

different industries in the public sector, different industries in the public sector, facilitate the procedures and secure the facilitate the procedures and secure the rights of the State and the environmentrights of the State and the environment..

11..Valid legislationValid legislation

))The Law No. (91) for the year The Law No. (91) for the year 1988, and its modifications1988, and its modifications.(.(

The most important items cited in The most important items cited in this Law arethis Law are::

11.. It is concerned with the extraction It is concerned with the extraction part only of the whole mineral part only of the whole mineral investment stagesinvestment stages..

22.. A committee from different A committee from different ministries is responsible to allocate ministries is responsible to allocate lands suitable for mineral lands suitable for mineral investment and the prohibited areas investment and the prohibited areas where investment is unlawful as: oil where investment is unlawful as: oil and gas fields, oil pipelines, and gas fields, oil pipelines,

electricity lines … etcelectricity lines … etc..

3.3. Geosurv-Iraq is entitled (by law) Geosurv-Iraq is entitled (by law) to monitor the implementation of to monitor the implementation of this law, being the only professional this law, being the only professional government authority in this field.government authority in this field.

4.4. GEOSURV grants licensing of GEOSURV grants licensing of quarries according to the required quarries according to the required specifications, but contracting is done specifications, but contracting is done with the local government where the with the local government where the quarry is located.quarry is located.

55.. Mines licensing are done with Mines licensing are done with Geosurv after the approval of the Geosurv after the approval of the MinistryMinistry..

66.. The investor pays the fees, The investor pays the fees, investment rates (Royalty) and investment rates (Royalty) and also pays for the services offered also pays for the services offered by Geosurv as cited in the Law by Geosurv as cited in the Law and according to the mineral and according to the mineral commoditycommodity..

77.. The Law has placed penalties The Law has placed penalties for non obeying cases through a for non obeying cases through a specialized committee and after specialized committee and after

the approval of the Ministerthe approval of the Minister..

88.. The Governor is given the The Governor is given the rank of a misdemeanor judge rank of a misdemeanor judge to look into issues arising from to look into issues arising from the application of the Lawthe application of the Law..

99.. Any extracted material Any extracted material whether from the quarries or whether from the quarries or from the mines can be exported from the mines can be exported after obtaining the approval of after obtaining the approval of the Ministry of Industry & the Ministry of Industry & MineralsMinerals..

** Pursuant to this Law, Geosurv has Pursuant to this Law, Geosurv has issued five legal instructions, the last issued five legal instructions, the last is modification No. (1) For the year is modification No. (1) For the year 2005 which implies reviewing royalty 2005 which implies reviewing royalty of quarry and mining materials of quarry and mining materials according to the prices of the local according to the prices of the local market and as shown in the following market and as shown in the following tabletable::

MaterialMaterialRoyalty per ton / (USD)Royalty per ton / (USD)

Native SulfurNative Sulfur5.85.8Phosphate rocksPhosphate rocks55Sodium SulphateSodium Sulphate22Sedimentary ironSedimentary iron22Sodium chlorideSodium chloride2.92.9

Silica sandSilica sand1.61.6BauxiteBauxite1.61.6KaolinKaolin1.61.6

BentoniteBentonite1.61.6Palygorskite (attapulgite)Palygorskite (attapulgite)1.61.6

Flint - clayFlint - clay1.61.6PorcelanitePorcelanite3.33.3

CelestiteCelestite3.33.3Feldspathic sandFeldspathic sand3.33.3

Bitumin (seepages)Bitumin (seepages)6.66.6Asphalt RockAsphalt Rock6.66.6

Table : (1)Table : (1)

Table : (2)Table : (2)

Raw Material and purpose of useRaw Material and purpose of useRoyalty per Royalty per

one cubic one cubic meter (USD)meter (USD)

Limestone and dolomite for constructionLimestone and dolomite for construction..0.20.2

Limestone and dolomite for ballast and Limestone and dolomite for ballast and fillingfilling..

0.80.8

Limestone and dolomite for industrial Limestone and dolomite for industrial purposespurposes..

1.61.6

Marble and its substitutes for constructionMarble and its substitutes for construction..6.26.2

Primary gypsum for industrial purposes Primary gypsum for industrial purposes (plaster)(plaster)..

0.60.6

Subase for constructionSubase for construction..0.20.2

Exchange rate :- 1 US $ ≈ Exchange rate :- 1 US $ ≈

1200 ID1200 ID

Subase for ballast and fillingSubase for ballast and filling..0.40.4

Subase for precipitatorsSubase for precipitators..0.60.6

Sand for constructionSand for construction 0.20.2

Sand for precipitatorsSand for precipitators..1.61.6

Secondary gypsum for industrial Secondary gypsum for industrial purposespurposes..

0.20.2

Loam for fillingLoam for filling..0.20.2

Loam for industrial purposesLoam for industrial purposes . .0.20.2

Alluvial sediments for agriculture and Alluvial sediments for agriculture and gardensgardens..

0.20.2

II. Legislation in II. Legislation in progressprogressA draft of a new Law has been prepared to A draft of a new Law has been prepared to meet the political and economic changes meet the political and economic changes which took place during the last decade which took place during the last decade in Iraq and in order to be up to the in Iraq and in order to be up to the requirements of free market economy. It requirements of free market economy. It is expected that the new law will be put is expected that the new law will be put into effect within the few coming monthsinto effect within the few coming months..

The new law bear the following The new law bear the following advantagesadvantages-:-:

11.. The provisions of this law are The provisions of this law are applied upon all nationalitiesapplied upon all nationalities

whether being individuals or whether being individuals or companiescompanies . .

22 . .The mineral resources includeThe mineral resources include:: a)a) Metallic mineral resourcesMetallic mineral resources..

b)b) Nonmetallic and semimetallicNonmetallic and semimetallic mineral resourcesmineral resources..

c)c) Radioactive mineral resourcesRadioactive mineral resources.. d)d) Organic mineral resourcesOrganic mineral resources..

e)e) Mineral water resources andMineral water resources and geothermal energygeothermal energy..

f)f) Precious and semiprecious stonesPrecious and semiprecious stones..

33.. All mineral investment aspects All mineral investment aspects are covered by the new law, are covered by the new law, including: prospecting, including: prospecting, exploration, mining, processing exploration, mining, processing

& marketing& marketing..

22

4.4. License fees (suggested):License fees (suggested):

a)a) Mineral prospecting: one millionMineral prospecting: one million

ID/kmID/km

b)b) Mineral exploration: five millionsMineral exploration: five millions

ID/2.25km.ID/2.25km.

c)c) Mining fees and royalty to beMining fees and royalty to be

defined according to the rawdefined according to the raw

material by later instructions.material by later instructions.

22

55.. Privileges and exemptionsPrivileges and exemptions::

The investor, regardless of hisThe investor, regardless of his

nationality, has the followingnationality, has the following

exemptionsexemptions::

a)a) Local governments bear up toLocal governments bear up to

50%50% of the expenses of the basicof the expenses of the basic

infrastructures. The investor hasinfrastructures. The investor has

to take upon the remainingto take upon the remaining

expensesexpenses..

b)b) To lease lands owned by the State forTo lease lands owned by the State for

the purpose of this law are dealt withthe purpose of this law are dealt with

according to the provisions of theaccording to the provisions of the

Law of Industry No. (20) for the yearLaw of Industry No. (20) for the year

19881988

c)c) The investor is exempted fromThe investor is exempted from

auction proceduresauction procedures..

d)d) Taking out the capital with itsTaking out the capital with its

returns and according to thereturns and according to the

instructions issued by the Iraqiinstructions issued by the Iraqi

Central BankCentral Bank..

e)e) To open bank accounts in theTo open bank accounts in the

reliable banks of Iraqreliable banks of Iraq..

f)f) Exemption of imported fixedExemption of imported fixed

assets for the project from allassets for the project from all

taxes and fees for long termtaxes and fees for long term

licenses within three years fromlicenses within three years from

the date of the validity of thethe date of the validity of the

investment licenseinvestment license..

g)g) To exempt the specialized spare To exempt the specialized spare parts for the project from rates parts for the project from rates

and fees, yet the amount shouldand fees, yet the amount should

not exceed 20% from the valuenot exceed 20% from the value

of the fixed assetsof the fixed assets..

h)h) Exemption of imported fixed assetsExemption of imported fixed assets

required for the expansionrequired for the expansion,,

development or upgrading of thedevelopment or upgrading of the

project from rates and fees on aproject from rates and fees on a

condition that these procedures willcondition that these procedures will

increase the designing capacity upincrease the designing capacity up

to no less than 10%to no less than 10%..

66.. There is a brief procedure for theThere is a brief procedure for the

investors to get investment licenseinvestors to get investment license

where the following document arewhere the following document are

neededneeded::

** Profile of investor (person or co.)Profile of investor (person or co.)..

** Similar job doneSimilar job done..

** Bank GuaranteeBank Guarantee..

** The request depends on the kind ofThe request depends on the kind of

investment as followinvestment as follow::

Kind of investmentKind of investment

Mine

Geosurv)Allocate the area

technically(

Ministry of Industry and Minerals

)Approval(

Geosurv)Sign contract(

Quarry

Local Government

Geosurve)Approval(

Local Government)Sign contract(

Geosurv)Monitoring & technical

consultation(

This will be in parallel to issue of a This will be in parallel to issue of a certification of registration from certification of registration from

the Director General of the Director General of Industrial Development, Industrial Development,

Ministry of Industry & Minerals Ministry of Industry & Minerals for an industrial plant for an industrial plant

constructionconstruction . .

77.. Penal clausesPenal clauses

Anyone who performs investmentAnyone who performs investment

works, prospecting or extracting minerals works, prospecting or extracting minerals contrary to the provisions of this Law, is contrary to the provisions of this Law, is considered as transgressor. The penalty considered as transgressor. The penalty is either a fine or an imprisonment and is either a fine or an imprisonment and according to the kind of transgressionaccording to the kind of transgression..

88.. Any arising issues from the Any arising issues from the application of this Law will be application of this Law will be handled by the specialized handled by the specialized Iraqi courtsIraqi courts..

All present and future laws of All present and future laws of mineral investment are a mineral investment are a

complementary part for the complementary part for the Law of the National Law of the National

Commission for InvestmentCommission for Investment

No. (13) for the year 2006No. (13) for the year 2006 . .

Thanks for the Thanks for the audienceaudience