The Legal Framework Of Mining Industry In Malaysia.

Updated: Feb 19










Part 1: Introduction

Mining is one of the oldest industries in Malaysia and this may be traced back to the early 1820s following the arrival of Chinese immigrants in Perak. The mining industry has consistently played a vital role in the country’s economic development as it serves as a backbone for the construction and manufacturing sectors, namely in supplying the relevant basic raw materials.1 For interested parties, this article will provide a brief insight as to the legal framework of mining industry in Malaysia.

Part 2: Legislations

In Malaysia, the two main legislations which govern mining related activities are the Mineral Development Act 1994 (“Act”) and the relevant state mineral enactments (“SME”). The Act is enforced by the Department of Minerals and Geoscience of Malaysia. In addition, the Federal Government also works hand in hand with the relevant state land and mine offices to govern the mining landscape.

Mineral Development Act 1994

In short, the Act provides provisions for the inspection and regulation of the exploration and mining of minerals and mineral ores and for other matters connected therewith.2

In addition, Section 63 of the Act provides:

(1) “The Minister may make regulations in respect of any matter which may be prescribed under this Act.”

Premised on the above section, as at the date of writing this article, there are currently seven (7) regulations made by the Minister of Natural Resources and Environment.

No.

Regulation(s)

Summary

Penalty **

(1)

Mineral Development (Operational Mining Scheme, Plans and Record Books) Regulations 2007

These Regulations provide the procedures for: -

  1. preparing operational mining schemes;

  2. operational mining plans; and

  3. operational record books.

**

(2) Mineral Development (Blasting) Regulations 2013

These Regulations impose, amongst others, a duty upon the license holder in relation to: -

  1. storage, handling and transportation of explosives;3 and

  2. safety aspects before, during and after the blasting operations.4

Any party who fails to observe any provisions of these Regulations shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit (RM 50,000.00) or imprisonment for a term not exceeding three (3) years or both.5 **

(3)

Mineral Development (Safety in Exploration and Surface Mining) Regulations 2014

These Regulations impose, amongst others, a duty upon the holder of prospecting licence, exploration licence, proprietary mining licence or mining lease (each as defined under the Act): -

  1. to prepare and submit a safety management plan to the Assistant Director of Mines for his approval, within six months of the start of any development work in a mine, or three months of the start of the operation;6 and

  2. to ensure safety in an area where exploration, mining or mineral processing is carried out in a mineral tenement.7

Any party who fails to observe any of the Part III provisions of these Regulations shall commit an offence and shall, on conviction, be liable to a fine not exceeding one hundred thousand ringgit (RM 100,000.00) or imprisonment for a term not exceeding five (5) years or to both.8

**

(4)

Mineral Development (Licensing) Regulations 2016

These Regulations provide, amongst others: -

  1. the prerequisites for:

  2. the storage management plan; and

  3. the mineral processing schemes;

  4. the prohibitions against obtaining minerals from illegal source;

  5. the procedures for:

  6. the application of licence(s);

  7. the issuance of licence(s);

  8. the renewal of licence(s);

  9. the assignment of licence(s)

  10. the need for appointment of a premise manager; and

  11. the duties imposed on the licence holder or the premise manager.

Any party who fails to observe any of the provisions of these Regulations shall commit an offence, and shall on conviction, be liable to a maximum fine not exceeding one hundred thousand ringgit (RM100,00.00) or to imprisonment for a maximum term not exceeding five (5) years or to both (Depending on the severity of the breach).

**

(5)

Mineral Development (Effluent) Regulations 2016

These Regulations provide:

  1. the parameters allowed in relation to discharge of effluent;9 and

  2. the procedures in relation to sampling and analysis of effluent.10

Any party who fails to observe any of the provisions of these Regulations shall commit an offence and shall on conviction, be liable to a fine not exceeding one hundred thousand ringgit (RM 100,000.00) or imprisonment for a term not exceeding five (5) years or to both.11

**

(6)

Mineral Development (Statistical Return) Regulations 2019

These Regulations impose a duty upon the holder of proprietary mining licence or mining lease or a manager (each as defined under the Act) to submit statistical monthly returns to the Assistant Director of Mines.12

Any party who fails to observe any of the provisions of these Regulations shall commit an offence and shall on conviction, be liable to a fine not exceeding fifty thousand ringgit (RM 50,000.00) or imprisonment for a term not exceeding three (3) years or to both.13

**

(7)

Mineral Development (Compounding of Offences) Regulations 2019

These Regulations provide, amongst others, the procedures in relation to compounding of offences.14

-

State Mineral Enactment

Presently, there are thirteen (13) States in Malaysia which have adopted the SME, which are as follows:

  1. Kelantan;

  2. Sarawak;

  3. Perak;

  4. Pahang;

  5. Negeri Sembilan;

  6. Melaka;

  7. Kedah;

  8. Terengganu;

  9. Selangor;

  10. Johor;

  11. Penang;

  12. Sabah; and

  13. Perlis;

The SMEs are essentially based on a model template created pursuant to the National Mineral Policy. Be that as it may, it is imperative to note that there are minor differences between various SMEs, in particular the operational and administration aspects.

In respect of the issuance of licences and mining lease, this responsibility befalls upon the State Director of the Lands and Mines Department, which is currently a sub-division of each State’s Land Office.


Part 3: Validity, Renewability and Transferability of Licences

Under the Act, there are seven (7) types of mineral tenement licences namely fossicking licence, dulang licence, individual mining licence, prospecting licence, exploration licence, proprietary mining licence, mining lease. The validity, renewability and transferability of the licences are set out as below: -

Mineral Tenement

Validity

Renewability

Transferability

**

Fossicking Licence

Not exceeding one (1) year

No

No **

Dulang Licence

Not exceeding one (1) year

No

No

**

Individual Mining Licence

Not exceeding one (1) year

No

No **

Prospecting Licence

Not exceeding two (2) years

Yes

Yes

**

Exploration Licence

Not exceeding ten (10) years

Yes

Yes

**

Proprietary Mining Licence

For the maximum economic life of the mine or mining operations, but shall not exceed the expiry date of the alienated land title

Yes

No, unless the transfer or dealing with the land includes the mining right

**

Mining Lease

For the maximum economic life of the mine or mining operations, but shall not exceed twenty-one (21) years

Yes

Yes

*Note: Any application for renewable or transfer of the above requires the approval of the relevant State Authority.


Part 4: Other Relevant Issues

Notwithstanding the above, applicants who are interested in the mining operations would also be wise to bear in mind the need to comply with the environmental, safety and health aspects, namely the Environmental Quality Act 1974, the Occupational Safety and Health Act 1994 and the Factories and Machinery Act 1967.

Pursuant to Section 34A of the Environmental Quality Act 1974,

(2) “Any person intending to carry out any of the prescribed activities shall, before any approval for the carrying out of such activity is granted by the relevant approving authority, submit a report to the Director General. The report shall be in accordance with the guidelines prescribed by the Director General and shall contain an assessment of the impact such activity will have or is likely to have on the environment and the proposed measures that shall be undertaken to prevent, reduce or control the adverse impact on the environment.”