Licensing system in the industry

Types of licences 

1) prospecting: up to 5 years with further renewal according to the technical project;

2) exploration: up to 10 years with further renewal according to the technical project;

3) mineral deposits development: up to 20 years with the further renewal until complete depletion of commercial minerals;
– targets, not related to geological exploration and commercial minerals deposits development: for the period provided in the technical project, with the further renewal as per the terms of amended technical project.

Information about the licensed and free subsoil targets is placed on the official site of the authorized state body for the implementation of the state policy on subsoil use.

According to the Subsoil Law the licensee has the exclusive right to change subsoil use license for prospecting to subsoils use license for exploration license in respect of an occurrence or a deposit discovered and registered by the said licensee at the State Registry. Thus, the business is guaranteed security of investments.

Procedures for granting subsoil use rights

Tender

Tenders are held on the targets of national significance by the decision of the Government of the Kyrgyz Republic. A tender participant recognized as the winner of the tender by the  decision of the Governmental Tender Committee  on the basis of accumulated points in the course of the tender becomes the Licensee. The license is issued in the office of the Agency based on the decision of the  Governmental Tender Committee.

Auction

Based on the auction results subsoil use right shall be granted:

– for the targets stated in the list, approved by the state body, authorised for implementation of the state subsoil use policy;

– for the targets of national significance which were not awarded based on the results of two tenders;

– for the targets not included into the list of auctioned deposits, but those with two or more applications for with the complete list of documents.

The bidder who offered the highest bid is recognised as the winner by the Tender Committee. The license is awarded to the winner of the auction at the office of the Agency on the basis of the minutes of the auction committee.

Direct negotiations

The subsoil right is granted through direct negotiations:

  1. for the deposits of commercial minerals and perspective areas that were subjects for two auctions acknowledged as failed;
  2. for the deposits of commercial minerals and perspective areas that were subjects for two auctions acknowledged as failed;
  3. for the subsoil areas, not associated with the geological study of subsoil and development of mineral deposits;

Consideration of the application and the decision to issue a license is within the authority of the Committee on subsoil use regulation through discussion and approval of licensing terms with the applicant. The results of the negotiations are documented in the minutes. The minutes of the negotiations signed by the parties is the basis for issuance of the license.

If the two or more applications are filed for the target that is subject to licensing through direct negotiations within 20 days, the target becomes subject for auctioning.

Obtaining a license by a foreign entity 

Legal and physical entities, established under the legislation of the Kyrgyz Republic, as well as foreign legal entities with state registration in accordance with the legislation of the Kyrgyz Republic, and physical entities, registered under the legislation of the Kyrgyz Republic as private entrepreneurs, can become subsoil users.

In order to obtain the license foreign legal entity is required to register a branch company (100% ownership) in the Kyrgyz Republic with indication of the name and the address of the licensee in the Kyrgyz Republic.

Procedures for granting subsoil use rights

Licensing is required for all types of subsoil use rights, except:

1.granting of rights to use subsoil under a production sharing agreement;

2.granting of rights to use subsoil under a production sharing agreement;

3.state registration.

Number of licenses for subsoil use, issued to the the subsoil user, is not limited.

Refusal in providing rights for subsoil use may occur in the following cases:

1.- if the applicant submitted incorrect data and (or) has insufficient financial capacity to arrange exploration or  development of the target area;

2.- if the license was already issued for the said target and for the same types of mineral resources.

The decision to issue a license for subsoil use or refusal to issue a license for subsoil use by the licensing authority is adopted within 30 days from the date of submission of the application for a subsoil use license.

The licensee must pay a bonus, specified by the tax legislation of the Kyrgyz Republic, within 30 days from the date of issuance of the license for subsoil use and the license fee for the first year of possessing the license for subsoil use and submit the documents, confirming payment, to the state body, authorized for implementation of the state subsoil use policy.

Suspension of a license Revocation of a license
The right for subsoil use may be suspended by the Agency for up to 3 months, providing indication is given for the reasons for the suspension and with instructions to rectify the infringements in the following cases:

1) violation of the requirements of protection of mineral resources, environmental and industrial safety, set by the relevant legislation of the Kyrgyz Republic;

2) submission of the report on the work performed, containing unreliable information;

3) submission of the report on the work performed, containing unreliable information;

4) failure to comply with the requirements on the accumulation of funds for reclamation of the allocated land and/or the  licensed property;

5) use of methods of mineral resources development, that   endanger the health and safety of workers and the public, as well as irreparable damage to the environment and loss of mineral reserves.

 The right for subsoil use is revoked by the decision of the Agency in the following cases:

1) transfer of licenses for subsoil use as collateral and when changing participants without registration with the Agency;

2) delays of payment over 30 days for a bonus and (or) license payments and (or) royalty;

3) waiver of the subsoil right by the subsoil user;

4) expiration of the license for subsoil use, if the licensee does not apply for an extension or transformation of the license within the specified period;

5) operating without a technical project that has passed all the necessary expert evaluations;

6) non-rectification of the reasons which led to the suspension of the right of subsoil use.

Decision to suspend or terminate the right of subsoil use, specifying the grounds of such decision shall be taken by the Committee on subsoil use licensing and then forwarded to the subsoil within 7 business days. Decision to suspend or terminate the right to use subsoil shall enter into force from the date of its adoption.

Termination of the right of subsoil use is not made if caused by no fault of the licensee, but because of force majeure, which have prevented implementation of legal requirements. Depending on the nature of the force majeure, such circumstances shall be confirmed by the documents issued by the competent authorities of the Kyrgyz Republic.

The procedure and conditions of subsoil use licensing conducted in accordance with the regulation approved by the Government of the Kyrgyz Republic.

Mandatory expert evaluation of technical projects 

According to the law on mineral resources of the Kyrgyz Republic, the technical design for prospecting, exploration or development of the deposit is subject to mandatory expert evaluation for compliance with the requirements of industrial and environmental safety and subsoil protection.

Expert evaluations of a project for compliance with the requirements of industrial safety and subsoil protection are held at the State Agency on Geology and Mineral Resources under the Government of the Kyrgyz Republic.

Expert evaluation of the project for compliance with environmental safety is held at the State Agency for Environmental Protection and Forestry under the Government of the Kyrgyz Republic.