Natural Resource Investment and Africa’s Development

Natural Resource Investment and Africa’s Development

New Horizons in Environmental and Energy Law series

Edited by Francis N. Botchway

This well-researched book covers a wide spectrum of important issues that are central to investment in natural resources and ultimately, economic development of Africa.

Chapter 4: Contractual Arrangements for Resource Investment

Emmanuel Laryea

Subjects: environment, environmental law, law - academic, environmental law, law and development


Emmanuel Laryea INTRODUCTION 1 Underpinning most foreign investments in resources are contractual arrangements either with a State (the host State or its agency) or a private entity (or entities) in which the resources to be exploited are vested. Ownership of natural resources is primarily determined by domestic law, though international law also plays an important part, particularly in resources that transcend international borders1 or in areas with undefined boundaries.2 Different jurisdictions have varying models of vesting natural resources, sometimes dependent on the nature of the resource concerned. In some jurisdictions, such as Western Europe and North America, private ownership dominates. Natural resources of the extractive kind are primarily vested in private parties (or entities) in whom the land containing the resource is vested.3 In other jurisdictions, natural resources are vested in the State (constituted in a government or monarch, as the case may be), usually for the benefit of the public at large.4 In most African countries natural resources are vested in the State.5 Thus, the contractual arrangement, which may range from a permit or licence for exploration and discovery to a substantive contract for development, production and distribution, is often between the investor and the State (or its agencies). The primary object of the investor is to procure profits, obtaining the maximum possible risk-adjusted return on its investment over the life of the investment. This informs issues of interest to the investor when it comes to arranging for and agreeing the contractual terms of engagement. Of particular interest to...

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