Mining 2019 Comparisons

Last Updated January 30, 2019

Law and Practice

Authors



AMERIA Legal and Tax Advisors AMERIA Legal and Tax Advisors is the oldest full-fledged business advisory team in Armenia, and is committed to the provision of comprehensive legal advisory and representation services to businesses and individuals on business-related issues, adding real value to its customers and contributing to their success in mining and other sectors. With a seasoned team of 13 individuals, Ameria's legal counselling covers a diverse range of the issues. Its lawyers work with local and international entities and organisations, including major legal due diligence and M&A transactions in the mining sector. The firm is part of Ameriagroup, a group of professional companies providing financial and consulting services in Armenia.

The Republic of Armenia is the exclusive owner of mineral deposits. These deposits may be leased, under concession, to be used and benefited from, but may not be privatised. The inner tracts of subsoil may not be bought, sold, pledged or otherwise alienated.

Mining legislation is based on the Minerals Code or Subsoil Code and regulations enacted by the Cabinet of Ministers and regulatory authorities (the Ministry of Energy and Natural Resources, the Ministry Of Nature Protection and the Environmental Protection and Mining Inspection Body).

Oil and gas regulation is explicitly included within the scope of the Minerals Code.

The mining industry is administered by the Cabinet of Ministers, the Ministry of Energy and Natural Resources, the Ministry Of Nature Protection and the Environmental Protection and Mining Inspection Body.

For prospecting, it is necessary to obtain a prospecting (exploration) permit and a prospecting/exploration contract with the state, and for the prospecting/exploration programme to be approved by the state (after environmental and technical safety clearance).

The requirements for exploration are the same as those required for prospecting (there is no difference between the regimes of prospecting and exploration, as long as both are conducted for mining purposes).

For mining, it is necessary to obtain a mining permit, a mining contract with the state and a Land Tract Allotment Act. The mining programme must also be approved by the state (after environmental and technical safety clearance).

Overall exploration/mining programmes, as well as each of the facilities to be used (ie, the mine, the tailings system, the processing plant and other facilities), must undergo environmental impact assessment clearance and gain positive opinions from state-funded experts.

A mining title grants its holder the exclusive right to explore and/or make use of the approved/granted deposits within the allotted area.

A title-holder has a duty to comply with the terms and other conditions of the mining title written into the mining contract (complying with the relevant laws and regulations and conducting works solely in accordance with the approved programme).

Surface rights must be obtained separately and without connection to mining title.

Possession of surface rights is a condition for exploration/mining operations, but does not automatically result in such operations being permitted.

The duties of a title holder towards landowners depend on the particular contract between them (unless the mining title-holder is the owner).

At the end of a title, the mine owner must fully implement the mine closure and cultivation programme approved as a part of the mining programme, and fund it throughout the term of the mine's operation.

Environmental protection-related issues are principally regulated under the following legal acts:

  • the Law of the Republic of Armenia on Environmental Impact Assessment and Expertise;
  • the Law of the Republic of Armenia on Waste;
  • the Subsoil Code of the Republic of Armenia;
  • the Forestry Code of the Republic of Armenia;
  • the Law of the Republic of Armenia on Specially Protected Areas;
  • the Law on Protection of Atmospheric Air;
  • the Law of the Republic of Armenia on Fauna; and
  • the Law of the Republic of Armenia on Flora.

The Ministry of Nature Protection and the Environmental and Mining Inspection Body have environmental competence in mining issues.

The environmental obligations of title-holders are many. The most significant include the obligation to prepare an environmental impact assessment (EIA) for the mining programme and its associated facilities and to ensure that this is approved by the government, to comply with the terms of the programme and EIA throughout operations, and to comply with waste management and waste disposal as well as mining area re-cultivation programmes as approved by the government.

There are no special rules or taxes for foreign people or companies, as long as foreigners are tax residents of Armenia. The regime for tax non-residents is different. Tax treatment may also vary depending on the double taxation avoidance treaties in force with particular jurisdictions.

There are some restricted or excluded zones for mining activities, including special protected areas, cultural, historical and natural monuments areas and areas which are the habitat of endangered species. Such areas are explicitly excluded from mining activity.

Local communities must be listened to as part of the EIA clearance required before mining titles may be granted. As the main owners of the land, affected communities can also impact the mine owner by refusing to grant surface rights, etc. A mining contract may require the mine owners to implement social programmes at their expense, specifying minimum levels of expenditure for these purposes.

The state can terminate a mining title without cause for higher public interest, compensating the title-holder (at a rate of the market value, plus 15%) for any such expropriation of mining rights. The state may also terminate the mining rights of the title-holder if the latter fails to remedy any breaches of laws within 90 days of the instruction to remedy being issued.

General taxes include:

  • corporate profit tax;
  • tax on dividends; and
  • VAT on purchases, withdrawing third-party taxes for non-resident counterparties, resident natural persons and employees.

Mining-specific taxes include:

  • ecological payments;
  • nature use payments;
  • re-cultivation deposit payments;
  • royalty payments to the state (only applicable to metal mining);
  • annual state duty for the licence (permission) on subsoil use; and
  • other duties stipulated under Armenian law.
Ameria Legal and Tax Advisors

2 Vazgen Sargsyan street,
0010,
Yerevan,
Armenia

+37410 56 11 11

+37410 51 31 33

a.chatalyan@ameriagroup.am www.amerialegal.am
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Law and Practice

Authors



AMERIA Legal and Tax Advisors AMERIA Legal and Tax Advisors is the oldest full-fledged business advisory team in Armenia, and is committed to the provision of comprehensive legal advisory and representation services to businesses and individuals on business-related issues, adding real value to its customers and contributing to their success in mining and other sectors. With a seasoned team of 13 individuals, Ameria's legal counselling covers a diverse range of the issues. Its lawyers work with local and international entities and organisations, including major legal due diligence and M&A transactions in the mining sector. The firm is part of Ameriagroup, a group of professional companies providing financial and consulting services in Armenia.

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