Mining 2021

The new 2021 Mining guide features 12 jurisdictions. The guide provides the latest information on the granting of mineral rights, the impact of environmental protection and community relations, the effect of climate change legislation and sustainable development initiatives on mining, taxation on mining and exploration, and mining investment and finance.

Last Updated: January 21, 2021

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Pinheiro Neto Advogados is a Brazilian, independent and full-service firm, specialising in multidisciplinary deals and translating the Brazilian legal environment for the benefit of local and foreign clients. Founded in 1942 and with clients in almost 60 countries, the firm has grown organically and developed a distinctive, tight-knit culture, with a low associate-to-partner ratio. Its unique, democratic governance structure promotes transparency and consensus-building among the partners. With a focus on innovation, the firm has kept its competitive edge throughout the years, and is widely hailed as an institution of the Brazilian legal market. In order to maintain its status as a valued strategic partner to its clients, the firm invests heavily in professional development, not only through strong on-the-job training, but also by means of the highly structured Pinheiro Neto Professional Development Program championed by the firm.


Introduction

The mining industry is still trying to recover from one of the most difficult periods it has ever faced. The COVID-19 pandemic, the downturn in commodity prices and the volatility of the market, along with other factors, have caused mining companies to seek greater safety, efficiency, automation and reduction of costs.

In a very interesting paper, curators of the World Economic Forum have identified seven points that they believe will shape the mining and metals' sector:

  • the decarbonisation of economies, because low-emission energy and transportation systems are mineral-intensive, potentially providing a great opportunity for the mining sector;
  • exposure to less well-developed and higher-risk jurisdictions as they will be forced to search for reserves;
  • moving to frontier jurisdictions, the industry will have to find ways to limit risk through new financing and production models;
  • the necessity of dealing with geopolitics and having to navigate rising country risk and protectionism;
  • ensuring benefits for affected communities;
  • transparency and data sharing will continue to be a major area of debate; and
  • new technologies and more automation will lead to a workforce with different skills and the need to deal with the transition of workers who cannot be absorbed into the operation as a result.

In addition, the challenges that arose and the risks imposed by the COVID-19 pandemic have made and will probably make the mining industry look harder on safety, workforce and community relations, as well as logistics.

These trends illustrate very well that, despite being fundamental to today's way of life, the mining industry currently faces a number of questions. The scenario is more challenging than ever before for mining companies. Consequently, the job and role of the mining lawyer is likewise more demanding.

Legislative and Regulatory Changes

Many countries around the world introduce, from time to time, significant legislative or regulatory changes to their mining, royalty and tax legislations. Recently, a number of new legislations and regulations affecting the mining industry have been introduced as countries tried to respond to the new scenario presented by the global impact of the COVID-19 pandemic.

From an economic viewpoint, commodity price changes can affect the mining industry in many different ways. The availability of funds for exploration projects, investment decisions for the development of new operations or the expansion of existing ones, job creation can all be influenced by the fluctuation of commodity prices in different manners. Over the years, it is clear to see the influence that prices have had in different markets and how they can affect countries and companies.

Dealing with new technologies, climate concerns, decarbonisation, environmental requirements, community relations, human rights' matters, health and safety, regulatory, tax, financing and social issues, among many other subjects, make this high-risk, long-term industry more a more daring prospect than ever before.

Hence, mining lawyers need to keep on top of the evolutions and features of a fast-changing environment and global order, the better to assist their clients as they navigate through a constantly changing world.

Established Mining Law

A deep understanding of the more traditional mining law matters, such as the different legal systems, sources of law, ownership of mineral resources, role of the State, legal nature of mineral rights, granting of mineral rights and security of tenure, just to name a few, remain a fundamental requirement for lawyers who wish to provide their clients with premium, top-notch services.

Additionally, lawyers must be fully updated and in control of the impact of health and safety requirements, taxes, duties, royalties, transfer tax and capital gains around the globe, as these are key factors to successful mining investments and operations.

Mining Investments and Finance

Mining investment and finance legal matters play a dominant role in the work of a mining lawyer. It is crucial for the mining law practitioner to be fully informed about the legal aspects of investment attraction, special rules on foreign investment approval, and restrictions to foreign investment in the exploration and mining sectors. Multilateral and bilateral treaties that favour and protect investments in the exploration and mining are also of the utmost importance.

Knowledge of the main sources of finance for exploration, development and mining in different jurisdictions will certainly be a great advantage for a lawyer in this field.

The intricacies of domestic and international securities' markets in the financing of exploration, development and mining in different parts of the world, as well as the legal features relating to security over mining tenements and related assets in the context of exploration, development and mining finance, are essential to a mining lawyer’s performance.

Environment, Health and Safety

Environmental, health and safety legal matters have been at the top of the list for mining lawyers for some time now. Mining companies are mostly very conscious of their environmental responsibilities. The majority of the significant players have very high standards and are prepared to adopt all necessary measures to deal with the environmental impacts arising from their mining operations. The consequences of the Covid-19 Pandemic made mining companies – and consequently mining lawyers -- be even more acute than before on health and safety concerns.

However, what the mining industry in different jurisdictions wants is clarity of the rules and consistency in the application of these regulations at all stages, including environmental permitting and health and safety throughout the course of the operation. In addition to this, stronger, better-equipped and resourceful permitting authorities would add to the desired legal security to the mining industry.

These elements – clear and stable rules, consistent application of the law and trustworthy permitting authorities – would certainly be beneficial, not only the mining industry, but also the different mining jurisdictions in the world, particularly the less developed ones.

Recent Issues

More recent issues, such as the impact of the health and safety arising from the Covid-19 Pandemic, climate change, decarbonisation, human rights' concerns, supply-chain standards, sustainable development policies, environmental protection and community relations, prior and informed consultation of affected people, on the ability of countries to exploit their mineral wealth, have become essential matters that need to be dominated by mining law practitioners.

The methods of relating to these features and taking a position is evolving very rapidly. For example, new ways of communicating, especially through social media and modern applications, such as Facebook, Twitter and WhatsApp, have brought significant changes to the way information (true or false) is disseminated among society. These new tools introduced tremendous differences in how communities, populations and groups of interest can mobilise, in favour or against a certain mining project or operation.

The mining industry, which historically has been poor at communicating, now faces an incredibly more challenging environment to get its message across.

Conclusion

The countries included in this guide have vast mineral potential, with swathes of territory still to be properly prospected and explored. Hopes around the globe are for more sensible, less interventionist and more business-friendly policies.

Populations, in particular those from less developed countries, have high expectations.

People from around the world are showing that they eagerly seek greater efficiency, fewer government interventions, privatisations, significant reduction of bureaucracy and a strong fight against corruption and social disparities. 

If the leading mining jurisdictions are able to deliver on these demands, there will be great interest from investors in exploration and mining sectors, which will in turn lead to economic and social prosperity. 

This guide aims to provide a wealth of experience and the submissions have been prepared by some of the most reputable and experienced law firms in the field of mining law.

Authors



Pinheiro Neto Advogados is a Brazilian, independent and full-service firm, specialising in multidisciplinary deals and translating the Brazilian legal environment for the benefit of local and foreign clients. Founded in 1942 and with clients in almost 60 countries, the firm has grown organically and developed a distinctive, tight-knit culture, with a low associate-to-partner ratio. Its unique, democratic governance structure promotes transparency and consensus-building among the partners. With a focus on innovation, the firm has kept its competitive edge throughout the years, and is widely hailed as an institution of the Brazilian legal market. In order to maintain its status as a valued strategic partner to its clients, the firm invests heavily in professional development, not only through strong on-the-job training, but also by means of the highly structured Pinheiro Neto Professional Development Program championed by the firm.