Mining 2024

Challenges for the Mining Industry in the Face of New Demands

As the world attempts to understand new demands, challenges will emerge for the mining industry. Mining companies around the world are seeking new opportunities and trying to adapt. Newcomers are on the move. All are increasing ESG standards and establishing and enhancing trust with stakeholders, including governments and communities.

Recent changes fostered the implementation of new technologies to reduce costs and increase production efficiency, as mining companies were forced to search for innovative, sustainable and more efficient production methods.

From a macroeconomic standpoint, economies and mining companies that have traditionally relied on conventional minerals such as iron ore and gold are observing an ever-increasing appetite of investors for green minerals projects. Traditional base metals players are keen for diversification towards green minerals, which may be perceived as a reaction to society and the market’s call for the adaption of the mineral industry to ESG principles.

ESG practice is perceptively increasing and is here to stay. The transition of the global energy matrix towards more renewable sources and the rising claims for low-carbon and sustainability goals will also require improvements in ESG standards for mining companies, as the mining industry plays a major role in the energy transition and will continue to do so in the years to come.

These trends illustrate very well that the mining industry currently faces a number of questions, in particular those arising from increased ESG-related concerns and the new technologies flourishing in the mineral production chains. The scenario is more challenging than ever 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 legislation.

From an economic viewpoint, commodity price changes can affect the mining industry in many ways. The availability of funds for exploration projects, investment decisions for the development of new operations or the expansion of existing ones, and 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, and regulatory, tax, financing and social issues, among many other subjects, make this high-risk, long-term industry 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 – remains 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 in successful mining investments and operations.

New technologies being implemented in mineral production chains, such as workflow automation and blockchain platforms for trading and tracking commercial operations, will demand equivalent legal skills among mining lawyers, as new legal issues may arise from the regulation of such matters by governments and from the dynamics of the new reality. This will demand constant improvement by mining lawyers, who will need to conduct cross-disciplinary analysis and counselling to assess increasingly complex mining operations from all angles.

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 on foreign investment in the exploration and mining sectors. Multilateral and bilateral treaties that favour and protect investments in 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, equipping these professionals to work in a variety of transnational deals.

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.

In the past years, private investors have signalled great appetite for green minerals projects aimed at energy transition, which has heated the markets for financing and M&A. In the years to come, considering the ambitious goals set for decarbonisation and the utmost relevance of certain minerals in this scenario, the industry may expect further increases in the capital availability for this type of investment, without prejudice to other minerals that may come into fashion.

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.

Mining industry players in different jurisdictions want 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 in the mining industry.

These elements – clear and stable rules, consistent application of the law and trustworthy permitting authorities – would certainly be beneficial not only for 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 health and safety, climate change, decarbonisation, human rights concerns, supply-chain standards, sustainable development policies, environmental protection and community relations, prior and informed consultation of affected people, and the ability of countries to exploit their mineral wealth – have become essential matters that need to be appraised 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 X 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 in which to get its message across.

In this context, the “G” pillar of the ESG initialism may have a major role to effectively showcase the industry’s true values and improve society’s view of mining activities, as there is plenty of room for improving matters relating to diversity and inclusion within mining authorities and companies.

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 in 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.

Society and investors’ call for a low-carbon and sustainable economy is directly linked with mineral prospection and exploration, which will inevitably intersect with the improvement of ESG standards by mining companies to cope with such demand.

If the leading mining jurisdictions are able to deliver on these demands, there will be great interest from investors in the 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.