Any company trying to gain a licence for a new mineral site is only too familiar with the headaches of dealing with multiple private and public stakeholders. Is it time to call for reform of the mineral licensing system?

For mineral explorers who venture into the shadowy world of UK mineral rights, it can be a chilling and possibly terminal experience.

Many countries, such as Australia and Canada, have a relatively clear system for the licensing of mineral exploration and extraction. But UK minerals law and practice have evolved over a thousand years, and the result is not exactly what you would design if starting from scratch.

The basic rule is that mineral rights go with the land, unless they have been severed from the surface rights. This severance can happen in various ways:

  • The mineral rights can be sold separately from the surface, or reservations or exceptions to the title can apply.
  • Mineral rights can be vested in a party other than the surface rights holder, by statute.
  • Various eccentric but effective customs and practices can apply; such as tin-bounding in Cornwall, where a prospector could stake his claim to an area by placing stones on the boundaries, to be validated by a proclamation by the stannary court.
  • The mineral rights may be manorial, (retained by the lord of the manor when the surface rights were transferred).
  • Thus, in Great Britain (Northern Ireland is different), mineral rights are generally in private ownership, except oil, gas, coal, gold and silver, which are owned by the state and are very often held in separate ownerships from the surface rights of the same area.

Also, many mineral rights are not registered. The Land Registry holds information on mineral-rights ownership if registered, but the registration of mineral rights, unless manorial, is voluntary, so there is currently no comprehensive, reliable register.

And even many manorial rights still remain unregistered, even though the Land Registration Act 2002 removed the “overriding rights” protection of those rights from October 2013. So, if an exploration company’s area of interest contains various mineral rights owners that company must:

  • Negotiate a deal (typically a deed of option and mining lease) with each mineral-rights owner in the whole bloc, unless they have had the foresight to combine in an association, as was the case at Hemerdon, now called Drakelands mine.
  • Negotiate access rights to the whole surface area with potentially numerous surface rights holders (including access agreements, disturbance payments etc).
  • Obtain planning permission, unless development is permitted, involving the local mineral planning authority and all necessary regulatory consents and permits, notably from the Environment Agency (EA).

If surface rights holders will not consent to the project, the last resort is an application, initially to the secretary of state under the Mines (Working Facilities and Support) Acts 1966 and 1974. I have done one of these: the Department for Business, Innovation & Skills (BIS) was great and it was successful, but it is not something to be undertaken lightly.

The confusion over mineral rights is compounded by the fact that we have no national onshore licensing system, except in Northern Ireland, for the exploration and extraction of minerals.

In summary, the diversity of ownerships of both surface and mineral rights, the difficulty of proving ownerships of mineral rights, and the lack of comprehensive records or system of registration or any licensing system, are material obstacles to mineral operators seeking to explore or develop projects.

Balancing interests

It can take years to assemble an exploration bloc, requiring patient negotiations with both surface and mineral rights holders. The outcome is far from certain — all it takes is for one owner to refuse. Human nature being what it is, everyone wants to get the best possible deal out of the exploration company. There is a commonly held assumption that mining companies are awash with money. At present this is rarely the case, and certainly not at the beginning of a project.

To an operator, how many mineral rights holders they have to deal with is sometimes just as important a question as the likely tonnage the site might generate.

What is needed is a way to balance the interests of a legitimate, accountable mining industry with a fair return to stakeholders and a scrupulous regard for the environment. After all, if there is no extraction of minerals, there will not be any profit for the mineral rights holders to participate in.

Our valuable mineral resources will be wasted, and surface development will continue with little regard to the subsoil resources. Minerals must be worked where they are found. But if they are sterilised by surface development that could be located elsewhere, at least until the minerals are extracted and the site remediated, then the real opportunities to benefit the economy and create long-lasting, skilled jobs, are gone.

Personally, I believe that a fair and reasonable licensing system is the answer. This is not a new idea. Our petroleum industry, for example, has a well-established licensing system – an operator applies for a petroleum exploration and development licence (PEDL), on clearly defined terms. True, petroleum is state-owned, so the mineral rights position is different, but there are many aspects of the system that could be translated to onshore mineral rights.

Change is perfectly possible: the wide-ranging reforms of the Infrastructure Act 2015 on underground access demonstrated the willingness of the UK government to impose dramatic change in mineral rights law, for a perceived economic benefit.

Irish lessons

How can we best balance the interests of stakeholders while ensuring a fair return to mineral-rights holders? The experience of other countries can provide some useful examples. The position in the Republic of Ireland is interesting, because it combines a mineral licensing system with protection of mineral rights in private ownership.

Although most minerals are state owned, including gold and silver, there are also privately held mineral rights, detailed in the land registry. But the right to work almost all minerals was vested in the minister by the Minerals Development Act 1979. Compensation is payable to a private mineral owner, either as agreed or by arbitration by the Mining Board.

The system is run by the Department of Communications, Energy and Natural Resources through the exploration and mining division. The process allows an initial statement of interest; prospecting licence (six years with renewal option), and mining leases and licences.

The department carries out title searches to determine the ownership of minerals before a lease or licence is issued, and must notify possible owners. Both the Republic of Ireland and Northern Ireland, which also has a well-established minerals policy and licensing system, have seen renewed interest in minerals, investment, and the creation of a substantial number of skilled jobs as a result of offering a mining-friendly environment.

One day, perhaps the rest of the UK could offer mineral exploration companies a licensing environment that would actually encourage inward investment. This would need the creation of a unitary authority that would operate a national licensing system with the power to grant exploration licences on clearly defined terms.

It would work closely with the EA and other key bodies. Planning decisions on mineral projects should, I believe, be under the ultimate control of such a unitary body, acting as a national mineral-planning authority.

What is clear is that, without a dramatic change in minerals law and practice, minerals companies will invest elsewhere, to the detriment of the UK minerals sector. Can we afford to sit back and let our national resources go to waste?

 

This article originally appeared in Mineral Planning magazine on 3 August 2016