Mineral Rights Cadastre

Transcription

1 Mineral Rights Cadastre Global Lessons Learned PROMOTING TRANSPARENT ACESS TO MINERAL RESOURCES Washington, Thursday 5 th March 2009

2 EITI ++ CHAIN Access to Resources Monitoring of Operations Collection of Taxes and Royalties Revenue Management and Allocation Efficient Sustainable Use OUTLINE 1.- Mineral Rights management: the cornerstone of mining sector development. 2.- The Mineral Rights Cadastre (MRC): autonomy and financial sustainability 3.- Two hot topics: a) Speculation. b) First come first served and auctioning. 4.- Conclusions.

3 1.- Mineral Rights management: the cornerstone of mining sector development: MRC - The interface between the State and the mining companies with respect to mineral rights management. MRC It has to keep the balance between protecting the interests of the State and the rights of mining companies. MRC Implementation of adequate mineral rights regulations allows countries to develop their mining sector according to their mineral potential.

4 How companies perceive the countries Geologically High Potential countries = Attractive Countries (Geologically High Potential + Low Risk) Countries = = Attractive Countries MINING CADASTRE IS ONE OF THE KEYS TO DECREASE THE RISK FOR MINING INVESTMENTS High risk Low risk If a country wants the investment, it should... reduce risk Increase return Low expected return These prospects attract financing High expected return

5 How the licensing procedures and MRC can decrease the risks? Increasing the security of tenure by : 1) Granting licenses where the holder s s rights are clearly defined in Regulations. 2) Avoiding overlapping and uncertainty (potential double property) about the position and geometry of the mineral rights. 3) Ensuring the exclusive right of the titleholder to access to the exploitation license at the end of the exploration phase. Nobody can invest in exploration if this right is not secured.

6 Mineral Rights management: the cornerstone of mining sector development: What are the principle to provide a strong security of tenure? Clear and simple licensing rules Avoiding unnecessary and unlimited waiting periods Transparency Public office, open for consultation of maps and registries No discretionality Application of the same rules and criteria for all Objectivity No subjective evaluation criteria for approval

7 2.- The Mineral Rights Cadastre (MRC): autonomy and financial sustainability The financial sustainability to ensure MRC services is critical to ensure the effective management of the mining sector NON ATTRACTIVE COUNTRY RISKY INVESTMENTS LOW INVESTMENTS INADEQUATE MANAGEMENT LOW INCOMES

8 How to ensure that stable and predictable financial resources will be sufficient to maintain the services offered by MRC? Many countries allocate (by law) the service fees generated by mining sector among the agencies responsible for their management But practical experience demonstrated that actually the resources are not getting to these agencies. RISKY INVESTMENTS INADEQUATE MANAGEMENT NON ATTRACTIVE COUNTRY LOW INVESTMENTS LOW INCOMES Many countries experience are showing that the sustainable management of the mining sector is best implemented through the set up of financially autonomous MRC Institutional Guarantees?

9 3.- Two hot topics: A) How to deal with speculation? TWO ESSENTIAL STATEMENTS : 1.- Speculation is present in all the economic activities and can be considered part of the framework of the economic activity itself. 2.- Not all speculative practices should be considered negative and should be differentiated between the passive passive or active active types.

10 3.- Two hot topics: A) How to deal with speculation? ANY MEASURE INTRODUCED TO DECREASE THE SPECULATIVE PRACTICES SHOULD PRESERVE THE BALANCE BETWEEN THE INTERESTS OF THE STATE AND SECURITY OF TENURE. THE INTRODUCTION OF SUBJECTIVE OR DISCRETIONARY CRITERIA SHOULD BE AVOIDED AS THEY WOULD CAUSE NEGATIVE EFFECTS WHICH WOULD BE WORSE THAN THE PRESENCE OF SPECULATION

11 3.- Two hot topics: A) How to deal with speculation? FLEXIBILITY Idealized evolution of metal prices Requests and needs of States and titleholders changes depending of prices situation Mineral Prices ($) STATE Low passive speculation level Retain investments TITLEHOLDERS Increase security of tenure for ongoing projects STATE High passive speculation level Attract new investments TITLEHOLDERS Fast access to free areas and New licenses

12 3.- Two hot topics: A) How to deal with speculation? ESCALATING RENTAL FEES Advantages Easy to be implemented No subjectivity No discretion. Transparency No corruption May ensure economic sustainability Easy adaptation to the sector. Guarantees security of tenure (no risks). Disadvantages Not able to stop speculation (?) Possible corruption in use of generated incomes Institutional distortions (making money?) MANDATORY RELINQUISHMENT Advantages Easy to be implemented No subjectivity No discretion. Transparency No corruption Avoid hoarding of areas (?). Disadvantages Not adaptable to the sector evolution. Affects the security of tenure.

13 3.- Two hot topics: A) How to deal with speculation? MINIMUM INVESTMENTS OR WORK OBLIGATIONS Advantages Easy adaptation to the sector evolution. Avoid dormant licenses (?) Disadvantages Practical difficulties for implementation. Potential subjectivity and discretion. Risks for lack of transparency Risk for corruption. Risks for security of tenure $us / Year Years 9 12 Escalating rental fees, if properly applied, is recommended as the more flexible and easily adapted measure to decrease passive speculation. Other type of measures, although efficient in developed countries, normally have important challenges to be implemented in less developed countries,

14 3.- Two hot topics: B) First come, first served versus auctioning. PRINCIPLE 1ST COME 1ST SERVED FOR LICENSING IS TODAY IMPLEMENTED BY THE MAJORITY OF MINING COUNTRIES AND WELCOMED BY TITLE APPLICANTS AND HOLDERS. OTHER COUNTRIES PREFER GRANTING LICENSES THROUGH AUCTIONING (TENDER BIDS). IN FACT, BOTH OPTIONS ARE COMPLEMENTARY AND CAN BE APPLIED IN PARALLEL. AUCTIONING WOULD APPLY WHEN INFORMATION ON RESOURCES IS AVAILABLE OR IN CASE OF PRE ESTABLISHED CIRCUMSTANCES.

15 3.- Two hot topics: B) First come, first served versus auctioning. FIRST COME FIRST SERVED Advantages Easy to be implemented No subjectivity No discretion. Transparency Not corruption Disadvantages Granting to not adequate (?) titleholders. Allows speculation (?) AUCTIONING (TENDER BIDS) Advantages Transparency (if properly implemented). Stop speculation. Granting to adequate (?) titleholders. Might generate additional revenues for the State Disadvantages Difficulties for implementation (requires available information). Potentially, increase of subjectivity, discretion and corruption.

16 3.- Two hot topics: B) First come, first served versus auctioning. Strong differences between overall geological characteristics of deposits: A) Differences in the geological context. A) Differences in size and probabilities to hit the target: 1 to 1,000 in mining vs 1 to 3 in oil.

17 3.- Two hot topics: B) First come, first served versus auctioning. Competitive licensing rounds are generally accepted as a standard procedure for the licensing of oil and gas blocks. However, the conditions and attitudes within the oil and gas sector are very different, due mainly to the much higher reward/risk ratio, and the scale of operations and investments High risk Low risk MINING SECTOR Low expected return OIL & GAS SECTOR High expected return

18 3.- Two hot topics: B) First come, first served versus auctioning. Practical experience in countries where tendering has been adopted as standard method for granting, shows an immediate decrease in exploration investments. However, tendering is well adapted for granting under some pre-established circumstances,as for instance: - When an overlapping appears in a vacant area immediately after the revocation, relinquishment, expiration or annulation. -When the State hold enough information about potential or reserves of some vacant area.

19 4.- Conclusions : Transparency is mandatory but not enough. Furthermore, licensing and cadastral procedures must reduce or minimize risks and ensure the security of tenure. Basic principles (transparency, lack of discretionality and subjectivity, etc.) are valid for both mining and oil sectors. But its application should be carefully adapted to the needs and particularities of each activity.