Otto - Security of Mineral Tenure

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Transparency and Accountability

Policy, Legal and Contractual Framework

Sector Organization and Institutions

Fiscal Design and Administration

Revenue Management and Distribution

Sustainable Development

Otto, J., Security of Mineral Tenure: Time Limits, in International and Comparative Mineral Law and Policy, Trends and Prospects, Bastida, E., Wälde, T., and Warden-Fernandez, J., (eds.), (Netherlands: Kluwer Law International, 2005)

In this paper the author argues that due to the relatively long periods of time mining activities take (anywhere from ten years and upwards to explore and develop) mining laws should be designed to be responsive to this time aspect so as not to discourage large-scale mining investments.

Ultimately, mining laws which impose strict time limits are essentially creating unnecessary burdens not only on the licensee or lease holder but also on the regulatory system which has to adjust to the constant changes and may lead to delays in project implementation; this has ramifications for sustainable development and optimum exploitation. Accordingly, the dilemma faced by policy makers is to appropriately address the need to induce quicker development, which when too onerous may have the unintended effect of stalling development, by imposing time frames on the operating companies.

To illustrate this point the author details the typical mining project gestation period, that is, the time between the initiation of exploration for the deposit to the start of commercial production. Using cross-country data the author demonstrates the typical time frames needed for any particular mineral at a particular location. Coupled with this is the concept of tenure security, where the transition between the discovery of a deposit and the obtaining of mining rights is of major concern to companies in particular. The ease of transition is therefore linked with the time frame of the right acquired and forms an integral part of a decision to invest.

By providing a guide of ways through which some states have addressed the above challenge, the author stresses the need for policy makers, when setting those limits, to take into account factors concerning the scale of the project, the type of targeted mineral and geological implications. 

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