The Government has proposed amendments to the Minerals Act

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Newsletter

Published 10 May 2021
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The Government has submitted a proposal to the Storting (Parliament) for amendments to the Minerals Act. Among the most important proposed amendments are the introduction of a general qualification requirement for everyone engaging in mineral activities. A sequential requirement has also been proposed, which requires the processing of applications under the Planning and Building Act, before any processing of applications for operating licenses under the Minerals Act. Furthermore, the Government has proposed that the possibility of transferring operating licenses are introduced. A number of the proposed amendments have long been desired by the industry, other amendments have been met with opposition in the consultation round.

The proposed amendments are part of a larger work on amendments to the Minerals Act that has been ongoing since 2018. The Evaluation Committee pointed out that there was a need to assess several parts of the Minerals Act. The Ministry of Trade, Industry and Fisheries proposed that the further work on amendments should follow a two-track system:

  1. The first part of the two-track system is followed up by setting up a committee to review more fundamental issues, including issues related to Sami interests and the rules for exploration, searches and extraction. The committee shall submit its recommendation in the form of an Official Norwegian Report (NOU) by 1 December 2021.
  2. The second part of the follow-up work has been carried out by the Ministry of Trade, Industry and Fisheries by the proposition which has now been submitted to the Storting (Prop. 124 L (2020-2021)). The proposals in the proposition are based on the Evaluation Committee's recommendation and have been the subject of consultation. On 29 April 2020, an open hearing was held in the Storting's Standing Committee on Business and Industry and the Standing Committee is expected to present its recommendation on 27 May 2021.

The most important proposed amendments are as follows:

  • Qualification requirements for everyone operating mineral activities
  • The possibility of transferring an operating license on certain conditions
  • Extended opportunity to expand the deadline for exploration rights to the State's minerals
  • Extended deadline for notification before searches of the State's minerals are initiated
  • Introduction of requirements for clarification in accordance with the Planning and Building Act before processing of an application for an operating license
  • Some minor linguistic changes etc.

The Government has a stated wish to invest more in the Norwegian mineral industry. This is an industry that will undoubtedly be very important in the future as a key part of achieving the green change. The purpose of the proposed amendments is improvements and simplifications for the industry, the Directorate of Mining and other public bodies that comply with the regulations. Among other things, the Government wants the amendments to lead to reduced case processing time and increased predictability. In addition, part of the purpose is to increase the trust in the industry as such.

In the following, a brief summary of the most important amendments is given:

Qualification requirements for all mineral activities

In the current Minerals Act, there is no generally explicit requirement for competence in order to conduct mineral activities in accordance with the Act. However, there is a stated competence requirement in the operational phase of mineral extraction. In addition, the preparatory works presuppose that professional soundness shall form the basis for mineral activities. However, the lack of an explicit qualification provision in the exploration and extraction phase means, for example, that the Directorate of Mining has no authority to reject applications where the applicant is considered to lack the necessary competence.

In the proposed amendment, the Ministry of Trade, Industry and Fisheries has proposed that a general qualification requirement shall be introduced for everyone conducting mineral activities. The qualification requirement applies to both the licensee and each individual participant carrying out mineral activities. The Ministry announces that there will be regulations that further specify the content of the qualification requirement. An important point with the legislative proposal is that the provision will give the Directorate of Mining the opportunity to reject applications for exploration rights to the State's minerals if the applicant is not considered to be sufficiently qualified. Presently, almost all applications for exploration rights received by the Directorate of Mining are approved.

Exploration rights – conditions for granting an application

As mentioned above, almost all applications for exploration rights to the State's minerals are approved. It follows from Section 13 of the Minerals Act that exploration rights to the State's minerals shall be granted to an applicant unless the applicant has previously violated significant provisions given in or pursuant to the Act. There has been uncertainty as to what are considered "significant provisions".

In the proposed amendment, the Ministry of Trade, Industry and Fisheries has proposed changing the wording so that it clarifies what will be the basis for rejection. According to the proposal, an application shall be rejected on the basis of a serious or repeated violation of provisions given in or pursuant to the Minerals Act.

In addition, it is proposed that an applicant must also be registered in the Register of Business Enterprises in order to have the application granted. This will be of particular importance to foreign companies. However, it is not a condition that the applicant is established in accordance with Norwegian law, which means that it is sufficient for foreign companies to be registered in the Register of Business Enterprises as a branch of a foreign company (so-called NUF). The legislative amendment will also have an impact on sole proprietorships, as it is required that the enterprise conducts business activities in order to be registered in the Register of Business Enterprises.

Extended opportunity to extension of exploration rights

Under current law, the right to extend the deadline for exploration rights to the State's minerals is narrow. The starting point is that "extraordinary circumstances that are not due to the applicant" must have occurred, or that there has been a dispute about the exploration rights. The rule has been strictly practiced. For example, it has proved problematic that there is no possibility for extension of deadlines when, due to large fluctuations in raw material prices, it has been unprofitable to conduct exploration, or when necessary funding has been delayed.

The Ministry of Trade, Industry and Fisheries has proposed an alternative condition for extending the deadline that takes into account the above-mentioned challenges. According to the proposal, an extension of the deadline can be granted if it is assumed that an extension will result in knowledge about the resource that is necessary in order to be able to assess whether there is a basis for applying for extraction rights.

Extended notification deadline for explorations

Explorations of the State's minerals require notification to a number of affected interested parties before the start of the exploration activity. According to current rules, notice is required at least three weeks before work is started.

The Ministry of Trade, Industry and Fisheries proposes that the notification deadline be extended to two months. In addition, it is proposed that the duty to notify may be waived by affected interested parties, and that it shall be emphasized that the duty to notify also applies to explorations under the auspices of a licensee who already has extraction rights.

Sequential requirements

Conducting mineral activities requires a number of public law and private law permits in addition to the permits required under the Minerals Act. This includes, inter alia, permits under the Planning and Building Act. Presently, there is no special regulation as to how the relationship between processing according to the Planning and Building Act and processing of applications for an operating license should be. It is therefore conceivable that situations arise where someone is granted an operating license under the Minerals Act, but where operation never becomes relevant because land planning or other parts of planning and building law put a stop to it.

In the proposed amendment, a new provision is proposed in the Minerals Act, which requires that matters relating to land use for the operating area pursuant to the Planning and Building Act must be clarified before the Directorate of Mining processes an application for an operating license.

Transfer of operating licenses

Presently, the Minerals Act prevents the transfer of operating licenses. While exploration rights and extraction rights can be transferred, a new application for an operating license will be required if another legal party is to operate the extraction. This creates unnecessary difficulties for the transfer and sale of these types of activities. In addition, in the event of bankruptcy, where the debtor company ceases to exist, a transfer of an operating license to a new legal entity will be an impossibility. This creates unpredictability as to whether the one acquiring assets, in contrast to the operating company as such with a view to further operations, will be able to obtain a license on similar or corresponding conditions. This in turn is assumed to have an impact on the ability to finance such activities and the price of such financing.

In the proposition, the Ministry of Trade, Industry and Fisheries proposes a new provision that allows an operating license to be transferred under certain conditions.

Repeal of the absolute requirement for an operating license when extracting natural stone

Presently, all extraction of natural stone is subject to a license requirement. For extraction of minerals other than natural stone, there is in principle no requirement for a license for total extraction under 10,000 m3 of rock material.

The Ministry of Trade, Industry and Fisheries proposes removing the absolute requirement for a license when extracting natural stone. If the proposal is included in the Act, extraction of natural stone will also be subject to the same threshold values as extraction of other mineral deposits as mentioned above. The Government has also proposed a linguistic clarification in the licensing provision, where it is emphasized that the threshold values apply to intact rock material.

Other legislative amendments

In addition, some minor amendments have been proposed that are primarily of a linguistic and pedagogical nature. Among other things, it has been proposed to clarify what is meant by "Finnmark" in the Act, and the term "suitable" when assessing whether an operating license should be granted, is proposed changed to "qualified". In addition, it is proposed that a provision shall be included for the obligation to clean up, and the companies' obligation to carry out internal control is proposed included in the wording of the Act. The Government is also announcing a number of draft regulations, and some amendments have been made to the provisions on coercive fines and fines for violations.

Schjødt has the expertise

A number of the legislative proposals presented in Prop. 124 L (2020-2021) received support in the consultation round. These are amendments that the industry and the Directorate of Mining have long called for. Several are also in line with current administrative practice. Some other proposals met with greater opposition. Among other things, this applies to the proposal for sequential requirements, where it was pointed out that the relationship to other legislation, also beyond that following from the Planning and Building Act, is something that the appointed NOU Committee is also working on. Schjødt follows developments closely, and we have extensive experience in assisting players in the mineral industry. We continuously monitor what is happening in the area and in the legislation – both onshore and on the Norwegian continental shelf. Worth mentioning here are the exciting things that are happening in the area of seabed minerals, where a consultation round has just been held for a plan program for an impact assessment for mineral activities on the continental shelf.

If you want more information about our work in the area or have further questions, please do not hesitate contacting one of us on the minerals team below.