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Overview

Law - Civil law

Member of New York Convention - Yes

Foreign investment regulation - No

Local party ownership requirement - Yes, if needed

Indigenous and local community rights - No

Land tenure - Mining rights are separate from surface rights

Environmental protection regulation - High

Rehabilitation bonds or guarantees - Yes

Exploration license - Up to three years, extendable for three more

Mining license - (a) Typically six months, with extensions to one year (Section A permits); (b) Typically one year (Section B, mining waste permits); (c) Typically 90 years (Section B, subterranean structures permits); (d) Typically 30 years, with two 30-year extensions maximum (Section C permits)

Able to use tenement as security - Yes

Royalty payable to government - Yes

Classification system used - Sections A, B or C pursuant to Article 2 of the Spanish Mining Act's requisites

Summary

Spain has very diverse geological deposits and resources in its territory, which results in different kinds of mining production. This mining wealth positions Spain as the third largest producer of copper ore, one of only four states that produce nickel ore and the leading producer of spar-fluorine. Its production of ornamental rock is also very important, particularly in the case of slate.

On the other side, Spain has passed from being the eighth largest producer of coal within the European Union, to start a process of de-carbonization that resulted in the progressive closing of almost all coal mines by December 2018 (only two of them have publicly expressed their intention to continue operating if they find the way to return all state aid received since 2011).

Regarding the geographic distribution by sub-sectors, energy products are found in six autonomous communities. In Asturias, Catalonia, Castilla y León and Castilla La Mancha, the mining of energy products represents between 19% and 37% of production value. The mining of metals accounts for 74% of the total value of mining in Andalusia, 72% in Extremadura and more than 40% in Asturias.

The main regulations governing the legal system for explanation and use of sites for mineral mining and other geological resources are Spanish Mining Act 22 of 21 July 1973 and Royal Decree 2857 of 25 August 1978, which approved the General Regulations for the Mining System.

However, there are other regulations that deal with specific aspects of the mining sector. In this respect, Spanish Mining Promotion Act 6 of 4 January 1977 provides the basis that governs the exportation of raw mineral materials and the mining taxation system. Regarding the environmental impact of mining in Spain and the different measures aimed at its protection, the most relevant are Royal Decree 975 of 12 June 2009 on Management of Industrial Mining Waste and Protection and Restoration of the Area Used for Mining Activities, Royal Legislative Decree 1 of 16 December 2016 on Prevention and Control of Contaminated Substances, and Act 26 of 23 October 2007 on Environmental Responsibility.

The foregoing, notwithstanding specific regulations, can also be found at local level in Spain, which is divided into municipalities, provinces and autonomous communities, based on the principle of independence of nationalities and regions therein. Each of these territorial bodies is granted certain regulatory powers.

Legal framework for mining

All natural resources and other geological resources existing both in national territory and in territorial waters or the continental platform are assets in the public domain, and the state can directly undertake or assign their explanation and production. Similarly, the state can reclaim areas when the use of the mineral deposits and geological resources may be of special interest for economic and social development or for national defense.

The Spanish Mining Regulations classify mineral deposits and other geological resources into the following three sections:

  1. Resources of low economic value, those with geographical restrictions for marketing, and those which are used in infrastructure and construction work and other uses that do not require any further processing.
  2. Mineral water (terrestrial or maritime), thermal water, subterranean structures and accumulations consisting of waste from the activities regulated by the Spanish Mining Act.
  3. Other mineral deposits and geological resources that are not included in any of the previous sections.

The type of permit required depends on the classification of the mineral deposit or geological resource, as well as on the kind of activity that will be carried out on the mineral deposit or geological resource.

However, the following items are excluded from the scope of both the Mining Act and the Mining Regulations: (i) exploration and production of liquid and gaseous hydrocarbons; (ii) exploration and production of radioactive minerals; and (iii) mining of minerals with low technical and economic importance, whatever the classification may be, carried out by the owner of the land where they are located, for the latter's exclusive use, and not requiring any mining technique to be applied.

Restrictions on foreign investment

Following Spain's inclusion as an EU Member State, all restrictions on foreign investment in mining were removed. Any natural or legal person, regardless of their nationality, may obtain authorizations and permits to enable them to develop mineral deposits or other geological resources within Spain.

Government or local participation requirements

Despite the lack of provisions regarding mandatory participation rights in a license or project, the state may reserve zones of any extension in the national territory, maritime territory and continental platform for itself, as long as the exploitation of the minerals and geological resources are of special interest for social and economic development, or for national defense. This special interest must be properly motivated.

When an authorization is granted, regardless of the kind, all rights conferred belong to the authorized subject. Nonetheless, the state may require the authorized subject to broaden the investigation or the usage of the deposit or geological resources that he/she applied for. The state may even adjudicate the reserved zones that had been granted or modify its conditions for its own benefit, as long as the grantees of the authorization agree with the new terms.

Land tenure and priority

All mineral deposits and geological resources in the national territory, territorial sea and continental platform are public domain goods. Depending on the classification of the minerals or geological resources lying underground, its tenure will vary. If a mining tenure's ownership differs from the land tenure's ownership, compensation may be granted for the loss of use of the land.

Indigenous or local community rights

There are no provisions that confer special rights to indigenous or other local communities.

Environmental protection and rehabilitation obligations

The Mining Regulations stipulate that the holders of mining rights are liable for all the damage caused by their work and those caused to adjacent areas, and have obligations under Spanish Environmental Liability Act 26/2007 and Royal Decree 975 of 12 June 2009 on Management of Industrial Mining Waste and Protection and Restoration of the Area Exploited by Mining Activities. The measures, procedures and guidelines aim to prevent, or reduce as much as possible, any adverse effects to the environment and, particularly to the water, air, soil, flora, fauna and landscape, as well as the risks to human health that could be caused by the exploration and exploitation of mineral deposits and other geological resources.

In this respect, the main regulations relating to the environment prescribe that companies exploiting mineral deposits must submit a plan to the competent mining authorities for rehabilitation of the natural area used for mining work, which must contain:

  1. a detailed description of the area where the mining work will be performed;
  2. the planned measures to restore the natural area used for the exploration of mineral resources;
  3. the planned measures to restore the services and facilities used for exploration and exploitation of mineral resources;
  4. a waste management plan; and
  5. the execution schedule and estimated cost for the rehabilitation work.

Once the relevant requirements have been verified to be duly met, the competent authorities must authorize this rehabilitation plan, with or without amendments, at the same time as granting the exploration permit or the authorization or exploitation concession.

In addition, once authorization for the rehabilitation plan has been obtained, the following two financial guarantees must be provided before beginning the mining work. These guarantees ensure that the contents of the authorized rehabilitation plan will be fulfilled:

  1. a financial guarantee for rehabilitation of the natural area used for exploitation, preparation, concentration and beneficiation of mineral resources; and
  2. a financial guarantee that one has met the conditions that were imposed in the authorisation for the management and rehabilitation plan for the natural area affected by the facilities and mining waste.

Royal Decree 975/2009 determines that, for any aspect that is not regulated by these specific regulations, Spanish Waste and Contaminated Soil Act 22 of 28 July 2011 will be applicable. In this respect, regarding the mining waste management plan that must be included with the aforementioned rehabilitation plan, it should be noted that this law forces initial producers or owners of waste to treat it themselves, assign the treatment of their waste to a third-party trader or deliver their waste to a public or private waste collection company.

Finally, before building, assembling and transferring facilities for the mineral industry, an integrated environmental authorization must be obtained from the body appointed by the autonomous community in the territorial area where the facilities are located.

Exploration licenses

Any natural or legal person that intends to obtain authorization, a permit or a concession for exploration or exploitation of a deposit or a resource must file an application in the relevant provincial department of the Spanish Ministry of Industry and Energy. In addition, if the work exceeds 25 meters below the surface on dry land or any depth underwater, as well as obtaining the required authorizations, the same department must also be notified with at least 15 days' prior notice of the date the work will begin. This notification must also be sent to the Spanish Geological and Mining Institute, which may further require the persons concerned to regularly notify it of the geological and mining data obtained during the work.

Scope

Exploration permits grant the holder a right to conduct studies and perform work aimed at detecting or defining one or several resources included in Section C, within the defined perimeter and for the valid term thereof, according to the approved project. Similarly, if the exploration proves that they can be rationally used, a right is also granted for the relevant exploitation concession.

Duration

Exploration permits are granted for the term requested. However, this period cannot exceed three years. Permits may be extended for a further period of three years by the provincial departments of the Ministry of Industry.

Steps to acquire an exploration right

Firstly, to obtain an exploration permit, the land must be available and registrable. In this respect, available lands are considered those included within the perimeter of a zone reserved by the state or regarding which no application has been made, nor has one been granted, for an exploration permit or exploitation concession. Moreover, land that can be registered is deemed to be an area of the minimum required size.

The application for an exploration permit must be filed by means of a request personally made by the applicant or the latter's representative to the provincial department of the Spanish Ministry of Industry and Energy. The request must contain:

  1. the full name or company name of the applicant, such person's residence and address;
  2. the name to be given to the exploration permit; and
  3. the location, limits and size of the land.

In addition, the applicant must submit the following documents within 60 days of applying:

  1. documents proving that the applicant meets the conditions to hold mining rights;
  2. the final classification of the land referred to in the application;
  3. the exploration project, containing an explanatory report on the general exploration plan intended to be implemented, the exploration schedule, an estimate of the investment, implementation term and location plans; and
  4. an economic financing study and the guarantees offered for its viability.

Within eight days from the date the documents are submitted, the provincial department will decide on the final acceptance of the application and a public information period will begin. After this, the whole file will be processed and a decision with due grounds will be adopted.

If the land becomes available due to a reserve granted in favor of the state or because an exploration permit or exploitation concession has expired, the exploration permit will be awarded by means of a public tender.

Relationship with landowners

Landowners may be compensated for any damages or losses caused to their properties.

Obligations of the holder

The holder of an exploration permit must begin the work promptly once the land can be occupied. They must also submit a work plan for the first year within four months and an updated work plan must be filed every year thereafter.

Holding tenements

Scope

If an exploration permit is insufficient to discover the resources lying in the area within the given time frame, the duration of the permit may be extended. Alternatively, the Spanish Mining Act, for those cases where further study is needed to determine the existence of resources classified under Section C of the Act, allows the holder of the permit to apply for an investigation permit.

Duration

An investigation permit can be granted for a maximum of three years, extendable for a further three years.

Rights and obligations

The investigation permit may not necessarily correspond to an area with mining potential, given that the investigation permit is issued merely to acknowledge the availability of resources within the area. The advantage of the investigation permit is that, if the above-mentioned resources are located within the investigation area, the holder shall be granted an exploitation permit if he/she applies for it. It therefore grants a priority right in case resources are found.

Development/production tenements

Scope

Exploitation Permits Section A

The use of the resources included in Section A: (i) if they are located on privately owned lands, are deemed to belong to the landowner, (ii) if they are located on land owned by the state, province or municipality, their holders may directly use them or assign them to third parties, and (iii) if they are located on lands of public domain and use, they are for common use.

However, to exercise the right to use these resources in any of these cases, authorization for exploitation must be obtained beforehand from the relevant provincial department of the Spanish Ministry of Industry and Energy or, when specified, from the local corporation.

Exploitation Permits Section B

The system of authorizations varies for Section B, depending on the nature of the resource and whether mineral and thermal water, deposits from non-natural sources or subterranean structures are involved.

Exploitation Permits Section C

Exploitation concessions are granted to the holder of the right to use all the resources included in Section C that are within its perimeter, except for those reserved for the state.

Duration

Exploitation Permits Section A

The holder of the authorization for exploitation must start the relevant work within six months or, if an extension is granted, a maximum of one year, counted from when such authorization is granted; otherwise the authorization for exploitation will expire.

Exploitation Permits Section B

1. Mineral and thermal water

Within a term of one year, counted from the date the condition of the mineral in the water has been declared, the owners (if the water is located on privately owned land) or the applicants for the declaration (if the springs are located on publicly owned land) are entitled to a pre-emptive right to use such water.

2. Deposits created by mining waste

The holder of the mining rights resulting in mining waste produced from research and mining work is entitled to a pre-emptive right to the use thereof.

3. Subterranean structures

The authorization for use is for a maximum term of 90 years.

In this respect, it should be pointed out that, for the three types of resources included in Section B, the Mining Regulations state that if the pre-emptive rights are not exercised, the use will either be granted to the person that submitted the file or, if this is not possible, the use will be awarded by means of a public tender.

Exploitation Permits Section C

Mining exploitation concessions are granted for a term of 30 years, which can be extended for a further two terms of the same length. Thus, the maximum term is 90 years.

Transition from exploration/holding right to mining right

If an investigation can sufficiently prove the existence of resources classified under Section C, as long as such permit is still in force, the tenant may apply for a mining right.

Steps to acquire a right

Exploitation Permits Section A

To obtain authorization for exploitation, an application must be filed containing the applicant's full name or company name and address, as well as the name given to the exploitation. This application must include:

  1. documents that confirm that the applicant meets the requirements to be considered as a holder of mining rights;
  2. documents that accredit the right to use; and
  3. report and plan showing all the data related to: the site of the deposit, the production forecast to be obtained, the purpose for which it is intended to be used, the time the work will take, and an exploitation schedule.

Moreover, initiation of the work must be notified to the provincial department or, if necessary, the local corporation, providing information about the appointment of the technical manager who will be responsible for such work.

Exploitation Permits Section B

1. Mineral and thermal water

Firstly, a declaration of the condition of the mineral in the water must be obtained from the Ministry of Industry, according to a proposal made by the General Directorate of Mining, with a prior report from the Spanish Geological and Mining Institute and the Higher Council of such department. In addition, if medicinal mineral water is involved, a binding report must also be issued by the Directorate General of Health.

To be able to exercise these rights for use, an application must be filed for the required authorization in the relevant provincial department of the Ministry of Industry. The application must contain:

  1. documents that justify its capacity to hold mining rights;
  2. the general project for use;
  3. an estimate of the investments to be made;
  4. an economic study of the project financing; and
  5. assignment of the protection perimeter, specifying the use that will be made of the water.

In turn, the provincial department will submit the file to the General Directorate of Mining, which, after a previous report has been issued by the Spanish Geological and Mining Institute and, when applicable, the Directorate General of Health of the Spanish Ministry of Public Works and Agriculture, will authorize the use, with or without the necessary amendments to the project submitted.

2. Deposits created by mining waste

Firstly, a declaration must be obtained confirming that this deposit has been categorized as a resource included in Section B. This declaration may be requested by the party concerned or officially by the provincial department of the Spanish Ministry of Industry and Energy.

An application for authorization must be filed in the relevant provincial department of the Spanish Ministry of Industry and Energy. The application must include data about the applicant, the location and limits of the resources that are intended to be used, and the following documents:

  1. documents accrediting the right to use;
  2. documents confirming the applicant meets the required conditions to hold the rights; and
  3. a report, with due grounds, about the work intended to be carried out.

In addition, the following documents must be provided within two months:

  1. a mining schedule and forecast annual production
  2. a project of the mining facilities to be provided
  3. an economic study specifying the plan for the investment to be made
  4. the forecast social improvements

In turn, the provincial department will submit the file to the General Directorate of Mining, which will authorize the use or return the project for rectification.

In any case, the work for the use of waste must start within one year, counted from the notification of authorization being granted, unless this term is extended.

3. Subterranean structures

An authorization must be obtained to use subterranean structures. For such purpose, an application must be filed in the relevant provincial department of the Spanish Ministry of Industry and Energy, specifying the following:

  1. the data related to the person or enterprise applying for the authorisation;
  2. a description and the exact location of the structure;
  3. the geological formations involved, structural context of the area and justification that such area is watertight;
  4. type of use, kind of product or waste that is intended to be stored and the system for temporary or permanent use;
  5. term of the authorisation requested; and
  6. perimeter or volume of protection considered necessary.

Once the application has been filed, the provincial department will order a verification inspection. After this, the file is submitted to the General Directorate of Mining and Construction Industries, who will determine whether such structure can be classified in Section B. If such classification is approved, the party concerned must provide the following documents:

  1. documents proving that the applicant meets the conditions to hold mining rights;
  2. documents justifying the applicant's technical and economic capacity;
  3. a report justifying the suitability of such use;
  4. the project for use; and
  5. a proposal for compensation to third parties for the assets or rights that may be affected.

After a prior report has been issued by the Geological and Mining Institute of the Higher Council of the Ministry of Industry and the Inter-Ministerial Commission for the Environment, the General Directorate of Mining will authorize the use for up to 90 years.

Exploitation Permits Section C

As in the case of exploration permits, to obtain an exploitation concession, the land must be available and registrable.

Two different kinds of concessions may be granted.

Firstly, there are direct exploitation concessions, for which an application may be filed for a concession of available lands that are able to be registered with no need to have previously obtained an exploration permit. However, this must be related to a resource included in Section C that is considered sufficiently well-known and its rational use is deemed viable or, if the resources are sufficiently well-known, the mining rights for them have expired and there is data and proof to enable their exploitation to be defined due to technological improvements or new market prospects.

To obtain a direct exploitation concession in the aforementioned cases, an application must be filed with the relevant provincial department. This application must contain the following:

  1. full name or company name of the applicant, such person's residence and address;
  2. location, limits and size of the land;
  3. name assigned to the requested concession;
  4. specification of the mineral resources to be exploited;
  5. documents proving that the applicant meets the conditions to hold mining rights; and
  6. a technical report justifying the admissibility of the application as a direct concession.

Similarly, the applicant must submit the following documents within 60 days from the date approval is notified of the exploitation concession process:

  1. the final classification of the land requested;
  2. a feasibility study and a project for use of the resource, which must include a report, general exploitation schedule, the facilities and machinery to be used and location plans for the work and facilities; and
  3. an economic financing study and the guarantees offered for its viability.

Once the processing of the file has been completed and after being submitted for public information, it will be sent to the General Directorate of Mining and Construction Industries, who will refuse or approve the concession after a prior report has been issued by the Spanish Geological and Mining Institute.

Secondly, exploitation concessions may be granted based on exploration permits. In this case, as soon as the exploration is proven to involve a resource included in Section C, within the valid term of the exploration permit, the holder thereof may apply for an exploitation concession for part or all of the land included in the perimeter of such exploration.

To obtain the exploitation concession, an application must be filed with the provincial department in which the land requested is specified. In addition, the following documents must be provided:

  1. a detailed report on the geological nature of the deposit and the exploration work conducted along with the results obtained; and
  2. a feasibility study and project for use of the resources, which must include a report on the exploitation system, a diagram of the infrastructure, work schedule, estimated investments to be made and an economic study of its profitability and the financing sources.

Once the provincial department verifies the land, the file will be submitted to the General Directorate of Mining who will approve or refuse the exploitation concession.

The holder of an exploitation concession must start the work for use within one year from the date the concession is granted.

Relationship with landowners

Landowners may be compensated for any damages or losses caused to their properties.

Obligations of the holder

Exploitation Permits Section A

After 10 months, counted from the start of the work, and subsequently on an annual basis, the holder of the authorization must submit a work plan in four copies for the following year to the provincial department or local corporation, and such plan is to be verified within two months. A copy of this plan is sent to the Higher Council of the Spanish Ministry of Industry and Energy and to the General Directorate of Mining and Construction Industries.

Exploitation Permits Section C

Within six months of the start of the work, a plan of the work and facilities to be carried out in the first year must be submitted. This must then be provided on an annual basis thereafter.

Priority between different resource classifications

Where an application is made for the proposed use of the same resources within Section A, Section B and Section C, before granting any authorization, the Ministry of Industry must make a decision on the compatibility or incompatibility of the work proposed under each classification. If the work is determined as incompatible, the government must specify which proposal has the greatest public interest or utility and that must be given priority.

Assignment of and security over tenements

Assignment

The rights conferred by an authorization for resources under Section A, or an exploitation tenement for resources under Section B, may be assigned as long as the Ministry of Industry approves it.

Exploitation permits for resources under Section C may be assigned as long as the granting authority accepts it and the mandatory documents are provided by the solicitor (contract draft, project regarding the tenement's feasibility and securities over the feasibility).

Security

The same dispositions applicable to assignment of tenements also apply to securities over them.

Royalties

The applicants for exploration permits and direct/assigned exploitation concessions are responsible for paying the expenses incurred to process these permits.

However, to promote and develop the use of raw mineral materials, Spanish companies are granted capital subsidies and loans, although they must be reimbursed once the objectives sought by them have been achieved.

The holders of mining rights for mineral deposits and other geological resources must pay a royalty as consideration for the mining area where the resources have a significant economic value, where no marketing restraints have been imposed, or where the resources are not directly used in infrastructure or construction work, or do not consist of mineral water, thermal water or subterranean structures.

Certain activities for exploration, exploitation or beneficiation of deposits, because of their nature or importance in the public interest, may be subject to certain tax benefits, such as free amortization over 10 years, a reduction of up to 95% in the tax rates or a reduction in the taxable base for an amount equivalent to those assigned as a depletion factor. However, these reduced amounts in the taxable base as a depletion factor must be invested in activities related to the mining sector in the following 10 years.

Mineral reporting and classification

Minerals are legally classified in Sections A, B and C of the Spanish Mining Act, as stated in section 2.

Other key issues

Export restrictions

Spanish Mining Promotion Act 6 of 4 January 1997 specifies the process for exporting raw mineral materials, according to the provisions in the National Raw Mineral Material Supply Plan, the National Energy Plan and the National Uranium Exportation Plan. The government plans to issue regulations on the minimum level of processing that must be achieved for certain raw mineral materials to obtain the relevant exportation license. Furthermore, the Spanish Ministry of Trade may create export sectors for surpluses of mineral substances or those for which there are no consumers in the domestic market. The Spanish Ministry of Industry, Energy and Tourism is yet to issue any regulations for the mineral export sector and there are no restraints on these export activities in Spain.

Effects of the expiry of exploitation concessions

When an authorization, permit or concession for any areas in Sections A, B or C terminates, due to the term for which it was granted having expired or for any other reason, such as waiver, breach of the commitments or the resource being depleted, etc., if the holder proposes to vacate the site, it must hand over the site in a proper and safe condition. A vacating holder must notify the provincial department of the Spanish Ministry of Industry and Energy which, after prior verification, will authorize the holder to vacate the site or will impose any conditions it deems necessary.

Once the holder has been authorized to vacate the site, it may freely dispose of the machinery and facilities it owns. However, the state may prohibit these assets being removed if this could harm the future exploitation of the deposit. As consideration in such cases, the holder may be entitled to receive compensation in the manner stipulated in the Spanish Compulsory Expropriation Act.

Construction licenses

If one intends to set up an establishment to be used for the preparation, storage or beneficiation of resources, authorization must first be obtained from the General Directorate of Mining and Construction Industries.

For this, an application must be filed with the relevant provincial department of the Spanish Ministry of Industry and Energy. This application must include the following:

  1. a project for setting up the establishment;
  2. an economic and financial study; and
  3. a schedule for building these facilities, which must specify the dates planned for carrying out each phase.

After receiving the documents, the relevant department will submit the file to the General Directorate of Mining and Construction Industries, who will adopt a decision after a prior report has been issued by the Spanish Geological and Mining Institute.

Compensation to landowners

Albeit with certain special features, the holder of a tenement over a mineral deposit or geological resource can generally apply for an order, under the Spanish Compulsory Expropriation Act, to occupy the land required for the site of the relevant work, facilities and services, after the required declaration of public utility, or temporary tenancy of the lands.

Useful websites

Ministry of Energy, Tourism and Digital Agenda - http://www.minetad.gob.es/es-ES/Paginas/index.aspx

Department of Mines - http://www.minetad.gob.es/energia/mineria/Mineria/Paginas/Mineria.aspx

Legislation regarding mining, mining promotion and environmental dispositions - http://www.minetad.gob.es/energia/mineria/Mineria/Legislacion/Paginas/Legislacion.aspx

The Spanish Geologic and Mining Institute - http://www.igme.es/

Mining Panorama in Spain (2015) - http://www.igme.es/PanoramaMinero/Panorama%20minero%20NIPO%20corregido/

Mining Statistics in Spain (last Update: 2014) - http://www.minetad.gob.es/energia/mineria/Estadistica/2014/anual-2014.pdf

Mining Engineers National Association - http://ingenierosdeminas.org/