Amendment of the Geological and Mining Law for strategic resources
Amendments are underway to the Polish Geological and Mining Law (AmGML). One of the aims is to focus on climate protection. One immediate question which springs to mind is whether the new law will be more favourable for the State or for entrepreneurs.
The key issues dealt with in the AmGML are:
- introducing a definition of strategic resources and a special mechanism for their protection;
- modifying provisions on the underground storage of CO2;
- reviewing regulations to ensure greater consistency and effectiveness.
“Strategic resources” are defined as deposits which benefit from special legal protection due to their value for the economy or state security. In order to deem a deposit as strategic, a special administrative procedure must be initiated by the Minister for the Environment and Climate, once the deposit’s geological documentation has been approved. The natural resources which can be recognised as strategic are hydrocarbons, hard coal, methane existing as an associated mineral, lignite, metal ores excluding bog iron ores, native metals, radioactive ores, native sulphur, rock salt, sylvinite, potassium-magnesium salts, gypsum and anhydrite, precious stones, rare-earth elements and noble gases. The procedure is initiated within one month from the approval date of the geological documentation or addendum thereto. The minister decides whether or not a given deposit falls within the special protection regime and whether to issue a respective administrative decision or not. If the minister’s assessment is negative, the proceedings will be discontinued. In other words, the procedure will be conducted in respect of all of the aforementioned resources once the necessary geological documentation is approved, but the minister will then decide whether to consider the deposit as strategic.
The assessment shall be based on the following criteria:
- the deposit’s value for the economy or state security;
- whether or not the deposit can be accessed without requiring further land development;
- the importance of the deposit for the state economy or the state’s interest in natural resources;
- the deposit has above-average volumes of the given mineral;
- unique factors of the mineral in the deposit.
The deposit may be considered as strategic in whole or in part. The minister shall keep a dedicated public register with a list of strategic resources including selected information on those deposits. Once a deposit is deemed to be strategic, within one year its location must be introduced to the zoning documents of the relevant local commune. The costs related thereto (preparing the necessary zoning documentation) shall be borne by the entrepreneur which had the geological documentation approved.
The AmGML’s intertemporal provisions state that the procedure to recognise a deposit as strategic may also be initiated for deposits whose geological documentation was already approved before the AmGML enters into force.
Suspension of concession activity
The AmGML empowers the minister to decide that no concessions will be granted for a specific period of time. This is the furthest-reaching method available for protecting strategic resources.
The above concerns the following activities:
1) prospecting for or exploration of hydrocarbons, hard coal, methane existing as an associated mineral, lignite, metal ores excluding bog iron ores, native metals, radioactive ores, native sulphur, rock salt, sylvinite, potassium-magnesium salts, gypsum and anhydrite, precious stones, rare-earth elements, noble gases are covered by mineral right wherever they occur;
2) extracting the above-mentioned minerals from deposits;
3) extracting minerals from deposits situated within maritime territories of the Republic of Poland.
The public interest reasons for suspending the granting of concessions are:
- state security, including energy security;
- state interests in raw materials;
- environmental protection;
- executing energy transformation and obtaining possible finances to realise such transformation.
Information regarding the decision to suspend the granting of concessions shall be publicly announced with 3 months’ notice of the kind of activity, the mineral, area and the timeframe for which no concessions will be granted, and the specific public interest which justifies the suspension.
Extending priority and exclusivity rights
The terms of priority and exclusivity rights shall be extended to 5 years. The foregoing revision may be particularly appreciated by entrepreneurs, as it will provide more time to prepare for production without the risk of losing the right of priority.
Underground storage of CO2 and hydrogen
Geosequestration offers great potential to reduce emissions and is often economically justified in mining operations. The Geological and Mining Law presently restricts underground storage exclusively to demonstrative projects. However, the AmGML proposes to extend these activities from solely experimental projects to commercial ventures and to introduce the possibility of tankless hydrogen storage which would be considered as a public purpose investment. This change would surely offer new opportunities for entrepreneurs and enable commercial use of mining areas even after the resource has been extracted.
The exclusive right to apply for a concession for the underground storage of carbon dioxide or hydrogen would be guaranteed primarily to entities which:
(i) hold a concession for the extraction of hydrocarbons from a deposit;
(ii) have completed the exploitation phase; and
(iii) intend to use the deposit for the underground storage of substances.
This right would be vested in the company for a five-year period following the approval of the geological documentation accounting for the deposit’s resources. Such entities would then be exempt from the obligation to liquidate the mining site. The AmGML also envisages allowing the simultaneous extraction of hydrocarbons from a deposit which has underground storage of CO2 or hydrogen, provided that a decision is obtained which approves an addendum to the geological documentation.
The new legislation also proposes measures to ensure that the GML’s provisions on hydrocarbons would also apply to the exploration, prospecting, documentation and extraction of hydrogen, including by applying the concept of mining ownership to this resource.
Abolishing COVID-19 regulations
The AmGML abolishes COVID-19 regulations which enabled geological operations to be rescheduled without requiring that the concession be amended. Once the AmGML enters into force, the concession holder will be obliged either to comply with the schedule of geological operations or to apply to amend the concession or geological works program in order to amend the schedule of concession works.
The AmGML’s intertemporal provisions are important, as they determine such issues as whether the new legislation applies to pre-granted concessions or pre-approved geological documentation or pending proceedings.
Current legislative status of the AmGML
The draft amendment has been forwarded to the Senate, where it can either be passed and submitted for the signature of the President of Poland or returned to the Sejm.
For more information or advice on how to utilize the potential of upcoming changes to best benefit your business, do not hesitate to contact us.