The Act of 15 June 2018 amending the Geological and Mining Law and certain other laws enters into force on 29 August 2018.
The Act’s most important amendments are as follows:
1. New principles regarding the priority right
The amendment re-words the so-called priority right. The new wording says that a company is entitled (instead of merely having a claim) to apply for the establishment of a mining usufruct with priority over others.
The amendments foresee that a company will be obliged to submit its claim within 3 years of the priority right having come into existence. Therefore, the additional 3 months period to conclude a mining usufruct agreement was dropped, indicating that it is possible to conclude such an agreement within 3 years of the priority right’s existence, when the company has the claim. In practice, this may cause many problems because this change makes it difficult to determine when the company should file an application to establish a mining usufruct so that an agreement may be concluded. Likewise, the amendment does not specify any criteria regarding a refusal to conclude such an agreement.
Moreover, the amendment introduces de facto new amendments regarding the entitlement to apply for the priority right to establish a mining usufruct, because this right can be applied for by anyone who:
· recognised a CO2 storage complex and documented it in sufficient detail to enable a zoning plan to be drawn-up and to obtain a decision approving the geological documentation;
· documented a mineral deposit to a degree that allows a zoning plan to be drawn-up and to obtain a decision approving the geological documentation. It will be significant whether the documentation occurred regarding a hitherto unknown and undocumented mineral deposit, based on a prospecting concession, or regarding a mineral deposit which was already documented based on a prospecting or exploration concession. In the latter case, in order to obtain the priority right it will be necessary to improve the category to which the mineral deposits is identified. The company will acquire the priority right only in relation to the deposit area where the identification has been improved.
It is worth noting that, according to the current wording, there are no obstacles to obtaining the priority right and to approving the geological documentation of a deposit to the extent which enables it to be developed on the basis of geological works performed on the basis of a prospecting concession. Given this, it seems that the definition of prospecting provided for in Article 6 sec. 1 point 7 of the Geological and Mining Law shall be modified by indication that prospecting means works which lead only to the initial documentation of the deposit.
As regards approvals of geological documentation for a mineral deposit or CO2 complex which were received in accordance with the hitherto legal provisions, the provisions regarding the so-called priority right shall continue to apply (i.e. in the wording which existed prior to the amendment).
2. Injecting water into rock mass
The amendment changes the definition of injecting water into rock mass. It clearly indicates that such injection is to remove water originating from the drainage of mining excavations, the usage of therapeutic, thermal or reservoir waters including waters from underground hydrocarbon storage, excluding technological waters used in hydrocarbons storage facilities located in rock salt deposits. Injection consists of introducing water via boreholes into geological formations isolated from usable water-bearing layers. This clarification will erase doubts regarding the interpretation of waters from underground hydrocarbon storage facilities.
3. Noble gases
Legal provisions regarding hydrocarbons will also apply to noble gases, i. e. helium, argon, neon, xenon, radon and krypton. For example, helium, accompanying natural gas is documented in Poland. Moreover, rare earths elements and noble gas fall within the scope of mining ownership.
4. Marine Waters – the Minister of Defence’s opinion
Prospecting, exploring or extracting hydrocarbon ores from deposits within the boundaries of the Republic of Poland’s maritime areas shall not be possible without having first received a positive opinion of the Minister of Defence and the Minister of Fisheries, concerning the location of the area within which the planned activity will be conducted. This is intended to prevent, from the very outset, the realization of objects which may ultimately conflict with Poland’s defence interests.
5. Grounds for refusing to grant a concession.
The amendment clarifies the grounds for refusing to grant a concession. A concession authority will refuse to grant a concession if the planned activity is against the public interest, especially as regards national security and the state’s interests in raw materials, or if it would prevent the intended use of Poland’s maritime areas, as recorded in a municipal local development plan or other provisions.
6. Withdrawing a concession
A new ground for withdrawing a concession was introduced. A concession authority can withdraw a concession if a company loses a mining usufruct for whatever reason. In such cases, the company is not entitled to receive compensation. The legislation does not contain a model mining usufruct agreement, nor does it define the most relevant elements of such an agreement. Therefore, it is unclear whether mining usufruct agreements will also contain additional restrictions.
7. The most important entitlements for hydrocarbons – A new procedure known as the “open door” procedure”
The amendment introduces a second procedure (alongside tenders) for granting hydrocarbon concessions, knows as the “open door” procedure. This enables tendering proceedings to be carried out at the company’s request. The hitherto procedure is also retained, whereby the Minister of the Environment determines the areas over which he intends to grant the concessions. In other words, a company proposes an area, in which it is interested, following which a tender or procedure for this area is announced to select the best tender submitted by competing companies. The Ministry of the Environment believes this will reduce the costs of issuing concessions, because the open door procedure does not require that information be prepared about the area. From the perspective of applicant companies, it will allow them to make tender requests about particular areas in which they are interested. The Minister of Environment believes that this will help to accelerate investments in Poland.
8. Simplification the so-called joint operating agreements for mining operations
The Amendment changed the joint operating agreements for mining operations, which are widely used in other countries. It is expected that this will result in the deletion of a provision requiring that the operator’s share of costs and profits resulting from the company’s cooperation shall exceed 50%. This may contribute to the more frequent use of such agreements in practice. This provision gives greater flexibility in concluding agreements, and does not jeopardize their execution, because the operator will still be liable for the realization of concession and statutory obligations.
9. The concession’s 2020 issue
9.1. Extending a concession
The amendment changes the wording of Article 205 of the Geological and Mining Law by adding section 5. This modifies the procedure for acquiring mining concessions to extract black and brown coal from a mineral deposit. The change would enable a concession’s duration to be extended upon having received a positive opinion of the district mayor (town mayor or president of a city) who is competent for the location where the planned business activity is executed. To date, instead of requiring such an opinion, it was necessary to acquire an official consent via lengthy administrative proceedings. The amendment will significantly shorten the length of the procedure itself. It primarily addresses the hitherto concerns of companies which extract brown and black coal from mineral deposits. In the opinion of the Ministry of Environment, prolongation of the concession within the same mining area should not last longer than 30 – 60 days.
9.2. No requirement to obtain an environmental permit
According to the Act of 3rd October 2008 on disseminating information on the natural environment and its protection, community involvement in environmental protection and environmental impact assessment, it will no longer be necessary to obtain an environmental decision in cases concerning a single extension to the validity period of a concession to extract black coal, provided that such an extension is justified by the rational management of mineral deposits and provided that the concession’s scope is not extended. As regards concessions to extract brown coal, the same rules will apply, but it will only be possible to extend the concession’s validity for up to 6 years.
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