CHAPTER 13 WORLDWIDE OBSERVATIONS ON THE LATIN AMERICAN MINING LAW MODEL
| Jurisdiction | United States |
(2001)
WORLDWIDE OBSERVATIONS ON THE LATIN AMERICAN MINING LAW MODEL
Duncan & Allen
Washington, D.C., USA
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I. WHAT IS THE LATIN AMERICAN MINING LAW MODEL?
A. ORIGINS AND EXPOSURE
The success of several Latin American countries in revitalizing the regional mining industry is well known. During the 1990's, a group of countries in the region emerged from a period of domination of the resource extraction and processing industries by state-owned enterprises, with very little investment in exploration and modernization, to a new era of extensive investment in minerals exploration, several major discoveries, modernization of extraction, hauling and processing techniques and equipment, with related increases in production and productivity, led by the national and international private sector. This trend began in Chile, with the adoption of its 1983 Mining Code. Since then, Peru, Mexico, Ecuador, Argentina, Bolivia, Brazil and Venezuela have made, or are making, major changes in their mining, tax and investment laws in order to promote the development of their mining sectors.
The results of the transformation in the legal landscape for mining in South America have been dramatic. The region boasts the world's number one producers of copper and silver, and is a major producer of numerous metallic minerals. Argentina has emerged as a major exploration investment destination and, in Bajo de la Alumbrera, has one of the largest copper and gold mines to come on line in the region in the last fifteen years. Overall, Latin America has increased its share of global investment in minerals exploration at the expense of the traditional mining venues of the United States, Canada and Australia. Even after the downturn in worldwide exploration investment since 1997, Latin America accounted for approximately 29% of worldwide investment in minerals exploration in 1999; as opposed to 13% in the 1980s.2
In 1994, The World Bank undertook a study of the changes that were occurring in the Latin American mining sector in order to understand what policies and legal and institutional reforms were working, and why. An objective of the study was to identify
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the key features of the reforms in Latin America that had succeeded in bringing about the transformation in the region's mining industry. It was hoped that the study would provide useful guidance for governments not only in the study region of Latin America and the Caribbean, but also in other regions — notably, the transitional economy countries of Eastern Europe and Asia — that wished to promote private sector led development of their natural resources.
The results of the World Bank study were published in 1996 as World Bank Technical Paper No. 345, entitled A Mining Strategy for Latin America and the Caribbean.3 Among other things, that study highlighted key features of the legal framework for minerals exploration and mining in the Latin American countries that had achieved the greatest success in promoting investment in, and modernization of, their mining sectors. The aggregate of those key features is what is referred to as "the Latin American Mining Law Model." It is a model for legal reform based on those key features, representing a blend of concepts and procedures distilled from the actual laws and regulations of various Latin American countries.
Since publication of the World Bank study, the Latin American Mining Law Model has been presented to various reform-minded governments around the world as an alternative approach to the legal framework for promotion and regulation of resource development in their countries. Obviously, the model is not a simple mining law module that can be reproduced in countries with different cultures, histories, geography, legal systems and values. Rather, the model represents a way of thinking about mining law that offers reform-minded governments a fresh international perspective from which to analyze what is the most appropriate combination of substantive and procedural legal norms for their respective countries, given their current situation and their objectives.
Although one might well suspect that the Latin American Mining Law Model is unique to the Central and Southern American context and would be of limited relevance to policy makers in other parts of the world, experience to date suggests that many legal principles that are fundamental to a healthy mining industry are clarified in the model. Those principles seem to enjoy a rather universal appeal among peoples who are interested in promoting resource development in a free market context.
The Latin American Mining Law Model has been presented to governments in Eastern Europe, Africa, the Middle East, Central Asia, East Asia and Southeast Asia. Although it has not been enthusiastically embraced everywhere, nevertheless, it has taken root in at least one country in both Asia and Africa, and it has contributed to a rethinking of mining law in a variety of developing countries with different cultural and legal heritages. The model continues to evolve, as its concepts are refined in reaction to feedback from new sources. Perhaps the evolving model may influence the next generation of mining laws in the region from whence it came.
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B. KEY FEATURES
There are numerous key features of the Latin American Mining Law Model. This paper will address four that are considered major: (1) the nature of exploration and mining rights; (2) the procedures for access to such rights; (3) security of mining title and tenure; and (4) stability of the investment parameters. Although these features will be discussed separately, it should become quite evident that they are all closely interrelated. Indeed, one of the strengths of the Latin American Mining Law Model is that its component parts all reinforce one another. The cohesiveness of the approach as a whole is a very important characteristic of the model.
1. Nature of Exploration and Mining Rights
Exploration and mining rights in the Latin American Mining Law Model have the following key features:
• They are concessions granted by the state, which are property rights. As such, they are Constitutionally protected against taking by the state without due process of law and just compensation.
• They are exclusive as to territory and as to all metallic or non-metallic minerals, depending on the class of targeted minerals.
• They can be used as collateral to secure financing.
• They are freely transferable to another eligible holder without the prior written consent of the granting authority.
• Small and medium scale miners are entitled to the same transferable, property rights as large scale mining enterprises.
• State owned enterprises, if any, operate under the same rules as the private sector, with respect to exploration and mining rights and the related obligations.
2. Procedures for Access to Rights
The procedures for obtaining mineral rights in the Latin American Mining Law Model are based on non-discriminatory criteria, transparency and efficiency. They have the following key features:
a. Map staking has replaced claim staking. UTM coordinates (e.g., Chile) or national grid systems (e.g., Peru and Bolivia) locatable in the offices of the mining cadaster on digitized and computerized maps, and in the field by GPS, have replaced triangulation as the predominant boundary identification technique. This change has reduced the number and the difficulty of boundary disputes.
b. Access procedures are based on a modern mining cadaster and a registry of mining titles showing who owns what and where. They are open to...
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