Regulatory Framework

Mining In Argentina And The Legal And Technical Protection Of Property Rights

1. Legal Framework

The mining activity in Argentina is regulated by the Constitution of Argentina, the Argentine Mining Code (law No. 1919), and additional federal laws, executive orders, resolutions, and regulations which
apply specifically to this activity.

The mining activity is also regulated by the local legislation enacted by each of the Argentine provinces.

2. Operational Framework

The procedures for obtaining mining rights (exploration permits and exploitation concessions) are mainly regulated by:

the Argentine Mining Code; and
the Provincial Mining Procedural Codes.

3. Operating Framework

3.1 Mining Legislation

The federal state and the provincial states are the owners of first category minerals (such as gold, copper, and silver) located in their respective territories. Nevertheless, except for certain specific cases, federal or provincial governments are prevented from exploring and exploiting mining areas and must grant to private parties the right to search for and exploit mineral resources.

In light of the above, provincial governments are entitled to enact their own mining legislation. However, such provincial legislation may not be contrary to federal legislation.

Pursuant to the Argentine Mining Code, mining rights are mainly divided into exploration permits and exploitation concessions.

It is important to point out that since ownership of surface land is not included in these exploration permits and exploitation concessions (except for certain exceptions), permit and concession holders need to negotiate access agreements with owner/s of the surface land. If surface access is unreasonably withheld, the holders may apply for easements.

3.2 Water Legislation

Before using water for the development of a mining project, the company that owns the project must obtain a permit for such purpose from the relevant authority.

The requirements and procedures that have to be fulfilled to obtain a water permit vary in each province.

3.3 Environmental Protection Legislation

Pursuant to the Argentine Mining Code, any company performing mining activities must be liable for the environmental damage it may cause. The arising liability is extended to the damage that the employees, contractors, or subcontractors of said company may cause.

The company that causes environmental damage will be obliged to restore and mitigate the damage and will be subject to fines and other sanctions.

Before performing mining activities, the interested company must submit to the relevant authority an environmental impact report. Such authority has 60 days to approve the report. If the report is not approved, the company will have 30 days to submit an amended and corrected environmental impact report. Such report must include the actions that the company will take to protect the environment and has to be updated every two years.

The provincial authorities are entitled to issue regulations to supplement those indicated by the federal government.

4. Exploration Permits

Under an exploration permit, the holder will be exclusively authorized to explore a specific area (for a limited time) and, provided such holder complies with the regulatory requirements and discovers a potential mineral deposit, it will be entitled to file a written request (declaration of discovery). The declaration of discovery allows the holder to start the procedure for obtaining an exploitation concession.

4.1 Extent of the Area

The area covered by an exploration permit is divided into units, and each unit comprises 500 hectares. One exploration permit may include up to 20 units (i.e., 10,000 hectares). A company or an individual is not allowed to receive directly, or through its shareholders, more than 20 exploration permits or more than 400 units per province (i.e., a company or an individual may not cover more than 200,000 hectares per province with exploration permits).

4.2 Term

The effectiveness of an exploration permit commences 30 days after it is granted. Each exploration permit covers a term of 150 days for the first unit and another term of 50 days for each additional unit.

However, 300 days as from commencement of the effectiveness of an exploration permit, the holder must release an area equal to half of the area exceeding four units (i.e., 2,000 hectares). Likewise, 700 days as from commencement of the effectiveness of an exploration permit, the holder must release an area equal to half of the area remaining from
the first release, excluding the four units.

4.3 Exploration Fee

In the case of hard minerals (such us gold, copper, and silver, among others), the exploration fee is AR$400 (Argentine pesos four hundred) for each exploration unit (500 hectares), regardless of the term of the exploration permit.

5. Exploitation Concessions

Under an exploitation concession, the holder will be exclusively authorized to exploit minerals within a specific area.

5.1 Extent of the Area

The area covered by an exploitation concession is divided into units. In the case of disseminated deposits, each mining unit comprises 100 hectares. The number of mining units to which a claimant is entitled varies, depending on: (i) whether the discoverer (“claimant”?) is a company or an individual; (ii) the minerals found; and (iii) the type of deposit (vein or disseminated form).

5.2 Term

An exploitation concession grants its holder a perpetual property right to the mine it has discovered.

5.3 Exploitation Fee

In the case of disseminated deposits, the annual exploitation fee is AR$800 (Argentine pesos eight hundred) per unit (100 hectares). Such exploitation fee is due three years as from the registration of the relevant declaration of discovery.

5.4 Investment Plan

Within one year as from the request for measurement of the relevant mine (whether completed or not), the applicant must file the estimated investment plan and has five years as from such filing to make the actual investments.

6. Filing Procedures

6.1 Exploration Permits

In order to explore minerals in a specific area, a company or an individual must file with the relevant mining authority an application for an exploration permit, together with (i) the geographical coordinates of the requested area/s; (ii) the names of the surface land owner and of the applicant; (iii) a description of the work to be done, including the estimated investment and equipment; and (iv) a sworn statement indicating that such request does not violate any provision of the Argentine Mining Code. Additionally, such application must include evidence of payment of a provisory exploration fee, which shall be reimbursed (totally or partially) if the exploration permit is denied or granted for a smaller area.

Upon filing of the application, the relevant mining authority shall: (i) register the application; (ii) notify the surface land owner that an application has been filed; and (iii) publish an official notice in the Official Gazette of the place where the exploration permit is requested. If there are no oppositions to the exploration permit request, the mining authority shall grant the exploration permit immediately, and from the application date, all discoveries (even those made by third parties) shall belong to the holder of the exploration permit.

6.2 Exploitation Concessions

Below is a summary of the procedure for obtaining an exploitation concession:

The holder of an exploration permit must file a declaration of discovery with the relevant mining authority, submitting a sample of the minerals found and informing the exact location of the mine or vein and the area to be covered by the mining units to be measured (this area will be blocked to [“from”?] third parties until the measurement is completed). By means of a declaration of discovery, the applicant may request an area equivalent to twice the area that may be covered by the resulting exploitation concession.
The relevant mining authority, with the report of the cadastral registry, shall inform whether the declaration of discovery is made on a free or occupied area. Provided the requested areais free, the mining authority shall register the declaration of discovery under the applicant’s name.
The registration of the declaration of discovery must be published in the Official Gazette for 15 days to allow any third party that may have preemptive rights to file oppositions.
Within 100 days as from the date of registration of the declaration of discovery, the applicant must execute the necessary works (legal labor) to determine the existence and type of minerals discovered, as well as the direction and inclination of the deposit.
Within 30 days following the “legal labor” (or its extensions), the applicant must indicate the amount of mining units that it is requesting and request their measurement. Once the measurement is executed, the relevant mining authority must register the measurement and a copy of it must be given to the applicant (“and give a copy of it to the applicant”?). The copy of this measurement is the definite property title of an exploitation concession.

The procedure summarized in items 1 to 5 just above is the one provided under the Mining Code. However, this procedure may slightly differ in each province.

6.3 Protecting the Exploitation Concession

An exploitation concession grants its holder perpetual property right to the mine it has discovered. However, such right is subject to two conditions: