Mining Cadastre & Licensing


1. Introduction

Origin of the cadastre concept

The concept of cadastre has existed for centuries, since private property was first recognised. The first known mining cadastre dates back to 500 years BC, in Greek culture. By this period, the principle of "first come, first served" for mineral rights had already been accepted.

A mining cadastre has two primary functions:

  • To provide titleholders with the security that there will not be more than one owner for the same mineral right; and

  • To establish taxation units for the state.

Both principles remain valid today.

The modern mining cadastre

In the modern era, mining cadastres have become public institutions with the exclusive responsibility for managing mineral titles in a country, integrating the regulatory, institutional, and technological aspects of mineral rights administration. Consequently, the cadastre is not restricted to maps, registries, archives, files or computerised systems. Rather, it is an administrative unit which has an institutional mandate for the management of mineral rights.

The efficient functioning of a cadastre relies on:

  • A clear legal and regulatory framework;

  • Well-defined institutional responsibilities; and

  • Transparent and non-discretionary processes.

Why is a cadastre critical for development of a mining industry?

Mineral rights form the cornerstone of mineral resource management in any country, and international experience demonstrates the importance of a well-functioning cadastre. A poorly-functioning mineral cadastre may deter investors and increase speculative practices, resulting in prospective land being withheld from exploration and ultimately leading to a decline in revenue contributions from the mineral sector, as shown in the diagram below.

The case of Argentina: The role of the cadastre in stimulating investment

It is possible for governments to break this cycle and increase their attractiveness to investors, by introducing an efficient mineral rights cadastre in the context of a well-functioning governance regime, as shown in this case study from Argentina.

Historically, Argentina’s mining sector has suffered from a lack of development, mainly a consequence of inadequate institutional organisation and an obsolete legal framework. Furthermore, the political organisation of the country also created obstacles because Argentina is a federal republic, composed of 23 provinces, each of which has its own constitution, ownership of its mineral resources, mining regulations, mineral rights granting procedures, and taxation systems. Under these conditions, mining investments were inherently risky, as provincial governments had the right to modify their taxation systems at any moment and granting procedures were complex and lengthy. Consequently, the security of tenure and level of interest from international investors was low.

In 1993 Argentina’s 23 provinces agreed on a federal pact for the mining sector, redefining the role of the state in the mining sector, introducing guarantees for fiscal stability and establishing uniform cadastral rules to guarantee security of tenure. This new policy and technical improvements led to a sharp increase in the number of foreign companies operating in the country, the development of several world-class deposits, a corresponding increase in investment into the sector and a proportional increase in exports.

In the early 1990s, mining activity in Argentina was restricted to small and medium-sized borax, uranium, tin, and silver operations. The production of building materials around the most important urban centres represented the bulk of the sector outputs. Today, the Argentinean mining sector is developed and diversified, contributes significantly to the national economy and, in some provinces, represents the main source of income. This growth is due largely to the modernisation of the legal and institutional frameworks. Implementation of the new cadastre, which increased security of tenure, represented the cornerstone of regulatory and institutional reforms.

% Contribution of the mineral sector to Argentina’s GDP

The growth of Argentina’s mineral sector (1992-2013)

 

1992

2013

PRODUCTION VALUE (US $)

434,000,000

5,960,000,000

EXPORT VALUE (US $)

16,000.000

5,267.000.000

FOREIGN COMPANIES

4

157

EXPLORATION AREAS (Km2)

70,000

183,000

DRILLED METRES FOR EXPLORATION

32,000

320,000

To see Argentina’s policy, legislation and for additional data and country analysis, see the Extractive Hub’s country information section.

Comparing mineral rights with other types of property

In most countries in the world, mineral rights have the same status as real estate properties. However, there are several key differences between standard land or soil properties and mineral rights, as outlined below:

  • Mineral resources belong to the state;

  • The right to explore and exploit mineral resources may be temporarily transferred to an individual or a corporate entity through a written document, normally called a licence or lease;

  • Mineral rights are distinct from surface or land ownership rights;

  • The granted licence or lease does usually not include visible physical boundaries (such as fencing). Instead, the area is usually delineated by geographic references or coordinates;

  • The holders of the granted licence or lease must fulfil pre-established conditions to be granted and maintain their rights over the area;

  • When the validity of the granted licence or lease ends, the rights return to the state;

  • The licence or the mineral right cannot be suspended or revoked except on specific grounds. These must be objective and non-discretionary. They should be clearly specified and detailed in the legal framework; and

  • In most countries, mineral rights are divided into exploration and mining licences.

For an overview of the process of mineral exploration, evaluation and planning, see the relevant Extractives Hub topic.