3. Why is a cadastre critical to for development of a mining industry?
Mineral rights form the cornerstone of good mineral resource management in any country. The cadastre is the first place point of call for an investor interested in operating in a country, as it provides information on availability of non-concessioned areas, the rules and processes for the granting of licences, application timeframes as well as the implicit risks (security of tenure) in the licensing procedures.
International experience demonstrates the importance of the cadastre. There is not a single country in the world where the mining sector is well developed without an efficient mineral rights cadastre.
Consequences of a poorly functioning mineral rights cadastre include:
Decrease for security of tenure and attractiveness for investors;
Increase of waiting periods for licensing (time elapsed since application until granting);
Decrease in investments;
Increase of the passive speculative practices;
Decrease of revenues (royalties and annual rental fees) for the state; and
A large percentage of fertile areas in the country are blocked by inactive (dormant) speculative licenses, meaning fewer available areas for investment in exploration. This discourages the entry of new investors.
The consequences of a country having a poorly functioning cadastre are demonstrated by the vicious cycle illustrated by the diagram below. However, it is possible for governments to break this cycle, increasing attractiveness to investors, by introducing an efficient mineral rights cadastre.