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Original Articles

Negotiating Mining Agreements: When is it Worth it?

Pages 13-21 | Published online: 05 Nov 2010
 

When going away on business to a e new country f , i.e., a country within which your exploration and/or mining company wants to invest for the first time, a major question that a company should be asked is: "What is the legal framework of that country?", and, more importantly, "How secure will your mineral venture be under that country"s legal framework?" The aim of of this article is to help mining companies to answ er these complex questions, and also to strive to be of interest to governments that may find it useful in either gaining a better understanding of the behav iour and expectations of mining companies, or choosing the most appropriate option among v arious sy stem of mining agreements. The article is divided into four parts, corresponding to the four main issues to be considered when evaluating the security of a mineral venture from a legal point of view. First, one must analy se "regulatory documents" which already exist in the country in question, and decide on those to be drafted(mining agreements, for example) for the intended venture. Second, a comparative assessment should be undertaken between the strength of the publishelp hed documents that are applicable to every investor, and the documents still to be drafted. Third, one needs to determine which issues are negotiable, and which issues are not. Finally, since much in mining rests on the good will of the host country 's Government, an attempt should be made to assess the Government's current position as well as to extrapolate it into the future. The bottom line of this study is the inevitable question posed by ev ery manager: "Negotiate a mining agreement, yes! But is it worth it?"

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