The amendment of the Geological and Mining Law of 11 July 2014 also introduced certain changes to the regulations concerning mining usufruct. It is worth reminding that, under the Polish legal system governing the activities related to prospecting, exploration and production, the fact that an entrepreneur is the holder of a concession is not tantamount to their ability to carry out works in the subsurface. For the works to be initiated, it is also necessary to sign a mining usufruct agreement in the form of a civil law contract concluded with the State Treasury.
The Geological and Mining Law of 9 June 2011 (further: GML) has re-introduced the concept of mining ownership as specified in the provisions of the Mining Law Ordinance of the President of the Republic of Poland of 29 November 1930. Its essence was to separate the notion of land property from mineral deposits and to acknowledge that certain deposits are not part of real property or land property. Article 10 of GML contains a list of deposits being subject to mining ownership vested in the State Treasury. The list includes deposits of high economic relevance (in particular hydrocarbons, hard coal, lignite, metal ores). Mineral deposits that are not subject to mining ownership constitute land property, which means that they are owned by the given owner of land property.
GML stipulates that the sole form of disposal over mining property by the State Treasury is mining usufruct, the establishment of which takes place through the conclusion of an agreement. As to the content of the agreement, the provisions of the amendment have not introduced any new solutions. The provision indicating maximum term of agreement (up to 50 years) was withdrawn, as the introduced provisions stipulate that such agreement expires (by operation of law) in the case of expiry, withdrawal or invalidity of a concession, regardless of reasons causing such situation. A stronger connection of mining usufruct with the concession is also confirmed by provisions according to which the agreement becomes effective on the date the concession is awarded.
The pre-emptive right
The entities which have explored a mineral deposit subject to mining ownership, which have documented such deposit at least in the C1 category and have obtained a decision approving the geological documentation, may demand that mining usufruct be established for their benefit on a preference basis with respect to other entities. It means that the act gives the pre-emptive right concerning the conclusion of an agreement establishing mining usufruct to the entities which have incurred financial expenses and faced the risk connected with the exploration of a given deposit. As regards the mere existence of the pre-emptive right, the amendment has not introduced any changes. The changes, however, concern the possibility to execute the right over a specific period of time. The amendment has shortened from 5 to 3 years the period for submitting applications. For entrepreneurs, the above means a shorter “exclusivity” period for submitting an application for a production concession. After the above period expires, the application for a concession can be submitted by any other entity interested in the explored deposit. While calculating the "exclusivity” time, it is worth to remember the provisions of Article 13 section 6 of GML, according to which an agreement establishing mining usufruct shall expire if an entrepreneur who has concluded it under their pre-emptive right does not obtain a concession within a year from the date of concluding the agreement. In practice, it means another additional year for an entrepreneur to obtain a production concession.
Attention should also be paid to transitional provisions. In fact, the former system will be applied only by those entrepreneurs who have explored and documented a mineral deposit to an extent enabling the preparation of a deposit development plan based on concessions for prospecting for or exploration of mineral deposits, which were awarded before the amendment entered into force, and who obtained a decision approving the geological documentation of such deposit before the amendment entered into force. Such entrepreneurs will keep their pre-emptive right to claim the establishment of mining usufruct for a period of 5 years from the date of submitting the decision approving the geological documentation of a deposit.
OUR OPINION
Introducing the validity of a suspended agreement establishing mining usufruct is a solution that is beneficial for entrepreneurs. Until the concession is awarded, a mining user is not obliged to deliver any services resulting from the agreement to the State Treasury, at the same time having a kind of reservation of the space mentioned in the agreement.
The provision contained in the act, according to which an agreement expires if an entrepreneur does not obtain a concession within one year from its conclusion, does solve the practical issue of terms on which an agreement of this kind should be concluded with an entity exercising their pre-emptive right. On the other hand, however, it is not known whether the time limited in this manner will be sufficient to obtain a concession in practice.
Having regard to the presented terms, an investor should consider the possibility of moving to the exploitation stage, and to conduct the procedure in a manner to fully and effectively use the “exclusivity” time granted to them with respect to a certain part of the subsurface under the provisions of law.