CHAPTER 3 SELECTED ISSUES AND PROBLEMS UNDER THE CHILEAN MINING CODE (ENGLISH VERSION)
| Jurisdiction | Derecho Internacional |
(Nov 1997)
SELECTED ISSUES AND PROBLEMS UNDER THE CHILEAN MINING CODE (ENGLISH VERSION)
Diez, Perez-Cotapos, Silva & Lira
Santiago, Chile
Prepared for Delivery at the Rocky Mountain Mineral Law Foundation Institute on International Oil, Gas, and Mining in Latin America
September 30—1997
at
Santiago-Chile
3.1 Constitutional Provisions and Legal Texts Applicable to Mining
Three major legal texts are concerned with mining: the Constitution, article 19 para 24, items 6-10; the Constitutional Organic Law on Mining Concessions (Law 18,097); and the Mining Code of 1983.
The Constitution of 1980 provides that the State has absolute, exclusive, inalienable, and imprescriptible title to all mines, except surface clays.
The same text provides that a constitutional organic law shall specify which substances -with the exception of liquid or gaseous hydrocarbons- may be available for mining exploration and exploitation concessions, which shall be established and extinguished by court ruling. Concession duration, rights and obligations arising therefrom, and form of mining rights shall be as such law provides.
Lastly, the Constitution provides that the holder's title to the mining concession is protected by the constitutional guaranty of proprietary rights.
In turn, the above constitutional organic law deals, inter alia, with the issues devolving upon it under the Constitution, and the Mining Code that took effect in 1983
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simultaneously with such law explicates in detail the provisions of the organic law.
3.2 The Aims of this Legislation
The rationale behind the mining legislation aims to strengthen private activity in the mining industry.
In this context, the constitutional statement that the State has absolute title to all mines should not mislead the reader, for such title can only be understood as a special title devoid of the characteristics of a proprietary right, whereas the real right under concession to concessionable mineral substances that private persons hold is strikingly similar to proprietary right.1 2
The State holds perfect title only on mineral substances reserved thereto; in addition, to benefit the owner of the land certain mineral substances, which in practice compose the soil itself, are excluded from the legislation.
Chile is undoubtedly a mining country. Providence has been most generous to this nation, for it has endowed its soil with the richest and most diverse ore deposits.
The sheer size of Chilean mineral reserves makes it advisable to mine them intensively in order to incorporate this wealth into the national economy and so raise the living standards of the population.
Mining requires abundant resources; to attract them, however, not only means incentives to promote domestic and foreign investment but also requires that basic legislation governing mining operations grant security for this purpose, to avoid adding juridical risk to the inherent risk of the industry.
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The mining legislation that preceded the present framework evidenced a number of flaws and deficiencies that discouraged any investment in mining.
Indeed, law 17,450 of 1971 made amendments to the Constitution of 1925 that affected the juridical nature of the mining operator's right to exploit mines by granting such mining operator a precarious or uncertain title.3
The Constitution of 1980 and supplementary legislation including Constitutional Organic Law No. 18,097 and the Mining Code resolved the above problem and mining operators today enjoy clear title, protected by the constitutional guaranty on all property.
Moreover, the Mining Code that preceded the present one urgently needed modernizing together with major amendments designed to correct voids and flaws revealed in the course of practical application.
To begin with, the current Code, seeking to avoid inefficiency and abuse, provides that all mining concessions be granted by the courts, thus suppressing any and all action by the administration in this context.4
The new mining legislation put an end to juridical uncertainty arising from frequent applications for concession annulment on the grounds that the concession concerned comprised such places as roads, springs, railroad tracks, etc. At present, a valid concession may comprise such places, but no mining operations may be carried on there.5
Another flaw now overcome was the lack of a method for granting a mining exploration concession, which, to protect the rights of whoever performed survey work, resulted in resort to the procedure for establishing a mining exploitation concession, which was absolutely inappropriate for the purpose.6
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Unlike the previous position, today the mining concession covers all mineral substances found within the bounds thereof, excepting of course the substances reserved for the State and others not considered such. As a result, legitimately overlapping concessions, which allowed mining various mineral substances in the same place, giving rise to manifold difficulties, have disappeared.
Development of a mining record completed now for the entire country except for nitrate concessions, has accurately determined the location of all existing concessions in Chile by establishing the vertices thereof in UTM coordinates.7
This has done away to a substantial extent with disputes arising from location of recorded concessions.
Undoubtedly, one of the major flaws of the previous Mining Code was in the procedure for establishing a concession.
The previous concession application was highly inaccurate as to the location of the place where a mine had been discovered and thus could be moved in different directions, affecting the discoveries of others. Nor were subsequent procedures any more precise as to location of the future concession, all of which gave rise to disputes among applicants and adjacent concession holders leading to protracted and costly trials.8
Such deficiencies are corrected under the new legislation and all concession applications are required to state the UTM or geographic coordinates of the central point and area of the site involved, together, if of rectangular shape, with the length and direction of the sides thereof. These data establish the bounds of the square or rectangular lot concerned, all uncertainty regarding such lot being thereby suppressed.
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Subsequently, neither the applicant nor the concession established may occupy any land outside the bounds of the concession under application.
The law further innovated in this regard, requiring that the site applied for follow the UTM north-south direction, which will be the same for the concession established, thus helping to avoid disputes between adjacent concessions and expediting the concession record carried by Servicio Nacional de Geología y Minería (Chilean Geology and Mining Agency).
Another major innovation is associated with mining suits, which proliferated under the previous legislation in the course of establishing a concession. Such suits have been practically eradicated now and, with rare and infrequent exceptions, any contentious matter arising in the course of establishing title must be settled separately without holding up the process.
Causes of concession extinction may be said to have been reduced and simplified. A mining exploitation concession is extinguished only by judicial ruling arising from acts or actions not executed or exercised by the concession holder, and by waiver. A mining exploration concession is extinguished, in addition, by expiry of the term of duration thereof.
The aim of Chilean mining legislation is thus marked by a desire to help miners in every way to establish title to explore in search of mines and to exploit such mines. The fullest juridical certainty is vested in such title with a view to promoting mining development in Chile, which has been achieved by combining Chilean mining tradition with technical developments.
3.3 Basic Principles of Mining Legislation in Chile
(1) Facilitating mining exploration and operations
(2) Ample number of concessionable mineral substances
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