RELATIONS AMONG MINING CONCESSIONARIES, SURFACE LANDS AND OWNERS OF OTHER RIGHTS SUCH AS GEOTHERMAL ENERGY CONCESSIONS, ELECTRIC CONCESSIONS, RIGHTS FOR THE USE OF WATERS

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development and Investment
(Apr 2009)
CHAPTER 7B
RELATIONS AMONG MINING CONCESSIONARIES, SURFACE LANDS AND OWNERS OF OTHER RIGHTS SUCH AS GEOTHERMAL ENERGY CONCESSIONS, ELECTRIC CONCESSIONS, RIGHTS FOR THE USE OF WATERS¹
Cristián Quinzio S.
Quinzio y Cía. Abogados Ltda.
Santiago

Cristián Quinzio is a lawyer having studied in the Faculty of Law of Universidad de Chile. He carried out graduate studies with specialty in International Public Law, in Fletcher School of Tufts University of Boston, and Tax Law in the Law School of the Universidad de Chile. Professor of Mining Law at the Faculty of Law of Universidad de Chile since the year 1991 and also Professor of the Magister Program of Mineral Economics which is co administered between the Engineering Department of Mines of Universidad de Chile with Curtin University of Australia. Senior partner of the Santiago based law-firm "Quinzio & Cia. Abogados", specialized in natural resources, particularly in foreign investments and mining, water and environmental issues, together with a broad experience in the construction and engineering legal matters. Has participated as speaker in several seminars about mining legal matters both in Chile and abroad. In the past has served as in-house counsel for Phelps Dodge operations in Chile and Latin America and was also a member of the Foreign Service of the Republic of Chile.

As stated in the name that has been given to this Panel, every day the exercise of the rights which are granted to the owner of a mining concession presents greater difficulty and conflicts appear as a normal occurrence between such concessionarys and the owners of different rights which covers land comprehend by the mining concession or which is necessary to occupy in order to develop and conduct peaceful and convenient mining works. Thus, apart from the usual conflicts between the owners of the surface rights and the miners, today other conflicts occurs as for example conflicts between the miner and power supply concessionarys, whether of generation or distribution, as well as those which occurs in respect to groundwater rights weather exploration permits or definitive concessions.

To understand how such conflicts are or can be resolved, it is necessary to have full understanding with respect to the rights granted by the mining concession in the Republic

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of Chile. This, because the conflicts arises between rights of different ownership or domains, all of which have legal protection. I would like to point out that, as provided in Art. 582 of the Civil Code, domain "is the real right on a corporeal thing, to enjoy and dispose of it arbitrarily, as long as it is not against the law or against the rights of third parties". Then, to understand the conflicts that arises between the different domains, such as that between the surface landowner and the mining concessionary, we must understand which is the "domain" that a mining concession grants in Chile, especially the concession of exploitation or "pertenencia".

A. DOMAIN GRANTED BY THE MINING CONCESSION AND ITS PROTECTION

In Chile, the original domain of the mining wealth belongs to the State, domain that has the characteristic of being a patrimonial domain. Thus Art. 19 No. 24, paragraph six, of the Political Constitution provides that "The State has absolute, exclusive, inalienable and imperative domain over all mines including guano deposits, metallliferous sands, salt mines, coal and hydrocarbon deposits and the other fossil substances, with the exception of surface clays, notwithstanding the ownership of the natural or juridical persons on the lands in which the above should be contained. The surface landed property will be susceptible to the obligations and limitations prescribed for by law to facilitate exploration, exploitation and the processing of such mines". According to what is inferred from this provision, the domain of all the mines belongs to the State, domain that is independent and different from the domain of the surface rights in which

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such mines can be found, distinguishing then between the right of domain of the owner of the surface land (the "superficiary") from that which belongs to the owner of the mining wealth that is located in the subsoil. As to be able to carry out the mining work it is required to comprise the surface land, to facilitate such mining work, the same constitutional provision subjects the surface landowners to obligations and limitations whose purpose is to facilitate the exploration, exploitation and processing of the mines. Such obligations and limitations are of a special nature and are found contemplated in the Constitutional Organic Law on Mining Concessions ("LOC") and in the Mining Code (the "Code"). What is most relevant in this connection is that since the mining domain is recognized as different and independent from the domain of the surface rights, the possibility of contraposition of interests is implicitly recognized

For purposes of the use of the mining wealth of domain of the State, the same Constitution, in the seventh paragraph of the provision already quoted, classifies mining wealth among that which is susceptible of being used only by the State, which are not able to be the object of a judicial concession ("inconcesible"), and that which is susceptible of use by any person through the prior obtainment of a mining judicial concession, that is called mining wealth that is susceptible to concession and which is the general rule. Today Chilean mining legislation priorizes free "concessibility", the exception being those substances that are not subject to concessions which only is restricted to oil, natural gas and lithium. Any other mineral wealth is susceptible to concession. To take advantage of the mining wealth susceptible to concession, it is required to obtain a mining concession through judicial channels, concession that can be

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obtained by any person, whether Chilean or foreign, natural or juridical. The judicial mining concession is a right of incorporeal nature that confers to its owner the right to explore in search of mining wealth that is susceptible to concession, which constitutes the object of the concession, and also, in the case of the exploitation concession or "pertenencia", grants the right to extract the minerals from the deposit of which they form part and become owner of the mining wealth thus extracted. To give a real protection to the right of the mining concessionary (the "miner"), the Political Constitution in paragraph nine of Art. 19 No. 24 grants the domain to the concessionary over the mining concession, the protection of the constitutional guarantee of the right of ownership.

To understand the object of the of the constitutional protection of a mining property, it is necessary to define the rights that the property grants to the miner, since only once these are determined the object of the constitutional rights can be established.

In accordance with what is provided in articles 2 both the LOC and of the Mining Code, the mining concession is a real property right, and according to what is provided in article 91 of the same Code, it is the judicial sentence registered in the pertinent Registry what creates this real right that, separated and independent from the domain of the soil, permits its owner of record to exercise the pertinent rights. Such rights are stipulated in articles 8 final paragraph, 9 and 11 of the LOC, and 94, 110 and 116 of the Mining Code. In general terms such rights are:

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— Exclusive right to explore and exploit; with the pertinent limitations;

— Right to impose easements over surface lands and over other mining concessions;

— Right to use the waters found on occasion of the mining work for their own purposes, waters that are known by the name of "miner's waters";

— Right to be indemnified in case of expropriation of the right to concession; and

— In general, right to legally defend the concession in case of events or acts that disturb the legitimate exercise of its rights.

The domain that the constituent recognizes to the miner, is on the substances susceptible to concession that it extracts from the earth and, once extracted, they become incorporated in the patrimony of the miner. It is with respect to such wealth, which has been extracted from the earth, that domain is granted to the concessionary of a mining property and such right is protected with the respective constitutional guarantee of the domain, protection which includes the mining concession. The exploration and exploitation activities, that are understood as the search for mine deposits and the extraction of mineral substances that are susceptible to concessions within the limits of the mining property, also are constitutionally protected, protection which, however, when contrasted with the rights of the superficiary our doctrine and jurisprudence concluded unanimously, requires an actual exercise, while the Constitution expressly obliges the miner to fulfill the necessary activity to satisfy public interest that justifies the granting of the concession (article 19 No. 24 seventh paragraph of the Political Constitution).

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Summarizing: Today in Chile, the State has the originary domain of mining wealth, which is classified in order to permit taking advantage of it, between mining wealth that is not susceptible of concession, which constitutes the exception and that only the State can use, and the general rule, which is the wealth subject to concession, susceptible of being taken advantage of by any person after obtaining by judicial channels a mining concession. The mining concessionary has a right of domain both on the concession itself; of the mining wealth subject to concession that is within the limits of its concession, and on the faculties to explore and exploit that arise from the concession...