Encyclopedia of Mineral and Energy Policy [1st ed. 2023] 3662474921, 9783662474921

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Günter Tiess Tapan Majumder Peter Cameron Editors

Encyclopedia of Mineral and Energy Policy

Encyclopedia of Mineral and Energy Policy

Gu¨nter Tiess • Tapan Majumder • Peter Cameron Editors

Encyclopedia of Mineral and Energy Policy With 132 Figures and 90 Tables

Editors Günter Tiess Agency for International Mineral Policy MinPol GmbH Vienna, Austria

Tapan Majumder Formerly with Indian Bureau of Mines Geological Survey of India and Faculty at Indian School of Mines Dhanbad, India

Peter Cameron Centre for Energy, Petroleum and Mineral Law and Policy University of Dundee Dundee, UK

ISBN 978-3-662-47492-1 ISBN 978-3-662-47493-8 (eBook) https://doi.org/10.1007/978-3-662-47493-8 © Springer-Verlag GmbH Germany, part of Springer Nature 2023 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer-Verlag GmbH, DE, part of Springer Nature. The registered company address is: Heidelberger Platz 3, 14197 Berlin, Germany

Preface

Minerals and energy are the two most vital requirements for propagation and sustenance of human life on earth. The commitments of almost every country in the world to take steps toward achieving a lower carbon economy mean that an energy transition will lead to an upheaval in our existing energy systems and to a more mineral-intensive economy. A sound and comprehensive understanding of minerals and energy policy among the diverse countries of the world has never been more important than it is today. This work of reference and analysis is a contribution to the challenge of re-thinking what mineral and energy policy means. Demand for different kinds of minerals and energy has been on the increase for decades, even though the supply is as unequally distributed around the world as it has always been. For many people, especially in the Global South, access to energy is an urgent priority, and it is of course one of the UN Sustainable Development Goals. Moreover, modern lifestyles as well as climate change actions have given a dramatic momentum for an increase in certain types of minerals, with lithium and cobalt being notable examples. Yet access to supplies can be limited by more than geographic or geological distribution. It can result from policy based on environmental preferences or from competition for different land use. Oligopolistic structures in the supplier countries may also lead to market distortions. In this context of tension and potential conflict, the investor is being asked to make what are usually large-scale commitments to projects often over a very long term. Before taking this risk, the investor requires reliable and prior knowledge of key facts such as: the presence of a large and sustainable reserve-resource base; the existence of a politically stable administration, understood as one that formulates and follows a legal and fiscal regime that combines good governance with the best environmental plan for long-term resource management. Many of the contributions to this work highlight the diverse ways in which governments try to meet these challenges in investment promotion and protection. Several decades of globalization have underlined the importance of minerals and energy as the most important links in the value chain of industrial goods production. However, a structural change has taken place on the global markets. The old rule of thumb – 20% of the world’s population in Europe, USA, and Japan consuming more than 80% of the total minerals production – is not valid any more. With the integration of populous countries such as India, the People’s Republic of China, and Brazil into the world economy, more than v

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half of the world’s population now consumes an increasing share of the available raw materials. Recent estimates by the OECD Development Centre suggest that today’s developing and emerging markets are likely to account for nearly 60% of global GDP by 2030 (Tiess G. General and International Policy 2009. Springer. https://link.springer.com/book/10.1007/978-3-211-89005-9). Increasing income in these countries means a growing demand for manufactured industrial goods, which opens new trade options for exportoriented industries. Measured by their population, the leading African markets, the so-called “African Lions” – Algeria, Botswana, Egypt, Libya, Mauritius, Morocco, South Africa, and Tunisia – have become important mineral and petroleum exporting countries. Moreover, China has become the major trade partner of Russia, Brazil, India, and South Africa. South-South links are therefore of increasing importance as a motor of growth in developing and emerging markets. One of the most important natural resources is coal. Many of our contributors note how pervasive and continuing use of coal is in parts of the world’s economy. Coal is still the largest energy source of all; even though with more than 40% ash content, it is a major source of environmental pollution. Perhaps, more than oil, coal is a challenge to many governments’ plans for an energy transition. Although the limited land-based coal resources under active utilization may soon be depleted, our contributors note the vast and potential reserves of minerals and energy resources in the oceanic regions that are likely to attract future consideration. All the above issues are analyzed in detail with respect to exploration and exploitation rules and regulations, supplemented by contextual information on population, Gross Domestic Product, and so on. In view of the risks and problems, securing the supply with minerals and energy is likely to remain a permanent challenge at global level. To date, there has not been a single or consolidated reliable source of such knowledge for global policy makers, permitting comparisons in their work and thereby assisting policy design and practice. The Encyclopedia of Mineral and Energy Policy, with its 142 entries covering around 130 countries of 13 geographical regions, is intended to fill that gap. Written by over 100 international experts in the fields of mineral and energy, and subject to strict peer review by 20 Section Editors, we present the results in this volume. It supplements its focus on key topics with a few related topics like Deep Mining, Hydro Metallurgy, Geosites, and their importance. We have also consolidated information on international bodies related to trade and commerce and provided many hyperlinks to assist those readers who seek further in-depth analysis from other sources. Vienna, Austria Dhanbad, India Dundee, United Kingdom July 2023

Günter Tiess Tapan Majumder Peter Cameron

Acknowledgements

Prof. Günter Tiess’s contribution is dedicated to his daughter Sophie: I’m so proud of you. Keep questioning, learning, and discovering. It’s a great big world out there – go explore! Never stop reaching for your dreams....! Prof. Tapan Majumder dedicates his contribution to his late life companion Mahuya Majumder for her financial support and encouragement as well as those from his family. Prof. Peter Cameron wishes to thank the many colleagues from all parts of the world who supported him in his work on this volume, and dedicates his contribution to his two children in the hope it will assist them in understanding an ever-more complex world. The three Editors in Chief convey their sincere thanks to the respective Section Editors for their support, they did a magnificent job along with those of the supporting staff of Springer-Verlag over the last decade. Thanks to all of them.

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List of Topics

Asia - Mineral Policy Section Editor: Prof. Günter Tiess Afghanistan: Mineral Policy SAARC: Mineral Policy

Australia/Surrounding countries: Mineral and Energy Policy Section Editor: Adv. Leon Gerber Australia, Western: Uranium Mining Australia: Environmental Approvals for New Resource Projects Australia: Landholder Rights to Subsoil Resources Australia: Parliamentary Agreements and Extractives Australia: Regulation and Management of Naturally Occurring Radioactive Material (NORM)

China/Japan: Energy Policy Section Editor: Dr. Gökçe Mete China: Coal Industry China: Mining Policy – Nonmetals China: Natural Gas China: Steel Industry China’s Oil Industry and Policy India: Energy Policy Japan: Natural Gas

Japan: Nuclear Policy Japan: Oil Policy

Coal Policy: General/Specific Technical Aspects Section Editors: Dr. Shibananda Sengupta and Prof. Günter Tiess Coal Bed Methane (CBM) Coal Bed Methane (CBM) Reservoir Property Coal Macerals Coal Rank Classification Coal, Adsorption Coal, Cleat System Coal, Desorption Coal, Permeability Coal, Porosity Coal, Trace Elements Coal: Chemical Behavior with Increasing Rank Coalification Coal-to-Liquids (CTL) Microlithotype Mineral Matters in Coal: Their Implication Pyrometamorphosed Coals and Changing Properties

Eastern Africa - Mineral Policy Section Editor: Dr. Gokce Mete Uganda: Mineral Policy Zambia: Mineral Policy

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Europe: Mineral and Energy Policy Section Editors: Dr. Zoltán Horváth and Prof. Peter Cameron Austria: Mineral Policy Cyprus: Energy Policy Czech Republic: Mineral and Energy Policy Estonia: Mineral Policy Finland: Mineral Policy France: Energy Policy Hungary: Mineral Policy Ireland: Mineral Policy Malta: Energy Policy Montenegro: Mineral Policy Poland: Energy Policy Poland: Mineral Policy Romania: Mineral Policy Serbia: Mineral Policy Slovakia: Energy Policy Slovenia: Mineral Policy Spain: Mineral Policy Sweden: Mineral Policy The Netherlands: Mineral Policy Turkey: Energy and Mining Policy Ukraine: Mineral Policy United Kingdom: Mineral Policy

General Section Editor: Prof. Tapan Majumder International Bodies Related to Mineral and Energy Oceanic Minerals and Energy: Resources and Policies

List of Topics

Geosites, Classification of Geosites, Management of Mining and Geoconservation Regional Geological Heritage

Latin America: Energy Policy Section Editors: Juan Felipe Neira Castro and Prof. Günter Tiess Argentina: Energy Policy Brazil: Energy Policy Chile: Energy Policy Chile: Renewable Energy Colombia: Energy Policy (Electricity) Mexico: Energy Policy Peru: Energy Policy

Latin America: Mineral Policy Section Editor: Dr. Diego I. Murguía Argentina: Mineral Policy Bolivia: Mineral Policy Brazil: Mineral Policy Chile: Mineral Policy Colombia: Mineral Policy Ecuador: Mineral Policy Mexico: Mineral Policy Peru: Mineral Policy Uruguay: Mineral Policy Venezuela: Mineral Policy

North Africa and Middle East: Energy Policy Section Editor: Dr. Gokce Mete

Geoconservation/Geological Heritage Section Editor: Dr. Dmitry A. Ruban Energy Production and Geoconservation Geoconservation Policy Geoconservation, Concept of Geoconservation, History of Geodiversity Geosite, Concept of

Oman Energy Policy Qatar: Energy Policy

North Africa and Middle East: Mineral Policy Section Editor: Prof. Tapan Majumder Oman: Mineral Policy

List of Topics

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Northern America - Mineral Policy

South Asia, Energy Policy

Section Editor: Prof. Günter Tiess

Section Editor: Khanindra Pathak

The United States: Mineral Policy

India’s Renewable Energy Resources

Primary Mineral Raw Materials Production (Mining and Processing)

South Asia: Mineral Policy

Section Editor: Dr. Horst Hejny Deep Mining, Health, and Safety Aspects Hydrometallurgy Mine Stability

Section Editor: Khanindra Pathak Bangladesh: Legal Framework on Mineral Exploration India: Mineral Policy

Sub-Saharan Africa - Energy Policy Russian Group: Energy Policy Section Editor: Prof. Günter Tiess Climate Policy in Russia EU-Russia Energy Dialogue: Russian Perspective Gazprom Oil and Gas Projects in Sakhalin Oil Reserve Fund (Russian Federation) Russian Domestic Gas Market Russian Energy Diplomacy Russian Energy Outlook Russia-Ukraine Gas Conflicts Taxation of the Russian Oil Sector Ukrainian Transit: Its Role in Russian Gas Exports to Europe

Section Editors: Leon Moller, Prof. Peter Cameron, Dr. Gokce Mete and Prof. Günter Tiess Cameroon: Energy Policy Ghana: Energy Policy Mozambique: Energy Policy Namibia: Energy Policy Nigeria: Energy Policy South Africa: Energy Policy Tanzania: Energy Policy Uganda: Energy Policy Zambia: Energy Policy

Sub-Saharan Africa: Mineral Policy Russian Group: Mineral Policy Section Editor: Prof. Dr. Svetlana Zorina Russian Federation: Energy Strategy Russian Federation: General Information on Mineral Policy Russian Federation: Mineral Policy – General Assessment Russian Federation: Mineral Reserves Russian Federation: Need of Minerals Russian Federation: Regulatory Framework of Mineral Policy Russian Federation: State Regulation and Mining Law Development Russian Federation: Voluntary Standards to Russian Mining Industry

Section Editor: Dr. Gokce Mete Angola: Mineral Policy Democratic Republic of the Congo: Mining Sector South Africa: Mineral Policy Sudan and South Sudan’s Mineral Policies The Republic of Congo: Mineral Policy

West Africa - Energy Policy Section Editor: Dr. Gokce Mete The Gambia: Energy Policy

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West Africa: Mineral Policy Section Editors: Kwabena Ata Mensah and Prof. Günter Tiess Botswana: Mineral Policy Gambia: Mineral Policy Ghana: Mineral Policy Guinea: Mineral Policy Kenya: Mineral Policy

List of Topics

Liberia: Mineral Policy Mali: Mineral Policy Niger: Mineral Policy Nigeria: Mineral Policy Sierra Leone: Mineral Policy Tanzania, United Republic of: Mineral Policy Togo: Mineral Policy Zimbabwe: Mineral Policy

About the Editors

Günter Tiess (Associate Prof. Dr.) is Managing Director of MinPol, agency for international mineral policy. MinPol is also running an international network of experts of every branch in the field of mineral policy that is continuously growing (www.minpol.com). The network is already by now covering almost all continents, which emphasizes the worldwide approach of MinPol. He is an economy geologist by training (Ph.D., Habilitation) and has more than 15 years of experience in research focused on international mineral policy, mining, and sustainability (Montanuniversitaet Leoben [2002–2014]; Technical University of Ostrava [since 2015]; since 2011, close relationship with the Department of Mining Engineering, Indian Institute of Technology, Kharagpur). During his career, Dr. Guenter Tiess has given presentations in international congresses and workshops and delivered publications at conference proceedings and also in peerreviewed journals. He was involved in several European Union funded projects as well as prepared position papers for EU initiatives. Moreover, Dr. Guenter Tiess is the author of the (Springer) books: General and International Mineral Policy, Focus Europe and Legal Basics of Mineral Policy in Europe.

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About the Editors

Tapan Majumder was born in India in 1946, completed schooling from Mayo College, Ajmer, in 1962, and did graduation, masters, and Ph.D. in 1975 on Applied Geology from Jadavpur University, Calcutta. Further, he did geological mapping, drilling, and mineral exploration at Indian Bureau of Mines and Geological Survey of India for 3 years. He joined the academic faculty of Indian School of Mines, Department of Applied Geology as Lecturer in 1978 and subsequently as Assistant Professor and Professor for 2 years as Department Head from 2001 to 2003. He was awarded D.Sc. in Geology from ISM in 1996. His field of interests include Economic Geology and Ore Geology for metallic and nonmetallic, Mineralogy, Sedimentary Geology, Mineral Economics, Geochemistry Coal, Environmental Geology, Geostatistics, and Fuzzy Logic. He was awarded Calcutta Prof N N Chatterjee Medal for conspicuous contribution in Geology by The Asiatic Society. He has guided 6 Ph.D., 68 M.Sc., and 21 M.Tech. student’s thesis. He has published 32 professional papers in national and international journals and 2 book chapters. He is a member of two IGCP related to Igneous (IGBA) and Sedimentary (SEDBA) Database. Geological field visits have been done in India etc. and in Finland, France, Germany, China, Egypt, Kuwait, and Australia. Post retirement, he is working as consultant for Environmental Studies and Impact assessments related to mining, geology, and hydrogeological aspects of open cast and underground metallic and non-metallic mines, power stations, and mini steel plants and mega construction projects.

About the Editors

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Peter Cameron is one of the world’s leading authorities on energy and mining law. He is Professor of International Energy Law and Director of the Centre for Energy, Petroleum and Mineral Law and Policy at the University of Dundee, Scotland, UK (http://www.dundee.ac.uk/cepmlp/ staff/pcameron.php). Prof. Peter is a barrister (England & Wales) and currently sits as an arbitrator in ICSID and ICC proceedings. He is regularly asked to act as an Expert Witness in international arbitral proceedings and litigation. He specializes in international investment law: his latest book, introduced by the Secretary General of ICSID, is International Energy Investment Law: The Pursuit of Stability (2nd edn, Oxford University Press, 2021, 864 pages). Prof. Peter is Co-director of the International Centre for Energy Arbitration, a joint venture between the Scottish Arbitration Centre and the University of Dundee, and is a speaker at the next ICCA Conference in Edinburgh in autumn 2022. He is an associate tenant at Landmark Chambers, London, and member of the Middle Temple Inn of Court, London. He has been elected a Fellow of the Royal Society of Edinburgh.

Section Editors

Juan Felipe Neira Castro Center for Energy, Petroleum and Mineral Law and Policy, The University of Dundee, Dundee, UK Leon Gerber Control Risks (Pty) Ltd Gauteng, South Africa

Horst Hejny Hünxe, Germany Zoltán Horváth Department of Mineral Resource Inventory and Mining Revenue, Supervisory Authority of Regulatory Affairs, Directorate of Mining Supervision, Hungary Budapest, Hungary

Kwabena Ata Mensah KAM Associates Limited Tema, Ghana Centre for Energy Petroleum Mineral Law and Policy (CEPMLP) University of Dundee Dundee, UK

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Section Editors

Gokce Mete Hydrogen & Industry Transition, South Pole Amsterdam, Netherlands

Leon Moller Law School Robert Gordon University Aberdeen, UK

Diego I. Murguía Consejo Nacional de Investigaciones Científicas y Técnicas (CONICET) & Instituto Interdisciplinario de Economía Política de Buenos Aires Facultad de Ciencias Económicas Universidad de Buenos Aires Buenos Aires, Argentina

Khanindra Pathak Indian Institute of Technology Kharagpur, Kharagpur, India Dmitry A. Ruban Department of Organization and Technologies of Service Activities Southern Federal University Rostov-on-Don, Russian

Section Editors

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Shibananda Sengupta Panchasayar Kolkata, West Bengal, India Ex-Geological Survey of India Kolkata, India

Svetlana Zorina Institute of Geology and Petroleum Technologies Kazan Federal University Kazan, Russia

Contributors

Pami Aalto School of Management/Politics, University of Tampere, Tampere, Finland Kafui Abbey LLM Oil and Gas, Aberdeen, Scotland Martha C. Acosta-García Caracas, Venezuela Utkarsh Akhouri MinPol GmbH – Agency for International Minerals Policy, New Delhi, India Imperial College London, London, UK Abdullah Al Faruque Department of Law, University of Chittagong, Chittagong, Bangladesh Saleh Hamed Albarashdi College of Law, Sultan Qaboos University, Muscat, Oman Raynold Wonder Alorse Centre for International and Defence Policy, Queen’s University, Kingston, ON, Canada Joe Amoako-Tuffour African Center for Economic Transformation (ACET), Cantonments, Accra, Ghana Lívia Amorim Researcher at FGV CERI, Rio de Janeiro, Brazil Oleg Anashkin School of World Economy, Higher School of Economics, Moscow, Russia Scot Anderson Hogan Lovells US LLP, Denver, CO, USA Kwabena Ata Mensah Centre for Energy Petroleum Mineral Law and Policy (CEPMLP), University of Dundee, Dundee, UK KAM Associates Limited, Tema, Ghana Rukundo Tom Ayebare Petroleum Costs and Economics, Petroleum Authority of Uganda, Kampala, Uganda Rose Marie Azzopardi University of Malta, Msida, Malta Ana Elizabeth Bastida Centre for Energy, Petroleum and Mineral Law and Policy, School of Social Sciences, University of Dundee, Dundee, Scotland, UK xxi

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Fatima Bello CEPMLP, University of Dundee, Dundee, Scotland, UK Nigerian Institute of Advanced Legal Studies, Abuja, Nigeria Alexey Belogoryev Institute for Energy and Finance, Moscow, Russia Indrani Bhattacharyya Department of Geology, Jadavpur University, Kolkata, India Ernesto Bonafé Energy Charter Secretariat, Brussels, Belgium Francis Nii Nuertey Botchway Centre for Law and Development, College of Law, Qatar University, Doha, Qatar Darko Božović Geological Survey of Montenegro, Podgorica, Montenegro Mike Bradshaw Warwick Busines School, Warwick, UK José Brilha Institute of Earth Sciences, Pole of the University of Minho, Braga, Portugal University of Minho and ProGEO, Braga, Portugal Delia Evelina Bruno Water Research Institute/National Research Council, Bari, Italy Brian D. Burstein Perez Alati, Grondona, Benites, Arntsen & Martinez de Hoz (h), Buenos Aires, Argentina Queen Mary University of London, London, UK Luis Bustos Department of Energy and Mining Law, Externado University, Bogotá, Colombia Federico Cernuschi Eclectic Rock, Montevideo, Uruguay Shankar Nath Chaudhuri Geological Survey of India (GSI), Kolkata, India Lorraine Chiwenga Arts and Humanities, Law and Philosophy, Stirling Law School, University of Stirling, Scotland, UK Prabal Dasgupta Indian Association for the Cultivation of Science, Kolkata, WB, India Dipak Ranjan Datta Geological Survey of India (GSI), Kolkata, India Gian Carlo Delgado Ramos Interdisciplinary Research Centre on Sciences and Humanities, National Autonomous University of Mexico, Mexico City, Mexico Julia Ebner International Relations, London School of Economics and Political Science, London, UK Mohamed Salem Abou El Farag College of Law, Qatar University, Doha, Qatar Edith Eshun Department of Geological Engineering, University of Mines and Technology, Tarkwa, Ghana Dipak Ranjan Datta has retired.

Contributors

Contributors

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W. Eberhard Falck MinPol, Saint-Cloud, France Tamás Fancsik Mining and Geological Survey of Hungary, Budapest, Hungary Vladimir Feygin Foundation of Energy and Finance, Moscow, Russia Carlos Frias Gomez Cobre Las Cruces, Spain Krzysztof Galos Department of Mineral Policy, Mineral and Energy Economy Research Institute, Polish Academy of Sciences, Kraków, Poland Iván Aranda Garoz PIIdISA, Universidad Nacional de Quilmes, Buenos Aires, Argentina Universidad Autónoma de Madrid, Madrid, Spain Universidad Complutense de Madrid, Madrid, Spain Claudio Gaucher Instituto de Ciencias Geológicas, Facultad de Ciencias, Universidad de la República, Montevideo, Uruguay Lidia Gawlik Mineral and Energy Economy Research Institute, Polish Academy of Sciences, Krakow, Poland Sara Geenen Institute of Development Policy and Management, University of Antwerp, Antwerp, Belgium Research Foundation Flanders, Brussels, Belgium Federico Gonzalez Ramos Montevideo, Uruguay J. Andrew Grant Centre for International and Defence Policy, Queen’s University, Kingston, ON, Canada Alexey Gromov Institute for Energy and Finance, Moscow, Russia Jaroslav M. Gutak Siberian State Industrial University, Novokuznetsk, Russia Kobena T. Hanson Strategic Outlooks LLC, Cantonments, Accra, Ghana Raphael J. Heffron Queen Mary University of London, London, UK Maria Helena Henriques Department of Earth Sciences and Geosciences Centre, Faculty of Sciences and Technology, University of Coimbra, Coimbra, Portugal Tessa Herrmann Central Desert Native Title Services Limited, Perth, WA, Australia Paul Hilton Hogan Lovells US LLP, Denver, CO, USA Robert Holnsteiner Division Minerals Policy, Section Energy and Mining, Federal Ministry of Science, Research and Economy (BMWFW), Vienna, Austria Jim Hondros JRHC Enterprises Pty Ltd, Stirling, SA, Australia

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Zoltán Horváth Mining and Geological Survey of Hungary, Budapest, Hungary Jakub Jirásek Institute of Geological Engineering, Faculty of Mining and Geology, VŠB, Technical University of Ostrava, Ostrava-Poruba, Czech Republic Bo Johansson Lulea University, Lulea, Sweden Jan Johansson Lulea University, Lulea, Sweden Abdoul Karim Kabèlè-Camara Centre for Energy, Petroleum, Mineral Law and Policy (CEPMLP), University of Dundee, Dundee, Scotland, UK Marshall Kala College of Education, School of Continuing and Distance Education, University of Ghana, Legon, Accra, Ghana Wairimu Karanja Wairimu & Co., Gigiri, Nairobi, Kenya Gábor Katona Mining and Geological Survey of Hungary, Budapest, Hungary Pavel Kavina Department of Raw Materials and Energy Policy, Ministry of Industry and Trade of the Czech Republic, Praha, Czech Republic Noreen Kidunduhu TripleOKLaw LLP, Nairobi, Kenya Francisca Kusi-Appiah Faculty of Law, University of Professional Studies, Accra (UPSA), Accra, Ghana Julia La Manna Hogan Lovells US LLP, Denver, CO, USA Tomás Lanardonne Perez Alati, Grondona, Benites, Arntsen & Martinez de Hoz (h), Buenos Aires, Argentina Kaj Lax Department of Mineral Resources, Geological Survey of Sweden (SGU), Uppsala, Sweden Rafael Leal-Arcas Queen Mary University of London (Centre for Commercial Law Studies), London, UK New York University Abu Dhabi, Abu Dhabi, UAE Singapore Management University School of Law, Singapore, Singapore European University Institute, Fiesole, Italy Stanford Law School, Stanford, CA, USA Columbia Law School, New York, NY, USA London School of Economics and Political Science, London, UK Granada University, Granada, Spain Janet Xuanli Liao CEPMLP, University of Dundee, Dundee, Scotland, UK Andrew Lillie Hogan Lovells US LLP, Denver, CO, USA Jessica Black Livingston Hogan Lovells US LLP, Denver, CO, USA C. Locatelli CNRS, GAEL, EDDEN, Univ.Grenoble, Grenoble, France

Contributors

Contributors

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Tao LV School of Management, China University of Mining and Technology, Xuzhou, China Ross Mackay EDO NSW, Sydney, Australia Tapan Majumder Formerly with Indian Bureau of Mines, Geological Survey of India and Faculty at Indian School of Mines, Dhanbad, India Lekwapa Malatji AfriOil, Johannesburg, South Africa Robert Gordon University, Aberdeen, Scotland, UK Boris I. Malyuk Center for International Cooperation, SRDE “Geoinform of Ukraine”, Kyiv, Ukraine J. M. Mankelow British Geological Survey, Mineral Resources and Policy team, Keyworth, Nottingham, UK Joseph Mante Robert Gordon University, Aberdeen, Scotland Salikhov Marcel Economic Research, Institute for Energy and Finance, Moscow, Russia Higher School of Economics – HSE, Moscow, Russia Mihai Marinescu Bucharest University, Bucharest, Romania Ryoba Marwa University of Dodoma, Dodoma, Tanzania Stefaan Marysse University of Antwerp, Antwerp, Belgium Komi Aimé Messan Faculty of Law and Political Science, University of Kara, Kara, Togo Gokce Mete The University of Dundee, Dundee, UK Tom Mills Two Oceans Strategy, London, UK Shantosh Kumar Mishra RRL Bhubaneswar, CSIR- Institute of Minerals and Materials Technology, Odisha, India Tatiana Mitrova Oil and Gas Department, Energy Research Institute of the Russian Academy of Sciences, Moscow, Russia Eugeniusz Mokrzycki Mineral and Energy Economy Research Institute, Polish Academy of Sciences, Krakow, Poland Leon Moller Robert Gordon University, Aberdeen, UK Diego I. Murguía Instituto Interdisciplinario de Economía Política de Buenos Aires (IIEP-Baires) y CONICET, Buenos Aires, Argentina Elia Mwanga University of Dodoma, Dodoma, Tanzania Federico Nacif IEALC, Universidad de Buenos Aires, Argentina

Buenos Aires,

PIIdISA, Universidad Nacional de Quilmes, Buenos Aires, Argentina Victoria Ritah Nalule CEPMLP, University of Dundee, Dundee, UK

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Fanyeu W. D. Ngwa Douala, Cameroon Nduta Njenga Wairimu & Co., Gigiri, Nairobi, Kenya Abraham Marshall Nunbogu Department of Planning, University for Development Studies, Wa Campus, Tamale, Ghana Nuriia G. Nurgalieva Kazan (Volga Region) Federal University, Kazan, Russia Aaron O’Connell Hogan Lovells US LLP, Denver, CO, USA Tade Oyewunmi Centre for Climate Change, Energy and Environmental Law, University of Eastern Finland, Joensuu, Finland Carlos Ciappa Petrescu LLM in Mineral Law and Policy, CEPMLP-Dundee University, Dundee, UK Lecturer at LLM-UC, Catholic University of Chile, Santiago, Chile Jussi Pokki Ore Geology and Mineral Economics, Geological Survey of Finland (GTK), Espoo, Finland W. Pytel Head of Rock Engineering Department, KGHM Cuprum, Wrocław, Poland Slobodan Radusinović Geological Survey of Montenegro, Podgorica, Montenegro Margus Raha Ministry of Economic Affairs and Communication, Tallinn, Estonia Manuel Regueiro y González-Barros Instituto Geológico y Minero de España (Geological Survey of Spain), Madrid, Spain Christian Reichl Division Minerals Policy, Section Energy and Mining, Federal Ministry of Science, Research and Economy (BMWFW), Vienna, Austria Mauricio Riesco Tagle LLM in Natural Resources Law and Policy, CEPMLP – Dundee University, Dundee, UK Energy and Natural Resources Lawyer, admitted to practice in Chile, Dundee, UK César Fabián Romero Roa CEPMLP – University of Dundee, Dundee, UK Dmitry A. Ruban Higher School of Business, Southern Federal University, Rostov-na-Donu, Russia Ayebare Tom Rukundo Petroleum Costs and Economics, Petroleum Authority of Uganda, Kampala, Uganda William Sacher Freslon FLACSO Ecuador, Quito, Ecuador Robrecht Schmitz Civil Engineering and Technical Geosciences, Delft University of Technology, Delft, The Netherlands

Contributors

Contributors

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R. T. Secen-Hondros JRHC Enterprises Pty Ltd, Stirling, SA, Australia Shibananda Sengupta Geological Survey of India, Kolkata, India Ex-Geological Survey of India, Calcutta, India Marco Antionio Sepúlveda Doctoral Centre for Offshore Renewable Energy (IDCORE), Dundee, UK Jack D. Sharples European University at St Petersburg, St Petersburg, Russia Xunpeng Shi Australia-China Relations Institute, University of Technology Sydney, Sydney, NSW, Australia Debasish Shome Department of Geological Sciences, Jadavpur University, Kolkata, India Yelena Sidorova Primakov Institute of World Economy and International Relations, Russian Academy of Sciences; Moscow State Institute of International Relations, Moscow, Russia Vladimir V. Silantiev Kazan (Volga Region) Federal University, Kazan, Russia Vladimir Simić Faculty of Mining and Geology, Department of Economic Geology, University of Belgrade, Belgrade, Serbia Martin Sivek Institute of Geological Engineering, Faculty of Mining and Geology, VŠB, Technical University of Ostrava, Ostrava-Poruba, Czech Republic Ligang Song Crawford School of Public Policy, Australian National University, Canberra, Australia Amara Ibrahima Soumah University of Fribourg-Switzerland, Fribourg, Switzerland John Southalan Centre for Energy, Petroleum and Mineral Law and Policy, University of Dundee, Dundee, Scotland University of Western Australia, Perth, Australia Western Australian Bar Association, Perth, Australia Akanksha Srivastava Minpol GmbH, London, UK Gerry Stanley Geological Survey Ireland, Dublin, Ireland Jaromír Starý Czech Geological Survey, Praha, Czech Republic Susanne Strobl Division Minerals Policy, Section Energy and Mining, Federal Ministry of Science, Research and Economy (BMWFW), Vienna, Austria Saurabh Thakur MinPol GmbH – Agency for International Minerals Policy, New Delhi, India IIT(ISM), Dhanbad, India Alusine Timbo National Mineral Agency, Freetown, Sierra Leone

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Elizabeth Titus Hogan Lovells US LLP, Denver, CO, USA Adriano Drummond Cançado Trindade University of Brasília (UnB), Brasilia, Brazil LLM (Distinction) Resources Law & Policy, The Centre for Energy, Petroleum & Mineral Law & Policy (CEPMLP), University of Dundee, Dundee, UK Jon Truby Centre for Law and Development, College of Law, Qatar University, Doha, Qatar Michail Tsangas Laboratory of Chemical Engineering and Engineering Sustainability, Faculty of Pure and Applied Sciences, Open University of Cyprus (OUC), Latsia, Cyprus María Cristina Vallejo Galárraga FLACSO Ecuador, Quito, Ecuador Enrique Velarde Superintendendy of Higher National Education, London, UK Abel Venero Santiváñez Abogados, Lima, Peru Sebastian Wagner Montana Tech Components GmbH, Vienna, Austria Teodoro Waty National Petroleum Institute (INP), Robert Gordon University (Oil and Gas Law), Maputo, Mozambique C. E. Wrighton British Geological Survey, Mineral Resources and Policy team, Keyworth, Nottingham, UK Yulia Yamineva University of Eastern Finland, Joensuu, Finland Gorazd Žibret Geological Survey of Slovenia, Ljubljana, Slovenia Svetlana O. Zorina Central Scientific Research Institute of Geology of Industrial Minerals, Kazan, Russia Kazan (Volga Region) Federal University, Kazan, Russia Institute of Geology and Petroleum Technologies, Kazan Federal University, Kazan, Republic of Tatarstan, Russia Antonis A. Zorpas Laboratory of Chemical Engineering and Engineering Sustainability, Faculty of Pure and Applied Sciences, Open University of Cyprus (OUC), Latsia, Cyprus

Contributors

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Afghanistan: Mineral Policy Noreen Kidunduhu TripleOKLaw LLP, Nairobi, Kenya

General Information on the Islamic Republic of Afghanistan Location The Islamic Republic of Afghanistan is located at the heart of South Central Asia. Although it has suffered the crippling effects of civil war and armed struggles, it is now recovering under a democratically elected government headed by the President and a bicameral National Assembly consisting of the Meshrano Jirga or House of Elders and the Wolesi Jirga or House of People. Afghanistan is a landlocked country. It is bordered by Pakistan to the South and East; Iran to the West; Turkmenistan, Uzbekistan, and Tajikistan to the North; and China to the far North East. It covers a total surface area of 652,000 km2. Afghanistan has a typical steppe climate characterized by extremely cold winters and hot summers. There are however regional variations with the mountainous regions of the North East having a subarctic climate, while those on the border of Pakistan are being influenced by the Indian monsoons that bring humidity and rains with them. As of July 2018, Afghanistan was estimated to have a population of 34.9 million people and a growth rate of 2.37% annually. It was also estimated

that 25.5% of its population lives in its urban areas (UNDP Data 2018). Afghanistan has a varied population of several ethnolinguistic groups comprising of the Pashtun (43%), Tajik (33%), Hazara (9%), Uzbek (9%), Aimaq (4%), Turkmen (3%), Baloch (2%), and others (Nuristani, Pamiri, Arab, Gujar, Brahui, Qizilbash, Pashai, and Kyrgyz). Pashto and Persian (Dari) are the official languages of the country. According to the United Nations Educational, Scientific and Cultural Organization (UNESCO), Afghanistan had one of the lowest literacy rates in the world, estimated at about 31% of the adult population (over 15 years of age) in 2011. Economic Context Afghanistan’s economic development was hamstrung by civil strife. Although there have been improvements in life expectancy, incomes, and literacy after the civil war, Afghanistan is categorized as a least developed country by the United Nations Economic Analysis and Policy Division. The gross domestic product (GDP) in Afghanistan was worth 19.36 billion US dollars in 2018 with a GDP annual growth rate of 7.2% (World Bank Data 2018) (Graph 1). Its GDP (purchasing power parity) was around $64.95 billion, and its GDP per capita (purchasing power parity) was $2000 as of 2017. The biggest sector of Afghanistan’s economy is services. Wholesale and retail trade; restaurants and hotels; transport, storage, and communications; finance,

© Springer-Verlag GmbH Germany, part of Springer Nature 2023 G. Tiess et al. (eds.), Encyclopedia of Mineral and Energy Policy, https://doi.org/10.1007/978-3-662-47493-8

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Afghanistan: Mineral Policy 22 20.56

20.48

20

20.19

19.81

19.36

17.8

20

18

15.86

16

14

13.36 12.44 2010

2012

2014

2016

2018

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SOURCE: TRADINGECONOMICS.COM I WORLD BANK

Afghanistan: Mineral Policy, Graph 1 Afghanistan’s GDP 2009–2018

insurance, and real estate and community; and personal, social, and government services account for 49% of the GDP. Agriculture creates 26% of the output, while manufacturing and mining constitute 13% of the wealth and construction 12%. Afghanistan’s exports account for around 20% of GDP. Its main exports are carpets and rugs (45%); dried fruits (31%); and medicinal plants (12%) with its main export partners being Pakistan (48%), India (19%), and Russia (9%). Afghanistan’s main imports are petroleum (33%), machinery and equipment (15%), food items (14%), and base metals and related articles (9%) with its import partners being Pakistan (14%), Russia (13%), Uzbekistan (11%), Iran (9.1%), and China (9%). Afghanistan is still highly dependent on foreign aid. The greatest challenges to its future economic growth include political uncertainty, corruption, security, as well as difficulty in extending rule of law to all parts of the country (World Fact Book 2018).

Its vast mineral resources have a promising potential of transforming the country into one of the most important mining centers in the world, thereby reinvigorating its economy. The table below shows the known resources and estimated undiscovered resources for selected minerals in Afghanistan identified by the US Geological Survey – Afghanistan Ministry of Mines Joint Mineral Resource Assessment Team (Table 1). Areas of Interest

From its initial mineral studies, Afghanistan identified 24 areas of interest (AOIs). The AOIs contain measures of mineral reserves/resources that were calculated from sampling trenches, drill holes, or underground workings. The figure below shows the locations of the AOIs on the Afghanistan map (Fig. 1). Strategic Developments Establishment of the Ministry of Mines

Mining Sector and Potential Mineral Resources Afghanistan is said to be sitting on one of the richest troves of natural resources in the world.

Recognizing the importance of mining to the achievement of national development goals, the Afghanistan government established the Ministry of Mines and Petroleum (MoMP). The Ministry’s role is to create a conducive environment for facilitating the responsible, equitable, and

Afghanistan: Mineral Policy

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Afghanistan: Mineral Policy, Table 1 Known resources and estimated undiscovered resources for selected minerals in Afghanistan Commodity Location Primary metals Iron Bamyan, Baghlan Aluminum Badakhshan, Kandahar Zabul, Baghlan Copper

Kabul, Lagar Kandahar, Zabul, Herat

Gold

Badakhshan, Ghazni Zabul Takhar, Ghazni Kandahar, Herat, Paktia Ghor Herat, Farah, Uruzgan

Lead and Zinc

Tin and tungsten Mercury Farah, Ghor Industrial minerals Brick clay Kabul Rare-earth Helmand elements

Chromite

Logar, Paktia

Barite Celestite Potash

Parwan, Herat Baghlan, Kunduz Balkh, Samangan, Kunduz Uruzgan Nangahar

Fluorite Talc, asbestos, and magnesite

Nangahar

Sulfur

Balkh

Kaolin

Baghlan Baghlan Badakhshan

Graphite

Lazurite Badakhshan Halite North Afghanistan Building materials Sand/gravel Badakhshan Marble Various Limestone

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Deposit type

Known resource estimates

Sediment-hosted iron Igneous-related aluminum Bauxite (50.5% alumina, 12% silica) Sediment-hosted copper Igneous-related copper

Two billion MTs of ore at 63–69% iron 178 million MTs 4.5 million MTs

Lode gold

16.9 million MTs of probable reserves 28.5 million MTs of probable reserves + 724,010 MTs of molybdenum, 682 MTs gold, 9067 MTs silver 1780 kg

Placer gold Igneous-related lead and zinc

918 kg 90,000 MTs

Sediment-hosted lead and zinc Sn veins, SN and W skarns and greisen Hot spring mercury (probable)

153,900 MTs Unknown

Clay Carbonatite (probable + 3.5 million MTs niobium, phosphorus, uranium, and thorium) Chromium oxide (43% weight, probable + 979,484 MTs) Bedded and vein barite Celestite (75% weight) Evaporite (probable)

2.2 million MTs 1.4 million MTs

Fluorspar (46.7% weight) Metasomatic (+31,200 MTs magnesite) Talc-magnesite (probable + 13.4 million MTs asbestos) Bedded and fumarolic (probable six million MTs) Sedimentary kaolin Residual kaolin Disseminated flake graphite (probable + one million MTs) Skarn lazurite Evaporite

8.8 million MTs 1 million MTs

1300 MTs Unknown

Aggregate Building stone Cement and flux

136 million MTs 1.3 million MTs >500 million MTs

32,234 MTs

200,000 MTs 151 million MTs >1 million MTs 27 million MTs

50,000 MTs 450,000 MTs 385,000 MTs 150,000 MTs 5000 MTs

(continued)

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Afghanistan: Mineral Policy

Afghanistan: Mineral Policy, Table 1 (continued) Commodity

Dolomite Glass sand Aragonite Sandstone

Location Badakhshan, Herat Baghlan Bamyan Bamyan Balkh Balkh Helmand Bamyan

Deposit type

Known resource estimates

Building stone Building stone Sand (sandstone) Sand (siliceous) Dimension stone Building stone (siliceous)

3.5 million MTs 1 million MTs 11 million MTs 110,000 MTs 777,000 MTs 650,000 MTs

Afghanistan: Mineral Policy, Fig. 1 Afghanistan: Areas of Interest (AOI)

balanced development of Afghanistan’s mining sector as well as to ensure that the benefits of the mineral resources exploitation serve the interests of the present and future Afghanistan generations.

In 2018, the Ministry developed a comprehensive mining sector road map that highlights key strategies and guides the Ministry’s crucial decisions on how to best govern and regulate

Afghanistan: Mineral Policy

Afghanistan’s mining sector. To operationalize the road map, the Ministry developed a 7-year reform strategy that specifies interventions needed for achieving the vision outlined in the road map over the short to medium term. The Ministry also developed a new Minerals Law to regulate mineral activities in Afghanistan. Acquisition of Data

The MoMP in conjunction with the Afghanistan Geological Survey (AGS) has intensified efforts to acquire mineral and geological data. Geological prospecting and mapping activities resulted in coverage of 174.5 km2 area of interest; 1524 km of prospecting lines and traverses; trenching, pitting, and scraping of 630 m3; and collecting 1230 rock and mineral samples in Paktia, Samangan, Balkh, Baghlan, Daikundi, Ghazni, and Kabul (MoMP Annual Report 2017–2018). MoMP and AGS have also assessed surface and groundwater levels; undertaken radiometric surveys; studied environmental impacts of mineral activities; and investigated tectonic activity faults and vulnerable areas. Consequently, AGS produced and added 79 geological maps and cross sections and 165 geological reports to its archives. It has also signed a Letter of Interest with United States Geological Survey (USGS) to provide technical assistance in remote sensing, geographic information system (GIS), geological data management, mining contract management, mining inspection, mining exploration, mining estimation and extraction, hydrogeology, environmental geology, coal geology, and mining law for a period of 4 years.

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of beneficial owners of contracting companies in public. Infrastructure Projects

Afghanistan has identified infrastructure as a constraint to the development of its mining sector. To this end, the country is investing heavily in rail, road, and power infrastructure that will ensure that mining operations costs are reduced over time. In particular, the government has embarked on completing the national ring road between Qaisar and Laman in North West Afghanistan to increase interconnections with its neighboring countries as well as with Central Afghanistan. It has also completed three railway connections with Uzbekistan, Turkmenistan, and Iran. With regard to power, Afghanistan has entered into agreements with Uzbekistan and Turkmenistan to import up to 4500 MWs of power. Key Institutions The institutional, legal, and regulatory framework for the mining sector in Afghanistan is guided by the Minerals Law. Under this law all minerals existing in their natural state are vested in the State as administered by the MoMP. The mandate of the MoMP is to implement and execute the Minerals Law and to regulate mining activities. The table below details other key institutions (Table 2). Mining Law Mining in Afghanistan is regulated by the Minerals Law.

Mining Cadaster System

Ownership

The Ministry has developed and operationalized a digitized cadastral system that includes Mining Cadastre Administration System (MCAS), NonTax Revenue System (NTRS), and a Transparency Portal. This system will increase efficiency and transparency in the grant of mineral rights and in monitoring payments received. As a precursor to the launch of a beneficial ownership register, the MoMP has also developed a company profiling database to include the names

The Minerals Law (Law) vests ownership of all minerals existing in their natural state in the State. All minerals extracted under a license in accordance with the conditions of the license are vested in the license holder (Article 15). The law requires the licensees to secure access to the land required for prospecting and mining and offer fair compensation for the same. Specifically, the licensing procedures require consents from local communities, owners, and occupiers of

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Afghanistan: Mineral Policy

Afghanistan: Mineral Policy, Table 2 Key institutions in Afghanistan’s mining sector Institution Geological Survey (Article 6)

Mining Technical Committee (Article 8)

High Economic Council (HEC) (Article 9)

National Procurement Authority (Article 10)

National Procurement Commission (NPC) (Article 11) Cabinet (Article 12)

Other: Afghanistan Public Protection Force National Environmental Protection Agency High Council on Human Capital

Role Conduct reconnaissance Analyze data Maintain the cadastral survey map Compile and maintain a public database of geological information Making recommendations in respect of a declaration or cancellation of LSM areas, SSSM areas, and prohibited areas Evaluating feasibility studies and mining proposals and issuing mine development reports Evaluating applications for the grant of SSM licenses Making recommendations in respect of variations to exploration programs, mining proposals, or small-scale work programs Evaluating tender proposals Determining any shortfall due in relation to a royalty Making recommendations in respect of the suspension and revocation of exploration and exploitation licenses Endorsing Restricted Minerals Programs Endorsing or rejecting the declaration or cancellation of LSM areas, SSM areas, and prohibited areas Providing approval to the Ministry to negotiate mining concessions to replace transitional licenses Approving or rejecting mining proposals Recommending the grant or refusal of SSM licenses Approving or refusing variations to exploration programs, mining proposals, and small-scale work programs Approving or rejecting the award of mining concessions Determining the quantum of performance bonds Approving the suspension and revocation of exploration and exploitation licenses Approving the compulsory acquisition of land Monitoring bidding process Preparing an audit report Making recommendations to the Ministry in relation to practices and bidding procedures Approving the award of a mining concession or terminating the bidding process Determine the salaries of the members of the Mining Technical Committee Approving Restricted Minerals Programs Approving or rejecting the declaration or cancellation of LSM areas, SSM areas, and prohibited areas Endorsing or rejecting the award of a mining concession or terminating the bidding process Provide customized protection Ensure mining activities adhere to international environmental standards Identifying skills necessary for the sustainable utilization of mineral resources and investing in systems and institutions to produce and upgrade skills

Afghanistan: Mineral Policy

land. Licensees are also obligated to offer fair compensations for damages, obstructions, and other inconveniences, to owners and/or occupiers of the land, where applicable (Article 71).

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– Company incorporated under the laws of Afghanistan – Company whose majority owner is a citizen of Afghanistan or is a company incorporated under the laws of Afghanistan

Acquisition of Mineral Right (Article 17)

• Natural Persons – Attained age of majority (18) – Resident of Afghanistan – Solvent – Does not hold an investment license – Has not been convicted of a contravention under the law or had a license cancelled for noncompliance in the last 3 years – Has not been convicted of a bribery or a corruption-related offense within the last 10 years – Is not a politically exposed person (PEP) or acting on behalf of one • Legal Entity – Solvent – Does not hold an investment license – Not been convicted of a contravention under the law or had a license cancelled for noncompliance in the last 3 years – Not been convicted of a bribery or a corruption-related offense within the last 10 years • Private Companies – Owner(s) not been convicted of a contravention under the law or had a license cancelled for noncompliance in the last 3 years – Owner(s) not been convicted of a bribery or a corruption-related offense within the last 10 years – Owner(s) not PEP • Publicly Listed Companies – Substantial owner(s) not been convicted of a contravention under the law or had a license cancelled for noncompliance in the last 3 years – Substantial owner(s) not been convicted of a bribery or a corruption-related offense within the last 10 years – Substantial owner(s) not PEP • For Small-Scale Mining Licenses – Citizen of Afghanistan

Licenses

The legal and regulatory regime for mining in Afghanistan allows for licensees to prospect and mine on any land (save for Prohibited Areas – Article 19) subject to the terms and conditions stipulated by the Minerals Law, mining concession, and HEC. The licenses constitute a proprietary interest but do not confer an interest in land (Article 27(1)). The licenses confer exclusive rights to the licensees to access land, remove samples, and construct and use infrastructure, as well as to extract and use surface and groundwater. Exploitation and SSM licenses also confer the right to remove and dispose of any minerals extracted from the licensed area subject to payment of prescribed royalties and additional fees, if any. The licenses are transferrable subject to the MoMp’s approval (Article 39). Under the Minerals Law, all licensees are required to obtain environmental permits and to lodge an environmental bond and environmental management plan before commencing any ground-disturbing work. In addition to these exploration and exploitation license holders are required to also lodge a local content plan, health and safety plan, and, in the case of an exploitation license, a performance bond and a community development plan. The Minerals Law also imposes substantial reporting obligations on licensees in Afghanistan’s mining sector: • Yearly reporting obligations – Technical and environmental reports by exploration and SSM licensees – Audited accounts by exploitation licensees • Half yearly reporting obligations – Technical and environmental reports by exploitation licensees

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Afghanistan: Mineral Policy, Table 3 Types of mining licenses License Exploration

Process Bidding

Decision NPC

Area (max) 250 square kilometers

Exploitation

Bidding

MoMP

SSM

Application

MoMP with recommendation of HEC

Not exceed area reasonably required for activities 1 km2 and depth of 60 m

ASM

Conducted under an SSM license

• Quarterly reporting obligations – Exploration reports by exploration and SSM licensees – Royalty reports by exploitation licensees Table 3 list the different types of mining licenses under the Minerals Law and the associated decision rights (Table 3). Fiscal Regime Fiscal terms for mining in Afghanistan are covered under the Minerals Law and the income tax law. Taxes

Under Article 8 of the Minerals Law, license holders and their contractors, advisors, and employees are liable to pay all applicable taxes and duties in accordance with the law of Afghanistan except land tax. These taxes include: • Corporate tax This is a direct tax on profits made by corporate bodies. All companies irrespective of their legal status are subject to 20% tax on income under Article 4 of the income tax law in Afghanistan. • Capital gains tax (CGT) Capital gains under Article 23 of the Tax Law refer to any gain from the sale, exchange, or transfer of the following assets: (a) Trade or business, including goodwill

•

•

•

•

Term 3 years + 2 extensions 30 years + 15 years extension 5 years + 5 years extension

(b) A factory including equipment, machinery, buildings and land, or any part of such assets (c) Equipment used in the business of transporting persons and property (d) Shares of stock in corporations or limited liability companies CGT is calculated by taking the gain (receipts less allowable expenses) arising from capital asset transaction and dividing it by number of years of usage of the said asset. The average rate so obtained is then applied to the total income of the person (natural or legal) for the year. The rate so calculated cannot be less than 2%. Branch profits tax The calculation of tax on the taxable profits of branch offices of international organizations is the same as other businesses. The tax is calculated at 20% of income after allowing all admissible expenses. The only exception to the rule is that any amount remitted outside Afghanistan to principal office or any other branch office shall be regarded as dividend and shall be subject to withholding tax at 20%. Value added (VAT) The government of Afghanistan is now planning to levy VAT; however, the detailed content of the said law is not yet available. Personal tax Individuals are subject to tax at progressive rates. The monthly maximum limit is 20% + AFN 8900 fixed amount. Withholding tax

Afghanistan: Mineral Policy

Individuals and companies are subject to withholding tax: (i) 20% on interest, dividends, royalties, prizes, rewards, lotteries, bonuses, and service charges; (ii) 10% on rent if the monthly rent is more than Afs.10,000 and less than Afs.100,000 and 15% if the monthly rent is more than Afs.100,000; and (iii) 7% on contractors for supplies of goods and service for contractors without a business license and 2% for contractors with a business license. • Foreign tax relief Any income tax paid to the government of a foreign country may be taken as credit on the principle of reciprocity. The tax credit on a foreign tax payment is calculated as follows: Afghanistan tax on global taxable income
(foreign country income/total global taxable income) • Related party transaction Tax authorities have the power in respect of a transaction between associates to distribute, apportion, or allocate income, deductions, or tax credits between such associates to reflect the income that would have been realized in an arm’s length transaction. Royalties

The Minerals Law makes provision for royalties to the government with respect to extracted minerals. Different rates apply to different minerals: • Construction minerals, by reference to the fixed sum per unit volume of the specified mineral • All others, 7.5% (primary product), 5% (secondary product), and 2.5% (tertiary product) of the royalty value The royalty value is the gross revenue unless the gross revenue is materially less than the market value, in which case the royalty value will be the market value. Development Fund

Under Article 49 of the Minerals Law, all revenues payable on mining activities and minerals including royalties, surface rent, fees, and penalties shall be paid into the general revenue account of

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the State. Five percent of the revenue paid into the general revenue account in connection with exploration and exploitation licenses and 8% of the revenue paid into the general revenue account in connection with SSM licenses will be appropriated annually into the Provincial Development Fund. The revenue appropriated into the Provincial Development Fund is to be invested in initiatives for the benefit of the province in which the relevant license is situated or transferred to the Municipal Incentive Fund and invested in initiatives for the benefit of the municipalities in the province in which the relevant license is situated.

International Memberships The Islamic Republic of Afghanistan is a member of several organizations with key ones being: Asian Development Bank (ADB) Economic Cooperation Organization (ECO) Group of 77 (G77) International Bank for Reconstruction and Development (IBRD) International Development Association (IDA) International Finance Corporation (IFC) International Labour Organization (ILO) International Monetary Fund (IMF) International Organization for Standardization (ISO) (correspondent) Islamic Development Bank (IsDB) Multilateral Investment Guarantee Agency (MIGA) United Nations (UN) United Nations Conference on Trade and Development (UNCTAD) United Nations Industrial Development Organization (UNIDO) World Customs Organization (WCO) World Federation of Trade Unions (WFTU) World Trade Organization (WTO) It is worth noting that Afghanistan is an Extractives Industries Transparency Initiatives (EITI) candidate country.

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Concluding Statement The Afghanistan Minerals Law has been lauded for having some extraordinary provisions by global standards, for example, on publication of contracts, payments, and beneficial ownership of companies. It has equally received criticism from international civil society organizations (CSOs) for having significant gaps in protections needed to reduce the major threat of corruption and abuses in the sector and to ensure the country’s huge mineral wealth benefits its people. Concerns that have been raised by the CSOs include: • The law gives great power over contracts to the HEC, which has no status in law and whose membership could in theory be changed at will. • The law minimizes the role of the Ministry of Mines, which normally would be the main institution for mining governance, in favor of presidentially appointed bodies. • There is no requirement for the publication of the Central Bank subaccounts used for mining revenues – although this exceptionally strong transparency measure was set out in the government’s own anti-corruption strategy. • Provisions for publication of the real, beneficial owners of mines are undermined by serious loopholes, including one which would allow officials and politicians to control up to 5% of a contract and another which could allow them to benefit from a contract so long as they do not own it. Controls in the current law on second-degree relatives have been removed, so an uncle or brother-in-law of an official could hold a contract. • Royalty rates are set in the law: they should indeed be fixed but in the regulations, so as to allow some possibility to adjust them for changing market conditions and different minerals. • There is no credible mechanism for resolving disputes between communities and mining companies – a proposed ombudsman would not be independent or have any powers.

Agreement Acts

• There is no special provision for artisanal mining – a major issue for the sector. Instead artisanal miners have to obtain small-scale licenses, which is likely to be beyond their abilities. • 5% of revenues are supposed to go to the provinces where mining takes place, but there is no guarantee that any of those funds would reach as far as local communities in mining areas. Funds could go to both, but these communities should be the first priority. • The government has removed a requirement under the existing law for companies to comply with the Extractive Industries Transparency Initiative. The law also does not fully reflect the government’s commitments to the Inter-Governmental Forum Mining Policy Framework. Of note is that the draft 2019 Mining Regulations have now been circulated for input from stakeholders. The regulations should provide an opportunity to implement the good parts of the law and also to address some of its flaws.

References Islamic Republic of Afghanistan Minerals Law 2018 Islamic Republic of Afghanistan, Ministry of Mines and Petroleum Annual Report 2017–2018 https://momp. gov.af/ accessed 19 July 2019 The World Factbook, Central Intelligence Agency https:// www.cia.gov/library/publications/the-world-factbook/ geos/af.html accessed 19 July 2019 United Nations Development Programme, Human Development Indices and Indicators: 2018 Statistical Update http://hdr.undp.org/en/countries/profiles/AFG accessed 19 July 2019 WorldBank, ‘Afghanistan’ https://data.worldbank.org/ country/afghanistan?view=chart accessed 19 July 2019

Agreement Acts ▶ Australia: Extractives

Parliamentary

Agreements

and

Angola: Mineral Policy

Angola: Mineral Policy Julia Ebner International Relations, London School of Economics and Political Science, London, UK

Overview Home to one of the world’s largest diamond reserves, Angola is a strategically important location which attracts much foreign investment. Despite heavy investments in the country’s mining infrastructure which had been largely destroyed during the Angolan Civil War (1975–2002), many industry-related problems remain unresolved. In particular, Angola’s high corruption levels and extensive diamond smuggling have hindered the country from fully exploiting its mineral wealth and translating it into economic prosperity.

General Information on Angola Angola is located in South-West Africa and consists of 18 provinces. The 2014 population census counted more than 24 million people within the country’s area of 1,246,700 km2. Its GDP amounted to 124.2 billion USD in 2013. Formerly a Portuguese colony, Angola gained its independence in 1975. The ethnically diverse country is today ruled as a unitary presidential republic. While there are six recognized national languages, its official language is Portuguese.

Need of Minerals The country can be divided into five main geological units, with distinctive mineral deposits occurring in each. For example, the coastal basins of Lower Cretaceous to Quaternary age contain the country’s oil and gas reserves. Most of Angola’s other mineral resources are related to its Precambrian shield stretching across the country. While Angola is historically known for its iron ore

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deposits, the country is today most famous for its diamonds from the Catoca Mine. Ranking Africa’s third largest producer of diamonds, Angola accounts for 6.7% of world diamond production by volume and about 8% of world diamond production by value. However, it has only explored approximately 40% of its diamond-rich areas. In addition to its vast diamond and iron ore resources, Angola also holds rather underdeveloped reserves of copper, gold, gypsum, manganese, silver, tungsten, uranium, vanadium, wolfram, zinc, and several other minerals. The Angolan Civil War has left the country with a largely destroyed mining infrastructure. Therefore, the government has invested heavily in the construction and enhancement of the country’s transport infrastructure, educational sector, and financial system during the past decade. Especially, main transport routes such as railways and roads have been rebuilt, and energy production has been increased. Today, Angola has a well-developed road network which provides links between all major cities and provinces. Furthermore, investments have flown in the creation of thousands of schools and universities as well as the enhancement of the country’s financial system. The following graphic provides an overview of the main extraction companies operating in Angola’s mining sector. It shows that Angola’s metal exploration and extraction are currently largely dominated by Angolan mining companies. The diamond sector shows a much more international mining landscape, with Chinese and Portuguese companies being the most important investors along with Angola’s national enterprises. It is worth noting that approximately 80% of Angola’s total diamonds are exported to China and India. Meanwhile, the country’s mineral fuel reserves have had attracted mainly European, Australian, Brazilian, and Canadian investors.

Regulatory Framework Angola’s mining sector is strongly statecontrolled. In the 1990s, the government created the Ministry of Geology and Mines in order to

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Asian

Angola: Mineral Policy Metalsa Empresa Nacional de Ferro de Angola, Angola Exploration Mining Resources S.A. DT Group of Singapore

Australian European

Diamonds Empresa Nacional de Diamantes de Angola E.P., Trans Hex Group Ltd. of South Africa, ITM Mining Ltd., LUMANHE Lda. China Petroleum and Chemical Corp., Sonangol Sinopec International New Millennium Resources Limited Sociedade Portuguesa de Empreendimentos, Odebrecht Mining Services Inc.

North American South American a

Mineral fuels Sociedade Nacional de Combustíveis de Angola

Roc Oil Co. Ltd. BP plc of UK, Eni S.p.A. of Italy, Total S.A. of France, Force Petroleum Group Ltd. Canadian Natural Resources Petróleos Brasileiros S.A.

Including copper and iron ore

exercise control over all geological exploration and mining efforts. While the Angolan Geological Institute performs geological research and mapping, the National Directorate of Mining Licence and Registration is in charge of attributing mining concessions, and the National Directorate of Mines monitors the minerals extraction across the country. Furthermore, the Empresa Nacional de Diamantes de Angola E.P. (Endiama) is a stateowned company which is in full control of Angola’s diamond sector. In recent years, the Angolan government has invested in many initiatives to enhance the country’s mining sector. First, the introduction of the National Geology Plan (2013–2017) aimed at gaining more geological knowledge about the country’s resources. Second, the Mining Code approved in 2011 sought to modernize, simplify, and clarify the country’s mining legislation in order to boost foreign investments. Third, the government has made efforts to enhance transparency in the extractive sector in order to fight the country’s high corruption levels.

International Memberships Angola is a member of the UN since 1976, a member of the WTO since 1996, and a member of the OPEC since 2007. It is furthermore a

member country of the UNCTAD, the IMF, the African Union, and the Community of Portuguese Language Countries (CPLP) and was one of the founding members of the Southern African Development Community (SADC).

Concluding Statement The government’s commitment to decrease corruption levels and to diversify the country’s mining sector could potentially lead to better conditions for foreign investors. Higher private investments in the mining sector combined with enhanced transparency could benefit Angola’s population and create new employment opportunities. Furthermore, the National Geology Plan will continue to play an important role in determining the government’s mining policies.

References Bermúdez-Lugo O (2011) The minerals industry of Angola. Minerals Yearbook. Online: http://minerals.usgs.gov/ minerals/pubs/country/2011/myb3-2011-ao.pdf. Last accessed 16 Feb 2014 Chatham House (2014) Advancing Angola’s mining sector: reform and investment. Africa Programme Summary. Online: http://www.chathamhouse.org/sites/files/ chathamhouse/field/field_document/20140624AngolasMi ningSector.pdf. Last accessed 16 Feb 2014

Argentina: Energy Policy Dietrich C (n.d.) Inventory of formal diamond mining in Angola. Online: http://www.issafrica.org/pubs/Books/ Angola/8Dietrich.pdf. Last accessed 16 Feb 2014 Pinheiro O (2010) Mineral resources of Angola, its importance for the socio-economic and sustainable development of the country. UNECE and Republic of Angola Ministry of Geology, Mines and Industry. Online: http://www.unece.org/fileadmin/DAM/energy/se/pp/ unfc/UNFC_iw_June10_WarsawPl/13_Pinheiro.pdf. Last accessed 16 Feb 2014 U.S. Library of Congress (2015) Sudan: mining. Country Studies. Online: http://countrystudies.us/angola/. Last accessed 10 Feb 2015 World Bank (2013) Angola country overview, 2013. Online: http://www.worldbank.org/en/country/angola/overview. Last accessed 18 Jan 2015

Argentina: Energy Policy Tomás Lanardonne and Brian D. Burstein Perez Alati, Grondona, Benites, Arntsen & Martinez de Hoz (h), Buenos Aires, Argentina

Argentina is a rich country in terms of natural resources. Its wide territory and natural environment makes Argentina a suitable location to develop diverse energy projects. In the economic field, Argentina has reached in 2015 a gross domestic product (GDP) of, roughly, US$540 billion. It has a total population of 42.98 million. In the last 10 years, its average GDP per capita reached US$12.501, while its annual growth has fluctuated between a 0,5 % and a 9,5 %, with an average of 4,63 % (See World Bank). The unemployment rate in 2014 (the last published rate) stood at 8.2 %. The annual inflation rate in the last years has ranged between 20 % and 30 %. In the foreign exchange market, and expressed in Argentine peso (AR$) per one United States dollar (US$), the current rate of exchange oscillates the AR$ 15.5. Finally, Argentina’s foreign exchange reserves are in the order of US$ 32 billion (Ibídem). The purpose of this section is to explore Argentine background, policy, and regulatory framework with regard to the main natural resources developed in the country: (1) oil and gas, (2) electricity, (3) renewable energies, and (4) mining.

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Before immersing into their specifications, some preliminary comments on the Argentine legal and political system should be made. Argentina is a sovereign, federal, and democratic country. It has a civil law jurisdiction due to its colonization by Spaniards rather than English. The territory is divided into 23 provinces and one federal capital city (the city of Buenos Aires). Argentine’s supreme law is the Argentine Constitution. The national state is divided into three branches: (i) An executive branch, headed by a president, elected by direct vote. (ii) A legislative branch, composed by a Federal Congress, consisting of a 72-seat senate and a 257-seat Chamber of Deputies, elected by direct vote. (iii) An independent judiciary, divided in federal and provincial courts, each of them comprising lower courts, court of appeal, and supreme courts. The supreme judicial power of Argentina is the Federal Supreme Court of Justice. Each province has its own constitution, elects its own governor and legislators, and appoints its own judges without the Federal Government’s interference. Substantial conflicts between the provinces or jurisdictional issues between two or more provinces are decided by the Federal Supreme Court. The Argentine Constitution entitles the Argentine Congress to enact the codes concerning, among others, civil, commercial, and mineral matters. Since 1871 Argentina has been governed by the same civil code, with only partial revisions. In November 2014, the new Civil and Commercial Code of Argentina was enacted. In August 2015, said code finally entered into force (See Law N 26,994, as amended by Law N 27,077). The federal executive branch, through the Ministry of Energy and Mining, establishes and enforces the federal energy policy (See Decree N 13/2015).

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Oil and Gas Historically, the exploration and production rights on reservoir fields used to be exclusively in the hands of Yacimientos Petrolíferos Fiscales (YPF), the main state-owned company. Private companies played a less important role in the hydrocarbon activity. This reality radically changed, mainly, since the 1990s. During those years, YPF was partially privatized, its exclusive rights were removed, and the ownership on hydrocarbon resources passed from the national state to the provinces. Thus, one of the primary objectives in restructuring the Argentine hydrocarbons industry was to promote competition. In 2012, the national state expropriated YPF’s majority shares, retaking control of the company. Nowadays, Argentina owns one of the most prominent shale plays in the world, Vaca Muerta¸ turning its energetic potential to a substantial increase. In sum, oil and gas resources nowadays belong to the provinces, where the hydrocarbons resources are located (except offshore deposits extending beyond 12 nautical miles which belong to the Federal State) (See Section 1 of Law N 17,319 (the Federal Hydrocarbons Law) as amended by Section 1 s paragraph of Law N 26,197 (the Re-provincialization Law)). Unlike other federal countries with abundant hydrocarbon resources (e.g., Australia or Canada) the Federal Government has the exclusive authority to regulate the oil and gas legal framework (See Section 3 of the Federal Hydrocarbons and Section 2 fourth paragraph of the Re-provincialization Law), but the provinces are the authorities that enforce such regulations (See Section 2 first paragraph of the Re-provincialization Law). In this context, the emerging challenge on these days is to create a suitable political, economical, and legal environment in seeking to attract adequate investments to operate the oil and gas flourishing industry. Most of the companies who immerse in oil and gas exploration and exploitation projects in Argentina do it through joint ventures, mainly to boost technical and economic resources, and also to divide business risks (See Nallar Dera 2010). In

Argentina: Energy Policy

Argentina, the parties to the worldwide known as joint operation agreement (JOA) (The Association of International Petroleum Negotiators (AIPN) constantly develops JOA’s model contracts to be used all around the world, which includes alternatives and variations on common issues. See¸ in this sense, Roizen 2012) generally incorporate what is locally known as a transitory union of companies, a sort of statutory joint venture (UTE or Union Transitoria de Empresas) (See Casal 2015; Massimino 2014). UTEs are created by contract. Argentine law establishes that UTEs constitute neither legal entities nor corporations, nor any kind of individual capable of holding legal rights or obligations. Hence, UTEs have a purely contractual nature. UTEs are types of joint venture agreements whereby each member thereof preserves its individuality and autonomy (See Section 1442 of the Argentine Civil and Commercial Code). Argentina’s Law N 17,319 (the Federal Hydrocarbons Law) (The Federal Hydrocarbons Law was recently amended by Law N 27,007 (the Oil Reform), by which many issues on, among others, unconventional exploration and exploitation concessions, tendering procedures, royalties, promotional regimes, were significantly modified. Also, the entering into force of the new Argentine Civil and Commercial Code is starting to cause several consequences on the hydrocarbon industry.) is the main regulatory framework of the hydrocarbons industry. It conceives a system of production concessions awarded by the state (federal or provincial, depending on the location of the resources), through which companies hold exclusive rights to explore, develop, exploit, and take title of the production at the wellhead, in exchange for a royalty payment and the application of a general taxation regime. On October 31, 2014, the Argentine Congress passed the Oil Reform. It aims to improve the investment conditions for the Argentine oil industry by means of: (i) extending exploration and production terms, (ii) creating a special type of concession for unconventional hydrocarbons projects, (iii) capping royalties and extending bonus fees, (iv) reducing government-take in special types of projects, and (v) reinstating the right to

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export a percentage of oil and gas production while maintaining abroad the export proceeds, among other benefits. The reform entered into effect on November 8, 2014 (See¸ in this sense, Lanardonne and Máculus 2014).

Electricity On December 1991, the Argentine Congress passed Law N 24.065 (the Federal Electricity Law), the main actual regulation on the industry. (For more information on the Argentine historical electricity regulation, see Sobre Casas 2003; Palacios 2014.) Pursuant to the Federal Electricity Law, the Federal Government established the wholesale electricity market (or WEM) in 1991, which consists of: • A term market in which generators, distributors, and large users enter into long-term agreements on quantities, prices, and conditions freely agreed upon by the parties. • A spot market, in which prices are established on an hourly basis as a function of economic production costs, represented by the short-term marginal cost of production measured at Ezeiza 500 kV substation, the system’s load center, and demand. • A seasonal stabilization fund, managed by Wholesale Electricity Market Administration Company (“Compañía Administradora del Mercado Mayorista Eléctrico S.A.” or “CAMMESA”), which absorbs the differences between purchases by distributors at seasonal prices and payments to generators for energy sales at the spot price. The operation of the WEM is administered CAMMESA. It was created in July 1992 by the Federal Government, which currently owns 20 % of CAMMESA’s capital stock. The remaining 80 % is owned by various associations that represent wholesale electricity market participants, including generators, transmitters, distributors, large users, and electricity brokers.

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Term Market Generators are able to enter into agreements in the term market to supply energy and capacity to distributors and large users. Distributors are able to purchase energy through agreements in the term market instead of purchasing energy in the spot market. Term agreements typically stipulate a price based on the spot price plus a margin. Spot Market Spot Prices

The 2002 emergency regulations had a significant impact on energy prices. Among the measures implemented pursuant to the emergency regulations were the pesification of prices in the spot market and the requirement that all spot prices be calculated based on the price of natural gas, even in circumstances where alternative fuel such as diesel or fuel oil is purchased by generators to meet demand due to the lack of supply of natural gas. Prior to the 2001 crisis, energy prices in the spot market were set by CAMMESA, which determined the price charged by generators for energy sold in the spot market of the WEM on an hourly basis. The spot price reflected supply and demand in the WEM at any given time, which CAMMESA determined using different supply and demand scenarios that dispatched the optimum amount of available supply, taking into account the restrictions of the transmission grid, in such a way as to meet demand requirements while seeking to minimize the production cost and the cost associated with reducing risk of system failure. The spot price set by CAMMESA compensated generators according to the cost of the last unit to be dispatched for the next unit as measured at the Ezeiza 500 kV substation, which is the system’s load center and is in close proximity of the city of Buenos Aires. Dispatch order was determined by plant efficiency and the marginal cost of providing energy. In addition to energy payments for actual output at the prevailing spot market prices, generators would receive compensation for capacity placed at the disposal of the spot market, including

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standby capacity, additional standby capacity (for system capacity shortages), and ancillary services (such as frequency regulation and voltage control). Seasonal Prices

The emergency regulations also made significant changes to the seasonal prices charged to distributors in the WEM, including the implementation of a cap (which varies depending on the category of customer) on the cost of electricity charged by CAMMESA to distributors at a price below the spot price charged by generators. Prior to implementation of the emergency regulations, seasonal prices were regulated by CAMMESA as follows: • Prices charged by CAMMESA to distributors changed only twice per year (in summer and winter), with interim quarterly revisions in case of significant changes in the spot price of energy, despite prices charged by generators in the wholesale electricity market fluctuating constantly. • Prices were determined by CAMMESA based on the average cost of providing 1 MWh of additional energy (its marginal cost), as well as the costs associated with the failure of the system and several other factors. • CAMMESA would use seasonal database and optimization models in determining the seasonal prices and would consider both anticipated energy supplies and demand.

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to generators if prices in the spot market during the quarter exceed the seasonal price. Billing of all wholesale electricity market transactions is performed monthly through CAMMESA, which acts as the clearing agent for all purchases between participants in the market. Payments are made approximately 40 days after the end of each month. The stabilization fund was adversely affected as a result of the modifications to the spot price and the seasonal price made by the emergency regulations issued since January 2002, pursuant to which seasonal prices were set below spot prices resulting in large deficits in the stabilization fund. This deficit has been financed by the Federal Government through loans to CAMMESA. As a result of the permanent imbalance between the seasonal prices paid by electricity distributors and the spot price, the seasonal stabilization fund was depleted and power generators were ceased to be paid in full for their energy sales. Since September 2003, by means of Resolution SE 406/2003 the Federal Government established a priority payment system to distribute power generators’ receivables in the WEM. In accordance with said resolution, capacity payments and generation margins rank below certain other items. The balance of what is owed to the generators and what is actually collected by them is computed as a credit of the generators against CAMMESA.

Renewable Energies Stabilization Fund

The seasonal stabilization fund managed by CAMMESA absorbs the difference between purchases by distributors at seasonal prices and payments to generators for energy sales at the spot price. When the spot price is lower than the seasonal price, the stabilization fund increases, and when the spot price is higher than the seasonal price, the stabilization fund decreases. The outstanding balance of this fund at any given time reflects the accumulation of differences between the seasonal price and the hourly energy price in the spot market. The stabilization fund is required to maintain a minimum amount to cover payments

Electricity Generation In December 2006, the Argentine Congress promulgated Law N 26,190, which established the “National Promotional Regime for the use of renewable energies destined to the production of electrical energy,” and declared of national interest the generation of electrical energy from renewable energy sources which is destined to the provision of a public service or to investigation for technological development and fabrication of equipment with that purpose. Law N 26,190 widened the scope of the renewable energies included in the promotional

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regime established by Law N 25.019 (national regime of wind and solar energy) and maintained the “Feed-in Tariff” system and the tax benefits established by the aforementioned law. The objective of Law N 26,190 is to achieve that an 8 % of national consumption of electrical energy comes from renewable energy sources, by the year 2017. The law establishes a promotional regime to attract investments in the field of renewable energies. This promotional regime is composed by: (i) tax benefits, (ii) a “Feed-in Tariff” system, and (iii) an invitation by the national government to the provinces and the city of Buenos Aires to also encourage the development of renewable energy projects through provincial and municipal tax benefits. The tax benefits contemplated in Law N 26,190 are: (i) anticipated rebate of the value added tax (Impuesto al valor agregado), or alternatively, the possibility to practice an accelerated depreciation when calculating the income tax (Impuesto a las Ganancias) regarding the assets or infrastructure works involved in the project and (ii) the assets which correspond to the application authority approved investment projects will not be included for the calculation of the alternative minimum income tax (Impuesto a la Ganancia Mínima Presunta) for a 3-year period as from the project’s start-off. The Feed-in Tariff system promoted by this law fixes premiums for eligible renewable energy technologies. However, this possibility was in practice neutralized due to two related circumstances: first, the premium levels were relatively low when compared to those in other countries; second, and most importantly, electricity prices in general did not represent the actual costs of the system and were under substantial government interference. These problems were later on solved through the launching of an ambitious tender program, through which the state energy company (ENARSA) presented bids for the granting of renewable energy “power purchase agreements” (PPA). Under this mechanism, the generator acts as the “seller” in the corresponding PPA with the

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state owned company Energía Argentina S.A. (ENARSA), who acts as the buyer (See Cassagne 2014/2015). Then, under another contract, ENARSA acts as the seller of the corresponding energy before the wholesale electricity market, which is represented by CAMMESA. For the entry into force of these contracts, the generator must be awarded in the bid called by ENARSA, and after being selected its offer must be approved by the Energy Secretariat, which will then instruct CAMMESA to make a contract with ENARSA. In parallel with this, ENARSA makes the contract with the generator. The List of Terms and Conditions of the International and Domestic Public Tender ENARSA No. 001/2009 for the Supply of Electricity from Renewable Sources (Pliego de Bases y Condiciones de la Licitacion Publica Nacional e Internacional ENARSA N 001/2009 de Provision de Energia Electrica a partir de Fuentes Renovables) establishes that the term of the contract is of 15 years and enters in force since the notification of the subscription of the wholesale electricity market supply contract (Contrato de Abastecimiento MEM) between ENARSA and CAMMESA. The price under the PPA is in dollars, fixed, and for supplied energy (US$/MWh), and the “made available power” (potencia puesta a disposición) is not remunerated. In the case of biofuel plants, the price is variable and the remuneration is for the “made available power” (potencia puesta a disposición) In summary, the Feed-in Tariff system and the tax benefits provided in Law N 26,190 fell short to foster the required investment to develop Argentina’s renewable energy potential, particularly with the existing electricity depressed prices resulting from the present government interference in energy prices. Thus, the great majority of existing renewable energy projects are comprised in the special renewable energy government sponsored program in which the state-owned company ENARSA purchases electricity at fixed prices way above average spot prices.

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Biofuels Even though Law N 26,190 regulates renewable energies, it expressly excludes biofuels (Law N 26,093 defines biofuels as bioethanol, biodiesel and biogas produced from raw materials of agricultural, agribusiness or organic wastes origin.), which have a different legal framework and are regulated by Law N 26,093, passed on April 2006. In order to foster an effective demand of biofuels, Law N 26,093 provided the denominated mandatory blending, that is, the mixing of fossil fuels (gas oil or petroleum, as the case may be) with biofuels (biodiesel as well as bioethanol) in a minimum percentage of 5 %, measured over the total quantity of the final product, for all the liquid fuel to be commercialized within Argentina. Law N 26,093 created a temporary Promotional Regime through federal tax benefits. The tax benefits are the same as those established by Law N 26,190, but Law N 26,093 adds a few more: (i) water infrastructure tax (Decree 1381/ 01), (ii) Tax on liquid fuel and natural gas (Law N 23,966), and (iii) tax on the transfer or import of gas oil (Law N 26,028) are not applicable to the biodiesel and bioethanol produced in order to comply with the mandatory blending, or the biodiesel or bioethanol used by the government or by private companies located on waterways or lakes (especially within national parks or ecological reserves). The Promotional Regime has not been effective attracting investments for two main reasons: (i) it has a limited scope of application: in principle, foreign investments and local investments corresponding to legal entities which do not have agricultural production (producción agropecuaria) as their main activity are excluded from the Promotional Regime and (ii) the price of the biofuels sold by the companies which are under the Promotional Regime are regulated by the application authority. As of today, most Argentine biofuel plants have been projected to satisfy the needs of foreign markets and do not enjoy the benefits of the Promotional Regime.

Argentina: Energy Policy

The New Renewable Energy Law On September 23, 2015, the National Congress passed a bill to amend the aforementioned Law 26,190 (Law 27,191). Many of its provisions need to be supplemented by regulations issued by the president through the Ministry of Energy and Mining. Law 27,191 establishes as a short-term target that renewable energy should supply 8 % of the energy demand by December 31, 2017. It also establishes a long-term target: 25 % by December 31, 2025. This would entail the installment of 2700 MW by 2017 and 9000 MW by 2025. For reference purposes, in 2014 the share of renewable energy in domestic electricity consumption was only at 1.5 %. To accomplish these targets, Law 27,191 introduces some amendments to the tax benefits awarded to renewable energy projects as per the original version of Law 26,190. Tax benefits mentioned below are even better if the project is carried out before December 31, 2017. Now, eligible investors would enjoy the following: (i) Anticipated devolution of value added tax. (ii) Accelerated depreciation when calculating the income tax in respect of the assets or infrastructure works involved in the project. (iii) The assets allocated to these projects shall not be included for the calculation of the applicable minimum presumed income tax (Ganancia Mínima y Presunta). (iv) Exemption from import taxes until December 31, 2017. (v) Exemption from specific charges/taxes, fees, or royalties (whether national, provincial, or municipal) until December 31, 2025. (vi) Extension of the tax loss carry-forward period from 5 to 10 years for purposes of calculating Income Tax. (vii) Exemption from income tax on dividends if those are allocated to new renewable projects in Argentina. Finally, Law 27,191 establishes a “purchase obligation” in head of large users registered as agents in the WEM and large customers of distribution companies (with consumption above

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300 kW/h). The difference between large users and large customers is that the former contract directly with power generators while the latter do it through the distribution company serving their relevant geographic zone.

Mining The Andes mountain range is one of the Argentine’s most prolific mineral deposits. The basic statute which governs mining is the Mining Code. The Mining Code was enacted by Law No. 1,919 of 1886 and was amended several times thereafter. As in most Latin American countries, Argentine law is based upon the principle that all mineral deposits are state owned. Each province or the Federal Government maintains the eminent domain in respect of the minerals located within their respective jurisdictions. However, persons and corporations may obtain property concessions from such bodies to explore and develop those deposits and may freely dispose of the minerals extracted within the territory of the concession. Section 8 of the Mining Code establishes the general principle that the right to explore and develop mines and dispose of them as owners is granted to private individuals and companies, in accordance with the provisions of this Code. The Mining Code provides for two basic types of mining concessions: (i) The exploration concession and (ii) the development concession. The first one grants the right to explore and search for mineral resources within a specific territory and furthermore the right to obtain a development concession if a discovery is made during the exploration term. The general provisions of the Mining Code do not apply to oil and gas deposits. In addition, the mining of ores used in the nuclear industry (uranium and thorium), although subject to the Mining Code, must comply with additional specific regulations (See Pigretti 1992). The law considers development concessions (including the mine and its deposits, as well as the buildings, machinery, cars, etc. used in the development of the mine) to be property distinct from the title to the surface land on which they are

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located. Once the discoverer’s rights are incorporated into public deeds and registered with the Registry of Mines, they provide title to the development concession. Development concession titles are transferable, mortgageable, irrevocable, and are regulated by similar civil law rules to those regulating real estate (Isola-Federico and Palavecino 2000). Mortgages may be granted over such rights, and, once extracted, minerals being movable property may also be pledged as security for financing proposes. Sampling and prospecting may be conducted freely (no government permit or concession is required), except in areas where mining concessions have already been granted to third parties, or in fenced or cultivated areas, urban areas, areas reserved for national defense, or areas reserved for public use. In these cases, written permission from the surface owner, concession holder or relevant authority, is required. Distribution of Regulatory and Enforcement Powers Mining laws and regulations are enacted by the Federal Government, and enforced by the Federal Government, each provincial government, and, to a lesser extent, each municipality. The basic legal framework governing mining rights (including the Mining Code) has been enacted by the Federal Congress. The enactment of procedural regulations is, however, vested in each provincial legislature. Each province organizes its own mining authority which deals with the granting and registration of exploration and development concessions and compliance with mining regulations (including safety and, in most cases, environmental standards). Regulations in connection with tax incentive programs are enacted either by the Federal Congress or the provinces depending upon whether the relevant tax is imposed by the Federal Government or the provinces. The main mining tax incentive program has, however, been enacted by a federal law to which the provinces have adhered. The registration and enforcement powers under this law are vested in the National Mining Secretary.

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Categories of Mines There are three classes of mines according to the type of mineral discovered. First class mines are those in which the following minerals are mined: gold, silver, platinum, mercury, copper, iron, lead, tin, zinc, nickel, cobalt, bismuth, manganese, antimony, wolframite, aluminum, beryllium, vanadium, cadmium, tantalum, molybdenum, lithium, and potassium. Certain fuels (such as mineral coal, lignite, anthracite coal, and solid hydrocarbons) and nonmetals (such as arsenic, quartz, feldspar, mica, fluorite, calcareous phosphates, sulfur, borates, and precious stones) are also included in this category. These mines belong to the state which grants concessions over such mines. Second class mines are divided into two categories: the first type comprises metallic sands and precious stones which are found in river beds, on the banks of running water streams, or at the facilities of abandoned mines. Minerals falling into this category may be mined by anyone without having to obtain a concession. The second type includes saltpeter, salines, peat bogs, metals not included in the first class and low-grade aluminous soils, abrasives, ochres, resins, steatite, barium sulfate, low-grade copper ores, graphite, fine white clay, alkaline salts or earthy alkaline salts, amianthus, bentonite, zeolite, and permutable or permutitic minerals. The owner of the surface rights has a preferential right to deposits within this category but must have its claims officially delineated. The third class of mines includes mines where minerals of an earthy or rocky nature which are used in the construction and ornamental industries are extracted. These deposits belong to the surface owner.

References Casal D (2015) Overview of the operating agreements in the hydrocarbon activity. Revista Argentina de Derecho de la Energía, Hidrocarburos y Minería 1:1–33 Cassagne E (2014/2015) Legal and contractual analysis of the development of generation of renewable energies in Argentina. Revista Argentina de Derecho de la Energía, Hidrocarburos y Minería 3:133–193

Argentina: Mineral Policy Isola-Federico AG, Palavecino M (2000) Temas actuales de derecho minero. editorial Universidad, Buenos Aires Lanardonne T, Máculus A (2014) La reciente reforma a la Ley de Hidrocarburos. Revista del Colegio de Abogados de la Ciudad de Buenos Aires, tomo 74(2):55–73 Massimino LF (2014) The natural gas system in Argentina: regulation, emergency and current situation. Revista Argentina de Derecho de la Energía, Hidrocarburos y Minería 1:63–84 Nallar Dera DM (2010) Regulación y control de los servicios públicos. editorial Marcial Pons, Buenos Aires, pp 155–194 Palacios M (2014) Constitution and electricity. Revista Argentina de Derecho de la Energía, Hidrocarburos y Minería 1:133–193 Pigretti EA (1992) Derecho de los recursos naturales, editorial La Ley, Buenos Aires, pp 349–456 Roizen DP (2012) Certain argentine law considerations regarding the 2002 AIPN JOA Model Contract. J World Energy Law Bus 5(2):139–147 Sobre Casas RP (2003) Los contratos en el mercado eléctrico, editorial Ábaco de Rodolfo Depalma, Buenos Aires, pp 119–151 World Bank. http://data.worldbank.org/country/argentina; http://data.worldbank.org/indicator/FI.RES.TOTL.CD; http://data.worldbank.org/indicator/NY.GDP.DEFL.KD. ZG

Argentina: Mineral Policy Ana Elizabeth Bastida1 and Diego I. Murguía2 1 Centre for Energy, Petroleum and Mineral Law and Policy, School of Social Sciences, University of Dundee, Dundee, Scotland, UK 2 Instituto Interdisciplinario de Economía Política de Buenos Aires (IIEP-Baires) y CONICET, Buenos Aires, Argentina

General Information on Argentina With a Gross Domestic Product (GDP, current USD, 2015) of around US$ 584,000 million, Argentina is after Brazil and Mexico, the third largest economy in Latin America (World Bank 2017). Argentina’s economic structure is diversified. Manufacturing and primary industries (agriculture, livestock, hunting, forestry, fishing, and mining) are the leading sectors accounting for

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21% and 14%, respectively, of the domestic economy (2011) (Secretariat of International Economic Relations 2012). Even though agriculture only represented 4.3% of the GDP (2011), it has traditionally been a pillar of the economy as the exports of grains and their derivatives (mainly soybean) represent the leading export sector (Jiménez 2011) and explain a large share of Argentina’s balance of trade which recorded surpluses during the last decade (although they ran on a deficit in 2015 and 2017). Mining and quarrying of energy and nonenergy minerals represent around 3% of the GDP (KPMG 2018), whereas the mining of nonenergy minerals is around 1% (CAEM 2013); exports of nonenergy minerals (mainly due to exports of gold, copper and silver) represented in 2014 a 5.4% of total Argentinian exports (Deloitte 2016). The country’s population (estimated at 43 million) grows slowly at an average annual rate of 0.9% (UN 2014). Though the country does not have an official religion, the population is mainly Roman Catholic. The life expectancy at birth is 76 years which has grown since 1990 (71 years). Argentina’s public health and educational systems are still well established and financed via public spending (represent around 5.3% and 5.8% of the GDP, 2010 and 2011, respectively) (UNICEF 2015). Argentina is placed among the very high human development countries (index value of 0.827 for 2015) according to the UN Human Development Index 2016. Energy and resource efficiency are fields still in their infancy in Argentina with much potential for development.

Need of Minerals In relation to energy minerals, the Argentinean energy matrix has traditionally and still remains highly dependent on hydrocarbons. By the 1970s, oil was the central source of energy, catering for a 68.5% of the energy matrix, followed by natural gas with a 21%; this has changed as natural gas became more important. By 2014 natural gas catered for a 51.1% of the country’s primary energy mix and oil for almost a 33%, followed

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by nuclear with 4.6% and hydraulic almost 2% (Secretaría de Energía 2015). In terms of domestic production, Argentina is almost self-sufficient producing oil and derivatives with low imports. Yet, regarding natural gas, domestic production has substantially decreased (in 2014 a 20% less than in 2004), while gas imports have increased during the last decade: imports reached almost 11,000 million m3 against a domestic production of almost 43,000 million m3 in 2015 (Instituto Argentino del Petróleo y del Gas 2018). At the same time exports of natural gas have been reduced to insignificant values. Regarding reserves, and due to years of deficient exploration, proven oil reserves have been declining in the last decade, from 425,000 m3 in 2003 to 343,000 m3 by 2016. Likewise proven natural gas reserves have dropped from 446,000 million m3 in 2003 to 336,000 million m3 by 2015 (Instituto Argentino del Petróleo y del Gas 2018), less than by 1990 (579,000 million m3). In relation to unconventional energy minerals, Argentina entered the list of the top 10 countries with technically recoverable shale oil and shale gas resources with the discovery of the Vaca Muerta formation in 2010. With 27 billion barrels of shale oil it ranks fourth worldwide after Russia, the USA, and China in the ranking of shale oilhosting countries and second for shale gas (EIA 2013). With regards to nonenergy minerals, copper, gold, silver, molybdenum, lead, and zinc remain the most valuable mineral commodities extracted and produced in Argentina. Copper production (concentrate) grew steadily, jumping from 30.2 kilotons (share in world’s production of 0.26%) in 1997 to 102.6 kilotons in 2014 (share in world production of 0.55%) driven by only one open pit mine (Bajo de la Alumbrera). Even though several first-rate copper-bearing deposits are known (e.g., Agua Rica, Taca Taca, Los Azules, El Altar, El Pachón, Cerro Atajo), no new copper mines have yet been opened, and Bajo de la Alumbrera (which mine life, now as underground, was recently extended until 2029) is still the sole copper and molybdenum producer in the country. Gold production (mostly as doré) takes place in a few large-scale open pit (Veladero, Gualcamayo,

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Don Nicolás, Farallón Negro, Bajo de la Alumbrera), open pit/underground (Casposo, Cerro Vanguardia, Manantial Espejo), and underground mines (San José-Huevos Verdes and Cerro Negro which started commercial production in 2015) and jumped from 1.1 metric ton in 1990 to 63.8 metric tons in 2015 (See Thomson ReutersGFMS 2017 Gold Survey), turning Argentina into the third largest producer in South America after Peru and Brazil. Domestic silver production has grown from almost 72 metric tons in 1990 to 850 metric tons in 2014, a growth explained by the opening of the Martha, San José, and Manantial Espejo projects and the expansion in Pirquitas (now in closure phase), to be followed up by the Chinchillas project (Chinchillas project is considered an extension of Pirquitas’ mine life. Chinchillas deposit will be mined by conventional open pit mining methods. The ore will be transported and processed in the Pirquitas processing facilities). Copper, silver, and gold are handled as commodities and are exported to smelter and refineries in the USA, Europe, or South Africa. Domestic production of zinc has remained stable around an average of 32,000 metric tons in the last decades. Other Minerals of Importance for the National Industry Encompass Iron, Aluminum, and Uranium. The production of iron has traditionally been insufficient to cater for domestic demand and iron is produced and imported. Since the re-opening of the Sierra Grande mine in 2006 (the sole iron ore producing mine), Argentina has been extracting iron and shipped 400,000 tons of iron concentrate in 2015. In 2014 the pig and sponge iron and crude steel production reached 3644 and 4580 thousand metric tons, respectively (Cámara Argentina del Acero 2015), using iron ore imported almost to 100% from Brazil (Argentina’s iron industry is completely relying on ore imports from Brazil because Sierra Grande not only produces a small annual amount of iron concentrate but also because the quality of such concentrate is not good as it contains high levels of phosphorus). Argentina’s primary aluminum domestic production (around 440,000 metric tons in 2013) takes place at ALUAR’s Puerto Madryn plant which

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imports bauxite (Argentina has no bauxite deposits) and delivers alumina catering for the domestic demand and exporting the remaining 70% of its production. Argentina’s nuclear power plants are fully dependent on imports of uranium as no uranium producing mines are in operation. Argentina’s uranium resources are small and total 15,000 tU (though the National Nuclear Energy Commission estimates that there are some 55,000 tU as exploration targets) (World Nuclear Association 2015). Argentina is self-sufficient in the production of industrial minerals and aggregates, being the main products sand, crushed stone, limestone, gravel, salt, tuff stone, and bentonite. Traditionally nonmetalliferous mining activities have represented a marginal share in the national GDP (Sarudiansky and Nielson 2014). Argentina is a big world player in the production of boron (a mineral considered of critical importance by the European Commission), diatomite, lithium, and strontium (shares of 11.2%, 12.2%, 8.3%, and 1.5%, respectively, in world’s 2013 production) (Reichl et al. 2015; USGS 2015). Argentina is the 3rd largest producer of lithium in the world and exports virtually all of its lithium production. During the period 2012–2016 Argentina produced an annual average of 18,500 tons of lithium carbonate equivalent (LCE), producing in 2016 over 30,000 LCE (16% of the global production) with the entry into production of the Salar de Olaroz operation (Delbuono et al. 2017). The lithium production is expected to grow in the short term with a large number of new projects being developed. Argentina’s lithium reserves are estimated at 5.1 million metric tons of LCE placing the country fourth in the world and are concentrated in the provinces of Jujuy, Salta, and north of Catamarca (Jerez et al. 2017). The recycling and usage of secondary raw materials is a new and underdeveloped business in Argentina. Almost no statistics exist and only a few companies are pioneering the recycling business, particularly those dedicated to recycling waste electrical and electronic equipment (WEEE) and hard metals. The recycling and re-use of secondary minerals is not expected to

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grow in the short term due to a lack of sufficient incentives in the legal framework.

Mining and Minerals Policy Conception of Argentina Each country, via the national governments which administer the State during certain periods, establishes goals and objectives to be achieved, i.e., establish priorities to allocate and manage resources in a certain direction. Public policy entails a course of action followed by government institutions to achieve desired outcomes. It is expressed in laws and regulations, public statements, and funding priorities. A minerals policy is part and parcel of the economic policy of a country (a public policy) and can be defined as the entirety of government actions to influence supply for mineral resources in its territory and beyond (Tiess 2011). The term “minerals policy” is related to the establishment of a minerals policy framework, which in turn, is (or should be) based on (analyses of) minerals consumption (Mineral consumption ¼ (primary + secondary) production + imports – exports) and considers the internal (national territory) and external (beyond) component of a minerals policy framework. Although mineral policies often cover only primary mineral resources, it has been argued (e.g., Murguía and Tiess 2017) that a paradigm shift is needed including secondary mineral resources within an integrated minerals policy framework. Actually, the European Union (EU) has now for years been strongly supporting (politically and financially) an integrated raw materials strategy (the “Raw Materials Initiative”) whose overall objective is to ensure a stable, sustainable and continuous supply of mineral resources (especially metals on which the EU has a high dependency rate) from imports, from within the EU’s territory and also from recycling. Mineral policies need to be distinguished from mining policies as the latter are focused on extractive activities, and not on the entire management of the minerals along the value chain. Mining policies (Every country has a mineral policy and/or a mining policy. In some instances, this

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may take the form of a stand-alone document, but in many cases, this is implicit and it can be construed from legislation and a range of information sources) have traditionally focused on minerals extraction issues, i.e., establishing enabling conditions for prospecting, exploration, and extraction of mineral resources. The emphasis on mining policy is slowly evolving, or expected to evolve, towards setting a framework for the transformation of natural wealth into sustainable, broader based development along the lines of Agenda 2030 (Bastida 2014; Bastida and Bustos 2017). In Argentina, like in other Latin American countries, there is no official minerals policy. Instead, since the 1990s, the country’s successive governments have maintained a mining policy aimed at promoting foreign investment to develop and expand predominantly the metals mining sector based on the production and export of commodities and, to a certain limited extent, the development of the upstream sector (the mining equipment, technology, and services). Very few incentives have been implemented so far to advance in the value chain and establish side stream (logistics, financial services and availability of risk capital, energy infrastructure, etc.) and downstream operations (e.g., refining of copper or of precious metals by the installation of a modern and certified refinery). Argentina’s current mining policy was designed as part and parcel of the general global trends featuring the 1990s. As an outcome of the profound liberalization of the Argentinean economy promoted over that decade, the country opened up the mining sector to private, foreign direct investment (FDI) through a highly competitive fiscal and legal framework and saw the first large-scale open pit mine open in Catamarca in 1997 (Bajo de la Alumbrera). During the 2000s, other large-scale metal mining projects were commissioned and the metal mining sector grew continuously. While core tenets of the mining framework per se remained unchanged, the administrations of Néstor Kirchner (2003–2007) and Cristina Fernández de Kirchner (2007–2015) (whenever suitable, jointly referred to in this article as the

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“Kirchner national administration,” spanning from 2003 until 2015), introduced, especially during the period 2011–2015, a number of protectionist measures (e.g., a ban on utilities and

dividends repatriation, see Table 1 below). Even though these discouraged speculative financial capital and promoted the development of some local service providers (e.g., the import

Argentina: Mineral Policy, Table 1 Tax and financial provisions changes during Kirchner and Macri administrations Subject Restrictions to purchase foreign exchange

Minimum stay period for foreign financial flows and compulsory deposit (‘encaje’)

Obligation to liquidate currency in the local market Ban on utilities and dividends repatriation Control of services and payments abroad (DJASDAPE) Import procedures (DJAI)

Export duties on metal exports

Program for the substitution of imports

Source: own elaboration

Regime during Kirchner Administration (2003–2015) From 2011 onwards prior authorization from the central Bank of Argentina (BCRA) and from the Argentinean Federal tax Agency (AFIP) was required to purchase foreign currency In 2005 a decree (616) established that all currency flows (stemming from debt originating outside of Argentina and belonging to private entities) entering the local market in Argentina needs to remain within such market for 365 days. Art. 4 of decree 616 established that a compulsory noninterest bearing deposit equivalent to 30% of any foreign investment was due which would be withheld for a period of 365 days Compulsory since 2011 (decree 1722/ 2011) Restricted amounts since 2012 Requirement to provide an Anticipated Sworn Statement of Services (DJAS) (res. 3726) and an anticipated statement of abroad payments (DAPE) (res. 3417) Requirement to provide an Anticipated Sworn Statement on Imports (DJAI), which could be approved or not. In 2007 the national government established export duties applicable to the mining activity at a rate of 5% FOB for doré/crude silver and 10% FOB for metal concentrate Requirement to hire Argentinean companies for freight transport (by ship, road, air, or any other means) exports of minerals or derivatives (res. 12/2012) and requirement to have an own Department for the Substitution of imports (res. 13/2012), both regulated by res. 54/2012.

Regime during Macri Administration (2015–2018) Any individual or company can freely access the exchange market to purchase foreign currency to invest in foreign assets, subject to the condition that no more than USD 2 million are bought per month Resolution no. 3/2015 reduces to 0% the non-transferable, non-interest-bearing deposit (‘encaje’) and reduces the minimum stay period from 365 to 120 calendar days as from the date when the funds entered into Argentina. Resolution no. 1-E/2017 of the Ministry of Economy reduced to 0 days the minimum stay period

The period for liquidation was made flexible (res. 47-E/2017) and then eliminated (decree 839/2017) Gradually opened, nowadays free inflow and outflow movements of capital The requirement to present DJAS or DAPE for international financial transactions was eliminated (res. 4008-E/ 2017 AFIP) DJAI procedure was terminated and replaced by the SIMI (simplified import procedure) (res. 3823/2015 AFIP and 5/2015 min. Producción) Abolished as one of the first measures taken by the new administration (decree 160/2015, decree 25/2016 and decree 349/2016) All mentioned resolutions were derogated by res. 110-E/2017 of the National Mining Secretariat. In such resolution (art. 3 ), it is established that companies will have to present a plan of participation of the National Industry along with the feasibility study describing how the company will promote a higher uptake of nationally produced components and services

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substitution program), it also infringed some of the stability principles of the national Mining Investment Law and discouraged FDI flows towards (not only) the mining sector. The introduction of export duties triggered much controversy in the mining sector over this period. Following the economic and financial crisis of 2001, the Law of Public Emergency 25,561 (2002) delegated on the Executive Power the power to establish export duties. By Resolution 11/2002 and subsequent amendments, the then Ministry of Economy and Infrastructure set out export duties for 5 to 10% of the FOB value of exported minerals. While these duties would not reach those companies that had obtained certificates of fiscal stability prior to the enactment of such law, joint Resolutions 288 and 130 issued in 2007 by the Secretariat of Commerce and by the National Secretariat of Mining mandated the National Customs Office to collect export duties from those companies. Over the years, and most clearly from around 2007, the tax regime was further eroded with restrictions to foreign currency exchange and a trend in resource-producing provinces to establish new taxes and charges, or setting up provincial State-owned companies to increase the provincial take. The administration of Mauricio Macri, who took office in December 2015, promoted fundamental macroeconomic changes steered to open up the financial market (promoting speculation at the expense of an increasing external public debt), reduced fiscal deficit, restored an investment climate (see Table 1 below), and aimed at strengthening the rule of law. In the mining sector, President Macri’s administration abolished the export duties and has been actively promoting a new investment climate to attract further FDI to the provinces. In the 1990s, the Federal Mining Covenant (Law No. 24,228 of 1993) crystallized the consensus reached between the national State and the provinces to develop coordinated actions. The administration of Mauricio Macri promoted a New Federal Mining Covenant between representatives of the national State and the provinces. The agreement was signed on 13 June 2017, and it will enter into force once it is

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approved by the National Congress and the provincial parliaments (still pending at the time of writing). This document lays down the basis for a new State policy for the mining sector. It seeks to anchor mining policy within a sustainable development matrix, invoking constitutional principles and the transformative role that mining can play in boosting regional development. It revolves around five core areas of agreement, each involving specific objectives. They are summarized as follows: • Community and social aspects, envisaging actions to maximize benefits to local communities, support artisanal and small-scale mining and enhancing education at school level on geological knowledge and mineral use aspects. • Environmental management, aiming at coordinated action between national and provincial mining authorities; provincial mining and environmental authorities; and the relevant federal councils in mining and environmental affairs (the Federal Mining Council -COFEMIN in its Spanish acronym- and the Federal Environmental Council -COFEMA-) to discuss appropriate environmental management tools for the sector. The Covenant calls for the creation of a technical and independent consultative taskforce in environmental management; setting up an environmental fund or guarantees for each mining project; establishing a mine closure regime; and promoting the use of renewable energies and the adoption of energy efficiency measures; • Productive development and economic and tax aspects, including actions to promote local content and support small and medium-sized enterprises; encouraging linkages with other sectors of the economy and through shared use of infrastructure, and science, technology and innovation; improving infrastructure and transport conditions (via a Mining Infrastructure Development Plan); authorizing the provinces to charge an additional contribution to establish public infrastructure funds; establishing the basis for calculating royalties; setting criteria for the participation and management of provincial State-owned companies.

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• Institutional and normative aspects, which include the establishment of a Mining Information Centre to systematize and organize all information related to the sector and projects and promote transparency, standardizing procedures and a unified cadastral system, and establishing a lithium round table, apart from a range of agreements on amendments to the Mining Code. Such federal covenant reflects Argentina’s current mining policy and is driving government actions in several aspects. It is early to assess whether the aspirational objectives set in the Covenant, and all the programmatic actions envisaged will be fully implemented. Yet, the text as drafted is still far from an integrated mineral policy as it does neither contain a minerals demand analysis nor considers secondary resources. On another point, the document implicitly favors an emphasis on exporting raw materials as commodities rather than on advancing in the value chain of minerals (especially metals) – a long-term trend in Argentina’s mining policy. Mining has developed in the provinces that support the sector, notably in Catamarca, Jujuy, San Juan, Santa Cruz, and Salta, while there are ongoing exploration efforts in others. The Northern province of Jujuy has taken some steps towards adding value in the value chain of lithium production. Similar to what occurs in Bolivia, the lithium extractive sector is increasingly attracting foreign investment from downstream user companies such as the Japanese Toyota (Sales de Jujuy S.A.) (See the company’s website at http:// salesdejujuy.com/ (accessed 26.02.18)) already exporting lithium carbonate to Japan), the Korean steelmaker POSCO (POSCO plans include extracting and processing about 2500 tons of lithium per annum as of 2017 to supply electric car battery makers in Korea and elsewhere. See http:// koreatimes.co.kr/www/news/biz/2016/02/602_ 198006.html (accessed 19.04.17)), or Lithium Americas in partnership with Sociedad Química y Minera (SQM) de Chile (In 2016, Lithium Americas entered a strategic 50/50 JV with (SQM) to develop and operate the Caucharí-Olaroz project in Jujuy. They plan to

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evaluate the economic feasibility for a project with a nameplate production capacity of approximately 40,000 metric tons per year of lithium carbonate equivalent. See http://www. marketwired.com/press-release/lithium-americasand-sqm-announce-joint-venture-tsx-wlc-2109434. htm (accessed 19.04.17)). At the time of writing, apart from the above mentioned Sales de Jujuy, the other project at the stage of production is Salar del Hombre Muerto, operated by FMC. The recently created provincial mining companies (JEMSE in Jujuy, REMSA in Salta) are entering into joint ventures with some of these foreign investors (e.g., JEMSE and REMSA with the French ERAMET). However, what is unique in the case of lithium is that R&I has been ongoing in the Jujuy province. The single known experience in Jujuy is embodied in the Jujuy Litio SA company, founded in December 2017 by JEMSE and the Italian FIB, and supported by Y-TEC. The company is now advancing towards the installation of, first, an assembly plant, and then it reports that it plans to advance towards the fabrication of ion-lithium cells for public transportation (Ensinck 2017). Another initiative which is still in its infancy is the company LITARSA which aims to advance in the value chain with a plant in Salta (Monzoni 2018). Yet, these initiatives appear isolated within a context where the economic, industrial, and R&I policies seem to head towards larger exports of lithium carbonate (or lithium chloride) and, at least at the time being, not linked to the technological or industrial development of the sector (Roger et al. 2017).

Regulatory Framework Argentina is constitutionally organized as a federal republic. The federal government only exercises powers that have been expressly delegated by the provinces. The provinces hold ownership over natural resources in their territories, according to the constitutional reform of 1994. The main pieces of the legal framework applicable to mining nation-wide are the following:

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• Mining Code, enacted by virtue of the power expressly delegated by the provinces to the national Congress (article 75, paragraph 12). The Code was enacted in 1886 and has been amended many times, most significantly during the 1990s. Law No. 24,585 -Environmental Protection for Mining Activities enacted in 1995 incorporated an environmental chapter (Title XVIII, section 2). • Mining Investment Law No. 24,196, which establishes tax benefits, including fiscal stability for 30 years from the date of submission of the feasibility study, and Law No. 24,402 of 1994 establishing a financing regime for paying Value Added Tax. • Law No. 24,228 of 1993 (Federal Mining Covenant) which expresses consensus reached between the national State and the provinces to develop coordinated actions; as explained above, a New Federal Mining Covenant was signed in 2017 (still pending of approval by National Congress and provincial parliaments). The Mining Code establishes the rules and procedures for granting, maintaining, transferring, and cancelling mineral rights. It thus so through a “concession system” whereby the State grants exploration permits and concessions (for exploitation) through an objective, nondiscretionary system that demands compliance with the payment of an annual fee, investment commitments, and the requirement to keep the mine “active.” Concessions have the status of real property and are granted for an indefinite period as long as the requirements inherent to the title are complied with. Procedural provisions under the Mining Code are implemented by provincial regulations. While the inherent features of the concession system and the status of mineral rights have proved attractive to private investment over time, its technical basis is outmoded (Catalano 1999). This has become most recently apparent faced to the boom of lithium and emerging debate on its most adequate regulation. The Mining Code also provides a regime applicable to areas reserved to the State due to its geological importance, which are granted through a tender process and administrative concessions.

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Over time, mining provinces have established State-owned provincial mining companies or agencies with varying extent of participation in the business (Zaballa and Arbeleche 2014). Investment Regime Pursuant to the Constitution, as a general principle, foreign investors enjoy the same status and hold the same rights than those afforded to local business. From the early 1990s, Argentina established very high standards for investment protection through the adoption of the Foreign Investment Law 21,382 (1993) and the conclusion of more than fifty Bilateral Investment Treaties for the promotion and protection of investment with many countries, including Australia, Canada, China, USA, and South Africa. Most of the 21 treaties to avoid double taxation of which the country is a party were also ratified in that decade. During the same period, Argentina joined the International Center for Settlement of Investment Disputes (ICSID) and became a member of the Multilateral Investment Guarantee Agency (MIGA). MIGA political risk guarantee covered Cerro Vanguardia project with a guarantee of USD 5 million. The hallmark of the Mining Investment Law No. 24,196 is the 30 years fiscal stability benefit. The Supreme Court of Justice has upheld such fiscal stability benefit in a case where the National Customs Office intended to collect a tax on shareholders’ dividends (Cerro Vanguardia v DGI). It has also granted a preliminary injunction favoring Minera Tritón Argentina S.A. by obliging Province of Santa Cruz to refrain from claiming the payment of a property tax on mines located in its territory that had been established back in 2013, until a decision on the merits of the case is made (Minera Tritón Argentina S.A. v Provincia de Santa Cruz, 30 June 2015). In a case brought to challenge the collection of export duties, the Court decided that the plaintiff should have demonstrated an increase in the overall fiscal obligation and in such a case, followed a specific procedure under the Mining Investment Law to request a compensation or a reduction of its tax burden (Minera del Altiplano v Estado Nacional, 10 July 2012, see Parravicini 2014). The Argentina-Chile Mining Integration and

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Complementation Treaty (signed in 1997 and approved by Law No 25,243 enacted on 23 March 2000) provides a framework to facilitate investment and coordinate the regime applicable to mining projects across the large border between both countries, where most metallic mineral deposits are located, as identified by the Treaty (e.g., on taxation and customs, labor and social security, environmental and health protection, and shared water resources). It applies to each specific cross-border project by means of a Special Mining Project Protocol. So far, Argentina and Chile have entered into five Protocols, i.e., for Pachón, Pascua-Lama, Vicuña, Las Flechas, and AmosAndrés projects. Environmental Regulation In environmental matters, the Constitution deals with the coordination of federal and provincial jurisdictions by providing for the enactment of environmental minimum standards at a federal level, which can be complemented at a provincial level (article 41, Constitution). Law 24,585 of Environmental Protection for Mining (1995), incorporated to the Mining Code, sets up a uniform environmental framework for the activity, which can be complemented by provincial laws and regulations. The competent authority in environmental affairs is either the mining authority or the environmental authority, as decided by each province. Law 24,585 covers the prospecting, exploration, exploitation, development, extraction, storage, and beneficiation phases, including those activities aimed at mine closure. They all require from the operator the filing of separate Environmental Impact Assessment Reports (EIR), which are reviewed separately for approval. For the closure phase, the operator must file another EIR, or an update or amendment of the existing one to cover it, including measures and actions aimed at avoiding (or mitigating) negative environmental impacts after the closure of operations. There is no specific national law establishing a mine closure regime and financial assurances to ensure compliance (though the National Mining Secretariat is currently working on a draft project advancing a national law on the subject and some provinces, such as Catamarca, have established guidelines for preparing the mine

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closure plan). The relevant authority approves EIRs through Environmental Impact Declarations, which must be updated every 2 years. The legislation relies on the traditional administrative (from warnings and fines to temporary and definite shutdown), civil, and criminal mechanisms to enforce compliance. Law 24,585 requires the relevant enforcement authority to provide information to whoever requests it regarding the application of environmental provisions. In turn, the provinces that have retained the powers to regulate general environmental matters within their own jurisdictions can introduce public participation mechanisms and other measures for environmental protection to complement national standards (see further the decision by the Supreme Court of Justice in Villivar v Provincia de Chubut). At national level, the National Congress enacted Law 26,639 of Minimum Standards for Glaciers Protection (2010) that bans mining from glacier and “peri-glacier” areas as defined by the law and as identified in an inventory prepared by the national glaciers institute. The execution of the inventory has been slow and limited by budget constraints. The Supreme Court of Justice revoked an injunction issued by a federal judge in San Juan province that had suspended the application of a few articles of Law 26,639 (Barrick Exploraciones Argentinas v Estado Nacional). It should be noted that due to the spatial overlap in the location of glaciers/peri-glaciers and metallic deposits and due to the lack of sufficient technological alternatives to the exploitation of deposits, this national law (and its deficient implementation) is currently a hot spot of conflicts for metal mining prospective projects. Provincial Laws and Municipal Ordinances Banning the Use of Chemicals and Open-Pit Mining The question of the extent of the powers retained by the provinces to regulate and even ban the use of specific technologies and extractive methods is hotly contested and expresses the underlying social conflicts permeating the large-scale metal mining sector in Argentina. 2003 witnessed the first case of major community opposition, which occurred in the Esquel project in the Southern

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Chubut province. This led to the suspension of the project and the start of the “No a la mina” movement. (http://noalamina.org/) Social opposition to large-scale metal mining has been growing in Argentina, resulting in the existence of a remarkable distinction between “mining provinces” (those that support mining) and those that have set restrictions to large segments of the activity. Currently seven provinces (out of 23) either ban open pit mining and/or the use of different types of chemical substances often used in mining-related processes from their territories. (Chubut (Law No. XVII-N 68 (formerly No. 5001), 2003); Tucumán (Law No. 7879, 20 April 2007); Mendoza (Law No. 7722, 22 June 2007); La Pampa (Law No. 2349, 14 September 2007); Córdoba (Law No. 9526, 31 October 2008); San Luis (Law No. IX-0634, 17 October 2008); Tierra del Fuego (Law No. 853, 21 September 2011). Río Negro and La Rioja enacted, and subsequently repealed, laws of this type.) Some of those provinces, such as Mendoza and Chubut, have high mineral potential (e.g., Navidad silver/lead deposit in Chubut, designed to be extracted using the open pit method and one of the world’s largest silver deposits). In the case of Chubut, Provincial Law No. XVII-N 68 establishes a process of zoning that once implemented should spatially define zones in which different extraction technologies (e.g., open pit mining) would be permitted and others where mining would be banned. At the time of writing, the zoning process has not yet been established, but there appears to be a growing political willingness for it to take place soon and allow the development of projects in advanced status. Companies and mining business associations have challenged the constitutionality of these restrictive provincial laws by bringing claims in the provinces of Cordoba and Mendoza, arguing that these laws impinge upon the powers expressly delegated to the Nation under article 75, section 12, and article 126 of the Constitution to enact the Mining Code. They have also argued that those provincial laws violate property rights and the right to exercise a legal activity – both protected under the Constitution – and that banning open-pit methods and the use of chemicals

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entails an outright ban to the activity, as these are inherent to processes used today. Such claims have been rejected by the highest provincial courts on the grounds the aforementioned laws have been enacted within the sphere of competence of provinces and are aimed at fulfilling the constitutional duty of guaranteeing environmental protection pursuant to article 41 of the Constitution – the environment being a highest common good. Such decisions have been further challenged and at the time of writing they are awaiting decision by the Supreme Court of Justice. (Superior Justice Tribunal, Cordoba, CEMINCOR y Otra c/ Superior Gobierno de la Provincia s/ Acción declarativa de inconstitucionalidad, Decision 11 August 2015. Id SAIJ: FA15160023 (File No. 1798036 initiated on 4 May 2009); Supreme Court of Justice, Mendoza, Minera del Oeste SRL y Ot. c/ Gbno. de la Provincia p/Accion Inconstitucionalidad *102863400*, Decision 18 April 2017. -CUIJ: 13–028433926((012174–9,058,901))-). A number of municipal governments have also enacted ordinances restricting large-scale metal mining activities. These include Esquel and Puerto Pirámides in Chubut, Tinogasta, Andalgalá and Ancasti in Catamarca, Chilecito in La Rioja, Junín de los Andes, Aluminé, San Martín de los Andes, Villa Pehuenia and Loncopué in Neuquén, and Viedma in Río Negro province. (Esquel (Ordinance No. 33/03–2003), Puerto Pirámides (Ordinance No. 536/13); Tinogasta (Ordinance No. 859/15); Andalgalá (Ordinance No. 029/16), Ancasti (Ordinance No. 10/17); Chilecito (Ordinance No. 2695/06), Junín de los Andes (Ordinance No. 2523/15), Aluminé (Ordinance No. 1008/15), Villa Pehuenia (Ordinance No. 381/15), Loncopué (Ordinance No. 1054/ 12), San Martín de los Andes (Ordinance No. 10664/15), Viedma (Ordinance No. 7882/17)).

Transparency and Sustainability Reporting On 6 December 2017, the Minister of Energy and Mines together with the Secretary of Public Ethics, Transparency and Anti-Corruption formally announced Argentina’s commitment to

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join the Extractive Industries Transparency Initiative (EITI). (“Argentina se suma a la transparencia para las industrias extractivas.” 06 de Diciembre de 2017, available from https://www.argentina. gob.ar/noticias/argentina-se-suma-la-transparenciapara-las-industrias-extractivas) The enactment of Law No. 27,275 on the right of access to public information (Official Gazette, 29 September 2016) and Law No. 27,401 on corporate criminal responsibility (Official Gazette, 1 December 2017) signal significant efforts to strengthening governance. In 2016 Argentina’s Mining Business Association (Cámara Argentina de Empresarios Mineros, CAEM) adopted the Towards Sustainable Mining (TSM) initiative, the tools, and indicators developed by the Mining Association of Canada (MAC) to improve environmental and social practice in the mining industry.

Mineral Resources and Resource Efficiency A national law safeguarding the recycling of minerals and metals does not yet exist. A fraction of the metals employed is generally recycled, but no statistics exist onto how much is recycled and how much is lost and dissipated (no longer recovered). As exemplified by the WEEE, without a transparent legal framework the industry of recycling of WEEE will not advance (Fernández Protomastro 2010).

International Memberships Argentina is a member of the G20; it has a permanent mission at UNCTAD; WTO member from 1995 and GATT member from 1967.

Concluding Statement In Argentina there is currently no comprehensive official minerals policy in place. From the 1990s, mining policy aims at promoting mining investment (exploration and exploitation). While the

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focus remains oriented towards exports of raw materials, the New Federal Mining Covenant (which has been signed but not yet received parliamentary approval) advances on concepts and actions that seek to supersede the more limited objective of attracting foreign investment to open up as many projects as possible. It envisages actions to promote local content and encourage broader linkages with other sectors of the economy. This follows the late period of the previous Kirchner administration which had a strong policy of import substitution intended to foster backward linkages, leading to the development of some low technology suppliers of goods and services. Yet, with the exception of some incipient initiatives like the national or provincial roundtables (e.g., on lithium), there have not been systematic and long-lived institutional attempts so far to build forward linkages further, in order to promote the use of minerals in the industry and new technologies, and to link up with Research and Development and innovation policies. The case of lithium (in the Jujuy province) appears to be the only one where a certain continuity exists in promoting R&D policies towards adding value to extracted metals. The debate about the environmental and social impacts of mining as well as about the economic contribution of the sector to development has been very polarized over the last 20 years and has led to a division between provinces (and communities of people, workers, media) that support mining and others that have banned the use of chemicals and open-pit methods. Mining takes place in the provinces that support the sector, while there are ongoing exploration efforts in others. The New Federal Mining Covenant envisages the coordination of actions with local communities, as well as with environmental agencies, and a range of actions aimed at enhancing transparency. This has been materialized in the signing up to EITI. If thoroughly implemented, these could lay the grounds to improving governance and fostering much needed dialogue. The challenges are very significant and call for filling regulatory gaps and strengthening the institutional capacities for enhanced environmental oversight and processes to meet community expectations and local

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development, furthering on the use of environmental and development planning tools and coordination through territorial ordering, and for advancing in the transparency and accountability agenda. In broader terms, there is much needed discussion on an integrated national, long-term, and strategic mining and minerals development policy that places innovation and linkages with science and technology at its core and is fully anchored in participative dialogue and inclusive governance. A review of the regime applicable to lithium also calls for sober debate faced to the prospects of global demand spurred by its role in low carbon economies.

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Policy Instruments National Mining Plan, Ministry of Federal Planning, Public Investment and Services, Mining Secretariat. Available from http://www.infoleg.gov.ar/basehome/actos_ gobierno/actosdegobierno11-5-2009-1.htm

Judicial Decisions

Primary Sources

Superior Justice Tribunal, Cordoba, CEMINCOR y Otra c/ Superior Gobierno de la Provincia s/ Acción declarativa de inconstitucionalidad, Decision 11 August 2015. Id SAIJ: FA15160023 (File No. 1798036 initiated on 4 May 2009) Supreme Court of Justice, Villivar, Silvia Noemí v Provincia de Chubut y otros, (Court decisions: 330:1791; 17 April 2007) Supreme Court of Justice, Cerro Vanguardia v DGI (C. 3378 XLII), 30 June 2009 Supreme Court of Justice, Minera del Altiplano v Gobierno Nacional, 10 July 2012a Supreme Court of Justice, Barrick Exploraciones Argentinas S.A. y otro c/ Estado Nacional s/ acción declarativa de inconstitucionalidad – B. 140 XLVII – 3 July 2012b Supreme Court of Justice, Minera Tritón Argentina S.A. v Santa Cruz, Provincia de (Injunction), (CSJ 1382/2013 (49-M), 30 June 2015 Supreme Court of Justice, Mendoza, Minera del Oeste SRL y Ot. c/ Gbno. de la Provincia p/Accion Inconstitucionalidad *102863400*, Decision 18 April 2017,. -CUIJ: 13-02843392-6((012174-9058901))-

Laws and Regulations

Secondary Sources

Acknowledgments We acknowledge Florencia Heredia’s and Sandra Basañes’s comments to a much earlier version of this manuscript. Potential errors and imprecisions are our own.

References

Agreements entered by Argentina to avoid double taxation, Public Revenue Under-Secretariat, Finance Secretariat, Finance Ministry. Available from https://www. economia.gob.ar/sip/basehome/dir3_convenios.htm Bilateral Investment Treaties concluded by Argentina, UNCTAD, Investment Policy Hub. Available from http://investmentpolicyhub.unctad.org/IIA/CountryBits/8 Constitution of the Republic of Argentina, 1853, including 1994 Amendment, Official Gazette 23 August 1994 Draft New Federal Mining Covenant, signed on 13 June 2017 Law No. 24,196 of Mining Investment, Official Gazette 24 May 1993, and Regulatory Decree No. 2686 Law No. 25,675, General Law of the Environment, Official Gazette 28 November 2002 Law No. 27,275, Right of Access to Public Information, Official Gazette, 29 September 2016 Law No. 27,401, Criminal Responsibility, Official Gazette, 1 December 2017 Law of Public Emergency and Reform of the Exchange Regime 25,561, enacted on 6 January 2002 Mining Code, Law No. 1919, 25 November 1886 that ordered that the Code would become effective as of 1 May 1887, as reorganised by Decree 456/97, Compiled Text, Decree No. 456/97, Official Gazette 30 May 1997

Bastida AE (2014) From extractive to transformative industries: paths for linkages and diversification for resource-driven development, Review Paper of the Special Issue of Mineral Economics edited by Bastida, Ana Elizabeth and Ericsson, Magnus, Can Mining Be a Catalyst to Diversifying Economies? vol 27 (2–3):73–87, Dec 2014 Bastida AE, Bustos L (2017) Towards regimes for sustainable mineral resources management. Constitutional reform, Law and Judicial Precedents in Latin America. In: Charbonnier G, Campodónico H, Tezanos Vásquez, S (eds) Special Issue on Alternative pathways to sustainable development: lessons from Latin America of International Development Policy series No.9. Graduate Institute Publications, Brill-Nijhoff, Geneva/Boston, pp 235–268 (published both in English and Spanish). Available from http://poldev.revues.org/2371 CAEM (2013) Minería Argentina. Todas las respuestas. Aspectos Económicos. http://www.caem.com.ar/wpcontent/uploads/2013/10/Miner%C3%ADa-ArgentinaTodas-las-Respuestas-Aspectos-Econ%C3%B3micos.pdf Cámara Argentina del Acero (2015) Estadísticas Locales. http://www.acero.org.ar/index.php?option¼com_remosit ory&Itemid¼27&func¼select&id¼2 Catalano E (1999) Código de Minería Comentado. Zavalía Editor, Buenos Aires

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32 Delbuono V, Such T, Toledo E, Jerez D (2017) Mercado de litio. Situación actual y perspectivas. Informe especial. Dirección de Economía Minera, Marzo Deloitte (2016) Industry outlook. Mining in Argentina. June EIA (2013) Technically Recoverable Shale Oil and Shale Gas Resources: an assessment of 137 shale formations in 41 countries outside the United States. U.S. Department of Energy, Washington, DC, June. http://www.eia.gov/ analysis/studies/worldshalegas/pdf/overview.pdf Ensinck MG (2017) Instalan en Jujuy la primera planta de baterías de litio de Sudamérica. El Cronista. https://www. cronista.com/negocios/Instalan-en-Jujuy-la-primera-pla nta-de-baterias-de-litio-de-Sudamerica-20171215-0048. html. 15 Dec 2017 Fernández Protomastro G (2010) El futuro de la industrial del reciclado electrónico en la Argentina. In: Los residuos electrónicos: Un desafío para la Sociedad del Conocimiento en América Latina y el Caribe.UNESCO Montevideo/Plataforma RELAC SUR/IDRC, Montevideo/Santiago de Chile Instituto Argentino del Petróleo y del Gas (2018) Producción de Petróleo y Gas. http://www.iapg.org.ar/ estadisticasnew/. Accessed 22 Feb 2018 Jerez D, Lazarte H, Delbuono V, Such T, Toledo E (2017) El litio: una oportunidad. Estado de situación. Perspectivas. Mercado. Subsecretaría de Desarrollo Minero Jiménez I (2011) Argentina. Estructura económica. Oficina Económica y Comercial de la Embajada de España en Buenos Aires, Buenos Aires, June. http://www.ibiae. com/sites/default/files/informes-paises/ARGENTINA% 20Estructura%20Econ%C3%B3mica.pdf KPMG (2018) Algunos temas relevantes para la minería en 2018. Energía y Recursos Naturales. 17pp Monzoni C (2018) La Argentina da sus primeros pasos para fabricar baterías de litio. La Nación. https://www. lanacion.com.ar/2102265-la-argentina-da-sus-primerospasos-para-fabricar-baterias-de-litio. 21 Jan 2018 Murguía D , Tiess G (2017) D7.1. Report on relevant business and policy issues for Europe pertinent to CRMs. SCRREEN Project Deliverable. Dreistetten. Available at: http://scrreen.eu/results/ Parravicini D (2014) An overview on Mining in Argentina: current perspectives on taxation issues, revenue distribution and investment risks. J Energy Nat Res Law 32(2):157–177. https://doi.org/10.1080/02646811.2014. 11435356 Reichl C, Schatz M, Zsak G (2015) World mining data. Welt Bergbau Daten. Vienna: Bundesministerium für Wirtschaft, Familie und Jugend/International Organizing Committee for the World Mining Congresses. http:// www.wmc.org.pl/sites/default/files/WMD2015.pdf Roger D, Nacif F, Casalis A, Mignaqui V, Lacabana M (2017) Exploraciones en torno al litio y su potencial de desarrollo para Argentina: identificación de temas estratégicos de cara a su explotación. Industrializar Argentina 15(33):21–34 Sarudiansky R, Nielson H (2014) Minería en la República Argentina. Asociación Argentina para el Progreso de las Ciencias. http://aargentinapciencias.org/2/index.

Australia, Western: Uranium Mining php/grandes-temas-ambientales/mineria-y-ambiente/ 76-mineria-en-la-republica-argentina Secretaría de Energía (2015) Balance Energético Nacional. Balances Energéticos 2014 (Provisorio) Publicado en Junio 2015. June. http://www.energia.gov.ar/ contenidos/archivos/Reorganizacion/informacion_del_ mercado/publicaciones/energia_en_gral/balances_2015/ Ben14provisorio.xlsx Secretariat of International Economic Relations (2012) Doing Business in Argentina. An Investor’s Guide. Ministry of Foreign Affairs and Worship, Argentina Tiess G (2011) General and international mineral policy: focus: Europe, 1st edn. Springer Vienna, Wien/New York, July 27 UN (2014) World Statistics Pocketbook 2014 edition. UN Department of Economic and Social Affairs, Statistics Division, New York. http://unstats.un.org/unsd/pocket book/WSPB2014.pdf UNICEF (2015) Statistics. UNICEF. http://www.unicef. org/infobycountry/argentina_statistics.html. Accessed 7 June 2015 USGS (2015) Mineral Commodities Summaries. Reston. http://minerals.usgs.gov/minerals/pubs/mcs/2015/mcs 2015.pdf World Bank 2017 GDP (current US$) | Data. January 15. http://data.worldbank.org/indicator/NY.GDP.MKTP.CD? end¼2015&locations¼AR-BR-CO-MX&start¼2001. Accessed 15 Jan 2017 World Nuclear Association (2015) Nuclear power in Argentina. May. http://www.world-nuclear.org/info/ Country-Profiles/Countries-A-F/Argentina/ Zaballa H, Arbeleche S (2014) Evolución de la intervención estatal en la legislación minera Argentina. Revista Argentina de Derecho de La Energía. Hidrocarburos y Minería 1:101–132

Australia, Western: Uranium Mining Tessa Herrmann Central Desert Native Title Services Limited, Perth, WA, Australia

Abbreviations ARPANS Act

Australian Radiation Protection and Nuclear Safety Act 1998 (Cth)

All views expressed in this article are the author’s own, and are not associated with Central Desert Native Title Services Ltd

Australia, Western: Uranium Mining

ARPANSA EIA EP Act EPBC Act

Mining Act MSIA MSIR RCWA RSA RSGR RWMP

Australian Radiation Protection and Nuclear Safety Agency Environmental Impact Assessment Environmental Protection Act 1986 (WA) Environmental Protection and Biodiversity Conservation Act 1999 (Cth) Mining Act 1978 (WA) Mines Safety and Inspection Act 1994 (WA) Mines Safety and Inspection Mining 1978 (WA) Radiological council of Western Australia Radiation Safety Act 1975 (Cth) Radiation Safety (General) Regulations 1983 (WA) Radiation waste management plan

Introduction Mining is a highly significant part of Western Australia’s economy. While in 2014–2015, declining commodity prices had a significant impact upon the contribution of mining to Western Australia’s economy, the resources sector continued to be a significant economic contributor to the State, worth $5.9 billion in royalty revenue (Department of Mines & Petroleum Western Australia 2014–2015). Uranium mining in Australia has generated heated debate (Wu et al. 2008). Australia, along with Canada and Kazakhstan, is one of the world’s largest producers and is thought to have the largest known uranium reserves in the world (Commonwealth of Australia 2006). Uranium mining in Australia is governed by a complex regulatory framework of parliamentary acts, regulations, codes, and guidelines, administered at both a Federal and State/Territory level (Uranium Advisory Group 2012). In 2008, the Western Australian Liberal Government overturned an 8-year ban on uranium mining, instituted by a previous Labor Government. In announcing the policy change, the Premier of Western Australia stated that this decision would unlock significant

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royalty revenue and allow the State to play a greater role in the fight against climate change (Wylynko 2009). However, despite a number of identified reserves, no uranium mine are operating in Western Australia to date.

International Obligations Affecting Uranium Mining in Western Australia Australia is a party to the Convention on Nuclear Safety (adopted 17 June 1994; entered into force 24 October 1996) and became subject to the Convention on Nuclear Safety on 24 March 1997. However, Australia does not have any subject nuclear installations as construction or operation of such installations is at present forbidden under Commonwealth, State, and Territory legislation (Australian Radiation Protection and Nuclear Safety Agency 2013). Australia is also a party to the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management (adopted 5 September 1997; entered into force on 18 June 2001), which it became subject to on 3 November 2003.

Australia’s Federal Radiation Protection and Waste Management System As a federation, regulation of nuclear actions in Australia occurs at both a Commonwealth and State or Territory level. Uranium mining in Western Australia is therefore governed by a framework of parliamentary acts, regulations, codes, and guidelines at both Federal and State Territory levels, with approvals for the establishment of a uranium mine being required from both governments. Two Commonwealth statutes are of particular relevance to uranium mining in Western Australia: the ARPANS Act and the EPBC Act. The ARPANS Act establishes ARPANSA; although the ARPANS Act only directly regulates Commonwealth activities, ARPANSA’s mandate includes promoting uniformity of radiation protection policies and practices throughout

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Australia, including through national standards and codes (Uranium Advisory Group 2012). The EPBC Act provides that a nuclear activity, including the mining of uranium oxide concentrate, cannot be undertaken without the approval of the Commonwealth Minister for the Environment. While EIA undertaken by the Commonwealth under the EPBC Act is confined to matters affecting “the environment,” the effect of a nuclear action upon people as an aspect of the environment requires radiation risk to be addressed (Government of Western Australia Inter-Agency Working Group 2009).

Regulatory Framework Affecting Uranium Mining The key WA statutes applicable to uranium mining projects are the EP Act, the Mining Act, the RSA, and the MSIA. Each of these acts is accompanied by subsidiary regulations, the most significant of which are Part 16 of the MSIR and the RSGR. Relevant to the gaining of approvals from the Western Australian government is the division of regulatory authority between different agencies. In Western Australia, the DMP is responsible for administering the Mining Act, the MSIA, and the MSIR. The RCWA, an independent statutory authority reporting directly to the WA Minister for Health, administers the RSA and associated regulations. Pursuant to the EP Act, environmental impact assessments are conducted by the Western Australian Environmental Protection Authority, which makes recommendations to the Environment Minister. This complexity creates significant overlap in regulatory functions between agencies. For example, a RMP is required to be approved by both the DMP (pursuant to the MSIA/MSIR) and the RCWA (pursuant to the RSA). The RSA is the principal legislation governing radiation protection in WA and applies to both ionizing and nonionizing radiation. The RCWA is established under the RSA as an independent statutory authority. The RSA provides that the use, manufacture, storage, transport, sale, or

Australia, Western: Uranium Mining

possession of any radioactive substance is an offense, unless licensed by the RCWA. The RSGR stipulates that mining/milling of radioactive ores cannot take place except in accordance with ARPANSA’s “Code of Practice and Safety Guide for Radiation Protection and Radioactive Waste Management in Mining and Mineral Processing,” thus incorporating national standards into WA regulation (s.27(5)(b) RSGR). The Code requires proponents of uranium mines/ mills to present to the “relevant regulatory authority” (in WA, the RCWA) a RMP prior to commencing any operations (r.16.7). Part 16 of the MSIR also requires an approved RMP before mining operations commence; proposed RMPs must be submitted for the approval of the State Mining Engineer, an officer within DMP.

Regulatory Framework Affecting Waste Management The same provisions of the RSA which require licensing for a uranium mine also apply to waste facilities; a tailing storage facility associated with a uranium mine will need to be covered by a license issued by the RCWA. The RSGR incorporate the ARPANSA Code, which outlines that a RWMP must be addressed “from the inception of project planning” (Australian Radiation Protection and Nuclear Safety Agency 2005). The RWMP must be developed together with the RMP and must be updated throughout the project. If circumstances change significantly, then the RWMP must be revised and reapproved by the RCWA. The MSIR also addresses the disposal of radioactive waste as a result of mining. It contemplates that radioactive waste will, at least in part, be addressed within the RMP (see, for example, r.16.34 MSIR). Additionally, the operator is required – prior to abandoning the mine – to obtain approval from the State Mining Engineer for a plan for “final management” of radiation, including the process for decommissioning and rehabilitation (r.16.35(1) MSIR). The plan is additional to the requirement for a “mine closure plan”

Australia: Environmental Approvals for New Resource Projects

required as a condition of all mining leases granted pursuant to the Mining Act (s.82(1)).

Concluding Statement While there are a number of uranium projects in Western Australia at present, none have yet formally commented mining operations. Regulation of uranium mining in Western Australia involves a complex framework due to the involvement of both Federal and State governments in the regulation of “nuclear actions,” including mining of uranium. This complexity is enhanced by the division of regulatory authority between a number of State-based authorities and legislative instruments.

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Mines Safety and Inspection Act 1994 (WA) Mines Safety and Inspection Regulations 1995 (WA) Radiation Safety Act 1975 (WA) Radiation Safety (General) Regulations 1983 (WA) Uranium Advisory Group, Australian Centre for Geomechanics (April 2012). Independent review of uranium mining regulation: prepared for the department of mines and petroleum, Western Australia Wu J, Garnett ST, Barnes T (2008) Beyond an energy deal: impacts of the Sino-Australia uranium agreement. Energy Policy 36:413–422 Wylynko B (2009) The regulation of Uranium mining in Western Australia: Ban Lifted. Mondaq Business Briefing. Available at http://www.mondaq.com/australia/x/86860/ Mining/The+Regulation+Of+Uranium+Mining+In+West ern+Australia+Ban+Lifted. Accessed 16 Feb 2016

Australia: Environmental Approvals for New Resource Projects

References 1994 Convention on Nuclear Safety. Adopted 17 June 1994, opened for signature 20 Sept 1994, entered into force 24 Oct 1996 1997 Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management. Adopted 5 Sept 1997, opened for signature 29 Sept 1997, entered into force 18 June 2001 Australian Radiation Protection and Nuclear Safety Act 1998 (Cth) Australian Radiation Protection and Nuclear Safety Agency, Commonwealth Government of Australia (August 2013), ‘Australian National Report’ Australian Radiation Protection and Nuclear Safety Agency (August 2005). Code of practice and safety guide: radiation protection and radioactive waste management in mining and mineral processing: Radiation Protection Series Publication No. 9 Commonwealth of Australia (December 2006) Uranium mining, processing and nuclear energy – opportunities for Australia? Report to the prime minister by the uranium mining, processing and nuclear energy review taskforce (December 2006) Department of Mines & Petroleum Western Australia (2014–2015) Annual report 2014–2015. Available at http://www.dmp.wa.gov.au/About-Us-Careers/Annualreport-1453.aspx. Accessed 16 Feb 2016 Environmental Protection Act 1986 (WA) Environmental Protection and Biodiversity Act 1999 (Cth) Government of Western Australia Inter-Agency Working Group, Department of Mines and Petroleum (August 2009). Review of regulatory adequacy for uranium mining development in Western Australia Mining Act 1978 (WA)

Jim Hondros and R. T. Secen-Hondros JRHC Enterprises Pty Ltd, Stirling, SA, Australia

Introduction All new mining or mineral-processing projects require some form of regulatory approval which is generally based on economic, social, and environmental impact assessments. Experience shows that the approval process can be long and complex, involving many studies and taking many years. For a project that involves the mining or processing of material uranium and thorium, even if uranium and thorium are not the payload of the material, the approval process is usually more complicated, and an assessment of the radiological impacts must be conducted. Radiation impact assessments are commonly conducted for projects producing uranium, thorium, or mineral sands. However, more recently, the International Atomic Energy Agency (IAEA) (IAEA 2006, 2007, 2011, 2012, 2013) has identified other sectors where uranium and thorium may be present, thereby also requiring assessment. The word radiation conjures up different responses from stakeholders, regulators, and the

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public. In many cases, the actual risk from radiation is far less than the perceived risk, and this fact needs to be considered in any assessment. Radiation aspects are only one part of any impact assessment for a project, and maintaining perspective is important.

Radiation Assessment Framework To undertake a radiation assessment in a clear and effective way, a practical framework consisting of four steps can be used. These steps are: • Characterize the existing radiological environment (the “background”). • Quantify the incremental radiological concentrations due to the project (the “project increment”). • Determine the impact of any increment (the “impact”). • Outline the control measures (the “controls”). Details on each of the steps are described below. Characterizing the Existing Radiological Environment The overall aim is to identify and quantify the preexisting environmental radiation concentrations (also known as “baseline” or “background” radiation levels) that exist in the region of the proposed project. This is important for the following reasons: • It provides confidence for stakeholders that the project is able to monitor radiation and understands the preexisting radiation levels in the areas where they are working. • It provides a quantified measure of the natural levels and the natural variation in radiation levels in space and time. • It is important for determining the requirements for project closure and target radiation levels for closure and rehabilitation. Baseline radiation levels can be obtained from a range of sources, including published data or

existing company or project data, such as geological information or water quality information. However, it is more than likely that information about the existing environment will need to be obtained from a dedicated monitoring program. Experience shows that monitoring should be conducted for a minimum period of 2 years to ensure that seasonal variations are included. Radiation-related information can be obtained in conjunction with other baseline or background monitoring that is occurring or has occurred. For example, groundwater monitoring is usually conducted as part of resource monitoring, and uranium, radium, and radionuclide analysis can be included in this. For a new project, there are a number of radiological parameters that should be monitored, and these are shown in Table 1 along with methodologies. Radiation monitoring, like all monitoring, must be undertaken in accordance with established scientific procedures and with calibrated equipment. Quantify the Incremental Radiological Concentrations Due to the Project (the “Project Increment”) An important precursor to quantifying the project increment is to accurately determine the radionuclide releases from the project. This provides the input information to calculate any change in the environmental radiation concentrations. In a practical sense, quantifying the increment involves: • Understanding the project design and where emissions may occur • Estimating the potential emissions from the various project components • Determining how the emissions result in changes in environmental levels Once the proposed project is understood and sources of emissions are determined, the emissions can be quantified by using standard emission factors or experimentally determined factors. The emission source values together with other non-radiological information such as general meteorological information are then used as inputs in air quality modeling or fate and transport modeling.

Australia: Environmental Approvals for New Resource Projects

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Australia: Environmental Approvals for New Resource Projects, Table 1 Radiation monitoring methods Radiation Gamma radiation

Radon

Radon decay products (RnDPs) Radionuclides in dusts Radionuclide deposition Radionuclides in soils Radionuclides in water Radionuclides in flora and fauna

Monitoring methodologies Thermoluminescent detectors (TLD badges) or InLight (Landauer) Handheld gamma monitor Aerial radiometric survey Passive track etch detectors (radon cups) Real-time electronic radon gas monitors Air sampling (Lucas cells) Accumulator drum (to measure radon exhalation) Spot sampling (Rolle method, environmental Rolle method) Real-time electronic RnDP samplers Personal dust pumps (low volume) Medium- and high-volume air sampler (run from either main power or batteries) Dust deposition gauges Sampling of different soil types Surface water and groundwater sampling Sampling of different species and tissues

The outputs of the models are increments, usually expressed as concentrations. For example, the project design may have an open-air uranium ore stockpile. The design provides the size and surface area of the stockpile and the average uranium grade. The emission of radon can be calculated from the surface area and the unit radon emission rate (which can be a reference figure inferred from the uranium grade or experimentally determined), and then the emission rate is input into air quality modeling to show the incremental radon concentration at various locations around the project. Another example is emissions to groundwater. This can be quantified by understanding the permeability of the lining of a liquid waste retention system to determine a seepage rate and knowledge of the radionuclide content of the liquid waste. The seepage rate can then be used as input to a groundwater fate and transport model to estimate groundwater concentrations at various distances from the emission source location. Determine the Impact of any Increment The third step in the framework is the assessment of impacts from the project emissions. The main impacts occur to members of the public, nonhuman biota, and the environment.

Members of the Public

The impacts to members of the public are determined through standard dose assessment (IAEA 2004). This involves identifying the potential exposure pathways and calculating exposures and doses from the project increment (this does not include the dose received from the naturally occurring environmental background radiation because this is generally beyond the responsibility of the proponent to manage). The exposure pathways for radiation are: • • • •

Irradiation by gamma radiation Inhalation of the decay products of radon Inhalation of radionuclides in dust Ingestion of project originated radionuclides in flora, fauna, and water

To assess impacts to the public, it is usual to identify a reference person (either hypothetical or real) to represent a community of people and calculate the radiation dose that they would receive. Nonhuman Biota

In recent years, the protection of plants and animals from radiation has become an additional consideration. Previously it was assumed that if humans were protected, then plants and animals

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would also be protected. The International Commission on Radiological Protection (ICRP) revised this approach in ICRP 2003, and a more detailed level of assessment is now generally required. A recognized method for assessing the impact to nonhuman biota is ERICA (http://www.ericatool.com/). The ERICA software uses changes in media radionuclide concentrations as inputs to calculate a risk quotient for a range of standard species. The changes in media concentrations can be determined from the dust deposition contours from the air quality modeling. In a similar matter, impacts to aquatic flora and fauna can be calculated using ERICA. The media concentrations in these cases are the changes in the water body and are calculated from dust deposition, runoff, and releases to the aquatic environment. Other modeling tools include the RESRAD suite of software (https://web.evs.anl.gov/resrad/). Environmental Changes

Environmental changes, such as increases in groundwater radionuclide concentrations or radionuclide in air concentrations, are sometimes considered to be “impacts” and may need to be reported. While the actual impacts on the public or the environment may be negligible, the fact that levels have changed is sometimes of importance. The changes in the environmental concentrations are determined from deposition, release, runoff, and emission data as previously discussed. Care should be taken when reporting such results as “impacts,” and baseline data is useful in providing perspective on the magnitude of the changes. Outline the Control Measures (The “Controls”) The assessment of impact is usually made against a set of standards, such as legislative limits. Where the standards are exceeded or the impact is deemed to be unacceptable, either the original design is modified or specific controls are implemented and the impact is reassessed. Even if the impacts do not exceed standards, the designs and controls that were used as the basis for the impact assessment of the project

must be described. These will include physical controls (such as scrubber systems on ventilation exhausts and waste containment structures) and management controls (such as training programs for operators and systems audits). These measures are usually described in more detail in the project radiation management plan (RMP) and radioactive waste management plan (RWMP). These plans cover such aspects as: • Process description including description of the processes producing radioactive waste • Details of the physical radiation control measures • Details of control and containment systems • Monitoring plans and methods for impact and dose assessment • Details of training • Plans for dealing with incidents and emergencies • The system of periodic assessment of controls • Details of record keeping system • Plan for decommissioning and closure of the waste facilities

Presenting the Results The most important part of an assessment is clearly communicating the aims, methods, and results of the assessment to the target audiences and stakeholders. Large, complex, and data-rich reports are seldom successfully communicated. The aim should be to present key information in an accessible and technically competent manner.

Conclusions Radiation impact assessments are part of many project assessments and approvals and can be considered in a four-step framework as follows: • Characterize the existing radiological conditions. • Quantify the incremental radiological concentrations due to the project. • Determine the impact of any increment. • Outline the control measures.

Australia: Landholder Rights to Subsoil Resources

It is important to then adequately and succinctly describe the process and findings so that all stakeholders have a good level of understanding of the radiological impacts for decision making.

References ICRP (2003) A framework for assessing the impact of ionising radiation on non-human species, ICRP Publication 91. Ann ICRP 33(3):213–214 IAEA (2004) Occupational radiation protection in the mining and processing of raw materials safety guide. IAEA safety standards series No. RS-G-1.6. International Atomic Energy Agency, Vienna IAEA (2006) Assessing the need for radiation protection measures in work involving minerals and raw materials. Safety reports series No. 49. International Atomic Energy Agency, Vienna IAEA (2007) Radiation protection and NORM residue management in the zircon and zirconia industries. Safety reports series No. 51. International Atomic Energy Agency, Vienna IAEA (2011) Radiation protection and NORM residue management in the production of rare earths from thorium containing minerals. Safety report series No. 68. International Atomic Energy Agency, Vienna IAEA (2012) Radiation protection and NORM residue management in the titanium dioxide and related industries. Safety report series No. 76. International Atomic Energy Agency, Vienna IAEA (2013) Radiation protection and management of NORM residues in the phosphate industry Safety report No. 78. International Atomic Energy Agency, Vienna

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Introduction In examining rights to subsoil resources in Australia, there are two separate elements which must be considered. The first is the ownership of those resources, noting the distinction between ownership of land, minerals, hydrocarbons, and other subsoil resources, and the second are the tenements, approvals, etc. which are required to extract those subsoil resources. This entry deals with the first element. It is important to note that ownership of minerals by a landholder in Australia does not normally (there are some limited exceptions in WA) give any right or exclusivity for the exploitation of those minerals, nor any right of veto or ability to determine whom may extract those minerals, beyond that of an ordinary landholder. Private mineral ownership generally entails merely a right to benefit from royalties, compensation, etc. accruing from the extraction of the resource (Mackay 2013). It should be noted that the commonwealth structure of Australia means there are significant differences in the law governing rights to subsoil resources between the different States and Territories in Australia (Forbes and Lang 1987; Crommelin 2009).

Ownership of Subsoil Resources

Australia: Landholder Rights to Subsoil Resources Ross Mackay EDO NSW, Sydney, Australia

Abbreviations ACT NSW NT Qld SA Tas Vic WA

Australian Capital Territory New South Wales Northern Territory Queensland South Australia Tasmania Victoria Western Australia

Following on from the common law tradition imported from the United Kingdom, the general principle relating to ownership of land in Australia is the cujus est solum eius est usque ad coelum et ad inferos maxim: “whoever has the soil, also owns to the heavens above and to the centre beneath” (Hepburn 2015). However in Australia, as a consequence of practice in the disposition of land both by the government and by legislation, the more valuable subsoil resources are often not held by the owner of the land in which they are located. The first disposition of land in Australia by the government (in right of the Crown) is normally by a “Crown grant.” Subsequent to this Crown grant, land can pass hands many times through normal conveyancing procedures. The Crown grant often

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contained reservations from the grant (i.e., things which the government reserved from the grant to remain the property of the Crown), including reservation of certain minerals and or other subsoil resources within the land (Crommelin 1983). Anything thereby reserved does not pass with the title of the land and remains the property of the Crown. In addition, all States and Territories have passed legislation affirming ownership of all or certain minerals and other subsoil resources within their boundaries. The instances and effect of such legislation are discussed separately in relation to each State and Territory below.

Minerals Legislation has been passed in Several States have enacted legislation to appropriate ownership of all in situ minerals within State boundaries, while other States have done so for certain minerals only. Where there is no such relevant legislation, the ownership of minerals in a given parcel of land depends on whether minerals were reserved in the original Crown grant and/or in subsequent dealings with the land. The exceptions to this are silver and gold. These are considered “royal metals” under the English common law, which has since the sixteenth century confirmed that all silver and gold in lands within the dominion of the Crown belong to the Crown. This ruling has been subsequently confirmed in the Australian context and has been enshrined in legislation throughout the Australian State and Territories, such that all in situ silver and gold in Australia remain the property of the government in right of the Crown (Badenhorst 2012). New South Wales Of the Australian States and Territories, NSW has the largest divergence in the historical treatment of minerals in Crown grants of land and is the most difficult for which to ascertain ownership of in situ minerals. From 1788 to 1828, most Crown grants in NSW did not reserve minerals; however, this

Australia: Landholder Rights to Subsoil Resources

was not a uniform rule. Regulations were passed in 1828 which announced an intention to reserve gold and silver from all Crown grants, to which was added coal in 1831. However, by 1843, it appears that these minerals were not, in practice, being reserved from all Crown grants as a matter of routine. Legislation was enacted in 1884 to the effect that all minerals were to be reserved from Crown grants from that time forward (Crommelin 1987; Montoya 2012). In terms of formal State appropriation of minerals, in addition to gold and silver as discussed above, the government of NSW also legislatively acquired all rights to coal in 1981 (the exception to which is coal which was vested in individuals as part of the compensation process for this State acquisition) and uranium in 2012 (Roth 2012). Therefore, in NSW all in situ gold, silver, coal (with the exceptions outlined above), and uranium are the property of the Crown. Other minerals may be the property of either the landholder or the Crown, depending on whether they were reserved in the original Crown grant (Bradbrook 1988). In rare cases, they may be the property of a prior landholder of the land, in circumstances where minerals were not reserved in the Crown grant, but were reserved by a previous landholder when they conveyed the land. Queensland In Qld, all minerals were legislatively appropriated in 1989, subject to the following exclusions: • Coal in land alienated prior to 1910 where the Crown grant did not contain a reservation of coal • Any in situ minerals specifically alienated in fee simple by the Crown Victoria Legislative appropriation of all in situ minerals in Vic by the Crown occurred in 1990. There are no exceptions or exemptions in this appropriation. South Australia Legislative appropriation of all in situ minerals in SA by the Crown occurred in 1971. There are no exceptions or exemptions in this appropriation.

Australia: Landholder Rights to Subsoil Resources

Tasmania In Tasmania, prior to 1859, it appears that in most cases only gold and silver were reserved from Crown grants. From 1859 to 1905, there seems to have, generally, been no reservation of minerals from Crown grants. In 1905, legislation was introduced to require all minerals to be reserved in Crown grants from this point forward (Waasaf 1980). In 1911, by legislative amendment, all gold and silver were appropriated by the Crown. The Crown also appropriated all other minerals in the State which had not been divested with land prior to 1893 (although there was power for the government to declare minerals in certain land exempt from this appropriation). In 1995, these legislative provisions were replaced, and the Crown acquired all of the following minerals within the State: • Gold • Silver • Atomic substances (uranium, thorium, and others so declared from time to time) • Helium • Geothermal substances (underground substances heated by natural processes above 40  C) • Hydrogen The legislation also provided that all minerals in land divested by the Crown after 1995 remain the property of the Crown. Therefore, the situation in relation to the above-listed minerals is clear; they are held by the Crown. For other minerals, investigations would need to be performed to determine whether they have passed with the land, bearing in mind the history detailed above.

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Legislative appropriation of all gold, silver, and other precious metals in situ within WA by the Crown occurred in 1978. All other minerals not divested by the Crown with land prior to 1899 have also been appropriated by that legislation (Hunt 2009). Northern Territory Legislative appropriation of all in situ minerals in NT by the Crown occurred in 1953. Australian Capital Territory On creation of the ACT by cession from NSW in 1911, the Commonwealth government legislatively forbade the disposition of land in the ACT by freehold sale. Therefore, the highest form of tenure in the ACT is leasehold, which does not entail ownership of subsurface minerals. Prior to 1911, the law of NSW applied, and therefore the discussion above in relation to ownership of NSW applies to land alienated in the ACT prior to 1911 (Waasaf 1980). Accordingly, all in situ minerals not disposed of prior to 1911 in the ACT are the property of the Crown.

Hydrocarbons Hydrocarbons, which are petroleum, oil, gas, etc., are generally administered under separate legislation to minerals in Australia. All the Australian States and Territories, excluding the ACT, have passed legislation confirming and/or appropriating Crown ownership of in situ hydrocarbons. Therefore, there is no private ownership of in situ hydrocarbons in Australia (Hepburn 2015).

Other Subsoil Resources Western Australia The general practice in WA, prior to 1887, was to reserve only gold and silver from Crown grants. After 1887, there was a wide discretion in the reservation of minerals from Crown grants. In 1905, legislation was introduced requiring all minerals to be reserved in Crown grants from this point forward (Waasaf 1980).

In relation to non-mineral and non-hydrocarbon subsoil resources, the cujus est solum principle retains a wider application, such that they will normally be held by the owner of the title (Bradbrook 1988). There, however, may still be some instances where reservations within the Crown grant have an effect. These may include reservations of specific subsoil resources, or

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reservation of subsoil resources for a specific purpose (e.g., rock and gravel for construction of public roads). The definition of what a “mineral” and thereby what subsoil resources are exempt from the regime relating to ownership of in situ minerals is not uniform across the Australian States. The definition of “mineral” in NSW legislation is expressed by an exhaustive list of all the substances considered to be minerals. In Vic, SA, Tas, and WA legislation, minerals are inversely expressed through a list of what subsoil resources do not constitute minerals. In Qld “minerals” are defined through a combination of the above. In NT, the legislative definition of “minerals” is only general in nature (Carson 2010). In most States (the exceptions being SA and Tas), substances such as rock, gravel, etc. are generally excluded from the definition of mineral. Despite coming under the definition of a mineral, rocks, gravel, etc. in Tas are determined by legislation to be the property of the landowner in land divested by the Crown prior to 1995.

Aboriginal Land In Australia, there exist two species of land interests unique to Indigenous Australians: Aboriginal land rights and native title rights. Aboriginal land rights were created and are managed under specific legislation, different in each State. In most States the general rules surrounding ownership of in situ minerals apply. The exceptions are NSW, where ownership of land under land rights legislation confers ownership of all in situ minerals excluding gold, silver, coal, petroleum, and uranium (NSWALC 2015; Butt 2001), and Tas, where ownership of land under land rights legislation confers ownership of in situ minerals to a depth of 50 m, excluding oil, atomic substances, and geothermal substances (Behrendt and Nettheim 2015). Native title rights are the rights and interests in land held under traditional laws and customs sourced prior to the Crown acquiring sovereignty in Australia. They are determined and recognized judicially, upon application to the Federal Court of

Australia: Landholder Rights to Subsoil Resources

Australia. There is no legislative impediment to native title rights and interests including a right to minerals; however, the judicial requirements of proof that have developed in native title jurisprudence mean that it is difficult to envisage native title claimants being able to make out a right to commercial exploitation of minerals (Meyers et al. 1997; Hunt 2009).

References Badenhorst P (2012) Cadia Holdings Pty Ltd v State of New South Wales (2010) 269 ALR 204. De Jure Law J 45(3):605–623 Behrendt L, Nettheim G (2015) Aborigines and Torres Strait Islanders. In: Kirby M (ed) The laws of Australia. Thomson Reuters, Sydney Bradbrook A (1988) The relevance of the Cujus Est Solum doctrine to the surface landowner’s claims to natural resources located above and beneath the land. Adelaide Law Rev 11:462–483 Butt P (2001) Land law, 4th edn. Lawbook Co, Sydney Carson J (2010) Energy and resources. In: Dal Pont G (ed) Halsbury’s laws of Australia. Butterworths, Sydney Crommelin M (1983) Resources law and public policy. UWA Law Rev 15(1–2):1–13 Crommelin M (1987) Acquisition of natural resource interests by the state: the Australian position. J Energy Nat Res Law 5(Suppl 1):3–26 Crommelin M (2009) Governance of oil and gas resources in the Australian federation. University of Melbourne Law School Research Series 8 Forbes J, Lang A (1987) Australian mining and petroleum laws, 2nd edn. Butterworths, Sydney Hepburn S (2015) Mining and energy law. Cambridge University Press, Sydney Hunt M (2009) Mining law in Western Australia, 4th edn. The Federation Press, Sydney Mackay R (2013) Private royalties in New South Wales and the state take thereof: are they valid? CEPMLP Annual Review 15 Meyers G, Piper C, Rumley H (1997) Asking the minerals question: rights in minerals as an incident of native title. Australian Ind Law Rep 2(2):203–250 Montoya D (2012) NSW Parliamentary Research Service Issues Backgrounder: a history of mineral and petroleum ownership and royalties in NSW. Available via NSW Parliament https://www.parliament.nsw.gov.au/prod/ parlment/publications.nsf/key/Ahistoryofmineraland petroleumownershipandroyaltiesinNSW/$File/A+history +of+mineral+and+petroleum+royalties+in+NSW,+Issue s+Backgrounder+Oct+2012.pdf. Accessed 23 Feb 2016 NSWAboriginal Land Council (NSWALC) (2015) Aboriginal land rights act amendments guide., Available via NSW Aboriginal Land Council, http://www.alc.org.au/ media/99294/aboriginal%20land%20rights%20act%

Australia: Parliamentary Agreements and Extractives 20amendments%20guide_print.pdf. Accessed 26 Feb 2016 Roth L (2012) NSW parliamentary research service E-Brief: exploration and mining on private land in NSW: a brief legislative history., Available via NSW Parliament, http://www.parliament.nsw.gov.au/prod/ parlment/publications.nsf/key/Explorationandminingon privatelandinNSW:abrieflegislativehistory/$File/e-brief. exploration+and+mining+on+private+land.pdf. Accessed 26 Feb 2016 Waasaf T (1980) The private ownership of coal and other minerals in NSW and other places. The Freehold Rights Association, Sydney

Australia: Parliamentary Agreements and Extractives John Southalan Centre for Energy, Petroleum and Mineral Law and Policy, University of Dundee, Dundee, Scotland University of Western Australia, Perth, Australia Western Australian Bar Association, Perth, Australia

Synonyms Agreement acts; Indentures; Ratified agreements; State agreements

Definition A contract between an executive government and a company which has been subsequently approved by the legislature

Introduction “Parliamentary agreement,” in this entry, means the legislative approval of a contract between an executive government and a company to develop/ operate a mine and associated facilities. Most parliamentary agreements comprise a long contract between the company and the executive (e.g., the Mining Minister or Premier), and then

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a short covering statute which attaches the agreement and records the legislature’s approval of the contract. This form of regulation for large mines exists in various countries (examples listed below) and is feasible in most parliamentary forms of government where the executive is chosen from the legislature. Parliamentary agreements have different names in different jurisdictions, sometimes called state agreements, indentures, ratified agreements, concessions, agreement acts, government agreements, or other names. The main advantage of a parliamentary agreement is transparency: as a parliamentary law, the rights and obligations of each party are publicly available (at least to the extent that occurs for parliamentary laws in that jurisdiction). Parliamentary agreements have been lauded, by various parties, as important in the development and regulation of large mining projects: e.g., Hunt et al. (2015), 12–13, and Morgan (2007), 116. The main disadvantage of a parliamentary agreement is creating a law especially for a single mine: this can increase administration problems for regulators and decrease the equality of the law applying to everyone. These aspects have seen parliamentary agreements criticized by various parties: e.g., WA Gov (2002), 101, and Watson (2010), 7199. Many existing (and ongoing) mining operations are regulated under parliamentary agreements but it is uncommon for jurisdictions to now use parliamentary agreements for new mines. The parliamentary agreement format, involving the legislature approving a government contract with a company, is used in areas other than mining regulation such as land development, transport projects, and entertainment complexes: Southalan et al. (2015), [13]. The jurisdiction which makes most use of parliamentary agreements in regulating mining is Western Australia: Horsley (2013), 284. In Western Australia, over 60 current extractive projects currently operate under parliamentary agreements, accounting for about 80 % of the value of all minerals and petroleum produced: Barnett (2014), 13.

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Format of Parliamentary Agreements The usual format for a parliamentary agreement is to provide a structure for the operations to be proposed and approved in stages. This is known as the “proposals procedure” and forms the core of the agreement: Hunt et al. (2015), 16. This requires the company to submit a proposal and the relevant government agency to consider/ request revision of that proposal, and, when the government has approved the proposal, the company is then obligated under the agreement to implement it. The agreement will specify the proposals required, for example (as summarized in Southalan et al. (2015), [8]): • Provide feasibility study of $A for the whole operation. • Submit a mine plan for a mine of B magnitude and constructing that. • Operate a mine to extract C tons/year. • Provide mining infrastructure to process/transport D amount. • Ensure social infrastructure for E people. • Have environmental management to ensure F outcomes. The content of a typical parliamentary agreement has changed over time. Earlier versions involved giving the company extensive land with little control over operations, which was similar to other forms of mining regulation at that time. More contemporary versions of parliamentary agreements involve more attention to social and environmental impacts and less exemption from general laws: Southalan et al. (2015), [17]. The Olympic Dam Agreement (referenced below) has been described as the “modern paradigm” (Fitzgerald (2005), 687), and so its content is a useful guidance. A parliamentary agreement need not, however, have any specific content. As it effectively becomes a law of the parliament, the agreement can cover anything on which the parliament is constitutionally able to legislate. The agreement will usually grant (or confirm the grant of) the relevant land interests required by the company for its operations. Agreements also often reduce

Australia: Parliamentary Agreements and Extractives

the royalties/taxation which would otherwise apply and sometimes impose a “stabilization” arrangement to fix that arrangement for the future.

Key Legal Principles Involved in the Use of Parliamentary Agreements in Regulating Mining in Australia The legal interpretation and implication of a parliamentary agreement will, of course, depend on the law of the relevant jurisdiction (particularly contract law, administrative law, and constitutional law). Various issues have arisen from disputes and court cases decided in Australia, and the principles drawn from these are summarized below: • The basic effect of (and reason for) a parliamentary agreement is that the legislature’s approval ensures the terms of the contract are valid. This removes any question of whether those terms contradicted an existing parliamentary law, or the government lacked the necessary authority to contract. The legislature’s approval of the agreement authorizes everything in the contract. • The parliament’s approval, and legislation, also prevents any future government from changing the agreement unless that occurs through proper parliamentary process for amending a statute. • The negotiation of contractual terms which are effectively “rubber-stamped” by the legislature (without amendment) is not an illegitimate abdication of the legislature’s role. Provided the legislature has the constitutional power to legislate on the matters addressed in the document, then the contract’s terms become valid once parliament has followed its usual procedures in passing the law. • The corollary is that the legislature is also empowered to remove/change the terms in a parliamentary agreement. The concept of “parliamentary supremacy” or “parliamentary sovereignty” requires that the legislature is free to pass any law within its constitutional power. The legislature cannot “entrench” a

Australia: Parliamentary Agreements and Extractives

•

•

•

•

law (e.g., the terms of parliamentary agreement) to protect it from future amendment. Accordingly, contractual clauses which seek to prevent future amendment will not be enforced by the courts, even where the parliament approved those clauses. The terms of the contract between the government and company do not have direct legislative enactment unless that is specified in the covering statute. If that occurs (which is rare), then the terms have legal effect as if they were the sections in a statute. However if the usual arrangement applies, which is the statute simply “approves” the contract, then the agreement remains a contract between the government and company (albeit one which cannot be held invalid because of any prior law). This is significant for two reasons: interpretation and third parties. For interpretation, where courts use different rules about interpreting a contract or statute, that means the document’s status must be determined first. For third parties, the significance is that a statute has legal force against all parties within the jurisdiction; a contract does not. The parliamentary agreement can explicitly address its relationship to other laws, indicating which law takes priority in the event of any inconsistency (e.g., stating that regardless of what is said in the new parliamentary agreement, the company must comply with existing environmental law or vice versa). If the matter is not addressed, and the court finds there is an inconsistency, the usual approach is the more recent law prevails to the extent of the inconsistency. The legal structures in a parliamentary agreement do not alter international legal standards and obligations. International investment treaties and international human rights requirements increasingly provide obligations for companies and governments. These apply regardless of what a parliamentary agreement may establish as part of its domestic law. If the terms of the parliamentary agreement establish any specific duty on the government, and that is not met, the court can order the government to perform the action it has

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failed to do so. However, if the obligation is not expressed as a duty, then specific performance is not available, and the most the court may order is some form of compensation payment. These above points summarize the key legal issues involved in the use of parliamentary agreements in regulating mining, at least in Australia. There are certainly other aspects and considerations in the use of parliamentary agreements. A legislature may legally be able to unilaterally amend a parliamentary agreement, but there may be significant economic and political reasons to only amend with the company’s agreement.

Conclusions Parliamentary agreements remain a significant structure in the regulation of many mining operations, as described in Southalan et al. (2015), [9]. In various jurisdictions, these agreements have provided the regulation (and therefore the structure for approval and development) of large mining and infrastructure projects where that was not otherwise possible or feasible. Various experts and reports reject any contemporary role for parliamentary agreements, arguing that everything should occur under a general mining law which applies to everyone, everywhere in the jurisdiction. However, that seems an unrealistic ideal considering the breadth of a large mining project which may involve:

(a) many decades-worth of exploration and extraction, rail, ports, roads, accommodation, power-generation, access, waste and rehabilitation; (b) the physical and social ramifications of all these; and (c) the revenue and other benefits to the government and broader public. Few parliaments have the time and resources to debate and finalise general statutory laws to regulate each of these issues, when it is not even known if such a development will ever occur. A better use of parliamentary and government resources would be to: (1) identify and set fundamentals which

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apply to every industrial development, including mining, which are ‘non-negotiable’, and (2) have a process which enables additional matters to be addressed only on the very rare occasions when they will arise and can respond to the particular proposal which has arisen. Parliamentary agreements can provide this second task.

General Works on Area General works of use in learning more about parliamentary agreements in mining regulation include: WA Gov (2004) – report by the Auditor General of the Western Australian Government, about the government’s management of parliamentary agreements Southalan et al. (2015) – international study emphasizing the importance of an increased role for legislatures in the establishment and use of parliamentary agreements Fitzgerald (2002) – book on the history and use of parliamentary agreements in regulating mining Southalan (2013) – chapter explaining the legal effect and interpretation of parliamentary agreements in Australia Hillman (2006) – journal article on the economic and future implications of parliamentary agreements in mining Saunders and Yam (2004) – journal article on public law implications of government regulation through contracting Barberis (1998) – book on negotiating mining agreements (generally, not just parliamentary agreements) Miranda (2007) – journal article on the public policy issues in government concessions (of which parliamentary agreements are one form)

Examples of Parliamentary Agreements McArthur River Agreement (1992). McArthur River Project Agreement Ratification Act (79 of 1992) Northern Territory Parliament, Australia

Australia: Parliamentary Agreements and Extractives

Ok Tedi Agreement (1976). Mining (Ok Tedi Tenth Supplemental Agreement) Act (9 of 2013), continuing various arrangements from Mining (Ok Tedi Agreement) Act 1976, Papua New Guinea Parliament, Papua New Guinea Mt Goldsworthy Agreement (1964). Iron Ore (Mount Goldsworthy) Agreement Act 1964 (97 of 1964) Western Australian Parliament, Australia Natural Gas (Canning Basin Joint Venture) Agreement (2012). Natural Gas (Canning Basin Joint Venture) Agreement Act (2 of 2013). Western Australian Parliament, Australia Olympic Dam Agreement (1982) Roxby Downs (Indenture Ratification) Act (52 of 1982). South Australian Parliament, Australia Queensland Nickel Agreement (1970) Queensland Nickel Agreement Act (33 of 1970) Queensland Parliament, Australia Selebi-Pikwe Agreement (1978) Bamangwato Concessions Limited Mining Lease Act (7 of 1970) Parliament of Botswana, Botswana Sierra Rutile Agreement (2001) Sierra Rutile Agreement (Ratification) Act (4 of 2002) Sierra Leone Parliament, Sierra Leone

References Barberis D (1998) Negotiating mining agreements: past, present and future trends. Kluwer Law, London Barnett CM (2014) Australian Mining in Africa. Paper presented at the Investing in African Mining Indaba, Cape Town (ZAF), 5 Feb 2014 Fitzgerald A (2002) Mining agreements: negotiated frameworks in the Australian mining sector. Prospect Media, Sydney Fitzgerald A (2005) Mining agreements in the regulation of the Australian minerals sector. In: Bastida E, Wälde T, Warden-Fernandez J (eds) International and comparative mineral law and policy. Kluwer Law International, The Hague, pp 681–696 Hillman R (2006) The future role for state agreements in Western Australia. Aust Resour Energy LJ 25:293 Horsley J (2013) Conceptualising the State, Governance and Development in a Semi-peripheral Resource Economy: the evolution of state agreements in Western Australia. Aust Geogr 44(3):283–303 Hunt M, Kavenagh T, Hunt J (2015) Hunt on mining law of Western Australia. Federation Press, Perth

Australia: Regulation and Management of Naturally Occurring Radioactive Material (NORM) Miranda N (2007) Concession agreements: from private contract to public policy. Yale LJ 117(3):510 Morgan C (2007) Building lasting agreements with governments. In: Morrison R (ed) Financing global mining: the complete picture. Thomson Financial Group, London, pp 111–116 Saunders C, Yam K (2004) Government regulation by contract: implications for the rule of law. Public Law Rev 15(1):51–70 Southalan J (2013) Parliamentary-ratified agreements in the resources sector. In: Dharmananda K, Firios L (eds) Long term contracts. Federation Press, Sydney, pp 161–186 Southalan J, Bennett M, Kusaasira D, Thein Oo U, Gabriel L (2015) Parliaments and Mining Agreements: Reviving the Numbed Arm of Government. IM4DC Action Research Report. International Mining for Development Centre, Perth WA Gov (2002) Review of the project development approvals system – final report. Western Australian Government, Perth WA Gov (2004) Developing the state: the management of state agreement acts. Report No 5 of 2004. Western Australian Government, Perth Watson G (2010) Second reading debate: cement works (Cockburn Cement Limited) Agreement Amendment Bill 2010. Hansard COUNCIL. WA Parliament, Perth

Australia: Regulation and Management of Naturally Occurring Radioactive Material (NORM) Jim Hondros and R. T. Secen-Hondros JRHC Enterprises Pty Ltd, Stirling, SA, Australia

Radiation, NORM, and Definitions Radiation is a term used to describe the movement or transfer of energy through space or through a medium. It occurs when unstable atoms give off energy in the form of radiation to move to a lower energy state. These unstable atoms are known as “radionuclides” and naturally occur in human plants, animal soils, water, and air and are responsible for much of the naturally occurring radiation known as “background radiation.” Naturally occurring background radiation is variable and causes radiation exposure to people everywhere.

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Exposures result in a dose, which is a standardized way of measuring the impacts to people taking into account different chemical, biological, and mechanical aspects of the exposure. Dose has the units of sieverts (Sv), and generally people all around the world receive on average 2–3 mSv per year from natural background, although this can be one or two orders of magnitude higher in some places. Essentially, all materials are radioactive in some way; however, there is a need for control only when the levels of radioactivity result in an unacceptable risk. Materials which contain concentrations of radionuclides that may require controls for health and environmental protection purposes are known as “naturally occurring radioactive material” (NORM). Controls may exist as regulations and can range from simply notifying the appropriate regulatory authority of the use of the material to approving engineering controls, to implementing a radiation management plan. The level of control generally depends upon the concentration of radionuclides in the material and its use and is based on whether the material is defined, in the legal sense, as “radioactive.” Unfortunately, the definition of “radioactive” for the purposes of regulatory control can be complex and sometimes confusing. This can sometimes result in an oversimplification of the IAEA framework. In IAEA Basic Safety Standard No. 115 (BSS115), “radioactive material” is defined by whether the material requires a system of radiological control or not as follows: • Radioactive material is a material (irrespective of whether processed or not) that: • Contains no significant amounts of radionuclides other than naturally occurring radionuclides • Is designated in national law or by a regulatory body as being subject to regulatory control because of its radioactivity BSS115 also provides a trigger level for a radioactive material as follows:

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Australia: Regulation and Management of Naturally Occurring Radioactive Material (NORM)

• For naturally occurring radioactive material, moderate quantities of materials containing natural uranium and thorium (Unat, Thnat) greater than 1 Bq/g are defined as radioactive material. (Note that Bq/g is an abbreviation for “becquerels per gram” which is a measure of the amount of radioactivity per mass of material.) However, BSS115 also notes that materials need to be controlled when radiological impacts to people from exposure to the materials could exceed the recognized worker and public dose limits, which are 20 mSv/y and 1 mSv/y, respectively. In some cases, this can create a contradictory situation in which a material might not exceed the 1 Bq/g trigger but could lead to doses above the dose limits, and, similarly, material greater than 1 Bq/g may result in doses below the limits. Recognizing the potential ambiguities, the IAEA developed the concepts of exclusion, exemption, and clearance of materials to assist national authorities, including regulatory authorities, in the regulation of NORM. The classifications were: • Exclusion refers to radionuclide concentrations being below the trigger level and therefore not subject to regulation. This refers to material that is “unamenable to control” and includes cosmic radiation, natural levels of radon, and radiation from K40. • Exemption refers to materials that are above the trigger level, but where it can be shown, the impacts of the material do not warrant radiological control and the “risks so low as to not warrant regulatory control or provide any net benefit.” Exemption can only be determined and granted by the appropriate regulatory authority, with automatic exemption for moderate quantities of materials < 1 Bq/g (Unat). For bulk materials, there is reference to exemption applying when exposure to the material containing radionuclides results in doses less than that of the dose criterion of 1 mSv/y. • Clearance refers to materials that are above the trigger level and already being used, and for

which it can be shown, the impacts do not warrant regulatory control or further regulatory control. The BSS specifically refers to “removal of material from further control. . .,” and this is applicable for equipment, material, residues, and wastes. The classifications provide a mechanism for local regulators, with sufficient evidence, to consider the actual risks of the material and regulate accordingly. If the risk is assessed as being acceptable, then the material and project can be exempt from regulation. However, in practice, even though the IAEA framework advises that regulation should be based on the actual impacts of the materials, it is more likely that the trigger levels are used to define when regulation is required. Regulation of NORM is complex and is subject to understanding both the risks from the materials and the radionuclide concentration of the materials, and this can sometimes be contradictory.

Overview of Regulation in Australia The IAEA safety guides and standards for radiation protection are almost universally adopted in countries around the world and end up in national legislation, and this is also the case for Australia. To understand the application of radiation protection regulations in Australia, it is necessary to note that Australia is a federation of six states and two territories, with their own governments and laws. This has resulted in the development and implementation of a range of sometimes different laws and regulations for the individual states and territories across the country. The federal government has specific responsibilities as follows: • Implementing Australia’s international obligations • Establishing laws and regulations for matters of national significance • Regulating matters on federal lands or activities conducted by federal entities

Australia: Regulation and Management of Naturally Occurring Radioactive Material (NORM)

At the federal level, Australia also has the Environmental Protection and Biodiversity Conservation Act (EPBC Act). This is a national regulation that refers to: . . . actions that have, or are likely to have, a significant impact on a matter of national environmental significance require approval from the Australian Government Minister for the Environment.

The EPBC Act applies to a range of actions including “nuclear actions.” Under the specific definitions, a waste facility from a NORM operation could be considered to be a nuclear action and therefore trigger regulation under the national EPBC Act. Although this is not likely to have been the intent of the Act and regulations, it is enforced, and many NORM operations trigger this level of assessment and regulations. In addition to this, the states and territories are responsible for developing and implementing regulations for activities and actions within their specific jurisdiction. While a nationally uniform system of laws and regulations is ideal and preferable, this is not the case in practice. However, it is important to note that there is much commonality across the jurisdictions and there is a commitment to move toward national uniformity, but large differences continue to exist (as shown later in this paper).

ARPANSA An important national body is the Australian Radiation Protection and Nuclear Safety Agency (ARPANSA) which is the Australian Government’s primary authority on radiation protection and nuclear safety. ARPANSA regulates federal entities that use radiation or are involved in nuclear activities. It also undertakes research and provides radiation protection services. Key functions of ARPANSA are to align Australia with recognized international practice and to promote and encourage national uniformity. To do this, ARPANSA publishes a series of documents as part of its Radiation Protection Series. These documents are based on

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international standards (such as those published by the IAEA) and include: • Radiation Fundamentals – The basic principles of radiation protection. • Codes of Practice and Standards – These are detailed documents which are usually adopted in state-based regulation or applied as permit or approval conditions. • Guides and Recommendations – General documents which provide practical advice and assistance for regulators or operators (Fundamentals for Protection Against Ionising Radiation [ARPANSA 2014]). A key ARPANSA NORM-related document is the Radiation Protection Series document number 15 (RSP 15), Safety Guide for the Management of Naturally Occurring Radioactive Material (NORM), published in 2008. The document essentially follows the guidance provided by the IAEA in Application of the Concepts of Exclusion, Exemption and Clearance Safety Guide, Safety Standards Series No. RS-G-1.7, 2004 and Occupational Radiation Protection in the Mining and Processing of Raw Materials Safety Guide, Safety Standards Series No. RS-G-1.6, 2004. RPS15 describes the following: • Identification of industries where NORM radiation protection issues may arise • Radiological issues in NORM management • Regulatory issues in NORM management • Operational issues – The NORM management plan • Remediation of legacy sites • Summary • References, bibliography (extensive), and glossary RPS15 also provides a practical set of further guidance in its annexes as follows: • Annex 1 – Oil & Gas Production • Annex 2 – Bauxite/Aluminum Industry • Annex 3 – Phosphate Industry

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Australia: Regulation and Management of Naturally Occurring Radioactive Material (NORM)

The RPS15 document has not been updated since 2008, and discussions are occurring to update the document to consider metal extraction industries, coal extraction and electricity, and iron and steel industries.

State- and Territory-Based Regulation The regulation of NORM across different states and territories varies. Individual jurisdictions have ultimate responsibility for regulation and have their own versions of radiation protection and control acts with associated regulations. The versions tend to be similar and focus on the issues present in that jurisdiction. Generally, the versions refer to national codes of practice and guidance documents (such as those produced by ARPANSA), but this is not always the case, with some jurisdictions writing their own guidance documents. In some cases, for jurisdictions with a strong mining presence, radiation-related regulations, which are applicable to NORM management, are part of general mining safety requirements. However, in general, the requirements of the radiation acts and regulations are similar and cover: • License (management, possession, facility) • Reference to National Directory (ARPANSA Codes and Guides) • Prescribed activity • Dose limits • Certificate of equipment and for use • Fees • Development and approval of a management plan For NORM-related operations, a NORM management plan is required as part of project approval, licensing, or permitting. These documents cover such aspects as: • Introduction to the project • Identification of potential sources of health impact on workers, members of the public, and the environment

• Management of the health impact on workers, members of the public, and the environment • Remediation and close-out requirements for operational sites • Non-radiological issues By way of example of the variation in application of regulations across the country, in Western Australia, which has a long history of mining, the state government has been quite specific and issued prescriptive documents which are required to be complied with. The documents are very detailed and guide the operator through exactly what they have to do and include: • NORM-1 Applying the system of radiation protection to mining operations • NORM-2.1 Preparation of a radiation management plan – exploration • NORM-2.2 Preparation of a radiation management plan – mining and processing • NORM-3.1 Monitoring NORM – preoperational monitoring requirements • NORM-3.2 Monitoring NORM – operational monitoring requirements • NORM-3.3MonitoringNORM – air-monitoring strategies • NORM-3.4 Monitoring NORM – airborne radioactivity sampling • NORM-3.5 Monitoring NORM – measurement of particle size • NORM-4.1 Controlling NORM – dust control strategies • NORM-4.2 Controlling NORM – management of radioactive waste • NORM-4.3 Controlling NORM – transport • NORM-5 Dose assessment • NORM-6 Reporting requirements • NORM-7 Boswell – assessment and reporting database However, in South Australia which has a long history of uranium mining specifically, the requirements are less prescriptive and more descriptive. The South Australian Radiation Protection and Control Act (and regulations) rely specifically on the ARPANSA guidance

Austria: Mineral Policy

documents and effectively enact the Mining Code (Code of Practice and Safety Guide for Radiation Protection and Radioactive Waste Management in Mining and Mineral Processing (ARPANSA 2005)) and Transport Code (Code of Practice for the Safe Transport of Radioactive Material (ARPANSA 2008)) for operations with NORM. Additional specific guidance documents for exploration were developed in South Australia.

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Austria: Mineral Policy Robert Holnsteiner1, Christian Reichl1, Susanne Strobl1 and Sebastian Wagner2 1 Division Minerals Policy, Section Energy and Mining, Federal Ministry of Science, Research and Economy (BMWFW), Vienna, Austria 2 Montana Tech Components GmbH, Vienna, Austria

Practical Considerations General Information on Austria In practice, operations with NORM tend to be regulated regardless of the actual risks from the radioactivity. There is a need to provide adequate education in order for risks to be managed in perspective. Australia is working toward national uniformity. However, state- and territory-based regulation of radiation protection means that priorities may not be common.

References Application of the Concepts of Exclusion, Exemption and Clearance: Safety Guide, Safety Standards Series No. RS-G-1.7. – Vienna: International Atomic Energy Agency, 2004 Code of Practice for the Safe Transport of Radioactive Material. Radiation Protection Series C-2, December 2014, ARPANSA Environmental Protection and Biodiversity Conservation Act 1999 (Commonwealth of Australia) International Basic Safety Standards for Protection Against Ionizing Radiation and for the Safety of Radiation Sources, Series No. 115, FAO, IAEA, ILO, OECD/ NEA, PAHO and WHO Management of Naturally Occurring Radioactive Material (NORM), Radiation Protection Series Publication No. 15, August 2008, ARPANSA Occupational Radiation Protection in the Mining and Processing of Raw Materials: Safety Guide, Safety Standards Series No. RS-G-1.6 – Vienna : International Atomic Energy Agency, 2004 Protection Against Ionising Radiation, Radiation Protection Series F-1, February 2014, ARPANSA The Code of Practice and Safety Guide for Radiation Protection and Radioactive Waste Management in Mining and Mineral Processing, 2005, Radiation Protection Series Publication No. 9, August 2005, ARPANSA

The Republic of Austria is situated in Central Europe, sharing borders with eight other countries. It is a member of the European Union and the Euro Zone. In 2015, GDP amounted to approximately 339,896 million €, i.e., 38,390 € per capita, growing by 1.0% as compared to the previous year. The official language is German with Croatian, Slovenian, and Hungarian being accepted local languages in some regions. The majority of the approximately 8.773 million Austrians are registered as Roman Catholics. As of 2014, 16.8% of people aged 25–64 held a university degree, up from 7.5% in 2001. Local customs and traditions are an important part of Austrian culture. Austria is well known for a number of composers especially of classical music, artists, scientists, and economists. Compared to other countries in the EU, Austria uses resources with an average efficiency. A total of 1,454 € worth of goods and services were produced for every tonne of raw material used (BMLFUW, BMWFW 2015).

Need of Minerals Mineral raw materials are the basis for industrial production. Therefore, an adequate supply of mineral raw materials to domestic companies is essential for a prosperous economy. Austria is strongly dependent on imports of metallic high technology raw materials. The share of aggregates and industrial minerals on total minerals consumption in Austria is high (ca. 110 million tonnes per

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annum). These minerals are mainly provided by domestic mineral deposits due to economic and environmental reasons. Mineral raw materials are finite resources and although the geological availability cannot be considered a current problem, shortages due to commercial and geopolitical factors have been reported. Moreover, competing interests in the area of land use (e.g., utilization of building land or nature conservation areas versus raw material extraction) lead to restrictions on accessibility of mineral deposits, particularly with regard to aggregates. As a consequence, the access to raw materials is increasingly becoming a crucial locational and competitive factor for Austria (Schönbauer et al. 2014). Supply of Minerals

Austria: Mineral Policy

countries totaling about 5% of world mining production. A significant decrease for the last 10 years is attributable to the decline in mineral fuels production from the United Kingdom. World mining production from 1984 to 2015 by continents (without aggregates, in million metric tonnes) is shown in Fig. 1. The main producer is China with 4.3 billion tonnes (a quarter of total world production), followed by the United States with 2.1 billion tonnes and Russia with 1.5 billion tonnes. The 20 largest producer countries of 2015 (without aggregates, in million tonnes) are shown in Fig. 2. Worldwide raw materials supply is partly hampered by resource nationalistic measures. Currently, OECD counts more than 450 restrictions hindering free trade of commodities (OECD 2014).

International Stage

Nearly all metallic raw materials need to be imported from third countries into Austria. Hence, the Austrian steel and nonferrous metals production relies on stable third countries’ supply. Thus knowledge of worldwide minerals production is essential for a forward-looking mineral raw materials policy. The Federal Ministry of Science, Research and Economy (BMWFW) has been publishing the so-called World Mining Data, which is an annual report on global minerals production (Reichl et al. 2017). In 2015, total world mining production without aggregates amounted to about 17 billion tonnes. In comparison to 2014, total world mining production growth rate flattened in 2015 to 0.05%. The large increases seen in production from the last years with annual growth rates of more than 5% (2009/2010) do not occur currently due to a cooling of growth in the largest economies, especially in Europe. Asia was the largest producer of mineral raw materials contributing about 60% to total world mining production, followed by North America (about 15%). Due to the increase of iron ore and coal, production in Australia Oceania had the biggest growth rate in 2015 with about 10% surpassing Africa. European minerals production remained at a low level of about 9% of world production, with European Union member

National Stage

Aggregates for construction purposes form the great majority of mineral raw materials in Austria. Most of sand and gravel producers are small to medium scale enterprises, which are not obliged to report statistical production figures. Supply and demand for construction materials can be considered as balanced. Imports only play a minor role in border regions. The majority of metallic raw materials as well as a part of industrial minerals have to be imported. In 2015, about 4.4 million tonnes of iron and ferro-alloy metals, about 1.1 million tonnes of nonferrous metals, about 300 tonnes of precious metals, and about 1.3 million tonnes of industrial minerals were imported into Austria (Statistik Austria 2017). Extraction data of raw materials from 2011 to 2015 (values in tonnes; according to BMWFW (2016)) are listed in Table 1.

Classification of Mineral Reserves Austrian standard ÖNORM G 1050 “Classification of resources and occurrences for solid mineral raw materials” (1 April 1989) is based on the USGS scheme. This Austrian standard can be

Austria: Mineral Policy

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Austria: Mineral Policy, Fig. 1 World mining production from 1984 to 2015 by continents (without aggregates, in million metric tonnes) (Source: World Mining Data 2017 (Reichl et al. 2017))

Austria: Mineral Policy, Fig. 2 The 20 largest producer countries of 2015 (without aggregates, in million metric tonnes) (Source: World Mining Data 2017 (Reichl et al. 2017))

seen as a further development of the USGS classification scheme. The reliable estimates (1A, 1B and 1C) correspond to the “identified resources of the USGS system”. The subclass “mineable

reserves” corresponds to the subclass “economic”, “conditionally mineable reserves” of the subclass “marginally economic”. However, the terms “not evaluated reserves” and

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Austria: Mineral Policy

Austria: Mineral Policy, Table 1 Extraction data of raw materials from 2011 to 2015 (values are in tonnes; according to BMWFW (2016)) Raw material Minerals free for mining Iron ore including specularite Tungsten ore Gypsum and anhydrite Graphite Oil shale Talc and leukophyllite Kaolin Magnesite Limestone Silica sand Clay including bentonite Diabase (basaltic rocks) State-owned minerals Brine (m³n) Halite Petroleum Natural gas (1,000 m³n) Condensate (NGL) (tonnes) Landowner’s minerals Consolidated rock Limestone Dolomite Marl Quartz and pegmatite Quartzite Basaltic rocks Serpentinite Amphibolite Granite Gneiss Conglomerate Sandstone Unconsolidated rock Sand and gravel Dolomite Feldspar from mineral processing

2011

2012

2013

2014

2015

2,206,910 423,790 815,438 925 132 132,018 56,976 867,912 14,337,260 898,200 1,926,605 2,082,847

2,142,255 376,460 791,961 219 540 134,665 43,174 778,810 13,985,224 819,764 1,739,452 1,880,562

2,323,323 487,310 635,299 Not available 173 134,814 40,055 714,422 13,960,640 805,920 1,696,148 1,816,904

2,436,675 499,883 729,892 Not available 203 131,108 36,334 754,096 14,815,277 912,132 1,776,344 1,794,915

2,783,327 535,762 715,195 Not available 68 122,306 32,126 702,504 14,784,066 959,869 1,890,613 1,876,451

3,808,969 169 838,052 1,591,117 81,385

3,193,216 222 837,561 1,729,444 79,788

3,717,419 184 847,952 1,358,945 69,196

3,846,881 245 883,020 1,244,550 61,811

3,340,360 248 847,185 1,182,506 58,746

7,233,712 3,710,729 1,483,529 16,938 267,990 1,791,417 1,483,792 1,317,611 3,034,265 1,435,183 34,762 12,400

7,106,768 3,627,043 1,072,743 25,824 290,492 1,362,525 1,310,227 1,289,372 2,704,089 1,424,267 22,642 7,946

7,202,007 3,825,317 993,426 20,107 290,988 1,600,362 1,506,892 1,271,243 2,667,163 1,477,275 17,458 4,500

6,833,650 4,338,936 962,722 20,000 349,807 1,731,899 1,621,191 1,288,843 2,989,117 1,266,585 13,809 3,350

6,412,120 3,923,486 894,579 30,000 338,120 2,124,564 1,464,445 1,077,242 2,796,513 1,510,592 15,674 4,220

25,046,197 2,870,359 27,000

23,861,785 2,892,971 32,000

24,227,444 2,918,156 35,000

25,716,737 2,990,348 35,000

26,051,728 2,902,251 35,000

“subeconomic” (“the part of identified resources that does not meet the economic criteria of reserves and marginal reserves”) are slightly different, above all for the rating to these subcategories according to ÖNORM G1050 obviously (still) no or not enough relevant information are available. The reserve base sensu USGS therefore

correspond to the sums of classes 1A, 1B (including subclasses). Classification according to ÖNORM G1050 includes specifications of the levels of confidence of the individual classes (Weber 2015).

Austria: Mineral Policy

The Austrian Minerals Policy The BMWFW defines minerals policy as “statements of agreed objectives for the management of mineral resources which aim to ensure their supply to meet the needs for those minerals.” Minerals policy is to be understood as a crosscutting issue of industrial, economic and trade policy, energy policy, climate and environment policy, foreign trade policy, education and research policy, and security and defense policy. The Austrian minerals policy is a major responsibility of the BMWFW (legislation on and legal authority for mining). The Federal Minister for Agriculture, Forestry, Environment and Water Management has the legislative competence for environmental law (resource efficiency and recycling issues). The Federal Ministry of Labour, Social Affairs and Consumer Protection has the legal competence for employee protection law (safety issues, protection of employees, Labour Inspectorate). Regional governments are responsible for nature protection. Minerals supply is a core competence of the industry. However, it is the duty of public administration to design an appropriate framework for an adequate and sustainable supply of mineral raw materials. Such a framework is characterized by an appropriate legal (Mineral Raw Materials Act, Waste Management Act, and many more) and information (national and international statistics, geoscientific information on exploration such as geological, geochemical, geophysical maps) framework. An additional requirement is the guarantee of legal and planning certainty for all parties involved (companies and public authorities). Requirements of an Up-to-Date Minerals Policy The Austrian Minerals Policy has been highlighted as a best practice method by the European Commission, as it fulfills the comprehensive requirements for an optimal minerals policy in most cases. Legal Framework

Austrian mining law is governed by the Austrian Mineral Raw Materials Act of 1999, published in

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the Austrian Federal Law Gazette (Bundesgesetzblatt, BGBl.) I, no. 38/1999, as amended by the Federal Acts published in BGBl. I no. 95/2016 as well as the announcement published in BGBl. I no. 83/2003. It regulates • Exploration and extraction of minerals free for mining, state-owned minerals and landowner’s minerals • Processing as far it is connected to exploration and extraction and carried out by the holder of the mining license • Investigation and exploration of geological structures to be used for storing liquid or gaseous hydrocarbons • Geological containerless storage of hydrocarbons • Processing of the stored hydrocarbons as far it is connected to the storage and carried out by the holder of the storage permit The Act applies mutatis mutandis to the technological mining aspects of • Investigation and exploration of geothermal energy and their exploitation involving shafts, tunnels, or boreholes of a depth in excess of 300 m • Examination of the subsurface suitability for storing materials in underground voids, their construction and utilization • Investigation and exploration of geological structures suitable for the storage of materials • Emplacement of materials into geological structures and their storage • Utilization of abandoned mine sites for purposes other than the extraction of mineral resources Minerals free for mining are minerals provided for in Article 3 (1) to (4) of the Austrian Mineral Raw Materials Act. Mineral raw materials listed in Article 3 (1) to (3) are not at the landowner’s disposal and can be prospected and extracted by any person meeting certain legal requirements, whereas mineral raw materials listed in Article 3 (4) belong to the landowner.

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Austria: Mineral Policy

Minerals free for mining include: • All minerals from which iron, manganese, chromium, molybdenum, tungsten, vanadium, titanium, zirconium, cobalt, nickel, copper, silver, gold, platinum and the platinum group metals, zinc, mercury, lead, bismuth, antimony, arsenic, sulfur, aluminum, beryllium, lithium, rare earth minerals or compounds of these elements can be extracted, as far not listed as federal or landowner’s minerals • Gypsum, anhydrite, barite, fluorspar, graphite, talc, kaolin, and leukophyllite • All kinds of coal and oil shales • Magnesite, limestone (with a CaCO3 content of at least 95%), and diabase (basaltic rock), as long as they are solid rock, as well as quartz sands (with an SiO2 content of at least 80%) and clays in unconsolidated form. State-owned minerals are minerals owned by the federal state. They include: • Halite and other coexisting salts • Hydrocarbons • Minerals containing uranium and thorium All other minerals are in the property of the landowner. Information Framework

With reference to the provisions of the Mineral Deposits Act 1947 (Federal Gazette 247/1947) both Geological Survey and the Mining Authority are obliged to cooperate in the field for surveying the territory for any minerals. Due to the longlasting fruitful cooperation of both organizations an excellent minerals-relevant information base has been achieved: Nationwide Aerogeophysical Survey Between 1977 and 1982 the entire Austrian territory has been aeromagnetically surveyed. Data were reprocessed in certain cases and results are available both as printed maps and digitally. Aerogeophysical survey of Austria is still continuously ongoing to cover regions of special interest.

Nationwide Stream Sediment Geochemistry More than 36,000 stream sediment samples and more than 6,000 samples of heavy mineral concentrates have been collected between 1978 and 1982 in the crystalline complexes of Austria and analyzed for 35 elements. The results are available both as printed maps (Thalmann et al. 1989) and digitally. Between 1990 and 2010 the remaining areas (Calcareous Alps, tertiary basins) have been surveyed (ca. 8,000 samples) as well. As a result, the geochemical survey covers the entire Austrian territory. Interactive Raw Material Information System “IRIS” The Austrian Interactive Raw materials Information System (“IRIS”) as an expert tool allows simultaneous visualization of geology, mineral occurrences, geochemical distribution of 35 elements (including geostatistical calculation), aerogeophysical survey, and information about size, shape, references, etc. Such information is of utmost interest to scientists and extractive industry alike. The IRIS application has been developed by the precursor of BMWFW, the Austrian Ministry of Economy, Family and Youth in close cooperation with the Austrian Geological Survey, the Austrian Academy of Sciences (Commission for Mineral Resources Research), and the Minerals Research Committee of the Austrian Mining Association. Web application of IRIS is available on the website of the Austrian Geological Survey. Figure 3 shows a screenshot of an “IRIS” query.

Components of the Austrian Minerals Strategy The BMWFW has developed a raw materials strategy in order to meet the challenges of the raw materials sector. In accordance with the Raw Materials Initiative of the European Commission, the Austrian raw materials strategy is based on three pillars (European Commission 2008, 2011). The Austrian minerals strategy is to be understood as the essential instrument to successfully transpose the national minerals policy into reality.

Austria: Mineral Policy, Fig. 3 Screenshot of an “IRIS” query

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Its priority objective is to ensure and to improve the supply of the Austrian economy with minerals and commodities. Pillar 1 Pillar 1 addresses on securing the minerals supply with domestic mineral resources. The main instrument is the execution of the Austrian Mineral Raw Materials Act. Pillar 1 addresses as well securing long-term access to domestic mineral deposits by means of land use planning. It is pursued with the regional governments implementing the Austrian Minerals Resources Plan, which is identified as a best practice example for minerals planning policy by the European Commission. Safeguarding of actual and potential mineral resource deposits has to be included in a sustainable minerals policy, so that future access to such areas is not blocked or hindered. It is the main purpose of the Austrian Mineral Resources Plan to identify mineral occurrences using innovative, objective, and system analytical methods (Weber 2012). In many cases mineral resources occur in areas where existing land use zoning does not allow exploitation. Therefore, a first approach was made to identify conflict free areas. Such mineral occurrences that are proved as worth to be protected because of quality and quantity and that do not coincide with “no-go zones” or “conflict zones” in land-use were reported to the authorities of the regions competent for land use planning. “No-go zones” are all zones, where mining activities are prohibited by law (e.g., land for buildings, national parks), “conflict zones” are, e.g., Natura2000 areas. The regional governments are responsible for the implementation of raw material safeguarding areas. However, of utmost importance was the identification of conflict free occurrences of construction materials (sand, gravel, and crushed stone). By respecting safeguarding methods in land use planning it was possible to keep sand and gravel available for more than 50 years, crushed stone for more than 100 years in most supply regions (safeguarding by demand). Almost 250 occurrences of metallic ores, industrial minerals, and coal have qualified to be safeguarded using tailor-

Austria: Mineral Policy

made evaluation methods (safeguarding by supply). However, this should not mean that these resources will actually be used in the future. By respecting safeguarding methods in land use planning a future access to these resources is ensured if required. The technical work of BMWFW on the Minerals Resources Plan was finished in 2010 and the results were sent to the regional authorities for implementation (e.g., Regional Planning Act in Vorarlberg, Rock Mining Concept in Tyrol, National Development Plan 2011 in Burgenland). A coordination process between BMWFW and the other regional governments is ongoing. Pillar 2 Pillar 2 addresses securing fair and nondiscriminatory access to mineral raw materials on world markets by means of raw material partnerships, international efforts of the European Commission, and international organizations in the trade policy field (e.g., WTO). As part of the activities of the Joint Economic Commissions of the BMWFW, Austria is exploring bilateral agreements with non-EU countries important for the raw material supply of the Austrian economy. Potential target countries are selected together with business and industry associations and local companies (bottom up process). Moreover, issues concerning international raw materials trade policy are coordinated internally within departments of BMWFW. Pillar 3 Pillar 3 addresses protection of primary resources, promoting of higher resources efficiency, and improving recycling techniques. These are objectives of the Austrian Raw Material Alliance as well as within the Austrian Action Plan on Resource Efficiency developed by the Federal Ministry of Agriculture, Forestry, Environment and Water Management (BMLFUW 2012). Horizontal Activities BMWFW founded the Austrian Raw Material Alliance in 2012, which acts as a discussion platform of stakeholders interested in improvements of raw material supply. The overarching objective

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of this platform is the reduction of import dependency and increasing the supply security of raw materials important for the Austrian economy. The Austrian Raw Material Alliance acts as a mirror committee of the European Innovation Partnership on Raw Materials. Additional horizontal activities of BMWFW covering all three pillars of the Austrian Minerals Strategy are supporting associations for awareness and acceptance raising, as well as organizing discussions on developments of education at university level and vocational training. R&D activities are responsibilities of universities and/or industry. However, basic research should be stimulated and financially supported by public administration. Basic research should cover all stages of mining activities including secondary materials. Furthermore, the provision of statistical data by BMWFW is essential.

Functioning markets ensure stable conditions and long-term security of supply. Market interventions such as export restrictions and unfavorable raw material developments, such as increasing resource nationalism, can lead to irritations that have a significant impact on security of supply. To counter these developments, the Federal Ministry of Science, Research and the Economy has developed the Austrian Raw Materials Strategy. This strategy is based on three core elements: securing the raw material supply from domestic resources, securing the supply of raw materials from abroad, and increasing resource efficiency and recycling. This is to guarantee long-term access to raw material deposits, to protect primary raw materials, to use them efficiently, to limit market disturbances, and to mitigate their consequences.

International Memberships

References

The Republic of Austria is member of UNCTAD, WTO (1 January 1995), OECD (29 September 1961), and World Bank (27 August 1948). List is nonexhaustive, date joined in parentheses.

Bundesministerium für Land- und Forstwirtschaft, Umwelt und Wasserwirtschaft (BMLFUW) (2012) Ressourceneffizienz Aktionsplan (REAP). Wegweiser zur Schonung natürlicher Ressourcen, Wien Bundesministerium für Land- und Forstwirtschaft, Umwelt und Wasserwirtschaft (BMLFUW) und Bundesministerium für Wissenschaft, Forschung und Wirtschaft (BMWFW) (2015) Ressourcennutzung in Österreich, Bericht 2015, Wien Bundesministerium für Wissenschaft, Forschung und Wirtschaft (BMWFW) (2016) Österreichisches Montanhandbuch, vol 90, Wien European Commission (2008) The raw materials initiative – meeting our critical needs for growth and jobs in Europe, COM (2008) 699, Brussels European Commission (2011) Tackling the challenges in commodity markets and on raw materials, COM (2011) 25, Brussels Mineralrohstoffgesetz – MinroG: BGBl. I Nr. 38/1999, modified as BGBl. I Nr. 95/2016 OECD (2014) Export restrictions in raw materials trade: facts, fallacies and better practices. OECD, Paris Reichl C, Schatz M, Zsak G (2017) World mining data, vol 32. Bundesministerium für Wissenschaft, Forschung und Wirtschaft (BMWFW), Wien. https://www.en. bmwfw.gv.at/Energy/WorldMiningData. Accessed 28 June 2017 Schönbauer C, Holnsteiner R, Reichl C (2014) Die Versorgung mit mineralischen Rohstoffen – Entwicklungen auf internationaler und nationaler

Concluding Statement Securing a sustainable supply of the industry and more general the society with mineral raw materials is an indispensable basis for a functioning and prospering economy. This especially applies for those industrial materials which have a high import dependency, e.g., rare earth metals, but also for internationally noncommercial construction raw materials such as gravel, which are essential for the construction and maintenance of our infrastructure. Key technologies which should ensure the future viability of the Austrian economy are important for solving specific problems of the major challenges in the areas of climate and energy, health, nutrition, mobility, security, or communication. It can only be successfully transposed with the sufficient supply of the necessary raw materials.

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60 Ebene. In: BHM, vol 159/10. Springer, Wien, pp 399–405 Statistik Austria (2017) Statistisches Jahrbuch Österreichs. Wien Thalmann F, Schermann O, Schroll E, Hausberger G (1989) Geochemischer Atlas der Republik Österreich 1:1,000.000. Geol. Bundesanstalt, Wien

Austria: Mineral Policy Weber L (ed) (2012) Der Österreichische Rohstoffplan. Archiv für Lagerstättenforschung der Geologischen Bundesanstalt, vol 26. Geologische Bundesanstalt, Wien Weber L (2015) Interpretation von Reserven- und Ressourcenangaben aus wirtschaftsgeologischer Sicht. In: BHM, vol 160/2. Springer, Wien, pp 71–78

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Bangladesh: Legal Framework on Mineral Exploration Present Trends and Issues Abdullah Al Faruque Department of Law, University of Chittagong, Chittagong, Bangladesh

HDI score of 0.558 indicating medium human development achievement (HDR 2013). Bangladesh is a parliamentary republic. Criminal and civil law in Bangladesh is still based on English Common Law, which was enacted during the colonial period, though a few aspects of family law derive from customary Islamic rules.

Need of Minerals General Information on Country The People’s Republic of Bangladesh is located in southeast Asia between latitudes 20
340 and 26
38’ N and longitudes 88
010 and 92
410 E. The country is bordered by India on the east, west, and north and by the Bay of Bengal on the south. There is also a small strip of frontier with Myanmar. The land is a deltaic plain with a network of numerous rivers and canals. The total area of the country is 147,570 km2, in which about 17% is forested. There are a few hilly areas in the southeast and the northeast of the country. Bangladesh gained independence in 1971. With a population of approximately 156.6 million as of 2013, Bangladesh is among the most densely populated countries in the world. The majority of the population are Muslim (around 88%), with the remaining percentage a mixture of Christian, Buddhist, and Hindu. Administratively, Bangladesh is divided into 7 divisions, 64 districts, 7 city corporations, and 308 municipalities. Bangladesh rates 142 out of 187 countries with a

The development of mineral resources has been one of the important factors in plans and programs of any country’s economic development. In particular, mineral resources are seen as a valuable asset of a country in a situation of considerable and increasing scarcity. A first and basic legal layer for mineral exploration is the general legislative and regulatory framework applicable to extractive activities. Mineral exploration and development are considered engines of economic growth particularly in developing countries. But it is also now widely acknowledged that such exploration and development can potentially be an environmental and socially disruptive process if not carried out in sustainable manner. Important mineral deposits of Bangladesh are natural gas, coal, limestone, hard rock, gravel, white clay, and peat. Bangladesh gas sector started its journey in the 1960s and till now, 26 gas fields have been discovered. Up to present time, total recoverable proven gas reserve of 26 gas fields in Bangladesh

© Springer-Verlag GmbH Germany, part of Springer Nature 2023 G. Tiess et al. (eds.), Encyclopedia of Mineral and Energy Policy, https://doi.org/10.1007/978-3-662-47493-8

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is 15 TCF (Trillion Cubic Feet). At present, natural gas accounts for about 73% of commercial energy in the country. The gas sector in Bangladesh is operated under four distinct segments with individual companies responsible for exploration, production, transmission, and distribution. The transmission and distribution companies are all state owned. Bangladesh’s natural gas needs for generation of electricity, fertilizer production, industrial, commercial, and domestic use are fully met from domestic production of gas. The production of natural gas is carried out by International Oil Companies (IOCs) under Production Sharing Contract (PSC). Few privatesector industries import Liquefied Petroleum Gas (LPG). Bangladesh does not produce Liquefied Natural Gas (LNG), but it is currently importing it to meet mounting natural gas demand. Bangladesh has no oil reserve. In Bangladesh, during 1980s, oil was discovered in the Haripur, Sylhet, field and it produced only about 0.544 million barrels of oil during 1987–1994. Coal has been remained a major source of energy generation for centuries. Coal is now considered most viable alternative for energy in Bangladesh given the fact that natural gas is fast depleting. At present, coal accounts for 6% of commercial energy supply in Bangladesh. Bangladesh has coal reserves of 2.5 billion metric tones in five fields, which may be equivalent of 65 TCF Gas. According to experts, 1.4 billion tones can be easily extracted – equivalent to 37 TCF of natural gas, which is enough to generate electricity for the whole country for 40 years. Five coal fields have so far been discovered in the Northeast part of Bangladesh, namely Barapukuria, Khalashpir, Phulbari, Jamalgonj, and Dighipara. The first coal mine of the country is developed at Barapukuria. At present, Barapukuria coal mine is producing approximately 4000–5000 metric tons daily. The coal extracted from this mine is mainly used to fuel the only coal powered 250 MW power generation plant of the country located in Barapukuria. The remainder of coal is used in brick fields, boiler industry, steel re-rolling mills, etc.

Bangladesh: Legal Framework on Mineral Exploration

As natural gas resources are fast depleting in absence of any new major discoveries in recent past, existing reserves of coal has enormous potential for future source of power generation to meet the growing energy demands. Bangladesh has a per capita electricity consumption of about 167 kWh per year, which is one of the lowest in the world. Therefore, adequate attention should be given to the exploration and prudent use of coal to address its ‘energy security’ needs. Although Bangladesh has significant reserves of high quality coal, its coal resources have remained largely unexploited. Bangladesh plans to set up 25 coal-fired power plants by 2022, to generate 23,692 MW, in order to meet rising electricity demand.

Mineral Policy Conception of Bangladesh Bangladesh is yet to adopt any policy on mineral exploration. However, the successive governments attempted to develop coal policy in 2005, 2008, and 2010. But it is yet to be finally adopted. However, Bangladesh has energy policy. The first National Energy Policy (NEP) of Bangladesh was formulated in 1996 to ensure proper exploration, production, distribution, and rational use of energy resources to meet the growing energy demands of the country. The policy was revised in 2004 and the revised and updated policy aims to ensure sustainable energy development programs, to encourage public and private sector participation in the development and management of energy sector and to bring the entire country under electrification by the year 2020. The government of Bangladesh also drafted coal policy.

Regulatory Framework Under Article 143 of the Constitution of Bangladesh, ownership of all minerals vests in the State. Therefore, all mineral resources are

Bangladesh: Legal Framework on Mineral Exploration

explored and developed by the Government of Bangladesh. The first mineral legislation in Bangladesh, the Mines Act, was published in 1923, which was enacted during the British colonial time. The Act aims for ensuring safety, security, and environmental protection in mining operation. The Petroleum Act, 1934 regulates import, transport, storage, production, refining, blending of petroleum, and other inflammable substances for prevention of accident and environmental harm. After its independence in 1971, Bangladesh Mineral Oil & Gas Corporation (BMOGC) was created through the Presidential order in 1972. The minerals operation of the corporation was segregated and vested with a new organization, Bangladesh Mineral Development Corporation (BMEDC) in the same year. In 1976, the importation, refining, and marketing of crude and petroleum products was vested with newly formed Bangladesh Petroleum Corporation (BPC). BOGC and BMEDC were merged into a single entity, Bangladesh Oil, Gas & Minerals Corporation (BOGMC) which had been created through the Bangladesh Oil, Gas & Minerals Corporation Ordinance, 1985. Through the Bangladesh Oil, Gas and Mineral Corporation (Amendment) Act, 1989 which modified this Ordinance, the corporation was short named as Petrobangla. Thus, Petrobangla operates as a public sector statutory body. It is the policy making and managing body of the Corporation, with members from Energy, Finance, and Planning Ministries. The Bangladesh Petroleum Act was enacted in 1974 to give the Government right to explore, develop, exploit, produce, and sell gas under PSC. The Act of 1974 aims for regulation of exploration, development, exploitation, production, processing, refining, and marketing of petroleum. It imposes duties of operator to ensure that petroleum operation is carried on in a proper and workmanlike manner and in accordance with good oil-field practice. Natural gas exploration, exploitation, and production in Bangladesh cannot be undertaken without entering into agreement with the government. As such the exploration, exploitation, and

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production activities are undertaken under the terms of production sharing contracts (PSCs) signed between international oil companies (IOCs) and the government of Bangladesh, represented by the Bangladesh Oil, Gas and Mineral Corporation (Petrobangla). Petrobangla is vested with overall control and coordination of production, transmission, and marketing gas, condensate, oil and mineral resources produced in the country; conducting necessary research required in oil, gas, and mineral exploration and development; implementation of projects to develop the gas and mining sector; concluding Production Sharing Contracts (PSC) with IOCs. It has the following six categories of companies: petroleum exploration company, gas production company, gas transmission company, gas distribution company, compressed natural gas company, and mining company. Generally IOCs submit an initial bid and the successful bidder enters into negotiation with Petrobangla with respect to the key elements of the PSC. The bid proposal contains critical features which include, among others: the maximum cost recovery by the IOC, the share of production between the IOC and Petrobangla, the price at which the IOC’s share of the gas production would be sold to Petrobangla, and the priority or right of purchasing the IOC’s store of gas. Under a PSC, the status of an IOC is that of a contractor who is paid for costs and risks from the output of successful drilling. Petrobangla is responsible for the natural gas industry in Bangladesh and works under the direction of the Ministry of Energy and Mineral Resources. A major activity of Petrobangla is organizing, supervising, and administering the Production Sharing Contracts (PSC) with the International Oil Companies (IOC). Its subsidiary, the Bangladesh Petroleum Exploration Company (BAPEX), is responsible for exploration activities. International oil companies must sell natural gas to Petrobangla at a government-determined price and are restricted in their ability to sell natural gas to customers directly. The major block bidding and awards took place under the 1974 offshore round, the 1993

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bidding round, the 1997–2000 bidding round, offshore bidding round 2008, and offshore bidding round 2012 (Information are available at http:// www.petrobangla.org.bd/oper_psc.php). The PSC contracts have proven to be a significant source of gas in the country; gas production from the PSC blocks has increased dramatically over the last few years. Bibiyana gas field has become the biggest producer of the country with a current production rate of about 830 MMCFD (Ibid). A new opportunity for offshore mineral exploration has been opened for Bangladesh after the peaceful settlement of maritime disputes with Myanmar and India. Following the delimitation of the maritime boundary between Bangladesh and Myanmar and India, Petrobangla reshaped the blocks considering the new boundaries and announced an off-shore bidding round in December, 2012. Petrobangla’s coal mining subsidiary is Barapukuria Coal Mining Co. Ltd (BCMCL) and owns an underground coal mine at Barapuluria in the Dinajpur District. The only coal-fired power station currently operating in Bangladesh is the 250 MW Barapukuria Coal Power Plant which is owned and operated by the Bangladesh Power Development Board (BPDB). Under the Bangladesh Energy Regulatory Commission Act, 2003, the Bangladesh Energy Regulatory Commission (BERC) was established in 2004 (Act No. 13 of 2003 (as amended in 2005 and 2010)). BERC has the functions of issuing licenses for exploration, transmission, and distribution of natural gas. BERC aims at fiscal discipline of energy sector, introducing performance targets and incentive-based regulation, introduction of uniform operational standards and quality of supply, transparency in tariff determination and economic efficiency, increasing opportunities for development of competitive markets, and public participation in decision-making process in energy sector. The Bangladesh Gas Act, 2010 deals with distribution, supply, marketing, and storage of natural and liquefied natural gas in Bangladesh. Other relevant legislation includes: the Natural Gas Safety Rules 1991, the Gas Cylinder Rules 1991,

Bangladesh: Legal Framework on Mineral Exploration

the Gas Pressure Vessel Rules 1995, and the Liquefied Petroleum Gas (LPG) Rules 2004. While exploration of natural gas requires contractual arrangement such as PSC, exploration of other mineral resources such as coal and hard rock is carried out through licensing regime. The Mines and Mineral Resources (Control and Development) Act, 1992 deals with licensing for mineral exploration. Section 3 of the Act lays down that prospecting license or mining lease or facility shall be granted only in accordance with the provisions of the Rules. Section 4 empowers the Government to make rules for regulating the grant of prospecting licenses, mining leases or facilities and for the purpose of preserving and developing mineral resources. The Mining and Mineral Rules have been formulated in 2012. Such Rules deal with the manner, conditions, and form in which prospecting licenses and mining leases and facilities shall be granted. The Rules also deal with the fixing of taxes, rents, and royalties to be paid by the receivers of licenses or the recipients of leases and facilities; the refinement of mineral ores; the control of the production, storing, and distribution of mineral resources; and the development of mineral resources through the control of engines, machines, or other equipments. Rule 4 says that foreign company can apply for license for mineral exploration. Rule 18 prescribes for payment of compensation by licensee for any loss or damage caused due to performance of license. Mineral exploration was part of the erstwhile Bangladesh Mineral Exploration and Development Corporation (BMEDC) till its merger with BOGMC. Later on, it was vested with Geological Survey of Bangladesh (GSB) and Petrobangla. While the exploration part of minerals activity falls under the functions of Geological Survey of Bangladesh (GSB), subsequent development of economic deposits are undertaken by Petrobangla. It has developed two underground mines, one for coal at Barapukuria which started commercial production in September, 2005 and the other for Granite at Maddhapara which went into commercial production in May, 2007. The country’s only granite mining company Maddhapara Granite

Bangladesh: Legal Framework on Mineral Exploration

Mining Company Ltd. at Dinajpur has been extracting granite which is used mostly as construction material. Certain other extraction operation, like limestone, white clay, and boulder, are controlled by the government through the Bureau of Mineral Development (BMD). The Power Division has signed a number of contracts for the construction of imported coalbased power plants and it is expected that coal use will jump from 4% to over 50% of the Bangladesh’s electricity supply by 2022, with 23,000 MW of proposed new coal-based plants. The legal framework on mineral resources does not adequately integrate environmental issues in exploration. For instance, the Petroleum Act, 1974 merely provides that it shall be the duty of any person engaged in any petroleum operation to consider factors connected with the ecology and the environment. But the Petroleum Act, 1974 does not impose any liability for potential damage to the environment due to negligent conduct of the operating companies. However, the Mining and Mineral Rules 2012 have more elaborate provisions on environmental issues in relation to mineral exploration. For example, Rule 18 provides that the licensee will be responsible for payment of compensation to the government for causing harm to the environment. Rule 19 of the Mining and Mineral Rules 2012 prescribes that if exploration of mineral takes place in reserved or protected forests, a prior notice must be served to the forest department. Rule 20 prescribes that no licensee without prior authorization of the government can cut hill or plants in government owned land. Rule 26 requires that if mineral resources are depleted or destroyed due to unscientific means of exploration, lack of proper supervision, negligence, or nonperformance of obligations by the licensee, the level and amount of compensation will be determined by the Director of Mineral Development and licensee and amount of compensation so determined will be paid by the licensee as the land revenue. Apart from this, Rule 42 prescribes in order to prevent environmental pollution, the licensee will comply with the provisions of the Bangladesh Environment Conservation Act, 1995 and the

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Conservation Rules, 1997 and will take necessary steps to control pollution in leased area. Operation of mining projects may produce negative socioeconomic and cultural impacts including changes in land-use patterns, human rights abuse, and destruction of cultural heritage and biodiversity. The indigenous people living in the remote area with their different life style and different value system are the most vulnerable among the diverse communities that can be affected by mining extraction. Indigenous or local people living in the area of operation can be uprooted from their traditional lands, their cultural base can be destroyed, and their habitat can be environmentally polluted. These negative impacts are partially inevitable consequence of the mining process and partially can be attributed to unsustainable practice and negligence of operating company towards the local community. Several incidents relating to mineral exploration – the Magurchara and Tengratilla gas blow out, and public outrage against Phulbari coal project that led to suspension of its operation illustrate that natural resources exploration can bring environmental catastrophe as well as social disruptions. Recently, the Bangladesh government planned for a 1320 MW coal-fired power station at Rampal of Khulna and the proposed project, on an area of over 1834 acres of land, is situated 14 km north of the world’s largest mangrove forest “Sundabans” which is a UNESCO world heritage site. This coal-based power plant project has generated huge public outcry as many believe that it would adversely affect the world’s largest mangrove forest. Therefore, any arrangement for mineral exploration and use should address the environmental and social concerns. But the Petroleum Act, 1974 and the Mining and Mineral Rules, 2012 are silent about these social issues. Rule 46 of the Mining and Mineral Rules, 2012 merely provides that cultural and religious sites will be excluded from the exploration or lease area. Although the main environmental legislation in Bangladesh – the Environment Conservation Act, 1995 contains provision for environmental impact assessment for all mining projects, no law provides for social impact assessment for the same. The legal framework also does not address

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the issue of participation and protection of interest of indigenous people or local community in mineral exploration. In view of the fact that total exclusion of host communities in the mineral resource development is one of the important underlying causes of subsequent conflict, public participation has emerged as the most significant new trend natural resource development in the twenty-first century. Public participation of community in mineral development becomes critically important since such development adversely affects the traditional way of life of local and indigenous people in many ways and accommodating their views in project designing, land use, and implementation can prevent such negative impacts and overcome subsequent public outrage towards the project.

International Memberships Bangladesh is a member of the many international organizations including UNCTAD, WTO, World Bank, SAARC, and ADB.

Concluding Statement Considering the fact that strong regulatory and contractual regime on environmental protection and social issues can prevent negative impacts, it is imperative that existing laws should be amended or a comprehensive new legislation on petroleum and mineral exploration should be adopted taking into consideration of emerging sustainable practices. Mineral laws and policies should also make provision for relocation and rehabilitation of the displaced people due to mining operation. There is a ongoing criticism by environmentalist groups against proposed coalbased power plants which are believed to produce significant negative impact on environment. The legal and policy arrangement for mineral exploration should address the environmental and social concerns and issues associated with such exploration and use of mineral such as coal.

Bolivia: Mineral Policy

Bolivia: Mineral Policy Federico Nacif1,2 and Iván Aranda Garoz2,3,4 1 IEALC, Universidad de Buenos Aires, Buenos Aires, Argentina 2 PIIdISA, Universidad Nacional de Quilmes, Buenos Aires, Argentina 3 Universidad Autónoma de Madrid, Madrid, Spain 4 Universidad Complutense de Madrid, Madrid, Spain

General Information on the Country Located in the central-western region of South America, the Plurinational State of Bolivia extends over a territory of 1,098,581 km2, with a population that barely exceeds 11 million inhabitants and a GDP that between 2005 and 2015 passed from US$ 9,500 million to US$ 33,000 million (World Bank 2019). Ratified by the Bolivian society in January 2009, the current Political Constitution defines the new Bolivian State as “Social Unitary Plurinational Community of Right, free, independent, sovereign, democratic, intercultural, decentralized and with autonomy” (Article 1). It declares the character of natural resources as “strategic and of public interest for the development of the country” (Article 348), whose ownership and direct control correspond in an “indivisible and imprescriptible way to the Bolivian people” (Article 349). Although at present, and for about a decade, Bolivia’s main export sector has been hydrocarbon (natural gas), both the constitution of the new Plurinational State and the ownership regime over natural resources – and associated development plans – are the result of a long historical cycle that had the mining sector at the center of the scene. From the mid-sixteenth century until the national independence of 1825, the exploitation of the Cerro Rico of Potosí represented about 85% of the total silver produced by the Viceroyalty of Upper Peru. That was actually the main economic

Bolivia: Mineral Policy

activity of the Spanish colony (Espinoza 2010: 31). Later, as a consequence of the War of the Pacific (1879–1880), Bolivia lost not only its 400-kilometer Chilean coastline but also the department of Litoral. With about 120,000 km2, Litoral held important mineral deposits such as saltpeter, silver, or copper which would be later developed (including lithium and potassium recently). In the early years of the twentieth century, on the other hand, the price drop of silver and the growth of the tin industry began in Bolivia the so-called tin era (Almaraz Paz 1967). At the end of the Second World War, only three large mine owners, known as the “Barones del Estaño” – Piatho, Hochschild, and Aramayo – controlled 80% of the country’s total exports, providing close to 50% of the world’s tin demand (Espinoza 2010: 66). With the National Revolution of April 9, 1952, the Revolutionary Nationalist Movement (MNR) reached the government and, together with the universal vote, the agrarian reform, and the dissolution of the army, nationalized the mining sector. The MNR government created the Mining Corporation of Bolivia (COMIBOL), inaugurating a productive model that, until the mid-1980s, would have as its protagonist the Central Obrera Boliviana (COB) trade union and the public sector as the main agent of the national economy. In 1985, however, the New Economic Policy of neoliberal inspiration (promoted by the MNR itself) and the subsequent tin crisis produced in the London Metal Exchange laid the groundwork for the subsequent restructuring of the Bolivian mining sector. Assisted by the World Bank, it was proposed eliminating the traditional state mining and consolidating the transnational private sector as the main agent, diversifying exports (zinc, gold, silver), and intensifying production scales (Espinoza 2010; Jordán Pozo -coord. 2010; Díaz-Cuellar 2017). At present, after a process of recovering the public sector initiated by the government of Evo Morales in 2006, the Bolivian mining sector represents around 5% of GDP, and it is the second export sector (with 26% of total exports in 2018, and reaching 41% of total exports, if manufactures linked to the smelting of metals are included). The

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mining sector in Bolivia includes three different social actors, certainly protagonist of the most intense social and environmental conflicts in the country: firstly, private mining, led by four transnational companies (Glencore Xstrata, Sumitomo, Coeur Mining, and Pan American Silver); secondly, mining cooperatives, which are the country’s main employers (more than 120,000 workers); and thirdly, state mining, which leads the main smelting and industrialization processes of minerals.

Need of Minerals and Structure of the Mining Sector The weight of basic industrial inputs in Bolivia’s imports has been historically very low. According to the estimation of the National Institute of Statistics, in 2018 they barely exceeded US$ 60 million, representing 0.7% of total imports. From this share, only US$ 10.9 million corresponded to the classification “Exploitation of Mines and Quarries,” corresponding only to 0.1% of total imports (INE 2019). In terms of the amount of minerals produced, according to the Ministry of Mining and Metallurgy of the Plurinational State of Bolivia, 773,138 metric tons worth US$ 3,135 million – an increase of 3.8% in relation to the last year – were produced mainly in gold, ulexite, wolfram, antimony, and zinc, while the production of tin (produced mainly by stateowned Empresa Minera Huanuni) decreased by 6.7%, from 13,473 to 12,563 tons. In relation to the players within the Bolivian mining sector, 81% of total physical production in 2018 corresponded to the private sector (626,015 tons), whose monetary value exceeded US$ 1,780 million. Cooperative mining produced about 10% of the total production volume (75,532 tons), accumulating sales for a total of US$ 1,149 million. The remaining 9% corresponded to the stateowned sector. Public mining is represented by the Huanuni Mining Company, the Colquiri Mining Company, the Corocoro Mining Company, the Siderúrgica del Mutún Company, and the Bolivian Lithium Deposits, and it produced about 71,500 tons of concentrates of minerals for

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a total of US$ 205 million, mainly from the production of tin, zinc, and copper. With regard to the geographical distribution of Bolivia’s mining production, the department of Potosí continues to be the main producer accounting 76% of the total volume, followed by Santa Cruz with 7%, Oruro with 6%, and Cochabamba and La Paz with 5% each. According to the same official source, from the total volume produced in 2018, 99% of it was destined for export, reaching 765,851 tons representing a total value of US$ 2,999 million. About the share of minerals exported, zinc accounted for 39% of the value in 2018 (US$ 1,171.9 million) and 50% of the physical volume. Gold and silver accounted, respectively, for 27% and 26% of the total value, but together accounted for only 0.1% of the volume (19.6 and 901 metric tons of fines, respectively). Tin, lead, and copper accounted for 8%, 6%, and 3% of the total value, accounting, respectively, 11,769, 79,220, and 3,934 metric tons. Regarding the destination of Bolivia’s mining exports, 17.1% of the total value in 2018 corresponded to exports to India (US$ 513 million), followed closely by Japan with 16.8% (US$ 503 million). South Korea received 15.2% (US$ 456 million), the People’s Republic of China with 11.1% (US$ 332 million), and the United States with 7.9% (US$ 237 million) – a decrease of 17% compared to the previous year due to the suspension of purchases of gold and refined tin. In the sixth place, the United Arab Emirates received 7.7% of the total (US$ 231 million), followed by Canada with 4.4% (US$ 133 million), Belgium with 4.4% (US$ 131 million), the Netherlands with 4.3% (US$ 129 million), and Australia with the 4, 2% (US$ 126 million). The remaining 7% of mining exports were destined to Latin American countries, mainly Chile, Brazil, Argentina, Peru, and Colombia (with a total of US$ 64 million).

Mineral Policy The normative and institutional reforms promoted since 1985 in the Bolivian mining sector had as

Bolivia: Mineral Policy

main objective to achieve the total elimination of the productive role that the State historically had in the mining sector through COMIBOL. Thus, by the end of the 1990s, a series of reforms promoted by the different governments of the period, and designed with the technical assistance of the World Bank (DS 21060 of 1985, DS 23459 of 1993, Law 1544 of 1994, Law 1777 of 1997), led to the privatization of the main deposits managed by COMIBOL and its conversion into a just simple administrator of mining contracts. Furthermore, the package of reforms included the liberalization and rationalization of labor contracts (allowing the dismissal of more than 20,000 workers) together with the closing and leasing to the cooperative sector of less profitable mines, the dissolution of the National Melting Company and the abandonment of all the industrialization plans, the dissolution of the traditional mining bank, and the tax reduction and unification in the royalty system. Through the structural reforms, concessions were turned into mining property, meaning that could be transferred, mortgaged, or inherited or “be the subject of any other contract” (Article 4 of Law 1777 of 1997). Finally, the structural reforms liberalized almost all stateowned mining areas which suspended the concession system (Espinoza 2010; World Bank 1997). With the government assumption by the peasant leader, Evo Morales Ayma, in 2006, a new process of partial restitution of the state role in the mining sector began. Based on the National Development Plan approved in 2006, the process included the declaration of the Fiscal Reserve over the entire national territory (Decree 29117) and the recovery of the productive faculties of COMIBOL in 2007 (Law 3720) (“The granting of new concessions is forbidden throughout the national territory and those that are in process remain without effect” (Article 2). From there, it will be “the State, in exercise of its right owner of the Fiscal Reserve, who grants to the Mining Corporation of Bolivia - COMIBOL, the power and authority of its exploitation and administration, saving the pre-constituted rights over the mining areas granted previously in concession” (Article 1) (Decree 29117 of 2007, our own translation from Spanish).). In this way, after the

Bolivia: Mineral Policy

bankruptcy of Allied Deals and the confrontations between mining cooperatives and salarieds, COMIBOL recovered its property over Huanuni (the main tin deposit in the country). Meanwhile the government reversed the privatizations of the Metallurgical Company of Vinto (tin melting company) and the Metallurgical Mining Complex of Karachipampa (to process and melt polymetallic minerals from lead, silver, zinc, and other by-products such as indium or bismuth), in both cases for breach of contracts by the former private owners. Besides, the Corocoro Mining Company was created for the production of high-purity cathodic copper (99.9% purity). At the same time, the new government boosted and promoted important large-scale mining projects through the transnational private sector (San Cristóbal, San Bartolomé). On February 7, 2009, the new Political Constitution of the State (CPE) came into force, reaffirming the state rights over all Fiscal Reserves (Article 350) and the “control and direction over exploration, exploitation, industrialization, transportation and marketing of strategic natural resources” (Article 351, Section I) (Traditionally, in Latin America, the “strategic” status of a natural resource is declared to remove it from the concession system, for reasons of national security and/or industrial development.). The new CPE also aimed to promote the mineral production through the state-owned company (COMIBOL) and the cooperatives (Articles 30 and 310) and to allow exploration and private exploitation through mining contracts ratified by the Plurinational Assembly (National Parliament) (Art. 370). In 2013, the “2025 Patriotic Agenda,” a strategic country roadmap toward the year 2025, defined the 13 fundamental pillars to achieve a national development for reaching a “dignified and sovereign Bolivia.” Among them, the seventh pillar refers to the sovereignty over natural resources, “with nationalization, industrialization, and commercialization, in harmony and balance with the mother earth.” This seventh pillar establishes as a priority for 2025 “the industrialization of our strategic natural resources, among them gas, lithium, minerals, and rare earths.”

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In 2014, after an extensive process of negotiation between the different actors in the sector, the new Mining and Metallurgy Law (Law 535) was ratified, confirming the objectives of industrialization and sovereignty and determining that contracts between private companies and mining cooperatives must have the backing of the Plurinational Legislative Assembly. In 2015, the National Development Plan 2016–2020 reaffirmed the objectives set for the sector: “The challenge of the mining sector lies in the establishment of a new medium-term mining model based on strengthening the mining exploration for the increase of reserves, the increase of primary production with generation of added value and the diversification of mining production and its industrialization – tackling of the downstream mining value chain-. And all these actions to be performed within the framework of the articulation among the State, the cooperative members and private companies. For this purpose, it is necessary the refoundation of COMIBOL for making it more efficient. And also to generate more private investment, moving towards the constitution of joint state companies and joint ventures, as well as invigorate the public and cooperative sector with more efficient institutions, mechanisms and technologies for production and transformation. In what corresponds to the generation of added value, smelting and refining plants will be implemented and the industrialization of the evaporitic resources will be initiated through the construction, commissioning and operation of the industrial plants for the production of potassium and lithium carbonate salts” (Estado Plurinacional de Bolivia 2015: 145, our own translation from Spanish).

The Case of Lithium According to the most modest estimates, the Andean salt flats of Argentina, Bolivia, and Chile concentrate around 80% of the world lithium resources, in brine form (this is a mix of inorganic salts dissolved in water). This is a key factor for the development of a new generation of rechargeable batteries, used in portable

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electronics, the new electric vehicles, and the renewable energy systems, all of them dynamic growth segments and with strong technological development. Unlike traditional lithium rock mining (spodumene, petalite), the brines (mixed of salts dissolved in water) contained in the South American salt flats make possible to obtain high-purity lithium carbonate with the lowest production costs in the world. According to the US Geological Survey (USGS 2017), only two lithium operations located in the Atacama salt flats (Chile), owned by SQM and Albemarle, and one in Hombre Muerto salt flat (Argentina), run by FMC Lithium Corp., account – for almost 20 years – around 50% of the global lithium supply and more than 80% of the production of lithium from brines (more than 100,000 tons of lithium carbonate equivalent in 2017) (Lithium carbonate equivalent (LCE) is the lithium industry standard terminology. 1 ton of LCE is equivalent to 5.32 tons of lithium carbonate (Li2CO3), to 0.87 tons of lithium chloride (LiCl), and to 0.88 tons of lithium hydroxide monohydrate (LiHO). See conversion factors between these various forms and other common compounds in British Geological Survey 2016: 2). Although the USGS allocates to the Plurinational State of Bolivia lithium resources equivalent to nine million metric tons of lithium (USGS 2017: 12) (this figure does not consider the feasible reserves to be exploited, but only the confirmed resources), the preliminary results of a recent study commissioned by the company Yacimientos de Litio Boliviano (YLB) and performed by the US consultancy firm SRK indicate that under the Salar de Uyuni, there exists a proven geological reserve of at least 21 million metric tons (http://www.la-razon.com/opinion/ editorial/litio-reserva_0_3098690167.html). All attempts to concession the Salar de Uyuni during the 1980s and 1990s (at the hands of the same FMC Lithium Corp. that exploits in Argentina the Salar del Hombre Muerto) were rejected by large and intense social mobilizations, which questioned the lack of public controls and economic benefits implied by the various proposed exploitation contracts (Nacif 2012). However, since 2008, the government of Evo

Bolivia: Mineral Policy

Morales has been promoting a novel national industrialization plan. It is based on the fiscal reserve barrier on all salt flats and the creation of a state-owned company, the only one authorized by the Mining and Metallurgy Law, for the exploration and exploitation of the evaporitic resources. As a first step, two pilot plants, one for producing lithium carbonate and the other for potassium chloride – both located in the Salar de Uyuni – were in-house designed and built up. In parallel, a modern Research and Piloting Center (CIDYP) – located in the city of La Palca (Potosí) – which includes state-of-the-art laboratories and two pilot plants bought by turnkey contract, one for the production of advanced lithium-based cathodic materials and the other for manufacturing lithium-ion batteries, unique of its kind in the Latin America region, were installed and commissioned. Based on the expertise gained through the research, development, and piloting activities, the brand new Yacimientos de Litio Bolivianos (YLB) contracted – through an international tender – the design and construction of the industrial potassium and lithium plants. At the same time, YLB moved forward in a complex productive investment contract with the German company ACI Systems, for the installation of a cathode material production plant and a lithium battery manufacturing factory – with a production capacity of 8 GWh/year of storage, roughly all current European battery storage needs. In order to win the contract, in April 2018, the German company had to comply with four basic requirements: (1) to accept the majority shareholding of the Bolivian State (51%), (2) to provide state-of-the-art technology, (3) to warrant the future market for the batteries produced, and (4) to process the residual brines from the industrial plant of lithium carbonate for producing lithium hydroxide. In this way, the important milestones reached so far ended up defining a long-term industrial and commercial strategy. This roadmap involves firmly entering to the global markets of lithium salts, electrode materials, and batteries but also seeking to develop potential domestic markets with high social impact, such as the storage coupled to solar and wind energy for rural electrification purposes

Bolivia: Mineral Policy

(Aranda Garoz 2015; Nacif 2018) (The estimated joint investment will be US$ 1.3 billion. Although no more details are known about the time and place of the future productive investment, German Economic Minister, Peter Altmaier, said the agreement was “an important building block” to “avoid falling behind and slipping into dependency.” Reuters, December 12, 2018.).

Regulatory Framework According to Law N
535 of Mining and Metallurgy, in force since May 28, 2014, the mineral resources “existing in the ground and underground of the Plurinational State of Bolivia, are property and direct, indivisible and imprescriptible domain of the Bolivians” (Art. 2). The administration of these resources corresponds to the State, which is empowered to grant, recognize, respect, and guarantee mining rights that, by definition, are non-transferable and must fulfil an economic-social function (Article 5). Aligned with the Political Constitution of the State, the law recognizes three productive actors in the mining sector: the state-owned mining industry, the private mining companies, and mining cooperatives (Article 31). The direction, administration, control, and supervision of the mining activity in the whole Bolivian territory correspond to the Mining Administrative Jurisdictional Authority, an autarchic entity that, under tuition of the Ministry of Mining and Metallurgy, has among its main attributions a) the administration of the Mining Registry, Cadastre, and Mining Chart; b) the reception and processing of requests for the adaptation of the special transitory authorizations to administrative mining contracts; and c) the reception and processing of applications for mining administrative contracts of the mining areas under lease agreements with the Mining Corporation of Bolivia (COMIBOL), which corresponds to the mining cooperatives (Article 39). As for the management and administration of the state mining sector, it is under the responsibility of COMIBOL, a strategic state-owned company that exercises the right to conduct

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prospecting, exploration, exploitation, concentration, smelting, refining, commercialization, and industrialization of minerals, metals, and precious and semiprecious stones, in the mining areas under its administration, and those of its subsidiary companies, without prejudice to the right to subscribe contracts with other productive mining actors (Article 61). Both the Political Constitution of the State and the Mining and Metallurgy Law of 2014 (Law No. 535) consider the mining royalty as a right and a compensation fee for the exploitation of mineral resources and non-renewable metals. In its Article 229, the Law of Mining and Metallurgy establishes the following distribution: 85% royalty fee for the Autonomous Departmental Government producer and 15% for the Autonomous Municipal Governments where mineral production takes place. The mining royalties are paid based on the exports. The calculation and the percentages are established according to the gross value of sales and depend on the type of mining operation and the different minerals and metals exported (the Ministry of Mining uses the data from the London Metal Exchange). Private mining companies, on the other hand, must add to the general income tax (25% on net income) an additional annual mining income tax of 12.5%. The transfer of profits or other income abroad is subject also to a tax of 12.5%. Finally, in relation to the association contracts between the private sector and the State, in no case the state company will gain a percentage lower than 55% over the net profit (Article 148). The government, on the other hand, has the right to declare certain areas of the national territory as a Mining Fiscal Reserve, “with the purpose of carrying out prospecting, exploration, and evaluation, to determine the mineralogical potential of the reserve area,” thus suspending in those areas the granting of mining rights; nevertheless, pre-constituted and acquired rights by other players are respected (Article 24). Upon the expiration of the term established in the Mining Fiscal Reserve, COMIBOL shall have the preferential right to request the mining area for the exercise of activities in all or part of the mining production chain (Art. 25).

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Meanwhile, the Law on Mining and Metallurgy (Law No. 535) clarifies that the “right to exercise the mining activities granted by the State, constitutes a separate and independent right over the property right of the land” (Article 20). In this sense, according to Article 19, “Native Indigenous Peasant Nations enjoy the right to participate in the benefits of the exploitation of mineral resources in their territories, in accordance with the mining royalties regime, without prejudice to other measures and compensations that correspond according to the prior consultation regime established in this Law” (described in Title VI of the Law, Articles 207 to 222). In relation to the environmental impacts associated with the mining activity, the “Chapter III Environment” of the Law of Mining and Metallurgy (Law No. 535) determines that “the mining activities in relation to the environment will be carried out in accordance with the Political Constitution of the State. Also, mining activities must fulfil the Environmental Law (No. 1333, dated 27th April of 1992), its regulations, the Environmental Regulation for Mining Activities and other legal regulations in force” (Art. 217). It should be mentioned that the environmental license for mining activities and related works does not belong to the mining authority in charge of the administration of mining rights, but to “the competent environmental authority according to Law No. 1333 on the Environment” (Art. 218). In this regard, it is worthwhile mentioning that the General Environmental Management Regulation (Supreme Decree No. 24176), of the Environment Law (Law No. 1333), defines environmental liabilities as “a) the set of negative impacts harmful to health and/or the environment, caused by certain works and activities existing in a certain period of time and b) environmental problems in general not solved by certain works or activities” (Article 46). On its side, the Regulation of Solid Waste Management (Supreme Decree No. 24176) defines mining waste as “products of the extraction and exploitation of minerals” (Article 9). Besides, Article 219 of the Mining and Metallurgy Law reaffirms Article 347 of the Political Constitution of the State,

Bolivia: Mineral Policy

according to which “environmental crimes do not prescribe.” Finally, in relation to the closure of mines, the only reference within the Law of Mining and Metallurgy (Law No. 535) corresponds to Article 221 of the environmental chapter, according to which all holders of mining rights must establish “a financial forecast to cover the cost of closing their operations.” In that sense, the Environmental Regulation for Mining ActivitiesRAAM (Supreme Decree No. 24782 of 1997) indicates in Title VII of the Closure of Mining Activities, “when the area of a mining activity must be closed and rehabilitated (Article 65), the closing will be done simultaneously to the development of the rehabilitation activity whenever possible (Article 66) and it is necessary to present a closure and rehabilitation plan, included and approved within the environmental license” (Article 67) (CEPAL 2016: 29).

International Memberships The Plurinational State of Bolivia has been a member of the WTO since 1995, of the GATT since 1990, and of the Non-Aligned Country Movement since 1979. It has also been a founding member of the ILO since 1919, where it has maintained 47 ratified Conventions. Among those are 8 fundamental labor agreements, 3 priority governance agreements, and the 169 agreement on indigenous and tribal peoples, the latter ratified by Law No. 1257 on December 11, 1991.

Concluding Statement Converted into state policy, the industrialization of mining is reflected in many official documents, such as the National Development Plan of 2006, the Political Constitution of the State (2009), the Patriotic Agenda 2025 (2013), or the new Law of Mining and Metallurgy 1777 (2014), and is based on three fundamental pillars: (1) recovery of state enterprises, (2) sovereignty of natural resources, and (3) autonomous technological development.

Bolivia: Mineral Policy

However, the country still exhibits a low degree of transformation of metallic minerals, limited to the production of tin, bismuth, and antimony (while zinc, lead, iron, and wolfram continue to be exported totally in the form of concentrates). The joint risk contracts with the transnational corporations, on the other hand, have not shown better results in relation to the investment commitments assumed. Even so, there are other mining sectors that allow us to see better results. While the industrial production of nonmetallic minerals progresses well, associated with the domestic manufacture of intermediate goods (glass, construction material, ceramics, concrete articles, cement, lime, and gypsum, among others), the basic chemistry of mineral origin it goes through a takeoff stage. The pilot production of potassium chloride and lithium carbonate in Salar de Uyuni and the recovery of the national production of sulfuric acid with sulfur of volcanic origin at the eucalyptus factory are good examples of this (Rodríguez-Carmona and Aranda Garoz 2014). Although Bolivia is not currently a major player in the global mineral market and, with the exception of lithium, in full-on development, the reserves of its main export minerals (zinc, tin, gold, silver, and antimony) have a geopolitical significance on a global level, and the centrality of the mining sector throughout national history is now reaffirmed by the important place it still occupies in relation to the domestic economy and the dynamics of the main social processes. In this sense, the main social actors and political representatives of the country recognize as a priority the need to advance in the productive chain, toward links of greater national technological complexity, assuming at the same time the challenge of being able to resolve in a democratic way the intense social conflicts that generates the distribution of surplus and the serious environmental impacts associated with exploitation.

References Agenda Patriótica 2025 (2013) Estado Plurinacional de Bolivia. https://observatorioplanificacion.cepal.org/

73 sites/default/files/plan/files/agenda%20patriotica%202 025%20PDGES.pdf. Accessed 25 Jan 2019 Almaraz Paz S (1967[2011]) El poder y la caída. El estaño en la historia de Bolivia. Los Amigos del Libro, La Paz Aranda Garoz I (2015) Litio en América Latina: alternativa productiva para la soberanía energética. In: Nacif y Lacabana (coord) ABC del litio sudamericano: soberanía, ambiente, tecnología e industria, Editorial de la Universidad Nacional de Quilmes y Ediciones del CCC, Bernal, pp 107–170 British Geological Survey (2016) Lithium. Commodity Profiles Series, Keyworth. https://www.bgs.ac.uk/ mineralsuk/statistics/mineralProfiles.html. Accessed 25 Jan 2019 CEPAL (2016) Estudio sobre lineamientos, incentivos y regulación para el manejo de los Pasivos Ambientales Mineros (PAM), incluyendo cierre de faenas mineras Bolivia (Estado Plurinacional de), Chile, Colombia y el Perú. Angela Oblasser, Serie Medio Ambiente y Desarrollo 163. https://repositorio.cepal.org/bitstream/ handle/11362/40475/S1600680_es.pdf?sequence¼1& isAllowed¼y. Accessed 25 Jan 2019 Constitución Política del Estado Plurinacional de Bolivia (2009). https://www.oep.org.bo/marconormativo/constitucion-politica-del-estado/. Accessed 25 Jan 2019 Díaz-Cuellar V (2017) The political economy of mining in Bolivia during the government of the Movement Towards Socialism (2006–2015). Extract Ind Soc 4(1):120–130 Espinoza J (2010) Minería boliviana, su realidad. Plural, La Paz Estado Plurinacional de Bolivia (2015) Plan de Desarrollo Económico y Social 2016–2020. En el marco del desarrollo integral para vivir bien. https://observator ioplanificacion.cepal.org/sites/default/files/plan/ files/pdes2016-2020.pdf. Accessed 25 Jan 2019 ILO (2019) 1996–2018 International Labour Organization. https://www.ilo.org/dyn/normlex/es/f?p¼NORMLEX PUB:11200:0::NO::P11200_COUNTRY_ID:102567. Accessed 25 Jan 2019 INE (2019) Importaciones. Enero a Diciembre de 2017 y 2018. en Resumen Estadístico, Instituto Nacional de Estadística, Estado Plurinacional de Bolivia, La Paz, Enero. https://www.ine.gob.bo/index.php/prensa/bole tines/resumenes-estadisticos/category/195-importacio nes-2018. Accessed 25 Jan 2019 Ministerio de Minería y Metalurgia (2018a) Dossier Estadísticas del Sector Minero Metalúrgico 1980–2015. La Paz. http://www.mineria.gob.bo/ revista/pdf/20170817-10-15-28.pdf. Accessed 25 Jan 2019 Ministerio de Minería y Metalurgia (2018b) Situación de la Minería y Boletín Estadístico tercer trimestre 2018. La Paz. http://www.mineria.gob.bo/revista/pdf/ 20190111-12-3-9.pdf. Accessed 25 Jan 2019 Nacif F (2012) Bolivia y el Plan de Industrialización del Litio 100% Estatal: desarrollo autónomo y soberanía energética. Revista La Migraña, Vicepresidencia del

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74 Estado Plurinacional de Bolivia 1(3):88–104. https:// migrana.vicepresidencia.gob.bo/wp-content/uploads/ 2018/06/R_LM_3.pdf. Accessed 25 Jan 2019 Nacif F (2018) Litio en América del Sur: enclave minero o alternativa post-extractivista. In: Ramírez M, Schmalz S (eds) ¿Fin de la bonanza?: entradas, salidas y encrucijadas del extractivismo. Buenos Aires, Biblos, pp 233–246 Jordán Pozo (coord) (2010) Excedente y renta en la minería mediana. Determinantes del crecimiento minero 2000–2009. Embajada del Reino de los Países Bajos y Fundación PIEB, La Paz Rodríguez-Carmona A Aranda Garoz I (2014) De la Salmuera a la Batería Soberanía y cadenas de valor. Un balance de la política de industrialización minera del Gobierno del MAS (2006–2013). Centro de Investigaciones Sociales de la Vicepresidencia del Estado Plurinacional de Bolivia y Programa de las Naciones Unidas para el Desarrollo (PNUD), La Paz USGS (2017) “Lithium”, by Bradley, D.C., Stillings, L.L., Jaskula, B.W., Munk, LeeAnn, and McCauley, A.D. In: Schulz KJ, DeYoung JH, Seal Jr RR, II, Bradley DC (eds) Critical mineral resources of the United States – economic and environmental geology and prospects for future supply, chap. K, U. S. Geological survey professional, paper 1802, pp K1– K21. https://pubs.usgs.gov/pp/1802/k/pp1802k.pdf. Accessed 25 Jan 2019 World Bank (1997) Bolivia – mining sector rehabilitation project. The World Bank, Washington, DC. http://documents.worldbank.org/curated/ en/1997/12/731781/bolivia-mining-sector-rehabilitat ion-project. Accessed 25 Jan 2019 World Bank (2019) Datos sobre las cuentas nacionales del Banco Mundial y archivos de datos sobre cuentas nacionales de la OCDE. https://datos.bancomundial. org/pais/bolivia. Accessed 25 Jan 2019

Botswana: Mineral Policy Kwabena Ata Mensah Centre for Energy Petroleum Mineral Law and Policy (CEPMLP), University of Dundee, Dundee, UK KAM Associates Limited, Tema, Ghana

General Information on Botswana Formerly known as Bechuanaland, the Republic of Botswana gained independence from Britain on September 30, 1966, with a total land mass 581, 730 km2. Botswana is located at the southern

Botswana: Mineral Policy

part of Africa. The country is landlocked with a great portion of its area covered by the Kalahari Desert. It is bounded by Zimbabwe to the northeast, Namibia to the northwest, South Africa to the south and southeast, and Zambia, a juncture with Botswana at a single location. Botswana has remained stable since independence and has recorded successful democratic elections. With a total population of 2.304 million (2016) and a growth rate of 1.19% annually, the country is one of the most sparsely populated countries in the world. Botswana is a multicultural country with three main ethnic groups. 79% of the citizens are Tswana, 11% are Kalanga, and 3% are Basarwa. Other minor ethnic groups make up the remaining 7%. Although English is the official language of the republic, a greater percentage of Batswana (79%) speak Setswana. That said, there are over 20 other smaller languages in Botswana. According to the United Nations Development Programme (UNDP), Botswana’s literacy rate was 81% in 2009.

The Economy Botswana’s fiscal deficit narrowed in fiscal year 2016/2017 to 0.7% of GDP compared to 4.7% in the previous fiscal year, which starts in April. The fiscal deficit improved largely due to higher than expected mining revenues and stronger GDP growth. However, fiscal revenues are still highly dependent and vulnerable to two volatile sources of revenue inflows: mineral revenue (which accounts for almost 40% of total revenue) and Southern African Customs Union (SACU) revenues, which account for over one quarter of total revenue. In aggregate, revenues increased by 0.8% of GDP in the fiscal year 2016/2017 and reached 31.9% of GDP, although they are still low compared to the historical average of around 37%. Expenditures declined by 2.7% of GDP compared to the last fiscal year and equaled 33.2% of GDP, mostly due to higher than anticipated GDP growth. The economy is expected to rebound with projected GDP growth of above 4% in 2017, driven mainly by improvements in the mining sector, services sectors, and continued fiscal

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stimulus that will propel non-mining activity. This intensification of economic activity and domestic demand, combined with the gradual increase of the commodity prices, will raise inflation to around 4%, which is still within the Bank of Botswana’s medium-term band of 3–6%. Budget revenues are expected to increase; if they do, this will be from higher mining revenues as industrialized economies stabilize and SACU receipts grow (World Bank Data 2016). The combination of expenditure growth and higher revenues is expected to reduce the fiscal balance until 2019. The current account will moderately narrow in 2018 and 2019 as a result of higher imports triggered by the recovery of domestic consumption. The country’s total debt at the end of 2016 stood at 2.0968 million dollars reaching 13.89% of the country’s GDP. This leaves Botswana’s per capital debt at 943 dollars. The spread of HIV/AIDS, however, appears as a menace to the country’s economic growth. Unemployment on the authority of government formal statistics stands at 20%, yet unofficial evaluations point higher (Fig. 1).

Botswana’s Mining Industry Mining is extremely important to the Botswana economy, and all mineral rights in Botswana are vested in the state. The Ministry of Minerals, Energy and Water Resources (MMEWR) has the

Minerals Mined in Botswana • Diamond This is the country’s main mineral accounting for 53% (473 licenses operated by 29 companies) of all prospecting licenses issued in Botswana (2008). Diamond mining has fueled much of the country’s expansion and thus

18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 2014

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Botswana: Mineral Policy, Fig. 1 Trends of GDP of Botswana (1960–2016). (Source: World Bank Data (Accessed 28/10/2017))

responsibility to ensure that the mineral resources of the country are explored and exploited in the most efficient, beneficial, and timely manner. A current 85/15 percentage partnership with De Beers , called Debswana, mines the diamond fields of Botswana making the volumes mined from Botswana second to Russia in terms of total volume; Botswana is, however, the world’s leading producer of diamonds in terms of value, producing 23.2 million karats worth USD 3.63 billion in 2013. This accounts for 81% of total revenue generated from mineral resources in Botswana. With the creation of the world’s largest diamond sorting and valuing center in Gaborone in 2013, mining and associated local content and value addition (LCVA) from their diamond sector thus played a major role in metamorphosing the economy from one of the poorest in the world to an upper middle-income country. Mining has been the largest contributor to GDP for the past 35 years and the source of large export earnings. The mining partnership agreement in 2014 generated USD 6.9 billion for the economy (Table 1).

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Botswana: Mineral Policy, Table 1 Status of mining rights in Botswana Name of mine Khoemacau Copper Mine

Parent company Cupric Canyon

Orapa/Lethakane and Damtshaa Mines Tati Nickel Mine

Debswana

Karaowe Diamond Mine Ghaghoo Diamond Mine Mupane Gold Mine BCL Mine Morupule Colliery Jwaneng Diamond Mine

Government of Botswana Lucara Diamond Corp. Gem Diamonds Galane Gold Government of Botswana Debswana Debswana

Country of origin USA

Metal(s) of interest Copper and silver Diamond

Status Closed/care and maintenance Operational

Canada

Nickel and copper Diamond

Closed/care and maintenance Operational

UK

Diamond

Canada Botswana

Gold Copper

Botswana Botswana

Coal Diamond

Closed/care and maintenance Operational Closed/care and maintenance Operational Operational

Botswana/ RSA Botswana

Source: Tshelang, 2017

dominates the national economy and will continue to be its mainstay for the foreseeable future. In 2007 mining accounted for about 35% of Botswana’s GDP, and diamond production contributed about 77% of the value of the mining sector. Botswana was the world’s leading producer of diamond by value and ranked second in terms of volume after the Russian Federation. Botswana’s gem diamond production accounted for 26.5% of world and 33.8% of African output. Production declined by 3% in 2008, and diamond revenues decreased substantially due to lower diamond prices. A unique 85/15 percentage partnership with De Beers named Debswana and a relocation of their main diamond processing center to Gaborone in 2013 have increased mineral revenue to Botswana’s economy (Tshelang 2017). • Coal Eastern Botswana has extensive coal reserves and has the potential to develop and support a coal-bed methane industry and additional coal-fueled electricity-generating plants. See http://www.eisourcebook.org/1362_ ExtractiveIndustries.html. • Others Other mineral commodities have held traditionally significant, though smaller, roles in the

Botswana national economy. The country registered significant increases in the production of copper (15.7%), gold (16.7%), nickel (26.7%), cobalt (39.2%), and coal (9.8%). • Soda Ash and Other Gemstones Botswana is the world’s third largest producer of soda ash (natural sodium carbonate) and has the second largest reserves after the USA; however, soda ash output declined by nearly 6% in 2008. The country also produces salt (ninth largest producer in Africa) and semiprecious stones, mainly agate and carnelian. • Copper-Nickel Botswana was the second largest producer of nickel (after South Africa) and third largest coal producer in Africa. With the SelebiPhikwe mine due to close in 2011–2012 and large nickel projects due to come on stream in Madagascar and Tanzania, Botswana will inevitably slip in the nickel production rankings.

Production and Export of Minerals Mining Exports 89.9% of total export value is from the mining sector (March 2016) with 85.4% (5456.9 million

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pula) from diamonds and 4.5% (290.4 million pula) from copper-nickel (March 2016). Mining Contribution to National Revenue • Government revenue from mineral tax was 4458.02 million pula (USD 404 million) during the 2015/2016 fiscal year. This was 9% of the total revenue for 2015/2016 (2016). • Government revenue from mineral royalties and dividends was 13,840.81 million pula (USD 1254 billion) during the 2015/2016 fiscal year, 27% of the total revenue for 2015/ 2016 (World Bank data 2016). Employment in the Mining Sector • Mining employment that is in formal sector: 12,773% • Share of total formal employment: 32% (2015) Foreign Direct Investment Mining accounts for 44.6% of FDI (2014). Local Procurement Up to 50% of imported goods and services (14 billion pula/USD 127 billion) were for the mining industry (2010).

Classification of Reserves 1. Botswana is bestowed with a variety of minerals, yet diamond, copper, nickel, and cobalt are the most exploited. Diamond spearheads mining in Botswana with a total reserve of 130 million karats at the end of 2014. These kimberlitic hosted diamonds constituted about 17.8% of the global total and are found in central and Kalahari districts.

Total petroleum system and assessment unit (AU)

Kalahari Coalbed Gas AU Total undiscovered resources

AU probability

1.0

Accumulation type

2. Copper and nickel mining accounts for 16% of Botswana mineral resources. This sector of mining unfortunately came to a standstill following the voluntary liquidation of top producer BCL which was preceded by the collapse of two other producers in 2015, with Khoemacau taking over Boseto Mine and PenMin Holdings acquiring Mowana Copper Mine, where copper-nickel production is expected to begin in year 2017. Botswana however had total copper, nickel, and cobalt matted production reaching 61,683 tons in 2008. BCL Limited and Tati Nickel Mining Company produce the majority of total metal matte production with 52,423 tons in 2008. 3. Gold, soda ash, and coal/gas are not conventional mining commodities in Botswana, but together they account for approximately 3% of the country’s mining products. Gold has been mined in Botswana for several 100 years, with many old mine workings identified in the northeast. Botswana’s gold deposits were relatively small and difficult to mine, and attention soon turned to the much richer South African gold deposits on the Witwatersrand. However, in 1998, Gallery Gold, a small Australian company, discovered a substantial gold deposit at Mopane. Production began in 2004 and averaged around 250 kg of gold a month. In 2006, Gallery Gold was taken over by a major international gold mining company, Iamgold (Canada) (Fig. 2) (Jefferis 2016). Eastern Botswana alone is estimated to have 17 billion tons of coal and Botswana’s total coal reserves estimated at 212 billion tons. See https:// www.export.gov/article_Botswana-Mining. Also, a geology-based assessment methodology by the

Gas (BCFG)

Total undiscovered resources NGL (MMBNGL)

F95 F50 F5 Mean Permian Composite Total Petroleum System 4,504 Gas 622 3,523 11,721 622 3,523 11,721 4,504

F95

F50

F5

Mean

0 0

0 0

0 0

0 0

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Botswana: Mineral Policy, Fig. 2 Coal and gas resources of the Kalahari Basin. See https://www.extractiveshub.org/ servefile/getFile/id/5323

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US Geological Survey estimated undiscovered, technically recoverable mean resources of 4.5 trillion cubic feet of coal-bed gas in the Kalahari Basin Province of Botswana, Zambia, and Zimbabwe, Africa.

resettlement and compensation, require a more inclusive process and stronger legislative framework, and local content policy should be developed with mining sector participation (‘Botswana Mining Investment and Governance Review’, 2016).

Botswana’s Mining Policy

Strategies Strategies that have been highlighted to achieve the above policy objectives include creating an access to information act to ensure public access to all relevant government data; considering an initiative to improve transparency in the sector and create a forum to allow for ongoing dialogue between the government, civil society, and industry stakeholders; and developing a national land use policy and strategy that has the input of a range of stakeholders, including civil society, community, industry, academic, government, and traditional authorities. It should include a process for public input into government decisions on land use and determine if mining is always the preferable option; consider developing a protected area strategy that would remove certain ecologically sensitive land from mineral exploration or development; increase intragovernmental communication so that the timing of various types of mine permitting is coordinated; ensure that there is a “whole of government” approach to land use, consideration of mining compared to other socioeconomic activities such as ecotourism, and other opportunities for economic diversification; and align with the Africa Mining Vision’s recommendation that a portion of mineral revenue be returned to local government (through to communities) where mining has negatively impacted on the people and natural resources of a particular area.

The Conception and Objectives of Botswana’s Mineral Policy One of the major challenges that was confronted by the government of Botswana after independence was how to build a market economy. The republic reached an agreement in 1969 with South Africa and leveraged mineral revenue from rising capital imports and mineral exports instead of remaining a fixed percentage of total union custom income. The government of Botswana took possession of all mineral rights owned by various tribes to create a conducive environment for private mining investment, thereby making mining lease and prospecting licensing procedures easier (Mines and Mineral Act 1967). The National Assembly of the republic replaced the mining code in 1999 to provide a fair balance between different stakeholders by retrenching support for mineral rights possessed by private individuals. The key focus of the mineral policy is to maximize the national economic benefits from the development of natural resources, and the policy is aligned with Botswana’s Mineral Revenues, Expenditure and Savings Policy to achieve this aim. Botswana was ranked 1st in Africa and 12th out of 104 countries globally among mining jurisdictions in the Frazer Institute 2016 Mining Policy Perception Index (PPI). Indeed, the just-released World Bank (2017) Mining Investment and Governance (MInGov) review for Botswana notes that Botswana’s existing mining policy and legal framework are sound. Mining sector institutions are for the most part staffed with trained, qualified people. Environmental protection legislation is current and in line with international good practice, with the exception of access to environmental impact assessments. Land use issues, including

Actions Possible areas for medium- to long-term action include the following: • Update the Mines and Mineral Act, 1999, to reflect current “better practice” in mineral regulation.

Botswana: Mineral Policy

• Increase the human resource capacity of the Department of Mines in licensing and geodata capture and utilization. • Publish mining contracts and beneficial ownership for both large-scale diamonds and integrated projects and subject them to audits. • Strengthen the EIA Act of 2011 to ensure a more participatory approach for all stakeholders, with separate but related policy for corporate social responsibility (CSR) along better practice. • Develop a national land use policy and strategy that has input from all relevant stakeholders. • Increase the coordination and communication of permitting and projects and the consideration of other socioeconomic diversification opportunities. • Align with the broader Africa Mining Vision (AMV) agenda specifically that recommends a larger portion of mineral wealth returns to host communities that have the largest environmental footprint from mining.

Legal, Fiscal and Regulatory Framework The government of Botswana has in place potent institutional arrangements for mineral exploration and development administration. Notable among them is the Department of Geological Survey. The department was established in 1948, and the obligation of the institution is effective geo-scientific information administration to foster economic development in the country. The department carries out direct mineral exploration and oversees and encourages mineral exploration by private companies. The department issues out three types of prospecting license – reconnaissance permit, restricted prospecting licenses, and prospecting license to private companies – and ensures through direct visits and monitoring that the companies obtaining the license carry out the exploration agreed upon. The Department of Mines’ primary objective is to establish and maintain effective organization to administer mineral exploitation legislation and to enhance socioeconomic, financial, and other

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benefits to Botswana arising from the exploitation of mineral resources. The department is also active in investment promotion and provides technical support to the Mineral Policy Committee and the negotiating teams. The Ministry of Mineral Resources, Green Technology and Energy Security coordinates development and operational activities in the energy, water, and mineral sector. The ministry provides necessary guidance and leads in negotiations in promoting mineral development through the Mineral Development Company Botswana (MDCB).

Law Supporting Mining in Botswana Regulated by Mines and Mineral Act, 1999 Ownership of Minerals All rights of ownership in minerals are vested in the Republic of Botswana, and the sector Minister shall ensure, in the public interest, that mineral resources of the Republic are investigated and exploited in the most efficient, beneficial, and timely manner. Acquisition of Mineral Right • Individual – Must be over 18 years of age – Be a citizen of Botswana, or resident in Botswana for at least 4 years – Never been declared bankrupt – Never been convicted of any offense of which dishonesty is an element in the previous 10 years • Company – Must be incorporated in Botswana – Must establish a domicilium citandi et executandi in Botswana – Should not be in liquidation – Must provide proof of financial and technical ability • Mining license granted for 25 years, with allowance of renewal for another 25 years • Prospecting license granted for 3 years, on area covering maximum 1000 km2

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Fiscal Regime Corporate tax – all minerals excluding diamonds

Corporate tax – diamond mining

Mineral royalties

Value added tax

Other taxes

International Memberships Varies from 22% to 55% and calculated as Tax ¼ 70% (150%/x), where x is the ratio of taxable income to gross income Taxed in terms of an agreement with the government of the Republic of Botswana Precious stones: 10% Precious metals: 5% Other minerals: 3% 12% – charged on importation of mining equipment into Botswana Capital gains tax (22%), rent (5%) Capital allowance (100% deduction)

Government Investment in Mining • “Upon the issue of a mining licence, the Government shall have the option of acquiring up to 15% working interest participation in the proposed mine, with the right to appoint up to two directors, with alternates, and to receive all dividends” (Sec 40(1) of Mines and Mineral Act). • The above provision does not apply to diamond mining. • For diamond mining: Sec 51(1–3) – “Any application for the issue, renewal, transfer or amendment of a licence to mine diamonds shall initiate a negotiating process, in good faith, between Government and the applicant covering all technical, financial and commercial aspects of the proposed project including Government participation.” – “Should the negotiations not lead to an agreement within six months or an extended period project including Government participation.” – “Upon successful conclusion of the negotiation, the Minister shall issue a license reflecting the terms and conditions agreed.”

Botswana is a member of several organizations with key ones including: • African, Caribbean, and Pacific Group of States (ACP) • African Development Bank Group (AfDB) • African Union (AU) • World Trade Organization (WTO) • Food and Agriculture Organization (FAO) • Group of 77 (G77) • Multilateral Investment Guarantee Agency (MIGA) • United Nations (UN) and sister organizations

Concluding Statement According to a MInGoV 2016 review, the following key points are worthy of mention and must be looked at going forward: • There is a need to provide clearer detail and clarity with licensing. The publishing of timelines, and updating of mineral laws and redrafting of regulations to complement such updates. • The government of Botswana responds to the call for greater transparency and disclosure in the diamond industry and associated linkages programs. This affects global ranking in transparency and accountability along the mineral value chain. Other key findings by the MInGoV review highlight the following key points: • Performance across the mineral value chain is better in the latter stages. • Environmental protection legislation is quite current and based generally on “better practice.” • Local content policy for the mining industry needs to be developed further. With regard to the larger economy, a slowdown in diamond production due to the increased cost in production has exacerbated

Brazil: Energy Policy

the challenge of available mineral revenue and heightened the disparity between the wealthy urban and rural poor. A better economic model is required, and better linkages are hence required between the mining sector and larger economy to increase the positive impacts of mining on the development. Policies designed to facilitate a stronger investment climate for private sector-led growth and a more efficient management of social sector spending and to strengthen its human and physical assets for sustained growth. See http://www.worldbank. org/en/country/botswana/overview.

81 World Bank Group (2016) Botswana mining investment and governance review. International Bank for Reconstruction and Development. Washington www.edhuliando.com/home/index.php/news/world-s-topdiamond-producing-countries

Brazil: Energy Policy Lívia Amorim Researcher at FGV CERI, Rio de Janeiro, Brazil

General Information on Brazil References Botswana Mining Investment and Governance Review, 2016 http://siteresources.worldbank.org/INTEXPCOMNET/ Resources/Briefing_Note_-_Botswana.doc http://www.eisourcebook.org/1362_ExtractiveIndustries. html http://www.europarl.europa.eu/intcoop/acp/2016_botswana/ pdf/study-en.pdf http://www.gov.bw/en/ministries–authorities/ministries/mini stry-of-minerals-energy-and-water-resources-mmwer/ http://www.gov.bw/en/Ministries–Authorities/Ministries/ Ministry-of-Minerals-Energy-and-Water-ResourcesMMWER/Department-of-Mines/ http://www.miningweekly.com/article/botswana-copperproduction-ceases-as-mining-sector-struggles-forsurvival-2016-12-06 http://www.worldbank.org/en/country/botswana/overview https://countryeconomy.com/national-debt/botswana https://openknowledge.worldbank.org/handle/10986/25225 https://southernafrican.news/2017/02/03/botswana-copperproduction-resumes/ https://www.export.gov/article-Botswana-Mining https://www.extractiveshub.org/servefile/getFile/id/5323 https://www.fraserinstitute.org/sites/default/files/survey-ofmining-companies-2016.pdf Charles J. Johnson Mineral objectives, policies and strategies in Botswana- analysis and lessons Jefferis K (2016) Economic accounting of mineral resources in Botswana, wealth accounting and the valuation of ecosystem services Johnson CJ (1981) Mineral objectives, policies and strategies in Botswana – analysis and lessons, New York pg.1477–8947. onlinelibrary.wiley.com Tshelang M (2017) Mineral development agreement between government of the republic of Botswana and De Beers group of companies, presentation at the university of Dundee, Scotland, (Unpublished)

Brazil is the 5th largest country of the world and the 1st in South America with a total area of 8,515,767.049 km2 (IBGE 2014). In 2014, it had a GDP of US$ 1.73 trillion and total population of 202,033,670 inhabitants, being 85.43% concentrated in urban areas and 14.57% in rural areas. Brazilian HDI (2013) is 0.744 (US HDI is 0.914) and unemployment level in 2015 is 7.9%. The GDP per capita ranges US$ 11.199 (IBGE 2014). The main economic activities are agriculture and extractive industries. Former Portuguese colony, Brazil is a secular presidential republic with a strong catholic tradition. The political system is multipartidary and the legislative power is bicameral (congress and senate). The country lived a military dictatorship from 1964 to 1985 and on the last twelve years is being governed by the left-oriented party PT. Dilma Rousseff was the former president of the Ministry of Mines and Energy.

Need of Nonrenewable and Renewable Resources The energy mix relies 41% on renewables and 59% on nonrenewables (EPE 2014). Total primary energy consumption is 12.095 quadrillion Btu, 8th largest consumer, and production is 9.758 095 quadrillion Btu, 10th largest producer (EIA 2012). In 2014, the growth of energy supply was

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Brazil: Energy Policy, Table 1 Brazilian Energy Mix Source Renewables Electricity Sugarcane biomass Firewood and charcoal Other renewables Nonrenewables Oil Natural gas Coal Uranium (U3O8)

2013 121.5 37.1 47.6 24.6 12.3 174.7 116.5 37.8 16.5 3.9

2012 119.8 39.2 43.6 25.7 11.4 163.6 111.4 32.6 15.3 4.3

Source: EPE. National Energy Balance. 2014

80% driven by oil and products and natural gas (Table 1). According to 2013 data, the industry and transportation were responsible for approximately 66% of total energy consumption in Brazil (EPE 2014), but industrial consumption reduced 0,5% and is expected to shorten more due to the economic crisis the country is facing. According to data published by the World Bank, the last balance of energy imports for Brazil was made in 2011 and the net percentage of energy use was 8% at the time (World Bank 2015). The electricity supply is currently compounded by different sources, being hydropower the one with the highest share on the system (62,21%). Besides hydro, Brazil also has installed capacity of fossil thermal power plants (18,07%), wind (4,05%), solar (0,01%), biomass (8,61%), and nuclear (1,37%). Also, 5,65% of the supply comes from electricity imports from Paraguay, Argentina, Venezuela, and Uruguay (ANEEL 2015).

Energy Policy Conception of Brazil The general framework for Brazil’s energy policy is established by Law no. 9.478/97 (Petroleum Act) (Table 2): These are the governing principles of Brazilian energy policy. Besides that, there is not an official document that sets specific goals to be reached by

Brazil: Energy Policy, Table 2 Brazilian Energy Policy Goals Principles and objectives of the National Energy Policy Preserve the national interest Promote the development and the growth of labor market and the maximization of resource recovery Protect consumers’ interest, including in respect to price, quality, and availability of products Protect the environment and promote the conservation of energy Guarantee the supply of oil products throughout the national territory Promote the increase of natural gas use on an economic basis Identify the most adequate solution for the supply of electricity in the various regions of the country Utilize alternative energy sources through the economic use of available inputs and applicable technologies Promote free competition Attract investments in energy production Promote the growth of the country’s competitiveness in the international market

the country’s energy policy, as a percentage of emissions or of a specific source in the energy matrix (wind, gas, etc.).

Regulatory Framework Petroleum As in most countries, the federal government owns the resource in place and since 1995 (after the Constitutional Amendment no. 9/95) can award licenses to private companies to explore and produce oil and gas in the country. Currently, after the pre-salt discovery and a change in the legal framework, there are three E&P regimes in the country: (a) concession regime, for areas outside of the pre-salt polygon; (b) production sharing regime for areas in the pre-salt polygon and other strategic areas, where Petrobras has the exclusive operation and minimum participation of 30% on the blocks; and (c) onerous assignment to Petrobras of blocks on the pre-salt area (up to a limit of five billion boe. With regard to the petroleum policy and regulation, the following institutional bodies are involved (Table 3):

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Brazil: Energy Policy, Table 3 Institutional Bodies enrolled in Petroleum regulation in Brazil Source Ministry of Mines and Energy (MME)

National Council for Energy Policy (CNPE)

National Agency of Petroleum, Natural Gas, and Biofuels (ANP)

Pre-salt Petroleum SA (PPSA)

Role/function The ministry has several competences, represents the central government on E&P awarding contracts, sets up the level of local content required, the minimum percentage of the Union on the profit oil CNPE is a council linked to the presidency and shall propose actions to drive the energy policies of the country. One of the main roles of CNPE is to define the rhythm and the content – the blocks – of the E&P bidding rounds in the country ANP is the independent regulator for oil and gas upstream, midstream, and part of the downstream in Brazil. Besides other roles, ANP is responsible for implementing the country’s energy policy, granting authorization for some activities in the chain (e.g., natural gas processing and commercialization) and more recently (after the Natural Gas Act – Law 11.909/09) to establish transport pipelines tariffs PPSA is the state-owned company created to represent the Union’s interests on the production sharing contracts. The company has veto powers on the operating committee of the PSCs and is also responsible for auditing the costs submitted by the operator to be recovered on the cost oil

Imports and exports of oil and gas are by Constitution a monopoly of the Federal Union and require a license to be made by a private party. Distribution of petroleum requires an authorization and is regulated by ANP, except price. Pipeline natural gas distribution is regulated by local states and is remunerated by tariff set by an independent regulator (for the states which have) or by other body defined by law. Petrobras, the Brazilian NOC, is an important vehicle of energy policy implementation in the country. Although not formally entitled to play such role, as a “national champion” controlled by the federal government, Petrobras has been – and continues to be – used to execute relevant policies in the sector, as subsidize gasoline prices or natural gas prices supplied for electricity generation (see information on Thermoelectricity Priority Program (PPT)). Uranium In Brazil, the exploration of all the activities encompassed by nuclear power value chain is also exclusive of the federal government, from enrichment to mining and nuclear electricity generation. Currently, exploitation of uranium is delegated to the state-owned company Brazilian Nuclear Industries (INB). Nuclear electricity generation is exclusively operated by Eletronuclear, a subsidiary of Eletrobras. Brazil has now three nuclear power plants: Angra I, Angra II, and Angra III.

Electricity All the electricity activities (generation, transmission, distribution, and commercialization) are regulated by the federal government. Transmission and distribution are granted under a concession regime and the concessionaires are remunerated by tariff. There are two “environments” to trade electricity in Brazil, the so-called “Regulated commercialization environment” (acronym in Portuguese ACR) and the free trade environment (acronym in Portuguese ACL). Under the free trade environment, suppliers (generators or not) are free to bilaterally sell electricity under a negotiated price and have open paid access to the transmission and distribution grid. Under the ACR, the government organizes auctions every year in order to buy electricity to meet the demand of the distribution companies (DISCOs) on the long term. The contracts known as CCEAR are signed between the seller (generator) and the buyer (distribution company) and normally are from 15 to 30 years in length. The Brazilian Electricity Regulatory Agency (ANEEL) regulates the contract. For hydropower, the generators receive the price bided in the auction and shall supply a fixed amount of electricity. For thermal power, the seller receives a two-part tariff: (i) a fixed revenue which remunerates the capital cost and pays for availability of the plant for dispatch and (ii) a variable

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Brazil: Energy Policy, Fig. 1 Brazilian transmission grid (Source: Brazilian Transmission Grid. ONS. Available at: http://www.ons.org.br/conheca_sistema/mapas_sin.aspx)

part, which passes through the O&M variable costs and fuel costs. Brazil is a wide country and the electricity system installed capacity is 136,341.49 MW (ANEEL 2015). The country is connected from north to south by an interconnected transmission system that lengths 116,767.7 km, denominated “interconnected national grid,” and known under the acronym SIN. Such aspect of the system allows for the optimization of the dispatch of the resources available. The system is operated by the non-lucrative operator ONS which is responsible for coordinating the operation of the grid. The following map shows the existing and projected – 2015’s horizon – gridlines (Fig. 1):

International Aspects On what relates to nuclear power, Brazil is a member of the International Atomic Energy Agency (IAEA) since 1957. The country is also a signing party to Mercosur, established by the Treaty of Asuncion in 199. Among other principles, the Treaty provides that the country will work together to eliminate physical, commercial, and other political-regulatory barriers to promote the free trade of goods and services between the member states (Argentina, Brazil, Paraguay, Uruguay, and Venezuela). Another important international energy-related initiative that Brazil is involved is the Initiative for Integration of the Regional Infrastructure of South

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America (IIRSA), launched in 2000. IIRSA gathers 12 Latin American countries toward integration through transportation, energy, and telecommunication projects. IIRSA aims to promote coordination and integration between the countries also by the legal and regulatory framework involved in binational/multinational investments in the region.

Concluding Statement Brazil is currently facing a deep and severe political and economic crisis, with a strong and direct impact over energy activities in the country. The oil and gas sector is one of the most affected by the corruption scandal involving Petrobras and its contractors. On the other side, the power sector went from a threat of shortage in supply in 2014 and 2015 – a blackout – to a scenario of excess supply in the second half of 2015 and 2016. Also, early 2015, the country experienced a substantial rise in electricity tariffs for end consumers (up to 70%) as part of the so-called “tariff realism” policy. This dramatic scenario is calling for regulatory reforms in Brazil and for incentives to attract investors. Recent announcements by the government anticipate that there might be changes on the pre-salt legal framework, especially with regard to Petrobras’s exclusive right to conduce operations (and 30% minimum share) and to local content rules (to be adjusted to levels more realistic to the pace of domestic industry development). Furthermore, Petrobras announced the sale of important assets, such as the thermal power plants and participation on the distribution companies (Petrobras has now participation on 18 of the 27 existing gas distribution companies in Brazil). The market also speculates that Petrobras will sell part of or all the natural gas transportation assets. This movement can be an important change to the local market, since Petrobras continues to be a de facto monopolist, even after the opening of the market in 1995. Finally, with regard to electricity generation, the country is undergoing a considerable change. Historically reliant on hydropower generation, due to environmental and social restrictions, Brazil is not investing on large reservoir hydropower

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plants. As a result, the need for sources which are firm and easily dispatchable is growing. Due to the increase in energy prices, natural gas (LNG) is rising as a competitive option for electricity generation. The country has now three LNG terminals in operation, all belonging to Petrobras. After the two last electricity auctions to add new capacity to the system, three large thermal LNG plants have been contracted (approximately 3850 MW) and three new LNG terminals. This is also a challenge to the country, which will have to redesign contracts and adapt system operation rules to this new reality.

References ANEEL (2015) BIG. Databasis of Electricity Generation. Available on: http://www.aneel.gov.br/aplicacoes/ capacidadebrasil/Combustivel.cfm. Accessed Jan 2016 IBGE (2014) Available on: http://www.ibge.gov.br/home/. Accessed Jan 2016 EIA (2012) Brazil Country Analysis. Avaliable on: https:// www.eia.gov/beta/international/analysis.cfm?iso=BRA EPE (2014) Brazilian Energy Balance 2013. Available on: https://ben.epe.gov.br/downloads/Relatorio_Final_BEN_ 2014.pdf The Natural Gas Act. Law no. 11.909/09 The Petroleum Act. Law no. 9.478/97 The Power Sector Act. Law no. 10.848/04 Tolmasquim M (2011) Novo Modelo do Setor Elétrico Brasileiro. Editora Synergia, Rio de Janeiro World Bank (2015) Data. Energy imports. Available on: http://data.worldbank.org/indicator/EG.IMP.CONS.ZS. Accessed Jan 2016

Brazil: Mineral Policy Adriano Drummond Cançado Trindade University of Brasília (UnB), Brasilia, Brazil LLM (Distinction) Resources Law & Policy, The Centre for Energy, Petroleum & Mineral Law & Policy (CEPMLP), University of Dundee, Dundee, UK

General Overview Brazil has considerable geological potential. Historically, the country was a large producer of diamonds in the seventeenth century and of gold

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in the eighteenth century. At present, the country produces more than 80 mineral substances, being an important global player in some of those commodities. According to the United States Geological Service (USGS), in 2019, Brazil was the largest world producer of niobium (88% of the world production), the second largest producer of iron ore (19.2%), the third largest producer of graphite (8.7%), and the fourth largest producer of bauxite (7.8%) (data collected from U.S. Geological Survey 2020). Furthermore, the country has significant reserves of niobium (84.6% of the world reserves), graphite (24%), rare earths (18.3%), nickel (12.4%), tin (14.9%), iron ore (17.1%), and manganese (17.3%), based on the statistics of the USGS. The total mineral production in 2019 was valued in approximately US$ 38 billion, and it is estimated that the 2020 Brazilian mineral production will increase to US$ 40 billion, according to the Brazilian Mining Association (IBRAM). Brazilian mineral exports in 2019 accounted for more than US$ 32.5 billion (FOB), representing around 14.5% of Brazilian overall exports in the period, while mineral imports reached approximately US$ 8.2 billion (FOB) (data collected from Instituto Brasileiro de Mineração – IBRAM). The mineral potential is coupled with a diversified industry and a large and vibrant economy, despite the monetary turmoil that the country faced in the last few years. Brazil has a population of 212 million inhabitants and its GDP was R$ 7.3 trillion (approximately US$ 2.02 trillion) in 2019 (information disclosed by the Brazilian Institute of Geography and Statistics – IBGE at https:// www.ibge.gov.br/apps/populacao/projecao/ and https://www.ibge.gov.br/explica/pib.php, respectively). The country has also been a popular destination of foreign direct investment, which – according to the United Nations Conference on Trade and Development (UNCTAD) – reached US$ 72 billion in 2019 and put the country as the world’s sixth largest FDI inflow host economy (data collected from United Nations Conference Trade and Development 2020). Since the re-democratization of the country in 1985, it has been considered a politically stable

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environment, despite the fact that two presidents were impeached, and several major corruption scandals involving top governmental officials hit the headlines. General elections are held regularly every 4 years for President of the Republic, State Governors, members of the Senate and the House of Representatives, and State Legislatures. Mayors and members of Local Legislatures are also elected, but those elections do not coincide with the general elections. Corruption investigations have been conducted independently by public prosecutors and many politicians – including a former President of the Republic – have been sentenced to imprisonment.

Regulatory Framework Although the current Constitution dates back to 1988, a significant reform was undertaken in 1995 to open up various economic sectors, including mining. Free participation of foreign capital in the Brazilian mineral sector greatly contributed to the growth of this sector from then on, which also contributed to the economic development of Brazil. The Constitution provides that ownership over minerals differ from the ownership of the land. In fact, the Federal Government (União) is the owner of the mineral resources and may grant authorizations and concessions for exploration and mining to Brazilian individuals and companies incorporated in accordance with Brazil laws and with registered address and management in the country – except for nuclear minerals, the exploration and mining of which are considered an exclusive right (under a monopoly) of the Federal Government. There are no restrictions to Brazilian companies controlled or wholly-owned by nonBrazilians, except for exploration and mining in areas located in the border zone – that is, the 150 km wide strip of land parallel to Brazilian borders – where the Government understands that foreign participation is limited to 49%. The holder of the mining concession is entitled to all of the minerals it produces, but a royalty is payable to the Government, to be shared between the Federal Government, States, and Municipalities.

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Moreover, the owner of the land is also entitled to a royalty. Finally, the Constitution requires that the one who exploits mineral resources restores the areas degraded by the activity. Exploration and mining rules in general are provided for in a Federal Mining Code (Decreelaw 227/1967, as subsequently amended) and its Regulations (Decree 9406/2018). Specific laws also deal with: (a) the extraction of minerals for the use in the construction industry (Law No. 6567/1978, as subsequently amended); (b) the performance of garimpagem activities in alluvials (Law No. 7805/1989); and (c) the monopoly over the exploration and production of nuclear minerals (Laws Nos. 4118/1962 and 6189/1974, as subsequently amended). All these pieces of legislation provide for five different legal regimes for exploration and/or mining: (a) Concession Regime: This system entails the operations aiming at the industrial development of the deposit, from the extraction of the mineral substance to its processing. Work under the concession regime depends upon an ordinance of the Ministry of Mines and Energy (MME), except for minerals used in civil construction, where the concession may be granted by the National Mining Agency (“Agência Nacional de Mineração” – ANM). (b) Authorization Regime: This system refers to the work required for the definition of the deposit, its evaluation, and the feasibility of economic development. Work under the authorization regime depends upon the issuance of a mineral exploration license granted by the ANM. (c) Licensing Regime: This system refers to the development of certain mineral substances which will be used immediately in the construction industry, for instance, clay used for the manufacturing of red ceramics and limestone used to correct the soil in agriculture. Work under this regime depends on the issuance of a specific license, to be granted by the authority of the municipality where the deposit is located, as well as on its registration with the ANM.

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(d) Garimpeira (Alluvial) Mining Regime: This system serves for the immediate development of the mineral deposit that in virtue of its nature, dimension, location and economic utilization, can be exploited immediately, independent from previous exploration. Work under this regime depends on a permission to be granted by the ANM. (e) Monopoly Regime: This system results from special laws and implies in direct execution by the Federal Government. Besides all the five regimes above, it is also possible that the Government (either at the federal, state or municipal level) carries out directly the extraction of certain mineral substances to be used immediately in public works carried out directly by that governmental entity. The extraction registration is issued by the ANM. Although this possibility may not be technically qualified as a regime (since it does not involve the extraction of minerals for commercial purposes), it has implications in what mining regulations concern. Minerals extracted based on an extraction registration cannot be sold or transferred to third parties and can be used only on public works. By and large, the two regimes mostly adopted for large-scale activities are the authorization for exploration (in Portuguese “autorização de pesquisa”) and the concession for mining (in Portuguese “concessão de lavra”). In fact, those two regimes are sequential, so that a given mining concession at some point in time has been preceded by an exploration license (we shall not delve into the mine manifest, which is a title for mining activities reminiscent from periods prior to 1934, at which time the landowner would also own the mineral resources subjacent to its lands). More details on these two regimes are provided below. Exploration. Exploration can be carried out by Brazilian individuals or companies through an exploration license issued by the ANM. Exploration is defined by the Mining Code as the work required to locate and define a deposit and to determine the economic feasibility thereof.

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Exploration licenses are granted on a “first-come, first-served” basis (known in Brazil as “priority”), provided that the application covers areas considered to be “free” (i.e., not previously staked by third parties with mineral rights in force). Exploration terms are set from 1 to 3 years, renewable at the discretion of the ANM. Such licenses may be transferred (in whole or in part) upon the prior approval of and registration by the ANM. The holder of an exploration license has the exclusive right to carry out exploration within the license area. Although the exploration license refers to a specific substance, the titleholder may explore for other mineral substances found in the area and has the obligation to report such occurrences to the ANM. Exploration works can be carried out in lands on the public or private domain. Landowners or occupiers are entitled to a rent for the period the property that is occupied with exploration activities, and compensation for damages caused by exploration. The precise amounts of the rent and compensation for damages can be freely negotiated between the landowner or occupier and the holder of the exploration license. In the event the parties are not able to reach a consensus, there is a court procedure set out in the Mining Code to ensure that the holder of an exploration license has access to the exploration area. The rent for occupation of the land cannot exceed the maximum net income that the owner or occupier would earn from its agricultural-pasture activity in the area of the property to be explored. The compensation for damages cannot exceed the assessed value of the area of the property intended for exploration. If the exploration work – even when only carried out on part of the property – causes the portion of the property not affected by the exploration to be unfeasible for pasture/agriculture purposes, compensation for damages may reach the total assessed value of the property. The holder of an exploration license also has to report yearly to the ANM on exploration expenditures (but there is no legal requirement for minimum exploration expenditures) and to pay an annual exploration fee per hectare to the ANM. The fee is area-based and is charged at BRL 3.55 (approximately US$ 0.67 as of June 2020) per

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hectare per year for the first term of exploration, and R$ 5.33 (approximately US$ 1.00) per hectare per year during the extension term. Transition from exploration to mining. Within the validity period of the exploration license or its renewal, the titleholder must submit a report on the results of the work to the ANM. In the event the exploration report is positive (i.e., when it shows the existence of a deposit which can be both technically and financially developed) and is approved by the ANM, the holder of the license will have 1 year to apply for a mining concession. If the license holder does not apply for the mining concession within this time period (or request an extension of the deadline), the mineral rights will lapse and will be auctioned to interested third parties. Classification of mineral reserves. The Regulations to the Mining Code define and classify deposits and reserves. However, in doing so, the Regulations do not match internationally accepted standards such as the JORC or the CIM (NI 43-101). In practical terms, Brazilian legislation provides for its own system, so companies need to abide by the Brazilian system to preserve its mineral rights, and resort to internationally accepted standards, which are much more detailed and precise, and accepted by the market. This could represent a difficulty for investors in the sense that its transition from exploration to mining may happen at a certain point where Brazilian requirements to classify a reserve have been met, but international standards to classify a resource or reserve may still require further exploration. Bearing this issue in mind, the new Regulations to the Mining Code approved by Decree 9406/ 2018 allow that the ANM and mining companies employ international reporting standards, which will reduce the gap between the Brazilian mining industry and the global standards adopted by the sector. ANM is expected to further regulate the matter so that the use of international reporting standards be fully applicable. Mining. Brazilian mining legislation defines mining as a set of connected operations with the principal aim to commercially develop and utilize a deposit, from extraction of the useful mineral substances to their processing. Mining may be

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performed through a mining concession, to be granted by the Ministry of Mines and Energy to Brazilian companies (i.e., companies incorporated in Brazil, with registered address and management in the country, although their equity may be 100% foreign). Mining concessions may be granted for the exploitation of all sorts of minerals and are valid up to the depletion of the mineral deposit, and may be transferred (in whole or in part) upon the prior approval of and registration by the ANM. Mining concessions can also be encumbered as security. Construction/industrial minerals can also be exploited under the Licensing Regime, where the local authority (municipality) issues a license to the interested party (as long as such party is the landowner, or has obtained the landowner’s consent), and such license is further registered with the DNPM/ ANM. In practical terms, in the event of lack of landowner’s consent, the interested party may apply for an exploration license and, later, for a mining concession. The holder of a mining concession has exclusive rights to mine the concession area and become the owner of all produced minerals. Furthermore, the holder of the concession is entitled to create servitudes over the land covered by the concession or adjacent to it for mining, processing, and infrastructure. On the other hand, the concession holder has to: (i) commence development within 180 calendar days; (ii) not suspend works for longer than 6 months without the prior approval of the ANM; (iii) mine according to the mining plan approved by the ANM; (iv) compensate the landowner for occupation of the property; (v) pay the applicable royalties to the Government and to the landowner, if applicable; (vi) restore the areas degraded by mining; and (vii) report annually to the ANM on activities, production, and sales. In Brazil currently there is no legal requirement of financial guarantee that ensures that sufficient funds will be available for restoration activities. In addition to the mining concession, the titleholder has to obtain an environmental license, which is usually issued by a separate State environmental authority (except for a few cases where the federal environmental authority has the

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attribution of issuing the license, such as activities that take place simultaneously in the Brazilian and foreign territories, in the continental shelf, in indigenous lands, in federal environmental conservation areas, in more than one Brazilian State simultaneously, military activities, activities that involve radioactive materials (including exploration and mining of nuclear minerals), and specific activities to be defined by the Federal Government). Environmental licensing is usually a three-stage process, where (a) the project is reviewed conceptually, and an environmental impact assessment is prepared and discussed with the community and, if approved, the preliminary license is issued; then (b) construction is assessed and the installation license is granted; and finally (c) operations are allowed pursuant to an operation license. Other ancillary licenses and approvals may be required, such as the license to impound water, the approval of the municipality if the operations are located within the city limits, the approval of the archaeological authority in the event of archaeological interests in the mine site, among others. Communities and Indigenous People. Community development agreements are not provided for in Brazilian mining legislation. Nonetheless, some companies adopt policies of fostering the dialogue and developing a relationship with local communities. Exploration and mining activities are not banned in indigenous lands and, in fact, are allowed under the 1988 Federal Constitution. In order to regulate those activities, the Federal Government presented a bill to the National Congress in February 2020 (Bill No. 191/2020). The bill provides that the Federal Government has to commission studies about the potential for a site and then request the authorization of the Congress to organize auctions with regard to such mineral rights. In this process, the indigenous populations that may be affected shall be heard. The hearing does not preclude further consultation such as the one provided for in Convention 169 of the International Labour Organisation (which was ratified by Brazil in 2002). If the Congress gives the approval, the mineral rights will be auction and shall be

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administered in accordance with the provisions of the Mining Code. The indigenous people will be entitled to a rent for the occupation of the lands. In addition, if there is any production from areas within indigenous lands, they will be entitled to a royalty. Bill No. 191/2020 will be reviewed by a special committee within the House of Representatives. If it is approved, it shall be reviewed by the Senate. In the event of approval, it will be remitted to the President of the Republic to pass it into law or veto any of its provisions. Royalties. Producing mines must pay a royalty to the Government, which is shared between the producing municipality (60%), the producing state (15%), nonproducing municipalities affected by the operations (15%), and the federal government (10%), as per Laws Nos. 7990/1989 and 8001/1990 (as amended by Law No. 13540/ 2017). The royalty rate varies from 1% to 3.5%, depending on the substance. The royalty is calculated based on the proceeds from the sale of the ore, after the marketing taxes have been deducted. Mining companies that verticalize their operations (i.e., industrialize the mineral substance) calculate royalty on the current market price of the substance (considering the applicable local, regional, national, or international market) or on a reference value calculated based on the cost of extracting and processing the ore up to the last stage of beneficiation. In the case of the royalty assessed as per the reference value, a 10% discount or surplus to the royalty may be added depending on a high or low degree of value added by the mining company. Producing mines must also pay a royalty to the landowner. The royalty is calculated at 50% of the royalty due to the Government and shall be paid monthly. Tailings Dams. Two major dam breaks took place in Brazil in less than 4 years. Those accidents brought about casualties, significant environmental damage, and social impact. As a consequence, new environmental laws were passed by certain States. At the federal level, ANM Resolution No. 13/2019 currently deals with tailings dams and provides for a number of requirements and obligations and has to be met by

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those companies that use tailings dams or dry stacking in their operations. It further prohibits the construction, or raising of tailings dams with the upstream method, and provides for deadlines for the current upstream dams to be decommissioned and decharacterized.

General Assessment of the Mining Framework The current mining framework in Brazil has been established for almost 50 years, despite adjustments that have been made overtime. This stable environment has contributed to the development of the sector, particularly after the 1995 constitutional reform and the major 1996 legal reform. The economic and industrial profile of the country, added by a large population and its diversified market, also reflects on the improvement of the mining sector over time. Although there was an attempt of the government in 2017 to amend the Mining Code that did not succeed, the new Regulations that were enacted under Decree No. 9406/2018 represented a significant progress of the mining legal framework. The Regulations managed to fill in many loopholes that existed in the Mining Code, such as (i) the possibility of continuing with certain exploration works after the final exploration report has been submitted, (ii) the possibility of companies creating a security interest over mining concessions, and (iii) more detailed rules on the public interest nature of the mining activity for the purposes of expropriating or creating servitudes over third parties’ lands. From an institutional perspective, a significant move was made in 2017/2018, when the former National Department of Mineral Production – DNPM was replaced by the ANM. By creating a new standard of agency for the mining sector, the government placed the mining industry into the same management model that has been applied to the oil and gas, power, telecommunications, transportation sectors for two decades in Brazil. The ANM has a board made up of five members with fixed terms of office in an attempt to reduce political influence and give higher independence to the

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regulatory agency. Key decisions are made at the board level, and board meetings are public and have an agenda that is disclosed 2 days in advance. In terms of public participation, proposed changes to the regulatory framework are subject to public hearings and consultations. Such proposed changes are also subject to an internal regulatory impact assessment. All in all, procedures have become more transparent, although they may be a little less dynamic. Be that as it may, these features represent a major departure from the previous institutional model that centralized decisions of the Director of the DNPM, and where that structure did not provide for enough transparency. Nonetheless, there is still one main concern, which is that the ANM does not represent simply a change of denomination, but rather that it will be endowed with budgetary funds to implement the new administrative framework and meet the purposes expected from a regulatory body. At the time of preparation of this entry, the budget of the ANM had not changed significantly in relation with the standards of the former DNPM. Another significant move of the current government to increase the availability of potential projects in Brazil is a change in rules applicable to the systematic of how to free up areas that used to be covered by mineral rights that lapsed, were withdrawn or forfeited. Until recently, those areas would stay with the government until it organized a tender process where technical (i.e., no cash) bids might be presented. This represented a high level of subjectivity and was not efficient. It is estimated that more than 30,000 areas are held by the government waiting for the tender to take place. Under the new systematic, there will be tender rounds where interested parties will indicate their interest in certain areas and, in those cases where there is potential competition, auctions will be organized electronically. Although technical aspects may be admitted exceptionally, the idea is to grant the mineral right to the party that presented the highest bid. The first auctions are expected to take place in the second semester of 2020, and other rounds of auctions will take place thereafter from time to time. It is important to underscore that this new mechanism only applies

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to those areas that used to be subject to mineral rights that have lapsed, been withdrawn or forfeited. The first-come, first-served system remains in place to areas considered as free. In addition to such new system of auctions, one initiative of the government that may increase interest in the sector is the divestment of the mineral rights over several projects held by the National Geological Survey Company (“Companhia de Pesquisa em Recursos Minerais” – CPRM). The first project was successfully sold in 2019 and involved an area with potential for zinc, copper, and lead. Two other projects (one for copper and one for phosphate) will probably be auctioned in the next few months. These projects have been held by CPRM for years and may represent new opportunities for the development of the mining sector, as well as revenue to the country in the auction process. As a final remark in terms of general assessment of the mining framework, the collapse of two major tailings dams in the State of Minas Gerais (the tailings dam operated by Samarco Mineração S.A. (which is a 50/50 joint venture between Vale S.A. and BHP Billiton), in November 2015, and the tailings dam operated by Vale S.A., in January 2019), were the two largest mining-related accidents in Brazil. As a result of the casualties, the environmental damage, and the social impact caused, the two dam breaks attracted general concern regarding tailings dams in general. From a legal standpoint, the accidents resulted in more stringent regulations on environmental issues, and more specifically on the use of dams in mining operations, as well as more severe supervision by environmental authorities and public prosecutors. From a social aspect, the collapse of the two dams attracted general criticism to mining in a country where the sector has never had a good reputation, and the environmental agenda is constantly at the headlines. Combining environmental protection, social development, and economic development as a result of mining activities has been a difficult task, but Brazil and its population have the opportunity to establish such a dialogue, and a sustainable development approach towards

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mining, in the context of the Sustainable Development Goals set by the United Nations.

International Memberships Brazil plays a significant role internationally. It is a member of, for example, the United Nations, Mercosur (Southern Common Market), World Trade Organisation, G-20, and The World Bank, among other relevant organizations. Brazil is also in the process of acceding to the OECD. Brazil ratified the ILO 169 Convention concerning Indigenous and Tribal Peoples in 2002, which came into effect domestically in 2004 (but its application has not been properly regulated to date). On the few absences of Brazil in international fora, it is noteworthy that the country resists to be a member of the Extractive Industries Transparency Initiative (EITI).

Brazil: Mineral Policy

The administrative reform whereby ANM was created and replaced the DNPM aims at a more efficient and well-equipped State for fostering and supervising exploration and mining activities. The new administrative structure contributes to reduce the sector’s exposure to political influences and forces the government to be more transparent and accountable. But this reform needs to be coupled with public investment and adequate budget so that the ANM has trained personnel and structure to meet its objectives. Finally, the tailings dams accidents in 2015 and 2019 brought the mining sector to the spotlight and under constant scrutiny of authorities, public prosecutors and society in general. New legislation was passed, new regulations were enacted, and further new requirements are still under discussion at the National Congress. It is expected that the set of obligations and controls required from mining companies will still increase. This scenario brings back the debate on mining in a sustainable development context, which is a debate that the mining sector must be engaged in.

Concluding Statement The relative success of the Brazilian mining sector over time reveals that the country is considered a favorable mining destination by investors. The regulatory framework has not changed dramatically over the past decades and the day-to-day practice of the Government provides certain assurances on how the framework is actually applied (although it is admitted that the 2012–2016 veiled moratorium in the granting of exploration and mining rights for metals did some harm to the country’s reputation mining-wise). Even so, there is still room for further adjustments to the mining regulatory framework, although the new Mining Regulations did a good job in reducing uncertainties that existed in the Mining Code.

References Brazilian Institute of Geography and Statistics – IBGE. https://www.ibge.gov.br/apps/populacao/projecao/; https://www.ibge.gov.br/explica/pib.php Instituto Brasileiro de Mineração – IBRAM, Economia Mineral, fev. 2020; and Instituto Brasileiro de Mineração – IBRAM, Comércio Externo 2019. Both available at http://www.ibram.org.br/ U.S. Geological Survey (2020) Mineral commodity summaries 2020. U.S. Geological Survey, Reston, pp 1–200. https://doi.org/10.3133/mcs2020 United Nations Conference on Trade and Development (UNCTAD) (2020) The World Investment Report 2020: international production beyond the pandemic, p 12. https://unctad.org/en/PublicationsLibrary/ wir2020_en.pdf

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Cameroon: Energy Policy Fanyeu W. D. Ngwa Douala, Cameroon

Introduction In the 1960s, the conventional wisdom was that effective exploitation of natural resources such as oil and gas in developing countries could serve as a key driver for promoting economic growth and political stability. Over 50 years later, despite intensive efforts to extract and process natural resources, the majority of resource-rich countries remain underdeveloped and politically unstable (US AID 2006, p. 5). The Republic of Cameroon, a democratic country with an estimated population of close to 25 million (World Population Review 2018), owes its most significant export commodities to its land and forestry resources – crude oil and petroleum products, coffee, aluminum, timber, and cotton (among others). Energy production, development, and exportation generate unparalleled benefits for national economies in Africa, especially in Cameroon (Cameroon’s economy is mainly bolstered by hydropower for electricity production and petroleum for transportation), acting as sources of tax revenue and employment and delivering inexpensive energy for the heavy industrial manufacturing sector (Dargin 2009). Invariably the significance

of such natural resources, as reflected through their taxation, has proven to be one of the most effective ways through which governments can ensure returns into the public purse, through the revenues generated from these natural resources. Against this background, this entry seeks to assess the effectiveness of policy instruments supporting Alternative Energy (Forms of energy which are not exhausted by use over time and can therefore be regenerated or renewed in a relatively short period of time) in Cameroon, while reviewing the contribution and influence of these policies to the nation so far, relating these to the growing need for the development of renewable energy projects in the forms of solar, wind, biomass, geothermal, and hydrothermal energies. Beginning with an introduction of the renewable industry in Cameroon, followed by a study on the effectiveness of policies supporting the aforementioned industry and concluding with applicable submissions from Uganda – a sub-Saharan African country that is successfully implementing alternative energy policies – an analytical approach shall be adopted evidenced through the use of primary and secondary resources.

The Energy Industry in Cameroon Country Overview Cameroon has one of the best-endowed primary commodity economies in sub-Saharan Africa, due

© Springer-Verlag GmbH Germany, part of Springer Nature 2023 G. Tiess et al. (eds.), Encyclopedia of Mineral and Energy Policy, https://doi.org/10.1007/978-3-662-47493-8

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in part to modest oil resources and favorable agricultural conditions. Still, it faces many of the serious problems confronting other developing states such as stagnant per capita income and a lack of developed infrastructure (Joule Africa, ‘KatsinaAla Project’ (Joule Africa, 2014) www. jouleafrica.com/projects/katsina-ala/). While the oil industry along the Atlantic coast of Cameroon has made important contributions to the national economy, this has been accompanied with adverse environmental impacts, such as significant pollution from oil drilling, refinery waste, oil spillage, gas, and flaring (Alemagi 2007). Similar to other developing countries, Cameroon faces the dual challenge of pursuing economic development and environmental protection. The country saw a Gross Domestic Product (GDP) expansion of 2.7% in the first quarter of 2018 over the previous quarter, but also a drop from its all time high of 2.9% in the first quarter of 2013 (Trading Economics, ‘Cameroon GDP Growth’ (Trading Economics, 2018) https://tradingeconomics.com/ cameroon/gdp-growth). Policies Governing the Renewable Energy Industry The key institutions governing and regulating the upstream oil and gas and energy sectors are the government (through the Ministry of Mines (Ministry of Mines, Cameroon. Available at http://www.mme.gov.na/)) and the SNH (National Hydrocarbons Corporation) (SociétéNationale des Hydrocarbures (SNH) Available at: http://www. snh.cm/). In order to protect the State from the exploitation of its natural resources, the Petroleum Code (The Petroleum Code (Law N
99/013 of 22nd December 1999)) was enacted. In accordance with Article 6 of the Code (The Petroleum Code (Law N
99/013 of 22nd December 1999)), the State reserves the right to take participation, directly or indirectly, in whatever legal form, in all or part of the petroleum operations in a petroleum contract subject to the conditions and modalities agreed upon in the said contract. In its Title IV, Chapter I, the Law N
98/022 of 24 December 1998 Governing the Electricity Sector (Title IV, Chapter I, Law N
98/022 of 24 December 1998, Governing the Electricity

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Sector available at www.spm.gov.cm/en/docume ntation/lois/news-browse/3.html), ARSEL (the Electricity Regulatory Agency) and AER (the Rural Electrification Agency) are in charge of the promotion and the supervision of the use of primary sources of energy, in particular, rene wable sources (Birgit Aurela, ‘Cameroon Re port’ (Laurea,) www.laurea.fi/en/connect/results/ Documents/Cameroon%20Country%20Report.pdf, p. 13). Additionally, seeking to address a number of issues plaguing the Renewable Energy industry in Cameroon, the Law No. 2011/022 of 14 Dece mber 2011, governing the Electricity Sector (Law N
896 of November 2011 governing the Ele ctricity Sector, Cameroon. Available at http:// faolex.fao.org/docs/pdf/cmr109549E.pdf) was e nacted. It had for purpose the promotion of rene wable energy/clean technologies, also making provisions for Independent Power Producers (IPPs) to directly invest and participate in the e nergy sector value chain. Thus, consequently e ncouraging them launch production activities from primary and secondary sources of energy as well as transport, distribution, supply, import, export, and engage in the sale of electricity on the Cameroonian territory. On the face of it, the enactment of this legislation appeared promising in terms of development opportunities for more accessible energy to the greater population, bringing about critical changes and the diversification of electricity distribution. However, a decade after its enactment after its enactment, this legislation has not attained its goals/assuage the Cameroon population’s energy demands. It could therefore be submitted that the 2011 Law would benefit from a much-needed review/revision that promotes specific goals to increase the share of renewables in power and heat generation and to involve private capital in the delivery of energy (Nathalie Ekoumou, ‘Why invest in Cameroon?’ (The Investment Promotion Agency, Cameroon) www.google.co.uk/url?sa¼t &rct¼j&q¼&esrc¼s&source¼web&cd¼4&cad ¼rja&uact¼8&ved¼0CDkQFjAD&url¼http%3A %2F%2Fagora.popso.it%2Fcm%2Fpages%2FSe rveAttachment.php%2FL%2FIT%2FD%2Fu%25 252Fn%25252Fi%25252FD.ef3f61711207e7c97 20b%2FP%2FBLOB%253AID%253D76&ei¼3

Cameroon: Energy Policy

1T7U-z2Cc3qaMyogoAC&usg¼AFQjCNHj534 hqpq_fG5521o3MCHSi5J1-A&sig2¼VwygQGi Ac19lbMef4Ah7Sg&bvm¼bv.73612305,d.d2s). Additionally, in line with Law n
2012/006 on the Gas Code in Cameroon (Law n
2012/006 of 19 April 2012 on the Gas Code in Cameroon), the gas sector includes all activities ranging from transportation, distribution, processing, storage, importation, exportation, and marketing of natural gas within the national territory. Furthermore, for the implementation of the Clean Development Mechanism (CDM), Cameroon has ratified the United Nations Framework Convention on Climate Change (Ratified on 19 October 1994) and the Kyoto Protocol (Ratified on 23 July 2002). Moreover, Cameroon created a designated national authority for CDM in 2006, while the Ministry of Environment and Nature Protection (Ministry of Environment and Nature Protection. Available at http://www.minep.gov.cm/) established a national committee for the implementation of CDM projects. The government seeks to get the country out of under development through the implementation of the long-term Energy Sector Development Plan (PDSE 2030) (Energy Sector Development Plan (PDSE 2030), available at; http://www. wame2015.org/policy-and-regulation/576/ energy-sector-development-plan-pdse-2030) and the Poverty Reduction Strategy Paper (PRSP) (Poverty Reduction Strategy Paper (PRSP), available at; http://www.imf.org/external/pubs/ft/scr/ 2010/cr10257.pdf). Development of the energy sector is considered an aspect for the promotion of investment and the strengthening growth. The rural electrification master plan supports rural access to electricity, targeting electrification in 660 localities through the extension of the interconnected grids, the rehabilitation and construction of isolated diesel power plants and mini hydro plants, as well as the development of a regional grid (ARSEL 2013). In light of this, via the Cameroon Strategic Vision 2035 report (Ministry of the Economy, Planning and Regional Development (MINEPAT) 2009), the government is looking at increasing its capacity to 4000 MW by 2020, a plan that would require up to 4.4 billion euros in investments

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(Ministry of the Economy, Planning and Regional Development (MINEPAT) 2009). Under this report, the development objectives for the country envisage significant investments in the energy sector, with the inclusion of renewables. Cameroon’s electricity deficit is partly explained by the excess losses observed on the electrical network due to poor maintenance. Despite the liberalization of the energy sector, the country was unable to attract enough investments to cover its energy needs (Tchanche 2014, p. 16). The potential for 100% clean electricity is really huge and potential sites have been identified, but the investments have not followed as planned (Tchanche 2014, p. 12). Over the years, with the growth in population, there has been an adjoining increase in the need for electricity.

Alternative Energy in Cameroon Overview of Available Renewable Energy Sources Economic diversification requires both significant political will and an integrated set of economic policies that are mutually reinforcing over time. Resource revenues must therefore be redirected toward reinvestment in the local economy and the development of new sectors (US AID 2006, p. 16), particularly alternative energy sources. Cameroon is rich in renewable energy resources with the five main forms being: solar power, wind energy, biothermal, biofuel, and water, but these remain largely untapped in the region, as there is still a vast dependence on fossil fuels and biomass. Solar

Due to the high temperatures in the northern part of the country, Cameroon possesses good sunlight, and to a lesser extent, in the more humid, southern part of the country, which can be used to generate solar energy (Wandji 2013, p. 12). Annual irradiation averages at 4,9 kWh/m2/day with 5,8 kWh/m2/day in the northern part and 4 kWh/m2/day in the south (British High Commission, ‘The Power and Energy Sector in Cameroon’ (British High Commission Yaoundé)

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https://www.gov.uk/government/uploads/system/ uploads/attachment_data/file/237129/Cameroon_ Doing_Business_Guides_Pt.1.pdf, p. 6). Solar power is currently used in distributed generation systems, particularly for powering the cellular telecommunications network. As a result of this availability, solar photovoltaic panels can be integrated on roofs or adequately installed where land is available. Solar thermal panels could produce heat for processes or coupled to absorption/ adsorption cooling systems (Tchanche 2014, p. 14). If Cameroon is to sustain its economic growth, substantial investments supporting solar projects should be prioritized in order to increase its electricity generation capacity in the upcoming years. Industrial companies should investigate sustainable solutions such as the integration of solar energy technologies in processes or waste recovery to generate onsite electricity (Fig. 1). Biomass

Cameroon possesses significant forest resources on the Adamawa plateau, a large potential source of dendro energy. Dendro power is the generation of electricity from sustainably grown biomass (fuel wood). It is particularly well suited to tropical countries such as Cameroon. Dendro, using sustainably grown fuel wood, can be effectively used to replace the use of fossil fuels for electricity generation, invariably delivering many other socioeconomic and environmental benefits (Energy Forum, ‘Dendro’ (Energy Forum, 2014) efsl.lk/details.aspx?catid¼ > 3). This is evaluated at 21 million hectares, covering almost half of the nation (45%). It is the most abundantly used energy source for households, especially in rural zones (Wandji 2013). Moreover, biofuel is considered renewable because it is derived from renewable sources such as biomass. Biofuel, such as bio-ethanol and biodiesel come directly from plant material (Such as maize and jatropha respectively), thereby creating a strong bond with agriculture. It has been argued that biofuel could potentially provide economic development within a community or rural livelihood as well as promising a source of environment-friendly energy that would serve as a

Cameroon: Energy Policy

bonus to farmers (AyukEffanga, ‘Biofuel - Opportunities and Challenges for the Poor in Cameroon. What can Cameroon learn from Brazil and South Africa?’ (SLU, 2010) https://stud.epsilon.slu. se/1843/1/effanga_a_r_100922.pdf, p. 8), through the provision of rural employment opportunities. Given the high level of biomass consumption (rated at 80% for household-consumed energy by a 2007 report published by the Ministry of Energy and Water, titled Système d’Information Energétique du Cameroon, Ministry of Energy and Water, ‘Systèmed’ Information Energétique du Cameroon’, available at; http://www.mediaterre. org/docactu,SUVQRi9kb2NzL3N5c3QuX2 V u Z X J n L l 9 k Z X Yu X 2 R 1 c m F i b G V fY21yX05rdWVfTmpvbW9fcmVzdW1l,9.pdf) in Cameroon, energy efficiency is foreseen to lighten the desert encroachment, and thus climate change (Kenfack et al. 2011, p. 2605). However, material recovery efficiency in the country was estimated at a low 32% for simple factories and 50% for integrated factories, implying that huge amounts of biomass material are wasted in timber factories. These residues could serve in households as well as for electricity generation (Agenced’ElectrificationRurale (AER). Cogénérationetélectrificationrurale: les opportunités pour les scieries au basin du Congo, (presentation) Douala, May 2013). Appropriate strategies should be developed by the government to encourage timber factories to maximize the recovery efficiency through the installation of cogeneration systems, which would produce heat and electricity for the factory, allowing the excess electricity produced and sold (Tchanche 2014, p. 14). Wind

While solar and biomass energy are abundant almost everywhere in Cameroon, wind energy is only feasible in select regions (Abanda 2013, p. 11). The potential for this form of energy is due to the country being covered by forest, thus creating some room for wind energy. Areas such as the North have wind speed in the range of 5–7 m/s, and the Littoral region could have potential for offshore and onshore wind energy (Tchanche 2014, p. 16). According to some studies, the ability to generate wind to power in

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Cameroon: Energy Policy, Fig. 1 Horizontal irradiation in Cameroon (Talla et al. 2018)

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Cameroon: Energy Policy

Cameroon is economically feasible in the West and Adamawa regions (British High Commission, ‘The Power and Energy Sector in Cameroon’ (British High Commission Yaoundé) https:// www.gov.uk/government/uploads/system/ uploads/attachment_data/file/237129/Cameroon_ Doing_Business_Guides_Pt.1.pdf, p. 6). It is difficult to be more specific about this area, seeing as research on wind potential in the country is limited.

hydropower, with 721 MW of Hydro schemes over the total installed capacity of above 1000 MW (Kenfack et al. 2011, p. 2607). The technical potential of the country was estimated at 23 GW, with the main hydroelectric power plants supplying the country being: Edéa (263 MW), Songloulou (396 MW), and Lagdo (72 MW) (Tchanche 2014, p. 5).

Geothermal

Logbaba Power Plant

There are possibilities that geothermal energy is available in the western part of Cameroon and hot springs particularly in the Adamawa and Southwest regions. However, the potential has not yet been thoroughly examined. Furthermore, while the insufficient scholarly sources about geothermal sources are nonconclusive about their potential, tidal energy is yet to receive considerable attention, with its first feasibility studies having been just recently begun. These findings illustrate that if renewable energy is to be part of the Cameroon’s energy program, there is the need to bolster research regarding its development, in order to better inform energy policies (Abanda 2013).

The Logbaba power plant in Douala, in the Littoral region of the country, which came to prominence as a result of a partnership between the National Hydrocarbons Corporation (SNH) and a British firm, Victoria Oil & Gas (Victoria Oil & Gas PLC, available at; http://www. victoriaoilandgas.com/), through its subsidiary, Rodeo Development Limited (Now Gaz du Cameroun), was inaugurated on November 15, 2013. With a significant number of industries in the area including food, steel, textile, and others, there is heavy reliance on electrical power. The gas produced here is considered a source of clean energy, essential for industries to be competitive and attract further investments (Godlove Bainkong, ‘Cameroon: Logbaba Gas Supplying 18 Companies Already’ (Cameroon Tribune, 2013) allafrica.com/ stories/201311180977.html). Additionally, GDC concluded a new 3-year gas sale agreement (Victoria Oil & Gas, “Renewal of Long-Term Gas Supply Contract with ENEO” (Victoria Oil & Gas PLC, 24 December 2018) www.victoriaoilandgas.com/investors/news/ renewal-long-term-gas-supply-contract-eneo) to provide gas to ENEO Cameroon S.A.’s (ENEO Cameroon, https://eneocameroon.cm/index.php/ en/) (Cameroon’s main electricity company/ power utility) 30 MW Logbaba power station on December 21, 2018, following a suspension of a previous contract with ENEO in January 2018. This suspension saw a strong sales decline in the company by 372% in Q2 2018 compared to Q2 2017. Also, between April and June 2018, the company sold 320 million cubic feet of natural gas, down the 1.192 billion cubic feet the same period in 2017 (Business In Cameroon, “Gaz du

Hydropower

Water, just like electricity, is considered a highly necessary resource in Africa. Cameroon possesses the second greatest hydroelectric potential in Africa, with an estimated 23 gigawatts (GW), following the Democratic Republic of Congo. Three large-scale hydropower projects are currently in various stages of development: Lom Pangar (30 MW), Memeve’ ele (210 MW), and Nachtigal (420 MW). In a bid to help the country reach its goal of providing access to electricity for 88% of its people by 2022, the World Bank Group (WBG) has approved an investment package of $794.5 million for the Nachtigal hydropower project that once completed, will increase the nation’s electricity generating capacity by 30% (World Bank Group 2018). Hydroelectricity can be perceived as the greenest form of energy in Cameroon, which explains the power sector’s heavy reliance on

Outline of Past and Current Projects

Cameroon: Energy Policy

Cameroun’s Sales Fell By 372% In Q2 2018” (Investir Au Cameroun, 22 August 2018) https:// www.businessincameroon.com/hydrocarbons/ 2208-8269-gaz-du-cameroun-s-sales-fell-by372-in-q2-2018). Lom Pangar Hydropower Project

In anticipation of the energy deficit, the Government of Cameroon highlighted the Lom Pangar Hydropower Project (LPHP) in the East of Cameroon as a priority project and part of their development strategy to improve access to reliable lowcost hydropower supply for growth and poverty reduction (Electricity Development Corporation, ‘LomPangar Hydroelectric Project. Environmental and Social Assessment (ESA)’ (Electricity Development Corporation, March 2011) www. edc-cameroon.org/IMG/pdf/sde/English%20Sum mary%20v1%20100311.pdf, p. 5). The $494 million, 6 billion cubic-meter capacity reservoir dam constructed by a Chinese firm, China Water and Electric Group, was officially commissioned in 2017 (Kimeng Hilton Ndukong, “Chinese

Cameroon: Energy Policy, Fig. 2 The Lom Pangar Project (Yves Prevost, ‘Harnessing Central Africa’s Hydropower Potential’ (World Bank) https://energypedia.

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Company Completes Construction of Cameroon’s Lom Pangar Dam”, (People’s Daily Online, 2017) http://en.people.cn/n3/2017/0711/c900009240131.html). As a regulating dam with an associated powerhouse, the LPHP underpins the strategy to tap Cameroon’s hydroelectric power potential (African Development Bank, ‘LomPangar Hydroelectric Project. Summary of the Environmental and Social Assessment (ESIA)’ (African Development Bank) www.afdb.org/ fileadmin/uploads/afdb/Documents/Enviro nmental-and-Social-Assessments/2011%20LomPangar%20Résumé%20Environnemental%20et %20Social_EN.pdf, p. 2). Associated investments include the adaptation of the Chad-Cameroon Pipeline, which is outside the scope of this project per se, but required for the project to come to fruition (The World Bank Group, 2013; Fig. 2). Projects such as these will not only boost the energy supply of the country, but they will also boost Cameroon’s economy, with regards to the exportation of energy, especially to countries such as Nigeria whose higher energy deficit totals

info/images/c/c5/Cameroon_Lom_Pangar_Hydropower_ Project_E%26FA.pdf, p. 5)

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Cameroon: Energy Policy

Cameroon: Energy Policy, Fig. 3 Hydropower development opportunities on the Sanaga River (Yves Prevost, ‘Harnessing Central Africa’s Hydropower Potential’ (World Bank) https://documents1.worldbank.org/curated/

en/639011488793035886/pdf/SFG3111-V1-FRENCHEA-P157733-Box402893B-PUBLIC-Disclosed-3-22017.pdf, p. 7)

about 10,000 MW (Reynolds Dagogo-Jack, ‘Deficits in Power Generation Slowing Development’ (Presidential Task Force on Power, 2014)). Thus, by developing the Sanaga River, exportation to more populous countries such as Nigeria could improve Cameroon’s currency, to a level where it is comparable to the revenues gained from petroleum production (Fig. 3). The potential positive socio-economic impacts of this electrification project will be visible in areas such as urbanization, education, health, and life and property safety. The LPHP project, as well as the Electricity Development Corporation (EDC) (A public enterprise launched in November 2006; Electricity Development Corporation, Cameroon, available at; www.edccameroon.org), strengthens the government’s mission to promote investment in the energy sector, particularly the improvement and development of electric energy.

Nachtigal Hydropower Project

The project company, Nachtigal Hydro Power Company (NHPC) whose shareholders are the Republic of Cameroon, Electricité de France (EDF), and International Finance Corporation (IFC), is developing this strategic project. A cornerstone of Cameroon’s electricity sector development plan, the Nachtigal Project, is located on the Sanaga River about 65 km northeast of Yaoundé, in the center region of Cameroon, and the commissioning of the first turbine is expected between 2021 and 2022 (Nachtigal Hydro Power Company, “About Project” (NHPC, 2018) www.nachtigal-hpp.com/index. php/home.html) (Fig. 4). According to EDF, the power generated by the project will be sold to the grid operator via a PPA at a competitive tariff, thereby benefitting Cameroonian consumers. The project will generate substantial economic benefits: up to 1,500 direct jobs during peak construction periods, of which 65%

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Cameroon: Energy Policy, Fig. 4 The 420 MW Greenfield Hydroelectric Power Plant on the Sanaga River (Power Technology, “Nachtigal Hydropower Project”

(2018) https://www.power-technology.com/projects/ nachtigal-hydropower-project/)

will be locally sourced within a 65-km radius of the construction site (Electricite de France “EDF, IFC and the Republic of Cameroon Sign Final and Binding Agreements for the Construction of the Nachtigal Hydroelectric Dam in Cameroon.’ (The EDF Group, November 2018) https://www.edf.fr/ en/edf/edf-ifc-and-the-republic-of-cameroonsign-final-and-binding-agreements-for-theconstruction-of-the-nachtigal-hydroelectric-damin-cameroon). NHPC will develop the project under a build-operate-transfer (BOT) model for a period of 35 years, following which the ownership will be transferred to the government of Cameroon. The construction is expected to commence by the end of 2018, while operations are expected to begin in 2023. The project is expected to boost Cameroon’s power generation capacity by 30% and reduce annual generation costs by $100 m (Power Technology, “Nachtigal Hydropower

Project” (2018) https://www.power-technology. com/projects/nachtigal-hydropower-project). Djoum Photovoltaic Power Plant

With Solar being a particularly promising source of energy, in January 2018, ENEO commissioned its first solar power plant in Djoum, South region of the country. Built by the Spanish ELECNOR, with a capacity of 186 kilowatts peak and built on nearly 3500 m2 of surface area, the solar farm, which is currently the largest that has ever been built in Cameroon, is equipped with 600 solar panels. In addition to contributing to the reduction of greenhouse gas (GHG) emissions, ENEO aims to offer better service quality than the conventional single-source system, cushion the impact of rising fuel prices, and reduce operating costs (ENEO 2018).

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Alternative Energy Policy in Uganda Uganda The East African country is making significant strides in the power reform and investment sectors. Following a decision to restructure the electricity sector, the Ugandan government enacted the Energy Policy for Uganda in September 2002 (The Republic of Uganda Ministry of Energy and Mineral Development, (“The Energy Policy for Uganda 2002”) https://www.iea.org/ media/pams/uganda/TheEnergyPolicyforU ganda2002.pdf), with the aim of meeting the energy needs of the population for social and economic development in an environmentally sustainable manner, improving energy service access to reduce poverty, improving governance and instituting improved administrative procedures, and stimulating the economic development of the energy sector (International Energy Agency, (“Energy Policy for Uganda”, 2017) https://www.iea.org/policiesandmeasures/pams/ uganda/name-127321-en.php). Referred to as “an African power success story,” (Chimp Reports, “Uganda’s Renewable Energy Policies”, 2017. https://chimpreports.com/ugandas-renewableenergy-policies-african-power-success-storyeaif-boss/) several lessons for the future could be drawn from Uganda’s clean energy policy. The Emerging Africa Infrastructure Fund (EAIF) (A public private partnership providing mezzanine finance on commercial terms to infrastructure projects in Africa; Emerging Africa Infrastructure Fund, “Building Energy Tororo PV Solar North”, 2018. https://www.eaif.com/ project/building-energy-tororo-pv-solar-north/), in a syndicate with a Dutch development finance bank, FMO, provided a loan of US$14.7 million to Building Energy (the developers and operators of the US$19.6 million Tororo Solar North facility launched in 2017). Tororo is the eighth renewable energy plant EAIF has backed in Uganda. In total, they contribute up to 15% of Uganda’s installed electricity generating capacity. The 10 MW solar farm is helping to meet the electricity needs of some 36,000 people in the Tororo area. Also benefiting from the GETFiT program of tariff

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supports, Tororo’s output will lower the average cost of electricity in Uganda (EAIF 2018). Moreover, during the first quarter of fiscal year 2018–2019, a consortium of development finance institutions and commercial lenders (Two members of the World Bank Group, the International Finance Corp. (IFC) and Multilateral Investment Guarantee Agency (MIGA)) approved a plan to refinance more than $400 million to Bujagali Energy Ltd. The 250 MW (DEVEX, “World Bank Refinancing of Uganda’s Bujugali Hydropower Scheme Under the Spotlight”, (Sophie Edwards, 2018) https://www.devex.com/news/ world-bank-refinancing-of-uganda-s-bujagalihydropower-scheme-under-the-spotlight-92132) $900 million hydroelectric project is the largest private sector investment ever undertaken in the region. Commissioned in 2012, the facility accounts for about 45% of Uganda’s annual electricity generation, according to IFC (Hydro Review, “Africa Market Brief” (Gregory B. Poindexter, 2018) https://www.hydroworld. com/articles/hr/print/volume-37/issue-5/articles/ africa-market-brief.html). A 2018 USAID document on the Energy Sector in Africa reveals that Uganda presents a most favorable environment for IPP development, with the nation being one of the few sub-Saharan African countries to have liberalized and financially viable energy markets, with generation, transmission, and supply segments unbundled since 2001. Furthermore, IPPs currently account for nearly 60% of generation capacity (USAID, 2018). Adaptation/Incorporation of Uganda’s Renewable Energy Policy into Cameroon’s Renewable Energy Framework and Recommendations In order to address energy issues such as reliability, accessibility, and security in Cameroon, it could be posited that more technical and vocational positions/jobs should be created in order to provide professionals with the gainful employment and appropriate/adequate skills required by the nation’s energy sector. Moreover, the provision and availability of accurate, certifiable energy information as well as government finances are

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important factors towards fostering transparency goals and the enlightenment of citizens. In a bid to implement pro-renewable policies in Cameroon, an enabling environment, as experienced in Uganda, is highly required. Supporting activities such as Power Purchase Agreements (PPAs), access to the grid, and creating markets for green electricity should be considered. Improvements to transparent regulatory agendas, as well as the development of clear long-term guarantees, and reliable and predictable market conditions are critical to the development of the alternative energy sector. Funding, both locally and internationally, is another important factor that should be encouraged as it would contribute towards community investment in terms of the restructuring of social infrastructures such as roads. These suggestions go to buttress the point that it is crucial that the energy system in Cameroon gets managed more professionally. These points illustrate the importance of a strong political dimension in the creation of a favorable investment climate and ensuring success for the expanding usage of renewable energy.

The Future of the Energy Sector in Cameroon Through the Cameroon Vision 2035 initiative, a roadmap for Cameroon’s economic takeoff, the nation has set itself the overall objective of becoming an industrialized, democratic, and emerging country by 2035. It also considers the over-exploitation of natural resources (Mines, oil, hydrography, forest, wildlife, etc.) and encourages the promotion and development of alternative energies, stating that “hydro-electric production in large plants will go along with the development of small power plants and other types of energy notably renewable energies such as solar and wind energies which constitute considerable potentials for Cameroon.” (Ministry of the Economy, Planning and Regional Development (MINEPAT) 2009, p. 40) Furthermore, Cameroon has ratified the Kyoto Protocol (2002) (Ratified on August 282,002, and came into force on February

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162,005; UNFCC 2014a), an international agreement linked to the United Nations Framework Convention on Climate Change (UNFCC), which commits its Parties by setting internationally binding emission reduction targets (UNFCC 2014b), tying in with the implementation of the Clean Development Mechanism (CDM) (“The Clean Development Mechanism (CDM), defined in Article 12 of the Protocol, allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an emission-reduction project in developing countries. Such projects can earn saleable certified emission reduction (CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto targets”. United Nations Framework Convention on Climate Change (UNFCC), ‘The Clean Development Mechanism (CDM)’ (United Nations Framework Convention on Climate Change (UNFCC), 2014). http://unfccc.int/kyoto_proto col/mechanisms/clean_development_mecha nism/items/2718.php.). In view of Cameroon’s dwindling resources, it is imperative that more changes be made to improve energy efficiency. The need to enact pro-renewable energy policies is often attributed to a variety of barriers, or conditions that prevent investments from occurring. These oftentimes result in renewable energy being placed at an economic, regulatory, or institutional disadvantage, relative to other forms of energy supply (Beck and Martinot 2004, p. 366). Barriers include poor long-term support of renewable energy projects (Till the point where they become profitable), subsidies for conventional forms of energy, high initial capital costs (Renewable energy technologies such as biomass, hydro, solar and wind energy technologies remain expensive in terms of their high capital costs, compared to firewood, charcoal, petrol and gas energy supplies), coupled with lack of fuel-price risk assessment, imperfect capital markets, lack of skills or information (Lack of consumer awareness on the benefits and opportunities accruing from renewable energy solutions), poor market acceptance, technology prejudice, financing risks and uncertainties (Unlike many countries where fiscal

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incentives are established to promote the use of clean energy, particularly solar energy, the prevailing framework in Cameroon does not encourage the widespread use of clean technologies. High customs duties and other taxes do not favor the dissemination of high quality modern lighting products. Lighting Africa 2012, p. 7.), and high transaction costs (Beck and Martinot 2004, p. 366). Financial, legal, regulatory, and institutional barriers equally need to be overcome in order to implement renewable energy technologies and develop markets (Kenfack et al. 2011, p. 2605). In order to transcend these limits in the Cameroonian renewable energy sector, the following suggestions should be considered: Vision Developing a vision aimed at boosting the clean energy policy, leading to relevant strategies and programs, would help change the status quo in renewable energy. While poor management and low rates of reinvestment undermine development (Shively and Smith 2013, p. 35), wise management and reinvestment would help support the Cameroon Vision 2035 (Ministry of the Economy, Planning and Regional Development (MINEPAT) 2009) that propagates long-run economic development. Industries will perform more efficiently where there is sufficient energy supply, consequently encouraging growth in the economy on the one hand, and helping combat poverty on the other hand. Favorable Investment Climate To implement a policy option, the Cameroonian government would need to create enabling conditions for the development of alternative energy. The key to creating a favorable investment climate is to allow renewable technologies to compete on a level playing field with alternative options. Means of doing this include power purchase agreements (PPAs (This is a financing mechanism that state and local government entities can use to acquire clean, renewable energy. National Renewable Energy Laboratory (NREL), ‘Power Purchase Agreement Checklist for State and Local Governments’ (National Renewable Energy

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Laboratory (NREL), 2008) www.nrel.gov/docs/ fy10osti/46668.pdf)), nondiscriminatory access to the grid, and funding for research, demonstration, and development. Such factors could lend critical support from government to an embryonic renewables industry (Winkler 2005). Investors, as well as the industry itself, need long-term guarantees to ensure reasonable returns over the lifetime of the project, as some investments last for decades (International Renewable Energy Agency 2013, p. 10). Role of Financial Instruments Several pro-renewable countries have adopted different specific renewable power generation approaches (feed in tariff, portfolio standards, and certificates). In order to achieve renewable targets, the introduction of renewable energy technologies into a market-driven energy economy will require the allocation of funding to assist in overcoming the initial high capital cost. It could be done through government bodies, private institutions sustained by government, or simply through dedicated funds (For instance, through incentives, subsidies, budgetary allocation, amongst others; Kenfack et al. 2011, p. 2607). Presently, fiscal measures specifically designed to foster the uptake of modern lighting technologies are nonexistent in Cameroon. Consequently, IPPs interested in investing in the distribution and sale of lighting products and technologies will not benefit from subsidies, thereby creating a substantial hindrance for large-scale investment in this domain (Lighting Africa 2012, p. 6). While renewables may face high upfront investment costs compared to fossil fuel generation, once installed the fuel source is largely free. This is where special Renewable Energy Feed-in Tariffs (REFiTs) can come in as a policy instrument that attracts investment in sustainable, renewable electricity production (Nganga et al. 2012, p. 5). Moreover, the costs of technologies to capture energy from renewable sources are falling and are becoming economically competitive with fossil fuels, while reducing the risk of climate change. Renewable energy deployment is growing globally and locally as a sustainable and increasingly economically viable alternative to conventional

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sources of energy (Ekobo 2014). Therefore, the development of technology that can harness the energy of many of these renewable sources would subsequently lead to numerous benefits.

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engage current and potential critics (Mallon 2006, p. 85).

Concluding Statement Institutional Reform As stated previously, the initial objective of the 2011 Law (Law N
896 of November 2011 governing the Electricity Sector, Cameroon. Available at http://faolex.fao.org/docs/pdf/ cmr109549E.pdf) was to boost production capacity and provide more extensive national access to electricity; however as is currently evidenced, its implementation has been far from groundbreaking with very few IPPs being able to begin operations or complete their projects due to challenges that are not being mitigated by this legal instrument. Thus, there is a need for Cameroon to adopt and use internationally recognized quality standards to enable successful product uptake and sustainable market development over the long term (Lighting Africa 2012, p. 8). Confidence in a robust and stable policy framework as well as in long-term national objectives and targets, backed up by sound market forecasts, also plays a crucial role (International Renewable Energy Agency 2013, p. 10). Good governance and good regulation in the sector are also very important for promoting an enabling environment for scaling up investments and mobilizing public and private initiatives (Kenfack et al. 2011, p. 2606). Many of the main elements of the necessary policy reforms are enhanced transparency, greater civil society participation, strengthened systems of governance, improved arrangements for international monitoring and oversight, and higher levels of efficiency and equity in translating large national revenues into improvements for the common welfare of citizens (US AID 2006, p. 27). Renewable energy development occurs only if the status quo is changed. This change would either need to be driven or it may occur anyway due to power shortages the nation faces. An embryonic renewable industry comprising a handful of individuals and businesses can do little on its own. As a result, it must leverage assistance from more powerful allies and constructively

Given the difficulties within Cameroon’s economy, the development of the energy sector in Cameroon is of very high prominence, seeing as energy is crucial to any development process. For instance, without the ready availability of energy, industries cannot progress efficiently, and the transformation of raw materials to finish products cannot be accomplished efficiently, consequently causing delays to the modernization of the economy. Hence, it is imperative to make the question of energy and renewable resources a central issue, in terms of policy and projects. Scholarly work on the exact sizes of the different renewable energy sources, their benefits, and the market potential that can stimulate their uptake are not well known. Therefore, stakeholders including policy makers, researchers, and investors lack guidelines on how and at what level to invest, intervene, and design policies that can lead to the practical exploitation of renewable energy sources (Abanda 2013). More quantitative research needs to be carried out. This would equally improve and supplement the economic development objectives proposed by the Cameroon Vision 2035 initiative. One of the key factors in driving an alternative energy agenda forward is political will. David Suzuki (A Canadian environmental scientist) asserted that: “Where there is a conflict between an available clean technology and an entrenched dirty one, the challenge is politics and the need for legislative action, not technology. We can do it, we just have to want to.” (Mallon 2006, p. 1) In addition to providing clean and environmentally friendly energy, clean energy policies also support wider socio-economic development in rural areas, with community-scale mini-grids offering all the benefits of the grid while encouraging greater levels of democratic control and ownership over local energy systems (Nganga et al. 2012, p. 1). The government’s primary role should be to set targets and to allow this emerging industry find

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the most cost-effective way of attaining them. Thus, similar to Uganda, a REFiT program is the recommended policy option. Making reliable electricity available through REFiTs can provide a much-needed boost for rural economies. Moreover, decentralized energy production will itself provide employment and strengthen the local tax base (Nganga et al. 2012, p. 12). FITs facilitate project financing through guaranteed, long-term contract for system output, they help attract capital to renewable energy market, and their ratepayer backing is an attractive feature to investors (Cory 2009, p. 18). With evidence illustrating energy as an important key driver of economic growth, it is axiomatic that if readily available, energy would help address structural problems. Correspondingly, the Government of Cameroon needs to establish a more robust renewable energy policy and strategy, firmer goals, and more ambitious long-term targets in order to encourage the investments required to stimulate and support economic development. A lower reliance on oil imports, clearer accounting, specific action dedicated to the promotion of renewable energy, and the dissemination of best practices (Amongst other suggestions discussed.) would contribute towards the enhancement of renewable energy, sustained energy access, and security.

References Abanda FH (2013) Renewable energy sources in Cameroon: potentials, benefits and enabling environment. Renew Sust Energ Rev 16(7):11. http://www. sciencedirect.com/science/article/pii/S136403211200 2699 Alemagi D (2007) The oil industry along the Atlantic coast of Cameroon: assessing impacts and possible solutions’. Department of Industrial Sustainability, Brandenburg University of Technology. https://www. researchgate.net/publication/223070864_The_oil_ industry_along_the_Atlantic_coast_of_Cameroon_ Assessing_impacts_and_possible_solutions?ev¼srch_ pub ARSEL (2013) Development of renewable energy in Cameroon: a master plan in view. ARSEL Cameroon. www. arsel-cm.org/index.php?action¼fullnews&id¼36 Beck F, Martinot E (2004) Renewable energy policies and barriers, vol 5. Elsevier, p 366. www.martinot.info/ Beck_Martinot_AP.pdf

Cameroon: Energy Policy Cory K (2009) Renewable energy feed-in tariffs: lessons learned from the U.S. and abroad. National Renewable Energy Laboratory, 2009, p. 18. www1.eere.energy. gov/wip/solutioncenter/pdfs/tap_webinar_ 20091028.pdf Dargin J (2009) Riding the horns of a dilemma: environmental enforcement in the oil and gas sector. OGEL 7(3):2. http://www.ogel.org/article.asp?key¼2917 Ekobo F (2014) Renewable energy and development in Cameroon (Environmental Gov, April 2014). www. engov-institute.org/blog/energy/renewable-energyand-development-in-cameroon/ Emerging Africa Infrastructure Fund (2018) Building energy: Tororo PV Solar North. https://www.eaif.com/ project/building-energy-tororo-pv-solar-north/ ENEO (2018) Eneo Cameroon commissions its first solar power plant in Djoum, Cameroon. https:// eneocameroon.cm/index.php/en/actualitecommuniques-en/communiques-communiques-depresse-en/2616-eneo-cameroon-commissions-its-firstsolar-power-plant-in-djoum-cameroon International Renewable Energy Agency (2013) Africa’s renewable future. The path to sustainable growth. (International Renewable Energy Agency (IRENA), 2013), p. 10. www.irena.org/DocumentDownloads/ Publications/Africa_renewable_future.pdf Kenfack J, Fogue M, Hamandjoda O, Tatietse TT (2011) Promoting renewable energy and energy efficiency in Central Africa: Cameroon case study. World Renewable Energy Congress, Sweden, p. 2605. www. ep.liu.se/ecp/057/vol10/042/ecp57vol10_042.pdf Lighting Africa (2012) Lighting Africa policy report note – Cameroon, p. 8. lightingafrica.org/wp-content/uploads/ bsk-pdf-manager/28_Cameroon-FINAL-August2012_LM.pdf Mallon K (2006) Renewable energy policy and politics: a handbook for decision-making, 1st edn. Earthscan, London, p 85 Ministry of the Economy, Planning and Regional Development (MINEPAT) (2009) Cameroon vision 2035. Working paper. http://www.cameroonembassyusa.org/ docs/webdocs/Cameroon_VISION_2035_English_ Version.pdf Nganga J, Wohlert M, Woods M (2012) Powering Africa through feed-in tariff policies advancing renewable energy to meet the continent’s electricity needs (World Future Council (WFC), December 2012), p. 5. www.foe.co.uk/sites/default/files/downloads/ powering_africa_summary.pdf Shively G, Smith T (2013) Natural resources, the environment and economic development in Southeast Asia (Purdue, 2013), p. 35. www.aae.wisc.edu/hoseae/ d5v3.pdf Talla D, Gaelle F, Lucas A (2018) Current status of renewable energy in Cameroon. North Am Acad Res 1(2):75. https://www.researchgate.net/publication/326635559_ Current_Status_of_Renewable_Energy_in_Cameroon Tchanche B (2014) The necessity of sustainable and affordable energy solutions for industrial companies in

Chile: Energy Policy Cameroon. In: First international e-conference on energies, Amiens, France, p. 16 The World Bank Group (2013) LomPangar Hydropower project. https://documents1.worldbank.org/curated/zh/ 625471579097390098/pdf/Cameroon-Lom-PangarHydropower-Project.pdf United Nations Framework Convention on Climate Change (UNFCC) (2014a) Status of ratification of the Kyoto protocol. https://unfccc.int/process/the-kyotoprotocol/status-of-ratification United Nations Framework Convention on Climate Change (UNFCC) (2014b) The Kyoto protocol. https://unfccc.int/kyoto_protocol/items/2830.php US AID (2006) Oil and Gas and Conflict Development Challenges and Policy Approaches. Foundation for Environmental Security and Sustainability 2006. www.fess-global.org/files/OilandGas.pdf USAID (2018) Uganda Power Africa fact sheet. https:// www.usaid.gov/powerafrica/uganda Wandji F (2013) Energy consumption and economic growth: Evidence from Cameroon. Elsevier Energy Policy 61:1298. http://www.sciencedirect.com/sci ence/article/pii/S0301421513004709, p. 12 Winkler H (2005) Renewable energy policy in South Africa: policy options for renewable electricity. Vol. 33(1), Elsevier. http://www.sciencedirect.com/ science/article/pii/S0301421503001952 World Bank Group (2018) Cameroon: World Bank Group helps boost hydropower capacity (Press release, 2018). https://www.worldbank.org/en/news/press-release/ 2018/07/19/cameroon-world-bank-group-helps-boosthydropower-capacity World Population Review (2018) Cameroon population 2018. http://worldpopulationreview.com/countries/ cameroon-population/

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CEN* CEOP* CNE* CODELCO* ENAP* GATT GDP GHG GSA IAEA ICSID

INE* kW LGSE* LNG MW MWh OECD PMGD* SEC*

Chile: Energy Policy Mauricio Riesco Tagle LLM in Natural Resources Law and Policy, CEPMLP – Dundee University, Dundee, UK Energy and Natural Resources Lawyer, admitted to practice in Chile, Dundee, UK

SEN* SIC* SING* TUA UNFCCC WTO (*)

National Electric Coordinator Special Petroleum Operation Contract National Energy Commission National Copper Corporation National Petroleum Company General Agreement on Tariffs and Trade Gross Domestic Product Greenhouse Gas Emissions Gas Sale Agreement International Atomic Energy Agency International Centre for Settlement of Investments Disputes Chilean National Institute of Statistics Kilowatt General Law on Electrical Services Liquefied Natural Gas Megawatt Megawatt/hour Organization for Economic Cooperation and Development Small-Distributed Generation Facilities Superintendence of Electricity and Fuels National Interconnected System Central Interconnected System Great Northern Interconnected System Terminal Use Agreement UN Framework Convention on Climate Change World Trade Organization Original acronym in Spanish

General Information List of Abbreviations APEC BC*

Asia-Pacific Economic Cooperation Chilean Central Bank

The Republic of Chile is a long and narrow country located in the south west of South America with 4270 kilometers of coastline facing the Pacific Ocean and an average width of 177 kilometers from east to west (Hudson 1994).

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Additionally, Chile is one of the seven countries that have done territorial claims in the Antarctica before the signature of the Antarctic Treaty in Washington, 1959. The country has 208 years of independence preceded by a period of 270 years of Spanish colonialism. The country’s population is mostly white and mestizo and 12.8% of it declares to be part of an indigenous ethnic group (INE 2017). Religious tradition of the country is strongly linked to Christianity with 67% of citizens professing the Catholic faith and 15% some Protestant derivation. Chile has a population of 17.6 million inhabitants (INE 2017) of which 69.39% are at working age (OCDE 2014). The average gross domestic product (GDP) of the last 3 years  2015, 2016, and 2017  was US $269,000 million (BC 2018) where major contributors are services 34%, mining 10%, manufacturing 10%, and trade 9% (BC 2018). Chile is a republic with a central government and representation offices for each of the Ministries along the regional administrative organization, which is composed of 16 regions. The capital city is Santiago, located in the geographic center of the country where 40% of the total population is concentrated. The prevailing political regime during the last 38 years is the presidential democracy with a strong separation and independence between the Executive, Legislative, and Judicial powers, which has allowed the country to become the most politically and socially stable country throughout Latin America. The country risk rating (COFACE 2018) as well as the corruption perception index (CPI 2017) are similar to countries like the US or UK.

Energy Outlook and Resources Energy Outlook In the recent years, both the energy market and regulation in Chile have been involved in a process of accelerated evolution and profound changes. The country shifted from struggling to develop energy projects to meet the growing

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energy demand to the explosion of the nonconventional renewable energies; went from having a limited number of actors to the incorporation of many new participants; and from energy prices that put the competitiveness of the country at risk, to the lowest prices at the regional level. The overall of such evolution is undoubtedly good for the country, but there are still some challenges for the energy sector in terms of reduction of environmental and social conflicts, the improvement of energy efficiency, among others. Certain progress has been made over the past few years in terms of identifying gaps in the environmental and social assessment process required for the development of projects. Now the required policies need to be implemented for those gaps to be surpassed enhancing the relation of projects with surrounding communities and the competitiveness of the energy market. Chile is a net importer of hydrocarbons fulfilling less than 5% of its needs with its own resources. At the same time, Chile is a major exporter of minerals, emerging as the largest copper producer in the world, whose extraction is highly energy demanding. According to the National Natural Resources Cadastre released by the Ministry of Energy, the renewable energy resources of the country are mainly composed of solar in the north and hydro and biomass in the center-south. Wind resources are present at specific locations distributed throughout the country. Furthermore, due to its geographical and geological conditions, Chile has great potential for the development of geothermal and marine energies, both resources being at a very preliminary stage of study and development. Hydrocarbons in Chile Notwithstanding the fact of being a net importer of hydrocarbons, since 1950 the Chilean National Oil Company (ENAP) exploits – by itself or jointly with private companies – the only hydrocarbon deposits discovered in the south of the country. Chilean oil fields are concentrated mainly in the Magallanes Basin, in three districts known as Continent, Tierra del Fuego Island, and Offshore.

Chile: Energy Policy

Hydrocarbons are subject to special rules in Chile according to the provisions of Articles 19 No. 24 paragraph 7 of the Constitution; Article 3, paragraph 4 of the Organic Constitutional Law on Mining Concessions; and Articles 7 and 8 of the Mining Code and the Decree in Force of Law N
1 of 1978. In general terms, hydrocarbons are substances for which the State has absolute, exclusive, inalienable, and imprescriptible domain. Upstream

According to the current legislation there are two alternatives that allow private exploration and exploitation of hydrocarbons in Chile: (i) the administrative concessions, and (ii) the special operating contracts. In this regard, national and/or international companies can obtain administrative concessions or special operating contracts, which are called “Special Petroleum Operation Contracts” (CEOP for its Spanish abbreviation), to explore and exploit hydrocarbons in the Chilean territory, exclusively or associated with the National Petroleum Company (ENAP). The Ministry of Energy is the body empowered to grant concessions and celebrate the CEOP’s on behalf of the State of Chile. Companies such as Geopark, Pan American Energy, Wintershall, and YPF have awarded CEOP’s and developed exploration and exploitation activities in the Magallanes Region. Downstream

The activity of crude oil refinery – either of the domestic oil production or the imports carried out by ENAP or private wholesale distributors – is performed exclusively by ENAP with its own plants. The latter exclusivity has no legal enshrinement but reflects the reality of a country with limited reserves of oil and therefore low incentive for private companies to develop refinery projects. In the storage market, the dominant player is also ENAP that stores both for subsidiaries and third parties. Notwithstanding the foregoing, there are several companies that have their own storage facilities such as Copec, Shell, and Petrobras.

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Transportation of fuels derived from petroleum to wholesale customers is done mainly through pipelines, ships, or trucks by a reduced number of players. In the market of wholesale distribution of liquid fuels, a small number of private companies are involved commercializing both imported oil and ENAP refined derivatives. The liberalization of the wholesale distribution and retail distribution in 1978 and 1982, respectively sought new entrants to the industry and increased competition. Regarding the gas distribution market, the Decree in Force of Law N
323 of 1931 regulates the conditions for private actors to establish, operate, and exploit the public service of household gas distribution, the transmission networks, the tariffs for household gas services, the quality standards for the gas, the security standards to be carried out on gas appliances and installations, among others. The above provisions regulate the very upstream and downstream of the oil and gas cycle, leaving midstream activities such as importation, regasification, and storage subject to no specific regulatory regime but the general legal regime in Chile where it prevails the right of any individual to develop an economic activity in the country. Chilean Natural Gas Market Due to the great relevance acquired by the natural gas in the last decades in Chile, it is necessary to refer specifically to this energy source that is currently looming as the most suitable back up for nonconventional renewable energies. From Natural Gas to LNG

The exploitation of natural gas in Chile dates back to the early 1970s in the Magallanes Region. In the rest of the country, despite the exploratory efforts of the state-owned National Petroleum Company (ENAP), no commercially exploitable wells have been found. In 1995, after the signature of the Protocol for Gas Integration with Argentina, the natural gas industry started a rapid development in Chile. However, in 2004, the supply of natural gas from Argentina began to face successive tax increases and restrictions due to internal demand

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prioritization. In 2006, the supply of Argentinian natural gas was definitely cut, generating an energy crisis in the country and making spot prices reach more than US$ 300 per MWh in March 2008 (COCHILCO 2014). To face the Argentinian gas crisis ENAP alongside private capitals, started in 2007, the construction of the first LNG terminal in the Quintero Bay, which received its first commercial LNG vessel in September 2009. At the same time, the demand of competitive energy supply made by the mining industry in the north of the country were addressed by the state-owned National Copper Corporation (CODELCO) that joined forces with ENGIE (fka GDF SUEZ) to start the construction of another LNG terminal in the Mejillones Bay, which received its first commercial LNG vessel in 2010.

to mention the existence of the Chilean Competition Law whose rules may apply to the LNG regasification capacity market specifically regarding the figures of refusal to supply or abuse of dominant position. Indeed, this possibility has been analyzed in the past by the National Economic Prosecutor showing signs to the actors that he is attentive to the movements of the market. The incumbents have also warned those signals and reacted with announcements for third party access bids and open seasons. Regarding the application of the doctrine of the essential facilities, it has not been expressly included in the Chilean legislation. However, the Tribunal for the Defence of the Free Competition has mentioned the doctrine in cases where its classic requirements have concurred (Decision No. 29/2005, “TransBank” case).

Legal and Regulatory Framework for LNG in Chile

LNG Import Terminals in Chile

In 2008 when the first LNG terminals were under development, the first specific regulation for LNG was issued to set the minimum safety requirements for LNG plants. After some improvements, such regulation was embodied in the Decree N
67 of 2012, which established the Safety Regulations for LNG Plants. In the same vein, the authority devoted itself to the preparation of minimum safety standards for the transportation of LNG. The result of that work came out in April 2014 where it came into force the Decree N
280, which establishes the Safety Regulations for the Transportation and Distribution of Gas. In the absence of specific legal rules imposing requirements, restrictions, or prohibitions to LNG “midstream” activities such as importation, liquefaction, regasification, storage, etc., they have been developed freely under the constitutional guarantee of the right to undertake any economic activity, enshrined in Article 19 No. 21 of the Chilean Constitution. LNG and the Chilean Competition Law

Taking into consideration the need to develop mayor infrastructure projects to allow the introduction of the LNG in Chile, together with the limited capacity of those projects, it is important

GNL Quintero • Started operating: 2009 • Regasification capacity: 15 million cubic meters/day • Storage capacity: 334,000 cubic meters • Distribution systems: Trucks and pipelines • Shareholders: Enagás 45%, Omers Infrastructure 35%, and Enap 20% • Third party access offered: Through GSA (gas sales agreement) and TUA (terminal use agreement) GNL Mejillones • Started operating: 2010 • Regasification capacity: 5.5 million cubic meters/day • Storage capacity: 175,000 cubic meters • Distribution systems: Pipeline • Shareholders: Codelco 37% and ENGIE (fka GDF Suez) 63% • Third party access offered: Through GSA (gas sales agreement) and TUA (terminal use agreement) Future of LNG in Chile

In recent years, several factors have contributed to increase the requirement for gas-fired generation.

Chile: Energy Policy

One of these factors is that there is significant public opposition to environmentally sensitive power projects. The latter has been followed by the introduction of environmental regulations as well as the adoption of stringent international standards for new power plants. As a result of the latter, it appears very unlikely that new large-scale hydropower dams or coalbased power plants will obtain environmental permits in Chile, regardless of emissions controls that could be incorporated into their design. The previous idea goes in line with the failure experiences of various projects as (i) the HydroAysén hydroelectric project comprising five hydropower dams in the Baker river basin in the Chilean Patagonia with a total installed generation capacity of 2750 MW; (ii) the Barrancones coal thermoelectric project located in the Coquimbo Region with an installed generation capacity of 540 MW; (iii) the Castilla coal thermoelectric project located in the Atacama Region with an installed generation capacity of 2100 MW; (iv) the Punta Alcalde coal thermoelectric project located in the Atacama Region with an installed generation capacity of 740 MW; among others. Consequently, financial institutions have increased their reluctance to lend for the development of these types of projects in Chile. Another factor is the explosive increase of renewable projects, mainly in the north of the country. Since the region is mostly covered by desert, there is no potential for hydroelectric power generation and the only scalable renewable technologies are wind and solar. However, the intermittent nature of these sources requires the support of conventional power plants with fastresponse capacity to secure the energy supply of the electric system. In this regard, gas-fired power plants have another comparative advantage in relation to coal plants that require more time to be switched on.

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of 1982, the provision of electricity in Chile was deposited solely in the hands of the private sector. There is a mix of domestic and foreign investment in infrastructure where the State plays a regulatory and safety role. Planning, policy making, and regulatory matters concerning the Chilean electricity sector are overseen by the Energy Ministry and the technical agencies that depend on it. Generation, transmission, and distribution are treated as independent activities. Distribution and part of the transmission system are regulated with service obligations and prices set in accordance with cost-efficiency standards. The system is also split into regulated and nonregulated customers depending on their energy consumption (500 kW ¼ nonregulated). The wholesale market model in Chile is based on a power-pool type structure with mandatory participation and the existence of bilateral contracts. The pool is operated by the National Electric Coordinator (CEN), which sets the spot price of electricity based on the declared marginal cost of each generator on the grid. Generators are paid by energy and capacity supplied. Energy Agenda The energy agendas promoted by the governments of recent years have been mostly aligned with their main objectives, giving continuity to the country’s energy policies and facilitating in this way the creation of an environment of stability and predictability for investors. The current government’s Energy Agenda launched in 2018 identifies the challenges of the Chilean energy system and focuses on the following seven pillars to work on its improvement. Energy Modernization

Modernize legislation and institutions to facilitate the processing and implementation of energy development.

Energy Policy Energy with Social Stamp

General Principles Since the introduction of a market-based regulatory framework, established by the Electricity Act

Provide access to energy to the most vulnerable sectors, so they can cover basic needs such as heating.

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Energy Development

Strengthen the monitoring, support, and sectoral guidance to developers of energy projects, both generation and transmission of electricity and hydrocarbons, in all stages of project development. Lower Emissions

Establish the means for the diversification and expansion of the energy matrix, enhancing local energies and considering costs and geography where those projects will be installed. Electromobility

Promote electromobility and the required supply industry, such as copper and lithium. Energy Efficiency

Develop of incentives for energy efficiency, both residential and industrial, reviewing and modifying the regulatory framework to recognize the needs of each region. Education and Training

Create a network that links all levels of education, forming technical skills oriented to the energy sector, considering the characteristics of each place to develop energy culture in people from an early age.

Regulatory Framework The legal system in Chile is strong and the Electrical Services Law (LGSE) is reasonably stable with clear rules designed to encourage private investment. The electric market is divided into three distinct areas: generation, transmission, and distribution. Market Generators must compete among themselves for the supply of free consumers as well as for supply of electricity distribution companies. The mechanism to allocate the energy supply to free consumers occurs through deregulated private negotiations. In the other hand, the energy supply

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of distribution companies for regulated customers is awarded to generators through a mechanism of regulated public tenders, coordinated by the National Energy Commission, which results into long-term contracts. The distribution of electric power to regulated final consumers is considered a public service and is awarded to private companies through a concession system. These concessions are governed by the general regulation as well as the particular conditions established by each decree of concession issued by the Ministry of Energy. Distribution concessions can be awarded to more than one company for the same territory under the same conditions. Even though the Chilean energy market is structured as an open access regulated market, until a few years ago the energy demand was supplied by a small number of private companies in a relatively concentrated and integrated electric market with four mayor players. However, over the last years there have been introduced measures that has succeed in the goal to increase competitiveness, stimulate the arrival of new players, and boost the development of renewable energies. Access Regime Open access is compulsory for either the national, regional, or dedicated transmission systems and their owners/operators must allow third parties to utilize their installations under technical and economic conditions that are not discriminatory among users. In exchange, said third parties must pay the remuneration for the use of the corresponding transmission system. Distributors are also required to grant access to generators for the supply of free consumers and to small-distributed generation facilities (PMGD) and small-scale renewable energies projects for the injection of their energy to the grid. The aim of these regulations is to ensure access to the transmission and distribution systems to any interested party, in order to make withdrawals and injections of energy and provide that the energy transmission system is aligned with the principles of security and efficiency of the whole electric system.

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Pricing Tools The LGSE establishes the basic premise that rates should represent the actual cost of generation, transmission, and distribution of electricity associated with an efficient operation. The latter is in the aim to deliver the appropriate signals both to companies and consumers in order to obtain optimal development of electrical systems. A general criterion incorporated in the system is the freedom of pricing in those segments where competitive conditions are observed. Following this premise, the LGSE provides for freedom of prices for the supplies to end users whose connected power exceeds 500 kW, assuming negotiation skills and the ability to source electricity from other forms, such as self-generation or direct supply from generating companies. On the other hand, those end users that consume less than or equal to 500 kW are considered sectors where the market has characteristics of natural monopolies and therefore, the LGSE makes them subject of price regulation. Customers located between 500 kW and 2000 kW of connected power are eligible to choose the regulated customers regime. Generators can market its energy and power in any of the following markets: (a) Market for major consumers on a freely agreed price (b) Market for the supply to distribution companies at the node price in the case of regulated customers (c) The spot market for the supply of the electric system at a marginal cost The price that distribution companies can charge to users located in their area of distribution for their electrical distribution servicing is given by the following expression: End user price ¼ Node price + Distribution Value Added + Single Fee for the use of the Trunk System. Market Dispatch Model Generation is coordinated by the CEN, whose main objective is to coordinate dispatch while at the same time minimizing the cost of the total system. The CEN use marginal costs for

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prioritizing dispatch, meaning that the generation units are dispatched in a merit order given by their declared variable costs, such that the most efficient units are dispatched first. The system has a set price for the capacity payment that is set by the Chile’s National Energy Commission (CNE) periodically through a technical report, depending on the type of generation unit that the system is going to assign over the gross installed power. The policy of real costs and the absence of economies of scale in the generation segment allow to index the price to the marginal cost of supply, consisting of two components (CNE 2018a): (a) Basic price of energy: Is the average of the marginal cost of energy in the electric system operating at minimum operation and rationing cost during the study period (b) Basic price of peak power: Annual marginal cost of increasing the installed capacity of electric system considering the more costefficient units, determined to supply additional power during the hours of peak annual demand of the electrical system, increased by a percentage equal to the theoretical reserve margin of the electric system The economic operation favors the dispatch of the units with the lowest variable cost of energy production. The variable production cost of a generating unit is the product of its specific fuel consumption by the price of it, plus a variable nonfuel cost attributable mainly to spare parts, chemicals, and lubricant additives. To properly compare generating costs of various generating units, a table of variable costs is prepared, which contains the variable production cost of each generating unit referred to the system load center or basic node and affected by factors, which considered the marginal losses of the transmission network (penalty factors). The programming of the operation and the calculation of marginal costs is done daily, resulting in a generation program which considers the hourly demand forecast, the maintenance of generating units and transmission system, and the technical limitations of the generating units,

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including the limits of maximum and minimum power, commissioning times and minimal operation time in service. Prior to each trading day, the market generators declare a cost of energy to the market operators. The CEN then organizes the generators into a merit order that will determine the order in which plants are dispatched or called to generate. The CEN coordinate in real time with the control centers of the generation units the implementing of the daily program, making corrections in the operation necessary to absorb significant variations or deviations from schedule. The Transmission System In 2017, the two main interconnected electrical systems in Chile were merged to establish a national system covering the territory from the northern city of Arica to the southern island of Chiloé. In the south, they remain isolated two minor systems covering the Aysén Region and the Magallanes Region.

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constituted by the Arica-Parinacota, Tarapacá, and Antofagasta Regions. Approximately 90% of consumption on the SING consisted of large customers, mining and industrial. The SIC was the main electrical system of the country, delivering electricity to more than 90% of the population. The SIC extended from Taltal in the north to Chiloé in the south. Unlike the SING, the SIC consumption was mainly focused to regulated domestic customers that represented 60% of the total population. The interconnection of the SING and the SIC was performed through a 600-km transmission line in 500 kV from the Antofagasta Region to the Atacama Region. The SEN has an installed capacity of 22,552 MW as of September 2018, meaning 99% of the country’s total installed capacity. The energy mix of the SEN installed capacity comes from 28% hydroelectric plants, 21% from coalfired power plants, 19% natural gas, 19% NCRE (9% solar, 6% wind, 2% biomass, 2% minihydro), and 13% diesel (CNE 2018b).

The SING-SIC Interconnection

In response to transmission capacity shortages in Chile, the interconnection of the Great Northern Interconnected System (SING) and the Central Interconnected System (SIC) was promoted by the Ministry of Energy to benefit from the synergies and the competitiveness of a mayor and most diversified grid. According to estimates provided by the studies commissioned by the National Energy Commission (CNE), this initiative will bring economic benefits to the country of around USD$ 1100 million in present value, resulting from a decrease in the costs of the electrical system and a projection of price reduction associated with increased competition and reduced risk in the market.

The Southern Systems

With 63 and 104 MW of installed capacity respectively (2018), the Aysén and Magallanes systems are totally isolated systems that supply energy to specific southern regions. These grids are both run by solitary generating companies and both supply less than 1% of the total national demand. Regulators and Operators The National Energy Commission (CNE)

The CNE is a technical body responsible for analyzing prices, tariffs, and standards to which they must adhere the generation, transmission, and distribution companies, to maintain a secure, safe, and quality service. Its functions are:

The National Electric System (SEN)

The SEN is the result of the interconnection in 2017 of the Great Northern Interconnected System (SING) and the Central Interconnected System (SIC). The SING was constituted by the interconnected power plants and transmission lines that supplied the Great North of Chile

(a) Technically analyses the structure and level of prices and rates of energy goods and services (b) Establish the necessary technical and quality standards for the performance and operation of energy facilities (c) Monitor and forecast the current and expected performance of the energy sector proposing

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the necessary regulations to the Ministry of Energy (d) Advice the Government through the Ministry of Energy, in all matters related to the energy sector for a better development Superintendence of Electricity and Fuels (SEC)

The Superintendence of Electricity and Fuels is the agency in charge of monitor and supervise the compliance with laws, regulations, and technical standards for generation, storage, transport, and distribution of liquid fuels, gas, and electricity. The SEC is in charge of verifying that the quality of the services provided to users is the one prescribed in the aforementioned provisions and that the operations at the different stages of the energy cycle pose no risk to people or goods (safety issues). National Energy Coordinator (CEN)

The CEN is an independent agency provided in the LGSE for the coordination and operation of all power facilities in the national system, including power plants, transmission and subtransmission lines, and electrical substations. According to the LGSE the CEN is responsible for:

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The panel is composed by seven members with extensive professional or academic career and who have demonstrated expertise and experience in technical, economic, or legal matters related to the electricity sector. Five of them should be engineers or graduates in economics and two must be lawyers. The Chilean Competition Tribunal through a public tender appoints the panel members for periods of 6 years with partial renewals every 3 years.

International Aspects Over the last decades, Chile has launched a strong commercial internationalization policy by joining various multilateral forums and signing a large number of bilateral free trade agreements as well as economic partnerships. Some of these instruments – listed below – have a direct impact on the energy industry by establishing mechanisms for the protection of investments or conflict resolution and others have an indirect impact by introducing safety, environmental and/or social standards for the development of projects. General Commercial Instruments

(a) Preserving the overall safety of the electric system (b) Ensuring the most economical operation for all facilities on the electricity system (c) Ensuring open access to transmission systems (d) Determining economic transfers between members of the CEN (e) Preparing studies and reports required by the National Energy Commission (CNE), the Superintendence of Electricity and Fuels (SEC), or the Ministry of Energy

World Trade Organization (WTO)

Dispute Resolution System: Expert Panel The expert panel is a technical and autonomous body contemplated in the LGSE. The panel has exclusive jurisdiction to rule on discrepancies and conflicts arising in connection with the application of the LGSE and its opinions are binding for those involved.

Organization for Economic Cooperation and Development (OECD)

Chile is a member of the WTO since the beginning of the General Agreement on Tariffs and Trade (GATT) in 1947, which regulated international trade. In 1995, the latter agreement was replaced with the World Trade Organization (WTO), which is the body that currently deals with international rules governing trade between countries. Nowadays, the WTO has 160 members, who represent about 98% of trade flows worldwide.

The OECD is an intergovernmental organization that brings together 34 countries committed to market economy and democratic political systems, which together represent 80% of world’s GDP.

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The OECD’s mission is to support economic growth, increase employment, improve quality of life, maintain financial stability, assist other countries with their economic development, and contribute to growth in world trade. In May 2007, the Council of Ministers of the member countries of the OECD invited Chile to start the accession process that culminated in 2010 with the signing of the “Agreement on the terms of access of the Republic of Chile to the Convention of the OECD.” Asia-Pacific Economic Cooperation (APEC)

Chile joined APEC in 1994 and since then has been actively involved in promoting free and open trade in the Asia Pacific region. The APEC forum has proved to be a catalyst for the economic and trade liberalization processes both in the bilateral and multilateral spheres and has served as a tool for the effective implementation of the Chilean foreign policy objectives in the region. Pacific Alliance

The Pacific Alliance is a regional integration initiative that brings together Chile, Colombia, Mexico, and Peru. It was officially established on April 28, 2011, and its main objectives are: (1) provide an area of integration to move towards the free movement of goods, services, capital, and people; (2) boost further growth, development, and competitiveness of the economies of its members; and (3) become a platform for political dialogue and economic and trade integration with global projection. International Centre for Settlement of Investments Disputes (ICSID)

In 1991, Chile becomes signatory part of the Convention on the Settlement of Investment Disputes between States and Nationals of other States that creates the ICSID. One of the purposes of the ICSID is to provide the international community with a tool to provide legal certainty for international investment flows by incorporating a mechanism of conciliation and arbitration.

Chile: Energy Policy

Specific Energy-Related Instruments International Atomic Energy Agency (IAEA)

The IAEA was established in 1957 as an independent international organization whose main objectives are: (1) to promote the peaceful use of nuclear energy, (2) facilitate technical cooperation in nuclear materials, (3) to establish safeguards to ensure that fissionable materials are not intended for military purposes, (4) adopt safety standards to protect health and reduce risk in the operation of nuclear facilities, and (5) establish standards for the physical protection of facilities and safety in nuclear operations. Chile is a member country of the IAEA since 1960 but its nuclear activity is essentially reduced to two research reactors and there are no plans to develop nuclear energy in the country in the near future. UN Framework Convention on Climate Change (UNFCCC) and Kyoto Protocol

Climate change is one of the great challenges faced by humanity nowadays and Chile has adopted a special commitment to this cause by ratifying the UN Framework Convention on Climate Change in 1994 and the Kyoto Protocol in 2002. Even though the Chilean “contribution” to world’s Greenhouse Gas Emissions (GHG) is only 0.26% and that the country is a “non-Annex I Party” in the UNFCCC, Chile has enacted mandatory standards to reduce GHG. One clear example of the aforementioned is the renewable energy target of 20% of the energy mix by 2025. ILO Convention 169

In 1989, the General Conference of the International Labour Organization adopted the Convention No. 169 on Indigenous and Tribal Peoples in Independent Countries. Chile joined in 2009 and assumed responsibility for developing actions to protect the rights of indigenous peoples and to guarantee respect for their integrity. Notwithstanding that this convention has no direct relation to energy, it is relevant to mention the difficulties that the country has faced for its

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implementation, sometimes hindering the development of investment projects.

Concluding Statement In the recent decades, Chile has excelled by the strength of its institutions, which have been the cornerstone of its growth jointly with the improvement in the quality of life of its citizens. Both the institutions and the regulation of the energy sector have been based on the principle of free enterprise with a strong emphasis on competitiveness and sustainability of the national electricity framework. As it often happens in regulated markets, there is room for improvement in the Chilean electricity sector, especially in what regards to, the consolidation of the new environmental legislation, the facilitation of relations with local communities, and the improvement of energy efficiency. Notwithstanding the foregoing, various measures to address those areas are currently under discussion by the Chilean policymakers in the aim to catch the momentum of an energy market that is facing an exciting growing stage. Therefore, nowadays the Chilean energy sector has attractive features to offer to investors for the development of new projects, existing abundant nonexploited renewable resources as well as a forecast of steady growth in the energy requirements.

117 censo2017.cl/descargas/home/sintesis-de-resultadoscenso2017.pdf. Accessed on 22 Sept 2018 COFACE (2018) Country risk overview – Chile. http:// www.coface.com/Economic-Studies-and-CountryRisks/Chile. Accessed on 22 Sept 2018 De la Flor, F. e. a. (2013) Regulatory constraints for the competitive operation of LNG terminals: the regulatory debate on coexistence of regulated and unregulated terminals, p. 26 Griffin P (2012). Liquefied natural gas: the law and business of LNG, globe law and business Hudson RA (ed) (1994) Chile: a country study. GPO for The Library of Congress, Washington, DC. Available at: http://countrystudies.us/chile/36.htm. Accessed on September 30, 2018 Maurer S, Suzanne S (2014) The essential facilities doctrine: the lost message of terminal railroad National Energy Commission (2018a) The concept of short term node prices. https://www.cne.cl/tarificacion/ electrica/precio-nudo-corto-plazo/. Accessed on 29 Sept 2018 National Energy Commission (2018b) Energy sector monthly report September 2018. https://www.cne.cl/ wp-content/uploads/2015/06/RMensual_v201809.pdf. Accessed on 30 Sept 2018 OCDE (2014) Chart of working age population by country. Available at: https://data.oecd.org/pop/working-agepopulation.htm#indicator-chart. Accessed on 22 Sept 2018 Transparency International (2017) Chile corruption perception index. Chile is ranked 21 in the CPI 2017. https://www.transparency.org/news/feature/corrup tion_perceptions_index_2017. Accessed on 22 Sept 2018 Weber ST, William (2009–2010) Harmonizing essential facilities. 76 Antitrust L.J. 741 (2009–2010): p. 741–767

Chile: Mineral Policy References Chilean Central Bank (2018) National accounts. Available at: https://si3.bcentral.cl/Siete/secure/cuadros/arboles. aspx?idCuadro¼CCNN2013_P0_V2. Accessed on 22 Sept 2018 Chilean Competition Tribunal (2005) Decision No. 29/2005, “TransBank” case Chilean Copper Commission (2014) Análisis histórico de los precios de energía eléctrica en minería y su impacto en competitividad. Available at: https://www.cochilco. cl/Listado%20Temtico/Analisis%20Historico%20de% 20Precios%20de%20EE%2024-12-2014%20vf.pdf. Accessed on 30 Sept 2018 Chilean Ministry of Energy (2015) Decree 158 – 2015 Chilean National Institute of Statistics (2017) Synthesis of results census 2017. Available at: http://www.

Carlos Ciappa Petrescu LLM in Mineral Law and Policy, CEPMLPDundee University, Dundee, UK Lecturer at LLM-UC, Catholic University of Chile, Santiago, Chile

Chilean Context Chile is a mining country and few people in the nation would doubt that condition which can be observed especially in the center and northern regions of it and also in Patagonia. From ports to

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roads, in the streets of main cities and even when you go on a family fieldtrip to the Andes mountain range, expressions of this condition of mineral producers can be found. Chile is a unitary republic with a central government and representation offices for each of the Ministries in all of the fifteen regions the country is administratively divided, which manage the main part of the regulation for project development. The parliament (also called the National Congress) has two cameras – the Chamber of Representatives and the Senate – and their scope of action is limited to new law establishment, despite the political stake some congressmen can take sometimes in relation to a specific project. At a local level, a Major and a Board of Counsellors manage Municipalities and they have a considerable amount of power to take decisions on domestic matters, usually being key stakeholders for projects development. The Courts in Chile are an independent power from the Government and the National Congress and they play a key role allocating mining property for exploration and exploitation following a highly regulated judicial process. Local Courts are the ones that grant the exploration or exploitation concessions by means of a noncontentious process, on a first-come first-served basis, which requires a prior and favorable report by the National Geology and Mining Service. That is, the granting of concessions is not an administrative procedure, as is usually the case in other countries, but a judicial one. Moreover, every day Courts are gaining relevance by the depth they get involved in mining developments and the rulings they issue elevating the standards and strengthening the requirements for projects.

Mining in Chile Copper is by far the king in the Chilean mining industry. Nonetheless, gold, silver, molybdenum, iron ore, coal, and lately lithium are also very important to complete the national mining scene. According to the figures provided by the Chilean Mining Council (in Spanish “Consejo

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Minero,” abbreviated as CM), Chile is the N
1 copper producer of the world with 30% of the world’s total output of this metal; nonetheless, Chile is also very relevant for the production of the other minerals previously mentioned, since it is ranked N
2 in the production of molybdenum with 18% of the world total production, it is ranked N
5 in the production of silver with 6% of the world total production, and it is ranked N
14 in the production of gold (CM 2017b). In addition to its current position in the worldmining scenario, the perspective is also very relevant considering the amount of reserves the country has to offer for future exploitation, accounting for 29% of the world copper reserves, 16% of molybdenum, 13% of silver, and 7% of gold (CM 2017b). Following these figures, it is easy to depict that mining is a key activity for Chile. The mining industry accounts for 55% of national exports, 13% of the national GDP, but in some northern regions of the country such as Antofagasta or Atacama, mining can represent up to 68% and 57% of the regional product, respectively. In terms of labor force, the mining industry directly contributes with 3% but, considering the supply chain, it reaches 10% of national employment (CM 2017a). Nowadays, the main part of the mining production comes from national and international private companies operating in Chile. Nevertheless, CODELCO – the national State-owned copper company – produces 1.8 million tonnes of copper, representing 32% of the Chilean copper production (CM 2017b), which makes CODELCO the biggest copper producer in the world (Rankia 2017). The country also has three copper refineries and seven smelters, which complement the mineral extraction and beneficiation to allow the industry to produce mineral as refined copper, blister, or copper concentrate according to each productive process. Despite this infrastructure, Chile is not a relevant consumer of mineral. Almost all the copper, molybdenum, gold, and silver mined and beneficiated are exported and only iron ore and coal are produced for internal consumption on energy and infrastructure.

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In the last decade, the mining industry along with other natural resources industries in Chile has suffered a strong opposition from communities. Often, this opposition is due to the effects of mining projects on water resources, environmental, and sociocultural components, which in sum are perceived as adversely affecting the livelihoods of those communities. It is noteworthy that in this context, following research developed in Chile in 2014 by the Commonwealth Scientific and Industrial Research Organization – CSIRO – most Chileans identify the mining activity as key for the country and agree to encourage and foster the mining activity in Chile (CSIRO 2014).

Mining Policy The structure of the institutions placed in the Chilean legal framework was adopted following the studies of a free market economy developed in the University of Chicago, mainly upon the works and ideas of the economist Friedrich A. Hayek (CEP 1992). The implementation of these kind of policies was not an isolated event but part of an international trend that swung back in the 1980s, with the rise of neoliberal economic ideas and the advent of the “Washington Consensus,” which was a set of ten policies that the US government and the international financial institutions based in the US capital believed were necessary elements of a “first stage policy reform” that all countries should adopt to increase economic growth. At its heart is an emphasis on the importance of macroeconomic stability and integration into the international economy – in other words – a neoliberal view of globalization (WHO 2015). The policies implemented in Chile in the 1980s resulted in a new Constitution, a renewed institutional scheme, and a legal framework fostering freedom and private participation in almost every aspect of the national economy, which led to a development of the Chilean economy along with all the social standards measuring quality of life (OECD 2013).

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This allowed the high-economic performance previously described, achieved following the establishment of a legal framework shaping strong economic institutions in the second half of the 1970s, which predominantly has remained unchanged until today (Fuentes 2011). The Chilean mining policy promotes fundamentally private investment in the sector, with an emphasis on foreign investment. This is expressed in a set of guarantees and incentives that are usually established in contracts, which can only be modified via agreement of the parties. The Chilean national Constitution gives equal treatment to the foreign and the domestic investment, also concerning mining investments. The framework for the Foreign Direct Investment (FDI) and the mineral resources were shaped through the implementation of tax laws, as per Decree 600 of 1974 and the Mining Code of 1983. Nonetheless, part of the mineral production is in public hands, as per the national copper company (CODELCO by its acronym in Spanish), which remains a 100% state-owned corporation. The main reform to the legal framework described was adopted in 2005, establishing a new specific tax for mining activities, which operates as a royalty over mining incomes. It has to be noted that this royalty applies only over private companies since CODELCO has its own mechanism to deliver revenues to the State. Following these explanations, it can be observed that in Chile the mining policies are stated in the law, leaving small room to the governments to innovate in this respect. Proof of this is the fact that there is no State lead policy, plan, or strategy, and the closest tool that can be found is the content of governmental programs, which set goals and activities for the specific presidential term of 4 years – without reelection. Nonetheless, what can be observed in these governmental programs are some goals that are reestablished in different periods and for that reason can be considered as transversal policies, some of them stated in official documents issued by the sectorial Ministry.

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One example of this are the policies developed for the water sector where the government developed a National Policy in 1999 aiming to develop new water sources, among other goals. And then, in 2012, the upcoming government replaced it with a National Strategy for Water, in which desalination was established as one of the technologies to be fostered in order to ensure the creation of new water sources. This has resulted in several desalination projects being developed by mining companies, mainly due to pressures during the environmental impact assessment of their operations to move from underground water extraction and to look for new water sources for their operations. These programs focus on the activities Ministerial authorities are authorized by law to execute; such as fostering FDI, improvement of production, adoption of mining standards, and increasing mining contribution to national treasury (Chile 2015). Despite this particular situation, there are public and private institutions in Chile promoting the mining industry, with specific programs to foster innovation, re-use, value added, and entrepreneurship. Chile’s economic development agency (CORFO by its acronym in Spanish) is leading these activities with several programs to fund innovation and entrepreneurship in relation to several industries including mining. Fundación Chile, a nonprofit foundation surged from a public–private partnership between the Chilean State and BHP Billiton, is also leading several initiatives and recently has published a program to foster innovation inside the mining industry and from there to other sectors of the economy through a plan named “From copper to innovation” (FCH 2015). This innovation program is based in a mining view at 2035 and has several work axes, which depict gaps in which the country needs to work to achieve the goals set in the vision for 2035. Among these: to go from 5.5 to 7.5 million metric tons of average annual production; from 40% to 80% of production in the first quarters of industry cost at a global level; from 65 to 250 companies with world-class contractor standard, and from

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US$ 537 million to US$ 4000 million in export of goods and services related to mining. Each of these goals has its own set of actions and activities that need to be addressed in order to fulfil them.

Regulatory Framework In relation to the mining activity, the national Chilean Constitution has adopted a position close to the liberal policies implemented in Chile since the second half of the 1970s, which consider mining as the priority land use and a compensation regime to its acquisition, which can be forced by courts. As previously mentioned, the national Constitution provides that the Chilean State has absolute and exclusive ownership over all mineral resources present in the national soil, without any legal limitation and over any kind of deposits (except for aggregates such as sand or gravel which belong to the landowner). The Constitution also defines a concessional regime to the mineral access by individuals or companies incorporated in Chile and commands for a law to define which minerals can be explored and exploited by them and the conditions under which those activities are to be developed. On the other hand, the Constitution also statutes that the mining concession imposes obligations (or duties) to the mining concessionaire in order to ensure the development of the mining activities related to the specific concession. Regarding the land, the Constitution recognizes private ownership of the land [Artículo 19 N
24 de la Constitución Política de la República de Chile] (but not of the mineral rights which are vested in the central state who can award mining concessions for the exploration or exploitation of mineral resources). Nevertheless, according to the Fundamental Chart [same article], the landowner must facilitate the land access to the mining concessionaire and commands the law to provide for the obligations of the landowner to comply with this. The landowner receives a monetary compensation calculated considering the market value of the land and the flows he could have received by the activity

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being done on it (in Spanish called “daño emergente y lucro cesante”). These features frame the access to mineral rights and to land under the Chilean Constitution, which as previously mentioned, consider mining as the best land use and a compensational regime, under a regime of environmental protection. Following the framework given by the Constitution, the characteristics for the mineral concessions are provided in a qualified quorum norm, giving the framework legal rigidness. Regarding the mining activity, the law referred in the Constitution is the national Mining Code published in 1983 (last amended in 2014), which regulates the access to mineral rights and the land required to develop mining activities, the features of the mining concession, the process to obtain them, and the causes to lose them, the obligations of the mining concessionaire, the contracts and quasi-contracts of the mining activity, and other complementary provisions. It is important to note that this code does not consider norms related to community issues, environmental assessments, tax regimes, foreign investment, or any other relevant aspect of the mining activity, which are established in different bodies of norms. The Law on Mining Concessions (1982) must also be mentioned next to the national Mining Code (1983). In relation to the access to minerals, the law regulates the requisites and the court procedure to obtain a mining concession. Notable is the fact that courts are bound to grant the concession when the applicant has fulfilled all the requisites provided by law and courts have a discretionary margin to decide only when another applicant is disputing the concession. Concerning the land access, the law [Constitución Política de la República de Chile Artículo 19 N
24, Código de Minería Artículo 109, Ley Orgánica de Concesiones Mineras Artículo 8] expressly provides that the mining concessionaire has the right to use the superficial land that it may require for its mining activities. For this purpose, the concessionaire will impose easements over the superficial land and the owner of it will have the right to receive an economic compensation equivalent to the economic damages caused.

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Regarding access to water, despite there is a specific law regulating the access to water rights for any economic activity, the Mining Code holds special provisions for the mining concessionaire, granting the rights to use the water found in the mining activities developed inside the area of the concession. Nonetheless, in most cases the mining operators need more water for the operation than the one found in the area of the concession, and they can obtain access to additional water rights through the processes established in the Water Code, which has similar structures to access water as the ones provided to access minerals. From a diverse perspective, the Constitution ensures every Chilean citizen the right to live in an environment free of contamination, and in order to accomplish that, allows the law to establish restrictions to others rights guaranteed in the Constitution. Following this, in 1994 Chile adopted a law that provides for the Environmental Impact Assessment of industrial activities – EIA. The activities to be assessed are specifically listed in the law, and mining is one of them. The evolution of the EIA and its reforms, which affected this framework between 2010 and 2013, made it the institutional tool to settle social and environmental conflicts from the development of mining activities in protected areas. The population affected by a proposed project is one of the elements to be assessed under the framework of this law, and then the EIA has allowed the communities surrounding mining projects to have a better understanding of the positive and negative effects upon them and to obtain measures to repair, compensate, or mitigate those negative effects. New EIA regulations have innovated in relation to indigenous people in the EIA process. In fact, the latter rules for the EIA have included a consultation process for indigenous people under certain circumstances, following the provision of the ILO Convention 169, which will be detailed further on. Important is the Decree 66/2013 which regulates Indigenous Consultation. It is mandatory for any project upon EIA to conduct an indigenous consultation when the project has effects

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over surrounding indigenous communities. There are no limits regarding the size or kind of project. Only whether it will have or not effects over indigenous communities. The promulgation and the entry into force of the Law N
20.551 that regulates the closure of mining operations and its facilities, through the Supreme Decree N
41, on November 2012, has been one of the most relevant regulatory changes in the last few years for the mining industry in Chile. In summary, the new Law has three fundamental pillars: the obligation to submit for the approval of the authorities a closure plan that guarantees the physical and chemical stability of the mining facilities after finishing their operations; the requirement to provide the State with a financial guarantee equal to the value of the implementation of the closure measures and works; and the establishment of a post-closure fund. In addition, the Law gives more attributions to the corresponding authority (SERNAGEOMIN, part of the Chilean Mining Ministry) to establish audits and apply rigorous sanctions to those noncompliant mining companies. The Law was successfully implemented through a collaborative public-private strategy, and the result was the presentation in time of the mine closure plans by 90% of the industry, with closure cost gradually guaranteed from 2015, for an amount superior to US$ 12,000 million (http://www.na.srk.com/en/ la-implementation-mine-closure-law-chile-lesson s-learned-and-opportunities (accessed 20.07.17)).

International Memberships Following its condition of middle-income country, Chile participates in many international organizations (APEC, BIS, CAN (associate), CD, CELAC, FAO, G-15, G-77, IADB, IAEA, IBRD, ICAO, ICC (national committees), ICCt, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC (NGOs), LAES, LAIA, Mercosur (associate), MIGA, MINUSTAH, NAM, OAS, OECD (Enhanced Engagement, OPANAL, OPCW, Pacific Alliance, PCA, SICA (observer), UN, UN Security Council (temporary), UNASUR, UNCTAD, UNESCO,

Chile: Mineral Policy

UNFICYP, UNHCR, UNIDO, Union Latina, UNMOGIP, UNTSO, UNWTO, UPU, WCO, WFTU (NGOs), WHO, WIPO, WMO, WTO) (CIA 2017) being the most important UN, OECD, WTO, IFC, Mercosur, UNESCO, APEC, CELAC, FAO, and WHO. Upon its participation in the international community in 2008, Chile ratified the ILO Convention 169, in what can be considered as the boldest measure adopted by the Chilean State to recognize community rights upon the development of extractive projects. Following the ratification, several regulations have been put in place for the implementation of indigenous consultation aiming to reduce social conflicts related to industrial developments, especially to mining and energy projects.

Concluding Statement Chile is traditionally a mining country and was able to establish a legal framework embedded with policies fostering the mining activity that led it to an outstanding development of the industry and the country in the last 40 years. The challenges of recent years required adjustments in the framework to balance the protection of the industry and the rights of communities to preserve their environment and their social conditions upon the development of mining projects. The future presents new challenges related to the improvement of the standards the mining industry should apply in their processes in order to upgrade social and environmental performance of mining activities. Furthermore, Chile has a great challenge to promote innovation and entrepreneurship in a way that the benefits of the mining activity can catalyze new pillars of economic development for the country. The latter, in a context where mining production is more expensive and contested every day.

References CEP (1992) El Ladrillo, Bases de la Política Económica del Gobierno Militar Chileno. Centro de Estudios Publicos, Santiago

Chile: Renewable Energy Chile (2015) Ministerio de Minería Políticas Ministeriales, from http://www.gob.cl/cuenta-publica/2015/sectorial/ 2015_sectorial_ministerio-mineria.pdf CIA (2017) The world factbook. 2017, from https://www. cia.gov/library/publications/the-world-factbook/geos/c i.html CM (2017a) Chile, país minero. 2017, from http://www. consejominero.cl/chile-pais-minero/ CM (2017b) Minería en Cifras. 2017, from http://www. consejominero.cl/wp-content/uploads/2017/03/ mineria-en-cifras-Febrero-2017.pdf CSIRO (2014) Percepciones chilenas hacia la minería – Encuesta ciudadana. 2017, from http://www.csiro.au/ es-CL/Research/Mining-manufacturing/CSIRO-Chile/ Chilean-attitudes-to-mining FCH (2015) Desde el cobre a la innovación: roadmap tecnológico 2015–2035. 2017, from http://fch.cl/recurs o/corporativo/roadmap/ Fuentes R (2011) Learning how to manage natural resources revenue: the experience of copper in Chile. In: Collier P, Venables AJ (eds) Plundered nations? successes and failures in natural resources extraction. Palgrave Macmillan, UK OECD (2013) Chile, Visión General. Estudios Económicos de la OCDE. The Organisation for Economic Co-operation and Development, http://www. oecd.org/eco/surveys/Overview%20Chile%20survey %202013%20Eng.pdf Rankia (2017) Los mayores productores de cobre del mundo. 2017, from https://www.rankia.com/blog/ materias-primas/1874123-mayores-productores-cobremundo WHO (2015) Washington consensus. Retrieved 20 Jan 2015, from http://www.who.int/trade/glossary/story 094/en/

Chile: Renewable Energy Marco Antionio Sepúlveda Doctoral Centre for Offshore Renewable Energy (IDCORE), Dundee, UK

Chile imports 60% of its energy consumption which represents energy supply instability due to international price volatility and the condition of bilateral countries and companies’ relationship. Without energy there is no sustainable development, there is deindustrialization, exportation, and production lose competitiveness (MinisterioEnergia 2015).

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The Chilean renewable energy (RE) potentiality in the energy matrix is well known already. Chile is economically and politically stable, and it has a very good investment climate, vast RE resources, high energy prices, and supportive energy policies. Only wave energy resources could provide ten times what is already installed in the energy matrix. In 2014, Chile added 1GW of RE to the total electricity capacity of 18GW which means that RE counts 41% of the matrix considering large hydro power plants. President Michelle Bachelet launched the construction of the largest solar energy project in South America. Governmental support has increased with new policies in place. The RE targets were doubled to 20% by 2025, and generators have an obligation to generate a portion of their capacity from renewable sources of face financial penalties. A carbon tax was introduced in September 2014, and smallscale projects can now feed directly to electricity grid. Financing for RE projects is also increasing lately with the support of governmental institutions and private banks. International companies are willing to invest, and they play an essential role in the Chilean RE development. For instance, British companies that are in Chile investing and developing projects are RAME Energy, ACTIS, Ernst and Young, PWC, and KPMG and Aquatera (UKTI 2014). Among American companies are Pattern Energy and SunEdison. It is clear that the main industry in Chile is mining, and now they are interested in decreasing the cost of energy (CoE) with an improved operation and maintenance (O&M) strategy in RE systems. In fact, to produce energy, harnessing solar resource is cheaper than conventional solution with fossil-based fuels (REW 2015). One of the major barriers for mine companies to develop wind and solar projects is the misalignment between mine and RE plant lifetime. Today, price is absolutely key in the RE development in Chile; mine companies struggle to develop RE projects and to sign energy contracts due to the depression of the commodities’ price and the necessity of being profitable when energy counts for 40–50% of the operational costs. The main obstacle for developers to sign a contract

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like Power Purchase Agreement (PPA) is the recurrent mismatch of the remaining life of the mine and the number of years necessary for RE projects developers to recover the investment which usually varies between 20 and 25 years. This does not give a project with stable balance sheets that a bank would finance (REW 2015).

Policies to Push Renewables In 2008, a law was enacted that among other things obliged new energy projects to generate a percentage from renewable energy by way of incremental increases or face the imposition of financial penalties. It requires new energy generation contracts to include 5% of RE from 2010. This 5% has to be increased by 0.5% each year from 2014 until 2025 when generators have to supply 10% from RE sources. This law is aligned with a previous law in 2004 which allows small generators to connect to the national grid and it sets standards (Bennett 2009). According to Mr Muga, Vice President of the Generator Association S.A., the design of long run energy policy known as ‘Energia 2050’ has been commenced. The newly added power capacity in 2014 in the two main electricity networks (Interconnected Central System (SIC) and Interconnected Greatest North System (SING)) was 1.262 MW. If it is compared with the previous year 2013, the increment was favorable, more than 300%. Two third of the energy for new capacity comes from RE sources, mainly solar, wind biomass, and minihydro power plants. According to information delivered by the SIC, there were 1,868 MW under construction for operation from 2015. Within these projects are six hydro projects greater than 40 MW, 475 MW in solar plants, and 38 MW of passing hydroelectric plants smaller than 20 MW (Muga 2015). The Chilean Association of Renewable Energy (ACERA) has stated that the energy matrix in the country has reached a turning point with the expectation of a significant increase in generation of RE. ACERA also remarks on the benefits of RE as they do not follow international energy price trends and they do not have the risk of restriction

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as conventional fuels do; RE can offer energy independence. This organization explains that it is important to develop local industry and local supply chain. For example, for a solar plant an average of 80 tonnes of structure of steel is necessary for installed MW and this can be supplied by Chilean companies. It is also identified that the main barrier for RE projects is the electricity transmission, which due to the current regulation, the proper integration of energy sources is not possible (Finat 2015). Additionally, Fischer in his study “promotion of competency in the energy sector” defines barriers such as environmentalist opposition and access problems due to regulations, transmission, distribution, and generation. He concluded that the institution in charge of generation, the center of dispatch of energy (CDEC) should have a long-term vision, not just trying to minimize the short-term cost. It should be possible to ensure the free competition in generation enhancing the entry of new competitors to the Chilean market and limiting that current generators participate in biddings for energy supply to regulated clients (Fischer 2015). Regarding the trend of prices, Mr Salgado has stated that the price of energy is a result of a proportion of the different sources of energy to generate electricity. Thus, it is possible to predict that for humid years, the cost of energy would be cheaper than the cost of energy for dry years. Humid years mean a greater proportion of hydro plants which have lower cost of generation, therefore, a lower cost of energy. If the energy matrix receives more contribution from RE sources such as hydro and solar (i.e., plants with low operation costs) and that contribution is greater and the increment of demand, the marginal cost of energy will decrease (Salgado 2015).

References Bennett C. Renewable energy rising in Chile [Internet]. 2 0 0 9 [ c i t e d 0 4 - 0 4 / 1 5 ] . h t t p : / / w w w. renewableenergyfocus.com/view/1802/renewableenergy-rising-in-chile/ Finat (2015) Las ERNC se han transformado en una opcion competitiva. El Mercurio Fischer (2015) Generacion Electrica. Mercurio

China: Coal Industry Ministerio-Energia (2015) El desafio de la energia en Chile. El Mercurio Muga R (2015) Balance 2014 y desafios del sector de generacion electrica. mercurio REW. Renewable energy and Chilean Mines: a market overview [Internet]. 2015 [cited 04-04/15]. http:// www.renewableenergyworld.com/rea/news/article/ 2015/01/renewable-energy-and-chilean-mines-amarket-overview Salgado. Importante alza de la generacion de electricidad con ERNC en 2014. El Mercurio. (2015) 1(1):1. UKTI. Chile: expansion of renewable energy [Internet]. 2014 [cited 04-04/15]. https://www.gov.uk/govern ment/publications/chile-expansion-of-renewableenergy/chile-expansion-of-renewable-energy

China: Coal Industry Tao LV School of Management, China University of Mining and Technology, Xuzhou, China

General Information China is located in the east of Asia and on the west coast of the Pacific Ocean with a land area of about 9.6 million square kilometers. Since the reform and opening-up that was started in December 1978, China’s economy has developed rapidly, GDP reached 4.86 trillion (constant 2005 US$) in 2013 from 0.186 trillion (constant 2005 US$) in 1978, with an average annual growth rate of 9.77. Today, China is the world’s second largest economy. With the rapid economic growth, China’s energy consumption continuously increased, making it the world’s largest energy consumer. China’s primary energy consumption increased from 396.2 million tons oil equivalent in 1978 to 2852.4 million tons oil equivalent in 2013, with an average annual growth rate of 5.80%. Among them, coal consumption accounted for more than 65% of total primary energy consumption, and oil consumption accounted for around 20%. The Energy Development Strategy Action Plan (2014–2020) sets the targets for the development of the coal industry in China by 2020. It puts a ceiling on the annual

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primary energy consumption at 4.8 billion tons standard coal equivalent, and total coal consumption is capped at 4.2 billion tons. In addition, the share of coal in total energy mix is limited with less than 62%, which indicates that coal will continue be China’s main energy source at least until 2020 (Fig. 1).

Coal Industry Layout China’s abundant coal resources are distributed unevenly between its coal rich northern and western regions and resource scarce southern and eastern parts. According to BP 2014 Data, China’s proved coal reserves were 114,500 million tons at the end of 2013, ranking the third in the world, next to the USA and Russia. The western region accounted for about 85% of China’s total reserves, including nine provinces of Inner Mongolia, Shanxi, Xinjiang, Gansu, Ningxia, Qinghai, Yunnan Guiyang, and Sichuan. Among them, the conditions of coal resource in northwest area are particularly good and suitable for large-scale mechanized mining, especially the Zhundong and Hami coalfields in Xinjiang, which have the characteristics of shallow seam and large thickness of coal seam, are suitable for large-scale open-pit mining. In the past several decades of the exploitation of coal resources, as coal resources in eastern China have gradually dried up, coal resources in the central region have been highly exploited and the main front of coal mining has been gradually transferred to the western region (Li et al. 2015; Chen and Wu 2012; Ma et al. 2009). In 1949, the coal industry focused mainly on the eastern region (ten major coal-producing provinces, including Heilongjiang, Jilin, Liaoning, Beijing, Hebei, Shandong, Jiangsu, Zhejiang, Fujian, and Guangdong), whose production was about 21.53 million tons, accounting for 66.4% of the national coal production, and coal production in Liaoning province reached 5.44 million tons, ranking first in China. Coal production in the central region (including Shanxi, Henan, Anhui, Hunan, Hubei, and other provinces) was 6.79 million tons, accounting for 21% of total national

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China: Coal Industry

Million tonnes oil equivalent

2500.0

90.0% 80.0%

2000.0

70.0% 60.0%

1500.0

50.0% 40.0%

1000.0

30.0% 20.0%

500.0

10.0% 0.0% 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

0.0

coal consumption (left vertical axis)

proportion of coal (right vertical axis)

proportion of oil (right vertical axis)

proportion of gas (right vertical axis)

China: Coal Industry, Fig. 1 China’s primary energy consumption and energy consumption structure

China: Coal Industry, Table 1 Coal production distribution of China in 2008 (unit: million ton)

Eastern region Central region Western region

coal production, and coal production in the western region (including Inner Mongolia, Ningxia, Gansu, Qinghai, Sichuan, Yunnan, Guizhou, Guangxi, and some other provinces) was 4.11 million tons, only accounting for 12.7% of the total national coal production (China National Coal Association 2009). After the reform and opening-up, with further adjustment of China’s coal industry, the scale of coal mining in the central and western regions increased sharply, while coal production in the eastern region accounted for only a small portion of the national coal production. In 1978, coal production in the eastern region reached 260.52 million tons, accounting for 42% of the total national coal production; coal production in the central region reached 225.62 million tons, accounting for 37% of the total national coal production; and coal production in the western region reached 132.56 million tons, accounting for 21% of the total national coal production. With coal production gradually shifting westward, the central and western regions which had

Coal production 465.9 1073.9 1171.31

Proportion (%) 17 40 43

rich coal resources and good mining conditions gradually became the focus of development of China’s coal industry. In 2008, the coal production in the western region reached 1171.31 million tons, accounting for 43% of total national coal production, and the western region surpassed the central region for the first time, becoming a major supplier of coal and an important area of commercial coal. The same year, coal production in the central region reached 1073.90 million tons, accounting for 40% of the nation’s total coal production, and coal production in the eastern region declined to 465.90 million tons, accounting for 17% of total national coal production (Table 1). In 2013, China produced 3.68 billion tons of raw coal. As China’s coal production continued moving to the central and western regions (the production in the central region accounted for 34% and in the western region accounted for 55% of total national production in 2013), coal production in the east appeared to decline to 11% of total national coal production (China National Coal Association, 2014).

China: Coal Industry

The Coal Industry Policy (Revised Draft) issued in 2013 proposed to control the mining intensity of coal resources in the eastern region, stabilize the coal production scale in the central region, and strengthen the exploration of coal resources in the western region. In addition, the construction of large-scale coal bases and enhancing the sustained and stable supply capacity of coal were necessary. The Coal Industry Policy of 2013 also includes recommendations/instructions for strategic coal bases. Accordingly, the Shendong, Shanbei, Huanglong (Longdong), and Ningdong should construct several large-scale modern coal mines, especially focusing on building a number of 10-million-ton coal mine groups. The Jinbei, Jinzhong, and Jindong should accelerate the upgrading and integration of the coal mines and construct new large modern coal mines moderately. The Jizhong, Luxi, Henan, and Double-Huai (Huainan and Huaibei) should do the exploration of deep resources wells, construct continuous coal mines, and restrict the construction of new wells over 1000 m. The Mengdong base should give priority to the construction of large opencast coal mines. The Yungui base should speed up the construction of large and medium-sized coal mines and integrate and close small-sized coal mines vigorously. As an important energy base for strategic reserves in China, Xinjiang should implement protective exploitation.

Coal Industry Admittance and Concentration Since the reform and opening-up of China, the coal industry concentration has declined as a way of boosting coal production and then gradually increased for enlarging industrial scale and improving production efficiency (Shen et al. 2012; Wang 2012; Yu et al. 2012). The first stage was from 1978 to 1993. The main content of coal industry policies was raising the coal output. In this period, the coal industrial concentration gradually declined. The index of CR4 declined to 7% in 1993 from 9% in 1984; the index of CR8 declined to 12% in 1993 from

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16% in 1984 (Tang 2011). In 1985, the state made great efforts to support the development of Township and Village Coal mines, and at the same time sought to bring into effect a long-term contract regime for the Major State Coal mines and the Local State Coal mines. These expansionary policies motivated the local and farmers to build coal mines. By the mid-90s, the coal output of Township and Village Coal mines had reached more than 600 million tons. But there were some problems resulting from these expansionary policies in the coal industry: for example, the Township and Village Coal mines blossomed everywhere, the coal production layout was disordered, commercial coal production was in surplus, the coal mine safety situation deteriorated, and the ecological environment was damaged. The second stage was from 1994 to 2001. Coal industry policies focused on closing small-scale coal mines. The coal industry concentration significantly increased. The index of CR4 increased to 14.2% in 2001 from 7.18% in 1994; the index of CR8 increased to 21.3% in 2001 from 11.3% in 1994 (Tang 2011). The excessive development of Townships and Villages Coal mines caused a considerable waste of resources, environmental pollution, and frequent security accidents and the imbalance between coal supply and demand. After 1998, China adopted a new policy of exercising macro-control over national total coal production, reducing the burden of coal enterprises and improving the competitive environment of coal companies in the market. Specific measures under this policy include closing down small-scale coal mines which were illegally exploited, had an unreasonable layout, and were not satisfying the conditions for safe production; encouraging coal export; rectifying the coal market operation order; practicing the system of examination and approval of coal operation qualification; reform of coal taxes; and closing down some resource-exhausted mines. The third stage was from 2002 to the present. The main content of coal industry policies were resources consolidation, closing small-sized mines, and building large coal mine groups. Coal industry concentration significantly increased. The index of CR4 increased to

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China: Coal Industry, Table 2 The minimum standard of coal enterprise scale and newly built and revamped coal mine scale The minimum standard of coal enterprise scale Shanxi, Inner Mongolia, North of Shaanxi 3 million tons/year Fujian, Jiangxi, Hubei, Hunan, Guangxi, 0.3 million Chongqing, Sichuan tons/year

Other regions

0.6 million tons/year

25.24% in 2013 from 14.1% in 2002, the index of CR8 increased to 37.59% in 2013 from 21.4% in 2002 (Li 2014). In 2005, the State Council of China issued Opinions on Promoting the Healthy Development of the Coal Industry. In 2007, the National Development and Reform Commission proposed the 11th Five-Year Plan for the Development of Coal Industry. The two policies supported the collaborations of coal mine enterprises in different sectors and different regions. In 2013, the National Development and Reform Commission and National Energy Administration commonly developed and issued the abovementioned Coal Industrial Policies (Revised Draft), which set the minimum standard of coal enterprise scale and newly built and revamped coal mine scale (Table 1 and Table 2). The coal corporate annexation reorganization has enjoyed remarkable achievements, and the coal supply structure dominated by large-sized coal enterprises groups has been established on a sound basis. The number of coal mines in Shanxi declined from 4278 in 2005 to 1063 in 2010; raw coal production increased from 551 million tons in 2005 to 741 million tons in 2010. The number of coal mines in Inner Mongolia declined from 1368 in 2005 to 551 in 2010; raw coal production increased from 260 million tons in 2005 to 787 million tons in 2010. The number of coal mines in Henan declined from 530 in 2005 to 30 in 2010. In 2013, the number of coal enterprises with more than 10 million tons of production was 52, with total production of 2700 million tons, accounting for 70% of the whole country’s

Coal mine scale of newly built and revamped Shanxi, Inner Mongolia, 1.2 million Shaanxi tons/year Chongqing, Sichuan, Guizhou, 0.15 million Yunnan, etc. tons/year Fujian, Jiangxi, Hubei, Hunan, 0.09 million Guangxi, etc. tons/year Other regions 0.3 million tons/year

production. Among them, 17 coal enterprises’ production was between 30 and 100 million tons. Eleven coal enterprises have stepped into the world’s top 500 enterprises.

Market-Oriented Reform of Coal Another development that took place after the reform and opening-up was on coal price policy, which has since then been adjusted in line with the economic growth. 1. Coal was purchased and sold uniformly (1953–1978) In this period, as productive material, coal was allocated by state. The government implemented a policy of purchasing and supplying coal uniformly. The coal price was only for internal settlement and accounting in the coal enterprise. Coal price was set on the basis of comparing with other productive material. 2. Coal price (1979–1992)

was

gradually

deregulated

In this period, the coal price within the plan increased gradually, and the coal price of Township and Village Coal mines and Local State Coal mines which were out of the plan were gradually deregulated. The price of coal produced beyond the production capacity of the Major State Coal mines was also gradually deregulated.

China: Coal Industry

To reverse the loss situation for a long time in coal enterprises, the State Council started to readjust the coal price nationwide in 1979; the price of raw coal increased from 15.91 yuan per ton to 20.98 yuan per ton. In 1983, the government implemented the rising price policy for the coal beyond the planned output for 22 Dominated Coal mines. In 1984, the price of out-of-quota coal output was deregulated (Yang et al. 2012). In 1986, the government guidance price consisted of two parts, the uniform producer price and an increase on the basis of the uniform price. In 1987, the government added the directional plan, implementing the price mark-up and negotiated price policies for coal beyond their verified production capacity and planned production capacity. In 1992, the government liberalized the coal producer price of national uniform allocation coal mines, which would be regulated by market forces. And at the same time, the price of directional coal was liberalized, out of the maximum price of unplanned coal. The coal price had three forms: the state’s mandatory price, the state’s instructive price markup of overproduction, and the regional price difference; the negotiated price of the marketable coal was not included in the state plan. 3. Coal marketization process (After 1993) In 1993, the government deregulated the coal producer prices of the major state coal mines in northeast China, east China, and Hunan province. In 1994, the coal price in the whole coal market was liberalized. There was no difference between the planned price and the unplanned price. In 1996, the coal market stepped into the stage of the double-track system for coal price, which meant that the government started to convene annual contract meetings for major coal and power companies and issue a reference price for generation coal. In the double-track system, the government only set the price of coal used for generation of electricity. In 2002, the government canceled the reference price of coal used for generation of electricity. The generation coal price was determined by the market when the coal price was stable, but the

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government implemented a temporary intervention on the generation coal price when coal prices fluctuated wildly. In 2004, the government introduced the policy of a price linkage mechanism. In 2005, the government stopped directly interfering with the generation coal price. In 2007, the government canceled the coal ordering system which had existed for more than 50 years, and turned “the Coal Ordering Meeting” to “Connection Meeting for National Key Coal Suppliers, Demanders and Shippers,” highlighting the status of coal enterprise as a principal part of the market, and the number of industry participants in the ordering Meeting fell from eight to three, including power, fertilizer, and residents. Suppliers, demander, and the shippers completed the orders according to the framework program, and the coal price was set through consultation between the supplier and the consumer. In 2008, the government convened the “Video Meeting instead of the Connection Meeting for National Key Coal Suppliers, Demanders and Shippers.” In 2009, the “Video Connection Meeting” was canceled, and the National Development and Reform Commission developed instructions of Coal Connection Framework. Accordingly, the coal suppliers and the consumers made the orders all by themselves on the China Coal Market Network and set the price through consultation among them. In 2010, according to the National Development and Reform Commission’s instructions, the Annual Inter-provincial Coal Connection Framework plan was formed. During this time, the difference between the market price and the contract price for generation coal was increasing, hence the dualpricing system became a serious problem. On 20 December 2012, along with the Opinions on Deepening Reform of Generation Coal Market issued by the State Council of China, the dualpricing system for generation coal was abandoned, which meant that the reform of the coal market made substantial progress (Sun 2015).

Summary and Prospect In the course of 30 years of reform and openingup, China’s coal industry achieved some

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remarkable results, effectively supporting the sustained and healthy development of the nation’s economy. These achievements can be summarized as follows: (1) Structural adjustment made further progress. Large base, large groups, and large modern coal mines became subjects of the national coal production, and coal industry concentration has been significantly increased. (2) Technological innovation capability has been significantly enhanced and some breakthroughs have been made in the basic theory and key technology research. (3) Substantial progress has been made in market-oriented reform, and the coal market was continually completed and perfected. (4) The long-term effective mechanism of coal mine safety was constantly improved, promoting work safety situation. The number of deaths declined from 6001 in 1978 to 1067 in 2013 and mortality (per million tons) declined from 9.94 in 1978 to 0.288 in 2013 (China National Coal Association, 2009; China National Coal Association, 2014). (5) The pace of international exchanges and cooperation speeded up, and the scope and field of opening-up continues to expand. Since China became a net coal importer in 2009, coal imports have been increasing significantly year by year. In 2013, China imported 327 million tons of coal and exported 7.51 million tons of coal; thus net imports are 320 million tons of coal. Despite the rapid development, China’s coal industry still faces a number of significant, deeprooted contradictions and problems at the same time. First, the task of structural adjustment and transformation of development mode is still arduous. Second, the development of coal resources, environmental protection, and the sustainable development of economy and society are facing severe challenges. Third, coal production capacity construction is ahead of time, and there still exist contradictions between surplus in supply of shortterm coal market and shortage in supply of longterm coal market. The future of China’s coal industry will be focused on the following important development goals (Project Team on the Energy Development Strategy of China in Medium- and Long-Term 2011):

China: Coal Industry

1. Strengthening the coal structural adjustment and promoting the reform of the coal market further. China will insist on relying on large-scale coal bases, promoting the merger and reorganization of coal enterprises, developing large enterprise groups with international competitive strength and increasing industrial concentration. In addition, China will stick to a deepening of the reform of the coal market, strengthening the construction of the national coal market trading system, improving the coal storage and distribution system, developing a modern coal logistics and service industry, and promoting the development of a coal economy depending on the quality and efficiency, instead of the scale and speed. 2. Optimizing the layout of coal development and enhancing the long-term stable support capability of coal supply. China will continue adhering to the general idea of “controlling the east, stabilizing the center and developing the west” by the layout of the coal exploitation. (Project Team on the Energy Development Strategy of China in Medium- and LongTerm 2011) With the continuous growth in energy demand, the increased distance between coal production center and consumption center, and limited railway transportation capacity, the conflicts between coal transportation and production will keep intensifying. According to the Research on the Energy Development Strategy of China in Medium- and Long-Term (2030, 2050), by 2030, the national demand for coal by railway transportation will reach three billion tons. The government will encourage the eastern region to develop non-coal energy and develop the high-voltage, large-capacity, and long-distance power transmission, changing coal transportation to power transportation. China will also encourage the southern coastal provinces to import coal to solve the problem of coal transportation capacity. Coal transportation capacity shortage will still exist for a long time, and the coal exporting region should plan and improve the coal transportation capacity by rail and waterway on the basis of changing coal

China: Mining Policy – Nonmetals

transportation to power transportation, which will still be the major task in the next 20–30 years. 3. Promoting the development and utilization of clean and efficient coal. The development and utilization of clean and efficient coal will be an important direction of China’s coal development in the future. According to the Energy Development Strategy Action Plan (2014–2020) of the State Council, China will adhere to the economical, clean, and Safe strategy to accelerate the development of clean coal technology and improve the ratio of efficiency and concentrated power generation coal and construction of large coal-electricity bases. Furthermore, the Energy Development Strategy Action Plan refers to the necessity to formulate and implement the plan of development and utilization of clean coal, actively promote quality coal fractionation cascade utilization, increase the proportion of coal washing, and encourage the conversion and utilization of low calorific value and low quality coal like coal gangue cleanly and locally. The government should also significantly reduce the direct burning of coal dispersed and encourage the use of clean coal and coal in rural areas.

References BP p.l.c. (2014) BP Statistical Review of World Energy 2014, www.bp.com/content/dam/bp/pdf/Energy-eco nomics/statistical-review-2014/BP-statistical-reviewof-world-energy-2014-full-report.pdf Chen L, Wu S (2012) The brief analysis of coal industrial layout and structural adjustment in China. Nat Resource Econ China 07:51–53 + 56 (In Chinese) China National Coal Association (2009) Annual report on coal industry in China 2009. China Economic Publishing House, Beijing (In Chinese) China National Coal Association (2014) Annual report on coal industry in China 2014. China Economic Publishing House, Beijing (In Chinese) General Office of the State Council. Energy development strategy action plan (2014–2020). http://www. gov.cn/zhengce/content/2014-11/19/content_9222. htm (In Chinese) Li D (2014) Analysis on China coal market structure based on industrial concentration. Coal Econ Res 07:62–65 + 69 (In Chinese)

131 Li J, Qiao J, Wang L-q (2015) Environmental situations facing westward shift of coal mining and policy recommendations. Environ Impact Assess 02:33–36 (In Chinese) Ma B, Lu C, Zhang L (2009) Assessment of exploitation potential and strategy of coal resource in China. Res Sci 02:224–230 (In Chinese) Project team on the Energy Development Strategy of China in Medium- and Long-Term (2011) Research on the energy development strategy of China in medium- and long-term (2030, 2050) (Energy conservation • coal). Science Press, Beijing (In Chinese) Shen L, Gao T, Cheng X (2012) China’s coal policy since 1979: a brief overview. Energy Policy 40:274–281 State Council (2005) Opinions on promoting the healthy development of the coal industry.http://www.gov.cn/ zwgk/2005-09/08/content_30251.htm (In Chinese) Sun X (2015) Transformation way of China coal industry under new normal state. Coal Econ Res 01: 32–35 + 61 (In Chinese) Tang J (2011) An empirical analysis of market concentration in coal industry of China. Xi’an University of Science and Technology, Xi’an (In Chinese) Wang B (2012) China’s coal industry concentration international comparison study. Econ Res Guid 25:162–168 (In Chinese) Yang CJ, Xuan X, Jackson RB (2012) China’s coal price disturbances: observations, explanations, and implications for global energy economies. Energy Policy 51:720–727 Yu Y, Zhou Y, Zhang X (2012) Analysis on concentration rate of China coal industry. Coal Econ Res 09:32–36 (In Chinese)

China: Mining Policy – Nonmetals Raynold Wonder Alorse and J. Andrew Grant Centre for International and Defence Policy, Queen’s University, Kingston, ON, Canada

Introduction The process of mining takes mineral, metal, or rock (in the form of sand, gravel, building stone, etc.) from the earth’s surface and makes it available for human usage mainly as a material but also in the form of chemicals (Intergovernmental Forum Secretariat 2013). Balraj and Grant (2011: 297) provide a succinct overview of the

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nonmetal mining industry, including specific products and market channels: The nonmetals mining industry excavates such minerals as dimension stone (e.g., granite, limestone, marble); crushed and broken stone (e.g., cement rock, sandstone); clay and ceramic (e.g., fire clay, China clay); sand and gravel (e.g., pebble, silica); and chemical and fertilizer minerals (e.g., nitrogen, potassium, phosphate). Some materials are sold in large regional markets (e.g., limestone) and others, because of high transportation costs, are mainly sold in local markets (e.g., sand, construction stone, and gravel).

The nonmetallic mineral products industry (NMMPI) processes certain industrial minerals, that is, minerals that are neither metals nor fuels, into useful products for society at large. More than 50% of the total value of these nonmetal products is employed by the construction industry (USGS 2014). Even though the NMMPI represents a vital sector of the Chinese economy, it is important to note that the activities associated with the production and consumption of nonmetals necessitate a significant use of energy, which in turn affects negatively the environment in various forms, including water pollution, air pollution, and emissions of carbon dioxide (CO2) – with the latter contributing to climate change (Chow 2007). Despite its importance for economic growth, the nonmetal sector poses a great challenge to sustainable development efforts.

China and the Nonmetal Mining Industry China is a major player in the nonmetal mining industry. For instance, China is presently the largest nonmetallic mineral producer in the world and one of the leading consumers of four major nonmetallic mineral products: cement, refractories, plate glass, and ceramics (Hui and Kavan 2014). According to a report published by the Ministry of Land and Resources of the People’s Republic of China, in collaboration with the Department of Science and Technology and Chinese Academy of Land and Resource Economics, 172 kinds of mineral resources were discovered in China. Of this variety of mineral resources, some 92 were different kinds of nonmetallic minerals, such as graphite, sulfur, and sylvite.

China: Mining Policy – Nonmetals

Clearly, China is rich in many mineral resources, including nonmetals. For instance, China is the main producer and consumer of graphite, a valuable mineral with special characteristics required in many existing and future technologies. In 2002, China was the world’s largest producer of ceramics, mostly for sanitary ware and porcelain (Wilson 2004). Furthermore, China’s cement industry, which produced 1,868 million metric tons (Mt) of cement in 2010, accounts for nearly half of the world’s total cement production (Ministry of Industry and Information Technology 2011). Moreover, China is the world’s largest refractory materials producer, consumer, and exporter. In recent years, the refractory industry of China has made substantial progress with respect to product quality and technological innovation, while satisfying the demand of high-temperature industries (Refractory China 2015). Even though there have been efforts to address the environmental and health challenges related to these nonmetallic minerals, there still remain major challenges for the industry. The country’s economic pattern of growth – which has been and continues to be energy- and natural-resource intensive – is environmentally unsustainable. As such, the Chinese government has announced that it is seeking to establish a more energy-efficient and ecologically-friendly economy by applying innovative production processes and promoting the development of new strategic industries. For example, the Chinese government recently announced plans to reduce carbon emissions from energy-intensive production sectors, such as cement, chemicals, nonferrous metals, and the like (USGS 2012).

An Overview of China’s Nonmetals and Output China has a wide variety of nonmetallic mineral resources. Presently, there are more than 5,000 nonmetallic mineral ore production bases with proven reserves in China (Ministry of Land and Resources of China 2012). Most of these nonmetallic mineral proven reserves in China are of a large scale.

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Hui and Kavan (2014, 8013) find that China’s NMMPI is a typical energy-intensive sector. They assert that “from 1994 to 2010, energy consumption in the NMMPI increased from 125 million metric tons of coal equivalent (mtce) to 277 million mtce”. Cement production in China is a particularly large emitter of carbon dioxide. In fact, its cement production processes emit more carbon dioxide than any other type of industrial processes, accounting for nearly 4% of global carbon emissions (Hui and Kavan 2014). Since China’s large-scale construction boom beginning in the 1990s, there has been a substantial increase in nonmetallic mineral production. Figure 1 below (adapted from Hui and Kavan 2014) displays the indexed outputs of four main nonmetallic mineral products (cement, plate glass, daily ceramics, and refractories) in China from 1991 to 2011, which depicts the rapid growth in nonmetallic mineral sectors. The growth in the nonmetal mining industry has been facilitated by demand in China’s expanding manufacturing sectors as well as accelerated urbanization and attendant construction needs.

policy, China has become much more aggressive in pursuing raw materials from different parts of the world (Humphries 2015). The objectives of the “go global” policy include “(1) to support national exports and expand into international markets; (2) to push domestic firms to internationalize their activities as a means of acquiring advanced technologies; and (3) to invest in the acquisition of strategic resources” (Humphries 2015: 2). China’s outbound direct investment in the mining sector can be seen as a resource security issue. However, not all observers and analysts are particularly cheerful about China’s rise as a major trader and source of foreign direct investment. For instance, in recent years, considerable interest has grown regarding China’s emergence as a major importer and investor in extractive sectors, particularly in African countries (Grant et al. 2014a: 273–274; Alden and Alves 2014). Some analysts have even called Chinese development assistance to Africa “rogue aid,” claiming that it is provided in exchange for unfettered access to fuel minerals and nonfuel minerals (including nonmetals) whose extraction is guided by nondemocratic and nontransparent governance practices (Hendrix and Noland 2014).

China’s Mining Policy Going Global China is a relative newcomer to the global mining stage, but in recent years, under its “go global”

Legislative and Environmental Frameworks According to the Mineral Resources Law of China, adopted in 1986, all mineral resources belong to the state, pursuant to the Chinese

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Constitution. Specifically, the State Council controls the mineral resources on behalf of the state (MacBride and Bei 2001). MacBride and Bei (2001) also note that in recent years, measures have been taken to revise China’s mineral strategy in order to strengthen the mineral sector and achieve economic and social development goals. However, the Chinese government has allocated relatively little attention to sustainable development goals within its mining policy discourses. That said, sustainability is a notoriously fluid concept and can be interpreted in the context of development and mining in many ways and therefore merits some elaboration. According to the Brundtland Report of the United Nations World Commission on Environment and Development (1987: 8), sustainability is defined as meeting “the needs of the present without compromising the ability of future generations to meet their own needs.” As a guide to institutional design and political practice, sustainability allows for the integrated pursuit of economic growth and environmental preservation (Lafferty and Meadowcroft 2000: 12). In 2002, the United Nations Environment Programme published Berlin II Guidelines for Mining and Sustainable Development, asserting that sustainable development is indeed possible in mining sectors so long as “social, economic and environmental aspects of a particular project are balanced in such a way that long-term benefits may accrue to all stakeholders” (Botin 2009). This suggests that environmental sustainability focuses on the sharing of natural resources, and those stakeholders must act as trustees for the present and future generations in terms of the quality of land, air, water, and other elements of the natural environment. Although partially motivated by geopolitical maneuvers, China has nonetheless cited environmental impact concerns as the rationale for reducing exports of its rare earth minerals (Grant et al. 2014b: 15). The main environmental laws applicable to the mining industry in China focus primarily upon environmental protection, prevention, and control of environmental pollution by solid waste, prevention and control of water pollution, and prevention and control of radioactive pollution (Getting the Deal Through 2012: 59). In terms of the implementation of these laws, administrative

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departments under the local council governments (or above the county-level) play key roles in the enforcement of and compliance with environmental laws. NMMPI’s Energy Efficiency and Emissions Reduction Efforts Cong and Wei (2010) observe that after the Copenhagen climate conference in 2009, the Chinese government set an ambitious target: by 2020, the carbon dioxide emissions per unit of GDP should be reduced by at least 40%, setting 2005 as the base year. This goal has led to a shift toward adopting and implementing new production technologies. For example, the cement industry has started to implement more efficient processing technologies, like using an advanced dryprocessing method to replace traditional methods. The proportion of production using the dryprocessing method had risen to over 85% by 2011 (Xu 2012). Moreover, the average integrated energy intensity of producing cement has been declining year by year (Venmans 2014). Notably, China has also made a considerable effort in cogeneration technology over the past few decades. Furthermore, China is home to an increased trend in using low-temperature, waste heat technology to generate power in the NMMPI (Hui and Kavan 2014). However, contradictions exist between NMMPI’s energy efficiency and emissions reduction when consideration is given to balancing China’s monetary policies (for instance, cooling the overheated economy) and meeting targets for emissions reduction and energy consumption (Hui and Kavan 2014). Despite the aforementioned commitment to more efficient processing technologies, carbon dioxide emissions from the NMMPI remain problematic and indicate failing efforts by various levels of the Chinese government to regulate the market in a way that will promote sustainable development in the nonmetal mining sector.

Looking Forward China’s Five-Year Plan (2011–2015), and future Five-Year Plans, anticipate rapid urbanization, an expanding middle class, and increased product

China: Mining Policy – Nonmetals

manufacturing of high-value, high-quality goods as well as attendant levels of increased consumption (Humphries 2015). China’s continuing efforts to promote urbanization and industrialization will likely pose a governance challenge and continue to drive up demand for raw materials and consumer products in the long run. While some have posited that China’s growing urbanization and industrialization will bring economic opportunities to millions of its citizens, other observers such as Humphries (2015) have suggested that government officials, investors, and consumers should be mindful of the environmental impact and sustainability issues of raw materials such as nonmetals throughout the entire supply chain.

References Alden C, Alves AC (2014) Global and local challenges and opportunities: reflections on China and the governance of African natural resources. In: Grant JA, Compaoré WRN, Mitchell MI (eds) New approaches to the governance of natural resources: insights from Africa. Palgrave Macmillan, London, pp 247–266 Balraj D, Grant JA (2011) Mining – nonmetals. In: Fredericks S, Shen L, Thompson S, Vasey D (eds) The Berkshire encyclopedia of sustainability: natural resources and sustainability, vol 4. Berkshire Publishing, Great Barrington, pp 297–300 Botin JA (2009) Introduction. In: Botin JA (ed) Sustainable management of mining operations. Society for Mining, Metallurgy, and Exploration, Littleton, pp 1–6 Chow GC (2007) China’s energy and environment APJAE2. www.learningace.com/doc/2480911/49e1d8d5c8727b301 61a99c1b041f773/china-s-energy-and-envornmentapjae2. Accessed 28 May 2015 Cong RG, Wei YM (2010) Potential impact of (CET) carbon emissions trading on China’s power sector: a perspective from different allowance allocation options. Energy 35:3921–3931 Getting the Deal Through (2012) Mining in 37 jurisdictions worldwide: China. p 55–60. Grant JA, Compaoré WRN, Mitchell MI, Shaw TM (2014a) Prospects and trends in the governance of Africa’s natural resources: reflections on the role of external and internal actors. In: Grant JA, Compaoré WRN, Mitchell MI (eds) New approaches to the governance of natural resources: insights from Africa. Palgrave Macmillan, London, pp 267–284 Grant JA, Compaoré WRN, Mitchell MI, Ingulstad M (2014b) ‘New’ approaches to the governance of Africa’s natural resources. In: Grant JA, Compaoré WRN, Mitchell MI (eds) New approaches to the governance of natural resources: insights from Africa. Palgrave Macmillan, London, pp 3–24

135 Hendrix C, Noland M (2014) Confronting the curse: the economics and geopolitics of natural resource governance. Peterson Institute for International Economics, Washington, DC Hui H, Kavan P (2014) Energy consumption and carbon dioxide emissions of China’s non-metallic mineral products industry: present state, prospects and policy analysis. Sustainability 6(11):8012–8028 Humphries M (2015) China’s mineral industry and U.S. access to strategic and critical minerals: issues for Congress. 7-5700 report R43864. Congressional Research Service, Washington, DC Intergovernmental Forum Secretariat (2013) A mining policy framework – mining and sustainable development: managing one to advance the other. The Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development, Ottawa. www.globaldialogue. info/MPFOct2013.pdf. Accessed 28 May 2015 Lafferty WM, Meadowcroft J (eds) (2000) ‘Introduction’, implementing sustainable development: strategies and initiatives in high consumption societies. Oxford University Press, Oxford, pp 1–22 MacBride WL Jr, Bei W (2001) Chinese mining law overview – part 1 of 4. www.infomine.com/suppliers/ supplymine-news/June15-2001.html. Accessed 28 May 2015 Ministry of Industry and Information Technology (2011) Production of building materials industry in 2010 and rapid growth of output of major products. www.miit.gov.cn/ n11293472/n11293832/n11294132/n12858402/n128585 82/13580206.html. Accessed 29 May 2015 Ministry of Land and Resources of the People’s Republic of China (2012) A guide to investment in China’s mineral industry. Report published in collaboration with the Department of Science and Technology and Chinese Academy of Land and Resource Economics Refractory China (2015) 3rd China international refractory production and application conference. www. refractorychina.cn/en/. Accessed 28 May 2015 United Nations World Commission on Environment and Development (1987) Our common future. Oxford University Press, New York United States Geological Survey (2012) 2012 minerals yearbook: the mineral industry of China. USGS, Washington, DC. http://minerals.usgs.gov/minerals/pubs/country/201 2/myb3-2012-ch.pdf. Accessed 27 May 2015 United States Geological Survey (2014) Nonmetallic mineral products industry indexes. USGS, Washington, DC. http://minerals.usgs.gov/minerals/pubs/imii/1402/ scgfeb14.pdf. Accessed 27 May 2015 Venmans F (2014) Triggers and barriers to energy efficiency measures in the ceramic, cement and lime sectors. J Clean Prod 69:133–142 Wilson IR (2004) Kaolin and halloysite deposits of China. Clay Miner 39(1):1–15 Xu R (2012) Current situation and prospect of China’s cement industry carbon dioxide emissions. In: Proceedings of the 2012 China cement technical conference and 14th cement technology exchange conference, Liuzhou, China, 20–22 November 2012

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China: Natural Gas

China: Natural Gas Xunpeng Shi Australia-China Relations Institute, University of Technology Sydney, Sydney, NSW, Australia

Given its size, growth, prosperity, and ongoing efforts in liberalization of its internal gas market and building natural gas trading hubs, China is likely to be a game changer in the regional and global gas markets. With current consumption of about 200 billion cubic meters (bcm), China is the world’s third-largest gas consumer, and its gas consumption is projected to grow to about 600 bcm by 2035 (BP 2015).

Production and Consumption For almost four decades during China’s rapid industrialization, natural gas remained behind coal, oil, and hydropower. The growth in natural gas consumption was slow in the period 1980–1995 (with an annual growth rate of 1.5%) and modest from 1996 to 2002 (with an annual growth rate of 7.9%) (Shi and Variam 2015).

The twenty-first century, however, witnessed an emphasis on developing natural gas as the “fuel of the future,” with an importance on its lower emission intensity among fossil fuels and promotion of it as a solution to urban pollution. Growth in natural gas consumption was dramatic from 2003–2014 (with an annual growth rate of 16.9%). Gas consumption increased from just 24.5 bcm per year (bcm/y) in 2000 to 182.4 bcm in 2014 (Fig. 1). In 2012, China became the world’s third-largest gas consumer after the United States and Russia (Fig. 1). However, growth in China’s demand for natural gas has slowed in recent years. Annual consumption in 2015 was 197 bcm, only up by 4.7% from 2014, almost a half of the grow rate of 2014 over 2013 (8.6%) (BP 2016). The share of natural gas in the energy mix is also low. In 2015, natural gas only accounted for about 5.9% of total primary energy supply, which was still below the international average of 24% (BP 2016). In the power generation sector, gas only accounted for 2% of the generation fuels in 2013 (IEA 2015). According to the Energy Development Strategy Action Plan (2014–2020) released by the State Council (2014) in November 2014, the share of natural gas will be raised above 10%, or

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360 bcm/y in 2020. Many observers (BP 2015; Reuters 2012) predict that China’s gas consumption will reach at least to 550 bcm/y in 2035, with natural gas representing 12% of the global energy mix by 2035. However, in the power generation sector, gas is only expected to account for 8% by 2040 in the IEA’s New Policy Scenario (IEA 2015).

Natural Gas and LNG Import As China’s domestic production lagged behind consumption, importation of gas started in 2006 and grew dramatically (Fig. 2). The first import of natural gas was in the form of LNG, which amounted to 20.16 megatonnes (Mt) in 2014. Pipeline gas imports started in 2010, bringing gas from Turkmenistan and other Central Asian countries in 2010 and from Myanmar in 2014. In 2013, pipeline gas imports overtook LNG imports, and in 2014, pipeline gas accounted for 52.5% of the total natural gas imports (Fig. 2). In 2015, China is the world’s third largest LNG imports, only after Japan and South Korea (GIIGNL 2016). In 2014, China was the sixth largest pipeline gas imports (Ratner et al. 2016). Qatar and Australia are China’s major LNG import sources. In 2014, 19.84 Mt. (82%) of this imported LNG were from Australia, Qatar, Indonesia, and Malaysia that have signed long-term

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contracts with China. The remaining 18% of supplies was purchased from Yemen, Equatorial Guinea, Nigeria, and other countries through the spot market (Fig. 3). China’s total natural gas import is projected to increase to about 200 bcm in 2035 when pipeline gas import will be the largest source of imports (Fig. 4). China’s pipeline import capacity is projected to increase from 77 bcm in 2015 to 160 bcm in 2035 (Shi and Variam 2015). Central Asia (Turkmenistan) remains the largest pipeline import source. However, Russian gas increases dramatically from as early as 2019. This increase in pipeline imports and domestic production (341 bcm in 2035) result in decreased dependence on LNG imports, as seen in Fig. 4. Based on forecasts from IEA, US Energy Information Administration (EIA), and China National Petroleum Corporation (CNPC), China’s LNG imports in 2035 are forecasted to reach only 34 bcm. Australia remains the dominant supplier of LNG to China after 2030, while South-East Asian LNG exporters (mainly due to their decreased export capacity) are expected to lose market share (Fig. 4).

Policy and Regulation China’s national gas policy emerged in the past decade with the rapid development of the natural

China: Natural Gas, Fig. 2 China’s imports of natural gas, 2006–2014 (Source: China Customs data, cited from Qian and Jiang (2015))

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Nigeria 2% Equatorial Guinea 4%

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China: Natural Gas, Fig. 3 China LNG import sources, 2014 (Source: Pang 2015)

China: Natural Gas, Fig. 4 China’s pipeline and LNG imports (bcm) (Source: Reproduced from Shi and Variam (2015))

gas sector. The policies include upstream development such as of shale gas and coalbed methane (CBM), liberalization of LNG imports, midstream regulation featuring third party access, and downstream regulations such as environmental projects that substitute coal with natural gas. Involvement of the private sector and liberalization of pricing

are applied to the whole supply chain. These policies aim to encourage exploration, production, infrastructure development, efficient utilization, and competition in the gas sector. According to a reform package issued after the Third Plenary Session of the Eighteenth Communist Party of China (CPC) Central Committee in

China: Natural Gas

November 2013, the principles related to the natural gas sector and their implications are the administrative monopoly and will be removed, and thus access to some upstream resources for non-state-owned companies will be improved; the government’s function will be regulation and not the operation of monopoly industries, thus creating a level playing field between state and private companies; network and operations (marketing) will be separated and thus could encourage private investment in monopoly sectors such as pipelines; restrictions on market access to competitionbased operations will also be removed, such as those in the downstream gas sector; pricing of gas will be liberalized, and there will be no intervention in any prices that can be determined by the markets (except network prices) (the 18th Central Committee of CPC 2013). The “Energy Revolution” advocated in mid 2014 calls for restoration of the commodity characteristics of energy products, which indicates that gas may be depoliticized and become a product open to more competition; market-based energy pricing mechanisms could be established; and there will be changes in governance and improvements in the regulatory system. The regulation of natural gas is divided between the central government and local governments along the supply chain: the central government, with the National Development and Reform Commission (NDRC) as the administrative agency, regulates gas prices from wellhead to the city-gate terminals (wellhead prices, processing fees, and transportation tariffs). Offshore gas prices, which accounted for 10 per cent of domestic gas output, at the wellhead are not strictly regulated by the NDRC as offshore acreage has been open to foreign cooperation since the 1980s and therefore is subject to a more market-driven pricing system. Similarly, LNG prices are not subject to regulation. However, the sale of LNG (after regasification) via long-distance pipeline would be subject to the uniform city-gate price regulation (Chen 2014). The provincial and local governments regulate local distribution charges (including connection fees) and end-user prices (Chen 2014). After the wholesale transaction, the price is adjusted by the provincial government

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with consideration given to economic disparities and local distribution costs (IEA 2013). As residential gas tariffs are regulated by local governments, uniform reforms are not possible and the central government’s policy goals may not be achieved at the local level. With its increasing interests on overseas energy markets, due to both imports and outbound investment as evidenced by the Belt and Road Initiative, China has signed the “International Energy Charter” in 2015 and become more active in reforming the global energy governance (Andrews-Speed and Shi 2015).

Gas Pricing Reform Like the pricing of other energy commodities, gas pricing has experienced transformation from the planned to the market economy. Under the costplus pricing mechanisms that prevailed until 2011, the ex-factory prices, including wellhead prices and processing fees, were often set according to production costs and could differ among producers and consumers (Chen 2014). (Currently, gas prices include ex-factory (plant) prices, transmission prices, city-gate prices, and end-user prices. In this chapter, unless mentioned otherwise, “gas price” refers to the wholesale price.) The fragmented prices discouraged investment in production and infrastructure and cannot accommodate increasing imports of LNG (IEA 2013). To address these challenges, the Chinese Government introduced a trial netback market-value pricing mechanism at the end of 2011 in Guangdong and Guangxi provinces to replace the fragmented, cost-plus onshore gas-pricing regime. Under this new regime, the cite gate prices are linked to the import prices of alternatives (40% of LPG and 60% of heavy fuel oil) and no longer differentiated among different sources (Shi and Variam 2015). This market-oriented netback pricing regime was extended to the “incremental gas volume,” the volume that newly generated in addition to the previous costplus volume (“existing volumes”), nation wide in 2013 (NDRC 2013). In 2013 and 2014, the

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government steadily raised the prices of “existing volumes” three times, and the price levels in both categories eventually converged to a fully oillinked gas price from April 1, 2015. From April 1, 2015, netback pricing replaced the cost-plus pricing as the mechanism to price gas for nonresidential use (NDRC 2015). Pricing reform for the residential sector was announced in March 2014, although still not market oriented. According to this reform plan, gas for the residential sector will be priced progressively: the price will be higher the greater the consumption, and all cities connected to gas pipelines must establish the three-tiered tariff by the end of 2015 (NDRC 2014). The regulation of prices – and thus limited pass-through of gas costs to residential end-users – will remain a long-term challenge to market liberalization. This prevailing cross-subsidization among gas end-users could distort the markets and could be counterproductive for gas use in the industry and commercial sectors (IEA 2012). In the latest policy on energy issued by the State Council (State Council 2014) – that is, the Energy Development Strategy Action Plan (2014–2020) – pricing reform and liberalization for competitive prices are specified: ex-plant prices and retail prices will be determined by the markets while network transmission prices will be regulated by the government; network infrastructure and its transparent and nondiscriminatory TPA will be gradually established; and laws and regulations on gas pipeline projection will be advanced. A detailed review could be found at Shi and Variam (2015).

Pipeline and Third-Party Access (TPA) The midstream, the pipeline, is dominated by national oil companies and provincial grid companies. China’s pipeline transmission is neither sufficient nor open. China only had about 75,000 km of long-distance gas transmission pipelines by late 2014 (Su 2014). Although the Energy Development Strategy Action Plan (2014–2020) projects that the backbone of natural gas pipelines will extend to at least 120,000 km by 2020, China seems to have a long way to go to

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develop its network infrastructure to the level of Germany or the United States (Shi and Variam 2015). Furthermore, CNPC is the dominant player here, owning 80% of the transmission pipeline network (IEA 2012). CNPC has made moves to privatize its pipeline assets, and its privatization plan is quite radical. East-West Pipelines (EWPs) started to undergo privatization by PetroChina, a subsidiary of CNPC, in 2012. It was further reported in January 2015 that the PetroChina board had approved the plan to fully privatize its Shanghai-based PetroChina Eastern Pipelines (CNPC News Center 2015). Once completed, the pipelines would be completely unbundled from PetroChina’s market activities. As for LNG receiving terminals, the first privately owned LNG import terminal, the Zhoushan LNG terminal, owned by ENN, was only approved in January 2015 and may be completed by 2017 (Platts 2015). The regulation of TPA was announced in February 2014, mandating gas pipeline operators provide nondiscriminatory TPA whenever they have spare capacity. The regulation also allows downstream distributors to negotiate directly with upstream suppliers over gas supply, while pipeline operators may provide only transmission services (NEA 2014). The TPA regulation, however, has a major limitation in that it mandates TPA only when the operator has spare capacity, which is difficult for third parties to monitor. The current shortage of network capacity renders the concept of TPA useless. It is also not clear who will judge where there is a surplus capacity. Furthermore, process, terms of conditions, and tariffs for the TPA are not publicly available (and may have not been determined by the NEA). Nevertheless, in the case of LNG import terminals, the first successful TPA happened in December 2014, when EEN received 6 Mt. of LNG through the PetroChina-operated Rudong LNG terminal in China’s eastern Jiangsu Province (Platts 2014).

Market Structure The Chinese gas industry is dominated by big three major national oil companies (NOCs):

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China National Petroleum Corporation (CNPC), China National Offshore Oil Corporation (CNOOC) and Sinopec (While the major oil and gas companies are partially privatized, the state is still the majority shareholder of these companies.). About 75% of China’s natural gas is produced by CNPC, which is also the biggest owner and operator of transmission pipelines (with about 90% share). CNOOC was the first company to import LNG and it is likely to remain the main LNG importer (IEA 2014). CNOOC also has exclusive marketing rights and buys offshore gas from its production-sharing contract partners at the wellhead (Chen 2014). Shaanxi Nanchang Petroleum (Group) was the only local oil and gas enterprise apart from the big three national oil companies that is qualified to undertake exploration and development (IEA 2012). Other small and medium-sized gas producers have a small share in production due to their limited market access: they have to either sell their supplies to CNPC or develop the gas for local consumption. Gas imports, such as LNG, are, however, not restricted (IEA 2012). Although auctions have been implemented to allocate the exploration rights for shale gas, according to a media report in January 2015, there was no successful experience of private investment in the shale gas development (Reuters 2016). The market remains dominated by large state-owned enterprises (SOEs). It is estimated that 80% of the shale gas resources were controlled or owned by state-run companies, i.e., CNPC (China National Petroleum Corporation), China Petrochemical Corporation (Sinopec), and Shaanxi Yanchang Petroleum Co. Ltd., in 2013. The midstream is still in the early days of privatization, and plans for full ownership unbundling are not clear. According to the decisions of the Central Committee of the CPC (the 18th Central Committee of CPC 2013), privatization is the politically preferred direction for stateowned companies, creating momentum for privatization of the Big Three. For example, Sinopec announced in September 2014 that it had sold almost 30% of its retail unit, comprising a wholesale business, more than 30,000 petrol stations, more than 23,000 convenience stores, as well as

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oil-product pipelines and storage facilities (Aldred and Zhu 2014). In the downstream sector, there are no nationally dominant players. A variety of domestic suppliers with various ownership structures (Some companies are privately owned – such as ENN Energy Holdings and China Gas – while others belong to local governments.) exists, often supported by local governments. These distribution companies usually receive gas at the city gate and have limited direct access to gas sources (IEA 2012). These distribution companies may have monopoly power in their local market, often owning the local gas pipeline, as is the case with ENN Energy Holdings. These distributors face new competition from the Big Three NOCs, which are currently trying to take over some of the domestic markets (IEA 2012). Such integration attempts may give the Big Three larger market power and thus impede competition (Shi and Variam 2015).

Concluding Statement Despite rapid growth in the early 2000s, the level of gas consumption in China is still relatively low. While the domestic production will be increased, from sources including shale gas, increased import is expected. Nevertheless, the import of LNG, although will be significantly increased before 2020, will be not as much as pipeline gas, when the Russia export comes to the Chinese market. In the recent years, China has determined to liberalize its natural gas sector by removing administrative monopoly, unbundling the gas sector, and allowing markets to determine resource allocation and prices. However, a legal framework is still absent from China’s gas regulatory framework and there is a lack of an independent and holistic gas regulator. While nonresidential gas prices are determined at the city gate level by netback pricing mechanism, it is still arguable that this mechanism does not necessarily reflect the gas market fundamentals and the frequency to adjust the prices are not transparent. Furthermore, the residential gas prices are still regulated.

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The transmission pipeline in China are still far from sufficient for an interconnected market and is largely owned by one company. Although the rule on third-party access has been announced in 2014, there is little successful cases due to a lack of information on available capacity, tariffs and terms of condition, and no transparent operational procedure. While privatization of the big gas company and unbundling are expected under the current marketized reform plan, no concrete progress has been seen. Unbundling is under debate. However, auction has been introduced to the allocation of exploration rights in the case of shale gas, despite it is difficult to find blocks that are attractive to the private investors, especially in the current low oil prices period.

References Aldred S, Zhu C (2014) Sinopec to sell $17.5 billion retail stake in privatization push. Reuters, Hong Kong/ Beijing Andrews-Speed P, Shi X (2015) What role can the G20 play in global energy governance? Implications for China’s presidency. Global Pol 7:198–206 BP (2015) Energy Outlook 2035. British Petroleum, London BP (2016) Statistical review of world energy 2016. British Petroleum, London Chen M (2014) The development of Chinese gas pricing: drivers, challenges and implications for demand. OIES, Oxford CNPC News Center 2015 To gradually advance mixed ownership for network assets, CNPC Plans to Sell the Eastern Pipeline Company (in Chinese) GIIGNL 2016 The LNG industry-GIIGNL annual report, 2016 edn. International Groupd of Liquified Natural Gas Importers, Paris IEA (2012) Gas pricing and regulation: China’s challenges and IEA experience. IEA, Paris IEA (2013) Developing a natural gas trading hub in Asia: obstacles and opportunities. International Energy Agency, Paris IEA (2014) The Asian quest for LNG in a globalizing market. International Energy Agency, Paris IEA (2015) World energy outlook 2015. IEA, Paris NDRC (2013) Circular on natural gas price adjustments (Fagai Jiage [2013] no 1246) (in Chinese). NDRC, Beijing NDRC (2015) Notice on streamlining prices for nonresidential uses (in Chinese). NDRC, Beijing

China: Steel Industry NEA (2014) Administrative Measures on Opening up Fair Access to the Oil and Gas Pipeline. NEA, Beijing Pang M (2015) Review of China’s gas import in 2014 (in Chinese). Caijing Energy, Beijing Platts (2014) China’s ENN receives first LNG cargo. Platts, Singapore Platts (2015) China’s first private LNG import terminal project in Zhejiang delayed. Platts, Singapore Qian X, Jiang X (2015) 2014 development report for oil and gas industry in China and abroad. Oil Industry Press, Beijing Ratner M, Nelson GM, Lawrence SV (2016) China's natural gas: uncertainty for markets. Congressional Research Service Reuters (2012) CNPC sees China’s gas consumption trebling by 2030 Reuters (2016) REFILE-China struggles to find prospective blocks for third shale auction -govt sources Shi X, Variam HMP (2015) China’s gas market liberalisation–the impact on China–Australia gas trade. In: Song L, Garnaut R, Cai F, Johnston L (eds) China’s domestic transformation in a global context. ANU Press, Canberra, pp 137–174 State Council (2014) Energy development strategy action plan (2014–2020) (in Chinese). General Office, State Council PRC, Beijing Su N (2014) Major energy Infrustructure Accellerated. China Energy Newspaper, Beijing The 18th Central Committee of CPC (2013) Decision of the central Committee of the Communist Party of China on some major issues concerning comprehensively deepening the reform, Xinhua News Agency, Beijing

China: Steel Industry Ligang Song Crawford School of Public Policy, Australian National University, Canberra, Australia

Introduction The development of China’s steel industry has been phenomenal in the past 30 years in terms of both the speed and the scale of the industry’s growth and development. By 2014, the Chinese

This chapter was prepared based on Chapter 1 in Ligang Song and Haimin Liu (ed.), The Chinese Steel Industry’s Transformation: Structural Change, Performance and Demand on Resources published by Edward Elgar in 2012 with changes and updating.

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crude steel output reached 823 million tonnes accounting for just above 50% of the total global steel outputs in that year (Song and Liu, 2012). The purposes of this chapter are to provide some historical background of the industry development including its rapid expansion over the reform period, discuss the key issues involved in the structural changes of the industry, and how the industry copes with the new challenges in China’s move towards economic rebalancing. This chapter consists of three sections accordingly. The first section provides an overview of the Chinese steel industry. The second section highlights the major achievements in China’s steel industry development during the reform period, and the third section points out the new challenges that the industry faces now and the strategies that the industry is likely to take to make the necessary adjustment to the way that the industry develops in future followed by conclusions.

The Steel Industry Development: An Overview The steel industry epitomizes traditional industrialization. The major economies of the United Kingdom, France, Germany, Japan, Korea, and the United States experienced stages of development where the steel industry played a pivotal role in transforming their economies. The role of the steel industry in this development is more than symbolic; the technology and ready availability of the steel products enabled further economic growth and development. Industries essential for industrialization and modernization, such as machinery and building infrastructure, were able to grow and expand. China has a long history of iron and steel production. Hartwell (1962, 1966, 1967, cited by Findlay and O’Rourke 2007) described the remarkable expansion in Chinese iron and steel production during the Northern Song dynasty (the period 960–1126 CE): “The scale of total production, and of the levels of output and employment in individual plants, was far in excess of anything attained by England in the eighteenth century, at the time of the Industrial Revolution.” Hartwell

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estimated that iron production in China in 1078 was of the order of 150,000 tonnes annually: The entire production of iron and steel in Europe in 1700 was not much above this, if at all (Hartwell 1967). The growth rate of Chinese iron and steel production was no less remarkable, increasing 12-fold in the two centuries from 850 to 1050 (Findlay and O’Rourke 2007, p. 65). Iron produced during this time was used primarily for agricultural and military purposes. A thousand years ago, China was the largest iron producer in the world, but for historical and institutional reasons the iron and steel industries were not fully developed until centuries later. The development of China’s modern steel industry can be traced back to the establishment of Hanyang Iron Works in 1890 (Hanyang Iron Works was established in 1890 and went into operation in 1894. It was the first integrated iron and steel works in modern China and was also one of the largest in Asia, with an annual output of 60,000 tonnes of steel.). In the following 58 years to 1948, China’s total accumulated pig iron output reached 22 million tonnes and crude steel nearly 7 million tonnes. The highest individual year was 1943, with iron production reaching 1.3 million tonnes and steel 0.9 million tonnes. During this period, the steel industry was located mainly in the Anshan area of Northeast China, producing more than 90% of the country’s total steel output. The wars which wracked the country for much of the 1940s, almost ruined the steel industry. When the People’s Republic of China (PRC) was founded in 1949, the national total production of pig iron was only 250,000 tonnes. In the same year, the country’s production of steel was 158,000 tonnes, accounting for 0.2% of the world’s total steel production and ranking 26th in the world. The production recovered quickly however, and by the end of 1952 the country had restored and expanded 34 blast furnaces and 26 open hearths. The national total production of iron, steel, and rolled steel in 1952 was 1.9, 1.4, and 1.1 million tonnes, respectively, topping all previous records. Meanwhile, the regional distribution of steel production showed no significant changes, with 70% being produced in the

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northeast, 23% in the east and north, and 7% in the hinterland. In the 30 years following the founding of the PRC, the steel industry was regarded as a pivotal link for industrialization. With the help of the former Soviet Union, an overall complete steel industry system was formed with “three big, five middle and 18 small” steel enterprises (3 big: Anshan, Wuhan, and Baotou Iron and Steel Company; 5 middle: Taiyuan, Chongqing, Beijing Shijingshan, Maanshan, and Xiangtan steelworks; 18 small: Handan, Jinan, Linfen, Xinyu, Nanjing, Liuzhou, Guangzhou, Sanming, Hefei, Jiangyou, Wulumuqi, Hangzhou, Echeng, Lianyuan, Anyang, Lanzhou, Guiyang, and Tonghua steelworks.), but this burgeoning steel industry development faced further setbacks with the implementation of the “Great Leap Forward” and later the “Cultural Revolution.” The highly centralized planned economic system hampered the development of productive forces in the steel industry, albeit after having played a major role in restoring production in the 1950s. Consequently, the industry saw very slow technological progress. In 1978 China’s total steel production was only 32 million tonnes, less than 3 weeks of current output levels. The per capita steel production was merely 33 kg, a fifth of the world average levels. The industry’s technology, equipment, product variety, and quality, as well as technical and economic indicators, all lagged far behind the developed countries. For example, when the world average ratio of open-hearth steel-making to total steel-making fell below 20% in the late 1970s, China’s ratio still stood at 35.5%. While the ratio of continuous casting was more than 50% in Japan and 30% in Europe, in China it was merely 3.5%. As a result of obsolete technologies, out of total production, the energy consumption per tonne of steel was as high as 2.52 tonnes of standard coal, with the yield of crude steel in rolling finished steel around 74% (The ratio increased to 94% in 2010.). Furthermore, 28% of the steel consumption relied on imports in 1978, costing foreign exchange earnings. The reform and opening-up policy of 1978 brought China into a new era of growth and development. The development of the steel industry since then can be divided broadly into three stages.

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The first stage was the early period of reform and opening-up, running from 1978 to 1992. This stage is characterized as a gradual transition from a highly centralized planned economy towards an early form of socialist market economy. Experiments on enterprise autonomy, profit contracts, and managerial responsibility systems were carried out in the steel industry. Shoudu (Capital) Steel Corporation, the first batch of large state enterprises experimenting with extended decision-making powers, implemented the managerial responsibility system of contracting in 1981. The new system brought firm and worker initiatives into play. As a result, the firm’s steel output and economic performance improved quickly. Afterwards, the contracted responsibility system spread step by step across the industry. By the end of 1992, 103 out of 110 key steel enterprises had implemented managerial responsibility system reforms. During this reform stage, China changed from a rigid system of state-fixed prices and centralized purchase and sales to allowing steel enterprises to purchase raw materials in the market. It also allowed them to sell a certain proportion of planned production, and all the excess steel products, through their own channels at market prices, which were usually higher than the planned prices. The country gradually lowered the ratio of mandatory planned rolled steel, reaching 20% in 1992. These measures boosted incentives for production in the industry. These steel enterprises were allowed to use retained profits for their expansion, bonuses, and employee welfare payments. The industry’s retained profits in 1992 reached 5.8 billion yuan, accounting for 56% of total profits. Of retained profits, 3.8 billion yuan was used for enterprise development, providing 26% of funds sourced from both the government and enterprises for upgrades and renovation. The average annual incomes for workers in the steel industry increased from less than 500 yuan in 1978 to around 3800 yuan in 1992. Financing for investment in the industry was transformed from relying heavily on state allocations before 1978 to relying on the enterprise itself by self-raising, bank loans, and foreign capital. At the same time, steel enterprises were permitted to make independent

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decisions and undertake technical innovations. These reforms adjusted the power–responsibility–favor relations between the state and enterprises. This made it clear that the enterprises were the principal point of interest. The steel industry also worked towards opening up. During the 14 years from 1978 to 1992, more than 700 advanced technologies were introduced and US$6 billion in foreign capital was utilized. In particular, two modern large steel enterprises, Baoshan Iron and Steel Corporation (launched in 1978 and put into operation in 1985) and Tianjin Seamless Steel Tube Corporation (launched in 1989 and put into operation in 1996), were established. Meanwhile, many old steel plants were rebuilt and restructured. These notable changes to the technology structure of the country’s steel industry saw the gap between it and world-class practices narrow. This initial stage (1978–92) saw significant achievements. By 1992, there was a 1.6-fold increase in the steel production; the domestic market share had increased by 17%, the ratio of openhearth steel-making to total steel-making was reduced to 11%, the ratio of continuous casting to the total rose to 30%, and the total production energy consumption per tonne of steel output fell to 1.6 tonnes of standard coal or by 62%. Despite greater autonomy granted to enterprises under the contracted responsibility system, China’s steel enterprises were still subordinate to the government. Further, varying contractual conditions together with the dual-track steel price system caused a disparity among steel enterprises in terms of performance. This disparity induced some firms to bargain with the government, distorting the market’s role in resource allocation. The second stage was the early period of establishing a socialist market economy from 1993 to 2000. In this stage, the main focus of China’s reform was the setting up and improvement of market systems. The key to this was establishing a complete modern enterprise system – separating the roles of government as the owner and manager of state-owned enterprises (SOEs), and making the enterprises the true market entities responsible for their own profits and losses. As for the steel industry, mandatory plans

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for production and sales were abolished in 1993, and the dual-track steel price system ended. Thereafter, steel enterprises made their own decisions on production and sales based on market demand. The steel market developed rapidly in all parts of China. With the development of the securities markets, transforming into a joint-stock company and listing on the stock markets became the new financing channel for a Chinese steel enterprise. By the end of 2000, there were 27 steel enterprises listed in the domestic and/or international securities market. This raised significant investment funds for development, and more importantly improved companies’ corporate governance and management skills. At the same time, the steel industry not only continued to utilize foreign capital to upgrade obsolete technology but also utilized overseas resources to make up for the domestic scarcity of raw materials. Total imports of iron ore reached 70 million tonnes in 2000, increasing nearly eightfold compared with 1978. Some enterprises began to buy or set up jointly owned iron ore production bases in Peru and Australia. During this period the steel industry faced many challenges, including continuously declining steel prices, chain debts, and the periodic return of overcapacity. It also went through a difficult macroeconomic environment, with overheating just before the Asian financial crisis and then a fall in output in the aftermath. Nevertheless, the steel enterprises streamlined their businesses, readjusted their product mix, and carried out technical innovations around energy savings and cost reductions. As a result, the industry’s technological bases and ability to adapt to market changes improved greatly. Along with the steel enterprises’ own efforts, the Chinese government offered them supporting policies, such as debt-to-equity swaps and discounts for technological transformation. These policies helped China become the world’s largest steel-producing country in 1996, with total output surpassing 100 million tonnes. Its steel production in 2000 reached 128 million tonnes, a decrease of 59% from 1992. This stage saw the fastest structural adjustment of the steel industry. By the end of 2000, open-hearth steel-making was almost

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eliminated, 5 years earlier than planned; the ratio of continuous casting reached 87%, surpassing the 75% target and catching up with to world averages; and the total energy consumption per tonne of steel output fell to 885 kg of standard coal, a decrease of 56% from 1992. The third stage has been the deepening of reform and fast economic growth period since 2001. With the new century, the Chinese iron and steel industries experienced significant and influential external developments. Following China’s entry into the World Trade Organization (WTO), market laws and regulations were geared towards reaching international standards, integrating the steel industry further into the world market. China’s manufacturing share increased from about 5% in the mid-1990s to over 17% of the world’s total manufacturing in 2009. Over the reform period, the urbanization ratio rose to 46% in 2010, rising from only 19% back in 1978, transferring nearly 300 million people from rural to urban areas. This large-scale urbanization boosted the investments in housing and infrastructure (According to the data from China Iron and Steel Association (CISA), the housing sector consumed more than 50% of steel produced in recent years.). All these developments led to the rapidly increasing demand for steel from domestic sources. For example, steel consumption increased by 16% per annum from 2000 to 2010. In meeting this rising demand, the industry’s total investment increased from 36.7 billion yuan in 2000 to 453.1 billion yuan in 2010, with an annual growth rate reaching 28.5% over this period. Steel production rose as a result. According to the figures from the Statistical Yearbooks, in 2010 the ferrous metal industry accounted for 4.6% of the total industrial employment, 8.3% of the total industrial value added, 25% of total industrial energy consumption, and between 10% and 16% of the total emissions of the main pollutants from the industry sector. Further trade liberalization has led to the sharp reduction of import duty as well as the complete abolition of quantitative import restrictions, which has exposed steel enterprises to the fierce competition of the international market. China’s rapid economic growth led to rapidly increasing

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demand for steel from domestic sources. The increased competition from the market entry of those non-state firms has forced the large and medium state-owned steel firms to deepen the corporate reform, to include shareholding and the separation of government functions from management. To further separate government functions from enterprise management, the Bureau of Metallurgical Industry at both state and local level was dissolved. Instead, the China Iron and Steel Association, a self-regulatory organization of the steel enterprises, acted as a bridge between enterprises and government. Steel enterprise reform proceeded towards developing a more diversified ownership structure. By the end of 2010 more than 50 steel enterprises were listed on stock markets and 50% of large and medium-sized steel enterprises, in terms of operating revenue, were transformed into joint-stock companies. Private steel enterprises also grew rapidly. Non-state enterprises accounted for about 45% of the total output of the steel industry in 2010. Reorganization and mergers and acquisitions (M&As) have also been part of the process of industrial agglomeration. The steel industry is accelerating its pace of globalization. The China Iron and Steel Association and the largest steel enterprises became members of the World Steel Association (WSA) at the end of 2004. They have taken part in worldwide dialogue and negotiations and adopted common actions as a response to resource, environmental, and market changes. The rapid expansion of steel production has forced the industry to utilize overseas resources on an unprecedented level. Imported iron ore now accounts for two thirds of the total consumption in the steel industry. For example, to produce 567 million tonnes of steel in 2009, China’s steel industry consumed 850 million tonnes of iron ore, of which 602 million tonnes were imported in that year, raising its import dependence ratio for iron ore to 74%. The share of China’s consumption of iron ore in world total iron ore consumption increased from 20% in 2000 to 56% in 2009. Many steel enterprises are also undertaking outward direct investment in the

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mining sectors in order to secure stable and longterm resource supplies (Song et al. 2011).

Industrial Achievements in the Reform Period Any shortage of steel in China may now be consigned to history. Since the reform and opening-up of 1978, and especially since 2000, China’s steel production capacity has expanded rapidly. The industry underwent a period of extraordinary growth in both total sales and total profits which increased at an average annual rate of 32% and 44% respectively over the period 2001–07 (The profit rate from sales grew by an average of 9.1% per annum over the same period.). The end of 2010 saw China’s total steel production reach 630 million tonnes, 18 times the output in 1978. The crude steel production grew at an annual growth rate of 17.2% after 2001. China’s share of global steel production increased from 4.4% in 1978 to 15% in 2000 and to 45% in 2010, a share which has been unprecedented in the entire history of industrialization (For a historical comparison, the United Kingdom was the largest steel producer in the world before the 1890s. In 1885, the United Kingdom’s steel output accounted for about 30% of the world total steel output. That top position was then taken by the United States from 1886 to 1971, and then the former Soviet Union from 1971 to the late 1980s, and Japan for only a brief period in the early 1990s (Yang 2010).). In the past, China relied on imported steel to fill the supply shortfall. Gross imported billet and rolled steel in the period from 1978 to 2004 amounted to 478 million tonnes. After deducting exports, net imports were 352 million tonnes, accounting for 12.6% of China’s total consumption of crude steel. Increasing exports and decreasing imports of steel products found China realizing a rough balance in 2005, becoming a net exporter of steel products in 2006. Such an historic change implies that China’s steel industry is capable of meeting the needs of the country’s economic development. It also suggests that the

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international competitiveness of Chinese steel products has improved immensely. Iron and steel production quality and variety have increased dramatically. Currently, China’s self-sufficiency rate in most steel products exceeds 100%. Only some high-value-added products, such as cold-rolled ordinary steel board (strip) and electric steel, are net imported. Most steel products used in the industry – such as machinery, automobiles, shipbuilding, home appliances, oil, electricity, and railways – are homemade. The product qualities are sufficient to meet the basic needs of those industries. Some varieties have even reached internationally advanced levels. China’s steel exports have gradually shifted from producing long products to producing higher-value-added sheets and pipe products. The industry has also achieved enhanced standards in terms of technology and equipment, and an increased localization rate. The accumulated fixed-asset investments of the steel industry, which were a mere 60 billion yuan in the first 30 years from 1949, reached 2.6 trillion yuan from 1978 to 2010. In addition to the establishment of world-advanced steel enterprises – such as Baoshan Iron and Steel Corporation and Tianjin Seamless Steel Tube Corporation, and some private steel enterprises – most of those investments went to the upgrading of outdated equipment and the restructuring of old steel enterprises. From 1978 to 2010 the number of large blast furnaces over 1000 m3 in volume grew from 10 to 260, of which 28 were over 3000 m3; the ratio of continuous casting grew from 3.5% to 98%, which is above the world average. The modern steel industry is encouraged to rely more on autonomous innovation rather than depend solely on the introduction of new techniques and equipment. By 2010 small and medium metallurgical equipment has been domestically produced, while the localization rate of large metallurgical equipment reached over 90%. The industry also experienced a remarkable rate of technological progress, resulting in improved technical and economic indicators. Many indicators of domestic productivity are outstripping those of developed countries. For example, since 1978 the overall ratio of rolling

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steel being produced has increased to over 95% from 75%; total production energy consumption per tonne of steel has fallen from 2.5 tonnes of standard coal to 605 kg of standard coal; freshwater consumption per tonne of steel has fallen to 4 tonnes; and labor productivity per tonne per person-year has increased from 33 to 400 tonnes.

New Challenges and Industrial Readjustment The market-oriented industry, corporate reform and opening-up policy have been the decisive factors in the development of China’s steel industry. Enterprises were released from the rigid centralized planning system, boosting competitiveness (enhanced in large part by the low cost of labor) and allowing the development of profitmaking incentives, leading to enhanced performance. The establishment and development of the market system enabled and urged steel enterprises to face the challenges of market competition, which again improved their productivity and efficiency. China’s rapid economic growth provided a huge demand for steel products, which gave impetus to the rapid growth and expansion of the industry. Despite these achievements, China’s steel industry still faces many challenges which demand deepened reform and consolidation. The state historically has dominated the steel industry. The transformation of state-owned enterprises in the past turned many steel enterprises into market players. However, they are still constrained by the traditional state-dominant system in orienting development strategies, making investment decisions, conducting M&As, restructuring, appointing senior managers, and employing workers. As a result, the industry’s overall economic performance remains behind the developed countries, by some margin. Private steel enterprises, although more flexible, require further improvement in implementing modern technologies, following codes of conduct and upgrading management skills according to market principles.

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Market competition is the catalyst for improving the overall quality of the steel industry, but the way competition has worked in it has been complicated by the cyclical fluctuations of the macroeconomy. In times of prosperity, steel enterprises have tended to assess the market prospects overoptimistically and expand production blindly. This has resulted in large amounts of overinvestment and backward production capacity being utilized. In times of weak demand, disorderly competition by cutting prices has occurred, and the industry has sometimes relied upon government intervention to alter the supply–demand balance. These patterns of behavior and fluctuations have added to structural adjustment costs, slowed down technological progress, and wasted social resources. The domestic market is still segmented and the degree of industrial concentration quite low. In 2000, the share of steel output by the top 10 firms and the top 4 in total output were 49 and 32%, respectively. The years to 2006 saw a falling ratio of industrial concentration, to 35% for the top 10 and 19% for the top 4, owing to the large number of small firms entering the market seeking to meet the rising domestic demand for steel. The benefits of industrial consolidation in responding to the problems associated with the use of materials, energy, and the environment thus led to the ratio of industry concentration rising again, in 2010 increasing to 49% for the top 10 and 28% for the top 4 (the latter is still below the level of 2000). Despite the progress made, the industry concentration ratio is far below that of the developed countries, which ranges between 70% to 80% for the top 4 or 5 (For example, Japan’s top 5 firms produce 79% of the total steel output; Korea’s top 2 firms produce 80% of its total output (Yang 2010).). The rapid increase in demand for steel products and the rising profitability of the industry stimulated the entry of many non-state small firms, usually supported by local governments for the purposes of increasing local employment and taxation. These small firms tend to use backward production capacities and technologies, adding further difficulties to restructuring the industry. This is the root cause of the problems associated

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with capital misallocation, low quality standards, duplication of construction effort, and blind expansion of production capacity, as well as structural overcapacity. These problems are intrinsically related to issues of wasteful investment, inefficiency in material use (including energy, water, and electricity), and environmental problems. Such industrial segmentation also hampers the technological progress as smaller firms lack the resources for research and innovation. The industry needs further structural reforms to address these problems at the microeconomic and industrial levels, and the government needs to do its part by strengthening the existing regulatory system with respect to market entry and the environment, and reforming its relationship with enterprises. The industry faces the pressure of rising costs of production resulting from the high prices of energy, water, and iron ore in addition to the rising costs of labor and transport on which the industry heavily depends (World iron ore prices (the longterm contract prices) rose by 8.9% in 2003, 18.6% in 2004, 71.5% in 2005, 19% in 2006, and 9.5% in 2007. In 2008, the prices rose by 65% for Brazilian ore and 79.8% for Australian (CISA report, 2008).). These rising costs of production have further squeezed the profit margin for the industry. When the industry passes on the price rises to the consumers, it affects future demand for steel. To cope with this, the strategy for the industry needs to be shifted from an emphasis on pure expansion of scale to a focus on optimization of the structure of production including the product structure through industrial upgrading and technological change. The industry is also compelled to reduce the costs of production, increase productivity and international competitiveness through, for example, an increase in industrial research and development (R&D) and improved corporate management. The introduction of advanced foreign technologies, equipment, capital, and resources has also helped the industry to realize a leapfrogging developmental path. An offsetting factor which helps the industry to reduce resource intensities, including primarily the use of iron ore in producing steel in the future, is that there will be an increasing proportion of

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steel demand which is met by scrap. China is still at the phase of industrialization where the accumulated stock of steel is not sufficiently large for more scrap to be recovered and used in steelmaking. In 2008, the proportion of electric furnaces using scrap for making steel was only 9% of total steel production in China, which was far below the world average level of 31%. In the same year, the proportion in the United States was 58%, while the proportion in the European Union (15 countries) was above 40% (Yang 2010) (The world average proportions of electric furnaces in steel-making were gradually increasing over time, rising from 14% in 1970 to 22% in 1980, then further to 28% in 1990 and to more than 30% in 2006 (CISA report, 2008).). China paid an excessive environmental price for the rapid development of its industries, including the steel industry, with an environmental ramification well beyond its border. China became the largest global carbon emitter in 2007 (an estimate by the World Steel Association shows that China’s steel industry was ranked number one in terms of its carbon emissions among all the steel industries in the world in 2007. China’s emission share accounted for about 51% of the total emissions emitted by world steel industries in 2007 followed by the European Union (12%), Japan (8%), Russia (7%), the United States (5%), and others (17%) (CISA report, 2008).), and yet the country is still in the middle phase of industrialization (according to the current level of per capita income) with the growth and expansion of the manufacturing sector (especially heavy industries) generating more emissions. China needs, and has an obligation to achieve, emission reduction targets as part of the global effort in confronting the challenge of climate change. The government needs to be clear about the scale, pattern, and pace of growth, which will meet China’s future demand for steel while ensuring that the industry’s development is conducive to environmental protection. At the moment, the government’s macroeconomic control policies and regulatory measures curb the development of large enterprises but leave the small ones and low-level projects unaffected. This leads to a high

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proportion of backward and low-level production capacities being utilized in the industry. China has to rely on exports to absorb the surplus of steel after meeting domestic demand. The share of steel exports in total world steel production has experienced both rising and falling trends in recent decades. In 1975 the share was 23%, then rose to a peak of 40% in 2000. It fell to 34% in 2008 and further to 26% in 2009 (World Steel Association 2010) (The quick fall in the share of exports of steel in total production in 2009 over the previous year may be due largely to the impact of the global financial crisis (GFC).). In contrast to this trend, China has been a net exporter of steel since 2005. In 2008, Chinese net exports were 40.7 million tonnes of steel, and ranked number one in the world, followed by those of Japan (32.4 million tonnes), Ukraine (26 million tonnes), and Russia (23 million tonnes). In the same year, the United States was the world’s largest net importer of steel (12.7 million tonnes) followed by the European Union (27 countries) with 11.4 million tonnes, United Arab Emirates (10 million tonnes), Thailand (9.4 million tonnes), and South Korea (8.8 million tonnes) (World Steel Association (2010).). Exporting steel products to world markets helps ease the problem of industrial overcapacity. However, an increase in exports of steel has made industrial restructuring (including ownership reform, industrial concentration, and technological progress) a less urgent task. It has also made the tasks of reducing the resource and pollution intensities of the industry more difficult. Furthermore, China’s exports of steel are causing trade frictions with others, especially those to the developed countries such as the United States and the European Union. The government has adopted various measures such as the imposition of export taxes and the reduction of export tax rebates for certain products in order to limit the increase in exports of steel. However, the industry’s low cost and other advantages will continue to run their course, despite the fact that the government intends to see the role of the steel industry as essentially to meet domestic demand. The challenge therefore is how the Chinese government could bring steel production back into line with

China: Steel Industry

the changes in domestic demand without relying too much on exports. China will continue to be the largest steel producer in the world for the time being, driven largely by the ongoing process of urbanization, industrialization, and her integration with the global economy. China’s level of per capita income needs to be tripled from the current level before the peak level of metal intensity is attained, something which is forecast to happen around 2024. By then, China’s total steel output will be in the vicinity of 1 billion tonnes (McKay et al. 2010). This prospect of China’s future metal intensity and the magnitude of its output raise an important question as to how the world supplies of key resources including energy and minerals, as well as the environment, will accommodate the continual growth in China. As Garnaut has said (2012), “one only has to identify the possibility of China absorbing more resource-based products than the currently developed world to raise some fundamental questions about ‘limit to growth.’” The steel industry can do its part in overcoming this limit to growth in the process of China’s modernization as the industry is scale-capitalresource and pollution-intensive. In fact, the industry will be compelled to do so because in recent years the Chinese government has promulgated a number of key laws and regulations with respect to energy use and the environment such as the “Environmental Protection Law,” the “Law for Prevention of Air Pollution,” the “Law for Prevention of Water Pollution,” the “Law for Prevention of Solid Waste Pollution,” and the “Law for Energy Saving.” Given the current level of the industry development, it is a challenging task for the industry to comply fully with the requirements of these laws (The International Iron and Steel Industry Association (IISI), at a meeting held in Berlin, Germany, in October 2007, published the statistics on its members’ CO2 emissions. IISI’s 180 members have agreed on the plan for reducing CO2 emissions. According to the data, only 20% of the steel production in China could meet the requirements set by IISI in 2006 (CISA 2008).). The world economy has entered a period of development requiring huge adjustment and

China: Steel Industry

rebalancing. Resource scarcity, demographic change, climate change, and global imbalances are global shared concerns. The Chinese government is responding to these changes by transforming the model of its growth and development (Song 2010). Accordingly, the requirements for the steel industry have also changed, as is reflected in a lower level of resource intensity, the higher variety and quality of steel products, and an increasing environmental constraint. These changes call for optimizing the industrial structure, enhancing technological progress, improving corporate management, and, most fundamentally and crucially, deepening the structural reform of the steel industry, including its ownership and concentration.

Concluding Statement The rapid expansion of China’s steel industry in meeting the rapid increases in demand in China since 2000 contributed largely to the recent “super resource boom” over the period 2003–2013, in which world prices of all the key commodities such as iron ores reached unprecedented levels. Since 2012, the Chinese economy started slowing down following the fall in its potential growth rates and the imperative for economic rebalancing. This includes reducing price distortions in resource markets; cooling down of the housing markets; structural changes for higher value-added production, which has lower resources and emission intensities; and greater diversification into services and consumptiondriven growth. As a result, the demand for steel products has eased worsening the problem of overcapacity of the steel industry prompting the industry to go through a painful period of readjustment. However, at the same time, even if demand moderates, it is still likely for China to sustain a relatively high level of resource intensity in production for a certain period similar to the pattern of change in Japan and Western Europe, even after the peak of steel intensity had been reached. Underscoring these are China’s unfinished process of urbanization, further room for infrastructure development, industrial upgrading

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towards more sophisticated industrial sectors (China’s State Council unveiled a national plan in 2015, which is called “Made in China 2025.” It is a 10-year action plan designed to transform China from a low-end to a high-end manufacturing giant. It covers 10 sectors (People’s Daily online, 22 May 2015): new information technology; numerical control tools and robotics; aerospace equipment; ocean engineering equipment and high-tech ships; railway equipment; energysaving and new energy equipment and vehicles; power equipment; new materials; biological medicine and medical devices; and agricultural machinery. This new strategy, coupled with the international strategy of “one belt and one road,” supported by the formation of the Asian Infrastructure Investment Bank (AIIB), reflects a comprehensive approach to a new growth model which has an important implication for future demand for metals.), continued exports with more metal contents such as automobile and machinery, and future revived housing development.

References China Iron and Steel Association (2008) On the path of restructuring the Chinese steel industry. A Report published by the Association, Beijing Findlay R, o’Rourke KH (2007) Power and plenty: trade, war, and the world economy in the second millennium. Princeton University Press, Princeton/Oxford Garnaut R (2012) Australia’s China resources boom. Aust J Agric Resour Econ 56(2):222–243 Hartwell R (1962) A revolution in the Chinese iron and coal industries during the northern sung, 960–1126 AD. J Asian Stud 21(2):153–162 Hartwell R (1966) Markets, technology, and the structure of enterprise in the development of the eleventh- century Chinese iron and steel industry. J Econ Hist 26(1):29–58 Hartwell R (1967) A cycle of economic change in imperial China: coal and iron in Northeast China, 750–1350. J Econ Soc Hist Orient 10(7):102–159 McKay H, Sheng Y, Song L (2010) China’s metal intensity in comparative perspective. In: Garnaut R, Golley J, Song L (eds) China: the next twenty years of reform and development. Australian National University E-Press/Brookings Institution Press, Canberra/Washington, DC, pp 73–98 Song L (2010) China’s rapid growth and development: an historical and international context, paper prepared for

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152 the 34th PAFTAD conference on China in the World Economy, Peking University, Beijing, 7–9 Dec Song L, Liu H (2012) Steel industry development and transformation in China: an overview, chapter 1. In: Song L, Liu H (eds) The Chinese steel Industry’s transformation: structural change, performance and demand on resources. Edward Elgar, Cheltenham, pp 1–16 Song L, Yang J, Zhang Y (2011) State-owned enterprises’ outward investment and the structural reform in China. Chin World Econ 19(4):38–53 World Steel Association (2010) World steel in figures 2010. World Steel Association, Brussels Yang L (2010) Studies on the sustainability of China’s steel industry under the constraints of iron ore resources. Metallurgical Industry Press, Beijing

China’s Oil Industry and Policy Janet Xuanli Liao CEPMLP, University of Dundee, Dundee, Scotland, UK

China’s Oil Situation and Oil Companies China is one of the largest oil producers and oil consumers in the world. Over the past half a century, China has undertaken the route from a net oil exporter to a net oil importer and has also become the world’s largest energy consumer since 2010. China’s oil industry was started in 1959 with the discovery of the Daqing Oil Fields in Northeast China. Together with further discoveries of the Shengli Oil Fields (in Shandong Province) and Dagang Oil Fields (near Tianjin), China became self-sufficient in oil supplies in 1965 and soon developed into a net oil exporter for nearly three decades. In 1989, the Tarim Basin oil fields were uncovered in the Xinjiang Uyghur Autonomous Region of Northwest China, making the country the tenth largest oil reserve nation in the world by the end of 1992 (BP 2003, p. 4). In the 1980s, China also discovered offshore oil fields in the Bohai Bay and the South China Sea, although the contribution of offshore oil production has remained limited. In 2008, China National Offshore Oil Corporation’s (CNOOC) oil production accounted for only 5.2% of China’s total, and the

China’s Oil Industry and Policy

figure grew to 11.5% by 2015 (BP 2016, p. 8; CNOOC 2009, 2016). By 2015, China was still the world’s fifth largest oil producer with 215 million tonnes (mts) of oil production, after Saudi Arabia, the USA, Russia, and Canada. However, with the depletion of domestic oil fields, the growth of China’s oil production remained modest against rapid growth in oil consumption. Between 2004 and 2015, China’s oil production grew from 174.5 to about 215 mts, while its oil consumption jumped from 308.6 to nearly 560 mts during the same period of time. In 1993, China became a net oil importer, and by 2013 China surpassed the USA as the world’s No. 1 oil importer with 346 mts of oil imported against 326.9 mts by the USA (BP 2014, 2016) (Fig. 1). There are three major state-owned oil companies in China: the CNOOC, the China National Petroleum Corporation (CNPC), and the China Petrochemical Corporation (Sinopec). Authorized by the State Council, CNOOC was established in 1982 to assume the overall responsibilities for the exploitation of oil and gas resources offshore China in cooperation with foreign partners. CNOOC was smaller in scale and with a shorter history in China’s oil sector but was more dynamic and modern in its management and operational styles. By contrast, CNPC and Sinopec used to be directly managed by the Ministry of Petroleum and the Ministry of Petrochemicals, respectively, between the 1960s and the late 1980s. Following the government reforms in 1982 and 1988, the administrative functions of the two oil giants were largely removed, but their respective dominance over China’s upstream and downstream remained largely intact. In order to promote competition between the national oil companies (NOCs), CNPC and Sinopec were restructured, in May 1998, as vertically integrated corporations. The restructuring was believed to provide the NOCs with more capacity to cover financial losses caused by price regulation through the use of profits from other parts of their operations (Tu 2012) and probably also to create “national champions” to compete internationally. However, since few new players were allowed into the

China’s Oil Industry and Policy China’s Oil Industry and Policy, Fig. 1 China’s oil situation, 1994–2015 (mts) (Source: adapted from the BP Statistical Review of World Energy, 2009, 2016)

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Chinese markets, the monopolies held by CNPC and Sinopec in the upstream and downstream did not fade away but were only replaced by regional dominance: divided by the Yangtze River, CNPC controlled the north against Sinopec ruling the south (Fig. 2). Between April 2000 and February 2001, the three Chinese NOCs – CNPC’s subsidiary PetroChina, Sinopec, and CNOOC – were listed on the international stock markets. This move could have allowed the NOCs to better integrate their operation and efficiency with the international system; however, as the majority of their shares were owned by the Chinese government, they were not really commercial companies but still enjoyed a dominant position in China’s oil market. It was only in 2004 that further efforts were made to break business territories among the NOCs. CNPC and Sinopec were allowed to conduct offshore exploration and production business, while CNOOC received the rights for onshore development. Some non-state-owned oil companies were also granted rights for oil imports, and the retail market of oil products was opened to foreign oil companies (Kong 2006). There are a few smaller NOCs that have emerged in China as well, such as the Sinochem Corporation, the CITIC Group, and the Yanchang Petroleum, but they have not enjoyed much influence in China’s oil sector. Still, CNPC is by far the largest oil producer in China. Among the top ten oil fields (in terms of

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production) in China in 2014, ranked by the International Petroleum Economics, CNPC owned six: Changqing, Daqing, Tarim, Xinjiang, Southwest, and Liaohe. Sinopec owned only two (Shengli and Zhongyuan) that left one each for CNOOC (Bohai) and Yanchang (Yanchang) (please refer to Fig. 2, IEA). Likewise, Sinopec still enjoyed an advantageous position in terms of refinery capacity. In 2013, Sinopec controlled 42.39% of oil refineries in China, followed by CNPC with 27.35% and CNOOC by 5.14%; the remaining 25.12% was shared by local and private refineries (Jin and Zhu 2014, p. 22). In 2016, CNPC and Sinopec were ranked by Fortune Global 500 as the third and fourth by total revenues, respectively, followed by CNOOC ranking the 109th (The Fortune 2016).

China’s Oil Imports and Main Sources of Supply According to the statistics by China’s State Planning Commission (renamed in March 2003 as the National Development and Reform Commission [NDRC]), between 1992 and 2002, China’s GDP growth was 9.7% annually in average, while China’s oil consumption rose by 5.8% per year against a 1.7% increase of domestic oil production. Such an imbalance in oil consumption and production forced China to give up the Maoist “self-reliance” principle in oil supplies. From the

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China’s Oil Industry and Policy, Fig. 2 China’s major oil fields (Source: IEA (2000), China’s worldwide quest for energy security, p. 6)

late 1990s, the Chinese government decided to pursue a “going-out” strategy, and Chinese NOCs were encouraged to invest overseas to help ensure the nation’s oil security. At the initial stage, Chinese NOCs focused mainly on the “belt regions,” namely, Russia, Central Asia, Middle East, and North Africa (Andrews-Speed et al. 2002). Yet the perpetual increase in oil demands and the geopolitical concerns over the Middle East stability have pushed China’s oil search globally since the new century. However, as a newcomer on the international oil markets, Chinese NOCs were often compelled to deal with the countries that had high political risks and which the international oil giants wanted to avoid, such as Sudan, Iran, and Syria. This triggered a lot of controversy in China’s oil diplomacy. Chinese NOCs have had noticeable success in cooperating with some other oil producers, such as Russia, Saudi Arabia, Angola, and Kazakhstan, but the process has also been fraught

with challenges on political and foreign policy grounds. Chinese NOCs also wished to cooperate with international oil majors, as suggested by the attempt by Sinopec and CNOOC to purchase the BG stake in Agip KCO group in March 2003 and CNOOC’s plan of taking over UNOCAL in October 2005 (Liao 2006, pp. 44 and 48). These efforts all ended up as failures due to distrust by the western parties. Only after the 2008 financial crisis did Chinese NOCs obtain a better opportunity to expand their global portfolio to Europe, North America, and Australia, usually through direct acquisition when possible. According to the International Energy Agency (IEA 2014), between 2011 and 2014 alone, the three Chinese NOCs had spent a total of US$73 billion in upstream investments around the world. By 2014, Chinese NOCs had a presence in more than 40 countries, with a US$270 billion investment for oil projects, and controlled about

China’s Oil Industry and Policy

Others [PERCENTAGE] Brazil [PERCENTAGE] Venezuela [PERCENTAGE]

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China’s Oil Industry and Policy, Fig. 3 Sources of China’s oil imports, 2015 (Source: adapted from Tian 2016, p. 47)

7% of crude oil output worldwide (CPPC 2015). This shift not only has smoothed investments and purchases, according to an IEA report, but has also furthered China’s mastery of the techniques it hopes to use for domestic production (IEA 2014). Still, China is highly reliant on the Middle East for its oil supplies. As shown in Fig. 3, among China’s top ten oil producers in 2015, six were from the Middle East, a region accounting for more than half of the country’s oil imports, followed by Africa (19%) and Russia (Tian 2016, p. 47).

China’s Strategic Petroleum Reserves Despite its ever-growing reliance on oil imports, China did not start building a strategic petroleum reserves (SPR) program until 2003: largely due to the relatively low oil prices – below US$20 per barrel – throughout the 1990s (BP 2003, p. 14). The building of oil reserves was mentioned in the tenth Five-Year Plan (FYP) (2001–2005), but no action was taken until the US invasion of Iraq that led to a rapid rise in the international oil price. In 2003, the Chinese government launched the SPR built outs, with a plan to construct facilities that can hold 500 million barrels of crude oil by 2020

in three phases, involving an investment of RMB 100 billion. In December 2007, the National Centre for Petroleum Storage was set up to manage the SPR and was later subordinated to the National Energy Bureau, founded in March 2008. Between 2003 and 2008, phase I of SPR was constructed in four bases, in Zhenhai, Zhoushan (both in Zhejiang Province), Dalian (Liaoning Province), and Huangdao (Shandong Province). In November 2014, the Chinese Bureau of Statistics announced that phase I facilities were filled up, with a capacity of 91 m barrels of crude oil, equivalent to 16 days of China’s oil imports (Jiang 2014). In 2009, construction on phase II of SPR was commenced involving eight bases: Tianjin, Zhanjiang, Huizhou (both in Guangdong Province), Jintan (Jiangsu Province), Shanshan, Dushanzi (both in the Xinjiang Uyghur Autonomous Region), Jinzhou (Liaoning Province), and Lanzhou (Gansu Province) (see Fig. 4). With a designed capacity of 168 m barrels, phase II was planned to be completed by 2015, and phase III was also under construction and expected to finish by 2020, adding another 500 m barrels of crude, equivalent to 100 days of oil imports (Xuan Jiang 2014). However, according to a recent Bloomberg report, completion of phase II would be completed by 2020, according to the 2016-2020 Five Year Plan released in March, and the ending date of phase III was also uncertain. As China has reportedly increased oil imports by 8.8% in 2015, to a record of 335.5 mts, against the low oil price in more than a decade, analysts believed that China might have reached its current storage capacity limit, and it would take time to build up anew (Bloomberg 2016). In addition to the government oil storage, the three NOCs were also encouraged to build more commercial oil storage. In February 2015, the NDRC issued a directive requiring the establishment of a minimum commercial stock of crude oil, according to which the NOCs should keep crude oil reserves equivalent to at least 15 days of their designed processing capacity. By early 2015, China’s crude oil reserves were only good for 22.7 days, including 8.9 days for SPR and 13.8 days for commercial reserves (CNPC 2015).

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China’s Oil Industry and Policy, Fig. 4 Chinese SPR and commercial inventory sites (Source: Meidan et al. 2015, p. 10)

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China’s Oil Industry and Policy, Fig. 5 Chinese SPR sites, 2010–2015 (in million barrels) (Source: Meidan et al. 2015, p. 10)

The Chinese government also welcomed private companies to participate in the bidding for SPR facilities since 2010, though no breakthrough was made until August 2013, when the Tianlu Energy Company (in Zhejiang Province) was

granted a license to serve the SPR from the Chinese Ministry of Commerce, with its two crude storages’ facilities (CNPC 2015). Figure 5 below shows a general picture of China’s SPR by 2015, but once the three phases of SPR are completed by

China’s Oil Industry and Policy China’s Oil Industry and Policy, Fig. 6 China’s GDP growth rate, 1980–2015 (Source: BBC 2016)

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2020 according to plans, we will definitely see a very different scenario.

Concluding Statement Chinese oil consumption has almost doubled over the past decade, and it is estimated that the figure will grow by another 67% by 2035 against a 3% decline of domestic oil production. China’s dependence on oil imports will also rise from 60% in 2015 to 75% in 2035 – higher than the USA’s at its peak in 2005 – though the share of oil in China’s energy mix will remain unchanged at around 18% (BP 2035). China has managed its oil supply so far despite the challenges it has encountered domestically and internationally. However, it remains a question to Beijing as to whether its current policy on oil security is sustainable, taking into account factors not only on energy security but also on environmental protection, climate change, and geopolitics. Beijing has taken various measures to promote the development of renewable energy, which will reach 15% in China’s energy mix by 2020 and 20% by 2030. The 13th FYP (2016–2020) has also reduced China’s GDP growth rate to below 6% annually from 8% in the 12th FYP. As a matter of fact, China’s economic development in 2015 was recorded as slowest in 25 years (BBC 2016), and such trend is expected to continue based on

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Beijing’s new strategy of sustainable development. Hopefully, China will be able to maintain a better balance between its economic development and environmental protection for the nation and for the world as a whole (Fig. 6).

References Andrews-Speed P, Liao X, Dannreuther R (2002) Strategic implications of China’s energy needs, vol 346, Adelphi paper. Oxford University Press, London BBC (2016) China economic growth slowest in 25 years. 19 Jan. http://www.bbc.co.uk/news/business35349576 Bloomberg (2016) Oil bulls beware because China’s almost done amassing crude. http://www.bloomberg. com/news/articles/2016-06-30/oil-bulls-beware-becausechina-s-almost-done-amassing-crude BP Energy Outlook 2035 (BP 2035) (2015) http://www. bp.com/content/dam/bp/pdf/energy-economics/energyoutlook-2015/bp-energy-outlook-2035-booklet.pdf BP Statistical Review of World Energy (BP) (2003) BP p.l.c, London (unavailable on line) BP Statistical Review of World Energy (BP) (2009) http:// news.bbc.co.uk/1/shared/bsp/hi/pdfs/10_06_09_bp_repo rt.pdf BP Statistical Review of World Energy (BP) (2016) https:// www.bp.com/content/dam/bp/pdf/energy-economics/sta tistical-review-2016/bp-statistical-review-of-world-ener gy-2016-full-report.pdf China National Petroleum Corporation (CNPC) (2015) NDRC issued directive to encourage oil companies for oil storage. http://wap.cnpc.com.cn/system/ 2015/02/09/001528149.shtml

158 China Petroleum Press Centre (CPPC) (2015) Improve overseas oil investment strategies. 13 Apr. http://news. cnpc.com.cn/system/2015/04/13/001536940.shtml CNOOC (2009) Annual report 2008. http://www. cnoocltd.com/upload/encnoocltd/tzzgx/dqbd/nianbao/ images/2009410578.pdf CNOOC (2016) Annual report 2015 http://www.cnoocltd. com/jcms/jcms_files/jcms1/web5/site/attach/0/16040 60647250551126.pdf The Fortune (2016) Global 500. http://beta.fortune.com/ global500/list/ IEA (2014) Chinese national oil companies’ investments: going global for energy. http://www.iea.org/ieaenergy/ issue7/chinese-national-oil-companies-investmentsgoing-global-for-energy.html International Energy Agency (IEA) (2000) China’s worldwide quest for energy security. OECD/IEA, Paris Jiang Xuan (2014) Our country’s 12.43mts of SPR was announced for the first time: equivalent only to 16-days of oil imports. http://finance.sina.com.cn/chanjing/ cyxw/20141124/022520898068.shtml Jin Yun, Zhu He (2014) Reflection and prospect of the Chinese refinery sector in 2013 (In Chinese). Int Pet Econ. 5: 22 Kong Bo (2006) Institutional insecurity. China Security, Summer, 64–88 Li Zhidong (2015) China watching: basic principle of the comprehensive energy policy. IEEJ e-Newsletter. 60, 20 April: 5 Liao JX (2006) A silk road for oil: Sino-Kazakh energy diplomacy. Brown J World Aff. XII(Issue II), Winter/ Spring: 39–52. Meidan M, Sen A, Campbell R (2015) China: the “new normal”. Institute of Energy Studies, Oxford Tian C (2016) The analysis of China’s oil imports and export in 2015 (In Chinese). Int Pet Econ 3:44–53 Tu Kevin Jianjun (2012) Chinese oil: an evolving strategy. China Dialogue, 24 Apr. http://carnegieendowment. org/2012/04/24/chinese-oil-evolving-strategy

Climate Policy in Russia Yulia Yamineva University of Eastern Finland, Joensuu, Finland

Climate change issues are peripheral on policy agenda in Russia. This owes to many factors including abundant mineral resources, a generally marginalized status of environmental and a related fossil fuel lobby, issues, and limited domestic expertise on this topic (Yamineva 2013). In fact, most developments in Russia’s national policy

Climate Policy in Russia

specific to climate change were triggered by the need to conform to the requirements under the UN Framework Convention on Climate Change (UNFCCC) to which Russia is a party.

Emissions’ Status According to the International Energy Agency, Russia is the fourth largest emitter of carbon dioxide (CO2) in the world, after the USA, China, and India (International Energy Agency 2013). Despite the apparently significant contribution to the world’s emissions, Russia’s own emissions in fact decreased dramatically – by nearly 40% – in the 1990s as its economy collapsed following the disintegration of the Soviet Union (Fig. 1). Although greenhouse gas emissions started slowly climbing up in the late 1990s as shown by the figure, by 2013, they were still at 70% of the 1990 levels (Ministry for Economic Development of the Russian Federation 2013). The energy sector is by far the largest contributor to the overall greenhouse gas emissions with the share of more than 80%.

Russia in International Climate Policy The Russian Federation is a party to the UNFCCC which is the main international agreement to address global climate change. Formally, in the convention’s regime, Russia is considered to be a developed nation with the resulting obligation to reduce its emissions; however, the country also enjoys a status of “economy in transition” implying a greater flexibility in meeting mitigation commitments. Russia is also a party to the Kyoto Protocol to the UNFCCC which sets legally binding quantified emission reduction targets for developed countries. Interestingly, the Protocol entered into force as a result of Russia’s ratification in 2004. (According to Article 25.1 of the Kyoto Protocol, the agreement would enter into force only after developed country parties accounting for at least 55% of their total carbon dioxide emissions of 1990 join the treaty. Given the USA’s refusal to

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Annual greenhouse gas (GHG) emissions fo Russian Federation Query results for Party: Russian Federation - Years: All years - Category: Total GHG emissions excluding LULUCF/LUCF - Gas: Aggregate GHGs - Unit: Gg CO2 equivalent

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Climate Policy in Russia, Fig. 1 Annual GHG emissions of the Russian Federation (1990–2012). (Source: UNFCCC greenhouse gas emissions inventory database, available at http://unfccc.int/ghg_data/items/3800.php)

ratify the Protocol, Russia’s ratification had a decisive role in the fate of the Protocol.) The ratification, heavily debated in Russia at the time, allegedly took place as a result of a behindthe-door bargaining with the EU in the promise for a more advantageous treatment in the ascension process for the World Trade Organization. Under the Kyoto Protocol’s first commitment period of 2008–2012, Russia as a developed nation agreed to a quantified economy-wide target to reduce its emissions. However, in reality, the target was defined in relation to 1990 which preceded the collapse of the economy, and hence the nation ended up with a nearly 40% room for emissions’ growth. Although still a party to the Protocol, Russia did not take any emission reduction commitments for its second commitment period of 2013–2020. Russia signed the Paris Agreement which was adopted by Parties to the Climate Change Convention in 2015. There are indications that the country will ratify the Agreement in 2019.

Climate-Specific Policy and Legislation Russia’s domestic policy specific to climate change includes the Climate doctrine and legislation pertaining to reducing emissions and an emission reduction target. In addition, policies on increasing energy efficiency and renewable energy and reducing emissions from associated petroleum gas are relevant to the goal of mitigating climate change. The latter policies are not always well coordinated with climate-specific legislation and in fact were developed beforehand or in parallel; yet, they directly address the most emitting sectors in Russia. Climate doctrine is a policy and political document which sets the framework for climate change mitigation and adaptation policies (Climate doctrine of the Russian Federation 2009). Largely declarative in nature, this document nevertheless carries a symbolic significance as it, for the first time for an official document in Russia, recognized the anthropogenic character of current climate change.

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Russia has an official greenhouse gas emission target of not exceeding 75% from the emissions of 1990 in 2020 (Decree of the President of the Russian Federation 2013). This target should be considered against the background that in 2013 emissions were still at 70% of 1990 levels. The government has also adopted a plan of actions to implement the decree which includes development of a monitoring, reporting, and verification system for emissions, emission scenarios and mitigation potential, and measures to regulate greenhouse gas emissions including through state subsidies, pilot projects, and international cooperation on low-carbon development (Plan of actions in support of reducing greenhouse gas emissions by 2020 to the levels of no more than 75% from the emissions of 1990, 2014). As for longer term, Russia suggested it would limit its emissions to 70-75% by 2030 from 1990 levels, provided for the appropriate accounting of the role of forests (Intended Nationally Determined Contribution to the UNFCCC, 2015). This appears to be a double safety net against strict international obligations to reduce GHG emissions. To implement the Paris Agreement, Russia also plans to develop a system of state regulation of reducing GHGs but the exact instruments and policies to be used remain unclear at this point. Russia has no domestic emission trading scheme although the possibility of one has been entertained for years. However, introducing a domestic emission trading scheme is unlikely in Russia due to the low political feasibility of the idea and lack of demand for carbon credits in the absence of a strict emission reduction goal (Korppoo et al. 2014). As a party to the Kyoto Protocol, in the first commitment period, Russia could avail itself of the opportunity to use so-called flexibility mechanisms to assist in achieving emission reductions. One of the schemes – joint implementation – allowed Russia to attract investments from another industrialized country for emission reduction projects in exchange for carbon credits. Despite its apparent benefits, Russia largely missed on the opportunity. Legislative inertia and administrative barriers prolonged the adoption of the legislation which would enable the scheme up to 2011

Climate Policy in Russia

(Directive of the Government of the Russian Federation 2011). In the remaining time until the end of the commitment period, 150 projects mostly on energy efficiency and development of renewables were submitted for approval with estimated emission reductions of 380 million tons of CO2 (Sberbank of Russia – Carbon Financing 2014). As Russia did not sign up for the second commitment period of the Protocol, it could no longer participate in the joint implementation scheme after 2012.

Climate-Related Energy Policies and Legislation Three areas relating to the energy sector deserve attention as significant for climate mitigation in Russia. Policy developments – namely, increasing energy efficiency, renewable in these areas energy promotion and reducing emissions from associated petroleum gas flaring – are not necessarily driven by climate change concerns but carry important climate co-benefits. As far as climate change mitigation is concerned, experts widely believe that increasing the efficiency of the energy sector is the most promising option for Russia due to its high cost-effectiveness (McKinsey & Company 2009) and significant co-benefits of increasing the competitiveness of the economy as well as freeing up more fossil fuels for export. Indeed, according to World Bank’s estimates of 2008, Russia’s economy is one of the most energyinefficient economies globally with the energy efficiency potential assessed at 45% (World Bank 2008). McKinsey & Company suggested that the highest potential for increasing energy efficiency is found in residential and commercial buildings, energy sector, industry, and road transportation. Indeed, increasing energy efficiency has been a policy priority in Russia in the last years. This priority is supported by a myriad of policy documents and legislation which are frequently repetitive and sometimes contradict each other. According to official documentation, the country aims at decreasing the energy intensity of its GDP by at least 40% by 2020 compared to 2007 (Concept for long-term social and economic

Climate Policy in Russia

development of the Russian Federation up to 2020, 2008). The main piece of legislation in support for this goal is the federal law on energy conservation and increasing energy efficiency adopted in 2009 which proposes such policy actions as, for example, energy efficiency labeling, phasing out energy-inefficient goods, energy audit, and energy efficiency requirements in the buildings sector and for state procurement (Federal law of the Russian Federation 2009). Two other policy documents are important: the state program on energy conservation and increasing energy efficiency (State Program of the Russian Federation 2010) and a more general state program on energy efficiency and development of the energy sector adopted in 2013 (State program of the Russian Federation 2013). Prolific policy and legislative work demonstrates that energy efficiency has indeed been a priority for the government; yet, in reality, the implementation of state programs and legislation has been delayed. Progress is hindered by several factors including insufficient budget and institutional support, lack of information and experience with financing and implementing energy efficiency projects, and legislative gaps. Renewable energy, except large hydropower, is currently at insignificant 1% in the total energy mix (main directions of the state policy in the area of increasing electrical energy efficiency on the basis of the use of renewables for the period up to 2020, 2009). There have been several policy attempts to expand the use of renewables, in particular wind and solar energy, which however yielded almost no significant impact. Officially, since 2009, Russia aims to increase the share of renewables to 4.5% by 2020 (main directions, 2009); but the country isn’t on track to meet the target. Two enabling schemes were proposed so far: a premium-based scheme of 2009 which was never implemented in practice and a capacitybased scheme of 2013 (Directive of the government of the Russian Federation 2013) which is assessed as more promising. Abundant fossil fuels and the lack of domestic expertise, financing, and technologies are some of the key factors obstructing the progress on making renewables more prominent. Overall, renewable energy

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development is not a cost-effective way to reduce greenhouse gas emissions (McKinsey & Company 2009) although the International Finance Corporation states that in isolated regions of Siberia and the Far East renewables can serve as a cheaper and cleaner alternative to diesel (International Finance Corporation Renewable Energy Program in Russia 2011). Russia’s emissions from associated petroleum gas flaring are the highest in the world; about 75–76% were utilized in 2011–2012 (Kiryushin et al. 2013). The state policy to reduce these emissions has followed a command-and-control approach: the legislation of 2009 set a target for companies to utilize at least 95% of associated petroleum gas by 2012 and introduced increased fines for excessive gas flaring (Directive of the government of the Russian Federation 2009). The fines had to be risen further in 2012 as compliance among companies was poor and the target was missed (Directive of the government of the Russian Federation 2012). Although the current legislation still aspires to reduce emissions from gas flaring to 5%, there is no clarity on a timeline for this reduction. As reasons for the ineffectiveness of the current legislation, experts cite the excessive reliance of state policy on targets and penalties for noncompliance instead of developing a related infrastructure and introducing measures to stimulate companies to utilize associated petroleum gas (Kiryushin et al. 2013).

References “Sberbank Russia” – carbon financing/Information on Kyoto Protocol projects. http://sberbank.ru/moscow/ ru/legal/cfinans/sozip/. Accessed 11 Jan 2014 Climate doctrine of the Russian Federation (2009) adopted by the order of the President of the Russian Federation No. 861-rp Decree of the President of the Russian Federation (2013) “On reducing greenhouse gas emissions” No. 752 Directive of the government of the Russian Federation (2009) “On the measures stimulating reduction of atmospheric pollution by products of associated petroleum gas flaring” No.7 Directive of the government of the Russian Federation (2011) “On measures to implement article 6 of the

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162 Kyoto Protocol to the UN Framework Convention on Climate Change” No. 780 Directive of the government of the Russian Federation (2012) “On estimating fines for emissions from associated petroleum gas flaring and/or dispersal of associated petroleum gas” No. 1148 Directive of the government of the Russian Federation (2013) “On the mechanism for the promotion of renewable energy use on the wholesale electricity and capacity market” No. 449 Federal law of the Russian Federation (2009) “On energy conservation and increasing energy efficiency and introducing amendments to specific legislative acts of the Russian Federation” No. 261-FZ Intended Nationally Determined Contribution of the Russian Federation to the UNFCCC (2015) International Financing Corporation Renewable Energy Programme in Russia (2011) Renewable energy policy in Russia: waking the green giant International Energy Agency (2013) CO2 emissions from fuel combustion highlights Kiryushin PA, Knizhnikov A Yu, Kochi KV, Puzanova TA, Uvarov SA (2013) Associated petroleum gas in Russia: “Do not burn but utilise!” Analytical report on economic and environmental impacts of associated petroleum gas flaring in Russia. WWF-Russia Korppoo A, Upston-Hooper K, Yliheljo E (2014) climate change mitigation in Russia: foreign policy, environmental action or simple economics? In: Van Calster G, Vandenberghe W, Reins L (eds) Research handbook on climate change mitigation law. Edward Elgar Publishing, Cheltenham Main directions of the state policy in the area of increasing electrical energy efficiency on the basis of the use of renewables for the period up to 2020 (2009) adopted by the order of the government of the Russian Federation No. 1-r McKinsey&Company (2009) Pathways to an energy and carbon efficient Russia: opportunities to increase energy efficiency and reduce greenhouse gas emissions Ministry for Economic Development of the Russian Federation (2013) Forecast for the long-term social and economic development of the Russian Federation up to 2030 Plan of actions in support of reducing greenhouse gas emissions by 2020 to the levels of no more than 75% from the emissions of 1990 (2014). Approved by the order of the government of the Russian Federation No. 504-r State programme of the Russian Federation (2010) Energy conservation and increasing energy efficiency for the period up to 2020. Approved by directive no. 2446-r of the government of the Russian Federation State programme of the Russian Federation (2013) “Energy efficiency and development of the energy sector.” Approved by directive No. 512-r of the government of the Russian Federation The concept for long-term social and economic development of the Russian Federation up to 2020

Coal Bed Methane (CBM) (2008) adopted by the order of the government of the Russian Federation No. 1662-r World Bank (2008) Energy efficiency in Russia: untapped reserves Yamineva Y (2013) Sustainable energy in Russia: a climate change perspective. In: report of the roundtable “European and Russian agenda towards efficient resource management and sustainable energy supply”, Konrad Adenauer Stiftung, European University in St Petersburg, Russia, 13 December 2013

Coal Bed Methane (CBM) Dipak Ranjan Datta Geological Survey of India (GSI), Kolkata, India

Coal Bed Methane, in short, well known as CBM, is actually methane (CH4) gas produced during formation of coal and is stored within coal beds – stratified sedimentary deposit consisting predominantly of hydrocarbon derived from plant debris of geological past through a process called coalification (details in) – occurring at considerable depth under sediment load pressure. In the past methane gas within coal was considered a hazardous one causing so many fire accidents while mining out coal from underground mines as it is highly combustible, and the miners used to adopt so many preventive measures to avoid fire accident for safe mining. In the recent past around the 1990s, a new technology is developed to extract methane gas from coal beds before mining out coal deposit. At the same time having significant heat value, methane gas, thus extracted, is utilized as a nonconventional energy resource which is otherwise very much eco-friendly. Thus the new technology played a dual purpose – eliminating chances of fire accident from the hazardous gas and discovering sources of alternate energy resources partly fulfilling the demand of the energy crisis. This way it has attracted attention of geoscientists of the world who were deeply engaged in the development, evaluation, and exploitation of CBM. USA, Australia, Canada, and China took the leading role in

Dipak Ranjan Datta has retired.

Coal Bed Methane (CBM)

this line and became successful and came out with the commercial production within a short time. The amount of coal bed methane (CBM) entrapped in a coal bed is a joint function of several geological parameters. Coal bed being a stratified deposit occurs in association with other sedimentary rocks (sandstone, shale, siltstone, etc.) and behaves mostly like a tabular sheet/ lensoidal body having certain thickness and spreading over a relatively extensive area occurring at some depth from the ground level. This type of coal bed with a minimum thickness and having economic viability is termed as “coal seam.” The quantity of methane gas generated and stored in a coal seam is a complicated and complex process which is mainly controlled by depth of occurrence of the seam, its thickness, geometry (lateral behavior characteristics), rank (stage of coalification process) and petrographic composition of coal seams derived from detailed analysis under microscope, cleat properties (cracks/fractures mostly developed during coalification), etc. (Spears and Caswell 1986; Tremain et al. 1991; Laubach et al. 1998). A coal seam characteristically performs mainly three significant roles with respect to CBM – it generates methane gas, stores the gas within its body, and allows to transmit it through the coal bed. Thus a coal bed is a unique reservoir having three major functions as mentioned above and also characterized by excessive storing capacity which is three to seven times that of any other conventional reservoir of the same dimension (Chandra 1997). For better understanding the controls of CBM which are very much essential for proper and systematic evaluation of CBM potentiality of an area forming part of the process of CBM exploration, these may be described one by one in brief. Generation of methane is intimately associated with the coal forming process and takes place in two successive stages during coalification. These two significant stages are (1) biogenic and (2) thermogenic. Their products are known as biogenic and thermogenic methane. The biogenic methane along with other compounds of negligible quantity like CO2, H2S, N2O, N2, etc. evolves in this first stage known as humification, which

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involves biogenic degradation of buried plant materials at temperatures less than 50
C resulting in the formation of low-rank coals (peat to subbituminous). As the low-rank coal is subjected to greater depth of burial and higher heat flows during progress of coalification it is converted into bituminous coal, generating additional methane, carbon dioxide, and water. This methane produced at a temperature greater than 50
C is known as thermogenic methane. However, scientists all over the world are much more interested in thermogenic methane as its rate of generation is very high. In the higher stage of coalification more than 5,000 c.ft./ton of methane (volume of methane available from unit mass of coal) is generated (Ayers and Kelso 1989; Cooper and Scidile 1995). Maximum expulsion of methane occurs during transition from High Volatile Bituminous ‘A’ to Low Volatile Bituminous coal at 150
C(details in). This thermogenic stage can produce much more methane gas beyond the capacity of the coal bed to store it resulting in migration of the excess gas to other noncoal reservoirs, if available. However, storing capacity increases with the increase in confining pressure, i.e., greater depth of burial of the coal bed due to gradual subsidence of the coal-bearing basin. The above stage of coalification may very well be assessed in a relatively quick mode by study of reflectance of vitrinite under oil (Ro %), a microconstituent of coal which is indicative of rank and commonly used as a measure of thermal maturity (under the purview of coal petrographic studies). For a commercial CBM project, the typical range of thermal maturity of coal varies from 0.7% to 2.0% (Chandra 1997; Cooper and Scidile 1995). A coal bed not only generates methane gas but also behaves as a very good reservoir for the same storing much more quantity of methane gas than any other conventional reservoir as already described. This unique behavior of coal is due to a special property of having preponderance of microporosity (detailed in “Microporosity” and “Adsorption”). More than 95% of the total methane gas of coal remains adsorbed (Gray 1987) along the internal surface of the micropores of the coal occurring at depth, i.e., under the influence of load pressure and only about 5% in the

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macropore system as free gas. Adsorption capacity of coal has a positive relationship with the total internal surface area of these micropores. More the internal surface area of these micropores, more is the adsorption capacity of the coal. It may be mentioned that out of the three organic microconstituents of coal (vitrinite, inertinite, and liptinite identifiable under microscope in polish section under oil), vitrinite has a greater proportion of micropores (GRI Manual 1996) and thus possesses a higher methane adsorption capacity due to availability of more micropores resulting in more internal surface area in it. So far as internal surface area is concerned it is worthy of mention that 1 lb of coal is reported to show internal surface area varying from 100,000 square feet to more than 1,000,000 square feet (Jones et al. 1988). However the above discussion suggests that vitriniterich coals, with compositional makeup determined petrographically under microscope, are supposed to contain more gas implying significance of petrographic composition of coal. The adsorption capacity of coal also increases with increase in depth of occurrence, i.e., burial pressure implying enhancement of its rank. Therefore higher-rank coals are supposed to have more gas content than lower-rank ones, and it is well established by Kim (1987). With the fundamentals of coal bed methane as described so far, control of seam thickness and its geometry for CBM potentiality may easily be visualized. When there are many coal seams having similar rank, compositional makeup, and depth of occurrence, the thickest one with maximum volume of coal would obviously show more gas content than others. Similarly a seam with regular geometric shape is supposed to contain more gas than an irregular-shaped coal body. Depth of occurrence, seam thickness, subsurface behavior pattern, and geometry of a coal seam are determined through exploration techniques, which is a must for assessment of CBM potentiality of an area. Instead of having sufficient gas content, a coal seam will not be viable for commercial production

Coal Bed Methane (CBM)

until and unless it possesses an optimum permeability (capacity to transmit gas and fluid through a coal bed). Permeability (detailed in) of the coal bed is a prerequisite to allow transmission of gas and liquid through coal bed for successful production of CBM. Macroporosity (mainly cleat, fractures, and interconnected macropores) plays a significant role in regulating permeability of a coal bed forming drainage path for the gas and fluid to flow through the coal bed.

References Ayers WB, Kelso BS (1989) Knowledge of methane potential for coal bed methane resources grown but needs more study. Oil Gas J 87:67–76 Chandra K (1997) Nonconventional hydrocarbon resources like coal bed methane and gas hydrates: exploration imperatives to India. Int J Geol 69(4):261–281 Cooper JL, Scidile J (1995) Controls on exploration: proceedings of Petrotech, New Delhi Gas Research Institute (1996) In: Saulsberry JL, Schafer P, Schraufnagel RA (eds) A guide to Coal Bed Methane Reservoir Engineering, Gas Research Institute 1996. Chicago, Illinois, USA. pp 1.1–7.27 Gray I (1987) Reservoir Engineering in Coal Seams: Part IThe Physical Process of Gas Storage and Movement in Coal Seams. SPERE. pp. 28–34 Jones AH, Bell GJ, Schraufnagel RA (1988) A review of the physical and mechanical properties of coal with implications for coal bed methane well completion and production. In: Fassett JE (ed) Geology and coal bed methane resources of the northern San Juan Basin, Colorado and New Mexico, Rocky Mountain Association of Geologists guidebook. Rocky Mountain Association of Geologists, Denver, pp 169–181 Kim AG (1987) Estimating methane content of bituminous coalfields from adsorption data.U.S. Bureau of Mines, Report of Investigations, 82455 Laubach SE, Marrett RA, Olson JE, Scott AR (1998) Characteristics and origins of cleat: a review. Int J Coal Geol 35:175–207 Spears DA, Caswell SA (1986) Mineral matter in coals: cleat mineral and their origin in some coals from the English Midlands. Int J Coal Geol 6:107–125 Tremain CM, Laubach SE, Whitehead HH (1991) Coal fracture (cleat) patterns in Upper cretaceous Fruit land Formation, San Juan Basin. Colorado and New Mexico: implications for exploration and development. In: Schwochow S, Murray DK, Fahy MF (eds) Coal bed Methane of Western North America. Rocky Mountain Association of Geologists, Denver, pp 49–59

Coal Bed Methane (CBM) Reservoir Property

Coal Bed Methane (CBM) Reservoir Property Dipak Ranjan Datta Geological Survey of India (GSI), Kolkata, India

Coal Bed Methane (CBM) is methane (CH4) gas produced during formation of coal and is stored within the coal bed – stratified sedimentary deposit consisting predominantly of hydrocarbon derived from plant debris of geological past through a process called coalification– occurring at considerable depth under sediment load pressure. In past, methane gas within coal was considered as hazardous causing so many fire accidents while mining out coal from underground mines as it is a highly combustible and the miners used to adopt so many preventive measures to avoid fire accident for safe mining. In recent past around nineties, a new technology is developed to extract methane gas from coal bed before mining out coal deposit. At the same time having significant heat value methane gas, thus extracted, is utilized as a nonconventional energy resources which is otherwise very much ecofriendly. Thus the new technology played a dual purpose – eliminating chances of fire accident from the hazardous gas and discovering sources of alternate energy resources partly fulfilling the demand of energy crisis. This way it has attracted attention of geoscientists of the world who are engaged in the development, evaluation, and exploitation of CBM. USA, Australia, Canada, and China took the leading role in this line and become successful and came out with the commercial production within a short time. The amount of coal bed methane (CBM) entrapped in a coal bed is a joint function of several geological parameters. Coal being a stratified deposit occurs in association with other sedimentary rocks (sandstone, shale, siltstone, etc.)

Dipak Ranjan Datta has retired.

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and behaves mostly like a tabular sheet/lensoidal body having certain thickness and spreading over a relatively extensive area occurring at some depth from the ground level.” Quantity of methane gas generated and stored in a coal seam is a complicated and complex process which is mainly controlled by depth of occurrence of the seam, its thickness, geometry (lateral behavior characteristics), rank (stage of coalification process) and petrographic composition of coal seams derived from detailed analysis under microscope, cleat properties (cracks/fractures mostly developed during coalification), and so on (Spears and Caswell 1986; Tremain et al. 1991; Laubach et al. 1998). A coal seam characteristically performs mainly three significant roles in respect of CBM – it generates methane gas, stores the gas within its body, and allows transmitting it through the coal bed. Thus coal bed is a unique reservoir having three major functions as mentioned above and also characterized by excessive storing capacity which is 3–7 times than that of any other conventional reservoir of the same dimension (Chandra 1997). Generation of methane is intimately associated with the coal-forming process and takes place in two successive stages during coalification. These two significant stages are – (1) biogenic and (2) thermogenic. Their products are known as biogenic and thermogenic methane. The biogenic methane along with other compounds of negligible quantity like CO2, H2S, N2O, N2, etc. evolves in this first stage known as humification which involves biogenic degradation of buried plant materials at temperature less than 50
C resulting in the formation of low rank coals (Peat to subbituminuous). As the low rank coal is subjected to greater depth of burial and higher heat flows during the progress of coalification, it is converted into bituminous coal, generating additional methane, carbon dioxide, and water. This methane produced at a temperature greater than 50
C is known as thermogenic methane. However, scientists all over the world are much more interested in thermogenic methane as its rate of generation is very high. In the higher stage of coalification more than 5000 c.ft./t of methane (volume of methane

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available from unit mass of coal) is generated (Ayers and Kelso 1989; Cooper and Scidile 1995). Maximum expulsion of methane occurs during transition from High Volatile Bituminous “A” to Low Volatile Bituminous coal at 150
C (details in Coal, Coal Bed Methane (CBM)). This thermogenic stage can produce much more methane gas beyond the capacity of the coal bed to store it resulting in migration of the excess gas to other non-coal reservoir, if available. However, storing capacity increases with the increase in confining pressure, i.e., greater depth of burial of the coal bed due to gradual subsidence of the coal bearing basin. The above stage of coalification may very well be assessed in a relatively quick mode by study of reflectance of vitrinite under oil (Ro%), a microconstituent of coal which is indicative of rank and commonly used as a measure of thermal maturity. For a commercial CBM project, the typical range of thermal maturity of coal varies from 0.7% to 2.0% (Chandra 1997; Cooper and Scidile 1995). Coal bed not only generates methane gas but also behaves as a very good reservoir for the same storing much more quantity of methane gas than any other conventional reservoir as already described. This unique behavior of coal is due to a special property of having preponderance of microporosity. More than 95% of the total methane gas of a coal remains adsorbed (Gray 1987) along the internal surface of the micropores of the coal occurring at depth, i.e., under the influence of load pressure and only about 5% occurs in the macropore system as free gas. Adsorption capacity of a coal has a positive relationship with the total internal surface area of these micropores. More the internal surface area of these micropores, more is the adsorption capacity of the coal. It may be mentioned that out of the three organic microconstituents of coal (vitrinite, inertinite, and liptinite), vitrinite has a greater proportion of micropores (Chandra 1997), and thus possesses a higher methane adsorption capacity due to availability of more micropores resulting in more internal surface area in it. So far as internal surface area is concerned, it is mention worthy that 1 lb of coal is reported to show internal surface area varying from 100,000 square feet

Coal Bed Methane (CBM) Reservoir Property

to more than 1,000,000 square feet (Jones et al. 1988). However, the above discussion suggests that vitrinite rich coals are supposed to contain more gas content implying significance of petrographic composition of coal. The adsorption capacity of coal also increases with increase in depth of occurrence, i.e., burial pressure implying enhancement of its rank. Therefore higher rank coals are supposed to have more gas content than lower rank ones and it is well established by Kim (1987). With the fundamentals of coal bed methane as described so far, control of seam thickness and its geometry for CBM potentiality may easily be visualized. When there are many coal seams having similar rank, compositional makeup, and depth of occurrence, the thickest one with maximum volume of coal would obviously show more gas content than others. Similarly a seam with regular geometric shape is supposed to contain more gas than an irregular shaped coal body. Depth of occurrence, seam thickness, subsurface behavior pattern, and geometry of a coal seam are determined through exploration techniques which is a must for assessment of CBM potentiality of an area. In spite of having sufficient gas content, a coal seam will not be viable for commercial production until and unless it possesses an optimum permeability (capacity to transmit gas and fluid through coal bed). Permeability of the coal bed is a prerequisite to allow transmission of gas and liquid through coal bed for successful production of CBM. Macroporosity (mainly cleat, fractures, and interconnected macropores) plays a significant role in regulating permeability of a coal bed forming drainage path for the gas and fluid to flow through the coal bed.

References Ayers WB, Kelso BS (1989) Knowledge of methane potential for coal bed methane resources grown but needs more study. OGU 87:67–76 Chandra K (1997) Nonconventional hydrocarbon resources like coal bed methane and and gas hydrates: exploration imperatives to India. Int J Geol 69(4):261–281

Coal Macerals Cooper JL, Scidile J (1995) Controls on exploration: proceedings of Petrotech., B.R.Pub.Corp., New Delhi Gray I (1987) Reservoir Engineering in Coal Seams: Part I - The Physical Process of Gas Storage and Movement in Coal Seams. SPERE. pp. 28–34 Jones AH, Bell GJ, Schraufnagel RA (1988) A review of the physical and mechanical properties of coal with implications for coal bed methane well completion and production. In: Fassett JE (ed) Geology and coal bed methane resources of the northern San Juan Basin, Colorado and New Mexico. Rocky Mountain Association of Geologists Guidebook, Colorado, pp 169–181 Kim AG (1987) Estimating methane content of bituminous coalfields from adsorption data. U.S. Bureau of Mines, Report of Investigations, 82455 Laubach SE, Marrett RA, Olson JE, Scott AR (1998) Characteristics and origins of cleat: a review. Int J Coal Geol 35:175–207 Spears DA, Caswell SA (1986) Mineral matter in coals: cleat mineral and their origin in some coals from the English Midlands. Int J Coal Geol 6:107–125 Tremain CM, Laubach SE, Whitehead HH (1991) Coal fracture (cleat) patterns in Upper cretaceous Fruitland Formation, San Juan Basin. Colorado and New Mexico: implications for exploration and development. In: Schwochow S, Murray DK, Fahy MF (eds) Coal bed methane of Western North America. Rocky Mountain Association of Geologists Guidebook, Colorado pp 49–59

Coal Macerals Shankar Nath Chaudhuri Geological Survey of India (GSI), Kolkata, India

Coal is a heterogeneous natural substance consisting of a number of constituents. Microscopically basic coal constituent is maceral which is synonymous to minerals in inorganic rocks. However, there is a difference between mineral and maceral. Minerals are generally inorganic crystalline in nature and has got a definite chemical composition, whereas a maceral is a noncrystalline organic substance and its composition may vary widely. Inorganic substances like mineral matter, shale, clay, and silt are also inherent constituents of coal. These constituents are recognized by the morphology, texture, and gray level or reflectance of macerals. Macerals are classified into three major organic groups, viz., vitrinite/huminite, liptinite/

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exinite, and inertinite, and one inorganic group, i.e., shale + mineral matter. Association of macerals constitutes microlithotype. These constituents are classified based on mono-, bi-, or tri-assemblage of the constituents.

LIPTINITE MACERALS PRIMARY LIPTINITE SPORINITE SPORANGIA CUTINITE RESINITE ALGINITE SUBERINITE FLUORINITE

SECONDARY LIPTINITE EXSUDATINITE BITUMINITE

Further subdivision of individual maceral groups is done based on physical and optical characters which include structure and texture, morphology, mode of occurrence, gray value/ reflectance, etc. Definition of macerals for bituminous coals was first brought out in the International Handbook of Coal Petrology in 1963. Since then it was felt necessary to update the definitions by ICCP. As a result, a new nomenclature of the vitrinite group of macerals was evolved (ICCP System 1994a, b). Maceral group – defined by level of reflectance Maceral subgroup – defined by degree of destruction Maceral – defined by morphology and degree of gelification

Vitrinite Group Vitrinite is a coalification product of humic substances which essentially originates from the tissues of roots, stems, barks, and leaves composed of lignin and cellulose. Depending on the process of decomposition, degree of gelification, and rank, cell structures are preserved in vitrinite. Color and reflectance of vitrinite change progressively with rank. Transformation of vegetable tissues is set in successive stages, namely, humification, gelification, and vitrinization

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(Stach et al. 1982). The most significant processes of vitrinite formation from precursors are humification and gelification. Humification involves slow progressive oxidation, which may be accelerated by addition of oxygen. In the presence of oxygen, the lignin is first attacked by wooddestroying fungi and then aerobic bacteria and is converted into humic substance (Sengupta 2013). Vitrinite group includes a group of macerals whose color is gray and whose reflectance is generally between that of the associated darker liptinites and brighter inertinites over the rank range in which three respective maceral groups can be readily recognized. The term huminite in low-rank coal, i.e., lignite or brown coal, is synonymous to vitrinite in medium- to highrank coal. Vitrinite group embraces three subgroups and six macerals which are based on structure, texture, morphology, and mode of occurrence. Telovitrinite: It is a subgroup of vitrinite, comprising vitrinites with preserved botanical cell structures which may or may not be visible. The maceral of this subgroup is derived from the parenchymatous and woody tissues of roots, stems, barks, and leaves composed of cellulose and lignin and originating from herbaceous and arborescent plants. Large amount of telovitrinite indicates a high degree of cell-tissue preservation under wet, possibly low-pH conditions within forested peatlands or forested wet raised bogs (Diessel 1992). Two macerals are under this subgroup:

Coal Macerals

and arborescent plants composed of cellulose and lignin. By chemical decay and mechanical attrition, the former structures have been broken down. Large amounts of detrovitrinite indicate a high degree of cell-tissue destruction, especially of cellulose-rich herbaceous plant material. Two macerals are under this subgroup: (i) Vitrodetrinite: It occurs as discrete small vitrinitic fragments of varying shape that become discernible when surrounded by non-vitrinitic material. (ii) Collodetrinite: It occurs as a mottled vitrinitic groundmass binding other coal components. It also occurs as impersistent band with 50 m thickness. (ii) Collotelinite: It is homogeneous, with a more or less structureless appearance. It also occurs as persistent band with >50 m thickness. Detrovitrinite: It is a subgroup of vitrinite consisting of finely fragmented vitrinitized plant remains occurring either isolated or cemented by amorphous vitrinitic matter. The maceral of this subgroup is derived through the strong decay of parenchymatous and woody tissues of stems, roots, and leaves originating from herbaceous

Inertinite is a maceral group that comprises macerals whose reflectance in low- and mediumrank coals and in sedimentary rocks of corresponding rank is higher in comparison to the macerals of the vitrinite and liptinite groups. The inertinite group of macerals originates from the same plant constituents as of vitrinite that are altered and degraded under oxidizing condition before deposition or by biochemical processes at the peat stage. They exhibit higher degree of aromatization and condensation. Chemical composition of inertinite suggests higher carbon and lower oxygen and hydrogen content compared to vitrinite (Van Krevelen, 1993).

Coal Macerals

On the basis of plant cell structure and morphology, seven macerals are classified under inertinite group. Contrary to vitrinite, the inertinite classification can be applied to the organic matter of all coalification stages from peat to high-rank coal, and the subdivision of the maceral group is simpler since there are no subgroups. Fusinite: It is a maceral of the inertinite maceral group, showing highly reflecting, wellpreserved cellular structure of at least one complete cell of parenchyma, collenchyma, or sclerenchyma. Only the cell walls of high-reflecting tissues are called and counted as fusinites. These cell walls are often thinner than the cell walls of the corresponding humotelinite/telovitrinite and semifusinites. Fusinite occurs either as regular and well-preserved tissues (sieve plates and bordered pits can sometimes be recognized) or as arc-shaped fragments of former cell tissues (bogen structure). Depending on the plant source, the degree of microbial destruction, and the orientation of the section, the cell cavities display varying sizes and shapes. The cell lumens may occasionally be filled with mineral matter, gelinite, or liptinite macerals (ICCP 1994). Fusinite originates from lingo-cellulosic cell walls. The botanical affinities of fusinites can be established in cases where the cell structure is well preserved. Semifusinite: It is a maceral of the inertinite maceral group that shows intermediate reflectance and structure between humotelinite/vitrinite and fusinites in the same coal or sedimentary rock. Cell lumens are only vague or partially visible. The cell lumens vary in size and shape even in the same particle, but they are generally smaller than those of the corresponding tissues in fusinites. Wood-derived semifusinites display better preserved plant cells or cell walls than leaf-derived semifusinites. Semifusinite originates from the parenchymatous and xylem tissues of stems, herbaceous plants, and leaves, which are composed of cellulose and lignin. It is formed in the peat stage by weak humification, dehydration, and redox processes. Funginite: High-reflecting single- or multicelled fungal spores, sclerotia, hyphae, and

169

mycelia (stomata, mycorrhiza) and other fungal remains are included in this class. It occurs as round or oval bodies of varying size having light gray to white color. It may occur as an irregular cellular structure which is referred to as the plectenchyme type of sclerotinite (Tayler and Cook 1962). It has strong relief and hardness with smooth or crenulated border. In tertiary and younger deposits, funginite consists mainly of roundish unicellular to multicellular oval forms. Funginite is derived from fungal spores, sclerotia, mycelia, and other fungal tissue. Secretinite: It is composed of commonly round, vesicled to non-vesicled, and equant to elongate bodies without obvious plant structure with high reflectance. It has higher relief than macrinite. It is pale gray to yellowish white and non-fluorescing. It does not fuse during coking but may contribute to coke strength when dispersed in fused matrix. Macrinite: It occurs either as an amorphous matrix or as discrete, structureless bodies of variable shapes, which are commonly elongated when viewed perpendicular to bedding. Macrinite may appear as a groundmass or in the form of bands or lenses when viewed in sections cut perpendicular to bedding. It does not possess a characteristic shape. The reflectance may vary in broad range within the same coal but is always higher than that of accompanying vitrinite. Micrinite: Very small rounded grains separated from other small inertinitic fragments, viz., inertodetrinite, by an upper size limit of 2 mm. Aggregates of micrinite differ from macrinite by their granularity. Because of the small size of individual grains, it is not possible to quantify the amount of micrinite exactly by maceral analysis. Only aggregates of micrinite can be properly accounted for. Micrinite appears to be relatively reactive in most coal-reforming processes. However, on accounts of its small size and low proportion in most coals, little is known about its practical importance. Inertodetrinite: It occurs as discrete small inertinite fragments of varying shape and size (>2mm < 10 mm). Inertodetrinite has a variety of phytogenic precursors all of which have been

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subjected to some degree of fusinitization. Depending on the different inertinite precursors, gray level and reflectance vary significantly within the same coal. It increases the mechanical strength of the coke. In general, its technical properties depend on the kind of inertinite macerals from which it derived.

Liptinite Group It originates from relatively hydrogen-rich plant material, viz., spore, pollen, resin, cutin, suberin, wax, balsam, latex, fat, and oil, as well as from bacterial degradation products of protein, cellulose, and other carbohydrates. It has got strong fluorescence property. Some of its members like alginate, cutinite, sporinite, and suberinite have considerable paleoenvironmental significance. Moreover, liptinite group contributes in coke formation. Generally liptinite contents are small in Gondwana coal, but high hydrogen content within it influences the technological properties of coal. In coal to oil process (CTL), liptinite-rich coals are essentially suitable. Primary liptinites: Macerals of liptinite group consist of coalified plants or parts of plants. Sporinite: The skin of spores and pollen are preserved as sporinite in the process of coalification. Due to its abundance in coal, it is the most important maceral among the liptinite group. Most of the spores are flattened and compressed in morphology. Thin-walled as well as thickwalled spores are common in Gondwana coals. Spore walls can be differentiated as outer wall or exine and inner wall or intine. The exine is composed of sporine, while the intine is composed of cellulose. The exine may or may not be sculptured. The exine can be layered with an outer and inner skin called exoexine and intexine respectively. The exoexine displays normal fluorescence in contrast to the much stronger fluorescence color of intexine. Spores can be subdivided into mico- (200 m). Sporangia: It is an association of spores, also known as spore capsules. A sporangium is filled with thin-walled spores of different shapes and

Coal Macerals

sizes. On polished surface, they are brownish gray. However, gray level varies with increase in rank. The outer wall of a sporangium may exhibit dentate pattern. Cutinite: It originates from cuticular layers and cuticles, which are formed from the protoplasts within the outer walls of the epidermal layer of leaves, stems, and other aerial plants (Sengupta 2013). It occurs as thin gray lenticular bands under normal reflected light and exhibits yellowish color with lower intensity under fluorescence mode. Resinite: Generally it occurs as infilling within the cell cavities of textinite/telinite/fusinite as well as isolated mass and thick bands within different macerals of Gondwana and tertiary coals and lignites. It can be of different shapes and sizes within vitrinite or inertinite bands. Under fluorescence mode, resinous bodies display pale to bright yellow and orange red color. Alginite: These are remains of algal bodies. This maceral has a characteristic shape of round and oval bodies and occur as inclusion in collinite or as infilling within cell lumens of telinite. It is dark gray under normal reflected light and shows greenish yellow color under fluorescence mode. Suberinite: Suberin, a layer of cell walls in the cork tissues, is usually preserved and recognized as suberinite. Depending on the content of fatty acid, suberinite shows a weak reddish fluorescence color. Fluorinite: It displays unusually strong fluorescence and radiation of short wavelength, but because of its appearance as black color in normal reflected light, it was earlier mistaken for lenses of clay. Besides its lensoidal appearance, it also occurs as small circular, elliptical, or oval-shaped bodies which are very commonly associated with cutinite macerals. Its striking optical properties justify its separation from resinite maceral. Secondary liptinites: Macerals of liptinite group derived from thermal condensation and dissociation reaction. Exsudatinite: It is generated by migration or expulsion of bitumen in coal as filling in cleats, small fractures, or pores. The expulsion of bitumen is related to catagenesis wherein droplets/ oozing from cleats and fractures is observed.

Coal Rank Classification Coal Macerals, Fig. 1 Photomicrograph of different maceral groups

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THREE MACERAL GROUPS

LIPTINITE

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VITRINITE

Bituminite: Bituminization takes place with rising rank in the brown coal to subbituminous coal range. These liptinite macerals form from plant oils. It does not possess any morphological identity. It occupies whatever empty space available at the time of its formation. This is essentially required for coal to oil technology (Fig. 1).

References Diessel CFK (1992) The problem of syn-versus post depositional marine influence on coal composition. In: Proceedings of the advances in the study of the Sydney Basin, 26th Newcastle Symposium, pp 154–163 ICCP (1994) The new inertinite classification. Fuel 80(2001):459–471 ICCP System (1994a) Methods for the petrographic analysis of bituminous coal and anthracite- part 3: method of determining maceral group composition-ISO 740433:1994. ISO, Geneva ICCP System (1994b) Methods for the petrographic analysis of bituminous coal and anthracite- part 5: method of determining Microscopically the reflectance of vitrinite-ISO 7404-53: 1994. ISO, Geneva Sengupta S (2013) Coal geology and its application in industrial use, 1st edn. Srinivas Press, India Stach E et al (1982) Stach’s text book of coal petrology, 3rd edn. Gebr.Borntrager, Berlin/Stuttgart, 535pp Tayler GH, Cook AC (1962) Sclerotinite in coal-its petrology and classification. Geol Mag 99:41–52 Van Krevelen DW (1993) Coal. Elsevier, Amsterdam

INERTINITE

Coal Rank Classification Shankar Nath Chaudhuri Geological Survey of India (GSI), Kolkata, India

The rank of a coal is characteristic of the stage reached by it in course of coalification. The development from peat through the stages of lignite, subbituminous, and bituminous coals to anthracite and meta-anthracite is termed coalification. Coalification or coal metamorphism is a function of heat and pressure acting over a period of time. Among the three primary factors, heat is generally considered to be the most important. Increased heat at greater depths of burial has been considered the primary factor (Hilt’s Law, after Hilt 1873). Rank or maturity of coal indicates its coalification stage which can be determined by reflectance measurement studies of vitrinite (Ro%), estimation of moisture, volatile matter, and carbon hydrogen content. Fundamental and technological properties of coal depend primarily on the rank of coal. Exact determination of rank always has been one of the most important subjects of coal science and research. It is universally accepted that rank

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Coal Rank Classification

determination by measurement of reflectance on vitrinite is the best method so far developed.

Vitrinite is the best reference maceral for determining rank of a coal due to the following reasons:

Reflectance Measurement (Ro%)

1. It is the most abundant and, therefore, the most representative maceral. 2. Its characteristic change is fairly continuous and commensurate (proportionately) with the course of coalification. 3. It is relatively easy to isolate visually under microscope.

It is an optical property of coal determined under a polarized microscope. A monochromatic light with a wavelength of 546 nm reflected from a specified area of well-polished vitrinite, measured under oil immersion using a photo multiplier, is compared with light reflected under identical condition from a number of standards of known reflectance. Enough readings on different vitrinite surfaces are taken and mean value is determined. It is the most important parameter for rank determination of coal. If the measurement is taken under plane polarized light, it is considered as “random” values. If the measurement is done under cross nicols, two readings may be available on rotation of the microscope stage. The maximum and minimum readings are recorded for synthesis of such anisotropic grain. This bireflectance character is important for coal where the difference of reflectance is more than 0.02% between maximum and minimum readings.

However, even vitrinite is not a completely homogeneous substance. In consequence, it is desirable to consider telocollinite/collotelinite for determining rank in coal. Calibration of a reflectivity measuring apparatus follows Fresnel’s equation (1998): R ¼ ðn  1Þ2 =ðn þ 1Þ2 x 100 where R ¼ reflectivity n ¼ refractive index

Coal Rank Classification, Table 1 Rank classification of coal (Taylor et al. 1998; Diessel 1992)

% Carbon (daf) 60 71 80

% Volatile matter (daf) >60 52 40

Gross specific energy (MJ/kg) 14.7 23 33.5

High volatile bituminous

86

31

35.6

Medium volatile bituminous Low volatile bituminous Semianthracite Anthracite

90

22

36

Vitrinite reflectance (%) Random Diessel Teichmuller (1992) (1982) 0.2 0.26 0.4 0.38 0.6 0.42 C 0.49 B 0.65 A 0.97 0.65 C 0.79 B 1.11 A 1.47 1.5

91

14

36.4

1.85

1.92

92 95

8 2

36 35.2

2.65 6.55

2.58 5

Rank stage Peat Lignite Subbituminous

Coal, Adsorption

If θs and θu are the angular reading for the standard substance and unknown substance, respectively, and Rs and Ru represent the reflectance coefficient (expressed as percentage),

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Coal, Adsorption Dipak Ranjan Datta Geological Survey of India (GSI), Kolkata, India

Ru ¼ Rs x Sinyu 2 =Sinys 2 where Ru ¼ reflectivity U ¼ unknown sample S ¼ standard θ ¼ Angular reading Bireflectance or anisotropy character of a coal sample is studied under microscope with 90
rotation of stage. It is an optical behavior of coal. In some special cases, it shows anisotropy if the measurement is taken under cross polarized light. Generally, high-rank coals (with some conditions) display a clear anisotropy. Like reflectance measurement estimation, moisture, volatile matter and carbon, hydrogen, oxygen content with gross calorific value, and swelling number are also significant for rank parameter as indicated in Seyler’s coal classification (Table 1).

References Diessel CFK (1992) Coal bearing depositional systems. Springer, Berlin, 721pp Fresnel’s equation (1998) In: Taylor GH, Teichmuller M, Davis A, Diessel CFK, Littke R, Robert P (eds) Organic petrology. Gebruder/Borntraeger, Berlin/Stuttgart, 371–373pp Hilt C (1873) Sitzungsber. Aach. Bez. V.D.I, 4 Taylor, G.H, Teichmuller, M, Davis, A, Diessel, C.F.K., Littke, R and Robert P (1998) Organic Petrology, Gebruder Borntraeger, Berlin,704p Teichmuller, M (1982) Fluoreszenzmikroskopische Anderungen von Liptiniten und Vitriniten mit zunehmendem Inkohlengsgrad und ihre Beziehungen zu Bitumenbildung und Vorkokungsver halten.In English SOC.Org.Petrol.Spec.Pub.1(1984):pp74.

C Adsorption refers to the phenomenon by which gas molecules are aligned and arranged in layered form along the internal surface of the micropores under the influence of pressure. After methane gas is generated at the time of coalification, it reaches to the coal matrix full of micropores following the drainage path formed by macropore system and migrates into it through diffusion passing from one pore to the other where adsorption takes place in the micropores. In context to coal bed methane (CBM), adsorption refers to the mechanism of gas storage within coal bed. The methane gas generated during coalification is stored in the coal bed mainly in three different ways – (a) as adsorbed molecules in the micropores, (b) as free gas in the meso- to macropores (cleat, fracture, cell lumens, etc.), and (c) as gas dissolved in groundwater. Out of these three, the first category is the most significant one as it is mainly responsible for storage of huge quantity of thermogenic methane gas in coal bed and makes it a unique reservoir (Crosdale et al. 1998). The remaining two categories have negligible contribution (about 5% only) for methane storage. More than 95% of methane gas particularly the thermogenic category occurs within coal matrix in adsorbed state within the micropores, and as a result coal bed acts as a special reservoir having much higher gas storing capacity than any other conventional reservoir Chandra (1997). This special reservoir property is attained by coal by virtue of having abundant micropores whose internal surfaces play a major role for adsorption. Quantity of methane adsorbed in a coal is a function of pressure at a fixed temperature (isotherm). With increasing pressure, more and more methane molecules are accommodated forming one layer after another along the internal

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surface of the micropore. This process continues till the space within micropore is fully occupied by methane molecules arranged in layered fashion. At this stage no more gas can be accommodated in the pore indicating that it has attained the saturation level (Kim 1987; Chandra 1997) or it is saturated with methane gas. Experimentally adsorption test is carried out in a well equipped and sophisticated laboratory. So far as the principle of the experiment is concerned, a coal sample is placed within a closed chamber/ container having attachments for injecting gas with pressure regulator in order to increase pressure within the chamber. At the same time, a temperature controlling device is also attached in order to maintain a fixed temperature throughout the duration of experimentation. A certain quantity of gas is injected into the chamber and allowed to be adsorbed at some pressure. This way more and more gas with increasing pressure is subjected to adsorption at the same temperature. A situation arrives when no more gas is absorbed instead of increasing pressure. This stage suggests that the sample is saturated with gas indicating the highest gas storing capacity of the sample. It brings out a curve called adsorption isotherm when quantity of adsorbed gas is plotted against pressure. The above experiment and the resultant adsorption isotherm curve of a coal are very much useful in deciphering maximum methane gas content (cc per g/m3 per kg/standard cubic feet (scf) per ton) at infinite pressure. It also helps to understand gas content of a coal bed at varying pressure. As adsorption predominantly or solely controls thermogenic gas storage in a coal bed, availability as well as abundance of micropores, magnitude of their internal surface area, and overburden pressure are the prime factors for CBM content of a coal bed. As vitrinite, one of the three organic microconstituents of coal, is reported to have abundant micropores than others (Chandra 1997), vitriniterich coal is indicative of higher gas content in comparison to inertinite-rich coals having more or less the same rank and depth of occurrence. It is stated (see ▶ “Coal, Porosity”) that highrank coals are abundant in micropores than low-rank ones. Hence high-rank coals are also suggestive of more gas content than low-rank

Coal, Cleat System

coals with similar compositional makeup and depth of occurrence. Similarly coal occurring at greater depth, i.e., under higher load pressure, should also contain higher-order methane gas. The role of rank and pressure with the gas content – both having direct relation with gas content – is well established by Kim (1987). Thus it is interesting to note that the adsorption is intimately associated with many geological parameters like petrographic composition, rank or thermal maturation, depth of coal seam (lithostatic pressure), etc. So proper and systematic evaluation of the abovementioned parameters needs to be carefully done in order to decipher methane gas content and CBM potentiality of an area.

References Chandra K (1997) Nonconventional hydrocarbon resources like coal bed methane and gas hydrates: exploration imperatives to India. Int J Geol 69(4):261–281 Crosdale PJ, Beamish BB, Valix M (1998) Coalbed methane sorption related to coal composition. Int J Coal Geol 35:147–158 Kim AG (1987) Estimating methane content of bituminous coalfields from adsorption data. U.S. Bureau of Mines, Report of Investigations, 82455

Coal, Cleat System Dipak Ranjan Datta Geological Survey of India (GSI), Kolkata, India

Cleats are natural opening mode fractures (belonging to meso- to macroporosity) systematically developed in coal bed and occur as two different sets which are at right angle to each other. Characteristically both are subvertical in

Dipak Ranjan Datta has retired.

Coal, Cleat System

orientation and perpendicular to the coal bed (Laubach et al. 1998; Clarkson and Bustin 1997). Bunch of subparallel aligned fractures form a set. The subparallel cleats as a set exhibit uniformity in strike within an outcrop or borehole core as well as in regional scale. Within a set, individual cleats behave separately each of which is characteristically three dimensional entity having limited length, depth extension, and width. The importance of coal beds, being a good gas reservoir, has attracted the attention of geoscientists all over the world to deal with the characteristics and origin of cleat. Knowledge of the properties of cleats is essential, because of their great influence on recovery of methane and the local and regional flow of hydrocarbons and water (Smyth and Buckley 1993; Clarkson and Bustin 1997; Pashin et al. 1999; Scott 2002; Pitman et al. 2003). The formation and orientation of cleat developed in a coal bed are closely related to the coalification process and begins in its early stage. These are controlled by at least two diagenetic factors, viz., (a) the progressive compaction of humic matter, when it is deeply buried and (b) tensional forces within the coal resulting from decreasing volume or shrinkage of the coal as coalification progresses (McCulloch et al. 1974). The cleat network within a coal bed acts for the passage of methane gas and liquid and accounts for most of the permeability and much of the porosity (macro) of coal bed gas reservoirs.

Classification When viewed on plan, coal bed shows two distinct sets of cleat which are oriented perpendicular to each other. Out of the two sets, the set consisting of cleats which are throughgoing and have the most prominent form is known as face cleat. Cleats of the other set, which form later and abut against face cleat, are termed as butt cleat. When viewed across the bed along a section oblique to two sets of cleat, the traces of these two types become parallel to one another making it impossible to differentiate these two types. So

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Coal, Cleat System, Plate 1 Photograph of coal sample showing two sets of cleat

these two sets can only be differentiated on plan view of coal bed (Plate 1). In sectional view, i.e., across coal bed, classification of cleat is based on the nature of its extension across different layers of coal. These are – (1) Master Cleat when it extends across different lithobands, (2) Primary cleat when develops/extends from top to bottom of a particular litho-band (mainly vitrinite), and (3) Tertiary/ Secondary cleat when developed partially within a litho-band (Clarkson and Bustin 1997; Laubach et al. 1998).

Cleat Properties/Parameters The overall picture of a cleat system developed in a coal bed may be assessed by detailed study on different properties of cleats in considerable population. Individual cleat of both the sets is characterized by the following attributes – (1) Length, (2) Aperture width, (3) Height, (4) Spacing/Frequency, (5) Mineralization along cleat opening, and (6) Cleat trend. Length is the dimension parallel to the cleat surface and bedding. It is measured on the bedding plane along the intersection of the cleat surface and bedding and varies widely up to several tens of centimeters. Aperture width of the cleat opening is measured perpendicular to the cleat surface. Estimates of cleat width range from

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Coal, Cleat System

Coal, Cleat System, Plate 2 Photomicrograph of coal polish section showing cleats and their different properties

0.001 to 20 mm (Gamson et al. 1993). Cleats mostly having aperture less than 0.1 mm are scarcely visible in naked eye and need microscopic study. It is generally observed that cleats with large apertures tend to have large heights (Close and Mavor 1991). Height is the vertical extension of cleat opening and its dimension is measured along a direction perpendicular to bedding. It varies widely depending upon the cleat types. Spacing between two cleats (of same set) is a distance between them at right angle to the cleat surface and has inverse relation with cleat frequency (Plate 2). Frequency is the number of cleats developed in unit length measured perpendicular to cleat surface. Mineralization along cleat opening by secondary minerals during geological processes plays a very significant role in Coal Bed Methane (CBM) production as it creates blockage in the gas flow through the cleat system. Mineralization, i.e., precipitation of authigenic mineral, commonly clays, quartz, and calcite, (Spears and Caswell 1986; Daniels and Altaner 1990) in the cleat opening or its infilling by organic material or resin may block fracture porosity. Thus it reduces the ability of the cleats to conduct fluid and gas causing reduction in permeability of the coal bed. In case of coal mining such minerals affect coal quality, but for coal bed methane sealing of the cleat opening by mineralization seriously hampers the production rate of methane gas (Plate 3).

Micro-Cleat Study of cleat under microscope (micro-cleat) differs at many points from that in outcrop scale. In polished section (perpendicular to bedding), both the face and butt cleats are subparallel to one another. These subparallel cleats are aligned perpendicular to bedding traces and thus both the cleats appear as transverse to bedding. Apparent length of a cleat is seen in polish section but cleat height in 3D perspective (Datta 2005). The master cleats cutting across all the layers as seen microscopically appear to be mega-cleats when observed in outcrop. Cleat height of primary cleat indirectly represents the thickness of vitrite layers present within a coal (Paterson et al. 1992; Clarkson and Bustin 1997). Thus the study of cleat properties, i.e., height, aperture, spacing, cleat frequency (nos./ cm), nature of cleat filling, etc., under microscope gives much more detail information.

Control of Cleat Development Cleat development generally indicates how intensely it is formed within a coal bed and is defined by its frequency/spacing. A number of factors have been cited which affect cleat development. These factors include coal composition, rank, depth of occurrence and layer, thickness. Based on outcrop and drill core data from North

Coal, Cleat System

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Coal, Cleat System, Plate 3 Photomicrograph of coal polish section showing cleat net work completely filled up with a mineral - pyrite

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American coal, it is found that face cleat spacing ranges from approximately 22 cm in lignite (Ro – 0.25–0.38%) to 0.2 cm in anthracite (Ro > 2.6%) (clearly indicates a direct relationship between cleat development and rank (Law 1993). However, this is valid up to a rank (Ro – 1.35%) as evidenced by detailed study which shows cleat frequency decreases with further increase of rank (Su et al. 2001). Cleat development defined by cleat spacing also varies with coal type and ash content (Spears and Caswell 1986; Tremain et al. 1991; Law 1993). Bright coal lithotypes (vitrain) generally have smaller cleat spacing/ higher frequency in comparison to dull coal lithotypes (durain) (Kendall and Briggs 1993; Stach et al. 1982). Coals with low ash content tend to have smaller cleat spacing/higher frequency than coals with high ash content indicating ash content inversely varies with cleat development.

Significance of Cleat Cleat system plays a vital role as it forms the principal permeability pathway for water and gas. The permeability of a coal bed is dependent upon the megascopic and macroscopic fractures, cleat, pore system, degree of connectivity of fractures/cleats, and mineralization in the openings. The success of a commercial production of a Coal Bed Methane (CBM) project depends upon an

optimum permeability of a coal bed which is solely controlled by cleat and fracture system.

References Clarkson CR, Bustin RM (1997) Variation in permeability with lithotype and maceral composition of Cretaceous coals of the Canadian Cordillera. Int J Coal Geol 33:135–151 Close J, Mavor M (1991) Influence of coal composition and rank on fracture development in Fruitland coal gas reservoirs of the San Juan Basin. In: Schwochow SD (ed) Coal bed methane of Western North America. Rocky Mountain Association of Geologists Field Conference Guidebook, Colorado, pp 109–121 Daniels EJ, Altaner SP (1990) Clay mineral authigenesis in coal and shale from the anthracite region, Pennsylvenia. Am Mineral 75:825–839 Datta DR (2005) Cleat system and its significance in the light of coal bed methane. Scientific Communication. News Coal Wing Geol Surv Ind 25(1):28–31 Gamson PD, Beamish BB, Johnson DP (1993) Coal microstructure and micro permeability and their effects on natural gas recovery. Fuel 72:87–99 Kendall PF, Briggs H (1993) The formation of rock joints and the cleat of coal. Proc R Soc Edinburgh 53:164–187 Law BE (1993) The relation between coal rank and cleat spacing: implications for the prediction of permeability in coal. In: Proceedings of international coal bed methane symposium II, Alabama, pp 435–442 Laubach SE, Marrett RA, Olson JE, Scott AR (1998) Characteristics and origins of cleat: a review. Int J Coal Geol 35:175–207 McCulloch CM, Deuj M, Jerran PW (1974) Cleat in bituminous coalbeds. U. S. Bureau of Mines Report of Investigations 7910. 25p

178 Pashin JC, Carroll RE, Hatch JR, Goldhaber MB (1999) Mechanical and thermal control of cleating and shearing in coal examples from the Alabama coalbed methane fields, USA. In: Mastalerz M, Glikson M, Golding SD (eds) Coalbed methane scientific, environmental and economic evaluation. Kluwer, Dordrecht, pp 305–327 Paterson L, Meaney K, Smyth M (1992) Measurements of relative permeability, absolute permeability and fracture geometry in coal. In: Beamish BB, Gamson PD (eds) Symposium on coal bed methane research and development in Australia (Townsville), vol 4, James Cook University of North Queensland, pp 79–86 Pitman JK, Pashin JC, Hatch JR, Goldhaber MB (2003) Origin of minerals in joint and cleat systems of the Spottsville Formation, Black Warror, Alabama implications for coal bed methane generation and production. AAPG Bull 87:713–731 Scott AR (2002) Hydrogeological factors affecting gas content distribution in coal beds. Int J Coal Geol 50:363–387 Spears DA, Caswell SA (1986) Mineral matter in coals: cleat mineral and their origin in some coals from the English Midlands. Int J Coal Geol 6:107–125 Smyth M, Buckley MJ (1993) Statistical analysis of the microlithotype sequences in the Bulli Seam, Australia and revelance to permeability for coal gas. Int J Coal Geol 22:167–187 Stach E, Mokowsky MT, Teichmuller M, Taylor GN, Chandra D, Teichmuller R (1982) Stach’s text book of coal petrology. Gebruder Borntraeger, Berlin/Stutgart, pp 140–150 Su X, Feng Y, Chen J, Pan J (2001) The characteristics and origins of cleat in coal from Western North China. Int J Coal Geol 47:51–62 Tremain CM, Laubach SE, Whitehead HH (1991) Coal fracture (cleat) patterns in Upper Cretaceous Fruitland Formation, San Juan Basin. Colorado and New Mexico: implications for exploration and development. In: Schwochow S, Murray DK, Fahy MF (eds) Coal bed methane of Western North America. Rocky Mountain Association of Geologists, Colorado, pp 49–59

Coal, Desorption Dipak Ranjan Datta Geological Survey of India (GSI), Kolkata, India

Desorption is a process opposite to adsorption. Methane is stored through adsorption within micropores in coal matrix with increasing

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Coal, Desorption

pressure in a coal bed. In the reverse way, with reduction in reservoir pressure, the adsorbed gas is released from the micropores and it migrates through coal matrix – a process called diffusion – to reach to drainage path defined by coal macropore system. This phenomenon is known as desorption (Harpalani and Schraufnagel 1990a, b; Crosdale et al. 1998). During CBM exploration, various investigations and tests are generally carried out in order to evaluate potentiality of an area before implementation of commercial production of methane gas. Of these very significant one is desorption test which is carried out during test drilling. Desorption test is a device of measuring gas content of a coal based on the principle of desorption phenomenon and is a direct method of gas measurement. There are many indirect methods to estimate gas content of a coal using empirical formula (Kim 1987; Chandra 1997; Chandra et al. 2007). While drilling a coal bed occurring at depth, coal core of certain length is taken out to the surface with due care consuming minimum time. Desorption of methane from the core will start as soon as it starts coming up from the coal bed through the hole. The amount of desorbed gas released during the time span of lifting the core from the drill hole is not possible to store and measure as it is lost in the way of coming out to the surface. This is known as lost gas. The time span for lifting the core sample from the coal bed to the surface is recorded for indirect calculation of lost gas which is carried out after completion of desorption test. As soon as the core reaches to the surface, instantly it is put within a closed container (canister) so that desorbed gas released from the coal core is stored within the canister. Desorption within the canister continues for several days – span of which varies depending upon gas content of the core sample. The volume of desorbed gas stored in the canister is measured at regular time intervals over these days of desorption test with recording of both the time and volume of desorbed gas. The process continues till desorption is complete, i.e., when no more gas is released from the sample and stored within the canister. Total volume of the gas thus measured during the entire period of desorption test is called desorbed

Coal, Desorption

gas. Then the core sample is taken to laboratory in order to carry out another test where the sample is crushed within a closed cylinder. It results in release of some quantity of gas trapped within the core sample which could not come out through desorption. This released gas obtained after crushing is stored in the closed cylinder and its volume is measured. It is known as residual gas. The above test results in a set of data (time vs. desorbed gas content). When desorbed gas content is plotted against square root of desorption time, it gives rise to a typical curve very much similar to adsorption isotherm. In this case it is called desorption isotherm. The gas which was lost during lifting the core, i.e., lost gas can easily be estimated through extrapolation of the curve using the lost time recorded during lifting the core sample. Now the sum of these three components, i.e., lost gas (Q1), desorbed gas (Q2), and residual gas (Q3) is the total volume of methane gas contained in the coal core sample. Mass of the core sample is determined before crushing it for determination of residual gas. The total volume of gas (Q1 + Q2 + Q3) thus obtained is divided by mass of the coal core sample and it gives gas content of the coal sample which may be expressed differently using different units, e.g., cc/g or m3/t in C.G.S system or scf/t (standard cubic feet per ton of coal) in F.P.S system. Desorption isotherm gives actual gas content of a coal bed, whereas adsorption isotherm (see ▶ Coal, Adsorption) indicates gas storing capacity or saturation level. Comparison of these two parameters of a sample is very much significant and indicates whether a coal is saturated or under saturated which are essential in course of CBM exploration. Principle of CBM exploitation/extraction is mainly based on desorption phenomenon along with movement of fluid and gas through the coal bed. Reduction in seam gas pressure to below saturation when punctured by drill hole causes desorption (release of gas due to withdrawal of confining pressure) of methane from micropores of coal matrix. The released methane initially diffuses

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through apparently impervious coal matrix and migrates towards the open space of cleat and fracture system. The release of methane molecules from the micropores and its movement through coal matrix takes place following a phenomenon known as diffusion. It is guided by Fick’s law, which governs the transport of mass through diffusive means. In this case it is concerned with diffusion in solid coal, where the diffused gas gets accumulated in the cleat opening of the coal bed. With time accumulation of gas and fluid gradually develops pressure and it starts flowing through the coal bed following the available drainage path formed by the cleat system present in it (Mavor et al. 1992; Smyth and Buckley 1993). This flow of fluid along the drainage path is controlled by Darcy’s law. Flow of gas from all different points of the coal bed is directed towards the borehole point at depth. Later when water is pumped out, the gas follows the borehole passage and automatically comes out to the surface where it is collected in a suitable container or directly sent to the user end through pipe line.

References Chandra K (1997) Nonconventional hydrocarbon resources like coal bed methane and gas hydrates: exploration imperatives to India. Int J Geol 69(4):261–281 Chandra D, Chaudhuri SG, Choudhury N (2007) Application of petrographic study in the prospecting of coal bed methane (CBM). In: Chandra’s textbook of applied coal petrology. Jijnasa Publishing House, Kolkata, pp 288–303 Crosdale PJ, Beamish BB, Valix M (1998) Coal bed methane sorption related to coal composition. Int J Coal Geol 35:147–158 Harpalani S, Schraufnagel RA (1990a) Measurement of parameters impacting methane recovery from coal seams. Int J Min Geol Eng 8:369–384 Harpalani S, Schraufnagel RA (1990b) Shrinkage of coal matrix with release of gas and its impact on permeability of coal. Fuel 69:551–556 Kim AG (1987) Estimating methane content of bituminous coalfields from adsorption data. U.S. Bureau of Mines, Report of Investigations, 82455 Mavor MJ, Close JC, Pratt TJ (1992) Review of recent US coalbed natural gas reservoir research. In: Beamish BB, Gamson PD (eds) Symposium on coalbed methane

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180 research and development in Australia (Townsville), James Cook University of North Queensland, vol 2, pp 109–152 Smyth M, Buckley MJ (1993) Statistical analysis of the microlithotype sequences in the Bulli Seam, Australia and relevance to permeability for coal gas. Int J Coal Geol 22:167–187

Coal, Permeability Dipak Ranjan Datta Geological Survey of India (GSI), Kolkata, India

The capability or specifically the capacity of a coal bed to transmit gas or fluid through it is generally expressed as permeability (Chandra 1997). This is one of the most significant characteristics of coal-bed reservoir in relation to the CBM exploitation. Availability of the passage or drainage path in the coal bed is essential for movement of gas and fluid through it. If drainage path is available, the desorbed gas accumulated at distant points flows toward the exit/outlet point and accumulates there to come up to the surface level following the exit/ outlet passage. In such a case, the coal bed is said to be permeable. On the other hand, if the coal bed is not permeable (without any drainage path), the desorbed gas fails to move and reach to the bore hole point which results in nonrecovery of methane gas. So permeability of a coal bed is the most vital parameter for coal-bed methane (CBM) recovery and its production. At the same time, it is most significant for prediction of reservoir performance during production of CBM. Flow/movement of gas and fluid along the available drainage path within the coal bed is guided by Darcy’s law, and permeability is measured in terms of darcy (D)/millidarcy (mD). The principle that governs how fluid moves in the subsurface is called Darcy’s Law. It defines the ability of a fluid to flow through a porous media such as rock. It is

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Coal, Permeability

based on the fact that the amount of flow between two points is directly related to the difference in pressure between the two points, the distance between the points, and the interconnectivity of flow pathways in the rock between the points. The permeability of a coal bed is dependent upon the mega- and macroporosity of the coal, i.e., cleats and fracture system which plays a significant role for production of methane gas (Bustin 1997; Laubach et al. 1998; Pashin et al. 1999). Cleat/fracture system varies markedly depending upon composition and rank of coal. Compositionally vitrite-rich (bright) coals are more permeable than dull coal which is due to greater abundance of cleating in the vitrite-rich coals (Smyth and Buckley 1993). Clarkson and Bustin (1997) recorded the following order of decreasing permeability, in average, with coal lithotype – bright (4.1 mD), banded (0.79 mD), fibrous (0.50 mD), banded dull (0.14 mD), and dull (0.016 mD). It is well understood that rank-wise, high-rank coal (up to Ro 1.35%) having a higher degree of cleat development, i.e., cleat frequency, should be more permeable than the low-rank counterpart. Above this rank (Ro 1.35%), cleat frequency decreases with further increase in rank indicating decrease in permeability (Su et. al. 2001). This behavior pattern of cleat development is a very significant one and should be carefully taken into consideration at the time of evaluation of reservoir characteristics in relation to permeability. Thus semianthracitic to anthracitic coal having very high Ro% may not be potential from the production point of view as its permeability decreases. The orientation, continuity, interconnectivity, and frequency of these structures (cleats), in addition to coal rank and composition, are important parameters in assessing permeability during the production of coal-bed gas. When all fractures/ cleats occur in isolation without interconnection among them, flow rate would be limited by matrix permeability and there will be no enhancement of permeability due to the fracture/cleat. Network geometry and connectivity of fractures/cleats in a system are very significant for the permeability enhancement. Coal-bed permeability may be three to ten times greater along the face cleat direction in comparison to any other directions indicating the strong preferred orientation and

Coal, Permeability

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greater length of interconnected fractures in that direction (McCulloch et al. 1974). On a local scale, cleat connectivity results from their crosscutting and abutting relations. Vertical connectivity of cleat network is commonly restricted due to confinement of small cleats at interfaces between coal types and large cleats at coal-non-coal-bed interfaces. Microcleat study renders good scope of studying many more aspects like aperture width, height, spacing, cleat type, frequency, degree of interconnectivity, and mineralization along cleat opening (Solano-Acosta et al. 2007; Datta 2005; Datta et al. 2007). Each of these properties has significant control for permeability of a coal bed. Of these, aperture width, height, and frequency (inverse of spacing) are directly proportional to permeability. Population % of primary, master cleat, and interconnected cleat system enhances permeability because of higher degree of interconnectivity. If the open space of cleat is filled in by secondary minerals, the drainage path is blocked/ sealed and hence it reduces permeability. This way population % of non-mineralized cleat is directly proportional to permeability. Based on the above said relation, permeability of coals may be qualitatively assessed. It is to be mentioned that aperture width of a coal changes when a core sample is brought to the surface from its subsurface occurrence (in situ condition) as a coal matrix shows plasticity at high pressure and temperature when it occurs in the coal bed at depth. Little information is available on in situ cleat aperture (Laubach et al., op. cit), which may differ a bit when the sample is studied in our crop or in laboratory. Harpalani and Chen (1995) suggested the following formula to determine permeability of coal. K ¼ a3 =12s [K ¼ permeability, a ¼ aperture, s ¼ spacing] In the formula two parameters, i.e., aperture width and spacing, are taken into account. Study on fractured carbonates established an equation of permeability in terms of aperture width and spacing of fractures (Lucia 1983).

K ¼ 84:4  105 w3 =z [K ¼ permeability in darcy, w ¼ fracture aperture in cm, and z ¼ fracture spacing in cm]. Scott (1999) used the above formula for permeability in coal, though it does not take into account the geometric distribution of microcleats and their possible contribution for permeability.

Importance of Permeability in Coal-Bed Methane Investigation Coal beds which are heterogeneous with respect to composition and fabric are responsible for significant vertical and lateral variation in permeability and thus may be important in making production decision in the extraction of hydrocarbons from coal. Permeability is the most important parameter in the prediction of reservoir performance. Average permeability influences the production rate, whereas permeability heterogeneity has a bearing on efficiency. Thus the successful production of coal-bed methane is, in major part, dependent upon the knowledge and understanding of the cleat system.

References Bustin RM (1997) Importance of fabric and composition on the stress sensitivity of permeability in some coals, Northern Sydney Basin, Australia: relevance to coal bed methane exploration. AAPG Bull 81:1894–1908 Chandra K (1997) Nonconventional hydrocarbon resources like coal bed methane and gas hydrates: exploration imperatives to India. Int J Geol 69(4):261–281 Clarkson CR, Bustin RM (1997) Variation in permeability with lithotype and maceral composition of Cretaceous coals of the Canadian Cordillera. Int J Coal Geol 33:135–151 Datta DR (2005) Cleat system and its significance in the light of coal bed methane. Scientific Communication. News Coal Wing Geol Surv Ind 25(1):28–31 Datta DR, Chaudhuri SN, Chakrabarti NC (2007) Assessment of permeability based on micro cleat studies of coals in certain seams of Koiyantar block, East Bokaro Coalfield, Jharkhand. Abstract paper presented at National Seminar on Energy Scenario 2020, June 2007, Nagpur, Organised by Gondwana Geological Society, Gond Geol Magz 9:76

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182 Harpalani S, Chen G (1995) Influence of gas production induced volumetric strain on permeability of coal. Geotech Geol Eng 15:303–325 Laubach SE, Marrett RA, Olson JE, Scott AR (1998) Characteristics and origins of cleat: a review. Int J Coal Geol 35:175–207 Lucia FJ (1983) Petrophysical parameters estimated from visual description of carbonate rocks: a field classification of carbonate pore space. J Petrol Tech 35:629–637 McCulloch CM, Deul M, Jeran PW (1974) Cleats in bituminous coalbeds. U S Bur Mines Rept Invest 7910:23 Pashin JC, Carroll RE, Hatch JR, Goldhaber MB (1999) Mechanical and thermal control of cleating and shearing in coal examples from the Alabama coalbed methane fields, USA. In: Mastalerz M, Glikson M, Golding SD (eds) Coalbed methane scientific, environmental and economic evaluation. Kluwer, Dordrecht, pp 305–327 Scott AR (1999) Improving coal gas recovery with microbially enhanced coal bed methane. In: Masterz M, Glikson M, Golding SD (eds) Coal bed methane scientific, environmental and economic evaluation. Kluwer, Dordrecht, pp 89–110 Smyth M, Buckley MJ (1993) Statistical analysis of the microlithotype sequencesin the Bulli Seam, Australi and revelance to permeability for coal gas. Int J Coal Geol 22:167–187 Solano-Acosta W, Mastalerz M, Schimmelmann A (2007) Cleats and their relation to geologic lineaments and coalbed methane potential in Pennsylvanian coals in Indiana. Int J Coal Geol 72:187–208 Su X, Feng Y, Chen J, Pan J (2001) The characteristics and origins of cleat in coal from Western North China. Int J Coal Geol 47:51–62

Coal, Porosity Dipak Ranjan Datta Geological Survey of India (GSI), Kolkata, India

Porosity in general is the measure of void or pore space present within a solid and is represented by volume percentage of void in the solid. A substance with pore space or void is known as porous substance. Presence of pores in a solid affects its density or specific gravity and in many ways influence physical properties of the substance. Volume percentage of void is inversely proportional to the density/specific gravity of the

Dipak Ranjan Datta has retired.

Coal, Porosity

solid, i.e., a solid with profuse void is less dense and vice versa. It is a significant parameter controlling physical properties of a solid and plays some important role in various applications. Coal – solid fossil fuel – the main energy resource of the world, is derived from gradual burial of plant debris of the geological past through complex biochemical and geochemical processes (coalification) acting over a prolong time span. Thus coal is the product of coalification process and represents an organic solid material composed predominantly of hydrocarbons. Like inorganic solid, coal also exhibits certain properties, e.g., density, hardness, color, streak, porosity, etc. Coalification process produces various products which are in order of higher rank which are peat, lignite or brown coal, bituminous coal, semianthracite, and anthracite (Stach et al. 1982; Chandra et al. 2007; Sengupta 2013). Coal pore system is of great significance in relation to coal bed methane (CBM) because pore system controls storage of methane gas in it, flow of gas and fluid through it, adsorption/ desorption, etc. (Chandra 1997). Thus proper understanding and knowledge of pore system is essential for evaluation of CBM potentiality. Coal pore system classification is mainly based on dimension and shape of pores and partly on their genesis. It consists of several categories which are described one by one. Based on diameters of pores, Xodot (1966) classified pores into four types – (1) micropores with diameter 1 mm. Gan et al. (1972) classified it slightly differently and described micropores (0.4–1.2 nm), transitional pores (1.2–30 nm), and macropores (>30 nm) using nanometer (nm) scale. According to the International Union of Pure and Applied Chemistry (IUPAC) (1982), pores may be categorized as (1) micropores (50 nm). Based on scanning electron microscopy (SEM), Zhang (2001) suggested genetic classification of coal pores into primary, metamorphic, epigenetic, and mineral pores.

Coal, Porosity

So far as porosity is concerned, coal is highly porous and heterogeneous in nature in comparison to other inorganic substance, which makes coal to inherit some special properties to behave as a unique reservoir for CBM. Pore characteristics generally change with rank of coal. For low-rank bituminous coals, vitrinite is more microporous and less macroporous than their equivalent inertinite. With rank increase, mesoporosity of vitrinite reduces considerably in comparison to that of inertinite (Crosdale et al. 1998). Thus peat and lignite show predominance of macropores, whereas anthracitic coal contains predominant micropores. Analysis of coal through a new technology – atomic force microscopy (AFM) – indicates that nanopores are mainly metamorphic and intermolecular pores. The former pores are commonly rounded and elliptical increasing quantitatively with increase in rank. The intermolecular pores show marked change in form and their size of low-rank coal is bigger than high-rank coal. The number of intermolecular pores decreases with increase in rank (Yao et al. 2011). Porosity of coal is a significant attribute possessing some characteristic features which are very much useful in different domains of coal industry. Coal pores include multivarious types like cell lumens derived from cellular structure of plants, crack, and fracture developed in coal during and after coalification process belonging to micro- to mesopore systems which are generally visible under microscope and space between hydrocarbon molecules belonging to micropores, generally not visible under microscope and through SEM. All these types occur together in coal in various proportions depending upon the nature of coal as already stated. This is worth mentioning that each type of pore is very much significant and serves a specific role particularly for determining coal bed methane (CBM) potentiality. It is well established that bulk of methane gas (>95%) is stored within coal bed reservoir under overburden pressure and occurring at greater depth through the mechanism of adsorption (Chandra 1997). With decreasing/releasing pressure, the adsorbed gas is released (known as desorption) and accumulates in low pressure

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zone. The micropores present in coal play the vital role in controlling adsorption/desorption phenomenon as well as adsorbed gas storage, and the success of a CBM project depends on proper functioning of these mechanisms (for details, see ▶ “Coal Bed Methane (CBM)”). At the same time, flow of methane gas along with fluid through coal bed (permeability) is guided by drainage path established by macropore system like cleat, fracture, crack, and interconnected pores (see ▶ “Coal, Permeability”). Minor quantity of methane gas is also stored as free gas in the macropores of coal (Crosdale et al. 1998; Zhang 2001). The meso- to macroporosity of coal bed consists of cleat/fracture network, phyteral (related to the structures of the plant organs), and matrix porosity (Gamson et al. 1993) and holds a minor portion of methane (5%) as free gas. The distribution as well as size, shape, and continuity of these microstructures, responsible for macroporosity, differs from one coal lithotype to another. The phyteral and matrix porosity is generally associated with duller coals, whereas fracture porosity is typical of brighter lithotype. Macroporosity plays a significant role in regulating permeability of a coal bed.

References Chandra K (1997) Nonconventional hydrocarbon resources like coal bed methane and gas hydrates: exploration imperatives to India. Int J Geol 69(4):261–281 Chandra D, Chaudhuri SG, Choudhury N (2007) Coalification process. In: Chandra’s textbook of applied coal petrology. Jijnasa Publishing House, Kolkata, pp 20–26 Crosdale PJ, Beamish BB, Valix M (1998) Coalbed methane sorption related to coal composition. Int J Coal Geol 35:147–158 Gamson PD, Beamish BB, Johnson DP (1993) Coal microstructure and micro permeability and their effects on natural gas recovery. Fuel 72:87–99 Gan H, Walker PL, Nandi SP (1972) Nature of porosity in American coals. Fuel 51:272–277 IUPAC (1982) Manual of symbols and terminology. Appendix 2, part I, colloid and surface chemistry. Pure Appl Chem 52:2201

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184 Sengupta S (2013) Coalification process. In: Coal geology and its application in industrial use. Srinivas Press, India, pp 36–44 Stach E, Mokowsky MT, Teichmuller M, Taylor GN, Chandra D, Teichmuller R (1982) Stach’s text book of coal petrology. Gebruder Borntraeger, Berlin/Stutgart, pp 140–150 Xodot BB (1966) Coal and gas outburst. China Industry Press, Beijing, pp 27–30 Yao SP, Jiao K, Zhang K, Hu WX, Ding H, Li MC, Pei WM (2011) An atomic force microscopy study of coal nanopore structure. Chin Sci Bull 56(25):2706–2712 Zhang H (2001) Genetic type of pores in coal reservoir and its research significance (in Chinese). J Coal Sci Eng 26:40–44

Coal, Trace Elements Shantosh Kumar Mishra RRL Bhubaneswar, CSIR- Institute of Minerals and Materials Technology, Odisha, India

With ever-increasing demand of solid fossil fuel, distribution of trace elements in coal has become a great concern as it is a big environmental constraint. Two aspects – mode of occurrence and distribution of trace elements – are significant. Trace elements may either be due to primary biogenic concentration in the plants or precipitation/ sorption during the formation of coal. The depositional environment during peatification and diagenesis plays an important role in the formation of trace elements in coal. Trace elements associated with plant materials undergo chemical changes causing alteration in organic combinations. The formation of insoluble metal sulfides is a result of the reduction of sulfate to sulfide due to bacterial action. Syngenetic elements are likely to be derivatives of organic matter, However, such elements are unlikely to remain in its original form during coalification process which involves change in hydrogen ion concentration (pH), oxidation reduction potential (Eh), and microbial effect. In an attempt to draw the relationship between biophile elements and the periodic table, Thatcher (1934) established that almost all elements,

Coal, Trace Elements

behaving as nutrient to the plants, are found in the first four periods of the system. According to plant physiology, some elements are indispensable as nutrient for the growth of the plants. Of these, oxygen is associated as free molecules, anions, and water, hydrogen as undissociated water, and carbon as product from photosynthesis or as water-soluble carbonates. In addition, N, S, P, K, Ca, Mg, and Fe are considered as mineral nutrients. Goldschmidt (1944) determined concentration of rare elements from plant ashes, obtained by burning wood from the Central German forest. The study of coal ash by Goldschmidt revealed that many coals contain an exceptionally high amount of certain trace elements. Accumulation of different elements is sometimes plant specific. For example, aluminum is concentrated in the plants of Lycopodiaceae family; silicon is concentrated in monocotyledon and sodium and chlorine in halophytes. Trace elements, both organic and inorganic components, are enriched manifolds in the fly ash after combustion. Volatile elements, like As, Cd, Cu, Ga, Pb, Zn, etc., are adsorbed into outlet as the flue gas. Some of them are preferentially concentrated in fine particulates within fly ash. Nonvolatile elements tend to be incorporated into slag. The adsorbed trace elements in fly ash are a matter of serious concern since they affect the biosphere on many counts. Some of the elements may be discussed for their impact on human population. Arsenic: It occurs in chemically bound forms and in acid-leachable (sorbed) forms. Sulfide form is common in coal. It may occur either as organic or inorganic compounds which have syngenetic or epigenetic origin. Arsenic may be associated with organic components of coals when it is difficult to remove. When arsenic is inorganically bound, mostly in pyrite, it is easier to remove by conventional coal cleaning methods. However, part of it is retained in association with constituents of solid waste – fly ash. When the fly ash is discharged in ash pond, the arsenic is leached and water medium is contaminated with arsenic. Habitats using arsenic-bearing groundwater are vulnerable to diseases like hyperpigmentation (flushed

Coal, Trace Elements

appearance, freckles) and hyperkeratosis (scaly lesion on the skin). Fluorine: In some Chinese coal samples, concentration of fluorine is high. High fluorine content in Late Permian coals from Guizhou province of China has been reported where coals are associated with hydrothermal fluids along tectonic faults (Zhang 2002). Zinc: Zinc (Zn) in nature replaces Fe2+ and Mg2+ in silicates and oxides. Clay minerals and the sediments containing organic matter readily adsorb Zn. Barium and chromium: Generally, barium (Ba) occurs in high concentration in coals of different stratigraphic horizons of the world. In India, 20–2413 ppm of Ba in Tertiary and Permian coals from NE India, NW India, and East Bokaro has been reported (Mukherjee et al. 1982). In both the seams, except vitrain, all other lithotypes contain appreciable amounts of Ba. It is probably contributed by a number of mineral forms like silicates, oxides, carbonates, and sulfates. Chromium (Cr) is very common in coals of all ages and ranks. Mukherjee et al. (1982) reported 38–153 ppm Cr in coals from Lower Gondwana formations. Rubidium and scandium: Among the lithotypes, the concentration of rubidium (Rb) is more in durain and clarain than other lithotypes. In coal, generally K-bearing minerals like orthoclase and clay are the sources of Rb. Hafnium, beryllium, and caesium: Hafnium is a strong lithophilic element and does not form minerals of its own. It is mostly associated with silicate minerals in coal and occurs in very trace amounts. Among the lithotypes, durain shows the highest concentration of Hf in most Indian coals. Beryllium is strongly lithophilic. Among the lithotypes, vitrain shows the highest and durain the lowest Be concentration. Caesium occurs as absorbed cations with K-rich and clay minerals. Thorium, uranium, and tungsten: Thorium and uranium are trace elements of great environmental importance. These are frequently absorbed by clay minerals. Uranium is a strong lithophilic element. Its occurrence in coal has been reported from all parts of the world. Radioactivity in coal is

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mainly caused due to uranium and thorium. Swaine (1990) opined that average content of those two elements is as low as 0.5–10 ppm. Finkelman reported abundance of uranium up to 2.1 ppm in American coal. Bregger and Schoff (1955) suggested that uranium is derived from circulating groundwater where it may travel as uranyl ion. Tungsten concentration varies between 0.5 and 2.71 ppm. In some Indian coal samples, fusain shows the highest (10.80 ppm) amount of tungsten followed by vitrain (7.63 ppm). Lanthanum, cerium, and samarium: Out of different light rare earth elements, only lanthanum (La), cerium (Ce), and samarium (Sm) contents in selected samples were determined. The bulk samples from both NE and NW India contain almost equal concentration of La (25.6 ppm). Maximum concentration of La is recorded in durain followed by clarain (Mukherjee et al. 1982). Cerium is reported in ash of some Indian coals. Among the lithotypes, durain and clarain have more Ce than the other two lithotypes. Samarium concentration in some Indian coals is recorded as 3.68 and 5.33 ppm, respectively. These are higher than the world coal average data. Clarain and durain contain high concentration of Sm in both the cases.

Cross-References ▶ Coal, Trace Elements

References Bregger IA, Schoff JM (1955) Germanium and uranium in coalfield wood from Devonian black shale. Geochem Cosmochem Acta 7:287–293 Goldschmidt VM (1944) The occurrence of rare elements in coal ashes. Lecture delivered to the British Coal Utilization Research Association Mukherjee KN, Raja Rao CS, Choudhury AN, Pal JC, Das M (1982) Trace element studies in the major Tertiary and Gondwana coalfields of India, vol 49, Bulletins of the Geological Survey of India. Geological Survey of India, Calcutta, 119pp Swaine, DJ (1990) Trace Elements in Coal. Butterworths, London

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Coal: Chemical Behavior with Increasing Rank

Prabal Dasgupta Indian Association for the Cultivation of Science, Kolkata, WB, India

schemes are still being introduced. Physicochemical properties, such as density, moisture content, volatile matter (VM), fixed carbon (FC), calorific value, and porosity, are directly linked with the chemistry and hence the rank of coal under study. Higher the rank of coal, structurally it approaches the order (structure) of graphite and its VM, moisture content and hydrogen content (%) diminishes. On the other hand, its calorific value, carbon content, and reflectance increase as the rank increases. We shall try to understand the changes in the abovementioned parameters in terms of chemical changes associated with the transition from a lower rank to a higher rank coal.

Rank of Coal

Moisture

Coal is derived from vegetable matters, which first decompose and form peat. Peat under suitable geothermal condition is progressively converted to lignite, bituminous coal, and finally anthracite. The process of conversion of lignite to anthracite is known as metamorphism or coalification. The position of coal in this metamorphic series is its rank or the degree of maturity.

Every coal contains moisture, and its presence lowers the calorific value and hence it is undesirable. Lower the rank of a coal, higher is its moisture (air-dried) content. In case of anthracite, moisture content slightly rises after the carbon content attains 90%, depicted in Fig. 1. Coal being a porous substance physically absorbs water molecules forming Van der Waal’s bond with water molecules, known as physical absorption. Besides, different mineral matters (inorganic) present in coal may contain water of crystallization. Finally, lower rank coals, like peat and lignite, are richer in aliphatic chains containing polar groups like hydroxyl (-OH) and carboxylic acid (-COOH), and water molecules are attached to these groups through hydrogen bonding. When dried in air, the externally adsorbed moisture mostly evaporates; however, coal still contains some physically adsorbed moisture, which may be removed on heating at or about 105
C. Loss in weight is a measure of moisture content. In case of peat and lignite, decomposition starts at an earlier temperature (below 105
C). In such cases, different method is being applied to determine moisture content. Water molecules held through hydrogen bond, particularly in case of lower rank coal, may not be removed by heating about 105
C. One shall have to do away with polar functional groups responsible for hydrogen

Thatcher RW (1934) Proposed classification of the chemical elements with respect to their functions in plant nutrition. Science 79:463 Zhang J (2002) Trace element abundances in major minerals of Late Permian coals from Southwestern Guizhou Province, China. Int J Coal Geol 53(1):55–64

Coal: Chemical Behavior with Increasing Rank

Classification of Coal In the past, peat, lignite, bituminous, and anthracite all were termed as coal and used as fuel, although they differ in color, chemical structure, and physical characteristics. In the 1850s, a need for classification of coal was felt and scientists all over Europe and America tried to classify coal either on the basis of composition of residue left when coal is heated or in terms of oxygen content or on the basis of some other parameters. Finally, Dr. Seyler came out with a brilliant idea of classifying coal not only in terms of a single elementary percentage but on the basis of the results of the ultimate analysis. His ideas were further extended in 1938, and this system is still regarded as a standard method of coal classification. Apart from Seyler’s, there exists number of coal classification system in use today and new

Coal: Chemical Behavior with Increasing Rank

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Coal: Chemical Behavior with Increasing Rank, Fig. 1 An example of an Indian coal plotted on Seyler Coal Chart, Singh and Singh (2011)

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bonding by heating to a still higher temperature (~450
C) in the absence of oxygen.

should be equal to 100%. If VM rises, FC falls and vice versa.

Volatile Matter

Carbon Content

Volatile matter and fixed carbon are, truly speaking, not constituents of coal. They represent the volatile and nonvolatile products of thermal decomposition of coal under specified condition. On dmmf (dry mineral matter free) basis, volatile matter represents volatile product of organic moieties. Similarly, fixed carbon does not include ash. Fixed carbon contains nonvolatile part of other elements too. Fixed carbon and volatile matter are interrelated to each other. The sum of volatile matter and fixed carbon both expressed on dmmf basis

Carbon content of a coal rises as the rank of the coal rises. Among macerals of the same coal, exinite and vitrinite have almost similar carbon content as that of coal, while fusinite has higher carbon content. Carbon content of a coal sample should not be confused with its fixed carbon. In anthracites, volatile matter is very little, but its carbon content and fixed carbon values are almost identical. In case of peat or lignite, carbon content and fixed carbon values differ widely. Oxygen content of a coal sample decreases as the rank increases. However, neither nitrogen nor sulfur

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or phosphorous content of a coal bears any relationship with the rank of the coal.

Calorific Value This is a fundamental property of all fuels. It shows the amount of heat evolved by complete combustion of a given mass of fuel under specified condition. In case of coal, more generally used parameter is gross calorific value (GCV). Higher the rank of coal, higher is its GCV. There exists number of correlation for estimating the GCV of a coal sample based on its proximate analysis and/or ultimate analysis results, like Ferguson and Rowe (1986). Central Fuel Research Institute of India (Majumder 2000) proposed a number of formulae for calculating GCV of Indian coals. Of late, the term Useful Calorific Value is often used in lieu of GCV, particularly for commercial purposes.

Solubility Only peat is slightly soluble in water, since it contains water-soluble carbohydrates and pectin, while all other coals are completely insoluble in water. Peat and lignite are partially soluble in alkali solution owing to the presence of humic acid, which on acidification precipitates. Higher rank coals do not contain humic acid but produce that on oxidation. Oxidized bituminous coal is, therefore, partly soluble in alkali. Dilute hydrochloric acid dissolves the hemicelluloses present in peat. Concentrated hydrochloric acid dissolves most of the mineral matters present in coal, while siliceous mineral matters are removed by hydrofluoric acid. On such successive treatment with HCl and HF, one may do away with all the mineral maters present but at the cost of gammaband observed in powder x-ray diffractogram of a certain variety of bituminous coals (Shoening 1982). Organic solvents like benzene and mixture of benzene and chloroform/alcohol dissolve waxes and resins present in peat (about 5%) and lignite (about 20%). High-boiling point solvents like anthracene oil and tetralin and basic solvents like pyridine,

Coal: Chemical Behavior with Increasing Rank

quinoline, ethylene, and diamine can dissolve considerable amount of coal. Organic mass of a medium-rank bituminous coal, when preheated, can be dissolved in chloroform. Medium rank bituminous coal can also be dissolved in tetralin or anthracene oil up to the extent of 85–95% on prior heating at about 350–450
C in an autoclave. The coal extracts are used in the production of liquid fuel or carbon electrode. Solubility of anthracite in the abovementioned solvents is negligible.

Porosity and Adsorption Activity Coal is a porous substance with a fairly high internal surface. When it is brought in contact with a suitable organic liquid such as methanol, it enters into fine pores and the surface is wetted. This process is exothermic and the heat of wetting released is a measure of its surface area and hence its porosity. Porosity is found to vary with rank in the same fashion as the moisture varies with rank. There is initially a fall in porosity with rank till a minimum is reached at 89–90% carbon content. Porosity again rises in the anthracite region.

Caking Property Many bituminous coals when heated are softened and form a plastic mass that swells and re-solidify as a porous solid. Coals that exhibit such behavior are called caking coal. Strong caking coals which yield hard and solid products with suitable properties for use in a blast furnace are called coking coal. Peat, lignite, sub-bituminous coal, anthracite, and semi-anthracite do not exhibit caking property. Many bituminous coals are non-caking in nature. Caking, swelling, agglutinating, and plastic properties are interrelated. Among the macerals of the coal, the fusinite is non-caking in nature, while exinite has good caking property. Caking property of vitrinite varies with the rank in the same way as that of the coal under study. Coal is a macromolecular substance. The macromolecular structure of the coal mass is thermally broken down on cokification, and some products of relatively low molecular weight

Coal: Chemical Behavior with Increasing Rank

remain in a softened state for sufficiently long time in the reaction zone. As a result, the entire mass takes the form of a plastic matter which is converted into solid lump, which re-solidifies on further heating.

Chemistry and Structure It is important to understand the chemistry and structure of coal for effective utilization as feedstock of chemicals (Lino 2000). On the basis of experimental results, it is believed that in case of lignite polynuclear, aromatic moieties like phenanthrene are connected to each other through aliphatic chains or ether linkage. In case of higher rank coals, more condensed poly-nuclear aromatic moieties are connected through similar linkage. Oxidation, methylation, and degradation of coal have been widely used for the investigation of coal structure. Mass spectroscopy has been used for identification of organic species found as oxidation product. Artok et al. (1998) suggested that aliphatic bridges connecting more than two aromatic moieties existed in Taiheiyo coal because abundant polycarboxylic acids were formed due to oxidation of coal and products were identified with the help of gas chromatography/mass spectroscopy (GC/MS). Kailuan bituminous coal was oxidized by alkali/oxygen at 300
C, and products obtained were identified as benzene polycarboxylic acid using highperformance liquid chromatography/mass spectroscopy (HPLC/MS) mainly derived from bridged bond breaking and ring opening. Analysis of oxidation products of Shengli lignite using MS provides insight about its molecular distribution. Recently MS/GC analysis of oxidation product of Chinese bituminous coal (You et al. 2015) reaffirms presence of many aromatic moieties. As many as nine molecular ions ranging from C7H18N4O8 to C19H16N4O3 were detected using GC/MS.

FTIR Spectra Peat and lignite are rich in aliphatic chains, and their FTIR spectra are easily identified by sharp

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bands assigned as stretching modes of sp2 and sp3 CH configurations in the range of 2800–3200 cm1, and their gasification properties can also be predicted. In case of higher rank coals, these bands become less sharp. Due to their unique properties recognized from the time of their discovery, carbon nanotubes (CNTs) have found many applications. The most important ones are as filler material for making composites (with great mechanical strength), potential material to replace age-old silicon in electronic devices, drug carrier in targeted drug delivery, as field emitters used in scanning electron microscopes, as sensors and as hydrogen storage material, and many others. The use of coal as a starting material to make carbon nano-material started in the early 1990s, following the report of successful synthesis of fullerenes from coke by Pang (Pang et al. 1991). After that several groups have reported the synthesis of nanotubes from coal or coke, mostly using arc discharge. Qiu et al. (2003) synthesized high purity single-walled carbon nanotubes (SWCNT) from anthracite by arc discharge method using iron catalyst. Graphene is the most recent and important member of carbon nano-structured family. Graphene was synthesized (Zhou et al. 2012) from chemically altered anthracite by means of catalytic graphitization. Till recently, SWCNT has been successfully synthesized by a group of Indian scientists using bituminous coal as starting material (Awasthi et al. 2015). Very recently carbon nanotubes are used as support to Fisher-Tropsch catalyst. Acknowledgments Author is indebted to Prof. Debashis Shome, Jadavpur University, for his help in the form of suggestions.

References Artok I, Murata S, Nomura M, Satoh T (1998) Reexamination of RICO method energy. Fuel 12: 391–398 Awasthi S, Awasthi K, Ghosh AK, Srivastava SK, Srivastava ON (2015) Formation of single and multiple walled carbon nanotubes and grapheme from Indian bituminous coal. Fuel 147:35–42 Ferguson JA, Rowe MW (1986) Calorific value of lignites from proximate analysis. Thermochim Acta 107(15): 291–298

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190 Lino M (2000) Network structure of coals and association behavior of coal derived materials. Fuel Process Technol 62:69–101 Majumder BK (2000) Theoretical oxygen requirement in coal combustion: relation with its calorific value. Fuel 79:1413–1419 Pang JS, Vassallo AM, Wilson MA (1991) Fullerenes from coal. Nature 352:480 Qiu JS, Li YF, Wang TH et al (2003) High purity single walled carbon nanotubes synthesized from coal. Carbon 41:2170–2173 Shoening FRL (1982) X-ray structure parameters of coal. Fuel 61:695–699 Singh P, Singh M (2011) A study on the classification and utilization of coal from Rajmahal Basin, Jharkhand, India. Energy Sources Part A 34:134–142. https:// www.researchgate.net/publication/241727636 You CY, Fan X et al (2015) Molecular characterization of Chinese coal analyzed using mass spectroscopy with various ionization modes. Fuel 155:122–127 Zhou Q, Zhao Z, Zhang Y, Meng B, Zhou A, Jieshen Q (2012) Graphene sheet from from graphitized anthracite coal, preparation, decoration and application. Enery Fuel 26:5186–5192

Coalification

Geochemical Coalification This process enhances the rank of coal. Temperature and pressure are main factors here. Generation of thermogenic methane takes place at a temperature more than 50
C at this stage. Development of coal through peat to anthracite involves complex chemical changes. Extensive studies on this evolutionary path led to number of correlations and classifications. Seyler’s coal classification depicts correlation among fundamental coal elements, including carbon, hydrogen, oxygen, volatile matter, and calorific values. It is considered to be a fundamental foundation for future classification of coal. Coalification Process. PLANT DEBRIS HUMIFICATION MINERALISATION ASH

HUMUS FLUID (NO BURRIAL)

GELIFICATION

Coalification GEL

Shankar Nath Chaudhuri Geological Survey of India (GSI), Kolkata, India

METAMORPHISM COAL

Coal is formed after decomposition of vegetal matter. The vegetal matter is transformed into peat, lignite, subbituminous, high, medium, and low volatile bituminous coal, semianthracite, and anthracite (in order of increasing rank) at different stages of biochemical and geochemical coalification processes.

Biochemical Coalification Mainly bacterial activities are predominant in this process. Humification, i.e., biogenic degradation of buried plant materials, takes place here. Maceral type, its morphology, and relative proportion are set at this stage. Generation of biogenic methane takes place at a temperature less than 50
C in this process.

In the initial biochemical stage, both chemical and microbial agencies are involved in the decomposition of the plant debris owing to which the entire part of the plant matter may be converted to coal substance. Most plant organs are composed of tissues with characteristic cell structures. The bulk of the wood cell walls are constituted of cellulose, while outermost middle lamellae are composed of lignin (Liess 1958). Carbon content in isolated lignin and cellulose from coniferous wood was determined as 63.2% and 44.4%, respectively (Francis 1961). This strongly favors the view that lignin-rich cell walls of wood tissues represent precursors of fusain. The cellulose part of the plant tissues is not destroyed totally but a part of the cellulose extract is likely to be utilized by the microorganism for metabolism, and substantial part of it is carried away under high pH condition to a basin as a chemical sediment of

Coal-to-Liquids (CTL)

humic composition, which under acidic condition is precipitated as complex humic acid (Sandor and Smith 1950). The coalification process produces water and carbon dioxide during lignite and low-rank coal formation, while in low-rank bituminous coals with more than 29% volatile matter, mainly carbon dioxide is evolved followed by methane with small amount of heavier hydrocarbons, carbon monoxide, and nitrogen. As the low-rank coal is subjected to greater depth of burial and higher heat flow during progress of coalification, it is converted into bituminous coal, generating additional methane. This methane produced at a temperature more than 50
C is known as thermogenic methane. Maximum expulsion of methane occurs during transition from high volatile bituminous A to low volatile bituminous coal at 150
C. Coal metamorphism is a function of heat and pressure acting over a period of time. Among the three primary factors, heat is generally considered to be the most important. Increased heat at greater depths of burial has been considered the primary factor (Hilt’s law, after Hilt 1873). For Indian coals progressive increase in maturation in terms of vitrinite reflectance with depth has been established (Sengupta and Bardhan 2005). During coalification, distinction may be made between chemical, physical, and petrological changes. All changes vary in the different rank stages. The main chemical reactions are those of condensation, polymerization, aromatization, and the loss of functional groups containing oxygen, sulfur, and nitrogen. The carbon content increases, but not linearly. The main physical changes are those of porosity, density, and hardness. Under microscope, the reflectance and the bireflectance (anisotropy) of vitrinites and liptinites increase, and the fluorescence properties of liptinites and huminites/vitrinites change in a characteristic way. Similarly the rank range of high volatile bituminous coals is characterized by the process of bituminization which starts during the subbituminous coal stage. This process is comparable to the formation of oil from kerogen in petroleum source rocks (Teichmuller 1974a, b). The change of porosity during coalification

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should be mentioned. In the early rank stages, porosity decreases due to increasing overburden pressure. During the bituminization process, the remaining pores are filled with oil bitumen. This may be the reason of minimum porosity in the coking coal stage. As the pore-filling bitumen is volatilized due to higher coalification temperatures, the porosity increases again and reaches a late maximum at the stage of meta-anthracite. Change in the macerals during coalification was examined through different techniques. It was observed that with progressive increase in rank, there is an increased aromatic character in vitrinite and inertinite and a shift toward greater aromaticity from liptinite to inertinite with intermediate stage at vitrinite.

References Francis W (1961) Coal – its formation and composition. Edward Amold, London, 806pp Hilt C (1873) Sitzungsber. Aach.Bez. V.D.I, 4 Liess W (1958) The fine structure of lignified cell wall. Cellulose Research Symposium II, CSIR, India pp 29–36 Sandor J, Smith RH (1950) Formation of humus and its relations to coal. In: Bangham DH (ed) Progress in coal science. Butterworth Scientific Pub, London Sengupta S, Bardhan B (2005) Petrographic atlas of Indian coal, vol 7, Geological Survey of India Publication Catalogue series. Geological Survey of India, Kolkata, 149pp Teichmuller M (1974a) Entstehung und Verander. . .. . .. . .. -Fortschr. Geol. Rheinid U. Westf.24-65-112 Teichmuller M (1974b) Generation of petroleum like substance in coal seams as seen under the microscope. In: Tissot B, Bienner F (eds) Advances in organic geochemistry 1973. Technip, Paris, pp 321–348

Coal-to-Liquids (CTL) Shankar Nath Chaudhuri Geological Survey of India (GSI), Kolkata, India

Petroleum precursors are found in coal, although in far lower concentrations than in oil source rocks. Similarly, as they are converted and

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incorporated into kerogen in the source rock, in coals they are apparently found mainly as hydrogen-rich, aliphatic edge groups on the humic substances. To a lesser extent, the precursors are present as macerals of liptinite group, mainly alginite, resinite, bituminite, cutinite, and liptodetrinite. It is observed that bituminization takes place with rising rank in the brown coal to subbituminous coal range. This is because petroleum-type hydrocarbons are formed at this stage from components of waxy leaf cuticles, pollen, and spore coatings by chemical reactions. Petroleum source rocks are able to generate petroleum from included organic matter. Their content of organic carbon may be less than 1%. On the other hand, coals with almost 100% of organic matter may be source rocks not only for gas but also for oil (Durand and Paratte 1983; Littke et al. 1990). In oil source rocks with type II organic matter, the liptinite maceral bituminite is commonly quantitatively very important and highly oil prone. In the immature and early mature stages, bituminite is characterized by a relatively weak fluorescence and a positive alteration. Bituminite loses its fluorescence at a stage corresponding to vitrinite reflectance (Ro) of about 0.8–0.9%. During bituminization petroleum-like substances are generated not only from liptinites but also from perhydrous vitrinites. The onset of bituminization appears to cause the diagenetic or geochemical gelification or vitrinization which takes place between the brown and hard coal stages. The first formed bitumen is believed to serve as a fluid component in a new colloidal system in which the solid part is represented by the stable aromatic groups of huminite/vitrinites. Thus the hydrogel brown coal changes into the bitumogel hard coal (bituminous coal) during the stage of subbituminous coal. Bituminization also explains why low-rank bituminous coals (Ro 0.4–0.7%) are suitable for hydrogenation. Hirsch (1954), on the basis of X-ray studies, described the liquid structure of bituminous coals. Coal as a source rock for oil has become a modern concept since petroleum-like substances were detected in

Coal-to-Liquids (CTL)

Australian coals (Brooks and Smith 1967). Since then, pyrolysis studies, mainly Rock-Eval pyrolysis, revealed that coals have a potential in petroleum formation (Durand and Oudin 1979; Teichmuller and Durand 1983; Cook and Struckmeyer 1986; Murchison 1987; Bertrand 1989). A modern concept of the evolution of coal as a source and reservoir rock for oil and gas was published by Levine (1993). Fluorescence microscopy has proved to be of the greatest importance in relation to hydrocarbon exploration. Compared with chemical or other microscopical methods, it has the advantage that all factors which are decisive for oil and gas proneness can be estimated directly, namely, type, abundance, distribution, and maturation stage of the organic matter (Teichmuller 1979). This is true also for the optically unresolved organic substances in untreated source rocks, that is, substances which are finely distributed between and within minerals (clay interlayer spaces). This part of the organic matter, which may well be the majority, can be detected indirectly by the fluorescence properties of the mineral bituminous groundmass (Teichmuller and Ottenjann 1977). Senftle et al. (1987) found good relationship between the atomic ratio H/C and the amount of fluorescing liptinites plus fluorescing amorphous material (fluoramorphinite). Both high H/C ratios and large amounts of fluorescing organic matter indicate high oil proneness. Conversion of coal to liquid requires an increase in the hydrogen-to-carbon ratio of coal, which can be achieved either by direct or indirect liquefaction. Direct liquefaction adds gaseous hydrogen to slurry of pulverized coal- and recycled coalderived liquids in the presence of catalysts. The process is efficient, but further refining is needed to achieve high-grade fuel characteristics. Indirect liquefaction first gasifies coal using oxygen and steam to form “syngas” (a mixture of mostly hydrogen and carbon monoxide). Using the “Fischer-Tropsch” process, the

Colombia: Energy Policy (Electricity)

syngas is purified and catalytically combined to produce high-quality, ultra-clean products.

References Bertrand PR (1989) Microfacies and petroleum properties of coals as revealed by a study of North Sea Jurassic coals. Int J Coal Geol 13:575–595 Brooks JD, Smith JW (1967) The diagenesis of plant lipids during the formation of coal, petroleum and natural gas. Geochim Cosmochim Acta 31:2389–2397 Cook AC, Struckmeyer H (1986) The role of coal as a source rock for oil. In: Glenic RC (ed) Australian oil exploration symposium. Petroleum Exploration Society of Australia, Melbourne, pp 419–432 Durand B, Oudin JL (1979) Exemple de migration des hydrocarbures . . .. . .. In: Proceedings of the 10th World Petroleum Congress. I Bukarest, Wiley, Chichester, pp 1–9 Durand B, Paratte M (1983) Oil potentials of coals, a geochemical approach. In: Brooks J (ed) Petroleum geochemistry and exploration of Europe. Blackwell, Oxford, pp 255–265 Hirsch PB (1954) X-ray scattering from coals. Proc R Soc Lond 226:143–169 Levine JR (1993) Coalification: the evolution of coal as a source rock and reservoir rock for oil and gas. In: Law BE, Rice DD (eds) Hydrocarbon from coal, vol 38, American Association of Petroleum Geologists studies in geology series. American Association of Petroleum Geologists, Tulsa, pp 39–77 Littke R, Leythaeuser D, Radke M, Schaefer RG (1990) Petroleum generation and migration in coal seams of the Carboniferous Rhur Basin, north west Germany. In: Advances in organic geochemistry 1989. Organic geochemistry, vol 16. pp 247–248 Murchison DG (1987) Recent advances in organic petrology and organic geochemistry: an overview with some reference to ‘oil from coal’. In: Scott AC (ed) Coal and coal-bearing strata: recent advances. Special Publication Geological Society of London, vol 32. pp 257–302 Senftle JT, Brown JH, Larter SR (1987) Refinement of organic petrographic methods for kerogen characterization. Int J Coal Geol 7:105–117 Teichmuller M (1979) Beispiele fur die Anwending fluoreszenzmikroskopischer Methoden . . .. . .. . .. . ... In: C.R. 8th congress international strategy geol. Carbonifere. 1975, 4, Moscow, pp 79–89 Teichmuller M, Durand B (1983) Fluorescence microscopical rank studies on liptinites and vitrinites in peat and coals, and comparison with results of the Rock-eval pyrolysis. Int J Coal Geol 2:197–230 Teichmuller M, Ottenjann K (1977) Art und Diagenese von liptiniten und lipoiden soften in cinsm. . .. . .. Erdol u Kohle 30:387–398

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Colombia: Energy Policy (Electricity) César Fabián Romero Roa CEPMLP – University of Dundee, Dundee, UK

General Information on Colombia According to the National Administrative Department of Statistics, the Republic of Colombia has a continental area of 1,141,748 km2 and 928,660 km2 of sovereign maritime area. It is located in the north-western corner of South America, sharing international waters with Costa Rica, Haiti, Jamaica, Dominican Republic, the United States, and Nicaragua, and boundaries with Panamá, Venezuela, Ecuador, Brazil, and Peru. Its official language is Spanish, and its predominant religion is Catholicism, even though freedom of religion is guaranteed under its Constitution (República de Colombia 1991; DANE 2015). Colombia is divided into 6 regions, 32 departments, and 1101 municipalities, all within the constitutional protection over indigenous and ethnical territories (DANE 2014). During 2013, Colombia generated a gross domestic product (GDP) of US$ 378.4 billion in and gross national income (GNI) per capita of US$ 11,960. Population for the same year was 48,321,405 (The World Bank 2015), making it the third country with the largest population in Latin America (DANE 2014).

Resources As of December 2013, net effective installed capacity in the Colombian National Interconnected System was 14,559 MW. During that same year, the National Interconnected System generated 62,196.6 GWh, divided in 41,835.9 GWh (67%) from hydraulic plants, 16,838.6 GWh (27%) from thermal plants (coal-based and gas-based), and 3,522.0 GWh (6%) from minor

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Colombia: Energy Policy (Electricity)

Colombia: Energy Policy (Electricity), Table 1 Power generation 2004–2012 (in GWh) Year 2004 2005 2006 2007 2008 2009 2010 2011 2012

Hydro 39,848.7 40,979.0 42,557.9 44,242.0 46,160.9 40,837.4 40,557.5 48,427.5 47,581.7

Gas 6,899.6 7,198.2 7,030.7 6,324.6 5,615.1 10,840.5 12,025.8 8,106.9 9,213.7

Coal 1,634.3 2,085.6 2,590.8 2,903.7 2,486.1 3,691.9 3,477.4 1,599.8 2,492.6

Eolic 50.7 49.6 63.0 49.9 53.9 57.7 38.6 41.3 54.9

Others 128.5 117.4 97.7 105.8 79.0 538.1 786.0 440.7 645.9

Total 48,561.8 50,429.8 52,340.0 53,626.0 54,395.0 55,965.6 56,885.3 58,616.2 59,988.9

Colombia: Energy Policy (Electricity), Table 2 Net effective installed capacity 2004–2013 (in MW) Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Hydro 8,925.8 8,948.1 8,947.4 8,991.1 8,996.6 8,997.1 9,257.4 9,718.3 9,778.1 9,875.5

Coal 692.0 694.0 701.6 701.6 701.6 701.6 701.6 702.6 997.0 1,002.0

Gas 3,580.8 3,496.7 3,459.7 3,549.6 3,551.6 3,571.4 4,029.4 3,746.4 2,484.4 1,850.4

Eolic 20.0 10.0 18.4 18.4 18.4 18.4 18.4 18.4 18.4 18.4

Others 208.5 206.5 152.4 152.4 209.4 220.4 240.3 241.8 1,136.3 1,812.3

Total 13,427.1 13,355.2 13,279.5 13,413.1 13,477.5 13,508.9 14,247.1 14,427.5 14,414.1 14,558.5

Colombia: Energy Policy (Electricity), Table 3 Power demand 2004–2013 (in GWh) Year 2004 2005 2006 2007 2008 2009 2010 2011 Total 47,011.1 48,828.9 50,814.6 52,853.2 53,870.6 54,678.9 56,145.3 57,231.7

plants (including renewable projects) and cogenerators (XM SA ESP 2013a). Demand in the National Interconnected system during 2013 was 60,890 GWh (XM SA ESP 2013b). From 2004 to 2012, the statistics are showed in Tables 1, 2, and 3 (UPME 2014a). Power exports and imports are from and to Ecuador, as well as from and to Venezuela. It has been developed as showed in Table 4 (UPME 2014a). According to the Ministry of Mines and Energy, the Colombian electric sector suffered significant changes, particularly with Acts 142 (República de Colombia 1994a) and 143 of 1994 (República de Colombia 1994b), which

2012 59,369.7

2013 60,890.3

allowed the participation of private actors, vertical disintegration, separation of generation, transmission, distribution, and commercialization business units; the creation of a wholesale electricity market; and an indicative planning in generation and a mandatory planning in transmission. These Acts also changed the state’s role in regulation, planning, and control of the power sector (UPME 2014a). Generation and commercialization are regulated free markets, whereas transmission and distribution are regulated monopolies (CREG N.A.). As of 2010, there are 41 electricity generators, 9 transporters, 29 distributors, and 69 traders (CREG N.A.).

Colombia: Energy Policy (Electricity)

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Colombia: Energy Policy (Electricity), Table 4 Power exports and imports 2004–2013 (in GWh) Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Exports Ecuador 1,681 1,758 1,609 877 497 1,077 798 1,295 236 662

Venezuela

102 282 249 478 715

Imports Ecuador 35 16 1 38 26 21 10 8 7 29

Venezuela 13 21 27 1

Colombia’s Electric Power Policy Conception The Ministry of Mines and Energy and the Mining and Energy Planning Unit (hereafter UPME) established the power policy in two documents, as follows: 1. The 2006–2025 National Energy Plan (MME 2007): Herein was established the short-term and long-term plans and related items for the energy sector, with specific studies regarding electricity. It pointed out the elements that will be used as orientation tools for decisionmaking, with a long-term vision that allows to secure supply of energy and a regional integration. Currently, the Ministry of Mines and Energy and the UPME are working in a new National Energy Plan, with a 2050 long-term vision. Its main purpose is to reach an efficient internal and external energy supply, with a minimal environmental impact and great generation value for regions and population. It has specific objectives – a diversified and reliable offer, demand with efficient prices, energy efficient goals, universal provision of services, more regional and global integration, and valuable generation options around the energy sector – and two transversal objectives. 2. The 2014–2028 Generation and Transmission Reference Expanding Plan (UPME 2014b):

A long-term plan based on the current power infrastructure, future projects, and power demand projections. It considers the primary sources of energy available in the country (coal, natural gas, hydrocarbons, hydraulic, and renewables) and expansion – transmission – projects within the country, Ecuador and Central America. For years 2014–2019, the goals could be fulfilled through the reliability criteria, established through existing regulation, and based on the reliability charges. The 2020–2028 period goals will require an increase of installed capacity, with 17 different scenarios. It also recommends the execution of eight new transmission projects within the National Interconnected System for guaranteeing securities of supply and demand. Moreover, this plan considers a generation matrix diversification, with a modeling methodology for renewable sources. Results show that power generated from renewables can reduce marginal costs, move expensive generation based on other sources, and provide security of supply. 3. The 2013–2017 Power Coverage Indicative Expanding Plan (UPME 2014c): It estimates public and private investments in order to universalize power coverage, based on the need for power service in municipalities in 2012, power coverage estimates on municipality level; planning methodology, and technical and economic criteria for assessing the best power service alternative in municipalities that do not have it, either in the National Interconnected System or through isolated services; number of housing that are able to be interconnected in both technical and economic way, and tariff impact. The commented plan found that, as 2012, 470,244 houses do not have power services. Power coverage on these requires an estimate investment of COP $4.3 billion, 88% for the expansion of the National Interconnected System, and the rest for diesel-based isolated solutions. It is important to point out that since 2013 network operators are obliged to present their coverage expansion plan, according to the

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Ministry of Mines and Energy Resolutions 1801456 and 90066. • Lastly, the National Planning Act is passed every 4 years, and it contains the general policies of each government, including the power sector.

Regulatory Framework The Ministry of Mines and Energy National is in charge of power policy and the regulation of power public service; nevertheless, the UPME is responsible for power planning, in both the National Interconnected System and the Non-interconnected Zones. The Commission for Electricity and Gas Regulation (hereafter CREG) is the regulatory agency for promoting competition and monopoly control in the power sector. The Superintendence of Public Services is responsible for controlling the power market. There are other authorities in charge of the technical and commercial management of the power system: the National Centre of Dispatch (hereafter CND), the Administrator of Trade Exchanges System – labor developed by XM (http://www.xm. com.co/Pages/home.aspx) – (hereafter ASIC), the National Operation Council, and the Trading Auxiliary Council (Moreno 2012). Articles 365 and 367 of the 1991 Constitution are the basis of the current power regulatory framework (República de Colombia 1991). These rules are developed by Acts 142 (República de Colombia 1994a) and 143 of 1994 (República de Colombia 1994b), which organize the institutional structure and establish the main principles, namely liberalization, privatization, regulation, free market, and planning (Moreno 2012). According to the regulatory framework, these are the main characteristics of the Colombian power market (Moreno 2012; Corredor and Fonseca 1999): • Generation is both in charge of public and private institutions. • The Act 143 of 1994 (República de Colombia 1994b) guarantees that no title or governmental

•

•

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authorization is required for power generation and trading. Generation, transmission, distribution, and commercialization are vertically separated activities in the National Interconnected System, with two exceptions: the vertical integration of commercialization with generation or distribution, within the same firm or its affiliated companies, and firms constituted before 1994 are authorized to keep their integrated activities, with an accounting separation. Bilateral contracts, such as power purchases agreements, are allowed. There is a wholesale power market, in which generators must offer their prices and capacity availability for each hour to the ASIC, who guarantees power exchanges between generators and traders (XM SA ESP 2015). There are short-term (duration less than 24 h) and long-term (duration more than 24 h) power trade markets. Transmission and distribution are regulated activities. There is a right for open access on a nondiscriminatory basis, upon payment. In the National Interconnected System current network expansion is free, but new network expansion is conditioned to public tenders. On the other hand, there are open access and freedom of network expansion in regional and local distribution systems. Tariffs depend on regulated and nonregulated customers. Nonregulated customers have freedom of tariffs, based on competition between generators and traders, and through short-term and long-term contracts, taking into account that transportation and distribution prices are regulated. In this case, customers – that consume more than 55 MWh per month – and traders are allowed to agree the terms and conditions for power quantities and prices.

On the other hand, tariffs for regulated customers are established according to the tariff formula approved by the CREG every 5 years. The Act 1715 of 2014 (República de Colombia 2014) regulates the integration of nonconventional renewable energies to the National Interconnected System. It has some rules for the promotion of power generation through

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renewable sources. It is still in the process of being developed through decrees and administrative acts.

International Aspects Colombia is a member of the IAEA since 1960, member of the World Trade Organization since 1995, member of IRENA since 2015, in the process of being a member of the OECD, and current candidate country of the EITI since 2014. It is neither member of the OPEC nor the IEA. It is a member of the Andean Community. It is also a member of MIGA and ICSID. It has signed several FTAs, with the US, the EU, Chile, Canada, among others. It signed the International Energy Charter.

References Comisión de Regulación de Energía y Gas CREG (N.A.) El Mercado Eléctrico Colombiano. http:// www.creg.gov.co/images/contenidos_estaticos/ documentos/mercado_electrico_colombiano.pdf Corredor P, Fonseca A (1999) Colombian electricity market In: Hammons T, Corredor P, Fonseca A, Melo A, Rudnick H, Calmet M, Guerra J (eds) Competitive generation agreements in Latin Americam systems with significant hydro generation. Power Eng Rev IEEE 19(9):4–12 Departamento Nacional de Estadística DANE (2014) Atlas Estadístico de Colombia, Tomo I – Demográfico. http:// sige.dane.gov.co/atlasestadistico/Pdf/Tomo_I_Demo grafico.pdf Departamento Nacional de Estadística DANE (2015) Colombia en Cifras. http://www.colombiestad. gov.co/index.php?option¼com_colcifras&task¼grinfo& Itemid¼58 Ministerio de Minas y Energía MME (2007) National energy plan 2006–2025. http://www.upme.gov.co/ English/Docs/PLAN_ENERGETICO_NAL_EN.pdf Moreno LF (2012) Regulación del mercado de energía eléctrica en América Latina: la convergencia entre libre competencia e intervención estatal, 1st edn. Universidad Externado de Colombia, Bogotá República de Colombia (1991) Constitución Política. http://wsp.presidencia.gov.co/Normativa/Documents/ Constitucion-Politica-Colombia.pdf República de Colombia (1994a) Ley 142, “por la cual se establece el régimen de los servicios públicos domiciliarios y se dictan otras disposiciones.” http://

197 www.secretariasenado.gov.co/senado/basedoc/ley_0142_ 1994.html República de Colombia (1994b) Ley 143, “por la cual se establece el régimen para la generación, interconexión, transmisión, distribución y comercialización de electricidad en el territorio nacional, se conceden unas autorizaciones y se dictan otras disposiciones en materia energética.” http://www.secretariasenado.gov. co/senado/basedoc/ley_0143_1994.html República de Colombia (2014) Ley 1715 “Por medio de la cual se regula la integración de las energías renovables no convencionales al Sistema Energético Nacional.” http://www.secretariasenado.gov.co/senado/basedoc/ley_ 1715_2014.html The World Bank (2015) Colombia. http://data.worldbank. org/country/colombia Unidad de Planeación Minera Energética UPME (2014a) Boletín estadístico de minas y energía 2000–2013. http://www.upme.gov.co/Boletines/Boletin%20Estadistico %202000-2013.pdf Unidad de Planeación Minera Energética UPME (2014b) Plan de Expansión de Referencia Generación – Transmisión 2014–2028. http://www.upme.gov.co/Docs/ Plan_Expansion/2015/Plan_GT_2014-2028.pdf Unidad de Planeación Minera Energética UPME (2014c) Plan Indicativo de Expansión de Cobertura de Energía Eléctrica 2013–2017. http://www.upme.gov.co/Siel/ Siel/Portals/0/Piec/Libro_PIEC.pdf XM SA ESP (2013a) Informe de Operación del SIN y Administración del Mercado – Presentación. http:// informesanuales.xm.com.co/2013/SitePages/operacion/ 1-1-Presentacion.aspx# XM SA ESP (2013b) Informe de Operación del SIN y Administración del Mercado – Demanda de energía nacional. http://informesanuales.xm.com.co/2013/ SitePages/operacion/3-1-Demanda-de-energia-nacional. aspx XM SA ESP (2015) Portfolio of Services – MEM Administration. http://www.xm.com.co/english/PortfolioOf Services/Pages/OperationofSINandMarketAdministration. aspx

Colombia: Mineral Policy Luis Bustos Department of Energy and Mining Law, Externado University, Bogotá, Colombia

General Information on Colombia Making reference to some social and economic indicators, the Republic of Colombia has a population constituted by 48.1 million inhabitants, the

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official language is Spanish, the currency is the Colombian peso (COP), and the life expectancy of the population is 74 years. Its GDP reached US$ 377,866 million in 2014, the unemployment rate 9.1% (2014), and the country exported US$ 54,795 million and imported US$ 61,087 million in (2014) (PROCOLOMBIA 2015; World Bank 2016). Colombia is located at the northwest of South America and has access to the Pacific and the Caribbean Coast; in addition it is divided in 32 departments and six main regions, the Colombian area is constituted by 2,070,408 km2, organized in 928,660 km2 of maritime areas, and 1,141,748 km2 of terrestrial areas. It shares land borders with Venezuela, Brazil, Peru, Panama, and Ecuador. It is important to highlight that by constitutional mandate there is within its territories a special protection over indigenous and ethnic territories (PROCOLOMBIA 2015; Romero 2016). The Colombian State possesses the three branches of the public power that operate independently. In addition the government can be defined as “. . . a social state under the rule of law, organized in the form of a unitary decentralized republic with policy centralization and administrative decentralization.”. Similarly there are multiple supervisory bodies as the Public Ministry and the Attorney General´s Office, among others (PROCOLOMBIA 2015). Likewise it is relevant to mention that Juan Manuel Santos has been the elected president of the Republic since August 2010 and will keep that mandate until 2018; it is not possible that he is re-elected for a third period. Another important fact is that President Santos was awarded with the Nobel Peace Prize 2016 for his work at the peace process with the guerrilla group FARC-EP.

Need of Minerals and Structure of the Mining Sector When references are made to the mining industry in Colombia, there is a tendency within the public policy of conceding more attention to some products which are reduced to coal, ferronickel, gold,

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and emeralds; the first three are highly relevant to the government due to its significant contribution to the national exports; on the other hand, the emeralds are closely related to a tradition in its exploitation, linked to certain regions of the country and, more importantly, they are a product wellpositioned at the global market (Velásquez et al. 2013 and Velásquez et al. 2014) (Table 1). It should be noted that in 2010, government institutions such as the Colombian Ombudsman's office reported that (28%) of the mining operations carried out without a title granted by the state were dedicated to the exploitation of gold and in the same sense the Departmental mining census for the period 2010–2011 indicated that (86.7%) of the gold mines at the country operated without mining title (It should be noted that “without mining title” is not equivalent to “illegal.” There is a great debate in Colombia about whether all untitled mineral exploitations are illegal. For example, there are several communities that operate without mining titles and extract minerals for their subsistence. For that reason the most neutral academic term “mines without title” was used since it cannot be clearly differentiated if all are illegal.). In other words, the production of this mineral is carried out in the vast majority of the country under the informality. The Office of the Comptroller General of the Republic revealed in 2013 that only (40%) of the gold exploited is reported while the remaining (60%) is placed on the international market through illegitimate channels (Hernández et al. 2017). It is important to highlight that the country´s demand for construction materials has grown in the past years fostered by the civil construction works and the creation of new infrastructure; consequently, there are numerous opportunities for the production of cement, lime, plaster products, clay, and ceramics (PROCOLOMBIA 2015). “. . .The Colombian mining sector represented on average 2.2% of Gross Domestic Product (GDP) between 2010 and 2015 and contributed 19.6% of all exports. . .”(Norton Rose 2016), in that order the principal exported mineral by far is coal followed by gold and ferronickel. Furthermore the major markets where these Colombian minerals arrive are the European Union, China,

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Colombia: Mineral Policy, Table 1 Colombian national production of minerals 2012–2016a,b Precious minerals Gold Silver Platinum Nonmetallic minerals Ground salt Sea salt Sulphur Limestone (for cement) Metallic minerals Copper (concentrates) Iron ore Nickel – (Ni) Content in Ferronickel Fuel minerals Coal Precious stones Emeraldsc Thousands of Carats

Unit Kilograms Kilograms Kilograms

2012 66,178 19,368 1,460

2013 55,745 13,968 1,504

2014 57,015 11,498 1,135

2015 59,202 10,155 861

2016 32,577 5,361 367

Metric tons Metric tons Metric tons Thousands of metric tons

308,547 211,721 63,790 13,548

319,184 154,709 52,470 13,954

340,263 105,577 48,513 15,374

338,804 78,634 63,236 16,312

181,227 88,021 ND 2,233

Metric tons Metric tons Metric tons

3,901 809,224 51,975

3,294 710,047 49,320

19,956 676,180 41,221

ND 901,736 36,670

ND 406,941 19,391

Thousands of metric tons

89,024

85,496

88,578

85,548

44,629

Thousands of Carats

1,211

2,627

1,967

2,167

918

Data: first half of 2016. Without measuring illegal production of minerals. c Correspond only to export records. ND ¼ no data available Original Table: Statistical Bulletin of Mines and Energy 2012–2016 created by (UPME) – Colombian Mining and Energy Planning Unit. (UPME 2016) - Translated and modified by the author for this article. a

b

and the United States; on the other hand, the construction materials are principally sold to closer neighbors such as Puerto Rico, Ecuador, Panama, Dominican Republic, Peru, and the United States (ANM 2015). A recent study published by the Colombian NGO Fundación Foro Nacional por Colombia on the Colombian mining sector indicates that if the coal mining and gold production for 2015 are compared with the government goals expectations for production during the same period, a profound dissimilarity is observed; in other words, instead of an expected production of 115 Million tons (hereafter MT) of coal, the real production only reached 84.9 (MT), and in the case of gold, with an expected extraction level of 58,000 kilograms, the production barely reached 31,610 kilograms (The figures presented by the ONG (Foro Nacional por Colombia) show a slight variation in the case of coal compared to the official figures presented by the Colombian government; in the

case of Gold, the difference is much wider.) (Velásquez et al. 2016). When referring to the issue of imports in Colombia, it must be indicated that by September 2016 the country is a continuous importer of manufactured products (77.1%); secondly it imports agricultural products (14.8%), fuels are located at third place (7.8%), and finally other products (0.3%). Currently Colombia has a trade deficit with the following countries: China, Mexico, United States, Germany, Brazil, France, India, Japan, and Korea. Colombia enjoys a trade surplus with the following countries: Peru, Spain, Turkey, Venezuela, the Netherlands, and Panama; hence the main import products associated with the mining industry can be distinguished as the aluminum with its different alloys and the machinery for the mining and construction sectors (DANE 2015). This short description would not be complete without a small reference to the initiative formed

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by the Alliance for Responsible Mining which created the Fairmined and Ecological Fairmined certification. Such certifications are designed for artisanal and small-scale mining organizations that wish to meet certain requirements focused on complying with internationally recognized responsible practices; the mentioned standard applies for gold, silver, and platinum. Two examples that can be mentioned as parts of this initiative in Colombian territory is the “Cooperativa Multiactiva Agrominera” located at the Íquira municipality and five certificated mines located at the municipality of La Llanada, as a matter of fact the medal of the Nobel Peace Prize 2016 received by Colombian President Juan Manuel Santos was elaborated with gold from the previously mentioned projects (Fairmined 2016a). In addition, the Alliance for Responsible Mining was inspired by the famous Green Gold program located in the Department of Chocó, which pioneered the certification of ecological gold for artisanal and small-scale mining. Unfortunately this program came to an end in 2014 due to the threats of illegal mining, state absence in the territories, and high costs in the exploitation of the mineral (Fairmined 2016b).

Mineral Policy With the beginning of the 21st century, several structural reforms related to the regulation of the mining sector were implemented in Colombia which meant that in the last ten to sixteen years this sector has come to be regarded as a central actor in the economy of the country (Velásquez et al. 2011). Furthermore there was a late strategy change in comparison to other Latin American nations that have implemented a change for the mining sector in the earlier 1990s or even before, that emphasize their efforts at the consolidation of a strong mining sector that in theory will lead them into economic growth (Bridge 2004). During the first years of the new century, two special factors supported the entrance of Colombia into a new extractive industry era; the first one was the positive economic cycle of international commodity prices, and, second, the entry into

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force of a new mining code (Law 685 of 2001) (República de Colombia 2001; Ricaurte 2013). The mentioned code follows a lot of aspects described at a 1996 document created by the World Bank entitled – A Mining Strategy for Latin America and the Caribbean (Van der Veen et al. 1996) – that was a key instrument to implement a new orientation for the country´s mining sector policy. In a nutshell, the regulations approved since the year 2000 reflect a direct change in the role of the Colombian State towards the lessening of specific procedures to access the mining titles and a redefinition of the role of the State from a productive agent to an inspector and promoter of the activity. Accordingly a model of development was implemented which defends the integration of the country into the world markets and the foreign investment, looking forward to an economic openness and a substantial reduction of the state intervention in favor of the mining market (Velásquez et al. 2011). The National Development Plan can be described as the main document that provides strategic guidelines of the public policies formulated by the Colombian President through his Government team. Under the administration of Alvaro Uribe (2002–2010), two National Plans were created and both of them provided clear advantages for the arrival of foreign capitals, the increase of the investor confidence, and the remarkable stimulation of these economic objectives through several mechanisms and incentives. Additionally, the plan recognized and included among their guidelines a specialization of the Colombian economy toward the extractive industry (Velásquez et al. 2011). In the same sense, under the administration of Juan Manuel Santos (2010–2018) two National Development Plans were created, the first one for the period 2010–2014, in which there is a particular interest in promoting a coherent and integrated energy and mining policy under the following priorities: (a) Promoting both domestic and foreign investment on mining and energy sectors in general; (b) Strengthening the creation of clusters sustained in goods and services that generate significant added value for the country

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and for the regions it comprises; (c) Creating certain regulatory policies such as good use of resources, transparency, environmental regulation, and measures to prevent the negative effects of revaluation. This first development plan considers that investment in the mining industry is one of the five main economic activities that will improve the economy performance of the country (Mancero and Montoya 2012a). Second, the National Development Plan adopted in 2015 which covers the period up to 2018 is predominantly directed at building a peaceful Colombia in which the best practices and international standards are adopted, taking into account a planning vision under sustainable development objectives (República de Colombia 2015). Under this general logic, it creates new requirements for the mining sector to accredit the economic capacity from beneficiaries of mining titles and the assignments of mineral rights allocations. Likewise, it fosters the creation and execution of social management plans within the concession of contracts, and what is more prominent, put together some so-called strategic mining reserve areas that because of their high potential joined with the importance of the exploited mineral, will receive differential treatment in respect of the areas regulated by the mining code (Bastida and Bustos 2017). In accordance with the National Development Plan (hereafter PND), the Mining Energy Planning Unit has the obligation to create the National Mining Development Plans (PNDM), which aim to “... guide the formulation of short and medium term policies that contribute to the strengthening of a sustainable mining industry ...” (p.4, own translation) (UPME 2012). Five plans of this type have been consolidated so far, and the last one of these is named National Plan of Mining Development to 2014. Such plan in summary defined four strategic lines: “(1) Promotion and positioning of the mining industry; (2) mining as a factor of economic growth and social development; (3) handicrafts mining and small scale mining (MAPE); And (4) State commitment to the development of industry.” (p.7, own translation) (Contraloría General de la República 2014).

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In addition, the Mining and Energy Planning Unit (hereafter UPME) has also been responsible for creating a document called the National Mining Ordinance Plan (PNOM), which is defined as an indicative document designed with a mediumterm horizon. The (PNOM) document acknowledged different difficulties faced by the mining industry and created proposals to accomplish the objective of obtaining an organized and responsible mining sector by “. . .promoting the conversion of mining capital into other forms of capital that result in greater welfare and development for the producing regions and for the country at large” (p.ix, own translation) (UPME 2014). The plan principally focused in actions that should be followed by the industry, and the Government, additionally recommended some institutional reforms. The principal regulatory entities that are responsible for the supervision and issuing of the mining concession contracts are: the Ministry of Mines and Energy and the National Mining Agency (hereafter ANM). The latter was part of the changes created at 2011 and is constituted as the authority that beholds the promotion of the mining production and exploration activities. The ANM is also responsible for the administration of the mineral resources. Other important entities are the Colombian Geological Service (SGC) that is in charge of the scientific research of the potential subsoil resources and the UPME that is the institution in charge for planning the development of the mining and energy sector in the country. On the other hand there are some organisms that are in authority of the observance of environmental standards and the grant of licenses and permits: the National Environmental Licensing Authority (ANLA) and the different Regional Autonomous Corporations (CARs). This work will be divided between the entities according to some rules imposed by the law (Ricaurte 2013; Mancero and Montoya 2012b). At the Colombian territory, there is a dense system of zones in which the mining activity is not allowed and which are fairly consistent with the mining code. At the same time these areas are complemented by a series of international commitments and obligations aimed at the protection

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of different areas of particular ecological importance. The result is a complex regulatory framework in which different protection zones are involved. It is possible to find these types of territories: the Special Reserves, the Excluded Zones, the Restricted Zones, the National Security Zones, and the Marine Zones, among others. Despite the aforementioned, there are concrete mechanisms that allow the execution of mining projects in the territory of some of the areas mentioned before (Amaya 2011). It should be stated that although formally the constitution of 1991 developed by Law 1454 of 2011 (República de Colombia 2011) organized the country territorially and established rules for the relationship between the different levels of administration, there are a number of gaps and inconsistencies in the system that have generated complications (Robledo 2016). This is especially expressed in conflicts that affect the Colombian extractive industries. A good example for the aforementioned in the previous paragraph is the recent decision taken by the Colombian Constitutional Court numbered T-445/16 in which this Court decides to empower the territorial entities giving the competence to regulate the use of the soil and to guarantee the protection of the environment, even if in exercising of such actions they end up prohibiting mining activity, decision that was traditionally granted for the central level of the administration, all of the foregoing based on the defense of fundamental rights (Bastida and Bustos 2017).

Regulatory Framework The Colombian mining code (Law 685 of 2001 (There are a number of modifications to the original mining code text (2001) that came from new laws, regulations, and declaration of unenforceability from the Constitutional Court.)) regulates the relationships between the private parties and the State linked to activities of the mining industry; however, it should not be ignored that other normative bodies still continue to generate legal effects as the former mining code Decree 2655 of 1988

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(República de Colombia 1988) and the Law 1382 of 2010 (República de Colombia 2010), which was intended as a reform of the current mine code, but it was declared unconstitutional by a decision of the Colombian Constitutional Court. The article 332 of the Colombian Constitution declares that the State is the owner of the subsoil and of nonrenewable natural resources, including all minerals (República de Colombia 1991). The right to explore and exploit mineral resources could be granted using the instrument of a concession contract awarded by the ANM. These acts must be registered in the National Mining Register, as soon as the mining title is granted the titleholder will be able to negotiate it with others. The concession contracts should be achieved for a maximum term of 30 years and could be extended (renewed) by the same period of time. The concession rights represented in the title could be transferred in whole or in part; it’s important to notice that the transfer must be approved by the mining authority (ANM) and registered at the mining registry (PROCOLOMBIA 2015; Mancero and Montoya 2012b). It is important to say that the owner of the mining title (title holder) does not obtain rights over the surface, in that order the rights granted are only over the subsoil exploration and exploitation. Moreover if the surface is owned by a third party, it may be leased, but if the owner is not willing to lease the surface, an easement could be negotiated, in these latter cases the title-holder will not be owner or leaseholder. In the specific cases when the land owner is not willing to negotiate, there is the possibility to create a compulsory easements that will need to follow an administrative procedures and at the end will provide compensations to the landowner; this latter procedure is supported in the concept that mining activity at Colombia is of public interest (Ricaurte 2013; Mancero and Montoya 2012b). The general rule is that Colombian mining regulations (the concession system) follow the principle of first-come, first-served; however, under distinctive conditions (when the investment project is very important from the Government’s point of view and involves national interests due

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to their importance or scale), the mining authorities may advance and create public bidding processes where mineral rights are conferred under a rights auction environment (PROCOLOMBIA 2015; Mancero and Montoya 2012b). It is also important to mention that the mining activity in the Colombian territory is subject to the Global Environmental License, which is constituted as a process that leads to the realization of an Environmental Impact Study, in which the miner must analyze the socioenvironmental impacts and the possible damages that can be derived from the activity, as well as the measures of compensation, prevention, and mitigation. As it was explained before, the environmental authority in charge varies according to the characteristics of the mining activity to be pursued (García et al. 2016). It is noteworthy that Colombia is part of the Indigenous and Tribal Peoples Convention No. 169 since 1991 which generates that the extractive industry that acts in the country is obliged to follow a prior consultation with ethnic communities when they are present at their operations. In this respect, it should be noted that the law imposes this burden to the exploitation phase but by protective judicial decisions of fundamental rights the obligation has been expanded in some particular cases to the exploration stage too (Rodríguez 2014).

International Memberships Colombia acts as a member of: IRENA since (2015), WTO (1995), IAEA (1960), and EITI (2014) and is in the middle of the process to become a member of the OECD. In the same sense, it is part of MIGA, ICSID, and the Andean Community; furthermore, it keeps multiple FTAs with, among others, US, Canada, the EU, and Chile (Romero 2016). It is important to highlight that the country incorporated the ILO Convention 169/1989 on Indigenous and Tribal Peoples, especially as regards the right of prior consultation, which has had extensive development of the Colombian Constitutional Court (Ortiz 2014).

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Concluding Statement Colombia is a country that has several challenges to overcome, but that at the same time, is structuring a serious institutionalism in mining which aims to take advantage in a better way of the business cycles of minerals. We trust it will have positive results in the short term, which will almost certainly be accompanied by new possibilities of access to large unexplored areas.

References Agencia Nacional De Minería (ANM) (2015) Exploring opportunities. Available via Dialog https://www.anm. gov.co/sites/default/files/DocumentosAnm/publication_ exploring_opportunities.pdf Accessed 01 Dec 2016 Amaya A (2011) Las zonas reservadas, excluidas y restringidas de la minería en Colombia. In: García MP (ed) Minería, energía y medio ambiente, 1st edn. Universidad Externado de Colombia, Bogotá, pp 15–55 Bastida A, Bustos L (2017) Towards Regimes for Sustainable Mineral Resource Management—Constitutional Reform, Law and Judicial Decisions in Latin America In: Campodónico, H., G. Carbonnier and S. Tezanos Vázquez (eds) (2017, forthcoming) Alternative pathways to sustainable development: lessons from Latin America, International Development Policy series No.9 (Geneva, Boston: Graduate Institute Publications, Brill-Nijhoff). Unpublished Bridge G (2004) Mapping the bonanza: geographies of mining investment in an era of neoliberal reform. Prof Geogr 56(3):406–421 Contraloria General De La República (2014) Política pública de desarrollo minero cuaderno 7. Available via dialog http://www.contraloria.gov.co/documents/ 20181/465902/07_Desarrollo+Minero.pdf/1e8d69267639-4bb6-8e11-fe0fad3c28a1?version¼1.0 Accessed 14 Dec 2016 Departamento Nacional De Estadistica (DANE) (2015) Presentación Boletín técnico Importaciones Septiembre 2016. Available via Dialog https://www. dane.gov.co/files/investigaciones/boletines/importaciones/ pres_impo_sep16.pdf Accessed 14 Dec 2016 Fairmined (2016a) Fairmined success stories/reasons to be proud. Available via Dialog http://www.fairmined.org/ Accessed 15 Dec 2016 Fairmined (2016b) Update from Oro Verde and AMICHOCÓ. Available via Dialog http://www. responsiblemines.org/en/uncategorized/update-fromoro-verde-and-amichoco/ Accessed 15 Dec 2016 García M, Bustos L, Ortiz A (2016) Derecho De Aguas y Minería en Colombia. In: Henao J, García M (eds)

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204 Minería y desarrollo. tomo ii: medio ambiente y desarrollo sostenible. Universidad Externado de Colombia, Bogotá, pp 109–151 Hernández V, Neira J, Bustos L, Gutiérrez A (2017) Postconflicto y futuro de la regulación minero – petrolera. In: Moreno LF, Montoya M (eds) Memorias XII jornadas internacionales en derecho minero energético, 1st edn. Universidad Externado de Colombia, Bogotá. Unpublished Mancero, G; Montoya, M (2012a) ‘Colombia’. In: B. Palmer y C. McKenna (eds.) Getting the deal through – oil regulation, Law Business Research, London, p 45 - 51 Mancero, G; Montoya, M (2012b) ‘Colombia’. In: B. Palmer y C. McKenna (eds.) Getting the deal through - mining regulation, Law Business Research, London, p 61 - 68 Norton Rose Fulbright Colombia (2016) Colombia mining vision by 2025. Available via Dialog http://acmineria. com.co/sites/default/files/publications/colombiaminin gvisionby-2025.pdf Accessed 15 Dec 2016 Ortiz A (2014) Manual de derecho minero, 1st edn. Universidad Externado de Colombia, Bogotá, pp 253–283 PROCOLOMBIA (2015) Investment booklet 2015. Available via Dialog http://www.investincolombia.com.co/ why-colombia.html Accessed 05 Dec 2016 República de Colombia (1988) Decreto 2655 de 1988, “Por el cual se expide el Código de Minas” Available via Dialog https://www.anm.gov.co/sites/default/files/ decreto_2655_de_1988.pdf Accessed 10 Dec 2016 República de Colombia (1991) “Constitución Política” Available via Dialog http://www.corteconstitucional. gov.co/inicio/Constitucion%20politica%20de%20Colom bia%20-%202015.pdf Accessed 15 Dec 2016 República de Colombia (2001) Ley 685 de 2001, “Por la cual se expide el Código de Minas y se dictan otras disposiciones” Available via Dialog http://www. secretariasenado.gov.co/senado/basedoc/ley_0685_ 2001.html Accessed 11 Dec 2016 República de Colombia (2010) Ley 1382 2010 “Por la cual se modifica la Ley 685 de 2001 Código de Minas” Available via Dialog http://www.secretariasenado.gov. co/senado/basedoc/ley_1382_2010.html Accessed 11 Dec 2016 República de Colombia (2011) Ley 1454 de 2011 “Por la cual se dictan normas orgánicas sobre ordenamiento territorial y se modifican otras disposiciones” Available via Dialog http://www.secretariasenado.gov.co/senado/ basedoc/ley_1454_2011.html Accessed 14 Dec 2016 República de Colombia (2015) Ley 1753 de 2015, “Por la cual se expide el Plan Nacional de Desarrollo 20142018 Todos por un nuevo país” Available via Dialog http://www.secretariasenado.gov.co/senado/basedoc/ ley_1753_2015.html Accessed 21 Dec 2016 Ricaurte M (2013) Colombia. In: Richer La Flèche E (ed) The Mining Law Review, 2nd edn. Law Business Research, London, pp 59–68

Colombia: Mineral Policy Robledo P (2016) El ordenamiento territorial para la paz In: Montaña A; Ospina A (eds.) La constitucionalización del derecho administrativo 1st edn V, 2. Universidad Externado de Colombia, Bogotá, P 55 - 65 Rodríguez G (2014) Ámbito Temático o Casos en los que es Obligatoria La Consulta Previa. In: Universidad del Rosario (ed) De la Consulta Previa al Consentimiento Libre, Previo e Informado a Pueblos Indígenas en Colombia, 1st edn. Universidad del Rosario, Bogotá, pp 65–107 Romero C (2016) Colombia: Energy policy (electricity). In: Tiess G, Majumder T, Cameron P (eds) Encyclopedia of mineral and energy policy. Springer, Berlin Heidelberg, p 1 Unidad De Planeacion Minero Energetica (UPME) (2012) Plan Nacional de Desarrollo Minero al 2014. Available via Dialog http://www.upme.gov.co/Docs/ Plan_Minero/2012/PNDM2014.pdf Accessed 08 Dec 2016 Unidad De Planeacion Minero Energetica (UPME) (2014) Cartilla PNOM: Principios, Lineamientos y Acciones Estratégicas. Available via Dialog http:// www1.upme.gov.co/simco/PlaneacionSector/Paginas/ Plan-Nacional-de-Ordenamiento-Minero.aspx Accessed 07 Dec 2016 Unidad De Planeacion Minero Energetica (UPME) (2016) Boletín Estadístico de Minas y Energía 20122016. Available via Dialog http://www1.upme.gov.co/ InformacionCifras/Paginas/Bolet%C3%ADn%20estad% C3%ADstico%20de%20Minas%20y%20Energ% C3%ADa.aspx Accessed 09 Dec 2016 Van der Veen, Peter; Remy, Felix; Williams, John P.; Lundberg, Bo; Walser, Gotthard (1996) A mining strategy for Latin America and the Caribbean; World Bank technical paper no. WTP 345 (1996/12/31) Washington DC, Available via Dialog http://documents.worldbank. org/curated/en/650841468087551845/A-miningstrategy-for-Latin-America-and-the-Caribbean Accessed 15 Feb 2017 Velásquez F, Martínez M, Gaitán L et al (2011) El sector extractivo en Colombia 2005-2010. Fundación Foro nacional por Colombia, Bogotá, pp 10–35 Velásquez F, Martínez M, Peña J (2013) El sector extractivo en Colombia 2011-2012. Fundación Foro nacional por Colombia, Bogotá, pp 67–86 Velásquez F, Martínez M, Peña J et al (2014) El sector extractivo en Colombia 2013, vol 2015. Fundación Foro nacional por Colombia, Bogotá, pp 65–70 Velásquez F, Martínez M, Peña J et al (2016) El sector extractivo en Colombia 2015. Fundación Foro nacional por Colombia, Bogotá, pp 66–67 World Bank (2016) Life expectancy at birth, total (years). Available via Dialog http://data.worldbank.org/indica tor/SP.DYN.LE00.IN Accessed 25 Feb 2017

Cyprus: Energy Policy

Cyprus: Energy Policy Michail Tsangas and Antonis A. Zorpas Laboratory of Chemical Engineering and Engineering Sustainability, Faculty of Pure and Applied Sciences, Open University of Cyprus (OUC), Latsia, Cyprus

General Information on Cyprus Cyprus is an insular country located at the Northeastern corner of the Mediterranean (Fig. 1) with total area of 9251 km2. This report takes into consideration the Republic of Cyprus data only. The political system is presidential republic and the country is a member of European Union (EU) since 2004 and a member of Eurogroup since 2008. According to the last officially published data, the total population in the

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Republic of Cyprus controlled area, at the end of 2019, was estimated at 888,000 (CYSTAT 2019). The dominant religion among the Greek Cypriot community is Greek Orthodox and is estimated that at the same period there was 0.4% Armenians, 0.8% Maronites, and 0.1% Latins. Permanent residents with foreign citizenship constituted the 18.1% of the total population. The population rate is 3.7 per 1000 citizens, much higher than the EU average. Furthermore, while the percentage of people aged over 65 is among the lowest and the percentage of aged below 15 is among the highest, the age structure of the population of the country is somewhat younger than the European average (CYSTAT 2019). The percentage of the population over 20 years old that have completed tertiary-level education is 38% and at least secondary level 46% (CYSTAT 2021a). The gross domestic product (GDP) of the Republic of Cyprus is estimated for 2020 at €21,548.4 mn with a growth rate about 5.2%

Cyprus: Energy Policy, Fig. 1 Location of Cyprus. (Source: Google maps)

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(CYSTAT 2021b). The unemployment rate during 2020 was about 6%, slightly increased comared to 2019 (CYSTAT 2022). The total production of primary energy at 2018 was 0.2 million tonnes of oil equivalent. The island had the largest share of oil and petroleum products in gross inland energy consumption observed among the EU members (89.6%) and of the lowest shares (below 2%) of use of solid fossil fuels. Moreover, in the second half of 2019, the electricity prices in Cyprus were the highest among the EU members (Eurostat 2020).

Need of Resources International Renewable Energy Agency estimates that Cyprus has a significant renewable energy potential that is able to cover the 25–40% of the total electricity needs by 2040 (Lin et al. 2016). The solar potential on the island has been calculated up to KWh/m2 per year, the total wind energy potential about 150 and 250 MW (Pilavachi et al. 2009), and the annual possible capacity of electricity generation by biogradable waste at least 242 GWh (Kythreotou et al. 2012). Moreover, the exploration, research, and exploitation of hydrocarbons in the exclusive economic zone (EEZ) of Cyprus have shown significant reserves of natural gas. The recoverable natural gas quantities are estimated by the government and foreign energy institutes to may be up to 200 tcf and they are expected to become available

in the forthcoming years (Cyprus Institute of Energy 2012 cited in Fokaides and Kylili 2014; Kazamias and Zorpas 2021). Cyprus energy resources are able to support sustainability (Tsangas et al. 2018, 2019). Moreover a submarine cable to connect electricity systems of Israel, Cyprus, and Greece, a natural gas pipeline from the Eastern Mediteranean reserves to Greece, and a gas supply infrastructure project in Cyprus have been characterized as Project of Common Interest for EU (European Commission 2019). Nevertheless, Cyprus energy system is isolated and depended on electricity produced by imported fossil fuel. The historical data of total generated energy for 2006–2020 are presented in Table 1. The generation forecast for 2021–2029 are presented in Table 2. The need for energy is expected to increase further and in 2044 to be 44% higher than the 2010 (Zachariadis and Taibi 2015). The 90% of the inland energy comsumption is produced by oil and oil products mostly imported by neighbor countries, e.g., Greece and Israel. Electricity is mainly produced by three thermal power stations, owned by the Electricity Authority of Cyprus, with a total installed capacity of 1478 MW mainly produced with heavy fuel oil (EAC 2022). The rest is covered by renewable energy sources (RES) (Republic of Cyprus 2020). The share of the renewables to the energy mix is covered by solar systems, but also there are wind and biomass projects (Zorpas et al. 2017). Their total penetration to the electricity system of the country for 2020 was 11.9% (CTSO 2021).

Cyprus: Energy Policy, Table 1 Historical generation data 2006–2020 (CERA 2021a) Year GWh Year GWh

2006 4333 2014 4190

2007 4583 2015 4202

2008 4772 2016 4501

2009 4967 2017 4863

2010 5111 2018 5011

2011 5192 2019 5096

2012 4974 2020 5060

2013 4681

Cyprus: Energy Policy, Table 2 Generation forecast 2021–2029 (CERA 2021a) Year Mild conditions (GWh) System generation forecast (GWh) Extreme conditions (GWh)

2021 5285 5350 5480

2022 5435 5550 5635

2023 5580 5640 5780

2024 5715 5770 5915

2025 5810 5855 6005

2026 5915 5965 6130

2027 6000 6040 6215

2028 6045 6085 6265

2029 6075 6110 6290

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Cyprus: Energy Policy, Table 3 Annually installed capacity of RES in Cyprus (CERA 2021a) Year Biomass/Biogas Units installed capacity (kW) Wind turbines and wind parks installed capacity (kW) Photovoltaic systems installed capacity (kW) Year Biomass/Biogas Units installed capacity (kW) Wind turbines and wind parks installed capacity (kW) Photovoltaic systems installed capacity (kW)

2005 0.0

2006 0.0

2007 0.25

2008 3.31

2009 3.56

2010 7.21

2011 7.96

2012 8.76

0.0

0.0

0.0

0.0

0.0

82.0

133.5

146.7

0.2

0.6

0.8

1.6

2.7

5.6

9.3

16.4

2013 9.70

2014 9.70

2015 9.70

2016 9.70

2017 9.70

2018 9.70

2019 12.10

2020 12.10

146.7

146.7

146.7

157.5

157.5

157.5

157.5

157.5

33.9

61.2

76.5

85.7

112.1

122.7

149.5

229.1

Cyprus: Energy Policy, Table 4 Annual generation (GWh) of RES in Cyprus (CERA 2021a) Year Biomass/Biogas Units production (MWh) Wind turbines and wind parks production (MWh) Photovoltaic systems installed production (MWh) Year Biomass/Biogas Units production (MWh) Year Wind turbines and wind parks production (MWh) Photovoltaic systems installed production (MWh)

2005 0.0 0.0

2006 0.0 0.0

2007 0.0 0.0

2008 7.8 0.0

2009 19.9 0.0

2010 24.8 31.4

2011 39.7 114.3

2012 37.6 185.1

0.1

0.3

0.9

1.6

2.9

10.2

19.8

45.3

2013 35.8 2013 230.6

2014 37.4 2014 182.4

2015 36.6 2015 221.4

2016 36.5 2016 226.3

2017 36.1 2017 211.0

2018 36.1 2018 220.6

2019 39.3 2019 238.1

2020 43.1 2020 240.0

45.3

79.9

125.9

145.1

167.8

195.3

216.3

277.9

This contribution is raising through the years as presented in Tables 3 and 4, when mostly solar energy projects continue to be built and connected to the electricity system. The established renewable energy projects in January 2021 were 637 photovoltaic systems bigger than 20 kWp, six wind farms, and 14 biomass plants. The capacity of biogas projects has also slightly raised in 2019 after 6 years of stability. On the other hand, the capacity of wind projects has not changed since 2015. In addition, in 2020, there was a total installed capacity 77.40 MWe of net-metering photovoltaic systems (CERA 2021a). Moreover, in Cyprus, a significant amount of heat produced is used by solar thermal panels mainly installed on roofs of buildings,

which on 2018 was calculated at 3015 TJ (CYSTAT 2020). The contribution of RES to the energy needed for transport in Cyprus is limited to 3% (Taliotis et al. 2020). Furthermore, the indigenous natural gas production is expected to commence by 2023 (Taliotis et al. 2017).

Energy Policy Conception of Cyprus The president of the Republic of Cyprus is both the head of state and of government. The government exercises executive power. Both the government and the parliament are vested with the legislative power (Laouris and Michaelides 2018). Environmental policy of the Republic of

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Cyprus is advised by the Department of Environment of the Ministry of Agriculture, Rural Development and Environment. Energy policy of the Republic is advised by the Energy Service of the Ministry of Energy, Commerce, and Industry, the strategic goal of which is to create a sustainable and competitive energy market, to exploit the national energy savings potential and to promote the domestic renewable energy sources (MECI 2020a). Hydrocarbons exploitation development as well as licensing in Cyprus is under the responsibility of the Hydrocarbons Service of the Ministry of Energy, Commerce, and Industry. The energy policy of the government of the Republic of Cyprus is fully harmonized with the energy policy of the European Union. It has three main axes, the market healthy competition safeguarding, the energy supply security, and the country energy demands fulfillment, with the least possible burden on the national economy and the environment (EAC 2019b). Cyprus is fully committed by the energy targets of the EU and sets specific for the country accordingly. According to the European Regulations, the Republic of Cyprus has prepared and submitted in 2020 to the European Commission an Integrated National Energy and Climate Plan (INECP) for the period 2021–2030. According to the plan the national energy and environmental objectives for the period 2021–2030 in the context of the EU policies are divided in three groups as follows. • Reducing greenhouse gas emissions and environmental objectives • Increasing the share of RES in energy consumption • Improving energy efficiency The specific objectives include the 20.9% reduction of emissions in the non-emission trading system sectors and the 24.9% reduction of emissions in the emission trading system sectors, as well as the increase of RES participation at 23% in gross final energy consumption, at 26% in gross final electricity consumption, at 39% in heating and cooling, and at 14% in the transportation sector. The emissions from land use, land use change, or forestry to be offset by at least an

Cyprus: Energy Policy

equivalent. Moreover, the final energy consumption to be reduced by 13% and the primary energy consumption to be reduced by 17% and the cumulative energy saving to be 243.04 ktoe during 2021–2030 (Republic of Cyprus 2020). According to the plan (Republic of Cyprus 2020), the key policy measures are developed in six pillars of planning priorities. The first is the GHG emissions and removals which include the promotion of natural gas and renewables use, the energy efficiency improvement in buildings, industry, and infrastructure, the reduction of emissions in the transport sector, of fluorinated gas, from agricultural and waste sector, and the increase of carbon sink. The second pillar is the renewable energy sources which include support schemes, synergies with other sectors, replacement of old solar collectors, replacement of old vehicles with electric, promotion of geothermal energy, installation of RES and energy efficiency technologies in buildings, electricity storage installations, various other measures in transport, e.g., new buses contracts, use of biofuels, other measures to increase use of RES, and energy efficiency in transports and energy exports in case of interconnection. The third pillar is energy efficiency measures which include energy efficiency obligation scheme for energy distributors, soft loans for energy efficiency, interventions and retrofits in governmental buildings, information and education measures, support schemes and incentives, energy-efficient street lighting, incentives to exceed energy efficiency legal requirements, advanced metering infrastructure plan, promotion of energy efficiency in enterprises, increasing of energy efficiency of the road transport, water sector energy efficiency, vehicle excise duty based on carbon emissions and excise tax on fuels exceeding the minimum legal levels and energy consumption fee for RES, and energy efficiency to be applied on electricity bills. Another pillar is security of supply including introduction of imported LNG via the necessary infrastructure and the increase of the national energy system flexibility. Moreover, there is the pillar of internal market which include measures for promotion of

Cyprus: Energy Policy

electricity interconnectivity, the development of internal network pipeline infrastructure for natural gas, investments for development and secure operation of the transmission electricity system, promotion of the necessary regulatory framework and projects for the operation of the competitive electricity market, and promotion of the EastMed pipeline project. Finally, there is the research, innovation, and competiveness pillar including a new industrial policy, the establishment and contribution of the Deputy Ministry of Innovation and Digital Transformation, the new programming period of European structural and investment fund, and the revision of the national funds for research and innovation to boost climate and energy priorities. The hydrocarbons policy of Cyprus which is the vision of the Hydrocarbons Service is summarized as “the optimal and sustainable development of the hydrocarbon resources of Cyprus, in order to contribute towards maximizing State revenues and boost the country’s economy for the benefit of Cypriot society and future generations” (MECI 2020b). Republic of Cyprus has divided the EEZ of the government-controlled areas in 13 blocks. Until today, exploration licenses have been granted to several oil companies for nine blocks. Furthermore, for block 12, where the “Aphrodite” natural gas field has been discovered, an exploitation license has already been granted in November 2019. The best estimation for the reserve is in the order of 4.5 trillion cubic feet (Hydrocarbons Service 2020a). Although a relevant development and production plan has already been submitted since 2015 by the licensee (Hydrocarbons Service 2020a), the exploitation has not yet commenced.

Regulatory Framework The available energy resources in Cyprus are renewable energy mainly in the form of solar energy, wind energy, and biomass. Moreover, there are hydrocarbon reserves and specifically natural gas reserves either potential or already discovered. However, the dominant energy source used on the island is imported fossil fuel like oil or

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oil products, either for building heating and electricity production or for transportation. The Ministry of Energy, Commerce, and Industry controls the quality of the petroleum products imported and used in Cyprus according to the requirements of the Law 148(I)/2003 and the relevant regulations. Moreover, the requirements of the European Regulation 98/70/EC for the control of the quality the petrol and diesel, including the required reporting to the European Commission, are also implemented (Energy Service 2022b). Furthermore, the Republic of Cyprus, according to the requirements of the directive 2009/119/EC, retains a minimum stock of oil or oil products to cover the needs of 90 days. This responsibility has been transferred to the Cyprus Organization for storage and management of oil stocks which keeps the stocks in rented storage facilities (Energy Service 2022a). The internal market of electricity and natural gas is monitored by the Cyprus Energy Regulatory Authority (CERA) whose aim is “to ensure a competitive, secure and environmentally sustainable energy market with a primary concern to protect the rights of the consumers.” This organization is responsible for the necessary licensing for the electricity and natural gas market (CERA 2021a). The parties currently participating in the electricity market of Cyprus are manufacturers with thermal units, producers with RES stations, and retailers. Anyone is not allowed to produce or supply electricity without a license. CERA grants licenses for the construction of electricity generation plants and for electricity production either for own use or for supply. For electricity production for own use by power systems 30 kW to 1 MW and electricity production by RES systems of power 50 kW to 8 MW are provided exception from licenses. The generation or supply licenses and the exceptions are provided after the submission of applications in official forms accompanied with the required documents. The electricity transmission system on the island is operated by the Cyprus Transmission System Operator (CTSO) and the distribution by the Distribution System Operator (DSO). A market officer contributes also to the electricity market (CERA 2022a).

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The dominant producer and supplier of electricity in Cyprus is the Electricity Authority of Cyprus (EAC) which is a public corporate corporation, established in 1952. It is governed by an authority the members of which is appointed by the Council of Ministers through the Minister of Energy, Commerce, and Industry (EAC 2019a). It operates three oil-fired power stations of the island (EAC 2022) and is the ultimate supplier in the island (CERA 2022a). EAC also owns the transmission and distribution systems of electricity in Cyprus and has obtained the relevant licenses by CERA as Owner of Transmission System (OTS) and Owner of Distribution System (ODS), respectively (CERA 2021a). Moreover, EAC owns a number of photovoltaic parks. There are also another 20 holders of electricity supply license by CERA, one licensee for the construction of a power plant for commercial use, with total electricity capacity of 130 Mwe, and a significant number of licensees for construction and operation of RES systems for electricity generation (CERA 2021b) as presented in Tables 3 and 4. The electricity fixed prices are proposed by EAC and are approved by CERA. The internal market of natural gas in Cyprus is under development. According to the legislative framework, any person who carry out activities related to natural gas must be licensed by CERA. These activities include the construction, operation, or ownership of any storage facility, pipeline networks, pipelines and related equipment, ownership of natural gas installation, or storage facility. Moreover, they include the performance of any function for natural gas system management, the supply of natural gas, and the implementation of any responsibilities of the network manager or owner for the import, storage, transmission, or distribution of natural gas network. Any applications to grant a license shall be submitted to CERA (CERA 2022b). Natural Gas Public Company (DEFA) is responsible for the import, storage, distribution, transmission, supply, and trading of natural gas as well as the management of the distribution and supply system of natural gas in Cyprus, which has been appointed by the Council of Ministers of the Republic of Cyprus as

Cyprus: Energy Policy

the sole importer and distributor of natural gas in Cyprus (DEFA 2022). All the hydrocarbons discovered in Cyprus, including the territorial waters, the continental shelf, and the EEZ of the island are owned by the Republic of Cyprus (Hydrocarbons Service 2022). The Council of Ministers is the body who grants the hydrocarbons prospection, exploration, and exploitation licenses. The prospection licenses are granted for 1 year. Exploration licenses are exclusive licenses and granted for an initial period for up to 3 years, with the ability to be renewed two times of 2 years each. In case of a commercial hydrocarbon discovery, the licensee has the ability to grant an exploitation license for it. These licenses are granted for an initial period of up to 25 years with the ability for one renewal of up to 10 years (Hydrocarbons Service 2020b). Up today, nine exploration licenses have been granted. One exploration licensee has granted one exploitation license. These have been granted to several multinational oil companies or joint ventures (Hydrocarbons Service 2020a). Another key stakeholder for the hydrocarbons reserves management of the island is the Cyprus Hydrocarbons Company (CHC), which was prescribed by the Council of Ministers as responsible for the management of the participation of the Republic of Cyprus in hydrocarbons prospecting, exploring, and exploiting activities (CHC 2022).

International Aspects Republic of Cyprus is a member state of EU. Therefore, the European directives and regulations concerning energy are enforced on the island. Moreover, Cyprus is committed to set national targets for climate and energy targets for 2030 in line with the EU commitment and binding targets for clean energy transition (European Commission 2020). Furthermore, although according to EU policy, national governments have control over the oil and gas in their territories, they must follow a set of common EU rules to ensure fair competition when granting licenses for these areas (European Commission 2022), the directive on the conditions for granting and using

Cyprus: Energy Policy

authorizations for the prospection, exploration, and production of hydrocarbons has been incorporated into the Cypriot Law (Hydrocarbons Service 2022).

Concluding Statement Cyprus is an insular, energy-isolated country which is depended on electricity consumption and imported fossil fuel. However, on the island there is a significant potential of RES, as well as offshore natural gas reserves (Tsangas et al. 2018). Moreover, the Republic of Cyprus is an EU member state, committed to follow the directives, regulations, and policies of the Union and to participate in the binding targeting for energy sustainability and climate change mitigation. There is an extended legislative framework regarding energy and energy sources. Moreover, a national energy and climate strategic plan for 2021–2030 (Republic of Cyprus 2020) has already been prepared, reviewed, start to be improved, and implemented. However, at the moment it is not clear how the indigenous hydrocarbons will be exploited and offered to the sustainable development.

References CERA (2021a) Annual report [online]. Available at: https://www.cera.org.cy/Templates/00001/data/ ektheseis/2020_en.pdf CERA (2021b) List of Licenses [online]. Available at: https://www.cera.org.cy/Templates/00001/data/ hlektrismos/mitrwo/adeies.pdf CERA (2022a) Electricity [online]. Available at: https:// w w w. c e r a . o rg . c y / e n - g b / i l e k t r i s m o s / d e t a i l s / ilektrismos-adeiodotisi. Accessed 18 Feb 2022 CERA (2022b) Natural gas [online]. Available at: https:// www.cera.org.cy/en-gb/fisiko-aerio/details/faadeiodotisi. Accessed 21 Feb 2022 CHC (2022) About us [online]. Available at: https://chc. com.cy/about-us/#responsibilities. Accessed 18 Feb 2022 CTSO (2021) Εnεrγειαkó Mείγmα tZB ΗlεktrιkήB ΕnerγειαB tZB Κύπrou για to 2020 [online]. Available at: https://tsoc.org.cy/files/regulations-directives/ APOKALIPSI_ENERG_MEIGMATOS_2020.pdf. Accessed 18 Feb 2022 CYSTAT (2019) Demographic statistics 2019. p 13

211 CYSTAT (2020) Energy statistics 2018 [online]. Nicosia. Available at: https://library.cystat.gov.cy/Documents/ P u b l i c a t i o n / E N E R G Y _ S TAT I S TI C S - A 2 0 1 8 170220.pdf CYSTAT (2021a) Education_indicators-A85_86-19_20EN-311221. [online] Nicosia. Available at: https:// www.cystat.gov.cy/en/KeyFiguresList?s¼33 CYSTAT (2021b) National Accounts [online]. Available at: https://www.cystat.gov.cy/en/Announcement? id¼64744. Accessed 20 Feb 2022 CYSTAT (2022) Labour market [online]. Available at: https://www.cystat.gov.cy/en/SubthemeStatistics? s¼43. Accessed 18 Feb 2022 DEFA (2022) Scope of work [online]. Available at: https:// defa.com.cy/en/scope-of-work.html. Accessed 18 Feb 2022 EAC (2019a) Annual report [online] Annual report 2019. Available at: https://www.eac.com.cy/EN/EAC/ FinancialInformation/Documents/ΑΗΚ-AnnualReport 2019-ENG-DIGITAL.pdf019-AnnualReport.pdf EAC (2019b) Energy policy [online]. Available at: https:// www.eac.com.cy/EN/EAC/Sustainability/Pages/ EnergyPolicy.aspx. Accessed 19 Feb 2022 EAC (2022) Generation [online]. Available at: https:// www.eac.com.cy/EN/eac/operations/Pages/Genera tion.aspx. Accessed 18 Feb 2022 Energy Service (2022a) ΔιαtήrZsZ Απoθεmάton Pεtrεlαιoειδo n [online]. Available at: https://energy. g o v. c y / s e c o n d a r y - m e n u / to mε ί B- π o lι tι kή B/ πεtrεlαιoειδή-kαι-kαύsιmα/διαtήrZsZ-απoθεmάto n-πεtrεlαιoειδo n.html. Accessed 22 Feb 2022 n kαι Energy Service (2022b) PoιótZtα Pεtrεlαιoειδo Καusίmon [online]. Available at: https://energy.gov. cy/secondary-menu/tomείB-πolιtιkήB/πεtrεlαιoειδ ή - kα ι - kα ύsι mα / π o ι ó tZtα - π ε trε lα ι o ε ι δ o n- kα ι-kαusίmon.html. Accessed 21 Feb 2022 European Commission (2019) Commission delegated regulation (EU) 2020/389 [online]. Available at: https:// eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri= CELEX:32020R0389&qid=1670267978397&from= EN European Commission (2020) Summary of the Commission assessment of the draft National Energy and Climate Plan 2021–2030 [online]. Available at: https:// energy.ec.europa.eu/system/files/2019-06/necp_ factsheet_cy_final_0.pdf European Commission (2022) Oil and gas licensing [online]. Available at: https://energy.ec.europa.eu/ topics/energy-security/oil-and-gas-licensing_en. Accessed 21 Feb 2022 Eurostat (2020) Energy, transport and environment statistics 2020 edition [online]. Printed by Imprimeries Bietlot Freres, Belgium- Statistical Books. Available at: https://ec.europa.eu/eurostat/about/policies/ copyright Fokaides PA, Kylili A (2014) Towards grid parity in insular energy systems: the case of photovoltaics (PV) in Cyprus. Energy Policy 65:223–228

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212 Hydrocarbons Service (2020a) Granted Licenses [online]. Available at: http://www.meci.gov.cy/MECI/hydrocar bon.nsf/page16_en/page16_en?OpenDocument. Accessed 21 Feb 2022 Hydrocarbons Service (2020b) License Types [online]. Available at: http://www.meci.gov.cy/MECI/hydrocar bon.nsf/page15_en/page15_en?OpenDocument. Accessed 18 Feb 2022 Hydrocarbons Service (2022) Laws – Regulations [online]. Available at: http://www.meci.gov.cy/MECI/hydrocar bon.nsf/page09_en/page09_en?OpenDocument. Accessed 21 Feb 2022 Kazamias G, Zorpas A (2021) Drill cuttings waste management from oil & gas exploitation industries through end-of-waste criteria in the framework of circular economy strategy. J Clean Prod 322:129098. https://doi.org/ 10.1016/j.jclepro.2021.129098 Kythreotou N, Tassou SA, Florides G (2012) An assessment of the biomass potential of Cyprus for energy production. Energy 47(1):253–261. https://doi.org/10. 1016/j.energy.2012.09.023 Laouris Y, Michaelides M (2018) Structured democratic dialogue: an application of a mathematical problem structuring method to facilitate reforms with local authorities in Cyprus. Eur J Oper Res 268(3): 918–931. https://doi.org/10.1016/j.ejor.2017.04.039 Lin JH, Wu YK, Lin HJ (2016) Successful experience of renewable energy development in several Offshore Islands. Energy Procedia 100:8–13. https://doi.org/10. 1016/j.egypro.2016.10.137 MECI (2020a) Energy Service [online]. Available at: https://meci.gov.cy/en/departments-services/energyservice. Accessed 21 Feb 2022 MECI (2020b) Hydrocarbons Service [online]. Available at: https://meci.gov.cy/en/departments-services/ hydrocarbons-service. Accessed 19 Feb 2022 Pilavachi PA, Kalampalikas NG, Kakouris MK, Kakaras E, Giannakopoulos D (2009) The energy policy of the Republic of Cyprus. Energy 34(5):547–554 Republic of Cyprus (2020) Cyprus’ Integrated national energy and climate plan for the period 2021–2030. [online] (January 2020), pp 1–302. Available at: https://ec.europa.eu/energy/topics/energy-strategy/ national-energy-climate-plans_en Taliotis C, Rogner H, Ressl S, Howells M, Gardumi F (2017) Natural gas in Cyprus: the need for consolidated planning. Energy Policy 107:197–209 Taliotis C, Giannakis E, Karmellos M, Fylaktos N, Zachariadis T (2020) Estimating the economy-wide impacts of energy policies in Cyprus. Energ Strat Rev 29:100495. https://doi.org/10.1016/j.esr.2020.100495 Tsangas M, Zorpas AA, Jeguirim M, Limousy L (2018) Cyprus energy resources and their potential to increase sustainability. In: 2018 9th international renewable energy congress, IREC 2018, pp 1–7 Tsangas M, Jeguirim M, Limousy L, Zorpas A (2019) The application of analytical hierarchy process in combination with PESTEL-SWOT analysis to assess the hydrocarbons sector in Cyprus. Energies 12(5):791

Czech Republic: Mineral and Energy Policy Zachariadis T, Taibi E (2015) Exploring drivers of energy demand in Cyprus – scenarios and policy options. Energy Policy 86:166–175 Zorpas AA, Tsangas M, Jeguirim M, Limousy L, Pedreno JN (2017) Evaluation of renewable energy sources (solar, wind, and biogas) established in Cyprus in the framework of sustainable development. Fresenius Environ Bull 26(9):5529–5536

Czech Republic: Mineral and Energy Policy Martin Sivek1, Jakub Jirásek1, Pavel Kavina2 and Jaromír Starý3 1 Institute of Geological Engineering, Faculty of Mining and Geology, VŠB, Technical University of Ostrava, Ostrava-Poruba, Czech Republic 2 Department of Raw Materials and Energy Policy, Ministry of Industry and Trade of the Czech Republic, Praha, Czech Republic 3 Czech Geological Survey, Praha, Czech Republic

General Information on the Czech Republic The Czech Republic is a landlocked country with area of ca 78,900 km2 and land population of approximately 10.5 million. Czechoslovakia experienced 40 years of communist rule and returned to democracy only in 1989. During the dramatic transformation period of the 1990s, it has peacefully split into Czech and Slovak Republics. Their transition toward Western-type democracies culminated in 2004 when they both joined the European Union. According to preliminary results of the 2011 census, the majority of the inhabitants of the Czech Republic are Czechs (64.3%), followed by Moravians (4.9%), Slovaks (1.4%), Ukrainian (0.5%), Poles (0.4%), Vietnamese (0.3%), Germans (0.2%), Silesians (0.1%), and Romani (0.1%). As the “nationality” was an optional item, a substantial number of people left this field blank (27.8%) – Czech Statistical Office (2015).

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The Czech Republic ranked 28th in the world in the Human Development Index of 2013 (United Nations Development Programme 2014). The quality of institutions is illustrated by Democracy Index, used by the Economist Intelligence Unit. The Czech Republic is ranked 25th most democratic state in the world with a score of 7.94 (The Economist Intelligence Unit 2015). The economic development is illustrated by the steady growth of GDP per capita. The latest figure of GDP at purchasing power parity per capita is 30445 Int$ in 2014 (The World Bank 2015). The Czech Republic belongs to a group of countries with a long history of mining in its territory. That is the reason why many of its deposits are already exhausted or why their output is declining. With regard to ore deposits, the Czech Republic is a net importer as in the case of liquid and gaseous hydrocarbons. The Czech Republic is essentially self-sufficient in bituminous coal and lignite, but their recoverable reserves are limited. The Czech Republic has long ranked among major producers of uranium ore. Today, only a single underground mine is operating near the end of its life span, and the future of uranium mining in the territory of the country is being deliberated. As far as industrial minerals are concerned, the Czech Republic has reserves of some minerals that have traditionally been mined in its territory (such as limestone, kaolin, clays, bentonite, silica sand, feldspar, and others); however, a number of them must be imported. All of the mentioned factors increase the importance of formulating the mineral and energy policy of the Czech Republic, as does the continued interest in expanding and strengthening the mineral and energy security of the country.

Need of Minerals The Czech Republic, mainly the part consisting of the Bohemian Massif, is very diverse and rich in ore resources and deposits. However, most of the rich and accessible ores in the territory of the country have been exhausted due to long-term and intensive mining. This applies in particular to the ores of silver, tin, iron, copper, lead, zinc, and also

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partly to gold and antimony ore. Yet the Czech Republic still has large reserves of gold, tungsten, and lithium ore. The geological structure and existing knowledge realistically indicate the occurrence of promising resources of some rare elements such as rubidium, cesium, zirconium, and hafnium. They are mostly by-products in the deposits of other metals such as uranium and lithium. By contrast, significant deposits and resources of the platinum-group metals; of aluminum, magnesium, titanium, chromium, nickel, and cobalt ores; of REE; and of some other precious metals cannot be assumed to occur in the Czech Republic (CR). The seemingly large registered reserves of manganese consist of very poor and difficult-to-process ores. The level of mining and its development was influenced over the long term by the so-called limit costs for metals that were promulgated by central authorities, which subsidized ore mining from 1965 to 1988. This also affected the volume of geological and mainly industrial reserves. In connection with the changes that occurred in the Czech Republic in 1989, the government adopted a concept of phasing out ore mining and processing in 1990, which was based on a gradual but radical reduction in subsidized mining and processing of ores so that subsidies would not be provided since 1993. As a result of the termination of subsidies, all ore-mining operations gradually ceased by the beginning of 1994. There are no metal ores that are currently being mined in the CR, and all consumption is covered by imports. The reserves at ore deposits were subsequently reevaluated according to new conditions of usability, and with a few exceptions (such as some gold ore deposits), originally economic reserves were reclassified as potentially economic and, in some cases, even removed from the Register of Reserved Mineral Reserves of the Czech Republic. The Czech Republic has limited resources of mineral fuels. Significant deposits and resources of coal and uranium ore occur in the territory of the country, but there are only small reserves and resources of crude oil and natural gas. The essential energy mineral of the Czech Republic is coal, nearly 50 million tonnes of which are produced

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and from which about 57% of electricity and 58% of heat are generated. With around 40 million tonnes, lignite accounts for the largest production volume and is consumed almost exclusively domestically to produce electricity and heat. Even though bituminous coal accounts for only 17–18% of the total coal production, only a part of it is consumed domestically and more than half is exported. However, the Czech Republic also imports about two million tonnes of bituminous coal annually. The total domestic resources of coal are high; however, mineable reserves are very limited. The average lifespan of lignite reserves is about 20 years and even shorter in the case of bituminous coal, roughly 15 years. The CR is the only country in the EU (not counting the smaller production in Romania, where uranium is recovered as a by-product of ore extraction) that still produces uranium ore, though only from the Rožná deposit. The annual production of around 200 tonnes of metal has, in recent years, theoretically (the produced concentrate is exported and finished fuel cells are imported) covered roughly one-third of domestic needs. Due to intensive mining, most of the richer vein-type uranium deposits were exhausted prior to 1990. By contrast, subeconomic resources of uranium ore in sandstone-type deposits are still very large, despite having been mined as well. The geological structure and current exploration of the Czech Republic exclude the occurrence of large and significant deposits of crude oil and natural gas. The reserves of both of these raw materials in the Czech Republic are small and their production covers about 1–2% of the country’s needs. Therefore, the vast majority of both of these two important energy and chemical raw materials must be imported. Industrial minerals include a wide range of minerals and rocks used directly or after processing in various industrial and agricultural sectors. There are many industrial minerals in the Czech Republic and their importance varies. The total resources of most of the important industrial minerals are relatively large: however, the mineable reserves of the highest quality and most accessible minerals are limited. As in the case of ore mining, the mining of fluorite-barite ores

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ceased in the first half of 1994. Graphite mining was terminated later on, at first in September 2003 at the South Bohemian deposits and in 2008 at the last worked deposit in North Moravia (the mineral that was mined earlier continued to be used over the next 2 years). Kaolin is traditionally one of the most important domestic industrial minerals. The Czech Republic ranks among the leading producers in Europe and the world with an annual production of crude and beneficiated kaolin of around 3–3.5 million tonnes and 0.55–0.65 million tonnes, respectively. The Czech Republic is also one of the leading European and world producers in the output of various types of clay, bentonite, feldspar, silica sand, and diatomite. Clay production declined significantly and currently ranges around 0.5 million tonnes annually, which is similar to foundry sand with about 0.4 million tonnes annually. The production of bentonite, feldspar, diatomite, and glass sand has been stable over the long term and ranges around 0.2 million tonnes, 0.4 million tonnes, 30–40 thousand tonnes, and about 0.9 million tonnes, respectively. The production and reserves of carbonates account for the largest volume of all industrial minerals. Around 4.5 million tonnes of highpurity limestone and 5–6 million tonnes of other types of limestone and corrective additives for cement production are produced annually. The term construction minerals applies to all minerals that are used in the construction industry, such as in road, railway, and building construction, and in the manufacture of concrete, mortar, bricks, and blocks. In the Czech Republic, construction minerals are subdivided into reserved (owned by the state) and non-reserved (owned by the land owner) minerals. Minerals for the production of building materials, primarily carbonates, are classified in the Czech Republic among industrial minerals. The Czech Republic has vast proved reserves of reserved and non-reserved deposits of construction minerals. They are however being depleted quickly, especially in the case of sand and gravel, primarily due to the construction of industrial zones and the expansion of satellite towns, road networks, etc. A total of 55–60 million tonnes of construction minerals are produced annually, which is

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nearly 45% of all minerals (the largest volume), yet production has declined by nearly 30% in the past 5 years. Crushed stone accounts for the largest share of production – reserved and non-reserved deposits annually produce around 30 million tonnes and three million tonnes, respectively. In the case of sand and gravel, reserved and non-reserved deposits annually produce around ten million tonnes and eight million tonnes, respectively. Brick clays and related minerals are produced to a lesser extent – around 1.3 million tonnes from reserved deposits and 0.3 million tonnes from non-reserved deposits – and in the case of dimension stone, about 0.4 million tonnes from reserved deposits and 0.1 million tonnes from non-reserved deposits.

Classification of Mineral Reserves The Czech mineral reserves/resources classifications were adopted from the former USSR classification, and it is not compatible with international classifications (UNFC, JORC, PERC ETA.). The effective Czech Mining Act divides the classification of geological reserves (total resources) at reserved deposits according to degree of exploration into the categories of explored reserves (prozkoumané zásoby) and prospected reserves (vyhledané zásoby) and, according to exploitability conditions, into economic reserves (bilanční zásoby) and potentially economic reserves (nebilanční zásoby). Economic reserves are suitable for existing technical and economic conditions in exploiting a reserved deposit. Potentially economic reserves are currently unexploitable due to being unsuitable for existing technical and economic conditions of exploitation, yet assumed to be exploitable in the future in consideration of expected technical and economic development. The term reserves as used, by contrast, in standard international classifications represents only the parts of economic-explored resources which are available for immediate or developed extraction. All other registered parts are resources, not reserves.

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Legislative Basis for the Mineral and Energy Policy of the Czech Republic The Czech Republic drafted its first mineral policy at the end of the 1990s. The document called the “Mineral and Mineral Resources Policy” was approved by Czech Government Resolution No. 1311 on 13 December 1999. The mineral policy was defined in this document as “the sum of all activities involving the exploration for and use of domestic mineral resources, including sources of secondary minerals, their efficient and rational use, and the acquisition of minerals abroad for the purpose of securing the economy.” In an addendum to the resolution, the government imposed 13 tasks addressing the main objectives of the mineral policy and set deadlines for their completion. The set objectives and deadlines for their completion were assessed in Czech Government Resolution No. 1239 on 10 December 2003, which approved the “Report on the Implementation of the Mineral and Mineral Resources Policy.” Since then, the basic concept of the mineral policy has essentially been implemented, even though it has neither been evaluated further nor updated (Mineral Policy of the Czech Republic 2012). The mineral policy approved in 1999 was established during a period when the Czech Republic was drawing closer to joining the European Union, but also at a time when the mining industry was being phased out, primarily in the member states of the European Union. This period was characterized by relatively low mineral prices, which subsequently began to rise only to start declining again after 2008. Many international political changes occurred in the global economy since the establishment of the first mineral policy of the Czech Republic in 1999. A general upward pressure was put primarily on the consumption of energy minerals, which lead among other things to increased political selfconfidence of mineral-producing countries. Issues that increasingly came to the forefront concerned the energy and mineral security of countries. The initial orientation of mineral policies toward energy minerals was gradually expanded to include metals and even some industrial minerals.

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Changes in the mineral markets also influenced the European Union’s approach to minerals. In 2008, specifically on 3 November 2008, the European Commission issued the communication COM (2008) 699, which outlined a new integrated strategy “The Raw Materials Initiative – Meeting our critical needs for growth and jobs in Europe.” It contains measures to ensure access to minerals for the European industry, which is considered to be of vital importance. Together with the other factors mentioned previously, this document, which was taken into account by the Czech government on 30 March 2011, accelerated efforts to draft an updated mineral policy. This prompted proposals that have yet to be approved by the Government of the Czech Republic due to some politicized mineral policy objectives. This is exemplified by a proposal from 2012 (Mineral Policy of the Czech Republic 2012), which was discussed at the meetings of the Government Council for Energy and Mineral Strategy. However, it is still not clear when the new mineral policy of the Czech Republic will be finalized and approved. The document was divided into two sub-documents. The first section entitled the “Secondary Mineral Policy” was finalized, successfully passed the mandatory SEA process, and was approved by the government. The second part is the actual mineral policy, which is still being dealt with and debated because it contains some sensitive issues such as a proposed new locality as a substitute for the Rožná uranium mine nearing the end of its life span or problems involving important reserves of lignite, which are still blocked by administrative restrictions. The energy policy of the Czech Republic was initially drafted as a part of the mineral policy. The growing problems of European countries, including the Czech Republic, in securing energy resources heightened the significance of the energy policy, which became an independent issue. In the Czech Republic, this development resulted in the establishment of independent documents entitled the State Energy Concept. The first of these documents was the “State Energy Conception of the Czech Republic,” which was approved by Czech Government Resolution No. 211 on 10 March 2004. The document

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outlined the state energy concept and defined targets and instruments for meeting those targets. It also included a comprehensive energy scenario of the state energy concept. Every 3 years, the Ministry of Industry and Trade evaluates the achievement of the objectives of the state energy concept. In recent years, several updated versions of the State Energy Concept were produced, the last of which is from 2013. The proposal includes a vision and priorities of the Czech energy sector, including a scenario of its development until 2050 (the scenario includes a detailed strategy up to 2030 and a strategic balance sheet for 2030–2050). The document was thoroughly discussed by the aforementioned Government Council for Energy and Mineral Strategy and passed through interdepartmental proceedings and the difficult SEA process, including a public hearing and international debate. It is expected to be adopted by the government in the next few months. However, the next step in the development of nuclear energy in the CR remains unresolved.

Basic Characteristics of the Mineral Policy of the Czech Republic The main objective of the national mineral policy is to secure an abundant supply of mineral resources for the nation’s economy. These resources may come from domestic sources or from imports. The ratio between the two groups is then to a certain extent an indicator of a nation’s mineral security. As mentioned in the section regarding the mineral resource base of the CR, our country depends on the imports of all primary metallic raw materials, of the vast majority of crude oil and natural gas and of some specific industrial minerals. In the case of these commodities, the most important factor is the sufficient diversification of supplies, specifically the diversification of source areas as well as transport routes. The Czech Republic has dealt with this relatively well as far as crude oil and natural gas is concerned, which of course does not mean that there is no room for improving the diversification further and thus for strengthening the country’s energy

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security. The nation’s stocks also play a role in the case of minerals, on whose imports our country depends. With regard to those minerals that are in sufficient supply in the territory of the Czech Republic, it is essential for the mineral policy to create conditions for their economic use, which is fully in line with the European Raw Materials Initiative. This is one of the three pillars that introduce a higher degree of use of domestic (European) mineral resources in order to reduce the frighteningly high import dependence and thus intimidation of the EU. A very important part of the national mineral policy is its soft areas, in particular the need to conduct high-quality geological surveys of our territory, with a particular focus on new, modern, super-strategic raw materials of the EU, for whose existence or extent of occurrences in our area the Czech administration does not possess relevant or rather hardly any information. Another level of the national mineral policy should be to provide support for the work conducted by Czech exploration companies abroad. This should involve both diplomatic and information support and primarily financial support for projects that have a great export-oriented potential and that may strengthen the mineral security of the CR in the future. Last but not least, it is necessary to mention the support of science and research in the field of mineral resource management, particularly the research into the use of new minerals, new modern applications of traditional minerals, advanced nondestructive exploration methods, material-saving technologies, smart recycling, etc.

Basic Characteristics of the Energy Policy of the Czech Republic Formulating and updating the energy policy is an extremely important task for the Czech Republic with regard to its heating industry and electricity generation. As previously mentioned, the energy policy is closely connected to the mineral policy because they basically share an identical basis. This mainly involves the evaluation of the mineral resource base of the country and the objective analysis of the possibilities for supplying missing

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minerals. At the same time, it is important to bear in mind that the evaluation of the domestic mineral resource base should be conducted from a geological and mining technology perspective and should also take into account the overall economic impact of mining. In comparison with the majority of the member states of the European Union, meeting the energy needs of the Czech Republic presents a number of specific features (Kavina et al. 2009). This is best observed by comparing their energy dependence. In 2013, the energy dependence of the entire European Union (EU-28) amounted to 53.2%. However, that same year, the energy dependence of the Czech Republic was 27.9%. It should be noted that the Czech economy reached this value in a situation where it is basically a net importer of crude oil and natural gas. The reason for this value is mainly the situation in electricity generation, in which the Czech Republic is presently completely self-sufficient, and even part of its production is exported. According to data from the Energy Regulatory Office of the Czech Republic (2015), the balance of cross-border electricity flows in 2014 amounted to 16 924.6 GWh, which is the difference between total export and import of electricity. This value represents 21.1% of net electricity produced that year in the Czech Republic. This is largely the result of the Czech Republic’s appropriate energy mix (Fig. 1), which safeguards a significant portion of the domestic mineral resource base for electricity generation and partly also for heating. Lignite and, to some extent, also bituminous coal still account for a significant share of heating and so does nuclear energy in the case of electricity as well as hydropower plants and other renewable resources. The share of electricity produced from crude oil and natural gas is very low. In addition to lignite, natural gas plays an important part in heating as well, and crude oil and petroleum products to a lesser extent. The orientation toward the domestic mineral resource base, primarily in electricity generation, is the main reason for the Czech Republic’s low energy dependence and also largely the main reason for the differences in the energy mix of the Czech Republic and European Union (Fig. 1).

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a

b

20,1% ,

18,3%

41,3 %

6,0% 1,9 %

3,9%

0,1%

10,3% 2,5 % 3,9% 10,3 % *

29,5%

,1 % ** 5,1

4,3 % *

1

3

5

2

4

6

35,3 % 7,3 % **

7

Czech Republic: Mineral and Energy Policy, Fig. 1 Comparison of sources from which electrical energy is produced. (a) in EU member states (in 2007), (b) in the Czech Republic (in 2013) (Source: Eurostat (2010); Energy Regulatory Office (2014)). (1) Lignite

power plants, (2) bituminous coal power plants, (3) natural gas power plants, (4) crude oil power plants, (5) nuclear power plants, (6) renewable energy sources, *hydropower, **other RES, (7) other power stations

The Czech Republic currently faces a major decision regarding the future orientation of its energy strategy. At the present time, electricity generation is based on two pillars: coal-fired and nuclear power plants. Changes in the mineral resource base of the Czech Republic, primarily the time constraints or administrative restrictions on lignite, are prompting a decision on the future of Czech energy, including nuclear energy. The changes are also the main reasons why the Czech Republic will be forced to adjust its future energy strategy and also its current best energy mix (Sivek et al. 2012a), which was chosen more or less in the 1970s. Since then, the reserves and consequently also the life span of lignite deposits have decreased significantly. The future development of uranium mining in the Czech Republic remains similarly in question. According to historical statistics, the Czech Republic is prominent in global rankings with a total production of 111 thousand tonnes of uranium, which were produced between 1946 and 2009. However, mining was terminated at all vein-type deposits (with the exception of the Rožná deposit) in the 1990s and also at sandstone-type deposits in 1993. Uranium

production therefore declined from an annual production in the range of 2000–2900 tonnes of uranium per year to 222 tonnes of uranium in 2012 (Starý et al. 2013). The estimated lifespan of the last deposit Rožná amounts to several years. However, the Czech Republic still has a sound potential for uranium resources. In order to maintain its unique know-how in the uranium industry in Europe and to maintain its ability to produce this highly strategic mineral, the preparation for the exploitation of a similar deposit, employing conventional underground mining, is realistically being considered as a substitute for the Rožná deposit that is about to be exhausted. According to statistics (Starý et al. 2013), the total uranium resources recorded in the Czech Republic amounted to 135 214 tonnes as of 31 December 2012. However, about 85% of these are registered as potentially economic resources (partly due to an administrative recalculation of reserves in connection with the phaseout of uranium mining). The activation of the mentioned resources requires renewed mineral exploration and also new technical and economic evaluations of prospective deposits as well as the use of the latest

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technologies for their possible exploitation. The need for a realistic assessment of the options and methods for developing renewable energy sources in the Czech Republic must also be taken into account with regard to the new energy policy (Sivek et al. 2012b), particularly those sources that are economically viable such as smaller photovoltaic installations on the roofs of houses or industrial sites. The open questions mentioned regarding the future development of energy in the Czech Republic are the main tasks that must be the subject of the proposed updated state energy concept and national mineral policy as well. In order to maintain its existing level of energy security and not to increase its energy dependence dramatically, the Czech Republic must resolve the fundamental question regarding the future orientation of the structure of electricity generation as it ponders the future development of its energy portfolio in the electricity generation sector. It’s a question involving coal or nuclear power as the future for electricity generation in the Czech Republic. The State Energy Policy of the Czech Republic that was approved in March 2004 and a government expert committee for assessing the future energy needs of the Czech Republic in 2008 came to similar conclusions:

Union (since 2004), NATO (since 1999), WTO (since 1995), OECD (since 1995), OSCE (since 1993), and the Council of Europe (as the Czech and Slovak Federative Republic since 1991, as the Czech Republic since 1993).

1. Not to delay the planned construction of new nuclear reactors, including a realistic evaluation of the role of domestic uranium deposits with regard to their integration into the uranium cycle 2. To consider the possibility of increasing the availability of domestic lignite

References

Other choices regarding the energy mix for electricity generation would substantially increase the energy dependence of the Czech Republic and thereby weaken its energy security.

International Memberships The Czech Republic is a member of the United Nations (as Czechoslovakia charter member, as the Czech Republic since 1993), the European

C Concluding Statement Ore deposits in the territory of the Czech Republic are mostly exhausted by long mining. The only exceptions are some gold, tungsten, and uranium deposits. Of the future interests, here might also be some deposits containing lithium minerals. Exploration of industrial minerals deposits is stable. Production is mostly focused on traditional ones, such as kaolin, refractory clay, bentonite, industrial sands, limestone, and feldspars. Domestic demand for construction minerals is mostly covered by local deposits of sand and gravel, aggregates, crushed stone, and brick clay. When creating its energy strategy, the Czech Republic may take advantage of the fact that despite a considerable drop of the exploitation of mineral raw materials at the end of the last century, the production of the majority of energy raw materials has been preserved in its territory.

COM (2008) 699 final. The raw materials initiative – meeting our critical needs for growth and jobs in Europe. Commission of the European Communities, Brussels Czech Statistical Office (2015) Preliminary reports on 2011 census – 2015, Prague. Available via https://vdb. czso.cz/vdbvo2/faces/cs/index.jsf?page¼profil-uzemi. Accessed 11 Nov 2015 Energy Regulatory Office (2014) Yearly report on operation of the Czech electricity grid for 2013, Prague. Available via http://www.eru.cz/documents/10540/ 462820/Annual_report_electricity_2013.pdf/34a35d279c58-4c79-99d1-f0fbc5eac06a. Accessed 4 Nov 2015 Energy Regulatory Office (2015) Monthly reports on operation of electric power system of the Czech Republic – 2014, Prague. Available via http://www.eru.cz/cs/3787. Accessed 4 Nov 2015 Eurostat (2010) Europe in figures: Eurostat yearbook 2010. European Union, Luxembourg Government Resolution No. 1311/1999 regarding the mineral and mineral resources policy (in Czech)

220 Government Resolution No. 1239/2003 approving the report on the implementation of the mineral and mineral resources policy (in Czech) Kavina P, Jirásek J, Sivek M (2009) Some issues related to the energy sources in the Czech Republic in the Czech Republic. Energy Policy 37:2139–2142 Mineral Policy of the Czech Republic (2012) Ministry of the industry and trade, Prague (in Czech) Sivek M, Kavina P, Jirásek J, Malečková V (2012a) Factors influencing the selection of the past and future strategies for electricity generation in the Czech Republic. Energy Policy 48:650–656 Sivek M, Kavina P, Malečková V, Jirásek J (2012b) Czech Republic and indicative targets of the European Union for electricity generation from renewable sources. Energy Policy 44:469–475 Starý J, Sitenský I, Mašek D, Hodková T, Kavina P (2013) Mineral commodity summaries of the Czech Republic 2013 (statistical data to 2012). Czech Geological Survey, Prague

Czech Republic: Mineral and Energy Policy State Energy Conception (approved by the Government of the Czech Republic resolution no. 211 of 10 Mar 2004) (2004) Ministry of the industry and trade, Praha (in Czech) The Economist Intelligence Unit (2015) Democracy index 2014. The Economist Intelligence Unit Ltd. Available via http://www.sudestada.com.uy/Content/Articles/ 421a313a-d58f-462e-9b24-2504a37f6b56/Democracyindex-2014.pdf. Accessed 11 Nov 2015 The World Bank (2015) GDP per capita, PPP (current international $). Available via http://data.worldbank.org/ indicator/NY.GDP.PCAP.PP.CD?order¼wbapi_data_ value_2014+wbapi_data_value+wbapi_data_valuelast&sort¼asc. Accessed 11 Nov 2015 United Nations Development Programme (2014) Human development records. Available via http://hdr.undp.org/ en/content/table-1-human-development-index-and-itscomponents. Accessed 11 Nov 2015

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Deep Mining, Health, and Safety Aspects Bo Johansson and Jan Johansson Lulea University, Lulea, Sweden

There is a lack of skilled miners and mining engineers in many countries, especially in the Western world. The present workforce is aging and the companies have difficulties in recruiting young talented people. This is already a great obstacle for the business and the problem has to be effectively solved before it gets even worse. An important task is therefore to create the future safe and attractive mining workplaces that engage and motivate youngsters to work within the industry. A good safety against accidents and work-related illness is essential and must be provided by the mining companies. Noting else is acceptable, now or in the future. A heavy responsibility lays here on the mine planners shoulders. They must find solutions that promote high productivity and good economy as well as safety and a healthy work environment. The mine planners will initially shape the general and specific work environment for miners for many years to come. If the planners design is a poor solution and it is necessary to redesign it, it will also probably be very expensive to correct after it has been implemented. Work environment and safety issues are unfortunately often left quite unattended in the early

stages of mine planning and design when instead it should be systematically highlighted and developed from the very first planning steps. The best and most efficient way to gain a good safety is through proactive planning instead of reactive corrective actions. It is also the best way to reduce the associated costs for risk elimination and reduction. The mine planner is however not alone; he or she works in a company context where safety climate and culture, safety policy, and safety management have a strong influence on how well the planner can succeed in his work. The slogan “Safety First” has been heard in the mining business for many decades but is still in many cases not more than a slogan since safety first is not fully practiced, especially if the business has financial problems. It seems however that the times are changing and many mining companies are now making great efforts to improve their safety climate and safety culture. Research on safety (Human Engineering 2005) has shown that a positive safety climate and well-developed safety culture are important requisites for a healthy and safe work environment, especially in heavy industries. In order to manage the risks in the business, every mining company is also in need of a strategic long-term policy regarding how to deal with safety issues and strive for better work conditions. The safety policy shall direct and establish systematic ways to manage (plan, steer, and control)

© Springer-Verlag GmbH Germany, part of Springer Nature 2023 G. Tiess et al. (eds.), Encyclopedia of Mineral and Energy Policy, https://doi.org/10.1007/978-3-662-47493-8

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the safety work, also including early planning and design activities. Because mining is a very risky business, it has to follow and obey a lot of directives, laws, and provisions. Most of these rules only stipulate minimum demands and the companies are free to exceed them. This is also what mine planners should aim at, exceeding minimum demands. A first step for a mine planner is therefore to get acquainted with the national and international (i.e., EU regulations) system of rules and basic demands. Many of these demands are provided by the national or EU authorities. This has to be done in a thorough way; in each country there are quite a large number of directives, laws, and provisions that regulate and give guidelines for health and safety issues in underground mining. The basis for all activities in systematic health and safety work shall always be an initial thorough risk assessment both of the present and a future planned state. It is of course easier to assess present or historical risks than future risks, especially if the future holds large changes in technology and or work organization. Still a mine planner needs to assess the risks with different mining concepts that are developed and planned. Mining might develop in a revolutionary way but will most probably develop in another way, in an evolutionary way. This means that much can be learned from history and from the present state. Thorough evaluations of present and historic

designs have, for example, systematically been used by the Swedish mining company LKAB in the design of their newly opened main level at 1,365 m below surface. This evaluation has been very important since the time span from the first conceptual designs to the final solutions has stretched over 12 years and involved a large number of planners. Risk assessments can be performed in number of ways depending on the situation and circumstances. All risk assessment shall however be based on probability and consequence for unwanted events. A practical tool for this purpose is a risk matrix that eases a systematic and consequent risk assessment (see below). As can be seen in Fig. 1, probability is expressed as a frequency for a specific event or deviation. The assessed risk level during planning can also be coupled to a specified need for action (see below) (Fig. 2). The risk matrix for risk assessments during planning can also with some modification be used for risk assessments in the operative production stages. The risk matrix has therefore become a quite well-known and used tool in the mining companies (Fig. 3). The classical tools for the identification of occupational risks in the existing production environments are safety rounds, incident, and accident reporting. These tools are however less suitable to identify and assess risks in future work

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environments. There you need other types of more proactive methods such as: • Preventive deviation analysis • Preventive energy analysis A deviation is according to Harms-Ringdahl (2013) defined as an event or condition that deviates from the intended or normal. The purpose of a deviation analysis is to prevent and to predict abnormalities that can cause damage and to develop proposals to improve safety measures. Deviation analysis is a very useful method since

it takes into account the entire system, HumanTechnology-Organization. Energy analysis focuses more on technology and might be useful when developing new productions systems. Three main components considered in an energy analysis are: • Energy that can damage • Targets that may be harmed • Barriers to energy The energies usually considered are gravity, height (including static load), linear motion,

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rotary motion, stored pressure, electrical energy, heating and cooling, fire and explosion, chemical effects, radiation, and miscellaneous (human movement, sharp edges, and points). There are also many other different risk analysis methods that can be used during the development of new production systems. Besides the methods mentioned above, methods like preventive work safety analysis (PWSA), failure mode effect analysis (FMEA), fault tree analysis (FTA), event tree analysis (ETA), work environment screening tool (WEST), etc. are possible to use. The most appropriate tools have to be chosen for every specific analysis task, and the users of the tools must also have the necessary competence in order to attain reliable and relevant results. Here the mining business probably can learn much from other industry that has a strong safety culture and long experience of systematic risk management. Especially important will be to learn how to proactively manage risks for fatalities and other severe risks. Here so-called leading indicators are preferred instead of lagging indicators. Even if there are many risk evaluation tools available, the mining industry seems to need new and efficient tools for description, evaluation, and design of work environment during early phases of strategic decision making and production system design. The most important decisions regarding work environment and safety are made by top management when mining methods, technology, work organization, etc. is decided. Therefore risk analyses regarding these matters should be made as early as possible in the mine design process. Once a risk analysis is completed, it often requires measures which in most situations should be implemented in the following well-known order: 1. Prevent already in the planning stage and replace the hazards entirely, for example, through automation to eliminate manual or mechanized underground work. 2. Isolate the individual hazard, risk process, for example, by designing ventilation and layout so that the blasting fumes can’t be spread outside the risk zone.

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3. Change process technology and behavior, for example, DTH-drilling with water hydraulics rather than pneumatics to reduce dust emissions. 4. Limit the hazard through enclosures and physical protection, for example, build concrete borders and railings at the shaft openings. 5. Isolate personnel from the hazard risk area, for example, by supplying the mining vehicles with safety cabs with good climate control. 6. Risk is reduced by instructions, procedures, training, etc. For example, procedures for safe handling of explosives. 7. Risk is reduced through personal protective equipment, for example, functional working clothes. Depending on the complexity and severity of problems, one may require different combinations of measures as described above. One recommendation is to always try to attack the root causes of the problem first. It tends to result in the most costefficient and result-efficient solutions. This is an important task for mine planners. They have the best opportunity to eliminate a lot of potential health and safety problems when they develop the first conceptual solutions. Planners that don’t realize this and neglect these matters can cause great harm for many years to the mining personnel and their company.

Special Problems Related to Deep Mining Mining at big depths that is more than 1,000 m below surface normally causes three major depthrelated problems that often are very difficult and expensive to solve. The problems are: • Increased rock stress resulting in seismicity and/or floor, wall or roof convergence, rock bursts, structural collapses, falling rock, etc. Instability may also cause blocked bore holes for blasting, resulting in poor charging which can increase dangerous handling of

Deep Mining, Health, and Safety Aspects

undetonated blasting agents and dangerous handling of boulders • Increased bedrock temperature causing heat stress on miners. • Prolonged transportation distances which reduce effective working time and make evacuation of the mine more critical. The first and most difficult of these problems is the rock stress increase by the increased gravitational weight of the overlaying rock and how it affects the rock masses surrounding all excavated openings: tunnels, shafts, ramps, etc. The increased load can result in an increased risk for serious rock falls and rock bursts due to induced seismic activity. The consequences can vary from minor to devastating and much effort must therefore be paid to reduce the present risks, both proactively and reactively. The main cause for rock bursts is high in situ stress which also can occur due to tectonic forces in any direction. Rock bursts therefore also can appear in shallow mines and in mines with high extraction ratio where forces are redistributed and concentrated to remaining pillars. There are a number of early design and planning factors that clearly affect the occurrence and severity of rock burst: • Mining method • Sequencing of developing the underground mine workings also including extraction of ore • Pillar layout and geometry • Blasting damages on the pillars • Presence of very strong rock in the openings • Rock and backfill used to stabilize mined out areas The most important preventive measure is a carefully designed safe mine layout, but this is a difficult task since other demands on production and product quality, metal recovery, etc. must be fulfilled. One must always consider that rock bursts and structural collapses are complex high-risk phenomena that are very difficult to predict. Top qualified expertise on rock mechanics and rock

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reinforcement should therefore always be engaged in early mine design and further on all the way into production phases so that the risks can be minimized. A second significant problem is increased bedrock temperature at larger depth. In average, the temperature increases with about 25  C for each 1,000 m (Fridleifsson et al. 2008). The warm bedrock heats up the air causing a heat stress on underground personnel if air cooling is not available. Cooling measures are very expensive but is necessary if miners working hours aren’t to be drastically reduced. Systems for managing a hot environment should therefore be considered already in conceptual studies so that the basic ventilation principles and design are appropriate. A third obvious depth-related problem is prolonged transportation distances and transport time which reduces the effective working hours for the miners causing higher labor costs per ton mined ore and makes fast emergency and rescue transports more difficult to achieve. In the large El Teniente new mine level project, there was, for example, a strong demand from the project manager to find design solutions to this problem that they had with the old transport system (Revuelta et al. 2008).

References Fridleifsson IB, Bertani R, Huenges E, Lund JW, Ragnarsson A, Rybach L (2008). The possible role and contribution of geothermal energy to the mitigation of climate change. In: Hohmeyer O, Trittin T (ed) IPCC scoping meeting on renewable energy sources, Luebeck, pp 59–80 Harms-Ringdahl L (2013) Guide to safety analysis for accident prevention. IRS Riskhantering AB, Stockholm Human Engineering (2005) A review of safety culture and safety climate literature for the development of the safety culture inspection toolkit, RESEARCH REPORT 36, First published 2005. ISBN 0 7176 6144 X Revuelta J, Reyes F and Pozo R (2008) El Teniente New Mine Level Project. Paper presented at The First International Future Mining Conference, Sydney, Nov 2008

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Democratic Republic of the Congo: Mining Sector

Democratic Republic of the Congo: Mining Sector Sara Geenen1,2 and Stefaan Marysse3 1 Institute of Development Policy and Management, University of Antwerp, Antwerp, Belgium 2 Research Foundation Flanders, Brussels, Belgium 3 University of Antwerp, Antwerp, Belgium

General Information on Democratic Republic of Congo The Democratic Republic of Congo (DRC) has taken its new name in 1997 after the demise of the reign of president Mobutu who governed autocratically for over two decades. The last years of Mobutu’s were characterized by hyperinflation and negative economic growth. Laurent Kabila, spokesman of the rebellion that set aside president Mobutu, became the new president, but the licensing of his (Rwandan) military chief of staff in 1998 sparked off a devastating war, commonly called the “first international African war” (1998–2003). After the murder of Laurent Kabila in 2001, his son Joseph took over power and negotiated – under the aegis of the international community – a peace agreement in 2003. This also marked the start of a macroeconomic

recovery through opening up to the international community. Chart 1 shows the growth rate of the economy as well as the control of inflation after 2001. Since 2003 (after introduction of the new Mining Code in 2002), there has been consistent growth (between 5 % and 9 % per annum except for the year 2009, due to falling world prices and export quantities of copper and cobalt, the main export goods) (Banque Centrale du Congo 2013). Undoubtedly growth rates (the seventh highest in the world) were triggered by booming mineral production, which spectacularly recovered through reforms led by the World Bank. Better control of the money press and international monitoring by the Bretton Woods institutions brought down inflation under two digit figures. The steady increase of exports has sustained a stable free exchange rate for more than a decade now, which is a postcolonial record. However, absolute levels of production are still very low by international standards (700 dollar PPP per capita, ranked 228 in the world). Formal employment is estimated to have risen from about 10 % in 2001 to some 28 % in 2014 (Marysse 2015). This means that about two thirds of the active population have to fend for themselves in the informal economy. A due account of this informal economy may change income figures, but cannot conceal huge poverty and below standard functioning of the economy, even in comparison with less endowed economies in sub-Saharan Africa. Most observers agree that neo patrimonial politics and deeply

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rooted corruption (DRC is ranked last but one in the Transparency International corruption index) are main reasons for this low performance.

Need of Minerals The DRC holds extensive mineral wealth in its subsoil, with over 1100 substances that have been identified, 22 of which are at present economically usable (World Bank 2008). The country is estimated to hold almost half of the world’s cobalt reserves and significant reserves of tantalum, tin, gold, and diamonds. In recent years, significant foreign private investments have been made in large-scale industrial mining, which has contributed to macroeconomic growth. According to EITI figures from 2014, the mining sector accounted for 64 % of state budget (total of US $ 716.55 million), 99 % of total exports, 24 % of formal employment, and 13 % of GDP in 2012 (EITI 2014: 21). In 2012 extractive companies in the mining sector declared having paid US $1,043,117,978 to the Congolese government, while declared government earnings amounted to US $1,052,659,116 of which 75 % went into the national treasury and the rest to other public services (EITI 2014: 8). In 2012 the DRC produced 85,409 tonnes of cobalt (about 82 % of world production), 619,301 tonnes of copper (3.5 %), 20,140,000 carats of diamond (22 %), 18,981 tonnes of cassiterite (tin ore) (8 %), 257 tonnes of coltan 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0

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(tantalum ore) (38 %), and 2,546 kg of gold (0.1 %) (EITI 2014: 21 and USGS). In 20152016 production levels for all minerals decreased because of falling commodity prices. There are no significant imports of minerals or mineral fuels. Industrial, large-scale mining (LSM) is mainly taking place in Katanga province (copper and cobalt) but is also coming up in North and South Kivu, Maniema, and East Province (gold). In Katanga, the national company Gécamines had seen its production dwindling from 500,000 tonnes of copper in the 1970s to some 30,000 in 1990, when the most important mine (Kamoto) collapsed due to the lack of maintenance and investment. The new foreign investments (see Chart 2) induced a boost in copper and cobalt production from 2006 onwards, to reach historic record levels in 2014 (more than one million tonnes) (Banque Centrale du Congo 2013) and falling back in 2015-2016. This makes the DRC the first copper exporter in Africa and the first cobalt exporter worldwide. The major companies are Sicomines (20 % Gécamines, 80 % Chinese companies), KCC (Kamoto Copper Company, 20 % Gécamines, 80 % other, among which Glencore/XStrata), TFM (Tenke Fungurume Mining, 80 % Freeport-McMoRan and Lundin Mining, 20 % Gécamines), Frontier (95 % ENRC Congo, 5 % Congolese state), and MUMI (Mutanda Mining, 60 % Glencore, 40 % other) (EITI 2014: 12–14 and 147–148). The spectacular rise in copper and cobalt production has

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Democratic Republic of the Congo: Mining Sector, Chart 2 Copper production 2001–2013 (in tonnes) (Source: Marysse and Tshimanga 2014)

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fundamentally altered the composition of exports. In 2004 almost 57 % of all exports consisted of diamonds (Chart 3). From 2004 onwards, copper and cobalt have become more prominent both in absolute and relative terms, taking up 85 % of all exports in 2013. Of lesser but increasing importance are the exports from the eastern provinces. In 2011 and 2013, Banro Corporation (South Kivu) and Kibali Gold (East Province), respectively, have started producing industrial gold, pushing volumes of exported gold to 6,125 kg, against only 2,546 kg in 2012 and less than 500 kg in the period 2006–2011 (Ministry of Mines 2013). Other international companies (mainly Chinese and South African) are doing exploration and starting up production in other eastern provinces. Artisanal and small-scale mining activities (ASM) are widespread over Katanga, North and South Kivu, East Province, Maniema, and Kasai. They occupy an estimated 500,000 to 2 million miners, while an estimated 8–10 million people, or 14–16 % of the total population, indirectly rely on ASM for their livelihoods (World Bank 2008). ASM is particularly important in the eastern Kivu provinces, a region that is recovering from violent conflict in the late 1990s to early 2000s, hence, the labeling of the region’s tantalum, tin, and tungsten (3Ts) and gold as “conflict minerals” (see reports by UN, Global Witness, Enough Project, International Peace Information Service, and others). Available estimates for the number of artisanal miners in the Kivu provinces, taken from 2007

to 2010, respectively, put the figure between 200,000 and 350,000 (D’Souza 2007; Pact 2010). As the sector is largely “informal,” official production and export figures for artisanal production are not reliable, especially not for gold with its high value per unit. Production of artisanally mined gold in South Kivu and East Province was estimated to be 12,000 kg in 2008 (World Bank 2008), the same year that official gold exports from South Kivu were recorded as just 65 kg (Geenen and Radley 2014). Before the effects of the de facto embargo in the region took hold (a result of international legislation around “conflict minerals,” see below), official figures for South Kivu from 2008 recorded cassiterite exports at 6,004 tonnes and coltan exports at 440 tonnes. Mineral smuggling still costs the government significant revenue. According to the UN Group of Experts, the loss in tax revenue in 2013 amounted to between US $7.7 million and 8.2 million for gold alone (UN 2014).

Regulatory Framework A new Mining Code (MC) (Law n 007/2002 of 11 July 2002) and Mining Regulations (decree n 038/2003 of 26 March 2003) replaced Law n 81-013 of 2 April 1981. The Mining Code differentiates between three modes of production, subject to different tax regimes and permit systems: industrial mining, small-scale mining, and artisanal mining. Every individual or company

Democratic Republic of the Congo: Mining Sector

wanting to engage in industrial or small-scale mining can apply for a research permit (“permis de recherches”) which is valid for a period of 4 years or 5 for non-precious minerals, possibly being renewed up to 8 years. If the holder of a research permit finds promising deposits, he or she may apply for an industrial exploitation permit (“permis d’exploitation”), valid for a period of 30 years (renewable). Deposits that are judged not suited for industrial mining may be covered by a small-scale mining permit (“permis d’exploitation des petites mines”). The customs and fiscal regime applicable to industrial and semi-industrial projects is uniform (MC, T9). According to the World Bank (2008: 19), the regime is “internationally competitive and reflects current best practice” with an expected effective rate of taxation of 46 %. It includes, among others royalties, income tax, customs duties, turnover tax, surface rights, and so on (MC, T9, C1-4). In addition to the taxes foreseen in the Code, there are numerous fees and payments for services required under the Mining Regulations (MR). An interministerial decree (2007), for example, identified 46 of those, required for various administrative authorizations (idem). Yet the World Bank (2008: 20) also acknowledges that in practice companies often pay much less and are able to negotiate more favorable tax rates and exemptions with the government. Mazalto (2009) also points to clauses in the Mining Regulations that allow companies to apply more liberal fiscal regimes (MR, T20, C1, Art. 510 and 543). The law also explicitly recognizes artisanal mining. It stipulates that the Minister of Mines may demarcate “artisanal exploitation zones” (AEZ) in areas where “the technological and economic factors are not suited for the site to be industrially exploited” (MC, T4, C1, Art. 109). The AEZ are to be determined and proclaimed by ministerial decree upon the advice of the Provincial Mining Division. Sites already covered by industrial mining titles cannot be transformed into AEZ. In turn, companies cannot acquire research permits inside the AEZ boundaries, except for demands by artisanal miners’ cooperatives (“groupements”) (MR, T9, C2, Art. 234–237). These cooperatives can thus officially

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work in these zones and should ideally evolve into small-scale, semi-industrial operations. Individual miners who want to work in an AEZ need to buy a “carte d’exploitant artisanal” at the Provincial Mining Division (MR, T9, C1, Art. 223–231). The card is an official authorization to mine and has to be renewed every year. Artisanal miners also need to comply with the regulations on security, hygiene, water use, and environmental protection specified in the “code of conduct for the artisanal miner,” published as an annex to the Mining Regulations (MC, T4, C1, Art. 111–112; MR, T18, C2, Art. 416). According to the Code, artisanal miners can only sell their production to registered traders (“négociants”) holding a “carte de négociant” issued by the Provincial Governor (MR, T10, C2, Art. 242–250). These traders may sell to registered buyers (“acheteurs des produits miniers artisanaux des comptoirs agréés”) who are associated to an export office (“comptoir”) (MC, T4, C2, Art. 120; MR, T10, C4, Art. 258–265). The following public services govern the mining sector at the national level (MC, T1, C2, Art. 11–15; MR, T1, C3, Art. 7–14): Ministry of Mines, Directorate of Geology (“Direction de Géologie”), Directorate of Mines (“Direction des Mines”), Directorate for the Protection of the Environment (“Direction chargée de la Protection de l’Environnement Minier”), and Mining Registry (“Cadastre Minier”) (MC, T1, C2, Art. 12). At the provincial level, there is a Ministry of Mines too, with its administrative service, the Provincial Mining Division (“Division Provinciale des Mines”). Finally there are a number of technical services: CTCPM (“Cellule Technique de Coordination et de Planification Minière” or Technical Coordination and Planning Unit), CEEC (“Centre d’Evaluation, d’Expertise et de Certification des substances minérales précieuses” or Center for Evaluation, Expertise and Certification), and the Service for Assistance to Small-Scale Mining or SAESSCAM (“Service d’Assistance et d’Encadrement du Small-Scale et Artisanal Mining”). The government as well as international donors have taken a series initiatives for reform in the artisanal mining sector, which include legal reforms (adoption of a traceability manual,

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mining ban, requirement for artisanal miners to form cooperatives) as well as supply chain reforms (certification and traceability, due diligence, Dodd-Frank act, and related legislation). Some of these have created a “de facto embargo” on Congolese exports since 2011, as companies are reluctant to source from the region. A process to revise the 2002 Mining Code has been called off in early 2016 (under the pressure of large mining companies who did not agree with the planned revisions of the tax regime and referred to the falling commodity prices to justify their position).

International Memberships The DRC is member of the Bretton Woods Institutions (IMF and World Bank) which, together with the membership of the Club of Paris, are instrumental in the country’s debt relief. The HIPC (highly indebted poor countries) process that started after the reintegration of the DRC as eligible member in 2001 paved the way for renewed ODA from different donors and the setting up of important reforms (macroeconomic stability, growth, new Mining Code, reform of public civil service, electronic payment of salaries, etc.) and resulted in a debt cancelation of 95 % in 2010. The DRC is also a member of UNCTAD and different regional organizations (AU, SADCC, ICGLR, etc.) but its membership in EITI (Extractive Industries Transparency Initiative) is especially worth mentioning. In 2013 the DRC was temporarily suspended from EITI, but in July 2014 the EITI Board declared the DRC compliant with the requirements. OECD plays an important role through its issuance of the “Due diligence guidelines for multinational companies,” which pertain to the DRC’s “conflict minerals.”

Concluding Statement The DRC holds extensive mineral reserves. Its mining sector, which developed during colonial times, came into crisis in the post-independence

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period, with a complete downfall in industrial production during the economic regress that started in the 1980s and the wars (1997–2003). In the meantime artisanal production has become an important source of livelihoods, although it contributes little to official state budgets. In recent years foreign investors have started up again industrial production, which has already resulted in record volumes of copper and cobalt, making the country the first copper exporter in Africa and the first cobalt exporter worldwide. There is also potential for large-scale exploitation of other minerals, including gold and diamonds. The legislative framework is in accordance with international standards, while implementation and good governance still remain a challenge for the relatively weak state administration. Although macroeconomic growth figures are impressive, poverty and underdevelopment continue to be significant challenges.

References Banque Centrale du Congo (2013) Rapport annuel 2013. Kinshasa D’Souza K (2007) Artisanal mining in the DRC. Key issues, challenges and opportunities [briefing note]. Communities and Artisanal and Small-scale Mining (CASM), Kinshasa EITI (2014) Democratic Republic of Congo. Executive Committee of the Extractive Industries Transparency Initiative. Reconciliation report for the year 2012. Extractive Industries Transparency Initiative report, Kinshasa Geenen S, Radley B (2014) In the face of reform: what future for ASM in the eastern DRC? Futures 62:58–66 Marysse S, Tshimanga C (2014) Les trous noirs de la rente minière en RDC. In: Marysse S, Omasombo J (eds) Conjonctures congolaises 2013. Percée sécuritaire, flottements politiques et essor économique. L’Harmattan, Paris Marysse S (2015) Croissance cloisonnée: note sur l’extraversion économique en RDC. In: Marysse S, Omasombo J (eds) Conjonctures congolaises 2014. L’Harmattan, Paris Mazalto M (2009) Governance, human rights and mining in the Democratic Republic of Congo. In: Campbell B (ed) Mining in Africa. Regulation and development. Pluto Press, London/New York, pp 187–242 Ministry of Mines (2013) Statistiques Minières. Exercise 2013. Kinshasa

Democratic Republic of the Congo: Mining Sector PACT (2010) Promines study. Artisanal mining in the Democratic Republic of Congo. Pact, Washington, DC/Kinshasa UN (2014) Letter dated 22 January 2014 from the Chair of the Security Council Committee established pursuant to resolution 1533 (2004) concerning the Democratic Republic of the Congo addressed to the President of the Security Council. S/2014/42. UN Security Council, New York World Bank (2008) Democratic Republic of Congo. Growth with governance in the mining sector. Report No. 43402-ZR. World Bank, Oil, Gas, Mining and Chemicals Department, Africa Region, Washington, DC

For Additional Information on Large-Scale Mining Garrett N, Lintzer M (2010) Can Katanga’s mining sector drive growth and development in the DRC? J East Afr Stud 4(3):400–424 Herderschee J, Kaiser K-A, Mukoko Samba D (eds) (2012) Resilience of an African giant: boosting growth and development in the Democratic Republic of Congo. World Bank, Washington, DC/Kinshasa Marysse S, Tshimanga C (2013) La renaissance spectaculaire du secteur minier en RDC: où va la rente minière? In: Marysse S, Omasombo J (eds) Conjonctures Congolaises 2012. Politique, secteur minier et gestion des ressources naturelles en RDCongo [Cahiers Africains]. Musée Royal de l’Afrique Centrale, Tervuren, pp 11–46

For Additional Information on Artisanal Mining Geenen S (2015) African artisanal mining from the inside out. Access, norms and power in Congo’s gold sector. Routledge, London

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For Additional Information on the Regulation Initiatives Related to “Conflict Minerals” Areskog Bjurling K, Ewing J, Munje D, Purje H (2012) From Congo with (no) blood: recent developments relating to the sourcing of conflict-free minerals from the Democratic Republic of Congo. MakeITFair Report. Finnwatch/Swedwatch, Helsinki/Stockholm Carisch E (2012) Conflict gold to criminal gold: the new face of artisanal gold mining in Congo. Southern Africa Resource Watch, Johannesburg Johnson D (2013) No Kivu, no conflict? The misguided struggle against conflict minerals in the DRC. Pole Institute, Goma Manhart A, Schleiper T (2013) Conflict minerals. An evaluation of the Dodd-Frank Act and other resourcerelated measures. Öko-Institut, Freiburg OECD (2011) OECD due diligence guidance for responsible supply chains of minerals from conflict-affected and high-risk areas. Organisation for Economic Cooperation and Development, Paris Perks R, Vlassenroot K (2010) From discourse to practice: a sharper perspective on the relationship between minerals and violence in DR Congo. In: Cuvelier J (ed) The complexity of resource governance in a context of state fragility: the case of Eastern DRC. International Alert and International Peace Information Service (IPIS), London, pp 64–69 Resource Consulting Services (2011) US Legislation on conflict minerals. RCS private sector guidance on the Dodd-Frank Act section 1502. Resource Consulting Services, London Verbruggen D, Francq E, Cuvelier J (2011) Guide to current mining reform initiatives in Eastern DRC. International Peace Information Service (IPIS), Antwerp

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Ecuador: Mineral Policy María Cristina Vallejo Galárraga and William Sacher Freslon FLACSO Ecuador, Quito, Ecuador

Introduction Ecuador is a small South American republic, with a population of 14,483,499 (INEC 2010) and an area of 283,560 km2. The country is administratively divided into 24 provinces, the capital Quito being the main political center. Over the past 8 years, the country’s Gross Domestic Product (GDP) increased annually by 4.09% on average, up to US$ 70,354 million in 2015 (BCE 2016a). Ecuador is poorly industrialized and its economy is highly dependent on raw materials exploitation: crude oil represented 51% of the total exports in 2014 and dropped to 35% in 2015 due to the decline in international prices; while a series of other commodities such as banana, coffee, cocoa, shrimp, tuna fish, and flowers together represented another 37%. Ecuador has no modern large-scale metal and nonmetal mining experiences, to the contrary of other Andean countries like Peru, Bolivia, or even Colombia. (With the notable exception of Sadco

The authors gratefully acknowledge the assistance rendered by Francisco Venes on the information processing.

in Zaruma, which produced 100 t of gold and 500 t of silver between 1898 and 1949 (Sacher 2015).) As a result, this sector has been a marginal part of the economy representing only 0.42% of the GDP in 2015 (BCE 2016a). Nevertheless, after two decades of minerals exploration and mining development, the country is on the verge of inaugurating its first large-scale open-pit copper mine. Meanwhile, a dozen of other metallic projects, currently in portfolio, are about to complete their exploration phase. According to the Constitution of Ecuador (Asamblea Constituyente 2008), nonrenewable natural resources, including mines and mineral deposits, are property of the National State (art. 408), and mining is a “strategic sector” of the economy managed and regulated by the State, according to the mining policy defined by the President of the Republic (art. 313). Ecuadorian’s economic objectives are mainly growth-led and raw materials exports are fundamental for the stability of the country’s economy, officially dollarized (to US$) since 2000. The government expects mineral exports to be a significant source of foreign exchange in a near future.

Need of Minerals and Structure of the Mining Sector Except for cement and construction materials, where a transnational company like Holcim plays a significant role in the total production,

© Springer-Verlag GmbH Germany, part of Springer Nature 2023 G. Tiess et al. (eds.), Encyclopedia of Mineral and Energy Policy, https://doi.org/10.1007/978-3-662-47493-8

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metals and nonmetals in Ecuador have so far been produced by small national companies and the informal sector, employing directly between 80,000 and 130,000 workers (MRNNR 2012; MEM 2007). As no large-scale mine is in operation yet, the production of metals and nonmetals is very low if compared to its direct neighbors in the Andean region. Nevertheless, the Ecuadorian mining industry has experimented quite important changes over the recent years. Exports of metals and nonmetals products multiplied eightfold since 2010, reaching US$ 698 million at FOB prices in 2015 (BCE 2016b), becoming the sixth export product with the United States as the main destination (PROECUADOR 2014). Metal concentrates highly contributed to these figures. In tonnage, copper concentrates and lead concentrates are the heaviest part of metal exports, representing 98% of metal exports (a total of 1,243 t (In this article, a “ton” refers to a metric ton, i.e., 1,000 kg.) in 2015, BCE 2016b). (These figures correspond to item 26 of NANDINA classification, include: metal minerals, slag, and ash.) An interesting aspect is that copper and lead exports are obtained through recycling and smelting of nonferrous metals. However, these figures do not account for the enormous amount of other materials removed or consumed during the whole process (extraction, metal concentration, and beneficiation phases). For instance, the Wuppertal Institute (2014) reports the material intensity or the “ecological rucksack” of 1 t of copper from

primary production as 348 t of abiotic materials, 367 t of water, and 1.6 t of air. Gavin (2008) determines that a ton of copper pollutes between 30 and 500,000 l of water, thus not able to human consumption afterward. Metals and concentrates production has multiplied twofold since 2010, reaching a total of 743,000 t in 2015 (ARCOM 2015). The main components were: 81,000 t of gold and copper concentrates and 662,000 t of steel (USGS 2014; ARCOM 2015). According to the Annual Survey on manufacturing and mining (INEC 2015), on the one hand, domestic consumption of copper as a raw material was 28.7 million dollars in 2015, which is 34% of the total consumption of copper (including exports). Most of the internal consumption includes basic chemical substances, cables, and copper alloys. On the other hand, domestic consumption of copper as product was 91.3 million dollars in 2015, which is 95% of the total consumption. Most of the copper products are used to manufacture basic chemical substances and cables. Table 1 summarizes consumption figures of copper, gold, and steel (INEC 2015). Most of the raw gold exploited in Ecuador is exported (95%), while gold ores and concentrates are internally consumed as raw materials. Steel, as raw material as well as product, is consumed in the domestic market mainly for basic manufactures (INEC 2015). On the other hand, in 2015, Ecuador imported 14,191 t of metals, mainly aluminum and their

Ecuador: Mineral Policy, Table 1 Metals for domestic consumption in Ecuador, 2015 Metals Copper

Gold

Steel

Raw materials US$ % of total consumption 28.727.951 34% Basic chemical substances (12%), cables and copper alloys for manufacturing engines (11%) 2.414.843 100% Extraction of gold ores and concentrates (65%), raw gold to jewelry making (19%) 418.376.251 46% Materials for basic manufactures (20%)

Source: INEC (2015)

Products US$ % of total sales 91.271.487 95% Manufacturing of basic chemical substances (31%) and cables manufacturing (52%) 11.418.343 5% Extraction of raw gold (5%) 1.160.743.861 96% Steel plates, profiles and bars for basic manufactures (45%)

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concentrates (BCE 2016b). From these figures it is estimated that only 0.4% of the available supply of metals (extraction plus imports) was destined for export in 2015. Nonmetal minerals exploited in relevant quantities are limestone, pumice, cements, clays, feldspar, silica, kaolin, sand (iron) and obviously stone, sand and gravel (a total of 11.7 million tons in 2015), and construction materials (6.6 million of m3). Imports account for 446,000 t (mainly cement and gypsum), and exports 141,000 t (primarily cement). Most of the nonmetal minerals are for domestic consumption, only 1% of the internal supply (without construction materials) was exported in 2015 (BCE 2016b). (These figures correspond to item 25 of NANDINA classification, include: salt, sulfur, lands and stones, gypsum, lime, and cement.) In addition to the trade of mineral raw materials, Ecuador imports cast iron and steel manufactures (6% of the total imports in 2014) and exports gold manufactures (4% of the national exports, BCE 2016b). (Manufactures of minerals corresponds to items 68, 69, 70–79, and 80–83 of the NANDINA classification.) Despite the recent announcement by the government of future construction of metal processing plants, the country lacks technological and human resources and the sector will remain heavily dedicated to the production of primary goods in the coming years. Finally, state revenues through tax and royalties associated with metal and nonmetal mining are almost negligible (0.13% of the total State budget in 2015, US$ 34,925 million, BCE 2016a). Before 2010, annual mining revenues had never been more than US$ 6 million. However, due to the payment of anticipated royalties (explained in a later section) associated with the Mirador project, there has been a substantial, although unstable, increment of these revenues over the past years: US$ 66 million in 2012, US$ 31.3 in 2013, US$ 60.3 in 2014, and US$ 34.9 in 2015 (ARCOM 2015).

Mineral Policy Conception of Ecuador The first neoliberal mining code of Ecuador was promulgated in 1991 through the “Law 126,”

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attracting numerous majors mining companies to invest in exploration campaigns (Sacher and Acosta 2012). Nevertheless, a drop in international mineral prices as well as domestic political instability at the end of the 1990s led them to abandon the country. In 2001, a second-generation neoliberal set of mining reforms, cancelled mining royalties and implemented new legal instruments to marginalize the artisanal mining sector (arguing that most of the small-scale mining is illegal and harmful to the environment). These new reforms almost coincided with the beginning of the so-called global mining supercycle (a marked increase of international metal prices, mainly induced by China’s two-digit growth), which lasted the whole decade 2000s. In this context, many junior mining companies invested back in the exploration projects left at the end of the 1990s. During the first 5 years of the 2000s decade, thousands of mining concessions (a mining title will be described in more detail in the next section) for exploration were issued. At the end of the year 2007, 20% of the national territory was covered by mining concessions for exploration (Acosta 2009, 98) in rural areas, but also páramos, indigenous territories and even protected areas. The presence of mining companies in these zones and the multiple dispossessions processes it implied (in the sense of Harvey’s accumulation by dispossession, Harvey 2003) triggered social conflicts in many parts of the country. The government and mining companies responded to the social resistance with violent repression, as documented by Álvarez (2009). The rise of the left-wing political leader Rafael Correa to the country’s presidency in 2007 implied a series of transformations in the mining sector. The first 2 years of his administration were times of uncertainty for the transnational mining sector. In 2008, a “Mining Mandate” was promulgated, that promoted a 6-month-long moratorium on any mining activity, environmental protection of water and forest resources, extinction or suspension of numerous mining concessions, as well as the creation of a national mining company (Asamblea Constituyente 2008). Under such drastic and threatening measures for their assets and future investments, many foreign

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junior companies simply left the country, leaving as only legacy for the Ecuadorian State, part of the geological information raised during their exploration campaign. Thus, some basic results can be found in the National Development Plan for the Mining Sector (MM et al. 2016). Correa promoted a “New Mining Deal” looking for a stronger presence of the State in mining operations, regulation of the sector as well as a higher state share of the income (according to the Constitution, at least 50% of the profits made on mining resources exploitation). Correa’s administration quickly promulgated a new mining law in January 2009 (Mining Law 2009). Nevertheless, a series of fundamental features of neoliberal codes were maintained, despite the appearance of radical change. Transnational mining companies were soon authorized to resume their activities. The institutional framework was reorganized with the aim of converting mining into a key productive activity of the economy. New institutions were created such as the ARCOM, in charge of auditing and regulating the proper functioning of mining activities; the National Institute of Geological, Mining and Metallurgical Research (INIGEMM); and the state-owned National Mining Company (ENAMI), up to now mainly focused on exploration activities as it does not possess human, technical and financial means to develop large-scale exploitation. After a new set of legal reforms introduced in 2013 the government created a Ministry of Mines in 2015. This Ministry is in charge of implementing a government mining policy and defining a National Development Plan for the Mining Sector. In April 2016, after 8 years without granting new mining concessions, the Ministry reopened the national territory to mining exploration. As a result, roughly 2,000,000 ha of new concessions (as represented in the map of Fig. 1) have been claimed, mostly by foreign mining companies and the ENAMI. From 2009 onward, Correa’s administration has strongly and consistently supported mining activities and foreign companies at the legal, political, and moral level. Using the “Responsible Mining” rhetoric, the government promotes

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national-wide legitimation campaigns. Nevertheless, land and water dispossessions, as well as repression to social protest, have strongly increased social resistance against large-scale mining in peasants and indigenous communities. In some cases, local groups have attacked mining camps, like in the recent case of Panantza-San Carlos in the so-called Cordillera del Condor.

Regulatory Framework As owner of mines and deposits (Asamblea Constituyente, art. 408), the National State may delegate prospecting, exploration, exploitation, beneficiation, smelting, refining, or even commercialization of mineral substances to private investors. There are no specific restrictions to foreign in comparison to national private investors, except for the obligation of creating a subsidiary under the Ecuadorian regime (Mining Law, art. 19). The Mining Ministry defines the granting, administration, or cessation of mining concession titles. The current mining law uses the legal figure of the concession, through which mining companies may have access to most of the national territory. Mining concessions are measured in “mining hectares,” which cannot exceed a limit of 5,000 has. (The mining hectare is a measure of volume of pyramidal form, whose apex is the center of the earth, its outer limit is the surface of the ground and corresponds to a square of 100 m/side (Mining Law, art.32). A mining concession is an official administrative mining title granted to a legal or natural person, which can be transferred with the approbation of the competent authorities (only after 2 years of the concession acquisition, though). It is an exclusive right to explore, exploit, benefit, refine, trade, and extract of all mineral substances in the concession area (Mining Law, art. 31). Such titles are valid for a period of up to 25 years, with option of renewal (Mining Law, arts. 30, 36). In the case of metal mining, new concessions are granted by public auction. However, the Mining Ministry can also directly authorize new mining concessions, if the State has a majority stake in the claimer. Nonmetallic concessions do not require public auction.

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Ecuador: Mineral Policy, Fig. 1 Exploration mining concessions in Ecuador (Sources: ARCOM (2017), MM et al. 2016)

Figure 1 shows the territorial distribution of the mining concessions claimed or granted until March 2017. Legal requirements for exploration and exploitation of small, medium, or large-scale mining projects, defined according to the size of the deposit, include an environmental license from the Ministry of Environment and water use

permission from the National Water Secretary (SENAGUA). Tax obligations of the concessionary comprise an annual patent (currently less than US$ 40 per hectare) and royalties to the State for exploitation concessions. According to the Mining Law (art. 93) and the Constitution (art. 408), a minimum of 50% State participation in total revenues from mining exploitation is

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required. For this purpose, the law imposes a payment of a minimum of 5% in royalties on mineral sales, in addition to a 25% corporate income tax, a 12% value added tax, and another 12% profit tax. The 2009s mining law prompted a new and controversial tax of 70% on windfall profits, which is applied to the positive difference between the sale price established in the contract and the market price. It was also established that 60% of the royalties must end in the hands of local governments for local development projects. Another specificity of the law is the obligation for private operators to sign a mining contract with the State before the beginning of the exploitation stage. There are two mechanisms: a servicerendered contract and a mining contract. In the former case, royalties and the windfall profit tax are not applied but a 3% tax on the mining sales have to go to sectional governments. For the contracts that have been signed up to date (Mirador and Fruta del Norte) the government negotiated that foreign mining companies pay anticipated royalties, that is to say payments in advance a share of the future royalties (a few dozens of millions). The funds are managed by a new state entity called Ecuador Estratégico. Regarding consultation processes with local communities affected by mining projects, the current mining law (art. 87) recognizes the right to “information, participation and social consultation.” Nevertheless, even in the case of a majority opposition to the project, the decision to develop can be adopted by resolution of the government. (In the mining projects areas, indigenous population (which along with afro-Ecuadorians represent more than 10% of the national population, INEC 2010) and antimining social movements are generally strongly represented.) In other words, the law does not give local communities the right to express their positions. Nor does it refer to the figure of Free Prior and Informed Consent, although this is mandatory for Ecuador in the case of indigenous people, as the country ratified the convention 169 of the ILO. However, some compensation to the mining effects on communities can in theory be included in the closing and rehabilitation costs, as well as compensation payments for damages and/or environmental

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guarantees. These payments are anticipated and planned in the closure plan approved by the Environment Ministry, when delivering the environmental license. The sovereignty of the State on subsoil resources is exercised independently of the right of ownership on the surface lands. The mining law regulates the relationships between the owners of minerals rights and the owners of land by means of the easements (servidumbres in Spanish). An easement is defined as a right, created by an express or implied agreement, to use and/or enter onto the real property of another without possessing it, in exchange for a monetary or material compensation. The easement is mandatory for the landowner, who can only negotiate the compensation received. It is a sort of compulsory “leasing,” authorized by the National Mining Regulation Agency (ARCOM in Spanish), which allows mining operators to legally dispossess (in the sense of Harvey, explained before) people from their land. We call this a process of dispossession because the exploitation of the mineral concession could be incompatible with other uses already given to the land, such as the living place of the landowner. Measures applied for the preservation of the environment during the concession period has to be foreseen in the environmental management plans, and monitored based on the environmental audits that are carried out periodically. The closure activities of the mining operations have to include the rehabilitation of affected areas, water treatment, revegetation, reforestation, waste management, and a compensation plan for social impacts. In protected areas, although the exploitation of nonrenewable resources is forbidden (Mining Law, art. 25), mining exploration and exploitation concessions may be granted if considered “reasonable” by the Presidency of the Republic, and a prior declaration of national interest is issued by the National Assembly. With these elements, the 2009s mining law generated resistance from civil society as well as from the private sector. The discontent of major companies like Kinross and Iamgold against the new tax regime was so important that they decided to partially or totally sell their assets and leave

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the country. As result, in the recent years there has been an increasing presence of Chinese mining capitals, such as the two Chinese state-owned companies Tongling NonFerrous Minerals and China Railways Construction Corporation (CRCC), in charge of the Mirador, MiradorNorte, and Panantza-San Carlos copper projects. On the other hand, various movements like indigenous and urban ecologists have repeatedly denounced the unconstitutionality of the law, because the Constitution states that a law that may affect indigenous people must be submitted to a prelegislative consultation to those potentially affected. In June 2013, the government enacted a set of modifications to the 2009s mining law in order to introduce some flexibility in the tax regime. In this new regime, the windfall profit tax cannot be applied until the company has recovered its initial investment. Also, a new upper threshold of 8% was fixed for royalties in the specific case of gold and copper. The process of obtaining the environmental license was simplified and a new regime of penalization was established for the “illegal mining.”

International Memberships Ecuador is a founding member of the United Nations (UN); therefore, the country is affiliated with many of its specialized agencies, such as ECLAC, UNCTAD, UNESCO, UNEP, and FAO. Regarding strategic sectors of the economy, the country is a member of OPEC, OLADE. For social issues important memberships are WHO and ILO. As mentioned, Ecuador ratified the ILO Convention 169 on Indigenous Peoples. For the regional interests of the country, other significant memberships are OEA, CELAC, ALADI, UNASUR, ALBA, and CAN. For economic purposes, the country is a member of the IDB, IMF, WB, and WTO. Regarding the mining sector, Ecuador is a member of the Inter-American Mining Society (SIM) and the Latin American Mining Organization (OLAMI). The country is only indirectly an adherent of the Initiative of Responsible Mining

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Assurance (IRMA), as part of the Latin American Mining Monitoring Programme (LAMMP), which follows the principles of IRMA. Ecuador also participates in the network Action for Prevention and conflict management for the Sustainable Industrial Development of Mining in IberoAmerica (GECOMIN). Ecuador is neither a member nor a candidate country to the EITI.

Concluding Statement Over the past two decades, the Ecuadorian governments, whatever their political orientation, have promoted large-scale metallic mining as being essential for the future of the country’s economy. From being marginal, three decades ago, mining is today on the verge of becoming one of the most important economic sectors of the country. In the 1990s and 2000s, as most of Latin American countries, Ecuador adopted neoliberal reforms promulgating a new mining code and institutional arrangements designed to attract foreign investment. As a result, the role of the State in the regulation of the sector was minimized. The rise of the leftist leader Rafael Correa in 2007 initially generated concerns among transnational miners with its promotion of a “return of the State.” This led to an increase in the State capacity to appropriate the mining rent, some institutional re-arrangements and the creation of a National Mining Company. Nevertheless, Correa has been a strong promoter of large-scale mining activities during its 9 years long administration (2007–2016), and the new mining law conserves many structural features of the preceding neoliberal codes. As a result, a dozen of large-scale mining projects have reached advanced exploration stage and one large-scale project, Mirador, is currently at the development stage. Despite Correa’s “New Mining Deal,” social resistance – sometimes armed – remains ubiquitous in the country and has shown capacity to delay or even stop projects. At a macroeconomic level, the mining policies implemented over the past decades increased the weight of extractive commodities such as oil and

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minerals in the Ecuadorian economy as a whole. Although the government expects mineral exports to be a significant source of foreign exchange for the country’s economy in the future, this will probably deepen the high dependence on international prices, with direct negative consequences on the economy in case of a drop, as currently observed with oil prices.

References Acosta A (2009) La Maldición de la Abundancia. AbyaYala, Quito Álvarez P (2009) A cielo abierto. Derechos minados. Directed by Pocho Álvarez. Comisión Ecuménica de Derechos Humanos, Ecuador. Documentary movie ARCOM, Agencia de Regulación y Control Minero (2015) Estadística Minera 2015. Available via DIALOG. http://www.controlminero.gob.ec/. Accessed 15 May 2017 ARCOM, Agencia de Regulación y Control Minero (2017) Catastro minero, marzo 2017 Asamblea Constituyente (2008) Constitución del Ecuador. Asamblea Constituyente, Quito. http://www. asambleanacional.gob.ec/sites/default/files/documents/ old/constitucion_de_bolsillo.pdf/. Accessed 12 Apr 2017 BCE, Banco Central del Ecuador (2016a) Boletín Anuario N 38. Available via DIALOG. https://www.bce.fin.ec/ index.php/component/k2/item/776. Accessed 15 May 2017 BCE, Banco Central del Ecuador (2016b) Foreign trade database. Available via DIALOG. https://www.bce.fin. ec/index.php/component/k2/item/762. Accessed 15 May 2017 Gavin M (2008) Sustainability reporting and water resources: a preliminary assessment of embodied water and sustainable mining. Mine Water Environ 27(3):136–144 Harvey D (2003) The new imperialism. Oxford University Press, New York INEC, Instituto Nacional de Estadística y Censos (2010) Censo de Población y Vivienda 2010. Available via DIALOG. http://www.ecuadorencifras.gob.ec/ censo-de-poblacion-y-vivienda. Accessed 15 May 2017 INEC, Instituto Nacional de Estadísticas y Censos (2015) Encuesta de Manufactura y Minería 2015. Available via DIALOG. http://www.ecuadorencifras. gob.ec/manufactura-y-mineria/. Accessed 15 May 2017 Law 126 (Ley 126). Registro Oficial N 695 de 31 de MAYO de 1991 MEM, Ministerio de Energía y Minas (2007) El ABC de la minería en el Ecuador. Ministerio de Energía y Minas, Quito

Energy Production and Geoconservation Mining Law (Ley de Minería). Registro oficial N 517 de 29 de ENERO de 2009 MM, Ministerio de Minería; ARCOM, Agencia de Regulación y Control Minero; INIGMM, Instituto Nacional de Investigación Geológico Minero Metalúrgico (2016) Plan Nacional de Desarrollo del Sector Minero, Nov. Available at https://drive.google. com/file/d/0B9t02UvtK83SbDA3a1FwZmpBY1k/ view. Accessed 15 May 2017 MRNNR, Ministerio de Recursos Naturales No Renovables (2012) Desarrollo Minero en el Ecuador. Gestión del Estado del Sector. MRNNR, Quito PROECUADOR, Instituto de Promoción de Exportaciones e Inversiones (2014) Perfil de minería para el inversionista. Available via DIALOG. http:// www.proecuador.gob.ec/pubs/proec_psi2014_ mineria. Accessed 10 Apr 2016 Sacher W (2015) Minería de oro en El Ecuador, entre actores nacionales y transnacionales. In: CEDLA (ed) La economía del oro. CEDLA, La Paz, pp 95–138 Sacher W, Acosta A (2012) La minería a gran escala en Ecuador. Análisis y datos estadísticos sobre la minería industrial en el Ecuador. Abya-Yala, Quito USGS, United States Geological Survey (2014) 2014 Minerals yearbook. Ecuador Available via DIALOG. http://minerals.usgs.gov/minerals/pubs/country/2014/ myb3-2014-ec.pdf. Accessed 15 May 2017 Wuppertal Institute for Climate, Environment and Energy (2014) Material intensity of materials, fuels, transport services, food. Available via DIALOG. https:// wupperinst.org/uploads/tx_wupperinst/MIT_2014. pdf. Accessed 29 May 2017

Energy Production and Geoconservation Delia Evelina Bruno1 and Dmitry A. Ruban2 1 Water Research Institute/National Research Council, Bari, Italy 2 Higher School of Business, Southern Federal University, Rostov-na-Donu, Russia

Energy production from different Earth’s natural resources has always marked great social and economic advance in the human history. Prehistoric man learned to conserve the fire after the lightning struck down on the forests. Later on, the first energy crisis of the late Paleolithic, when the hunting target began to lack, was resolved by the discovery of solar energy in the Neolithic age. During the centuries, the first great

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civilizations invented devices to draw and carry water through hydraulic and wind energy of rivers in order to solve the problem of field irrigation. Following the enormous technical-scientific progress of the Renaissance, the coal became a major fuel for industry for the eighteenth, nineteenth, and twentieth centuries. In the 1700s, its vast deposits were discovered in eastern North America. At the beginning of the 1800s, the first natural gas deposit was drilled in Fredonia (USA) and the first oil well was drilled in Titusville (USA). About a century later, geothermal energy was used for the first time in order to heat buildings in Boise (USA). The Ghawar oil field, the world’s largest petroleum deposit, was discovered in Saudi Arabia in the mid-1900s. In the modern society, the increasing demand of energy leads to more intense exploitation of the Earth’s resources. A lot of energy is produced from resources linked to the geological environment. First of all, these are coal, oil, gas, and unconventional hydrocarbons (like shale gas). Their deposits are of interest to geoconservation and geotourism because of two reasons. On the one hand, they are results of specific geological processes. On the other hand, economic interest to these deposits and their exploration and exploitation demonstrate the activity of humans as geological agents. That is why deposits of energy resources can be considered as a kind of geological heritage. Besides fossil energy resources, some renewable resources are also linked to the geological environment. These include, for instance, hydraulic (for hydropower production) and geothermal resources. Additionally, energy production facilities demonstrate the geological activity of man, and they can be treated as objects of the geological heritage. Energy resources as available in nature and relevant energy production facilities are often not well accessible (because of the owners’ restrictions and safety issues), although the relevant geological heritage is represented sometimes in special exhibition/visitor centers. The primary goals of geoconservation of energy-related objects are their recognition as valuable for scientific, educational, and/or tourism purposes, effective management for the purposes of conservation, and promotion of the knowledge

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on these objects. However, two higher tasks can be solved additionally. The first higher task is promotion of the knowledge on energy resources, their restriction, and achievements in their use (e.g., the exploitation of low-enthalpy resource for direct use of thermal energy is not more regulated today). This is important to make the present society aware of possible scenarios of further socioeconomic development, which strongly depends on the amount of energy resources. A broad circle of experts, policy makers, journalists, various activists, etc., need trustable geological and geoengineering information permitting them to judge about such hotly debated subjects as “peak oil” or “unconventional hydrocarbons.” A limited ability for such judgments may have serious economic consequences (e.g., Smith 2012). The second higher task is promotion of the interest to such alternative energy sources as hydraulics and geothermal energy. There are several kinds of geothermal resources (Montgomery 2014), and the importance of each of them should become well known. Hot springs and geysers are popular tourism destinations, and in some cases the latter include also geothermal power stations (examples are known, particularly, from Iceland and Japan) (Erfurt-Cooper 2010). It should be stressed that hot spring-related geotourism may interact with ecotourism, health tourism, and nature-based (outdoor) recreation, which forms a good basis for the distribution of ideas on alternative energy sources. Both fossil (nonrenewable) and renewable resources reenter into the geological heritage on the basis of energy production system and cultural role in the past and present. Consequently, geosites can be divided into two categories, namely: (1) directly visible and (2) needing exploration (Fig. 1). Typical energy-relevant geosites may be either simple (e.g., single quarry, power plant, or visitor center) or complex (e.g., when exploited drillhole, energy production facility, and other infrastructure are located in one place). Not only those acting but also abandoned objects are valuable, because they demonstrate the history of the energy-related geological activity of man. Successfully reclaimed/restored sites disturbed earlier by energy resource extraction represent

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Energy Production and Geoconservation, Fig. 1 Earth’s energy resources and category of observation/production for geoconservation

man-made (or “man-improved”) geological environment, which, therefore, deserve inclusion in geoconservation programs (examples of reclaimed coal mining sites are considered by Krutka and Li 2013). Moreover, geoconservation can itself become an approach of landscape reclamation at such sites, enhancing the ancient works exploitation of energy or proving human error resulted in disasters. Finally, it should be stressed that energy-relevant geosites (especially mines, quarries, and drillholes) provide new information about the Earth’s interiors, and consequently, their importance is not limited to the only energy resources. A lot of stratigraphical, sedimentological, paleontological, and other knowledge can be obtained from these sites. Their complexity contributes to the correct understanding of the diversity of the regional geological heritage. Coal, oil, gas, and unconventional hydrocarbons, which are the fossil energy resources, have been exploited intensively in the entire world. They are represented in numerous geosites, and two representative examples should be noted. The first is the Ruhr Region (Germany), famous for long-term coal mining and relevant industry. Many geosites concentrate there; these include rock outcrops and sections, mines and quarries, coal-processing facilities, museums and exhibits, and some coal-related cultural heritage (MüggeBartolović et al. 2011; Stottrop 2013). These do

Energy Production and Geoconservation

not provide the only information on coal as a resource but also exhibit a lot of valuable stratigraphical, paleontological, tectonic, hydrogeological, and other features. This exceptional regional geological heritage is conserved properly and used actively for the purposes of geotourism and cultural tourism. The second example is from Oman, where the national geological heritage is used actively for the purposes of tourism (Lawrence 2010). This country boasts rich oil resources, and the Oil and Gas Exhibition Centre and Planetarium in Muscat offers a unique possibility to perceive the heritage value of these resources. The world hydropower production is due to approximately thousand dams that provide part of the world electricity. The dams, apart from being a source of energy, are also defense work and fluvial reservoirs for drinking water or irrigation. The creation of artificial reservoirs poses environmental problems through influences on microclimate, flora, fauna, sedimentary budget, etc., both upstream and downstream of the dams. In some cases, these sites may become areas of interest if well integrated into the natural environment and if a cultural/historical valence joins to peculiar geological and geomorphological features. Electricity can be also produced by tide through the construction of dams between the headlands of a bay; in this way, the environmental impact is “limited” to coastal ecosystems. The (geo)conservation and (geo)tourism potential of hydropower production sites may be significant. For instance, Ampollino, Arvo, and Cecita lakes have been created on the Sila Massif (Italy) in the 1950s to hydroelectric exploitation of rivers (Scarciglia et al. 2008). Today, these lakes are perfectly integrated into the environment, acquiring a significant touristic value. They have become important hydrological and geomorphological components of the regional nature heritage. Another example can be found on the Zambezi River (Zambia and Zimbabwe), where the Kariba dam has been created (Osborne 2000). The relationship between archaeological remains and the soil they rest upon is well known. Less known, but certainly not new, is their relationship with water (Frémond and Maceri 2003),

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especially used for the energy production. Kerisel (1987) reports a map which indicates all sites of ancient dams in the Mediterranean area, mentioning the Jawa dam (Jordan) as the oldest site in the Mediterranean basin. The area between the Muro Lucano dam and the Pascone River (Italy), in which there are ruins of ancient water mills, is a site of particular environmental, geological, and cultural interest. Indeed, the hydropower exploitation has been an important vocation of this area for centuries. The abandoned dam is an example of industrial archeological site with geological value (it reflects the geological activity of man in the past), and the ancient water mills are also indelible marks of the interconnection between human activities and nature. The geoconservation concept (Wimbledon and Smith-Meyer 2012) can also be applied to sites known for being related to hydraulics-related geological hazards. Perhaps, the most sorrowfully famous European geosite of this kind is the Vajont dam (Italy) where the prehistoric rockslide of Monte Toc (Paronuzzi and Bolla 2012) caused more than 2,000 deaths in 1963 (Schuster 1996). The hazard was caused by the abnormal wave provoked by a landslide, and the wave of reflux went down to the lake, destroying the town of Longarone. Presently, a notable interest in the Vajont dam exists: frequent guided tours are organized for specialists interested in scientific aspects of the dam as well as tourists who can access the entire path of the dam crown, observing the striking scenery of the Monte Toc landslide and the Longarone valley. The tunnels inside the mountain are not yet accessible, but a noncompetitive running event entitled “The Paths of Memory” allows to cross all the inside structures of the mountain since September 2006. Of interest is also the first plant constructed for exploitation of tidal waves in La Rance (France) (this experiment was disappointed later since the cost of energy produced is higher than conventional hydropower systems) (Andre 1978; De Laleu 2009). Recovery and utilization of the Earth’s heat acquired more importance due to the need of diversifying sources of energy. The temperature of the Earth increases 1  C/30 m of depth, but in geologically active areas, as volcanic ones, the

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gradient is greater. All over the world, more and more plants use this resource according to different geothermal systems prevailing in a geological area. The geothermal source is continuous and independent from climatic influences; but, since its transport is very difficult, it is used chiefly for local needs. The conventional hydrothermal systems, used both in the production of electricity and in direct uses, consist of a reservoir, which contain the fluid, covered by impermeable rocks, with temperature between 70  C and 200  C (Buonasorte et al. 2010). Omitting all unconventional systems, direct utilization of conventional geothermal system is well known and distributed in many countries. The presence of geothermal events has attracted in past eras human settlements favoring their development. Furthermore, the evidence of the surface heat Earth (also volcanotectonic phenomena) originated legends, myths, folk customs, and the existence of divinity (beneficial or malevolent) or mythological beings endowed with superhuman strength (Cataldi 2002). Baianus Lacus (Italy) is an example of submarine geosite near the Phlegrean Fields, an active volcanic complex, where bradyseism and recent volcanic activity strongly influenced the coastline shape over the last 2 Ka (Passaro et al. 2013). At 6 m below the sea level, there are the remains of nymphaeum triclinium, a sacred monument built to a nymph near a spring (First Century BC), villas with mosaic floors, a wine shop, and thermal bath plants (Davidde 2002), in which the conventional geothermal resource was used. The Ischia Island, a part of the same Phlegrean Fields, is an example of resurgent caldera with hydrothermal activity well known since the ages of the Romans. Actually, its thermal waters are used for balneotherapeutic medical cures (Sbrana et al. 2010). The preservation of the Phlegrean Fields is a part of the great “integrated” operation for the recovery of archaeological and geological areas in the Campania Region. A “slow tour,” along more than 50 km, will be realized to visit on foot or on bike this geosite as a whole, because losing this geoheritage means losing natural references of much classic literature. The other example is the geosite of the Menderes River valley (Turkey) delimited by a step fault

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Energy Production and Geoconservation

Energy Production and Geoconservation, Fig. 2 Larderello site: “Park of Biancane” designated by the light color of rocks due to coating of salt efflorescence and cooling towers of the geothermal plant in the distance

escarpment with a large geothermic field giving rise to thermal water springs and poisonous gases. Travertine deposits have also covered part of archaeological remains of a temple that was built for the main divinity of Hierapolis Apollo (Negri and Leucci 2006). With the requirement of increasing fluid production rates and higher wellhead pressures, the target depth of geothermal energy development has increased in many countries. This turns attention to possible unconventional geothermal system geosites. Several 3,000–4,000 m deep geothermal wells have been drilled in Italy, the USA, as well as in Mexico, Japan, New Zealand, and the Philippines. The Reykjanes (Iceland) geothermal system is much hotter and exploited on a limited scale at present. There, high-quality salts are extracted from the high-temperature geothermal brine. Reykjanes can be considered a natural drilling platform above a mid-ocean-ridge hightemperature system. Seawater salinity, high metal content, and open fracture system on the spreading Reykjanes ridge make it an ideal site for studies on high pressure-temperature to harness similar fluids as thrive within the black smokers on ocean ridges (Fridleifsson and Albertsson 2000). In Iceland, some best practices of geoconservation for a quality geotourism are

being developed on geothermal areas. The “Bridge Between Two Continents” and the “World of Fire” buried village are touristic attractions since 1973 and they are situated on the lavascarred peninsula where two of the Earth’s tectonic plates split (Dowling and Newsome 2008). Larderello (Italy) is one of the most ancient areas of energy production by geothermal source, where today is possible to visit the geothermal museum and park (Fig. 2; Rossato and Tonelli 2009). The Geysers (USA) is the only other significant geothermal field that produces dry steam. In fact, the more common kind of steam found in geothermal fields is wet steam, such as Cerro Prieto (Mexico), Wairakei (New Zealand), Reykjavik (Iceland), and Otake (Japan). Generally, a great variety of geosites with unique geological features are both linked to the memory of peoples and have an economic role for its vocation to energy production. These sites, for their important value, need prudent management. It is clear geoconservation requires policy implication of deep importance into strategies of sustainable exploitation that will preserve the territory’s geological heritage and will produce economic benefits to population. In many countries, the mineral/energy policy is changing to deal with global competition, and, unfortunately, in

Energy Production and Geoconservation

many others these rules are totally absent. However, it is the national mining/energy policy that can facilitate conservation of energy-related geological heritage.

Cross-References ▶ Geoconservation Policy ▶ Geosite, Concept of ▶ Geosites, Classification of ▶ Mining and Geoconservation ▶ Regional Geological Heritage

References Andre H (1978) Ten years of experience at the “LaRance” tidal power plant. Ocean Manage 4:165–178 Buonasorte G, Rizzi F, Passaleva G (2010) Direct uses of geothermal energy in Italy 2005–2009: Update Report and Perspectives. In: Proceedings World Geothermal Congress. Bali, pp 1–5 Cataldi R (2002) Sviluppo storico della geotermia nel mondo, con particolare riguardo al periodo 1950–2000. Geotermia 2:4–8 Davidde B (2002) Underwater archaeological parks: a new perspective and a challenge for conservation the Italian panorama. Int J Naut Archaeol 31:83–88 De Laleu V (2009) La Rance tidal power plant. 40-year operation feedback-lessons learnt. In: British hydropower association annual conference, 14–15 Oct 2009. Liverpool, pp 1–40 Dowling RK, Newsome D (2008) Geotourism. In: Proceedings of the inaugural global geotourism conference, discover the earth beneath our feet, Promaco Conventions, Fremantle, pp 17–20 Erfurt-Cooper PJ (2010) Active geothermal and volcanic environments as tourist destinations. In: Dowling R, Newsome D (eds) Global geotourism perspectives. Goodfellow, Woodeaton, pp 33–48 Frémond M, Maceri F (2003) Novel approaches in civil engineering. In: Pfeiffer F, Wriggers P (eds) Lecture notes in applied and computational mechanics. Springer, Berlin, p 400 Fridleifsson GÓ, Albertsson A (2000) Deep geothermal drilling on the Reykjanes ridge opportunity for international collaboration. In: Proceedings of the world geothermal congress, Kyushu-Tohoku/Reykjavik, pp 3701–3705 Kerisel J (1987) Down to earth, foundations past and present: the invisible art of the builder. A.A. Balkema, Rotterdam, p 149

245 Krutka H, Li J (2013) Case studies of successfully reclaimed mining sites. Cornerstone Off J World Coal Ind 1:70–74 Lawrence A (2010) Geotourism in the Sultanate of Oman. In: Dowling R, Newsome D (eds) Global geotourism perspectives. Goodfellow, Woodeaton, pp 93–112 Montgomery CW (2014) Environmental geology, 10th edn. McGraw-Hill, New York, p 500 Mügge-Bartolović V, Röhling H-G, Wrede V (eds) (2011) Geotop 2010. Geosites for the public. Paleontology and conservation of geosites. In: Mügge-Bartolović V, Röhling H-G, Wrede V (eds) Schriftenreiche der Deutschen Gesellschaft fur Geowissenschaften, vol 66. Hegen, Germany, pp 1–244. Negri S, Leucci G (2006) Geophysical investigation of the Temple of Apollo (Hierapolis, Turkey). J Archaeol Sci 33:1505–1513 Osborne NS (2000) Management of shared river basins: the case of the Zambezi River. Water Policy 2:65–81 Paronuzzi P, Bolla A (2012) The prehistoric Vajont rockslide: an updated geological model. Geomorphology 169–170:165–191 Passaro S, Barra M, Saggiomo R, Di Giacomo S, Leotta A, Uhlend H, Mazzola S (2013) Multi-resolution morphobathymetric survey results at the Pozzuoli e Baia under water archaeological site (Naples, Italy). J Archaeol Sci 40:1268–1278 Rossato L, Tonelli G (2009) Il parco geo-mineralogico dell’Isola D’Elba: stato dell’arte. In: Recupero e valorizzazione delle miniere dismesse: lo stato dell’arte in Italia. Atti della Sessione V3 – GeoItalia 2009, VII Forum Italinao di Scienze della Terra. Quaderni – Ambiente e Società 3:125–141 Sbrana A, Fulignati P, Giulivo I, Monti L, Guidetti G (2010) Ischia Island (Italy) geothermal system. In: Proceedings world geothermal congress. Bali, 25–29 Apr 2010, pp 1–6 Scarciglia F, De Rosa R, Vecchio G, Apollaro C, Robustelli G, Terrasi F (2008) Volcanic soil formation in Calabria (southern Italy): The Cecita Lake geosol in the late Quaternary geomorphological evolution of the Sila uplands. J Volcanol Geotherm Res 177:101–117 Schuster RL (1996) Socioeconomic significance of landslides. In: Turner AK, Schuster RL (eds) Landslides: investigation and mitigation, vol 247, Special report. Transportation Research Board, National Research Council, Washington, DC, pp 12–35 Smith JL (2012) On the portents of peak oil (and other indicators of resource scarcity). Energy Policy 44:68–78 Stottrop U (ed) (2013) Coal Global. Other coalfields: a journey. Exhibition catalogue, Ruhr Museum, Essen, 15 Apr to 24 Nov 2013. Klartext, p 386 Wimbledon WAP, Smith-Meyer S (2012) Geoheritage in Europe and its conservation. ProGEO, Oslo, p 405

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Estonia: Mineral Policy Margus Raha Ministry of Economic Affairs and Communication, Tallinn, Estonia

General Information on Estonia The Republic of Estonia is a country in the Baltic region of Northern Europe. It is bordered to the north by the Gulf of Finland, to the west by the Baltic Sea, to the south by Latvia, and to the east by Lake Peipus and Russia. Across the Baltic Sea lies Sweden in the west and Finland in the north. The territory of Estonia consists of mainland and 2222 islands and islets in the Baltic Sea, covering 45,339 km2 of land and water, and is influenced by humid continental climate. Estonia is a democratic parliamentary republic. Its capital and largest city is Tallinn. With a population of 1.3 million, Estonia is one of the least-populous member states of the European Union. The territory of Estonia has been inhabited since at least 6500 BC, with Finno-Ugric speakers – the linguistic ancestors of modern Estonians – arriving no later than around 1800 BC. Following centuries of successive German, Danish, Swedish, and Russian rule, Estonians experienced a national awakening that culminated in independence from the Russian Empire toward the end of World War I. During World War II, Estonia was occupied by the Soviet Union in 1940, then by Nazi Germany a year later, and was again annexed by the Soviets in 1944. The independence was restored on 20 August 1991. The first tribes to settle in the area were hunters and fishers who could already use local raw materials, such as crystalline erratic boulders, gravel, sand, and clay. At about 6000 BP inhabitants learned to make earthenware from clay and around 5000 to 4000 BC to apply carbonate rocks to building of townlets and fortified settlements. Since AD 1230, lime has been widely used as a binder. Red bricks, made of local clays and used as building material for strongholds and churches, provide Estonia’s historical buildings

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and architectural monuments with a specific geological splendor. The first geological studies were carried out in Estonia more than 150 years ago. The long tradition of geological research in the area is due to the large and representative bedrock exposures providing excellent conditions for the study of Lower Palaeozoic rocks and making Estonia a key region for solving several principal stratigraphic problems. The Palaeozoic rocks in Estonia enclose extraordinarily rich communities of well-preserved fossils, and a great number of new species and higher taxa have been established here. Ancient coastal formations of the Baltic Sea and relief forms, left behind by the last glaciation, are represented here more completely than in other regions. Excellent examples of meteorite craters and the largest erratic boulders in Northern Europe are found within Estonia. All this makes the geology of Estonia unique in several aspects. In 1937, the Geological Committee of Estonia was founded. After the occupation, the most prominent geologists and a lot of promising young scientists left homeland, and a new generation of geologists was trained (Raukas and Teedumäe 1997). In 1997, a state-owned company – the Geological Centre of Estonia (still represented abroad as Geological Survey) – was established instead of a classical state survey. But the history repeats itself – the new Geological Survey of Estonia will start to operate on 1st of January 2018. The ethnic distribution in Estonia is very homogeneous, where in most counties over 90% of the people are ethnic Estonians who are a Finnic people, sharing close cultural ties with their northern neighbor, Finland, and the official language, Estonian, is a Finno-Ugric language closely related to Finnish and the Sami languages and distantly related to Hungarian. This is in contrast to large urban centers like Tallinn, where Estonians account for 60% of the population, and the remainder is composed mostly of Russian and other Slavic inhabitants, who arrived in Estonia during the Soviet period. Apart from the Slavic (Russians, Ukrainians, and Belorussians) population, the next biggest group of inhabitants is Finns. The population structure is mostly homogeneous in the island of Hiiumaa, where

Estonia: Mineral Policy

Estonians account for 98.4% of the population (Estonian Statistical Office 2017). The education system is based on four levels: preschool, basic, secondary, and higher education. The Estonian education system consists of state, municipal, public, and private institutions. Academic higher education in Estonia is divided into three levels: bachelor’s, master’s, and doctoral studies. Estonia has two types of higher educational institutions: public and private universities. According to the Programme for International Student Assessment, the performance levels of gymnasium-age pupils in Estonia are among the highest in the world: in 2010, the country was ranked 13th for the quality of its education system, well above the OECD average. Additionally, around 89% of Estonian adults aged 25–64 have earned the equivalent of a high school degree, one of the highest rates in the industrialized world. The 2015 PISA test places Estonian high school students third in the world, just behind Singapore and Japan. Estonia is a developed country with an advanced, high-income economy that is among the fastest growing in the EU. Its Human Development Index ranks very highly, and it performs favorably in measurements of economic freedom, civil liberties, and press freedom (third in the world in 2012 and 2007). Citizens of Estonia are provided with universal health care, free education, and the longest-paid maternity leave in the OECD. Since independence the country has rapidly developed its IT sector, becoming one of the world’s most digitally advanced societies. In 2005, Estonia became the first nation to hold elections over the Internet and in 2014 the first nation to provide E-residency. Estonia’s economy continues to benefit from a transparent government and policies that sustain a high level of economic freedom. A simplified tax system with flat rates and low indirect taxation, openness to foreign investment, and a liberal trade regime have supported the resilient and well-functioning economy. The 2017 Ease of Doing Business Index by the World Bank Group places the country 12th in the world, surpassing neighboring Finland, Australia, Germany, Canada, and Switzerland. The strong focus on the IT sector

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has led to much faster, simpler, and efficient public services where, for example, filing a tax return takes less than 5 min and 98% of banking transactions are being conducted through the Internet. Estonia has the third lowest business bribery risk in the world, according to TRACE Matrix (The Trace Matrix). Estonia ranked 1st in the list of Internet freedom (Freedom House 2016), 6th in economic freedom (Index of Economic Freedom 2017), 12th in ease of doing business (Ease of Doing Business Index 2017), and 1st in International tax competitiveness (International Tax Competitiveness Index 2015) (Estonian Investment Agency: Economy at glance 2017). In 2015, total exports of Estonia were valued at about 12 billion euros; metal exports accounted for about 7% and mineral fuels 9% of the total exports. The major export partners of the country were Sweden, accounting for about 19% of total exports; Finland, 16%; Russia, 7%; Latvia, 10%; Lithuania, 6%; and Germany, 5%. Estonia’s total imports were valued at about 13 billion euros; mineral fuels were among the major imported commodities. Estonia also exports and imports electricity. The major import partners were Finland, which accounted for about 15% of total imports; Germany 11%; Sweden and Latvia, 9% each; Lithuania, 10%; and Poland, 7%. About 79% of Estonia’s total trade was with EU member countries. The value of exports to EU countries accounted for 75% of Estonia’s total exports; the value of imports from EU countries accounted for 83% of total imports (Ministry of Foreign Affairs 2017). The culture of Estonia incorporates indigenous heritage, as represented by the Estonian language and the sauna, with mainstream Nordic and European cultural aspects. Because of its history and geography, Estonia’s culture has been influenced by traditions of various Finnic, Baltic, Slavic, and Germanic peoples in adjacent areas, as well as the cultural developments in the former dominant powers Sweden and Russia. The mining industry of Estonia is primarily engaged in extracting industrial minerals, which include clays, limestone, sand, and gravel, oil shale, and peat. Estonia is not very rich in mineral resources, although the country does have one of

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the leading commercially exploited oil shale deposits in the world. Thus the country has been one of the world’s major producers and consumers of oil shale. It has experience and know-how in mining, processing, and use of oil shale, which could be helpful for other countries seek to develop and use oil shale as an alternative for depleting oil reserves. The Rakvere phosphorite deposit in Estonia is among the largest in Europe, although it has not been mined so far because of environmental concerns. Estonia has also some of the richest peatlands in Northern Europe, including more than 9000 mires that cover about 22% of its territory. There are more than 300 peat deposits within these mires. Estonia has the only operating rare-earth metal processing plant outside of China and has acquired experience in the processing of rare-earth metals, which could be drawn upon by other countries as they seek to augment rare-earth metal supplies.

Need of Minerals Estonia is situated on the southern buried slope of the Baltic Shield where the sedimentary bedrock overlies the Precambrian crystalline basement. The Cambrian section contains mainly sandstone and clay (e.g., the famous “blue clay”). Lower Ordovician is represented by sandstone, including phosphate obolus sandstone (shelly phosphorite) and Upper Ordovician by oil shale (kukersite). According to the Earth’s Crust Act of Estonia, mineral resources include clay, dolostone, gravel, lacustrine lime, mud, limestone, oil shale, peat, phosphate rock (phosphorite), and sand. Deposits of the most important mineral resources – oil shale, phosphorite, and carbonate rocks – are located in the northern and northeastern part of Estonia. Peat, sand, and gravel resources are distributed almost evenly over the country. Mineral resources play almost as big of a role in people’s lives as do food, water, and air. Using mineral resources provides employment for thousands of people in Estonia. Our everyday lives depend on our mineral resources: electricity and heating, production of building materials, road construction, horticulture, etc. The mining

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industry makes up 1% of the GDP (the total GDP of Estonia was 21 billion euros in 2016). However, not all mineral resources found in Estonia are mined, for example, phosphorus, granite, and graptolite argillite, which is known for its uranium concentration, are not mined yet. Oil shale and peat are used intensively along with the increasing demand for natural building materials (such as sand, gravel, limestone, and clay). Estonia produces construction materials, peat, secondary lead from battery recycling, and shale oil for domestic consumption. In 2016, 12,7 mln/t of oil shale, about 2 mln m3 of different types of limestone, 630,000 m3 of dolostone, and 517,000 m3 of peat were mined. There were 911 mines in the Land Board registry. In 2015, a total of 143 mining and quarrying companies were active in Estonia – including 1 governmentowned organization (The Statistic Portal 2017). Oil shale is the most important energetic mineral resource in Estonia. Moreover, Estonia is the only country in the world that uses oil shale as its primary energy source. Over 80% of the mined oil shale is used to produce electricity and heating. A smaller proportion of the mined oil shale is used to produce shale oil, a type of synthetic oil extracted from shale by pyrolysis. This is sufficient to keep Estonia as the second largest shale oil producer in the world after China. In addition, oil shale and its products are used in Estonia for district heating and as a feedstock material for the cement industry (Väli et al. 2008). Oil shale is a strategic energy resource that constitutes about 4% of Estonia’s gross domestic product. About one-third of Estonian public research, development, and demonstration expenditures goes to the oil shale sector. In 2012, the oil shale industry employed 6500 people – about 1,1% of the national workforce. Of all the oil shale fired power stations in the world, the two largest are in this country. Mining takes place in northeastern Estonia, mainly in the Ida-Viru County and lately also in the Lääne-Viru County. Oil shale industry in Estonia began with oil production, but focused on electricity generation after World War II, while shale oil was consumed as a raw liquid fuel material. The state-owned energy company Eesti Energia AS Group has a stable annual production

Estonia: Mineral Policy

of approximately 1.3 million barrels of shale oil. The company also produces electricity and heat from semicoke (remaining after oil extraction) and from retort shale gas, but generated a large amount of CO2 during the process. The shale oil is mainly exported (as a bunker fuel) to Belgium (33%), the Netherlands (20%), and Sweden (8%) (Enefit) (Eesti Energia annual report 2017). Industrial/construction minerals are the most diverse class of mineral resources used as building materials (constructional natural resources). Due to the road construction and building boom, mining of constructional natural resources has increased significantly since 2002. Sand, gravel, and limestone are the most widely used construction minerals in Estonia. Sand and gravel are used in the building materials industry to make concrete and other mixes, as well as in road construction. Limestone is used in the construction of buildings and roads, technological limestone is used to make a cement, and dolostone is used to produce, e.g., crushed stone, masonry stones, pavement slabs and stairs, etc. (Ministry of the Environment). Due to Rail Baltica – a transport link to other parts of Europe financed partially with EU support – the need for industrial minerals, especially sand and gravel, is growing sharply. Therefore, for much of this line, new tracks will be built and more construction materials will be needed. Also, the Estonian Government has commissioned a feasibility study on the use of limestone waste from oil shale mining for the construction. While the quality of such rock is not appropriate for track ballast, it could be used for complementary works. Rail Baltica is an international rail connection that will connect Estonia with Central and Western Europe and its neighbors. Rail Baltica is one of the biggest investments in the years to come in improving travel opportunities of Estonian people as well as developing business and trade, tourism, and exchange of goods. The railway route ensures speeds of up to 240 km/h and provides an opportunity to travel comfortably and quickly to Latvia and Lithuania and onward to Central Europe and further (total length of the route – ca. 700 km, including ca. 200 in Estonia. Time of completion: 2022–2025) (The Rail Baltic Project 2015).

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Rare-earth metals, in significant quantities, are found in tailings accumulated from 50 years of uranium ore, shale, and loparite mining at Sillamäe. Because of rising prices of rare earths, extraction of these oxides has become economically viable. Estonia currently exports around 3000 tonnes per annum, representing around 2% of world production and about 700 t/year of rare metals. The production covers metals cerium, lanthanum, neodymium, praseodymium, and samarium-europium-gadolinium products as well as niobium and tantalum metal chips, ingots, metallic hydrides, and powders. The rare-earth metals are used in producing aircraft, electronics, and energy. Peat is the other mined mineral resource with considerable energetic value. Highly decomposed peat is mainly used as heating material. Depending on the level of decomposition, peat can also be used in horticulture and agriculture. Mining of peat has varied from year to year, depending on annual precipitation. Domestic consumption of peat for electricity production has decreased in recent years, because environmental regulations are less favorable for electricity producers using peat rather than other fuels. For example, electricity producers that use peat as a fuel must buy carbon dioxide (CO2) allowances.

Classification of Mineral Reserves The Estonian classification of mineral reserves is founded on international principles. The United Nations (UN) Framework Classification has been developed by the UN Economic Commission for Europe (UN 1997). That classification includes definitions of stages of geological study and also definitions for reserves. Estimates of quantities are inferred, based on outcrop identification, geological mapping, indirect methods, and limited sampling. Arising from the detail of exploration, mineral reserves are divided into proved reserves, inferred reserves, and reconnaissance resources. Proved reserves are mineral reserves, the extent of geological exploration of which allows the receipt of information necessary for extraction and use of mineral reserves. Proved reserves are classified on

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the basis of geological exploration. Inferred reserves are mineral reserves, the extent of geological exploration of which allows the receipt of information necessary to assess the perspectives of the mineral reserves and to direct further geological exploration. Inferred reserves are classified on the basis of geological investigation or exploration. Reconnaissance resources are mineral reserves, the extent of geological exploration of which is determined by geological investigation. Reconnaissance resources allow assessment of the possibility to increase mineral reserves in a mineral deposit or discover a new mineral deposit and are the basis upon directing prospecting or geological exploration. Proved reserves and inferred reserves are divided as mineable reserves and submarginal mineral resources on the basis of their possibilities of use and economic importance. Therefore, mineral reserves are deemed to be mineable if the technology and equipment used upon extraction ensure rational use of the Earth’s crust and compliance with the environmental requirements and if use of the mineral resources is economically advantageous. On the other hand, mineral reserves are deemed to be submarginal if the use of the reserves is not possible from the standpoint of environmental protection or there is no corresponding technology, but which may prove to be usable in the future. It is highly probable that in the nearest future, the separation of mineable reserves and submarginal mineral resources will be abandoned. So far, the requirements for the categories of mineral reserves shall be established by the minister responsible for the area on the basis of the level of exploration of mineral resources, the extent of the possible environmental impact, and the possibility and economical expediency of extraction. List of mineral resources is based on the classification in Earth’s Crust Act, where mineral resources are shown by the field of use (Earth’s Crust Act 2005 vs. 2015).

Mineral Policy Conception of Estonia The use of mineral resources is aimed at promoting the economic growth of the state, while

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compensating for the environmental impacts, and providing benefits to people directly affected by the operation and to local governments. In June 2017, Riigikogu (Parliament) approved “The general principles of Earth’s crust policy until 2050,” which declares: “Earth’s crust and the natural resources found there are explored and used in a way which creates as much value for Estonia as possible, at the same time considering the environmental, social, economic, geological, and security aspects of these activities” (Parliament resolution RT III, 2017). Also, this very important document, which serves as the national mineral strategy, declares that the state’s interests related to the field of Earth’s crust must be clearly defined to ensure that the sectoral competence of all the relevant institutions is at an adequate level and to manage the field based on the relevant principles. The Earth’s crust in Estonia contains several resources with considerable economic potential. Considering the environmental, social, and economic impacts related to the use of extractable land resources, the state should have the main competence and initiative in making decisions regarding the use of these resources. For this end, it is necessary to, at the national level, systematically and consistently plan, carry out, and fund research on extractable land resources and their valuation. Also, the location of the use of Earth’s crust must be reasonable and spatially thought-through; the site must be reclaimed after use in the light of the development of the entire region. The relevance of the legislation must be regularly reviewed, optimized, and complemented on the basis of the results, if necessary. The legal framework must be purposeful and proportionate, and its implementation for all concerned must be as little burdensome as possible. The Government of the Republic will submit, from 2021, an overview of the implementation of the general principles of Earth’s crust policy to the Riigikogu not less than every 4 years. The general principles of Earth’s crust policy until 2050 will also be reviewed and updated every 4 years, if necessary (the general principles of Earth’s crust policy until 2050, 2017). The other national-level documents, related to the mineral policy, are the following: policy of the oil shale, National

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Development Plan for the Use of Oil Shale 2016–2030; policy of the industrial minerals, National Development Plan for the Use of Construction Minerals 2011–2020; the Estonia 2030+ national spatial plan; and the Estonian National Strategy on Sustainable Development “Sustainable Estonia 21” which covers many areas and which different ministries are responsible for.

Regulatory Framework Mining and using of mineral resources are regulated with the Earth’s Crust Act and the Mining Act (entered into force 2003). Other important acts concerning oil shale are, for example, the Ambient Air Protection Act and the Waste Act, which regulate the using of oil shale in combustion plants and in oil production (Ministry of the Environment). Ownership of mineral resources: bedrock minerals, mineral resources in mineral deposits of national importance, and lake mud and sea mud (medicinal mud) belong to the state, and the immovable property ownership of other persons does not extend to these. Mineral resources located on immovables or in internal water bodies in state ownership belong to the state. The natural body of bedrock, sediments, liquid, or gas not registered in the environmental register belongs to the state and the immovable property ownership of other persons does not extend to these, unless the purpose of use of the immovable requires this. Mineral resources in state ownership are not in commerce in their natural form. If a permit is required in order to remove mineral resources in state ownership from the natural state, the excavated mineral raw material generated upon mining on the basis of the permit belongs to the miner of the mineral resources. If a permit is required in order to remove mineral resources in state ownership from the natural state, the excavated mineral raw material generated upon mining without the permit belongs to the state. The Earth’s Crust Act provides for the procedure for and the principles of exploration, protection, and use of the Earth’s crust, with the

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purpose of ensuring economically efficient and environmentally sound use of it. The Act regulates the geological investigation, geological exploration, and extraction of mineral resources, except in the part regulated by the (Mining Act entered into force 2003). Mineral resource account is maintained in environmental register of deposits according to the regulation of the Environmental Register Act (Environmental Register Act, entered into force 2007). All mineral resources are shown by the field of use in Mineral Resources Balance Sheet according to the code system regulated in the Earth’s Crust Act. Mineral Resources Balance Sheet contains data of the Estonian Ministry of the Environment, County Environmental Departments, and Estonian Geological Fund’s registry cards and geological surveys. Records of mineral resources of the Environmental Register are a database of resources on the land, sea, lakes, and rivers and economic land. Chief and authorized processors of these data are the Ministry of the Environment and Estonian Land Board, respectively. In total, 906 deposits (oil shale, peat, crystalline rocks, gravel, sand, clay, dolostone, limestone, phosphorite, sea mud) were registered in 2016. Every deposit has its own registry card that includes a map of the deposit and information about the location; area; source documents; type of the deposit; usage; natural and immovable monuments located within the territory of the deposit; type section of the deposit; chemical, rock, mineralogical, and granulometric composition; technical indicators; mining conditions; hydrogeological characteristics; microcomponents of the mineral resource; rock, mineral, and granulometric composition; physicomechanical properties; and mining conditions. The Environmental Register also includes balance of mineral resources. This part of the register consists of mineral reserves of the deposit, mined amounts of the mineral reserves, and changes of the mineral reserves of the deposits (Estonian Land Board). According to the Earth’s Crust Act, it is permitted to carry out geological investigation on the basis of a respective permit. Geological exploration is permitted on the basis of a geological

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exploration permit for mineral resources. The holder of a permit shall submit the rock material, drilling cores, samples, and other geological data obtained in the course of geological investigation and exploration to the issuer of permits within 30 days after approval of the results of the geological investigation and exploration. The issuer of permits shall transfer the collected material to the authorized processor of the environmental register for preservation. If, on the basis of the results of geological investigation or exploration, changes need to be made in the environmental register, a relevant report shall be submitted for approval to the Ministry of the Environment. The mining right arises on the basis of an extraction permit for mineral resources. If, during the period of validity of an extraction permit, the mineral reserves are not completely exhausted within the boundaries of a mining claim or disturbed land is not restored, the issuer of permits shall extend the validity of the permit on the basis of an application of the holder of the permit in a dolostone, phosphate rock, crystalline building stone, limestone, metal raw material, oil shale, clay or peat deposit, and a sand deposit of national importance altogether for not more than 10 years and in a lacustrine lime, lake mud, gravel or sea mud deposit, and a sand deposit of local importance altogether for not more than 5 years if the holder of the permit has received the right to use the immovable by the time specified in the application. The extraction tax (mineral resource charge) for the right to mine mineral resources shall be calculated and paid pursuant to the Environmental Charges Act and legislation established on the basis thereof. Permits for geological investigation, exploration permits and extraction permits for mineral resources, and exploration permits for earth material are issued by the Environmental Board. The Commission of Estonian Mineral Resources was established in 1995, within the area of government of the Ministry of the Environment. The main function of the Commission of Estonian Mineral Resources is to advise the Ministry of the Environment on the issues of exploration and use of the Earth’s crust, keeping records of mineral resources and approval, qualification,

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writing-off, and protection of mineral reserves. Experts of geology, extractive industry, environmental protection, and other specialties shall be appointed as members of the Commission of Estonian Mineral Resources (Earth’s Crust Act 2005).

International Memberships The Estonian Republic is a member of the United Nations (since 1991), European Union (since 2004), Eurozone, North Atlantic Treaty Organization (NATO), OECD, OSCE, UN, and WTO. Estonia belongs to the Schengen Area.

Concluding Statement The Estonian Government has decided to find a complex solution to different problems related to mining and utilization of georesources. The mining industry of Estonia will continue to focus on reducing CO2 emissions by improving technology for greater efficiency throughout the oil shale cycle (from mining to consumption). The production of Estonia’s major minerals, such as rareearth metals, peat, and oil shale, is expected to increase steadily and to be exported to meet global market demands. Estonia is anxious to start to exploit its phosphorite deposits; to explore the black shale deposit (graptolitic argillite), which has a high concentration of uranium, and probably of other heavy metals such as vanadium, molybdenum, and nickel; as well as to investigate the deposits of iron ore and glauconite. New principles of exploiting the mineral resources are currently developed in the Ministry of the Economic Affairs and Communications, including such definitions as concession, mineral resource charges, and added value to the economy of Estonia.

References Earth’s Crust Act (entered into force 2005). Available via www.riigiteataja.ee/en/eli/525022015002/consolide. Accessed 29 Aug 2017 Ease of doing business index (2017). Available via http:// www.doingbusiness.org/content/dam/doingBusiness/

EU-Russia Energy Dialogue: Russian Perspective media/Annual-Reports/English/DB17-Report.pdf Accessed 14 May 2019 Eesti Energia annual report. Available via www.energia.ee/ en/ettevottest/aastaaruanne2017. Accessed 14 May 2019 Enefit (Estonian Energy). Available via www.enefit.com/ en/oil. Accessed 29 Aug 2017 Environmental Register Act (entered into force 2007). Available via www.riigiteataja.ee/en/compare_origi nal/531012014002. Accessed 29 Aug 2017 Estonian Investment Agency: Economy at glance (2017). Available via www.investinestonia.com/en/aboutestonia/economy-at-a-glance. Accessed 29 Aug 2017 Estonian Land Board: geoportal. Available via http:// geoportaal.maaamet.ee/eng/Maps-and-Data/GeologicalData/Mineral-Deposits-p352.html. Accessed 29 Aug 2017 Estonian Statistical Office (2017) Census by nationality 2017. Available via www.stat.ee/34267. Accessed 29 Aug 2017. (in Estonian) Freedom in the world (2016). Available via https:// freedomhouse.org/report/freedom-world/freedom-world2016. Accessed 14 May 2019 Index of Economic Freedom (2017). Available via www. heritage.org/index/pdf/2017/book/index_2017.pdf. Accessed 14 May 2019 International tax competitiveness index (2015). Available via https://files.taxfoundation.org/legacy/docs/TF_ ITCI_2015.pdf. Accessed 14 May 2019 Mining Act (entered into force 2003). Available via www. riigiteataja.ee/en/eli/501072015001/consolide. Accessed 29 Aug 2017 Ministry of the Environment of Estonia: Mineral Resources. Available via www.envir.ee/en/mineralresources. Accessed 29 Aug 2017 Ministry of the Foreign Affairs of Estonia: Economy in Numbers (2017). Available via http://vm.ee/en/ economy-numbers. Accessed 29 Aug 2017 Parliament resolution RT III, 07.06.2017 approving the general principles of Earth’s crust policy until 2050, Tallinn (in Estonian). Available via https://www.riigiteataja.ee/ akt/307062017002. Accessed 30 Aug 2017 Raukas A, Teedumäe A (1997) Geology and mineral resource of Estonia. Available via http://geoloogia. info/. Accessed 29 Aug 2017 The Rail Baltic Project (2015). Available via http:// railbaltic.info/en/. Accessed 29 Aug 2017 The Statistic Portal: Number of enterprises in the mining and quarrying industry in Estonia from 2008 to 2015 (2017). Available via www.statista.com/statistics/ 339937/number-of-enterprises-in-the-mining-andquarrying-industry-in-estonia/. Accessed 29 Aug 2017 The Trace Matrix: The Global Business Bribery Risk Index for Compliance Professionals. Available via www. traceinternational.org/trace-matrix. Accessed 29 Aug 2017 United Nations International Framework Classification for Reserves/Resources – Solid Fuels and Mineral

253 Commodities of 1997 (UNFC-1997). Available via www.unece.org/fileadmin/DAM/energy/se/pdfs/unfc_ fc_sf/ENERGY.WP.1.R.70_e.pdf. Accessed 14 May 2019 Väli E, Valgma I, Reinsalu E (2008) Usage of Estonian oil shale (PDF). Sci Tech J 25, 2 Special, 101–114. Estonian Academy Publishers. Oil Shale, 2008. Available via http://www.kirj.ee/public/oilshale_pdf/2008/issue_ 2S/oil-2008-2S-2.pdf. Accessed 29 Aug 2017

EU-Russia Energy Dialogue: Russian Perspective Vladimir Feygin1, Alexey Gromov2 and Alexey Belogoryev2 1 Foundation of Energy and Finance, Moscow, Russia 2 Institute for Energy and Finance, Moscow, Russia

The Energy Dialogue plays a special role in the political and economic relations between Russia and the EU due to the dominant position of energy in the mutual trade, its importance for both sides, and difficulties in finding mutual ground on issues of energy security and energy transition. It should be noted that there are significant contradictions between the EU countries regarding energy cooperation with Russia, and the position of the European Commission does not always coincide with the opinion of individual EU countries. The main supporters of the deep EU-Russia energy integration are traditionally Germany, Italy, the Netherlands, France, Austria, Slovakia, and Finland. The key critics of energy cooperation with Russia include usually Poland and the Baltic States. The EU-Russia Energy Dialogue has its roots in the depths of the Cold War, when western European countries and the USSR regarded the development of mutually beneficial energy trade as an important element of the Detente in international relations. The main monument of that time is Urengoy-Pomary-Uzhgorod gas pipeline – a part of large-scale gas project of 1970–1980s “gas-forpipelines.” It is worth to mention that in those

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difficult political environments, energy trade between USSR (and Eastern bloc COMECON as a whole) and Western Europe was never put at risk. After 2014 this context of the EU-Russia energy trade became relevant again. In the 1990s, after disruption of COMECOM and then of the USSR, risks in energy trade had significantly increased. New type of relations and concerns was reflected in the new format of agreements as a declaration of the European Energy Charter (1991) and then Energy Charter Treaty (ECT, 1994). It purposed to cover three main areas of mutual interests – investments, trade, and transit. In fact, since the early 1990s until the middle of the 2010s, the EU-Russia energy relations have been considered by both sides as a strategic partnership, not just commercial operations. In the 2000s, the EU enlargement to the Eastern Europe and the liberalization of gas and electricity markets of the European Union (Second and Third Energy Packages) created the clash between fundamentally different approaches of Russia and the EU to the understanding what the European energy security is. For Russia, it is, first of all, timely investments in energy production and infrastructure, as well as the reliability of transport routes, primarily of transit pipelines through the third countries (Ukraine, Belorussia, etc.). For the EU it is a diversification of supply sources, an opportunity for the consumer to choose a supplier and terms of supply. Despite the fact that crude oil and oil products are dominated in Russia’s energy exports to the EU, the main EU-Russia mutual contradictions are traditionally linked with pipeline gas deliveries, beginning from the discussion about the Energy Charter Treaty and its Transit Protocol in 1990s. Gazprom worried that an open transit of Central Asian gas via Russian and Ukrainian gas systems could damage its positions on the European market. In 2009 Russia finally refused to ratify the Energy Charter Treaty. The legal basis of the EU-Russia Energy Dialogue is the Partnership and Cooperation Agreement (PCA), signed in June 1994. The Energy Dialogue had officially started in October 2000. Coordinators of the Dialogue have been the

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Minister of Energy of the Russian Federation and the European Commissioner for Energy Union. The first years the Dialogue had quite formal and insipid, because, on the one hand, the mutual contradictions have not been sharp, on the other hand, effective forms of dialogue were not developed. Important to note that until the first Russian-Ukrainian gas crisis of January 2006 the energy issues were not in the focus of EU-Russia political relations. The role of the Energy Dialogue has increased dramatically since 2009. Europe was shocked by the stopping of the Russian gas transit in January 2009 as a result of the second Russian-Ukrainian gas crisis. Simultaneously Russia perceived highly negatively the “anti-Gazprom” Third Energy Package. It is no exaggeration to say that since that time, the Energy Dialogue has taken center stage in EU-Russia relations. Even the Crimean crisis (2014) and the armed conflict in the Donbass (2014–2019) could not overshadow the contradictions in the energy sphere. On the contrary, gas relations have taken a more conflicted character, especially in such cases like Gazprom gas pricing in Eastern Europe, Ukrainian gas transit risks, South stream, Turkish stream, and Nord Stream 2 gas pipeline projects, access to the Opal gas pipeline etc. In March 2014 the Energy Dialogue has been temporarily frozen on the official level at the initiative of the European Commission in view of the Ukrainian crisis. On working level, contacts and meetings are continuing. However, 2009–2013 were fruitful period for the Energy Dialogue. The key result of the period was the creation of the “Roadmap for Russia-EU Energy Cooperation until 2050,” signed in March 2013. Thirty-two pages of this document contain a coordinated vision for the long-term potential of EU-Russia energy cooperation and its main challenges. A prospective renewal of the EU-Russia Dialogue can be based on the Roadmap. The strategic goal of the Roadmap is “to achieve a Pan-European Energy Space, with a functioning integrated network infrastructure, with open, transparent, efficient and competitive markets, making the necessary contribution to

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ensuring energy security and reaching the sustainable development goals of the EU and Russia.” In 2015–2019 the European Commission became an arbitrator and to a large extent a third party to negotiations between Russia and Ukraine on the supply of Russian gas to the Ukrainian market, ensuring the reliability of gas transit through Ukraine and concluding a new transit contract for the period after 2019. The Energy Dialogue has worked in frame of four Thematic Working Groups: – The Group on Energy Markets and Strategies – The Group on Energy Efficiency and Innovation – The Group on Electric Power Industry – The Group on Nuclear Energy Thematic Groups bring together EU and Russian leading experts, including representatives from the energy companies, academic research organizations, European Commission, the Ministry of Energy of the Russian Federation, and financial institutions. All issues linked with EU-Russia gas relations are worked on an expert level in special Gas Advisory Council (GAC), established in 2011 by decision of the Coordinators of the Russia-EU Energy Dialogue as a mechanism to assess future trends in the gas sector with the aim of reducing risks and using opportunities in EU-Russia gas cooperation. The GAC is focused on the most actual and controversial part of the Energy Dialogue. It is significant that the GAC expert’s Working groups meetings have continued even in the period of full Energy Dialogue freeze in 2014–2019. The GAC is composed of three Work Streams (on Internal Market, on Infrastructure, and on Scenarios), involving gas experts from Russia and the EU. The members of the GAC are independent and are free to take any position or

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recommendation they deem appropriate in relation to the EU-Russia gas relations. The work of the Council is supported by the Thematic Working Groups of the EU-Russia Energy Dialogue. The main GAC initiatives are: – Inclusion of Coordinated Open Seasons (COS) in EU legislation for the development of new gas interconnection capacity – Creation of Early Warning System (EWS) in the short term and Gas Dispatching Service (GDS) in the medium/longer term perspective as mechanism of mutual control over gas pipeline transportation – Creation of High Road Scenario of EU-Russia gas relations development

References Conclusions of the 8th EU-Russia Gas Advisory Council. Moscow, 19 November 2013. https://ec.europa.eu/ energy/sites/ener/files/documents/20131119_gac_ conclusions.pdf. Accessed 19 May 2015 EU-Russia Energy Dialogue 2000–2010: the first ten years (2011) European Commission Direcorate-General for Energy. Brussels. https://ec.europa.eu/energy/sites/ ener/files/documents/2011_eu-russia_energy_ relations.pdf. Accessed 19 May 2015 Konoplyanik A (2010) A common Russia-EU Energy Space (The New EU-Russia Partnership Agreement, Acquis Communautaire, the Energy Charter and the New Russian initiative). In: EU – Russia Energy Relations, Legal and Political Issues. Euroconfidentiel, Brussels, pp 45–101 Memorandum on a Mechanism for Preventing and overcoming Emergency Situations in the Energy Sector within the Framework of the EU-Russia Energy Dialogue (Early Warning Mechanism) https://ec.europa. eu/energy/sites/ener/files/documents/20110224_ memorandum.pdf. Accessed 19 May 2015 Roadmap Russia-EU Energy Cooperation until 2050, March 2013. https://ec.europa.eu/energy/sites/ener/ files/documents/2013_03_eu_russia_roadmap_2050_ signed.pdf. Accessed 19 May 2015

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Finland: Mineral Policy Jussi Pokki Ore Geology and Mineral Economics, Geological Survey of Finland (GTK), Espoo, Finland

General Information on Finland Finland, located in Northern Europe, is one of the world’s northernmost countries (Fig. 1). Finland remained largely an agrarian country until the 1950s. Thereafter, it rapidly developed an advanced economy while building an extensive Nordic-style welfare state, resulting in widespread prosperity. Finland is a top performer in numerous metrics of national performance, including education, economic competitiveness, civil liberties, quality of life, and human development. The population of Finland in 2014 was 5.471 million. The average population density (18 inhabitants per km2) is the third lowest of any European country. The World Economic Forum ranks Finland’s higher education and training first in the world (WEF 2013). Around 33 % of residents have a tertiary degree. In 2014, Finland’s real gross domestic product (GDP) was €186.5 billion, very close to that of 2006 (all values calculated with 2010 as the reference year). From 2000 to 2008, the real GDP annually increased, but in 2009, the GDP decreased by 8 % after a record high in 2008 (€198.0 billion). Recent development has

displayed a slight decrease in consecutive years from €191.9 billion in 2011 (Statistics Finland 2015). Finland ranked 25th place in GDP per capita in 2014, behind 13 other European countries (Wikipedia 2015b). Of the value added by industries, primary production (agriculture, forestry, fishery) comprises 3 %, secondary production (including mining and quarrying) 27 %, and services 71 %. Mining and quarrying alone have comprised 0.3–0.5 % of the value added by industries during recent years (Statistics Finland 2015). The trade balance of Finland was positive between 1991 and 2010, but negative from 2011 to 2014 (Customs 2015).

Need for Minerals Mining From the late 1970s until 2007, the total mining of ores (metallic and industrial minerals) in Finland amounted to about 15–20 million tons (Mt) annually. Thereafter, a boom in mining of metallic ores started, resulting in a record high of 37 Mt in ore mining in 2013. This boom was initiated by the Talvivaara mine, which was able to utilize low-grade ore due to a new bioleaching method. Several other metallic ore mines also started production, and even after the temporary cease of mining at Talvivaara, ore mining amounted to 30 Mt in 2014. Mines in Finland are shown in Fig. 1 and mining in 2014 is summarized in Table 1. Since the early 1980s, the

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Finland: Mineral Policy, Fig. 1 Active mines in Finland in 2014

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Finland: Mineral Policy, Table 1 Overview of mining in Finland in 2014 (Source: GTK 2015a)

Metal ores Carbonate rock Other industrial minerals Industrial rock Soapstone Gem (amethyst) Total

Ore mined 13.4 Mt 3.7 Mt 12.0 Mt 125 kt 282 kt 5t 29.5 Mt

Number of mines 11 14 6 2 6 1 40

annual amount of ore mined has been the highest in the Siilinjärvi apatite mine, only exceeded during 2009–2011 by the Talvivaara mine. Siilinjärvi apatite ore typically constitutes about 70 %, carbonate rocks 20–25 %, talc ore 5 %, and industrial rocks and soapstone for dimension stones both 1–2 % of all industrial mineral ores mined annually. Mineral Production From 2010 onwards, the amount of metals annually produced from the Finnish mines has been unparalleled since the late 1980s. Of the metals produced during 2000–2014, 80 % consisted of ferrochrome, 12 % of zinc, 6 % of copper, and 2 % of nickel (GTK 2015b). Ferrochrome is produced at the Kemi mine, currently showing record-high production (441,000 t in 2014). Most of the zinc and copper produced during 2000–2014 originated from the Pyhäsalmi mine, and Talvivaara has been the largest nickel producer. Of the precious metals produced during 2000–2014, 74 % consisted of silver, 24 % of gold, and 2 % of platinum group metals (PGM). The annual production of silver is about 10–14 t, most of it originating from the Pyhäsalmi mine. Annual gold production soared from 2 t in 2008 to 8 t in 2014, mainly as a result of the production at the Kittilä mine. In 2012, Finland became the leading mine producer of PGM in the EU owing to the Kevitsa mine, which produced 1060 kg of platinum and 808 kg of palladium in 2014. Considering the production volumes and market prices in 2014, ferrochrome showed the highest value (€864 M), with gold in second place

(€272 M) (GTK 2015b). Considering the production in 35 European countries (EU-35; Brown et al. 2014), the mine production of cobalt, PGM, nickel, ferrochrome, and gold in Finland is particularly significant on the European scale. Calcite and dolomite are the industrial minerals having the largest production levels in Finland. Their annual production has varied between 5 and 3 Mt since the early 1970s. Since the year 1980s, apatite has been the second most important industrial mineral in terms of production, closely followed by pyrite. Currently, the annual production of pyrite exceeds that of apatite, both reaching a record high in 2014 (1035 kt and 946 kt, respectively). Pyrite is mainly originating from the Pyhäsalmi mine, and apatite is produced at Siilinjärvi, the only producer of phosphate rock among the EU 35 countries (Brown et al. 2014). Phosphate rock is defined as a critical raw material by the EU (European Commission 2014). Finland is also one of the biggest producers of talc and wollastonite in Europe. Quartz, feldspar, mica, and magnesite sand are also produced in Finland (GTK 2015a). Aggregates The aggregate industry forms the largest sector of the extractive industry in Finland in terms of production volumes, number of personnel, and net revenue. The per capita consumption of aggregates in Finland is also one of the highest in the EU, which is the combined effect of the relatively large area of the country, low population density, extensive road network, use of studded tires in winter, and extensive road, railway, and housing construction in urban areas. The Precambrian crystalline bedrock is generally a good but heterogeneous source of rock aggregates. However, there is a shortage of outcrops suitable for the production of aggregates with the best strength properties. The annual consumption of aggregates has declined to 80–90 Mt from 113 Mt in 2008. Of the total consumption, 60 % consists of hard rock aggregates and 40 % of glaciofluvial sand and gravel. The proportion of superficial deposits being extracted is decreasing, as they typically also form important groundwater areas. Whereas mining has concentrated in the northern and

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central parts of the country, the most important sites for the extraction of aggregates are located in southern Finland, close to the Helsinki and Tampere regions. The total extraction of 12 Mt of marine sand close to Helsinki during 2004–2006 is the only example of the significant use of marine mineral resources in Finland in recent years (Pokki et al. 2014). Dimension Stones Since 2000, the annual production of dimension stones has varied between 0.5 and 0.8 Mt, of which 70–80 % consists of granitic rocks and about 20 % of soapstone. Small amounts of schists are also produced. The rapakivi granite batholith in SE Finland is the most important area for the production of dimension stones, while soapstones are produced in Eastern Finland. From 2000 to 2009, production followed an increasing trend, which thereafter turned to a decreasing trend. Rapakivi granite, a special type of homogeneous granite, comprises about 65 % of the dimension stones produced; 90 % of these rapakivi granites are extracted from SE Finland and 10 % from SW Finland (Pokki et al. 2014). Secondary Raw Materials Pyrite is used in the production of sulfuric acid, needed in the manufacture of phosphoric acid and fertilizers from the apatite concentrate at Siilinjärvi. Two huge secondary reserves, roasted pyrite and gypsum, have formed in the process, and during recent years, over a million tons of roasted pyrite have annually been exported, to be used in the production of steel. This represents an enormously successful utilization of secondary resources. The value of roasted pyrite exported during 2010–2014 (€189 million) is 45 % of the value of metal ore concentrates exported from Finland during the same years, the mass being more than tenfold greater than the mass of metal ore concentrates (ULJAS 2015). Foreign Trade The metal industry in Finland is heavily dependent on imports of metal ore concentrates. In 2014, the smelter production of zinc was 7 times greater than the domestic mine production; for

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copper and nickel, these ratios were 3 and 2, respectively. These ratios have displayed decreasing trends due to increased domestic mine production, but this increased mine production has not resulted in a decrease in imports of these concentrates. The decrease in the total mass of imported metallic concentrates during the most recent years is due to the decrease in imports of iron ore concentrates, which are not produced in Finland. During 2010–2014, annual imports of metallic concentrates ranged from €1.6 to 1.9 billion or 4.1 to 5.3 million t. The import of copper concentrates clearly has a higher value than that of nickel, zinc, or iron, whereas the mass of imported iron concentrates is more than double the combined mass of imported zinc, copper, and nickel concentrates. In 2014, the value of imports of metal ore concentrates was 15 times greater than the value of their exports. Among other imported extractives, coal is the most important, both in value and tonnage, followed by kaolin and limestone (ULJAS 2015; Pokki et al. 2014). In the statistics available since 1995, the annual exports of metallic ore concentrates (in mass) have been highest from 2011 onwards, reflecting increased domestic mine production. This growth is even more evident in value due to the developments in metal prices. The export of zinc concentrate dominated in 2010 and 2011, but the increase in the export of nickel concentrate made the latter dominant in later years. Precious metals formed the bulk of exports of metal ore concentrates during 2003–2007, when the exports of nickel and zinc concentrates were nearly halted. Exports of metallic gold increased from €87 million in 2011 to €387 million in 2012 (Customs 2013), which probably reflects the production of doré bars at the Kittilä gold mine. Granitic dimension stone, talc, (unroasted) pyrite, rock aggregate, and peat are other extractives with significant exports from Finland (ULJAS 2015; Pokki et al. 2014).

Classification of Mineral Reserves The largest ore reserves in Finland include iron (45 Mt Fe), chromium (12 Mt Cr2O3), and sulfur (2 Mt S), followed by copper (932 kt Cu), nickel

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(453 kt Ni), zinc (146 kt Zn), cobalt (33 kt Co), lithium (28 kt LiO2), and lead (11 kt Pb). Reserves of precious metals include 421 t Ag, 195 t Au, 33 t Pt, and 25 t Pd. The in situ value of the reserves is €6.7 billion for nickel and €6.4 billion and €5.2 billion for gold and copper, respectively, calculated by using annual (2014) World Bank Commodity Price Data. In addition, the Talvivaara mine has huge resources of nickel, zinc, copper, and cobalt, but the amount of corresponding reserves has not been specified. The reporting codes used are JORC or NI43-101, with the exception of the Fennoscandian Review Board standard used for chromium. Finland shows excellent potential for iron, all the reserves being associated with mining projects. The chromium reserves are located in Kemi mine and the sulfur reserves in Pyhäsalmi and Hitura mines. Kevitsa mine has the largest reserves of copper, nickel, and cobalt and Pyhäsalmi mine that of zinc. The lithiumcontaining spodumene resources in Finland are among the most significant in Europe, and their production is planned to start in the coming years. The largest silver reserve is associated with the Taivaljärvi mine project, followed by Pyhäsalmi mine. Kittilä mine forms by far the largest gold reserve and Kevitsa mine the largest PGM reserves.

Mineral Policy Conception The national natural resource strategy of Finland entitled “Intelligently powered by nature” (SITRA 2009) was one of the world’s first national natural resource strategies to combine all natural resources under a shared strategic framework. One of the objectives was to compile a strategy focusing on the long-term demand for minerals and rock aggregates. This led to the compilation of Finland’s Minerals Strategy (GTK 2010). The aim of the strategy was to anticipate international and domestic development trends in the minerals sector over the next few decades and to make recommendations concerning the formulation of a sustainable minerals policy and the development of the minerals

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sector in a way that satisfies the needs of both society and business. According to the strategy, Finland aims to be a global leader in the sustainable utilization of mineral resources by 2050, and the minerals sector is one of the key foundations of the Finnish national economy. Three strategic objectives were defined to facilitate implementation of the minerals strategic vision: (1) the promotion of domestic growth and prosperity, (2) solutions for global mineral chain challenges, and (3) mitigation of environmental impacts. In addition, 12 action proposals were highlighted relating to four themes: (1) strengthening the minerals policy, (2) securing the supply of raw materials, (3) reducing the environmental impact of the minerals sector and increasing its productivity, and (4) strengthening R&D capabilities and expertise. The extractive industry and the related refining, technology industry, and research and development offer significant growth opportunities for Finland. Further dialogue between the extractive industry and its stakeholders led to an action plan, “Making Finland a leader in the sustainable extractive industry” (MEE 2012). The plan includes measures to be taken by the industry in order to obtain society’s support for its activities. Proposals for improving the operating conditions of the extractive industry are made with regard to administration, training, and infrastructure. In addition, the action plan proposes a more active, open exchange of information and experiences. According to the report “Building an Intelligent and Responsible Natural Resources Economy,” submitted to Finnish Parliament, the natural resource policies must be based on a deep understanding of the ways in which natural resources should be utilized and conserved to ensure success in the future (MEE 2011a). The updated version of this report (MEE 2014) contains the policies, strategic aims, and the principal activities that are aimed at making Finland the path setter in the sustainable natural resources economy. The sustainable use of natural resources increases well-being and competitiveness while creating the conditions to uncouple economic growth from the non-sustainable use of natural

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resources and from the growth of environmental stress.

Regulatory Framework The Mining Act, renewed in 2011, lays down provisions for the exploration and exploitation of a deposit containing mining minerals and the termination of related operations (MEE 2011b). The term “mining minerals” refers to specific chemical elements and minerals, marble, and soapstone. Exploitation of other rocks types, as well as the extraction of superficial deposits such as gravel, sand, and clay, are governed by the Land Extraction Act (Ministry of the Environment 1981). Operations carried out under the Mining Act must comply with other legislation. The environmental aspects of exploration and mining activities are also governed by environmental legislation. A water permit issued under the Water Act is usually also required. The necessity to acquire other permits is assessed on a case-bycase basis. The Mining Act ensures the priority of exploitation for the operator discovering a deposit, as well as compensation for the landowners. Prospecting work that does not cause more than minor inconvenience or disturbance may, in most cases, be performed without a permit. The operator may reserve an area for a maximum of 2 years in order to obtain priority for applying for an exploration permit. Similarly, an exploration permit gives priority to the permit holder when applying for a mining permit. An exploration permit can be obtained for a maximum of 4 years and it can be extended for periods of 3 years at maximum, so that it can be valid in total for 15 years. An extension is only possible if exploration has been effective and is justified. The longer the total duration of the permit, the higher the fee per hectare that must be paid to the landowners. A mining permit is required for the establishment of a mine and exploitation of the mining minerals and by-products in the area. The mining permit holder must ensure, e.g., that mining activities do not cause damage to people’s health, danger to public safety, or significant harm to public

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or private interests. A mining permit remains valid until further notice or can be granted for a fixed term with a maximum of 10 years. The validity of a fixed-term permit can be extended as necessary in order to exploit the deposit. Prior to the commencement of mining activities, the operator is obligated to deposit collateral, for the purpose of termination of mining and after-care measures. The mining permit holder is obliged to pay €50/ ha annually to the landowners and 0.15 % of the value of exploited mining minerals in metal ores, and reasonable compensation for other exploited mining minerals.

International Membership Finland joined the United Nations in 1955 and established an official policy of neutrality. It joined the Organisation for Economic Co-operation and Development (OECD) in 1969, the European Union in 1995, and the Eurozone at its inception in 1999. Finland is the only Nordic country using euros (Wikipedia 2015a). Finland is also a member of the World Bank and World Trade Organisation.

Concluding Statement During the twenty-first century, Finland has become one of the most interesting exploration and mining countries in the European Union. The change has been driven by the good potential to find and develop mineral deposits combined with the excellent infrastructure and information base and favorable politics. In the Fraser Institute’s Annual Survey of Mining Companies in 2014, Finland was ranked as the most attractive jurisdiction in the world for mining investment and in second place in policy attractiveness.

References Brown TJ, Idoine NE, Hobbs SF et al (2014) European mineral statistics 2008–12. A product of the world mineal statistics database. Available via https://www.bgs.ac.uk/

France: Energy Policy mineralsuk/statistics/europeanStatistics.html. Accessed 20 Apr 2015 Customs (2013) Kaivannais- ja louhintatuotteiden kauppa. Available via http://www.tulli.fi/fi/tiedotteet/ulkomaan kauppatilastot/katsaukset/toimialat/kaivannais13/index. html?bc¼370. Accessed 20 Apr 2015 Customs (2015) Kuvioita Suomen ulkomaankaupasta 2014. Available via http://www.tulli.fi/fi/suomen_tulli/ ulkomaankauppatilastot/grafiikkaa/liitteet/Kuviot_2014 FI.pdf. Accessed 20 Apr 2015 European Commission (2014) Report on critical raw materials for the EU. Report of the ad hoc working group on defining critical raw materials. May 2014. 41 p. Available via http://ec.europa.eu/growth/sectors/raw-materials/ specific-interest/critical/index_en.htm. Accessed 9 Nov 2015 GTK (2010) Finland’s minerals strategy completed. Geological survey of Finland. Available via http://projects. gtk.fi/minerals_strategy/index.html. Accessed 20 Apr 2015 GTK (2015a) Metals and minerals production. Geological survey of Finland. Available via http://en.gtk.fi/ informationservices/mineralproduction/index.html. Acce ssed 20 Apr 2015 GTK (2015b) Metallimalmikaivokset ja metallinjalostus. Geological Survey of Finland. Available via http:// kaiva.fi/kaivannaisala/kaivostoiminta/metallimalmi kaivokset/. Accessed 28 Apr 2015 MEE (2011a) Building an intelligent and responsible natural Resource economy. Natural resources report submitted to parliament by the Finnish government. Publications of the ministry of employment and the economy. 60 p. Available via http://www.tem.fi/files/ 29319/TEM_5_2011_netti.pdf. Accessed 20 Apr 2015 MEE (2011b) Mining act. Ministry of employment and the economy. Available via http://www.finlex.fi/en/laki/ kaannokset/2011/20110621. Accessed 20 Apr 2015 MEE (2012) Making Finland a leader in the sustainable extractive industry  action plan. Available via http:// www.tem.fi/en/current_issues/pending_projects/strategic _programmes_and_flagship_projects/strategic_progra mme_for_the_cleantech_business/sustainable_mining. Accessed 20 Apr 2015 MEE (2014) Suomi kestävän luonnonvaratalouden edelläkävijäksi 2050. Summary: Finland as the path setter for natural sources economy in 2050. Available via http:// www.tem.fi/ajankohtaista/julkaisut/energia_ja_ilmasto/ suomi_kestavan_luonnonvaratalouden_edellakavijaksi _2050.97981.xhtml. Accessed 20 Apr 2015 Ministry of the Environment (1981) Land extraction act. Available via http://www.finlex.fi/en/laki/kaannokset/ 1981/19810555. Accessed 20 Apr 2015 Pokki J, Aumo R, Kananoja T et al (2014) Geologisten luonnonvarojen hyödyntäminen Suomessa vuonna 2012. Summary: geological resources in Finland, production data and annual report 2012. Geological survey of Finland, report of investigation 210, 42 p. Available via https://www.gtk-kauppa.fi/en-gb/products/view/ 14378. Accessed 20 Apr 2015

263 SITRA (2009) Natural resources strategy. Available via http:// www.sitra.fi/en/natural-resources-strategy. Accessed 20 Apr 2015 Statistics Finland (2015) National accounts. Available via http://www.stat.fi/tup/suoluk/suoluk_kansantalous_en. html. Accessed 20 Apr 2015 ULJAS (2015) Foreign trade statistics. Digital database of the Finnish customs. Available via http://uljas.tulli.fi. Accessed 20 Apr 2015 WEF (2013) The global competitiveness report 2013–2014. Full data edition. 551 p. Available via http://www3. weforum.org/docs/WEF_GlobalCompetitivenessReport _2013-14.pdf. Accessed 30 Apr 2015 Wikipedia (2015a) Finland. Available via http://en. wikipedia.org/wiki/Finland. Accessed 20 Apr 2015 Wikipedia (2015b) List of countries by GDP (PPP) per capita. Available via http://en.wikipedia.org/wiki/List_ of_countries_by_GDP_(PPP)_per_capita. Accessed 20 Apr 2015

France: Energy Policy W. Eberhard Falck MinPol, Saint-Cloud, France

General Information on France France consists of 95 “Départements” on the mainland and the five overseas departments (DOM) of Guadeloupe, Martinique, FrenchGuaiana, Réunion, and Mayotte. Statistical data usually include these five DOM. In 2014, France (mainland and DOM) had a population of around 66 million (INSEE no year), together with a nominal GDP of 2.060 billion Euro; this translates into a per capita GDP of 32.229 Euro (IMF 2015). France has the fifth largest economy in the world (World Bank no year) and ranks no. 4 in wealth, with 2.44 million millionaires (Credit Suisse 2014). Need of (Nonrenewable and Renewable) Energy Resources The gross energy consumption in France rose from 228 Mtoe in 1990 to 277 Mtoe in 2005, but since then has fallen off and remained stable since 2009 at around 260 Mtoe (Eurostat). This pattern

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is attributed to the economically difficult situation of the last few years. At the same time the energy intensity is steadily declining, indicating an increase in energy efficiency. Industry and transport account for some 60 % of the final energy consumption, with the remainder being used for private and the wide variety of commercial activities, such as heating and lighting. 78 % of the electricity is produced in nuclear power-stations, 11 % by hydropower, 3.9 % in coal-fired and 3.8 % in natural gas-fired power stations, 1.3 % arise as by-product in industries using fossil fuels, and the remaining 1.3 % come from, e.g., wind-turbines. As heating amounts to 44 % of France’s energy expenditure, improvement of existing buildings and the construction of energy-efficient buildings is one of the French policy priorities. Since 2002, the transport-related energy consumption remains at a stable 32 % of the total (but 50 % of the fossil fuel). The total number of cars remained stable at around 32 million, but the ratio between diesel and petrol engines continues to increase, with the number of diesel-powered cars surpassing that of other cars in 1997. This has implicitly led to a reduction of specific CO2-emissions. The (partial) taxation of carbon-emissions from cars has fostered the adoption of engines with relatively low emissions. However, most recently, local governments, e.g., that of Paris, announced restrictions for diesel-powered vehicles in order to reduce fine particle emissions. Considering the low cost and carbon emission of electricity generated in nuclear power-stations, France also fosters the adoption of electrical and hybrid vehicles. Following EU targets, fuel for automotive application has to contain a 10 % contribution from renewable sources, i.e., ethanol or plantderived oils. The sources for these agro-fuels are 89 % domestic and the remainder is bought in from other countries around the world (Observ’ER 2015). Nuclear Energy constitutes a major economic sector with several hundred thousand employees and exports worth of several billion euros. France has a full nuclear fuel cycle established, but the uranium used in French power-stations originates

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mainly in Niger, Canada, and Australia (all small domestic mines have been closed). Enrichment and fuel production takes place in La Hague. Spent fuel is also being reprocessed in France and the resulting Mixed Oxide (MOX) fuel is reused in the power stations. A deep geological repository for high-level waste is currently being investigated at Bure (Lorraine). The energy needs of the enrichment and reprocessing plants are met by nuclear power, which overall results in the worldwide lowest carbon emissions per kWh electrical energy generated and makes France the lowest carbon emitter among the industrialized nations. Frances large nuclear base-load electricity generating capacity makes it a net exporter and an important player in supply security and grid stability for Western Europe. In 2013, a total of 79.4 TWh were exported, but only 32.2 TWh imported. Thus a reduction of nuclear capacity will also influence the energy policies of France’s neighbors. As the nuclear power-stations are largely written off, electricity for private consumers and industry is cheap compared to most of Europe. The cost of uranium, through volatile, contributes to less than 1 % of the generating cost in nuclear energy systems. This results in a very stable electricity price in France and a price that is the lowest in the European Union. However, the policy of providing private and industrial customers with cheap electricity may undermine the industries capability to renew its infrastructure and may be unsustainable in the medium term (IEA 2010). Following the events in Japan in 2011, the newly elected French president began to embark in 2013 on a re-orientation of the French electricity generating-mix away from the dominance of nuclear power towards a share of only 50 % by 2025. This political decision also triggered a more intensive debate on the solutions for the management of the high-level radioactive waste. The new law on energy had a second reading the National Assembly in May 2015 and foresees the reduction of the nuclear share. In July 2011 a Strategic Nuclear Industry Committee (CSFN) was set up that includes representatives from the industry itself, its supply and service industry, as well as

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trade unions and is tasked with strengthening the relations between the partners. Hydroelectric power. Its rapid modulation capabilities, annual reserves of 7,500 billion liters on the national territory and its renewable and non-CO2 emitting dimension make it a major asset for the French electricity portfolio. With 25.4 GW of installed capacity and a production of 75.7 TWh in 2013, hydropower comes second behind nuclear power for electricity generation (accounting for about 11 %) and is the most important form of renewable energy in France. Riverine hydroelectric power plants provide base-load electricity owing to their lack of storage capability. More than 85 % of the 2000 plants are small with less than 10 MW capacity, but their production represents approximately 37 TWh per year or more than half of the French hydroelectric production. On the other hand, around 30 large hydropower stations located along the major rivers, such as Rhone and Rhine account for the difference. At suitable locations, excess electrical energy is used to pump water into storage reservoirs, allowing to generate extra electricity during peak-hours with start-up times in the order of minutes only. In France, ten such hydropower plants are available with an installed capacity of 4500 MW. Overall, hydroelectric power plants are a major element for providing network security owing to their output being able to be modulated quickly as demand fluctuates over the day and seasons. In 2013, an assessment of the hydroelectric potential on French territory was carried out using standardized evaluation methods jointly by the State and electricity producers. This potential was estimated at around 12 TWh/year, of which would be 10.3 TWh/year at new and 1.7 TWh/ year at existing sites. Oil and Gas. France produces less than 10 % of its needs of oil and gas and none in the French mainland. Liquid and gaseous fossil fuels are imported. Agrofuels are mainly used for automotive applications and have developed into a considerable business. Coal. France has only limited resources of solid fossil fuels, mainly hard coal in the Lorraine area. Currently France does not mine any coal and the small number of coal-fired power plants,

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which contribute with 3–5 % to the electricity needs, is run on imported coal. Wind power. In 2014, wind turbines with a capacity of around 8.3 GW had been installed in France. Reflecting suitable wind conditions the installations concentrate in five regions. The wind-based electricity production amounted to around 15.2 TWh in 2013. Growth rates in the wind power have begun to stagnate in recent years though planning permission had been filed for nearly additional 6 GW by the end of 2013. Biomass makes an important contribution (85 %) to renewable heating requirements, followed by hydropower. Individual wood burning is the most important contributor. France has abundant forests that could be used for energetic applications, but resource use conflicts between this and other uses of wood have to be resolved. The direct combustion of biomass in small-scale facilities, however, can lead to air-quality issues due to the release of particles (PM10) and gaseous pollutants, e.g., PAH. In 2012 France had 843 MW capacity for electricity generation from solid biomass (mainly agricultural residues, such as straw, reflecting the importance of agriculture in France) installed, while biogas-based installation had a capacity of 247 MW. By 2020 the installed respective capacities are planned to be increased by 180 and 42 MW. Other renewables are mainly still at a conceptual or experimental stage. France supported for many years research on the use of deep geothermal wells for electricity production. The sale of heat-pumps to private customers for residential heating stagnates in recent years. Another area of development concerns the use of wave and tidal energy.

Energy-Related Research France spent in 2012 a total of 1.1 billion Euros on energy-related research, namely, 447 M€ (¼41 %) on new energy technologies, 543 M€ (¼49 %) on nuclear technologies, 66 M€ (¼6 %) on fossil fuel-related technologies, while rest was spent on transversal research tasks. The Alliance Nationale de Coordination de la

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Recherche pour l’Énergie (ANCRE) coordinates the research activities of the various public institutions (ANDRA, BRGM, CDEFI, CIRAD, CSTB, IFREMER, IFSTTAR, INERIS, INRA, INRIA, IRD, IRSN, ISTEA, LNE, ONERA) (Panorama 2014).

Classification of Reserves The reserves of (energy) minerals in the mainland of France are comparatively limited and occurrences are mainly small. Data are not currently collected on primary raw materials resources and reserves in France. Secondary data collected on legacy metallic commodities and coal do not comply with an internationally recognized code, although a national code is used for reporting. There is no obligation for exploration and mining companies to report resource and reserve data (EC 2016). The Bureau de Recherches Géologiques et Minières (BRGM) and various ministries collate data on energy and non-energy mineral resources (see below). There have been some occurrences of uranium of commercial interest, but these were mined out and the various uranium mine sites have been closed and remediated. AREVA, the statecontrolled nuclear supply company, has extensive interests in the uranium mines of inter alia Niger and Canada, securing the supply for the domestic nuclear reactors. The production of oil and gas in the mainland of France from limited reserves in the Île de France and Aquitaine regions has continued to decline for many years and is now suspended altogether. After the last gas field Lacq closed in the autumn of 2013, virtually all the natural gas consumed is imported. To the contrary, there is on-going exploration in the overseas territory of French Guiania with 55 active concessions. The production of hard coal ceased when the last mine in the Lorraine region closed in 2004. The state-owned production company Charbonnage de France was dissolved in 2007 (CC 2009).

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The annual reserves for hydroelectric power generation are in the order of 7,500 billion liters on the national territory. France also has a considerable potential for wind power from both on-shore and off-shore installations. Concerning forestry-related renewable energy sources, France ranks on the third place in Europe and on the first place for agricultural energy sources (agrofuels, biogas). This makes France the second biggest producer of renewable energies in Europe.

Energy Policy Conception of France The French energy policy has been coupled closely to the aim of reducing GHG and fossil carbon emissions, while at the same time to assure adequate energy supply. The goal of the French government is a 75 % reduction of CO2 emissions by 2050 and a reduction of GHG emissions from the transport sector to 1990 levels by 2020 (“Loi Grenelle 2”, LOI n 2010-788). France is following since 2011 first national adaptation plan (PNACC), with the ambitious objective to reduce its energy consumption to 131.4 Mtoe at user level and the primary consumption to 236.3 Mtoe by 2020. This also reflects the transposition of the EU Directive 2012/27/EU (CEU 2012) that had to be effected by 05.06.2014. A plan for the transposition, detailing the measures by sector, was submitted to the European Commission on 24.04.2014. As the reduction in consumption between 2007 and 2012 amounted to only 6 Mtoe, the 2020 objective remains very ambitious. At the same time, the plan foresees an increase of the renewable energy contribution per annum of 20 Mtoe by 2020. This plan is complemented by plans that integrate regional development with energy policies and environmental protection (Plans Climat(Air)-Énergie Territoriaux PCAET). In 2007, the Ministère de L’Écologie, du Développement Durable et de L’Énergie (http://www. developpement-durable.gouv.fr) was created to

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address energy and environmental issues in an integrated way. The GHG emissions of France from electricity production are among the lowest in the world, so that the strategy of reducing emissions from the transport sector focuses on an increased use of electricity. The government Hollande fosters the increased use of “decarbonized” sources of energy. However, in 2015 a new energy legislation is being debated that foresees a capping of 50 % on the nuclear energy contribution by 2025. It is not yet clear, whether this will be achieved by fostering “renewables” or by imposing sanctions on the nuclear side. Such a capping will make targets to further reduce GHG emissions more ambitious. The French plan for renewable energy development expects to increase their use to meet the heat demand (+10.5 Mteo from 2005) as well as the production of electricity (+6.8 Mteo) and increasing the contribution of biofuels to the energy needs of the transport sector (+3.7 Mteo). For heat, the biomass sector will be the largest contributor to the goal with a production of 16.5 Mteo in 2020. For electricity, wind energy and hydropower will contribute the targets 5 and 5.5 Mteo, respectively. Incentives to achieve these targets are tax rebates and purchasing guarantees by the state-owned electricity company (EdF). The objective of replacing 7 % of the fossil fuel by agrofuels was achieved in 2013, and the target was increased for 2014 to 7.7 % for diesel and 7 % for petrol. These agrofuels make an important contribution to the European targets of 10 % renewable fuels in the transport sector by 2020. The use of untaxed agrofuel is only permitted for agriculture, public transport, and public services. The exoneration from the TICPE (Taxe Intérieure de Consommation sur les Produits Énergétiques; Douane 2013) was permitted according to the EU Directive 2003/96/CE (CEU 2003) in order to compensate for the higher production costs of agrofuels but has been gradually phased out until the end of 2015. Biomass currently contributes to 60 % of all final renewable energy consumption. The Plan National d’Actions pour les Énergies

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Renouvelables (PNA EnR) foresees a stabilization at this level until 2020. The environmental legislation (“Loi Grenelle 2”, LOI n 2010-788) promotes the injection of biogas into the natural gas network. The law is supported by subsidiary regulations that inter alia regulate the tariffs paid to the biogas producers. Biogas is further favored by purchase guarantees for coproduced electricity. A register to document the origins of biomethane was set up in 2013. At the end of 2013, three producers regularly injected biomethane into the gas network. The national committee for off-shore renewable energies (Comité National sur les Energies Renouvelables en Mer, CNEM), which was set up in November 2013 by the Ministry for Ecology, Sustainable Development and Energy, proposed a roadmap for off-shore wind energy exploitation. Regulatory Framework As across the European Union, the French regulatory framework strongly reflects government policies with respect to economic development and environmental protection (LOI n 2005-781). The overarching instrument in France here is the Loi Grenelle 2, having both regulating as well as policy setting objectives. Ownership. Though the energy market is fully open to competition in line with European Union Directives, it is dominated by (partly) state-owned companies, namely, Electricité de France (EdF), Gaz de France (GdF-Suez, since April 2015 ENGIE SA), Total (oil and gas), and AREVA (uranium), and therefore, competition in reality is rather limited. This means that energy carriers, conversion, and distribution as well as tariffs are at least partially controlled by the government. While this hinders full market competition, the government maintains that it benefits the (domestic) customers, as EU wholesale electricity tariffs are generally higher than those in France. Tariffs. The electricity and gas market is overseen by the Commission de Régulation de l’Énergie (CRE) as independent regulatory body, but the government retains the final decision on the tariffs. Nuclear Energy. The Loi Grenelle 2 also provides the framework for regulating nuclear energy

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systems in France. Following the events at Fukushima in 2011, laws and regulations pertaining to the safety and security of nuclear installations were subject to a review at EU and national level. A French regulation of 07.02.2012 sets out the safety management, public information, risk management, the management of environmental and health impacts, the management of radioactive wastes, as well as management of emergency situations. The management of radioactive waste is more specifically addressed by the Plan National de Gestion des Matières et Déchets Radioactifs (PNGMDR). The plans are reviewed every 3 years, and current plan covers the period 2013–2015. Renewables. Over the past 10 years, a large number of legal instruments to regulate and foster the development of renewable energy option have been put into place, partly in response to European Commission policy instruments. The various EC Directives pertaining to energy and related environmental policies have been transposed into national legislation, namely, Directives 2009/28/ CE et 2009/30/CE on renewable energies and biofuels were transposed into the Energy Law (articles L.661-1 to L.661-9) by Ordonnance No. 2011-1105 of 14.09.2011. The life cycle environmental impacts of energy carriers based on renewable sources slowly gain attention. The decree No. 2011-1468 of 09.11.2011 (DÉCRET n 509 2011-1468) concerns the sustainability of biofuels. Similarly, the Ordonnance No. 2014-355 of 20.03.2014 sets out inter alia the licensing procedures for wind power installations considering their environmental impact and competing land-uses. The (subsidizing) tariffs by which windgenerated electricity is compensated for feeding into the national grid were fixed by an Arrêté of 17.06.2014. The law No. 2012-387 (Loi Warsman IV, LOI n 2012-387) concerns the simplification of a wide variety of administrative procedures. For instance, article 66 sets out a simplified procedure for the exploration and licensing of deep geothermal systems. Geological Resources. The French geological survey (BRGM) is tasked with safeguarding

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records and information pertaining to the subsurface geology in general, geothermal and hydrocarbon potential, gas storage, as well as CO2 disposal capacities. International Aspects As a member of the European Union, France is bound by EU Directives and related legal instruments that set the framework for laws and regulations as well as certain policy objectives. France is closely linked with its neighboring countries through the electricity supply network. This interlinkage helps to stabilize the nets in the participating countries, by providing base-load supply as well as meeting peak demands. France is a member of the International Energy Agency (IEA) of the OECD. While France is a member of Euratom and the International Atomic Energy Agency (IAEA), as well as the Nuclear Energy Agency (OECDNEA), it also continues to pursue a military nuclear program.

Concluding Statement French energy policies have been dominated in the electricity by the large-scale reliance on nuclear power. The announcement of the Hollande government to reduce the nuclear share from close to 80 % to 50 % will have major impact on domestic electricity prices as well as net security in France’s neighbors. The popularity of the current government steadily declines so that further changes to the energy policies are not unlikely after the presidential elections in 2017.

References ARRÊTÉ du 17.062014 fixant les conditions d’achat de l’électricité produite par les installations utilisant l’énergie mécanique du vent implantées à terre. Available via http://www.legifrance.gouv.fr/affichTexte.do? cidTexte¼JORFTEXT000029167875&categorieLien ¼id. Accessed 18 Apr 2016 CC Cour des Comptes (2009) La fin de l’exploitation charbonnière.- Rapport public annuel 2009: pp 712–728. Available via https://www.ccomptes.fr/ content/download/1159/11293/version/1/file/27-fin-

France: Energy Policy exploitation-charbonniere.pdf. Accessed 18 Apr 2016 CEU Council of the European Union (2003) Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity.- OJ L283/51-L283/70 of 31.10.03. Available via http://eur-lex.europa.eu/LexUriServ/ LexUriServ.do?uri¼OJ:L:2003:283:0051:0070:EN: PDF. Accessed 18 Apr 2016 CEU Council of the European Union (2012) Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/ EC.- OJ L315/1-L315/56 of 11.04.12. Available via http://eur-lex.europa.eu/LexUriServ/LexUriServ. do?uri¼OJ:L:2012:315:0001:0056:en:PDF. Accessed 18 Apr 2016 Credit Suisse (2014) Credit Suisse wealth report. 157 p. Credit Suisse AG, Zürich. Available via https:// publications.credit-suisse.com/tasks/render/file/? fileID¼5521F296-D460-2B88-081889DB12817E02. Accessed 18 Apr 2016 DÉCRET n 2011-1468 du 09.11.2011 pris pour l’application de l’ordonnance portant transposition des directives 2009/28/CE et 2009/30/CE du Parlement européen et du Conseil du 23 avril 2009 dans le domaine des énergies renouvelables et des biocarburants. Available via http://www.legifrance.gouv.fr/affichTexte. do?cidTexte¼JORFTEXT000024771809. Accessed 18 Apr 2016 Douane (2013) Taxes sur les produits pétroliers: notions essentielles. Available via http://www.douane.gouv.fr/ articles/a10997-taxes-sur-les-produits-petroliers-notionsessentielles. Accessed 18 Apr 2016 EC European Commission DG Growth (2016) MINVENORY – National Reporting – France. Available via https://ec.europa.eu/growth/tools-data bases/minventory/country-summaries?country¼France. Accessed 18 Apr 2016 IEA International Energy Agency (2010) Energy Policies of IEA countries: France – 2009 Review. 160 p. International Energy Agency, Paris. Available via https://www.iea.org/publications/freepublications/ publication/france2009.pdf. Accessed 18 Apr 2016 IMF International Monetary Fund (2015) World Economic Outlook database. New York. Available via http://www.imf.org/external/pubs/ft/weo/2015/ 01/weodata/index.aspx. Accessed 18 Apr 2016

269 INSEE Institute National de la Statistique et des Études Économiques (no year) Évolution de la population. Paris. Available via http://www.insee.fr/fr/themes/detail. asp?reg_id¼0&ref_id¼bilan-demo&page¼donnees-de taillees/bilan-demo/pop_age3.htm. Accessed 18 Apr 2016 LOI n 2005-781 du 13.07.2005 de programme fixant les orientations de la politique énergétique. Available via http://www.legifrance.gouv.fr/affichTexte.do? cidTexte¼JORFTEXT000000813253. Accessed 18 Apr 2016 LOI n 2010-788 du 12.07.2010 portant engagement national pour l’environnement (Loi Grenelle 2). Available via http://www.legifrance.gouv.fr/affichTexte. do?cidTexte¼JORFTEXT000022470434. Accessed 18 Apr 2016 LOI n 2012-387 du 22.03.2012 relative à la simplification du droit et à l’allégement des démarches administratives (Loi Warsman IV). Available via http://www.legifrance.gouv. fr/affichTexte.do?cidTexte¼JORFTEXT000025553296. Accessed 18 Apr 2016 Ministère de L’Écologie, du Développement Durable et de L’Énergie (2014) Panorama énergies-climat, Edition 2014. 164 p. Paris. Available via http://www. developpement-durable.gouv.fr/IMG/pdf/rapport_ industrie_energies_decarbonnees_2011.pdf. Accessed 18 Apr 2016 Observ’ER (2015) The state of renewable energies in Europe. 15th EurObserv’ER report, Edition 2015. 103 p. Available via http://www.eurobserv-er.org/pdf/ annual-overview-2015-en-observer/. Accessed 18 Apr 2016 ORDONNANCE n 2011-1105 du 14.09.2011 portant transposition des directives 2009/28/CE et 2009/30/ CE du Parlement européen et du Conseil du 23 avril 2009 dans le domaine des énergies renouvelables et des biocarburants. Available via http://www.legifrance. gouv.fr/affichTexte.do?cidTexte¼JORFTEXT000024 562958&categorieLien¼id. Accessed 18 Apr 2016 ORDONNANCE n 2014-355 du 20.032014 relative à l’expérimentation d’une autorisation unique en matière d’installations classées pour la protection de l’environnement. Available via http://www. legifrance.gouv.fr/affichTexte.do?cidTexte¼JORFT EXT000028752144&categorieLien¼id. Accessed 18 Apr 2016 World Bank (no year) Data: GDP (current US$). New York. Available via http://data.worldbank.org/indica tor/NY.GDP.MKTP.CD. Accessed 18 Apr 2016

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Gambia: Mineral Policy Abraham Marshall Nunbogu1, Marshall Kala2 and Kwabena Ata Mensah3,4 1 Department of Planning, University for Development Studies, Wa Campus, Tamale, Ghana 2 College of Education, School of Continuing and Distance Education, University of Ghana, Legon, Accra, Ghana 3 Centre for Energy Petroleum Mineral Law and Policy (CEPMLP), University of Dundee, Dundee, Scotland, UK 4 KAM Associates Limited, Tema, Ghana

General Information on Gambia The Gambia is one of the smallest African countries with a surface area of 10,689 km2 and has borders with only Senegal. The Gambia had an estimated population of 1.9 million as of 2013, with an annual growth rate of 3.3 percent and a population density of 127 persons per square km (Gambia Bureau of Statistics 2014). The country is currently undergoing a rapid rate of urbanization with the share of the urban population increasing from 37 percent in 1993 to about 55 percent in 2013 (ECA 2017). The main drivers of economic growth for the Gambia remain the agriculture sector and the tourism industry (MoE 2014). Real GDP growth averaged 2.4 percent between 2011 and 2015, which was below the

regional average for both the ECOWAS region and Africa as a whole (Gambia Bureau of Statistics 2014). With respect to the GDP of the Gambia, growth fell from 4.8 percent in 2013 to only 0.9 percent in 2014 (see Fig. 1). The decline in economic growth was a result low agricultural production due to the severe drought in the Sahel region during cropping season and the Ebola outbreak in the subregion in 2014, which affected tourism revenues (ECA 2017). Agriculture is an important sector of the economy of the Gambia, but it depends almost entirely on seasonal rainfall. The sector grew by 7 percent and contributed an estimated 21 percent to GDP in 2015. The industrial sector in the Gambia is underdeveloped. It comprises small-scale manufacturing companies such as bottling and fruit-canning enterprises, as well as small-scale cement and corrugated packaging plants. Despite its underdevelopment, the sector maintains steady growth, averaging 3.9 percent over the last decade. It contributed 15 percent to GDP in 2015. Driven by construction, the industrial sector was the fastest-growing sector in 2015, recording 8.2 percent growth (Gambia Bureau of Statistics 2014). Poverty and unemployment are key challenges of the Gambian economy. The Gambia is one of the poorest countries in the world and ranked 175th out of 188 countries on the UNDP human development index in 2015. Incidence of poverty stands at 48.4 percent, with the proportion of rural dwellers living on less than $1.25 per day estimated at 73.9 percent, compared with

© Springer-Verlag GmbH Germany, part of Springer Nature 2023 G. Tiess et al. (eds.), Encyclopedia of Mineral and Energy Policy, https://doi.org/10.1007/978-3-662-47493-8

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6 5

Gambia

4

Africa

3 2

West Africa

1 0 –1 –2 –3 –4 –5 2011

2012

2013

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Gambia: Mineral Policy, Fig. 1 Growth performance of the Gambia, West Africa, and Africa Source: Economic Commission for Africa, 2016

32.7 percent in urban areas. This disparity in income is an important cause of mass migration from rural to urban areas (ECA 2017).

Need of Minerals Geology The Gambian terrain encompasses the flood plain of the Gambia River flanked by some low hills. 1295 km2 (11.5%) of the Gambia’s area is covered by water. Consequently, the trans-SenegalGambian border holds deposits of titaniumzirconium heavy mineral sands (EI Sourcebook 2018). The country does not produce any hydrocarbons and is dependent on imports of petroleum for its domestic energy requirement and undeclared quantities of granitic rock from neighboring Senegal for its construction industry (Cham 2018).

Classification of Mineral Reserves Total resource of its titanium-zirconium heavy minerals sands was estimated in 2008 at 18.8 Mt. containing 1Mt of heavy minerals (71% ilmenite, 15% zircon, and 3% rutile) (EI Sourcebook 2018).

The Gambia has as well potential for industrial minerals including limestone and coastal land sands and regolith with reported production volumes for 2016 as follows: Laterite, 250,000 tonnes per annum; kaolin, 3 m tonnes per annum; quartz, 42 m tonnes per annum; clay, 10 m tonnes per annum (Cham 2018). There are also occurrences of gold, lead, and tin in Eastern Gambia (Cham 2018).

Mineral Policy Conception of Gambia The Gambia has a long history of mining despite the fact that the country’s mining industry is still very small and does not play a significant role in the Gambian economy (Bermudez-Lugo 2010). Mining in Gambia is limited to the production of laterite, clay, sand and gravel, zircon, and silica sand. Before colonization, alluvial gold was mined along streams and rivers in several places as in other African countries. However, till date, not many gold reserves have been found though the country has the potential for commercial gold exploration. Most gold mining operations in Gambia are artisanal and in the region to the south of Bangui. The Gambia does not have a well-outlined mineral resource policy. However, the country has a Mining Law (CAP. 121, 1963) which clearly

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outlined all legal issues relating to mining. This review therefore draws from various disaggregated national policies and local programs, projects, and activities geared toward mining development in the Gambia. The Gambian Government recognizes the need to revive the mineral sector to propel its contribution to sustained national growth and development. In order to achieve this, various uncoordinated actions have been targeted under these broad objectives. To help make the private sector the key producer and exporter regarding mineral products through setting up a privatization program also to promote private sector initiative. The country is working on a new investment code to help attract investors to its mining sector. So far there are quite a number of regulatory incentives that seek to attract private sector investments in its mining sector. The Gambian government is also working on tax reforms that seek to provide a better economic environment for international gold miners to work in the country’s mining sector. Company tax which stands at 31% has been stopping many international firms with the mining know-how from setting base in the country. The government is looking at how to cut down the tax so as to open up the mining sector to private investments (see PWC 2015, PKF International Limited 2016). To enhance the participation of local communities in mining projects and the benefits they accrue. In the Gambia as in many sub-Saharan African countries, local equity participation in mining projects and decisions is not promoted or integrated in mineral resource programs. As a result, there was much unrest including demonstrations against sand mining along some coastal areas in Gambia between 2015 and 2016. In this regard, national government has employed a multistakeholder approach to bring on board the views of all stakeholders in the mining sector. Improvements in community participation have been facilitated by local government agencies in their respective jurisdictions. At the regional

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level, these agencies are encouraged to harmonize their actions in order to have uniform mining governance. To build infrastructure and restore energy services to power the economy. The Gambia’s long-term economic development strategy and long-term program, known as Vision 2020, recognizes that infrastructure, and in particular a reliable power supply, is vital in sparking economic growth (MoE 2014). Access to electricity is a precondition for the establishment of new industries or the expansion of existing ones in the Gambia. Under the plan, government will seek to improve the policy and regulatory environment to attract investments into the energy sector; improve generation capacity, including the use of renewables and access to electricity; and enhance industrial energy security. Government also focuses on enhancing road infrastructure to improve the transportation of mining products through Public-Private Partnerships (PPP). Completion of the national road network, its maintenance, and expansion of the secondary feeder road network to improve access in rural areas are key priorities of government under the plan. Building human and institutional capacity for mining. Many African countries have received immense technical assistance by development partners to support mining reforms. There has also been policy making assistance and programs for environmental management associated with mining. The Gambian government in its National Development Plan (2018–2021) has also recognized the need for building human and institutional capacity for holistic mining development (Government of Gambia 2018). The government is rolling out programs to enhance the technical and human capacity of agencies under the state department of trade, industry and mining, the National Environmental Protection Agency (EPA), and other related stakeholder institutions to ensure effective implementation, enforcement, and monitoring of environmental laws and regulations.

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Regulatory Framework Under the auspices of the Geological Department of Gambia, the country is currently developing a National Mineral Policy, but its active quarrying industry is regulated by the following laws: Mines and Quarries Act of 2005, Mines and Quarries Regulation, Mining Law (CAP. 121, 1963), and National Environmental Management Act.

International Membership The Gambia is a member of some 40 regional and international agencies including the World Bank, UN, and sister organizations as well as the ECOWAS and AU (Fortune Africa 2018).

Concluding Statement Considering the negative impacts of mining activities on the environment and livelihoods of communities, it is recommended that a strategic environmental assessment (SEA) of policy activities be carried out before implementation. Conducting SEA will be effective if an articulated mineral resource policy is developed. The SEA translates strategic policies in a transparent way into an operational project. An effective SEA is used in decision-making and ultimately leads to the selection of the most environmentally friendly option and/or the adoption of necessary mitigation measures if the most environmentally friendly option is not selected. However, the effectiveness of an SEA depends not only on the use of the knowledge to enable rational and sustainable policy choices but also on its contribution to a collaborative dialogue. Government, guided by the National Environmental Management Act, should therefore ensure the involvement of relevant stakeholders throughout the process. At the operational level environmental impact assessment (EIA) is recommended. The rationale for EIA is to evaluate the potential environmental and social risks and impacts in the areas and sites selected for the implementation. The EIA examines ways of improving site selection, planning,

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design, and implementation; it also attempts to prevent, minimize, mitigate, or compensate for adverse environmental impacts and to enhance positive impacts throughout the implementation of the proposed mining projects. In conclusion, we emphasize that the Gambia is making a conscious effort to regulate the mining of beach sands which is becoming an environmental hazard and promote aggressively the use of clay and bricks for their construction industry which should reduce significantly the import of granitic aggregate from Senegal and improve the economic fortunes of the Gambia (Cham 2018).

References Bermúdez-Lugo O (2010) The mineral industries of The Gambia, Guinea-Bissau, and Senegal. Minerals Yearbook, 2008, vol 3, Area reports, international, Africa and the Middle East, 15 Cham AM (2018) Importance of industrial minerals in the socio –economic development of the Gambia. Paper presented at the 1st Mining Investment Conference in West Africa, Alisa Hotel, Accra-Ghana, 15–16 Mar 2018 Cooper Pricewaterhouse (PWC) (2015) A Quick guide to taxation in the Gambia. Retrieved from https://www. pwc.com/gh/en/assets/pdf/a-quick-guide-to-taxationin-gambia-september-2013.pdf on 5 Feb 2018 Economic Commission for Africa (ECA) (2017) Country profile – The Gambia EI Sourcebook (2018) Good-fit practice activities in the international Oil, Gas & Mining Industries. Available at http://www.eisourcebook.org/2324_Gambia.html. Retrieved on 22 Mar 2018 Fortune Africa (2018) Membership of regional international organisation of Gambia. Available at http:// fortuneofafrica.com/gambia/2014/01/24/membershipof-regional-and-international-organisations-in-gambia/ on 22 Mar 2018 Gambia Bureau of Statistics (2014) The gambia: population and housing census 2013 Government of Gambia (2018) Gambia National Development Plan (2018–2021). Retrieved online from http:// mofea.gov.gm/downloads-file/national-developmentplan on 8 Mar 2018 Ministry of Energy (MoE) (2014) National energy policy – Part II (Strategy and Action Plan) – (2014–2018), Gambia PKF International Limited (2016) Gambia taxation guide 2016/2017. Retrieved from https://www.pkf.com/media/ 10028414/gambia-tax-guide-2016-17.pdf on 3 Feb 2018

Gazprom

Gazprom C. Locatelli CNRS, GAEL, EDDEN, Univ.Grenoble, Grenoble, France

Given the scale of its reserves (16.8 % of the global total, according to BP) and output (605 Bcm in 2013), Russia is a major, perhaps essential, supplier for the European Union and international markets. Its gas industry is dominated by a powerful player, the Gazprom financial holding brought into existence by the reforms which followed the collapse of the Soviet Union and its centrally planned economy. Gazprom occupies a unique position in the world market. In terms of reserves (70 % of the Russian Federation’s gas reserves), output (487 Bcm), and exports (233.7 Bcm), it is the largest vertically integrated gas company, with interests ranging from exploration to transport. It has a monopoly on Russia’s Unified Gas Supply System (for longdistance domestic transport) and on exports by gas pipeline, thanks to Gazprom Export, a wholly owned subsidiary. As such it is an essential player in the European gas market.

Gazprom and the European Gas Market: From Relations of Interdependence to Uncertainty in the European Gas Market Trade in gas between the EU and Russia started in the late 1960s. The first contract was concluded between the Soviet Union and Austria in 1968, with the Federal Republic of Germany following suit in 1973, and then Italy and Finland the next year. Only in the 1980s were the first major agreements signed with EU countries, increasing the importance of these relations. In 2013 the EU imported 163 Bcm, making it Russia’s prime export market; at the same time, with roughly 30 % market share, Russia is the EU’s main outside source of supply. However the degree of dependence of the member states on Russian gas

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imports varies. In terms of the volume imported, Germany, France, Italy, and the United Kingdom are the key markets targeted by Gazprom strategy. Exports take three main routes. The traditional one, with a capacity of 140 Bcm, passes through Ukraine. The Yamal-Europe gas pipeline (capacity 33 Bcm) crosses Belarus. Lastly Nord Stream, which comprises two parallel lines (each with a capacity of 27.5 Bcm), is the first corridor for exports from Russia not to cross any transit countries. It goes straight to Germany, passing under the Baltic. Finally mention should be made of Blue Stream (capacity 16 Bcm), which runs under the Black Sea. The gas trade between the Soviet Union, then Russia, and the EU developed on the basis of bilateral agreements in the form of long-term take-or-pay (TOP) contracts. These types of contract and the various terms organizing the shareout of risks with regard to price and volume between the producer and the consumer, all the way along the gas supply chain (Boussena 1999), made possible the development of mature, stable gas supply systems. They ensure that substantial investments are made in both production and transport. The contracts are agreed between European gas companies and Gazprom, the only Russian player operating in the European market. When the Soviet Union collapsed, it inherited all the TOP gas contracts which had been agreed with European companies (the incumbents) such as ENI, E.ON-Ruhrgas, and GDF Suez. The EU gas market has always been of prime importance for both the Gazprom and the Russian state. Exports to this part of the world fulfill three main functions. The first is to secure the profitability of the company, given the low price of the commodity on the home market. Second in the 1990s, a period fraught by bartering and unpaid bills, exports enabled the company to maintain a steady supply to the Russian economy. As the Russian gas market has evolved, these two constraints have become less pressing, but they are still present, with a large gap between the prices on the two markets. Lastly these exports bring in substantial tax revenue for the state, hydrocarbons being a key variable for budget stability and economic growth for the country as a whole. One

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may therefore expect the gas company to do its best to maximize revenue (Stern 2014, p. 97), with reference to its price strategy, qualifies Gazprom as a “revenue-maximized discriminating monopolist” (in terms of price and volume) from the EU. Liberalization of gas sales in the EU, which seeks to create a single, competitive market, tends to undermine the contractual modalities by which Gazprom organizes the major part of its supply to the EU. In the eyes of the EU, long-term TOP contracts or some of their clauses are seen as contrary to the principles of competition. The criticisms are only too well known and focus on a few main issues. Such contracts are a major barrier to the entry of potential new players and therefore inhibit the development of liquidity in spot markets (Percebois 2008). The final destination clause, the territorial restriction clause, and the use restriction clause create entry barriers and partition markets and limit their size and are an encouragement to collusion among vendors and inhibit competition in the downstream sector (Nyssens et al. 2004; Nyssens and Osborne 2005; Hirschhausen and Neuman 2008). As a result, such clauses can no longer be included in natural gas supply contracts. In attempting to assess the effect of long-term contracts on its competition policy, the EU must take into account not only the structure of the market but also the types of companies involved in trading relations (Locatelli 2013). From this point of view, Russia, through its state-controlled company Gazprom, is seen as a specific risk by the EU for a number of reasons. As a result of trading relations established under the former Soviet Union, Gazprom has a huge market share (and is more than a dominant player) in certain economies, for example, the Baltic states, Hungary, Poland, and Bulgaria. Gazprom’s profile – a company vertically integrated on its domestic market, with a transmission and export monopoly, majority state-ownership (51 %) and ambitions to gain a foothold in the downstream market in Europe – is the second factor used by the EU to justify its perception of a “Russian risk.” Finally, Russian legislation limiting foreign investment in the development and production of Russian gas

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reserves is hampering attempts by European companies to get involved in this part of the chain and is thus adding to the perceived risks and uncertainties associated with this country (Locatelli and Rossiaud 2011).

Gazprom Strategies to Adapt to the European Market The debate currently centers on one of the main clauses of the TOP contracts, namely, indexation of gas prices to those of oil and petroleum products. In particular changes in the EU gas market are casting doubt on this practice. Whereas the prices in TOP contracts followed the same trend as oil prices in 2009–2011, the prices of natural gas and liquefied natural gas on spot markets plummeted due to surplus supply. This in turn led to significant uncoupling between prices in long-term contracts and on spot markets, prompting most European gas companies to demand the revision of their long-term contracts, particularly those with Gazprom. Under these circumstances, if we continue to assume that, much as any other gas supplier, Gazprom’s prime objective is to maximize revenue, it may choose between two main strategies, which involve a different price-volume balance. It may opt to protect its market share, consequently focusing on volume; alternatively it may choose to uphold its prices. The strategy traditionally pursued by the Soviet Union – which Gazprom perpetuated to a large extent through the 1990s and 2000s – gave priority to volume, in other words seeking to increase (and consequently defend) its market share in the EU. The period between 2008 and 2012 saw a sudden break from this policy. The refusal by Gazprom to renegotiate the indexation formula in its long-term contracts reflects the shift to a strategy of upholding prices. Over this period the average sales price of Russian gas in the EU remained steady at around $400/ mcm. This resulted in a significant loss of market share for the company, its customers preferring to resort to the spot markets, even if this meant invoking the flexibility clauses in their contracts. In 2012 its gas exports to the EU fell by 5 %,

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whereas those from Norway increased. From this point onwards, Gazprom started trimming its prices to keep them competitive. But these adjustments were made without changing the principle of prices being linked to those of oil (Stern 2014). Two rationales governed price cuts. On the one hand, Gazprom reduced the base price in the formula, but maintained indexation on oil and petroleum products. This closed the gap between prices resulting from indexation of TOP contracts and European gas hub prices. On the other hand, the firm granted some of its customer’s discounts, estimated at 10–20 % in the relevant literature. Consequently, in 2013, the average price of Russian gas was $387/mcm (or $10 per MBTU) (Uncomfortable bedfellows, Petroleum Economist, June 2014.). Also, in some cases it reined in its TOP clauses (Focus gaz Focus gaz, 2 July 2014). Several variables weigh on Gazprom’s decision whether to uphold prices or defend volume. Its production costs (in particular compared to alternative sources such as American LNG), position on its home market (the margin on domestic sales having improved, Locatelli 2014), and scope for diversifying outlets into Asia (compensating for lower revenue from the EU market) will be the determining factors for Gazprom when defining its strategy with regard to the EU. In the short term, it will nevertheless remain the firm’s preferred export market, from which it derives a large share of its profits, and witness the many projects for boosting export capacity in this direction (see Table 1).

Gazprom, Table 1 Russian export capacity to Europe – projects expressed in Bcm Planned increase in transport capacity Nord Stream 3 Nord Stream 4 Yamal-Europe 2 Blue Stream Turkish Stream

133 27.5 27.5 15.0 3.0 ?

Source: Russian gas: strategy and threats, Energy Economist, n
382, Aug 2013

Asia: The Strategic Response to Shifts in the European Gas Market In the long term, Gazprom and Russia’s strategic response to shifts in the European gas market will be to export natural gas to Asia and more generally to diversify its export markets. This is not an option in the short term because it entails the development of new production centers in Eastern Siberia and the Russian Far East, as well as the construction of extensive infrastructure. This policy was particularly encouraged in the early 2000s when the Russian government was reasserting its control over the industry. It coincided with a growing awareness of the increasing scarcity of long-term resources and the competition between large importing countries for access to hydrocarbons. The policy has gained further credence recently, with an increasingly competitive European market and little prospect of growth in demand there due to economic recession and EU climate policy. The diversification strategy displays two specific features, compared to Russia’s traditional stance on exports. Firstly it is underpinned by a dual approach to exports, by pipeline and in the form of LNG, the latter being the only option which allows real diversification of the export markets and create competition between different markets. Secondly this strategy tends to bring Gazprom into competition with other Russian gas producers. In 2014 Gazprom lost its monopoly on LNG exports to Asia and many competing projects are underway. The main ones are Sakhalin-1 (ExxonMobil-Rosneft), Yamal LNG (Novatek-Total), and Pechora LNG, originally operated by TNK-BP (but now in the hands of Rosneft). Some of these projects are linked to the construction of a gas pipeline to China, which would also supply gas to a liquefaction plant in Vladivostok serving several destinations, in particular Japan (see Table 2). Apart from the LNG supply from Sakhalin-2, the signature of an agreement between Gazprom and China National Petroleum Corporation, in May 2014, is the first concrete achievement of the Russian firm’s diversification strategy. This will be achieved by construction of the new

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Gazprom, Table 2 LNG projects in Russia Projects Vladivostok LNG

Main players Gazprom

Gas fields Sakhalin 3, Kovykta, Chayanda

Yamal LNG

Novatek (60 %), Total (20 %), CNPC

Yuzhno-Tambey (Yamal)

LNG on Gydan Peninsula Sakhalin-1

Novatek

Salmanovsk and Geofizik Sakhalin-1 Sea of Okhotsk Sakhalin-2 or Sakhalin-3

Sakhalin-2a

RosneftExxonMobil Gazprom-Shell

Capacity (Mt/year) 3 trains, each of 5 Mt 16.5 Mt

Online 1 train: 2018 2 trains: 2020 3 trains: ? 1 train: 2017 2 trains: 2018 3 trains: 2019

Target markets Asia including Japan Europe and Asia Asia

5 Mt

1 train: 2018

Asia Pacific

5 Mt

1 train: 2018

China

a

Sakhalin already produces 10.8 Mt of LNG per year for export to Asia, notably Japan Sources: Russia pays high price for export prize, Petroleum Economist, October 2012; Russia reviews LNG export policy, International Gas Report, n
718, 25 February 2013; IEA (2014). Russia 2014. OECD/IEA

Power of Siberia pipeline, which will initially be fed by development of the Chayanda gas field. The pipeline will run as far as Vladivostok, via Khabarovsk. The two partners have signed a conventional long-term, TOP contract for the annual delivery of 38 Bcm of gas during 30 years. For a long time, agreement was held up by the question of prices, Gazprom treating EU prices as a baseline for all exports (Henderson 2011; Paik 2012). The two parties seem finally to have reached agreement on this issue. Only fragmentary data is available. The terms of the contract are confidential, but it is reportedly worth $400 billion, which gives a preliminary idea of what the price of gas exported to China may be, somewhere between $10–12 per MBTU. According to Henderson and Stern (2014), this would satisfy both parties, securing adequate profit margins for Gazprom with prices for CNPC equivalent to those of its imports from Central Asia. In strategic terms the deal is just as important for Russia as it is for China, allaying both parties’ concerns about energy security. Thanks to this move, Russia will be able to reduce its overdependence on Europe and secure demand. As for China, given the foreseeable growth in demand for natural gas, diversifying its supply sources and routes is a key feature of its policy on energy security, with Russia playing an integral part alongside Central Asia.

For the time being, there is no question of the real competition between Gazprom exports to the Asian and European markets, as they concern different gas fields and pipelines. However the apparent determination of the Russian state and Gazprom to hasten the development of the “Western” route – the Altai project – fed by reserves in Western Siberia, shows that such considerations do play a part in Russian gas policy, though it will take time to take shape. Two points should be borne in mind in this respect. It may already be taken as a given that the price on the European gas market serves as an implicit benchmark for Gazprom sales to other markets. Similarly the price at which Gazprom supplies to China will also serve as a baseline against which China’s other sources of supply will be assessed in the future, particularly for LNG. With globalization of natural gas markets, Russia can claim an important role in price formation for this commodity.

References Boussena S (1999) New European gas market: gas strategies of other present and potential suppliers. In: Paper presented at the 1999 international conference on the role of Russian and CIS countries in deregulated energy markets, Moscow International Energy Club, Centre de géopolitique de l’énergie et des matières premières, Université Paris Dauphine, Paris, 6–7 December 1999

Geoconservation Policy Henderson J (2011) The pricing debate over Russian gas exports to China. Oxford Institute for Energy Studies, Oxford, UK Henderson J, Stern J (2014) The potential impact on Asia gas markets of Russia’s eastern gas strategy. Oxford Institute for Energy Studies, Oxford, UK Locatelli C (2013) EU-Russia trading relations: the challenges of a new gas architecture. Eur J Law Econ 36(2):313–329 Locatelli C (2014) The Russian gas industry: challenges to the ‘Gazprom model’? Post-Communist Econ 26:53–66 Locatelli C, Rossiaud S (2011) Russia’s gas and oil policy: the emerging organizational and institutional framework for regulating access to hydrocarbon resources. In: IAEE Energy Forum 1st Quarter, pp 23–26 Nyssens H, Osborne L (2005) Profit splitting mechanism in a liberalised gas market: the devil lies in the detail. Comp Policy Newsletter 1:25–29 Nyssens H, Cultreta C, Schnichels D (2004) The territorial restrictions case in the gas sector: a state of play. Comp Policy Newsletter 1:48–51 Paik K (2012) Sino-Russian oil and gas cooperation: the reality and implications. Oxford University Press, Oxford, UK Percebois J (2008) The supply of natural gas in the European union. OPEC Energ Rev 32:33–53 Stern J (2014) The impact of European regulation and policy on Russian gas exports and pipelines. In: Henderson J, Pirani S (eds) The Russian gas matrix: how markets are driving change. Oxford Institute for Energy Studies, Oxford, UK von Hirschhausen C, Neumann A (2008) Long-term contracts and asset specificity revisited: an empirical analysis of producer-importer relations in the natural gas industry. Rev Ind Organ 32:131–143

Geoconservation Policy Maria Helena Henriques Department of Earth Sciences and Geosciences Centre, Faculty of Sciences and Technology, University of Coimbra, Coimbra, Portugal

Introduction Geoconservation is related to a new social responsibility toward the sustainable use of the geological resources, including those geological elements (or geosites) displaying exceptional scientific, educational, touristic, or cultural value – the geological heritage of the Earth (Henriques

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et al. 2011). The geosites, being notable representatives of natural heritage, must be protected by nature conservation and land-use planning policies (Brilha 2002). However, the implementation of strategies and guidelines for the protection and management of areas of special geological interest and/or the establishment of a legal framework in order to protect geosites is a social matter. As such, it involves different actors besides geoscientists, the only professionals who have the expertise to provide adequate geoheritage evaluations. And their perception concerning the need of protection of a geosite is not always well understood by the politicians who have the power to legislate on nature conservation. So, different countries and/or regions around the world, by displaying very different social conditions, legislation, and history linked to nature management, take care or not of their natural heritage, including its geological component. As a result, the geological heritage of the planet is irregularly protected all over the world (Pena dos Reis and Henriques 2009). In Europe, for instance, geoconservation is generally actively pursued, and many countries have different legal instruments that allow the preservation of their geological heritage (Wimbledon and Smith-Meyer 2012). But in some of them, the nature conservation policies implemented have led to the approval of legal instruments that have created misconceptions of nature, confusing it with its biological component only and not as component of the Earth’ s natural heritage (Henriques 2004). In others, geosites’ protection has been expert driven through a top-down process linked to formal administrative procedures resulting in a vast number of protected areas, but also in skepticism, even hostility in many local societies among landowners and stakeholders (Erikstad 2013). On the other hand, in Africa, the situation is quite different. Although many countries contain important sites displaying heritage value, geoconservation has a relatively poor record (Reimold 1999; Schlüter 2008; Henriques et al. 2013). In order to avoid such deficiencies, legal instruments concerning geoconservation should be

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Geoconservation Policy, Fig. 1 The social perception of nature as the main factor affecting both public policies and legal instruments on nature conservation within any society

prepared with a great caution and with the participation of experts in geoconservation, in articulation with experts in resources policy and law (Ruban 2012), and involving local communities. The social role attributed to geological objects by communities outside Earth scientists should be taken into account particularly with regard to the geosites’ selection and assessment (Pena dos Reis and Henriques 2009). In fact, within any society, it is the social perception of nature that affects individual and/or collective, personal and/or institutional decisions, behaviors, and attitudes in relation to nature, geosites included (Fig. 1).

Global Reference Documents and Initiatives Several international documents and initiatives toward the conservation of the geological heritage have been made in recent decades (Larwood et al. 2013). Most of them have inspired presentday policies and legal instruments around the world. They reflect a geoconservation growing movement, which is supported by local, national, and international geoconservation groups, nationally driven programs or international initiatives (Prosser 2013). The World Heritage Convention which was adopted by the General Conference of UNESCO on 16 November 1972 is a supranational initiative which has strongly influenced national policies worldwide, and it is by now a reference document for at least 190 state members (UNESCO 2014a).

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It aims at linking together in a single document “the concepts of nature conservation and the preservation of cultural properties [and] recognizes the way in which people interact with nature, and the fundamental need to preserve the balance between the two” (UNESCO 2014b). More recently, and also emerging from the political sphere, the Council of Europe adopted the Recommendation Rec(2004)3 on conservation of the geological heritage and areas of special geological interest (Council of Europe 2004). The state members are, since then, committed in reinforcing existing legal instruments or developing new ones, to protect areas of special geological interest and moveable items of geological heritage, taking into account existing organizations and current geological conservation programs. By recognizing the important role of the existing inventory programs grounded by the IUGS and ProGEO (the GEOSITES project; Wimbledon 1996), by the European Geoparks Network assisted by the UNESCO (EGN 2014), and by NGOs and other relevant organizations, the Rec(2004)3 represents a step forward toward the vision that conservation of the geological heritage for future generations is everyone’s responsibility, thus imposing new challenges not only for geoscientists but for all sectors of society (politicians, businessmen, educators, and media) (Ruban 2012). The International Year of Planet Earth (IYPE) (2007–2009) was a global initiative developed in the framework of the United Nations Decade of Education for Sustainable Development (2005–2014). It emphasized the need to generate interest and greater awareness among the general public, decision-makers, and politicians about the effective application of Earth Sciences knowledge to promote sustainable extraction of Earth’s resources (De Mulder et al. 2006). Moreover, the Paris Declaration presented at the Global Launch Event of IYPE highlights the relevance of promoting awareness of the structure, evolution, beauty, and diversity of the Earth system and its human cultures inscribed in landscapes, through the establishment of geoparks, biosphere reserves, and World Heritage Sites as a public tool for conservation and development (PD 2008).

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Conclusion Geologists and the society, including policy makers, generally do not agree on the evaluation and subsequent legal protection of the heritage value of geosites, except for those exhibiting more “popular” contents such as volcanoes, dinosaur track sites, or outstanding landscapes (Pena dos Reis and Henriques 2009). As a consequence, the very need for conservation of the geological heritage is still not well developed and accepted in many countries and needs to be promoted as a priority (Erikstad 2013). Geoconservation policies and legislation are important but not enough to ensure the integrity of the geological heritage of the Earth. Educational interventions using geoparks, for instance, can contribute to promote significant and relevant learning on geology and on geoconservation, thus increasing the public awareness of the need to require from governors’ appropriate political measures (Henriques et al. 2012).

References Brilha J (2002) Geoconservation and protected areas. Environ Conserv 29(3):273–276 Council of Europe (2004) Recommendation Rec(2004)3 on conservation of the geological heritage and areas of special geological interest. Council of Europe, Committee of Ministers. Available: https://wcd.coe.int/ ViewDoc.jsp?id¼740629. Accessed 6 Feb 2014 De Mulder EFJ, Nield T, Derbyshire E (2006) The international year of planet earth (2007–2009): earth sciences for society. Episodes 29(2):82–86 EGN (2014) European geoparks network. Available: http:// www.europeangeoparks.org/. Accessed 6 Feb 2014 Erikstad L (2013) Geoheritage and geodiversity management – the questions for tomorrow. Proc Geolo Assoc 124(4):713–719 Henriques MH (2004) Jurassic heritage of Portugal – state of the art and open problems. Riv Ital Paleontol Stratigr 10(1):389–392 Henriques MH, Pena dos Reis R, Brilha J, Mota T (2011) Geoconservation as an emergent geoscience. Geoheritage 3:117–128 Henriques MH, Tomaz C, Sá AA (2012) The Arouca Geopark (Portugal) as an educational resource: a study case. Episodes 35(4):481–488 Henriques MH, Tavares AO, Bala ALM (2013) The geological heritage of Tundavala (Angola): an integrated

281 approach to its characterization. J Afr Earth Sci 88:62–71 Larwood JG, Badman T, McKeever PJ (2013) The progress and future of geoconservation at a global level. Proc Geol Assoc 124(4):720–730 PD (2008) Paris declaration. Declaration presented at the Global Launch Event of the International Year of Planet Earth (IYPE), UNESCO, Paris, 12–13 Feb 2008. International Year of Planet Earth. Available: http:// yearofplanetearth.org/content/GLE/declaration/ ParisDeclaration.doc. Accessed 10 Feb 2014 Pena dos Reis R, Henriques MH (2009) Approaching an integrated qualification and evaluation system for geological heritage. Geoheritage 1:1–10 Prosser CD (2013) Our rich and varied geoconservation portfolio: the foundation for the future. Proc Geol Assoc 124:568–580 Reimold WU (1999) Geoconservation – a southern African and African perspective. J Afr Earth Sci 29(3):469–483 Ruban DA (2012) Geoconservation versus legislation and resources policy: new achievements, new questions – comment on Cairncross (Resources policy, 2011) The national heritage resource act (1999): can legislation protect South Africa’s rare geoheritage resources? Resour Policy 37:126–129 Schlüter T (2008) Geological atlas of Africa: with notes on stratigraphy, tectonics, economic geology, geohazards, geosites and geoscientific education of each country, 2nd edn. Springer, Berlin/Heidelberg, pp 1–308 UNESCO (2014a) States parties: ratification status. UNESCO world heritage centre. Available: http:// whc.unesco.org/en/statesparties/. Accessed 6 Feb 2014 UNESCO (2014b) The world heritage convention. UNESCO world heritage centre. Available: http:// whc.unesco.org/en/convention/. Accessed 6 Feb 2014 Wimbledon WAP (1996) GEOSITES – a new IUGS initiative to compile a global comparative site inventory, an aid to international and national conservation activity. Episodes 19:87–88 Wimbledon WAP, Smith-Meyer S (eds) (2012) Geoheritage in Europe and its conservation. ProGEO, Oslo, pp 1–405

Geoconservation, Concept of José Brilha Institute of Earth Sciences, Pole of the University of Minho, Braga, Portugal

The exceptional scientific value of certain geodiversity elements justifies the need to implement proper measures in order to assure their conservation. Obviously, not all geodiversity

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elements should be envisaged for conservation. Most elements have no particular value, and a vast variety of geological resources are exploited everyday to satisfy the needs of modern societies. This means that accurate methods should be used to select exceptional sites that need to be protected and conserved, i.e., geosites. It should be noted that geological heritage (or geoheritage) encompasses in situ occurrences of notable geodiversity elements (minerals, fossils, rocks, soils, and landforms) and ex situ elements usually integrating museum collections. Their management requires different approaches based on different legal settings. While geosites protection is usually assured by nature conservation policies, museum collections fall into the category of cultural assets. The main scope of geoconservation is the conservation of geosites, the basic units of the geological heritage of the Earth, by means of specific inventory, evaluation, conservation, valuing, and monitoring procedures (Henriques et al. 2011). In addition, the management of geological specimens in collections is also considered as geoconservation. Therefore, geoconservation must be regarded a comprehensive strategy fostering the conservation of geological heritage, from identification and assessment to management (Prosser 2013). Initially, the concept of geoconservation was not restricted to the conservation of geoheritage but rather applied to all geodiversity (Sharples 1993, 1995). However, in the recent years, the scope of geoconservation has been narrowed, and it has gained greater specialization. Today, geoconservation is also considered an emergent geoscience discipline (Henriques et al. 2011), like mineralogy, paleontology, or geomorphology. This statement is based on the existence of a growing volume of scientific knowledge on the subject, creation of research schools and teaching, discussion of data and results among experts, and publication of peer-reviewed papers in specialized scientific journals. Geoconservation is a discipline with five close connections with the society (see i–v below). (i) Concerning scientific practice, two different aspects should be considered. Firstly, selection and assessment of geosites is based on scientific data and procedures. Secondly, conservation of

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geosites assures the availability of key geodiversity elements, which are essential for advancement of geosciences. (ii) Regarding nature conservation policies, geoheritage corresponds to the abiotic part of natural heritage; alas, current conservation actions still focus on the preservation of biodiversity (Brilha 2002). During its 60 years of activity, the International Union for Conservation of Nature (IUCN) has been promoting biodiversity almost exclusively. Only recently, did the IUCN show some signs of change, by acknowledging the importance of geoheritage in nature conservation. Two IUCN’s resolutions stressing the importance of geodiversity in nature and the need to protect geoheritage were approved: the first one in 2008 (Resolution 4.040 – Conservation of geodiversity and geological heritage) and the second in 2012 (Resolution 048 – Valuing and conserving geoheritage within the IUCN Programme 2013–2016). Another link with nature conservation is the necessity to support geoconservation actions by a proper legal framework. (iii) The occurrence of geosites should also be considered by national policies of land-use planning and impact assessment evaluations, as well as by national mineral policies. The need to conserve geosites and the consequent setup of management procedures may imply restrictions in the ordinary use of the territory. For instance, the protection of a geosite may justify changes in initial planning concerning construction of new infrastructures, such as roads, dams, or buildings. During environmental impact assessment, the occurrence of geosites in a certain area should be considered in the final evaluation. (iv) The link between geoconservation and education is twofold: on the one hand, the conservation of geosites with high educative value is a mean to raise awareness on geoconservation, in particular, and on geosciences, in general. A society more and better informed about geology is more willing to accept geoconservation. On the other hand, a society that has some knowledge on the value of geoheritage guarantees a more effective geoconservation. (v) Nowadays, geotourism is considered a niche sector of nature sustainable tourism. Regardless of the different approaches to the geotourism

Geoconservation, History of

definition, there is no doubt that the existence of geodiversity elements (mainly landforms) as touristic attractions is important to originate economical and social revenues. Geosites with touristic value do not only support economical activities, but they also help visitors to interpret nature and to better understand our planet.

Cross-References ▶ Geoconservation Policy ▶ Geoconservation, History of ▶ Geodiversity ▶ Geosite, Concept of ▶ Geosites, Management of ▶ Mining and Geoconservation

References Brilha J (2002) Geoconservation and protected areas. Environ Conserv 29:273–276 Henriques MH, Pena dos Reis R, Brilha J, Mota TS (2011) Geoconservation as an emerging geoscience. Geoheritage 3:117–128 Prosser CD (2013) Our rich and varied geoconservation portfolio: the foundation for the future. Proc Geol Assoc 124:568–580 Sharples C (1993) A methodology for the identification of significant landforms and geological sites for geoconservation purposes. Report to the forestry commission, Tasmania, p 31. Available at http:// eprints.utas.edu.au/11747/ Sharples C (1995) Geoconservation in forest management – principles and procedures. Tasman For 7:37–50

Geoconservation, History of José Brilha University of Minho and ProGEO, Braga, Portugal

The word “geoconservation” was probably used for the first time in Tasmania (Australia) in the beginning of the 1990s (Sharples 1993). Sharples, a pioneer of Australian geoconservation, reports that during the period of 1993–1994, the Forestry

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Commission of Tasmania prepared several reports with preliminary inventories of landforms in the state forests of Tasmania in order to facilitate “the conservation of Earth systems (‘Geoconservation’)” (Sharples 1993). However, initiatives to protect particular geological and geomorphological features started centuries before, during the seventeenth century. The first example of the protection of geological features dates back to 1668, concerning the protection of the Baumannshöhle cave in the Harz Mountains in Germany (Grube 1994). During the nineteenth century, Germany continued to protect geology, and some other countries such as Denmark, Switzerland, and Belgium initiated the protection of certain localities, mostly for their striking geomorphological features (Erikstad 2008). In 1819, legal actions were taken to prevent impacts on the city landscape due to quarrying of stone from Salisbury Crags in Edinburgh, Scotland (Gray 2013). In Britain, the Lepidodendron stumps of “Fossil Grove” in Glasgow have been protected since their discovery in 1887; at about the same time, the “Agassiz Rock” (a striated rock surface due to the effects of the passage of glacier ice) was also preserved in Edinburgh (Black 1988). The Yellowstone National Park established in 1872 in the USA is considered the first formal protected area. The establishment of protected areas quickly expanded to other countries during the twentieth century, but most of the time geoconservation actions were not considered a priority by park managers (Brilha 2002). The first public institution devoted specifically to geoconservation was perhaps the one created in Great Britain in the mid-twentieth century. In 1949, the approval of the National Parks and Access to the Countryside Act was the first step toward the establishment of the Nature Conservancy, the world’s first statutory nonvoluntary conservation body, which included the conservation of geological and geomorphological features in its role (Prosser 2012). This initiative led to the first full-time professional role in geoconservation, a role filled in 1950 by an experienced geologist, W. A. Macfadyen, and held by him for 10 years until his retirement in 1960 (Prosser 2012). In 1977, the Nature Conservancy

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established the Geological Conservation Review, setting the background for the implementation of geosites conservation by means of a scientificbased methodology (Wimbledon 1988). The aim of the Geological Conservation Review was to “assess systematically the scientific part of the geological heritage of Great Britain and to select for conservation those localities that exceed a minimum threshold in their national (British) value to Earth science” (Ellis 2008). The UK played an important role in the establishment of the first methods aiming at the national-scale systematic inventory of geosites with scientific value. These methods were adapted in several other countries, particularly in Europe. International institutions started to deal with geoconservation issues in the 1970s. The UNESCO’s “Convention Concerning the Protection of the World Cultural and Natural Heritage” signed in Paris in 1972 was the first international effort to select sites of paramount world importance due to their natural characteristics. Presently, 200 sites are inscribed in the World Heritage List for their natural properties, and one third of them were selected mainly due to their geological significance. UNESCO is also linked to geoconservation through geoparks. Geoparks are well-defined territories with a development plan that aims at integrating geoconservation with the preservation of local communities’ cultural identity. Based on the conservation of natural and cultural assets and on the promotion of education and geotourism, geoparks are designed to promote the sustainable development of local populations (McKeever et al. 2010). A Global Network of National Geoparks (GGN) has been set up under the auspices of UNESCO since 2004, and it integrates today 111 geoparks from 32 countries. The International Union of Geological Sciences (IUGS) created the project “Global Geosites” in 1996 aiming at the inventory of geosites with worldwide scientific importance (Wimbledon et al. 1999). However, this project was closed in 2003 by the IUGS without reaching the main goals initially expected. Since 1970, the IUGS’s International Commission on Stratigraphy has identified and protected global stratotypes, which are localities with world

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scientific relevance to understand the Earth’s time scale (GSSP, Global Boundary Stratotype Section and Point). More recently, in 2011, a new Geoheritage Task Group was created by the IUGS. The International Geographical Union (IGU) has a Commission on Geoparks since 2008 with a vision to promote the development of geoparks from a geographical perspective. The International Union for Conservation of Nature (IUCN) has approved two resolutions in 2008 and 2012 stressing the importance of geodiversity in nature and the need to protect geoheritage. In 2013, a new Geoheritage Specialist Group was created under the scope of the IUCN’s World Commission on Protected Areas. The European Association for the Conservation of the Geological Heritage (ProGEO) was created in 1993, and it comprehends today the national groups in most European countries (Wimbledon and SmithMeyer 2012). ProGEO evolved from “the European Working Group on Earth-Science Conservation,” which was created during a workshop in Leersum (the Netherlands) in 1988. Presently, ProGEO is the most important international NGO concerning geoconservation and an active member of IUGS and IUCN. In 2001, the International Association of Geomorphologists created the working group “Geomorphological Sites: research, assessment and improvement” (the name was later changed to “Geomorphosites: research, protection and education”). This active group has been promoting scientific events, courses, and publications, mainly dedicated to the conservation and management of geomorphological heritage. On the national level, geoconservation is being pushed forward by several types of institutions, namely, geological surveys (Albania, Argentina, Brazil, Chile, Denmark, Finland, Greece, Spain, Sweden, etc.), universities and research institutes (Bulgaria, France, Iceland, Italy, Morocco, Portugal, Romania, Spain, Switzerland, etc.), official institutions dedicated to nature conservation (China, Norway, Poland, Serbia, the UK, the USA, etc.), and NGOs (Croatia, Portugal, Turkey, the UK, etc.).

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The last decade of the twentieth century marked the beginning of international meetings focused on geoconservation. The “First International Symposium on the Conservation of our Geological Heritage” held in Digne (France) in 1991 was attended by over 100 specialists from more than 30 countries. This event is considered a landmark of international discussions on geoconservation. The proceedings of the second international conference organized in Malvern (UK) in 1993 are a reference document with international impact (O’Halloran et al. 1994). So far, ProGEO has organized seven international symposia since its foundation in 1993, and the Global Geoparks Network organizes a general conference every 2 years since 2004. Every 4 years, the International Geological Congress hosts geoconservation thematic sessions, at least since the 32nd convention held in Florence (Italy) in 2004. Some recent developments in geoconservation education and training are worth mentioning. The University of Minho (Portugal) offers a master’s degree on geological heritage and geoconservation since 2005 (Brilha et al. 2012). A growing number of universities worldwide are offering courses on different subjects related to geoconservation, either as master or PhD studies. Summer courses joining students and experts in different areas of geoconservation are also organized in many countries for the last decade. A reference set of papers on the history of geoconservation was published in 2008 by the Geological Society of London (Burek and Prosser 2008). Much more information about initiatives that belong to the history of geoconservation is available, but it remains published in only national languages; this is an obstacle to worldwide recognition.

Cross-References ▶ Geoconservation Policy ▶ Geoconservation, Concept of ▶ Geodiversity ▶ Geosite, Concept of ▶ Geosites, Classification of

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References Black G (1988) Geological conservation: a review of past problems and future promise. In: Crowther PR, Wimbledon WAP (eds) The use and conservation of palaeontological sites, vol 40, Special papers in palaeontology. Palaeontological Association, London, pp 105–111 Brilha J (2002) Geoconservation and protected areas. Environ Conserv 29:273–276 Brilha J, Pereira D, Pereira P (2012) Geoconservation education, research and outreach: the experience of the University of Minho (Portugal). Geologia dell’Ambiente, Società Italiana di Geologia Ambientale, Supplemento al n. 3/2012:191–192 Burek CV, Prosser CD (eds) (2008) The history of geoconservation, vol 300, The Geological Society, London, special publication, p 312 Ellis N (2008) A history of the geological conservation review. In: Burek CV, Prosser CD (eds) The history of geoconservation, vol 300. The Geological Society, London, pp 123–135 Erikstad L (2008) History of geoconservation in Europe. In: Burek CV, Prosser CD (eds) The history of geoconservation, vol 300. The Geological Society, London, pp 249–256 Gray M (2013) Geodiversity: valuing and conserving abiotic nature, 2nd edn. Wiley-Blackwell, Chichester, p 495 Grube A (1994) The national park system in Germany. In: O’Halloran D, Green C, Harley M, Stanley M, Knill J (eds) Geological and landscape conservation. Geological Society, London, pp 175–180 McKeever P, Zouros N, Patzak M, Weber J (2010) The UNESCO global network of national geoparks. In: Newsome D, Dowling R (eds) Geotourism: the tourism of geology and landscape. Goodfellow, Oxford, pp 221–230 O’Halloran D, Green C, Harley M, Stanley M, Knill J (eds) (1994) Geological and landscape conservation. Geological Society, London, p 530 Prosser CD (2012) William Archibald Macfadyen (1893–1985): the ‘father of geoconservation’. Proc Geol Assoc 123:182–188 Sharples C (1993) A methodology for the identification of significant landforms and geological sites for geoconservation purposes. Report to the forestry commission, Tasmania, p 31. Available at http://eprints. utas.edu.au/11747/ Wimbledon WAP (1988) Palaeontological site conservation in Britain: facts, form, function, and efficacy. In: Crowther PR, Wimbledon WA (eds) The use and conservation of palaeontological sites, vol 40, Special papers in palaeontology. Palaeontological Association, London, pp 41–55 Wimbledon WAP, Smith-Meyer S (eds) (2012) Geoheritage in Europe and its conservation. ProGEO, Oslo, p 405 Wimbledon WAP, Andersen S, Cleal CJ, Cowie JW, Erikstad L, Gonggrijp GP, Johansson CE, Karis LO,

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Geodiversity Dmitry A. Ruban Higher School of Business, Southern Federal University, Rostov-na-Donu, Russia

Geodiversity is a fundamental concept of geoconservation. It was introduced in the early 1990s to be fully developed (as a kind of paradigm) a decade later by Gray (2004, 2008, 2013). Generally, geodiversity is understood as a diversity of geological phenomena that constitute the geological heritage and make the latter unique and needing conservation/protection. However, there is not any single definition of geodiversity, and this concept is understood by geoconservationists with certain difference. The main views were summarized by Gray (2004, 2008, 2013), Panizza and Piacente (2009), Ruban (2010), and Serrano and Ruiz-Flaño (2009). Moreover, Panizza and Piacente (2009) proposed six types of the geodiversity and emphasized that it can be considered from the “intrinsic” and “extrinsic” points of view, i.e., with regard to the geological complexity of a given area or its geological differences from the other areas, respectively. All available views complement one another, and they should not be judged contradictory. Generally, the concept of geodiversity is very close to that of biodiversity, although these concepts should not be mixed (if even they intersect in somewhat). The geodiversity sensu stricto is a number of geosite types. It should be distinguished from geoabundance (the number of geosites) and georichness (the number of both geosite types and geosites) (Ruban 2010). The number of geosites types depends on the classification of geosites. According to Ruban (2010), there are about 20 geosite types (stratigraphical,

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paleontological, mineralogical, geomorphological, geohistorical, etc.). Gray (2008) distinguishes between geological, geomorphological, and soil features. This schema is more or less followed by Pereira et al. (2013), who paid attention to geology (stratigraphy and lithology), geomorphology, paleontology, soils, and mineral occurrences (precious stones and metals, energy and industrial minerals, mineral waters, and springs) as the main constituents of the geodiversity. The geosite rank (global, national, regional, or local), esthetic properties, accessibility, damage by natural or anthropogenic processes, and other characteristics may influence the geodiversity. Different approaches are available for the quantitative assessment of the geodiversity sensu stricto. The approach developed by Ruban (2010) is based on the simple calculation of the number of geosite types accounting also for the rank and the complexity of geosites. Serrano and Ruiz-Flaño (2009) stressed the importance of roughness and surfaces of the areas, for which the geodiversity is evaluated. The alternative approach proposed by Pereira et al. (2013) involves mapping techniques. Finally, Hjort and Luoto (2012) explained how to employ digital elevation models and remote sensing for the evaluation of the geodiversity. Irrespective of the approach, the geodiversity can be established globally and regionally (e.g., for administrative region or country, territory of the existing or planned geopark, etc.), for complex geosite comprising several geosite types and for ex situ geological heritage (e.g., museum collection). It is also possible to measure geodiversity in the content of conservation and tourist resources (brochures, Web pages, etc.) in order to evaluate the adequate representation of the true (“natural”) geodiversity in these resources. The geodiversity sensu lato is a quasiphilosophical and qualitative category, which is necessary to describe the uniqueness of the geological heritage and/or the geological value of the landscape, as well as to argue the urgency of geoconservation. It can be defined also as a territory/landscape attribute or as a signature of the diverse world’s geological heritage. Additionally,

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if the geological heritage is precious because of information about the past and present planetary composition, state, and dynamics, the geodiversity reflects the amount of this information and the geology-relevant informative utility of the environment. Gray (2008) linked the geodiversity to the geological history and, particularly, the phenomena of plate tectonics, climatic differentiation in time and space, and biological evolution and extinction. The same specialist also stressed that areas with long and complex geological history, lithospheric plate margins, highelevated areas, and coasts are geodiversity hot spots, where diverse geological phenomena are concentrated. Panizza and Piacente (2009) suggested to consider the cultural dimension of geodiversity, which is sensible because geodiversity is not only what is available in the nature but also what the people perceive and judge about. The qualitative treatment of the geodiversity is important, particularly, to promote the geoconservation ideas and to establish geoparks in the geodiversity hot spots (outstanding centers of geodiversity). The concept of geodiversity is relevant to the mineral and energy policy. Firstly, it helps to understand the value of the geological environment, where the geological exploration is conducted and the mining/energy production occurs. This is urgent to prevent negative anthropogenic influences on the unique geological features and their damage and loss. Secondly, the better planetary mineral and energy resources known, the more precise our evaluation of the geodiversity. A lot of unique geological features can be discovered as a result of geological exploration and extraction of the material from the Earth’s interiors. Thirdly, the mining/energy production is itself a constituent of the geodiversity. On the one hand, humans are efficient geological agents that reshape actively the geological environment. On the other hand, coal mines, quarries, etc., are also a part of the geological heritage that sometimes needs conservation and that can be used efficiently for the purposes of tourism (examples can be found, particularly, in Germany and Oman).

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Cross-References ▶ Geoconservation, Concept of ▶ Geoconservation, History of ▶ Geosite, Concept of ▶ Geosites, Classification of ▶ Regional Geological Heritage

References Gray M (2004) Geodiversity: valuing and conserving abiotic nature. Wiley, Chichester, p 434 Gray M (2008) Geodiversity: developing the paradigm. Proc Geol Assoc 119:287–298 Gray M (2013) Geodiversity: valuing and conserving abiotic nature, 2nd edn. Wiley-Blackwell, Chichester, p 495 Hjort J, Luoto M (2012) Can geodiversity be predicted from space? Geomorphology 153–154:74–80 Panizza M, Piacente S (2009) Cultural geomorphology and geodiversity. In: Reynard E, Coratza P, Regolini-Bissig G (eds) Geomorphosites. Dr. F. Pfeil, München, pp 35–48 Pereira DI, Pereira P, Brilha J, Santos L (2013) Geodiversity assessment of Parana State (Brazil): an innovative approach. Environ Manage 52:541–552 Ruban DA (2010) Quantification of geodiversity and its loss. Proc Geol Assoc 121:326–333 Serrano E, Ruiz-Flaño P (2009) Geomorphosites and geodiversity. In: Reynard E, Coratza P, Regolini-Bissig G (eds) Geomorphosites. Dr. F. Pfeil, München, pp 49–61

Geosite, Concept of Delia Evelina Bruno Water Research Institute/National Research Council, Bari, Italy

One of the first significant descriptions of geological dynamics of the landscape has been given at the beginning of the fourteenth century by Dante Alighieri in his “The Divine Comedy.” The verse “What’s that disaster damaged Adice beyond Trento” is a clear description of a landslide that occurred centuries before. More than one century later, the verse “The awareness of time and Earth’s site are food and ornament of human minds,” in

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Leonardo da Vinci’s “Atlantic Codex,” anticipated the modern concept of geosite (Wimbledon 1996, 1998; Poli 1999). Between the first Leonardo’s intuition and subsequent statements of our contemporaries, many centuries have passed and the approaches of naturalists and intellectuals and then professional researchers to study the territory have thoroughly changed. Despite the Herculaneum excavations that started in 1738, only with the exhumation of Pompeii, 10 years later, there was a radical change in the

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scientific approach. These excavations were characterized by a fascinating new connotation: through the findings of various grave goods, they made possible to reconstruct the daily life of an entire population that had suddenly disappeared. At the same time, the discovery of the entire city buried by ashes of the Mount Vesuvius made possible direct observations of sedimentological and volcanological features of the area, allowing the reconstruction of the disastrous events of 79 AD. From that moment, the

Geosite, Concept of, Fig. 1 Geosite essence with regard to the geological, natural and cultural aspects

Geosite, Concept of, Fig. 2 Geosite of Timpa Falconara, Pollino Park (Italy). The Mesozoic-Tertiary carbonate platform, sliced by subvertical faults along the

eastern border of the Pollino massif; complex junction segments of different structural domains

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observation of the landscape and the awareness of its environmental characteristics were never again the same. The concept of landscape, linked to different cultural aspects, became soon the subject of a new kind of tourism. Between the end of the seventeenth century and the advent of large-scale rail transit in the 1840s, it became very popular among aristocrats, literates, and scientists to undertake the “Grand Tour,” the journey to discover their natural heritage as a destination for the necessary human and intellectual growth of each one. Johann von Goethe’s “Journey to Italy” and Rodolphe Töpffer’s “Nouveaux voyages en zigzag” are two of the most famous examples that left detailed descriptions of locations, integrated by sketches and drawings. Today, these essays are fundamental tools to reconstruct the ancient forms of territory, to identify the geological and geomorphological heritage elements of a region, as objects of the environmental and scientific values of the landscape, i.e., geosites. The term “geosite” comes from a Greek root “geo” (¼Earth) which when combined with the Latin word “situs” (¼site) gives a lexical form meaning “geological site” or “site of geological interest.” Therefore, a geosite is a natural landscape feature that testifies processes that have formed and shaped our planet that for this reason is the product of different relationships between various factors acted in the past and that still affect the present (Fig. 1). A geosite provides an indispensable contribution to the scientific understanding of the geological history of a given region (Fig. 2). According to Wimbledon (1996), a geological site can be any location, area, or territory, for which any geological and geomorphological interest for conservation can be found. Therefore, the term “geosite” can be applied for confined outcrops, isolated elements with remarkable features, and groups of sites with great extension. Overall, geosites could be compared to pieces of a puzzle (Carreras and Druguet 2000) which, when completed in its entirety, shows the image of the Earth’s history. Although many, if not all, exposed geological objects are potential geosites, the evaluation of their uniqueness will help to rank their relative

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importance: global, national, regional, or local. Such evaluation is possible by comparison with similar geosites (Ruban 2005, 2006, 2010). The main criteria to determine the value of a geosite include quality of exposure, abundance and size of similar sites, geographical location, accessibility, educational value (public, school, university and research) and historical value. The available classification systems distinguish among several types of geosites: from geomorphosites (Panizza 2001; Panizza and Piacente 2003) to geoarchaeosites (Bruno and Perrotta 2012) with a subclass represented by urban geological sites, which do not necessarily have a landscape value, but often have a cultural value, since they represent the historical memory

Geosite, Concept of, Fig. 3 Geosite of the Alcantara River (Italy). The valley morphology has been modified by lava flows from the northern slopes of Etna, the largest and most active basaltic volcano in Europe. The incessant flow has gradually brought to light pentagonal and hexagonal basalt columns as a result of deposition, lava cooling, and erosion processes. Today, the Alcantara canyons are a famous tourist and recreation destination

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Geosite, Concept of, Fig. 4 Geosite of the Cirella’s island (Italy). Mesozoic metasedimentary and ophiolitic rocks representing the remains of the Neo-Tethys Ocean. In addition, the present sea bottom is full of Posidonia

oceanica – a living and endemic Mediterranean seagrass (Serra et al. 2012) with high biodiversity. The island, surmounted by an ancient tower, is located in front of the coast with an archaeological value

of landscape changes. Other examples are geosites located in restricted areas or natural parks (Fig. 3), which are better protected by laws or regulations that strongly limit potential anthropogenic influences. In this regard, it is possible to distinguish between restricted (affected by rules for protection and enhancement), limited (without protection rules), obliterated (lost or destined to disappear as a result of natural processes or human activities), and lost geosites (with only a descriptive testimony of their location) (Fabbri et al. 2011). Today, only a limited number of geosites are accessible to man, since many of these were destroyed by natural processes (erosion, earthquakes, volcanic eruptions, etc.). Human activity has a double function in geoconservation. In some cases (e.g., wars and urban constructions), this activity contributed to the disappearance of geosites. In other instances (mining, quarrying, and road cut works), it made available new sedimentary outcrops, tectonic arrangements, etc., even when embedded in historical and cultural structures. For some authors, the term “geosite” is roughly equivalent to the term “geotope” (Poli 1999; Stürm 1994). Geotopes represent those parts of

the geosphere that are recognizable or accessible on the Earth’s surface, spatially limited, and clearly distinguishable from the surrounding areas, in relation to geological processes and defined morphological features. So, the definition of geotope may take the same function as that of biotope (Poli 1999) in the spatial planning and nature protection (Serra et al. 2012) (Fig. 4). The concept of geosite can also be applied to sites for the production of energy, both by fossil resources (mines, caves, etc.) and by green resources (e.g., geothermal and hydraulic). In the world, there are many sites where actual energy production is much fruitful, but also abandoned sites. In both cases, these particular types attest the history of energy-related geological activities of man. Anyway, geosite management is tied closely to the mineral and energy policy. Generally, geosites represent the heritage that should be studied and surveyed as part of the landscape to be protected and safeguarded. Preservation of these locations with high geological interest is to ensure that future generations can continue learning the geological history of the Earth, to enjoy the full beauty of landscapes, and also to incentivize the socioeconomic development.

Geosites, Classification of

Cross-References ▶ Geoconservation, Concept of ▶ Geoconservation, History of ▶ Geosites, Classification of ▶ Geosites, Management of ▶ Regional Geological Heritage

References Bruno DE, Perrotta P (2012) A geotouristic proposal for Amendolara territory (northern ionic sector of Calabria, Italy). Geoheritage 4:139–151 Carreras J, Druguet E (2000) Geological heritage, an essential part of the integral management of World heritage in protected sites. In: Barettino D, Wimbledon WAP, Gallego E (eds) Geological Heritage: its conservation and management. Lectures presented in the III international symposium ProGEO on the conservation of the geological heritage, Madrid, pp 95–110 Fabbri M, Lanzini M, Mancinella D, Succhiarelli C (2011) I geositi urbani: definizione e caso-studio preliminare nel territorio del comune di Roma. In: Bentivenga M (ed) Il Patrimonio Geologico: una risorsa da proteggere e valorizzare. Paper presented at Convegno Nazionale, Sasso di Castalda, Potenza, 29–30 april 2010. Geologia dell’Ambiente, Periodico Sigea 2:126–134 Panizza M (2001) Geomorphosites: concepts, methods and examples of geomorphological survey. Chin Sci Bull 46:4–6 Panizza M, Piacente S (2003) Geomorfologia culturale. Pitagora, Bologna, p 350 Poli G (1999) Geositi testimoni del tempo – Fondamenti per la conservazione del patrimonio geologico. Pendragon, Bologna, p 259 Ruban DA (2005) Geologitcheskie pamjatniki: kratkij obzor klassifikatsionnykh priznakov (Geological monuments: brief review of classification criteria). Izvestija Vysshikh Utchebnykh Zavedenij Geologija i razvedka 4:67–69 Ruban DA (2006) Standartizatsija opisanija geologitcheskikh pamjatnikov prirody kak vazhnykh ob’ektov national’nogo nasledija. Geografija i prirodnye resursy 3:166–168 Ruban DA (2010) Quantification of geodiversity and its loss. Proc Geol Assoc 121:326–333 Serra IA, Lauritano C, Dattolo E, Puoti A, Nicastro S, Innocenti AM, Procaccini G (2012) Reference genes assessment for the seagrass Posidonia oceanica in different salinity, pH and light conditions. Mar Biol 159:1269–1282 Stürm B (1994) Integration de la protection du patrimoine geologique dans 1’amenagement du territoire en Suisse. Mem Soc Geol Fr 165:93–97

291 Wimbledon WAP (1996) Geosites, a new conservation initiative. Episodes 19:87–88 Wimbledon W, Ishchenko A, Gerasimenko N, Alexandrowicz Z, Vinokurov V, Liscak P, Vozar J, Bezak V, Kohut M, Polak M, Mello J, Potfaj M, Gross P, Elecko M, Nagy A, Barath I, Lapo A, Vdovets M, Klincharov S, Marjanac L, Mijovic D, Dimitrijevic M, Gavrolovic D, Theodossiou-DrandakiI, Serjani A, Todorov T, Nakov R, Zagorchev I, PerezGonzalez A, Benvenuti M, Boni M, Bracucci G, Bortolani G, Burlando M, Costantini E, D’Andrea M, Gisotti G, Guado G, Marchetti M, Massolli-Novelli R, Panizza M, Pavia G, Poli G, Zarlenga F, Satkunas J, Mikulenas V, Suominen V, Kananajo T, Lehtinen M, Gonggriijp G, Look E, Grube A, Johansson C, Karis L, Parkes M, Paudsep R, Andersen S, Cleal C, Bevins R (1998) A first attempt at a GEOSITES framework for Europe – an IUGS initiative to support recognition of world heritage and European geodiversity. Geol Balc 28:5–32

Geosites, Classification of Svetlana O. Zorina1,2 and Vladimir V. Silantiev2 1 Central Scientific Research Institute of Geology of Industrial Minerals, Kazan, Russia 2 Kazan (Volga Region) Federal University, Kazan, Russia

Geosite is a geological heritage site (Ruban and Kuo 2010; Wimbledon 1999). According to “Protocol on geoconservation principles, sustainable site use, management, fieldwork, fossil and mineral collecting” adopted by the European Association for the Conservation of the Geological Heritage (ProGeo), geosite is a particular locality or area of geological interest for the knowledge of Earth history (ProGeo 2011; Wimbledon and Smith-Meyer 2012) or the peculiar Earth’s crust phenomena (typical or, in contrast, unique geological feature or process) (Ruban and Kuo 2010). Geosites can be established according to their scientific, educational, and aesthetic values, rarity, current condition, accessibility, etc. The special protection status, maintenance, monitoring, and planning of tourism should be specified for them (Ruban and Kuo 2010). Methods and purposes of geoconservation and the status of geosites vary

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greatly in different countries in accordance with local geoconservation laws. Irrespective of the presence or absence of relevant laws, geosites require international responsibility. Geosites differ by their unique geological features, which determine their value for science, education, and tourism. Classification of geosites is linked to their types, ranks, and categories (Ruban 2010). Firstly, the abiological natural heritage was subdivided by Grandgirard (1999) into geological, geomorphological, geochemical, geohistorical, hydrological, mineralogical, paleontological, pedological, petrographic, sedimentological, speleological, stratigraphical, structural, tectonic, etc. Geosites were subdivided by Ruban (2010) and Ruban and Kuo (2010) into two dozens of types, which are listed below. Stratigraphical geosite represents succession of rocks, and/or it demonstrates chronology of the geologic time. Paleontological geosite contains fossil organisms (including those with unique preservation) or their traces (e.g., the Hojapil-Ata dinosaur mega-tracksite is located in the Koytendag National Park of eastern Turkmenistan, Central Asia (Fig. 1)). Sedimentary geosite exhibits sedimentary rocks and bodies that can be composed of lithified or unlithified terri-, chemo-, bio-, volcano-, and cosmogenic matter. Igneous geosite represents igneous (magmatic) rocks and bodies. Metamorphic geosite contains rocks and bodies composed of significantly altered matter of preexisted rocks. This alteration can be caused by mainly temperature, pressure, and chemical reactions. Mineralogical geosite demonstrates minerals and mineral associations. Economical geosite represents ore, non-ore, and hydrocarbon deposits. Geochemical geosite reflects anomalies in concentration of elements and natural and anthropogenic chemical compounds in the Earth’s crust. Seismical geosite is linked to modern and ancient earthquakes. Structural geosite exhibits deformation structures (folds, faults, nappes, etc.). Paleogeographical geosite provides an information on paleoenvironments. Cosmogenic geosite contains traces of influences of cosmic bodies and forces on the Earth’s surface and its interiors. Geothermal geosites include hot springs and relevant phenomena. Geocryological geosite is linked to

Geosites, Classification of

Geosites, Classification of, Fig. 1 Paleontological geosite – the Hojapil-Ata dinosaur mega-tracksite located in the Koytendag National Park of eastern Turkmenistan, Central Asia

permafrost. Geomorphological geosite represents landforms and surficial processes. Hydrological and hydrogeological geosites reflect geological activity of surficial and subsurficial waters. Engineering geosite reflects outstanding mass wasting (landslides, rockfalls, etc.) and other phenomena relevant to construction and other forms of the anthropogenic activity. Radiogeological geosite is linked to natural radioactive rocks, waters, or gases. Neotectonical geosite is a manifestation of modern tectonic activity. Pedological geosite is linked to modern soils and paleosols. Geohistorical geosite reflects the history of geological exploration, mining activity, and other human activities linked to the geological environment, as well as the history of geology as a science. Complex geosite is a combination of two or more abovementioned types. The majority of geosites belong to several types (e.g., the Pechischinsky Geological Section is the Geological nature sanctuary near the city of Kazan, Russia; it has stratigraphical, mineralogical,

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Geosites, Classification of, Fig. 2 Complex (stratigraphical, mineralogical, geohistorical, paleogeographical, and economical) geosite – the Pechischinsky Geological Section located Kazan, Russia

geohistorical, paleogeographical, and economical value (Fig. 2)). The parameters of complex geosite should be listed in decreasing order of importance (Ruban 2010). Geosites may look like outcrops, caves, quarries, mines, boreholes, and individual landforms (Ruban and Kuo 2010). Depending on their size, geosites can be judged provisionally as small (monument, point, site, and geotop) or large (park, reserve, and protected area) (Wimbledon and Smith-Meyer 2012). Based on their importance, geosites of different ranks (global, national, regional, or local) can be distinguished. Global geosites are important for the world community; national, for countries; regional, for states, provinces, regions, and historical regions; and local, for restricted areas and local communities (Ruban 2010). According to Ruban (2010), all geosites can be classified into three categories: spatial appearance (point, linear, and area geosites), dynamic state (static and dynamic geosites), and origin (natural and artificial geosites). Finally, geosites can be evaluated in various contexts: for

instance, with regard to environmental impact assessment (Rivas et al. 1997; Coratza and Giusti 2005), inventory of natural heritage sites (Serrano and González-Trueba 2005), tourism promotion (Pralong 2005), management of nature parks (Pereira et al. 2007), etc. And they can be classified accordingly. All countries should demonstrate responsibility for sustainable management and conservation of their nationally and internationally significant geosites, and their mineral policy should be developed and implemented accordingly. The main purpose of geoconservation is to remain geosites “available for legitimate use” (ProGeo 2011).

Cross-References ▶ Geoconservation, Concept of ▶ Geoconservation, History of ▶ Geodiversity ▶ Geosite, Concept of ▶ Geosites, Management of

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References Coratza P, Giusti C (2005) Methodological proposal for the assessment of the scientific quality of geomorphosites. Il Quaternario 18:307–313 Grandgirard V (1999) L`évaluation des géotopes. Geol Insubr 4:59–66 Pereira P, Pereira D, Caetano Alves MI (2007) Geomorphosite assessment in Montesinho Natural Park (Portugal). Geogr Helvet 62(3):159–168 Pralong J-P (2005) A method for assessing the tourist potential and use of geomorphological sites. Géomorphologie. Relief Process Environ 3:189–196 ProGEO (2011) Conserving our shared geoheritage – a protocol on geoconservation principles, sustainable site use, management, fieldwork, fossil and mineral collecting, p 10. http://www.progeo.se/progeoprotocol-definitions-20110915.pdf Rivas V, Rix K, Frances E, Cendrero A, Brunsden D (1997) Geomorphological indicators for environmental impact assessment: consumable and non-consumable geomorphological resources. Geomorphology 18:169–182 Ruban DA (2010) Quantification of geodiversity and its loss. Proc Geol Assoc 121:326–333 Ruban DA, Kuo I-L (2010) Essentials of geological heritage site (geosite) management: a conceptual assessment of interests and conflicts. Natura Nascosta 41:16–31 Serrano E, González-Trueba JJ (2005) Assessment of geomorphosites in natural protected areas: the Picos de Europa National Park (Spain). Géomorphologie. Relief Process Environ 3:197–208 Wimbledon WAP (1999) GEOSITES – a new conservation initiative. Episodes 19:87–88 Wimbledon WAP, Smith-Meyer S (eds) (2012) Geoheritage in Europe and its conservation. ProGeo, Oslo, p 405

Geosites, Management of Maria Helena Henriques Department of Earth Sciences and Geosciences Centre, Faculty of Sciences and Technology, University of Coimbra, Coimbra, Portugal

The areas in which minerals occur often have other nonrenewable geological resources displaying heritage value that can represent an alternative choice of land use. Mineral policy and environmental policy when grounded in a sustainable development perspective, i.e., keeping in view the needs of development as well as needs of protecting the Earth’s natural systems

Geosites, Management of

(including its bio- and geodiversity), facilitate the appropriate choice or order of land use. Geoconservation involves the implementation of specific inventory, assessment, conservation, and monitoring procedures to determine which geosites within a territory displaying geological heritage should be subjected to protection measures (Henriques et al. 2011). Once identified and evaluated, the geosite requires some statutory protection and appropriate management procedures to keep or increase its value, which can be controlled through the use of specific monitoring tools. As so, geosites management involves the manipulation of the human capital of the organization to which the geosite’s responsibility is assigned (geopark, natural monument, or natural park) and the people living there to a common purpose, namely, to contribute to the geosite condition and threats (Wimbledon 2012) and to attract more people to visit it, thus increasing its social relevance. By doing so, the geosite and/or a set of geosites within a geopark or a natural park can become an important economic asset as a geotouristic product (Hose 1998, 2012). In developing countries, it can provide in a very significant way to poverty alleviation (Kiernan 2013). Moreover, they can also represent a relevant educational resource, thus contributing for the promotion of education for sustainable development (Henriques et al. 2012). Well-designed plans, strong motivation among the local people (Worton and Guilard 2013), and effective communication mechanisms (Stewart and Nield 2013) engaging decision makers and the public on geoconservation issues (Prosser et al. 2013) are crucial factors to meet the goal of conserving and valorizing geosites within a geopark or other similar organizations. The abovementioned requirements can be found in many management solutions for geoparks, in particular among those constituting the Global Geoparks Network assisted by the UNESCO (GGN 2014). In fact, prerequisites to any geopark proposal being approved include the establishment of an effective management system based on a clear responsible management body or partnership that has demonstrable local support and the existence of a management plan, most

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Geosites, Management of, Fig. 1 Interpretative panels at Alto Tajo Geopark (Spain) displaying handicapped accessibility and information in Braille

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Geosites, Management of, Fig. 2 Interpretative center at Capelinhos volcano (Azores Geopark, Portugal) built in perfect harmony with the landscape

likely to be based on geotourism, designed to foster socioeconomic development that is sustainable (GGN 2010). These are accomplished through the implementation of specific managing actions on geosites. Geoheritage maps (FuertesGutiérrez and Fernández-Martínez 2012), detailed geosite inventories (Rocha et al. 2014), and interpretation facilities play leading roles in the

protection and enhancement of geosites. The relevant solutions include interpretative panels (Fig. 1); museums and centers (Fig. 2); guided tours and school class excursions (Fig. 3); popular literature, maps, educational materials, and displays (Fig. 4); and seminars (Dowling 2011), among many other examples which are being employed worldwide to improve awareness of

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Geosites, Management of, Fig. 3 A school class excursion in the frame of a research on science education by Henriques et al. (2012) at the Arouca Geopark (Portugal)

Geosites, Management of, Fig. 4 An educational display regarding the internal structure of a volcano at the Vulkaneifel Geopark (Germany)

geology and geomorphology among the general public (Gray 2013). Monitoring is necessary for geosite management as a tool to measure whether the development of an area is in accordance to the defined management goals for the geopark or similar entity (Erikstad 2013). Measuring visitor’s satisfaction regarding a geosite enables adjusting plans and meeting goals of the geopark or coeval organization. As so, determination of the amount of

visitors to museums or centers and evaluation of the visitors’ level of understanding of the interpretative panels (Mansur and Silva 2011) are also important management instruments.

Cross-References ▶ Geoconservation Policy ▶ Geoconservation, Concept of

Ghana: Energy Policy

▶ Geoconservation, History of ▶ Geosite, Concept of ▶ Geosites, Classification of

297 Wimbledon WAP (2012) Preface. In: Wimbledon WAP, Smith-Meyer S (eds) Geoheritage in Europe and its conservation. ProGEO, Oslo, pp 6–13 Worton GJ, Guilard R (2013) Local communities and young people – the future of geoconservation. Proc Geol Assoc 124:681–690

References Dowling RK (2011) Geotourism’s global growth. Geoheritage 3:1–13 Erikstad L (2013) Geoheritage and geodiversity management – the questions for tomorrow. Proc Geol Assoc 124:713–719 Fuertes-Gutiérrez I, Fernández-Martínez E (2012) Mapping geosites for geoheritage management: a methodological proposal for the Regional Park of Picos de Europa (León, Spain). Environ Manage 50:789–806 GGN (2010) Guidelines and Criteria for National Geoparks seeking UNESCO’s assistance to join the Global Geoparks Network (GGN). Global Geoparks Network, p 12. Available via: http://www. globalgeopark.org/UploadFiles/2012_9_6/GGN2010. pdf. Accessed 13 Feb 2014 GGN (2014) Global Network of National Geoparks. Global Geopark Network. Available via: http://www. globalgeopark.org/index.htm. Accessed 13 Feb 2014 Gray M (2013) Geodiversity: valuing and conserving abiotic nature, 2nd edn. Wiley-Blackwell, Chichester, pp 1–508 Henriques MH, Pena dos Reis R, Brilha J, Mota T (2011) Geoconservation as an emergent geoscience. Geoheritage 3:117–128 Henriques MH, Tomaz C, Sá AA (2012) The Arouca Geopark (Portugal) as an educational resource: a study case. Episodes 35:481–488 Hose TA (1998) Selling coastal geology to visitors. In: Hooke J (ed) Coastal defense and earth science conservation. Geological Society of London, London, pp 178–195 Hose TA (2012) 3G’s for modern geotourism. Geoheritage 4:7–24 Kiernan K (2013) The nature conservation, geotourism and poverty reduction nexus in developing countries: a case study from the Lao PDR. Geoheritage 5:207–225 Mansur KL, Silva AS (2011) Society’s response: assessment of the performance of the “Caminhos Geológicos” (“geological paths”) project, State of Rio de Janeiro, Brazil. Geoheritage 3:27–39 Prosser CD, Eleanor JB, Larwood JG, Bridgland DR (2013) Geoconservation for science and society – an agenda for the future. Proc Geol Assoc 124:561–567 Rocha J, Brilha J, Henriques MH (2014) Assessment of the geological heritage of Cape Mondego Natural Monument (Central Portugal). Proc Geol Assoc 125:107–113 Stewart IS, Nield T (2013) Earth stories: context and narrative in the communication of popular geoscience. Proc Geol Assoc 124:699–712

Ghana: Energy Policy Kafui Abbey1 and Joseph Mante2 1 LLM Oil and Gas, Aberdeen, Scotland 2 Robert Gordon University, Aberdeen, Scotland

General Information on Ghana Ghana (formerly known as the Gold Coast) is a located in West Africa and it shares boundaries with Burkina Faso to the north, the Atlantic Ocean to the south, Togo to the east, and Cote d’Ivoire to the west. It has a total land area of approximately 238,540 km2 and is demarcated into ten administrative regions. Ghana’s estimated population is 27,341,565 made up of 50.9 % male and 49.1 % female, with a 1.82 % increase in the population compared to the previous year in 2015 (Countrymeters 2016). Forty percent of the population are 15 years and below, while the elderly population (65 years and above) accounts for 4.7 % of the total population (Ghana Statistical Service 2013, p. 64). Since 1960, the population of Ghana has more than tripled, and this has implications for energy supply and consumption. As a thriving multiparty democratic state underpinned by a Constitution (The Constitution of the Republic of Ghana, 1992), it has a functional government, a vibrant legislature, and a reasonably independent judiciary. Ghana’s image as a stable democracy, in a region noted for political instability, coupled with an attractive investment climate has made it one of the preferred investment destinations in West Africa. With a real GDP per capita estimated at US$ 3,864, Ghana ranks 140th out of the 188 countries on the UNDP Human Development Index (based on national income and composition of resources) (UNDP 2015, p. 248). The country’s economy is

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largely based on natural resource extraction, forestry, and agriculture, but in recent years, it has also witnessed strong growth in the service sector especially in the area of telecommunication. After years of intermittent exploration and prospecting, 600 million barrels of light oil were discovered offshore in the West Cape Block in Ghana in 2007, sparking a flurry of exploration activity. In December 2010, Ghana joined the community of oil-producing countries with the commissioning of the Jubilee Oil Field operations. Intensive petroleum exploration and production activities coupled with other economic activities in the past decade led to significant economic growth in Ghana. This growth pattern has slowed since 2013 due to economic relapse attributable mainly to factors such as unreliable power supply, weak manufacturing, and high inflation.

Energy Mix of Ghana The main energy sources in Ghana are biomass, electricity, and fossil fuels. Biomass or wood fuel constitutes the primary source of energy in Ghana constituting about 65.6 % of energy consumption in the country. The main components of this source of energy are charcoal, firewood, and other wood products such as sawdust and sawmill residue. Many households and small businesses in the informal sector of the economy rely on this source of energy for residential and commercial use. Activities such as baking, fish smoking, traditional soap making, brewing, and textile manufacturing by these small enterprises depend almost entirely on the availability of biomass (Energy Commission 2006). Fossil fuels (petroleum products) constitute 26 % of total energy consumption in the country and represent an important source of energy for the transport, aviation, and manufacturing sectors of the economy. Its main components include aviation fuel, petrol (gasoline), DPK (kerosene), gas oil, and liquefied petroleum gas (LPG). Ghana is a net importer of crude oil and other refined petroleum products and is often exposed to the instabilities of the international oil market.

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The other major source of energy is electricity. Since 1965, Ghana’s main source of electricity was hydro until the construction of the first thermal plant in 1998. There was a sharp drop in the hydro share of electricity from 91.5 % in 2000 to about 66 % in 2003, largely due to unfavorable climatic conditions which affected water flow in the Volta River, the main water source (Energy Commission 2006). Since then, there has been a gradual decline of the hydro share of electricity and a corresponding increase in the volume of electricity generated from thermal sources. In the 2016 National Budget and Economic Policy Statement, there are clear indications of the current government’s intentions to expand thermal generation with the installation of three thermal facilities with total production capacity of about 700MW and expansion of existing capacity (p. 15). Table 1 provides details of the current installed electricity generation capacity. Renewable energy in Ghana is defined broadly to include solar, biomass, wind, hydro, and tidal sources (Energy Commission 2006, p. 8). However, in this work, the term is used narrowly to cover solar, mini hydro, wind, and biomass sources (National Energy Policy 2010). Apart from solar energy which is utilized heavily in its natural direct form and, to a lesser degree, through solar panels and other solar-related equipment, the country’s range of renewable energy sources remains largely underexploited. Solar generation, for example, contributed only 0.1 % of the total generation in 2015 (VRA 2016). But, there are indications that solar power generation and use are currently being promoted – in 2015, a total of 272 solar systems were installed in public facilities (National Budget and Economic Policy Statement 2016, p. 15). There are also efforts to promote residential use of solar energy in Ghana through the Rooftop Solar Photovoltaic (PV) Program and the Capital Subsidy Scheme. Under this program, 20,000 solar PV systems are to be installed on residential facilities across the country (Energy Commission 2006). Figures 1 and 2 provide an overview of energy supply and consumption in Ghana between 2005 and 2014. Increasing demand for energy, especially electricity, has created an energy supply deficit. This

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Ghana: Energy Policy, Table 1 Installed electricity generation capacity as of 2014 Plant Hydro Akosombo Bui Kpong Subtotal Thermal Takoradi Power Company (TAPCO) Takoradi International Company (TICO) Sunon Asogli Power (Ghana) Limited (SAPP) – IPP Cenit Energy Ltd (CEL) – IPP Tema Thermal 1 Power Plant (TT1PP) Tema Thermal 2 Power Plant (TT2PP) Takoradi T3 Mines Reserve Plant (MRP) Subtotal Renewables VRA Solar Subtotal Total

Fuel type

Installed capacity

Share (%)

Water Water Water

1,020 400 160 1,580

36.0 14.1 5.7 55.8

LCO/natural gas LCO/natural gas Natural gas LCO LCO/natural gas DFO/natural gas LCO/natural gas DFO/natural gas

330 220 200 126 110 50 132 80 1,248

11.7 7.8 7.1 4.5 3.9 1.8 4.7 2.8 44.1

Solar

2.5 2.5 2,831

0.1 0.1 100

Source: Ghana Energy Statistics 2015

Ghana: Energy Policy, Fig. 1 Trend in primary energy supply (ktoe) (Source: Based on figures from the Energy Statistics 2015)

5,000 4,000 3,000 2,000 1,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Wood

crisis has persisted for more than a decade. Regular electricity imports from neighboring countries such as Cote D’Ivoire and Burkina Faso to supplement power generated domestically at peak periods have not met required demands.

Energy Policy Conception of Ghana Ghana has implemented a number of policies relevant to the energy sector with the aim of ensuring that adequate, reliable, and quality energy is available to users. The main policies

Hydro

Oil

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for the energy sector (power and petroleum) are the Strategic National Energy Plan (SNEP) and the National Energy Policy (NEP). In 2001, the Ministry of Energy developed an Energy Sector Policy Framework document. The aim of this document was to provide a stable basis for future developments in the energy sector. This document was subsequently revised into the SNEP in 2006. The SNEP presents an outlook of energy in Ghana for the period 2006–2020 (the SNEP period covers two decades for a number of reasons, including the need for policy continuity; for the other reasons, see Energy

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2006

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Electricity

Commission (2006) Strategic National Energy Plan (2006–2020)–Main Report, p.17. Available via: http://www.energycom.gov.gh/files/snep/ MAIN%20REPORT%20final%20PD.pdf) based on the economic growth rates forecasted in the Ghana Poverty Reduction Strategy II. (This is a national economic policy document.) The plan reviews the available energy sources and resources in Ghana and the ways to exploit them in order to ensure secured and adequate energy supply to support sustainable economic growth for both the present and the future. The vision of the energy sector, as captured in the SNEP, is to turn Ghana into an “energy economy” that ensures the production and distribution of high-quality energy services to all sectors of the economy in a sustainable manner, without compromising the environment. The objective to accelerate the development and utilization of renewable energy is complemented by a strategy targeting a 10 % renewable energy share in Ghana’s energy mix by 2020. Under the SNEP, a policy decision was made to allow private sector participation in the energy generation and supply. The SNEP had both demand and supply components focusing on key consumption sectors (these sectors include industry and transportation, commercial and services, agriculture and fisheries, and residential users) and energy supply sources (these sources are electricity, petroleum, wood fuels, and renewables), respectively. The latter component contains individual source-specific plans to help achieve the main goals of the SNEP. Under the plan, total energy expenditure is expected to rise from about US$4.3–4.6 billion, 13–14 % of GDP in 2015, to US$5.2–5.6 billion, 8–9 % of GDP in

2008

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2010

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2012

2013

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2020. Initial targets in the plans have not yet been achieved. The NEP (formulated in 2010; available via: http://www.mofep.gov.gh/sites/default/files/ pbb/ENERGY%20POLICY-%20February%2013, %202010%20FINAL.pdf) essentially builds on the ideas in the SNEP. It retains the country’s vision of becoming an “Energy Economy.” The main goal of NEP is to “make energy services universally accessible and readily available in an environmentally sustainable manner” (p. 8). To achieve these goals, ten specific objectives were set which include securing long-term fuel supply for the thermal plants in operation, modernizing and expanding energy infrastructure, increasing access to modern forms of energy, and promoting private participation in the energy sector (NEP 2010, pp. 8–9). The NEP divides the energy sector into three main subsectors, namely, power, petroleum, and renewable sources. Under the policy document, each subsector has a specific goal and policy direction. For the power subsector, the goal is to “become a major exporter of power in the sub-region by 2015” (NEP 2010, p. 11). To achieve this goal, it is expected that generation capacity will increase, while transmission and distribution infrastructure is improved through public and private sector investments. The renewable energy subsector has a two-prong goal, namely, to increase the share of renewable energy in the energy mix and to help mitigate the deleterious aspects of climate change. There are specific policy directions on biomass, wind and solar, mini hydro, and waste to energy conversion. On the petroleum subsector, the goal is “to sustain and optimise the exploitation and utilisation of Ghana’s oil and gas endowment for the overall benefit and welfare of all Ghanaians,

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present and future” (NEP 2010, p. 16). Ghana’s petroleum sector is segmented into the upstream, midstream, and downstream sectors. The upstream activities include exploration and production of petroleum. The midstream activities include transportation of petroleum. The downstream activities include refining of petroleum by the country’s only petroleum refinery, Tema Oil Refinery (TOR), the marketing and distribution of petroleum products by Oil Marketing Companies (OMCs), and the premixing of petroleum product for other industrial uses. Policy direction under this subsector is, thus, divided into upstream, midstream, and downstream. There are elaborate policy positions on the upstream and midstream component. These include development and management of hydrocarbons, strengthening the investment regulatory framework for the sector, and developing local content, participation, and capacity building in the subsector (NEP 2010, p. 17). There are also directions on oil revenue management. The downstream component of the policy focuses primarily on expanding the infrastructure for the supply of petroleum products and enhancing access. In 2009, the need for a standalone policy on the petroleum subsector became apparent with the production of oil well underway in Ghana. Another policy, the Fundamental Petroleum Policy of Ghana (FPPG), was formulated specifically for this subsector. The main goal of this policy is to transform the country into a net exporter of oil and gas. The FPPG addresses fundamental questions on resource ownership and jurisdiction, fiscal and legal framework, relationships among actors in the petroleum sector, and sectoral institutional frameworks. The policy also provides direction on principles of national participation, with clear emphasis on the monitoring of operations of petroleum companies. This policy broadly sketches the government’s oil policy, essentially committing it to pursuing sound management strategies that guarantee, among others, optimal extraction, minimal environmental and social disruption, and local development (Cavnar 2008). The Policy serves as a “permanent guideline for governmental monitoring of the petroleum industry” (Draft Fundamental Petroleum Policy of Ghana 2009, s. 3.1). The NEP and FPPG have

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been implemented for the past 5 years, and there are clear indications that some aspects of these policies have culminated in institutional and regulatory reforms in the energy sector. For example, in 2011, the Renewable Energy Act (Renewable Energy Act, 2011 (Act 832)) was enacted to provide for the development, management, utilization, sustainability, and adequate supply of renewable energy (Renewable Energy Act 2011 (Act 832), s. 1.).

Institutional and Regulatory Framework Ghana’s energy sector is classified into two main subsectors: power and petroleum. The government, through the Ministry of Energy, oversees the entire sector. The Ministry formulates energy policies, oversees implementation by bodies working under it, monitors, and evaluates policies.

Power Subsector Hydroelectricity and thermal energy are the main sources of power under this subsector. The generation, transmission, and distribution of power from these sources are under the control of five main state-owned entities (namely, the Volta River Authority, the Bui Power Authority, and the Ghana Grid Company; the others are the Electricity Company of Ghana and the Northern Electricity Distribution Company). The Volta River Authority (VRA) and the Bui Power Authority (BPA) are mainly responsible for hydropower generation, with the former overseeing generation activities at the Akosombo and Kpong hydroelectric dams, while the latter is responsible for the 400 MW hydroelectric dam located at Bui, on the boundary between Brong-Ahafo and the northern regions of Ghana. Additionally, VRA is also responsible for some thermal plants located at different parts of the country. In recent times, some limited share of power generation, especially from thermal sources, has come from independent power producers (IPPs). Until 2006, VRA’s functions covered transmission and distribution activities as well. Pursuant to

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the Energy Commission Act, 1997 (Act 541) (EC Act), and the Volta River Development (Amendment) Act, 2005 (Act 692), the Ghana Grid Company (GRIDCo) was incorporated in 2006 as a wholly owned state company with exclusive responsibility for the operation of the National Interconnected Transmission system. Following the completion of an unbundling exercise involving GRIDCo and VRA in 2008, the transmission function was passed on to GRIDCo. GRIDCo’s roles include bulk power purchase of electricity from generators (both national generator and IPPs) and sale to distributors and bulk customers. Power producers expecting to be connected to the transmission system must enter into an electrical connection agreement with GRIDCo. The Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCo) (previously known as the Northern Electricity Department, a subsidiary of the VRA) are responsible for distributing electricity to the southern part of the country (Ashanti, central, eastern, Greater Accra, Volta, and western regions) and the northern regions, respectively. With its large distribution network, ECG functions as an off-taker and guarantees the purchase of generated power by IPPs. The power subsector has two key regulating bodies, namely, the Public Utilities Regulatory Commission (PURC) (established under the Public Utilities Regulation Act, 1997 (Act 538)) and the Energy Commission (established under the Energy Commission Act, 1997 (Act 541)). The PURC has oversight responsibility for the provision of utility services by public utilities including those in the power subsector. It plays key roles in economic regulation, quality assurance, promotion of competition among utility providers, and price regulation. The Energy Commission, the other regulator, is responsible for granting licenses to power generators, transmitters, and suppliers (it plays a similar role in the petroleum sector in the areas of refining, storage, bulk distribution, sale, and marketing – see the Energy Commission Act, 1997 (Act 541)). The core object of the Commission is “to regulate and manage the utilisation of energy resources in

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Ghana and co-ordinate policies in relation to them” (Energy Commission Act, 1997 (Act 541), s.1(2)). There are several laws and regulations which collectively comprise the regulatory framework for the power subsector. Some of these laws set up the relevant institutions and their roles in the sector, while others provide detailed information on regulatory issues such as licensing and standard setting. For instance, the Volta River Development Act, 1961 (Act 46) (as amended) (amended by the Volta River Development (Amendment) Act 2005 (Act 692)), and the Bui Power Authority Act 2007 (Act 740) established the main hydropower generating entities and their respective roles. The Renewable Energy Act, 2011 (Act 832), provides for the development, management, and utilization of renewable energy sources. The EC Act and the Public Utility Regulatory Commission Act, 1997 (Act 538), set out the laws relating to the technical and economic regulation of the power sector, respectively. (Beyond these legislations, there are subordinate legislations such as the Electricity Transmission (Technical, Operational and Standards of Performance) Rules, 2008 (L.I.1934), and the Electricity Regulations, 2008 (L.I. 1937).) The Environmental Protection Agency Act, 1994 (Act 494), requires that projects in the power sector receive environmental clearance from the agency. Apart from these laws, there are investment-related laws such as the Ghana Investment Promotion Centre Act, 2013 (Act 865), and the Free Zones Act, 1995 (Act 504) (as amended), which provide investment incentives to entities who wish to participate in the sector. There are laws on incorporation of companies such as the Companies Code, 1963 (Act 179), and the Incorporated Private Partnership Act, 1962 (Act 152), which entities seeking to register their companies to participate in the sector will need to be aware of. The current regulatory framework has liberalized generation and distribution of power, thereby making it possible for IPPs and distributors to participate in the process together with the established state-owned entities. Entities seeking to participate in this sector must meet the citizenship criterion (for individuals) or be incorporated

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under the laws of Ghana (for corporate entities) (Energy Commission Act, 1997, s. 12). The licensing regime does not exclude the stateowned entities (except those expressly exempted like the VRA). For instance, the EC Act allows relevant state-owned utility companies to apply for and be granted license for transmission or wholesale supply of electricity and gas to distribution companies and “bulk customers” (Energy Commission Act, 10997 (Act 541), ss. 23–25). The participation of foreign entities in the sector is also permitted. Those intending to take advantage of this window will need to be aware of the constitutional provision – Article 181 (5) – which requires that any international business or economic transaction to which the State is a party requires parliamentary approval before it can become effective. This applies to power purchase agreements as well, as highlighted in the recent Supreme court cases of A-G v Faroe Atlantic Company Limited (the Faroe Atlantic Case) ([2005–2006] SCGLR 271) and A-G v Balkan Energy (Ghana) Limited & Ors (the Balkan Energy Case) ([2012] 2 SCGLR 998).

Petroleum Subsector: Institutional and Regulatory Framework There are five key institutions involved in the regulation of the petroleum sector. The Ministry of Energy has the overall oversight responsibility for the sector. It is assisted in this role by the Petroleum Commission (established under the Petroleum Commission Act, 2011 (Act 821)) which focuses on the upstream sector, the National Petroleum Authority (NPA) (established by the National Petroleum Authority Act 2005 (Act 691 for the downstream sector, and the Ghana National Petroleum Corporation (GNPC) which has pioneered oil exploration in Ghana for several decades and is currently involved in the upstream sector as a statutory commercial venture. Then there is the Environmental Protection Agency (EPA) (Environmental Protection Agency Act, 1994 (Act 490)) which functions cut across all sectors.

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The Petroleum Commission’s functions include issuing licenses to operators and prospective operators, managing the use of petroleum resources, and coordinating policies that relate to these functions. The NPA’s main function is to ensure efficiency, growth, and stakeholder satisfaction in the sector through regulation and monitoring. For instance, it monitors and regulates petroleum prices in accordance with the prescribed pricing formula and grants licenses to service providers and marketing companies engaged in a business or commercial activity in this downstream arena. The EPA is empowered to manage, control, and monitor compliance of environmental regulations within the petroleum industry. The GNPC (GNPC is akin to a National Oil Company (NOC)) is vested with exclusive power to intervene in the upstream sector as a “commercial venture” and “undertake the exploration, development, production and disposal of petroleum” (Petroleum (Exploration and Production) Law, 1984 (PNDCL 84), s. 2(1)). No person, company, or entity can engage in the exploration, development, or production of petroleum without signing a petroleum agreement with GNPC and the Government of Ghana to that effect. The practice in Ghana is that Petroleum Sharing Agreements (PSA) is used. However, since petroleum, like any other mineral in its natural state in or upon land or water in Ghana, is the property of the republic and vested in the president on behalf of the people (the Constitution of the Republic of Ghana 1992, article 237 (6)), any transaction which involves the granting of rights for the exploitation of petroleum requires parliamentary ratification (the Constitution of the Republic of Ghana 1992, article 268). The Ministry of Finance, with the approval of parliament, has the responsibility of setting the applicable levels of taxes, charges, duties, or levies in order to achieve revenue targets for the national budget. The margins for the distribution companies are fixed annually through negotiations with the companies and are usually higher for kerosene because it is consumed in remote rural areas (ESMAP 2006).

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International Aspects Ghana, although not a member of the Organization for Economic Co-operation and Development (OECD), joined the OECD Development Centre on 6 October 2015. This center “helps decision makers find policy solutions to stimulate growth and improve living conditions in developing and emerging economies” (OECD 2015). Ghana is also a member of the Economic Community of West African States (ECOWAS) which promotes regional energy cooperation and integration. In terms of the environment, Ghana is a signatory to the United Nations Framework and Kyoto Protocol. In 2003, the Government of Ghana formally committed itself to implementing the Extractive Industries Transparency Initiative (EITI). However, until 2013 Ghana was only a signatory for the mining sector and did not submit its audits for oil and gas to the EITI (Ministry of Finance 2014).

Concluding Statement There are varied challenges with the energy sector in Ghana. Most of these are catalogued in the various policy documents. In recent times, Ghana has experienced persistent, irregular, and unpredictable power outages. Although the country experienced similar power outages in 1983, 1994, 1997–1998, and 2006–2007, none was as intense as the current situation. This energy crisis threatens not only GDP growth but also public safety. The crisis has been attributed to overdependence on hydropower facilities which are now plagued with low water levels. (Increasing energy demand due to changes in demographics, scheduled, and unscheduled maintenance of some power plants and low tariffs which are not cost reflective have been the other reasons cited.) The government in attempt to solve this problem is attracting more private sector participation into the sector through IPPs who have begun to enter the electricity generation market previously dominated by the public sector. However, the industry is still beset with uncompetitive tariffs and the absence of credible off-takers. It is expected that with strong demand, a clear regulatory

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environment, credible market pricing, and a viable off-taker, the public and private efforts to address the energy crisis will be successful.

References This section provides information on reference cited, in addition to other general resources

Adabla SW (2015) Notes from the field – an English law perspective on the oil & gas market. Available via https://eiti.org/files/2012-2013%20Ghana%20EITI %20Oil%20and%20Gas%20Sector%20Report.pdf Agyei G, Gordon J, Addei I (2012) Offshore oil industry activities and fishing in Ghana: community perceptions and sustainable solutions. Curr Res J Soc Sci 4(3):182–189 Amankwah C (2014) Issues of stability in Ghana’s model petroleum. UK Law Student Rev 2(1):27–59 Anang T (2015) The sad story of Ghana’s cocoa industry and the way forward. Ghana business news. Available via https://www.ghanabusinessnews.com/2015/06/22/ the-sad-story-of-ghanas-cocoa-industry-and-the-wayforward/ BFT online Ghana (2015) The power sector, prospects & way to go. Available via http://thebftonline.com/ features/opinions/16126/the-power-sector-prospectsway-to-go.html Cavnar A (2008) Averting the resource curse in Ghana: the need for accountability. Ghana Center for Democratic Development Ghana. Briefing Pap 19:3 Countrymeters (2016) Ghana population. Available via http://countrymeters.info/en/Ghana.%20 Edjekumhene I, Cobson-Cobbold JC (2011) Low-carbon Africa. KITE, Ghana Edjekumhene I, Amaka-Otchere ABK, Amissah-Arthur H (2006) Ghana: sector reform and the pattern of the poor (energy use and supply). Paper presented at the International Bank for Reconstruction and Development Meeting on Energy Sector Management Assistance Program, Washington, DC. Energy Commission (2006) Strategic national energy plan (2006-2020)–main report. Available via http://www. energycom.gov.gh/files/snep/MAIN%20REPORT% 20final%20PD.pdf Eshun G, Austin K (2016) Ghana: oil & gas regulation 2016. International comparative legal guides. Available via http://www.iclg.co.uk/practice-areas/oil-and-gas-regula tion/oil-and-gas-regulation-2016/ghana#chaptercontent5 Ghana Statistical Service (2013) 2010 population & housing census: national analytical report. Available via http://www.statsghana.gov.gh/docfiles/2010phc/ National_Analytical_Report.pdf Government of Ghana (2010) National energy policy. Available via http://ghanaoilwatch.org/images/laws/ national_energy_policy.pdf

Ghana: Mineral Policy Government of Ghana (2015) The budget statement and economic policy of the government of ghana for the 2016 financial year [highlights]. Available via http:// www.mofep.gov.gh/sites/default/files/news/2016%20B UDGET%20-%20HIGHLIGHTS.pdf Institute of Economic Affairs (2010) Natural resource management in ghana: a case for constitutional amendment. Constitutional review series 8. Available via http:// ieagh.org/wp-content/uploads/2014/06/crs-8.pdf%20 Kapika J, Eberhard A (2013) Ghana: pursuing the standard model for power-sector reform. In: Kapika J, Eberhard A (eds) Power-sector reform and regulation in Africa: lessons from Ghana, Kenya, Namibia, Tanzania, Uganda and Zambia. HSRC Press, Cape Town, pp 195–232 Kwatia G (2015) Energy, utilities & mining in Ghana. PwC. Available via http://www.pwc.com/gh/en/indus tries/energy-utilities-mining.html Laary D (2016) Ghana’s electricity, water tariffs drive inflation. The Africa report. Available via http://www.theafricareport.com/West-Africa/ghanaselectricity-water-tariffs-drive-inflation.html Ministry of Finance (2014) Final report-production of oil & gas sector GHEITI report for 2012 and 2013. Available via https://eiti.org/files/2012-2013%20Ghana% 20EITI%20Oil%20and%20Gas%20Sector%20Report. pdf OECD (2015) Ghana becomes the 50th member of the OECD development centre. Available via http://www.oecd.org/ dev/ghana-joins-oecd-development-centre.htm UNDP (2015) Human development report 2015. Available via http://hdr.undp.org/sites/default/files/2015_ human_development_report_1.pdf VRA (2016) Power generation: facts & figures. Available via http://www.vra.com/resources/facts.php

Ghana: Mineral Policy Joe Amoako-Tuffour African Center for Economic Transformation (ACET), Cantonments, Accra, Ghana

About Ghana 1. Officially called the Republic of Ghana, Ghana is a sovereign unitary presidential constitutional democracy, located along the Gulf of Guinea and the Atlantic Ocean, in the

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subregion of West Africa.1 Ghana has a land mass of 238,535 km2 and shares boundaries with Cote D’Ivoire on the west, Togo in the east, and Burkina Faso in the north. Established in the 1900 as the British Gold Coast, it gained independence in 1957 and is considered one of the more stable countries in the subregion since its transition to parliamentary multiparty democracy in 1992.2 2. A multicultural nation, Ghana has a population of approximately 27 million (2014), growing at an estimated rate of 2.4% annually, with a variety of ethnic, linguistic, and religious groups. The major ethnic groups according to the 2010 population census are the Akans who form 47.5% of the population, followed by Mole-Dagbon 16.6%, Ewe 13.9%, and Ga-Dangme 7.4%, with the others (Gurma, Guan, Grusi, Mande-Busanga) making up approximately 15%. The top three languages widely spoken are Twi, Ewe, and Fanti.3 According to the 2010 population census, about 74% of the population (over 11 years) is literate, about one-fifth can read and write in English language, and about 71.2% of the population profess the Christian faith, followed by Islam (17.6%). A small proportion of the population profess traditional religion and 5.3% are officially not affiliated to any religion. 3. Ghana has a youthful population of nearly 40% under 15 years and a small elderly population of 4.7% (65 years and over). Urbanization is sharply on the rise as the proportion of the population living in urban areas increased from 43.8% in 2000 to 50.9% in 2010. About 41% of the economically active population (aged 15 years and over) identify themselves as skilled agricultural, fishery, and forestry workers. Approximately 65% of the economically active population are self-employed. The private sector remains the largest employer, accounting for 93% of the economically active persons, of which the private informal sector

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Prepared by Joe Amoako-Tuffour Director of Research, African Center for Economic Transformation, Ghana.

Wikipedia, accessed June 1, 2016. BBC Monitoring www.bbc.com/rev/worldAfrica. 3 Ghana Statistical Service. 2

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remains the largest employer (86%) of the economically active population.

The Economy 4. Gold, cocoa, and recently oil and gas form the backbone of Ghana’s economy. Ghana’s economy began a sustained recovery in the mid1980s (following a near collapse in the 1970s) that continued through the 2000s due to improvements in macroeconomic management, high commodity prices, and in recent years, the advent of oil production and related investments in mining and oil. The economy grew from its annual average of 6.5% in the 2000s to 14% in 2011. The overall real GDP growth, however, has since lost its momentum, slowing down to 7.9% in 2012 and trended downward to 4% and 3.9% in 2014 and 2015, respectively, much of which can be attributed to persistent fiscal imbalances, mounting public debt burden, and a widening infrastructure gap, especially energy. 5. According to the Ghana Statistical Service, the services sector led by telecommunication, banking, and other financial services has become the main driver of growth in Ghana. The sector contributes about 51.9% to GDP, followed by natural resource extraction at 26.6%, and agriculture which has continually slackened in recent years to about 21.8% as at 2015. Relative to sub-Saharan Africa norm, Ghana generally possess sound economics and business environment and fairly welcoming to foreign direct investment.

Ghana’s Mineral Industry 6. Mining is a century old industry in Ghana. Ghana remains the second largest gold producer in Africa after South Africa and tenth largest globally. With an average annual production of approximately 2.6 million ounces since 2003, gold is Ghana’s leading mineral and accounts for 95% of Ghana’s mineral revenue.

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Classification of Reserves 7. Ghana is endowed with a range of minerals, though only a few are actively exploited. Generally, these resources are categorized into traditional and nontraditional minerals. The latter include gold, diamond, manganese, and bauxite. The rest constitute nontraditional minerals. Though Ghana reportedly has various geological data collection, especially in relation to the traditional mineral sector, data on reserves are very difficult to come by. The US Geological Survey only report reserves data for gold on Ghana in its flagship Mineral Commodity Summaries. Ghana’s gold reserves of about 2000 metric tonnes constitute about 3.1% of global gold reserves.4 8. For bauxite, the Kibi reserves are estimated at about 180,000 metric tonnes, while the Anyinahin bauxite reserves range between 350,000 and 700,000 metric tonnes.5 It is unclear the amount of reserves at Awaso home of the country’s only bauxite mine. According to Wikipedia, Ghana’s manganese reserves exceed 60 million metric tonnes. However, KPMG International (2014) reported (citing Consolidated Minerals, a Jersey-based company which owns 90% stake in Ghana Manganese Company) that as of June 2011, the company estimated reserves of manganese carbonate at 24.4 million metric tonnes with a manganese content of 29%. Reserve figures for diamonds are very difficult to obtain. 9. Beyond the traditional minerals, Ghana’s nontraditional minerals include salt, clay, iron, phosphate, copper, nickel, chromium, and uranium. Reserve figures on these minerals are not available at the time of this writing. The growth index of mineral output in Ghana is captured in Fig. 1. Gold is the only mineral with consistent rise in output since 2003. With the exception of diamond, noticeable increase in production of other minerals is due largely to privatization 4

United States Geological Survey (2016). The Chief Executive Officer of the Minerals Commission indicated in a conversation published on the website of Ghana Chamber of Mines in 2015.

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Ghana: Mineral Policy Ghana: Mineral Policy, Fig. 1 Growth index of mineral output (Source: ACET, GCM data with 2003 as base year)

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Source: ACET, GCM data with 2003 as base year

of the state companies responsible for manganese and bauxite production. Exports from the sector have been on a steady rise since 2003 peaking in 2012 due largely to the hike in gold prices experienced in 2012 and to the inflow of new foreign investments in the sector (Fig. 2). On the average, solid mineral exports constitute 40% of all Ghana exports. Foreign investment in the sector has been steady at an average of US$776 million between 2003 and 2012 with keen investor interest in gold production.

10. Ghana’s fiscal benefits from mining activities have been notable. Between 2003 and 2014, the sector on average contributed 16% to the domestic tax revenue and also led in royalty and corporate income tax payments. For example in 2012, royalties and corporate income tax payments were $916 million and $228 million, representing approximately 16.9% and 4.2% of total tax revenues, respectively.6 About 1.6% of all formal sector jobs in Ghana are created by the large-scale mining and quarrying sector employing about 19,000 workers7 and more if the direct and induced effects are factored in. It is estimated 6

https://eiti.org/files/2012-2013_final_Mining_Sector_ Report.pdf accessed May 15, 2016. 7 Ghana Living Standard Survey (GLSS6) conducted in 2014.

by the Minerals Commission of Ghana that additional 1 million people (though difficult to confirm) are engaged in small-scale mining activities across the country. 11. Ghana’s long history in mining and the setting up of training institutions solely for mining has endowed the country with a large pool of skilled and semiskilled labor from which new mining firms can tap into to develop new fields and operate mines. Indeed, most mining companies in the West African subregion tap into these experts to train, develop, and operate mining field in other countries.

General Approach to Mineral Policy 12. Current policy direction in the mining sector focuses on creating “an enabling environment” for the private sector to undertake exploration and production activities. This reflects a diminished role of the state in the mining sector and a focus on attracting investors into the sector. This policy approach was adopted as part of the mining sector reforms begun in the mid-1980s and in line with worldwide trends spearheaded by the World Bank.8 The decade prior to the reforms was characterized by steady decline in mineral production, macroeconomic instability, and 8

World Bank (1992), Strategy for Africa Mining, World Bank Technical Paper 181, Washington D.C.

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308 Ghana: Mineral Policy, Fig. 2 Mining sector exports and imports (US$, millions) (Source: ACET Ghana Chamber of Mines, Bank of Ghana)

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6000 5000

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3000 2000 1000 0 2009 2010 2011 2012 2013 Source: ACET Ghana Chamber of Mines, Bank of Ghan

lack of investment in the mining sector. Reforms were aimed at halting the decline in production by attracting financial resources to existing mines for rehabilitation and upgrade of mine infrastructure, improving management practices in state-owned mines, and instituting legal measures to attract investment in exploration for new mines and expansion of old ones.9 13. The current approach contrasts sharply with the regime that emerged and operated for almost two decades after independence, characterized by an active and strong state involvement in all sectors of the economy, including mining. The active role of the state reflected developments in the developing world at the time where permanent sovereignty was declared over natural resources. By the mid- to late 1970s, attempts to attract foreign investment into mining were unsuccessful partly because of the threat of state capture and partly for a host of other reasons, including the lack of foreign exchange to rehabilitate and maintain existing mines. For nearly three decades up to the early 1980, no new mine was opened in Ghana.10 14. During the 1990s, the government continued with the mid-1980s reforms. Again, reforms focused on various fiscal incentives in order to attract investment into the sector. Existing 9

Akabzaa and Ayamdoo (2009). Aryee (2001).

10

mines were rehabilitated with resources from multilateral and bilateral donors. Some mines were put on management contract in order to improve efficiency. Most notably, Ashanti Goldfields obtained substantial funds to undertake expansion and rehabilitation. Tarkwa gold mine, Prestea gold mine, and Akwatia diamond mine were given out to various investors under management contract agreements.11 This was followed by divestment of the state from various mines in order to focus on its role as a regulator in line with worldwide trends in the mining sector.12 15. The period between 1983 and 1998 saw the establishment of new mines and rehabilitation of existing mines. By 1998 about 237 companies (154 Ghanaian and 83 foreign) were prospecting for gold, while 23 were granted mining leases.13 By 2007 there were about 160 companies operating in the mining sector followed by a period of mergers and acquisitions. The ownership structure of the remaining large mining companies is private,

11

Akabzaa and Darimani (2001). For example, in the case of Ashanti Goldfields, the state reduced its stake from 55% in 1993 (through initial public offering and subsequent sale of shares on the Ghana Stock Exchange) to 19% in 1998. The Ghana Bauxite Company saw the state’s stake fall from 55% to 20%. The government sold outright Dunkwa Goldfields and Ghana National Manganese Corporation. Other mines were given out on contract and eventually sold to foreign interest. 13 Minerals Commission Annual Report (1998). 12

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largely foreign-owned with government holding a minority equity interest in all but Newmont mine. Much mining operations in Ghana are in the hands of ten large foreignowned mining companies who in turn engage the services of numerous contract mining companies, mineral exploration companies, and companies that provide allied services.14 16. The government has made various changes to the policy approach adopted in the mid-1980s, especially in the areas of taxation to withdraw some incentives offered to foreign investors. The government has also introduced some regulations in the sector, compelling mining companies to procure greater amounts of inputs from the country (on the back of growing demands for local content). These changes are supported by the Africa Mining Vision (AMV) and ECOWAS Minerals Development Policy and by the government. In 2015, the government launched its maiden minerals and mining policy and is currently engaged in a process to develop a Country Mining Vision (CMV) in line with the AMV.

Legislative and Regulatory Framework and Institutions 17. The change in policy direction in the mid1980s was accompanied by changes in the regulatory and institutional frameworks that govern the sector. Notable among them were the passage of the Minerals and Mining Law (PNDCL 153), PNDCL 154 (which established the Minerals Commission), the Mercury Law (PNDCL 217), the Small-Scale Mining Law (PNDCL 218), PNDCL 219 (which established the Precious Minerals Marketing Corporation), and a new Minerals and Royalty Regulations (LI 1349) (Tsikata 1997). 18. The Ministry of Lands and Natural Resources is entrusted with the management of Ghana’s land, forest, wildlife, and mineral resources.

14

Joe Amoako-Tuffour (2013), Ghana’s Mineral Fiscal Regime: A Baseline Study, Study prepared for the African Centre for Economic Transformation, Ghana.

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The Ministry’s key mandate in relation to mineral resources is in policy formulation and coordination; monitoring and evaluation; validation of policies, programs, and projects; and supervision of sector departments and agencies. Established by the Minerals Commission Law, 1986 (PNDCL 15), the Minerals Commission is the main government agency responsible for governance of the mineral sector. 19. Following the adoption of the 1992 Constitution, the Minerals Commission Act, 1993 (Act 450), was passed to reaffirm its multifaceted role in the mining sector. Act 450 further mandates the Commission as responsible for the day-to-day administration, regulation, and management of Ghana’s mineral resources. The Commission is mandated to advise the sector minister on matters concerning mineral policy and on granting of reconnaissance license, prospecting license, and mining lease. Although originally conceived as a regulator, the Commission has over time also emerged as the promoter for the exploitation of Ghana’s mineral resources. 20. The Precious Minerals Marketing Company (PMMC) was first established as Ghana Diamond Marketing Board in 1963 to purchase and market the country’s diamonds. PMMC was subsequently charged with providing official marketing services for small-scale miners as a way of transforming the smallscale mining sector. PMMC operates gold and diamond purchasing offices in Accra, Tarkwa, and Bolgatanga and has licensed buying agents throughout mining areas in the country. It operates a jewelry plant that converts raw precious minerals into jewelry. 21. The Office of Administration of Stool Lands (OASL) represents the group of traditional authorities and representatives of communities on whose land mining activities take place. Apart from the collection and onward distribution of mineral royalties to stool lands, the relevance of the OASL in mining sector governance is in compensation negotiation and resettlement after licenses are issued for mining activities be in reconnaissance, prospecting, and extraction.

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22. In 1994, the Environmental Protection Agency was established and a new mining environmental guidelines were developed. The table in Annex 1 summarizes the evolution of legislative and regulatory framework that applies to the mining sector. Also in relation to the institutional framework, the Ghana Extractive Industry Transparency Initiative (hosted by the Ministry of Finance) has emerged as an important actor in the mining sector. Its main function is to collect information on tax revenues from relevant government agencies as well as mining companies, reconcile them, and share with the public with aim of increasing transparency in the mining sector. 23. In 2006, the government consolidated some mining laws in the sector (particularly PNDCL 153 and PNDCL 218) into Minerals and Mining Act (Act 703). Notable among the changes made to the regulatory framework were the concessions (largely fiscal) granted to investors under the new mining law. The Act provided further reliefs (in the form of reduction in tax rates) that apply to the sector. Corporate income tax rate, reduced from 45 to 35% in 1994, was further reduced to 25% in 2006. This was, in spite, of increasing gold prices on the international markets. The aftermath of the world financial crisis in 2008 (as well as change in government in 2009) ushered a new phase in the mining sector characterized by some major changes to the mining code. Royalty rate was fixed at 5%, instead of a range from 3% to 6% when almost all companies were paying the lower rate of 3% (Government of Ghana 2011). 24. In 2012, six regulatory instruments were passed on the back of the Minerals and Mining Act. Two of those regulations (LI 2173 and LI 2174) support widespread local content or localization drive that aims at increasing mining benefits that remain in the country. LI 2175 focused on compensation and resettlement, an area which produces substantial conflicts around mining activities. These changes, notwithstanding, the country is still struggling to contain an explosion in a largely unregulated and environmentally destructive artisanal and small-scale mining activities.

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The Minerals Commission in 2016 decided not to recognize them as illegal operators and begun the process to register them and support them in operating within the law. However, the new government which came into office in 2017 signaled its determination to stop the destructive impact of unregulated small scale and illegal mining on the environment, especially on water bodies, overturning the perception that these mining activities are the linchpin to rural economic development. 25. Over the past decade, the sector has benefited from sound policy and regulatory interventions which compares well with best international practices. Ghana scored 63 and placed 15th out of 58 countries on the Natural Resources and Governance index, which coincidentally is the best score for any African country. Transparency and disclosures in mining activities have also increased due to Ghana’s ascension to the EITI initiative as at 2007. The mining code is fairly stable with minor fiscal revisions in 2010, 2013, and 2015. Government’s recent policy interventions in the sector have focused on streamlining small-scale mining operations and promoting responsible mining in Ghana to promote sustainable economic growth.

Annex Annex 1 Chronological List of Legal Instruments and Guidelines that Applies to the Mining Sector 1. Supreme Military Council Decree 5, 1975 2. Investment Code of 1981 (Act 437) 3. Minerals and Mining Law, 1986 (PNDCL 153) (a) The Minerals and Mining (Amendment) Act, 1994 4. Minerals Commission Law, 1986 (PNDCL 154) 5. The Minerals and Royalty Regulations, 1987 (L.I. 1349) 6. Mercury Law, 1989 (PNDCL 217) 7. Small-Scale Gold Mining Law, 1989 (PNDCL 218)

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8. Precious Minerals and Marketing Corporation Law, 1989 (PNDCL 219) 9. Minerals Commission Act, 1993 (Act 450) 10. Local Government Act, 1993 (Act 462) 11. Office of the Administrator of Stool Lands Act, 1994 (Act 481) 12. Environmental Protection Agency Act, 1994 (Act 490) 13. Mining Environmental Guidelines, 1994 14. Water Resources Commission Act, 1996 (Act 522) 15. Operational Guidelines for Mineral Exploration in Forest Reserves for selected Companies, 1997 16. Forestry Commission Act, 1999 (Act 571) 17. Environmental Assessment Regulations, 1999 (L.I. 1652) 18. Review of Mining Environmental Guidelines, 1999 19. Internal Revenue Act, 2000 (Act 592) 20. Environmental Guidelines for Mining in Production Forest Reserves in Ghana, 2001 21. Minerals and Mining Act, 2006 (Act 703) 22. Ghana Revenue Authority Act, 2009 (Act 791) 23. Guidelines for the Preparation of Feasibility study reports, 2009 24. Minerals and Mining (Amendment) Act 2010 (Act 794) 25. Minerals and Mining Regulations, 2012 (a) Minerals and Mining (General) Regulations, 2012 (LI 2173) (b) Minerals and Mining (Support Services) Regulations, 2012 (LI 2174) (c) Minerals and Mining (Compensation and Resettlement) Regulations, 2012 (LI 2175) (d) Minerals and Mining (Licensing) Regulations, 2012 (LI 2176) (e) Minerals and Mining (Explosives) Regulations, 2012 (LI 2177) (f) The Minerals and Mining (Health, safety and Technical) Regulations, 2012 (LI 2182) 26. Income Tax Act, 2015 (Act 896) 27. Code of Practice for Small-Scale Gold Mining Operations 28. Ghana’s Mining and Environmental Guidelines

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29. Mine Closure and Post-closure Policies 30. Guidelines for Corporate Social Responsibility in Mining Communities

References Akabzaa TM, Ayamdoo CA (2009) Towards a fair and equitable taxation for sustainable development financing in Africa: a study on trends and nature of taxation in Ghana’s extractive sector. ISODEC, Accra Akabzaa T, Daramani A (2001) A study of impacts of mining sector investment in Ghana on mining communities. Report prepared for the technical committee on structural adjustment participatory review initiative on Ghana Amoako-Tuffour J (2013) Ghana’s mineral fiscal regime: a baseline study. African Center for Economic Transformation, Cantonments Accra Aryee BNA (2001) Ghana’s mining sector its contribution to the national economy. Resources Policy 27:61–75 Government of Ghana (2011) 2012 Annual Budget Statement and Economic Policy. Government of Ghana, Accra KPMG Global Mining Institute, Ghana Country Mining Guide 2014 Accessed 29 May 2016 Tsikata F (1997) The vicissitudes of mineral policy in Ghana. Resource Policy 23:9–14 United States Geological Survey. (2016) World Bank (1992) Strategy for African mining, World Bank technical paper number 181 Washington DC: The World Bank

Guinea: Mineral Policy Abdoul Karim Kabèlè-Camara1 and Amara Ibrahima Soumah2 1 Centre for Energy, Petroleum, Mineral Law and Policy (CEPMLP), University of Dundee, Dundee, Scotland, UK 2 University of Fribourg-Switzerland, Fribourg, Switzerland

General Information on the Republic of Guinea Geographically, Guinea is situated in West Africa. It is surrounded in the north by Guinea-Bissau, Senegal, and Mali; in the east and southeast by Ivory Coast; in the south by Liberia and Sierra Leone; and in the west by the Atlantic Ocean (see

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Guinea: Mineral Policy, Map 1 Guinea map and basic data. (Source: Arieff, A., Guinea: In Brief, U.S. Congressional Research Service Report (CRS Report), prepared for members and committees of congress, p. 3, 16 October 2014.)

Map 1). The country covers an area of 245,857 km2, which is generally flat along the coast and mountainous in the interior, with four geographic regions: a narrow coastal belt (Lower Guinea); the pastoral Fouta Djallon highlands (Middle Guinea); the northern savannah (Upper Guinea); and a southeastern rain forest region (Forest Guinea). Also known as the water tower of Africa, the Niger, Gambia, and Senegal rivers are among the 22 West African rivers originating in Guinea, primarily in the Fouta Djallon highlands (Winrock International 2005). A constitutional

republic, the power is concentrated within the hands of a president that rules the country assisted by a ministerial cabinet appointed by him. At the district level, leaders are elected, but the president still appoints officials to all other levels of a highly centralized administration. The country is administratively divided into 33 prefectures and one special zone (Conakry). According to the USA State Department, Guinea is a country with approximately 12 million people that has endured more than 50 years of authoritarian rule and severe economic mismanagement prior to a transition to a

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democratically elected government in 2010 (USGS 2016). In 1958, Guinea obtained its independence from the French colonial authority but has since been confronted with numerous obstacles that have confined its ability to achieve its incredible economic potential (Carvalho 2011). Despite being immensely endowed with natural resources, the country is yet to realize a strong and sustained economic development. For instance, over the past few decades, although periods of growth have been observed intermittently, economic improvement has generally been hindered by international isolation, a low base of capital and skills, and governance challenges (Rito Tinto 2014). When it comes to access to basic services and the living conditions of the people, the country development indicators are low notwithstanding the relative progresses realized between 1984 and 2005. For instance, over 50% of the population is reported to live below the poverty line and essential services such as electricity and water supply are weak, while unemployment is prevalent among the youth (Carvalho 2011). Given Guinea’s minerals potential, one of the biggest challenges faced by the country is how it could create more value out of its minerals resources, stimulate foreign investment, and make its mining sector competitive. At the same time, it is also equally important to ensure that the profits derived from the exploitation of natural resources stay in the country and that these are used for development purposes and not stolen by interest groups.

Need of Mineral and Classification of Minerals Reserves Guinea is generally described as being well endowed with abundant mineral wealth. The country is the host of one-third of the world’s proven reserves of bauxite, large reserves of high-grade iron ore, considerable diamond and gold deposit, and undetermined quantities of uranium to name but a few (Winrock International 2005). This explains why the mining sector is responsible for more than 70% of the country’s exports and about

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80% of its foreign currency earning (CIA World FactBook 2010). However, although Guinea’s mineral deposit abundance could make it one of Africa’s richest countries, the 2009 United Nations Human Poverty index ranks the country as being among the poorest in world, at 170 out of 182 countries. With respect to Guinea’s bulk minerals industry, it is important to note that Guinea is host to the world’s biggest known bauxite reserves, at about 25 billion metric tons, a commodity used to produce aluminum (CIA World FactBook 2010). In 2013, the country was considered to be among the world’s top five producers of bauxite and accounted for 7% of global bauxite production, which accounted for 96% of the country’s total exports in the same year (Omayra Bermúdez 2013). Bauxite in Guinea is produced from the “Debele,” “Friguia,” and “Sangaredi” mines all located in the northern part of the country (see Map 2). Numerous companies operate in the area with the largest one being “Companie des Bauxites de Guinee” (CBG), a joint venture between the Government of Guinea, Alcoa, and Rio TintoAlcan. Another company operating in this sector is Compagnie des Bauxites de Kindia (CBK), a joint venture between the Government of Guinea and Russki Alumina (Rusal), which produces roughly a fifth of CBG production quantities (Kormos and Kormos 2011). Rusal also operates FRIGUIA, an aluminum refinery operated via the Rusal subsidiary Alumina Compagnie de Guinee (ACG). Finally, the other major consortium in operation is the Guinea Alumina Corporation (GAC), which includes BHP-Billiton, the Global Alumina Corporation, the Dubai Alumina Corporation, and the Mubadala Development Company (Kormos and Kormos 2011). Guinea also has considerable iron ore reserves, which is a product used to produce steel, a commodity largely considered as the second most significant mineral commodity for the global economy after oil. For instance, the well-known Simandou high-grade iron ore deposit located in the southeast of the country is estimated at roughly 4 billion metric tons. This deposit is projected to be one of the biggest in Africa and will alone make the West Africa region one of the

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Guinea: Mineral Policy, Map 2 Map of Guinea’s bauxite potential. (Source: Ministry of Mine and Geology, Republic of Guinea – Mining Sector: Building Strong

Partnership for Success, power point presentation to Invest in Guinea Conference, 2015.)

world’s foremost iron ore exporters, comparable with established producers like Brazil and Australia (Mining Weekly 2011). But up until now, many of the iron ore projects in Guinea are in a nascent stage including the Simandou North (Blocks 1 and 2), the Simandou South (Blocks 3 and 4), the Simandou South (Zogota), the Forécariah, and the Kalia projects (Omayra 2013). In February 2013, the Government of Guinea approved a social and environmental impact assessment for the Simandou South (Blocks 3 and 4) project. An investment framework for the project was expected to be finalized by the first half of 2014 (Rio Tinto 2014). Moreover, the development of the Simandou South (Zogota) and the Simandou North (Blocks 1 and 2) projects remained on hold pending the resolution of a mining rights dispute between the government and joint-venture partners BSG Resources Ltd. of the United Kingdom and Vale S.A. of Brazil. The Map 3 illustrates the Simandou project potential compared to that of the rest of West Africa. Another pending iron ore project in Guinea is the one lead by Bellzone Mining plc from the United Kingdom. The company initially

announced the start of its iron ore deposit preproduction at the Forécariah Mine in December 2012 and then informed the government of Guinea that it would not proceed with further development of the mine in 2013 (Belzone Mining 2014). The company subsequently declared that it would rather concentrate all its effort in developing its other iron ore assets in Guinea, the Kalia project, which is considered to have better prospects for development given the recent decrease in the international price of iron ore. In September 2014, a feasibility study of the Kalia project was conducted and it was concluded that it was a viable project based on the Joint Ore Reserves Committee (JORC) projections that estimated the project to account for about 59.8 million metric tons (Mt) at 54.1% iron and estimated resources (inclusive of the 59.8 Mt. of reserves) of 124.2 Mt. at 53.5% iron (Bermúdez-Lugo 2013). The development plan for Kalia envisioned the building of a mine with a production output of 7 Mt. per year of iron ore at a grade of 58%, the overall cost of which is estimated to be USD 865 million (Arieff 2014).

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Guinea: Mineral Policy, Map 3 Overview of iron ore mining industry in Guinea and that of its neighbors. (Source: Public data from the Ministry of Mines and Geology of Guinea.)

Assessment of Guinea’s Other Economics Sectors’ Potential In addition to possessing a very large share of mineral resources that include the world’s largest known reserves of bauxite (aluminium ore) and substantial deposits of high-grade iron ore, Guinea’s also hosts vast resources of diamonds, gold, uranium, and potential (as yet unverified) offshore oil and gas reserves. Moreover, the country also has a considerable hydroelectric and commercial agricultural potential. Despite having its economy greatly depend on the mining sector, over three-quarters of the country’s workforce is employed primarily in agriculture (Arieff 2014). Guinea’s potential for agriculture is regarded as one of the biggest in the West African region and is supported by significant water and forest resources. For instance, seven major rivers in West Africa have their source in Guinea and 15% of Guinea is under forest cover. Moreover, with up to 400 billion m3 of rainfall a year, 6.2 million hectares (ha) of arable land, 364,000 ha of

irrigable land, levels of sunshine that allows the production of several crops throughout the year, 300 km of Atlantic coastline, an abundance of fishery resources, as well as a climate suited to the production of livestock, Guinea is well positioned to be the breadbasket of West Africa (USAID 2016). The agriculture sector in Guinea offers several investment opportunities including: the construction and management of processing centers, the construction and maintenance of storage facilities, enterprises to produce agricultural inputs and packaging, the large-scale production of crops such as fruits, vegetables, rice, cashew, coffee, cocoa and cotton, the creation and development of agricultural production poles to boost agroindustrial value chains, and livestock production and processing. These opportunities should be considered from a subregional perspective, and investors can leverage Guinea’s strategic positioning along key infrastructure projects such as the transnational coastal road that will run from Lagos to Dakar linking markets across West Africa.

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Furthermore, additional infrastructure construction is underway in Guinea such as growth corridors, ports, airports, hydroelectric dams, and railways that will open up markets and reduce the cost of doing business (Winrock International 2005). Another sector that could boost Guinea’s economic activities is its forest resources. The country has 156 classified forests (forest reserves), covering approximately 1,186,611 ha. It also has two national parks (Haut Niger with 54,000 ha, and Niokolo-Badiar with 38,200 ha) and two biosphere reserves (Réserves de la Biosphère Nimba and Massif du Ziama Biosphere Reserve). The majority of Guinea’s dense humid forests form parts of trans-boundary forests connected to Liberia and Ivory Coast. The highest point in Guinea is Mount Nimba (1752 m), which is the site of the Nimba Biosphere Reserve, and where the three countries intersect. Despite its forest potential, it must be highlighted that Guinea also suffers from forest degradation mainly caused by population migration and the influx of refugees, clearing for agriculture, uncontrolled grazing, burning, and hunting. For instance, the closed forest is fragmented and disappearing as a result of bush fires and clearing. The deforestation rate is estimated at 30,000 ha a year, and the majority (26,000 ha) of it occurs in the humid dense forest zone (Winrock International 2005). As for the hydrocarbons sector, Guinea’s petroleum code dates back to 23 September 1986. It constitutes the legal framework for the various stakeholders involved in the exploration or mining of liquid and gaseous hydrocarbons. With the recent attraction for Guinea’s offshore hydrocarbons, the petroleum code is under revision by a commission consisting of members from the Ministry of Commerce, the Ministry of Environment, the Office of the President, and other government departments. Among the companies operating in Guinea’s offshore hydrocarbons is the Houstonbased Hyperdynamics Corporation through its subsidiary SCS Corporation, which holds a 77% interest in its offshore (Soto-Viruet 2011). Hyperdynamics holds a 100% working interest and is the operator of one of the largest offshore exploration concessions in West Africa offshore

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Guinea. The company is making preparations to drill a deepwater exploration well in the first half of 2017 at the Fatala turbidite fan prospect. Multiple play types, leads, and prospects have been identified in this largely unexplored basin at the intersection of several prospective exploration trends within the Atlantic Transform Margin, where Hyperdynamics holds a concession covering approximately 5000 km2. Recently, following the exit of Tullow Oil and Dana Petroleum as Hyperdynamics’ partners in the drilling consortium in August 2016, Hyperdynamics negotiated a Production Sharing Contract Amendment with the Government of Guinea on 15 September 2016, granting an extension of the Concession to 22 September 2017 (Hyperdynamics 2016).

Mining Policy and Regulatory Framework According to Barberis (1998), political will is the key element that defines the approach taken by a country towards international mining companies (IMCs) that want to develop natural resources. The major concern of IMCs investing in a country is how receptive a host country will be to their investment, and one way to determine a country’s political will is through its contract law or legal policies. Generally, obtaining the rights to explore or mine derive from a grant given by a legal authority that may originate either in a mining law, a mining agreement (MA), or both. These two documents constitute, with some exceptions, the method used by host countries (HCs) to manifest their political will towards international investors that want to venture into the mining sector. One way of understanding whether the political will of a country is conducive for foreign investors that want to develop natural resources is to investigate prior investment ventures if the country uses MAs as parts of its regulatory system. The reason behind this is that “agreements about the shared value of resources, likes other agreements, may project a common policy with respect to formation and distribution of many values” (Arsanjani 1981). The intention of these

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MAs, according to Wälde (1992), is to adjust to the varying HCs’ political views and attitudes. Therefore, when it comes to foreign investment, MA has been defined as follows: “Agreement between a nation-state and a private foreign entity about the development of resources and the production, processing, transportation, and marketing of goods from resources. The more comprehensive resources brought together by development agreement include natural resources, such as raw materials; human resources, such as skill and labour; or industrial resources, such as technology; and so forth” (Arsanjani 1981). In Guinea, the administration of the mining sector is the prerogative of the ministry of mines and geology and any other government agencies that are affected by the mining activities undertaken by the IMCs in the country. With regards to the development of its mineral sectors, the Government of Guinea has been confronted with two dilemma: on the one hand with the need to develop an attractive tax system and on the other hand with the need to obtain a fair share of its mining rent. Finding equilibrium between these interests has been appreciated in light of the historical evolution of the mining sector and the political regimes. Starting from September 1958 to April 1983, the mining legal regime in Guinea was characterized by the existence of a contractual practice. Accordingly, there was no mining code to govern the sector. Faced with this legal vacuum, it became necessary to regulate the existing practice, hence the enactment of a mining code in 1986. This code despite being enacted but was deemed unattractive by foreign investors. Therefore, it was not until the second republic with the adoption of the Constitution in 1990, and the debates on the design of a new mining policy in 1991 that the country will adopt a new mining code by Law L/95/036/CTRN of 30 June 1995. Guinea’s first mining code was indeed inspired by French civil law and was revised and amended in 1995 and 1998, respectively. Under these codes, mining companies (MCs) could purchase up to 100% interest in mining projects (Bermúdez-Lugo 2015). The government,

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however, has a right to “founder’s shares” for mineral commodities such as gold, diamond, and other precious stones. This government’s “founder’s shares” are equivalent to 15% of the capital of the company, and no financial contributions may be required from the government for such shares. On the other hand, for minerals such as bauxite, iron ore, and solid hydrocarbons, no such free shares are authorized. For these commodities, the government stakes are negotiated with the investor (Bermúdez-Lugo 2015). In 2011, Guinea’s mining legal framework was modernized (by Law L/2011/N
006/CNT of 09 September 2011) with the aim to create a more equitable system and this necessitated the review of the existing mining contracts. The policy approach taken by the new mining code was completely different from the previous one: “(a) it introduced a host of new requirements relating to social, environmental, and accountability mechanisms and established stringent requirements on license applicants, including a detailed feasibly study with environmental and social impact assessments; (b) it contained tighter controls on license-holders, intended to deter the freezing of mining assets without meaningful investment; (c) it introduced corporate social responsibility standards including on employment and training, as well as industry standards and anticorruption measures that made Guinea a leader in the subregion; and finally, (d) the new legal regime took the bold step of requiring that all mining agreements negotiated under its regime comply with all of its provisions, though it is not clear that this requirement is being strictly observed” (NRGI 2016). Despite the numerous attempts to make the reform process of Guinea’s mining legal framework participatory and inclusive, some of the amendments that came with the 2011 mining code were not welcomed by the private sector. The opposition to the code was so strong that, soon after the law was passed, an amendment procedure for the new mining code was initiated, but this time it was more considerate of private sector concerns and perspectives (law L/2013/ 053/CNT of 8 April 2013).

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Internationals Membership The Republic of Guinea is member of various of international conventions including the World Trade Organization (WTO), The Extractive industries Transparency Initiative (ITIE), The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) and subregional conventions such as African Union (AU), The Economic Community of West African States (ECOWAS), Organization for the Harmonization of Corporate Law in Africa (OHADA) to name but a few.

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that a strategic response should be given based on the following three objectives that are: (a) Improved design and implementation of mining legislation, regulations, internal controls and external oversight mechanisms; (b) More informed decision-making in the mining sector, consistent with a long-term development strategy and with effective internal and external checks and balances; (c) Strengthened transparency mechanisms and increased use of extractive sector data for accountability (NRGI 2016).

References Concluding Statement In summary, Guinea has tremendous potential for investment in its minerals sector. These minerals development projects prospect were even instrumental to the World Bank’s forecasts of GDP increases in Guinea and its neighboring countries through to 2017 (WBG 2012). For instance, in 2012, it was forecasted that, for Guinea, the development of its bulk minerals projects had the potential to double the country’s real GDP by 2015 and to greatly enhance the prospects for future GDP growth through 2017. But in March 2014, West Africa experienced the largest outbreak of Ebola in history with multiple countries affected. Guinea was at the heart of the epidemic. Hence, the mining operations that continued mostly uninterrupted during 2014 included that of the Debele and Sangaredi bauxite mines, the Kiniero, Lefa and Siguiri gold mines (WBG 2012). The resource dichotomy across the continent has prevailed for years and Guinea is not an exception. It is indeed shocking that mineral deposits were discovered more than 70 years ago and branded as the most promising around the world not only for Guinea but for any potential investors have not yet been developed because of the same issues that have long been faced by resource-rich countries – the legal, regulatory, institutional, and governance challenges. In order to overcome these challenges, the Natural Resource Governance Institute (NRGI) proposes

Arieff A (2014) Guinea: in brief, U.S. Congressional Research Service Report (CRS Report), prepared for members and committees of congress, 16 Oct 2014 Arsanjani MH (1981) The inclusive enjoyment of resources through agreements. In: International regulation of internal resources. University Press of Virginia, Charlottesville Barberis D (1998) Negotiating mining agreements: past, present and future trends. Kluwer Law International, The Hague Belzone Mining plc, company report 2014, p. 34 Bermúdez-Lugo O (2015) The mineral industry of Guinea – 2013 minerals yearbook (Guinea advance release), U.S. Department of the Interior/U.S. Geological Survey, p 20.1, Dec 2015 Bermúdez-Lugo O, Menzie DW (2015) The Ebola Virus Disease Outbreak and the Mineral Sectors of Guinea, Liberia, and Sierra Leone, U.S. Department of the Interior/U.S. Geological Survey, Fact Sheet 2015–3033, Apr 2015 Carvalho AL (2011) Republic of Guinea: an analysis of current drivers of change, Noref Working Paper, Norwegian Peace Building Centre, Mar 2011 Davis A (2016) Simandou economic impact report investment framework update. Rio Tinto company Hyperdynamics (2016) Overview of the Guinea project. Available at https://www.hyperdynamics.com/guinea_ project.htm Kormos R, Kormos C (2011) Towards a strategic national plan for biodiversity offsets for mining in the Republic of Guinea, West Africa with a focus on chimpanzees Mining Weekly report, 24 January 2011 Ministry of Mine and Geology (2015) Republic of Guinea – mining sector: building strong partnership for success, power point presentation to Invest in Guinea Conference, 2015 Omayra Bermúdez L (2015) The Mineral Industry of Guinea – 2013 Minerals Yearbook (Guinea advance release), U.S. Department of the Interior/U.S. Geological Survey, p. 21

Guinea: Mineral Policy Rio Tinto (2014) Simandou Economic Impact Report – Investment Framework Update Soto-Viruet Y (2011) The mineral industry of Guinea, 2010 minerals yearbook (Guinea Advance Release), U.S. Department of the Interior/U.S. Geological Survey, Sept 2011 Summary of case study – Guinea, Study prepared by Winrock International including Chris Kopp and Boubacar Thiam, Sept 2005

319 USAID (2016) Guinea: food security and nutrition. Available at https://www.usaid.gov/guinea/environment Wälde TW (1992) Innovations in petroleum and mining licensing. In: IBA Section on ENRL (ed) Energy and resources law 92, proceedings of the 10th advanced seminar in petroleum, minerals, energy and resources law, 5–10 April 1992. Graham and Trotman and IBA, Washington, DC World Bank, 2012 report, p. 2–3 www.state.gov

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Hungary: Mineral Policy Zoltán Horváth, Tamás Fancsik and Gábor Katona Mining and Geological Survey of Hungary, Budapest, Hungary

General Overview Hungary is a relatively rich country by mineral resources point of view and has a relatively high potential for exploration and exploitation of different types mineral resources. Complex legislation supports the mineral policy with a Mining Law having long tradition and a developing Mineral Resource Assessment and Utilization Action Plan with innovative objectives to improve mineral policy. Mineral policy serves the needs of the economy and the society of Hungary with strict environmental considerations. The economy of Hungary is a medium-sized, structurally, politically, and institutionally open and stable in Central Europe and is part of the European Union’s (EU) single market. The economy of Hungary went through a transition from a socialist to a market type one in the early 1990s, similarly to other former Eastern Bloc’s countries. In 2018 the Gross Domestic Product (GDP) of Hungary per capita is 16,162 USD in 2018 according to the World Bank database (2019) shows significant increase comparing with GDP per capita in 2017 (14,458 USD). In 2018, the total GDP was 157,883

billion USD according to the World Bank country profile. The educational background of the Hungarian population is increasing further. Based on the labor force statistics in 2011, more than one-fifth of the age group between 25 and 64 years has a diploma, 31% has a maturity qualification and 29% completed the secondary technical school. Only 18% has lower qualifications (primary school). Between 2005 and 2010, the ratio of the population with higher education increased by 4%, and the ratio of those who have secondary school-leaving exam also slightly increased (KSH data 2011). Hungary has rich culture and folklore tradition, famous for folk music, folk dances, craft traditions, and national holidays. A national institution called Hungarian Heritage House was founded in 2001 with the purpose of preserving and promoting the Hungarian folk tradition. The population of the country on 1 January 2014 was 9,877,365, which has been decreasing since 1981 as a result of low birth rate and high mortality rate. Thereby the structure of the population can be considered as an aging society. In August 2010, 4,302,827 housing units were registered in Hungary. Hungary’s stable economic recovery will provide an opportunity to ensure sustainable growth in the next decade. In 2017, the Hungarian economy grew strongly after a temporary stagnation. It is estimated that GDP has grown over the potential level through a favourable external environment and adaptable internal policies. Employment has

© Springer-Verlag GmbH Germany, part of Springer Nature 2023 G. Tiess et al. (eds.), Encyclopedia of Mineral and Energy Policy, https://doi.org/10.1007/978-3-662-47493-8

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made a record. The improvement of the labour market situation is mainly due to the economic recovery, but the policy measures contributed to the growth. Economic growth continued to be driven mainly by domestic demand.

Resource Efficiency According to the global and national needs in the last decades Hungary has accelerated environmental developments. In addition to environmental concerns, the improvement of resource efficiency seen in the past decades was partly due to economic restructuring (closing inefficient industries and mines, investments into improving efficiency of the remaining industries, substantial shift towards the service sector). In the last few years, new environmental challenges, growing public consciousness, sustainable consumption and production, resource efficiency, and green economy have become the focus of policy making. The fact that Hungary is not abundant in most of the resources means that security of supply remains a main concern. Furthermore, the growing costs of resource use and the restricted access to many resources have also led to the recognition of water, soil, land, and biodiversity, as resources of strategic importance. As a consequence, improving resource efficiency is an overall objective of several policies in Hungary. The issue is addressed in the National Environmental Programme in a comprehensive way. Sectorial plans, in particular, the Waste Management Plan is elaborated in accordance with the thematic programs of the National Environmental Programme (European Environmental Agency 2011).

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minerals (58%). Regarding mineral, the primary aggregates’ production was 25 million tons in 2011 (Brown et al. 2014). 4.5% of this quantity was sold as export; however, around 0.4 million tons of import were required. In Hungary the ore mining has a great tradition (bauxite, base metals, iron, uranium) but the last manganese mine was closed in 2016 (Úrkút, Transdanubian Central Range). However, a call for tender regarding the exploration and use of copper ore and precious metal and non-ferrous metal ore (RecskI-II. mining sites) has published in 2018. Remarkable potential can be considered for each of the above-mentioned ore resources. Mining of construction materials has a great importance (approximately 1000 active quarries and around 3000 registered sites). The largest deposit of the copper resource is situated close to Recsk, consisting of a near-surface and a deep underground mineralization with accessory gold, silver, molybdenum, and rhenium. The mining of perlite is also significant, giving 5% of the world production (8% considering also perlite used by cement industry) (Farkas 2002). Additional data for energy minerals and the related exploitation can be found in the Table 1. Ore mining in Hungary decreased significantly in the past few years. There was only a single mine producing bauxite in 2016, the production of manganese ore (Úrkút) terminated in mid-2016. Nonmetallic minerals including construction aggregates (sand, gravel, crushed stones) and other industrial minerals (dimension stone, clays, perlite) have sufficient resources and proper potential for future exploitations. These minerals can be found in 3255 deposits and are mined in around 800 quarries. Data for geological and exploitable resources with production data in previous year are seen on Table 2.

Need of Minerals (nonmetallic and ores) The Structure of Mining Industry The distribution of domestic material consumption in Hungary is as follows: the total material consumption in 2018 was 151497478 tons according to the EUROSTAT (2018). Hungary used about 23434 481 tons (15%) fossil energy materials, 37347410 tons (25%) biomass, 3271356 tons (2%) metals, and 87 381 484 tons nonmetallic

The non-energy mineral raw material production has been significantly transformed over the last decades. Mineral raw material extraction companies are largely foreign but there are also many examples of 100% domestic-owned entrepreneurs. With the development of the economy

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Hungary: Mineral Policy, Table 1 Summary of mineral resources and reserves in Hungary (calculated values, MBFSZ 2019)

Mineral resource Crude oil Conventional Non-conventional Natural gas Conventional Nonconventional CO2 gas Black coal Brown coal Lignite Uranium ore Iron ore Bauxite Lead - zinc ore Copper ore Precious metals Manganese ore

Production in 2018 Mm3 kt

Geologic resources as of 1 Jan 2019 Mm3 kt

Exploitable resources as of 1 Jan 2019 Mm3 kt

0.97 0.00

274.27 537.11

23.60 58.52

2099.73 3.92 135.32

187133.76 923318.1 44539.50

76909.29 1565328.52 28662.80

2.083 53.606 7843 0 0 4.2 0 0 0 19

1,915,321b 2,241,135 4,232,806 31,483 43,664 79,783 100,817 726,459 36,507 51,982

1,625,042 3,195,910 5,678,435 31,483 43,151 123,955 90,775 781,170 36,588 78,868

Attenuation is higher than loss (Geologic reserve + attenuation
loss
pillar ¼ Exploitable reserve)/quantity of exploitable coal + interim waste rock may exceed the registered geologic reserve!

b

Hungary: Mineral Policy, Table 2 Nonmetallic resources and reserves of Hungary, with production

Main raw material category Industrial minerals Peat, paludal (swampy) mud, calcareous silt Raw materials for cement and lime industry Construction and dimension stone Sand Gravel Ceramic raw materials Other Non-metallic raw materials

Geologic resources/million m3/

Exploitable resources/million m3/

1 Jan 2018 1711.90 538.35

Production in 2018

1 Jan 2019 1714.33 538.21

Production in 2017 1 Jan 1 Jan 2018 2019 544.67 525.84 305.09 305.03

1000 m3 1126.70 269.49

1000 m3 1382.56 141.99

1135.44

1134.16

567.48

566.20

1160.72

1278.48

1998.68

2027.14

1360.22

1318.09

5073.05

6318.88

866.47 3653.07 999.66 58.33 10961.90

867.79 3640.33 1006.73 59.76 10988.45

628.96 2340.00 648.98 46.55 6441.95

627.49 2315.22 651.61 46.68 6356.15

7450.39 14442.14 1341.57 2108.65 32972.7

7387.90 17681.87 1360.48 2321.71 37873.9

and the liberalization of the market, the domestic utilization of raw materials, maintenance and development of production can only be ensured

by economic benefits and the production of the desired quality products. Aggregates (sand, gravel, crushed stones) have high importance

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Hungary: Mineral Policy

Hungary: Mineral Policy, Fig. 1 Production of nonmetallic mineral resources between 2002 and 2016 (https://mbfsz. gov.hu/sites/default/files/file/2020/02/12/mineral_resources_of_hungary_2018_01_01.pdf)

according to the growing construction industry on both areas: house building and linear infrastructure: highways, roads, and railways. The perlite production is stable and the dominant part of the extraction is for export according to the innovative utilization of this mineral raw material (insulation, water-cleaning, soil remediation). Most of the mining, mainly quarrying sites (nearly 3000), carry out extraction of nonmetallic raw materials; they not only provide a significant contribution to the employment but also represented an important basis of the construction material supply. Related to the mineral raw materials, mining waste is an important secondary raw material. In this respect, quantitative data is available in National Mineral and Geothermal Energy Resource Inventory. In the Mining and Geological Survey of Hungary (MBFSZ), risk-based inventory of the mine waste facilities has been published, in order to comply with a Directive of

European Union (http://elginfo.elgi.hu/mwf/ mwf2012E.pdf). The construction-demolition waste is registered by a distinct building authority and environmental inspectorate (Fig. 1).

Exports and Imports Exports from Hungary rose 1.5% year-on-year to HUF 2857 billion in May 2018. In the first 5 months of 2018, shipments went up 4.8% to HUF 13,670 billion. Imports to Hungary grew 4.4% year-on-year to HUF 2673 billion in May 2018. In the first 5 months of 2018, purchases surged 6.7% to HUF 12,670 billion (https://tradingeconomics.com/hun gary). Hungary’s export market share continues to recover. The aftermath of the financial crisis resulted in a cumulative loss for the country’s export market share, which totaled 24%. Since 2013, Hungary has increased its export market share, and by the end of

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2016, it regained one third of the previous losses. New export capacities and improved cost competitiveness supported the recovery. Additional export capacities are in the pipeline, in particular in the automotive sector, which is expected to facilitate improvements in export performance (COM/2018120 2018).

Classification of Resources and Reserves The Mining and Geological Survey of Hungary (MBFSZ) maintains data on minerals reported by mine operators according to the traditional “Russian” classification system of resources. This system allocates mineral resources to A, B, C1, and C2 categories based on geological knowledge. Uncertainty of categories from A to C2 is 10%, 15%, 30%, and 60%, respectively. No data are recorded in category D having more than 60% uncertainty, i.e., prognostic resource but there is a project of potential assessment of both energy (hydrocarbon, geothermal energy, coals) and nonenergy minerals (ores, non-metallic mineral raw materials). Until 2007, economic parameters such as real cost were included in the inventory but are not recorded any more. A joint project of the predecessor of the MBFSZ (Hungarian Office for Mining and Geology as MBFH and the Geological and Geophysical Institute of Hungary as MFGI) (Horváth et al. 2016; Horváth and Sári 2016) mapped the opportunities of interoperation between the national reporting and inventory and international systems (CRIRSCO-aligned standards like JORC and PERC and United Nations classification framework, the UNFC). Methodology was provided and tests confirmed that harmonization for recently available data in the inventory can be done in case of the knowledge of in homogeneity (complexity) and by involvement of an expert or a competent person. The modifying factors of CRIRSCO Template are considered during the procedures of professional authorities, before the issue of so-called Technical Operating Plan for extraction. The harmonization of resource categories of CRIRSCO can be carried out at most cases; the possibility to harmonize reserves is limited. Conversion for coal, ore and non-metallic minerals were

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made on project level (Horváth et al. 2016; Horváth and Sári 2016). The classification and inventory of hydrocarbons can be done according to the SPEPRMS, for which practice and legislation are under development. Harmonization according to UNFC2009 can be carried out for both solid and fluid minerals if first steps (harmonization according to CRIRSCO and PRMS) have been realized. Additional data are required in all cases for harmonization. Hungarian mine operators apply the traditional classification, although, it is not regulated by any legislation. The Hungarian inventory of mineral resources is maintained by the MBFSZ, whose supervisory body is the Ministry of Innovation and Technology. A public database of minerals is available on the website of MBFSZ (www.mbfsz. gov.hu), containing data on active mines and quarries (e.g., name, location, coordinates, type of mineral, and owner). A national summary of the mineral resource inventory is also available on the same webpage. Quantitative and qualitative data on the mineral resources of individual active mines are confidential.

Mineral Policy A comprehensive Hungarian mineral policy addressing all kinds of minerals is in progress. An important document establishing the solid mineral strategy is the Parliamentary Resolution No. 77/2011 (14.10) on the implementation of the National Energy Strategy approved by the Hungarian Parliament in 2011. Based on the authorization of this resolution, the “Mineral Resource Assessment and Utilization Action Plan” (ÁCST) was prepared. This document deals mainly with domestic energy minerals (hydrocarbons, geothermal energy, coals, uranium), rare earth elements, and carbon capture and storage but declares the need of a domestic mineral resource management strategy addressing all kinds of minerals. The administrative plan of the Action Plan, which has gone through social and administrative consultation, determines target values, and ways to achieve them. The mineral strategy will be a comprehensive document within the determining industry strategy, specifying action areas for all

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types of minerals. It will aim to take into account not only extraction but also processing, use, and even transport and recycling, supporting sustainable mineral management. This Document was approved by the Government and the Governmental Resolution No. 1345/2018 (VII. 26) was published in the official Hungarian Official Gazette. The most important legislative document of mining is the Mining law (Act No. XLVIII. 1993 on Mining), its implementing legislation (Governmental Decree No. 203/1998. (XII.19.) on the implementation of the Act No. XLVIII. 1993 on Mining) control the whole sequence of the mining activity from the exploration phase to the closure of mines with the relevant obligatory data service. Statute (Governmental Decree No. 161/2017. (VI. 28.)) of the MBFSZ describes the related tasks supporting the mineral policy. The terms “mineral deposit” and “mineral management area” are included in the first (Substantive requirements of establishing investigation) and ninth appendices of the Governmental Decree No. 314/2012 (08.11) on Integrated Urban Development Strategy and Instruments of Urban Planning, and Certain Urban Planning Specific Legal Institutions. It is important that the legislation allows confirming both terms, which are essential in urban development, with relevant professional information. Therefore up-to-date information on accessible minerals in a certain area, settlement or in its neighbourhood should be available, supporting the mineral resource management. Consequently, solid, first of all non-metallic minerals are addressed by several legislations. Permitting procedure is almost completely “one-stop-shop,” since permitting from exploration through exploitation and prolongation of Technical Operating Plan for extraction to recovery is done by the former Mining Inspectorates (recently Government Offices, Mining Departments), involving the relevant professional authorities (e.g., environmental, cultural heritage); however, administration of land ownership and land use change belongs to other authorities. MBFSZ has both first- and secondlevel authorities. The competencies of MBFSZ are mostly second instance proceedings in respect of the Government Office, but in some cases

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MBFSZ is competent at first instance: e.g., royalty; inventories for mineral resources and mining activities, approval of technical safety management system for the design, establishment, and operation of hydrocarbon transmission pipelines; establishing a geologically stable repository for underground storage of hydrocarbons and of carbon dioxide; and the related activities and its supervision. This Survey operates also the geological and geophysical repository and the core-sample warehouse. Geologist experts who are authorized by the MBFSZ based on specific legislation play an important role in preparation of final reports of exploration and in validation of annual reports. An area can be classified as minerals designation in that case only if it has mineral resources. These areas are recorded in the National Mineral Resource Inventory. According to the Act No. XXVI. 2003 on National Land Use Plan (so-called “mineral resource areas”), minerals designation are included in the land use plans of counties and special regions. The mineral resource areas should be taken into account during developing land use plans; and can be used only in a way which does not make impossible their future extraction. Mineral resource management is realized through the work permitting procedure and data management and the collection of royalty.

Regulatory Framework Act XLVIII of 1993 on Mining: The purpose of this Act is to regulate the mining of mineral raw materials, prospecting for and exploitation of geothermal energy, the establishment and operation of pipelines conveying hydrocarbon, and the activities related thereto, in harmony with the protection of life, health, security, the environment and property, and the management of mineral and geothermal Energy resources. Mining activities shall be carried out by mining entrepreneurs in possession of a license issued by the mine supervision (Regional Government Offices, Mining Department). Licenses shall be granted for the prospecting for mineral raw materials, for the exploration, exploitation and utilization of waste

Hungary: Mineral Policy

stock-piles, and for the construction and operation of hydrocarbon conveying pipelines. The State shall be entitled to a mining royalty for the mineral raw material exploited by the mining entrepreneur as well as for the geothermal energy generated. The Act further makes provision for the following: security zones and protective pillars; mine plans; safety of mining; landscape rehabilitation; mine damages; right to use water; fines; state supervision of mining activities; etc. The mining Act has been amended several times. The most related legislation is the Government Decree No. 203/1998. (XII. 19.) on the implementation of the Mining Act. The Mining Act covers the mining-related activities: geological and geophysical survey, minerals exploration, exploitation, break in operation, mineral processing, closure, and remediation. It deals with all mineral commodities: energy resources (hydrocarbon, geothermal energy, coal and CO2 storage) and non-energy resources (non-metallic solid minerals and ores); establishment, utilization and termination of waste rock heaps; maintenance, utilization, and closure of open spaces of closed underground mines; underground activities of nonmineral exploitation purposes using mining methods; the utilization of geothermal energy with the exception of groundwater; establishment and operation of pipelines conveying hydrocarbons; all facilities and equipment necessary for the above activities. Water, even groundwater, holding geothermal energy, works of water management in general, and manual goldwashing are not subject to the Mining Act. In Hungary, regarding the mineral resources the owner is the state.

Membership Hungary is not represented on EITI, although the country has a UNCTAD and OECD membership, and since 1995, it is a member of the WTO. The latest OECD report from the country highlighted that Hungary displays better performance regarding organizational structure, developments of public administration; moreover, the structural and institutional system of the state has become more streamlined through renewal of public

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administration. These measures including the previous structural reforms can contribute to the longterm economic growth. Hungary furthermore has extensive relationship with the following international associations by the Hungarian companies: EUROMINES (MBSZ), EURACOAL (Mátra Power Plant Ltd.), IMA (OMYA Hungary Ltd.), UEPG European Aggregates Association (MBSZ UEPG Member). All of these associations are organized into an EU-level committee, called EU Sectoral Social Dialogue Committee of the Mining Industry and OGP (Association of Oil and Gas Produces – MOL Plc.).

Concluding Statement The development of a comprehensive mineral policy of Hungary including specific strategy for all types of mineral resources is in progress which is supported by the publication of the Mineral Resource Assessment and Utilization Action Plan. Hungary is a landlocked country in Central Europe with appropriate resources from construction aggregates and medium-level supply from energy minerals. The access to minerals is a major challenge in Hungary like in other European countries. The potential of mineral resources is high for even if recently only a single mine produces bauxite periodically. The tender of the Recsk I and Recsk II porphyry ore deposit has been published in 2018. The major part of Hungarian mineral production is made up of nonmetallic minerals, mainly aggregates. Mineral resource management is realized through the activity of the Mining and Geological Survey of Hungary (MBFSZ) and Mining Departments of regional Government Offices (together Mining Authority) by checking and approving extraction technical operational plans. The Hungarian mining law regulates all kinds of mining activities, exploration, extraction, recovery, mining waste management, etc. It details the rules related to royalty, licenses, concessions, and reporting. Mining permitting procedures are regulated by the Mining Law and its implementing legislation. Since April 2015, when regional mining

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authorities and several other authorities were merged to form so-called Governmental Offices, the permitting procedure is one-stop-shop. Operators are required to report exploration and exploitation data to the Mining Authority when the exploration is completed, during the exploitation annually and after stopping the mine/quarry. The type of reporting standard is not prescribed by law; however, traditionally the “Russian” system is used in Hungary. The MBFSZ aims to improve the current classification system. According to the outcomes of this project, the interoperability between national and international systems (CRIRSCO aligned standards and UNFC) can be done in case of sufficient knowledge on the complexity of a mineral deposit and the involvement of an expert or competent person is recommended.

Hydrometallurgical Processing Geol Soc 146(2):107–120. http://epa.oszk.hu/01600/ 01635/00452/pdf/ KSH (2011) Hungarian Central Statistical Office (KSH) website. http://www.ksh.hu/docs/hun/xstadat/xstadat_ eves/i_wnt001b.html Mineral Resource Assessment and Utilization Action Plan (2018) Governmental resolution no. 1345/2018 (VII. 26), Hungarian Official Gazette, 27440–27442 World Bank country profiles, Hungary. http://data. worldbank.org/country/hungary

Hydrometallurgical Processing ▶ Hydrometallurgy

Hydrometallurgy References Brown TJ, Idoine NE, Hobbs SF, Mills AJ (2014) European mineral statistics 2008–2012. A product of the world mineral statistics database. British Geological Survey, Nottingham, p 353 COM/2018–120 (2018) European semester: assessment of progress on structural reforms, prevention and correction of macroeconomic imbalances, and results of in-depth reviews under regulation (EU) no 1176/2011 {COM(2018) 120 final} EUROESTAT (2018) Material flow accounts European Environmental Agency (2011) 2011 survey of resource efficiency policies in EEA member and cooperating countries. Country information on resource efficiency policies, instruments, objectives, targets and indicators, institutional setup and information needs Country Profile: Hungary (based on Gabriella Pajna, Hungarian Ministry of Rural Development) Farkas G (2002) A korszerűperlitbányászatés -előkészítéskialakulása, várhatófejlődése (The development of modern mining and processing of perlite), Építőanyag (Construction materials) 54/2. https://doi.org/10. 14382/epitoanyag-jsbcm.2002.9 Horváth Z, Sári K (2016) The modernisation of the Hungarian non-metallic mineral resource inventory based on the international mineral classification framework and reporting standards. Bull Hung Geol Soc 146(2):147–154. http://epa.oszk.hu/01600/01635/ 00452/pdf/ Horváth Z, Sári K, Fodor B (2016) Overview of the international mineral resource classification framework and the reporting standards for solid minerals. Bull Hung

Carlos Frias Gomez Cobre Las Cruces, Spain

Synonyms Hydroprocessing; Hydrometallurgical processing

Definition The role and importance of hydrometallurgy is growing every day not only in the field of primary raw materials but also in secondary materials and recycling of scraps and wastes containing metals. Anyway, in line with the goals and objectives of this Encyclopedia, the content of this chapter will be mainly focused on hydrometallurgical technologies and processes applied to the benefit of metallic minerals. Basically, hydrometallurgy consists in processing metallic minerals to yield high-purity and high-value metals through the use of water or water-based solvents with or without microorganisms’ interaction. Hydrometallurgy and electrometallurgy are disciplines of the extractive metallurgy science;

Hydrometallurgy

here electrometallurgy is considered to be a part of the hydrometallurgy. Compared with pyrometallurgy, the hydrometallurgy is more environmentally friendly and has the ability to deal with complex and low-grade metallic ores, which are more abundant every day in open mines and in new discoveries. A wide range of textbooks on fundamentals and process applications of hydrometallurgy are available (Habashi 1999; Havlik 2008; Free 2013; Schlesinger et al. 2011; Crundwell et al. 2011), including also many proceedings from periodical international symposiums and conferences (International Symposium on Hydrometallurgy 2014; International Aluminium 2013; CopperCobre International 2013; Lead-Zinc International 2010; International Biohydrometallurgy 2013; International Nickel-Cobalt 2013) organized by well-reputed institutions such as The Minerals, Metals and Materials Society (USA), Canadian Institute of Mining, Metallurgy and Petroleum (Canada), and Gesellschaft der Metallurgen und Bergleute e.V. (Germany). In addition, specific journals (Hydrometallurgy Journal; Minerals Engineering Journal; The Journal of the Minerals) are published since decades ago, which provides the most advanced and comprehensive scientific developments and applications in hydrometallurgical field.

Historical Background Hydrometallurgy source is linked to alchemists that tried the transmutation of some metals to gold. The modern hydrometallurgy was born in 1887 when two important processes were invented: gold recovery through cyanide treatment and the Bayer Process for aluminum production (Habashi 2005). Since the beginning of the twentieth century, the development and application of numerous leaching processes was started. In particular, hydrometallurgy of copper had fast development thanks to the antecedents of industrial scale copper recovery by means of iron scraps (the Cementation process) in Rio Tinto mines (Spain) and in Germany.

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The First World War favored the development of zinc electrolytic process for brass production. During the Second World War many innovative leachants and new solvents and specific equipments were developed for military uses such as uranium and other radioactive elements recovery, separation, and purification. In 1960s and 1970s, bacterial leaching started to be applied for copper extraction from sulfide ores and copper solvent extraction (SX) and electrowinning (EW) was extensively used; as a result, currently, over 20% worldwide copper production is yielded through SX-EW routes. Nowadays, hydrometallurgical technologies are the key to extract scarce and added value rare earth elements and special metals for high-tech applications such as solar panels manufacturing and displays and components for electronic devices. Besides, nanomaterials production is mainly based on hydrometallurgical and electrometallurgical techniques (Handbook of Nanoelectrochemistry 2016).

Metallic Ores Hydroprocessing Any hydrometallurgical application includes three sequential stages:

usually

(i) The metal of interest is transferred from the ores to the aqueous media by means of leaching. (ii) The pregnant solution is then conditioned, purified, and concentrated to fit recovery requirements. (iii) The metal is then recovered from the purified solution as added value final product, most frequently in the form of electrodeposited cathodes or ingots. Alternatives to process run-of-mine (ROM) metallic ores by hydrometallurgical ways are conceptually summarized in Fig. 1. Leaching is the essential hydrometallurgical operation and is based on aqueous solutions chemistry, thermodynamic of the physicochemical systems, and chemical reactions engineering that includes process and equipment

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Hydrometallurgy

Hydrometallurgy, Fig. 1 Conceptual diagram summarizing metallic ores hydroprocessing alternatives

Run-of-Mine Ores

COMMINUTION

CONCENTRATION FLOTATION

DUMP LEACHING

ORE LEACHING

CONCENTRATE LEACHING

SOLUTION PURIFICATION

SOLUTION PURIFICATION

SOLUTION PURIFICATION

METAL WINNING

METAL WINNING

METAL WINNING

HIGH PURITY METAL

design. The thermodynamics of a reaction system will determine its capability to extract the valuable metal from the metal-bearing ores while the yield and rate of such a transfer will depend on the reaction mechanism and kinetic. The slowest reaction step will control the overall rate of the leaching process. Leaching conditions are adapted to metallic ores characteristics: – Dump leaching. The uncrushed ROM ores are stacked on a leach pad immediately after mine extraction. Next, the ore is irrigated with a solution that leaches the desired metal out of the ore. The leach solution composition depends on the type of metal to be extracted, for example, cyanide solution to recover precious metals and acid solution to recover copper metal. The dump leaching approach is

HIGH PURITY METAL

HIGH PURITY METAL

normally used to treat low-grade ores assuming that poor recovery rate is achieved due to bigger size materials. – Leaching of ground ores. After ROM ores comminution, the ground ore is sent to leaching stage where it is processed under suitable conditions: • Heap Leaching. The ore is stockpiled with or without agglomeration in underlined pads and then the chemical solution is sprayed over the top ores, percolates through the pads, and is collected downwards and sent to purification and further metal winning. The heap leaching technique is broadly applied, for instance, in Chile to leach copper oxides and also in Nevada (USA) to extract gold by cyanidation. In case of metal sulfides ores,

Hydrometallurgy

the leach is carried out by bacterial-assisted oxidation, named heap bioleaching process. • Stirred Tank Leaching and Vat Leaching. The metallic ore is contacted with the leach solution composition in tank reactors or vats to extract the valuable metal. Next, solid and liquid are separated and a pregnant solution is obtained for further processing to yield finally the high-value metal. This type of leaching process normally runs at atmospheric pressure and below water boiling point. On the other hand, chemical leaching or bioleaching approach is applicable for sulfides ores oxidation and/or leaching in agitated tanks. For example, this technique is used for direct atmospheric leaching of high-grade copper ores, e.g., chalcocite ores. – Leaching of concentrates. The ground ore is concentrated through different methods such as gravity, froth flotation, and magnetic separation, etc., to remove the gangue materials and to produce an upgraded concentrate that is fed to the leaching process running at the required conditions: • Stirred Tanks Leaching. The leaching reactors can run at atmospheric pressure and below water boiling point, e.g., below 95  C. This technique known as Direct Atmospheric Leaching is applied in several zinc refineries in Europe and China to treat commercial zinc concentrates. • Autoclave Leaching. It is a high-intensity process to oxidize metallic sulfides and is industrially used to process zinc concentrates, copper concentrates, and also to oxide gold sulfide minerals before treatment through traditional cyanidation process. For example, over the last 20 years, more than 15 pressure oxidation plants were implemented for gold extraction; those autoclaves usually operate over 200  C and the process is designed to be autothermally controlled. • Bioleaching. In this process, bacteria like Acidithiobacillus ferrooxidans catalyses metallic sulfides oxidation and leaching in large agitated tanks with injected oxygen.

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The technology is well proven in many industrial plants, mainly in the field of gold pyrite/arsenopyrite biooxidation prior to treatment in a cyanidation plant. Main limitation of this technology is long residence-time requirement, usually 3–5 days. Recently, thermophile bacteria applications have been developed running above 70  C to reduce substantially bioleaching time; however, process scale up to commercial size failed. Another less common technique is called “Insitu Leaching” and is concerning with metals dissolution from minerals present in underground ore body in place. This technique is less costly than other conventional metal extraction processes but presents difficulties to control the leaching efficiency through leach solution injection and pregnant solution extraction. Normally, it is used to treat low-grade ores, and there are several industrial operations to extract mainly uranium and copper metal. A critical issue in metallic sulfide ores is generation of acid mine drainage (AMD) that is formed when sulfide minerals in rocks are exposed to oxidizing conditions; such oxidation reactions are catalyzed and accelerated by the bacteria present in the mine waters, producing sulfuric acid and releasing metals like iron, copper, zinc, etc., to waters that are pumped out of the mine. Hydrometallurgy plays an important role to deal with those acidic waters and innumerable technologies and processes have been developed including active or passive treatment and chemical or biochemical methods. By nature, leaching is a selective process, in such a way that unwanted components remain unattacked in the ore matrix and the metal value is released to the pregnant solution. However, the reality shows that impurities and other elements (iron is a good example) are usually co-leached; in consequence, the efficient purification of the leach solution is critical for subsequent high-quality metal production. The solution purification can be achieved using one or a combination of the next known hydrometallurgical methods:

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– – – – –

Precipitation Carbon adsorption Solvent extraction Ion exchange Membrane separation: reverse osmosis, nanofiltration, ultrafiltration – Electro-assisted techniques, e.g., electrodialysis After purification and concentration or conditioning, valuable metals are usually recovered by two ways: – Physicochemical process: crystallization, cementation, etc. – Electrochemical process: electrodeposition, etc.

Key Applications The process flow sheets are properly adapted to fit requirements of every specific ores and concentrates. Following is briefly described widely used hydrometallurgical industrial applications to extract base metals such as copper and zinc. See next Figs. 2 and 3. – Hydrometallurgical processing of copper ores: • (Habashi 1999) Copper oxide ores. The copper bearing oxidized ores are easily leached in acidic media; therefore, they are processed in dump leaching or heap leaching spread areas irrigated with diluted sulfuric acid; copper metal is then released into solution, percolates through the pad, and is finally collected in dedicated ponds. Next, copper pregnant solutions are treated by means of solvent extraction and electrowinning (Cu SX-EW), obtaining copper cathodes. This technology approach is nowadays broadly used in Chile and USA copper mines. • (Havlik 2008; Free 2013) Copper sulfide ores. The sulfidic ores do require chemical oxidation or biological oxidation to leach and facilitate copper metal dissolution. For

Hydrometallurgy

instance, Acidithiobacillus ferrooxidans and Leptospirillum ferrooxidans are two of the most important bacteria in heap bioleaching of copper sulfide at ambient temperature. In case of secondary copper sulfides, e.g., chalcocite or covellite, heap leaching or bioleaching is usually applied for low-grade copper ores, while atmospheric leaching in stirred tanks is utilized for high-grade copper ores for instance in Las Cruces mine (Spain) and Sepon mine (Laos). In case of chalcopyrite ores, which are more difficult to leach, new bioleaching technologies are currently under development in some places, such as Escondida mine in Chile (Gentina and Acevedo 2013). Once the copper metal goes to solution, then solvent extraction and electrowinning techniques (Cu SX-EW) are employed to yield copper cathodes. • (Free 2013) Copper concentrates. Typically, commercial copper concentrates contain mainly chalcopyrite and bornite minerals, etc. and are normally treated through copper smelting (e.g., in flash furnace) and further electrorefining techniques; at the end of the process, pure copper is collected on cathodes. It is remarkable that over 70% of worldwide copper metal production is obtained through smelting and electrolytic refining ways; for example, large and modern copper smelters include Codelco Norte (Chile), Jiangxi Copper Corp. Guixi (China), and Aurubis Hamburg (Germany), all of them using Outokumpu flash furnace. In copper electrorefining process, frequently there are other metals that are recovered as valuable coproducts or by-products, e.g., Ni, Co, Au, and Pt. For instance, nickel goes into solution as ions and then is extracted and purified to produce nickel salts or nickel cathodes; other more noble metals, such as gold or platinum group metals fall to the bottom of the cell as an “anode sludge” that is collected and later processed to separate, refine, and recover those high added-value metals (Fig. 2).

Hydrometallurgy

333

Cu Ores

[1]

[3]

[2]

Oxide ores

Sulphide ores

DUMP OR HEAP LEACHING

HEAP BIOLEACHING

Sulphide ores or concentrates

ATMOSPHERIC OR PRESSURE LEACHING

ROASTING

Gases SOLVENT EXTRACTION

SOLVENT EXTRACTION

SOLID/LIQUID SEPARATION

LEACHING

H

Residue ELECTROWINNING

ELECTROWINNING

SOLID/LIQUID SEPARATION

SOLVENT EXTRACTION

Residue

Cu CATHODES

Cu CATHODES

ELECTROWINNING

Cu CATHODES

SOLVENT EXTRACTION

ELECTROWINNING

Cu CATHODES Hydrometallurgy, Fig. 2 Copper metal extraction through hydrometallurgical processing

– Hydrometallurgical processing of zinc ores: • (Habashi 1999) Zinc oxide, carbonate, and silicate ores. Those zinc-bearing ores are not amenable to conventional processing applied to sulfide ores; however, it is demonstrated that oxide, silicate, and carbonatebased zinc ores can be suitably processed through atmospheric leaching in sulfuric acid, followed by iron, aluminum, and silica removal, and then, zinc is selectively extracted by solvent extraction and electrowinning (Zn SX-EW), enabling production of SHG zinc. The plant of reference in this field is Skorpion mining-metallurgical

plant in Namibia, yielding 150,000 tpa zinc cathodes. • (Havlik 2008) Zinc sulfide ores and concentrates. Over 80% of the world’s zinc is produced from sulfidic zinc ores (ZnS) by using hydrometallurgical techniques after concentrate roasting. The pressure leaching of zinc concentrates was initially developed by Sherritt Gordon in Canada, and later, it has been applied worldwide in many other hydrometallurgical plants, having the advantage to do not produce sulfur dioxide or dusts, but instead it produces elemental sulfur. In the roasting process, the concentrate is brought to a temperature of more

334

Hydrometallurgy Zn Ores

[1]

[2]

Sulphide ores or concentrates

Oxide, silicate ores or concentrates

ATMOSPHERIC OR PRESSURE LEACHING

PRESSURE LEACHING

ROASTING Gases

SOLID/LIQUID SEPARATION Residue

SOLID/LIQUID SEPARATION

LEACHING

ATMOSPHERIC LEACHING

IRON REMOVAL

SOLID/LIQUID SEPARATION

SOLID/LIQUID SEPARATION

Residue

SOLVENT EXTRACTION

Residue

ELECTROWINNING

Residue

SOLID/LIQUID SEPARATION

IRON REMOVAL

ZINC DUST PURIFICATION

SOLID/LIQUID SEPARATION

Residue

Zn CATHODES Cements

Residue

ZINC DUST PURIFICATION

ELECTROWINNING

Cements

Zn CATHODES

ELECTROWINNING

Zn CATHODES

Hydrometallurgy, Fig. 3 Zinc metal extraction through hydrometallurgical processing

than 900  C where zinc sulfide converts into the more active zinc oxide or calcine and sulfur dioxide, which subsequently is converted to sulfuric acid. The zinc calcine is leached with recycled electrolyte to extract zinc content; next, zinc sulfate solution is subjected to purification with zinc

dust to remove impurities like copper, cadmium, cobalt, etc., before being finally sent to electrowinning to render zinc cathodes. Atmospheric leaching of zinc concentrates has been implemented in several refineries in Finland, Norway, and China aiming to

Hydrometallurgy

increase zinc capacity production but avoiding incremental acid generation. In zinc hydrometallurgical processes, there are some metals recovered as valuable by-products such as cadmium, germanium, gallium, and indium. Those by-products are currently much appreciated because they are utilized for photovoltaic solar panels manufacturing (Fig. 3).

Future Directions Within the extractive metallurgy field, the role of hydrometallurgy will be more and more relevant in the future because metallic ores become more complex and having lower grade. On the other hand, the hydrometallurgy science has to face important challenges in the twenty-first century, such as: – Development of more eco-efficient and energy-efficient technologies, process, and equipment. Some examples includes: (i) conductive polymers for electrolytic applications, (ii) new catalytic reactors, (iii) hydro process intensification to improve plant and equipment efficiency and markedly shrinking their size, (iv) faster and more cost-effective bioleaching and bioremediation applications, etc. – More effective recovery/separation methods covering diverse areas: (i) more resistant and selective membranes for specific requirements; (ii) next generation of high-selectivity extractants for diverse application, on one side, massive metals production, and on the other side, rare metals and special metals efficient recovery; (iii) less toxic reagent to replace cyanide for gold recovery, etc. – Increased linking and collaborative approach in between hydrometallurgy and nanotechnologies and nanomaterials development, production, and utilization, e.g., use of nanoparticles to achieve more efficient and selective impurities removal.

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– To achieve industrial applications of new hydrometallurgical technologies based, for instance, on ionic liquid materials for electrochemical processes and metals winning.

References Copper-Cobre International Conference (2013) Last event: 2013 copper-cobre international conference, 1–4 Dec 2013, Santiago Chile Crundwell F, Moats M, Ramachandran V, Robinson TG, Davenport WG (2011) Extractive metallurgy of nickel, cobalt and platinum group metals, 1st edn. Editor: Elsevier B.V., ISBN-10: 0080968090, ISBN-13: 9780080968094 Free ML (2013) Hydrometallurgy: fundamentals and applications, 1st edn. Editor: Wiley. ISBN-10: 1118230779, ISBN-13: 9781118230770 Gentina JC, Acevedo F (2013) Application of bioleaching to copper mining in Chile. Electronic Journal of Biotechnology 16(3) Issue of 15 May 2013 Habashi FA (1999) Textbook of hydrometallurgy, 2nd edn. Editor: Métallurgie Extractive Québec, ISBN-10: 2980324779, ISBN-13:9782980324772 Habashi, FA (2005) Short history of hydrometallurgy. Hydrometallurgy Journal 79: 15–22, Elsevier B.V Handbook of nanoelectrochemistry: electrochemical synthesis methods, properties, and characterization techniques. Editors: Mahmood Aliofkhazraei, Abdel Salam Hamdy Makhlouf. Springer International Publishing, Switzerland, 2016. ISBN-10: 3319152653, ISBN-13: 9783319152653 Havlik T (2008) Hydrometallurgy: principles and applications, 1st edn. Editor: Woodhead Publishing series in metals and surface engineering, ISBN-10: 1845694074, ISBN-13: 978–1845694074 Hydrometallurgy Journal. Editor-in-Chief: Jochen Petersen, Elsevier B.V International Aluminium Conference (2013) Last event: 28th international aluminium conference, 17–19 Sept 2013, Geneva International Biohydrometallurgy Symposium (2013) Las event: IBS’2013, 20th international biohydrometallurgy symposium, 8–11 Oct 2013, Antofagasta International Nickel-Cobalt Symposium (2013) 3–7 Mar 2013, San Antonio International Symposium on Hydrometallurgy (2014) Last event: Hydro’ 2014, 7th international symposium on hydrometallurgy, 22–25 June 2014, Victoria Lead-Zinc International Symposium (2010) Last event: 2010 lead & zinc international conference, 3–6 Oct 2010, Vancouver Minerals Engineering Journal. Editor in Chief: B.A. Wills, Elsevier B.V

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336 Schlesinger ME, King MJ, Sole KC, Davenport WG (2011) Extractive metallurgy of copper, 5th edn. Editor: Elsevier B.V., ISBN-10: 0080967892, ISBN-13: 9780080967899 The Journal of the Minerals, Metals and Materials Society. Editor: Maureen Byko, Springer International Publishing

Hydroprocessing

Hydroprocessing ▶ Hydrometallurgy

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Indentures ▶ Australia: Extractives

Parliamentary

Agreements

and

India: Energy Policy Shibananda Sengupta1 and Debasish Shome2 1 Ex-Geological Survey of India, Calcutta, India 2 Department of Geological Sciences, Jadavpur University, Kolkata, India

General Information on India The citizens of the Indus Valley civilization, a permanent settlement that flourished between 2800 BC and 1800 BC, practiced agriculture, domesticated animals, used uniform weights and measures, made tools and weapons, and traded with other cities. Evidence of well-planned streets, drainage system, and water supply reveals their knowledge of urban planning, which included the world’s first urban sanitation systems and the existence of a form of municipal government. The Mughal economy functioned on an elaborate system of coined currency, land revenue, and trade. Gold, silver, and copper coins were issued by the royal mints which functioned on the basis of free coinage. The political stability and uniform

revenue policy resulting from a centralized administration under the Mughals, coupled with a well-developed internal trade network, ensured that India, before the arrival of the British, was to a large extent economically unified, despite having a traditional agrarian economy characterized by a predominance of subsistence agriculture dependent on primitive technology. After the decline of the Mughals, western, central, and parts of south and north India were integrated and administered by the Maratha Empire. After the loss at the Third Battle of Panipat, the Maratha Empire disintegrated into several confederate states, and the resulting political instability and armed conflict severely affected economic life in several parts of the country, although this was compensated for to some extent by localized prosperity in the new provincial kingdoms. This period was followed by British Era (1793–1947). From the beginning of nineteenth century, British East India Company’s gradual expansion and consolidation of power brought a major change in the taxation and agricultural policies, which tended to promote commercialization of agriculture with a focus on trade, resulting in decreased production of food crops (Kumar 2005). India is presently the second most populated country in the world with 1.3 billion people (as in 2016). It occupies 2.4% of the world’s land area. Rural population accounts for 72.2%. It is politically divided into 36 Provincial States. It has more than two thousand ethnic groups. They belong to different religious philosophy.

© Springer-Verlag GmbH Germany, part of Springer Nature 2023 G. Tiess et al. (eds.), Encyclopedia of Mineral and Energy Policy, https://doi.org/10.1007/978-3-662-47493-8

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Total population is divided on different religious groups namely Hindu (79.80%), Islamic (14.23%), Christian (2.3%), Sikhs (1.72%), Buddhist (0.7%), Jain (0.37%), and others (0.89%) (Ghosh and Singh 2015). India is a member of trade organizations, namely WTO, UNO, SAPTA, BRICS, G20, SAARC, and SCO. The economy of India is the seventh largest economy in the world measured by nominal GDP and the third largest by purchasing power parity (PPP). The country is classified as a newly industrialized country, one of the G-20 major economies, a member of BRICS, and a developing economy with an average growth rate of approximately 7% over the last two decades. Maharashtra is the wealthiest Indian state and has an annual GDP of US$220 billion, nearly equal to that of Portugal, and accounts for 12% of the Indian GDP followed by the states of Tamil Nadu (US$140 billion) and Uttar Pradesh (US$130 billion). India’s economy became the world’s fastest growing major economy from the last quarter of 2014, replacing the People’s Republic of China. Mass impoverishment and destitution of farmers, and in the short term, led to numerous famines.

Need of Primary and Renewable Resources India is well endowed with both primary and renewable energy resources. Coal, oil, and natural gas are the three primary commercial energy sources. India’s energy policy, till the end of the 1980s, was mainly based on availability of indigenous resources. Coal was by far the largest source of energy. However, India’s primary energy mix has been changing over a period of time. India now ranks third among the coal producing countries in the world. Being the most abundant fossil fuel in India till date, it continues to be one of the most important sources for meeting the domestic energy needs. It accounts for 55% of the country’s total energy supplies. Through sustained increase in investment, production of coal increased from about 70 MT

India: Energy Policy

(million tonnes) (MoC 2005) in early 1970s to 382 MT in 2004/2005. Most of the coal production in India comes from open pit mines contributing to over 81% of the total production, while underground mining accounts for rest of the national output (MoC 2005). Despite this increase in production, the existing demand exceeds the supply. India currently faces coal shortage of 23.96 MT. This shortage is likely to be met through imports mainly by steel, power, and cement sector (MoC 2005). India exports insignificant quantity of coal to the neighboring countries. The traditional buyers of Indian coal are Bangladesh, Bhutan, and Nepal. Power Access to affordable and reliable electricity is critical to a country’s growth and prosperity. The country has made significant progress towards the augmentation of its power infrastructure. In absolute terms, the installed power capacity has increased from only 1,713 MW (megawatts) as on 31 December 1950 to 118,419 MW as on March 2005 (CEA 2005). The all India gross electricity generation, excluding that from the captive generating plants, was 5,107 GWh (gigawatt-hours) in 1950 and increased to 565,102 GWh in 2003/2004 (CEA 2005). Energy requirement increased from 390 BkWh (billion kilowatt-hours) during 1995/1996 to 591 BkWh (energy) by the year 2004/2005, and peak demand increased from 61 GW (gigawatts) to 88 GW over the same time period. The country experienced energy shortage of 7.3% and peak shortage of 11.7% during 2003/2004. Though, the growth in electricity consumption over the past decade has been slower than the GDP’s growth, this increase could be due to high growth of the service sector and efficient use of electricity. Per capita electricity consumption rose from merely 15.6 kWh (kilowatt-hours) in 1950 to 592 kWh in 2003/2004 (CEA 2005). However, it is a matter of concern that per capita consumption of electricity is among the lowest in the world. Moreover, poor quality of power supply and frequent power cuts and shortages impose a heavy burden on India’s fast-growing trade and industry.

India: Energy Policy

Coal The Indian coal industry was nationalized in the early 1970s. While the production of coal increased from 70 MT (million tonnes) at the time of nationalization to 382 MT in 2004/2005; the national coal industry has always been producing less coal than the actual demand leading to a shortage situation. The situation became more serious as emphasis increased on coal-based power plants in last few years. The shortages led to backing down of many power plants. Loss of generation due to short supply of coal during the year 2004/2005 was estimated at 3,588 million units. Against a projected demand of 405.1 MT by the Planning Commission, indigenous coal supply in 2004/2005 was 387.2 MT. Coal accounts for over 50% of India’s commercial energy consumption and about 78% of domestic coal production is dedicated to power generation. This dominance of coal in India’s energy mix is not likely to change till 2031–2032. Since prices were de-controlled, the sector has become profitable primarily as a result of price increases and the rising share of open cast production. India would need to augment domestic production and encourage thermal coal imports to meet its energy needs. Such a cost advantage of imported coal over imported gas is likely to continue for some time in the future. Oil and Natural Gas The latest estimates indicate that India has around 0.4% of the world’s proven reserves of crude oil. The production of crude oil in the country has increased from 6.82 MT in 1970/1971 to 33.38 MT in 2003/2004 (MoPNG 2004). The production of natural gas increased from 1.4 BCM (billion cubic meters) to 31.96 BCM during the same period. The quantity of crude oil imported increased from 11.66 MT during 1970/ 1971 to 81 MT by 2003/2004. Besides, imports of other petroleum products increased from 1 MT to 7.3 MT during the same period. The exports of petroleum products went up from around 0.5 MT during 1970/1971 to 14 MT by 2003/2004. The refining capacity, as on 1 April 2004, was 125.97 MTPA (million tonnes per annum). The production of petroleum products increased from

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5.7 MT during 1970/1971 to 110 MT in 2003/ 2004. India’s consumption of natural gas has risen faster than any other fuel in the recent years. Natural gas demand has been growing at the rate of about 6.5% during the last 10 years. Industries such as power generation, fertilizer, and petrochemical production are shifting towards natural gas. India’s natural gas consumption has been met entirely through domestic production in the past. However, in the last 4/5 years, there has been a huge unmet demand of natural gas in the country, mainly required for the core sectors of the economy. To bridge this gap, apart from encouraging domestic production, the import of LNG (liquefied natural gas) is being considered as one of the possible solutions for India’s expected gas shortages. Several LNG terminals have been planned in the country. Two LNG terminals have already been commissioned: (1) Petronet LNG Terminal of 5 MTPA (million tonnes per annum) at Dahej, and (2) LNG import terminal at Hazira. In addition, an in-principle agreement has been reached with Iran for import of 5 MTPA of LNG. Role of Nuclear and Hydro Power India has to realize development of nuclear power with vast thorium resource to become independent as far as energy requirement is concerned in another 25 years. With present trend in view, it can be predicted that even if a 20-fold increase takes place in India’s nuclear power capacity in next 15 years the contribution of nuclear energy at best be expected to be 4.0–6.4%. India is poorly endowed with Uranium. Available Uranium supply can fuel only 10,000 MW of the pressurized heavy water reactors (PHWR). Further, India is extracting Uranium from extremely low grade ores (as low as 0.1% Uranium) compared to ores with up to 12–14% Uranium in certain resources abroad. This makes Indian nuclear fuel 2–3 times costlier than international supplies. The substantial Thorium reserves can be used but that requires that the fertile Thorium be converted to fissile material. In this context, a three-stage nuclear power program is envisaged which consists of setting up of pressurized heavy water reactors (PHWRs) in the

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first stage, fast breeder reactors (FBRs) in the second stage, and reactors based on the Uranium 233-Thorium 232 cycle in the third stage. It is also envisaged that in the first stage of the program, capacity addition will be supplemented by electricity generation through light water reactors (LWRs), initially through imports of technology but with the long-term objective of indigenization. PHWR technology was selected for the first stage as these reactors are efficient users of natural Uranium for yielding the plutonium fuel required for the second stage FBR program. The FBRs will be fuelled by plutonium and will also recycle spent Uranium from the PHWR to breed more plutonium fuel for electricity generation. Hydropower India’s hydel resources are estimated to be 84,000 MW at 60% load factor. The current utility based installed capacity is 32,326 MW and the average annual generation over the last 3 years (2002–2005) was a 74 Billion Kilowatt hour (BkWh) giving a load factor of 29%. At such a load factor an installed capacity of 1,50,000 MW including some 15,000 MW of small hydel plants (size 3 years of age) speak Irish on a daily basis. Other languages spoken in the home (in decreasing order) are Polish, French, Romanian, Lithuanian, Spanish, German, Russian, Portuguese, Chinese, and Arabic. Economic Ireland is a modern knowledge-based economy focusing on services, the agricultural and food, and high-tech industries such as pharma-chem, medical devices, and information and communications technologies (ICT). The Irish economy is heavily dependent on exports from the food and high-tech sectors and foreign direct investment, especially for the latter. The construction sector in Ireland has been severely affected by the recession and the 2008–2013 Irish banking crisis. However, the sector returned to growth in 2014.

The GDP for Ireland in 2016 is estimated at €293 billion. This represents a growth of 5.2% (in GDP) over 2015 – the highest growth rate in Europe. Employment

Persons in employment in Ireland stands at 2,045,100 (Q1 2017) and employment has been rising steadily since 2011. The unemployment rate has been falling since 2011 and currently (May 2017) stands at 6.4% (CSO 2017). Climate Ireland has a temperate climate. The dominant influence on Ireland’s climate is the Atlantic Ocean. The average annual temperature is about 9  C. In the middle and east of the country, the summer mean daily maximum temperature is about 19  C and the winter mean daily minimum temperature is about 2.5  C.

Ireland’s Mineral Production Exports

The country is one of the largest exporters of pharmaceuticals, medical devices, and softwarerelated goods and services in the world. Ireland’s main economic resource is its large area of Ireland: Mineral Policy, Table 1 Breakdown of population in Ireland in terms of male/female and urban/rural Male 2,354,428 (49.4%) Urban 2,985,781 (62.7%) Source: CSO 2017

Female 2,407,437 (50.6%) Rural 1,776,084 (37.3%)

Total 4,761,865 Total 4,761,865

Ireland is a significant global producer of zinc, ranking 11th in the world, and of lead, silver, and alumina (Table 2). Ireland’s annual production of minerals for the years 2004– 2013 is given in Table 3. Today, Ireland is internationally renowned as a major zinc-lead mining province. Over the last 40 years, a number of significant base metal discoveries have been made, including the giant ore deposit at Navan, Co. Meath (>100 Mt). Zinclead ores were also produced in recent times at Lisheen in Co. Tipperary (closed in 2015) and at

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Ireland: Mineral Policy, Table 2 Significance of Irish mineral production World importance Zinc

European importance Alumina Lead Silver

National importance Cement Gypsum Crushed rock Sand and gravel

Source: Geological Survey of Ireland, unpublished information

Galmoy in Co. Kilkenny (closed in 2012). Previous producers include Silvermines and Tynagh. The combined output from these mines has made Ireland one of the largest zinc and lead producers in Europe. In addition, Ireland has also mined copper at Avoca and Gortdrum and barite at Ballynoe, Lady’s Well, Benbulben, and Tynagh in recent times.

Classification of Mineral Reserves EMD requires that all mineral reserves and resources be reported using the PERC Standard or another CRIRSCO-aligned code.

Mineral Policy The Irish Government’s mineral policy is: To support the development of Ireland’s mineral resources in an environmentally and socially responsible way, recognising the economic contribution that mineral extraction can make, through the provision of well-paid secure jobs in rural areas that often have relatively limited employment opportunities.

These Acts are to be consolidated in a new Minerals Development Act which will also update and modernize many of the provisions of the existing Acts. At the time of writing, the Minerals Development Bill has been introduced to the Houses of the Parliament. There are also a number of Regulations which have been made under the Acts. Scope Legislation and regulations covering mineral exploration and development in Ireland encompass the minerals listed in the schedule to the main Act (Table 4). Those shaded (oil shale and natural gas) in the Table have been removed from the schedule in subsequent amendments to the Act. Petroleum and natural gas are covered by separate legislation. Acts The Acts are: Minerals Development Act, 1940

This is the principal Act and deals with definition of minerals, mineral ownership, prospecting licenses, state mining leases, arbitration, etc. Petroleum and Other Minerals Development Act, 1960

This Act ceased the application of 1940 Act to Petroleum and also made a number of other amendments to that Act. Minerals Development Act, 1979

This Act vests in the minister the exclusive right to work privately owned minerals and provides for permitting of the working of those minerals by third parties, subject to payment of compensation. Minerals Development Act, 1995

Ireland’s Mineral Legislation The Minister for Communications, Climate Action and the Environment has statutory responsibility for regulation of exploration for and development of all minerals, other than stone, clay, sand, and gravel. The Minerals Development Acts, 1940–1999 are the principal legislative instruments which govern activity in this area.

This Act deals with renewals of prospecting licenses and application fees for state mining facilities. Minerals Development Act, 1999

This Act clarifies state ownership of certain minerals and addresses the transfer of the right to compensation under the 1979 Act.

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Source: Exploration and Mining Division, and Geological Survey Ireland, unpublished

Year Commodity Units 2004 2005 2006 2007 2008 2009 1,500,000* 1,800,000* 1,800,000* 1,800,000 1,228,500 806,000 Alumina Tonnes (Al2O3 content) Lead, mine Tonnes 63,800 72,200 61,800 56,800 50,200 49,500 (metal content) Lead, Tonnes 19,600 22,500 21,700 22,500 20,000 19,000 refined (metric) Silver, mine Kilograms 5,200 10,500 12,900 9,650 7,172 5,267 (metal content) Zinc, mine Tonnes 438,300 445,400 425,800 400,900 398,200 385,700 (metal content) Finished Tonnes 4,900,000* 4,700,000* 4,700,000* 3,910,000* 2,720,000* cement Gypsum Tonnes 650,000* 700,000* 700,000* 700,000* 600,000* 400,000* Crushed Tonnes 60,000,000* 94,000,000* 96,000,000* 90,000,000* 60,000,000* 50,000,000* rock Sand and Tonnes 40,000,000* 40,000,000* 64,000,000* 40,000,000* 25,000,000* 15,000,000* gravel 2011 1,249,300

50,700

18,000 6,109

344,000

1,700,000* 300,000* 25,000,000* 7,000,000*

2010 1,211,600

39,100

19,000 3,818

342,500

2,290,000* 300,000* 40,000,000* 10,000,000*

Ireland: Mineral Policy, Table 3 Mineral production in Ireland from 2004 to 2013. Figures indicated with * are estimates

7,000,000*

200,000* 22,000,000*

1,573,000

337,500

9,454

16,000

47,400

2012 1,250,600

9,000,000*

200,000* 21,000,000*

1,450,000

326,700

7,822

17,000

42,950

2013 1,264,689

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Ireland: Mineral Policy, Table 4 The schedule of minerals covered by minerals development legislation in Ireland (Minerals Development Act, 1940). Those highlighted in

Alum Shales Anhydrite Antimony, Ores of Apatite Arsenic, Ores of Asbestos minerals Ball Clay Barytes Bauxite Beryl Bismuth, Ores of Bitumens Calcite Chalk China Clay Chromite Coal Cobalt, Ores of Copper, Ores of Corundum Cryolite Diatomaceous Earth Dolomite and Dolomitic Limestone Monazite

gray have been removed from the schedule by the Petroleum and other Minerals Development Act, 1960

Fireclay Flint and Chert Fluorspar Ganister Gem minerals Gold, Ores of Graphite Gypsum Iron, Ores of Kaolin Laterite Lead, Ores of Lignite Lithomarge Magnesium, Ores of Magnesite Manganese, Ores of Marble Mercury, Ores of Mica Mineral Oils Mineral Pigments Molybdenite

Nickel, Ores of Oil Shale Platinum, Ores of Potash Mineral Salts Quartz Rock Radioactive Minerals Refractory Clays Rock Phosphates Rock Salt Roofing Slate Serpentinous Marble Silica Sand Silver, Ores of Strontium, Ores of Sulphur, Ores of Talc and Steatite or Soapstone Tin, Ores of Titanium, Ores of Tripoli Tungsten, Ores of Witherite Zinc, Ores of Natural Gas

Felspar

Energy (Miscellaneous Provisions) Act 2006

Part 9 of this Act contains provisions relating to the rehabilitation of lands affected by mines and former mines and for the compulsory acquisition of lands for the purposes of such rehabilitation. Regulations In addition to primary legislation, Regulations have been made under the Minerals Development Acts. The Regulations cover matters such as fees, information to be provided with PL applications, procedures for claiming compensation, etc. The principal Regulations currently in force are: Minerals Development Regulations, 1979

These deal with the application procedures and fees for licenses, leases, and compensations under the Acts.

Minerals Development (Amendment) Regulations, 1994

These deal with changes to fees. Minerals Development (Application Fees for Certain State Mining Facilities) Regulations, 1996

These deal with fees for certain state mining facilities.

Regulatory Framework The information provided here is a summary of the main aspects related to conducting mineral exploration and development in Ireland. Any body (corporate) wishing to carry out exploration or development for minerals is strongly advised to consult with the relevant authorities and

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especially the Exploration and Mining Division (EMD) of the Department of Communications, Climate Action and the Environment. The Exploration and Mining Division (EMD) is responsible for the administration of regulatory aspects of Ireland’s minerals industry by means of a system of a prospecting licenses and mining leases and licenses. Exploration (Information Summarized from EMD 2013a) Exploration is carried out through a prospecting license (PL) that gives the holder the right to explore for specified minerals over a certain area. Only license holders are considered for mining facilities to develop such minerals within the license area. A prospecting license typically covers some 35 km2 the boundaries of which typically follow the Ordnance Survey of Ireland townland boundaries. Licenses are described as either standard or incentive. An incentive license is one upon which exploration has not been carried out for 4 years or areas currently licensed for certain minerals but available for exploration for other minerals. Otherwise, it is a standard license. There is also a category of ground which is described as open ground. This is ground which has never been licensed. In addition, a license that is surrendered or expires is listed in the regular three monthly update on licenses issued by EMD (normally on February 1, May 1, August 1, and November 1 of each year). There is a general invitation to interested parties to submit applications for these licenses within two calendar months. Any and all applications for such licenses are treated on an equal basis, and the EMD makes a decision on which applicant, if any, should be awarded the license. Such licenses are called competition licenses. Standard and competition licenses are treated equally from a fees point of view; there are minimum expenditure levels set for standard licenses, but in the case of competition licenses, the proposed expenditure in the application will be the committed expenditure for that license. Such expenditures should at least meet the standard expenditure levels. Incentive licenses have reduced commitments (see below).

Ireland: Mineral Policy

The main features of the prospecting license system are: 1. Application To apply for a prospecting license, you must submit the following: • Completed prospecting license application form • Application fee of €190 per area • If the area has never been licensed before a map indicting the area being applied for All applications are processed on a “first-come, first-served” basis (except for competition ground), and if an application is successful, the applicant will receive a letter of offer stating the terms and conditions of the prospecting license. 2. Issue Before a license is issued, the proposed offer of a license will be advertised in newspapers circulating in the local area. This allows anyone with concerns about exploration 21 days to submit a representation or observation (either positive or negative) for consideration before the granting of the prospecting license. 3. Duration A prospecting license is normally issued for 6 years, with the option of renewal if the holder has met the terms and conditions of the license. 4. Fees and expenditure A licensee must commit to minimum exploration expenditures on the license as listed in Table 5. In addition, each issue, review, or renewal must be accompanied by a consideration fee (Table 5). 5. Validation and reporting During a license period, two reviews are undertaken to ensure that exploration programs meet the conditions of the license. These reviews

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Ireland: Mineral Policy, Table 5 Consideration fees and minimum expenditure requirements for prospecting licenses Minimum expenditures (per period) Reporting period First period (years 1–2) Second period (years 3–4) Third period (years 5–6) Fourth period (years 7–8) Fifth period (years 9–10) Sixth period (years 11–12) Seventh period (years 13–14) Eighth period (years 15–16) Ninth period (years 17–18) Tenth period (years 19–20) Consideration fees

Standard or competition €10,000 €15,000 €20,000

Incentive €2,500 €5,000 €10,000 €30,000 €30,000 €37,500 €50,000 €50,000 €50,000 €62,500

Open ground €2,500 €3,750 €5,000

Standard or competition Incentive or open ground First 2 years €750 €375 Second 2 years €875 €375 Third 2 years €1,500 €500 After the sixth year, a fee of €2,500 is payable for each subsequent 2-year term for each category of license Source: EMD

require license holders to submit exploration reports for the previous 2 years of work. These reports must also be accompanied by a Confidential Work Summary Form and a Statement of Qualification Form. EMD publishes guidance on the preparation of reports.

after 6 years, whichever is the sooner. EMD makes these reports available on its website. This assists exploration companies assess a license and eliminates expensive duplication of exploration effort. Other information is available from the Geological Survey of Ireland on its website.

6. Renewal After 6 years and before the license is due to expire, a company may apply to have the license renewed by submitting a Prospecting License Renewal Application Form. If the license holder does not wish to renew the license, the license holder must submit a Prospecting License Expiry /Surrender Form and return the original license document.

Mining (Information Summarized from EMD 2013b) Three main permits are required before a new mineral development can take place: • Planning permission • An integrated pollution control (IPC) license • A state mining lease or license Planning Permission

7. Expiry or surrender If a license is allowed to expire or is surrendered, the license area will be entered into the next available Prospecting License Area Competition. 8. Exploration information Exploration reports submitted to EMD are kept confidential until the license is surrendered or

Any development, whether related to minerals or not, requires planning permission under the Planning and Development Act 2000. Further information on the physical land use planning system can be obtained from the Department of Environment, Heritage and Local Government and details of procedures from the relevant local planning authorities. An environmental impact statement must accompany applications for developments involving the extraction of minerals under the

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Minerals Development Acts. The consent of the Minister for Communications, Energy and Natural Resources is also required to make a valid planning application for such minerals. In essence the process is as follows:

• The decision of An Bord Pleanála is final and no challenge may be made to the decision other than to its legal validity. A person wishing to challenge the validity of a Board decision may do so by way of judicial review only.

• An application is submitted to the relevant local authority. • The planning authority has 2 months to consider the application. Third parties may make representations to the local authority (for or against) on the application. At the end of this period it may: – Grant permission – with conditions. – Refuse permission – giving reasons. – Request further information – which normally should be provided within 1 month. • If the response to the application is the last and the applicant provides the requested information, then the local authority has a further 2 months to make a determination. Third parties may make representations to the local authority (for or against) on the application. At the end of this period, the local authority must make a determination taking the application, any responses made by the applicant to a request for additional information, any representations made by third parties into account, and the relevant development plan for the area. It may: – Grant permission – with conditions. – Refuse permission – giving reasons. • The applicant or any third party can appeal the local authority’s decision (to grant or to refuse) or any of the conditions attached to a decision to grant permission to An Bord Pleanála (The Planning Appeals Board – a central authority) within 4 weeks of the decision. Any appellant may request An Bord Pleanála to hold a public hearing into the matter. • An Bord Pleanála’s statutory objective is to determine appeals within 18 weeks. However, where the Board does not consider it possible or appropriate to reach a decision within 18 weeks (e.g., because of delays arising from the holding of an oral hearing), it shall inform the parties of the reasons for this and shall state when it intends to make the decision.

Integrated Pollution Control (IPC) License

An IPC license is required for any development involving scheduled minerals. IPC licenses aim to prevent or reduce emissions to air, water, and land, to reduce waste, and to use energy/resources efficiently. Applications are made to the Environmental Protection Agency (EPA). The EPA provides guidance on the process (EPA 2012). The EPA Act 1992, as amended, provides a definition of environmental pollution as follows: The direct or indirect introduction to an environmental medium, as a result of human activity, of substances, heat or noise which may be harmful to human health or the quality of the environment, result in damage to material property, or impair or interfere with amenities and other legitimate uses of the environment and includes – (a) Air pollution for the purposes of the Air Pollution Act 1987; (b) The condition of waters after entry of pollution matter within the meaning of the Local Government (Water Pollution) Act 1977; (c) In relation to waste, the holding, transport, recovery or disposal of waste in a manner, which would, to a significant extent, endanger human health or harm the environment and, in particular: (i) Create a risk to the atmosphere, waters, land, plants or animals, (ii) Create a nuisance through noise, odours or litter, or (iii) Adversely affect the countryside or places of special interest,

or (d) noise which is a nuisance, or would endanger human health or damage property or harm the environment.

A license will only be granted if the emissions from the development comply with or will not result in the contravention of: For air quality • Any relevant air quality standard specified under Section 50 of the Air Pollution Act, 1987 (Environmental Specifications for Petrol

Ireland: Mineral Policy

and Diesel Fuels) (Amendment) Regulations 2004. • Any relevant emission limit value specified under Section 51 of the Air Pollution Act, 1987. • The Air Quality Standards Regulations, 2011 (S.I. No. 180/2011). For water • Any relevant quality standard for waters, trade effluent, and sewage effluent and standards in relation to treatment of such effluent prescribed under Section 26 of the European Communities Environmental Objectives (Surface Waters) Regulations, 2009 (S.I. No. 272 of 2009). • The European Communities Environmental Objectives (Ground Water) Regulations 2010 (S.I. No. 9 of 2010). For noise • Any regulations under Section 106, of the EPA Act, 1992, as amended. Generally • Any standard for an environmental medium prescribed under regulations made under the European Communities Act, 1972, or under any other enactment. • Any emissions from the activity will not cause significant environmental pollution. • The best available techniques will be used to prevent or eliminate or, where that is not practicable, to limit, abate, or reduce an emission from the activity. • Necessary measures will be taken to prevent accidents in the carrying on of the activity and, where an accident occurs, to limit its consequences for the environment and, in so far as it does have such consequences, to remedy those consequences. • Necessary measures will be taken upon cessation of the activity (including such a cessation resulting from the abandonment of the activity)

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to avoid any risk of environmental pollution and return the site of the activity to a satisfactory state. In addition, the developer shall address the following in his/her application: minimization of waste, energy efficiency, and propose an acceptable environmental management plan using an appropriate environmental system. It is a normal practice to include regular reporting of environmental performance and to report any and all exceedances of conditions to the EPA and any other relevant authority. Mining Lease or License

The right to work minerals is vested in the Minister for Communications, Energy and Natural Resources under the Minerals Development Act 1979. The minister may issue a state mining lease for minerals in state ownership or a state mining license for minerals not in state ownership to work the minerals. As a matter of policy, the minister will only accept an application from the holder of a valid prospecting license, state mining lease, license, or permission over the area in question. Mining leases are negotiated on a case-by-case basis as required by Section 26 of the Minerals Development Act 1940 which also applies to licenses under the Minerals Development Act 1979 (see Section 17 of the 1979 Act). While the information that will be required to support an application may vary according to the individual circumstances, applicants are advised to consult the Exploration and Mining Division. The following is a generic list for a base metal mine of what is required in an application: • Mineral and land ownership of the area: (a) Area for which a facility is being sought. This should be clearly related to mineral reserves/resources. (b) Any information available to the applicant on mineral ownership, whether it is in state or private ownership and details of any title searches. (c) Any information on land ownership within the application area, and specifically which

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•

•

• •

•

land is in the control of the applicant. Folio numbers should be provided if possible. Minerals Tonnage and grade of mineral reserves, together with details of their calculation. Sufficient information should be provided so that the department can verify that the estimate is reasonable. Development plan and feasibility study (i) Mining and processing plans These should include the development and production schedules, employment, and equipment. (ii) Estimated capital and operating costs The total estimated capital cost and annual operating costs showing the main elements should be provided together with their basis. (iii) Sales Proposed concentrate output, and grade of concentrate, including any significant penalties. Projected metal prices and treatment charges. (iv) Sources of capital That is, equity, loans, grants. (v) Financial projections including cash flow projections for the mine life Note: The level of information will normally be similar to that required for third-party funding. Mine closure plan (of which site rehabilitation is an element) Tax clearance certificate It will normally be necessary to furnish a tax clearance certificate before a state mining facility is issued. Applicant Details of the applicant including, for a limited company, a memorandum and articles of association, a recent balance sheet, and shareholders, together with the evidence that the applicant has the financial and technical capacity to undertake the proposed development, and is a fit and proper person to hold the mining lease/license. The applicant should be a body corporate registered in the Republic of Ireland.

Ireland: Mineral Policy

• Application fee: the appropriate application fee as set out in S.I. No. 259 of 1996 – Minerals Development Regulations (application fees for certain state mining facilities). • Governing law This lease or license agreement shall be governed by and construed in accordance with the laws of Ireland. The courts of Ireland shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the lease or license agreement. The mine lease or license will contain terms and clauses as the minister and the applicant agree and would normally cover such items as: • Duration of the facility (a fixed term related to the predicted length of the operation). Financial payments, normally consisting of a fixed annual fee, plus a royalty payment related to tonnage produced or revenue – royalties are individually agreed. An example of royalty terms (for the Lisheen Zn-Pb mine) is presented in Table 6: • Efficient and continuous working to ensure optimum development • Provisions to protect the rights and safety of third parties

Ireland: Mineral Policy, Table 6 The financial terms for the Lisheen Mine as agreed between the Minister of Communications, Energy and Natural Resources and the Lisheen Mine Ltd Lisheen Lease for 30 years under the 1940 Act Dead rent (index linked) Year 1 Year 2 Year 3 onwards After closure Royalty (per cent of revenue) Until 31 December 2000 1 January 2001–31 December 2007 Thereafter

€63,486 €126,973 €380,921 €25,394 1.75% 1.5% 3.5%

Ireland: Mineral Policy

• Sureties to ensure that the site can be fully rehabilitated on closure • In cases involving private minerals, indemnification of the minister against successful compensation claims Corporation Tax

Corporation tax on mining operations is charged at a rate of 25%. On-site surface processing is considered to be part of mining operations. However, these operations attract special allowances, as listed below: • • • • • • •

Exploration expenditure Development expenditure Plant and machinery Industrial buildings Acquisition of scheduled mineral assets Mine closure and rehabilitation Marginal mine allowance

Other Requirements

Under the Mines and Quarries Act, 1965, there are statutory obligations with regard to safety, health, and welfare, provision of adequate plans, etc. Other permits may also be needed, e.g., for the use of explosives from the Department of Justice and for fire safety from the local authority.

International Memberships The Department of Communications, Energy and Natural Resources is a member of the International Lead and Zinc Study Group. Ireland is a member of the European Union and the European single currency (the Euro). Ireland is also a member of the following international bodies: UNCTAD (United Nations Conference on Trade and Development), WTO (World Trade Organization), and OECD (Organisation for Economic Co-operation and Development). The Institute of Geologists of Ireland is a founding member of the Pan-European Reserves and Resources Reporting Committee (PERC) which supports the use of the PERC Standard (one of the CRIRSCO-aligned codes).

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Concluding Statement Ireland’s mineral policy and legislative framework is supportive of mineral development that takes into account economic, environmental, and social concerns into account. The Irish regulatory systems frequently scores highly in the annual Fraser Institute survey of mining companies and for the past 3 years has been ranked in first place for “Policy Perception Index” – an index that takes into account the following: uncertainty concerning the administration of current regulations, environmental regulations, regulatory duplication, the legal system and taxation regime, uncertainty concerning protected areas and disputed land claims, infrastructure, socioeconomic and community development conditions, trade barriers, political stability, labor regulations, quality of the geological database, security, and labor and skills availability.

References Central Statistics Office (CSO) (2017) Census 2016. http:// www.cso.ie/en/census Environmental Protection Agency (EPA) (2012) Integrated pollution prevention and control (IPPC) licensing, application guidance notes, p 38. http://www.epa.ie/ pubs/forms/lic/ipc/IPPC%20Application%20Form% 20Guidance%20Note%202012%20v4.pdf Exploration and Mining Division EMD (2013a) Mining in Ireland, p 2. http://www.dcenr.gov.ie/natural-resources/ Lists/Publications%20Documents/Exploration%20and %20Mining/Mining_in%20Ireland_2013.pdf Exploration and Mining Division EMD (2013b) Mineral exploration in Ireland, p 2. http://www.dcenr.gov.ie/ natural-resources/Lists/Publications%20Documents/ Exploration%20and%20Mining/Exploration_in%20 Ireland_2013.pdf Exploration and Mining Division (EMD) (2015). Fiscal framework, p 4. http://www.dcenr.gov.ie/natural-resour ces/Lists/Publications%20Documents/Exploration% 20and%20Mining/Fiscal_Framework_Feb%202015.pdf

Websites Containing Useful Information An Bord Pleanála website (Planning Appeals Board) http:// www.pleanala.ie/ The Department of Environment, Community and Local Government website http://www.environ.ie/ The Environmental Protection Agency website http:// www.epa.ie/ The Exploration and Mining Division website http://www. mineralsireland.ie/ The Geological Survey of Ireland website http://www.gsi.ie/

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Japan: Natural Gas Janet Xuanli Liao CEPMLP, University of Dundee, Dundee, Scotland, UK

Introduction Natural gas is one of the most important fuels in Japan’s primary energy supply, accounted for 23% of Japan’s total energy consumption in 2015, after oil (42%) and coal (27%). Japan has limited natural gas reserves domestically from numerous small fields, discovered and developed by Inpex since 1979. Japan’s proved natural gas reserves were 738 billion cubic feet (bcf) as of January 2015, according to the Oil and Gas Journal (OGJ), and its natural gas production has also been low and flat for more than a decade (EIA 2016). As a result, Japan relies on liquid natural gas (LNG) imports for virtually all of its natural gas supply and is also the world’s largest LNG importer, accounting for 35% of the global market (BP 2016, p. 25). Since the Fukushima Daiichi nuclear accident in 2011, the share of nuclear energy has decreased dramatically from 13% to a mere 0.2% by 2015 in Japan’s primary energy

I am very grateful to Dr. Tetsuo Morikawa from the Institute of Energy Economics, Japan, for kindly providing part of the materials used in this article.

supply, and its 30% share in electricity generation also declined severely. The lost nuclear capacity has then been largely replaced by natural gas, making its share grow from 19% in 2010 to 23% in 2015 in Japan’s energy mix (BP 2016, pp. 41 and 23) (Fig. 1). Meanwhile, there is no well-connected domestic gas pipeline system in Japan nor cross border pipelines. The existing gas pipelines are either serving a few domestic gas fields along the western coastline or linking the LNG terminals to demand areas. The total length of gas pipelines by 2012 was 249,786 km, of which only 4,772 km was high pressured (above 1.0 MPa) (IEA 2014, p. 284). Currently, there are 36 LNG receiving terminals in operation: 30 for imports and 6 for secondary supplies from imports terminals (see Fig. 2). With the rising demand for natural gas, two new terminals were commissioned in Japan in 2015, and two terminals were under construction (GIIGNL 2016).

Japan’s Natural Gas Supply As mentioned above, Japan is heavily dependent on imported LNG to meet its demand due to limited domestic natural gas production. In the wake of the “3.11” nuclear accident, LNG provided about 50% of Japan’s additional power generation caused by the loss of nuclear energy, so its imports of LNG jumped to 107 mts in 2011 against 95 mts in 2010. By 2015, Japan’s LNG

© Springer-Verlag GmbH Germany, part of Springer Nature 2023 G. Tiess et al. (eds.), Encyclopedia of Mineral and Energy Policy, https://doi.org/10.1007/978-3-662-47493-8

386 Japan: Natural Gas, Fig. 1 Japan’s energy mix, 2003–2015 (in Mts) (Source: adapted from the BP Statistical Review of World Energy, various years)

Japan: Natural Gas

600 500 400 300 200 100 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Gas

Oil

Coal

Nuclear

Hydro

renewable

䞉 LNG terminals (in operation) 䞉 LNG terminals (planned or under construction) /

䞉 Satellite stations (in operation or under construction, with a total storage capacity of at least 300 m3) 䞉 Satellite stations for coastal vessels (in operation) 䞉 Satellite stations for coastal vessels (planned or under construction) 䞉 Major pipelines

䞉 Pipelines planned or under construction

䞉 Selected route 䞉 Route for improved security 䞉 Selected route (high-pressure line with medium-pressure one)

Japan: Natural Gas, Fig. 2 Japan’s gas infrastructures (Source: Morikawa 2014)

Japan: Natural Gas Japan: Natural Gas, Fig. 3 Japan’s LNG imports by source (Source: adapted from the BP Statistical Review of World Energy 2016, p. 28.)

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Nigeria [PERCENTAGE]

Other [PERCENTAGE] Russia [PERCENTAGE]

UAE [PERCENTAGE]

Australia [PERCENTAGE]

Qatar [PERCENTAGE]

PNG [PERCENTAGE] Brunei [PERCENTAGE]

imports reached 118 mts (down from 123 mts in 2014 though), with Australia being the largest supplier, accounting for 22% of its total imports, followed by Malaysia at 18%, Qatar at 17%, and Russia at 9%, respectively (BP 2012, 2016) (Fig. 3).

Long-Term LNG Contracts and Spot/ Short-Term Deals Japan’s LNG import has been largely based on a number of long-term contracts following the traditional way of LNG trade, and by 2013, the total contracted amount reached around 66 mts (Morikawa 2014). However, the recent few years have seen an increase of Japan’s LNG imports by spot and short-term deals, as they were less costly than Japan’s long-term contract prices. This led to a triple growth of short-term and spot LNG trade in the Asia Pacific market since 2010, as indicated by Fig. 4 below (EIA 2016). The main reasons behind include an oversupply in the LNG market since 2014, with Qatar and US LNG joining the market, against China’s economic slowdown and restart of Japan’s nuclear reactors, plus the global falling oil prices. These have not only led to lower

Malaysia [PERCENTAGE] Indonesia [PERCENTAGE]

LNG prices and allowed spare capacity from the supply side but have also enabled consumers to request for increased flexibility in the LNG market (Corbeau and Ledesma 2016). In May 2016, Japan’s Ministry of International Trade and Industry (MITI) proposed three principles for Japan’s future LNG trade: (1) Ensure supply and demand stabilization, which means that long-term contracts will be minimized while the share of short-term and spot contracts will be increased. (2) Create more reasonable price via changing the destination clause and utilizing reselling and arbitrage trading. (3) Pricing should show stabilization and transparency in order to reflect LNG supply and demand. MITI also wanted Japan to become an LNG trading hub in Asia, engaging in price formation and dissemination (MITI 2016).

Regulatory Policies General Energy Policy Japan’s energy policy is principally formulated and implemented by the Agency for Natural Resources and Energy (ANRE) under the Ministry of Economy, Trade and Industry (METI). Prior

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388 Japan: Natural Gas, Fig. 4 Asia Pacific natural gas trade by country and contract type, 2010–2014 (bcf/d) (Source: EIA 2016)

Japan: Natural Gas

2010 Japan 2014 Long term

Short term

2010 South Korea 2014 2010 China 2014 2010 India 2014 2010 Taiwan 2014 0

2

4

6

8

10

12

to the Fukushima accident, Japan lay its principal energy policy in the Basic Energy Plan of 2010, which proposed to increase nuclear energy to 50% in Japan’s power generation by 2030, to help the country tackle both energy insecurity and global warming. Since the Fukushima disaster, an intensive “national discussion” has been conducted over the role of nuclear power in Japan’s future energy mix (Morikawa 2014). On 16 July 2015, MITI published a “Long-Term Energy Supply and Demand Outlook” to reset Japan’s energy structure in 2030. Adding the “safety” factor into Japan’s old “Three Es” – energy security, economic efficiency, and environmental protection – the new plan has reduced the share of nuclear power to 20–22% in Japan’s power generation by 2030, with LNG accounting for 27%, followed by coal (26%) and renewables (22–24%) (METI 2015).

liberalized, and consumers with more than 0.1 million m3 demand could choose their suppliers (Morikawa 2014). In June 2015, the Japanese Diet further enacted two bills to finalize the liberalization of the electricity and city gas industries, which led to full liberalization of Japan’s electricity market in April 2016, and the retail market for natural gas will follow suit in April 2017. The purpose of the reform was to completely separate power transmission and distribution sections from the nation’s nine major power firms, which had enjoyed regional monopolies. It was also aimed to increase competition among power suppliers beyond traditionally demarcated service areas and to make it easier to transmit electricity generated from renewable energy sources (JT 2015; Morikawa 2016).

Gas Utilities Industry Law and Gas Market Liberalization Japan’s city gas industry is governed by the Gas Utilities Industry Law, which was first formulated in 1957. The Law had not been amended significantly until the 1990s. However, as gas market liberalization is being implemented, the Law was amended in 1995, 1999, and 2003 to accommodate the expansion of liberalization coverage. Under which, about 60% of the gas market was

Supply and Demand Outlook According to IEEJ prediction in 2015, Japan’s primary energy consumption by 2030 would be about 489 million kl (mkl), against an annual economic growth at 1.7% in average, compared with 361 mkl in 2013. Among Japan would have 24.3% of energy self-sufficiency (with 13–14% of renewable and 10–11% of nuclear), and the rest would be supplied by oil (32%), coal (25%) and

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Mtoe 500 450 400 350 300 250 200 150 100 50 0

2011

2020 Coal

Oil

2030 Natural Gas

Nuclear

2040 Others

Japan: Natural Gas, Fig. 5 Japan’s primary energy supply outlook (Source: Morikawa 2014)

natural gas (18%). Energy efficiency was expected to be improved by 35% by 2030 (Toyoda 2015). In terms of Japan’s future LNG consumption, the IEA predicted a constant demand at about 100 bcm (74 mtpa) until 2040, while METI announced in 2015 that Japan’s LNG imports would drop to 62 mtpa by 2030, assuming a significant restart of nuclear. Contracted LNG supply was believed to peak by 2017 at 90 mtpa and then decline progressively to 35 mtpa by 2030 (Corbeau and Ledesma 2016). An IEEJ source forecast is that Japan’s power generation will increase by 0.5%/year to reach 1,192 TWh in 2040, while nuclear situation is expected to influence natural gas supply significantly. The share of natural gas in total energy mix is expected to decrease toward 2020 since the partial nuclear comeback will suppress the load factor of gas-fired power plants. Nevertheless, natural gas demand will increase again after 2020 to reach 107 mtoe (119 bcm) by 2040 m. IEEJ also anticipates that nuclear will replace natural gas for power generation to a certain extent toward 2020, and the reverse is to happen after 2020. The shares of nuclear and natural gas should also

reach 21% and 29% in 2020 and 8% and 38% in 2040, respectively (Morikawa 2014) (Fig. 5).

Challenges for Supply Security Generally speaking, Japan’s LNG imports have not experienced any dramatic supply disruptions so far. Nevertheless, it is not completely free from supply shortage. Recent examples include the under-delivery from Indonesia in the 2000s onward, due to lack of transparency and poor coordination of legislation across government (IEA 2008: 26) and a shutdown for 8 months of Malaysia’s Tiga project in 2003. Both of these caused certain problems for Japan’s LNG supply (IEA 2004). Another case was the de facto nationalization of Russia’s Sakhalin 2, where Russia took over control of its first LNG project. With Russia’s dissatisfaction on the production-sharing agreement terms, the project’s cost escalation and environmental violations became a major point of contention between the Russian authorities and Sakhalin Energy (Krysiek 2007: 20). Under growing pressure, Sakhalin Energy agreed to hand over the controlling stake to Gazprom in 2006.

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Recognizing the local concerns over environmental damages, Itoh argues that bringing this issue to the forefront during the criticism of Sakhalin Energy was a pretext for Gazprom to be included in the project (Itoh 2011: 53). Because of this series of actions, the original project start-up was delayed about 2 years until 2009. According to the Medium- and Long-Term Natural Gas Outlook 2016 by Cedigaz, the international gas association, natural gas will play an increasing role as a bridge fuel toward a longerterm, increasingly renewable-based energy system. The Outlook believed that “Looking forward to 2035, the total primary energy consumption is forecast to grow at a moderate rate of 1%/year in a context of increased energy efficiency. In this context, gas stands as the fastest-growing fossil fuel over 2014–35 (+1.6%/year). In contrast, the growth of oil and coal is expected to slow sharply, with respective annual rates of 0.2% and 0.1%.” Gas will therefore increase its relative share in the global primary energy supply to 23.9% in 2035 from 21.4% in 2013 (OGJ 2016).

Krysiek TF (2007) Agreements from another era – production sharing agreements in Putin’s Russia, 2000–2007. Oxford Institute for Energy Studies. http://www. oxfordenergy.org/wpcms/wp-content/uploads/2010/11/ WPM34-AgreementsFromAnotherEraProductionSharin gAgreementsinPutinsRussia2000-2007-TimothyFen tonKrysiek-2007.pdf Ministry of Economy, Trade and Industry (MITI) (2015) Long-term energy supply and demand outlook. http:// www.meti.go.jp/english/press/2015/pdf/0716_01a.pdf Ministry of Economy, Trade and Industry (MITI) (2016) Strategy for LNG market development: challenges and countermeasures towards the creation of flexible LNG market and developing an LNG trading Hub in Japan. May 2nd. http://www.meti.go.jp/english/ press/2016/pdf/0502_01a.pdf Morikawa T (2014) Japan’s Gas Industry. An unpublished paper Morikawa T (2016) International and domestic natural gas situation. IEEJ e-Newsletter, No. 77, 19 January. p. 6 Oil and Gas Journal (OGJ) (2016) Cedigaz: global gas demand to rise 1.6%/year over 2014–35. 1 July. http:// www.ogj.com/articles/2016/07/cedigaz-global-gas-dema nd-to-rise-1-6-year-over-2014-35.html U.S. Energy Information Administration (EIA) (2016) International energy outlook 2016, Chapter 3, “Natural Gas”. http://www.eia.gov/forecasts/ieo/nat_gas.cfm

References

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BP Statistical Review of World Energy (2012) http://www. bp.com/content/dam/bp-country/de_at/pdfs/20120620_ statistical_review_of_world_energy_full_report_2012. pdf BP Statistical Review of World Energy (2016) http://www. bp.com/content/dam/bp/pdf/energy-economics/statis tical-review-2016/bp-statistical-review-of-world-energy2016-full-report.pdf Corbeau A-S, Ledesma D (2016) LNG markets in transition: the great reconfiguration. https://www.kapsarc.org/wpcontent/uploads/2016/05/LNG-Markets-in-Transition_ A-Corbeau-and-D-Ledesma.pdf GIIGNL (2016) The LNG industry in 2015, Annual report 2016. http://www.giignl.org/sites/default/files/PUB LIC_AREA/Publications/giignl_2016annualreport.pdf International Energy Agency (IEA) (2004) Security of gas supply in open markets: LNG and power at a turning point. OECD/IEA, Paris International Energy Agency (IEA) (2008) Energy policy review of Indonesia. OECD/IEA, Paris International Energy Agency (IEA) (2014) Energy supply security 2014. OECD/IEA, Paris Itoh S (2011) Russia looks East – energy markets and geopolitics in Northeast Asia. Center for Strategic and International Studies The Japan Times (JT) (2015) Electricity and gas liberalization. Editorial, 5 July

Janet Xuanli Liao CEPMLP, University of Dundee, Dundee, Scotland, UK

Keywords

Japan · METI · Nuclear energy · Fukushima · Low carbon

Introduction Japan started to develop nuclear energy from the 1950s, despite its painful experience at the end of WWII. After a few decades of research and development, Japan became the world’s third biggest user of nuclear power by 2010, after the United States and France, with 55 reactors nationally that generated a third of Japan’s total electricity demands (METI 2006a: 5). Prior to the Fukushima nuclear accident in March 2011,

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391

Japan: Nuclear Policy, Fig. 1 Japan’s net electricity generation by fuel, 2010–2015 (Source: Patel 2015)

J Japan’s Ministry of Economy, Trade and Industry (METI) planned to make nuclear power counting for 30–40% in its energy mix by 2030, and for 60% by 2100 (WNA 2015). However, such an ambitious strategy became unattainable after the Fukushima accident, as Japan was forced to shut down all of its nuclear reactors by September 2013 (BBC 2013) (see Fig. 1): the role of nuclear seems still uncertain in Japan’s future energy mix.

Initiation of Japan’s Nuclear Industry Japan’s first set of nuclear laws was introduced in 1955, with three set of decrees: the Atomic Energy Basic Act, the Atomic Energy Commission Establishment Law, and the Law to introduce a partial revision to the Prime Minister’s Office Establishment Law. The Atomic Energy Basic Law explicitly set up the principle of research, development, and use of nuclear energy for peaceful purposes, which was of special significance as the peaceful use of nuclear energy had not become an international norm at the time (JAEA 2010: 1). Under the three principles of nuclear power use – democratic methods, independent management, and transparency – the Japanese government established several nuclear energy-related organizations in 1956, including the Atomic

Energy Commission (AEC) (aimed to promoted nuclear power development), Japan Atomic Energy Research Institute (JAERI), and the Atomic Fuel Corporation. Prior to this, a research program for peaceful use of nuclear energy was already launched by Tokyo in 1954, involving a budget of ¥235 million, plus a 15 million yen funding for uranium resource survey (JAEA 2010: 2). In 1957, a research reactor brought from the United States began to operate, which set up the basis for Japan’s nuclear power development. In July 1966, Japan’s first imported commercial nuclear power reactor (from the United Kingdom), Tokai-1, became operational until March 1998 (WNA 2012: 2). However, Japan’s nuclear power industry only started to make real progress from the late 1970s, due to three main reasons: (1) public objection to and distrust of nuclear power; (2) Japan’s limited capacity of nuclear power production; and (3) the two oil crises in the 1970s. Against this background, the 1970s–1980s had witnessed a high speed in the construction of nuclear reactors: there were 41 new reactors built between 1970 and 1989 (37 became operational), in contrast to the seven new reactors that were built during the 1960s (two became operational) (Aldrich 2012: 4).

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Unfortunately, such phenomena did not last long. Following the Three Mile Island accident in the United States in 1979 and the 1986 Chernobyl disaster in the former Soviet Union, the widespread public opposition forced the United States and other Western countries to withdraw from the nuclear fuel cycle and the construction of new nuclear power plants. In the meantime, the stable and low oil prices throughout the 1980s made energy security less challenging, together with Japan’s energy market liberalization and enhanced energy efficiency (METI 2006b: 5). This change had, to a certain extent, hindered the development of nuclear energy. On the one hand, the government began to make deregulation of the electricity market as its priority and avoided taking initiatives in long term nuclear energy strategy. On the other hand, the electric power utilities were fully occupied with making immediate responses to deregulation, and thus also tended to delay high-risk, long-term investment strategies. As a result, nuclear plant makers reduced their investments in technology development and focused on survival strategies, and there were only six new reactors built in the 1990s (METI 2006b: 7).

Japan’s Nuclear Power in the New Century Japan resumed its attention to nuclear power development in recent years, for the purpose of “achieving a stable energy supply while addressing environmental issues.” Indeed, faced with skyrocketing oil prices in the new century and constant growth of oil demand from the emerging economies, METI was highly concerned about Japan’s “lowest ratio of energy self-sufficiency” among the OECD countries: discounting nuclear power, Japan could only rely on 4% of domestic energy supply, in contrast to its 40% self-reliance in food (METI 2006b: 7; Aldrich 2012: 4). In 2001, the Nuclear and Industrial Safety Agency (NISA) was created as a nuclear regulatory body under METI. In the following year, Tokyo announced that it would increase reliance on nuclear energy substantially in order to achieve greenhouse gas emission reduction goals set by

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the Kyoto Protocol (WNA 2012: 3). In 2004, Japan’s Atomic Industrial Forum (JAIF) released a report on the future prospects for nuclear power, suggesting that the country’s nuclear capacity would reach 90GWe by 2050, doubling both nuclear energy capacity and the share in the energy mix (WNA 2012: 3). In October 2005, Tokyo further issued a Framework for Nuclear Energy Policy, which was the first long-term plan drafted after the Atomic Energy Commission (AEC) and was incorporated into the Cabinet Office. With shared goals set among the Cabinet Office, the Ministry of Education, Culture, Sports, Science and Technology (MEXT) and the METI, the Framework became an extremely strong monolith (METI 2006b: 8). Soon after, the Nuclear Energy Subcommittee (NES) of the METI Advisory Committee deliberated concrete actions for achieving the basic goals: (1) nuclear power generation would continue meeting at least 30–40% of electricity supply even after 2030; (2) the nuclear fuel cycle should be further promoted; and (3) aiming at commercializing practical FBR cycle (METI 2006a: 1). The government policy was supported by public opinion as well. According to a survey conducted in December 2005, despite the reservations held by 66% over nuclear safety, 75% of the responses supported to further increase nuclear power (to 55%) or to maintain it at the current level (20%) (Machi 2006: 57). In April 2007 the government selected Mitsubishi Heavy Industries (MHI) as the core company to develop a new generation of fast breeder reactors (FBR) to further advance its nuclear power industry. In 2010, METI again issued an electricity supply plan showing that nuclear capacity would grow by 12.94 GWe by 2019, and the share of nuclear electricity supply would grow from 2007s depressed 262 TWh (25.4%) levels to about 455 TWh (41%) in 2019 (WNA 2012: 4).

Nuclear Power After the Fukushima The devastating earthquake and tsunami on 11 March 2011, which hit the Fukushima Daiichi nuclear power plant (owned by TEPCO) and

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broke its four reactors, has caused huge damage to Japan’s nuclear industry. In the immediate aftermath, the Cabinet under Prime Minister Naoto Kan decided to eliminate Japan’s reliance on nuclear energy, in line with the public opposition to nuclear power. Tokyo was also forced to shut down the remaining 50 nuclear reactors for safety checks eventually. By early May 2012, all the nuclear reactors were offline and Japan was nuclear-free for the first time since the 1970s (JP 2012). Although two reactors in Oi near Osaka area were restarted in July that year; they were shut down again for maintenance in September 2013 (BBC 2013). On 14 September 2012, the Cabinet under Prime Minister Yoshihiko Noda officially adopted a new long-term energy strategy calling for elimination of nuclear power dependency by the end of the 2030s. Also in September, the Nuclear Regulation Authority (NRA) was established under the Ministry of the Environment to replace NISA, which was criticized for its lack of independence under METI’s heavy influence (Fukasawa and Okusaki 2012). In November 2013, NRA further announced new safety standards for nuclear facilities but no indication was given on when to complete the safety checks for all the reactors (Kyodo 2013). On the other hand, appeals to restarting nuclear reactors have been made by energy experts, government bureaucrats at the METI, and, of course, by the nuclear industry itself. Their key concerns were that it would be unrealistic for Japan to phase out nuclear energy without instigating new problems, such as likely electricity rate hikes and difficulties in maintaining the balance between energy supply and low carbon commitments. Indeed, nuclear power had played a significant role in helping to reach Japan’s target on greenhouse gas (GHG) reduction, which had been set to fall to 1990 levels, that is 25%, by 2020, at the Copenhagen COP in 2009. Yet against the changed scenario of nuclear-free energy, Tokyo had to replace its initial target with a 3.8% reduction of GHG by 2020 from 2005 levels at the 2013 Warsaw COP, meaning a 3.1% increase from the 1990 levels (Blumenthal et al. 2014). Meanwhile, as shown by Fig. 2, nuclear power was believed to

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be able to keep the cost of Japan’s power generation at lower levels. According to a report by the Financial Times, since 2011 the average price of electricity in Japan to offices and factories had risen about 29% and the price for households by roughly 19% (FT 2015). Despite continuing opposition by a majority of the Japanese public, Tokyo decided to restart No. 1 and No. 2 reactors at the Kyushu Electric Power Co.’s Sendai nuclear power plant, in Kagoshima Prefecture, in August and November 2015, after a 4-year suspension. According to Yoshihide Suga, chief cabinet secretary, “it is important for our energy policy to push forward restart of reactors that are deemed safe” (FT 2015). In February 2016, NRA further cleared the No. 3 and 4 reactors at Takahama plant (under the Kansai Electric Power Co.) in Fukui Prefecture for a resumption of operations. However, due to the objection of the local residents, in March 2016, the Fukui District Court ordered Kansai Electric to keep the two reactors offline. But in early April 2016, the Fukuoka High Court rejected a lawsuit that would have suspended operation of the Sendai plants, and the Fukui court later lifted its own injunction as well. These mixed rulings from the regional courts could suggest how divided Japan remains on the nuclear issue. On 20 June 2016, the NRA approved 20-year license extensions for Kansai Electric Power Co.’s Takahama 1 and 2. Since both of the reactors had been in service for more

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than 40 years, they are required to take additional safety measures and are not expected to be revived earlier than autumn 2019 (Asahi 2016). In April 2016, Shikoku Electric Power Co. also obtained NRA’s approval to restart its No 3 reactor in Ikata plant, Ehime Prefecture, and fuel-loading work was started from 24 June for it to be operational by late July (Yomiuri 2016). Moreover, a few more nuclear reactors will be restarted shortly (NEI 2016), which is opposed by the Japanese public but seems necessary for Japan to ensure its mid- and long-term energy demands. As shown in Fig. 3, by 2015, renewable energy only accounted for 3% in Japan’s primary energy consumption, far behind the Fukushima nuclear capacity at 13% against its total primary energy. Therefore, until renewables can overtake the role played by nuclear energy, Japan will be unable to meet the challenges posed by both economic development and by tackling the climate change without the support of nuclear energy.

Concluding Statement The above discussion has shown that nuclear power has been given special attention by the Japanese government to help gain the country’s energy independence. Since the 1970s, Tokyo has employed legal, financial, and political means to promote the development of nuclear energy,

which proved highly effective prior to the Fukushima disaster, as the nation relied on nuclear energy for 30% of its electricity supply. To a large extent, the carbon-free nuclear energy had also provided Japan with sufficient confidence in undertaking tough commitments in CO2 reductions within the Kyoto Protocol, together with renewable energy. After the Fukushima disaster, the Japanese government was forced to revisit its nuclear strategy, but it was an uneasy decision to simply phase out nuclear energy in Japan’s energy mix given the scarcity of its domestic resources. Over the past 5 years, there have been intensive national debates in Japan over the nation’s future energy strategy and the role of nuclear energy. The industry and energy specialists seem to be in favor of keeping nuclear in Japan’s energy mix for another few decades, in order to ensure its energy selfsufficiency and to avoid severe economic penalties, but the Japanese public have requested to phase out nuclear energy completely, largely due to the concerns of nuclear safety. The METI’s “Long-Term Energy Supply and Demand Outlook,” published in July 2015, can be viewed as a compromise of the two perspectives. It has reduced nuclear power to 20–22% in Japan’s power generation in 2030, against the previous target of 50%, and the share of LNG is set at 27%, followed by coal at 26% and renewables at 22–24% (METI 2015). However, whether

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nuclear energy can be phased out completely beyond 2030 will be largely dependent on the development of the renewable energy, which has faced a lot of uncertainties, not least, technologically and financially.

395 World Nuclear Association (WNA) (2012) Nuclear power in Japan. http://www.world-nuctablear.org/info/inf79. html. Updated 30 Sept 2012 WNA (2015) Nuclear power in Japan. http://www.worldnuclear.org/info/Country-Profiles/Countries-G-N/Japan/. Updated 23 July 2015 Yomiuri Shimbun (Yomiuri) (2016) Fuel-loading work begins at Ikata reactor. 24 June

References Aldrich DP (2012) Post-crisis Japanese nuclear policy: from top-down directives to bottom-up activism. Analysis from the East-West Center, No. 103. Jan. www. eastwestcenter.org/download/4342/33250/api103.pdf Asahi Shimbun (Asahi) (2016) Editorial: license renewal of aging reactors betrays promise, fuels concerns. 21 June BBC (2013) Japan halts last nuclear reactor at Ohi. 15 Sept. http://www.bbc.co.uk/news/world-asia-24099022 Blumenthal J, Damassa T, Kuramochi T (2014) PostFukushima Climate Action: how Japan can achieve greater emissions reductions. 19 June. http://www.wri. org/blog/2014/06/post-fukushima-climate-action-howjapan-can-achieve-greater-emissions-reductions Financial Times (FT) (2014) Japan: power switch weighs on Abe. 22 Oct FT (2015) Japan poised for nuclear restart. 10 Aug Fukasawa J, Okusaki M (2012) Reform of the nuclear safety regulatory bodies in Japan. http://www.burgessalmon.com/inla_2012/10147.pdf Japan Atomic Energy Agency (JAEA) (2010) Review and analysis of Japan’s efforts to ensure nuclear nonproliferation. Sept. www.jaea.go.jp/04/np/activity/ 2010-07-29/2010-07-29-11.pdf Japan Times (JT) (2012) Japan nuke-free for first time since ’70. 5 May Kyodo (2013) Japan’s nuclear watchdog pledges to regain trust on quake anniversary. BBC Energy Monitory. 11 Mar Machi S (2006) Japan’s nuclear energy program and international approach. http://www.touchbriefings.com/pdf/ 2178/Machi.pdf. METI (2006a) Main points and policy package in ‘Japan’s Nuclear Energy National Plan’. Report by METI’s Nuclear Energy Subcommittee. June. Available at http:// www.enecho.meti.go.jp/english/report/rikkokugaiyou.pdf METI (2006b) The challenges and directions for nuclear energy policy in Japan. Dec. http://www.enecho.meti. go.jp/english/report/rikkoku.pdf METI (2015) Long-term energy supply and demand outlook. http://www.meti.go.jp/english/press/2015/pdf/ 0716_01a.pdf Nuclear Energy Institute (NEI) (2016) Japan nuclear update. 5 July. http://www.nei.org/News-Media/News/ Japan-Nuclear-Update Patel S (2015) Sendai-1 reactor restart marks Japan’s nuclear rebirth. 11 Aug. http://www.powermag.com/ sendai-1-reactor-restart-marks-japans-nuclear-rebirth/

Japan: Oil Policy Janet Xuanli Liao CEPMLP, University of Dundee, Dundee, Scotland, UK

Introduction Japan is the world’s fifth largest energy consumer since 2015, after the USA, China, India, and Russia. Since the country has few domestic natural resources, Japan has relied entirely on imports of oil and gas to meet its demand over the past half a century. In 2015, Japan ranked as No. 4 in oil imports (after the USA, China, and India), No.1 in liquid natural gas (LNG) imports, and No. 2 in coal imports, second only to China (BP 2016, pp. 19, 23, and 28; Mundi 2016). As shown in Fig. 1, petroleum (oil and gas) and coal together have accounted for 92% of Japan’s primary energy in 2015; therefore, how to ensure security of energy supply became a serious challenge for the Japanese government, far greater than for other major energy consumers, including China and the USA. During the first couple of decades after the WWII, Japan relied on domestic sources for 76% of its energy supply, with coal accounting for 45.8% and hydropower for 21.2% of primary energy consumption. Starting from the 1960s, Japan switched its primary energy supply from coal to oil, and by the early 1970s, its reliance on oil reached to 78% of the primary energy consumption, among which 87.8% was from the Middle East (Koyama 2002, pp. 39–48, 74). Prior to the first oil crisis in 1973, Tokyo focused on ensuring stable oil supply at the lowest possible

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Japan: Oil Policy, Fig. 1 Japan’s energy mix, 2015 (Source: adapted from the BP 2016)

cost but eventually was forced to accept higher costs to ensure stable oil supply in the aftermath of the oil crisis. The Japanese government also reinforced the efforts to obtain greater autonomy in oil production (Jishu Kaihatsu), as the country relied heavily on international oil majors for its oil supply. Since there was no state-owned oil company in Japan (A state-owned upstream company, the Japan Petroleum Exploration Co., Ltd. (JAPEX), was established in December 1955, but in April 1970, it was reorganized as a private company and was listed on the Tokyo Stock Exchange in December 2003. http://www.japex.co.jp/english/ company/history.html), the Japanese government set up a special agency in 1967 – Japan Petroleum Development Corporation (JPDC) – as the parent organization for promoting the exploration and development of primarily overseas oil resources. Its primary role at the time of establishment was to provide the necessary funding and liability guarantees for overseas oil exploration. In 1972, JPDC added natural gas to its scope of business in order to diversify energy sources. In 1978, under the new name Japan National Oil Corporation (JNOC), it commenced oil stockpiling (JOGMEC history). However, due to the loose alliance between the JNOC and private

companies, the government was unable to ensure real control over the private oil companies; as a result, the government’s target for 30% of “autonomous oil production” by 1985 has never been achieved (Koyama 2002, pp. 45–48), even until today. That being said, the Japanese government had also taken some other measures to ensure security of oil supply, including enhancement of energy efficiency, establishment of strategic oil stockpiles, and energy diplomacy, and these strategies proved highly successful. As shown in Fig. 2, Japan’s oil consumption between 1980 and 2015 had declined in absolute terms, and the trend also showed a decrease since the mid-1990s. With much improved energy circumstances, Tokyo pursued a more sensible energy strategy from the 1990s onward, focusing on “optimal balance between supply and cost” (Kashiwagi et al. 2004). In the new century, Japan further shifted to a more environmentally friendly energy policy, and, in February 2004, the JNOC was integrated with the Metal Mining Agency of Japan into the Japan Oil, Gas, and Metal Corporation (JOGMEC).

Japan’s Energy Efficiency Japan is one of the most energy-efficient nations in the world, thanks to the policy and regulations adopted by the government since the first oil crisis. At the initial stage, energy efficiency was viewed primarily a matter of energy security; therefore, a series of policy measures made since 1971 were mainly focused on industries. Even in the first comprehensive energy legislation, the Energy Conservation Act enacted in 1979, the emphasis was still on taking fiscal measures to encourage rational use of energy in energyintensive industries, such as utilities, machinery, buildings, and factories (Ogawa et al. 2010, pp. 4–12). Thereafter, Tokyo formulated additional regulations on energy conservation and efficiency enhancement, and the scope was also expanded to consumers and transportation sectors.

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Japan: Oil Policy, Fig. 2 Japan’s oil imports and consumption (kb/d), 1980–2015 (Source: adapted from the BP Statistical Review of World Energy, various years)

In the wake of the Rio Earth Summit in 1992, a new feature appeared in Japan’s energy policy: the consideration of environmental protection. Japan then revised the Energy Conservation Act in 1993, 2002, 2005, and 2008, respectively (Ogawa et al. 2010, p. 3), to reflect the three guiding principles (3Es) for energy demand and supply: energy security, environment (i.e., climate change mitigation), and economic efficiency (i.e., lower energy cost). Under energy security, the diversification of primary energy resources and increasing self-sufficiency was listed as key issues. On environmental protection, three factors were highlighted: preventing the greenhouse effect, preserving the regional environment, and transforming society toward recycling. In terms of economic efficiency, activating market mechanism and promoting deregulation policies to facilitate the above two principles were viewed as the key points (Ogawa et al. 2010). As a result of these policies, Japan’s energy efficiency was enhanced by approximately 40% between 1973 and 2009, as shown in Fig. 3, making the country the most energy efficient in the world prior to the 2011 Fukushima nuclear accident. Likewise, Japan’s oil demand has steadily decreased since the mid-1970s, from 5.27 million barrels per day (bpd) in 1973 to 4.47 million bpd in 2011, and its oil imports also dropped from 5.48 million bpd to 4.49 million bpd during the same period of time (BP various). Even after the

Fukushima accident, which forced suspension of all 54 nuclear reactors, Japan’s oil consumption only showed a modest increase to 4.53 million bpd in 2013 but then declined again to 4.15 million bpd in 2015 (BP 2016, p. 9). On 24 May 2013, Tokyo amended the Energy Conservation Act for the fifth time, calling for establishment of the Top Runner Program for building materials and for measures on the demand side during peak demand (say factories, transportation), and these measures were promulgated as Act No. 25 at the end of May (ARNE 2013). In order to promote energy conservation measures for the summer, on 31 May 2016, MITI again announced that the Inter-Ministerial Liaison Council for the Promotion of Energy and Resource Conservation Measures was held and made a decision on the summer energy conservation measures. According to which a summer energy conservation campaign would be launched from June to September, led by the government but appealing for public cooperation as well in carrying out measures in electricity saving and energy conservation (ARNE 2016). Given the fact that considerable achievements Japan have made over the last four decades, some believed that it would be unrealistic to see Japan making major gains in energy efficiency in the future, while minor gains could still be possible (Vivoda 2012). Yet the counter argument, for instance, by IEA, suggests that there is

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398 Japan: Oil Policy, Fig. 3 Primary energy use per real GDP of Japan (Mtse/1 trillion yen) (Source: Nagata 2014)

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“unrealized energy efficiency potential” in four sectors: about 80% in buildings and in power generation, respectively, and about 60% in transport and in industry as well, as indicated in Fig. 4. DeWit also argued that, in Japan’s case, “heating and cooling equipment have the highest potential to curb energy in office buildings” (DeWit 2013, p. 2), which might partially explain the reason behind MITI’s recent summer energy conservation campaign.

Japan’s Strategic Oil Reserves Japan’s oil stockpiling system was initiated after the first oil crisis, comprising of two elements. One is the government strategic oil reserves that was built from 1978, as stipulated by the Oil Stockpiling Act (OSA) issued on 27 December 1975. The other is the stockpiling by the private sector that was encouraged by the government in 1971 but became a legal obligation under the OSA in 1975 (OSA 1975). Prior to the oil crisis in 1973, the Japanese government already encouraged private companies to build oil stockpiling and set a target for 45 days by the end of 1971 and 60 days by 1974. This target was reached ahead of schedule: by 1973, stockpiling by private had reached to an amount equivalent to 61 days of oil consumption (Okabe 2001). In 1974, the International Energy Agency (IEA) was created and then required its member

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states to establish a strategic petroleum reserve (SPR) equivalent to 90 days of consumption. As a founding member of the IEA, Japan issued the OSA in 1975 as the legal mechanism for its SPR building, which required that the private sector should establish 90 days’ worth of oil stockpiling and that the government SPR should start in 1978 under the leadership of JNOC. By 1998, Japan’s government oil SPR reached 50 million kiloliters (mkl), equivalent to 85 days of Japan’s oil consumption (Okabe 2001). In 2006, OSA was amended to request the government to increase the volume of SPR (while allowing the private sector to reduce the stockpiling obligations), and it also introduced government oil product reserves, such as gasoline, kerosene, fuel oil, and diesel oil – prior to this the government only had crude oil in its SPR. Thereafter, the government stockpiling showed constant increase and reached 47.5 mkl in December 2014, equivalent to 114 days of Japan’s oil consumption. The industry stocks declined comparatively but were still equivalent to 84 days of oil consumption (35.1 mkl) at the end of 2014 despite the stipulations that they could have lower than 70 days of reserves (PAJ 2015, pp. 22–23). Currently, the government stockpiling is still dominated by crude oil (97.1%), with 2/3 stored in ten national stockpiling bases and the rest in tanks leased from the private sector across Japan. The private stockpiling scheme is stored by private oil companies in 16 domestic private

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J Oil Stockpiling Obligation Trends: Volume and Days (fiscal year end) Unit: 10,000kl, (days) 10,000 8,953 (150)

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8,343 (197)

8,590 (185)

8,406 (193)

8,147 (199) (2)

7,098 (127)

Private Stockpiles (90)

(92)

(88)

(74)

(78)

(78)

(77)

(81)

(84)

(79)

(84)

(83)

(83)

(80)

4,000

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0

(7)

(10)

(35)

(54)

(76)

(85)

(90)

(99)

(102)

(115)

(114)

(113)

(102)

(110)

(117)

1977 1978 1980 1985 1990 1995 2000 2005 2007 2008 2009 2010 2011 2012 2013 2014

Japan: Oil Policy, Fig. 5 Japan’s oil stockpiling, 1977–2014 (Source: PAJ 2015, p. 24)

terminals (PAJ 2015; IEA 2013). As shown in Fig. 5, Japan’s total SPR in 2014 reached 8,147 mkl, equivalent to nearly 200 days of its oil consumption, making the country one of the

top oil stockpiling holders in the world, second only to the USA. Starting from 2007, Tokyo formulated a new scheme of oil stockpiling – jointly with foreign

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Japan’s Energy Diplomacy

countries. As the Japanese stockholding law stipulates that all government/compulsory stocks must be held domestically (IEA 2014), in a bilateral stockholding agreement signed between Japan and New Zealand at the end of 2007, New Zealand was allowed to have bilateral stockholdings in Japan. Meanwhile, Japan also promoted joint stockpiling projects with oil-producing countries, such as the Abu Dhabi National Oil Company in 2009 and the Saudi Arabian Oil Company in 2010. Such schemes would allow the producers to reserve their crude oils in Japan and use them commercially under normal times, while in an emergency, Japanese oil companies receive preferential crude oil supply from their reserves under this agreement (PAJ 2015, p. 23). In October 2012, MITI announced two further amendments of OSA. One was about mobilization, meaning that national stockpiled oil and LP gas would be allowed to be released not only in the event of a shortage of oil supply from overseas but also in the event of an oil supply shortage in a specific area of Japan due to a disaster. The other was that oil refinerdistributors oblige to cooperate with each other to supply oil to the affected people in the event of a disaster (ARNE 2012).

Japan: Oil Policy, Fig. 6 Sources of Japan’s oil supply in 2014 (Source: http://www.marcon.com/ print_index.cfm? SectionListsID¼93& PageID¼403)

Apart from the abovementioned two measures, the Japanese government has also pursued energy diplomacy to help secure Japan’s oil supply. Among the focal points, the Middle East has played a major role for Japan’s oil supply since the 1960s. Tokyo has taken two kinds of measures to cope with the high risks associated with its heavy reliance on Middle East oil supply. One was its attempt to strengthen ties with the oil states in the Middle East amid the oil crisis in 1973 – until then Japan relied on the USA to ensure its oil supply, which became unviable with the arise of the Arab oil embargo. Japan then took an orientation independent of the US policy by setting a fixed allocation of 10% for the Middle East states in its budget of Official Development Assistance (ODA). The hope was to facilitate its oil supplies through the support for infrastructure building in the region (Miyagi 2008, p. 45). The other was the efforts made to reduce Tokyo’s dependence on Middle East oil by diversifying its sources of energy supply from East Asian countries and Russia. However, as the competition for oil sources became severe, particularly due to the emergence of large economies such as China and India, particularly since China turned from an oil exporter into a net importer in 1993,

Japan’s crude oil imports by source, 2014 (11 months)

Rest of world 11% Russia 8% Saudi Arabia 34%

Iran 5% Kuwait 7% Qatar 11%

eia

UAE 24%

Sources: Japan’s Ministry of Finance, Global Trade Information Serivces

Japan: Oil Policy

Japan has increasingly pursued strengthening of ties with the leading and influential oil producer: Saudi Arabia. The rationale was that having a share in the oil production would mean having a leverage over the oil flow into Japan, as well as the oil pricing, especially at a time of war in the Middle East. Tokyo has also established emergency and security measures for the Japanese oil business, such as state insurance to cover damage at the time of an unexpected event or the provision of loans on a favorable term to support oil projects pursued by the Japanese companies by the Japan Bank for International Corporation (JBIC) (Miyagi 2008). Japan’s intention to obtain oil from Russia had also ended as a failure due to competition with China and the political mistrust between Tokyo and Moscow (Liao 2008). As a result, Japan has not managed to move away from its reliance on the Middle East oil, which still counted 81% of its total imports by 2014, as shown in Fig. 6. In 2015, Japan’s reliance on the Middle East crude further grew to 83% (BP 2016), making the region not only the most important source of oil supply but also a venue to strengthen Japan’s international role. This explains why Abe has made three trips to the Middle East since he was elected in December 2012, visiting more than a dozen of countries there, including Iran (Miller 2016).

Concluding Statement Japan has made remarkable achievements in ensuring the security of its oil supply over the past few decades using various means, including enhancing energy efficiency and establishing sizeable strategic oil reserves and active energy diplomacy. Largely due to these measures, together with the development of nuclear energy, Japan’s oil consumption has shown a constant decline alongside its economic growth. Japan has also become the most energy-efficient country in the world today, thanks to its successful energy efficiency strategy. In the wake of the Fukushima nuclear accident, Japan has faced more uncertainties in its future energy mix: the role of nuclear will certainly be

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reduced and even be phased out in the long run, yet the room for Japan to future improve energy efficiency is much limited than before. Therefore, the development of renewable energy seems the most feasible option for Japan, to safeguard its energy supply and to fulfill its international commitment to CO2 reduction. It may be a challenging and costly task but will be proved as worthwhile for the country in the long run.

References Agency of Natural Resources and Energy (ANRE) (2012) Amended oil stockpiling act to be enforced in november: for strengthening the structure for supplying oil and LP gas in the event of disaster. 30 Oct. http:// www.meti.go.jp/english/press/2012/1030_01.html ANRE (2013) Act to partially amend the act on the rational use of energy (energy conservation act) was passed by the diet and promulgated. http://www.meti.go.jp/ english/press/2013/0708_03.html ANRE (2016) Summer energy conservation measures: summer energy conservation Campaign from June to September. http://www.meti.go.jp/english/press/2016/ 0531_02.html BP Statistical Review of World Energy (BP) (2016). http:// www.bp.com/content/dam/bp/pdf/energy-economics/ statistical-review-2016/bp-statistical-review-of-worldenergy-2016-full-report.pdf DeWit A (2013) Abenomics and energy efficiency in Japan. Asia-Pacific J. 11(6), No. 2, 11 Feb, pp. 1–14. IEA (2014) Chapter 4: emergency response systems of individual IEA countries, Japan. Energy Suppl Secur 2014, pp. 271–286. https://www.iea.org/media/ freepublications/security/EnergySupplySecurity2014_ Japan.pdf Index Mundi (2016) Coal imports by country. http://www. indexmundi.com/energy.aspx?product¼coal&gra ph¼imports&display¼rank International Energy Agency (IEA) (2013) Oil and gas security: Japan. OECD/IEA, Paris Japan Oil, Gas and Metals National Corporation (JOGMEC), History. http://www.jogmec.go.jp/ english/about/about003.html?recommend¼1 Kashiwagi T et al (2004) The new direction of Japanese energy policy and the role of gasification. http://www. gasification.org/Docs/2004_Papers/ 18KASH.pdf Koyama K (2002) Japan’s energy strategies towards the Middle East. PhD dissertation, University of Dundee Liao JX (2008) Politics of oil behind Sino-Japanese energy security strategies, Asia paper. The Institute for Security and Development Policy, Stockholm Miller JB (2016) Japan’s strategic ties with Iran. 18 Feb. http://studies.aljazeera.net/en/reports/2016/02/20162 1864717335576.html

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402 Miyagi Y (2008) Japan’s Middle East security policy: theory and cases. Routledge, London/New York Nagata T (2014) Japan’s policy on energy conservation. 12 Mar. https://unfccc.int/files/bodies/awg/application/ pdf/2_japan.pdf Ogawa J, Noda F, Yamashita Y (2010) Japan’s energy management policy experiences and their implications for developing countries. https://eneken.ieej.or.jp/data/ 3357.pdf Oil Stockpiling Act (OSA) (1975) http://www.japanese lawtranslation.go.jp/law/detail/?id¼65&vm¼04& re¼02. 27 Dec

Japan: Oil Policy Okabe T (2001) Petroleum stockpile policy in Japan. Presentation. http://www.egcfe.ewg.apec.org/publica tions/proceedings/ESI/ESI_Bangkok_2001/2-3_ okabe.pdf Petroleum Association of Japan (PAJ) (2015) Petroleum industry in Japan 2015. http://www.paj.gr.jp/english/ data/paj2015.pdf Vivoda V (2012) Japan’s energy security predicament post-Fukushima. Energy Policy 46:135–143

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Kenya: Mineral Policy Kobena T. Hanson1 and Kwabena Ata Mensah2,3 1 Strategic Outlooks LLC, Cantonments, Accra, Ghana 2 CEPMLP, University of Dundee, Dundee, Scotland, UK 3 KAM Associates Limited, Tema, Ghana

Kenya is an East African country officially known as the Republic of Kenya and a founding member of the East African Community (EAC) with its capital and largest city called Nairobi. Kenya has a land mass of 581,309 km2 (224,445 square miles). It is bordered by Tanzania to the south and southwest, Uganda to the west, South Sudan to the northwest, Ethiopia to the north, and Somalia to the northeast. The country’s population is currently estimated at 48 million. It has a young population, with 73% of residents aged below 30 years because of rapid population growth from 2.9 million to 40 million inhabitants over the last century.

The Economy of Kenya The driving forces of the economy of Kenya have been agriculture, tourism, and other service industries such as the hospitality industry. Mining has

not been key to the government, potential investors, and majority of the citizens until recently. The economy has seen much expansion, seen by strong performance in tourism, higher education, and telecommunications and acceptable post-drought results in agriculture, especially the vital tea and coffee sectors. Kenya’s economy grew by more than 7% in 2007, and its foreign debt was greatly reduced. However, this changed immediately after the disputed presidential election of December 2007, following the chaos which engulfed the country, and this has been worsening over the past 8 years and more recently exacerbated by tension and civil strife over a rerun of the annulled August 2017 presidential election. Although Kenya has the biggest and most advanced economy in East and Central Africa and has an affluent urban minority, it has a Human Development Index (HDI) of 0.519, ranked 145 out of 186 in the world. As of 2005, 17.7% of Kenyans lived on less than $1.25 a day. In 2017, it was ranked 92nd by the World Bank for ease of doing business, elevating from 113th in 2016 (of 190 countries). The agricultural sector is one of the least developed and largely inefficient, employing 75% of the workforce compared to less than 3% in the food-secure developed countries. Kenya is usually classified as a frontier market or occasionally an emerging market, but it is not one of the least developed countries.

© Springer-Verlag GmbH Germany, part of Springer Nature 2023 G. Tiess et al. (eds.), Encyclopedia of Mineral and Energy Policy, https://doi.org/10.1007/978-3-662-47493-8

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East and Central Africa’s biggest economy has posted tremendous growth in the service sector, boosted by rapid expansion in telecommunication and financial activity over the last decade, and now contributes 62% of GDP. 22% of GDP still comes from the unreliable agricultural sector which employs 75% of the labor force (a consistent characteristic of underdeveloped economies that have not attained – an important catalyst of economic growth). A small portion of the population relies on food aid. Industry and manufacturing are the smallest sector, accounting for 16% of GDP. The service, industry, and manufacturing sectors only employ 25% of the labor force but contribute 75% of GDP. Privatization of state corporations like the defunct Kenya Post and Telecommunications Company, which resulted in East Africa’s most profitable company – Safaricom – has led to their revival because of massive private investment. Economic prospects were positive with 4–5% GDP growth expected in 2011, largely because of expansions in tourism and telecommunication, transport, and construction and a recovery in agriculture. The World Bank estimated growth of 4.3% in 2012 (Kenya, Trends in the Human Development Index (1970–2010)). Kenya is East and Central Africa’s hub for financial services. The Nairobi Securities Exchange (NSE) is ranked fourth in Africa in terms of market capitalization. The Kenyan banking system is supervised by the Central Bank of Kenya (CBK). By late July 2004, the system consisted of 43 commercial banks (down from 48 in 2001) and several nonbank financial institutions, including mortgage companies, four savings and loan associations, and several core foreign exchange bureaus. Kenya’s services sector, which contributes 61% of GDP, is dominated by tourism. The tourism sector has exhibited steady growth in most years since independence and by the late 1980s had become the country’s principal source of foreign exchange. Tourists, the largest number being from Germany and the United Kingdom, are attracted mainly to the coastal beaches and the game reserves, notably, the expansive Tsavo East

Kenya: Mineral Policy

and Tsavo West National Park 20,808 square kilometers (8034 sq. mi) in the southeast. Tourism has seen a substantial revival over the past several years and is the major contributor to the pickup in the country’s economic growth. Tourism is now Kenya’s largest foreign exchange earning sector, followed by flowers, tea, and coffee. In 2006 tourism generated USD 803 million, up from USD 699 million the previous year. Presently, there are also numerous shopping malls in Kenya. In addition, there are four main hypermarket chains in Kenya. Kenya banned most game hunting in 1977, removing a major economic incentive for rural communities to protect wildlife. By best estimates, Kenya’s wildlife has declined by more than 70% over the past 20 years. Manufacturing still accounts for only 14% of the GDP. Industrial activity, concentrated around the three largest urban centers, Nairobi, Mombasa, and Kisumu, is dominated by foodprocessing industries, such as grain milling, beer production, and sugarcane crushing, and the fabrication of consumer goods, e.g., vehicles from kits. There is a cement production industry. Kenya has an oil refinery that processes imported crude petroleum to petroleum products, mainly for the domestic market. In addition, a substantial and expanding informal sector commonly referred to as jua kali engages in small-scale manufacturing of household goods, auto parts, and farm implements. Kenya’s inclusion among the beneficiaries of the US government’s African Growth and Opportunity Act (AGOA) has given a boost to manufacturing in recent years. Since AGOA took effect in 2000, Kenya’s clothing sales to the United States increased from USD 44 million to USD 270 million (2006) (Fig. 1).

Kenya’s Mining Industry Kenya is endowed with non-energy minerals that include soda ash, fluorite (fluorspar), titanium, niobium, rare earth elements (REEs), diatomite, carbon dioxide, gold, coal, iron ore, vermiculite,

Kenya: Mineral Policy

8E+10

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Kenya: Mineral Policy, Fig. 1 Trend of GDP in Kenya (1960–2016) (Source: World Bank Data (Accessed 28/10/ 2017))

kyanite, manganese, chromite, silica sand, gemstones, gypsum, and limestone (Table 1). Most of these minerals are heavily underexploited except for soda ash (trona), fluorspar, niobium, REEs, and titanium. Despite the country’s long-standing involvement in mining, its medium- to large-scale mining activities of gold and base metals took place during periods that predate Kenya’s independence in December 1963. Soda ash is the country’s leading mineral export earner at about 2,716,338 metric tons. With experts predicting a rise in the country’s production of fluorspar, gemstones, and soda, the government has introduced the Mining Act (2016) to address gaps in outdated legal framework and regulations, access to land for exploration and mining, inadequate geological data and information, mineral marketing and value addition, inadequate funding, environmental degradation, and gender issues and child labor. Kenya currently has different players at different stages of the mining cycle, ranging from early stage exploration through to production. The sector is thus characterized by an extensive range of activity across time and at different scales of operation – many of which are relatively small in size. Depending on the mineral being exploited, operations have commenced as recently as 2014, or as early as the 1940s. Mining and quarrying are

reported to currently contribute 0.8% of the GDP and around 3% of export revenues (Adam Smith International 2015).

Classification of Resources and Reserves According to the Chamber of Mines website of Kenya, the country can boast of an array of minerals categorized as precious metal group, construction and industrial minerals, fuel minerals, base and rare metal group, precious stones, semiprecious stones, and gaseous minerals (The Kenya Chamber of Mines 2015.). With about 97 individual minerals sectioned under each category, the precious metal category, among other metals, comprises gold. Construction and industrial minerals have diatomite and gypsum as its main minerals, while fuel mineral composes of nuclear and nonnuclear coal. Base and rare metal group in addition to 29 other metals contain copper, cobalt, iron, titanium, and manganese. Under precious stones are diamonds, emeralds rubies, sapphires, and green garnet/tsavolite. The last two categories, semiprecious stone and gaseous minerals, encompass 22 and 4 elements, respectively.

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Kenya: Mineral Policy, Table 1 Summary of non-energy mineral resources reserves and production in Kenya Mineral Limestone and lime products

Companies National Cement Company Bamburi Cement Athi River Mining East African Portland Cement Savannah Cement

Iron ore

Skylight Limited Wanjala Mining Company Ltd/R.K Sanghani Artisanal Miners Karebe Gold Mining Ltd Base Titanium

Gold Titanium and mineral

Base metal prospecting

Acacia Mining

Carbon dioxide

Carbacid Co2 Ltd BOC Kenya Limited Yamata Gypsum Limited Athi Stores Ltd Kutima Investment Limited Bridges Exploration Ltd First Green Garnet (Co) Kenya Ltd Kilimapesa Gold Pty Limited Mineral Mining (1965) Corporation Ltd Eastern Chemical Industries Limited

Gypsum Gemstones

Magnesite Silica sand

Notes • Produced from manufacture of cement and other industrial products • Cement and construction industries take bulk of limestone mined and quarried • Estimated annual capacity for cement production: Bamburi Cement: 2.3 M tons East African Portland Cement Company (EAPCC): 1.4 M tons Athi River Mining: 1 M tons Mombasa Cement: 1.6 M tons Savannah Cement: 1.5 M tons • Mainly for use in domestic manufacture of cement • New steel plant project sourcing about 40% of required iron ore from domestic producers • Several small greenstone belts and operation in western and southern parts of Kenya • One of Kenya’s world-class advanced development projects • Constitutes about 2/3 of mineral sector in Kenya with: Titanium: 140 M tons Rutile: 80 K tons annually Zirconthe: 40 K tons annually Ilmenite: 330 K tons annually • Estimated project capital cost of USD 300 M • Estimated USD 100 M to be designated as direct spend in Kenya (contractors, machinery and equipment, goods and services, and employment during construction) • Estimated USD 260 M–300 M tax revenue through mine life • Estimated contribution of 1% to GDP • Other project prospects in Mambrui, Kilifi, and Vipingo • Project constitutes about 2,800km3 of Ndori Greenstone Belt as well as Lake Zone Gold Camp • Potential for gold, copper, lead, and zinc • Project constitutes about 2,800km3 of Ndori Greenstones Belt as well as Lake Zone Gold Camp • Potential for gold, copper, lead, and zinc • Project constitutes advanced knowledge of belt geology and structure • Will also include drill testing of up to 50,000 meters of air core, reverse circulation, and diamond drill core and to collect more than 15,000 auger and soil samples throughout the properties • About 16,000 metric tons produced annually through Carbacid which has the capacity to produce 35,000 MT annually • Primarily used in production of cement with about 7,000 MT produced annually • Various precious and semiprecious stones • Cumulative production annually of about 17,5550 kilograms

• Under exploration

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See http://www.kenyachambermines.com/ resources/minerals-found-in-kenya/. Kenya is very well known for gemstone mining; however, the small-scale (artisanal) miners dominate the industry. Artisanal mining accounts for over 60% of annual gemstone production in Kenya; women and youth play a major role in artisanal mining. In 2002 Kenya had an estimated production of 10.9 tons of ruby – corundum (5.86 tons in 2001) – and 61.4 tons of gemstones (compared to 73.3 tons in 2001). “There has been a decline in Kenya’s gemstone mining industry recently, with the same traditional players continuing to dominate the sector” (Source: UNDP). Of specific mention is gold, which is largely produced by artisanal miners, mining about 2100 kilograms (kg) in 2013 against 3600 kg in 2012. According to the Kenya National Bureau of Statistics (2014), the decreased production may have resulted from decreased world gold prices. A regional soil sampling and drilling operation was in 2013 undertaken by African Barrick Gold plc (ABG) of the United Kingdom. The operation which took place at ABG’s West Kenya Joint Venture close to Lake Victoria was to ascertain the mineral composition of the area prior to further exploration in 2014 (African Barrick Gold plc 2014, p. 24).

Need for Minerals According to the Kenya National Bureau of Statistics, total mineral output increased by 9.5% from 1571.9 thousand tons in 2015 to 1720.6 thousand tons in 2016 (KNBS 2017) (Table 2). See https://beta.extractiveshub.org/servefile/ getFile/id/5395.

Mineral Policy Conception of Kenya The Mining and Mineral Policy of Kenya deals comprehensively with the drawbacks that have hindered the progress of the mineral and mining policy; the goals, guiding principles, and objectives; and the way forward and strategies to

407 Kenya: Mineral Policy, Table 2 Energy mineral resources and production in Kenya Coal

Fenxi Mining and Great Lakes Corporation

• Estimated 400 M tons of coal • Estimate value of USD 40B • Investment required of close to USD 500 M in exploration and production

achieve the desired results that would help boost the country’s economic growth rate envisioned under Kenya Vision 2030 development strategy and in line with the African Mining Vision (AMV) charter of 2009, which seeks to position mining as a key driver of development in Africa. In addition, the policy addresses the issues of environmental conservation, small-scale mining, intergenerational equity, best practices, gender issues, discovery and innovation benefits, transparency and accountability, as well as equitable benefit sharing. Kenya’s mining and mineral sector had been regulated with laws and ad hoc regulations enacted since the colonial era of 1940. This has meant that over time, the sector had failed to attract the appropriate amount of investment and growth and hence contributed approximately 1% of Kenya’s GDP. Indeed, a situational analysis carried out on the sector highlighted the various shortfalls including (1) outdated legal framework and regulations, (2) poorly regulated access to land for exploration and mining, (3) inadequate expertise to address mineral marketing and value addition, (4) inadequate funding in the sector, (5) environmental degradation, (6) gender inequalities and child labor, (7) inadequate institutional and human capacity, (8) artisanal and small-scale mining and related vices and issues, and (9) a poorly structured fiscal regime to generate the required revenues for the economy. The current policy focuses on the development of the mining and mineral sector with the overriding aim of reviewing the sector’s obsolete legal framework and regulations. Due to its immense potential, the new Mining and Mineral Policy of

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Kenya aims to include the mining and mineral sector as one of the avenues of achieving high economic growth envisioned under the Kenya Vision 2030 agenda, making mining a key driver of economic growth and transformation. With the rollout of this policy, the policy has mandated that mining and mineral contribution to GDP is expected to increase to three (3%) percent by 2017 and ten (10%) percent by 2030. The policy comprehensively addresses the gaps that have existed in the mining sector and further aligns the country’s mining sector with the aspirations of Kenya Vision 2030, the provisions of the Constitution of Kenya (2010), and the African Union Mining Vision (2009) which aims at positioning mining as a key driver of Africa’s socioeconomic development. The policy provides a firm foundation and basis for the establishment of an enabling framework for accelerated and sustainable development of the country’s mining and mineral resources sector. It further ensures that all stakeholders including investors, artisanal and small-scale miners, national and county governments, local communities, and the people of Kenya benefit from the growth of the sector. To address the problems that preceded the policy, the policy has key guiding principles, and detailed objectives of the policy based on these guidelines and objectives include the following: • Provide long-term policy direction and legal framework which conform to current industry needs, trends, and international best practices. • Provide a strategy for clear, simple, predictable, transparent, and accountable licensing procedures in the mining and mineral resources sector including access to land. • Provide a framework for a well-structured and globally competitive fiscal regime. • Enhance acquisition, processing, and dissemination of geological and mineral data and information to investors and other key stakeholders including the public. • Provide a strategy for marketing, promotion, and value addition of minerals. • Provide a framework for mobilizing resources and capacity building for the sector.

Kenya: Mineral Policy

• Provide a framework for harmonizing legislations relating to mining, health and occupational safety, and the environment. • Provide a framework for gender mainstreaming and eradication of child labor in the industry. • Provide a framework for mainstreaming activities of artisanal and small-scale miners. • Provide a framework to promote and facilitate local participation and investment in mining. • Provide a framework for equitable sharing of mineral benefits between the national government, county governments, and the host communities. Thirteen policy strategies are further drawn along the mineral value chain to ensure its effectiveness with a summary as follows: • Strategy 1: Put in place a simple, stable, predictable, transparent, efficient, and unified regulatory framework for the mining sector. • Strategy 2: Develop a transparent licensing system which will enable the efficient management of concessions and allocations of mineral rights. • Strategy 3: Enhance collection and access to geological data. • Strategy 4: Develop legislative mechanisms for accessing land for mineral development. • Strategy 5: Achieve an acceptable balance between mining and environmental conservation and ensure that the sector operates within the approved (national and where necessary international) standards of health, safety, human rights, and environmental protection. • Strategy 6: Develop and implement a stable, transparent, predictable, and competitive fiscal regime. • Strategy 7: Develop mechanisms for promotion of investments in mining and value addition. • Strategy 8: Pursue a responsive regulatory framework that ensures benefits accruing from the mining sector are maximized for greater socioeconomic development. • Strategy 9: Design mechanisms for sharing benefits accruing from exploitation of minerals

Kenya: Mineral Policy

•

•

•

•

between the national government, the local governments, and host communities. Strategy 10: Develop and implement mechanisms to enhance participation of government (national and county), affected communities, and other stakeholders in mining activities. Strategy 11: Develop a framework for mainstreaming and formalizing artisanal and small-scale mining operations in order to support livelihoods and entrepreneurship. Strategy 12: Develop and implement frameworks, structures, and mechanisms that ensure equitable participation, ownership, and decision-making value chains by women, youth, and disadvantaged groups. Strategy 13: Develop and enforce measures that will ensure a competitive local workforce, facilitate knowledge and skill transfer, and promote the use of local goods and services (USAID 2016).

The Ministry of Mining has the main responsibility for the oversight of the implementation of the Mining Policy (2016). In carrying out this responsibility, the Ministry will collaborate with other government ministries, departments, and agencies, the National Assembly, the private sector, and other key stakeholders, with key actions and responsibilities including financing of the policy, monitoring and evaluation, and according to well-structured policy implementation timelines.

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the potential of the mining industry; the Government of Kenya has put in place a new and appropriate institutional framework through the establishment of requisite directorates and specialized agencies. These include the Directorate of Mines, Directorate of Geological Surveys, Directorate of Mineral Promotion and Value Addition, Directorate of Resource Surveys and Remote Sensing, internationally accredited Mineral Certification Laboratory and Geo-Data Bank, Mineral Audit Agency, National Mining Corporation, National Mining Institute, and Mineral Rights Board. These institutions have been assigned specific tasks to perform covering various activities relating to the mining and mineral sector of Kenya (USAID 2016).

International Membership Kenya is a member of several international organizations, but two related directly to mining are the Public-Private Alliance for Responsible Minerals Trade (PPA) (African Great Lakes region), a joint initiative among governments, companies, and civil society to support supply chain solutions to conflict mineral challenges in the Great Lakes Region (GLR) of Central Africa, Kenya is a member of and committed to the ideals of the Extractive Industries Transparency Initiative (EITI) in 2015. See http://www.eisourcebook.org/993_Kenya. html.

Legislative and Regulatory Framework and Institutions

Concluding Statement

The new mining law enacted in May 2016 repealed the colonial-era Mining Act of 1940 essentially; the aim of the regulation is to increase local or Kenyan participation in mining companies. The regulation states “it shall be a condition of every mining license that the mineral right in respect of which the license is issued shall have a component of local equity participation amounting to thirty-five (35%) of mineral right.” With the aim of achieving the goal, objectives and strategies are outlined in the policy and realize

The enactment of Kenya’s Mining Act (2016) (“the Mining Act”) in 2016 was to strike a proper balance between investor interest, public interest, and financial obligations to the mineral rights holders. This is partly due to the fact that the mining law which was enacted in 1940 has not kept pace with the reviews of mining codes that have taken place on the continent over the decades. The Mining Act is to enable the country take full advantage of its mining and mineral resources sector and also tap into its rich mineral

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resources that have been underexplored and underexploited by the government as it addresses gaps that had not been considered in the previous Act.

References African Barrick Gold plc (2014) Annual report & accounts 2013: London. African Barrick Gold plc, United Kingdom 168 p http://www.eisourcebook.org/993_Kenya.html

Kenya: Mineral Policy https://beta.extractiveshub.org/servefile/getFile/id/5395. Retrieved 28 Oct 2017 https://www.idlo.int/sites/default/files/pdfs/highlights/ Kenya Mining Policy Popular Version-LowRes.pdf Kenya National Bureau of Statistics (2014) Statistical abstract 2014: Nairobi. Kenya National Bureau of Statistics, Kenya 277 p Kenya National Bureau of Statistics (2017) Economic survey. https://www.knbs.or.ke/ Minerals found in Kenya – The Kenya Chamber of Mines. http://www.kenyachambermines.com/resources/mineralsfound-in-kenya/. Accessed 13 Oct 2017

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Liberia: Mineral Policy Marshall Kala1 and Kwabena Ata Mensah2,3 1 College of Education, School of Continuing and Distance Education, University of Ghana, Legon, Accra, Ghana 2 Centre for Energy Petroleum Mineral Law and Policy (CEPMLP), University of Dundee, Dundee, Scotland 3 Kam Associates Limited, Tema, Ghana

General Information on Liberia There has been a consistent increase in Liberia’s GDP since the 1960s until the start of the first civil war when it dropped sharply. The GDP has grown consistently again after the end of the second civil war which ended in 2003 (see Fig. 1). Businesses that fled the country began to return after the installation of a democratically elected government in 2006. The country achieved high growth during 2010–2013 due to favorable world prices for its commodities. The economy declined following the outbreak of the ebolavirus and a drop in global prices of their mineral exports. Not only did businesses and expertise leave, the Liberia government had to divert resources to combat the spread of the virus. Weak commodity prices continue to weigh on Liberia’s economy, which contracted by an estimated 0.5% in 2016. Remittance inflows remain a major source of foreign capital for Liberia. Liberia’s remittance-

to-GDP ratio was 30.4%, while remittances per capita was US$ 150. Despite the huge role education can play in building up the human resource of a country, Liberia has an illiteracy rate of between 70% and 80%. Poverty rate of Liberia is 54%.

Need for Minerals The mineral sector played a pivotal role in the Liberian economy prior to the civil unrest. The sector contributed a whopping 65% of export earnings and approximately 25% of GDP. However, 15 years of a civil war, followed by an Ebola disease outbreak in 2014/2015, that coincided with a global slump in commodity prices took a toll on the economy. Production The real GDP performance of the Liberian economy is hinged on the production in the mining and panning sector. Decline in real GDP by 0.4 percentage points in 2015 (0.3%) from the 2014 (0.7%) figure is explained by decline in the mining and panning sector through iron ore production to negative 17% (from 3.3% in 2014). Also, estimated contraction of real GDP from US$ 896.4 million in 2015 to US$ 891.9 million in 2016 is attributable to decline in mining and panning to negative 23.8% (from negative 15.9% in 2015). Total iron ore production reduced by 38.3% from 5,189,723 in 2014 to 3,202,402

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Liberia: Mineral Policy, Fig. 1 Trend of GDP of Liberia (1960–2016). (Source: World Bank Data (Accessed 20/10/ 2017))

metric tons in 2015 (Central Bank 2016). Unfavorable global price for the commodity and decline in demand emanating from China are to explain the slump in iron output. Gold and diamond also witnessed declines in production in the same period due mainly to declining market price. Production figures continued to trend downward for iron ore, gold, and diamond in 2016 from the previous year. Iron ore output at the end of 2016 was estimated at 1.5 million metric tons, down from 4.5 million metric tons produced in preceding year (Central Bank 2017). Whereas the 66% contraction in iron output was due to the activities of the major concessionaire, global price of gold and diamond accounted for the decline in their production (Central Bank 2017). Export Figures from the Central Bank of Liberia indicate that merchandise export receipts declined sharply by 55.8% to US$ 259.5 million in 2015, from US$ 587.1 million in 2014. This was largely driven by 64.3% year-on-year declines in iron ore and rubber exports. The main reason for this is the reduced demand of iron ore from especially China despite strong production and supply mainly from Australia and Brazil thereby leading

to a 43.7% fall in iron ore prices in 2015 (Central Bank 2016). Figures from the 2016 report of LEITI reveal that the mining sector contributed US$ 78,852,842 (representing 58%) of the total government revenues during the FY13/14. Oil and gas contributed US$ 31,343,001 (23.16%), while agriculture and forestry each contributed US$ 19,077,268 (14.10%) and US$ 6,030,733 (4.46%) to total government revenues.

Classification of Mineral Reserves Mineral commodities produced in Liberia include cement, diamond, gold, iron ore, sand, and crushed stone. Other mineral resources, which were still undeveloped, included base metals (such as cobalt, lead, manganese, nickel, and tin) and industrial minerals (such as dolerite, granite, ilmenite, kyanite, phosphate rock, rutile, and sulfur). Liberia’s current mineral production covers diamonds, gold, and construction materials. Since being legalized, diamond production had increased by over 216% and now ranked 14th in Africa. Gold production doubled in 2008 with the

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commencement of the New Liberty mine making it one of the minor known gold producers on the continent. The country has substantial iron ore reserves, but mining ceased during the 1990s with the onset of the civil war. Liberia’s iron ore resources and reserves at grades of 30–70% are probably the largest in Africa, and there is renewed interest in the exploitation of the iron ore deposits by major players including ArcellorMittal, Tata, and minor companies such as Jonah Capital, specifically in Nimba county which has more than 1 billion tons of reserves hosted mainly by Precambrian Banded Iron Formations; the high-grade ores are the result of enrichment through laterization. The Wologisi in Bofa County and Putu deposits are reported to have in excess of 1 billion tons each of mediumgrade iron ore (see http://www.eisourcebook.org/ 1465_Extractive Industries.html).

Mineral Policy Conception of Liberia The Mineral Policy of Liberia is a policy document drafted in March 2010 to complement the Mining and Minerals Law of 2000 (Mineral and Mining Law 2000). It outlines the government’s expectations for the sustainable development of Liberia’s mineral resources, according to the United States Geological Survey, by establishing guidelines to ensure the proper management of these resources by public and private stakeholders. The Policy, among others, specifically addresses the need to correct the many deviations of Liberia’s Mineral Development Agreement (MDA) contracts with national law, noted in a later audit by the Liberia Extractive Industries Transparency Initiative (LEITI), saying “MDAs will be standardized and deviations from national fiscal, environmental and other regimes will be minimized” (Mineral Policy of Liberia 2010 p8). The objectives of the new Mining Policy seek to “provide an equitable and competitive mining sector, fully integrated into the African market and constitute a major player in national, continental and international capacity and commodity markets. It is most significantly, intended to guide

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the sustainable management of Liberia’s mineral resources” (Shannon 2010): 1. To establish an internationally competitive, stable, and conducive business climate to attract and sustain foreign and local investment 2. To formulate a fiscal and permitting regime that assures the country of fair value for its resources while offering equitable rewards to private investors 3. To institutionalize procedures to maximize returns to the nation from its finite known and unknown mineral assets 4. To put in place a mechanism for the evaluation of competing land use options 5. To eliminate adverse social conditions and environmental degradation due to mining activities 6. To support and enable artisanal and smallscale mining activities to create employment, generate income, and help reduce poverty in the rural areas 7. To ensure equitable distribution of benefits from mining activities to meet both current and future needs 8. To facilitate equitable access to the sector by all qualified Liberians, irrespective of gender or ethnicity 9. To ensure consultation of all stakeholders and protect affected people from exploration through mining and post-mine closure 10. To establish an effective administration and management of the mineral sector (http:// www.eisourcebook.org/cms/June%202013/ Liberia%20Mineral%20Policy.pdf) The government recognizes the need to revive the mineral sector to optimize its contribution to sustained national growth and development. In order to achieve this strategic direction, the following policy strategies will be targeted for implementation. These strategies are discussed under the policy objectives stated above. Ensure transparent and fair tendering for mineral concessions.

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According to the policy think tank Revenue Watch Institute (2013), the fate of the resource-rich countries crucially hinges “on how they manage their oil, gas and minerals.” This observation reflects the emerging consensus in policy circles that these states can avoid the ills of resource abundance, such as slowing development and an increased risk of political violence, through good governance. The Liberian government therefore seeks to avoid future resource conflicts by adopting the strategy of transparency and fairness in the tendering processes of mineral concessions. Institute a robust financial regime that will encourage competition and also ensure fair share of revenue between the country and investors. In post conflict settings, the business environment is usually very weak, especially in terms of regulation, security, corruption, and institutional framework. These institutional conditions are typically slow to improve, and private investment remains limited several years later (USAID 2009). The mineral policy therefore seeks to address this challenge with a robust financial system that will encourage private sector competition. The PPCA sets out the modalities for this to happen. This will also create a platform for the effective collection of mineral revenue. Promotion of local technology development and integration of mining and the other sectors of the economy. In post conflict countries, the pressing need for economic recovery compels government to rethink and adopt new directions for development. Generally, as stated earlier, Liberia lacks the requisite technology to propel local economic development. Therefore, under this strategy, the government seeks to trigger local technology development – which is always cheap and financially sustainable – and integrate the potentials of the various sectors of the economy for sustained economic growth. This will also help avoid the enclave nature of the

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mineral sector as realized in other resource rich countries. Environmental stewardship. Develop an integrated and multi-sector approach for resource and environmental planning. Generally, extractive industries constitute a web of interrelated actors and networks, in physical, social, political, and institutional sense. An integrated and multi-sector approach would help respond to local specificities, such as embedding mining activities in their local landscapes and decentralized infrastructure, and to integrate local initiatives in national systems. This in the long run will trigger new partnership arrangement and financial engagements around local mining initiatives. Also, sectoral integration will enable the government to integrate mining activities with the physical and social landscape. This will be done by conducting a participatory EIA to identify potential impacts of mining activities and appropriate compensation packages for affected households. Exploitation of resources such as mineral deposits can bring about transformation, development, and negative impacts on a nation, community, individuals, environment, and ecosystems. Though mining remains the mainstay of the Liberian economy, balancing mining activities and human needs, including livelihood sustainability of indigenous people and inhabitants of mining concessions, has always been challenging. Although mining is expected to trigger and enhance local livelihoods, it has in many cases led to marginalization and displacement of host communities. Therefore, conducting EIA is necessary as it will help identify potential impacts and alternative means of addressing them. However, EIA is not enough, since it only addresses impacts at the implementation stage. Adopt the concept of sustainable development initiatives to serve as a framework for infrastructure development to boost mining activities and the other sectors of the economy.

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Global acknowledgment of the need for environmental protection policies in development planning practices led to the emergence and promotion of sustainable development. However, with increasing number of case studies from developing countries reporting on the failure of sustainable development to achieve the ideal synergies between environment, economy, and society, the adoption of sustainable initiatives in mining is timely and relevant in an economy where over 54% of the population is below the poverty threshold (African Development Bank 2017). Another strategy to achieve integrated mining sector is to harness opportunities for fostering up, down- and side-stream value addition. Link sectoral development with the development of requisite human skills. In a variety of contexts, it is true that African economies are staggering because human resources are generally trained without a specific sector or industry in mind. Therefore, linking sectoral development with the development of required human skills will help address this development gap. Although unemployment has characterized graduates in developing countries since past years, this strategy will reverse this trend. Another strategy of the mineral policy is to support the development of small-, micro-, and mediumscale enterprises (SMMEs) that will survive even after the depletion of mineral resources which are finite. One of the ways is to ensure mineral extraction creates maximum local economic linkages. Integrate mineral sector development with spatial planning and also ensure simultaneous development of the built environment. The socioeconomic and political challenges faced by the country have substantially eroded capacity for planning and implementation in Liberia. Line ministries have insufficient resources to plan, manage, and execute programs and projects. Local governments lack

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human and financial resources. This weakens coordination and integration between sectors and consequently affects the built environment. This strategic development could allow a number of land uses to coexist and mutually support each other. With this, the nature and form of land development would be indeterminate. This would allow, for instance, smallscale mining activities to be interspersed with agricultural activities and also promote novelty. Promote collaboration within the ECOWAS subregion and the African Union for viable markets Fundamental market reforms in key sectors in Africa are critical for competiveness and economic growth. Strengthened collaboration policy in the ECOWAS subregion and Africa at large will not only encourage sustainable economic growth and competitiveness across the continent by creating firms and industries that are more productive; it directly impacts poverty by encouraging firms to deliver the best deals to consumers – particularly the poor. Though ECOWAS has made a great stride in market liberalization, individual economies have not been able to integrate into the larger African markets. Therefore, this strategy intends to fill this gap. Strategies to achieve this objective include integrating ASM activities and linking the sector to rural development programs, developing the human capacity of ASM miners, and providing technical advice as well as microloans for the operations of license ASM miners. The other strategies are encourage ASM miners to form or organize themselves into associations and cooperatives in order to enhance their credit worthiness and promote coordination between operations of ASM sector and large-scale mining enterprises. In order to build effective administration and management of the mineral sector, the government seeks to allocate resources to strengthen the capacity of relevant institutions and also empower the private sector to support

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mainstream institutions in areas of finance, service, and skills training, among others. The Policy seeks to adopt the principles of the Extractive Industries Transparency Initiative (EITI) to providing information on revenue obtained from mining and share benefits in an equitable manner. A scorecard will be formulated to enable government to monitor these contributions on nine thematic areas.

Regulatory Framework The mineral sector is regulated by the Mining and Minerals Law of 2000. With the support of international partners (USA/USAID, IMF, World Bank), a new Minerals Policy was created in March 2010 to complement the Mining and Minerals Law. The document outlines the government’s expectations with regard to the contributions of all stakeholders in the sustainable development of Liberia’s mineral resources. Public Procurement and Concessions Act (PPCA) sets out the open and transparent permitting process and an elaborate competitive bidding process. It is to ensure an open, transparent, and competitive auction procedure for known mineral deposits. The Ministry of Lands, Mines and Energy implemented the Mineral Cadastral Information Management System (MCIMS), which is important for security of tenure and a key pillar in mineral resource governance. Formulation and promulgation of New Mineral Exploration Regulations to regulate the conduct of mining and guarantee security of tenure is still ongoing. The new Environmental Law of 2007 is an attempt to update the existing Mineral and Mining Law. Additionally, there is a revised revenue code that provides special fiscal packages for the mineral resource sector. Institutional Framework The Ministry of Lands, Mines and Energy (MLME) is the government agency responsible for the administration of the mineral sector,

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including granting mining licenses, and it has statutory oversight of the energy, land, minerals, and water sectors. The Ministry has a number of departments and units: Department of Mineral Exploration and Environmental Research; Department of Mines and Concessions, Precious Minerals Management Unit; and Mineral Cadastral Information Management Unit. Exports and imports of rough diamonds are overseen by the Government Diamond Office (GDO) within MLME and by the Bureau of Customs. In November 2013, ArcelorMittal, Putu Iron Ore Mining Co. Inc. (a subsidiary of OAO Severstal of Russia), and Western Cluster Ltd. (a subsidiary of Vedanta Resources plc. of the United Kingdom) signed an agreement to set up Liberia’s first Chamber of Mines. The proposed Chamber of Mines was to serve as an umbrella organization representing the interests of companies operating mining concessions in Liberia. The Chamber was also to provide advisory services to its members regarding the country’s mineral laws and its mining regulations and policies. See http:// www.eisourcebook.org/cms/June%202013/Libe ria%20Mineral%20Policy.pdf.

International Memberships Liberia has been a member of the Extractive Industry Transparency Initiative (EITI) since 2007 and remains Kimberley Process Certification Scheme (KPCS) compliant for diamonds. The Liberia Extractive Industry Transparency Initiative (LEITI) process covers four sectors: mining, oil, forestry, and agriculture. Liberia also became the 63rd member of the World Trade Organization and a member of several UN agencies, including UNCTAD.

Concluding Statement Strenuous efforts have been made to maximize earnings from the mineral sector to foster development in Liberia especially in line with the Africa Mining Vision (AMV) headline target of deepening linkages and diversification as per

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Programme Cluster 8 in the 2011 AMV Action Plan. However, regulations to govern exploration, exploitation, and revenue allocation and management still need urgent attention to continually enforce, monitor, and realign policies toward achieving sustainable socioeconomic growth. Though the objectives discussed above when achieved will revive Liberia’s mineral sector, limited local expertise and low financial capacity of the government would hinder their implementation. Therefore, significant arrangements should be made to build the technical and financial capacity of local investors. Also, local communities (concession communities) should be empowered to support the processes of sustainable mineral extraction. The policy should also consider environmental assessment of respective mining strategic plans and programs and their realistic alternatives. Strategic Environmental Assessment (SEA) will increase the integration of environmental considerations in all relevant policy fields in order to effectively contribute to environmental protection and sustainable mining as desired by the government.

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References African Development Bank (2017) African economic outlook 2017: entrepreneurship and industrialization Central Bank (2016) Annual report of Central Bank of Liberia 2015. Liberia. Available from: https://www. cbl.org.lr/doc/annualreport2015.pdf Central Bank (2017) Annual report of Central Bank of Liberia 2016. Liberia. Available from: https://www. cbl.org.lr/doc/annualreport_2017.pdf https://data.worldbank.org/country/liberia http://www.eisourcebook.org/cms/June%202013/Liberia %20Mineral%20Policy.pdf http://www.ipa-cologne.de/reports/bennett-et-al-2014-AMVGap-Analysis-160714.pdf http://www.sdsg.org/wp-content/uploads/2011/06/LiberiaMineral-Law-2006.pdf Minerals Policy of Liberia (2010). Available from: http:// www.eisourcebook.org/cms/June%202013/Liberia% 20Mineral%20Policy.pdf Revenue Watch Institute (2013) Resource governance index report. Available from: http://www.revenuewatch.org/ sites/default/files/rgi_2013_Eng.pdf. Accessed 23 Oct 2017 Shannon, EH (2010) Forward. In: Minerals Policy of Liberia (2010) pdf. USAID (2009) Patterns of post conflict economic recovery

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Mali: Mineral Policy Kwabena Ata Mensah1,2 and Edith Eshun3 1 KAM Associates Limited, Tema, Ghana 2 Centre for Energy Petroleum Mineral Law and Policy (CEPMLP), University of Dundee, Dundee, UK 3 Department of Geological Engineering, University of Mines and Technology, Tarkwa, Ghana

General Information on Mali Mali, officially the Republic of Mali, is the eighth largest country in West Africa bounded by Algeria to the north, Niger to the east, Burkina Faso and Cote d’Ivoire to the south, Guinea to the southwest, and Senegal and Mauritania to the west. It is a land-locked country of 1,241,000 km2 of which one-third is covered by the Sahara Desert connected by a railway (1228 km) to the port of Dakar in Senegal (One-World-Mali 2019). Mali’s population is estimated to be 18 million and most of its inhabitants are found within the southern part of the country. The economy of the country is centered on agriculture and mining. However, the developing industrial sector comprises an important mining industry, including a cement plant (Diamou, 50000 t/y), a phosphate mine (Tamaguleilt 10 00 t/y), and several gold mines. Gold being a prominent natural resource, Mali is in the third position as the largest producer of

gold in the African continent (Reuters 2012). On the UNDP’s Human Development Index, it ranks fourth from the bottom on a 177-country listing. Considering this, measurement of poverty, using the indicator of GDP per capita makes Mali slightly better placed. Economic activity in Mali has traditionally been confined to the area irrigated by the river Niger in the south. However, it was estimated that 80% of the Malian population made a living from agricultural activities including farming and fishing (Mali Agriculture-FoodSecurity 2019). Agriculture and livestock provided the bulk of Mali’s export revenue until the advent of large-scale industrial gold production in the past few years. Cotton remains the most important agricultural export commodity. However, a prominent but often omitted aspect of Malian economy is migration and its population in the diaspora. It is estimated that around onethird of Malians live abroad, and remittances from these migrants constitute an important part of the economy (Daum 1998; Manchuelle 1997). Liberalization of Mali’s economy started in the early 1980s and was consolidated in the 1990s under the influence of the World Bank and the IMF. In recent years macroeconomic performance has improved, with the average growth rate reaching almost 5% during the 1999–2003 periods (EIU 2004). As noted, between 2004 and 2008, actual GDP growth was 4.5%, whereas real per capita GDP growth over the same period was 1.4% according to IMF (2013e). In addition, private per capita consumption grew at an average annual

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rate of 1.2% between 2001 and 2010, and thus, by these measures Mali remains one of the most aiddependent countries in the world (IMF 2013c).

Overview of Mali’s Mining Sector Mali’s rise to be the ninth largest what in the world can be explained by the fact that industrial exploitation of Mali’s gold started at a particular time in history when conditions such as the end of the Cold War and the liberalization of the world economy increased mobility of investment capital, which led to continued demand for precious natural resources such as gold (Jul-Larsen et al. 2006). Presently, a specific reason that accounts for the country’s situation is the very low operating costs relative to output existing at the country’s various open pit mines. At the Morila mine, for instance, operating costs are around US$108/oz, while the world average is reported to lie between US$230/oz and US$250/oz (EIU 2004; Hatcher 2004). The growth of Mali’s gold mining industry has been intertwined with investments from foreign mining companies. Similarly, certain multinational mining companies consider Mali as one of the feasible locations for siphoning natural resources, specifically gold, with minimal attention to Environment, Sustainability, and Governance (ESG) issues that violate fundamental human rights (Shuriye et al. 2013). According to them, a report was made on environmental problems and development in which they stated that “Investors see Mali as the perfect environment for resource extraction with none of the responsibility of honoring human rights, contributing to the state economy or respecting environmental conditions.” Mali has four main operating gold mines which include Kalana and Morila in southern Mali and Sadiola and Loulo in western Mali. Advanced gold exploration projects include Kofi, Koddieran, Banankoro, Napalm, and many more (Teichmann 2013). Shuriye and others (2013) also stated that all the companies that operate in the Gold mines in Mali province are owned by the Europeans which include the IAMGold, a Toronto based company, and Randgold, whose headquarters is based at Saint Helier, Jersey, in partnership with, South African based,

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AngloGold, which merged with a Ghanaian company to form AngloGold Ashanti in 2003. South African RANGOLD Resources and Canadian IAMGold have been the key shareholders in one or more of the four main gold mines in Mali at present: Sadiola, Morila, Yatela, and Syama, respectively. Table 1 provides an overview of the four main mines, indicating their production levels, ownership, and reserves. As illustrated in the table, Sadiola and Morila mines have in recent years been the foremost contributors to Mali’s gold production. Gold mining contributed between 40–67% of Mali’s export income during the six-year period from 1998 to 2003. In addition, the contribution of gold exports increased from 1999 to 2001 and decreased from 2001 to 2003. Moreover, these contributions accounted for more than half of the export revenue in 2003 and made Mali extraordinary from a historical perspective. Findings on Mali’s export income from gold production in recent years have been illustrated in Fig. 1 (EIU 2004; WGC 2005). In absolute terms, Mali exported gold worth CFAF 256 billion or US$ 383 million every year between 1998 and 2003 on average. During the peak years from 2001 through 2003, the annual average export income from gold was CFAF 358 billion, or US$536 million. Today Mali has been ranked as one of the most gold-dependent countries in the world due to a higher share of its export income coming from gold as compared to other gold producers in indebted and poorest countries (WGC 2005). Gold production contribution to gross domestic product (GDP) increased from 6% to 14% in 1998 which in turn accounted for about 80% of all mining activities in the country and 65% of the country’s total exports in 2006 (OECD 2007). Also, considering the mineral trade of Mali, its exports to the United States were valued at about 8 million in 2006 compared to about US$3.7 million in 2005 where gold accounts for US$141,000 of these exports. However, imports from the United States were also valued at about US$43 million in 2006 as compared with about $32 million in 2005. Thus, this total included US$1.1 million for excavating machinery, US$60,000 for drilling and oilfield equipment, and US$281,000 for specialized mining

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Mali: Mineral Policy, Table 1 Mali’s gold mines: owners, production, and reserves Ownership Mine Sadiola

Morila

Yatela

Syama

Shareholder AngloGold IamGold International Finance Corp. Government of Mali AngloGold Randgold GoM AngloGold IamGold GoM Resolute Mining IFC GoM

Share in percentage 38 38 6

Startup year 1996

Production per 2003, accumulated in tons 114.7

Production cost (in US$/oz) 131–210

Proven reserves as of 2004 (in tons) 157

2000

97.1

108

150

2001

21.3

235

2.1

1990

22.8

250

141.7

18 40 40 20 40 40 20 75 5 20

Source: AIRD and ENA (2002) and EIU (2004)

Gold Exports Total Exports

800 CFAF BILLION

Mali: Mineral Policy, Fig. 1 Gold mining’s contribution to Mali’s export income, 1998–2003. (Source: EIU (2005a, 2004))

600 400 200 0

equipment according to US Census Bureau (2007). Mali’s most important export, gold, comprises 64% of total exports and 21% of government revenue. The sector however faced challenges because of the closure of unproductive mines and imminent closure of other mines. Total local production of gold with its total exports from 2015 to 2018 is illustrated in Table 2.

Need of Minerals Mali has mineral resources such as gold, uranium, diamond, bauxite, phosphates, limestones, ornamental stones, barite, fluorspars, kaolin, gypsum,

1998 1999 2000 2001 2002 2003

silver, lead, nickel, salt, diatomite, and many more (DNGM 2006). In Mali’s mineral sector, gold in recent years has only contributed between 5% and 15% of the country’s GDP (EIU 2005). According to the International Trade Centre, the leading import goods for the Republic of Mali in 2008 were mineral fuels, oils, distillation products which comprise 21.4% of total imports; boilers, machinery, nuclear reactors (11.8% of total imports); vehicles other than railway (6.7% of total imports); electrical and electronic equipment (6.6% of total imports); and salt, Sulfur, plaster, lime, and cement which also comprise 6% of total imports (Mali-Export-Import 2019). However, rising prices and improved technologies have led

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Mali: Mineral Policy, Table 2 Total local production and total exports Total local production Total exports

2015 50 t $1.7 billion

2016 50 t $1.9 billion

2017 ’ 50 t $2 billion

2018 60.8 t $2 billion

Source: Mali-Mining (2019)

to the increased demand for hydrocarbons, research for oil exploration, production, and potential export. Therefore, the vast Taoudeni Basin at Mali’s borders with Mauritania and Algeria, which shows great potentials for major oil and gas discoveries, has several companies operating on the ground and thus results of oil reserves in Mali prove probable (Mali- Mining-Petroleum 2019). In the energy sector, Mali imports petroleum products for electricity production as well as private and public sector consumption. This has led to state subsidization of petroleum products via the National Office for Petroleum Products (ONAP) which places stress on public finances. Electricity production in Mali is dominated by hydropower (55%) and diesel (45%). Currently, electricity demand is growing at about 12% per year, increasing the shortage of supply and worsening the challenge the government faces in trying to close the gap. However, supply, on the other hand, grew on average 8% per year between 2005 and 2015. As a result, the Malian government is working to expand its electricity supply and encourage investment in the energy sector to stimulate the economy (Mali-Energy 2019). Mali’s major potential reserves remain largely unexplored and unmapped and the Ministry of Mines estimates mineral prospects comprising 800 t of gold deposits, 2 million tons of iron ore, 5,000 t of uranium, 20 million tons of manganese, 4 million tons of lithium, and 10 million tons of limestone. The main phosphate resources are located to the west and south of Adar. The only prospected Tamaguilelt deposit has a reserve of 11.8 Mt averaging 31.4% P2O5. Economically, the most important deposits of limestones suitable for cement manufacturing are situated in western Mali, near the Bamako- Dakar railway southeast of Kayes. In the Taoudeni area, gypsum occurs together with salt in the quaternary deposits of

Sebkhas, The only prospected Sebkha covering an area of 100–140 km has reserves of 53 Mt of rock salt, 35 Mt of gypsum, 198 Mt of mirabilite, and 36 Mt of glauberite (Traore et al. 1981; PNUD/DNGM 1987). Mali has numerous sedimentary basins in the central and northern regions, specifically in the remote Taoudeni region and, thus, seeks to encourage oil exploration in these areas since insufficient exploration has been carried out to date, nor any production done. The challenge with this is reported to be the high cost of extraction, lack of infrastructure, and insecurity in central and northern Mali. Mali will continue to import petroleum products for some time in the future, principally through neighboring countries (Mali-Oil-Gas 2019)

Classification of Mineral Reserves Mali inhabits a very favorable geological position in West Africa. Underground surveys disclose several deposits such as gold, diamond, iron, bauxite, manganese, base metals, uranium, phosphates, and other industrial rocks such as limestone, gypsum, marble, and granite. Gold It is Africa’s third largest gold producer with large-scale exploration ongoing and currently has several operating gold mines which include Kalana and Morila in Southern Mali, and Yatela, Sadiola, and Loulo in Western Mali. Gold represents over 90% of Mali’s mineral wealth (USGS 2006). Uranium Exploration is currently being carried out by several companies with indications of deposits of uranium in Mali. Uranium potential in Falea is

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Mali: Mineral Policy, Table 3 Classification of mineral reserves: commodity, reserves, and significance Commodity Uranium Bauxite

Reserves 5000 1.2

Limestone

40

Phosphates

20

Manganese

10

Iron ore

2

Unit Metric tons Billion metric tons Million metric tons Million metric tons Million metric tons Billion metric tons

Significance Mali has 5000 t of U3O6 and 200 t of U302 at 0.085% Bauxite reserves are located primarily around Kayes and west of Bamako Limestone deposits are in Bafoulamé and Hombori Phosphate deposits are centered on Tilemsi Manganese reserves are located around Ansongo Iron ore deposits are located around Kayes.

Source: US Geological Survey of Mali and Niger Minerals Yearbook (2012)

thought to be 5000 tons and in Samit deposit, Gao region, 200 t (Delta Exploration Inc. 2006). Diamonds Mali has the potential to develop its diamond industry: in the Kayes administrative region, some eight small diamonds have been picked in the Sikasso administrative region of southern Mali. Precious stones Precious stones include garnets, rare magnetic minerals, pegmatite, metamorphosing minerals, quartz, and carbonates (USGS 2006). Iron Ore, Bauxite, and Manganese Ore Mali has estimates of more than 2 million tons of iron ore reserves located in the areas of DjidianKenieba, Diamou, and Bale. Bauxite reserves are projected to be 1.2 million tons located in Kita, Kenieba, and Bafing-Makana. Traces of manganese have been found in Bafing-Makana, Tondibi, and Tassiga (Fortune of Africa 2014). Table 3 illustrates classification of some mineral reserves consisting of its commodity, reserve, and significance. Primary mineralization is said to be exclusive of two types: lode mineralization, with native gold in quartz veins, or as sulfides disseminated in strata bound mineralization in tourmaline quartzite. Gold also occurs in eluvial and alluvial placers, which are the main source of gold mined (Kusnir 1999). The main auriferous deposits lie mostly within the volcano-sedimentary formations (green rocks) of the Birimian Age which are found in two main

zones. The first main zone is in the western Bambouck auriferous district with Sadiola deposit about 150 t exploited by Anglo-American Mining Co since 1997, Yétala deposit about 40 t exploited since September 2001. Additionally, there are other deposits which are in various phases of certification and development which includes Loulo deposit (40 t proven), Médinandi (evidence of 4 t of gold), Tabakoto (43 t), and Ségala (40 t) The second main zone is in the southern auriferous district of Bouré with deposits in Bagoé, Yanfolila, Kangaba, and Syama of about 150 t of gold worked since 1990. Also, Morila deposits located in the same district with reserves estimated at 150 t of gold started production in February 2001 (Keita 2001). In these two districts, there are placer, eluvial deposits, and lodes. The placer deposits are in bare beds, recent and old fluvial terraces within which gold concentrates in gravelly layers, normally smaller than one meter on the bedrock. The gold content is 1–3 g/m3 for the mineralized layer, which outcrops in bare beds generally covered by weakly mineralized ones. Evolutionary deposits are found in laterite, quartz, shale, sandstones, metamorphosed bedrock sprinkled with quartz lodes and veinlets within which gold is concentrated in a layer formed with angular and nonclassified rubble. The eluvial layer varies between 10 cm and 1 m with variable gold contents which can reach several hundred grams per ton above the ground water level. Though there are no data about the contents at underground water level, experience and discovery of macro nuggets of about 8 kg in

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Mali: Mineral Policy

Mali: Mineral Policy, Fig. 2 Key mining activity in Mali. (Source: Western Mali Gold Province (2017))

weight are evidence of an important enrichment in the supergene zone (Keita 2001). By 2006, 19 international companies and dozens of local companies were engaged in gold exploration and production in Mali (USGS 2006) These included Resolute Mining Limited of Australia; Canadian companies African Gold Group Inc., African Metals Corporation (AMC), IAMGold Corp., Nevsun Resources Ltd., North Atlantic Resources Ltd., and Robex Resources Inc.; Cyprus-based PAGE Management Limited; Glencar Mining Plc of Ireland; AngloGold Ashanti Ltd. and Central African Gold (through Mali Gold Fields SA and Songhoi Resources SA) of South Africa; and Cluff Gold Plc and Randgold Resources Ltd. of the United Kingdom. Delta Exploration also explored for copper and uranium; Central African Mining and Exploration Company Plc (CAMEC) of the United Kingdom explored for bauxite; Rio Tinto Plc of the United Kingdom explored for diamond and planned to conduct a multi-commodity exploration program

in the country (Rio Tinto Plc. 2006, p. 3, 9). Some key mining activity in Mali is illustrated in Table 3 (Fig. 2).

Mineral Policy This section presents an analysis of the government objectives and strategies for improving the contribution of the mining sector for the government’s long-term growth objectives by placing emphasis on growth and diversification of mineral production, improved governance, and extractive revenues and mining- induced local economic development. To this end, the government envisioned three main strategic objectives: (i) improving the enabling environment for diversification and growth of the mining sector; (ii) strengthening resource governance and transparency; and (iii) maximizing the socio-economic impact of mining by developing economic and fiscal linkages with the local economy. To achieve

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these objectives, it seeks to pursue the following three strategies: (i) Creating conditions for growth and diversification of the mineral sector; to build the Government’s institutional capacity for sustainable management of the mineral sector. Measures put in place to support this objective include: (a) improving and expanding geological coverage which aims to improve the geological knowledge to promote new gold potential and attract investment into non-gold minerals with a view to diversifying mineral production. This will be supported by: (i) detailed geological mapping and associated capacity building of prospective areas on a more detailed scale at 1/50,000 covering 14 topographic sheets, and targeted geological ground works in 20 areas designated as ASM corridors; (ii) regional geological mapping (airborne geophysical survey) at 1/200,000 scale covering 16 sheets of high potential areas: Kayes / Bakel, Kankossa, Yelimane, Sandare, Bafoulabe, Bafing-Makana, Nioro, Diema, Kita, Sirakoro, Kolokani, Banamba, Dioila, Koutiala, and Sikasso; (iii) design and implementation of geodata protocols to ensure transparency and efficiency for end users for data, (b) updating the policy and regulatory framework in support of diversification of mineral production will also support consulting services aimed at: (i) updating the mining policies and regulations to encourage exploration investment outside the gold sector; (ii) drafting specific environmental, social, health, and safety regulations for mining, and mine closure policies; (iii) preparing a policy and regulatory framework for ASM, including social regulations and guidelines on gender and child labor, (c) strengthening institutional arrangements and capacity for efficient management of the mineral sector will also aid in: (i) organizational structuring to improve regulatory management of the sector (including establishment of ASM Unit and inter-ministerial mining unit, and strengthening inspection and mineral sector

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promotion functions); (ii) institutional capacity building of the Senior Ministry staff and the established Inter-Ministerial mining unit on contract negotiations including financial and economic modeling, review of technical and feasibility reports, updating model agreements for specific commodities, and developing negotiations strategies and contract monitoring (including training for inspections of operations, technical, environmental and financial audits, and market trend monitoring). (ii) Strengthening Revenue Transparency and Governance; this strategy aims to leverage and complement bank-funded and donorfunded governance enhancement projects to improve extractive revenue transparency at the national and local levels, and to also build the capacity of local governments to manage revenues from extractive industries as well as other revenues received pursuant to the Agreement of Peace and Reconciliation signed in 2015 to transfer up to 30% of budget revenues to local governments. In view of this: (a) improving extractive revenue transparency will support the Mali Extractive Industries Transparency Initiative (EITI) Secretariat through consulting, outreach activities and studies aimed at improving sector governance through: (i) enhancing the disclosure mechanism for subnational transfers to reinforce revenue reconciliation activities for subnational transfers at the level of three local authorities (region, circle, and commune); (ii) developing and implementing a mining sector beneficial ownership roadmap; and (iii) integrating Artisanal Small-Scale Mining (ASM) sector data into EITI reports to improve transparency of revenues from artisanal mining, (b) promoting social accountability and direct citizen engagement in managing extractive industry revenues at the national and local levels will emphasize the provision of support for consultative processes to strengthen social accountability and participatory decision making about revenue management by: (i) support of feasibility study and

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implementation of the integration of Extractive Industries’ (EI) data on a digital platform encompassing all data on the extractive sector (tax data, public treasures, customs, etc.); and (ii) promoting public awareness of extractive revenue data through debates on the governance and transparency of social payments, corporate social responsibility (CSR), and other contextual data related to the extractive sector (dissemination of EITI information on a large scale, translation of data in computer graphics, local language, organization of events around the EITI process). (iii) Maximizing the local development impact of mining focuses on supporting the rationalization of small-scale mining and leveraging private mining investments in using clean energy in rural areas. Accordingly, these will be achievable by: (a) promoting responsible development of small-scale and artisanal mining which include building the capacity of the Ministry of Mines to: (i) provide technical (geological and mining) advisory services to delineate ASM blocks and design sustainable mine plans, organize and register ASM miners, establish chain of custody and responsible supply chains, issue ASM authorizations, and monitor activities; (ii) acquire and set up demonstration units to train miners and demonstrate acceptable ASM practices; and (iii) conduct ASM environmental management, including monitoring of water pollution management in ASM areas, mapping of water pollution, and establishment and implementation of mitigation measures, monitoring and alert system of potential large-scale ASM pollution, and (b) maximizing mining-led local development which will support in carrying out a program of activities aimed at assisting the Government to maximize mining-led local development including: (i) strengthening select local entities capacity to manage mining revenues through the use of participatory mechanisms for budget allocation and investment planning; (ii) provision of technical assistance designed to maximize local development derived from mining activities

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(excluding any implementation and/or infrastructure investments); and (iii) developing a strategic framework to leverage green energy investment plans and improve local communities’ access to clean energy access. The country has been implementing the Extractive Industries Transparency Initiative (EITI) since 2007. According to Oxfam (2006), improving transparency of the extractive sectors will be necessary if mining is to benefit national development since there is the existence of broad agreement among development banks, bilateral donors, and organizations. In May 2017, the International EITI Board agreed that Mali had made significant progress in implementing the 2016 EITI Standard but found several weaknesses which must be addressed to improve resource governance. These included the governance of the multi-stakeholder group, the granting and management of licenses, the completeness and reliability of data, the disclosure of sub-national transfers, the systematic disclosure of data by government entities actively involved in the EITI reporting, and the inclusion of artisanal and smallscale activities in EITI reports (National Resource Governance Institute 2017). Moreover, Extractive Industries Transparency Initiative had been initiated to serve as a good promoter of transparency in the governance of the mining sector according to World Bank (2007). In this way, strengthening the weakness of EITI, traceability, and accountability of mining revenues as explained above will complement the bank’s support for strengthening fiscal management in local governments (with a focus on the mining districts) for better service. It will also coordinate with and leverage the activities of donor interventions for mining governance in Mali. This includes OECD supply chain due to diligence implementation support consisting of capacity building and advice on implementation of the OECD guidance in the mining sector, capacity building of local law enforcement to monitor money laundering and terrorism financing, and development of a network of tripartite risk monitoring units in mineral producing areas (OECD 2008). Additionally, the government also needs to improve mining title issuance and

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surveillance, disclosure and management of geosciences information, and its oversight capabilities. Government’s capacity to have oversight of company revenues remains an important area of improvement (Open Society Institute of Southern Africa 2009). Additionally, effects of mining activities imposed on affected communities such as water and air pollution, land degradation, and air pollution must be compensated. Considering this, mining companies must be required to set aside sufficient resources for post closure activities and give business incentives to minimize the negative externalities. Some of these requirements will be better planning including the use of environmental assessments and improved monitoring schemes for mining activities, promotion of awareness of environment and health risks of mining, and how they can be mitigated strategically to reduce negative impacts of mining, particularly in the case of artisanal mining (Telmer 2009).

Regulatory Framework The legal foundations for mining in Mali are outlined in the mining codes and their model agreements. The law spells out all mineral resources as the property of the state, which has the right to assign and give permission to national or international entities for exploration. The mining companies and their subcontractors in operation in Mali are governed by three mining codes and their model agreements are: (a) Order 910065/P-CTSP and Decree 91-278/PM-RM of September 19, 1991; (b) Order 99-032/P-RM of August 19, 1999, and Decree 99-256/PM-RM of September 15, 1999; (c) Law 2012/015 of February 27, 2012, and Decree 2012-311/P-RM of June 21, 2012. Currently, all operational gold mines are subject to the 1991 Mining Code. According to the West African Economic and Monetary Union (WAEMU), Mali has not applied the Community Mining Code as its implementing decrees have not been endorsed (Regulation /CM/ UEMOA 2003). Thus, the mission did not factor the usefulness of this Community Mining Code.

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In addition, the main taxes, duties, levies, and royalties under the Mining Code are managed by four directorates in three different ministries: the Directorate General of Taxes (DGI) and the Directorate General of Customs (DGD) in the Ministry of Economy and Finance; the National Geology and Mines Directorate (DNGM) in the Ministry of Mines; the Property and Land Registry Directorate (DNDC) in the Ministry of State Property and Land Affairs, and the Ministry of Economy and Finance (Rota-Graziosi et al. 2014). The Ministry of Mines, Energy and Water Resources is the main ministry in charge with the mining sector management in Mali. There are technical advisers and various administrative and technical structures which support this cabinet namely: (a) The National Directorate for Geology and Mines (DNGM): it oversees elaborating the national policy in the research, development, exploitation, and processing of underground resources and ensures coordination between public and private services working to this end. To fulfill its mission, DNGM integrates three divisions: the division of cartography and geological prospecting, the divisions of hydrocarbons, and the division of mineral substances and classified establishments. Also, DNGM is provided with a documentation center to manage all existing cartographic documents and research reports, (b) the Programme for Mineral Resources Development (PDRM) is a service attached to the PNGM and set up by UNDP to provide services in various areas of geological and mining research such as geology, geophysics, geochemistry, mining drilling, cartography, and laboratory analyses for gold and other minerals. (c) The Project for the Promotion of Traditional Mining and Environment Protection (PAMPE) is a technical structure attached to the DNGM. It is the first structure in charge of supervising and assisting the traditional mining sector and smallscale mining in Mali. It was initiated by UNDP and the government of Mali to support the promotion of traditional mining and integrate the fight against poverty with environmental aspects in mineral resources exploitation.

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International Membership Mali is an active member of Specialized Agencies including the United Nations (UN), African Development Bank (ADB), The African Union (AU), International Monetary Fund (IMF), World Bank, International Labour Organization (ILO), International Telecommunication Union (ITU), Universal Postal Union (UPU), International Criminal Court (ICC), Organisation of Islamic Cooperation (OIC), and an associate member of The European Community (EC). Mali is also active in other regional bodies such as Economic Community of West African States (ECOWAS), West African Economic and Monetary Union (UEMOA), which focuses on regional economic integration, Liptako-Gourma Authority (LGA), which places much focus on development of contiguous areas in Mali, Permanent Interstate Committee for Drought Control in the Sahel (CILSS), and Senegal River Valley Development Organizations. In addition, Mali is also a member of Organization for the Harmonization of Business Law in Africa (OHADA) and the French Central Bank (FCB).

Concluding Statement Mali seeks to achieve sustainable growth in its economy by building profitable, equitable, and safe partnerships with other global investors while ensuring that the people benefit from their natural resources in a safe environment. However, challenges with contributions from gold mining to its economic growth need to be worked out. Thus, the relevant ministry must work out ambiguities in mining operations by providing clear guidelines and more research in inputs for policy makers. Consequently, involvement of the local government as well as contributions from relevant research and policy debates on undeveloped mineral resources and corporate social responsibility will serve as a useful tool in stimulating a more integrated approach to the management of benefits from mining. It is hoped this crucial approach will enable Mali to use its rich mineral resources to create alternative sources of income which will

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contribute to the sustainable development of mining areas in line with the SDGs, and thus expand the local and national economy to make its way out of current levels of poverty.

References Publications AIRD and ENA (Associates for International Resources and Development and Ecole Nationale de l’Administration) (2002) The value of gold for the Republic of Mali. Cambridge, MA/Bamako Daum C (1998) Les associations de Maliensen France, migration, développement et citoyenneté. Khartala, Paris Delta Exploration Inc. (2006) Delta acquires Falea copperuranium property: Kamloops, Press Release, British Columbia, Canada, 1 p DNGM (Direction Nationale de la Géologie et des Moines) (1987) Resources min.rales du Mali-Minerale Resources, Bamako 1987, 64p DNGM/PNUD (Direction Nationale de la Géologie et des Moines) (2006) listeclassee des richesses en substances minerals et materiaux du sous—sol de la Republique du Mali: Bamako, Mali, Direction Nationale de la Géologie et des Mines, 21 p EIR (Extractive Industries Review) (2003) Striking a better balance: Jakarta and Washington, DC EIU (The Economist Intelligence Unit) (2004) Country Profile 2004: Mali. London EIU (The Economist Intelligence Unit) (2005). Country Report: Mali. London EIU (The Economist Intelligence Unit) (2005) Country Profile 2005: Mali. London. Girard P (1998) les gites et indices mineraux du Mali— Projetd’assistance technique au secteurminier du Mali: KilbornTecsultinc, October, 107 p Grätz T (2002) Gold mining communities in Northern Benin as semi-autonomous social fields. Max Planck Institute for Social Anthropology, Halle Grätz T (2003a) Gold mining and risk management: a case study from Northern Benin. Ethnos 68:192–208 Grätz T (2003b) Sharing and sustaining: the thrusts of friendship among young artisanal gold miners in Northern Benin. Max Planck Institute for Social Anthropology, Halle Hatcher P (2004) In: Campbell B (ed) Rewriting the mining code or redefining the role of the state? In regulating mining in Africa: for whose benefit? , Uppsala, The Nordic Africa Institute, Mali IAMGold and AngloGold (2004) Sadiola and Yatela Media Briefing 7 May. Bamako IAMGold Corp. (2007) 2006 Annual report: Toronto, Ontario, Canada, 108 p

Mali: Mineral Policy IMF (International Monetary Fund) (2013c) Mali poverty reduction strategy paper – Joint staff Advisory Note, IMF Country Report N.13/112 IMF (International Monetary Fund) (2013e) Sub-Saharan Africa – keeping the pace, Regional Economic Outlook Jul-Larsen E, Kassibo B, Lange S, Samset I (2006) Socioeconomic effects of gold mining in Mali. A Study of the Sadiola and Morila Mining Operations. Small Scale Mining. CMI Report, (4) Keita S (2001) Study on Artisanal and small-scale mining in Mali. International Institute for Environment and Development and World Business Council for Social Development, London Kusnir I (1999) Gold in Mali: acta MontanisticaSlovaca, no. 4, pp 311–318 Manchuelle F (1997) Willing migrants, Soninke labor diasporas. Ohio University Press & James Currey, Athens/London, pp 1848–1960 Natural Resource Institute (2017) Resource governance index. Retrieved from https://resourcegovernance.org/ sites/default/files/documents/2017resourcegovernanceindex.pdf OECD (Organisation for Economic Cooperation and Development) (2008) Natural resources and pro poor growth – the economics and politics of natural resources use in developing countries Open Society Institute in Southern Africa, Third World Network Africa, Tax Justice Network Africa, Action Aid International, Christian Aid, (2009) “Breaking the curse how transparent taxation and fair tax can turn Africa’s mineral wealth into development Oxfam America (2006) Hidden treasure? In search of Mali’s gold-mining revenues Randgold Resources ltd (2007) 2006 annual report: St. Helier Jersey, Channel Islands, United Kingdom, 94 p Reuters (2012) Mali Gold reserves rise in 2011 alongside price. Retrieved from http://www.sabc.co.za/ Rio Tinto plc. (2006) Annual business report: London, UK, 17 p Shuriye AO, Ibrahim DS (2013) The Role of Islam and Natural Resources in Current Mali Political Turmoil. Mediterr J Soc Sci 4(6)., 507 p Teichmann R (2013) The war on Mali, What you should know: an Eldorado of Uranium, Gold, Petroleum, Strategic Minerals Global Research Telmer, K. (2009) Artisanal Gold Council: presentation on mercury Artisanal and small-scale mining, extent, causes and solutions at CASM Maputo, University of Victoria, Canada Traore H, Melox J, Bassot JP (1981) Notice explicative de la carte à 1:500.000 de la République du Mali. DNGM, 1981, 137 p U.S. Census Bureau (2007a) U.S. exports to Mali from 2003 to 2007 by 5-digit end-use code: Retrieved from http://www.census.gov/foreign-trade/statistics/prod uct/enduse/exports/c7450.html U.S. Census Bureau (2007b) U.S Imports from Mali from 2003 to 2007 by 5-digit-end-use code: Retrieved from

429 http://www.census.gov/foreigntrade/statistics/product/ enduse/imports/ c7450.html U.S. Department of State (2007) Background note – Mali: U.S. Department of State. Retrieved from http://www. state.gov/r/pa/ei/bgn/2828.html. UNDP (United Nations Development Programme) (2004) Human Development Report: Cultural Diversity in Today's Diverse World. New York Werthmann K (2000) Gold Rush in West Africa - the appropriation of “Natural” resources: non-industrial gold mining in South Western Burkina Fasso. Sociologus 50:90–104 Werthmann K (2003) The President of the Gold Digger: source of Power in a Gold Mine in Burkina Faso. Ethnos 68:95–111 WGC (World Gold Council) (2005) A touch of gold: Gold mining's importance to lower-income countries. London World Bank (2007) Country assistance strategy for the republic of Mali for the period 2008–2011. World Bank

Web Sources Africa-Public-Health-Info (2012). https://www.who.int/ pmnch/media/news/2012/201205_africa_scorecard.pdf. Accessed 8 Sept 2019 Combined Project Information Documents/Integrated Safeguards Data Sheet (2019). http://documents. worldbank.org/curated/en/525361557761330402/pdf/ Project-Information-Document-Integrated-SafeguardsData-Sheet-Mali-Governance-of-Mining-SectorP164242.pdf. Accessed 16 Aug 2019 http://.imf eiti.org/mali&hl¼en-GH. Accessed 15 Aug 2019 http://documents.worldbank.org/curated/en/96702151921 5311151/Project-Information-Document-IntegratedSafeguards-Data-Sheet.docx. Accessed 19 Aug 2019 http://www.usgs.gov/centers/nmic/africa-and-middleeast#ml. Accessed 21 Aug 2019 https://data.worldbank.org/indicator. Accessed 05 November 2020 https://eiti.org/document/mali-eiti-2016-work-plan. Accessed 18 Aug 2019 https://fortuneofafrica.com/mali/2014/02/22/naturalresources-of-mali. Fortune of Africa, 2014: Accessed 28 Aug 2019 https://www.export.gov/article?id¼Mali-Mining. Accessed 17 Aug 2019 https://www.imf.org/external/pubs/ft/scr/2015/cr15348.pdf. Accessed 19 Aug 2019 https://www.imf.org/external/pubs/ft/scr/2015/cr15348.pdf. Accessed 20 Aug 2019 Mali Technical Assistance Report – Mining and Petroleum Taxation (Diagnostic Assessment) (2015). https:// www.imf.org/external/pubs/ft/scr/2015/cr15348.pdf. Accessed 20 Aug 2019 Mali-Agriculture-Food-Security (2019). https://www.usaid. gov/mali/agriculture-and-food-security. Accessed 31 Aug 2019

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430 Mali-Energy (2019). https://www.export.gov/article? id¼Mali-Energy. Accessed 28 Aug 2019 Mali-Export-Import (2019). https://www.economywatch. com/world_economy/mali/export-import.htm. Accessed 30 Aug 2019 Mali-Mining (2019). https://www.export.gov/article? id¼Mali-Mining. Accessed 17 Aug 2019 Mali-Mining-Petroleum (2019). https://ametrade.org/jmp/ mali-mining-and-petroleum-fact-file/. Accessed 30 Aug 2019 Mali-Oil-Gas (2019). https://www.export.gov/article? id¼Mali-Oil-Gas. Accessed 27 Aug 2019 One-World-Mali (2019). https://www.nationsonline.org/ oneworld/mali.htm. Accessed on 31 Aug 2019 Regulation/CM/UEMOA (2003). http://www.izf.net/con tent/waemu-regulations-mali?language¼en. Accessed 8 Sept 2019 US Geological Survey of Mali and Niger Minerals Yearbook (2012). http://minerals.usgs.gov/minerals/pubs/ country/2012/myb3-2012-ml-ng.pdf. Accessed 20 Aug 2019 US Geological Survey of Mali Minerals Yearbook (2006). https://s3-us-west-2.amazonaws.com/prd-wret/assets/ palladium/production/mineral-pubs/country/2006/ myb3-2006-ml.pdf. Accessed 28 Aug 2019 Western Mali Gold Province (2017). http://www.altusstrategies.com/news/altus-targets-substantial-oxidegold-resource-in-western-mali/. Accessed 14 Aug 2019

Malta: Energy Policy Rose Marie Azzopardi University of Malta, Msida, Malta

General Information on Malta Malta is a young country, having gained independence from the United Kingdom (UK) in 1964 and becoming a Republic in 1979. In 2004 it became a European Union (EU) member state, adopting the euro in 2008. During the intervening decades, Malta managed to develop an economy that was no longer dependent on servicing Britain as a military base, but rather an economy which started focusing on manufacturing and tourism in the beginning, and later becoming more diversified (Azzopardi 2011). The archipelago (made up of three inhabited islands and other islets) only measures 316 km2, has a resident population of

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just over half a million, and is one of the most densely populated countries in the world. The 1970 Association Agreement with the European Community gave Malta preferential access for its exports, except for sensitive products, such as agricultural goods (European Community 1992). Through the centuries Malta has been under different powers and these have left their mark on the culture of the island. Its religion is Roman Catholic, although recent years have seen inroads made by other religions. The welfare state which Malta has developed is seen as generous, providing for different types of social benefits, which need not always be based on social security contributions. This wide array of benefits is further supported by a system of free education, from childcare centers to university (at the first degree level), and also free medical services, including free medicines for chronic illness and specific maladies. In recent decades, Malta is seeing a wider spread between those at the top and at the bottom of the income range, meaning that economic inequality is increasing. Similar to other EU states, the fertility rate continues to decrease and stood at just 1.13 in 2020 (NSO 2021a). Those under the age of 18 and those over the age of 65 make up 34.8% of the population, which is expected to create dependency issues in the future (ibid.). In the last decade (post 2008 financial crisis), inward migration has increased sevenfold (Jobsplus 2021), mainly due to the demands for more resources created by a buoyant economy. Latest data for Q1 2021 shows an employment rate of 74.2% and an unemployment rate of 3.9% (NSO 2021b). Nonetheless, Eurostat data for 2019 shows that one in five persons is at risk of poverty or social exclusion (Eurostat 2021a). Malta is dependent on trade and external sources of financing. Tourism, one of the main contributors to the economy, increased from 1 million tourists to over 2 million in the last decade (NSO 2020a). Malta’s GDP in 2019 (pre-Covid) was €13.2 billion, decreasing to €12.8 billion in 2020 (NSO 2021c). Its growth rate has averaged 5.6% in real terms in the decade before 2020 (Eurostat 2021b). This growth spurred inward migration, increased the demand for goods and

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services, massive construction, and road works, which in turn have all increased the demand for energy.

Need of Resources Malta does not have any traditional energy sources and thus imports most of its needs. In recent years, particularly due to EU membership, attention has turned to renewable sources. Various studies and schemes have been put in place to encourage more uptake of these alternative methods. One goal of the EU’s energy policy was to have 20% of its energy consumption derived from renewable sources by the year 2020. This policy promotes large-scale projects and Malta’s target was lower, at 10%. A qualitative in-depth study of Malta’s policy implementation for renewable energy found that due to the island’s size, “planning of central largescale RE projects in Malta provokes land and marine use conflicts and can cause difficulties in implementation” (Kotzebue et al., 2010). The demand for energy is increasing due to “tourism, the economy and population” (Government of Malta 2019). Figure 1 shows the increase in electricity supply from 2010 to 2019 (latest possible data). The Maltese economy is focused on services, and final energy consumption in this sector is higher than the EU average. The services sector constitutes 85% of the

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Malta: Energy Policy, Fig. 1 NSO data show that total electricity supply in Malta continues to increase on an annual basis. Source: Based on data from NSO (2018, 2020c)

economy. In the past years, while the services sector increased by 9%, its energy needs increased by a lower 4%. On the other hand, final energy consumption for industry is lower than the EU average; this is mainly because there are no significant energy-intensive industries (ibid.). Industry constitutes 9.9% of the economy, with 99.8% of registered companies being micro-entities (97.3%) and small and mediumsized enterprises (2.5%) (NSO 2020b). Three economic sectors which consume the most are: manufacturing; wholesale and retail trade; repair of motor vehicles; and accommodation and food services activities (OPM 2017). An article written 20 years ago saw the demand mainly “due to the energy requirement for water production and an inflated road transport sector” (Fsadni et al. 2000). The authors decried untapped renewable sources and saw the “need for an energy policy that promotes energy efficiency and conservation as well as the use of renewable sources at all levels” (ibid.). From 2006 to 2015, consumption increased from 1.85 to 2.11 TWh, reaching 2.656 TWh by 2019 (REWS 2020). An analysis for 2017 showed that most of consumption was due to transport activities (55%), industry accounted for 8%, services sectors for 22%, while households consumed 14%. The other 1% was due to agriculture, fishing, and others. During the same year, 70% of electricity generation was derived from local power plants production, with 24%

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coming from the interconnector and the remaining 6% derived from solar energy (OPM 2017). Significant changes to the energy mix have occurred in the past 8 years. It was in 1992 that Malta built its last heavy fuel oil power plant, which was finally switched off in 2017. In 2015, a 62-year-old heavy fuel oil power plant on another part of the island was switched off from the national grid. The former was replaced by a gas-fired CCGT plant, while the latter was demolished. In 2015, the 120-k, 200 MW MaltaItaly Interconnector was inaugurated. This meant that finally the Maltese electricity grid was linked to the European energy network and was no longer isolated. Malta currently has two gas-fired plants and two gasoil-fired plants, the latter providing for an adequate level of emergency capacity. Up until some years ago, Malta was still heavily dependent on coal and heavy oil, but it is slowly transitioning to more efficient production, based on “natural gas, oil for backup, and an electricity interconnector with Sicily” (Government of Malta 2019). A study conducted on the 2015 interconnector found that while the interconnector will not necessarily lower prices for Maltese consumers, future plans for natural gas to be included in Malta’s energy supply portfolio could bring benefits, and that the impact of the cable depends on “the installed generation capacity, oil price and market design” (Ries et al. 2016). Up until 2013, all electricity was generated via the power plants in Delimara and Marsa.

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Malta: Energy Policy, Fig. 2 NSO data indicates that the interconnector put less pressure on power plants in the first two years, with renewable energy sources only increasing marginally and remaining a low percentage of total supply. Source: Based on data from NSO (2018, 2020c)

It was only in 2013 that Malta started recording some electricity derived from renewable energy, mainly from photovoltaic systems, and other means including micro wind turbines and the Combined Heat and Power (CHP) plants. Then in March 2015, electricity generation was also possible not only through local power stations but also through importation via the Malta-Sicily interconnector. Later on in 2017, Malta was also exporting via this interconnector. By 2019, electricity supply in Malta came from three sources: generation from power plants (67.8%), imports via the interconnector (25%), and renewable sources (7.5%). Generation from gas oil was less than 1% since this was mainly used as a backup, with the rest (66.7%) based on natural gas (REWS 2020). A total of 2653.7 GWh were supplied during 2019 (NSO 2020c). Figure 2 provides information regarding energy sources in the past decade, while Fig. 3 gives more information regarding renewable sources. By the end of 2019, the renewable energy capacity installed on the islands reached 157.7 MWp (REWS 2020). The next step in this process is the plan for the government to commission a new 159 km long Malta-Italy (in Gela, Sicily), 2200 diameter gas pipeline (an investment of about €400 million) by 2025; said pipe is expected to replace a moored gas tanker presently used to supply the power plant. This pipeline will also operate in a bidirectional mode and will have an estimated capacity of 2 billion cubic meters per year and a guaranteed flow of 141,000 Sm3/h. However, initially the

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Malta: Energy Policy, Fig. 3 NSO data show that the main supply for renewable energy sources are photovoltaic panels. Source: Based on data from NSO (2018, 2020c)

pipeline will only operate in one direction, Italy to Malta, and will have a maximum operational capacity of 1.2 billion cubic meters per year. The investment request was made by Melita TransGas Co. Ltd., a public undertaking set up in 2018 to oversee this project. In the future this will connect Malta to the European natural gas network. However, the EU will not be funding the project due to the impact on climate change. On the other hand, the EU has agreed to consider a hydrogen-ready gas pipeline. According to the recently published national plan to reduce carbon emissions, this would be accompanied by the possibility of retrofitting the existing power stations to work on hydrogen, although the expense might be prohibitive. The final Environmental Impact Statement for the project refers to ongoing discussions between Malta and Italy to encourage the conversion of the supply of non-renewable natural gas to a renewable source such as biomethane. The aim is to have the pipeline ready for hydrogen transportation when green gas is injected into the European/Italian gas grid. Thus, Malta would be able to attain its decarburization targets of zero GHG emissions, in compliance with the European Green Deal goals (Melita TransGas Co., Ltd. 2021). The Environmental Impact Assessment was approved by the Environmental and Resources Authority in July 2021.

Water production is also a significant energy consumer. This is because the Water Services Corporation operates reverse osmosis desalination plants in order to satisfy a significant portion of Malta’s demand for potable water. The first plant was opened in 1982. Currently Malta has three such plants in Malta and another one was opened on the island of Gozo in 2021. Data for 2015 shows that about 58% of potable water was derived from these three plants (WSC 2021). Malta does not have a significant mass transportation system such as trains, trams, or monorail. The local transport system is mainly composed of buses or boats/ferries. The stock of cars on Malta’s streets continues to increase on a daily basis and thus the transport sector also contributes to the increase in the demand for energy products and to pollution. By the end of June 2021, there were 408,205 licensed motor vehicles (for a population of just over half a million), 76.2% of which were passenger cars, while buses and minibuses were less than 1%. The remainder were commercial vehicles (13.8%) and motorcycles/quads/all-terrain-vehicles (8.9%) (NSO 2021d). Alternative Sources, Studies, and Schemes In the past years, particularly since EU membership, and mainly financed through EU funds, there

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have been many schemes aimed at harnessing solar energy through the partial financing of solar panels. This has meant that many homes have installed such panels on rooftops where these were possible. However, the recent increase in population and a Planning Authority policy to transform houses into apartments, have led to more people only having the possibility of owning flats and thus making the possibility of having solar panels on one’s rooftop impossible. Nonetheless the number of schemes which were issued over the years in terms of solar panels and for example double-glazed apertures, roof insulation, and other energy-saving schemes, have generally been taken up by the public. Households can sell the excess supply of energy back to the national company, through the grid and then buy back what they need on days when the sun does not produce enough for the family. The Mediterranean location ensures that Malta enjoys sunshine almost every day of the year and thus solar panels have been a success. There have also been efforts through PR campaigns for people to make more effective use of energy, essentially to not be wasteful. Marine-based renewable energy technology studies were commissioned to try to see if Malta could develop a wind farm. Since the island is relatively small and very densely populated, this has meant that such studies were carried out regarding the possibility of having offshore wind farms. A 5-year project, Blue Ocean Energy, also studied the possibility of wave energy off the western coast of the Maltese islands (Drago et al. 2013). For the past years there has been a push toward electric cars, and this is in relation to environmental issues of pollution in conjunction with recently launched companies offering electric car-sharing services. The reason is twofold, primarily for environmental reasons and secondly to reduce the number of cars on the streets which lead to congestion and more usage of energy sources. To also reduce pollution, cruise liners in Malta are being provided with a direct onshore electricity link, thus leading to the liners switching off their polluting apparatus while in port. The Grand Harbour Clean Air Project, costing around €40

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million and partially funded through EU funds, is expected to reduce pollution by 90%, as well as reduce the noise emanating from engine vibrations. Malta was one of the first countries to start installing electricity smart meters with Automatic Metering Management capability. By the end of 2019, these accounted for 88.51% of all active meters, with the figure increasing to 90.85% for households (REWS 2020). As from 2015, nonSMEs are legally bound to conduct energy audits of their properties every 4 years. The Energy and Water Agency also has schemes to aid SMEs to conduct energy audits in order to identify actions and investments which lead to reduction in energy consumption. These are in compliance with the Energy Efficiency Directive (The Energy and Water Agency 2021).

Energy Policy Conception of Malta Malta has a National Energy and Climate Plan (2030), which follows the aim of the EU Energy Union, a strategy that is based on the Union’s five dimensions: decarburization; energy efficiency; energy security; internal energy markets; and research, innovation, and competitiveness. Although annual consumption of electricity in Malta is no more than 2500 GWh, demand is on the increase. Malta’s current energy policy rests on the following pillars: a diversified energy mix and less reliance on imported oil; reducing the country’s carbon footprint and emissions by replacing heavy fuel oil with natural gas, gas oil, and renewable sources; strengthening security of supply with a back-up capability; providing incentives to encourage investment in renewables sources; aiming for interconnection of energy supply; and achieving higher efficiency gains through an overhaul of the generation capacity of the island (Government of Malta 2019). Malta has several schemes which focus on promoting energy efficiency investment, by providing investment aid in relation to the amount of energy savings achieved. Malta’s energy policy estimates that in the decade covered (2021–2030) savings of €62.5 million can be achieved, assuming that the

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current state aid framework continues to be in place. As an EU member state, Malta is obliged to increase its share of renewable energy sources, according to EU agreed targets (based on Directive 2009/28/EC). For 2020, Malta had a 10% target to be derived from renewable sources. Due to the size and topology of the country, biomass is not an option, while hydro and geothermal energy are not possible. Wave energy is still being investigated. Size also does not lend itself to onshore wind energy, but the option of an offshore possibility is also being researched, although “the deep bathymetry of the Maltese marine area is a major drawback”. The idea of floating devices would entail significant capital investment and therefore at this stage remain prohibitive in that respect. Furthermore, closer to shore options (of less than 50 m depth) would conflict with other industries related to tourism, shipping, and maritime activities. Moreover, a significant portion of Malta’s waters also have protection under designations of Special Protected Area and Special Area of Conservation (ibid.). The remaining main viable option is solar energy, with photovoltaic systems deployed on rooftops and other brownfield sites such as quarries. Greenfield sites are not considered an option because of the limitations imposed by land size, population density, and restricted agricultural land. According to Malta’s energy policy document, further deployment of photovoltaic systems might decrease in the coming years because of the limitations mentioned earlier. By 2020, it was estimated that such deployment was 160 MW, expected to reach 260 MW by 2030. This would mean a footprint of 3.4 km2. Based on the current policy estimate, this could mean that Malta would be delivering 30–40% of its needs from solar energy. The other source of energy presently used in Malta is electricity generation from waste-toenergy plants. However, its contribution is relatively small and not expected to increase in the coming future. While RES were only 1.1% in 2010, these went up to 7.5% by 2019.

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Regulatory Framework Energy policy is under the portfolio of the Ministry for Energy, Enterprise, and Sustainable Development. The Ministry also has the responsibility of several entities entrusted with energy-related matters. The Malta Resources Authority (MRA) is a public corporate body set up in 2000 under the Malta Resources Act, Chapter 423. Its original aims were to regulate energy, mineral resources, and water, and to promote energy efficiency and renewable sources of energy. It also covered the areas of oil exploration and climate change. In 2015, under the Regulator for Energy and Water Services Act, the Authority’s role changed when several responsibilities, including grant schemes for domestic photovoltaic panels, wells, solar water heaters, roof insulation, swimming pool licenses, licenses for electricians and wiremen, water tankers or bowsers, and fuel regulation, were taken over by the new Regulator for Energy and Water Services (REWS). The two entities dealing with water and electricity, Water Services Corporation and Enemalta, respectively, also fall under the regulation of the new entity. In accordance with Council Directive 2009/119/EC, the Regulator also has the responsibility of being the central stockholding entity for security stocks. The directive obliges member states to maintain minimum stocks of crude oil and/or petroleum products. The role of the MRA is now centered around climate change reporting, groundwater abstraction regulation, and quarry licensing. It is also responsible for the preparation of the national report on lifecycle greenhouse gas emissions for fuels used in road transport (under the EU Fuel Quality Directive). The European Commission uses such reports to monitor the progress toward the reduction of lifecycle emissions of such fuels. The functions of the Energy and Water Agency include energy efficiency, renewable sources of energy, the water framework regulations, and the protection of groundwater. The Energy and Water Agency has a dedicated unit specifically focused on energy. The unit aids in the form of schemes adopted by government to ensure more energy efficiency. These include for example, double-

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glazing, residential roof insulation schemes, vehicle scrappage schemes, solar water heaters, photovoltaic panels, and other support systems for economic operators. The main renewable source is derived from photovoltaic panels, with support coming in the form of grants for the purchase of equipment and competitive feed-in tariffs. The Agency also runs campaigns offering energy saving tips for everyday living, such as the use of bulbs, energy efficient devices, etc. (The Energy and Water Agency 2021). Ownership of Electricity Generation Capacities Electric lighting was introduced in Malta in 1882. The importation of petroleum products was nationalized in 1974 through the setting up of a Fuel Oil Board within the Office of the Prime Minister. Up until 1977 petroleum products were imported by three private companies: Shell Malta Co. Ltd., British Petroleum, and Esso Co. Ltd. In 1977, new legislation set up Enemalta, a new Government corporation whose role was the development and operation of Malta’s energy requirements, including electricity, gas, and petroleum fuels. At that time electricity generation was based on coal. It was later in 1995 that Enemalta stopped using coal as fuel for its generation plants, thus being able to reduce CO2 and dust emissions. Another change came in 1999, when Enemalta commissioned a combined cycle generation plant using 0.2% sulfur gas oil. In 2005 Enemalta made a commitment to buy renewable energy generated on the Maltese archipelago. The contract for the works related to the Malta-Italy interconnector was signed in 2010, with the final ceremony for its launch coming in 2015. The interconnector links Malta to the European energy network, through a substation operated by the Italian transmission system operation Terna (at Ragusa) and has a bi-directional flow capacity of 200 MW of electricity at 230 kV. It is considered as one of the longest high voltage alternating current interconnector of its kind globally. In 2012, Enemalta took over the new 149 MW power plant extension in Delimara (which included 8 Wartsila diesel engines operating in combined cycle mode and one steam turbine).

Malta: Energy Policy

A change in government in 2013 also brought changes to the energy policy, with the aim of no longer using heavy fuel oil in Enemalta’s electricity generation mix. A shift was made to natural gas; this brought about projects which included the building of a new plant and the decommissioning of old plants. In 2014, Enemalta plc was established, and it took over the electricity generation and distribution infrastructure, and operations which had been administered by Enemalta Corporation. Later in the same year, Shanghai Electric Power acquired a 33% shareholding in Enemalta plc. Another government entity, Enemed Co. Ltd., was set up to take over the Corporation’s Petroleum Division. Enemalta plc is the only entity which is licensed to carry out the activities of generation, distribution, and supply (REWS 2020). In 2013, Enemalta Corporation issued a tender for the supply of LNG. ElectroGas Malta Ltd. is the private company (a consortium of Maltese and international partners) which constructed a LNGto-Power plant in Delimara and currently delivers electricity to Malta via Plant 4, while also having the regasification unit. Another private company, D3 Power Generation Malta Ltd., (a subsidiary of Shanghai Electric Power) operates Plant 3. Plants 1 and 2 are operated by Enemalta plc itself, although during 2019, only 0.64% of electricity sent to the grid was produced by this company. Enemalta plc only owns 23.36% of the full productive capacity. Plants 1 and 2 are generally used as backup. During 2019, the two private companies produced 67.12% of all electricity sent out to the grid (REWS 2020). Recent changes and investments have led to a more efficient and environmentally sustainable energy mix, which includes: new gas-fired plants; the Malta-Italy interconnector to import electricity; and renewable energy sources which are connected to the national grid. Distribution of electricity is derived from these three main sources; the Delimara Power Station; the Maghtab Terminal Station of the Malta-Italy Interconnector; and several grid-connected RES located over the islands. The entity operates a four-level network (four different voltage levels) through a number of primary and secondary

Malta: Energy Policy

substations, mainly via underground and subsea cables, but also some kilometers of overhead high voltage lines, the latter mostly in rural areas. Where possible, these are being replaced by underground cables, making them less prone to damage. By 2019, the electricity distribution system encompassed a network of 5231.237 km, with most (2958.092 km) being underground cables, 2159.910 km were overhead cables, while 113.235 km were submarine cables (REWS 2020). The Delimara Power Station complex includes four electricity generation plants. The total combined capacity is 537.8 MW. This includes the two main units (a 205 MW natural gas-fired CCGT system and a 152.8 MW diesel engine plant which was rebuilt to run on natural gas and gasoil instead of heavy fuel oil, both dating to 2017). These are operated by partners Electrogas Malta, and Delimara 3 Power Generation Ltd. respectively. There are a further two gasoil-fired plants which are older: 1994 and 1999, with a combined capacity of 180 MW, which are utilized as standby capacity during emergencies. The power station is connected to the national electricity network through four 132 kV and six 33 kV outgoing feeder cables (Enemalta plc 2021). Unbundling refers to the separation of the electricity supply and generation activities from the actual operation regarding distribution and/or transmission networks. EU Directive 2009/72/ EC and Regulation (EC) 714/2009 refer to this, but Malta has a derogation in this respect. Malta has no Transmission System Operators (TSOs) because there are no electricity transmission systems. The electricity distribution system which covers the Maltese islands is the responsibility of only one Distribution System Operator (DSO). Enemalta plc is the sole designated DSO, with a license to both generate and supply electricity to Maltese consumers (REWS 2020). Another derogation from Directive 2009/72/ EC relates to Article 32 (Third Party Access). This refers to independent power producers (such as households with photovoltaic equipment), who are connected to the distribution network, where they are obliged to sell excess electricity produced and not consumed on site, to the sole supplier of electricity; in Malta’s case,

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Enemalta plc. This means that the retail market is not open to competition. The sale of electricity by photovoltaic installations come under the subsidiary legislation SL 545.45, that is the Feed-in Tariffs Scheme Regulations. While the electricity generation sector has been liberalized since 2005, such generation was limited to a few small producers via renewables sources. It was only in 2017 that two big Independent Power Producers (IPPs) entered the market, and now practically account for more than twothirds of electricity generation in Malta. The fossil fuel IPPs are D3 Power Generation Ltd. and ElectroGas Malta Ltd. The latter company is equally shared by three entities, one local (itself made up of three local group of companies) and two international entities (ElectroGas Malta Ltd. 2021). Since there is no liquid wholesale market, it is the regulator which “determines the proxy of the wholesale market price on an annual basis” (REWS 2020). This price is then used as the reference to determine other rates (the feed-in tariff, the rate paid to generators providing electricity to the grid, and the market price). The supply market is not open to competition. Electricity tariffs are established by the Regulator through legislation. Such regulated electricity retail tariffs are made up of two components: a fixed annual service charge (which differentiates between a single-phase and a three-phase service, and between premises used as residences/domestic and non-residential) and a tariff structure depending on consumption (which also differentiates between premises registered as primary residence, domestic, or non-residential). For consumers who do not reside in Malta there is also a maximum demand charge. However, there are no tariffs for the use of the existing network. Households benefit from a reduction in electricity rates, known as the “eco-contribution” mechanism. Different schemes apply depending on the amount of persons within the households and whether such persons consume less than a specific threshold on an annual basis. For non-residential premises, a night and day tariff is provided for those whose annual consumption is more than 5 GWh. According to 2020 REWS annual report,

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there is no expectation that such regulated prices be phased out.

International Aspects As a member state of the EU, Malta has obligations in terms of renewable energy sources, energy efficiency, climate change, and other environmental issues which impact energy use. Malta’s 2030 National Energy and Climate Plan is in line with its commitment as an EU member state, which in turn is framed within the EU’s 2030 commitment regarding the targets set by the Paris Agreement toward a decarbonized energy system and ambitious goals regarding mitigating climate change. Malta has also ratified this agreement. The plan is also set within a set of new EU legislation which specifically targets renewable energy, energy efficiency, energy security, and market design, collectively referred to as the “Clean Energy for all Europeans Package” (Government of Malta, 2019). The EU’s collective commitment is of 40% of GHG emissions by the end of 2030, when compared to the levels prevailing in 1990. The EU has recently unveiled new ambitious plans to drive this figure up to 55% by 2030 and to eliminate them by 2050. Directive 2012/27/EU deals with Energy Efficiency, where member states are expected to submit an action plan every 3 years on how they are going to become more efficient. Malta’s 2017 Energy Efficiency Action Plan spells out several ways on how to increase efficiency and also decrease energy demand: energy tariffs to encourage less consumption; smart meters; energy audits for large companies; residential schemes; renewable energy also for households; efficiency in transport; and upgrading of the national distribution system. This plan has been superseded by the 2030 National Energy and Climate Plan. Directive 2009/28/EC promotes the use of renewable sources and obliges member states to commit to a target for the share of energy of their gross final consumption derived from such sources. Malta’s goal for 2020 was 10% while for the EU as a whole the target was 20%. Malta’s new target for 2030 is 11.5%, while that of the EU is 40%, replacing the initial figure of 32%.

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Through its regulator, Malta is a member of the EU regulatory fora. The Regulator for Energy and Water is a member of the EU Agency for the Cooperation of Energy Regulators (ACER), established by Regulation 713/2009 of the European Parliament and the Council. Its main role is to coordinate the activities of national regulatory authorities. The aim is to integrate the electricity and natural gas market across member states and to harmonize the regulatory frameworks of the EU energy policy. The main body within the Agency is the Board of Regulators. The national regulator is also a member of the Council of European Energy Regulators (CEER), which represents all national regulators for electricity and gas. Through cooperation, CEER supports national regulators and fosters best practice energy regulation. The Association of the Mediterranean Regulators for Energy is an EU-funded project which was set up in 2006 as a working group, but a year later became an association. It promotes a consistent harmonized and investment-friendly regulatory framework to provide maximum benefits to energy consumers in the Mediterranean region.

Concluding Statement Malta has several obligations in terms of its energy policy, based on EU directives and regulations. However, it also has the possibility to tap into relevant funds which cater for such projects. Over the years these have included projects under programs such as the Intelligent Energy Europe (2002–2013), Horizon 2020 Energy Efficiency (2014–2020), and currently the LIFE program (2021–2027). Such funds sustain the delivery of EU policies in the area of sustainable energy, with a particular focus on the European Green Deal, the Energy Union (with the interim 2030 energy and climate targets), and the EU’s longer term 2050 decarburization strategy.

References Azzopardi RM (2011) Social policies in Malta. Commonwealth Secretariat, London

Mexico: Energy Policy Drago A, Azzopardi J, Gauci A, Tarasova R, Bruschi A (2013) Assessing the wave energy potential for the Maltese Islands. Paper presented at the Sustainable energy 2013: the ISE annual conference, held on 21 March 2013 in Malta ElectroGas Malta Ltd. (2021) About us. Available at https://www.electrogas.com.mt/about-us/ Enemalta plc (2021) About Enemalta plc. Available at https://www.enemalta.com.mt/about-us/delimarapower-station/ European Community (1992) EEC-Malta association agreement and protocols and other basic texts. Available on https://op.europa.eu/en/publication-detail/-/ publication/53778c11-d497-43ec-ae4d-b62ef38f92e3 Eurostat (2021a) People at risk of poverty or social exclusion. Available at https://ec.europa.eu/eurostat/ databrowser/view/t2020_50/default/table?lang¼en Eurostat (2021b) Real GDP growth rate. Various years. Av ail abl e o n ht tps :/ /ec.e uropa .eu/ euros tat/ databrowser/view/tec00115/default/table?lang¼en Fsadni M, Mallia EA, Nasser S, Sayigh AAM (2000) Chapter 365: Sustainability in the energy sector in Malta. In: Sayigh AAA (ed) World renewable energy congress VI. Pergamon/Sciencedirect, Brighton, pp 1755–1758 Government of Malta (2019) Malta’s 2030 National energy and climate plan for Malta. Available on https://www. interregeurope.eu/resindustry/news/news-article/7415/ malta-s-national-energy-and-climateplan/#:~: text¼Directive%202009%2F28%2FEC%20on,from% 20renewable%20sources%20in%202020 Jobsplus (2021) Foreign nationals employment trends. Available at https://jobsplus.gov.mt/resources/ publication-statistics-mt-mt-en-gb/labour-marketinformation/foreigners-data Kotzebue JR, Bressers HTA, Yousif C (2010) Spatial misfits in a multi-level renewable energy policy implementation process on the Small Island State of Malta. Energy Policy 38(10):5967–5976. https://doi.org/10. 1016/j.enpol.2010.05.052 Melita TransGas Co, Ltd (2021). Available at https:// melitatransgas.com.mt/ NSO (2018) Electricity supply: 2008–2018. News Release 156/2018, published on 8 October 2018 NSO (2020a) Inbound tourism: December 2019. News Release 017/2020, published on 5 February 2020. Malta NSO (2020b) Registered business units 2019. News Release 072/2020, published on 4 May 2020. Malta NSO (2020c) Electricity supply: 2015–2019. News Release 161/2020, published on 8 October 2020. Malta NSO (2021a) World Population Day – 11 July 2021. News Release 122/2021, published on 9 July 2021 NSO (2021b) Labour force survey: Q1 2021. News Release 112/2021, published on 24 June 2021 NSO (2021c) Gross domestic product – 2020. News Release 040/2021, published on 1 March 2021 NSO (2021d) Motor vehicles: Q2/2021. News Release 130/2021, published on 21 July 2021

439 Office of the Prime Minister (2017) Malta’s National energy efficiency action plan – April 2017 Regulator for Energy and Water Services (REWS) (2020) 2020 annual report of the regulator for energy and water services to the European Commission on the electricity and natural gas sector in Malta. Marketing monitoring report, published 31 July 2020 Ries J, Gaudard L, Romerio F (2016) Interconnecting an isolated electricity system to the European Market: the Case of Malta. Util Policy 40:1–14. https://doi.org/10. 1016/j.jup.2016.03.001 The Energy and Water Agency (2021) Schemes: promotion of energy audits in small and medium sized enterprises. Available at https://www.energywateragency. gov.mt/schemes/ and https://www.energywateragency. gov.mt/energy/ Water Services Corporation (WSC) (2021) Water production. Available at https://www.wsc.com.mt/about-us/ water-production-distribution/

Mexico: Energy Policy Ernesto Bonafé Energy Charter Secretariat, Brussels, Belgium

Need of (Nonrenewable and Renewable) Resources The energy sector in Mexico experienced a major overhaul following the constitutional reform of 2013. The main sources of energy produced by Mexico are hydrocarbons; first oil, which represented 64.3 percent of primary energy production, followed by natural gas, which represented 22.7 percent. The production of renewable energies was not a priority for the country. This has changed in the past years, as Mexico has created a complete strategy for the development of a sustainable energy system and the promotion of renewable energy sources. Mexico is one of the top ten oil producers in the world. In 2013, the oil sector accounted for 13 percent of export earnings in the country. The same year it was reported that energy production was on par with the national energy consumption, which suggested the decline in production and an increase in consumption. In fact, the Mexican energy sector experienced in a drop in its oil

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production, going from 3.4 million barrels per day (bpd) in 2004 to 2.8 million bpd day in 2014. Mexico had 9.8 billion barrels of proved oil reserves as of the end of 2014 (IEA 1-3, 2015), and a total potential of 44,530 million barrels of oil. Mexico sits on a blanket of oil that was not being explored due to the lack of technology to access deep waters hydrocarbons. Estimations considered that developing the potential of the domestic industry for exploration and exploitation of energy resources would require about US $60,000 million per year (Energía16 Actualidad, 2014).

Energy Policy Conception of Mexico In late 2013, the Mexican Government reformed Articles 25, 27, and 28 of its Constitution, allowing private companies to participate in the exploration and exploitation of oil. This ended a monopoly under which Pemex operated for 70 years following the expropriation of the oil company in 1938. The energy reform aimed to create a transparent market and open free competition in which all actors can operate on equal terms. The reform implied a very ambitious institutional transformation given its political and technical complexity. It had an impact in all the industries involved in the production and sale of energy, including oil, gas, electricity, coal, renewables, and in different aspects surrounding the sector, such as contracts, taxation, and corporate social responsibility, among others. Secondary laws were issued in August 2014 by the National Congress, developing the Constitutional Reform in order to provide stability and legal certainty to the energy reform. The ordinary legislative process involved 21 laws grouped into nine initiatives. Out of 21 laws, nine were issued and 12 others were reformed (Encuentros Reforma Energética, 2014). Additionally, Pemex had an organic restructuration, which determined it as a productive state-owned company and ensured transparency in its new role (PEMEX, 2015; Estatuto Orgánico de Petróleos Mexicanos, 2015). Another institutional was the restructuring

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of the Federal Electricity Commission (Comisión Federal de Electricidad, CFE) similarly to Pemex. There has also been an evolution towards greater institutional reinforcement. The regulators transitioned from being mere advisory bodies to having a decentralized structure with greater powers and a self-sufficient budget. Regulators are entities that have their origin in the Constitution, which gives them a strong institutional stability with the same status as a ministry. A renowned regulator is the Energy Regulatory Commission (Comisión Reguladora de Energía, CRE), which received certain powers that were previously assigned to the Federal Competition Commission. For example, it can set the maximum level of market concentration and prohibition of crossshareholding between activities. Before the reform, the CRE was a simple regulator with powers limited to electrical and gas activities. Then it turned into a complex regulatory entity with a governing body constituted of seven commissioners and five new units dealing with the economic analysis of tariffs, regulation, legal affairs, planning and evaluation of regulation, and electrical systems. Additionally, the CRE could rely on regional offices primarily oriented to the hydrocarbons sector.

Regulatory Framework The new Electricity Industry Act established the regulatory framework that distinguishes between monopoly activities (i.e., transport and distribution), and activities on a competitive basis (i.e., generation and supply). All activities in the electricity industry, such as generation, transmission, distribution, and supply, should be kept under a strict legal separation to promote open access and an efficient market functionality. The transmission and distribution of electricity remains provided for by the State through the CFE. The CFE can agree with private parties to expand, modernize, finance, and operate transmission projects, as well as to modernize the distribution areas. SENER was given the power to issue expansion programs for the transmission and

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distribution grids, while the CRE was allocated the responsibility for designing and issuing the related regulation on the basis of the market rules. The electricity generators may freely enter into contracts and sell electricity in the wholesale market. The coordination needed to meet energy demand at the lowest cost and provide the necessary stability to the electrical system was allocated to the National Center for Energy Control (Centro Nacional de Control de Energía, CENACE). CENACE can impartially coordinate the wholesale electricity market accordingly and can propose the expansion of the transmission electricity network to SENER. The new regulation provided a classification of consumers as either qualified or basic supply consumers. Qualified consumers are allowed to directly participate in the wholesale electricity market or directly buy from a supplier at prices freely determined, while basic supply consumers can be served by the CFE under regulated tariffs. The CFE must purchase energy through auctions to secure lower energy costs for consumers. Meanwhile, the CRE was entitled to regulate tariffs for transmission and distribution. The electricity regulation created an Electric Universal Service Fund (Fondo de Servicio Universal Eléctrico) to finance electrification in rural communities and marginalized urban areas. The products offered in the wholesale market are: power, capacity, related services, financial transmission rights, and certificates of clean energy, in addition to any other service that may be required. Any power plant with generation capacity greater than 0.5 MW requires special permission to join the generation market. Traders recognize the capability to buy and sell energy as well as other end products, but they were not allowed to sell any of these products directly to final consumers; they must pass through suppliers. On the demand side, the qualified consumers are those that can directly access the market, with an average demand higher than 3 MW during the first year of reform, the following year over 2 MW and the third year of reform with a demand over 1 MW. The average threshold demand was to be gradually reduced in time. The qualified consumers were enabled to take part

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directly on the electricity market or act through a supply company. An additional element of the electricity market was the nodal price system. In Mexico, there was already an embryo of what would be a nodal price market, but eventually the number of nodes could rise from 42 up to 3,000/4,000 nodes considering the distribution losses. Furthermore, the market is expected to become increasingly complex. This evolution would be associated with financial supply rights to ensure risk hedging against risks of congestion. Regarding the electricity sector, the CRE was allocated major powers to implement regulations. In relation to the transmission and distribution of electricity, the CRE is responsible for issuing market rules, monitoring market operation, determining the costs of the market system operator, ensuring open access to transmission and distribution, establishing pricing models, issuing opinions in relation to the cost of the expansion and modernization of transmission lines, and regulating the growth of the “smart grids” and distributed generation. As for electricity generation, the CRE issues the terms of its authorization rules allowing transactions between generators and retailers, guidelines on accounting, operational and functional separation, the grant of clean energy certificates, authorization of energy imports and exports, and keep track of retailers. In relation to electricity supply, the CRE is responsible for issuing the supply permits, delivering an opinion on hedge contracts of basic supply, establishing capacity requirements, keeping record of qualified consumers, and establishing regulated revenues and charging objectives for basic supply. To meet the sustainability requirements in the electrical industry, the law created a scheme of obligations to qualified consumers and utility companies to purchase clean energy certificates, ensuring demand for clean generation. An important topic of the Mexican electricity market is the clean energy obligations of investors. Clean energy is a broad concept, since it does not only include renewable energy, but also large hydro, nuclear, and efficient cogeneration. The investor might seek clean energy certificates, supporting

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the country to meet its goals and ensuring incentives to develop the sector. Moreover, the new Law on Geothermal Energy regulated the stages of recognition, exploration, and exploitation of geothermal resources for the benefit of this energy within the boundaries of the national territory, to be used for electricity generation or any other use. In a similar way as in the case of oil, it was done as a Zero Round and Round One for geothermal fields, giving the possibility to the CFE to choose certain geothermal fields. SENER addressed this request to determine which fields could be developed by the CFE and which were left for the private sector initiative. At the time of the reform, the global geothermal installed capacity was over 12 GW. Mexico ranked fourth in installed geothermal capacity, with about 840 MW, behind only the United States, the Philippines, and Indonesia. The Mexican geothermal potential is estimated to reach 10 GW.

International Aspects Mexico has signed and ratified more than 100 multilateral and bilateral international treaties dealing with the energy sector, particularly with hydrocarbons, renewables, nuclear, research and development, and relating also to trade issues, imports, exports, and investment. Some of the most important international agreements signed by Mexico are noted in this section. The United States–Mexico Transboundary Hydrocarbons Agreement establishes a legal framework that provides certainty to the process and outcomes of the possible exploitation of hydrocarbons that are in the border area of these countries. The North American Free Trade Agreement (NAFTA) entered into force in 1994. It is one of the most important legal documents on economic matters. However, Mexico excluded trade on the energy sector, as the Constitution did not allow it at that time. The amendments on Articles 25, 27, and 28 of the Mexican Constitution opened the discussion regarding the possibility of NAFTA application over the Mexican energy trade.

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The Pacific Alliance was formally constituted in June 2012 by Chile, Colombia, Mexico, and Peru. The members agreed on the free movement of goods, services, capitals, and people. The main objective of the alliance is to boost an “area of deep integration.” In relation to the energy sector, it aims to improve energy infrastructure and interconnectivity (Tvevad, 2014). Mexico’s energy reform represents opportunities for the other Alliance members to make investments in this sector. The Mexico-European Union Strategic Partnership, Joint Executive Plan of 2010 referred to the project of the Integration and Development of Mesoamerica in which Mexico and the European Union sought to reinforce their cooperation and work together to support the development of the other countries which, with Mexico, form the Mesoamerican area, namely, Belize, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, the Dominican Republic, and Panama. Cooperation focuses on electrical interconnection, biofuels, and renewable energy. Mexico and the European Union reached a new trade agreement in 2018. In Latin America, the main institutions responsible for promoting the creation of agreements and treaties to integrate the energy markets are ARPEL (Regional Association of Oil and Natural Gas in Latin America and the Caribbean), CIER (Electricity Commission Regional Integration), and OLADE (Latin American Energy Organization). The San José Agreement was a multilateral agreement made with 11 countries of Central America and the Caribbean. Due to this agreement, Mexico and Venezuela supplied together 160 thousand barrels of crude oil and/or refined products per day (80,000 each) through credit lines offered by both countries. It was abrogated in 2007 but it served as a reference for the opening of new areas such as the recent pipeline agreement with Guatemala in Central America. The Gas Pipeline Cooperation Agreement was reached between Mexico, Guatemala, Honduras, and El Salvador in March 2015 and aims to transport fuels with competitive prices from Mexico to Central America (México firma Proyecto para repartir gas a Centroamérica, 2015). This regional

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effort was made to respond to the historic objectives of Central America to promote access to natural gas, combat climate change, and liberalize the regional market. The Energy Cooperation Agreement of Caracas and Petrocaribe established frameworks to develop the construction of electricity and gas interconnections, the creation of economic complementation agreements, and joint participation in the construction of projects. The Asia-Pacific Economic Forum (APEC) has 21 Pacific Rim member economies, including Mexico since 1993. APEC promotes free and open trade throughout the Asia-Pacific region (APEC, 2015). Four of the world’s five largest energy users (China, the USA, Russia, and Japan) are members, and by 2035, APEC demand for energy is forecast to increase by 34 percent to around 6,900 Mtoe above 2013 levels (APEC Energy Demand and Outlook, 2013).

The Hydrocarbons Industry Reform The national energy reform allowed private equity investment, from which the latest technology is expected, together with risk sharing in the upstream segment, particularly for the exploration and exploitation in deep or ultra-deep waters. In midstream or transportation activities, from oil exploitation to the refineries, there is not the same risk or need for such technology or capital as in the upstream segment. On the other hand, it was necessary to extend the national gas pipeline system to guarantee the gas supply. In the downstream, where the refining and marketing of petroleum products is carried out, it was also expected that private participation would inject capital and technology to allow the upgrade of existing refineries and the installation of new and more efficient ones. In fact, Mexico’s goal is to receive not only financial resources but technology, which is a core aspect for offshore activities. Moreover, the reform aims to extract and sell crude oil and its derivatives in the best market conditions. In 2014, the so-called Round Zero took place. That round gave Pemex preemptive rights to choose operational and new oil fields before the

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entry of private companies. Pemex was granted 83% of the proven reserves and 21% of prospective resources based on its technical and financial capabilities. The Round One defined the oil fields as open to domestic and foreign private investment, where Pemex could participate on equal terms with the rest of investors. In December 2014, the terms of the Round One were published, which established a total of 169 blocks to be tendered on five different calls. There were 109 blocks for exploration and 60 for exploitation. The National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos, CNH) is the authority subscribing the contracts for exploration and exploitation. The reform sought to open the market to international companies with financial muscle and technological capabilities to be able to take advantage of the new findings placed in deep waters. To award, sign and monitor contracts for exploration and exploitation were some of the powers granted to the CNH and, hence, the importance of this institution at the time of the commencement of the market opening. Other functions of the CNH included providing technical advice to the Secretary of Energy (SENER), the compilation of geological and operational information, as well as conducting tenders for contracts for exploration and exploitation of hydrocarbons. The CNH was also entitled to sign contracts with the bidding winner, either Pemex or a private company or Pemex in partnership with private groups. Another key function is to approve plans for exploration and extraction and to authorize the drilling of wells. The CNH ensures that tenders and contracts are implemented with full transparency guaranteeing national interests. Foreign companies must submit an executive exploration project plan; list their technical, operational, and personnel capabilities; as well as a roadmap where the delimitation of the geographical area and a risk analysis are displayed, among others. The contracts for exploration and exploitation are awarded through competitive bidding. First, SENER with the support of the CNH select the area to tender, and later based on this information determine the applicable contract. SENER drafts the contract, including the determination of local

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content. It must meet a minimum local content that will go from 25% in 2015 to 35% in 2025, excluding deep waters, to develop productive and supplier chains in extractive activities. Meanwhile, the Ministry of Finance determines the fiscal aspects of the contract, together with the recommendations of the Federal Antitrust Commission regarding the awarding procedure. Then, the CNH tenders, awards, signs, and administers the contracts, which can be of four types: production sharing, profit sharing, and licensing or services. Additionally, the new Technical Regulator in the Field of Industrial Safety and Environmental Protection (Regulador Técnico en Materia de Seguridad Industrial y Protección del Ambiente) must set out technical guidelines for logistics infrastructure. The CNH is in charge of the upstream regulation, and the CRE is in charge of regulating the midstream and downstream. The most important powers granted to the CRE regarding hydrocarbons are the following: issuing permits in the areas of transport and storage, guaranteeing open and nondiscriminatory access to networks, tariff regulatory policy, powers to establish prohibitions or limitations on market share, regulation for quality measurement, and issuing opinions in regards to the expansion of energy systems. Moreover, there have been major changes in market liberalization, for example, imports of liquefied petroleum gas (LPG) were allowed since the regulated price was above the market price, and there was room for market competition. Prior to full opening, the government needed to identify the subsidies for consumers. The idea was that the generalized subsidy system migrated towards target subsidies for consumers in need. Subsidies on the price would disappear and only individuals within certain levels of poverty would have access to subsidies, for example, through smart cards. Finally, gasoline imports were allowed, leading to a completely open gasoline market.

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to bring in the latest technology to enhance exploration and production of hydrocarbon resources and, at the same time, to improve market functioning by introducing competition. Round Zero gave priority to Pemex to determine the areas that it kept for extractive activity, leaving the door open in the successive rounds to foreign investments. The reform also included straightened institutions. The CNH is responsible to celebrate contracts with the new market investors. In contrast, the CFE continues to provide and supply electrical energy, although the generation and supply of electricity may be freely held by private companies in order to meet the market’s needs. The new CRE obtained greater technical and operational autonomy and has the ability to implement the regulatory framework in the energy sectors. As one of the ten largest oil exporters in the world, the production of renewable energies was not a priority for Mexico. However, following international trends, Mexico is implementing various programs to reduce dependence on hydrocarbons, especially oil. Regarding natural gas, the country has great potential, although major developments are to be reached with foreign investment. The growing prominence of the Mexican energy sector is reflected in a national perspective, with the ambitious legal reform. From an international perspective, it is in line with the Mexican involvement in more than 100 multilateral/bilateral agreements and international treaties in the areas of hydrocarbons, renewable energy, nuclear energy, research, and development of energy infrastructure. Mexico’s decisive step to allow foreign investments in the sector seeks economic growth and aims to benefit from the new economic and global conditions of the energy sector, with a new stable and transparent legal system, and strengthened institutions.

References Concluding Statement Mexico’s energy reform allows private investors to participate in the energy sector. This is expected

APEC Energy Demand and Outlook, 5th Edition (2013) Asia-Pacific Economic Cooperation. Available via https://www.apec.org/Publications/2013/02/

Mexico: Mineral Policy APEC-Energy-Demand-and-Supply-Outlook-5thEdition Asia-Pacific Economic Cooperation: About APEC (2015) APEC. Available via http://www.apec.org/About-Us/ About-APEC/Member-Economies Country Analysis Brief: Mexico (2015: 1,3) US Energy Information Administration. Available via https:// www.eia.gov/beta/international/analysis_includes/ countries_long/Mexico/mexico.pdf Encuentros Reforma Energética (2014) Comisión de Energía, page 3–4. Available via http://www.senado. gob.mx/comisiones/energia/docs/reforma_energetica/ presentacion.pdf Energía16 Actualidad (2014) Energía16. Available via www.energia16.com Estatuto Orgánico de Petróleos Mexicanos (2015). Diario Oficial de la Federación. Available via http://dof.gob. mx/nota_detalle.php?codigo=5390323&fecha=28/04/ 2015 México firma proyecto para repartir gas a Centroamérica (2015) CNN. Available via https://expansion.mx/ economia/2015/03/13/mexico-repartira-gas-acentroamerica-a-traves-de-gasoducto Petróleos Mexicanos: History (2015) PEMEX. Available via http://www.pemex.com/en/about-pemex/history/ Paginas/default.aspx Tvevad J (2014) The Pacific Alliance: regional integration or fragmentation? European Parliament DirectorateGeneral for External Policies. Available via http:// www.europarl.europa.eu/RegData/etudes/briefing_ note/join/2014/522318/EXPO-AFET_SP(2014) 522318_EN.pdf

Mexico: Mineral Policy Gian Carlo Delgado Ramos Interdisciplinary Research Centre on Sciences and Humanities, National Autonomous University of Mexico, Mexico City, Mexico

General Information on Mexico Mexico covers an area of 1.96 million km2 and accounts for 11,593 km of coast line. Overlapping the Tropic of Cancer, Mexico is a megadiverse country, holding between 10% and 12% of the known species worldwide across prodigious and diverse ecosystems from arid deserts to tropical rainforests and coral reefs. Mexico’s Federal Republic is composed of 32 states and 2457 municipalities. The

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government structure is comprised of the Presidency and its secretariats, the Legislative which is arranged into a bicameral Congress (Senate and Chamber of Representatives), and the Judicial power. States also have their executive, legislative, and judicial branches. The country is the second largest economy in Latin America. In 2015, the GDP almost reached US$ 1.3 trillion. The primary sector of the economy generates 3.3% of the total GDP, secondary activities (where mining is included) generates 32%, tertiary activities generates 59%, and the remaining 5.9% corresponds to collected taxes (http://www.inegi.org.mx/est/contenidos/proyectos/ ce/ce2014/default.aspx). Distribution of wealth is notoriously uneven. On the one hand, indigenous people (25 million self-identified) and women figure as the poorest among the 55.3 million inhabitants living in poverty in 2014. On the other, from a total population of 122 million inhabitants, 1% owned, that same year, 21% of the national income (Esquivel 2015).

Need of Minerals: Reserves, Production, Exports, and Imports Mexico has five main metallogenic belts and three with a NW and SE orientation: Occidental Belt, Central Belt, and Oriental Belt. The remaining metallogenic belts have an E-W orientation: Parras Belt and Volcanic Belt. Mineral deposits are diverse, ranging from those known as epithermal deposits (such as those in Real del Monte, Fresnillo, or Taxco) to skarn (Mezcala, Naica, Charcas), porphyry (Cananea, La Caridad, Cerro San Pedro), IOCG iron deposits (Peña Colorada in Colima), and copper red-bed deposits (Las Vigas in Chihuahua), among other types. See Fig. 1 for the location of main mineral occurrences. Other mineral reserves include those of barite (mainly in Nuevo León, followed by Coahuila and Zacatecas with shared deposits in JaliscoMichoacán and Oaxaca-Puebla), titanium (such as the occurrences in Baja California, Baja California Sur, Sonora, Tamaulipas, Colima, Oaxaca, Guerrero, or Chiapas), lithium (Sonora and

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Mineral Gold

Silver Lead Copper Molybdenum Zinc Bismuth Manganese Iron Phosphate

Main deposits location Sierra Madre Occidental, mainly in Sonora, Zacatecas and Chihuahua, followed by Durango, Guerrero, San Luis Potosí, Guanajuato, Baja California, Oaxaca, Sinaloa, Aguascalientes and the state of Mexico. Sierra Madre Occidental and Oriental, mainly in Zacatecas followed by Chihuahua, Durango, Sonora, Oaxaca, Guanajuato, San Luis Potosí, Mexico, Queretaro, Coahuila, and Guerrero. Zacatecas, Chihuahua, Durango, followed by Mexico, Aguascalientes and Oaxaca Copper and molybdenum occurrences are for the most part located in Sonora. Other less productive occurrences, mainly of copper, are those of Chihuahua, San Luis Potosí and Zacatecas. Zacatecas, Chihuahua, Durango, followed by Mexico, Aguascalientes, Guerrero and San Luis Potosí Coahuila Mainly in Hidalgo with smaller occurrences in Veracruz Colima, Michoacán, Coahuila, Durango and Sonora Mainly Baja California Sur with other smaller occurrences in Tamaulipas.

Source: map of main mining projects by type of mineral elaborated with GeoInfomex (mapasims.sgm.gob.mx) and table based on data of GeoInfomex and the Mexican Geological Service, including the 2014 Statistical Yearbook of Mexican Mining.

Mexico: Mineral Policy, Fig. 1 Major mineral occurrences in Mexico (selected minerals)

Zacatecas), platinum (Sinaloa), and uranium (mainly in Chihuahua, Nuevo Leon, Sonora, Durango, Oaxaca, and Baja California Sur). The official geographical information system of mineral deposits, activities, and other miningrelated information is available at http:// mapasims.sgm.gob.mx/GeoInfoMexDB Mineral Production Mexico was in 2015 the worldwide leading producer of silver; the second in fluorite; third in bismuth, celestite, and wollastonite; fifth in lead, cadmium, barite, and molybdenum; sixth in zinc and salt; seventh in gold, selenium, plaster, and

diatomite; ninth in manganese and graphite; and tenth in world copper production (SGM 2016). The value of mining production has increased from MXN $ 45.2 billion (It refers to a thousand millions or 109) in 2002 to MXN $ 264.3 billion in 2015; a value lower than that of 2012 – the best year in the last decades when production value reached MXN $ 291.1 billion (SGM 2015, 2016). Mining and metallurgic activities combined reached MXN $ 417 billion in 2015, 37% more than in 2011 (SMG 2016). Precious metals represented 30.5%, industrial minerals 22.5%, and nonmetallic minerals 47% (Ibid). In terms of volume, mining productivity (comprises both

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volume and cost basis) has increased 4.7% annually during the period 2001–2012, more than the double experienced during the 1990s when productivity increased only at a rhythm of 2% (DOF 2014). In 2015, Mexico extracted 1550 million tons of materials from the Earth’s crust, almost 32% more than in 2014. Limestone, sand, basalt, gravel, and other stone aggregates represented 89% of the total, mostly stimulated by the renovation and expansion of domestic infrastructure (based on SGM 2016). Main producer states in terms of value were Sonora (27.9%), Zacatecas (22.9%), Durango (10.1%), Chihuahua (8.7%), and Coahuila (8.4%) (Ibid). Nevertheless, just ten municipalities from three states generated 46.5% of the total value of the national mining production in 2014 (SGM 2015). Exports and Imports Mexico commercialized 1% of minerals globally in 2001, reaching 1.7% by 2012 (DOF 2014). The volume of minerals mobilized in 2014 thru Mexican ports, for the most part – measured in terms of value – gold (29.5%), copper (17.2%), silver (16.1%), and lead (10.9%), has been estimated at 28.8 million tons. (Precious metals represented 44% of exports value, industrial minerals 49%, and nonmetallic minerals 7% (Ibid).) Exports value in 2015 kept dropping, reaching US$ 14.6 billion in 2015 or 55% less than in 2012. More than half of 2015 mineral exports (52%) had the USA as final destiny (mainly palladium [99% of all volume exported], gold [92%], barite [81%], fluorite [40%], lead [28%], zinc [16%], molybdenum [16%], and copper [14%]), 16.2% Europe (mainly bismuth [82%], fluorite [29%], molybdenum [26%], zinc [23%], and lead [17%]), 10.4% China (mainly copper [62%], silver [41%], and lead [21%]), and 7% South Korea (mainly molybdenum [33%], lead [18%], zinc [32%], and silver [12%]) (SGM 2016). The value of mineral imports in 2014 increased 4% in relation to 2013, while in 2015, it decreased from US$ 8.6 billion in 2014 to US$ 8.1 billion. Industrial minerals represent 67% of Mexico’s imports (mainly aluminum [32% of the total], iron [13.3%], copper [10.3%]); and nonmetallic

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minerals 29% (coal leading with 9.7% and sodium with 3.4%); and the remaining 4% corresponds to precious metals (gold, palladium, silver, and platinum). Most of Mexico’s mineral imports, in terms of value, occurred from the USA (50.6%), Europe (9.4%), India (6%), China (4.6%), and Australia (4.2%) (SGM 2016). In relation to the metallurgic industry, production has increased from 263.7 million tons in 2010 to 287.2 million tons in 2014 (SGM 2015). Major metallurgic production, in terms of weight, corresponded to ferroalloys with 88% of the total (Ibid). Apparent national consumption of steel was 51 million tons in 2014, about 33% more than 2010 (Ibid). Exports of raw materials and products from the metallurgic industry reached a value of US$ 14.6 billion in 2015, while imports reached US$ 8.1 billion (SGM 2016). Mining and metallurgic trade balance went from a deficit during 2001–2005 to a surplus from 2006 onward. In 2015, surplus reached a positive balance of US$ 6.4 billion, yet it represented a reduction of almost 50% of surplus in relation to 2012 when the balance reached US$ 12.6 billion (based on SGM 2016). Figure 2 shows the evolution of exports and imports between 2010 and 2015.

Mining Industry Structure Mining activities generated 0.98% of the total GDP in 2015, while the metallurgic activities added 1.95% of the total GDP (https://www.camimex. org.mx/index.php/secciones1/publicaciones/informeanual/). Both recorded 344,912 direct jobs in 2015 which is about 0.6% of Mexico’s economically active population: 67.5% of jobs corresponded to the metallurgic industry. Indirect employment has been estimated at 1.7 million jobs. There are around 3700 mining and miningrelated companies in Mexico, including intermediaries (www.desi.economia.gob.mx/DES/) which by the end of 2015 served 1558 operating mines, 1156 exploration projects, and 19 metallurgic facilities (www.camimex.org.mx). Extraction of gold, silver, lead, zinc, copper, molybdenum, manganese, and cadmium is highly or totally controlled by big-size companies (from

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Mexico's mineral exports and imports, 2000 -2015 (based on SGM, 2016) 25,000 US million dollars

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Mexico: Mineral Policy, Fig. 2 Mexico’s mineral exports and imports, 2000–2015

97% to 100% of total production); 84.6% of iron extraction is carried out by big-size companies and 14.8% by midsize companies; barite is extracted 59% by midsize companies and the remaining 41% by small-size companies (SGM 2015, 2016). Mexico is in the fifth position of the Behre Dolbear’s 2015 ranking of countries for mining investment (www.dolbear.com). By the end of 2015, foreign mining production was carried out in 927 locations by 267 foreign companies, mostly from Canada and the USA (see Fig. 3); 64% of the projects were associated with precious metals, 14% with polymetallic minerals, 13% with copper, and 6% with iron. Total investment in the mining sector, domestic and foreign, reached US$ 4.6 billion in 2015 and US$ 4.8 billion in 2014, a cutback of 24.7% in relation to 2013 and of 38.5% in relation to 2012 (year of the highest investment ever). Total accumulated investment from 2001 to 2015 is about US$ 46.8 billion. Foreign direct investment participation has no limitations, yet a clearance is required for those investors who intend to exceed 49% of the capital stock if the value of the target company exceeds MXN $ 4 billion.

National Mineral Policy Mexico’s mineral potential is without question. In fact, the National Development Plan 2013–2018 of the federal government considers mining and metallurgic activities as strategic (DOF 2014). With that in mind, the Secretariat of Economy elaborated the existing Mining Development Program (approved in April, 2014; DOF 2014) which proclaims four main goals: 1. Increase investments and promote competitiveness (e.g., by extending the Mexican Geological Service research with the purpose of delivering more precise information for investment decision-making and by increasing legal certainty to sectorial investments while simplifying legal procedures) 2. Procure funding for extractive activities and its value of chain (e.g., thru the creation of regional mining clusters, by supporting mining councils at the state level and enhancing, diversifying, and expanding Mexico’s Mining Development Trust (Fideicomiso de Fomento Minero) portfolio and terms credit, as well as other public and private funding options 3. Support the growth and capitalization of smalland midsize mining and metallurgic businesses (private and socially owned) (It refers to micro

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Mexico: Mineral Policy, Fig. 3 Foreign mining companies in Mexico, 2014

Foreign mining companies in Mexico, 2014 Japan 2%

UK 1%

South Korea 1%

Others 6%

China 5%

Australia 3% USA 17% Canada 65%

mining undertakings, family owned or cooperatives. It’s mainly focused but not limited to construction materials and stonework.), including actions for transferring know-how and for the introduction of new efficient and sustainable technologies 4. Modernize the sector’s regulation and procedures to increase its accountability (Ibid) In addition, special interest has been expressed in relation to the advancement of the exploitation of industrial materials, particularly iron and rare earth deposits; on the promotion of high impact mining projects (which are not defined); and regarding the need for expanding the financial support to metal processing plants, smelters, and collection facilities, as well as to those economic agents involved in the commercialization of minerals and mineral concentrates. The metrics proposed for evaluating the Program are reach 45 points in the Behre Dolbear’s index (in 2013 Mexico had 43.1 points; by 2014 it already has 46 points); expand the geological cartography at a 1:50,000 scale, from 35.8% to 44.8% of the national territory (or 877,717 km2); increase the amount of loans allocated and the

number of companies assisted; and reduce the time necessary to evaluate and issue mining titles (from 140 days to 90 days). Despite the intentions to strengthen the value chain of the mining sector, there is a continuity on an export-led scheme (as the data presented above shows). Improving conditions for exporting as many minerals as possible is clearly a motivation. (This can be as well concluded from the outlook studies carried out by the Mexican Geological Service at the state level, available online: www.gob. mx/sgm/articulos/consulta-los-panoramas-minerosestatales. Data from the National Chamber of the Iron and Steel Industry of Mexico show an increasing negative trade balance (Mexico is currently exporting 4.3 million tons and importing 13.7 million tons of steel, mainly to assemble vehicles), decreasing investments in the sector (from US$ 2557 million in 2013 to US$ 1311 million in 2015) and a persistent reduction in employment created since 2010 (www.canacero.org.mx/Es/ assets/infografia.pdf).) Yet there is a lack of public transparency and accountability by the government agencies regarding future minerals demand, national production and export capacity building, and the associated socioecological implications. At the

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same time, there is not a clear-cut vision to strengthen the relationship between mining and the metallurgic-mechanical industry. Thus, the possibilities to foster national value-adding processes, in a sustainable and socially responsible manner, are certainly not being fully pursued, specifically in those areas where most of the value is generated but also in relation to know-how and innovation in manufacturing machinery (currently imported from Germany, Japan, and the USA). This issue may change as more attention is paid to the domestic market because of an eventual reduction of commercial relations with the USA. This seems to suggest the “made-in-Mexico” initiative (February 2017) and the intentions of Giant Motor’s (controlled by Carlos Slim’s financial services conglomerate) of manufacturing a made-in-Mexico electric vehicle by 2018. A long-term vision Program may be part of a profound transformation of Mexico’s productive matrix, one aimed toward a more knowledgeintensive, low-carbon, and sustainable economy, a context in which energy consumption efficiency and recycling are two key actions to confront environmental constraints, material supply risk, and reserve depletion. However, currently there is not a specific federal program for metal and scrap recycling despite the fact that the country disposes of about 1.1 million tons of metals annually of which only 39% are in the best case recycled (SEMARNAT 2013). Due to Mexico’s low technological development in the metal recycling sector, a great part of the collected metals – formally and informally by waste pickers – are exported and processed elsewhere. Major challenges therefore are the high degree of informality, the lack of sufficient data, and a weak regulatory framework.

Regulatory Framework According to Mexico’s Federal Constitution, minerals are property of the nation, and thus, its exploration and exploitation can only be carried out thru concessions granted by the General Direction of Mining Regulation of the Secretariat of Economy. Mining concessions grant the right

Mexico: Mineral Policy

for exploiting all types of minerals, excluding oil and gas and radioactive materials. Titles for mineral exploration and exploitation are granted for 50 years, renewable for a second period of the same length. In both cases, a first-come, firstserved approach has been established for allocating titles, yet mining rights and surface rights are separated. (Mining rights are separated from surface rights; therefore, companies must buy or rent land with the expressed consent of landowners. Mining companies may have access to the surface of the area covered by the mining title through temporary occupation, a sort of mandatory lease (see: www.economia.gob.mx/files/comunidad_ negocios/industria_comercio/informacionSectorial/ minero/guia_de_ocupacion_territorial_0513.pdf).) During 2001 to 2012, 28,807 titles were approved, covering 61.7 million ha. Only 198 titles or 0.68% of total titles granted allowed the control of 34.6% of land area concessioned to mining activities during that period (DOF 2014). Between 2013 and 2015, almost 3000 new titles or renovations were granted (for a full list of such titles, see www.siam.economia.gob.mx/es/siam/ 2015). Mining activities are regulated by multiple laws, the core one being, the Ley Minera of 1992 (latest amendment: August, 2014) (see www. diputados.gob.mx/LeyesBiblio/pdf/151_110814. pdf) and its latest rules of procedure of 2012 (Reglamento de la Ley Minera; latest amendment: October 2014). Environmental aspects are regulated by the Ley General de Equilibrio Ecológico y Protección al Ambiente (latest amendment: May, 2016) (see www.diputados.gob.mx/ LeyesBiblio/pdf/148_130516.pdf) and five environmental standards (NOM-120-SEMARNAT2011, NOM-141-SEMARNAT-2033,NOM-155SEMARNAT-2007, NOM-157-SEMARNAT2009, NOM-159-SEMARNAT-2011); water concessions and regulations are regulated by the Ley de Aguas Nacionales (latest amendment: March, 2016) (see www.diputados.gob.mx/LeyesBiblio/ pdf/16_240316.pdf) Water concessions and land ownership are separated. Water concessions are granted by Comisión Nancional de Agua for 5–30 years, and may be extended for the same period. Concession holders may transfer rights

Mexico: Mineral Policy

after the approval of the Commission; land tenure and other related aspects are regulated by the Ley Agraria (latest amendment: April, 2012) (see www.diputados.gob.mx/LeyesBiblio/pdf/13.pdf); waste management is regulated by the Ley General para la Prevención y Gestión Integral de los Residuos (latest amendment: May, 2015) (see www.diputados.gob.mx/LeyesBiblio/pdf/263_ 220515.pdf); mining rights and fees are regulated by the Ley Federal de Derechos (latest amendment: December, 2016) (see www.diputados.gob. mx/LeyesBiblio/pdf/107_071216.pdf); foreign direct investment is regulated by the Ley de Inversión Extranjera (latest amendment: December, 2015) (see www.diputados.gob.mx/LeyesBiblio/ pdf/44_181215.pdf). Other regulatory instruments are the Federal Civil Code (latest amendment: December, 2013) (see www.diputados.gob. mx/LeyesBiblio/pdf/2_241213.pdf) and the Ley General de Desarrollo Forestal Sustentable (related to sustainable forestry; latest amendment: May, 2016) (see www.diputados.gob.mx/ LeyesBiblio/pdf/259_100516.pdf), among others such as those regulations related to labor conditions (NOM-023-STPS-2003), archeological preservation, and regular taxation. Rights and Royalties Rights must be paid for all mining concessions to the federal revenue service (Servicio de Administración Tributaria). Concessions are established in terms of land area, not on the type of extracted mineral. Applications for titles, studies, and resolution fees are determined by the extension of the area involved. In 2016, the annual fees per hectare for exploration and extraction were established as low as MXN $ 571 (about US$ 28) for up to 20 hectares and as high as MXN $ 177,495 (about US$ 8658) for more than 50,001 hectares. Renovations pay only 50% of the amount previously indicated. Other fees apply as well for a diversity of specific legal procedures such as registering to mining societies, notarial notifications, cartography, etc. (see Article 64 of the Ley Federal de Derechos). Mining companies must pay a conventional income tax (ISR – impuesto sobre la renta); a special mining tax on income before tax,

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depreciation, and interest of 7.5%; and an additional tax of 0.5% on gross revenues generated from gold, silver, and platinum mining. An additional 50% fee may be charged by the government to all non-explored or exploited concessions during two consecutive years. During 2015, mining companies paid MXN $31,780 million in taxes and duties (www.camimex.org.mx). In 2006, the total amount of taxes paid by mining companies was MXN $12,060 million, in 2009 MXN $17,537 million, and in 2012 MXN $ 22,267 million (Camimex 2015). Land Access and Social Conflicts Mexico has three types of land property: private, public (of the State), and social. About 53% of land is social property (composed by 2344 communal units and 29,441 ejidos, all covering more than 100 million hectares of which 62 million are forests, jungles, and scrublands) (Reyes et al. 2012). This land property implies a complex and uncertain relationship between landowners and mining companies, particularly in those cases where indigenous communities are involved (as there are specific indigenous rights recognized in Mexico’s legal framework in accordance with the ILO Convention 169). Obtaining, and even more, maintaining the consent of landowners – beyond the legal consent and procedures – can be an everyday challenge and may derive into a social conflict. Other disputes may rise from tensions related to the amount of fees and land rents to be paid by mining companies to landowners, complaints about potential or existing environmental degradation, water access and use, population displacement, or even the disappearance and murder of social leaders. See some study cases at the Latin American Observatory of Mining Conflicts website (basedatos.conflictosmineros.net/ocmal_ db) or the Environmental Justice Atlas website (ejatlas.org).

Mexico’s International Memberships Mexico is a member of the International Monetary Fund, the World Bank, G20, UN – Conference on

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Trade and Development, World Trade Organization, Organization for Economic Co-operation and Development, Inter-American Development Bank, World Intellectual Property, and International Labour Organization (including the ratification of C169 in Indigenous and Tribal Peoples Convention), among other international institutions and organizations. The country has signed several free trade agreements including the North American Free Trade Agreement – NAFTA (1992) and an agreement with the European Union (1997). Bilateral Investment Treaties have been signed with almost three dozen countries from all continents, omitting Africa. All of them impact mining and metallurgic activities somehow. Additionally, some memorandum of understanding related to mining cooperation has been signed with China, South Korea, and Cuba. Mexico is not yet a member of the Extractive Industries Transparency Initiative, but efforts are under way since mid-2014 (www.gob.mx/cms/ uploads/attachment/file/58733/EITI-M_xico_Avan ces_Febrero_2016.PDF). The country has signed and implemented multiple environmental multilateral agreements, including the Stockholm Declaration (1972), the Montreal Protocol (1987), the UN Convention on Climate Change (1994), and the related Paris Agreement (2016), among others.

References Camimex (2015) Informe annual 2015. Cámara Minera Mexicana, México. www.camimex.org.mx/index.php/ secciones1/publicaciones/informe-anual/informe-anual2015/. Accessed 8 Feb 2017 DOF (2014) Programa de Desarrollo Minero 2013–2018. Diario Oficial de la Federación. Mexico, 9 May. www. dof.gob.mx/nota_detalle.php?codigo¼5344070& fecha¼09/05/2014. Accessed 8 Feb 2017 Esquivel Hernández G (2015) Desigualdad extrema en México. IGUALES/Oxfam, México Reyes JA, Gómez JP, Muis RO, Zavala R, Ríos GA, Villalobos O (2012) Atlas de Propiedad Social y Servicios Ambientales en México. Instituto Interamericano de Cooperación para la Agricultura. Cooperación Técnica Registro Agrario Nacional – Instituto Interamericano de Cooperación para la Agricultura, México

Microlithotype SEMARNAT (2013) Informe de la situación del medio ambiente en México. Compendio de estadísticas ambientales. Edición 2012. México. http://apps1. semarnat.gob.mx/dgeia/informe_12/pdf/Informe_2012. pdf. Accessed 8 Feb 2017 SGM – Servicio Geológico Mexicano (2015) Anuario Estadístico de la Minería Mexicana, 2014. México’s Federal Government. México SGM – Servicio Geológico Mexicano (2016) Anuario Estadístico de la Minería Mexicana, 2015. México’s Federal Government. México

Microlithotype Shankar Nath Chaudhuri Geological Survey of India (GSI), Kolkata, India

The individual microconstituents in coal or macerals rarely occur by themselves but are mostly in association with each other. Such association of macerals is termed as microlithotype. Broadly, they are divided into three groups, namely, monomaceral, bimaceral, and trimaceral, based on whether a microlithotype contains macerals of one, two, or three maceral groups. All microlithotypes bear the suffix “ite” so as to distinguish them from macerals. An area of 50  50 m is considered on the polished surface of coal perpendicular to the bedding plane for microlithotype analysis. Mono-, bi-, or trimaceral microlithotypes are classified as per the content of major and accessory macerals. For example, microlithotype vitrite must contain 95 % vitrinite. In addition to the maceral content, 20–60 % (vol) of silicate or carbonate minerals or 5–20 % (vol) sulfide minerals redefine the microlithotype as a carbominerite. The following table describes the classification of microlithotypes. Vitrite: This microlithotype consists of collinite and collotelinite as majority with vitrinite content at least 95 %. In caking coal with greater than 18 % volatile matter, it contributes to coking ability due to its high swelling property and plasticity. Inertite: It consists primarily of macerals of fusinites, semifusinites, and secretinite. It is inert and without caking power and acts as dilutent

Microlithotype Microlithotype, Fig. 1 Photomicrographs of microlithotype – duroclarite (vitrinite + liptinite + inertinite), inertite and vitrite

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ASSOCIATION OF THREE MACERAL GROUPS

MONOMACERAL INERTITE

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MONOMACERAL VITRITE

during carbonization. It has low tendency to spontaneous combustion. Liptite: It consists of 95 % assemblage of liptinite group of macerals. It contributes in coke

formation due to its reactive nature during carbonization. It also gives rise to high yield of by-products during carbonization. This is an

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MICROLITHOTYPE

MONOMACERAL VITRITE(>95% VITRINITE) LIPTITE(>95% LIPTINITE) INERTITE(>95 INERTINITE)

BIMACERAL CLARITE (VITRINITE+EXINITE) DURITE (INERTINITE+EXINITE) INTERMEDIATES VITRINERTITE(V)

TRIMACERAL DUROCLARITE (VITR+EXN+INRT) CLARODURITE (INRT+EXN+VITR)

VITRINERTITE(I)

Microlithotype, Fig. 2

essential constituent for coal liquefaction technology. Durite: Consists of 95 % of inertinite and liptinite. The proportion of these two macerals may vary widely. It improves coke strength only when finely dispersed. Vitrinertite: It consists of at least 95 % of vitrinite and inertinite in varying proportion. This microlithotype is further subdivided into vitrinertite-V and vitrinertite-I depending on the prevalence of vitrinite and inertinite, respectively. Duroclarite: It is an assemblage of three macerals, viz., vitrinite, liptinite, and inertinite in order of abundance, and each should exceed 5 %. Clarodurite: It is an assemblage of three macerals, viz., inertinite, liptinite, and vitrinite in order of abundance, and each should exceed 5 %. Carbominerite: Microlithotypes are generally contaminated with minerals. Twenty to sixty percent (vol) of silicate or carbonate minerals or 5–20 % (vol) sulfide minerals redefine the microlithotype as a carbominerite. Other nomenclatures depending on the composition of minerals and association between 20 % and 60 % (vol) are carbergilite (with clay minerals), carbopyrite (with pyrite), carbankerite (with carbonate minerals), carbosilicate (with quartz), and carbopolyminerite (with various minerals) (Stach et al. 1982) (Fig. 1).

References Stach E et al (1982) Stach’s text book of coal petrology, 3rd edn. Gebr.Borntrager, Berlin/Stuttgart, 535pp

Mine Stability W. Pytel Head of Rock Engineering Department, KGHM Cuprum, Wrocław, Poland

Introduction to Underground Mines Stability Stability of rock mass may be related to its “state of being in stable equilibrium” (Webster’s Dictionary). On the other hand, it express also behavior of rock mass in respect to the required level of safety, which may vary with the use of the construction, with regulations for working conditions and safety in different countries. Generally, the term “mine stability/instability” is a relative term referring to the judgment of whether the mine workings are in a state of equilibrium or not. Based on classic engineering mechanics, this state is understood as a kind of the limit state and may be expressed quantitatively

Mine Stability

in static domain as a system of equations assuring that the structure is not moving in space and all external loads are balanced. Essentially, the limit state implies that “any small change in the equilibrium state of loading in a structure can provoke a sudden release of energy or large change in the geometry of the structure” (Brady and Brown 2004). Since all mining operations (e.g., rock excavations, blasting, increasing depth of mining, etc.) from their nature always introduce permanent changes in the equilibrium state of loading, achieving a state of equilibrium seems to be only a prerequisite of any practical stability analyses. This is because all engineering structures and also mines are expected to operate within safe strain/ stress domain which is located in a sufficient distance from the limit state envelope expressed generally by appropriate strength hypotheses formulated in the stain/stress/strength 3D coordinates. To assess the potential for mine instability, different analytical/numerical techniques, based on rock mechanics principles, may be utilized. This usually provides a sufficient database which enables formulating alternate design concepts preventing rock mass instability. Using this approach and applying it to computational/numerical model of a mine, the total (general) mine stability or instability may be determined. In contrast to instability (“the lack of being fixed in position”) failure, “the losing of strength,” may, be regarded as the follower of instability. It may be simply said that failure is the result of instability (Palmstrom 1995). Most often instability manifests itself by large continuous and/or discontinuous deformations which are associated with high stress level or violent rupture followed by seismic emissions. Three principal failure mechanisms (modes) of failure of isotropic rocks have been already identified as: (a) shear, (b) tensile, and (c) spalling failure. The failure modes vary among mines even among different mining areas in a specific mine. This is because the development of rock mass instability is usually a complex/progressive, time dependent process.

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The nature of the stability is largely dependent on local geologic conditions. Precautions for stability of any mining operations can be divided into two basic categories: • Global stability (prevention of mine working failure due to bumps, collapses, and squeezes) • Local stability (prevention of rock mass falls in the working area) Global stability is provided through proper mine design and appropriate mining sequence, while local stability is addressed through the installation of an adequate type of underground support. This is well known that ground behavior is strongly related to different type of driving forces and associated mechanisms of failure. Based on the nature of these phenomena, Hudson (1989) has classified the instabilities of rock masses surrounding an underground opening dividing them into two main groups of events which occur when: (a) Pre-existing blocks in the roof and side walls become free to move because the excavation is made – this event has been called by Hoek and Brown (1980) as ‘structurally controlled failures’ involving a great variety of failure modes (e.g., loosening, raveling, block falls, etc.) (b) Failures are induced from overstressing of competent rock (spalling, popping, rock burst etc.) or particulate rather weak materials like soils and jointed rocks (squeezing, creep, etc.) Instabilities which may be encountered in underground mines may be also classified in different way as different types of rock mass behavior (Goricki 2013): A. Gravity induced behavior:

(a) Discontinuity controlled blocks – falling/sliding/rotating of the kinematic free and relatively large blocks along existing discontinuities with possible local shear failure development (b) Raveling ground – falling/raveling of highly fractured and poorly interlocked rocks into

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Mine Stability, Table 1 Suggested classification of seismic event source (Ortlepp 1997) Rock burst type Strainbursting Buckling Pillar or face crush Shear rupture Fault-slip

Postulated source mechanism Superficial spalling with violent ejection of fragments

Richter magnitude ML 0.2 to 0

Outward expulsion of larger slabs pre-existing parallel to surface of opening Sudden collapse of stope pillar or violent expulsion of large volume of rock from tabular stope face or tunnel face Violent propagation of shear fracture through intact rock mass

0 to 1.5 1.0 to 2.5

Sudden movement along existing fault

2.5 to 5.0

the excavation due to exceeding the tensional strength at the contacts between the individual pieces of rock (cohesion).

B. Stress induced behavior:

(a) Shear failure in high stress conditions – may develop around the excavation in high, triaxial loading conditions, in rocks of average quality or worse; in high confinement pressure conditions, shear failure expands and “transforms” into form of “plastic” behavior (b) Brittle failure in high stress conditions – may develop close to the surface of the excavation (uniaxial loading conditions) in hard and massive rock; it is exceptionally dependent on the orientation of the primary stress and may manifest itself in the wide variety of forms, from local spalling to violent rock burst

C. Swelling – volumetric increase of rock mass due to chemical processes induced by water/ moisture presence Although most of the underground mine disasters around the world were caused by gas and dust explosions in coal mines, the geotechnical type of instabilities in all kinds of underground mines still are considered to be one of the sources of extremely serious events with large number of deaths.

2.0 to 3.5

The Nature of Instability For better understanding of the problem, Ortlepp (2001) has defined two terms to, essentially, distinguish the “cause” and the “effect.” A seismic event is then considered to be the “ transient energy released by a sudden fracture or failure in the rock mass which results in the emission of a seismic vibration transmitted through the rock,” while a rock burst “is the significant damage caused to underground excavations by a seismic event.” In some instances, however, seismic events occur as an effect of instability at the excavations level – e.g., pillar(s) failure (rock burst) – and are followed by aftershocks, additionally damaging underground mine workings. An occurrence of a such sequence of dynamic events requires however from rock mass to remain close to the bound representing state of the hesitant equilibrium. Table 1 gives a framework of names, mechanisms, and magnitudes that has been suggested by Ortlepp (1997) as a useful classification not only for the South African situation but may be applied to other mines. The spectrum of mine damage extends from minor events (Fig. 1) to the catastrophic collapse of a large section of a mine or a complete mine. The term mine-quake which has been used first time by Fernandez and van der Heever (1984), expresses an appropriate sense of the extreme magnitude and the possibility of substantial damage on surface which is often experienced with these events. One of the most dramatic of occurrences of this kind was the collapse of Coalbrook mine with 435 deaths, the worst ever disaster in South Africa’s mining history which has

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Mine Stability, Fig. 1 Evidence of massive roof fall in one of Polish copper mine in 2014 (Szczerbinski, 2014, personal communication)

happened on 21 January 1960 (Bryan and Bryan 1964). The collapse of underground mine area of around 3km² caused the disintegration of around 900 underground pillars supporting the tunnel roofs.

Mine Stability Analyses There are no universal standard analyses for determining rock mass stability, because each design is specifically fitted to the circumstances (ore body type and geometry, geology, method of ore body extraction, scale of production, depth, presence of water, etc.) at the actual site and the national and local regulations and experience. Due to the material and the underground openings’ extreme complexity, “it is seldom possible, neither to acquire the accurate mechanical data of the ground and forces acting, nor to theoretically determine the exact interaction of these” (Hoek and Brown 1980). The stability of underground mine openings depends on three general factors: – The geologic nature and structural features of surrounding rock mass (the most critical) – The stress conditions encountered in the mine

– The roof support used to provide adequate support to the rock mass around the mine openings The philosophy behind the stability mapping system methods (Wang and Heasley 2005) has revealed itself to be very useful tool integrating the geologic data with mine-level ground stress calculations. Prior to the application of the stability mapping system, these three mentioned factors should be analyzed individually and combined in order to develop projections of the stability potential in the mine. Therefore, the rock engineer is generally faced with the need to arrive at a number of design decisions in which judgment and practical experience must play an important part. Prediction and/or evaluation of support requirements is largely based on observations, experience, and personal judgment backed by theoretical approaches in support design of which three main groups have been practiced in recent years, namely – The classification systems (e.g., Laubscher 1990; Palmstrom 2000) – The roof -support interaction analysis – The key block analysis (e.g. Hoek et al. 2006)

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Mine Stability, Fig. 2 Mine stability modeling (Pytel and Pałac-Walko 2014); (a) view of the FEM transversal isotropic model of the mine, (b) safety margin distribution at 54 m above the ore body’s crown

Since rock mass refers to rocks in all possible structure and morphology which constitute them as a competent, high strength material or as weathered, essentially soil like material of very low strength, ground control refers to the analysis methods applied to manage the risks associated with various forms of instability in underground mines. The following three basic approaches are recently applied for numerical modeling of typical problems concerning rock mass stability in mines:

Hildyard et al. (2006) have also listed several approaches based on energy release computations which have been also utilized for mine stability analyses. The design of excavation and support systems for rock, although based on some scientific principles, have to meet practical requirements.

References 1. Modeling of rocks mass as a continuum (FEM, FDM, BEM), assuming that the body cannot be ruptured or fragmented; however, it may have a discontinuity (e.g., fault) but in the form of inner boundary (void) or interface with given strength parameters only. The potential for rock mass instability may be assessed using different indicators such as: plastic strain rate, safety factor, safety margin (Fig. 2), and many others. 2. Modeling of rock mass as a discontinuum (DEM), based on the assumption that the body is composed of a set of discrete (distinct) elements (blocks, particles, etc.) interacting mutually, which may also separate completely. 3. Modeling of rock mass as a hybrid object which uses DEM for the immediate vicinity of excavation description while the remote areas are modeled by the model appropriate for discontinuum. This generally may improve the effectiveness of computations.

Brady B-H-G, Brown E-T (2004) Rock mechanics for underground mining. Kluwer, Dordrecht/Boston/ London, 626 pp Bryan A, Bryan J-G (1964) The problems of strata control and support in pillar workings. Min Eng 123:238–266 Fernandez L-M, van der Heever P-K (1984) Ground movement and damage accompanying a large seismic event in the Klerksdorp district. In: Proceeding of the RaSiM1 Johannesburg, pp 193–198 Goricki A (2013) Engineering aspects of geotechnical tunnel design. In: Kwaśniewski M, Łydżba D (eds) Rock mechanics for resources, energy and environment. Taylor and Francis Group, London, pp 3–13 Hildyard M-W, Napier J-A-L, Spottiswoode S-M, Sellers E et al (2006) New criteria for rock mass stability and control using integration of seismicity and numerical modeling. SIMRAC Report, SIM 02 03 01 Hoek E, Brown E-T (1980) Underground excavations in rock. Institution of Mining and Metallurgy, London Hoek E, Kaiser P-K, Bawden W-F (2006) Support of underground excavations in hard rock. Taylor and Francis Group, London/New York, p. 215 Hudson J-A (1989) Rock mechanics principles in engineering practice. CIRIA Ground Engineering Report, 72 pp

Mineral Matters in Coal: Their Implication Laubscher D-H (1990) A geomechanics classification system for the rating of rock mass in mine design. J S Afr J Min Metall 90(10):257–273 Ortlepp W-D (1997) Rock fracture and rockbursts. SAIMM monograph series M9. South African Institute of Mining and Metallurgy, Johannesburg, 98 pp Ortlepp W-D (2001) RaSiM comes of age – a review of the contribution to the understanding and control of mine rockbursts. Keynote Lecture at RaSiM5, Johannesburg Palmström A (1995) RMi – a rock mass characterization system for rock engineering purposes. PhD thesis, Oslo University, 400 pp Palmström A (2000) Recent developments in rock support estimates by the RMi. J Rock Mech Tunnel Tech 6(1):1–9 Pytel W, Palac-Walko B (2014) Geomechanical risk assessment for transversal isotropic rock mass subjected to deep mining operations. Can Geotech J 52(10):1477–1489 Wang Q, Heasley K (2005) Stability mapping system. Paper presented at the 24th international conference on ground control in mining, Morgantown, pp 243–249 Webster’s Third New International Dictionary (1993) Köneman, VerlagsGesellschaft MBH, Cologne, 2662 pp

Mineral Matters in Coal: Their Implication Shibananda Sengupta1 and Tapan Majumder2 1 Ex-Geological Survey of India, Calcutta, India 2 Formerly with Indian Bureau of Mines, Geological Survey of India and Faculty at Indian School of Mines, Dhanbad, India Preamble Mineral matters (MM) of organic and inorganic nature are inherent and integral part of coal of all rank, type, and geologic age, being incorporated both in the depositional as well as in post depositional stages. Majority of the MM range from 5% to 8% in low ash coal and may be as high as 35% or more in raw coal which on combustion produce a residue called the ash that do not contribute to the heat production but on the other hand reduces the heat producing capacity of the coal and results in major environmental pollution.. The ash content of the coal during combustion produces many undesirable products and also contributes to the transportation cost. Presently both dry and wet techniques are available for significantly reducing

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the ash content of coal to prevent operational problems during industrial application as well as environmental pollution.

Introduction The primary source for coal are plant material of many types which on burial in shallow slowly sinking sedimentary basin on burial undergoes changes both in presence of bacteria or in their absence to form coal of different types starting from peat to bituminous and finally to anthracite. This progressive alteration is both physical and chemical such as moisture content, reflectance of vitrinite (a maceral of coal) and its hydrogen, oxygen, carbon, and may be sulphur. The primary use of coal is in utilizing its thermal capacity for thermal power generation, used in metallurgical processes including steel making and the by-products of coal processing giving rise to coal tar, sulfuric acid, and others have many direct and indirect industrial application. Coal of a special nature called coking coal is used in steel making and the high ash content not only reduces the efficacy of the furnace but that of the finished product. However coal of low ash can is directly used or blended with medium ash content to produce cokes suitable metallurgical grade. Beside mineral matter coal also contains many trace elements and rare earth which may be recovered from the fly ash. (https://pubs.usgs.gov/fs/1997/ fs163-97/FS-163-97.html) All the minerals and other inorganic elements occurring in coal may be considered as “Mineral Matter” (Ward 2002). They include (i) dissolved salts and other inorganic substances; (ii) inorganic elements incorporated within organic components; and (iii) discrete inorganic particles, both crystalline and amorphous. The first two forms (non-mineral inorganic) are most abundant in the mineral matter of lower rank coal (Kiss and King 1977; Given and Spackman 1978). These nonmineral inorganic materials are usually eliminated with increasing rank. Discrete mineral particles, however, may occur in coal and are usually dominant factor for its role (Rao and Gluskoter 1973). Inorganic constituents in coal are either organophyllic or lithophyllic. Those constituents

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distributed in coal macerals are grouped under organophyllic, while those derived from settlement and precipitation after weathering are grouped under lithophyllic. The anoxic depositional environment is a guiding factor in selecting the type of precipitation such as oxides, hydroxide, sulfate, carbonate, or even sulfides. The non-combustible portion of coal attributes mostly to inorganic matter. The effect of such inorganic matter is considerable in coal utilization and hence warrants assessment of their presence. They may be phytogenic minerals, essential for the growth of the plants, and adventitious minerals added to the coal at the time of emplacement. The adventitious minerals contribute to a great extent in the formation of coal and have been given much emphasis. The organophyllic minerals may occur between macerals, distributed as disseminated grains or layers. Individual minerals may be visible on coal face or identifiable through instrumental aid like optical microscope, X-ray diffraction, electron microscope, epma, etc. They may also be identified by analyzing ash remaining after burning of coal. However, analyzing ash after burning of coal restricts detection of original compounds as many original minerals are susceptible to changes during combustion. Silicates and Oxides Silicates are mostly represented by clay a mineral of which kaolinite is a common member. However, individual species of clay group is difficult to establish under normal microscopic examination. Siliceous material may replace sporangia body; Kaolin may occur as inclusion within tracheid fiber of telinitic cells. It may occur as inclusion with carbonaceous matter to form ball coal. Quartz is mostly non-reactive during combustion due to its high fusion temperature (around 1800  C). Transformation of quartz to tridymite and crystobalite may take place at high temperature (Reifenstein et al. 1999). However, in case of coal combustion, which involves reaction at slow rate, such transformation is not common and quartz retains its form during the process. Due to weathering of silicate-rich horizons, some minerals break down to form clay minerals

Mineral Matters in Coal: Their Implication

which are transported as detrital by the water course in association with precursors of coal. These detrital clay minerals may subsequently occur as finely dispersed inclusion in coal or as layers. The behavior of these clay minerals plays important role in utilization of coal. In the presence of water montmorillonite group of minerals swell. Swelling of such minerals causes disintegration of coal, and thereby reduces cohesive strength. Mineralogical and textural transformation is appreciably noted, particularly in transition from smectite to illite phases. Such transformation of mineral phase, in the presence of water, acts as center of catalytic cracking of hydrocarbon (Saxby et al. 1992; Hetenyi 1995). It is a matter of concern in petroleum exploration. Carbonate Carbonate minerals in coal occur mainly as calcite and siderite. They may form during deposition of plant materials or develop at a later stage during coalification. Siderite and dolomite are dominant syngenetic phases. Siderite occurs as aggregate of grains exhibiting radial or concentric growth. Syngenetic carbonate occurs as spheroidal concretion with siderite and calcium carbonate over which the vitrinite bands swerve. They are also observed as infilling within cleat/ fissures in telovitrinite. Dolomite mainly occurs as idiomorphic entities or impregnation in plant materials. The plant materials with siderite impregnation mostly constitute “coal ball”. Sometimes, presence of coal ball in the roof of a coal seam is considered as a marker horizon. Growth of dolomite may be influenced by marine invasion. In course of coalification, calcite and ankarite may develop along cracks and fissures. At around 900  C calcite changes to lime while dolomite alters to lime as well as periclase. At a high temperature calcium reacts to form gehlemite (Ca2Al2SiO7) and anorthite (CaAl2Si2O8) when it interacts with aluminosilicates. Sulfide Sulfur occurs in the form of organic or inorganic compounds. Of these, inorganic sulfides such as pyrite and marcasite are common. Organic sulfide

Mineral Matters in Coal: Their Implication

in the form of pyrite globule within resin mass is considered to have been precipitated in course of plant growth. Inorganic sulfur in the form of pyrite and marcasite occurs as discrete grains or as framboids in association with vitrinite/huminite or inertinite). Chandra et al. (1980) used Thiobascillous Ferrooxidan to remove pyritic sulfur from high sulfur coal along with some sulfate sulfur and some organic sulfur. The used prior acid leaching to remove carbonates. Siderite may occur as infilling within vitrinite cell structure or as transformational stage to pyrite. Pyrite and siderite decompose to form hematite and magnetite (Huffman et al. 1981; Raask 1985; Reifenstein et al. 1999. Clay Minerals They form dominant inorganic parts in coal. These clay minerals are derived either of three processes, namely, detrital transportation, transformation of existing compounds or authigenic association with the organic matter. Clay minerals, represented mainly by kaolinite and illite, in addition to quartz, pyrite, and siderite are dominant phases of mineral matter. Clay minerals occur either as fine dissemination or as infilling within cell lumens or in cracks within vitrinite or in inertinite. Detrital quartz occurs as dissemination or in cluster. Siderite occurs as discrete grain or an assemblage. Disseminated grains or framboids of pyrite is frequently observed in the Gondwana and Tertiary coals. Organic pyrite, though rarely discernible, occurs as discrete grains embedded within resins of Tertiary coals. Trace Elements With ever increasing demand of solid fossil fuel, distribution of trace elements in coal has become a great concern as it is a big environmental constraint. Two aspects – mode of occurrence and distribution of trace elements are significant. Some elements might have been brought in by the plants at the time of peat formation. They are considered as syngenetic elements. On the other hand, the post-peat stage elements associated with the detrital substances and mostly occurring in cleats and fissures are epigenetic in nature.

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The depositional environment during peat formation and digenesis plays important role in the formation of trace elements in coal. Trace elements associated with plant materials undergo chemical changes causing alteration in organic combinations. The formation of insoluble metal sulfides is a result of reduction of sulfate to sulfide due to bacterial action. Syngenetic elements are likely to be derivatives of organic matter, However, such elements are unlikely to remain in its original form during coalification process which involves change in hydrogen ion concentration (pH), oxidation reduction potential (Eh), and microbial effect. Finkelman (1981) indicated that with increase in rank originally combined trace elements are insignificant with less than 5% ash yield. In an attempt to draw the relationship between biophile elements and the Periodic Table, Thatcher (1934) established that almost all elements, behaving as nutrient to the plants, are found in the first four periods of the Periodic Table Webb (1937) postulated that the biological elements, except lithium and beryllium, occupy the first second period of the Table and the contaminants occupy periods with higher atomic weights. According to plant physiology some elements are indispensable as nutrient for the growth of the plants. Of these, oxygen is associated as free molecules, anions and water; hydrogen as undissociated water and carbon as product from photosynthesis or as water soluble carbonates. In addition N, S, P, K, Ca, Mg, and Fe are considered as mineral nutrients. Goldschmidt (1944) determined concentration of rare elements from plant ashes, obtained by burning woods from Central German forest. Study of coal ash by Goldschmidt revealed that many coals contain exceptionally high amount of certain trace elements. Accumulation of different elements is sometimes plant specific. For example aluminum is concentrated in the plants of Lycopodiaceae family; silicon is concentrated in monocotyledon; sodium and chlorine in halophytes. Palmer and Filby (1984) have studied the trace element distribution in coal of different ages and

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ranks. Differential distribution of trace element study by Minkin et al. (1982, 1983, 1987) is significant for higher resolution methods applied by microprobe. Ghosh et al. (1987) have examined selected Indian coals and observed that fixation of trace elements appears to be independent of age of the coal but depends more on the basin condition and preferential affinity of respective elements toward either organic or inorganic phase. According to them Ga, Nb, Cr, and it may be attributed to non-woody portion, while Pb, Co appear to have been supplied by the woody portion. Elements having affinity to inorganic phase include V, Sr, Mn, La, Ba, and Cu. Trace elements, both organic and inorganic components are enriched manifolds in the fly ash after combustion. Volatile elements like As, Cd, Cu, Ga, Pb, Zn, etc. are adsorbed into outlet as the flue gas. Some of them are preferentially concentrated in fine particulates within fly ash. Nonvolatile elements tend to be incorporated into slag. The adsorbed trace elements in fly ash are a matter of serious concern since they affect biosphere on many counts. Some of the elements will be discussed for their impact on human population. Arsenic It occurs in chemically bound forms and in acid leachable (sorbed) forms. Sulfide form is common in coal. It may occur either as organic or inorganic compounds which have syngenetic or epigenetic origin. Arsenic may be associated with organic components of coals when it is difficult to remove. When arsenic is inorganically bound, mostly in pyrite, it is easier to remove by conventional coal cleaning methods. However, part of it is retained in association with constituents of solid waste – fly ash. The fly ash, when discharged in ash pond the arsenic is leached and water medium is contaminated with arsenic. Habitats using arsenic bearing ground water are vulnerable to diseases like hyper pigmentation (flushed appearance, freckles), hyperkeratosis (scaly lesion on the skin).

Mineral Matters in Coal: Their Implication

Fluorine In some Chinese coal concentration of fluorine is high. High fluorine content in Late Permian coals from Guizhou province of China has been reported where coals are associated with hydrothermal fluids along tectonic faults (Zhang 2002). Zinc Zinc (Zn) in nature replaces Fe2+ and Mg2+ in silicates and oxides. Clay minerals and the sediments containing organic matter readily adsorb Zn. Barium and Chromium Generally, barium (Ba) occurs in high concentration in coals of different stratigraphic horizons of the world. In India, 20–2413 ppm of Ba in Tertiary and Permian coals from NE India, NW India, and East Bokaro has been reported. In both the seams, except vitrain, all other lithotypes contain appreciable amounts of Ba. It is probably contributed by a number of mineral forms like silicates, oxides, carbonates, and sulfates. Chromium (Cr) is very common in coals of all ages and ranks. Mukherjee et al. reported 38–153 ppm Cr in coals from Lower Gondwana formations. Rubidium and Scandium Among the lithotypes, the concentration of rubidium (Rb) is more in durain and clarain than other lithotypes. In coal, generally K-bearing minerals like orthoclase and clay are the sources of Rb. Hafnium, Beryllium, and Cesium Hafnium is a strong lithophilic element and does not form minerals of its own. It is mostly associated with silicate minerals in coal and occurs in very trace amount. Among the lithotype, durain shows the highest concentration of Hf in most Indian coals. Beryllium is strongly lithophilic. Singh et al. (1983) had reported traces of Be in coals from Wardha Valley. Among the lithotype, vitrain shows the highest and durain the lowest Be concentration. Cesium occurs as absorbed cation with K-rich and clay minerals.

Mineral Matters in Coal: Their Implication

Thorium, Uranium, and Tungsten Thorium and Uranium are trace elements of great environmental importance. These are frequently absorbed by clay minerals. Uranium is a strong lithophilic element. Its occurrence in coal has been reported from all parts of the world. Radioactivity in coal is mainly caused due to uranium and thorium. Swaine (1990) opined that average content of those two elements is as low as 0.5–10 ppm. Finkelman (2004) reported abundance of uranium up to 2.1 ppm in American coal. Van Hook (1979) suggested that atmospheric release of radio nuclides due to coal containing 680 million tonnes (SRK 2013) The Sokoya Deposit (Tonkolili District) Resource Estimate: 900 million tonnes (Chinese Code of Resource Reporting) Lake Mabesi/Funyehun Deposits (Pujehun District) Resource Estimate: 1.1 billion Tonnes (Chinese Code of Reporting) The Malompo Deposit (Tonkolili District) Resource Estimate: 1.1 billion tonnes (Chinese Code of Resource Reporting) The Gbafaya Deposit (Tonkolili District)

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Directorate of Geological Survey, National Minerals Agency, February, 2017

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Resource Estimate: 1.6 billion tonnes (Chinese Code of Resource Reporting)

Mineral Policy Conception of Sierra Leone The importance of the minerals sector to the economy of Sierra Leone is illustrated by the fact that during the 1960s and 1970s, it provided the country with over 70% of foreign exchange earnings, 20% of gross domestic product, and 15% of fiscal revenue. In order to revive the minerals sector, the geological potential of the country needs to be complemented by the implementation of mineral policies that will attract foreign and local investors. Some policy responses to external factors and the implementation of aid projects and maintenance have led to a general decline in economic activity and an intense degradation of economic infrastructures. However, in June 2016, the Sierra Leone Ministry of Mines and Mineral Resources (MMMR) began the process of preparing a new core mineral policy (CMP), in line with the Africa Mining Vision (AMV). Objectives The policy objectives of the Government for the minerals sector are to: • Enhance intergovernmental agency and multistakeholder coordination and collaboration to ensure transparent, accountable, inclusive, and effective governance of the minerals sector • Establish a viable geoscience database and data management systems that will contribute to strengthened technical and commercial capacity of Sierra Leoneans • Create a fair and predictable fiscal regime that increases market competitiveness, attracts legitimate investment, and enhances sustained economic transformation, development, and economic growth • Promote improved revenue management with more equitable distribution of benefits and prudent investment of mineral revenues

Sierra Leone: Mineral Policy

• Promote economic linkages between the minerals sector and other sectors of the economy that will catalyze economic diversification and growth, support rural community development, and are supported by capacity building of appropriate human resources • Promote sustainable mineral development in a manner that protects human rights and meets international health and safety standards • Ensure the application of high-level environmental standards that are appropriate for all categories of mineral rights • Enhance regional cooperation and collaboration for the management and governance of the minerals sector Strategies One of the strategies that was put in place was a sensitization workshop organized by a partnership between the Government and the African Minerals Development Centre (AMDC). The workshop was aimed at increasing awareness of the African Mining Vision and to show its potential benefits to Sierra Leone. Over the past few decades and years, quite a number of reforms, laws, and regulations have been adopted by Sierra Leone with regard to the mining sector. This is usually common with governments in emerging economies to develop a more robust legal framework for their extractive industries, usually based on the regulations put in place by nations with very developed economies. The Government of Sierra Leone is also harmonizing all legislative regimes applicable to the minerals sector. To this end, a comprehensive review of policies, legal and regulatory, and other instruments has been undertaken to create a clear and stable environment for the sustainable exploration and exploitation of minerals aimed at the optimization of benefits for all stakeholders. In order to support a modern minerals sector, continued development of the minerals’ legal and regulatory regime is being set up. Further development of this regulatory framework has been undertaken by the MMMR to address specific technical, financial, health and safety, environmental, and social issues in coordination with relevant government agencies.

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Technical standards for mineral operations have been prepared by the appropriate technical bodies. A summary of primary legal and regulatory principles and requirements shall be codified in a guidebook prepared by the MMMR for all interested parties.

Strategic Implementation Plan A Strategic Implementation Planning (SIP) workshop was held from 7 to 9 September 2017 to finalize the draft 5-Year Strategic Implementation Plan that was prepared in October 2016. The draft plan only captured the recommendations of the Sierra Leone Minerals Sector Benchmarking Report. The focus of the workshop was to include the activities for the implementation of the draft Sierra Leone Minerals Policy in the 5-Year Strategic Implementation Plan. The draft plan looked at mineral sector governance, fiscal regime and revenue management, geological and minerals information systems, research and technology, subregional issues, artisanal mining, linkages, diversification and value addition, environmental issues, health and safety issues, community development and social issues, resettlement, and the access and use of land. The workshop discussions were also centered around implementation actions with responsible institution and time frame for the completion of each policy issue.

Regulatory Framework Sierra Leone was under British administration between 1787 and 1896 and was a British Protectorate until April 1961, when it became independent. The first piece of mining legislation enacted in Sierra Leone was the Minerals Act 1927, which was amended as the Revised Minerals Act in 1960. The 1960 Revised Minerals Act was replaced by the 1994 Mines and Minerals Decree, which was enacted as law in 1996 (1994 Act). The 1994 Act was slightly amended in 1999 and 2004 and supplemented by the Mines and Minerals Regulations in 1994 and the Mines and Minerals (Fees) Regulations in 2008.

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The 1994 Act was very similar to other mining laws (such as the 1995 Guinean Mining Code) adopted in Africa in the wake of the 1992 World Bank paper, “Strategy for Mining in Africa,” which promoted foreign direct investments as well as the establishment of a clear legal framework for mining activities. As in the case of these laws, the 1994 Act was criticized for not being sufficiently detailed on environmental, social development, health, safety, and community issues. Sierra Leone has adopted a number of laws and regulations over the past 12 years to tackle these criticisms and promote transparency, local content, and stronger governance while also encouraging foreign investments. In 2003, with the support of the UK Department for International Development and the World Bank, the Sierra Leonean Government issued a “Core Minerals Policy” with 10 “strategic objectives,” including “attracting private investments” and “ensuring that Sierra Leone’s wealth supports national economic and social development,” and Sierra Leone has been a founder member of the Kimberley Process, a multiparty initiative that has developed a system of rough diamond certification aimed at assuring buyers that they are purchasing legitimate diamonds. In 2004, the Sierra Leonean legislature passed the Investment Promotion Act, which aims at giving foreign investors a number of guarantees in terms of expropriations, transfer of funds, and dispute resolution, and in 2006, the country joined the Extractive Industries Transparency Initiative (EITI). In 2008, the Sierra Leonean legislature adopted the Environment Protection Agency Act 2008 (EPA Act), which provides that mining projects can only be undertaken following the preparation and approval of an environmental impact assessment and the issuance of an environmental impact assessment license. In 2009, a new Mines and Minerals Act (2009 Act) replaced the 1994 Act. It has brought about the following major changes: (a) Improved clarity on the role and functions of the Minerals Advisory Board, including

Sierra Leone: Mineral Policy

certifying that an applicant is legally compliant with all requirements before Ministerial consideration. (b) Enabled the Government to issue mineral rights for proven economically viable deposits through a public competitive tender process. (c) Improving provisions associated with registration of applications and recording of mineral rights – establishing a Mining Cadastre Office with clear instructions on managing information. (d) Introduced a Reconnaissance License – a nonexclusive mineral right that enables more companies to identify areas of interest and apply for exclusive rights subsequently. This nonexclusive license essentially replaced more commonly acquired Exclusive Prospecting Licenses (EPLs). This nonexclusive license is only granted for 1 year and it is renewable only once. (e) Significantly reformed provisions for Exploration Licenses – tightening the rules associated with the issuance of licenses and introducing a minimum expenditure requirement (which escalates every year), a maximum allowable area of 250 km, and a shorter overall duration. Exploration license holders are also required to relinquish land under license. Overall the obligations of a license holder have substantially increased over time, thus encouraging exploration and progressive relinquishments. (f) Introduction of a small-scale mining license category – this has enabled the Government to closely control and regulate the sector. Applicants now need to be considered by the Minerals Advisory Board, complete an environmental impact assessment, and report against a management plan and more fully engage communities. This license category is valid for only 3 years (renewable) and over an area of up to one (1) square kilometer. (g) Improved provisions associated with artisanal and large-scale mining licenses were included, providing greater clarity on rights and obligations of license holders.

Sierra Leone: Mineral Policy

(h) Stronger provisions for the protection of the environment which require that all smalland large-scale mining license holders provide financial surety against potential negative impacts on the environment. (i) Introduced the requirement for large- and certain small-scale mining license holders to enter into a Community Development Agreement with affected communities prior to commencing mine development. (j) New substantive part of the Act dedicated to health and safety, requiring all mineral rights holders to provide and promote conditions for safe operations and a healthy working environment. (k) Increased royalty rates for precious stones and precious minerals; diamonds are now charged a 6.5% royalty, up from 5%, and precious metals (e.g., gold) are charged a 5% royalty up from 4%. All royalties are assessed against market value rather than ex-mine price. (l) Provisions were included in the Act to ensure that all transactions are made transparent and on fair market prices (i.e., arm’s length sales). Additionally, mining operations are required to separate their accounts from other exploration activities carried out under other licenses (i.e., ring-fencing). These provisions will better protect the Government from eroding taxable income of mining companies. (m) Under the Act, the Government has the right to acquire interests in large-scale mining operations on such terms as will be mutually agreed between the Government and the mining company. The 2009 Act was described by Alhaji Alpha Kanu, then Minister of Mines and Mineral Resources, as “more comprehensive with respect to the issues it addresses, more balanced between the interests of the sector and those of communities and more rigorous in terms of governance and oversight.” However, it has been criticized by (i) certain investors for the lack of clarity of certain provisions (e.g., the state’s potential participation in large-scale operations) and the difficulty in implementing others (e.g., those regarding

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community development agreements) and (ii) certain nongovernmental organizations for not containing detailed provisions on the practice of entering into mining agreements with investors in relation to certain projects. In an effort to promote governance in the mining sector, the National Minerals Agency (NMA), a new semiautonomous government agency, was established in April 2012 by the National Minerals Agency Act 2012. Its mandate is to “administer and enforce the [2009 Act] and any other acts related to the trade in minerals and related regulations and make recommendations to the Minister for amendment and other improvements in [these] laws and regulations.” It is inter alia in charge of managing the Sierra Leone Online Repository System, an online database created in January 2012, with the support of the European Union, the United Nations Development Program, and the German Society for International Cooperation, to provide information on revenue data in relation to the country’s extractive industry. More generally, since the early 2000s, Sierra Lone has passed a number of laws aimed at providing investors with a more detailed legal framework. These laws, arranged according to their years of establishment, include: • The Income Tax Act 2000, the Sierra Leone Maritime Administration Act 2000, the Bank of Sierra Leone Act 2000, the Banking Act 2000, the Insurance Act 2000, the AntiCorruption Act 2000, the State Proceedings Act 2000, and the Registration of Instruments (Amendment) Act 2000 • The Sierra Leone Water Company Act 2001 and the Town and Country Planning (Amendment) Act 2001 • The National Revenue Authority Act 2002 • The Road Transport Authority (Amendment) Act 2003 • The Local Government Act 2004, the Public Procurement Act 2004, and the Human Rights Commission of Sierra Leone Act 2004 • The Anti-Money Laundering Act 2005 • The Telecommunications Act 2006, the National Power Authority (Amendment) Act 2006, and the Courts (Amendment) Act 2006

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• The Diamond Cutting and Polishing Act 2007, the Registration of Business Act 2007, the General Law (Business Start-up) Act 2007, the Sierra Leone Investment and Export Promotion Agency Act 2007, the Road Traffic Act 2007, and the Sierra Leone Maritime Administration (Amendment) Act 2007 • The Anti-Corruption Act 2008 • The Companies Act 2009, the Bankruptcy Act 2009, the Good and Services Act 2009, and the Telecommunications (Amendment) Act 2009 • The Public-Private Partnership Act 2010 and the Sierra Leone Roads Authority (Amendment) Act 2010 • The Customs Act 2011, the Bank of Sierra Leone Act 2011, the National Electricity Act 2011, the Sierra Leone Electricity and Water Regulatory Commission Act 2011, the Local Courts Act 2011, and the Anti-Money Laundering Act and Combating of Financing Terrorism Act 2011. • The Patents and Industrial Design Act 2012 and the National Protected Area Authority and Conservation Trust Fund Act 2012. Recently, in an effort to promote local content and the interests of the Sierra Leone National Shipping Company (SLNSC), the Sierra Leonean legislature adopted a controversial act (the Sierra Leone National Carrier Ratification Agreement Act (SLNC Act) of 2012, as amended in 2014). A number of the laws referred to above have been supplemented by regulations. In particular, the 2009 Mines and Minerals Act has recently been supplemented by the following detailed regulations, which contain key provisions for mining projects: • The Mines and Minerals Operational Regulations of 11 July 2013, which provide for requirements in relation to surface, open pit, and underground mining operations, reporting of mineral resources, health and safety standards, waste disposal, as well as explosives and blasting • The Environment Protection (Mines and Minerals) Regulations of 4 July 2013, which provide for a number of obligations in relation to

Sierra Leone: Mineral Policy

the environmental permitting process, environmental standards, grievance mechanisms, and mine closure, as well as guidance on the contents of the environmental impact assessment reports and the environmental management plans The volume of laws and regulations adopted by Sierra Leone over the past few years in relation to its mining sector is fairly extensive. The merit of such policies is to provide investors with more clarity and certainty in relation to the legal framework applicable to their investments, but it also requires investors to conduct a more detailed due diligence process before making investment decisions.

International Memberships Sierra Leone is a member of more than 45 international organizations, notably African, Caribbean, and Pacific Group of States (ACP), African Development Bank Group (AfDB), African Union (AU), Commonwealth of Nations, Economic Community of West African States (ECOWAS), Food and Agriculture Organization (FAO), Group of 77 (G77), International Criminal Court (ICCt), International Finance Corporation (IFC) International Monetary Fund (IMF), Multilateral Investment Guarantee Agency (MIGA), the United Nations (UN) and other sister organizations. Sierra Leone also ascribes to the ideals of and is a member of the Extractive Industries Transparency Index (EITI).

Concluding Statement In conclusion, the impact of the mineral policy of Sierra Leone could be measured by how investors in the mining industry embrace it, hereby causing economic development for the people and the nation at large. Ranked 80/104 on the Fraser Institute’s Policy Perception Index (PPI), Sierra Leone still has a lot to do to make their mineral policy as one that meets global standards and is investor

Slovakia: Energy Policy

friendly (see https://www.fraserinstitute.org/sites/ default/files/survey-of-mining-companies-2016).

References Directorate of Geological Survey, National Minerals Agency, February, 2017 http://sierraleonenationaltouristboard.com/people-culture http://www.worldbank.org/en/country/sierraleone/overview https://www.fraserinstitute.org/sites/default/files/survey-ofmining-companies-2016.pdf www.miningreview.com

Slovakia: Energy Policy Rafael Leal-Arcas1,2,3,4,5,6,7,8 and Brian D. Burstein9 1 Queen Mary University of London (Centre for Commercial Law Studies), London, UK 2 New York University Abu Dhabi, Abu Dhabi, UAE 3 Singapore Management University School of Law, Singapore, Singapore 4 European University Institute, Fiesole, Italy 5 Stanford Law School, Stanford, CA, USA 6 Columbia Law School, New York, NY, USA 7 London School of Economics and Political Science, London, UK 8 Granada University, Granada, Spain 9 Queen Mary University of London, London, UK

General Information The Slovak Republic is a member of the European Union (EU) and therefore its policies on energy follow closely the framework set by the EU for all member states in the bloc. Traditionally, the EU has traditionally focused on achieving energy security by encouraging strong governance

A much longer version of this chapter was published as R. Leal-Arcas et al., “Electrifying the energy sector: The case of Slovakia and the Czech Republic,” Kentucky Journal of Equine, Agriculture, & Natural Resources Law, Vol. 13, Issue 1, pp. 1–83, 2020–2021.

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strategies (Leal-Arcas and Filis 2015). Given that the bloc’s level of fossil fuel production is not enough to cover its energy demand (Buschle and Westphal 2019a), it has always sought energy partnerships to secure its supply needs. In times of decarbonization and climate change awareness, energy security faces some additional conditions. In this regard, the role of low-carbon energy sources becomes crucial. The ties between energy security and the need to foster cleaner energy sources have given rise to some well-known European policies, such as renewable energy policies. In this context, the EU “third energy package” mandates member states to focus on decentralizing the electricity market and promoting a greener energy supply (See https://ec.europa.eu/energy/ en/topics/markets-and-consumers/marketlegislation/third-energy-package.). More recently, the “clean energy for all Europeans package” was passed by the European Council. This last set of rules enshrines the crucial role of energy efficiency as a priority for the European Union (See https://ec. europa.eu/info/news/clean-energy-all-europeanspackage-completed-good-consumers-goodgrowth-and-jobs-and-good-planet-2019-may-22_ en.). To this end, it facilitates the increasing role of consumers in the electricity market by way of integrating renewable sources into a more technologically advanced grid (See https://ec.europa.eu/ info/news/clean-energy-all-europeans-packagecompleted-good-consumers-good-growth-andjobs-and-good-planet-2019-may-22_en.). This way, empowered consumers  transformed into “prosumers” (The European Parliament defined this term to refer to consumers who both produce and consume electricity. See European Parliament, Electricity Prosumers (Members Research Service, Briefing, 2016) http://www.europarl.europa.eu/ RegData/etudes/BRIE/2016/593518/EPRS_BRI (2016)593518_EN.pdf. For a deep study on the concept of prosumers, see Rafael Leal-Arcas, Feja Lesniewska and Filippos Proedrou, ‘Prosumers: New actors in EU Energy Security’ (2017) 257 Queen Mary University of London School of Law Legal Studies Research Paper, 3.)  would have an increasing role to play in the energy conversation. In this context, smart grids are

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being widely promoted and are expected to be progressively expanded across Europe. Focusing on the particular context of the Slovak Republic, this article explores its electricity market in light of the EU policies aimed at incorporating new technologies to the sector, such as smart grids. For this purpose, decentralization efforts become vital. To tackle this matter in the specific context of Slovakia, this chapter initially explores the current picture of its domestic energy market, and the national reality concerning decentralization efforts and its suitability to achieve it. Subsequently, it assesses individually the current situation of new technologies, namely, smart grids, electric mobility, demand response, and electricity storage technologies. Further, it looks at data protection concerns in the development of new technologies. Finally, based on the circumstances of the Slovak reality, it outlines a set of recommendations to facilitate the implementation of new technologies in its energy sector. Energy Profile Overview of the Slovakian Energy Market

In today’s world, the notion that an energy transition towards a lower carbon economy is necessary  especially in the EU  is one that has had a remarkable influence on regional and national energy policies. Low carbon sources of energy are, on this view, to be prioritized over carbon-intense fossil fuels. With this in mind, the demand and supply figures of the Slovak energy market can be examined, and evaluated with a view to understanding where its market stands today and what the direction of travel is. From a demand perspective, total final consumption of energy (“TFC”) in Slovakia has decreased in the last decades. It dropped from 15,752 kilotonnes of oil equivalent (“ktoe”) in 1990 to 10,252 ktoe in 2016 (International Energy Agency, Statistics data browser https://www.iea. org/statistics/?country¼SLOVAKIA&year¼2 016&category¼Energy%20consumption&indica tor¼TFCbySource&mode¼chart&dataTable ¼BALANCES.). From the International Energy Agency (IEA) figures, the consumption of coal

Slovakia: Energy Policy

and oil products has substantially decreased in those 26 years: 80% and 40%, respectively (Ibid.). Its large industrial sector captures almost half of the total energy consumption, substantially outweighing the indexes of residential, transport and commercial sectors (International Energy Agency 2018, 104). The indicator of energy intensity (International Energy Agency 2018, 104) in the Slovak Republic dropped in recent years but it is still placed above the European average standard (International Energy Agency 2018, 104) In terms of electricity final consumption, Slovak numbers evidence a stability between 1990 and 2018, ranging averagely around 29,000 gigawatt hour (“GWh”) (International Energy Agency, Statistics data browser https://www.iea.org/statistics/? country¼SLOVAKIA&year¼2016&catego ry¼Energy%20consumption&indicator¼TFCbyS ource&mode¼chart&dataTable¼BALANCES). The overall increase for the last ten years was 5% (International Energy Agency 2018, 67). From the supply perspective, the recent picture of Slovakia’s total primary energy supply (“TPES”) provides a valuable starting point for the analysis proposed in this article. As an accurate reflection of its energy balances  including the breakdown of national production and import indexes  the TPES helps an understanding of the main challenges in the Slovakian energy market. The large share of nuclear production in the Slovak energy mix is notable. However, Table 1 also shows that Slovakia is extremely dependent (nearly 90% according to its own government) upon imported primary energy sources, especially crude oil and natural gas (Calculated as a result of official estimations of nuclear fuel (100%), natural gas (98%), oil (99%) and coal (68%). See Ministry of Economy of the Slovak Republic 2014a, 23). From a more dynamic perspective throughout the last decades, although Slovakia has largely abandoned priority of oil production and hence lowered its production indexes, it still depends on high levels of oil imports. National oil production has dropped from 73 ktoe in 1990 to just 4 ktoe in 2018 (International Energy Agency, Statistics data browser https://www.iea.org/statistics/?

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Slovakia: Energy Policy, Table 1 Slovakia’s indexes of national production and import of primary energy sources

National Production (ktoe) Import (ktoe)

Coal 446

Crude oil 224

Other oil products –

Natural gas 117

3019

5609

1965

4368

Nuclear 3980

Renewable energy: Hydro 372

Other renewable energy sources 59

Biofuels and waste 1383

–

–

–

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Source: Data extracted from IEA (Calculated as a result of official estimations of nuclear fuel (100%), natural gas (98%), oil (99%) and coal (68%). See Ministry of Economy of the Slovak Republic 2014a, 23)

country¼SLOVAKIA&year¼2016&category¼E nergy%20consumption&indicator¼TFCbySourc e&mode¼chart&dataTable¼BALANCES). Conversely, oil imports increased from 178 ktoe in 1990 to 1915 ktoe in 2018 (International Energy Agency, Statistics data browser https://www.iea. o r g / s t a t i s t i c s / ? c o u n t r y ¼S L O VA K I A & year¼2016&category¼Energy%20consump tion&indicator¼TFCbySource&mode¼chart& dataTable¼BALANCES). Considering that shifting to a low carbon energy economy has been identified as a priority for the Slovak government (Ministry of Economy of the Slovak Republic 2014a, 39), coal experienced a more positive route. Its production decreased from 1397 ktoe in 1990 to 366 ktoe in 2018 (International Energy Agency, Statistics data browser https://www.iea.org/statistics/? country¼SLOVAKIA&year¼2016&category¼E nergy%20consumption&indicator¼TFCbySourc e&mode¼chart&dataTable¼BALANCES). Its imports fell from 6210 ktoe to 3503 in the last three decades (International Energy Agency, Statistics data browser https://www.iea.org/statistics/? country¼SLO VAKIA&year¼2016&categ ory¼Energy%20consumption&indicator¼TFCb ySource&mode¼chart&dataTable¼BALANCES.). Despite the overall increase of oil imports, the decrease in reliance on coal has been balanced with a valuable increase in renewables, essentially from hydro power sources. Following the obligations set forth in EU Directive 2009/28/EC (Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing

Directives 2001/77/EC and 2003/30/EC [2009] OJ L140/16.), Slovakia initially targeted a total installed capacity of 125 megawatt (“MW”) of renewable-sourced electricity (Act No. 309/2009 on the promotion of renewable energy sources and high-efficiency cogeneration and on amendments to certain acts of 19 June 2009 (‘Renewable Energy Act of 2009’), Section 3 (3, b). See https://www.slov-lex.sk/pravne-predpisy/SK/ZZ/ 2009/309/20150801.). More recently, it has set a new set of objectives, divided into sectors and final use of renewable energy, as described in Table 2 . The EU Directive 2018/2001 has recently increased the target for the overall share of renewables in the EU (Directive 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources [2018] L328/ 82, Article 3). Hence, national regulations are expected to adapt to this updated target scheme. In terms of electricity generation, the overall numbers have remained stable since the 1990s (International Energy Agency, Statistics data browser https://www.iea.org/statistics/?country¼S LOVAKIA&year¼2016&category¼Energy%20c onsumption&indicator¼TFCbySource&mode¼c hart&dataTable¼BALANCES). Nuclear energy retains an overwhelming share of 58.5% (Ibid.). Largely driven by hydro power, renewable energy increased from 2515 GWh in 1990 to 3903 GWh in 2018 (Ibid.). From the total production in the country, this represented nearly a 25% share in the energy mix (International Energy Agency 2018, 121). With the increasing global pressure to shift away from fossil fuels, these numbers are expected to grow

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Slovakia: Energy Policy, Table 2 Slovak renewable energy targets outlined by sector Year Heating (%) Electricity (%) Transport (%) Total share of RES in gross final energy consumption (%)

2005 6.1 16.7

2010 7.6 19.1

2011 8.0 19.3

2012 8.5 20.2

2013 9.2 21.0

2014 10.2 21.5

2015 10.9 23.0

2016 11.7 23.3

2017 12.5 23.3

2018 13.3 23.7

2019 14.1 23.9

2020 14.6 24.0

0.6 6.7

4.1 9.5

4.2 8.2

4.3 8.2

4.4 8.9

5.0 8.9

6.0 10.0

6.3 10.0

6.8 11.4

8.3 11.4

8.5 13.2

10.0 14.0

Source: IEA and Act No. 136/2011 (International Energy Agency, ‘Energy Policies of IEA Countries: Slovak Republic’ (2018), 125; Act No. 136 / 2011 of 2 January 2015 amending and supplementing the Renewable Energy Act of 2009 https://www.slov-lex.sk/pravne-predpisy/SK/ZZ/2011/136/20150102.)

substantially. The Slovak government specifically acknowledges that renewables have a wider potential for its market, especially biomass (Ministry of Economy of the Slovak Republic 2014a, 60). Electricity Market

The Slovak government recognizes that liberalization of prices in the energy sector is crucial for enhancing its quality and improving energy efficiency (Ministry of Economy of the Slovak Republic 2014a, 11). This is crucial for the development of smart grids, as decentralization of the electricity market is essential for this purpose. But in order to understand the kind of measures required to achieve this, four particularities of the Slovakian market in the areas of generation, transmission, distribution and retail need to be understood. First, to conduct a business focused on generating electricity, a license is required. However, a decisive exception to this rule enables small businesses to produce their own energy: if the installed capacity of a given facility is below 1 MW, a license is not required (Act No. 251/2012 Coll. of 31 July 2012 on Energy, Section 6 (4)). Boosted by renewable sources, this trend is where the Slovak potential to encourage small consumers to become prosumers (that is, a consumer and producer at the same time) lies on. The generation sector is largely dominated by Slovenské Elektrárne (“SE”), which generated 69% of the total domestic electricity production (see https://www.seas.sk/key-information) from

diversified sources (SE operates 31 hydroelectric, 2 nuclear, 2 thermoelectric and 2 photovoltaic plants in Slovakia. See https://www.seas.sk/ about-us.). For the rest, the sector comprises 260 district heating and power plants and other several industrial cogeneration facilities (International Energy Agency 2018, 69.). Second, the functions of the transmission system operator (“TSO”) are thoroughly regulated in the “Energy Act” (Act No. 251/2012 Coll. of 31 July 2012 on Energy.). It is operated by stateowned Slovenska Elektrizacna Prenosova Sustava, a.s. (“SEPS”), which is the sole transmission operator in the country. As the only TSO, it is obliged to submit ten-year forecast development plans to anticipate the developments in the electricity market (Ibid, Section 28.). Hence, the TSO plays a key role in anticipating and leading reforms in the transmission segment. Cross-border interconnectivity is very significant for the Slovak energy market. As a result of EU policies to integrate national markets, interconnections with neighboring states have been given a high priority, at double the European recommended ratios (European Commission Expert Group 2017). Projects to integrate the Hungarian, Czech, Romanian and Slovakian energy markets have been quite successful and are expected to develop further (Ministry of Economy of the Slovak Republic 2014a, 81). For instance, Ukraine’s and Slovak’s operators of power grids have recently agreed to build a new interconnector to improve capacity (See https://

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Slovakia: Energy Policy, Fig. 1 Slovakia’s current transmission network. (Source: SEPS (See https://www.sepsas.sk/ en_SchemaSiete.asp?kod¼107.))

www.unian.info/economics/10288323-newpower-line-to-be-built-between-ukraine-andslovakia.html.). Likewise, in the HungarianSlovak segment, new power lines are envisaged (See http://www.mavir.hu/documents/10262/ 217288844/Hun_Slovak_press_release_0301. pdf/60c22a11-24eb-4269-b059-a8fd0cd850bd.). As depicted in Fig. 1, the transmission electricity infrastructure map of Slovakia (as it stands today) shows both a rich interconnectivity with its neighboring countries and the distribution of domestic regional lines. Third, the distribution segment is more heavily regulated. Network tariffs are monitored by the Slovak government. The Regulatory Office for Network Industries (“RONI”) is in charge of regulating the whole network industries, including the electricity sector (Act 276/2001 of Coll. on regulation in network industries.). Electricity prices for end users ranged below 100 MW per year enjoy a regulated capped maximum price (International Energy Agency 2018, 46.). As with all other EU members, price regulation still covers network operations to protect end users (Ibid, 104.). Thus, coupled with the impact of

the Renewable Energy Act of 2009, new decentralized installations have been largely favored to boost their development (Act No. 309/2009 Coll. on the Support of Renewable Energy Sources and High Efficiency Combined Heat and Power Generation and on Amendments to Certain Acts and Act No. 30/2013 amending and supplementing Act. 309/2009 (collectively, the ‘Renewable Energy Act of 2009’)). The distribution system operation in Slovakia is divided into three regions. Each of these distribution system operators (“DSOs”) is structured as a public-private ownership (International Energy Agency 2018, 72). Moreover, another 157 smaller licensees operate local distribution systems (Ibid.). Slovakia seeks to unbundle ownerships of distribution system operation with other segments of the electricity sector (Act No. 251/2012 Coll. of 31 July 2012 on Energy, Section 32.). As to distribution losses in the network, Slovakian figures are fairly positive: the last available report showed that 0.98% of the total electricity transmitted was lost (International Energy Agency 2018, 69).

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Lastly, the wholesale trade is basically conducted under agreements linked to the Prague Power Exchange and the European Energy Exchange, identified as the most transparent price signals in the region (Ibid.). Another key player is the state-owned short-term electricity market operator, which carries out the day-ahead wholesale electricity activities (See https://www. okte.sk/en/short-term-market/). Decentralization Efforts: Where Does Slovakia Stand? Energy is a shared competence between the EU and its member states. In Slovakia, national competence lies with the Ministry of Economy, which is the body in charge of preparing and implementing the national energy policy (Act 2012 on Energy, Section 88.). It is also worth recalling how Slovakia turned from being self-sufficient to energy import dependent. This fact is crucial to understanding today’s national challenges. Slovakia was self-sufficient for electricity supply and even remained as an electricity exporter until 2006 (Ministry of Economy of the Slovak Republic 2014a, 65). Following the commitments made to enter the EU (consisting of shutting down certain nuclear facilities), Slovakia became dependent again on electricity imports (Ibid.). As a result, a liberalization phase started in 2006, when Italian company Enel a.s. purchased the majority of the former state-owned SE as part of the first privatization wave (Ibid, 10.). Further, by means of the “Act on Regulation of Network Industries” (Act No. 250/2012 Coll. on Regulation of Network Industries), Slovakia implemented the EU “third energy package” in its domestic energy market. Ever since, the Slovak government has fully recognized that liberalization of prices in the energy sector is a decisive prerequisite for the expansion, quality enhancement, and increase of energy security and efficiency (Ministry of Economy of the Slovak Republic 2014a, 11). In terms of worldwide nuclear power generation capacity, Slovakia ranks second, behind France (International Energy Agency 2018, 81). So, in the current era of energy transition to low

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carbon sources, nuclear energy is expected to have a new opportunity. By way of increasing the safety of the new power plants, the Slovak government seeks to increase the share of nuclear energy (as clean source of electricity) to place the country as an exporter again (International Energy Agency 2018, 81). But developing nuclear projects has become very complex due to the high nuclear safety standards required (Nuclear Regulatory Authority of the Slovak Republic 2016; Ministry of Economy of the Slovak Republic 2014a, 68). Furthermore, restrictions on the new development of fossil fuel power plants are seriously under study by Slovak authorities (Ministry of Economy of the Slovak Republic 2014a, 69). Thus, efforts are focused on low carbon sources, giving rise to a great momentum for the fostering of renewable energy. To this end, the Slovak Innovation and Energy Agency  subordinated to the Ministry of Economy  especially focuses on exploring alternative sources to increase energy efficiency (http://www.siea.sk/odborne-o-energii/ .). In this regard, the penetration of new technologies (e.g., smart meters, solar photovoltaic panels, electric cars, storage batteries, and other smart devices) offers an unprecedented opportunity for consumers to transform conventional energy practices. For the first time, consumers are empowered to have an active role in the electricity value chain: they become energy producers and administer that energy in a more efficient manner, i.e., prosumers. Hence, decentralized power generation is gaining weight in electricity markets with the increasing role of prosumers. Given that decentralization in the electricity generation segment enables self-generation, there are various types of prosumers. Residential households, citizen-led energy cooperatives or housing communities represent small scale prosumers (European Parliament, ‘Electricity “Prosumers”’ (2016) Members Research Service, 2.). On a larger scale, commercial companies whose main business activity is not electricity production and public institutions in general (usually functioning in large buildings) have great potential for self-generation (European Parliament, ‘Electricity “Prosumers”’ (2016) Members Research Service, 2.).

Slovakia: Energy Policy

This revolutionary progress involves a shift away from the classical model of large, centralized and localized power generation stations feeding a concentrated transmission network. Decentralized systems help to improve demandside consumption patterns, leading to achieve better efficiency in electrical energy systems (Behrangrad 2015). In fact, the development of locally generated electricity is acknowledged as an efficient mechanism to increase installed capacities in smaller segments and it is expected to grow substantially in the short term (Ministry of Economy of the Slovak Republic 2014a, 71). Thus, energy efficiency plays a decisive role in its national policy. In line with this ambition, Slovakia has passed abundant legislation on this subject (Most remarkably: (i) Act No. 476/2008 on Efficiency During Energy Utilisation and on the amendment of Act No. 555/2005 on energy efficiency of buildings, (ii) Act No. 182/2011 Coll. on Labelling Energy-Using Products, and (iii) Act No. 300/2012 on Energy Efficiency of Buildings. For an exhaustive description of all the Slovak legislation on energy efficiency, see Ministry of Economy of the Slovak Republic 2014a, 103). In this transition context, the Slovak government considers it has achieved a suitable regulatory environment to create transparent competition and ample market liberalization in the energy sector (Ministry of Economy of the Slovak Republic 2014a, 12). Likewise, it acknowledges that liberalization is what will truly ensure competitiveness while safeguarding energy security maximizing the costs (Ibid, 35.). Based on the success of the Renewable Energy Act of 2009 in fostering the creating of decentralized generation sources, the development of intelligent networks is under the spotlight in Slovakia (Ibid, 61 and 79.). The implementation of these smart systems was already envisaged as one of the legal obligations of DSOs (Act No. 251/2012 Coll. of 31 July 2012 on Energy, Section 31–3(p).). This Slovak energy reality explains the need to embrace new technologies as part of its energy strategy for the upcoming years. Decentralized generation from renewables was confirmed as a

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priority for the Slovak authorities (Ministry of Economy of the Slovak Republic 2018, 172). So, public support for new technologies is decisive to drive suppliers and consumers towards that direction. In this respect, initiatives such as the decree on smart meters (Decree of the Ministry of Agriculture of the Slovak Republic No. 358/2013 Coll. on the introduction of smart meters and distribution networks (15 November 2013).) are highly celebrated. Overall, Slovakia offers a promising environment for the development of new technologies aimed at enhancing energy security and efficiency. Smart Metering Systems Slovakia’s approach to smart metering systems can be analyzed from three perspectives: the European, the Slovak international, and a strictly domestic approach. Firstly, the EU has consistently fostered the widespread use of smart grids and intelligent metering systems as a paradigm shift to improve energy security and efficiency (In this regard, and for a comprehensive study of the EU overview and legal setting of smart grids, see Leal-Arcas et al. 2018). The implementation of such technologies is not easy. The EU targets for reaching a minimum of 80% of intelligent metering systems for consumers by 2020 “where roll-out of smart meters is assessed positively” (EU Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity (‘EU Directive 2009/72/EC’), Annex I (2).). Member states are required to prepare ten-year plans for the implementation of smart metering (Ibid.). As a complement, the EU issued specific guidelines to assist its member states in creating suitable pathways (European Commission, ‘Recommendation of 9 March 2012 on preparations for the roll-out of smart metering systems’ (2012/148/EU) (‘EU Recommendation on Smart Metering’).). Following this EU perspective, a national analysis on the potential of intelligent metering set forth in EU Directive 2009/72/EC was required. This evaluation consisted of an economic assessment of the long-term costs and benefits of

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implementing smart meters at a national level (“CBA”). The results placed Slovakia among the group of states for which the CBA proved to be “negative or inconclusive” (European Commission 2014, 4). However, it was also found that in Slovakia smart metering would be economically justified for certain groups of consumers (Ibid.). Hence, Slovakia was placed among those member states not opting for largescale roll-out of smart grids (Ibid, 10.), but instead focused on particular groupings of energy endusers. In this respect, Slovakia has not embarked on undertaking a large-scale reform to transform its network into a whole new smart grid. Conversely, it has focused on incentivizing the implementation of smart metering only where it is deemed cost-effective (Ministry of Economy 2018, 111), with an emphasis on decentralized generation (Ministry of Economy of the Slovak Republic 2014a, 79). Secondly, from a Slovak international perspective, a much-publicized project with the Czech Republic, known as “Again Connected Networks,” is intended to strengthen their electricity markets by installing a cross-border smart grid (Ministry of Economy 2018, 58). This is one of the first smart grid initiatives to be incorporated as a project of common interest in the EU (Ministry of Economy 2018, 58). The project is expected to bring landmark improvement in regard to energy security and efficiency in both countries. Thirdly, from a strictly domestic point of view  and following the EU Recommendation on Smart Metering  Slovakia regulated intelligent metering systems in its Energy Act. At that stage, with special regard to individual categories of final consumers, the Slovak government introduced an exploratory phase to evaluate the convenience and economic benefits of introducing smart systems (Act No. 251/2012 Coll. of 31 July 2012 on Energy, Section 42.). Further, the Ministry of Economy regulated the criteria and conditions for the deployment of smart measuring systems (Decree of the Ministry of Economy No. 358/2013 Coll. on the introduction of smart meters and distribution networks” (15 November 2013).). Following the initial mandates of the Energy Act, it compels the DSOs in

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Slovakia to install intelligent measuring system to specific categories of consumers. A first group of consumers is determined by the nominal consumption rates: end-users consuming yearly at least 4 MW (and a maximum of 30 MW) (Ibid, Section 3 (1–4).). Regardless of the annual consumption, a second group is comprised by endusers that: (i) have power generating devices connected to the distribution system, (ii) have a charging station connected at the supply point for electric vehicles, (iii) have transfer points where they can produce energy, and (iv) are selected by the distribution system operator to monitor the power and quality parameters of their electricity supply (Ibid, Section 3 (5).). The main functionalities of smart metering systems in Slovakia include: (a) two-way communication between the off take point of the electricity end-user and the headquarters of the intelligent metering system, (b) monitoring of electricity consumption by customers via secure serial interface, Wi-Fi or Bluetooth technologies, and (c) regular meter reading and remote reading (Ibid, Section 3 (8).). Slovak authorities calculate that the implementation of this decree will transform an estimated 53% of the electricity end-users at the low voltage level, i.e., below 30 MW of annual consumption (Ministry of Economy of the Slovak Republic 2014a, 78). SEPS, as the sole transmission system operator, is in charge of implementing the intelligent systems. Complementing these programs, the Slovak Innovation and Energy Agency launched the program, “Green to the households,” an initiative financed by the European Regional Development Fund. As a pilot project, it subsidizes solar photovoltaic panels for domestic households and enables them to connect to the grid (See https://bankwatch. org/blog/in-slovakia-a-shining-example-of-eufunds-for-renewables-and-families). Electric Mobility From a European perspective, electromobility has been identified as a crucial element of the shifting process to low-carbon transportation, which represents almost 25% of the EU greenhouse emissions (EU Commission 2016, 1). The initial step towards this direction was the strengthening of the

Slovakia: Energy Policy

coefficient to measure real driving emissions (EU Commission 2016, 1). The recently-created worldwide harmonized light vehicles test cycle is envisaged to reflect vehicles emission in a more transparent and updated way (EU Commission 2016, 7; EU Commission Regulation No. 2016/ 427 of 10 March 2016 amending Regulation (EC) No 692/2008 as regards emissions from light passenger and commercial vehicles (Euro 6), Appendix 3.). Following the implementation of EU policies, electric vehicles (“EVs”) are expected to grow progressively in the upcoming years. The EU has already defined the direction towards increasing the use of electric vehicles. By means of the “Directive on Alternative Fuels Infrastructure” (EU Directive 2014/94 of the European Parliament and of the Council of 22 October 2014 on the deployment of alternative fuels infrastructure.), member states are committed to deploy the necessary infrastructure to implement enough electric vehicle recharging points (Ibid, Article 3.). Subject to technical feasibility, these stations should be equipped with intelligent metering systems (EU Directive 2014/ 94 of the European Parliament and of the Council of 22 October 2014 on the deployment of alternative fuels infrastructure, Article 4 (7).). Despite its value, this kind of measure has not been enough. More regulatory and policy efforts have been deemed necessary to uptake the EV European market. Subsequently, the EU Parliament urged the Commission to adopt an “ambitious action plan” to boost the EV market (European Parliament resolution No. 2016/2327 of 14 December 2017 on a European Strategy for Low-Emission Mobility, 42.). For this purpose, it outlined some general guiding recommendations: (i) to implement tax incentives for low-emission vehicles, (ii) to create the necessary availability of charging stations, and (iii) generally, create the necessary competitiveness of EVs in the EU market (Ibid.). As a result, the EU Commission took action by means of the “Europe on the Move” package, a set of measures and a long-term plan focused on developing EV mobility in accordance with the EU Parliament guidelines (European Parliamentary Research

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Service 2019, 4). Most recently, the EU has increased the pressure in the car industry. By setting new CO2 emission targets for new vehicles (which will enter into force in 2020), producers are to adapt to greener manufacture standards (European Parliamentary Research Service 2019, 4). Additionally, the EU facilitated financial incentives and support to foster the EV market. Most remarkably, by allocating funds from the “Connecting Europe Facility” and implementing other research and innovation projects seeking to develop technologies and reduce costs for EVs (European Parliamentary Research Service 2019, 4). Despite these efforts, current EVs’ overall average costs are approximately 40% higher than an equivalent fuel car (European Parliamentary Research Service 2019, 8). The evolution of the EV market would be crucial to its car sector in the upcoming years. Slovakia ranks first worldwide in the number of vehicles manufactured per capita (Daňo and Róbert 2018a). Meanwhile, transport is the heaviest sector in terms of carbon emissions in the country (International Energy Agency 2018, 97). In addition, the growing burden of reducing greenhouse gas emissions has pressured the Slovak government to adopt more aggressive strategies in that regard (Ibid, 98.). Some of these measures, presented in the “Strategic Transport Development Plan of the Slovak Republic up to 2030,” included: (i) payment of tolls by cargo vehicles calculated upon their carbon emission performance, (ii) stricter emission standard requirements for new cars, and (iii) a support scheme aimed at increasing the share of transport biofuel sales (Ministry of Transport, Construction and Regional Development of the Slovak Republic 2016; International Energy Agency 2018, 98). More recently, the Slovak government implemented direct subsidies for the purchase of new EVs, complemented by initial tax reductions (International Energy Agency 2018, 98). Yet, this has not been enough. Although the Slovak market offers a variety of electric vehicles, only 0.3% of the registered vehicles in the second semester of 2017 were electric (Potkánya and Lesníkováa

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2019). The main explanation for the low sale rates of EVs is their high market price (Daňo and Róbert 2018b). In parallel, the amount of charging stations has shown a rapid development, at least in Bratislava, showing an increase from 50 stations in 2014 to 335 in 2016 (Daňo and Róbert 2018b). This is a convenient setting from EV use within the capital city. Still, it exposes serious limitations when planning it at a national level. Smaller cities in Slovakia do not have this infrastructure. Charging points outside major cities are scarce, while the actual distance range of EVs is around 200 km on a single charge (Daňo and Róbert 2018c). This current reality limits the potential use of EVs to metropolitan areas. In comparison with other European incentive policies, Slovakia does not offer sufficient benefits to foster EV in its domestic market. Apart from the direct subsidies and some specific tax exemptions, comparative examples show that integral policies can truly deploy the EV market. For instance, further purchase-related tax exemptions (e.g., import tax, registration tax), or varied local incentives (e.g., free parking, circulation benefits, toll exemptions, free charging facilities) (European Environment Agency 2016). Overall, in order to reach the required targets for the renewable energy in transport, the Slovak government prioritizes other alternatives. It has been acknowledged that the policies adopted show a preference for second-generation biofuels over the advantages that EVs offer to the transport sector (International Energy Agency 2018, 130). The official policy documents equate the relevance of alternative biofuels (such as compressed natural gas or liquefied propane gas) with EVs (Ministry of Economy of the Slovak Republic 2014a, 33). This evidences that further developments are needed in the Slovak market to deploy electric mobility to its highest potential. As has been already recognized by the government, EVs are strictly linked to decentralizing electricity generation (Ministry of Economy of the Slovak Republic 2014a, 92). The role of batteries in the EV sector is expected to influence up to 20% of the system capacity, enabling a twoway decentralized potential use (i.e., charging and discharging batteries) (Ibid.). In this regard, EVs

Slovakia: Energy Policy

should not be understood as an isolated technology trend, but rather as a valuable tool to shift to greener transportation while fostering decentralization in the electricity sector. Demand Response Demand response is a tariff-based policy or program implemented to foster changes in electric consumption patterns by consumers, based on changes in the price of electricity over time (See http://publications.jrc.ec.europa.eu/repository/ bitstream/JRC101191/ldna27998enn.pdf.). The cornerstone of demand response policies is the “EU Directive on Energy Efficiency” (EU Directive No. 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/ 125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC). By means of this instrument, member states were required to set up an energy efficiency obligations scheme (Ibid, Article 7.), with special attention to facilitating an efficient use of energy for the domestic customers segment (Ibid, Article 12.). Most remarkably, this Directive commits states to “remove all those incentives in transmission and distribution that are detrimental to the overall efficiency” of all the sectors in the electricity sector (Ibid, Article 15.). This directive was recently updated (EU Directive No. 2018/2002 of the European Parliament and of the Council of 11 December 2018 amending Directive 2012/ 27/EU on energy efficiency.). In this line, since old systems are factually unfavorable in terms of energy efficiency, all technological improvements are called to being implemented in due course. EU Directive on Energy Efficiency was implemented in Slovakia by means of the “Energy Efficiency Act” (Act No 321/2014 Coll. of 21 October 2014 on Energy Efficiency.). The main identifiable features to tackle demand response are: (i) the obligation to undertake periodical energy audits to evaluate cost-effective electricity use for large consumers (mainly the industrial segment) (Ibid, Section 2 (j).), (ii) the requirement for DSOs and TSOs to monitor, inform and anticipate their annual operation with regards to their energy efficiency performance

Slovakia: Energy Policy

(Ibid, Section 16 (4).), and (iii) owners of buildings of above 1000 m2 shall install central hotwater heating (Act No 321/2014 Coll. of 21 October 2014 on Energy Efficiency, Section 11 (1).). Upon express request of the monitor operator, these large building consumers shall inform their electronic set of data on total energy consumption and energy efficiency improvement measures (Ibid, Section 11 (2).). Seemingly, Slovak’s implementation of the EU Directive on Energy Efficiency is mostly focused on the industrial sector and, to a smaller extent, to large consumers. Smaller end-users and households are not captured by this measure. Hence, demand response behaviors are not fostered for this portion of the energy sector. In essence, Slovakia lacks a regulatory framework to tackle energy efficiency in the network tariff level (Bertoldi et al. 2016). • Slovakia recognizes that achieving a level of adequate information throughout the grid is a fundamental prerequisite to successfully handling demand response (Ministry of Economy of the Slovak Republic 2014b, 83). Here lies the importance of introducing of intelligent metering systems (Act No. 251/2012 Coll. of 31 July 2012 on Energy, Section 42.), which was regarded as a valuable initiative (Bertoldi et al. 2016). Lastly, the RONI published a set of guidelines to foster a better management of consumption, in particular focused on lowering peak consumption when avoidable (Ministry of Economy of the Slovak Republic 2014b, 83). Therefore, Slovakia is moving to enhance its grid system prior to addressing directly demand response from its core. This strategy was recently confirmed, as it was envisaged that concrete national objectives on demand response would be determined in an upcoming update on the national energy plan (Ministry of Economy of the Slovak Republic 2018, 61). Electricity Storage The EU legal framework of electricity storage in Europe is defined by means of the “third energy

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package”. It is not directly addressed in EU Directive 2009/72/EC, but nonetheless a specific regulation on electricity storage is foreseen (Ministry of Economy of the Slovak Republic 2018, 61). Accordingly, energy storage in Slovakia is taking its first steps. Similar to the EU, it still lacks a precise national regulation. At a larger scale, Slovak authorities have particularly regarded the relevance of underground storage for natural gas supply (Ministry of Economy of the Slovak Republic 2018, 61). However, they also recognize the importance of developing electricity storage to adequately integrate lowcarbon energy into the Slovak system (Ibid, 79.). In pursuit of energy efficiency, electricity storage has proven to be crucial to tackle the increasing need to balance generation and demand in realtime scales (International Renewable Energy Agency (IRENA), Electricity Storage and Renewables: Costs and Markets to 2030 (IRENA 2017), 28 https://www.irena.org/publications/2017/Oct/ Electricity-storage-and-renewables-costs-andmarkets.). Further, storage capacities would play a crucial role for the integration of locally-produced energy in Slovakia (Ministry of Economy of the Slovak Republic 2014a, 79). Short-term storage (lasting only some minutes long), daily storage, and long-term storage or even seasonal storage are already available (International Renewable Energy Agency (IRENA), Electricity Storage and Renewables: Costs and Markets to 2030 (IRENA 2017), 43 https://www.irena.org/publications/2017/Oct/ Electricity-storage-and-renewables-costs-andmarkets.). The current technological development is starting to offer a wider variety of storage possibilities. However, the main barrier is the high cost of developing this kind of technology. Yet, battery energy storage is expected to progressively drop in cost over the upcoming years (International Renewable Energy Agency (IRENA), Electricity Storage and Renewables: Costs and Markets to 2030 (IRENA 2017), 43 https://www.irena.org/ publications/2017/Oct/Electricity-storage-andrenewables-costs-and-markets.). As soon as competitiveness is reached in a cost-benefit assessment, batteries are anticipated to play a crucial role in the near future of grid operation (International

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Renewable Energy Agency (IRENA), Electricity Storage and Renewables: Costs and Markets to 2030 (IRENA 2017), 43 https://www.irena.org/ publications/2017/Oct/Electricity-storage-andrenewables-costs-and-markets.). The Slovak Renewable Energy Agency, an EU-supported organization which promotes energy efficiency and low-carbon sources, briefly addresses storage as part of its agenda. There are no concrete projects on research and development in this area (See https://skrea.sk/about-us/ research-and-development/.). Neither the Slovak government allocates enough public funding to foster research on electricity storage. Over half of the grants available for scientific research and development in the field are allocated to the study of renewable energy per se, while only a minor portion is focused on energy efficiency and electricity storage (International Energy Agency, ‘Energy Policies of IEA Countries: Slovak Republic’ (2018 review), 152.). Still, the idea of coupling renewables with batteries and storage mechanisms is identified as a perfect match in this era of energy transition (See https://skrea.sk/energy-storage/.). This is especially visible in the case of hydropower sources. It currently accounts for nearly 20% of the electricity consumption in Slovakia (Ministry of Economy of the Slovak Republic 2014a, 61). Coupled with pumped storage technologies, this popular source in Slovakia is regarded as the key to lower disruptions in the national transmission network ( International Energy Agency, ‘Energy Policies of IEA Countries: Slovak Republic’ (2018 review), 123.). Hence, despite the lack of available tools at the time being, the purpose to aim for is clear in the context of Slovak energy policy. Data Protection Intelligent meter systems and smart grids offer invaluable advantages. The flow of information enables real-time interaction in the network. Its potential to foster energy efficiency and facilitate decentralized generation sources is widely recognized. The rise of prosumers, two-way network responsiveness and, ultimately, decentralization gives rise to new issues. The increasing

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availability of information entails concerns regarding consumers’ data management and protection. The Internet-based design of intelligent systems facilitates instant communication, but also opens the door both to fraudulent cyber activities and privacy issues. First, digitalization automatically turns the whole system potentially vulnerable to hackers who could influence or even take over the functioning of the electricity grid (Mann 2013). Cyberattacks are at the spotlight as one of the main caveats when thinking about modernizing distribution networks (Massachusetts Institute of Technology Energy Initiative, The Future of Electric Grid: An Interdisciplinary MIT Study (Massachusetts Institute of Technology 2011), 220.). Consequently, if not addressed properly, overcoming the barrier of information asymmetry might entail serious negative externalities. Second, the increasing use of online databases (accessible to some of the agents involved in the electricity sector) (Vandenbergh and Stern 2017), software systems (Science Applications International Corporation and U.S. Energy Information Association 2011), and other forms of massive information raise concerns on consumers’ privacy. In particular, disproportionate availability of electricity consuming information could reveal collateral sensitive information: daily routine timetables, or extended absences from home. This level of accessibility to domestic energy patterns could expose consumers to house break-ins or facilitate organized criminal activities. Furthermore, the issue of “eco-privacy” is becoming a more significant issue in smart grid data protection matters (It has been acknowledged that smart grids can potentially increase the tension between environmental goals and a need for ‘eco-privacy’. Law enforcers might be tempted to use data collected via intelligent metering systems to achieve environmental goals, operating an alleged public purpose at the expense of consumer privacy. See in this regard, Eisen 2013). In this regard, allowing consumers to have access upon request to their own data becomes crucial (Klass 2017). Regulators are facing the initial set of privacy and data management concerns. An adequate implementation of privacy rules has proven to be

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a priority, as exposed in the German and American congress and social debates concerning smart grids (Mann 2013). Crucial issues are expected soon to be globally addressed to a greater extent. Matters such as who manages electricity information, purposes and limits of such a usage and, ultimately, who owns this data are questions that must be answered before moving forward with these technologies (Eisen 2014). Following the most recent EU General Data Protection Regulation (EU Regulation No. 2016/ 679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation).), Slovakia amended its national data protection law (Act No. 18/2018 Coll. on the Protection of Personal Data of 29 November 2017.). Although it does not contain any specific provision in connection with smart grids, it expressly allows for personal data to be lawfully collected and processed for statistical and scientific purposes (Ibid, Article 16 (K).). The evaluation of the convenience of implementing intelligent metering systems in Slovakia would allegedly fall within this category. However, regarded as having a technical nature, the use of this information shall comply with the “principle of data minimization” in order to protect, to the largest extent, the anonymity of the personal data handled (Ibid, Article 78 (8).). For the specific case of Slovakia, DSOs are expected to be fully responsible for ownership and managing matters concerning data collection from intelligent meter systems (European Commission 2014, 5.). However, logically, a certain degree of smart grid development is required to start thinking of data protection as a tangible issue. But, at any stage, relaxed approaches on data protection may increase a reluctance to embrace technological advances in the era of energy transition (Buschle and Westphal 2019b). Considering this, the Slovak government has reassured the importance of guaranteeing that only relevant data should be collected (of Economy of the Slovak Republic, ‘Energy Policy of the Slovak Republic’ (October 2014), 34. https://www.mhsr.

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sk/uploads/files/47NgRIPQ.pdf.). Focusing specifically on the energy sector, no concrete guidelines were included when considering the initial steps to deploy intelligent systems in the Slovak electricity segment. Conclusions and Recommendations The EU energy context frames any analysis of Slovak energy policy. In recent years it has moved towards enhancing the energy security of the EU bloc. The “third energy package” has served as the cornerstone to boost efficiency programs and, in pursuit of that goal, has given a new role to the prosumers. The next logical step is the definitive deployment of intelligent metering systems and other new technologies to improve efficiency in the electricity sector. In this European setting, Slovakia is largely dependent on its domestic production of nuclear energy and the import of primary energy sources to meet its primary demand. The implementation of decentralized electricity generation then becomes a priority. In terms of legal environment, Slovakia offers suitable conditions to continue developing new technologies in the energy sector. Its regulatory framework presents a valuable basis  although not developed enough  to drive this paradigm shift. As an advantageous feature, the installation of intelligent systems was elevated to a legal obligation to the DSOs. However, the downside is that the strategy targets only large consumers (above 4 MW of yearly consumption). This approach raises concerns as to its effectiveness to influence of the required behavioral shifts of smaller end-users. Yet, decentralized generation from renewable energy was recently affirmed as a high priority in the Slovak energy policy. So, further regulations to enhance transparent competition and keep on liberalizing the electricity market in Slovakia are likely to be adopted. Considering the current Slovak picture in terms of the implementation of new technologies, the challenge lies in adapting national capacities with the available innovations in the energy sector. From the capacities and barriers of its market, five sets of recommendations can be offered with regard to the introduction of particular new technologies addressed in this article.

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(i) Smart Grids The large investment required is certainly a barrier for any country, and especially to Slovakia (Buschle and Westphal 2019c). As identified from an EU level, Slovakia’s smart metering roll-out assessment concluded that it would only be economically justified for a specific segment of end-users. This entails an additional challenge to Slovak authorities, as they should carefully balance the incentives and cost-evaluation of implementing smart metering systems. The design of financing mechanisms should be carefully shaped in order to facilitate the implementation by the RONI without incurring excessive financial burdens (Janíček et al. 2015a). Certainly, the instability of electricity from renewable energy sources is precisely where smart grids would have a greater potential (Janíček et al. 2018). This should be carefully assessed by the Slovak authorities in order to understand the variety of benefits entailed in the deployment of decentralized generation from renewables. Moreover, as a result of the CBA carried at an EU level, it is relevant to identify that the Slovak’s approach is primarily to target an exclusively larger scale of consumers (i.e., above 4 MW) to implement smart grids. Nonetheless, targeting this segment should not necessarily prevent minor end-users from embracing efficiency trends (Janíček et al. 2015b). Furthermore, certain administrative procedures in recent years have facilitated the process of integrating small households to simplify self-generation at a smaller scale (International Energy Agency 2018, 78). The convenience of implementing smart grids is therefore strictly conditioned to a comparative advantage in terms of costs of implementation. Hence, Slovak policy is designed to tackle energy efficiency from a general perspective strategy and, from there, on moving to influence energy patterns of individual consumers (Janíček et al. 2015b). To succeed, awareness campaigns to educate its population on the benefits of shifting to a more conscious and efficient way of consuming energy should advisedly supplement its official efforts. Changing behaviors cannot be easily measured in terms of economic values, but successful

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attempts may surely help to reduce inefficiency in the electricity generation and consumption patterns at all scales. The renewable energy industry of Slovakia raises an additional challenge. Despite the large influence of hydropower sources, other forms of renewables are relatively scarce. For instance, the use of wind ranks in the lowest positions among IEA members (International Energy Agency, ‘Energy Policies of IEA Countries: Slovak Republic’ (2018 review)). This complicates a more rapid impact of smart metering in its national energy market. By 2020, the Slovak government was expected to have solar generation fully decentralized (Ministry of Economy of the Slovak Republic 2014a, 62). This major advance should be complemented by an aggressive policy to increase and facilitate the individual use of other renewable sources with higher potential (e.g., solar panels) (Taking advantage of the increasing installed capacity of solar panel generation and the legislative support that is slowly moving towards that direction, the Slovak government acknowledges the increasing potential of solar energy. See Ministry of Economy of the Slovak Republic 2014a, 62). (ii) EVs Despite its huge potential in the car industry, EVs are being introduced relatively slowly to the Slovak market. The network of recharging stations is not competitive enough to allow users to travel around the country relying on the existing recharging infrastructure. Further improvements are required in order to provide the Slovak market with matching advantages to increase the share of EVs in its domestic market. Considering that transportation is the largest greenhouse gas emitter in Slovakia, this is a matter that will soon raise the alarms of its authorities. In times of energy transition, the shift in the mobility segment should become a priority, especially in a country where the car industry globally ranks among the largest. With increasing EU pressure to reduce polluting emissions, it is a matter of time before Slovakia decides to undertake a substantive change in its transport sector.

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Identical to the case of renewable energy generation, EVs offer an invaluable potential beyond its primary benefits. They are zero-carbon and have relatively low operating and maintenance costs (Potkánya and Lesníkováa 2019). This should be accordingly recognized in national policies, which should primarily focus on embracing the snowball effect of supporting new technologies. Logically, incentives should focus on the current downsides of EVs, namely, the high purchase costs, the availability of an adequate network of charging stations and the range of their batteries (Ibid, 1169.). But after market failures and comparative disadvantages are overcome, EVs have the capacity of outweighing traditional fuel vehicles. As to the specific design of policies, there are no magic formulas. Successful countries that have managed to substantially reduce greenhouse gas emissions in the transport sector are those who have directly targeted the industry. Mainly, they have done so by passing especially tailored regulation aimed at increasing the use of EVs (e.g., Norway, Netherlands) (European Environment Agency 2019). Less direct policies were clearly less successful at it (Ibid.). Of course, Slovakia’s economic reality differs substantially from those exemplary countries. Considering this, the challenge is greater. However, there are some unexplored tools that the Slovak authorities should consider. With this is mind, direct subsidies emerge as ideal incentive schemes. Yet, given Slovak’s context, it would be unrealistic to expect such a policy (Daňo and Róbert 2018d). Alternatively, apart from the limited actual subsidies and tax exemptions (Cansino et al. 2018), there are other incentives that could complement these initial policies. Some successful examples include the exemption of registration taxes or fees (e.g., Latvia, Romania, Ireland), or waiver of ownership taxes for the first years of an EV registration (e.g., Austria, Cyprus, Germany, Italy, United Kingdom) (Cansino et al. 2018). Other forms of benefits include free parking, circulation benefits (such as exclusive lanes), toll exemptions, or free charging facilities (European Environment Agency 2016). Considering that

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aggressive direct subsidies would be unlikely to be implemented in Slovakia, the combination of incentives would be crucial to drive consumers’ election of EVs over other forms of fuel vehicles. Finally, education-focused campaigns could play a significant role considering the importance of the car industry in Slovakia. Supporting the educational initiatives of the Slovak Electric Vehicle Association (see https://www.seva.sk/pro jekty/) could be a reasonable starting point. Further, combining the EV development with integration efforts of renewable energy generation (Daňo and Róbert 2018e) would facilitate a more integral design of Slovakia’s energy policy. (iii) Demand Response Slovakia does not have a regulatory framework to specifically address demand response mechanisms. Its approach focuses on an earlier stage, as it recognizes that prior to addressing this kind of improvement, an ample information basis should be previously achieved by implementing smart metering systems. In essence, demand-side policies should be adopted only when the supply segment has reached a sufficient level of modernization. However, in accordance with carrying a more integral policy design, demand response patterns can be influenced by imposing progressive obligations to the key agents of its national energy industry. In particular, the dominant position of SEPS as the sole TSO should be seized as a legitimate enforcer of measures to facilitate the responsiveness side. Likewise, following the spirit of the Slovak’s strategy, DSOs could also implement responsiveness programs especially targeted to larger consumers. (iv) Storage Similar to the global trend, the decisive obstacle to developing storage technologies lies in their high costs. As a result, it is reasonable that Slovakia is expecting further developments on these technologies. Other priorities are certainly more urgent.

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However, the energy storage sector offers an opportunity for new hubs and markets to be created. In Slovakia, funding for research and development of storage mechanisms is scarce. Reality shows that without efficient networks, efforts to deploy renewable energy lose most of their distinctive features. In this regard, Slovakia might be missing a valuable opportunity. Hydropower sources are crucial to the Slovak market. Its potential for the upcoming years is uncontested. The operational flexibility of these power plants offers a suitable environment to test storage mechanisms. In the long run, dependence on nuclear energy could be progressively diversified by increasing the share of renewables in the national energy mix. Similarly, the EV segment (as the natural hub to boost storage technologies) should be regarded as a perfect match to develop storage technologies. (v) Data Protection The management of personal data appears to emerge as a consequence after a reasonable degree of operation via smart grids has taken place. The Slovak government seems to opt for deferring the matter until a higher intelligent metering development occurs. However, for a significant deployment of these technologies to emerge, certain externalities of such a shift should be anticipated. Despite the well-known advantages of smart metering, areas of concern (such as data protection) should advisedly be addressed while the technology is developing (Buschle and Westphal 2019c). This way, consumers would naturally embrace the introduction of new equipment to make their everyday lives easier and more efficient. Alongside the enhancement of technological capacities, it is advisable to maintain high standards of data protection. Wider data protection standards may facilitate the popularity of intelligent metering systems as a favorable tool to empower consumers in a safe and reliable way.

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References Behrangrad M (2015) A review of demand side management business models in the electricity market. Renew Sust Energ Rev 47:270–272 Bertoldi P, Zancanella P, Boza-Kiss B (2016) Demand response status in member states. Eur Commission 2016:29–30. http://publications.jrc.ec.europa.eu/reposi tory/bitstream/JRC101191/ldna27998enn.pdf Buschle D, Westphal K (2019a) A challenge to governance in the EU: decarbonization and energy security. Eur Energy J 8:53–56 Buschle D, Westphal K (2019b) A challenge to governance in the EU: decarbonization and energy security. Eur Energy J 8(53):63 Buschle D, Westphal K (2019c) A challenge to governance in the EU: decarbonization and energy security. Eur Energy J 8:53–61 Cansino J, Sánchez-Braza A, Sanz-Díaz T (2018) Policy instruments to promote electro-mobility in the EU28: a comprehensive review. Sustainability 10:6 Daňo F, Róbert R (2018a) Electromobility in the European Union and in the Slovakia and its development opportunities. Int J Multidiscip Bus Sci 4(5):74–76 Daňo F, Róbert R (2018b) Electromobility in the European Union and in the Slovakia and its development opportunities. Int J Multidiscip Bus Sci 4(5):74–77 Daňo F, Róbert R (2018c) Electromobility in the European Union and in the Slovakia and its development opportunities. Int J Multidiscip Bus Sci 4(5):74–82 Daňo F, Róbert R (2018d) Electromobility in the European Union and in the Slovakia and its development opportunities. Int J Multidiscip Bus Sci 4(5):74–80 Daňo F, Róbert R (2018e) Electromobility in the European Union and in the Slovakia and its development opportunities. Int J Multidiscip Bus Sci 4(5):74–78 Eisen J (2013) Smart regulation and federalism for the smart grid. Harv Environ Law Rev 37:1–16 Eisen J (2014) An open access distribution tariff: removing barriers to innovation on the smart grid. UCLA Law Rev 61:1712–1728 EU Commission (2016) A European Strategy for lowemission mobility, 1. https://eur-lex.europa.eu/ resource.html?uri¼cellar:e44d3c21-531e-11e6-89bd01aa75ed71a1.0002.02/DOC_1&format¼PDF European Commission (2014) Report from the Commission: benchmarking smart metering deployment in the EU-27 with a focus on electricity. https://eur-lex. europa.eu/legal-content/EN/TXT/?uri¼COM:2014: 356:FIN European Commission Expert Group (2017) Towards a sustainable and integrated Europe: report of the Commission Expert Group on electricity interconnection targets, 31. https://ec.europa.eu/energy/sites/ener/files/ documents/report_of_the_commission_expert_group_ on_electricity_interconnection_targets.pdf European Environment Agency (2016) Electric vehicles in Europe. European Environment Agency, 64–65.

Slovenia: Mineral Policy https://www.eea.europa.eu/publications/electricvehicles-in-europe European Environment Agency (2019) Fiscal instruments favouring electric over conventional cars are greener, 7. https://www.eea.europa.eu/publications/fiscalinstruments-favouring-electric-over European Parliamentary Research Service (2019) Electric road vehicles in the European Union: trends, impacts and policies, 4. http://www.europarl.europa.eu/ RegData/etudes/BRIE/2019/637895/EPRS_BRI (2019)637895_EN.pdf International Energy Agency (2018) Energy policies of IEA countries: Slovak Republic Janíček F, Scepánek M, Belán A et al (2015a) Roadmap for smart metering in the Slovak Republic. Energy Environ 26:35–48 Janíček F, Scepánek M, Belán A et al (2015b) Roadmap for smart metering in the Slovak Republic. Energy Environ 26:35–50 Janíček F, Perný M, Šály V et al (2018) The role of smart grid in integrating the renewable energies in Slovakia. Energy Environ 29(2):300–309 Klass A (2017) Expanding the U.S. electric transmission and distribution grid to meet deep decarbonization goals. Environ Law Rep 47:749–760 Leal-Arcas R, Filis A (2015) The energy community, the energy charter treaty, and the promotion of EU energy security, Queen Mary School of Law Studies Research Paper No. 203/2015, 557 Leal-Arcas R, Lasniewska F, Proedrou F (2018) Smart grids in the European Union: assessing energy security, regulation & social and ethical considerations. Columbia J Eur Law 24:291 Mann R (2013) Smart incentives for the smart grid. New Mexico Law Rev 43:127–149 Ministry of Economy (2018) Proposal for an integrated national energy and climate plan. https://ec.europa.eu/ energy/sites/ener/files/documents/slovakia_draftnecp_ en.pdf Ministry of Economy of the Slovak Republic (2014a) Energy policy of the Slovak Republic (October). https://www.mhsr.sk/uploads/files/47NgRIPQ.pdf Ministry of Economy of the Slovak Republic (2014b) Energy efficiency action plan 2014–2016 with an Outlook up to 2020, 83. https://ec.europa.eu/energy/sites/ ener/files/documents/NEEAP_EN_ENER-201401001-00-00-EN-TRA-00.pdf Ministry of Economy of the Slovak Republic (2018) Proposal for an integrated national energy and climate plan. https://ec.europa.eu/energy/sites/ener/files/docu ments/slovakia_draftnecp_en.pdf Ministry of Transport, Construction and Regional Development of the Slovak Republic (2016) Strategic transport development plan of the Slovak Republic up to 2030. https://www.opii.gov.sk/download/d/sk_trans port_masterplan_(en_version).pdf Nuclear Regulatory Authority of the Slovak Republic (2016) Policy, principles and strategy for further development of nuclear safety, 1. https://www.ujd.gov.sk/

673 ujd/WebStore.nsf/7b21dbbfc64188dbc1257c3b0056b ae5 /056472daa94b 227bc1257ed0 0046c861/$ FILE/03_Policy,%20principles%20and%20strat% 20for%20further%20devel%20of%20nuclear% 20safety_ENG.pdf Potkánya M, Lesníkováa P (2019) The amount of subsidy for the electric vehicle in Slovakia through a strategic cost calculation. Transp Res Procedia 40:1168–1169 Science Applications International Corporation and U.S. Energy Information Association (2011) Smart grid around the world. 44. https://www.eia.gov/ analysis/studies/electricity/pdf/intl_sg.pdf Vandenbergh M, Stern P (2017) The role of individual and household behavior in decarbonization. Environ Law Inst 47:940–959

Slovenia: Mineral Policy Gorazd Žibret Geological Survey of Slovenia, Ljubljana, Slovenia

General Information on Slovenia The Republic of Slovenia is the Central European country with approximately two million inhabitants. It is a small country – its size is 20,273 km2. Slovenia gained its independence from the SFR Yugoslavia in 1991 and established a parliamentary democracy. The capital is Ljubljana. GDP per capita in 2014 was 18,100 €. Slovenes represents the majority of the population (83 %) and while other minorities include Italian and Hungarian. The dominant religion is Roman Catholic. Currency is euro. The main export products of Slovenia are automotive products, pharmaceuticals, cosmetics, electric and electronics equipment, iron/steel alloys and products, aluminum and aluminum alloys and products, tires, home appliances, furniture and other wood products, electricity, etc. The economic importance of transport and tourism sectors increased in the recent years.

Need of Minerals Slovenia is highly dependent on the imports of minerals and energy, especially on the import of

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metals, oil, and gas. However, aggregates, materials for the construction industry (cement, lime, clay, ornamental stone, etc.), and some industrial minerals (chert, calcite, quartz sand, etc.) are extracted within the country. One third of the electricity production comes from the domestic source – from the Šoštanj coal-fired power plant and adjacent underground lignite mine. There is no detailed analysis about the dependence of the economy to the imports of raw materials, specially made for Slovenia. Statistical Yearbook of the Republic of Slovenia states that Slovenia spent 3.3 billion € on imports of mineral fuels and lubricants (including coal, petroleum and petroleum products, natural and manufactured gas) and 18 million € on metal ores in 2012 (SI-STAT 2013). It is expected that Slovenia faces similar situation regarding the dependence of its economy on raw materials import as it is in other EU countries.

Historical Overview of Mining in Slovenia Mining and smelting on the territory of Slovenia has a long history. Archaeological artifacts from the Bronze Age, representing different tools for mining, were found next to the known mineralization occurrences in Pohorje area (Tržan 1989). During the Iron Age period (Hallstatt, 800–300 B.C.), numerous evidences of iron mining and smelting, such as casts, tools, etc., were found. Smelting and forgery have been widespread. The land was rich with bog iron ore, which can be found and picked from the ground. It can be speculated that high natural background levels of manganese in this area made iron products famous of its quality. This was also recognized by the Roman Empire, and the province, called Noricum, has maintained independence and the status “hospitum publicum” (friends of Rome) for a long period before its actual annexation. After annexation of this land into the Roman Empire, the beginning of the exploitation of lead and copper ore started. The exploitation of the biggest ore deposits on the territory of Slovenia started in the medieval

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period. The main branch was iron smelting and forging. The ore was collected on the surface and inside small mining shafts. First written evidence of iron ore mining dates back to 1381. This is the Ortenburg mining order for Savske Jame iron ore mines, which is direct evidence of mining north of the town of Jesenice. Mining activities at this location took place for more than 600 years. Mercury was found in Idrija in 1490 and mining took place until 1991. The Idrija mine produced around 13 % of total historical world Hg production, and it is UNESCO world heritage site today. First written evidence of mining in the Mežica area dates back to 1424. In 1556, Agricola published his work De re Metallica, where smelting activities in theMežica area were reported. The mine reached its peak between two world wars when it contributed 1 % to annual world lead production. Another historic mining site should be mentioned – the Litija mine. Iron slag in the area dates back to the Roman period. A tombstone from 1537 in the church in the town of Šmartno pri Litiji, 2 km southeast from Litija, dedicated to a chief miner Christof Brukherschmid, carries the inscription: “God bless noble mining.” It provides direct evidence on how important the mining was in that period. In the second half of the eighteenth century, Litija mine was one of the largest lead mine in Europe. Beside metal mining and smelting, coal mining on the territory of Slovenia started in a period between the eighteenth and the nineteenth century to provide energy needed, since mining and smelting processes used a lot of wood and large areas around mines were completely deforested. The construction of railways in 1850 brought boom to the iron smelting activities and coal mining, and the mining reached its peak between 1850 and 1900 when taking into account the number of known mining pits. The production of other metals, such as Pb, Zn, Hg, Cu, and Sb, has also gained in its importance. The most important was the Idrija mercury mine, and because of the strategic importance of mercury in that time, the mine itself contributed as much as 5 % of the Habsburg Empire’s annual budget. In the beginning of the twentieth century, many mines have been closed down due to the limited

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ore quantities and low ore grade, with the exception of the short-term impulsion in the period of the First World War because of the lack of base metals supply. Only coal mining remained an important mining branch and it contributed up to 42 % of total Yugoslavian coal production at that time (Markič 2007). Between the world wars, almost all metal production in the territory of Slovenia ceased, especially after the great depression started in 1929. Only the Mežica Pb-Zn mine remained operational, and the Idrija and Litija mines were reopened before the start of the Second World War. After the Second World War and the arrival of the communism, the emphasis was put on the mineral prospection, but no new large metal deposits were discovered. The only exception was the opening of the Žirovski vrh uranium mine; mining took place here from 1982 until 1990. As the ore processing capacities have exceeded the mining capacity, a lot of metal ores was imported from other mines in Yugoslavia. In more recent times, due to the low prices of metals and bigger environmental awareness, all mines and smelters were closed. Nevertheless, larger mines still have the capacity to be reopened, because not all of the reserves have been exploited. From the times of the Roman Empire until present, 49 different mines and 25 ore processing plants have been recognized on the Slovenian territary. Four of these were large (Idrija, MežicaTopla, Litija, and Žirovski vrh). Thirty-three historical ironworks are documented, three of these are still operational (Jesenice, Štore, Ravne na Koroškem), Fig. 1 (Budkovič et al. 2003). Despite large-scale mining activities ceased today (with the only one exception – the Velenje lignite mine), mining gave boost for many other industrial activities, which are important industrial branches in Slovenia today, such as production of construction materials, metallurgy, electrical industry, glass manufacturing (common from the sixteenth century) and ceramics (started in 1746; Kos and Žargi 1991), chemical industry and others.

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Current Situation of Mining in Slovenia and Future Outlooks The current status (year 2014) of mining activities and mineral occurrences in Slovenia is: – 130 locations of known coal occurrences, 23 of them were mined in the past, one underground lignite mine is still active (Markič 2007) – Known occurrences of uranium ore deposit, one uranium mine operational between 1982 and 1990 – 16% of Slovenian territory is geothermally perspective (Senegačnik and Šolar 2014), especially eastern part of the country in the Pannonian basin (Nádor and Lapanje 2010) – 152 known occurrences of metal mineralization (Hg, Pb, Zn, Cu, Sb, Fe, Mn and bauxite), 63 smaller metal mines, and four larger metal mines, none of them is operational today (Budkovič 2010) – 44 active extraction sites for production of materials for construction industry, 16 active extraction sites of industrial minerals, 115 active aggregates extraction sites (Senegačnik and Šolar 2014) – Very small production of oil and natural gas in the eastern part of Slovenia Different types of metal-bearing ores are found in a variety of tectonic environments and in different stratigraphic units. The oldest sulfide mineralization is from Paleozoic, where many Carboniferous and Permian polymetallic mineralization belts exist. The most important ore bodies are connected to Triassic tectonic events which caused felsic magmatism and hydrothermal mineralization in the host rocks (Drovenik et al. 1980). Younger mineral deposits with sedimentary (mainly bauxite, coal and manganese) while hydrothermal vents are also present. Pegmatite veins in NE area of Slovenia are connected to Oligocene magmatism. Mineralization containing the following known metals is common in the territory of Slovenia: Fe, Hg, Pb, Zn, Cu, U, Sb, and Ag. In the late 80s or early 90s, the largest operational metal mines, especially Idrija, Žirovski vrh

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Slovenia: Mineral Policy, Fig. 1 Locations of the past metal mines and smelters (Reprinted by the permission of authors and publisher Geological Survey of Slovenia from Budkovič et al. 2003)

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and Mežica, were finally closed down due to the extremely low price of the mineral resources on the world market and increased environmental awareness. These two events gradually decreased the economic feasibility of mining operations and not the minerals depletion itself. At the same time, almost no investments in mineral exploration deeper than approx. 300 m below the surface were made, with only few exceptions related to the exploration of natural gas. The current knowledge concerning metal deposits today relies only on data from few large mines and scattered and incomplete data about mineral prospections of smaller deposits. The geochemical data acquired in the past commonly does not comply with today’s standards. This means that many important minor and trace elements were not analyzed, because the focus of past prospection were mainly on primarily base metals (Fe, Cu, Zn, Pb, U, Al). World’s demand on metals and minerals has also changed drastically in the past decades, and what was considered as impurity 50 years ago is now regarded as a critical mineral today (for instance, Ge, Sb, Li, etc.). All of this indicates that the level of knowledge about metal deposits in Slovenia is not adequate for present needs.

Mining authority competences were the followings: mining permits, mining survey, mining water management, miner’s rights, resolving disputes, etc. After the establishment of the Kingdom of Yugoslavia, the head mining authority for Slovenia was moved to Ljubljana, with an office in Celje, and remained operational in a similar way as before. In 1929, part of the mining office competences was taken over by the Ministry of Mining and Forests (Ribnikar 1981; Cerovac 2012). After the Second World War, the past mining authority was dismantled and the Ministry of Industry and Mining took over all mining-related competences. All minerals, mining properties and mines were nationalized. The mining legislation of SFR Yugoslavia was adopted in 1966 and in 1975. Slovenia acquired independence in 1991 and adopted its own mining law in 1999 (Zakon o rudarstvu – ZRud), embedding the principles of the EU directives (Cerovac 1999). The improved version of the Mining Act was adopted in 2010 and corrected later on (ZRud-1 2014). The Mining Act (ZRud-1) sets up that all mineral ownership and competences are within the domain of the Republic of Slovenia. The Mining Act regulates the extraction of following energy and mineral resources:

Mining Legislation

1. Energy resources (coal, geothermic resources, oil and gas, radioactive mineral resources) 2. Metal mineral resources (iron ore, bauxite, zinc, lead, chromium, nickel, etc.) 3. Non-metal mineral resources (“industrial minerals”): – Mineral resources for manufacturing industry (bentonite, quartz sand, tuff, calcite, mica, china clay, chert, phosphates, etc.) – Mineral resources for the industry of construction materials (brick clay, materials for the cement industry, natural and ornamental stone, etc.) – Mineral resources for construction (aggregates and sand and gravel) 4. Other mineral resources (gemstones, sea salt, all types of secondary resources as by-products of mining and all other possible natural mineral resources)

History of mining regulations in Slovenia started with the regulations connected to coal mining activities in the eighteenth century when a taxation benefits for glass, bricks, and iron manufacturers for using coal instead of wooden-based fuels were adopted. This boosted coal production in the area and local dukes kept authorities over the mining rights, assembling mining courts and monitoring of activities. The mining headquarters for the majority of the present territory of Slovenia was established in Leoben in 1866, as well as the local office in Celje in the 30s of the eighteenth century. After the revolution in 1848, the first mining law of the Habsburg Monarchy was adopted in 1854, establishing regional mining authorities in Ljubljana, Celje, and Celovec (Klagenfurt). This law was changed in 1871 and remained relatively unchanged until the collapse of the Habsburg Monarchy in 1918.

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The Mining Act defines: – Managing authorities on national levels, National Mining Strategy (including the necessity to establish the list of the strategic resources), and Mining Registry framework – Competent bodies in the minerals management, including mining rights holders, competent bodies for mining design, and audit procedures – Prospection of mineral resources, procedures to obtain prospecting right, and public procurement procedures – Exploitation of mineral resources, permitting process including public procurement procedures to obtain mining right – Financial obligations of the holders of mining right and guarantee funds – Cancellation procedures for mining rights – Exploitation of the resources of strategic interest – Obligations before and during the mineral resource extraction and processing, including health and safety procedures, mining rescue services, technical leadership, monitoring and other components – Obligations for mine closure – Technical documentation in mining – Services in mining, with an emphasis of the regulated services, procedures to obtain authorizations for experts to prepare technical documentation, technical supervision of mining, and revision – Mining inspection, penalties. The core document that allows mining on a designated area and of designated mineral resource is the Mining Right, which is given to the legal or physical person by the government of the Republic of Slovenia. The procedure begins with the proposal for the Concession Act, which can be done either by the Ministry in charge for the mining or by the interested party. At that stage the consistency with the spatial planning acts, especially on the municipality level, must be proven. Spatial planning is driven by the spatial planning legislation (ZUreP-1 2002). The

Slovenia: Mineral Policy

definition of the mining area at municipality level must comply with other relevant aspects of planning: residential, farming, forestry and tourism areas, economy, infrastructure of public importance, environmental protection and natural conservation, cultural heritage conservation, landscaping, sport, recreation areas, and protection from natural hazards. Spatial planning process includes the participation of public on multiple levels. If certain area where minerals should be extracted is consistent with spatial planning acts, Concession Act is published, and the Mining Right can be obtained through mining concession procedure. This tender defines information about the mining area, duration of mining right, quantity of the permitted exploitation, the type of mineral resource, environmental protection, health and safety constraints, as well as the minimum financial obligations for a mining right holder and other parameters. Bidders must prepare a mine plan, which is an obligatory supplement. The essential part of the mine plan is the plan for restoration works when mining ends. An auction is required for the selection if more than one application is submitted. The successful bidder must prove that it can legally use the land (signature of the contract with owners of the plots) before actual signature of the Mining Right document. Mining Right can be extended after expiry of the contract or can cease to exist. However, to do all necessary restoration works according to the mine plan is a legal obligation of mining right holder. The Mining Act defines four special cases when public tendering procedure is not obligatory: if the interested person (legal or physical) has finished with the prospection works and he was the holder of the prospection rights; if the interested person is the owner of the land (plots) or he has the appropriate contract with the owners of the plots; if the interested person wants to modify the existing exploration/exploitation permit (including the expansion of mining plots or increasing the permitted extraction depth); or if an previously undiscovered mineral resource is found during the extraction on existing mining area and the mining right holder wants to extract it.

Slovenia: Mineral Policy

The National Mining Strategy The National Mining Strategy has not been adopted yet (April, 2015), therefore the “National Mineral Resource Management Programme – General Plan” is still valid since 2009. It sets up the general guidelines for mineral resource management. Four levels of importance of mineral resources are defined: strategically important, important for industry, important for the region (unique), and other resources. The General Plan sets up the general orientation for minerals management, based on the sustainable development principles. This includes the principles of “wiseuse” (with the emphasis of the balance between impacts on the environment, society and economy), fostering competitiveness of mining sector, promoting communication and partnership and implementing coherency to other regulations. However, this program does not define mineral priority areas, but it provides general guidelines on how to define new mining areas, covering economic, environmental and societal aspects. It also emphasizes the local supply of aggregates and other mineral resources, needed for the construction in large quantities. Mining sites should be within the supply radius of 20–30 km, should have enough reserves (at least for the 15 years of operation), and should have suitable annual production (at least 30,000 m3). Limestone quarrying should be clustered, while dolomite quarrying should be scattered.

The Mineral Resources Classification System and Reporting Standards Since Slovenia was a part of Eastern Bloc in the past, the classification system follows the Soviet system for classification of mineral resources that incorporates the degree of geological knowledge about deposit, as well as economic feasibility of extraction. When an ore body is discovered, it is classified as resource. Resources are subdivided into three categories (D2, D1, and C2), with the increasing geological knowledge about deposit, ore mineral occurrence, quantities, etc. Resources C2 with the highest level of

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geological knowledge must be proved also by exploratory techniques, such as drilling. Resources can be classified as reserves when the level of geological knowledge further increases. Three categories of reserves are defined, indicating different confidence levels in geological knowledge and quality parameters (A – 85 %, B – 70 %, and C1 – 50 % of confidence level). Reserves A and B must also be evaluated in the sense of suitability for processing and extraction. According to their economic, societal, and legal feasibility for the extraction, Reserves A, B, and C1 are divided further. On-Balance Reserves are the resources where their exploitation is economically feasible, and there are no legal barriers for the extraction. Potentially On-Balanced reserves are currently not feasible to extract; however, it is expected that they will become onbalance reserves in the near future. Off-balance reserves are those where certain economic or legal obstacles for their extraction exist. Extraction reserves are the resources where mining waste are taken into account.

International Membership Slovenia is the member of more than 250 different international organizations, including: United Nations, European Union, The Organisation for Economic Co-operation and Development (OECD), NATO, International Monetary Fund, World Bank, European Investment Bank, European Bank for Reconstruction and Development, etc. It is also a member of different research organizations, including European Space Agency and CERN.

Concluding Statement Very complex tectonic settings, poor knowledge about deep geological structures, and inadequate knowledge about geochemical composition of the area, as well as the abundance of known sites of mineralization on the surface might suggest the possibility of the existence of undiscovered ore bodies and that there might be the potential for a

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renaissance of mineral exploration and exploitation in Slovenia.

References Budkovič T (2010) Baza rudišč Republike Slovenije (The database about ore deposits in Slovenia). Paper presented at the 3rd Slovenian Geological Congress, Bovec, 16–18 Sept 2010 Budkovič T, Šajn R, Gosar M (2003) Vpliv delujočih in opuščenih rudnikov kovin in topilniških obratov na okolje v Sloveniji (Influence of abandoned metal mines and smelters to the environment of Slovenia). Geologija 46(1):135–140 (in Slovenian with English abstract) Cerovac M (1999) Slovensko rudarstvo in rudarska zakonodaja pred vstopom v Evropsko Unijo (Slovenian mining industry and mining legislation before becoming a full member of the EU). RMZ 46(2):215–218 Cerovac M (2012) Zgodovina rudarstva in rudarskih oblasti v slovenski pokrajini od 17. stoletja do samostojne države Slovenije v 21 stoletju (The history of mining and mining authorities on the territory of Slovenia from the 17th century until Slovenian’s independence). SRDIT – Zbrana gradiva članov sekcije za zgodovino Montanistike, Ljubljana, 4 pp Drovenik M, Pleničar M, Drovenik F (1980) Nastanek rudišč v SR Sloveniji (The origin of Slovenian ore deposits). Geologija 23(1):1–157 (in Slovenian with English abstract) Kos M, Žargi M (1991) Gradovi minevajo, fabrike nastajajo – Industrijsko oblikovanje v 19. stoletju na Slovenskem (Castles ends, manufacturing plants emerges – industrial design in the 19th century on the territory of Slovenia). Narodni muzej, Ljubljana, 199 pp Markič M (2007) Premogi v Sloveniji ter prikaz njihovih nahajališč na šestih izbranih kartah (Coals in Slovenia and coal occurrences plotted on the six selected thematic maps). Miner Surovine 3(1):149–165 Nádor A, Lapanje A (2010) Transboundary geothermal resources of the Mura-Zala basin – joint thermal aquifer management of Slovenia and Hungary. Eur Geol 29:24–27 Ribnikar P (1981) Rudarsko glavarstvo 1858–1945 in pomen njegovega arhivskega gradiva za zgodovino (Mining authorities between 1858–1945 and the importance of keeping the historical archives). Arhivi 4(1–2):53–60 Senegačnik A, Šolar S (2014) Stanje na področju mineralnih surovin v Sloveniji v letu 2013 (Mineral resources in Slovenia in 2013). Miner Surovine 10:10–13 SI-STAT (2013) Statistical yearbook 2013. Statistical Office of the Republic of Slovenia, Ljubljana

South Africa: Energy Policy Tržan B (1989) Pohorje – prazgodovinski rudarski revir? (Pohorje – prehistoric mining field?). Časopis za zgodovino in narodopisje 25(2):238–260 ZRud-1 (2014) Zakon o rudarstvu (s popravki) (The Mining Act (with amendments)). Off Gaz Repub Slov 14:1373–1412 ZUreP-1 (2002) Zakon o urejanju prostora (s popravki) (The Spatial Planning Act (with amendments)). Off Gaz Repub Slov 110:13057–13083

South Africa: Energy Policy Lekwapa Malatji AfriOil, Johannesburg, South Africa Robert Gordon University, Aberdeen, Scotland, UK

General Information on South Africa GDP: South Africa’s GDP for 2014 was USD350.1 billion. The manufacturing, agriculture, and mining sectors are historical major contributors to South Africa’s (SA) economy, albeit on a declining path. The main contributors to the 2015 increase in economic activity were finance, real estate, and business services and mining and quarrying. SA’s economy grew by 1.3% in 2017 compared to 0.6% in 2016. A 2.2% GDP growth in the third quarter of 2018 got SA moving out of a technical recession. In the fourth quarter of 2018, rating agencies S&P and Fitch kept SA credit rating at sub-investment grade. Source: (Statistics South Africa 2014) Social policy: SA’s social policy was historically influenced by institutionalized racism and segregation policies which discriminated against Africans. Since 1994, the post-apartheid government introduced a regime of redistributional social policies (Leubolt 2014) centered around social security; affordable housing; and broadbased black economic empowerment. Culture of the population: SA is a diverse society with a multicultural orientation. There are 11 official languages which are equal under the Constitution.

South Africa: Energy Policy

Religion: The Constitution guarantees the right to religious beliefs. SA is one of the most religiontolerant societies, with very few incidents of religious conflicts. Education: In SA, schooling is compulsory for children aged 7–15 years (South African Schools Act 1996). Currently, education is free in public schools. On average, 92% of learners under 18 have completed primary education, and SA has a fair educational attainment up to grade 11, by international comparisons. Some of SA’s universities are regarded as the best in Africa and are recognized internationally. Social structure: One of the salient characteristics of SA is its cultural pluralism. Social stratification shifted from race to class namely: the poor/unemployed/lower class; working class; (black) middle class; upper middle class; and the rich economic oligarchy who owns the Minerals Energy Complex and financial sector (Seekings 2003; Human Sciences Research Council: South Africa Social Attitudes Survey 2009; van den Berghe 2004). Specific features: SA is the most industrialized African country coupled with its geographic advantage of being surrounded by the Indian and Atlantic oceans giving the country port terminal facilities. Population trends: According to the latest statistics (Census 2011) Source: (Statistics South Africa: Census 2014), SA’s population grew from 45 million in 2007 to a mid-2015 estimate of 54.96 million, with an unemployment rate of 24.5% as of quarter 4 – 2015. Life expectancy grew from 54 years in 2007 to 57 years in 2010 due to better living conditions and HIV prevention interventions. Infant mortality rate was 25% in 2011. Resource efficiency: New technologies such as Platinum Group Metals (PGM) fuel cells, CoalTo-Liquids (CTL), and Gas-To-Liquids (GTL) are some of the innovative means of optimizing the utilization of mineral resources to contribute to sustainable development. The National Energy Efficiency Strategy sets the following sectoral energy efficiency targets: industry and mining (15%); commercial and public buildings (15%); residential (10%); and transport (15%).

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Need for Nonrenewable and Renewable Resources Energy Mix SA’s energy mix consists of coal-powered electricity (72%) and nuclear-powered electricity produced by state-owned power utility Eskom (3%); natural gas (3%); refined petroleum products including gas to liquids (22%); and renewable energy procured from independent power producers (IPPs)(