The reform of the French mining code is consistent with the Ministry of the Industry’s desire expressed in 2012 to see France “once again become a country in which mines can be operated”. Going beyond a simple expression of political determination, this trend appears to be confirmed in practice. In June 2013, Variscan, an affiliate of the Australian company Platsearch, obtained an exploration permit principally for the exploration of copper and gold potentially contained in the subsoil of the Sarthe and Mayenne administrative departments, the first mining permit granted in Metropolitan France in almost thirty years, and a second exploration permit for gold and silver in the Maine and Loire administrative departments. Likewise, Cominor, an affiliate of La Mancha Resources, was granted an exploration permit for gold in the Creuse administrative department in November 2013.
Although the French extractive industry is currently focused on aggregates, with some 400 million tons extracted yearly to support the construction industry, Metropolitan France’s subsoil contains significant resources of base metals and precious metals such as gold, copper and iron ore, among others.
The petroleum industry in France, with a production averaging 875 000 barrels of crude oil per year, spread over approximately sixty fields in operation, is also a sector which the Ministry would like to see developed further.
With this in mind, last February, Arnaud Montebourg, Minister of Industry, announced the creation of the French national mining company “Compagnie nationale des mines de France” (CMF), with the purpose of prospecting and exploiting the French subsoil, both in Metropolitan France and in its overseas administrative departments, territories and collectivities. The CMF will also have the goal of carrying out mining operations in Africa, Central Asia and South America.
This briefing summarises the key provisions of the reform of the French legislative mining framework, the draft of which is likely to be presented to the French Parliament in the course of Spring 2014.
Current mining regime
The current French mining code (the Mining Code), initially adopted in 1810 but modified several times since then, is the result of the codification of its legislative provisions effected by ordinance in January 2011. Together with implementing decrees n°2006-648 and n°2006-649 dated 2 June 2006 relating to mining titles (respectively Decree n°2006-648 and Decree n°2006-649), it constitutes the mining law applicable in France, although its overseas administrative departments, territories and collectivities are, in certain instances, governed by other specific legislative and regulatory provisions which may vary or supplement those of the Mining Code and the aforementioned Decrees.
A unique characteristic of the Mining Code is its broad scope of application, as it not only covers the exploration and exploitation of mineral substances or fossils set out in article L. 111-1, but also liquid or gaseous hydrocarbons, marine aggregates and geothermal deposits. However, the exploration and exploitation of liquid or gaseous hydrocarbons by hydraulic fracturing (“fracking”) was banned by a law dated 13 July 2011, which itself was confirmed by a decision of the Constitutional Council dated 11 October 2013.
Areas of reform
The planned reform of the Mining Code, which was announced by the Government in the summer of 2012, will retain a large part of the content of the Mining Code by preserving the “French mining model” which is based on the ownership of the subsoil by the State (beneath 30 metres) and the grant of exploration or exploitation permits (referred to as “titles” (titres)). However, the proposed bill would, if enacted, effect several significant changes, relating principally to the strengthening of public participation, an improved consideration of environmental constraints and the enhancement of legal certainty for the holders of mining titles and the simplification of administrative procedures. The Draft also proposes a new tax structure, although this subject will not be analysed here.
Following the circulation in July 2013 of a first draft introducing the principle of a new mining code, a complete draft of the new proposed mining code, excluding however the specific provisions applicable to French overseas administrative departments, territories and collectivities (the Draft), was delivered to the Government on 5 December 2013 by the working group headed by Mr. Thierry Tuot (the Working Group).
Mining exploration and exploitation activities are currently governed by the two mining titles provided in the Mining Code, namely the exclusive exploration permit (“permis exclusif de recherche” or PR) for the exploration phase and the concession (the Concession) for the exploitation phase.
Granted by ministerial order for a maximum term of five years renewable twice for maximum terms of five years each, the PR grants an exclusive and assignable right to carry out all exploration works within the perimeter it defines and to freely dispose of the products extracted during exploration and sampling. While preserving its current characteristics, the Draft changes the PR’s name to “permis d’exploration” (exploration permit). The Draft also proposes to introduce the right to carry out exploration and prospection activities on a non-exclusive basis, subject to the declaration, registration and authorisation procedures provided in the text.
Under the Mining Code, the Concession is granted by decree issued by the Council of State for an initial maximum term of 50 years, which may be subject to successive renewals of a duration shorter than or equal to 25 years, and confers on its holder, within the perimeter of the Concession, an exclusive right to explore and exploit the substances set out in the granting decree. It is assignable and leasable but may not be mortgaged. Without revising its features, the Draft changes the Concession’s name to exploitation permit (“permis d’exploitation” or PE) and provides for the granting thereof by the Minister in charge of Mines. A transitory provision provides that existing concessions shall expire on 31 December 2018, but that, to the extent such concessions relate to deposits in production, their extension in the form of a PE is granted ex officio in compliance with the provisions of the Draft.
It is noteworthy that the Draft maintains the principle according to which the holder of a PR is exempt from a competitive tendering at the time of the application for a PE for all or part of the perimeter covered by the relevant PR.
Grant of mining titles
One of the Draft’s main innovations relates to the creation of a “procedural ruling” (“rescrit procedural”), permitting the obtaining of a judicial validation by the Administrative Court of Appeal of administrative decisions. This procedure is intended to resolve in advance the legal irregularities of any mining decision, including the grant of titles. Consequently, in the event of a favourable judgment, the relevant administrative decision will be definitively validated, and will therefore be no longer subject to any appeals, whether by way of cancellation or exception. This provision, which gives jurisdiction to the judge to authorise or prohibit a mining operation, has however been criticised, as it could conflict with the constitutional principle of separation of powers.
The Draft also introduces a process of assessment, during the procedure for the granting of the mining title, of the technical and financial capacities of the person to be designated as the operator. According to the executive summary annexed to the Draft by the Working Group, this would result in the rejection of applications filed by subsidiaries incorporated as “sociétés par action simplifiées” (simplified joint stock companies), the rules of operation of which, particularly concerning the constitution of share capital, would not offer sufficient guarantees for the grant of a mining title.
Finally, the Draft provides for an improvement in the time periods for the grant of mining titles with the implementation of a system in which applications are considered as having been tacitly approved in the case of silence of the administration for more than three months following the date of filing of the application.
Supervision by the administration
In order to focus future debates, the Draft creates a High council of mines composed of all the “stakeholders” (“parties prenantes”), to which any questions regarding the scope of the Mining Code, the implementing texts, as well as the administrative decisions related to exploration and exploitation may be referred.
The Draft also provides for the elaboration of a national mining valorisation and subsoil preservation scheme, the purpose of which will be close to the already existing mining orientation scheme in French Guiana. The outlines of this valorisation scheme however remain unclear.
In addition, the Minister in charge of Mines would be given authority to make all decisions relating to mining titles and works, which are currently the responsibility of the prefectural authority.
Currently, in addition to obtaining a mining title, the title holder must, before carrying out certain exploration or exploitation works, either file a declaration or obtain an authorisation from the administration.
In view of broadening the administration’s areas of control for mining works, a recent draft decree already provided for the amendment of Decree n°2006-649 in order to subject mining exploration drilling and hydrocarbons exploration drilling to authorisation rather than declaration, as such operations are considered potentially more damaging to the environment.
The Draft follows this reasoning regarding the control of the administration by proposing to subject mining works, following the example of classified installations for the protection of the environment (“installations classées pour la protection de l’environnement” or ICPEs), based on their qualification in a list set by decree of the Council of State, either:
- to authorisation for works presenting serious danger or drawbacks to the environment, security, public health and the interests of the population (together, the Protected Interests);
- or to simplified authorisation (recording) for mining works presenting serious dangers and drawbacks to the Protected Interests when such dangers and drawbacks can be prevented by compliance with general instructions promulgated by the authorities;
- or to simple declaration for mining works which, while not presenting serious dangers or drawbacks to the Protected Interests, must nevertheless comply with general instructions promulgated by the authorities.
With respect to the procedural aspects of the authorisation, the Draft refers to the provisions of the Environment Code on ICPEs.
Furthermore, the Draft proposes, when mining works are not compatible with the applicable urban planning rules or require prior expropriation, to subject them to the procedures for declaration of public utility. Such authorisations will thus be delivered in application of the Urban Planning Code and will be equivalent to construction permits.
The opening of mining works subject to authorisation is currently conditional on the elaboration of an environmental impact study and a public enquiry provided for under the Environment Code. The grant of a Concession is also subject to a public enquiry, and, since 1st January 2013, a law amending the Environment Code and aiming at ensuring compliance with article 7 of the Environmental Charter subjects the grant of a PR to compliance with the provisions ensuring the participation of the public. This alignment of the conditions for the grant of PRs and Concessions (PE under the Draft) is maintained in the Draft.
The Draft also proposes to strengthen the procedure for the information and participation of the public prior to the possible grant of a mining title or an authorisation for mining works. This special and exceptional strengthening would take the form of a “temporary investigative group” (“groupement momentané d’enquête”), a legal entity created by the enforcing authority. Composed of all the “stakeholders” (“l’ensemble des parties prenantes”), the group would be in charge of appraising the grant of the mining title or the authorisation to commence the works and of issuing a recommendation to the enforcing authority on the decision to be made. The group is required to provide its conclusions within six months of its creation, unless such timeframe is extended for an additional period of six months by order of the Minister. This strengthened procedure would thus suspend the processing of applications for mining titles or mining works declarations.
Protection of the environment
The constitution of a financial guarantee for mines comprising waste management facilities in order to guarantee the preservation and eventual rehabilitation of the site, imposed by the Mining Code, is maintained in the Draft.
This is also the case of the provisions providing, at the end of each portion of works, at the end of the works or at the end of the exploration or production, for the application of a particular procedure conducted by the Prefect, by which the explorer or operator must provide the security and environmental protection measures it intends to implement in order to cease the disturbances and nuisances caused by the mining operations, to prevent the risks of occurrences of such disturbances and to provide for the possibility of the exploitation being taken over. The explorer or operator will also remain required to remit to the local authorities the hydraulic facilities it deems necessary or useful to the sanitation and distribution of water, which transfer is accompanied by the payment of an amount corresponding to the estimated cost of the first ten years of operation of such facilities.
As regards liability, the Mining Code provides for a presumption of the liability of the explorer or operator, or failing that, the holder of the mining title, concerning the damages caused by its operations, which may be exempted only where such damages have a “foreign cause”, without such liability being limited to the perimeter of the mining title or its period of validity. The presumption of liability will be applied even when the mining works have been carried out in the state of the art and in the absence of any fault, as long as it is proven that the damages are actually the direct consequence of the mining works.
In addition, as contained in the law dated 1st August 2008, and based on the “polluter pays” principle, title VI of the Environment Code (articles L. 160-1 and following) provides a mechanism for implementing the liability of any legal entity running a mining operation, causing damages to the environment, whether for example causing serious harm to human health, or having a detrimental effect on the quality of water. A presumption of liability has been established by such provisions, which must be taken into account in the framework of mining exploration or exploitation, although it is specified that the scope of such liability and the conditions for its application must be carefully considered, in each particular case, to assess whether a risk exists in respect of this liability regime.
The current liability regime was the subject matter of a draft bill presented to the Senate on 21 September 2012, proposing in particular a wider definition of mining damage, including all damages resulting from a mining operation, whether direct or indirect. On this subject, the Draft extends the field of potentially liable persons to the “beneficiary of the exploitation” or “the person who actually assumed leadership”. The Draft however maintains the principle of exemption for a “foreign cause”.
The Draft also introduces a national post-mine solidarity fund to provide compensation to the victims of damages resulting from risks for which compensation is not required to be borne by the persons responsible.