Mining rights and title in Chile

Mining rights and title

To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?

The Chilean state has the exclusive ownership over all mines, excluding surface clays, within the territory of Chile (see question 5). The exploration and exploitation of such substances may be granted through a judicial procedure to any person or company by means of a mining concession. Both kinds of concession are given the same status as a real estate property right and any encumbrance or appropriation by third parties is susceptible to be challenged at the courts. Also, the said concession only grants rights on the mineral substances but not on the surface land in which they are located. In order to obtain the necessary rights to execute the exploration or exploitation over the surface land, the Chilean Mining Code sets forth a system of mining easements, which are granted through a judicial procedure, contemplating the necessary compensation to the surface land owner.

Also, as mentioned in question 5, liquid and gaseous hydrocarbons, lithium or deposits of any kind in territorial waters and deposits of any kind located in whole or in part in areas that, by law, have been classified as important to national security with mining effects, shall be excluded from mining concessions. Regarding the latter substances, not subject to a mining concession, they may be explored or exploited directly by the state or by one of its companies, by means of an administrative concession or by special operation contracts under the requisites and conditions set by the president of Chile specifically for each case by a Supreme Decree.

Finally, regarding surface clays, sands, rocks and other materials directly used for construction, they belong to the owner of the surface land. However, if the surface land is under public administration, such as a municipality, the municipality shall be entitled to grant extraction permits over these materials.

What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?

Several agencies hold information related to geographic, economic or commercial data about the mining industry. Generally, this information is public and any private concern may request it from the relevant authority.

Among the most important information holders are the Undersecretary of Mining, Sernageomin and the Chilean Copper Commission (Cochilco).

What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?

Under Chilean legislation, private parties may acquire several mining rights. These are:

• mining claims (mining exploitation concessions under constitution process);
• mining petitions (mining exploration concessions under constitution process);
• mining exploration concessions (reconnaissance licences); and
• mining exploitation concessions (mining licence).

All mining rights are acquired on a first-come, first-served basis.

Mining concessions are considered as real immovable rights, having the same legal status of a property, but only regarding the mineral substances. Also, mining concessions entitle their holders to request the necessary access over the surface land through the constitution of mining easements for both exploration and exploitation concessions, with the obligation of adequately compensating any damage to the land owner. To this rule, however, some exceptions may apply. Additionally, the exploration licence grants preferential rights for requesting an exploitation licence.

Concerning the main obligations of the rights holder, they are obliged to pay the necessary annual fee for either exploration or exploitation licences. The avoidance of complying with this obligation to obtain and comply with all the pertinent administrative authorisation such as environmental approvals, health and safety procedures, labour, taxation and municipal regulation may cause the loss of the concession.

What is the regime for the renewal and transfer of mineral licences?

An exploration mining concession is granted for a period of two years and is renewable for another two years. Holding this type of concession gives priority to those applying for an exploiting mining concession, which is granted to the requesting party without a time limit. Both kinds of concession are granted after a judicial writ is submitted to the competent court. Under Chilean law, a concession is equivalent to a real estate property right, but differs as to the dominion over the land where it is constituted.

Concessions can be transferred to any private or public entity fulfilling the formal requirements, which are similar to any sale of property in the related regulation. This kind of right is also susceptible to be given as collateral to any kind of commercial operation.

What is the typical duration of mining rights?

Regarding the duration of mining rights, see question 11. Mining concessions cannot be revoked or cancelled by the government due to the property right that its holder has over such concessions, which is guaranteed by article 19 No. 24 of the Chilean Constitution.

Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?

There are neither special requirements nor distinctions between nationals of foreign countries or Chilean parties. As such, there is no necessity or desirability of having a domestic partner for the activity.

How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?

Mining rights are protected in the same way as property rights and others of similar characteristics. There are no special courts concerning mining, because it is considered part of the general jurisdiction of the civil courts of each district.

The Chilean judicial system is independent and respectful of the rule of law and due process.

Chilean law follows the rules of the New York Convention of Recognition and Enforcement of Foreign Arbitral Awards 1958, which makes international arbitration awards fully valid and enforceable in the country.

What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests?

The holder of a mining concession may acquire any kind of rights contained in the Chilean legislation over the surface property. Therefore, the interested party can constitute dominion, settle easements or pact leases over it. Nevertheless, the proprietor of the surface land is entitled to ask the mining licensee to remedy any damage caused by the operation of the mine; however, he or she cannot oppose the request for mining easements.

The Mining Code also considers the possibility for a series of easements the licence holder can impose on the landowner of the surface land. Examples include the permit to transit and to construct pipelines, ports and railways, among others.

Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?

There is no special right for the Chilean government and its agencies to engage in mining activities. Moreover, the relevant regulation forces the state to act through state-owned companies, which require a special law to exist and are treated commercially as if they were private companies.

There is no local listing requirement needed for mining projects.

Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?

The Chilean Constitution establishes that, only in cases where there is a public need, is it possible to proceed on expropriation of any right of particulars. In the case of a mining licence, the legislation establishes a procedure to protect and to justly determine the price of the dispossessed. The procedure is both administrative and judicial and it is designed to reduce the eventual involvement of the government in the final decision. The relevant legislation is the Organic Law of Expropriation Procedures (Decree No. 2,186 of 1978).

This piece of legislation follows the international standard for prompt, adequate and effective compensation in the case of expropriation.

Are any areas designated as protected areas within your jurisdiction and which are off-limits or specially regulated?

There is no cohesive body of legislation containing regulations regarding protected areas. Therefore, there are several classifications of areas that are restricted to economic exploitation or human activities. This structure is made considering the location’s importance either environmentally or culturally.

These areas are well delineated by the relevant authorities, and the level of human activity they can be subject to is variable with consideration of their characteristics. Some of the protected areas allow economic activities, yet there are still specific restrictions or requirements that must be fulfilled beforehand (eg, in protected indigenous or cultural areas).

Another relevant regulation is set out in article 17 of the Mining Code, which lists several authorities from which the mining company must request permits before proceeding to extraction activities.

Generally speaking, most of the environmentally restricted areas are located in the southern provinces of the country, away from the populated centres, which, considering that the more active mining provinces are in the northern part of the country, make them of limited interest from the mining perspective.