Articles Posted in Mining

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A multinational mining company with operations in one or more Latin American countries – countries with diverse cultures and widely different stages of social and economic development – is invariably faced with significant challenges that dictate the need for periodic legal checkups or diagnoses of its projects on a case by case basis.

Challenges Faced by Multinational Mining Companies

Some of the challenges multinational mining companies face in Latin America include the following:

  • Communication problems with the company’s Latin American offices, often as a result of language barriers and/or the failure of in-country personnel to recognize critical timing requirements, may make it difficult to obtain complete and accurate information on the status of in-country operations.
  • The locations of the company’s Latin American offices – often far removed from the company’s home office – frequently result in host country personnel making decisions on their own, without seeking appropriate senior management input or approval.
  • Home office executives and their North American counsel may be unaware of potential problems faced in a given Latin American country and the consequences imposed by the host country’s legal system. All Latin American countries operate in civil law jurisdictions (there are a variety of types of civil codes), which may be unfamiliar to North American common law
  • Legal documents in Latin America may be extremely formalistic and rigid, in large measure because they are based on civil law. These documents tend to be sparsely worded, often accompanied by unacceptable explanations that omitted items are “understood” or “unnecessary.”
  • The laws in a given Latin American country may provide severe remedies (g., prejudgment attachment of bank accounts, pretrial detention or even criminal proceedings) that can significantly disrupt or paralyze a Company’s in-country operations.

Goals of an Effective Mining Legal Diagnosis

Some of the goals sought to be achieved in connection with an effective mining legal diagnosis of a mining company’s Latin American operations include: Continue reading

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Effective Diagnosis for Mining Companies to Achieve a Social License to Operate: Who should perform the diagnosis? What to do after the investigation?

Final in a series of articles about mining companies achieving an effective social license to operate

by Jordi Ventura

See Part 1: What is a Social License to Operate (SLO) and How Do Mining Companies Achieve an SLO?

See Part 2: Effective Diagnosis of Social License to Operate – Off-site preparation and on-site investigation

What happens after the investigation?

It is imperative that a follow-up SLO diagnosis report be prepared as soon as practicable after the on-site visit (and, as a time and cost saving measure, perhaps the SLO diagnosis report should be initiated during the visit). The SLO diagnosis report should contain, at a minimum, the following:

  • a description of the scope and methodology employed in conducting the on-site investigative work SLO diagnosis;
  • the on-site investigative work findings and conclusions (making sure that they are duly supported);
  • concrete recommendations for correcting problems/issues encountered during the on-site investigative work; and
  • with the input and assistance of experts in the sustainability concepts, proposals for the adoption of key concepts.

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Effective Social License to Operate: Off-site preparation and on-site investigation

Second in a series of articles about mining companies achieving an effective social license to operate

by Jordi Ventura

See Part 1: What is a Social License to Operate (SLO) and how do mining companies achieve an SLO?

See Part 3: How Mining Companies Can Achieve an Effective License to Operate in South America – Who should do the diagnosis?

 

An effective diagnosis for a Social License to Operate (SLO) will include off-site preparatory work and well as on-site investigation.

Off-site preparatory work

In order to ensure a quick, successful and cost-effective investigation, the SLO diagnosis initially involves preparatory work that takes place away from the proposed mining project and prior to any significant presence of the mining company on the ground. This preparatory work consists of, at a minimum, the following:

  • meeting with relevant members of the company’s senior management team to:
    • ascertain what, if any, endeavors have already been conducted by the company or additional companies (mining or otherwise) concerning the SLO and related matters, and obtain any copies of all documentation;
    • discuss any particular areas of concern that the company may have; and
    • agree to an overall game plan that includes expected deliverables, deadlines and costs.

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We are pleased to announce that Jordi Ventura has joined the Natural Resources and Mining Group at Jeffer Mangels Butler & Mitchell LLP (JMBM), as Of Counsel. Jordi’s practice focuses on the legal needs of the mining industry, with an emphasis on representation in Latin America.

His in-depth knowledge of the legal, business and financial aspects of the mining industry strengthens our firm’s mining practice, and his wide-ranging experience with mining projects in Latin America brings tremendous value to our mining clients.

Read Jordi’s professional biography here. He is licensed in Utah and Colorado; he is not licensed in California.

Today, we bring you the first in a series of articles in which Jordi Ventura explains how mining companies can achieve an effective social license to operate.

Kerry Shapiro, Chair, JMBM’s Natural Resources & Mining Group

HOW MINING COMPANIES CAN ACHIEVE AN EFFECTIVE “SOCIAL LICENSE TO OPERATE” IN LATIN AMERICA – PART 1

What is a Social License to Operate (SLO) and How Do Mining Companies Achieve an SLO?

First in a series of articles about mining companies achieving an effective social license to operate

by Jordi Ventura

See Part 2: The Effective Social License to Operate – Off-site preparation and on-site investigation

See Part 3: How Mining Companies Can Achieve an Effective Social License to Operate in Latin America- Who should do the diagnosis?

When embarking on a new project in Latin America, a multinational mining company needs to understand it is entering into a pre-existing yet dynamic environment, with established histories and cultures. Complex political, social and economic relations among indigenous groups and other local communities can be thrown into disarray by the introduction of a mining project and the development process that accompanies it. Community relations can become politicized and complicated, and can create conflicts that ultimately cost the company time, money and PR problems.

This is not news to mining companies. In Ernst & Young’s “top risks facing mining and metals in 2019-20,” license to operate is listed as the #1 risk, up from #7 the year prior.

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By Kerry Shapiro

Last week, President Trump signed an executive order with potentially wide-ranging implications for the mining industry and many other affected stakeholders. The order directs the Department of the Interior (DOI) to review national monuments, particularly those larger than 100,000 acres, that were designated since January 1, 1996, and to recommend if any of those designations should be modified, resized or rescinded.

The Bears Ears National Monument Controversy

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BLM releases maps showing 1.3 million acres of proposed mining withdrawal

On January 13, 2017, the U.S. Bureau of Land Management (“BLM”) released maps showing the areas that BLM, on December 28, 2016, proposed to withdraw from mining. The withdrawal is designed to “protect nationally significant landscapes with outstanding cultural, biological, and scientific values” and is part of the Desert Renewable Energy Conservation Plan (“DRECP”).

What does the proposed withdrawal do?

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California Mining Update

AB 1142 and SB 209: What operators need to know about SMARA modernization
Changes will be effective January 1, 2017

by
Kerry Shapiro


This article was first published in The Conveyor magazine, a publication of CalCIMA.

On April 18, 2016, Governor Jerry Brown signed into law two bills that together provide the most significant update to the California Surface Mining and Reclamation Act (SMARA) in 25 years.  Assembly Bill (AB) 1142 (Gray) and Senate Bill (SB) 209 (Pavley) are the outgrowth of more modest changes in recent years, and of a promise by the Governor, in 2013, to reform SMARA from “top to bottom.”  Although the bills are not effective until January 1, 2017, operators must be aware of their changes and start planning for their implementation.

Most important in the near term are changes to SMARA’s inspections process, financial assurance approval process, reclamation plan requirements, and inspector qualifications.

Inspections Process

Beginning in 2017, operators must request, on their annual reports, an inspection date within 12 months of their prior inspection.  For inspections conducted in 2016, the 12-month date will be triggered for 2017.

Financial Assurances

The annual inspection date is the starting point for wholly new annual financial assurance review and approval processes.  Note the plural—under AB 1142 and SB 209, SMARA will now have (1) a process for financial assurance cost estimates (FACEs) for new or amended reclamation plans and (2) another process for annual FACE updates.  Each process sets new steps and deadlines that are tied to the annual inspection date.  Moreover, each process provides the Department of Conservation (DOC) a new right to formally consult with lead agencies and operators during the FACE review process, and to give DOC a new right to appeal a lead agency’s approval of a FACE.  Annual financial assurance review was already a SMARA requirement, but the new legislation formalizes the review process to provide greater clarity and transparency.

Corporate self-bonding is now permitted for companies worth more than $35 million, subject to regulations which will be approved by the SMGB.  Multiple operations can combine their assets to pass the financial test, but self-bonding is limited to 75% of the value of an operator’s FACE(s). Continue reading

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California Mining Update

AB 1142 and SB 209: What lead agencies need to know about SMARA Modernization
Changes will be effective January 1, 2017

by
Kerry Shapiro

 

On April 18, 2016, Governor Jerry Brown signed into law two bills that together provide the most significant update to the California Surface Mining and Reclamation Act (SMARA) in 25 years.  Assembly Bill (AB) 1142 (Gray) and Senate Bill (SB) 209 (Pavley) are the outgrowth of more modest changes in recent years, and of a promise by the Governor, in 2013, to reform SMARA from “top to bottom.”  Although the bills are not effective until January 1, 2017, lead agencies and operators must be aware of their changes and start planning for their implementation.

Most important in the near term are changes to SMARA’s inspections process, financial assurance approval process, reclamation plan requirements, and inspector qualifications.

Inspections Process

Beginning in 2017, operators will request, on their annual reports, an inspection date within 12 months of their prior inspection. (For inspections conducted in 2016, the 12-month date will be triggered for 2017.)  Lead agencies may reschedule inspections, and will have 90 days — not 30 days — to file Notices of Completion with the Department of Conservation (DOC).  However, the additional time comes with a catch: lead agencies must use their Notices to describe any problems at operations and their plans for correcting them.

Financial Assurance Approval Process

The annual inspection date is the starting point for wholly new annual financial assurance review and approval processes.  Note the plural—under AB 1142 and SB 209, SMARA will now have (1) a process for financial assurance cost estimates (FACEs) for new or amended reclamation plans and (2) another process for annual FACE updates.  Each process sets new steps and deadlines, tied to the annual inspection date.  Both processes provide DOC a new right to formally consult with lead agencies and operators during the FACE review process, and also give DOC a new right to appeal a lead agency’s approval of a FACE.  Annual financial assurance review was already a SMARA requirement, but the new legislation formalizes the review process to provide greater clarity and transparency. Continue reading

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by Kerry Shapiro

This article was first published in The Conveyor, a publication of the California Construction and Industrial Materials Association.

Mining companies are subject to myriad requirements under the Surface Mining and Reclamation Act (SMARA) and implementing regulations that can trip up even the most diligent of operators from time to time. When a potential violation occurs, SMARA holds that either the lead agency or the Department of Conservation (read OMR) may initiate enforcement proceedings by issuing a notice of violation (NOV). All too often, the process results in an order to comply issued against the operator, which in turn can jeopardize the operator’s AB 3098 List eligibility. Removal from the AB 3098 List forecloses an operator’s ability to sell materials to State and/or local agencies, often a major component of many operators’ customer bases.

Enter SB 447. Under this new CalCIMA-driven legislation operators can maintain AB 3098 List eligibility while working to resolve enforcement issues required by an order to comply, and may now also negotiate the terms of, and stipulate to, such an order. These are called stipulated orders to comply.

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by Kerry Shapiro, Esq.

The recent submittal of significant proposed revisions to California’s mining law, the Surface Mining and Reclamation Act (“SMARA”), signals potentially broad-reaching changes to the statute. On February 21, 2014, Senator Fran Pavely (D) introduced SB 1270, a bill proposing to overhaul various sections of SMARA. SB 1270 proposes fundamental changes to SMARA. Click here for a copy of SB 1270.

If these changes go through, mine owners and operators will be subject to a new regulatory system under which the State will assume a far greater and centralized role in various aspects of SMARA, including mine inspections, enforcement, and establishment of financial assurance mechanisms. The mining industry also faces the likely prospect of increased carrying costs, arising from such proposals as changes to the annual reporting fee structure (proposed at a minimum of $1,000/year on a per-acre basis, and with no maximum cap), to increased ability to appeal decisions relating to the State’s “3098” list.

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