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Draft Law on Mining and Geological Exploration: Protection of Mineral Resources, More Efficient Procedures, and Increased Revenues

Draft Law on Mining and Geological Exploration

Serbia
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In line with the latest estimates, the ore reserves in Serbia are valued at 200 billion dollars. After copper ores, the most significant metal ores are lead and zinc ores which are currently exploited in 5 active mines. Great attention has been brought to the excavation of jadarite, a mineral containing lithium and boron, at a location near the river Jadar, which is estimated to contain ten percent of the total lithium supplies discover throughout the world so far.

Mining and geological exploration represent one of the most important sectors of Republic of Serbia’s economy and the primary goal of amendments to the Law on Mining and Geological Exploration (hereinafter: Draft Law), whose adoption is expected any time, is further development of this area, as well as attracting investments, quicker entry into exploration, and subsequently into exploitation.

The Law proposal anticipates first and foremost a significant acceleration of the procedure of issuing approvals and the option of electronic submission of entire documentation for the parties. For example, the expected effect of amendments is that, instead of the current 150 days, the approvals be issued in just 15 days which would increase the efficiency of the entire procedure tremendously. 

Further on, the Law introduces significant novelties regarding environmental protection in accordance with Republic of Serbia’s adopted goals of the in the direction of establishing climate-neutral development before year 2050. Certain members of the public find these novelties to be insufficient. Specifically, as emphasized by the environmental protection associations, should the new Law be adopted, the damage to the environment will be enormous, having in mind that the Draft Law fails to prescribe adequate compensation, creating a possibility for detriment through loss of water resources, land, oil erosion etc.

In addition, a crucial element related to the scope of mining considers the increase of the mining lease which in Serbia is one of the lowest in Europe. Bearing in mind that mineral resources represent a public good of Serbia’s citizens, the mining lease rate is prescribed by the Law on Fees for use of Public Goods. The basis for mineral lease is the income which the company has generated from exploited or sold mineral raw materials, and the rates for the mineral lease are determined in percentages and are currently among the lowest in Europe.

The Draft Law finally introduces an expert and professional authority which shall be competent for verification of mineral raw material resources and reserves. Further on, the Draft Law anticipates the reduction of exploration rights duration from the maximum eight years to five years. The intention is to prevent an extended use of an area by an entity which has not demonstrated serious intent regarding geological explorations and exploitation of mineral raw materials.

Finally, the Draft Law introduces for the first time the option of concluding an investment agreement, i.e., an agreement concluded by the Republic of Serbia, represented by the Serbian Government, and investor in the exploitation of mineral raw materials.

By Milos Vulic, Partner, Vulic Law