The United States is rich in natural resources and home to some of the world’s largest reserves of copper, coal, gold, and silver, producing over $90 billion of these minerals in 2021. Mining has been a vital industry in the United States for centuries, and the government has established numerous laws and regulations to govern mining activities. This insight contains a snapshot of the framework that governs mining in the United States.
Framework – The General Mining Law of 1872 is one of the oldest and most significant mining laws in the United States. It allows individuals and companies to stake a claim on public lands that contain minerals, granting the right to explore, extract, and sell minerals from their claims, subject to certain conditions and requirements.
To obtain a mining claim under the General Mining Law, a person must meet specific criteria, which include evidence of a valuable mineral deposit, performing work on the claim, and paying annual maintenance fees. Numerous other federal laws govern mining operations including the Clean Water Act, the Clean Air Act, the Mine Safety and Health Act, and the National Environmental Policy Act.
States also have their own mining laws and regulations, which vary depending on the state and the type of mining activity. Some states, such as Alaska and Nevada, have significant mining industries and have developed extensive regulatory frameworks to oversee mining activities.
Mining Rights – The mineral rights available in the United States vary depending on the location and ownership of the land. Generally speaking, the terms “leasable,” “locatable,” and “salable” describe the different ways that mineral resources can be acquired and managed by individuals or companies.
Leasable minerals are owned by the federal or state government and can be leased for exploration and development. See information on leasable minerals below.
Locatable minerals can be claimed and owned through the process of staking a claim, through staking out an area where mineral deposits may exist and then obtaining a legal right to mine and extract them.
Salable minerals are owned by private individuals or companies and can be sold on the open market. This includes common minerals such as gold, silver, copper, and iron, as well as diamonds and gemstones.
Classifying minerals as leasable, locatable, or salable will depend on various factors, including the ownership of the mineral rights, the local legal framework for mineral extraction, and the characteristics of the mineral deposit.
Who administers the rights? – Generally, if minerals are located on federal lands, the mining rights will be administered by the Bureau of Land Management (BLM). Nevertheless, laws relating to mineral rights can vary by state, so it is important to determine the specific mineral rights that are available in a particular area. Further, bear in mind that mineral rights can be owned separately from surface rights, so a person can own the rights to the minerals beneath the surface of a piece of land while someone else owns the rights to the land itself.
What is mineral leasing? – The Mineral Leasing Act of 1920 provides for a leasing system which applies to certain minerals on federally owned lands managed by the BLM, the U.S. Forest Service, and other federal agencies. Such ‘leasable minerals’ include oil gas, coal, phosphate and sulfur, and other minerals that the Secretary of the Interior determines to be leasable. The Act requires that leases be awarded through a competitive bidding process and establishes guidelines for royalties, rental fees, and other payments associated with mineral leasing.
Foreign Ownership – Only U.S. citizens or a company incorporated in the U.S. may own a mining title. There are no restrictions on transfers or change of control of US mining rights.
Fiscal – To encourage the development of the western United States, the 1872 law did not impose royalties on the extraction of minerals from public lands. To date, efforts to introduce such royalties have been unsuccessful. Nevertheless, resources managed under the leasing system are subject to royalties and include oil, gas, coal, and some hard rock minerals. Upon the grant of a lease, the BLM determines the royalty rate based on a percentage of the value of the mineral produced. For example, the royalty for oil and gas has been 12.5% since 1920.
Critical Minerals – Mining laws are continually evolving, with new laws introduced to address emerging issues. Recently these include support for the development of critical mineral projects. Starting in 2018, the Department of the Interior produced a list of 35 minerals that are considered critical to U.S. national security, establishing a process to expedite the permitting of these projects on federal lands. Funding is provided to develop these critical minerals projects through various programs providing grants, loans, and other financial assistance.
Why Serus? – The Serus team has extensive experience working in the US mining industry. With headquarters in New York City, we have team members and contacts based across North America and internationally. We assist with the structuring, acquisition, and due diligence of mining projects, and prepare all forms of mining agreements, including royalty, JV, construction, and earn-in agreements.
Serus is an international law firm that uses technology and lower overheads to provide legal services at a significantly better value. Please contact our team or email info@seruslegal.com
The contents of this insight do not constitute legal advice and are subject to input from a lawyer.