Karl Erik Navestad
Phone: +47 23 89 40 00
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The exploration for and recovery of offshore mineral deposits in Norway has so far mainly been limited to excavation of sand and gravel at shallow depths near coast. The activities were previously governed by the Act on Scientific Exploration and Exploitation of other Subsea Natural Deposits than Petroleum Deposits (the “Continental Shelf Act”). From 1 July 2019, the new Act relating to Mineral Activities on the Norwegian Continental Shelf (“NCS”) (the “Mineral Activities Act”) will apply to all exploration for and recovery of subsea minerals on the NCS. The act provides basis for awards of permits for mineral activities and may be a more suitable legal framework for a future, potential industry.
The new Mineral Activities Act applies to exploration and recovery of all subsea mineral deposits, including shell sand, sand, gravel and clay within Norwegian internal waters, the territorial waters and on the NCS. The act does not apply to exploration and production of petroleum or scientific studies and research of minerals offshore.
While offshore exploration for other minerals than sand formations has not yet been commercially attractive, a growing interest is expected in, potentially, near future. This due to an increased demand for minerals in renewable energy projects such as wind turbines and solar panels. Further, battery production for electric cars as well as consumer electronics require large amounts of rare metals such as lithium, manganese and cobalt. The Norwegian Petroleum Directorate has therefore already initiated the process of mapping deep-sea mineral resources in the Norwegian Sea.
By adopting the new Mineral Activities Act, the Norwegian government wish to provide a comprehensive and sound regulatory framework, based on familiar applicable legislation for oil and gas activities on the NCS. Principles from the Act relating to Petroleum Activities (the “Petroleum Act”) has clearly formed basis for the Mineral Activities Act.
The purpose of the Mineral Activities Act is to facilitate for the potential future exploration and recovery of mineral deposits on the NCS and to ensure a safe and environmentally friendly resource management alongside other offshore activities. The Norwegian State shall retain the ownership of the mineral deposits and the Ministry of Petroleum and Energy (the “MPE”) will have the exclusive right to manage the resources.
Corresponding to the system in the Petroleum Act, the Mineral Activities Act distinguishes between non-exclusive exploration licenses and exclusive production licenses. The award of production licenses will impose associated work obligations to the licensee.
Production licenses for mineral activities can only be awarded after the MPE has officially opened the relevant geographical area and an impact assessment has been carried out. The license awards shall as a main rule be based on public tendering processes, on objective criteria. Following the award, the licensee will be granted an exclusive right to conduct mineral activities within a specified geographical area and the licensee will become the owner of the minerals once they have been recovered from the seabed to the sea level.
Production licenses will be awarded for an initial period up to 10 years. Once the work obligations are completed, including the submission of a detailed plan for recovery and operations, the licensee may require an extension of the license period by up to 20 years. The license period can thereafter be further extended, provided that the activities at all times are performed in accordance with the submitted plan for recovery and operations.
The principles and requirements in the Mineral Activities Act provides a necessary legal framework to ensure a sound resource management and predictability for a future offshore mineral industry. While the act may only be an early step towards a commercially viable industry, the Norwegian government hopes that it may contribute to and facilitate for a more blooming offshore mining industry in Norway.
Arntzen de Besche is a leading business law firm in Norway with more than 40 years’ experience providing regulatory and commercial advice to the oil, gas and energy sector both on NCS and internationally. Our experience span through the entire value chain and through all project phases, from exploration to decommissioning. This experience will be directly transferable to the legal framework provided in the Mineral Activities Act, making Arntzen de Besche well established to provide our services to a future offshore mineral industry.