Mining and Geological Exploration in Serbia – Reshaped Legal Framework

Law on Amendments to the Law on Mining and Geological Exploration (“Official Gazette of RS “, no. 40/2021) enters into force on 30 April 2021. In order to encourage investment in this area, the Law introduces a number of novelties, including the rationalization of administrative procedures before the Ministry of Mining and Energy. Furthermore, there are certain changes in terms of the required conditions for exploration and the exploitation of geological resources, as well as in terms of conditions under which geological exploration shall be performed, and such changes are primarily aimed at optimizing management of resources of the Republic of Serbia and environmental protection.

Simplified procedure

The Law establishes the basis for the introduction of e-business – e-mining and geology. Article 8a stipulates that the correspondence with the Ministry or with relevant provincial body, in relation to administrative procedures, shall be performed by electronic means, in accordance with the Law on Electronic Document. Therefore, a party who has a qualified electronic signature, i.e., a qualified electronic seal, can complete the procedure before the competent authorities much faster, easier and more efficiently. Exceptionally, an appeal and other legal remedies, as well as the evidence that accompanies them, and documentation that contains secret information, are submitted in the form of a paper document. These provisions will apply from the date of creating software that supports this system, which implies the adoption of appropriate bylaws in the upcoming period.

Moreover, the applicant is not obliged to submit the original documents issued by the Ministry with the request for the issuance of approval to the Ministry – a photocopy of the permission or certificate, or data on them is sufficient. In this way, the process is made more economical on the basis of the fact that a government body has access to official records, hence it is able to note the existence of the document and to inspect it electronically. The procedure is further simplified by stipulating that the applicant is not obliged to submit an excerpt from the register of economic entities. Furthermore, in order to avoid a situation in which the requested area is occupied during the period granted to the applicant to supplement the request, such possibility has been abolished, so the permission for applied geological research is issued to the applicant who is the first to submit the complete request.

Issuance of permission and conditions of use

A significant novelty in comparison to the prior law is stipulating laying a collateral as an additional mandatory condition for issuing approval for applied geological exploration. Namely, the applicant is obliged to submit a letter of intent from the bank or another company from the group within which it operates, to issue a bank guarantee or corporate guarantee for its obligations within 30 days from the date of receipt of the decision on exploration of metallic minerals, lithium and boron, or a statement of the company that it will submit the bill of exchange within that period;

Moreover, the Law introduced changes regarding mandatory supervision of geological exploration – professional supervision of geological exploration cannot be conducted by legal person who is the holder of the permission for the exploration, who performs the geological exploration, nor the person who prepared the report on geological exploration, except for oil and gas exploration, and the obligation of keeping a record of professional supervision is prescribed.

Environmental Protection

Environmental protection stands out as one of the foundations on which the system established by the new Law rests. Accordingly, the holder of the permission for exploration is bound by new obligations: to suspend exploration work in the event of a negative impact on existing wellspring and inform the competent state authority and local authorities, to preserve drill hole in case of finding ground water that will not be used immediately, and to implement all security measures that will permanently exclude the occurrence of danger to people and property, as well as the environment, and to bring the terrain on which the works were performed to its original purpose, after completion or suspension of the  geological exploration. An important novelty is the rule according to which, in case of initiating bankruptcy proceedings or liquidation of the holder of the approval for mining works, which did not rehabilitate nor recultivate the degraded land, the rehabilitation costs are covered from the bankruptcy or liquidation estate.

Moreover, the law stipulates that the environmental protection regulations shall apply in terms of conditions and methods of controlling and monitoring of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic disturbances in the climate system, while in terms of conditions and methods of construction of CO2 storage facility construction regulations shall apply.

Other important amendments

The Law introduced a number of other changes, such as enabling the transfer of the certificate on reserves of mineral raw materials and other geological resources, abolishing the obligation to insure against liability for damage on the part of the person performing technical documentation, as well as numerous procedural novelties. In addition, the Law stipulates that the value of geological resources excavated without the necessary permissions is determined by an act of the Government every other year, based on its market value, by which rule the legislator seeks to prevent unauthorized exploitation works. The jurisdiction of the Geological Institute of Serbia is expanded, in the sense that it gives its opinion on the feasibility study and general project for the capital facilities of interest for Serbia, and envisages is the establishment of the Chamber of Mining and Geological Engineers of Serbia, which consists of engineers of various technical professions in the field of geological exploration.

Proceedings commenced prior to the entry into force of this Law will be regulated according to the regulations that were in force at the time of their commencement, except in case the applicant requests otherwise in writing. The next step in the regulation of this subject will be the regulations for implementing this Law on Amendments, that will be issued within one year from the date of its entry into force. Finally, we note that the Law does not regulate the issue of “mining annuity” – compensation is for the exploitation of natural mineral resources – but appropriate legislation that regulates this issue is expected to be enacted in the upcoming period.