The Mining Law Review: Portugal

I OVERVIEW

Although the country's territorial dimension is small, Portugal is historically known for being a 'mining country' with a very diverse and complex geology.

Given the overwhelming technological progresses and the growth of consumption of different types of goods that use minerals as raw material, as well as the fact that these are limited resources, it is imperative that the government provides a clear and transparent set of rules that allow national and foreign investors to decide, plan and implement profitable mining projects in Portugal.

The Portuguese legal system belongs to the family of the continental or civil law countries, which provides any interested party the possibility of knowing the applicable rules and statutes, sustained in written law.

The Portuguese Constitution (the primary and fundamental law, approved in 1976 and still in force)2 determines that mineral deposits, mineral-medicinal water springs and natural underground caves are public property.3 This reference clearly demonstrates the importance of geological resources.

Portuguese legislation has been adjusted over time to provide an adequate framework for the exploration and exploitation of the country's geological resources.

Following the National Strategy for Geological and Mineral Resources, approved by the Council of Ministers Resolution No. 78/2012, of 11 September, the current legal framework for the discovery and use of geological resources located in Portugal was enacted – Law No. 54/2015, of 22 June, and previous mining legislation (from the 1990s)4 was revoked.5

In 2021, through Decree-Law No. 30/2021, of 7 May, the mining legal framework for Portugal knew its most recent development, setting clearly that revelation and use of mineral deposits in Portugal is based on three main axis: more demanding environmental sustainability standards and maximum economic valorisation in the countries' benefit (green mining and remining); promotion of greater public information and participation, to assure transparency of all the procedures; and finally, fair distribution of exploitation benefits between the state, the municipalities and local populations.

Since November 2018,6 the mining industry has been administered by the Ministry of the Environment and Climate Action (MAAC), who directly supervises the General Directorate for Energy and Geology (DGEG). This has been a clear sign of the new governmental approach, in which the goal to develop and satisfy the national extractive industry is to be balanced with strong environmental and sustainability concerns, at both a national and a regional perspective. As such, the Portuguese Environmental Agency (APA), the Nature and Forest Conservation Institute (ICNF) and the municipalities are relevant players in the mining sector in Portugal.

Bearing in mind that Portugal offers a steady and clear legal framework, political stability, and that foreign direct investment is not restricted under general Portuguese law, the most relevant mining companies in the world have invested in Portugal,7 considering it to be a 'low-risk' country, apart from the risk inherent to the mining activity itself. The mines of Neves-Corvo and Aljustrel (copper and zinc) and Panasqueira (tungsten) can be highlighted as significant examples.

In response to the number of applications for the exploration and exploitation of lithium mineral deposits in Portugal– as a result of the EU-defined targets for emissions reduction and for the main goal – the Portuguese government has clearly set this as a priority. A national strategic environmental evaluation is currently taking place, and a public tender for lithium is expected to be launched in 2022.

In fact, Portugal is already Europe's largest producer of lithium, which was, in 2020, included in the list of critical raw materials. By increasing extraction and making refinement and production processes more economically viable, Portugal might assume a leading role within this new market.

II LEGAL FRAMEWORK

The revelation and use of Portuguese geological resources can relate to different types of natural assets and is subject to both European and national legislation.

Law No. 54/2015, of 22 June, establishes the basis of the legal regime for the disclosure and enhancement of the existing geological resources in national territory, including those located in the national maritime space, and consists in a general regime for all types of geological resources. Decree-Law No. 30/2021, of 7 May, specifically regulates the use of natural mineral deposits.8

Nevertheless, mining activity must comply with adjacent national and European legislation, as it affects different areas, such as industrial licensing, environmental impact, safety, security, workforce, among others. Therefore, it is important to take into consideration the following:

  1. Decree-Law No. 162/90, of 22 May, which approves the Regulation of Safety and Hygiene for Work in Mines and Quarries;
  2. Ministerial Order No. 897/95, of 17 July, which establishes the fees applicable to the licensing procedures;
  3. Council of Ministers' Resolution No. 11/2018, of 31 January, which approves the strategic guidelines for enhancing the potential of lithium minerals in Portugal;
  4. Decree-Law No. 151-B/2013, of 31 October, amended by Law No. 75-B/2020, of 31 December, which transposes to the Portuguese internal legal order the European Directive 2014/52 and establishes the regulation for the environmental impact assessment (EIA) of public and private projects that may have significant effects on the environment;
  5. Decree-Law No. 75/2015, of 11 May, amended by Law No. 75-B/2020, of 31 December, which approves the single environmental licensing regime;
  6. Ministerial Orders No. 368/2015, of 19 October, and No. 395/2015, of 4 November, which establish the fees to be charged and the technical requirements and standards applicable under the EIA process;
  7. Decree-Law No. 10/2010, of 4 February, amended by Decree-Law No. 9/2021, of 29 January, which establishes the legal regime for the waste management of mineral deposits and mineral masses, and transposes to internal order Directive 2006/21/EC, of the European Parliament and of the Council, of 15 March;
  8. Decree-Law No. 147/2008, of 29 July, as amended by Decree-Law No. 13/2016, of 9 March, which establishes the legal regime of liability for environmental damages, applicable to the waste management of mineral deposits and mineral masses waste;
  9. Decree-Law No. 232/2007, of 15 June, as amended by Decree-Law No. 58/2011, of 4 May, which establishes the regime to which is subjected the assessment of the effects of certain plans and programmes on the environment, and transposes to internal order the Directives 2001/42/EC, of the European Parliament and of the Council, of 27 June, and 2003/35;
  10. Decree-Laws No. 376/84, of 30 November 303/90, of 27 September (amended by Decree-Law No. 93/2018, of 13 November) and 139/2002, of 17 May, which contain the regulations on the commercialisation, manufacturing and use of explosives;
  11. Decree-Law No. 195/95, of 28 July, as amended by Law No. 71/2018, of 31 December, which establishes the specific legal regime for social security of mine workers; and
  12. Decree-Law No. 198-A/2001, of 6 July, as amended by Decree-Law No. 60/2005, of 9 March, which establishes the legal framework concerning the environmental recovery of degraded mining areas.

Presently, the MAAC is the entity responsible for the main political and administrative decisions concerning mining activity, such as those made within the acquisition of mining rights and EIA procedures. Currently, these powers – licensing and granting of mining rights – are delegated, by the Minister, in the deputy minister and Secretary of State of Energy (SEE), and subdelegated in the Director General of Energy and Geology.9 The administrative procedure itself shall be held by the DGEG.

However, there are other entities that have jurisdiction over the attribution of mining rights, such as Madeira's and Azores' autonomous regional governments, or that must be consulted in the process, some with biding opinion as the municipalities, but also the entities with jurisdiction over environmental protection, land management, cultural heritage, nature conservation, forests and hydro-agricultural uses.

III MINING RIGHTS AND REQUIRED LICENCES AND PERMITS

In Portugal, geological resources can be privately or publicly owned according to their nature. Therefore, mineral deposits, natural mineral waters, mining industrial waters and geothermal resources, because of their rarity, natural and economic value, and the importance of their application in industrial processes are considered of public domain. The same classification is given to other geological resources that are of geological and mining relevance to the country, and to all the geological resources found in the bed and underground of the Portuguese national maritime space.

Conversely, mineral masses and spring waters, as well as other geological formations, structures or natural assets that do not have the above-mentioned necessary characteristics, can be privately owned.

When in the public domain, the property of these natural resources cannot be transferred to private parties. However, the state can – instead of directly exploring – grant private parties (applicants), through administrative contracts, the right to exclusively use them. The revelation and use of geological resources non-integrated in the public domain also need an administrative authorisation, through the attribution of a licence to the landowner or to a third party that has entered an exploitation contract with the landowner.

i Surface and mining rights

According to the Mining Law, geological resources integrated in the public domain may be subject to four different types of private use, that correspond to different stages of knowledge of the existent geological and mineral asset:

  1. preliminary assessment rights, which aim to authorise the applicant to undertake the necessary studies and analysis to better understand the existing resources in the intended area;
  2. prospection and exploration rights, for the development of activities, studies and analysis directed at the disclosure of the resources and the determination of their characteristics and evaluation of their economic value;
  3. experimental exploitation rights, when the conditions for exploitation have not been met; and
  4. exploitation rights for the purpose of conducting operations for the economic use of the resources, when the previously developed studies already allow for such confirmation.

The specific type of rights granted to the applicable entity, and requested by it if that is the case, should and will, therefore, be adjusted to the pre-existent knowledge regarding the resource and according with the private party's technical and financial capacity to develop and invest. All rights under an administrative contract for pre-assessment, exploration, experimental exploitation or concession of exploitation, are granted to the applicable entity on an exclusive basis; therefore, no incompatible rights (considering the object, nature and area granted) can be given to third parties during the term of the contract.

Each type of right can be acquired through a different administrative procedure, subject to different conditions and duration.

Pre-assessments rights are not transferable and can be granted for a maximum area of 15 square kilometres and for the limited period of one year, without extension. Thirty days before the expiry of these rights, the applicant must inform DGEG of its ability to proceed to the next phase and request the granting of exploration rights, or if it is its intention to release the granted area. The number of contract proposals and pre-assessment contracts is limited to one per applicant and per NUTS II statistical units on the continent.

The attribution of these types of rights depends on a previous administrative procedure that starts with the submission of an application before the DGEG, where – among other details – the applicant must disclose its technical, economic and financial capability, the work plan, the technical and financial means and the budget that will be applied to reach the proposed goals. Once approved, these will be the conditions for the maintenance of the granted pre-assessment rights. However, DGEG can reject the request based on its manifest contradiction with the applicable legal or regulatory rules, the lack of viability of the project conditions, or of the suitability, technical and financial capacity of the applicant or, finally, for reasons of public interest. The procedure will always be submitted to a public consultation period, which will take place after the preliminary evaluation of the application made by DGEG and will take place on the website participa.pt.

On the other hand, granting exploration rights may depend either on a direct application (proposal) or a public tender. The decision on the procedure to adopt belongs to the central government (i.e., MAAC). However, when the procedure is triggered based on the applicant's initiative, the filing of another application with the same object by a third party, within the period legally established for that purpose, determines the opening of a public tender by the DGEG, with the first applicant having pre-emptive rights on equal terms.10

On the individual proposal, the applicant must indicate the mineral substances he or she is applying for, the intended area – which cannot exceed 500 square kilometres11 or 5,000 km2 if the granted area is located on the Portuguese maritime space – the general work plan, the volume of investment envisaged and how it is financed for such purpose, as well as present evidence of his or her technical and financial suitability.

As with the request for the attribution of pre-assessment rights, the application for exploration rights can also be rejected after a preliminary analysis. In this case, the preliminary rejection may also occur based on the decision to open a public tender. If the application is accepted after a preliminary analysis, the DGEG must promote the mandatory consultation of the municipalities in whose territory the application is located, of all the competent entities according to territorial conditions, restrictions or easements of public utility covered by the application, as well as of the National Laboratory of Energy and Geology (LNEG), to pronounce on the adoption of the best practices available in the exploration work proposed by the applicant. The opinion issued by the consulted entities bound them for a period of two years and the municipalities' opinion, when, totally or partially, unfavourable is binding and is always based on applicable legal or regulatory rules or on the municipal territorial development strategy.12

Once this initial phase is concluded, the opening of a public participation period, to be promoted on the website participa.pt, must be advertised by the DGEG on its website and also by the municipalities covered by the application's area on their website with an invitation for the submission of complaints within 30 working days.13 The applicant will also have the obligation to promote, in each municipality covered by the application's area, at least one public clarification session, addressed essentially to the populations of those territories, which is advertised, at least 20 days in advance, in two newspapers, one with national circulation and the other with regional circulation, and on the websites of the municipalities and of the DGEG.

After this public consultation period, the DGEG defines the essential elements and contractual conditions and send a proposal to the applicant, which can accept or present a single counterproposal within a 30-day deadline. DGEG has a period of 30 days to accept this, with DGEG's silence being a refusal of the applicant's proposal. DGEG's final information and the contractual proposal will then be sent to the MAAC for a final decision – to the SEE if the powers are delegated or to other entities if the powers are subdelegated – and if such decision is favourable, the procedure will proceed to the signing of the contract. This contract will establish the conditions for exploration and can also determine some of the conditions for the exploitation phase.

Exploration rights can be granted for a maximum period of five years, with extensions. The extension is subject to the compliance with the conditions set in the signed contract, such as the mandatory work and investment plans, the deadlines for each phase of the work plan, the financial charges of the exploration activity and the periodic submission of activity reports to the DGEG. The applicant is requested to provide a bank guarantee to ensure the performance of the contract and must initiate the work until the term of a six-month period.

Exploration rights may only be granted for available areas, unless there is no incompatibility with the activities corresponding to operating concessions already allocated or in the allocation procedure. Available areas are the areas of the national territory over which exclusive rights do not apply to geological resources integrated in the public domain of the state.

Upon the expiry of the term of the exploration contract, the applicant has the right to apply to the corresponding experimental exploitation rights or to ask for the concession of exploitation rights.

The application for the concession of exploitation rights may be carried out for an area covered by a contract for prospecting and exploration, for experimental exploitation,14 or directly for an available area. It may also be granted as a result of a public tender.

The procedure to obtain experimental exploitation rights or exploration rights follows the same steps established for the application for exploration rights and is subordinated to the same mandatory hearings (e.g., public consultation, municipalities, administrative and environmental hearings). However, DGEG must consult the environmental impact assessment authority (AIA) about the need to obtain a favourable environmental impact statement, even when the project is not covered by the EIA regime, and regardless of whether it is in a sensitive area or not. In that case, or if the project is covered by the EIA regime, in accordance with the applicable law, the licensing will only take place upon the issuance of that favourable statement.

The experimental exploitation rights can only be granted for a maximum of five years and their sole purpose is to obtain additional information of the existing resource.

Conversely, the exploitation rights entitle the applicant to exploit resources in accordance with the law and the respective contract and to market all products resulting from the exploitation and can last up to 90 years (nevertheless, the Portuguese state normally establishes a duration of 50 years).

The application for these types of mining rights must include, among other information, the intended area, the characterisation of the mineral deposit, and the certified15 Mining Plan (exploitation plan), or the previous study of the Mining Plan. The contract will set the conditions that must be complied during the development of the exploitation activity, such as the financial guarantee that must be provided by the applicant,16 the financial compensation (exploitation charges) that must be paid and the opinions, approvals, licences and authorisations that must be obtained by the concessionaire previously to the beginning of the exploitation works. The exploitation contract can also impose the obligation to the concessionaire to install its headquarters in the territory of one of the municipalities covered by the concession, unless it already has its headquarters in another municipality where it holds a concession, and set some obligations concerning the production, transformation or sale of ores, or others that may represent benefits for the technical and economic development of the country.

Regardless of the specific type of mining rights granted, the applicant is legally required to keep confidential all technical and financial data obtained during the pre-assessment, exploration or exploitation activities.

Exploration and exploitation rights may be transferable to a third party. However, that transference, or the change of control over the holder of the rights, is never automatic, depending on authorisation of the MAAC. In the case of dissolution of the legal entity to which the rights were granted, only the asset value is transferred.

A mortgage can only be lodged over the exploitation rights or over the exploration annexes or infrastructures as a guarantee for credits intended for exploration work, but the security shall be notified in advance to the DGEG.

The mining rights are granted through administrative contracts concluded with Portuguese state, according with the mining laws and the Portuguese Public Procurement Code. Therefore, in case of a contractual breach by the state, the private party has the same rights as those recognised under other types of administrative or public contracts, being able to – through judicial means – force the execution and compliance of the contract or claiming a compensation in case of breach.

ii Additional permits and licences

Under Law No. 54/2015, attribution of mining rights may depend on additional permits and licences issued by other entities, such as administrative entities or environmental entities with jurisdiction over the territory; namely, because of environmental protection, landscape recovery, spatial planning, hygiene, and health and safety. This is also applicable if the activities of disclosure and exploitation of geological resources were to take place in the national maritime space, in which case the respective title of private use is demanded.

The concession of exploitation rights normally depends on an EIA.

These entities can be the municipalities whose territory is affected by the granted area, APA, ICNF, Coordination and Regional Development Commission (CCDR), among others.

On the other hand, once the mining rights are granted, the applicant will have the right to temporarily use the soils and lands that are necessary for the mining activities (pre-assessment, exploration, exploitation). For such purpose, the applicant will have to obtain all the necessary permits before the landowners and pay them the due compensations.

If no agreement is reached with the landowners, Law No. 54/2015 recognises the applicant entitled with exploration and experimental exploitation rights, the right to ask the government for the constitution of an administrative easement on the buildings covered in the granted areas. The concessionaire of exploitation rights has the right to request the expropriation of the necessary land. They can also express preference in the purchase of any rustic or urban land within the defined concession area.

Within the Portuguese territory and social context, the legal framework regulating vacant and community managed lands assumes relevance.17

iii Closure and remediation of mining projects

The holders of the rights (pre-assessment, exploration, experimental exploitation and exploitation rights) are responsible for taking the appropriate measures to guarantee the minimisation of the environmental impact of their respective activities.

The environmental plans and landscape recovery should all be implemented on the mining sites during exploitation projects and not after the concession period. There are also remining cases, when applications for the allocation of exploitation rights concern an area subject to pre-existing exploitation that has been deactivated. In these cases, if there are any environmental liabilities of the pre-existing exploitation that the new concessionaire assumes to undertake, the exploitation charges will be reduced according to the liability to be recovered. If that recovery was already committed to the Mining Development Company (EDM), a partnership agreement must be established between it and the concessionaire, and EDM will have to provide technical support and contribute with 50 per cent of the budget for the recovery.

The closure plan is approved with the granting of the concession and should be implemented during the execution of the exploitation works, in collaboration with the municipalities.

IV ENVIRONMENTAL AND SOCIAL CONSIDERATIONS

i Environmental, health and safety regulations

As previously mentioned, the attribution of any rights over geological resources is preceded by a mandatory consultation of, namely, the municipalities whose territory is affected and other relevant entities concerning environmental or territorial protection.

The main environmental regulations to be considered within the mining activity refer to the Portuguese environmental impact assessment legislation and to the European ecological network – Natura 2000 – legislation.18 These legal acts have the intention of protecting biodiversity, through the conservation or restoration of natural habitats, wild flora and fauna and species control.

There is a specific legal regulation concerning waste management of mineral deposits and mineral masses that must also be considered,19 as well as the related legal regime of civil liability for environmental damages applicable to this waste management. The facilities connected to this type of waste are subject to a licensing procedure, to be pursued before the DGEG, within the approval of the 'mining plan'. The holder of mining rights must prepare a sustainable waste management plan and review it every five years.

Concerning Health and Safety regulations in the mining sector, one must have in mind, in addition to the legal regime for the promotion of health and safety at work,20 the provisions of the General Regulation of Safety and Health at work in Mines and Quarries.21 This legal instrument imposes certain obligations – on both the employer and the employees – to prevent professional hazards and to promote health and hygiene within mines and quarries. Ordinance No. 198/96, of 4 June, also regulates the minimum safety and health requirements in open and underground sites of the extractive industries (e.g., emergency exists, dangers zones).

Decree-Law No. 50/2005, of 25 February, must also be highlighted. It refers to the minimum safety and health requirements regarding the use of work equipment, and to Decree-Law No. 24/2012, of 6 February (in its latest version, given by Decree-Law No. 1/2021, of 6 January), which consolidates minimum requirements for the protection of workers exposed to chemicals at work.

ii Environmental compliance

According to the Portuguese legal framework of the EIA, this assessment must be carried out in all public and private projects that may have significant effects on the environment.

Regarding mining projects, the law states that an EIA is mandatory when the area of the open cast mine exceeds 25 hectares or when there are peat extraction projects in an area that exceeds 150 hectares.

An EIA may also be required when the mining projects are partially, or totally located in a sensible area and can potentially cause a significant environmental impact because of their location, dimension or nature. It may also be required if the competent public authority considers that the mining projects are likely to cause a significant impact on the environment even though they do not exceed the above-mentioned limits and are not located in sensible areas. A thorough environmental impact study will be required to determine all the direct and indirect effects of the project on the environment and to recommend adequate measures to minimise or annul those effects.

The most relevant administrative authorities involved in the EIA procedure are the licensing entity (DGEG) and the EIA authority – which can be either APA or CCDR.

The attribution of exploration rights is not dependant on an EIA, as it is only demanded when in the context of exploitation rights. The new legal framework provided by Decree-Law No. 30/2021, of 7 May, demands DGEG to consult the AIA within the procedure of experimental exploitation or exploitation of mineral resources, to confirm if an EIA is required.

An environmental licence – according to Decree-Law No. 127/2013, of 30 August – may also be required, to prevent or reduce air, water and soil pollution, as well as waste production.

In this case, the EIA and the environmental licence will be processed within the 'single licensing environmental regime', which aims at articulating all the legal regimes involved and therefore simplifying the procedures of environmental licensing, concluding in the emission of a single environmental title (a document containing all the relevant information about the environmental licences of the project or activity).22

The timeline to conclude the above-mentioned procedures is variable, but one could expect a minimum time frame of six to 12 months until conclusion.

iii Third-party rights

The bearer of mining rights will have inherent rights over the lands in which the mining projects are to be developed, namely the one to temporarily use the land required for the work and the implementation of the respective facilities. Therefore, it will have to pay compensation to third parties for any damage caused by the exploration and exploitation activities and provide all security, environmental protection and landscape recovery measures.

iv Additional considerations

The authorisations, conditions or restrictions to mining activities will depend on the location, area and type or works to be promoted.

In some areas, such as protection zones of natural mineral and spring water, protected areas of natural parks or demarcated regions (e.g., vineyards, rivers), there are specific regulations that might restrict or forbid certain types of works and activities. Also, Decree-Law No. 30/2021, of 7 May, sets out clearly that areas classified as pertaining to Rede Natura 2000 should not be considered for exploitation, either in the context of single applications or of a public tender.

As we previously explained above in this text, this recent law also reinforced the importance of the municipalities whose areas are affected by an application for exploration or exploitation rights.23

The social licence to operate, regarding the approach of local communities, clarification of the exploration and exploitation purposes, methods and contribution to local economic, social and environmental welfare is a very important issue to be addressed. For this purpose, Decree-Law No. 30/2021 has also established more effective procedures to assure public participation in the procedures, either online or locally, imposing that at least one public session, destined to clarify any doubts, is promoted in each municipality whose territory is affected by an application.

V OPERATIONS, PROCESSING AND SALE OF MINERALS

i Processing and operations

The importation of equipment and machinery for use in mining activities is not subject to special restrictions, other than those related to the security of people and assets.

During the activity, the concessionaire has to make use of the resources in accordance with the appropriate technical standards and in harmony with the public interest of the best use of these assets and cannot proceed with the mining activity in a way that compromises the best economic use of resources.24

The use of foreign labour in mining activities in Portugal is subject to the same restrictions as in any other activity. As such, it must comply with the conditions and procedures for the entry, stay, departure and removal of foreign citizens from Portuguese territory, established by Law No. 23/2007, of 4 July, as amended by Law No. 28/2019, of 29 March.

To legally work in Portugal, non-EU citizens must have a residence permit with the purpose of work. This type of permit can have three different purposes:

  1. to live and work in Portugal as an employee with an employment contract, which demands that the job vacancy exists and that it has not been filled by a Portuguese or European Union national, by citizens of countries with special agreements with Portugal and by foreigners who live in Portugal with valid residence permits;
  2. to live and work in Portugal as an employee with an employment contract in a highly qualified activity; and
  3. to live and work in Portugal as self-employed or as an entrepreneurial immigrant.

ii Sale, import and export of extracted or processed minerals

The commercialisation or valorisation of the exploitation products, originating from authorised mining activities, is subject to inspection by the DGEG, who can request the contracts concluded for the sale of products resulting from the exploitation of mineral deposits and any other elements deemed necessary for the legal and economic evaluation of the streaming. Conversely, export, sale or any form of transmission of products, even free of charge, that are not from authorised exploitations or legally imported holdings is prohibited. In any case, the exportation of ores must also follow all the applicable European legislation and treaties.

On the other hand, the exportation of ores or lands obtained during the exploration activities may be allowed by a member of the MAAC, if for industrial analysis or testing.

The state has pre-emption rights over the acquisition of the exploitation products, based on the public interest.

European legislation establishes some restrictions to the importation of some minerals. For example, EU Regulation (EU) 2017/821 of the European Parliament and of the Council, of 17 May 2017, amended by the Commission Delegated Regulation (EU) 2020/1588, of 25 June 2020, lays down supply chain due diligence obligations for EU importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas. This EU Conflict Minerals Regulation, of which most of the legal provisions come into force on 1 January 2021, applies to conflict minerals, so it 'only applies directly to EU-based importers of tin, tantalum, tungsten and gold – whether these are in the form of mineral ores, concentrates or processed metals' – but also intends to 'promote the responsible sourcing of smelters and refiners of tin, tantalum, tungsten and gold, whether they are based inside the EU or not'. European companies must ensure, through a due diligence process, that they import these minerals and metals from responsible sources only.

iii Foreign investment

There are no restrictions to foreign investment in mining companies or mining projects in Portugal, neither is that type of investment subject to prior governmental review or approval. Foreign companies are subject to the same administrative procedures as Portuguese companies and must comply with the same criteria and must recognise the same rights and obligations during mining activities.

VI CHARGES

i Royalties

In the context of mining projects, Law No. 54/2015 states that geological resources exploitation is subject to payment of 'exploitation charges'.

This payment is defined in the concession contracts signed with the Portuguese State, in the terms of Article 62 and 63 of Decree-Law No. 30/2021, of 7 May, that is, considering a minimum standard of 3 per cent of the value of the resources 'at the mine gate' as a reference. This percentage may be reduced to 2 per cent when the industrial treatment of the resources is promoted in Portugal.25

Decree-Law No. 30/2021 now establishes that a part of the royalties (between one-third and one-half) is to be paid to the municipalities in which the exploitation takes place, and the remaining part to the Portuguese state.

ii Taxes

Corporate income tax (IRC) is a tax levied on profits derived by both resident and non-resident entities. Resident entities (with head office or effective place of management in a Portuguese territory) are generally subject to taxation on worldwide profits.

Non-resident entities with a permanent establishment in Portugal are subject to corporate tax on the profits of their permanent establishments in a Portuguese territory. The concept of permanent establishment is one of the most controversial concepts of tax law in Europe, as it is dynamic and constantly evolving, being important for legal certainty and security to be aware of the limits of this concept. The current law considers that a permanent establishment is any fixed installation through which an activity of a commercial, industrial or agricultural nature is exercised.

In Portugal, the determination of taxable profit is based on the equity increase recorded in the accounts and is subject to several tax adjustments, essentially aimed at adapting accounting rules to the purposes of the tax system. This means that corporate tax is determined based on taxable income, which corresponds to the deduction from the income obtained from the company's activity of the expenses incurred to guarantee that same income.

IRC is levied at a 21 per cent rate, to which may be added a municipal surtax of up to 1.5 per cent levied on taxable profits (depending on the municipality), as well as a state surtax of 3 per cent on taxable profits exceeding €1.5 million and up to €7.5 million, 5 per cent on taxable profits exceeding €7.5 million and up to €35 million, and 9 per cent on taxable profits exceeding €35 million. This means that the effective tax rate can reach 22.5 per cent, to which will be added the state surtax, to which the above rates are applied in a staggered way. A special reduced IRC rate (of 17 per cent on taxable profits up to €25,000) is available for small and medium companies (with a turnover below €50 million among other criteria established by law).

Non-resident entities are subject to corporate tax on Portuguese-sourced income, which in most cases is subject to a tax rate of 25 per cent.

Portugal has many tax benefits available; for instance, for investments in research and development or in non-current assets, as well as in the reinvestment of retained earnings that are reinvested.

One of the most relevant tax incentives is the contractual tax benefits for productive investments, applicable to investments of at least €3 million, executed until the end of 2021, which are considered relevant for the development of business sectors important for the national economy and the reduction of regional asymmetries, enhancing technological innovation and national scientific innovation or employment creation. These incentives may include a 10 to 25 per cent corporate income tax credit and an exemption from a multiplicity of taxes, such as municipal property tax, municipal property transfer tax and stamp duty tax.

iii Duties

Since the implementation of the EU internal market, goods can circulate freely between member states. For non-EU goods, all member states apply the common customs tariff (CCT) and the revised European Union Customs Code. As such, Portugal uses the harmonised nomenclature and classification system (HS) present in the CCT, where Section V is devoted to mineral products and its Chapter 26 specifically refers to minerals, determining the exemption of duties. This applies to products coming from legal and authorised concessions or importation.

In January 2021, the United Kingdom withdrew from the EU Internal Market but managed to achieve an agreement expediting procedures and exempting trade between the Member States and the UK (now not a Member State) from tariffs and quotes applied on goods.

iv Other fees

Aside from the above-mentioned exploration charges and indemnification payments, namely for environmental and landscape restoration, Ordinance No. 897/95 currently establishes the fees due for contracts and activities related to geological resources exploration and exploitation to be charged to the holder of the mining rights. Fixed annual fees per area (km2) and prizes for the granting of the concession might also be contractually established.

VII OUTLOOK AND TRENDS

The entering into force of Decree-Law No. 30/2021, of 7 May, represents a major step in the regulation of the mining sector in Portugal, revoking legislation from the 1990s and promoting a better articulation of legal regimes with Law No. 54/2015, of 22 June.

This new Law sets clear rules and proceedings for any investor and is coherent with the national strategy that Portugal has defined for mineral resources (Resolution No. 72/2012 of June, of the Council of Ministers), aligned with the National Plan for Energy and Climate and Carbon Neutrality Guidelines.

Social acceptance and environmental concerns are well expressed in this new legislation and represent the high standards of quality and competitiveness that Portugal wants for its mining sector, levelling up with the more efficient and sustainable mining policies.

Public tenders for lithium and gold concessions are expected to be launched in 2022.


Footnotes

1 Joana Silva Aroso and Olinda Magalhães are partners at JPAB – José Pedro Aguiar-Branco Advogados.

2 With seven amendments – 1982, 1989, 1992, 1997, 2011, 2004 and 2005 – many being necessary for articulation with European Union and International Treaties' rules.

3 Article 84 of the Portuguese Constitution.

4 Decree-Law No. 90/90, of 16 March.

5 This legal diploma revoked Decree-Law No. 88/90, of 16 March, which still regulated Law No. 54/2015. It entered into force on 8 May 2021.

6 Decree-Law No 169-B/2019, of 3 December, last amended by Decree-Law No. 54/2021, of 25 June.

7 There are currently 74 active mining concessions in Portugal (five metalic ore and 69 industrial minerals); 695 quarries; 32 water concessions (spring and mineral waters) and 40 water thermal concessions (five of which are also geothermal), according to the provisional data referring to 2019 provided by DGEG in www.dgeg.gov.pt/pt/estatistica/geologia/.

8 The revelation and use of other geological resources are regulated by Decree-Laws No. 84/90 (spring water), 85/90 (industrial mineral waters), 86/90 (mineral water), 87/90 (geothermal resources), all of 16 March; 109/94, of 26 April, amended by Law No. 82/2017, of 18 August, concerning the exploration, exploitation and production of oil, and, finally 270/2001, of 6 October, amended by Decree-Law 9/2021, of 29 January, concerning mineral masses (quarries).

9 According to Order No. 5448/2020, of 12 May.

10 According to Decree-Law No. 30/2021, of 7 May, two requests are considered to overlap whenever, until the end of public consultation or participation period for one of the applications, another one is submitted to DGEG with total or partial coincidence of areas and with the same object.

11 Decree-Law No. 30/2021 restricts the execution of the exploration works in some areas, namely will be prohibited to carry out these works in the bed and margins of surface waters and, within a minimum perimeter of 1 km around urban and rural agglomerations, the works will be subject to express approval within the scope of the work programme, to be provided by the DGEG annually.

12 The opinions issued by the municipalities don't have a binding effect in the case of a public tender.

13 Public participation is one of the most important aspects of the new decree-law. All persons, whether natural or legal, including associations representing environmental, economic, social and cultural interests, have the right to participate in the procedures for the attribution of use or revelation rights, and have the right to access all the information available and to formulate suggestions.

14 However, the right to request the concession expires within two years after the expiry of the contracts that hold these rights, the area becoming available from that date.

15 In this certification, several parameters will be analysed and verified, such as: the de-carbonisation of the activity, the exploration techniques, and the recovery of exploration waste, from the perspective of the circular economy.

16 The concessionaire will be obliged to post a financial guarantee to ensure compliance with the contract and with the established terms for the landscape recovery of the covered area. This financial guarantee will comprise a fixed and a variable amount depending on the execution of the environmental recovery of the intervened area.

17 Law No. 75/2017, of 17 August.

18 Decree-Law No. 232/2007, of 15 June (in its current version), provides the legal framework for the strategic environmental evaluation of certain plans and projects that may have environmental impacts. Specific rules on the environmental impact evaluation procedure and natural habitats conservation are respectively sustained in Decree-Law No. 151-B/2013, of 31 October and Decree-Law No. 140/99, of 24 April and Decree-Law No. 142/2008, of 24 July, in their last versions.

19 Decree-Law No. 10/2010, of 4 February.

20 Decree-Law No. 102/2009, of 10 September, modified and republished by Law No. 37/014, of 28 January, with recent adjustments by the Law No. 79/2019, of 2 September.

21 Approved by Decree-Law No. 162/90, of 22 May.

22 Approved by Decree-Law No. 75/2015, of 11 May, recently modified by Decree-Law No. 119/2019, of 21 August.

23 The municipalities are consulted by the DGEG within the administrative procedure and their opinion is binding when unfavourable, if it is based in the violation of legal or regulatory rules.

24 Decree-Law No. 30/2021, of 7 May, absolutely prohibits and sanctions ambitious mining, which compromises the best economic use of resources.

25 Deductions to the annual exploitation charges may be admitted up to the limit of 5 per cent, related with treatment, processing, storage and transportation of the mineral resources or of the final product.

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