20. The constitutional status of minerals

• The New Constitution Project provides a relatively short regulation with minimal explanation of the system applicable to mining activity.
• The above contrasts sharply with the current Constitution, which regulates in detail a robust system of mining concessions.
• In this newsletter, we will address the Project prepared by the Convention and the main differences that can be identified concerning the current regulations.

The Project

The New Constitution contemplates a Constitutional Statute for Minerals that provides, principally, the following:

• The State has absolute, exclusive, inalienable and imprescriptible property over all mines and mineral substances, metallic, non-metallic, and deposits of fossil substances and hydrocarbons existing in the national territory, without prejudice to the ownership of the land on which they are located. It provides that the exploration, exploitation and use of these substances are acts of a finite, non-renewable, and public intergenerational interest and whose regulation must contemplate environmental protection.
• The protection of the environment through the regulation of the impacts and synergistic effects generated by the mining activity, in the manner established by law. In this way, it establishes the obligation on the part of whoever carries out the mining activity to allocate resources to repair the impacts caused and reduce the harmful effects in the territories where the mining project is carried out
• Glaciers, protected areas, those established by law for reasons of hydrographic protection and others declared by law are excluded from all mining activities.
• The protection of small-scale mining and the pirquineros, promoting their development and the use of tools, technologies and resources for this activity’s traditional and sustainable exercise.

Mining in the current Constitution

Our Constitution establishes a series of guarantees for mining and a detailed concession regime in article 19, paragraph 24.

• The absolute domain of the State: “The State has total, exclusive, inalienable and imprescriptible property over all mines, including covaderas, metalliferous sands, salt flats, coal and hydrocarbon deposits and other fossil substances, except surface clays, notwithstanding the ownership of natural or legal persons over the land of which they are located. Surface lands shall be subject to the obligations and limitations established by law to facilitate the exploration, exploitation and benefit of said mines.“
• Legal mandate for determining which substances are concessional: It is up to the law to determine which substances may be subject to exploration or exploitation concessions, except for liquid or gaseous hydrocarbons.
• Concession regime: The current Constitution establishes an effective system of concessions for the development of mining activities:
  – Constitution by judicial resolution: “(…) the concessions will always be constituted by judicial resolution and will have the duration, confer the rights and impose the obligations that the law expresses, which will have the character of constitutional organic. (…).
  – The courts determine the termination of concessions. It will be the exclusive competence of the ordinary courts of justice to declare the extinction of such concessions. The controversies that arise with respect to the expiration or termination of the domain of the concession will be resolved by them (…).
  – Ownership Right over the concession: The owner’s ownership over his mining concession is protected by the constitutional guarantee (…).
  – The exploration, exploitation or use of deposits containing substances not subject to concession may be carried out directly by the State or by its companies, or through administrative concessions or special operating contracts, with the requirements and under the conditions that the President of the Republic establishes, for each case, by supreme decree (…)” (…)“.

A narrow regulation that undermines the guarantees granted by the current Constitution

The mining Statute draft is relatively brief. There are six mining regulations (along with the transitory rules that may be issued), which are intended to lay the foundations of the mining panorama generating a significant change in relation to what exists today in our current Constitution.

However, the content of such a change is not fully defined; instead, a broad framework is left for the legislator to determine:

• It is not clearly established what the concession regime for private exploitation will be, whose determination is left to what is approved and determined in a common or simple law.
  In this way, the global idea of concession and the clearly statutory legal-concession nature of mining statute, enshrined in the current Constitution, since none of its articles regulates concessions as an instrument through which mining activity is developed. Therefore, the nature and characteristics of the mining concession title remains unknown.
• The Project regulates in a very broad and imprecise manner what is understood by mining exclusion and prohibition zones, which generates uncertainty since there is no specific parameter to determine which sectors comprise such areas. In addition, it has been proposed to the plenary of the Convention to aim at the closure of all mining activities currently located in these exclusion zones, without establishing a system for the gradual implementation of such closures. It is not yet clear what the final regulation on this matter will be, which will eventually be defined in a transitory norm.
• The Project states that the exploitation of mineral wealth will be authorized considering its finite, non-renewable nature, public intergenerational interest and its relationship with the environment.
  The above is an innovation. Therefore, for this rule to be applied, it will have to be regulated through laws that must be processed later.
• In addition, these issues must be linked to the new regulation of territories included in the Project, with those referring to the restitution of indigenous territories being especially relevant. In this regard, the creation of an Indigenous Territory Commission has been proposed to the plenary session of the Convention with broad – and almost absolute – powers to carry out cadastre and establish specific mechanisms that allow the reparation and restitution of indigenous lands, which could generate uncertainty on its impact on the development of mining.
• Finally, the Project grants particular relevance to the protection of the environment in any activity that could put it at risk – an issue currently enshrined in our current Constitution – and to the protection of areas excluded from the possibility of mining works. In relation to this point, it is not clear how this rule will be used in practice. Currently, environmental institutions allow mining activities to be carried out in this type of place as long as the requirements are met.

Finally, the Project certainly differs from our current Constitution, which conceives and defines a special regime of concessions that are protected, especially with the constitutional guarantee of the Right to Property and entrusts the Constitution, processing and resolution of controversies to the court on the expiration or termination of such concessions. Our current Constitution also establishes a higher approval quorum to change the protection regime for mining concessions, that is, through a qualified quorum law, which has given stability to this system. This will change if the new Constitution is approved, which entrusts the definition of these matters to a simple law.

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