Our Information Note on the latest development concerning the financial obligations within the Mining Law as another COVID-19 measure has been published.

1. INTRODUCTION

Law No. 7226 on the Amendment of Certain Laws (the “Law”) has entered into force following its publication in the Official Gazette (repeating) dated 26 March 2020 and numbered 31080. The Law introduces certain measures pertaining to the fight against the COVID-19 pandemic.

Article 15 of the Law introduces an additional article to the Mining Law No. 3213[1] (the “Mining Law”) which provides the option to postpone financial obligations and/or to pay such in instalments in the event of a force majeure. The Law further provides that in case of a force majeure, limitation periods and time lapses with respect to financial obligations will cease during the relevant postponement period.   

2. REGULATIONS OF THE LAW

The additional article 19 newly included in the Mining Law now regulates the existence of a force majeure situation. Accordingly, in circumstances of a force majeure, it will now be possible for the Ministry of Energy and Natural Resources (“MENR”) to postpone financial obligations within the scope of the Mining Law or to allow these to be paid in instalments upon consultation of the Ministry of Treasury and Finance. Accordingly, all limitation periods and time lapses will cease during the relevant postponement period.

The relevant provision provides that such regulation will become applicable where the existence of a force majeure is certain or can be proven or certified by the parties concerned. The new regulation further provides that MENR will be authorised to declare a state of force majeure with respect to regions, cities, areas and districts or for those facing a disaster and to determine the financial obligations under the Mining Law which will not be implemented during such period.

The entry into force of the additional article is as of 1 January 2020. This date predates the entry into force of the additional article itself which in turn implies that the intention of the legislator was to introduce a regulation of a wider-reaching scope in terms of applicability.

Despite that fact that the regulation of the Law does not contain wording as to which events will constitute force majeure or that there is currently no formal announcement of a state of force majeure by MENR, the Law has established the legal basis for the authority of MENR to do so in the future. MENR will therefore be entitled to announce a state of force majeure and provide a degree of comfort to businesses active in the mining sector by postponing their financial obligations under the Mining Law in the event that the spread of the COVID-19 pandemic expands and intensifies even further.  

3. CONCLUSION

This regulation on the postponement and/or restructuring of financial obligations under the Mining Law constitutes an adequate and positive development. The authority of MENR to declare a state of force majeure due to COVID-19 carries special importance with respect to the sustainability of the mining sector as it has the potential to offer a degree of relief by allowing relevant businesses to benefit from such postponement as of 1 January 2020.