Mining and Mining Partnership under Iranian Law
In this article, our aim is to thoroughly analyze miming and mining partnership within the framework of Iranian law. We will discuss the types of mines from the point of view of Iranian law, its point of view on mining partnership, obtaining necessary documents for conducting business in this sector, and examining a sample of mining partnership.
Mine ownership in Iran
According to Article 45 of the Constitution of Iran, mines are one of the types of property and public wealth. It means that the ownership of mines is 100% related to the general wealth, and its income goes to the country and people. This property belongs to the Islamic government.
The Islamic government makes decisions regarding mining activities by considering public opinion with paying attention to the laws and regulations. For example, according to Article 44 of the Constitution, the Islamic government can allow the exploration, extraction, and exploitation of natural or legal persons and increase the activity of the private sector. Therefore, the original owner of the mine is the monopoly of the Islamic government and cannot be transferred to others.
What is discussed about the ownership of mines is only the “right to usufruct from mines” for individuals, including natural and legal persons.
Types of mines from the point of view of Iranian laws
According to the Mining Law, a mine “refers to an area that contains a mineral reserve“. Minerals can be solid, gas, liquid, or soluble in water. Based on the law, mines are divided into four classes according to their mineral content in them:
- The first class includes minerals such as limestone, gypsum, sand, and the like.
- The second class includes metallic materials such as iron, wormwood, gold, and mercury and non-metallic materials such as nitrates, phosphates, red soil, yellow soil, all kinds of decorative and facade stones, asphalt stone, mineral gases, materials found in the continental plateau, etc.
- The third class includes crude oil, natural gas, oil rocks, etc.
- The fourth class also contains all radioactive materials.
The exploitation of mines has its conditions. According to Articles 4 and 5 of the Mining Law, the Ministry of Mining Industry and Trade is responsible for providing the necessary platform for exploring mineral reserves for natural and legal persons. In this regard, the government allocates a share of the budget annually to provide the necessary credit to create a suitable platform for mining exploration.
You shall get a license to operate in the mine and prepare and conclude a sample partnership agreement in the mine. You can contact a mining license in 3 areas to arrange this contract. These licenses include:
- Exploration permit
- Certificate of discovery
- Operation license.
There is another type of license called a temporary withdrawal permit.
Iranian law’s view of mining partnership
In setting the text of this contract, two groups of laws are adequate. The text of the mining partnership contract is written and regulated according to two groups of laws. These two categories are:
- Laws: including the Constitution of the Islamic Republic of Iran (according to Articles 44 and 45), the law on the establishment of two Ministries of Cooperation, Labor and Social Welfare and the Ministry of Industry, Mining and Trade, the Law on Mining, the Law on the Implementation of the General Policies of Article 44 of the Constitution, the Law on Removing Obstacles to Production competitive and improving the country’s financial system, Civil Law, Law of Procedure and Organization of the Court of Administrative Justice, Law of Mining Engineering System, Law of Labor, Law of Real Estate Registration, Environment and Natural Resources Laws, Laws related to the Ministry of Energy (in the water and energy sector) and Prohibition Law Intervention of government employees in government transactions and Islamic Penal Code.
- Bylaws and regulations: The Executive Regulations of the Mining Law, which was approved in 2012. This regulation covers obtaining technical and financial qualifications, calculating government salaries, etc.
Obtaining a mining lease in the mining partnership agreement
Activity and starting work in mining requires a valid degree, capital, knowledge, and mastery. All these conditions mean having a license and employment permit. Prior to you signing the mining partnership agreement sample, you shall obtain the required permits. Obtaining a mining license is possible in three methods. These three methods are:
- Exploratory steps
- Winning the auction
- Buying and selling said licenses
Sometimes it is asked how many licenses can people have? In answer to this question, we can refer to Note 2 of Article 4 of the Executive Regulations of the Mining Law:
“Real persons cannot apply for more than one range registration or exploration permit, and the number of range registration requests at a time for legal entities will be according to the Ministry’s instructions.”
The meaning of a mining discovery permit and mining discovery certificate
The mining law defines the discovery permit as follows:
“It is a license that is issued by the Ministry of Industry, Mines, and Trade to carry out mineral exploration operations in a specific area.“ and discovery certificate according to the mining law:
“It is a confirmation issued by the Ministry of Industry, Mines, and Trade after the completion of exploration operations and the discovery of reserves in the name of the holder of the exploration license.”
According to this article and the following articles contained in the law, it is clear that the ministry will visit your mine during the exploration operation and issue a discovery certificate after recording the reports on the progress of the exploration. After receiving this certificate, the mine owner is obliged to pay the ministry a percentage of his profit determined by the ministry based on the class of the mine every year.
Necessary measures to obtain permits required to participate in mining
The first step for extracting from mines is to obtain a discovery permitted. The Executive Regulations of the Mining Law provide the details of obtaining a discovery permit in the form of legal articles, which we briefly describe here:
The first step is filing a case. This file contains the following:
- Identification documents of you and your partners
- Exact coordinates of the mining area
- Special forms provided by the Ministry
- Review in the Ministry of Industry, Mining and Trade
The ministry must receive your documents, give you the receipt, and deal with your request immediately. After determining and handing over the uncontested area for mining exploration, you shall pay an amount to the government according to the tariff of the ministry.
You can determine the location of the mine by yourself (that is, provide the location you are considering, provided that it is not conflicting) and use the potential of the exploration zones that the Ministry of Mines and the Geological Organization has selected and put up for auction. After examining the case, the ministry will issue a discovery permit if there are no problems or defects.
Sample types of mining partnership contracts
This contract has three types that we can use according to the desired activity:
- Sample contract for participation in mining exploration
- Sample mining partnership agreement
- Sample contract for participation in mine exploitation
These three sample contracts are adjusted according to the type of mining activity. In addition, the example of the mining partnership contract also pays attention to the type of mineral. What kind of minerals the mine in question has, is written at the very beginning and in the sample title of the mining partnership contract.
Mining partnership based on Article 44 of the Iranian Constitution
Article 44 of the Constitution is considered one of the economic principles of the Constitution. This principle of the constitution has many supporters. The purpose of Article 44 of the Constitution is to accelerate national economic growth, improve the efficiency of economic enterprises and the productivity of financial, human, and technological resources, increase competitiveness in the national economy, increase the share of private and cooperative sectors in the national economy, increase the general level of employment, etc.
A part of this principle that is very important, and the leadership has paid attention to it in a statement and called for its strengthening, is “the general policies of the development of non-governmental sectors through the transfer of activities and government enterprises.” Based on this, you can, as a natural person and investor, apply for a license in the field of mining and start working alone or with your partner. Therefore, it is possible to allow partnership and work on mines through Article 44 of the Constitution.
A sample of partnership agreement in mines
Writing a sample mining partnership agreement is according to Civil Law. The three forms of the mining partnership contract sample do not differ much in the order of writing and arrangement. In the following, we will describe a sample mining partnership contract.
Title of the contract
We all know that the sample title of a mining partnership contract is one of the essential parts of a contract. Therefore, the title should be most closely related to the topic. This short phrase should be able to cover the contract’s content fully.
Specifications and information in the mining partnership letter
You and your partner are legally parties to the same contract. You can be natural persons or legal entities. A contract is a valid legal document. The document that proves your presence in an agreement in court is the part of the contract that contains your information. Since mines are considered the national capital, the importance of this issue increases.
In the mining partnership, information such as name, surname, father’s name, birth certificate number, national number, the exact address of residence, postal code, and contact number are recorded for natural persons. If the party to the contract is a legal entity, at this point, we write information such as the company name, registration number, economic code, exact address of the company location, phone number, name of the representative, and position of the representative.
The subject of the text of the mining partnership agreement
As we mentioned this earlier, we can use the three formats of the mining partnership agreement, the mining exploration partnership agreement, and the mining exploitation partnership agreement sample to write mining partnership contracts. As you can see, the only difference is in the subject section. Is the subject of your contract mining or exploration or extraction and exploitation?
In this part of the contract, write all the steps and tasks you consider the subject of the contract. Even specify for what purpose you have partnered with your partner.
Period of the contract
It is necessary to mention the start and end date of the contract in this section. Mines are one of the cases that can have long-term contracts. Of course, there is a condition that Article 51 of the Executive Regulations of the Mining Law refers to. Article 51 states:
“At the end of each year, the operator is required to prepare and submit to the ministry a full report of exploitation operations according to the framework set by the ministry, which includes information such as the amount of extraction, cost price, sales price and statistics, and human resources information.”
According to the law, the maximum time for a mining partnership agreement to be written and regulated is 25 years.
Contributions and capital of the parties in the sample contract of participation in mines
In this part of the contract, check the exact amount of your and your partner’s capital and record it in detail in the mining partnership letter. The amount of your investment determines your share of the mining revenue. However, in case of damage and loss, you must share and pay for this damage.
Obligations of partners
In this part of the contract, each partner’s obligations, responsibilities, and duties are explained and recorded in the agreement. As soon as the contract is signed, the parties are obliged to fulfill these obligations and start working towards the partnership’s goal.
Guarantee of the implementation of the mining partnership agreement sample
You and your business partner can take cheques from each other as a requirement to fulfill the contract. This guarantee can be in the form of a valid document, cheque, promissory note, bank guarantee, etc.
You can discuss your questions regarding Mining and Mining Partnership in Iran with our legal experts in Iran Best Lawyer.
