Energy Production and Geoconservation

Encyclopedia of Mineral and Energy Policy
DOI 10.1007/978-3-642-40871-7_1-1
# Springer-Verlag Berlin Heidelberg 2014
Energy Production and Geoconservation

Delia Evelina Brunoa* and Dmitry A. Rubanb
a
Water Research Institute/National Research Council, Bari, Italy
b
Higher School of Business, Southern Federal University, Rostov-na-Donu, Russia
Energy production from different Earth’s natural resources has always marked great social and economic
advance in the human history. Prehistoric man learned to conserve the fire after the lightning struck down
on the forests. Later on, the first energy crisis of the late Paleolithic, when the hunting target began to lack,
was resolved by the discovery of solar energy in the Neolithic age. During the centuries, the first great
civilizations invented devices to draw and carry water through hydraulic and wind energy of rivers in
order to solve the problem of field irrigation. Following the enormous technical-scientific progress of the
Renaissance, the coal became a major fuel for industry for the eighteenth, nineteenth, and twentieth
centuries. In the 1700s, its vast deposits were discovered in eastern North America. At the beginning of
the 1800s, the first natural gas deposit was drilled in Fredonia (USA) and the first oil well was drilled in
Titusville (USA). About a century later, geothermal energy was used for the first time in order to heat
buildings in Boise (USA). The Ghawar oil field, the world’s largest petroleum deposit, was discovered in
Saudi Arabia in the mid-1900s. In the modern society, the increasing demand of energy leads to more
intense exploitation of the Earth’s resources.
A lot of energy is produced from resources linked to the geological environment. First of all, these are
coal, oil, gas, and unconventional hydrocarbons (like shale gas). Their deposits are of interest to
geoconservation and geotourism because of two reasons. On the one hand, they are results of specific
geological processes. On the other hand, economic interest to these deposits and their exploration and
exploitation demonstrate the activity of humans as geological agents. That is why deposits of energy
resources can be considered as a kind of geological heritage. Besides fossil energy resources, some
renewable resources are also linked to the geological environment. These include, for instance, hydraulic
(for hydropower production) and geothermal resources. Additionally, energy production facilities dem-
onstrate the geological activity of man, and they can be treated as objects of the geological heritage.
Energy resources as available in nature and relevant energy production facilities are often not well
accessible (because of the owners’ restrictions and safety issues), although the relevant geological
heritage is represented sometimes in special exhibition/visitor centers.
The primary goals of geoconservation of energy-related objects are their recognition as valuable for
scientific, educational, and/or tourism purposes, effective management for the purposes of conservation,
and promotion of the knowledge on these objects. However, two higher tasks can be solved additionally.
The first higher task is promotion of the knowledge on energy resources, their restriction, and achieve-
ments in their use (e.g., the exploitation of low-enthalpy resource for direct use of thermal energy is not
more regulated today). This is important to make the present society aware of possible scenarios of further
socioeconomic development, which strongly depends on the amount of energy resources. A broad circle
of experts, policy makers, journalists, various activists, etc., need trustable geological and geoengineering
information permitting them to judge about such hotly debated subjects as “peak oil” or “unconventional
hydrocarbons.” A limited ability for such judgments may have serious economic consequences (e.g.,
Smith 2012). The second higher task is promotion of the interest to such alternative energy sources as
hydraulics and geothermal energy. There are several kinds of geothermal resources (Montgomery 2014),
and the importance of each of them should become well known. Hot springs and geysers are popular
*Email: [email protected]
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tourism destinations, and in some cases the latter include also geothermal power stations (examples are
known, particularly, from Iceland and Japan) (Erfurt-Cooper 2010). It should be stressed that hot spring-
related geotourism may interact with ecotourism, health tourism, and nature-based (outdoor) recreation,
which forms a good basis for the distribution of ideas on alternative energy sources.
Both fossil (nonrenewable) and renewable resources reenter into the geological heritage on the basis of
energy production system and cultural role in the past and present. Consequently, geosites can be divided
into two categories, namely: (1) directly visible and (2) needing exploration (Fig. 1). Typical energy-
relevant geosites may be either simple (e.g., single quarry, power plant, or visitor center) or complex (e.g.,
when exploited drillhole, energy production facility, and other infrastructure are located in one place). Not
only those acting but also abandoned objects are valuable, because they demonstrate the history of the
energy-related geological activity of man. Successfully reclaimed/restored sites disturbed earlier by
energy resource extraction represent man-made (or “man-improved”) geological environment, which,
therefore, deserve inclusion in geoconservation programs (examples of reclaimed coal mining sites are
considered by Krutka and Li 2013). Moreover, geoconservation can itself become an approach of
landscape reclamation at such sites, enhancing the ancient works exploitation of energy or proving
human error resulted in disasters. Finally, it should be stressed that energy-relevant geosites (especially
mines, quarries, and drillholes) provide new information about the Earth’s interiors, and consequently,
their importance is not limited to the only energy resources. A lot of stratigraphical, sedimentological,
paleontological, and other knowledge can be obtained from these sites. Their complexity contributes to
the correct understanding of the diversity of the regional geological heritage.
Coal, oil, gas, and unconventional hydrocarbons, which are the fossil energy resources, have been
exploited intensively in the entire world. They are represented in numerous geosites, and two represen-
tative examples should be noted. The first is the Ruhr Region (Germany), famous for long-term coal
mining and relevant industry. Many geosites concentrate there; these include rock outcrops and sections,
mines and quarries, coal-processing facilities, museums and exhibits, and some coal-related cultural
heritage (M€ ugge-Bartolović et al. 2011; Stottrop 2013). These do not provide the only information on coal
as a resource but also exhibit a lot of valuable stratigraphical, paleontological, tectonic, hydrogeological,
and other features. This exceptional regional geological heritage is conserved properly and used actively
for the purposes of geotourism and cultural tourism. The second example is from Oman, where the
national geological heritage is used actively for the purposes of tourism (Lawrence 2010). This country
boasts rich oil resources, and the Oil and Gas Exhibition Centre and Planetarium in Muscat offers a unique
possibility to perceive the heritage value of these resources.
Fig. 1 Earth’s energy resources and category of observation/production for geoconservation
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The world hydropower production is due to approximately thousand dams that provide part of the
world electricity. The dams, apart from being a source of energy, are also defense work and fluvial
reservoirs for drinking water or irrigation. The creation of artificial reservoirs poses environmental
problems through influences on microclimate, flora, fauna, sedimentary budget, etc., both upstream and
downstream of the dams. In some cases, these sites may become areas of interest if well integrated into the
natural environment and if a cultural/historical valence joins to peculiar geological and geomorphological
features. Electricity can be also produced by tide through the construction of dams between the headlands
of a bay; in this way, the environmental impact is “limited” to coastal ecosystems. The (geo)conservation
and (geo)tourism potential of hydropower production sites may be significant. For instance, Ampollino,
Arvo, and Cecita lakes have been created on the Sila Massif (Italy) in the 1950s to hydroelectric
exploitation of rivers (Scarciglia et al. 2008). Today, these lakes are perfectly integrated into the
environment, acquiring a significant touristic value. They have become important hydrological and
geomorphological components of the regional nature heritage. Another example can be found on the
Zambezi River (Zambia and Zimbabwe), where the Kariba dam has been created (Osborne 2000). The
relationship between archaeological remains and the soil they rest upon is well known. Less known, but
certainly not new, is their relationship with water (Frémond and Maceri 2003), especially used for the
energy production. Kerisel (1987) reports a map which indicates all sites of ancient dams in the
Mediterranean area, mentioning the Jawa dam (Jordan) as the oldest site in the Mediterranean basin.
The area between the Muro Lucano dam and the Pascone River (Italy), in which there are ruins of ancient
water mills, is a site of particular environmental, geological, and cultural interest. Indeed, the hydropower
exploitation has been an important vocation of this area for centuries. The abandoned dam is an example
of industrial archeological site with geological value (it reflects the geological activity of man in the past),
and the ancient water mills are also indelible marks of the interconnection between human activities and
nature.
The geoconservation concept (Wimbledon and Smith-Meyer 2012) can also be applied to sites known
for being related to hydraulics-related geological hazards. Perhaps, the most sorrowfully famous Euro-
pean geosite of this kind is the Vajont dam (Italy) where the prehistoric rockslide of Monte Toc (Paronuzzi
and Bolla 2012) caused more than 2,000 deaths in 1963 (Schuster 1996). The hazard was caused by the
abnormal wave provoked by a landslide, and the wave of reflux went down to the lake, destroying the
town of Longarone. Presently, a notable interest in the Vajont dam exists: frequent guided tours are
organized for specialists interested in scientific aspects of the dam as well as tourists who can access the
entire path of the dam crown, observing the striking scenery of the Monte Toc landslide and the
Longarone valley. The tunnels inside the mountain are not yet accessible, but a noncompetitive running
event entitled “The Paths of Memory” allows to cross all the inside structures of the mountain since
September 2006. Of interest is also the first plant constructed for exploitation of tidal waves in La Rance
(France) (this experiment was disappointed later since the cost of energy produced is higher than
conventional hydropower systems) (Andre 1978; De Laleu 2009).
Recovery and utilization of the Earth’s heat acquired more importance due to the need of diversifying
sources of energy. The temperature of the Earth increases 1 C/30 m of depth, but in geologically active
areas, as volcanic ones, the gradient is greater. All over the world, more and more plants use this resource
according to different geothermal systems prevailing in a geological area. The geothermal source is
continuous and independent from climatic influences; but, since its transport is very difficult, it is used
chiefly for local needs. The conventional hydrothermal systems, used both in the production of electricity
and in direct uses, consist of a reservoir, which contain the fluid, covered by impermeable rocks, with
temperature between 70 C and 200 C (Buonasorte et al. 2010). Omitting all unconventional systems,
direct utilization of conventional geothermal system is well known and distributed in many countries. The
presence of geothermal events has attracted in past eras human settlements favoring their development.
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Furthermore, the evidence of the surface heat Earth (also volcano-tectonic phenomena) originated
legends, myths, folk customs, and the existence of divinity (beneficial or malevolent) or mythological
beings endowed with superhuman strength (Cataldi 2002). Baianus Lacus (Italy) is an example of
submarine geosite near the Phlegrean Fields, an active volcanic complex, where bradyseism and recent
volcanic activity strongly influenced the coastline shape over the last 2 Ka (Passaro et al. 2013). At 6 m
below the sea level, there are the remains of nymphaeum triclinium, a sacred monument built to a nymph
near a spring (First Century BC), villas with mosaic floors, a wine shop, and thermal bath plants (Davidde
2002), in which the conventional geothermal resource was used. The Ischia Island, a part of the same
Phlegrean Fields, is an example of resurgent caldera with hydrothermal activity well known since the ages
of the Romans. Actually, its thermal waters are used for balneotherapeutic medical cures (Sbrana
et al. 2010). The preservation of the Phlegrean Fields is a part of the great “integrated” operation for
the recovery of archaeological and geological areas in the Campania Region. A “slow tour,” along more
than 50 km, will be realized to visit on foot or on bike this geosite as a whole, because losing this
geoheritage means losing natural references of much classic literature. The other example is the geosite of
the Menderes River valley (Turkey) delimited by a step fault escarpment with a large geothermic field
giving rise to thermal water springs and poisonous gases. Travertine deposits have also covered part of
archaeological remains of a temple that was built for the main divinity of Hierapolis Apollo (Negri and
Leucci 2006).
With the requirement of increasing fluid production rates and higher wellhead pressures, the target
depth of geothermal energy development has increased in many countries. This turns attention to possible
unconventional geothermal system geosites. Several 3,000–4,000 m deep geothermal wells have been
drilled in Italy, the USA, as well as in Mexico, Japan, New Zealand, and the Philippines. The Reykjanes
(Iceland) geothermal system is much hotter and exploited on a limited scale at present. There, high-quality
salts are extracted from the high-temperature geothermal brine. Reykjanes can be considered a natural
drilling platform above a mid-ocean-ridge high-temperature system. Seawater salinity, high metal con-
tent, and open fracture system on the spreading Reykjanes ridge make it an ideal site for studies on high
pressure-temperature to harness similar fluids as thrive within the black smokers on ocean ridges
(Fridleifsson and Albertsson 2000). In Iceland, some best practices of geoconservation for a quality
geotourism are being developed on geothermal areas. The “Bridge Between Two Continents” and the
“World of Fire” buried village are touristic attractions since 1973 and they are situated on the lava-scarred
peninsula where two of the Earth’s tectonic plates split (Dowling and Newsome 2008). Larderello (Italy)
is one of the most ancient areas of energy production by geothermal source, where today is possible to
visit the geothermal museum and park (Fig. 2; Rossato and Tonelli 2009). The Geysers (USA) is the only
other significant geothermal field that produces dry steam. In fact, the more common kind of steam found
in geothermal fields is wet steam, such as Cerro Prieto (Mexico), Wairakei (New Zealand), Reykjavik
(Iceland), and Otake (Japan).
Generally, a great variety of geosites with unique geological features are both linked to the memory of
peoples and have an economic role for its vocation to energy production. These sites, for their important
value, need prudent management. It is clear geoconservation requires policy implication of deep impor-
tance into strategies of sustainable exploitation that will preserve the territory’s geological heritage and
will produce economic benefits to population. In many countries, the mineral/energy policy is changing to
deal with global competition, and, unfortunately, in many others these rules are totally absent. However, it
is the national mining/energy policy that can facilitate conservation of energy-related geological heritage.
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Fig. 2 Larderello site: “Park of Biancane” designated by the light color of rocks due to coating of salt efflorescence and
cooling towers of the geothermal plant in the distance
Cross-References
▶ Geoconservation Policy
▶ Geosite, Concept of
▶ Geosites, Classification of
▶ Mining and Geoconservation
▶ Regional Geological Heritage
References
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Buonasorte G, Rizzi F, Passaleva G (2010) Direct uses of geothermal energy in Italy 2005–2009: Update
Report and Perspectives. In: Proceedings World Geothermal Congress. Bali, pp 1–5
Cataldi R (2002) Sviluppo storico della geotermia nel mondo, con particolare riguardo al periodo
1950–2000. Geotermia 2:4–8
Davidde B (2002) Underwater archaeological parks: a new perspective and a challenge for conservation
the Italian panorama. Int J Naut Archaeol 31:83–88
De Laleu V (2009) La Rance tidal power plant. 40-year operation feedback-lessons learnt. In: British
hydropower association annual conference, 14–15 Oct 2009. Liverpool, pp 1–40
Dowling RK, Newsome D (2008) Geotourism. In: Proceedings of the inaugural global geotourism
conference, discover the earth beneath our feet, Promaco Conventions, Fremantle, pp 17–20
Erfurt-Cooper PJ (2010) Active geothermal and volcanic environments as tourist destinations. In:
Dowling R, Newsome D (eds) Global geotourism perspectives. Goodfellow, Woodeaton, pp 33–48
Frémond M, Maceri F (2003) Novel approaches in civil engineering. In: Pfeiffer F, Wriggers P (eds)
Lecture notes in applied and computational mechanics. Springer, Berlin, p 400
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Fridleifsson GÓ, Albertsson A (2000) Deep geothermal drilling on the Reykjanes ridge opportunity for
international collaboration. In: Proceedings of the world geothermal congress, Kyushu-Tohoku/
Reykjavik, pp 3701–3705
Kerisel J (1987) Down to earth, foundations past and present: the invisible art of the builder.
A.A. Balkema, Rotterdam, p 149
Krutka H, Li J (2013) Case studies of successfully reclaimed mining sites. Cornerstone Off J World Coal
Ind 1:70–74
Lawrence A (2010) Geotourism in the Sultanate of Oman. In: Dowling R, Newsome D (eds) Global
geotourism perspectives. Goodfellow, Woodeaton, pp 93–112
Montgomery CW (2014) Environmental geology, 10th edn. McGraw-Hill, New York, p 500
M€ugge-Bartolović V, Röhling H-G, Wrede V (eds) (2011) Geotop 2010. Geosites for the public.
Paleontology and conservation of geosites. In: M€ ugge-Bartolović V, Röhling H-G, Wrede V (eds)
Schriftenreiche der Deutschen Gesellschaft fur Geowissenschaften, vol 66. Hegen, Germany,
pp 1–244.
Negri S, Leucci G (2006) Geophysical investigation of the Temple of Apollo (Hierapolis, Turkey).
J Archaeol Sci 33:1505–1513
Osborne NS (2000) Management of shared river basins: the case of the Zambezi River. Water Policy
2:65–81
Paronuzzi P, Bolla A (2012) The prehistoric Vajont rockslide: an updated geological model. Geomor-
phology 169–170:165–191
Passaro S, Barra M, Saggiomo R, Di Giacomo S, Leotta A, Uhlend H, Mazzola S (2013) Multi-resolution
morpho-bathymetric survey results at the Pozzuoli e Baia under water archaeological site (Naples,
Italy). J Archaeol Sci 40:1268–1278
Rossato L, Tonelli G (2009) Il parco geo-mineralogico dell’Isola D’Elba: stato dell’arte. In: Recupero e
valorizzazione delle miniere dismesse: lo stato dell’arte in Italia. Atti della Sessione V3 – GeoItalia
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Sbrana A, Fulignati P, Giulivo I, Monti L, Guidetti G (2010) Ischia Island (Italy) geothermal system. In:
Proceedings world geothermal congress. Bali, 25–29 Apr 2010, pp 1–6
Scarciglia F, De Rosa R, Vecchio G, Apollaro C, Robustelli G, Terrasi F (2008) Volcanic soil formation in
Calabria (southern Italy): The Cecita Lake geosol in the late Quaternary geomorphological evolution of
the Sila uplands. J Volcanol Geotherm Res 177:101–117
Schuster RL (1996) Socioeconomic significance of landslides. In: Turner AK, Schuster RL (eds)
Landslides: investigation and mitigation, vol 247, Special report. Transportation Research Board,
National Research Council, Washington, DC, pp 12–35
Smith JL (2012) On the portents of peak oil (and other indicators of resource scarcity). Energy Policy
44:68–78
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Geoconservation, Concept of
José Brilha*
Institute of Earth Sciences, Pole of the University of Minho, Braga, Portugal
The exceptional scientific value of certain geodiversity elements justifies the need to implement proper
measures in order to assure their conservation. Obviously, not all geodiversity elements should be
envisaged for conservation. Most elements have no particular value, and a vast variety of geological
resources are exploited everyday to satisfy the needs of modern societies. This means that accurate
methods should be used to select exceptional sites that need to be protected and conserved, i.e., geosites. It
should be noted that geological heritage (or geoheritage) encompasses in situ occurrences of notable
geodiversity elements (minerals, fossils, rocks, soils, and landforms) and ex situ elements usually
integrating museum collections. Their management requires different approaches based on different
legal settings. While geosites protection is usually assured by nature conservation policies, museum
collections fall into the category of cultural assets. The main scope of geoconservation is the conservation
of geosites, the basic units of the geological heritage of the Earth, by means of specific inventory,
evaluation, conservation, valuing, and monitoring procedures (Henriques et al. 2011). In addition, the
management of geological specimens in collections is also considered as geoconservation. Therefore,
geoconservation must be regarded a comprehensive strategy fostering the conservation of geological
heritage, from identification and assessment to management (Prosser 2013). Initially, the concept of
geoconservation was not restricted to the conservation of geoheritage but rather applied to all geodiversity
(Sharples 1993, 1995). However, in the recent years, the scope of geoconservation has been narrowed,
and it has gained greater specialization. Today, geoconservation is also considered an emergent geosci-
ence discipline (Henriques et al. 2011), like mineralogy, paleontology, or geomorphology. This statement
is based on the existence of a growing volume of scientific knowledge on the subject, creation of research
schools and teaching, discussion of data and results among experts, and publication of peer-reviewed
papers in specialized scientific journals.
Geoconservation is a discipline with five close connections with the society (see i–v below).
(i) Concerning scientific practice, two different aspects should be considered. Firstly, selection and
assessment of geosites is based on scientific data and procedures. Secondly, conservation of geosites
assures the availability of key geodiversity elements, which are essential for advancement of geosciences.
(ii) Regarding nature conservation policies, geoheritage corresponds to the abiotic part of natural heritage;
alas, current conservation actions still focus on the preservation of biodiversity (Brilha 2002). During its
60 years of activity, the International Union for Conservation of Nature (IUCN) has been promoting
biodiversity almost exclusively. Only recently, did the IUCN show some signs of change, by acknowl-
edging the importance of geoheritage in nature conservation. Two IUCN’s resolutions stressing the
importance of geodiversity in nature and the need to protect geoheritage were approved: the first one in
2008 (Resolution 4.040 – Conservation of geodiversity and geological heritage) and the second in 2012
(Resolution 048 – Valuing and conserving geoheritage within the IUCN Programme 2013–2016).
Another link with nature conservation is the necessity to support geoconservation actions by a proper
legal framework. (iii) The occurrence of geosites should also be considered by national policies of land-
use planning and impact assessment evaluations, as well as by national mineral policies. The need to
conserve geosites and the consequent setup of management procedures may imply restrictions in the
ordinary use of the territory. For instance, the protection of a geosite may justify changes in initial
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planning concerning construction of new infrastructures, such as roads, dams, or buildings. During
environmental impact assessment, the occurrence of geosites in a certain area should be considered in
the final evaluation. (iv) The link between geoconservation and education is twofold: on the one hand, the
conservation of geosites with high educative value is a mean to raise awareness on geoconservation, in
particular, and on geosciences, in general. A society more and better informed about geology is more
willing to accept geoconservation. On the other hand, a society that has some knowledge on the value of
geoheritage guarantees a more effective geoconservation. (v) Nowadays, geotourism is considered a niche
sector of nature sustainable tourism. Regardless of the different approaches to the geotourism definition,
there is no doubt that the existence of geodiversity elements (mainly landforms) as touristic attractions is
important to originate economical and social revenues. Geosites with touristic value do not only support
economical activities, but they also help visitors to interpret nature and to better understand our planet.
Cross-References
▶ Geoconservation, History of
▶ Geodiversity
▶ Geosites, Management of
▶ Mining and Geoconservation
References
Brilha J (2002) Geoconservation and protected areas. Environ Conserv 29:273–276
Henriques MH, Pena dos Reis R, Brilha J, Mota TS (2011) Geoconservation as an emerging geoscience.
Geoheritage 3:117–128
Prosser CD (2013) Our rich and varied geoconservation portfolio: the foundation for the future. Proc Geol
Assoc 124:568–580
Sharples C (1993) A methodology for the identification of significant landforms and geological sites
for geoconservation purposes. Report to the forestry commission, Tasmania, p 31. Available at http://
eprints.utas.edu.au/11747/
Sharples C (1995) Geoconservation in forest management – principles and procedures. Tasman For
7:37–50
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Geoconservation, History of
José Brilha*
University of Minho and ProGEO, Braga, Portugal
The word “geoconservation” was probably used for the first time in Tasmania (Australia) in the beginning
of the 1990s (Sharples 1993). Sharples, a pioneer of Australian geoconservation, reports that during the
period of 1993–1994, the Forestry Commission of Tasmania prepared several reports with preliminary
inventories of landforms in the state forests of Tasmania in order to facilitate “the conservation of Earth
systems (‘Geoconservation’)” (Sharples 1993). However, initiatives to protect particular geological and
geomorphological features started centuries before, during the seventeenth century. The first example of
the protection of geological features dates back to 1668, concerning the protection of the Baumannshöhle
cave in the Harz Mountains in Germany (Grube 1994). During the nineteenth century, Germany continued
to protect geology, and some other countries such as Denmark, Switzerland, and Belgium initiated the
protection of certain localities, mostly for their striking geomorphological features (Erikstad 2008). In
1819, legal actions were taken to prevent impacts on the city landscape due to quarrying of stone from
Salisbury Crags in Edinburgh, Scotland (Gray 2013). In Britain, the Lepidodendron stumps of “Fossil
Grove” in Glasgow have been protected since their discovery in 1887; at about the same time, the
“Agassiz Rock” (a striated rock surface due to the effects of the passage of glacier ice) was also preserved
in Edinburgh (Black 1988). The Yellowstone National Park established in 1872 in the USA is considered
the first formal protected area. The establishment of protected areas quickly expanded to other countries
during the twentieth century, but most of the time geoconservation actions were not considered a priority
by park managers (Brilha 2002).
The first public institution devoted specifically to geoconservation was perhaps the one created in Great
Britain in the mid-twentieth century. In 1949, the approval of the National Parks and Access to the
Countryside Act was the first step toward the establishment of the Nature Conservancy, the world’s first
statutory nonvoluntary conservation body, which included the conservation of geological and geomor-
phological features in its role (Prosser 2012). This initiative led to the first full-time professional role in
geoconservation, a role filled in 1950 by an experienced geologist, W. A. Macfadyen, and held by him for
10 years until his retirement in 1960 (Prosser 2012). In 1977, the Nature Conservancy established the
Geological Conservation Review, setting the background for the implementation of geosites conservation
by means of a scientific-based methodology (Wimbledon 1988). The aim of the Geological Conservation
Review was to “assess systematically the scientific part of the geological heritage of Great Britain and to
select for conservation those localities that exceed a minimum threshold in their national (British) value to
Earth science” (Ellis 2008). The UK played an important role in the establishment of the first methods
aiming at the national-scale systematic inventory of geosites with scientific value. These methods were
adapted in several other countries, particularly in Europe. International institutions started to deal with
geoconservation issues in the 1970s. The UNESCO’s “Convention Concerning the Protection of the
World Cultural and Natural Heritage” signed in Paris in 1972 was the first international effort to select
sites of paramount world importance due to their natural characteristics. Presently, 200 sites are
inscribed in the World Heritage List for their natural properties, and one third of them were selected
mainly due to their geological significance. UNESCO is also linked to geoconservation through geoparks.
Geoparks are well-defined territories with a development plan that aims at integrating geoconservation
with the preservation of local communities’ cultural identity. Based on the conservation of natural and
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cultural assets and on the promotion of education and geotourism, geoparks are designed to promote the
sustainable development of local populations (McKeever et al. 2010). A Global Network of National
Geoparks (GGN) has been set up under the auspices of UNESCO since 2004, and it integrates today
111 geoparks from 32 countries. The International Union of Geological Sciences (IUGS) created the
project “Global Geosites” in 1996 aiming at the inventory of geosites with worldwide scientific impor-
tance (Wimbledon et al. 1999). However, this project was closed in 2003 by the IUGS without reaching
the main goals initially expected. Since 1970, the IUGS’s International Commission on Stratigraphy has
identified and protected global stratotypes, which are localities with world scientific relevance to
understand the Earth’s time scale (GSSP, Global Boundary Stratotype Section and Point). More recently,
in 2011, a new Geoheritage Task Group was created by the IUGS. The International Geographical Union
(IGU) has a Commission on Geoparks since 2008 with a vision to promote the development of geoparks
from a geographical perspective. The International Union for Conservation of Nature (IUCN) has
approved two resolutions in 2008 and 2012 stressing the importance of geodiversity in nature and the
need to protect geoheritage. In 2013, a new Geoheritage Specialist Group was created under the scope of
the IUCN’s World Commission on Protected Areas. The European Association for the Conservation of
the Geological Heritage (ProGEO) was created in 1993, and it comprehends today the national groups in
most European countries (Wimbledon and Smith-Meyer 2012). ProGEO evolved from “the European
Working Group on Earth-Science Conservation,” which was created during a workshop in Leersum (the
Netherlands) in 1988. Presently, ProGEO is the most important international NGO concerning
geoconservation and an active member of IUGS and IUCN. In 2001, the International Association of
Geomorphologists created the working group “Geomorphological Sites: research, assessment and
improvement” (the name was later changed to “Geomorphosites: research, protection and education”).
This active group has been promoting scientific events, courses, and publications, mainly dedicated to the
conservation and management of geomorphological heritage.
On the national level, geoconservation is being pushed forward by several types of institutions, namely,
geological surveys (Albania, Argentina, Brazil, Chile, Denmark, Finland, Greece, Spain, Sweden, etc.),
universities and research institutes (Bulgaria, France, Iceland, Italy, Morocco, Portugal, Romania, Spain,
Switzerland, etc.), official institutions dedicated to nature conservation (China, Norway, Poland, Serbia,
the UK, the USA, etc.), and NGOs (Croatia, Portugal, Turkey, the UK, etc.).
The last decade of the twentieth century marked the beginning of international meetings focused on
geoconservation. The “First International Symposium on the Conservation of our Geological Heritage”
held in Digne (France) in 1991 was attended by over 100 specialists from more than 30 countries. This
event is considered a landmark of international discussions on geoconservation. The proceedings of the
second international conference organized in Malvern (UK) in 1993 are a reference document with
international impact (O’Halloran et al. 1994). So far, ProGEO has organized seven international symposia
since its foundation in 1993, and the Global Geoparks Network organizes a general conference every
2 years since 2004. Every 4 years, the International Geological Congress hosts geoconservation thematic
sessions, at least since the 32nd convention held in Florence (Italy) in 2004.
Some recent developments in geoconservation education and training are worth mentioning. The
University of Minho (Portugal) offers a master’s degree on geological heritage and geoconservation since
2005 (Brilha et al. 2012). A growing number of universities worldwide are offering courses on different
subjects related to geoconservation, either as master or PhD studies. Summer courses joining students and
experts in different areas of geoconservation are also organized in many countries for the last decade.
A reference set of papers on the history of geoconservation was published in 2008 by the Geological
Society of London (Burek and Prosser 2008). Much more information about initiatives that belong to the
history of geoconservation is available, but it remains published in only national languages; this is an
obstacle to worldwide recognition.
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Cross-References
▶ Geoconservation, Concept of
▶ Geodiversity
References
Black G (1988) Geological conservation: a review of past problems and future promise. In: Crowther PR,
Wimbledon WAP (eds) The use and conservation of palaeontological sites, vol 40, Special papers in
palaeontology. Palaeontological Association, London, pp 105–111
Brilha J (2002) Geoconservation and protected areas. Environ Conserv 29:273–276
Brilha J, Pereira D, Pereira P (2012) Geoconservation education, research and outreach: the experience of
the University of Minho (Portugal). Geologia dell’Ambiente, Società Italiana di Geologia Ambientale,
Supplemento al n. 3/2012:191–192
Burek CV, Prosser CD (eds) (2008) The history of geoconservation, vol 300, The Geological Society,
London, special publication, p 312
Ellis N (2008) A history of the geological conservation review. In: Burek CV, Prosser CD (eds) The
history of geoconservation, vol 300. The Geological Society, London, pp 123–135
Erikstad L (2008) History of geoconservation in Europe. In: Burek CV, Prosser CD (eds) The history of
geoconservation, vol 300. The Geological Society, London, pp 249–256
Gray M (2013) Geodiversity: valuing and conserving abiotic nature, 2nd edn. Wiley-Blackwell, Chich-
ester, p 495
Grube A (1994) The national park system in Germany. In: O’Halloran D, Green C, Harley M, Stanley M,
Knill J (eds) Geological and landscape conservation. Geological Society, London, pp 175–180
McKeever P, Zouros N, Patzak M, Weber J (2010) The UNESCO global network of national geoparks. In:
Newsome D, Dowling R (eds) Geotourism: the tourism of geology and landscape. Goodfellow,
Oxford, pp 221–230
O’Halloran D, Green C, Harley M, Stanley M, Knill J (eds) (1994) Geological and landscape conserva-
tion. Geological Society, London, p 530
Prosser CD (2012) William Archibald Macfadyen (1893–1985): the ‘father of geoconservation’. Proc
Geol Assoc 123:182–188
Sharples C (1993) A methodology for the identification of significant landforms and geological sites for
geoconservation purposes. Report to the forestry commission, Tasmania, p 31. Available at http://
eprints.utas.edu.au/11747/
Wimbledon WAP (1988) Palaeontological site conservation in Britain: facts, form, function, and efficacy.
In: Crowther PR, Wimbledon WA (eds) The use and conservation of palaeontological sites,
vol 40, Special papers in palaeontology. Palaeontological Association, London, pp 41–55
Wimbledon WAP, Smith-Meyer S (eds) (2012) Geoheritage in Europe and its conservation. ProGEO,
Oslo, p 405
Wimbledon WAP, Andersen S, Cleal CJ, Cowie JW, Erikstad L, Gonggrijp GP, Johansson CE, Karis LO,
Suominen V (1999) Geological World Heritage: GEOSITES – a global comparative site inventory to
enable prioritisation for conservation. Memorie Descrittive della Carta Geologica d’Italia 54:45–60
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Geoconservation Policy
Maria Helena Henriques*
Department of Earth Sciences and Geosciences Centre, Faculty of Sciences and Technology, University of Coimbra, Coimbra,
Portugal
Introduction
Geoconservation is related to a new social responsibility toward the sustainable use of the geological
resources, including those geological elements (or geosites) displaying exceptional scientific, educational,
touristic, or cultural value – the geological heritage of the Earth (Henriques et al. 2011). The geosites,
being notable representatives of natural heritage, must be protected by nature conservation and land-use
planning policies (Brilha 2002). However, the implementation of strategies and guidelines for the
protection and management of areas of special geological interest and/or the establishment of a legal
framework in order to protect geosites is a social matter.
As such, it involves different actors besides geoscientists, the only professionals who have the expertise
to provide adequate geoheritage evaluations. And their perception concerning the need of protection of a
geosite is not always well understood by the politicians who have the power to legislate on nature
conservation.
So, different countries and/or regions around the world, by displaying very different social conditions,
legislation, and history linked to nature management, take care or not of their natural heritage, including
its geological component. As a result, the geological heritage of the planet is irregularly protected all over
the world (Pena dos Reis and Henriques 2009).
In Europe, for instance, geoconservation is generally actively pursued, and many countries have
different legal instruments that allow the preservation of their geological heritage (Wimbledon and
Smith-Meyer 2012). But in some of them, the nature conservation policies implemented have led to the
approval of legal instruments that have created misconceptions of nature, confusing it with its biological
component only and not as component of the Earth’ s natural heritage (Henriques 2004). In others,
geosites’ protection has been expert driven through a top-down process linked to formal administrative
procedures resulting in a vast number of protected areas, but also in skepticism, even hostility in many
local societies among landowners and stakeholders (Erikstad 2013).
On the other hand, in Africa, the situation is quite different. Although many countries contain important
sites displaying heritage value, geoconservation has a relatively poor record (Reimold 1999; Schl€uter
2008; Henriques et al. 2013).
In order to avoid such deficiencies, legal instruments concerning geoconservation should be prepared
with a great caution and with the participation of experts in geoconservation, in articulation with experts in
resources policy and law (Ruban 2012), and involving local communities. The social role attributed to
geological objects by communities outside Earth scientists should be taken into account particularly with
regard to the geosites’ selection and assessment (Pena dos Reis and Henriques 2009). In fact, within any
society, it is the social perception of nature that affects individual and/or collective, personal and/or
institutional decisions, behaviors, and attitudes in relation to nature, geosites included (Fig. 1).
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Fig. 1 The social perception of nature as the main factor affecting both public policies and legal instruments on nature
conservation within any society
Global Reference Documents and Initiatives

Several international documents and initiatives toward the conservation of the geological heritage have
been made in recent decades (Larwood et al. 2013). Most of them have inspired present-day policies and
legal instruments around the world. They reflect a geoconservation growing movement, which is
supported by local, national, and international geoconservation groups, nationally driven programs or
international initiatives (Prosser 2013).
The World Heritage Convention which was adopted by the General Conference of UNESCO on
16 November 1972 is a supranational initiative which has strongly influenced national policies world-
wide, and it is by now a reference document for at least 190 state members (UNESCO 2014a). It aims at
linking together in a single document “the concepts of nature conservation and the preservation of cultural
properties [and] recognizes the way in which people interact with nature, and the fundamental need to
preserve the balance between the two” (UNESCO 2014b).
More recently, and also emerging from the political sphere, the Council of Europe adopted the
Recommendation Rec(2004)3 on conservation of the geological heritage and areas of special geological
interest (Council of Europe 2004). The state members are, since then, committed in reinforcing existing
legal instruments or developing new ones, to protect areas of special geological interest and moveable
items of geological heritage, taking into account existing organizations and current geological conserva-
tion programs.
By recognizing the important role of the existing inventory programs grounded by the IUGS and
ProGEO (the GEOSITES project; Wimbledon 1996), by the European Geoparks Network assisted by the
UNESCO (EGN 2014), and by NGOs and other relevant organizations, the Rec(2004)3 represents a step
forward toward the vision that conservation of the geological heritage for future generations is everyone’s
responsibility, thus imposing new challenges not only for geoscientists but for all sectors of society
(politicians, businessmen, educators, and media) (Ruban 2012).
The International Year of Planet Earth (IYPE) (2007–2009) was a global initiative developed in the
framework of the United Nations Decade of Education for Sustainable Development (2005–2014). It
emphasized the need to generate interest and greater awareness among the general public, decision-
makers, and politicians about the effective application of Earth Sciences knowledge to promote sustain-
able extraction of Earth’s resources (De Mulder et al. 2006). Moreover, the Paris Declaration presented at
the Global Launch Event of IYPE highlights the relevance of promoting awareness of the structure,
evolution, beauty, and diversity of the Earth system and its human cultures inscribed in landscapes,
through the establishment of geoparks, biosphere reserves, and World Heritage Sites as a public tool for
conservation and development (PD 2008).
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Conclusion
Geologists and the society, including policy makers, generally do not agree on the evaluation and
subsequent legal protection of the heritage value of geosites, except for those exhibiting more “popular”
contents such as volcanoes, dinosaur track sites, or outstanding landscapes (Pena dos Reis and Henriques
2009). As a consequence, the very need for conservation of the geological heritage is still not well
developed and accepted in many countries and needs to be promoted as a priority (Erikstad 2013).
Geoconservation policies and legislation are important but not enough to ensure the integrity of the
geological heritage of the Earth. Educational interventions using geoparks, for instance, can contribute to
promote significant and relevant learning on geology and on geoconservation, thus increasing the public
awareness of the need to require from governors’ appropriate political measures (Henriques et al. 2012).
References
Brilha J (2002) Geoconservation and protected areas. Environ Conserv 29(3):273–276
Council of Europe (2004) Recommendation Rec(2004)3 on conservation of the geological heritage and
areas of special geological interest. Council of Europe, Committee of Ministers. Available: https://wcd.
coe.int/ViewDoc.jsp?id=740629. Accessed 6 Feb 2014
De Mulder EFJ, Nield T, Derbyshire E (2006) The international year of planet earth (2007–2009): earth
sciences for society. Episodes 29(2):82–86
EGN (2014) European geoparks network. Available: http://www.europeangeoparks.org/. Accessed 6 Feb
2014
Erikstad L (2013) Geoheritage and geodiversity management – the questions for tomorrow. Proc Geolo
Assoc 124(4):713–719
Henriques MH (2004) Jurassic heritage of Portugal – state of the art and open problems. Riv Ital Paleontol
Stratigr 10(1):389–392
Henriques MH, Pena dos Reis R, Brilha J, Mota T (2011) Geoconservation as an emergent geoscience.
Henriques MH, Tomaz C, Sá AA (2012) The Arouca Geopark (Portugal) as an educational resource: a
study case. Episodes 35(4):481–488
Henriques MH, Tavares AO, Bala ALM (2013) The geological heritage of Tundavala (Angola): an
integrated approach to its characterization. J Afr Earth Sci 88:62–71
Larwood JG, Badman T, McKeever PJ (2013) The progress and future of geoconservation at a global
level. Proc Geol Assoc 124(4):720–730
PD (2008) Paris declaration. Declaration presented at the Global Launch Event of the International Year
of Planet Earth (IYPE), UNESCO, Paris, 12–13 Feb 2008. International Year of Planet Earth.
Available: http://yearofplanetearth.org/content/GLE/declaration/ParisDeclaration.doc. Accessed
10 Feb 2014
Pena dos Reis R, Henriques MH (2009) Approaching an integrated qualification and evaluation system
for geological heritage. Geoheritage 1:1–10
Assoc 124:568–580
Reimold WU (1999) Geoconservation – a southern African and African perspective. J Afr Earth Sci
29(3):469–483
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Ruban DA (2012) Geoconservation versus legislation and resources policy: new achievements, new
questions – comment on Cairncross (Resources policy, 2011) The national heritage resource act (1999):
can legislation protect South Africa’s rare geoheritage resources? Resour Policy 37:126–129
Schl€
uter T (2008) Geological atlas of Africa: with notes on stratigraphy, tectonics, economic geology,
geohazards, geosites and geoscientific education of each country, 2nd edn. Springer, Berlin/Heidelberg,
pp 1–308
UNESCO (2014a) States parties: ratification status. UNESCO world heritage centre. Available: http://
whc.unesco.org/en/statesparties/. Accessed 6 Feb 2014
UNESCO (2014b) The world heritage convention. UNESCO world heritage centre. Available: http://whc.
unesco.org/en/convention/. Accessed 6 Feb 2014
Wimbledon WAP (1996) GEOSITES – a new IUGS initiative to compile a global comparative site
inventory, an aid to international and national conservation activity. Episodes 19:87–88
Wimbledon WAP, Smith-Meyer S (eds) (2012) Geoheritage in Europe and its conservation. ProGEO,
Oslo, pp 1–405
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Geodiversity
Dmitry A. Ruban*
Higher School of Business, Southern Federal University, Rostov-na-Donu, Russia
Geodiversity is a fundamental concept of geoconservation. It was introduced in the early 1990s to be fully
developed (as a kind of paradigm) a decade later by Gray (2004, 2008, 2013). Generally, geodiversity is
understood as a diversity of geological phenomena that constitute the geological heritage and make the
latter unique and needing conservation/protection. However, there is not any single definition of
geodiversity, and this concept is understood by geoconservationists with certain difference. The main
views were summarized by Gray (2004, 2008, 2013), Panizza and Piacente (2009), Ruban (2010), and
Serrano and Ruiz-Flaño (2009). Moreover, Panizza and Piacente (2009) proposed six types of the
geodiversity and emphasized that it can be considered from the “intrinsic” and “extrinsic” points of
view, i.e., with regard to the geological complexity of a given area or its geological differences from the
other areas, respectively. All available views complement one another, and they should not be judged
contradictory. Generally, the concept of geodiversity is very close to that of biodiversity, although these
concepts should not be mixed (if even they intersect in somewhat).
The geodiversity sensu stricto is a number of geosite types. It should be distinguished from
geoabundance (the number of geosites) and georichness (the number of both geosite types and geosites)
(Ruban 2010). The number of geosites types depends on the classification of geosites. According to
Ruban (2010), there are about 20 geosite types (stratigraphical, paleontological, mineralogical, geomor-
phological, geohistorical, etc.). Gray (2008) distinguishes between geological, geomorphological, and
soil features. This schema is more or less followed by Pereira et al. (2013), who paid attention to geology
(stratigraphy and lithology), geomorphology, paleontology, soils, and mineral occurrences (precious
stones and metals, energy and industrial minerals, mineral waters, and springs) as the main constituents
of the geodiversity. The geosite rank (global, national, regional, or local), esthetic properties, accessibility,
damage by natural or anthropogenic processes, and other characteristics may influence the geodiversity.
Different approaches are available for the quantitative assessment of the geodiversity sensu stricto. The
approach developed by Ruban (2010) is based on the simple calculation of the number of geosite types
accounting also for the rank and the complexity of geosites. Serrano and Ruiz-Flaño (2009) stressed the
importance of roughness and surfaces of the areas, for which the geodiversity is evaluated. The alternative
approach proposed by Pereira et al. (2013) involves mapping techniques. Finally, Hjort and Luoto (2012)
explained how to employ digital elevation models and remote sensing for the evaluation of the
geodiversity. Irrespective of the approach, the geodiversity can be established globally and regionally
(e.g., for administrative region or country, territory of the existing or planned geopark, etc.), for complex
geosite comprising several geosite types and for ex situ geological heritage (e.g., museum collection).
It is also possible to measure geodiversity in the content of conservation and tourist resources (brochures,
Web pages, etc.) in order to evaluate the adequate representation of the true (“natural”) geodiversity in
these resources.
The geodiversity sensu lato is a quasi-philosophical and qualitative category, which is necessary to
describe the uniqueness of the geological heritage and/or the geological value of the landscape, as well as
to argue the urgency of geoconservation. It can be defined also as a territory/landscape attribute or as a
signature of the diverse world’s geological heritage. Additionally, if the geological heritage is precious
because of information about the past and present planetary composition, state, and dynamics, the
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geodiversity reflects the amount of this information and the geology-relevant informative utility of the
environment. Gray (2008) linked the geodiversity to the geological history and, particularly, the phe-
nomena of plate tectonics, climatic differentiation in time and space, and biological evolution and
extinction. The same specialist also stressed that areas with long and complex geological history,
lithospheric plate margins, high-elevated areas, and coasts are geodiversity hot spots, where diverse
geological phenomena are concentrated. Panizza and Piacente (2009) suggested to consider the cultural
dimension of geodiversity, which is sensible because geodiversity is not only what is available in the
nature but also what the people perceive and judge about. The qualitative treatment of the geodiversity is
important, particularly, to promote the geoconservation ideas and to establish geoparks in the geodiversity
hot spots (outstanding centers of geodiversity).
The concept of geodiversity is relevant to the mineral and energy policy. Firstly, it helps to understand
the value of the geological environment, where the geological exploration is conducted and the mining/
energy production occurs. This is urgent to prevent negative anthropogenic influences on the unique
geological features and their damage and loss. Secondly, the better planetary mineral and energy resources
known, the more precise our evaluation of the geodiversity. A lot of unique geological features can be
discovered as a result of geological exploration and extraction of the material from the Earth’s interiors.
Thirdly, the mining/energy production is itself a constituent of the geodiversity. On the one hand, humans
are efficient geological agents that reshape actively the geological environment. On the other hand, coal
mines, quarries, etc., are also a part of the geological heritage that sometimes needs conservation and that
can be used efficiently for the purposes of tourism (examples can be found, particularly, in Germany
and Oman).
Cross-References
References
Gray M (2004) Geodiversity: valuing and conserving abiotic nature. Wiley, Chichester, p 434
Gray M (2008) Geodiversity: developing the paradigm. Proc Geol Assoc 119:287–298
ester, p 495
Hjort J, Luoto M (2012) Can geodiversity be predicted from space? Geomorphology 153–154:74–80
Panizza M, Piacente S (2009) Cultural geomorphology and geodiversity. In: Reynard E, Coratza P,
Regolini-Bissig G (eds) Geomorphosites. Dr. F. Pfeil, M€unchen, pp 35–48
Pereira DI, Pereira P, Brilha J, Santos L (2013) Geodiversity assessment of Parana State (Brazil): an
innovative approach. Environ Manage 52:541–552
Ruban DA (2010) Quantification of geodiversity and its loss. Proc Geol Assoc 121:326–333
Serrano E, Ruiz-Flaño P (2009) Geomorphosites and geodiversity. In: Reynard E, Coratza P, Regolini-
Bissig G (eds) Geomorphosites. Dr. F. Pfeil, M€unchen, pp 49–61
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Geosite, Concept of
Delia Evelina Bruno*
Water Research Institute/National Research Council, Bari, Italy
One of the first significant descriptions of geological dynamics of the landscape has been given at the
beginning of the fourteenth century by Dante Alighieri in his “The Divine Comedy.” The verse “What’s
that disaster damaged Adice beyond Trento” is a clear description of a landslide that occurred centuries
before. More than one century later, the verse “The awareness of time and Earth’s site are food and
ornament of human minds,” in Leonardo da Vinci’s “Atlantic Codex,” anticipated the modern concept of
geosite (Wimbledon 1996, 1998; Poli 1999). Between the first Leonardo’s intuition and subsequent
statements of our contemporaries, many centuries have passed and the approaches of naturalists and
intellectuals and then professional researchers to study the territory have thoroughly changed. Despite the
Herculaneum excavations that started in 1738, only with the exhumation of Pompeii, 10 years later, there
was a radical change in the scientific approach. These excavations were characterized by a fascinating new
connotation: through the findings of various grave goods, they made possible to reconstruct the daily life
of an entire population that had suddenly disappeared. At the same time, the discovery of the entire city
buried by ashes of the Mount Vesuvius made possible direct observations of sedimentological and
volcanological features of the area, allowing the reconstruction of the disastrous events of 79 AD. From
that moment, the observation of the landscape and the awareness of its environmental characteristics were
never again the same. The concept of landscape, linked to different cultural aspects, became soon the
subject of a new kind of tourism. Between the end of the seventeenth century and the advent of large-scale
rail transit in the 1840s, it became very popular among aristocrats, literates, and scientists to undertake the
“Grand Tour,” the journey to discover their natural heritage as a destination for the necessary human and
intellectual growth of each one. Johann von Goethe’s “Journey to Italy” and Rodolphe Töpffer’s
“Nouveaux voyages en zigzag” are two of the most famous examples that left detailed descriptions of
locations, integrated by sketches and drawings. Today, these essays are fundamental tools to reconstruct
the ancient forms of territory, to identify the geological and geomorphological heritage elements of a
region, as objects of the environmental and scientific values of the landscape, i.e., geosites.
The term “geosite” comes from a Greek root “geo” (=Earth) which when combined with the Latin
word “situs” (=site) gives a lexical form meaning “geological site” or “site of geological interest.”
Therefore, a geosite is a natural landscape feature that testifies processes that have formed and shaped
our planet that for this reason is the product of different relationships between various factors acted in the
past and that still affect the present (Fig. 1). A geosite provides an indispensable contribution to the
scientific understanding of the geological history of a given region (Fig. 2). According to Wimbledon
(1996), a geological site can be any location, area, or territory, for which any geological and geomorpho-
logical interest for conservation can be found. Therefore, the term “geosite” can be applied for confined
outcrops, isolated elements with remarkable features, and groups of sites with great extension. Overall,
geosites could be compared to pieces of a puzzle (Carreras and Druguet 2000) which, when completed in
its entirety, shows the image of the Earth’s history.
Although many, if not all, exposed geological objects are potential geosites, the evaluation of their
uniqueness will help to rank their relative importance: global, national, regional, or local. Such evaluation
is possible by comparison with similar geosites (Ruban 2005, 2006, 2010). The main criteria to determine
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Fig. 1 Geosite essence with regard to the geological, natural and cultural aspects
Fig. 2 Geosite of Timpa Falconara, Pollino Park (Italy). The Mesozoic-Tertiary carbonate platform, sliced by subvertical
faults along the eastern border of the Pollino massif; complex junction segments of different structural domains
the value of a geosite include quality of exposure, abundance and size of similar sites, geographical
location, accessibility, educational value (public, school, university and research) and historical value.
The available classification systems distinguish among several types of geosites: from geomorphosites
(Panizza 2001; Panizza and Piacente 2003) to geoarchaeosites (Bruno and Perrotta 2012) with a subclass
represented by urban geological sites, which do not necessarily have a landscape value, but often have a
cultural value, since they represent the historical memory of landscape changes. Other examples are
geosites located in restricted areas or natural parks (Fig. 3), which are better protected by laws or
regulations that strongly limit potential anthropogenic influences. In this regard, it is possible to distin-
guish between restricted (affected by rules for protection and enhancement), limited (without protection
rules), obliterated (lost or destined to disappear as a result of natural processes or human activities), and
lost geosites (with only a descriptive testimony of their location) (Fabbri et al. 2011).
Today, only a limited number of geosites are accessible to man, since many of these were destroyed by
natural processes (erosion, earthquakes, volcanic eruptions, etc.). Human activity has a double function in
geoconservation. In some cases (e.g., wars and urban constructions), this activity contributed to the
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Fig. 3 Geosite of the Alcantara River (Italy). The valley morphology has been modified by lava flows from the northern slopes
of Etna, the largest and most active basaltic volcano in Europe. The incessant flow has gradually brought to light pentagonal
and hexagonal basalt columns as a result of deposition, lava cooling, and erosion processes. Today, the Alcantara canyons are a
famous tourist and recreation destination
disappearance of geosites. In other instances (mining, quarrying, and road cut works), it made available
new sedimentary outcrops, tectonic arrangements, etc., even when embedded in historical and cultural
structures.
For some authors, the term “geosite” is roughly equivalent to the term “geotope” (Poli 1999; St€urm
1994). Geotopes represent those parts of the geosphere that are recognizable or accessible on the Earth’s
surface, spatially limited, and clearly distinguishable from the surrounding areas, in relation to geological
processes and defined morphological features. So, the definition of geotope may take the same function as
that of biotope (Poli 1999) in the spatial planning and nature protection (Serra et al. 2012) (Fig. 4).
The concept of geosite can also be applied to sites for the production of energy, both by fossil resources
(mines, caves, etc.) and by green resources (e.g., geothermal and hydraulic). In the world, there are many
sites where actual energy production is much fruitful, but also abandoned sites. In both cases, these
particular types attest the history of energy-related geological activities of man. Anyway, geosite
management is tied closely to the mineral and energy policy.
Generally, geosites represent the heritage that should be studied and surveyed as part of the landscape to
be protected and safeguarded. Preservation of these locations with high geological interest is to ensure that
future generations can continue learning the geological history of the Earth, to enjoy the full beauty of
landscapes, and also to incentivize the socioeconomic development.
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Fig. 4 Geosite of the Cirella’s island (Italy). Mesozoic metasedimentary and ophiolitic rocks representing the remains of the
Neo-Tethys Ocean. In addition, the present sea bottom is full of Posidonia oceanica – a living and endemic Mediterranean
seagrass (Serra et al. 2012) with high biodiversity. The island, surmounted by an ancient tower, is located in front of the coast
with an archaeological value
Cross-References
References
Bruno DE, Perrotta P (2012) A geotouristic proposal for Amendolara territory (northern ionic sector of
Calabria, Italy). Geoheritage 4:139–151
Carreras J, Druguet E (2000) Geological heritage, an essential part of the integral management of World
heritage in protected sites. In: Barettino D, Wimbledon WAP, Gallego E (eds) Geological Heritage: its
conservation and management. Lectures presented in the III international symposium ProGEO on the
conservation of the geological heritage, Madrid, pp 95–110
Fabbri M, Lanzini M, Mancinella D, Succhiarelli C (2011) I geositi urbani: definizione e caso-studio
preliminare nel territorio del comune di Roma. In: Bentivenga M (ed) Il Patrimonio Geologico: una
risorsa da proteggere e valorizzare. Paper presented at Convegno Nazionale, Sasso di Castalda,
Potenza, 29–30 april 2010. Geologia dell’Ambiente, Periodico Sigea 2:126–134
Panizza M (2001) Geomorphosites: concepts, methods and examples of geomorphological survey. Chin
Sci Bull 46:4–6
Panizza M, Piacente S (2003) Geomorfologia culturale. Pitagora, Bologna, p 350
Poli G (1999) Geositi testimoni del tempo – Fondamenti per la conservazione del patrimonio geologico.
Pendragon, Bologna, p 259
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Ruban DA (2005) Geologitcheskie pamjatniki: kratkij obzor klassifikatsionnykh priznakov (Geological

monuments: brief review of classification criteria). Izvestija Vysshikh Utchebnykh Zavedenij
Geologija i razvedka 4:67–69
Ruban DA (2006) Standartizatsija opisanija geologitcheskikh pamjatnikov prirody kak vazhnykh
ob’ektov national’nogo nasledija. Geografija i prirodnye resursy 3:166–168
Serra IA, Lauritano C, Dattolo E, Puoti A, Nicastro S, Innocenti AM, Procaccini G (2012) Reference
genes assessment for the seagrass Posidonia oceanica in different salinity, pH and light conditions. Mar
Biol 159:1269–1282
St€urm B (1994) Integration de la protection du patrimoine geologique dans 1’amenagement du territoire
en Suisse. Mem Soc Geol Fr 165:93–97
Wimbledon WAP (1996) Geosites, a new conservation initiative. Episodes 19:87–88
Wimbledon W, Ishchenko A, Gerasimenko N, Alexandrowicz Z, Vinokurov V, Liscak P, Vozar J,
Bezak V, Kohut M, Polak M, Mello J, Potfaj M, Gross P, Elecko M, Nagy A, Barath I, Lapo A,
Vdovets M, Klincharov S, Marjanac L, Mijovic D, Dimitrijevic M, Gavrolovic D, Theodossiou-
Drandaki I, Serjani A, Todorov T, Nakov R, Zagorchev I, Perez-Gonzalez A, Benvenuti M, Boni M,
Bracucci G, Bortolani G, Burlando M, Costantini E, D’Andrea M, Gisotti G, Guado G, Marchetti M,
Massolli-Novelli R, Panizza M, Pavia G, Poli G, Zarlenga F, Satkunas J, Mikulenas V, Suominen V,
Kananajo T, Lehtinen M, Gonggriijp G, Look E, Grube A, Johansson C, Karis L, Parkes M, Paudsep R,
Andersen S, Cleal C, Bevins R (1998) A first attempt at a GEOSITES framework for Europe – an IUGS
initiative to support recognition of world heritage and European geodiversity. Geol Balc 28:5–32
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Geosites, Classification of
Svetlana O. Zorinaa,b* and Vladimir V. Silantievb
a
Central Scientific Research Institute of Geology of Industrial Minerals, Kazan, Russia
b
Kazan (Volga Region) Federal University, Kazan, Russia
Geosite is a geological heritage site (Ruban and Kuo 2010; Wimbledon 1999). According to “Protocol on
geoconservation principles, sustainable site use, management, fieldwork, fossil and mineral collecting”
adopted by the European Association for the Conservation of the Geological Heritage (ProGeo), geosite is
a particular locality or area of geological interest for the knowledge of Earth history (ProGeo 2011;
Wimbledon and Smith-Meyer 2012) or the peculiar Earth’s crust phenomena (typical or, in contrast,
unique geological feature or process) (Ruban and Kuo 2010). Geosites can be established according to
their scientific, educational, and aesthetic values, rarity, current condition, accessibility, etc. The special
protection status, maintenance, monitoring, and planning of tourism should be specified for them (Ruban
and Kuo 2010). Methods and purposes of geoconservation and the status of geosites vary greatly in
different countries in accordance with local geoconservation laws. Irrespective of the presence or absence
of relevant laws, geosites require international responsibility. Geosites differ by their unique geological
features, which determine their value for science, education, and tourism.
Classification of geosites is linked to their types, ranks, and categories (Ruban 2010). Firstly, the
abiological natural heritage was subdivided by Grandgirard (1999) into geological, geomorphological,
geochemical, geohistorical, hydrological, mineralogical, paleontological, pedological, petrographic, sed-
imentological, speleological, stratigraphical, structural, tectonic, etc. Geosites were subdivided by Ruban
(2010) and Ruban and Kuo (2010) into two dozens of types, which are listed below. Stratigraphical
geosite represents succession of rocks, and/or it demonstrates chronology of the geologic time. Paleon-
tological geosite contains fossil organisms (including those with unique preservation) or their traces (e.g.,
the Hojapil-Ata dinosaur mega-tracksite is located in the Koytendag National Park of eastern Turkmen-
istan, Central Asia (Fig. 1)). Sedimentary geosite exhibits sedimentary rocks and bodies that can be
composed of lithified or unlithified terri-, chemo-, bio-, volcano-, and cosmogenic matter. Igneous geosite
represents igneous (magmatic) rocks and bodies. Metamorphic geosite contains rocks and bodies
composed of significantly altered matter of preexisted rocks. This alteration can be caused by mainly
temperature, pressure, and chemical reactions.
Mineralogical geosite demonstrates minerals and mineral associations. Economical geosite represents
ore, non-ore, and hydrocarbon deposits. Geochemical geosite reflects anomalies in concentration of
elements and natural and anthropogenic chemical compounds in the Earth’s crust. Seismical geosite is
linked to modern and ancient earthquakes. Structural geosite exhibits deformation structures (folds, faults,
nappes, etc.). Paleogeographical geosite provides an information on paleoenvironments. Cosmogenic
geosite contains traces of influences of cosmic bodies and forces on the Earth’s surface and its interiors.
Geothermal geosites include hot springs and relevant phenomena. Geocryological geosite is linked to
permafrost. Geomorphological geosite represents landforms and surficial processes. Hydrological and
hydrogeological geosites reflect geological activity of surficial and subsurficial waters. Engineering
geosite reflects outstanding mass wasting (landslides, rockfalls, etc.) and other phenomena relevant to
construction and other forms of the anthropogenic activity. Radiogeological geosite is linked to natural
radioactive rocks, waters, or gases. Neotectonical geosite is a manifestation of modern tectonic activity.
Pedological geosite is linked to modern soils and paleosols. Geohistorical geosite reflects the history of
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Fig. 1 Paleontological geosite – the Hojapil-Ata dinosaur mega-tracksite located in the Koytendag National Park of eastern
Turkmenistan, Central Asia
geological exploration, mining activity, and other human activities linked to the geological environment,
as well as the history of geology as a science. Complex geosite is a combination of two or more
abovementioned types. The majority of geosites belong to several types (e.g., the Pechischinsky Geo-
logical Section is the Geological nature sanctuary near the city of Kazan, Russia; it has stratigraphical,
mineralogical, geohistorical, paleogeographical, and economical value (Fig. 2)). The parameters of
complex geosite should be listed in decreasing order of importance (Ruban 2010).
Geosites may look like outcrops, caves, quarries, mines, boreholes, and individual landforms (Ruban
and Kuo 2010). Depending on their size, geosites can be judged provisionally as small (monument, point,
site, and geotop) or large (park, reserve, and protected area) (Wimbledon and Smith-Meyer 2012). Based
on their importance, geosites of different ranks (global, national, regional, or local) can be distinguished.
Global geosites are important for the world community; national, for countries; regional, for states,
provinces, regions, and historical regions; and local, for restricted areas and local communities (Ruban
2010). According to Ruban (2010), all geosites can be classified into three categories: spatial appearance
(point, linear, and area geosites), dynamic state (static and dynamic geosites), and origin (natural and
artificial geosites). Finally, geosites can be evaluated in various contexts: for instance, with regard to
environmental impact assessment (Rivas et al. 1997; Coratza and Giusti 2005), inventory of natural
heritage sites (Serrano and González-Trueba 2005), tourism promotion (Pralong 2005), management of
nature parks (Pereira et al. 2007), etc. And they can be classified accordingly.
All countries should demonstrate responsibility for sustainable management and conservation of their
nationally and internationally significant geosites, and their mineral policy should be developed and
implemented accordingly. The main purpose of geoconservation is to remain geosites “available for
legitimate use” (ProGeo 2011).
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Fig. 2 Complex (stratigraphical, mineralogical, geohistorical, paleogeographical, and economical) geosite – the
Pechischinsky Geological Section located Kazan, Russia
Cross-References
▶ Geodiversity
References
Coratza P, Giusti C (2005) Methodological proposal for the assessment of the scientific quality of
geomorphosites. Il Quaternario 18:307–313
Grandgirard V (1999) L`évaluation des géotopes. Geol Insubr 4:59–66
Pereira P, Pereira D, Caetano Alves MI (2007) Geomorphosite assessment in Montesinho Natural Park
(Portugal). Geogr Helvet 62(3):159–168
Pralong J-P (2005) A method for assessing the tourist potential and use of geomorphological sites.
Géomorphologie. Relief Process Environ 3:189–196
ProGEO (2011) Conserving our shared geoheritage – a protocol on geoconservation principles, sustain-
able site use, management, fieldwork, fossil and mineral collecting, p 10. http://www.progeo.se/
progeo-protocol-definitions-20110915.pdf
Rivas V, Rix K, Frances E, Cendrero A, Brunsden D (1997) Geomorphological indicators for environ-
mental impact assessment: consumable and non-consumable geomorphological resources. Geomor-
phology 18:169–182
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Ruban DA, Kuo I-L (2010) Essentials of geological heritage site (geosite) management: a conceptual
assessment of interests and conflicts. Natura Nascosta 41:16–31
Serrano E, González-Trueba JJ (2005) Assessment of geomorphosites in natural protected areas: the Picos
de Europa National Park (Spain). Géomorphologie. Relief Process Environ 3:197–208
Wimbledon WAP (1999) GEOSITES – a new conservation initiative. Episodes 19:87–88
Wimbledon WAP, Smith-Meyer S (eds) (2012) Geoheritage in Europe and its conservation. ProGeo,
Oslo, p 405
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Geosites, Management of
Maria Helena Henriques*
Departamento de Ciências da Terra, University of Coimbra, Coimbra, Portugal
The areas in which minerals occur often have other nonrenewable geological resources displaying
heritage value that can represent an alternative choice of land use. Mineral policy and environmental
policy when grounded in a sustainable development perspective, i.e., keeping in view the needs of
development as well as needs of protecting the Earth’s natural systems (including its bio- and
geodiversity), facilitate the appropriate choice or order of land use. Geoconservation involves the
implementation of specific inventory, assessment, conservation, and monitoring procedures to determine
which geosites within a territory displaying geological heritage should be subjected to protection
measures (Henriques et al. 2011). Once identified and evaluated, the geosite requires some statutory
protection and appropriate management procedures to keep or increase its value, which can be controlled
through the use of specific monitoring tools. As so, geosites management involves the manipulation of
the human capital of the organization to which the geosite’s responsibility is assigned (geopark, natural
monument, or natural park) and the people living there to a common purpose, namely, to contribute to the
geosite condition and threats (Wimbledon 2012) and to attract more people to visit it, thus increasing
its social relevance. By doing so, the geosite and/or a set of geosites within a geopark or a natural park
can become an important economic asset as a geotouristic product (Hose 1998, 2012). In developing
countries, it can provide in a very significant way to poverty alleviation (Kiernan 2013). Moreover, they
can also represent a relevant educational resource, thus contributing for the promotion of education for
sustainable development (Henriques et al. 2012). Well-designed plans, strong motivation among the local
people (Worton and Guilard 2013), and effective communication mechanisms (Stewart and Nield 2013)
engaging decision makers and the public on geoconservation issues (Prosser et al. 2013) are crucial
factors to meet the goal of conserving and valorizing geosites within a geopark or other similar
organizations.
The abovementioned requirements can be found in many management solutions for geoparks, in
particular among those constituting the Global Geoparks Network assisted by the UNESCO (GGN
2014). In fact, prerequisites to any geopark proposal being approved include the establishment of an
effective management system based on a clear responsible management body or partnership that has
demonstrable local support and the existence of a management plan, most likely to be based on
geotourism, designed to foster socioeconomic development that is sustainable (GGN 2010). These are
accomplished through the implementation of specific managing actions on geosites. Geoheritage maps
(Fuertes-Gutiérrez and Fernández-Martínez 2012), detailed geosite inventories (Rocha et al. 2014), and
interpretation facilities play leading roles in the protection and enhancement of geosites. The relevant
solutions include interpretative panels (Fig. 1); museums and centers (Fig. 2); guided tours and school
class excursions (Fig. 3); popular literature, maps, educational materials, and displays (Fig. 4); and
seminars (Dowling 2011), among many other examples which are being employed worldwide to improve
awareness of geology and geomorphology among the general public (Gray 2013).
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Fig. 1 Interpretative panels at Alto Tajo Geopark (Spain) displaying handicapped accessibility and information in Braille
Fig. 2 Interpretative center at Capelinhos volcano (Azores Geopark, Portugal) built in perfect harmony with the landscape
Monitoring is necessary for geosite management as a tool to measure whether the development of an
area is in accordance to the defined management goals for the geopark or similar entity (Erikstad 2013).
Measuring visitor’s satisfaction regarding a geosite enables adjusting plans and meeting goals of the
geopark or coeval organization. As so, determination of the amount of visitors to museums or centers and
evaluation of the visitors’ level of understanding of the interpretative panels (Mansur and Silva 2011) are
also important management instruments.
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Fig. 3 A school class excursion in the frame of a research on science education by Henriques et al. (2012) at the Arouca
Geopark (Portugal)
Fig. 4 An educational display regarding the internal structure of a volcano at the Vulkaneifel Geopark (Germany)
Cross-References
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References
Dowling RK (2011) Geotourism’s global growth. Geoheritage 3:1–13
Erikstad L (2013) Geoheritage and geodiversity management – the questions for tomorrow. Proc Geol
Assoc 124:713–719
Fuertes-Gutiérrez I, Fernández-Martínez E (2012) Mapping geosites for geoheritage management: a
methodological proposal for the Regional Park of Picos de Europa (León, Spain). Environ Manage
50:789–806
GGN (2010) Guidelines and Criteria for National Geoparks seeking UNESCO’s assistance to join the
Global Geoparks Network (GGN). Global Geoparks Network, p 12. Available via: http://www.
globalgeopark.org/UploadFiles/2012_9_6/GGN2010.pdf. Accessed 13 Feb 2014
GGN (2014) Global Network of National Geoparks. Global Geopark Network. Available via: http://www.
globalgeopark.org/index.htm. Accessed 13 Feb 2014
ester, pp 1–508
Henriques MH, Pena dos Reis R, Brilha J, Mota T (2011) Geoconservation as an emergent geoscience.
Henriques MH, Tomaz C, Sá AA (2012) The Arouca Geopark (Portugal) as an educational resource: a
study case. Episodes 35:481–488
Hose TA (1998) Selling coastal geology to visitors. In: Hooke J (ed) Coastal defense and earth science
conservation. Geological Society of London, London, pp 178–195
Hose TA (2012) 3G’s for modern geotourism. Geoheritage 4:7–24
Kiernan K (2013) The nature conservation, geotourism and poverty reduction nexus in developing
countries: a case study from the Lao PDR. Geoheritage 5:207–225
Mansur KL, Silva AS (2011) Society’s response: assessment of the performance of the “Caminhos
Geológicos” (“geological paths”) project, State of Rio de Janeiro, Brazil. Geoheritage 3:27–39
Prosser CD, Eleanor JB, Larwood JG, Bridgland DR (2013) Geoconservation for science and society – an
agenda for the future. Proc Geol Assoc 124:561–567
Rocha J, Brilha J, Henriques MH (2014) Assessment of the geological heritage of Cape Mondego Natural
Monument (Central Portugal). Proc Geol Assoc 125:107–113
Stewart IS, Nield T (2013) Earth stories: context and narrative in the communication of popular
geoscience. Proc Geol Assoc 124:699–712
Wimbledon WAP (2012) Preface. In: Wimbledon WAP, Smith-Meyer S (eds) Geoheritage in Europe and
its conservation. ProGEO, Oslo, pp 6–13
Worton GJ, Guilard R (2013) Local communities and young people – the future of geoconservation. Proc
Geol Assoc 124:681–690
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Mining and Geoconservation

José Brilha*
Institute of Earth Sciences, Pole of the University of Minho, Braga, Portugal
Mining versus geoconservation is often addressed as a source of conflict. Frequently, misconceptions and
misleading arguments are used to explain this apparently difficult relation. However, the two activities
may coexist. The demystification of some preconceived ideas (see i–iv below) is thus necessary.
(i) “Geoconservation wants mining activity to stop.” Since the Stone Age, humans use all types of
geological materials, either directly or after being modified by some type of industrial handling. The
modern society needs huge amounts of geological resources to satisfy all sorts of growing consumer
demands. Hence, our society depends on mining, and no one is willing to lower their living standards
to avoid an intensive exploitation of Earth resources. Geoconservation does not require mining to
stop; it just wants to save the most significant vestiges of the Earth’s long history for the use of
society.
(ii) “Mining is always negative regarding geoconservation.” Worldwide examples show exactly the
opposite: mining can promote geoconservation. Very often, mining activities enable access to rocky
massifs where new geological occurrences with geoheritage relevance are identified. The mining of
fossiliferous formations is a source of new fossils, and it may lead to eventual identification of new
species. The same happens with mineralogical heritage. Many mineral specimens are only available
to science due to mining exploitations. Without mining, many important mineral and fossil speci-
mens would remain completely unknown for science and education.
(iii) “Mining is a threat to geoheritage.” Mining activity can surely lead to the destruction of some
geological features with potential scientific, educative, and touristic uses. Centuries of human
exploitation of geological resources have led to the destruction of many fossils and minerals with
geoheritage value. In fact, conflicts between mining and geoconservation may arise. For instance, a
mining company may be interested in exploring a certain area where geoheritage has been already
identified. Mining activities may also have significant impacts on geomorphologic features or may
change the original landscape pattern of an area. It is unquestionable that almost all human activities
have negative impacts on nature. The solution is to achieve a right balance between the exploitation
of geological resources and geoconservation.
(iv) “Mining and geoconservation cannot match.” There are interesting examples worldwide that show
how it is possible to combine mining and geoconservation. For instance, agreements with owners of
mines and quarries may open the door to the recovery of valuable specimens. Some quarrying and
mining areas that do not have high economical revenues, as well as abandoned mining sites, may be
left available for scientific, educational, and touristic purposes. Educational and touristic/recreation
activities can be implemented in active mines and quarries, once it takes into account visitors’ safety.
In many European countries, the “European Minerals Day” is an example of a joint initiative by the
mineral raw material industries where visits to active facilities are provided to students and general
public. Mining companies ready to cooperate with geoconservation activities may acquire a positive
public visibility and enhance their “environmental-friendly” image.
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In certain EU countries, national regulations concerning mineral policies foresee the need to develop
geoconservation (Tiess and Ruban 2013). Nevertheless, these regulations rarely clarify how relevant
fossil and mineral specimens should be collected or how educational and recreation visits can be
accomplished during regular mining activities.
Mining heritage is quite often associated with geoconservation. This type of heritage relates to
whatever is involved in active and inactive mining exploitation, such as minerals and rocks that are
being (or were) extracted from the underground, industrial facilities, historical documentation of old
mines, exploitation processes and techniques, and even stories and traditions of mining communities. Old
and inactive mining facilities and areas are sometimes considered undesirable assets due to environmen-
tal, visual, and social impacts. Nevertheless, this perspective is gradually changing, and the vestiges
associated with mining activity are faced nowadays as a potential touristic/recreation and educational
resources, which can bring economical revenues and social progress to local communities. For instance,
there are some interesting examples concerning the use of mining heritage in the Iberian Peninsula. Las
Médulas gold-mining area in Northern Spain is an outstanding example of the use of mining technology
during the Roman Empire, where all the elements of the ancient landscape have survived to an exceptional
degree. Las Médulas is inscribed in the UNESCO’s World Heritage List for cultural reasons since 1997
and has received almost 70,000 visitors during 2013. In Southern Portugal, the Lousal mines exploited
pyrite during almost the entire twentieth century. In 1988, the exploitation of volcanic-hosted massive
sulfides of the Iberian Pyrite Belt ended, and today, an ambitious touristic and educative project is
changing the life of local communities in this quite isolated area of the country.
Cross-References
▶ Energy Production and Geoconservation
Reference
Tiess G, Ruban DA (2013) Geological heritage and mining legislation: a brief conceptual assessment of
the principal legal acts of selected EU countries. Proc Geol Assoc 124:411–416
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Regional Geological Heritage

Jaroslav M. Gutak*
Siberian State Industrial University, Novokuznetsk, Russia
Regional geological heritage is of special importance for geoconservation, because it stresses the
importance of peculiar geological features limited to a given territory. It should be noted that the entity
of these features is more valuable than the simple sum of values of each of them: the combination of these
features itself is a peculiar territorial characteristics. Evidently, the regional geological heritage includes
the both in situ objects (geosites) and ex situ objects (specimens from museum collections). However, as
the latter may be removed from the given area (e.g., stored in museum collections in the other region or
even country), the presence of ex situ objects on the same territory where they were collected should
always be considered. Moreover, the idea of regional geological heritage is closely related to the concept
of geodiversity (Gray 2004, 2008; Serrano and Ruiz-Flaño 2009; Ruban 2010; Pereira et al. 2013). In the
majority of cases, the width of the spectrum of peculiar geological phenomena represented regionally
determines geodiversity, and the various approaches of its evaluation (Serrano and Ruiz-Flaño 2009;
Ruban 2010; Pereira et al. 2013) can be used in order to characterize the regional geological heritage.
At least three definitions of the regional geological heritage can be proposed. Firstly, the regional
geological heritage encompasses all proven geological objects with heritage value (including geosites of
all ranks and specimens from museum collections) that are available on a particular territory. In some
cases, this is a geological domain (structure) – e.g., the Siberian Platform (Russia) or the Vocontian
Trough (France). In the other cases, this is an administrative unit (state, province, region, etc.). Secondly,
the regional geological heritage can be used as a descriptive term applied to those geosites, which are of
regional importance, i.e., to the regional-rank geosites (one can distinguish geosites of international
(global), national, regional, and local ranks (Ruban 2010)). In this case, both in situ and ex situ objects
matter. In the United Kingdom, the Regionally Important Geological and Geomorphologic Sites (RIGS)
are recognized since 1990 (Prosser et al. 2006). However, differences between the classifications of
geological objects with heritage value by their ranks, as well as the diversity of official statuses of geosites
(Wimbledon and Smith-Meyer 2012; Prosser 2013), may complicate a bit the compilation of lists of
objects that should be ascribed to the regional geological heritage. Thirdly, the regional geological
heritage can be defined as a quasi-philosophical category that reflects the uniqueness of geological
resources of a given territory. In this case, the geological heritage is not limited on the only established
geosites and museum collections but embraces all peculiar geological features that reflect the geological
setting and evolution of the particular region. Such a definition may be employed effectively in such a case
when rational and careful use of the geological environment needs to be argued for policy-makers or
broad public.
The main purposes of the regional geological heritage irrespective of how it is understood (see above)
are science, education, and tourism. In the other words, this heritage demonstrates potential for further
research (including cases when geosites or ex situ objects mark outstanding scientific achievements or can
be used as standards), utility for school and university programs (both geological and environmental), and
importance for the growth of regional geotourism, ecotourism, and nature-based (outdoor) recreation. An
appropriate conservation of the regional geological heritage should be balanced with the implementation
of the regional mineral policy and development of the regional programs of mineral resources
exploitation.
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Fig. 1 Kija geosite – a constituent of the regional geological heritage of the Western Altai-Sayan Fold Belt
An example of the regional geological heritage is the entity of geosites of the Western Altai-Sayan Fold
Belt (Southern Siberia, Russia) (Gutak et al. 2009). Its typical constituent is the Kija section, a geosite of
regional rank designated in the canyon of the Kija River in the Kemerovo Region (Fig. 1). This section of
lower Cambrian deposits (with some outcrops of Neoproterozoic rocks) stretching across the anticline is
3.3 km in length. It has been studied for more than a half of the century (e.g., Pospelov et al. 1995). The
heritage value of this section is determined by several features, namely well-visible stratification, rich
fossil remains (archaeocyaths, bivalves, brachiopods, trilobites, sponges, etc.), and carbonate buildups. It
also allows investigation of the so-called “Cambrian Explosion,” one of the most important events in the
history of life on the Earth. This is the only so complete section of the lower Cambrian deposits in the
region. Besides its scientific importance, this geosite is well accessible for excursions (for education and
tourism purposes), and it can be involved into the adventure water tourism programs. The Kija geosite can
be judged unique for the Western Altai-Sayan Fold Belt (if the regional geological heritage is limited to
the geological domain) or the Kemerovo Region (if the regional geological heritage is limited to the
administrative unit), and thus, it is regionally important.
Cross-References
▶ Geodiversity
References
Gray M (2004) Geodiversity: valuing and conserving abiotic nature. Wiley, Chichester, p 434
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Gray M (2008) Geodiversity: developing the paradigm. Proc Geol Assoc 119:287–298
Gutak JM, Nadler JS, Tolokonnikova ZA (2009) Geological monuments of nature of the Kemerovo
region (stratigraphical and palaeontological types). KuzGPA, Novokuznetsk, p 149 (in Russian)
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Page 3 of 3
M
Mine Stability from their nature always introduce permanent

changes in the equilibrium state of loading,
W. Pytel achieving a state of equilibrium seems to be only
Head of Rock Engineering Department, KGHM a prerequisite of any practical stability analyses.
Cuprum, Wrocław, Poland This is because all engineering structures and also
mines are expected to operate within safe strain/
stress domain which is located in a sufficient
Introduction to Underground Mines distance from the limit state envelope expressed
Stability generally by appropriate strength hypotheses for-
mulated in the stain/stress/strength 3D
Stability of rock mass may be related to its “state coordinates.
of being in stable equilibrium” (Webster’s Dictio- To assess the potential for mine instability,
nary). On the other hand, it express also behavior different analytical/numerical techniques, based
of rock mass in respect to the required level of on rock mechanics principles, may be utilized.
safety, which may vary with the use of the con- This usually provides a sufficient database which
struction, with regulations for working conditions enables formulating alternate design concepts
and safety in different countries. preventing rock mass instability.
Generally, the term “mine stability/instability” Using this approach and applying it to compu-
is a relative term referring to the judgment of tational/numerical model of a mine, the total
whether the mine workings are in a state of equi- (general) mine stability or instability may be
librium or not. Based on classic engineering determined. In contrast to instability (“the lack
mechanics, this state is understood as a kind of of being fixed in position”) failure, “the losing of
the limit state and may be expressed quantitatively strength,” may, be regarded as the follower of
in static domain as a system of equations assuring instability. It may be simply said that failure is
that the structure is not moving in space and all the result of instability (Palmstrom 1995).
external loads are balanced. Essentially, the limit Most often instability manifests itself by large
state implies that “any small change in the equi- continuous and/or discontinuous deformations
librium state of loading in a structure can provoke which are associated with high stress level or
a sudden release of energy or large change in the violent rupture followed by seismic emissions.
geometry of the structure” (Brady and Brown Three principal failure mechanisms (modes) of
2004). failure of isotropic rocks have been already iden-
Since all mining operations (e.g., rock excava- tified as: (a) shear, (b) tensile, and (c) spalling
tions, blasting, increasing depth of mining, etc.) failure. The failure modes vary among mines
# Springer-Verlag GmbH Germany 2016
G. Tiess et al. (eds.), Encyclopedia of Mineral and Energy Policy,
DOI 10.1007/978-3-642-40871-7_23-1
2 Mine Stability
even among different mining areas in a specific relatively large blocks along existing discon-
mine. This is because the development of rock tinuities with possible local shear failure
mass instability is usually a complex/progressive, development
time dependent process. (b) Raveling ground – falling/raveling of highly
The nature of the stability is largely dependent fractured and poorly interlocked rocks into
on local geologic conditions. Precautions for sta- the excavation due to exceeding the tensional
bility of any mining operations can be divided into strength at the contacts between the individual
two basic categories: pieces of rock (cohesion).
• Global stability (prevention of mine working

failure due to bumps, collapses, and squeezes) B. Stress induced behavior:
• Local stability (prevention of rock mass falls in
the working area)
(a) Shear failure in high stress conditions – may
Global stability is provided through proper develop around the excavation in high, triaxial
mine design and appropriate mining sequence, loading conditions, in rocks of average quality
while local stability is addressed through the instal- or worse; in high confinement pressure condi-
lation of an adequate type of underground support. tions, shear failure expands and “transforms”
This is well known that ground behavior is into form of “plastic” behavior
strongly related to different type of driving forces (b) Brittle failure in high stress conditions – may
and associated mechanisms of failure. Based on develop close to the surface of the excavation
the nature of these phenomena, Hudson (1989) (uniaxial loading conditions) in hard and mas-
has classified the instabilities of rock masses sur- sive rock; it is exceptionally dependent on the
rounding an underground opening dividing them orientation of the primary stress and may
into two main groups of events which occur when: manifest itself in the wide variety of forms,
from local spalling to violent rock burst
(a) Pre-existing blocks in the roof and side walls
become free to move because the excavation is
made – this event has been called by Hoek and C. Swelling – volumetric increase of rock mass
Brown (1980) as ‘structurally controlled fail- due to chemical processes induced by water/
ures’ involving a great variety of failure modes moisture presence
(e.g., loosening, raveling, block falls, etc.)
(b) Failures are induced from overstressing of Although most of the underground mine disas-
competent rock (spalling, popping, rock burst ters around the world were caused by gas and dust
etc.) or particulate rather weak materials like explosions in coal mines, the geotechnical type of
soils and jointed rocks (squeezing, creep, etc.) instabilities in all kinds of underground mines still
are considered to be one of the sources of
Instabilities which may be encountered in extremely serious events with large number of
underground mines may be also classified in dif- deaths.
ferent way as different types of rock mass behav-
ior (Goricki 2013):
The Nature of Instability
A. Gravity induced behavior:
For better understanding of the problem,
Ortlepp (2001) has defined two terms to, essentially,
(a) Discontinuity controlled blocks – falling/slid- distinguish the “cause” and the “effect.” A seismic
ing/rotating of the kinematic free and event is then considered to be the “ transient energy
released by a sudden fracture or failure in the rock
Mine Stability 3
Mine Stability, Table 1 Suggested classification of seismic event source (Ortlepp 1997)
Rock burst Richter
type Postulated source mechanism magnitude ML
Strain- Superficial spalling with violent ejection of fragments 0.2 to 0
bursting
Buckling Outward expulsion of larger slabs pre-existing parallel to surface of opening 0 to 1.5
Pillar or face Sudden collapse of stope pillar or violent expulsion of large volume of rock from 1.0 to 2.5
crush tabular stope face or tunnel face
Shear Violent propagation of shear fracture through intact rock mass 2.0 to 3.5
rupture
Fault-slip Sudden movement along existing fault 2.5 to 5.0
mass which results in the emission of a seismic Mine Stability Analyses

vibration transmitted through the rock,” while a
rock burst “is the significant damage caused to There are no universal standard analyses for deter-
underground excavations by a seismic event.” In mining rock mass stability, because each design is
some instances, however, seismic events occur as specifically fitted to the circumstances (ore body
an effect of instability at the excavations level – e.g., type and geometry, geology, method of ore body
pillar(s) failure (rock burst) – and are followed by extraction, scale of production, depth, presence of
aftershocks, additionally damaging underground water, etc.) at the actual site and the national and
mine workings. An occurrence of a such sequence local regulations and experience. Due to the mate-
of dynamic events requires however from rock mass rial and the underground openings’ extreme com-
to remain close to the bound representing state of plexity, “it is seldom possible, neither to acquire
the hesitant equilibrium. Table 1 gives a framework the accurate mechanical data of the ground and
of names, mechanisms, and magnitudes that has forces acting, nor to theoretically determine the
been suggested by Ortlepp (1997) as a useful clas- exact interaction of these” (Hoek and Brown
sification not only for the South African situation 1980).
but may be applied to other mines. The stability of underground mine openings
The spectrum of mine damage extends from depends on three general factors:
minor events (Fig. 1) to the catastrophic collapse
of a large section of a mine or a complete mine. – The geologic nature and structural features of
The term mine-quake which has been used first surrounding rock mass (the most critical)
time by Fernandez and van der Heever (1984), – The stress conditions encountered in the mine
expresses an appropriate sense of the extreme – The roof support used to provide adequate
magnitude and the possibility of substantial dam- support to the rock mass around the mine
age on surface which is often experienced with openings
these events. One of the most dramatic of occur-
rences of this kind was the collapse of Coalbrook The philosophy behind the stability mapping
mine with 435 deaths, the worst ever disaster in system methods (Wang and Heasley 2005) has
South Africa’s mining history which has hap- revealed itself to be very useful tool integrating
pened on 21 January 1960 (Bryan and Bryan the geologic data with mine-level ground stress
1964). The collapse of underground mine area of calculations. Prior to the application of the stabil-
around 3km2 caused the disintegration of around ity mapping system, these three mentioned factors
900 underground pillars supporting the tunnel should be analyzed individually and combined in
roofs. order to develop projections of the stability poten-
tial in the mine.
4 Mine Stability
Mine Stability,
Fig. 1 Evidence of
massive roof fall in one of
Polish copper mine in 2014
(Szczerbinski, 2014,
personal communication)
Therefore, the rock engineer is generally faced 1. Modeling of rocks mass as a continuum (FEM,
with the need to arrive at a number of design FDM, BEM), assuming that the body cannot
decisions in which judgment and practical expe- be ruptured or fragmented; however, it may
rience must play an important part. Prediction have a discontinuity (e.g., fault) but in the
and/or evaluation of support requirements is form of inner boundary (void) or interface
largely based on observations, experience, and with given strength parameters only. The
personal judgment backed by theoretical potential for rock mass instability may be
approaches in support design of which three assessed using different indicators such as:
main groups have been practiced in recent years, plastic strain rate, safety factor, safety margin
namely (Fig. 2), and many others.
2. Modeling of rock mass as a discontinuum
– The classification systems (e.g., Laubscher (DEM), based on the assumption that the
1990; Palmstrom 2000) body is composed of a set of discrete
– The roof -support interaction analysis (distinct) elements (blocks, particles, etc.)
– The key block analysis (e.g. Hoek et al. 2006) interacting mutually, which may also separate
completely.
Since rock mass refers to rocks in all possible 3. Modeling of rock mass as a hybrid object
structure and morphology which constitute them which uses DEM for the immediate vicinity
as a competent, high strength material or as weath- of excavation description while the remote
ered, essentially soil like material of very low areas are modeled by the model appropriate
strength, ground control refers to the analysis for discontinuum. This generally may improve
methods applied to manage the risks associated the effectiveness of computations.
with various forms of instability in underground
mines. The following three basic approaches are
recently applied for numerical modeling of typical Hildyard et al. (2006) have also listed several
problems concerning rock mass stability in mines: approaches based on energy release computations
Mine Stability 5
Mine Stability, Fig. 2 Mine stability modeling (Pytel and Pałac-Walko 2014); (a) view of the FEM transversal isotropic
model of the mine, (b) safety margin distribution at 54 m above the ore body’s crown
which have been also utilized for mine stability Hoek E, Kaiser P-K, Bawden W-F (2006) Support of
analyses. underground excavations in hard rock. Taylor and
Francis Group, London/New York, p. 215
The design of excavation and support systems Hudson J-A (1989) Rock mechanics principles in engi-
for rock, although based on some scientific prin- neering practice. CIRIA Ground Engineering Report,
ciples, have to meet practical requirements. 72 pp
Laubscher D-H (1990) A geomechanics classification sys-
tem for the rating of rock mass in mine design. J S Afr
J Min Metall 90(10):257–273
Ortlepp W-D (1997) Rock fracture and rockbursts.
References
SAIMM monograph series M9. South African Institute
of Mining and Metallurgy, Johannesburg, 98 pp
Brady B-H-G, Brown E-T (2004) Rock mechanics Ortlepp W-D (2001) RaSiM comes of age – a review of the
for underground mining. Kluwer, Dordrecht/Boston/ contribution to the understanding and control of mine
London, 626 pp rockbursts. Keynote Lecture at RaSiM5, Johannesburg
Bryan A, Bryan J-G (1964) The problems of strata control Palmström A (1995) RMi – a rock mass characterization
and support in pillar workings. Min Eng 123:238–266 system for rock engineering purposes. PhD thesis, Oslo
Fernandez L-M, van der Heever P-K (1984) Ground move- University, 400 pp
ment and damage accompanying a large seismic event Palmström A (2000) Recent developments in rock support
in the Klerksdorp district. In: Proceeding of the estimates by the RMi. J Rock Mech Tunnel Tech
RaSiM1 Johannesburg, pp 193–198 6(1):1–9
Goricki A (2013) Engineering aspects of geotechnical tun- Pytel W, Palac-Walko B (2014) Geomechanical risk
nel design. In: Kwaśniewski M, Łydżba D (eds) Rock assessment for transversal isotropic rock mass
mechanics for resources, energy and environment. Tay- subjected to deep mining operations. Can Geotech
lor and Francis Group, London, pp 3–13 J 52(10):1477–1489
Hildyard M-W, Napier J-A-L, Spottiswoode S-M, Sellers Wang Q, Heasley K (2005) Stability mapping system.
E et al (2006) New criteria for rock mass stability and Paper presented at the 24th international conference
control using integration of seismicity and numerical on ground control in mining, Morgantown, pp 243–249
modeling. SIMRAC Report, SIM 02 03 01 Webster’s Third New International Dictionary
Hoek E, Brown E-T (1980) Underground excavations in (1993) Köneman, VerlagsGesellschaft MBH, Cologne,
rock. Institution of Mining and Metallurgy, London 2662 pp
D
Deep Mining, Health, and Safety Work environment and safety issues are unfor-
Aspects tunately often left quite unattended in the early
stages of mine planning and design when instead
Bo Johansson and Jan Johansson it should be systematically highlighted and devel-
Lulea University, Lulea, Sweden oped from the very first planning steps. The best
and most efficient way to gain a good safety is
through proactive planning instead of reactive
corrective actions. It is also the best way to reduce
There is a lack of skilled miners and mining engi- the associated costs for risk elimination and
neers in many countries, especially in the Western reduction.
world. The present workforce is aging and the The mine planner is however not alone; he or
companies have difficulties in recruiting young she works in a company context where safety
talented people. This is already a great obstacle climate and culture, safety policy, and safety man-
for the business and the problem has to be effec- agement have a strong influence on how well the
tively solved before it gets even worse. An impor- planner can succeed in his work.
tant task is therefore to create the future safe and The slogan “Safety First” has been heard in the
attractive mining workplaces that engage and mining business for many decades but is still in
motivate youngsters to work within the industry. many cases not more than a slogan since safety
A good safety against accidents and work-related first is not fully practiced, especially if the busi-
illness is essential and must be provided by the ness has financial problems. It seems however that
mining companies. Noting else is acceptable, now the times are changing and many mining compa-
or in the future. nies are now making great efforts to improve their
A heavy responsibility lays here on the mine safety climate and safety culture. Research on
planners shoulders. They must find solutions that safety (Human Engineering 2005) has shown
promote high productivity and good economy as that a positive safety climate and well-developed
well as safety and a healthy work environment. safety culture are important requisites for a
The mine planners will initially shape the general healthy and safe work environment, especially in
and specific work environment for miners for heavy industries.
many years to come. If the planners design is a In order to manage the risks in the business,
poor solution and it is necessary to redesign it, it every mining company is also in need of a strate-
will also probably be very expensive to correct gic long-term policy regarding how to deal with
after it has been implemented. safety issues and strive for better work conditions.
The safety policy shall direct and establish
DOI 10.1007/978-3-642-40871-7_26-1
2 Deep Mining, Health, and Safety Aspects
systematic ways to manage (plan, steer, and con- As can be seen in Fig. 1, probability is
trol) the safety work, also including early planning expressed as a frequency for a specific event or
and design activities. deviation. The assessed risk level during planning
Because mining is a very risky business, it has can also be coupled to a specified need for action
to follow and obey a lot of directives, laws, and (see below) (Fig. 2).
provisions. Most of these rules only stipulate min- The risk matrix for risk assessments during
imum demands and the companies are free to planning can also with some modification be
exceed them. This is also what mine planners used for risk assessments in the operative produc-
should aim at, exceeding minimum demands. tion stages. The risk matrix has therefore become
A first step for a mine planner is therefore to get a quite well-known and used tool in the mining
acquainted with the national and international companies (Fig. 3).
(i.e., EU regulations) system of rules and basic The classical tools for the identification of
demands. Many of these demands are provided by occupational risks in the existing production envi-
the national or EU authorities. This has to be done ronments are safety rounds, incident, and accident
in a thorough way; in each country there are quite reporting. These tools are however less suitable to
a large number of directives, laws, and provisions identify and assess risks in future work environ-
that regulate and give guidelines for health and ments. There you need other types of more proac-
safety issues in underground mining. tive methods such as:
The basis for all activities in systematic health
and safety work shall always be an initial thor- • Preventive deviation analysis
ough risk assessment both of the present and a • Preventive energy analysis
future planned state. It is of course easier to assess
present or historical risks than future risks, espe- A deviation is according to Harms-Ringdahl
cially if the future holds large changes in technol- (2013) defined as an event or condition that devi-
ogy and or work organization. Still a mine planner ates from the intended or normal. The purpose of a
needs to assess the risks with different mining deviation analysis is to prevent and to predict
concepts that are developed and planned. abnormalities that can cause damage and to
Mining might develop in a revolutionary way develop proposals to improve safety measures.
but will most probably develop in another way, in Deviation analysis is a very useful method since
an evolutionary way. This means that much can be it takes into account the entire system, Human-
learned from history and from the present state. Technology-Organization. Energy analysis
Thorough evaluations of present and historic focuses more on technology and might be useful
designs have, for example, systematically been when developing new productions systems. Three
used by the Swedish mining company LKAB in main components considered in an energy analy-
the design of their newly opened main level at sis are:
1,365 m below surface. This evaluation has been
very important since the time span from the first • Energy that can damage
conceptual designs to the final solutions has • Targets that may be harmed
stretched over 12 years and involved a large num- • Barriers to energy
ber of planners.
Risk assessments can be performed in number The energies usually considered are gravity,
of ways depending on the situation and circum- height (including static load), linear motion,
stances. All risk assessment shall however be rotary motion, stored pressure, electrical energy,
based on probability and consequence for heating and cooling, fire and explosion, chemical
unwanted events. A practical tool for this purpose effects, radiation, and miscellaneous (human
is a risk matrix that eases a systematic and conse- movement, sharp edges, and points).
quent risk assessment (see below).
Deep Mining, Health, and Safety Aspects 3
Very common
-1/week R3 R4 R5 R5 R5
Common
-1/month R2 R3 R4 R5 R5
Relatively common
-1/år R2 R3 R3 R4 R5
Quite unusual
-1/10 år R1 R2 R3 R3 R4
Not probable
-1/100 år R1 R1 R2 R2 R3
Probability Some Injury but no Short sick Long sick Permanent

discomfort sick leave leave leave serious injury
Consequence
but harmless or death
Deep Mining, Health, and Safety Aspects, Fig. 1 Risk matrix based on probability and consequence
Risk level Need for action during planning
R1
No need for any redesign of the basic concept
Low risk – negligible risk
R2
A limited redesign of the basic concept might not be needed
Small risk
R3
Average risk – certain risk A thorough redesign of the basic concept is recommended for
parts related to identified risks
R4
Severe risk A redesign of major parts of the basic concept is necessary to
reach a less than average risk
R5
Any further development of the design concept is not permitted
Very severe risk
until the identified risk is reduced to a less than average risk
Deep Mining, Health, and Safety Aspects, Fig. 2 Risk level and need for action during planning
There are also many other different risk analy- from other industry that has a strong safety culture
sis methods that can be used during the develop- and long experience of systematic risk manage-
ment of new production systems. Besides the ment. Especially important will be to learn how to
methods mentioned above, methods like preven- proactively manage risks for fatalities and other
tive work safety analysis (PWSA), failure mode severe risks. Here so-called leading indicators are
effect analysis (FMEA), fault tree analysis (FTA), preferred instead of lagging indicators.
event tree analysis (ETA), work environment Even if there are many risk evaluation tools
screening tool (WEST), etc. are possible to use. available, the mining industry seems to need new
The most appropriate tools have to be chosen for and efficient tools for description, evaluation, and
every specific analysis task, and the users of the design of work environment during early phases
tools must also have the necessary competence in of strategic decision making and production sys-
order to attain reliable and relevant results. Here tem design. The most important decisions regard-
the mining business probably can learn much ing work environment and safety are made by top
4 Deep Mining, Health, and Safety Aspects
Risk level Need for action during production
R1
No need for action
Low risk – negligible risk
R2
Action might not be needed within months
Small risk
R3 Reasonable risk reduction needed within a week

Average risk – certain risk
R4
Severe risk Promt action is necessary within hours
R5 Work is not permitted until risk is reduced to an acceptable level

Very severe risk
Deep Mining, Health, and Safety Aspects, Fig. 3 Risk level and need for action during production
management when mining methods, technology, 7. Risk is reduced through personal protective
work organization, etc. is decided. Therefore risk equipment, for example, functional working
analyses regarding these matters should be made clothes.
as early as possible in the mine design process.
Once a risk analysis is completed, it often Depending on the complexity and severity of
requires measures which in most situations should problems, one may require different combinations
be implemented in the following well-known of measures as described above. One recommen-
order: dation is to always try to attack the root causes of
the problem first. It tends to result in the most cost-
1. Prevent already in the planning stage and efficient and result-efficient solutions. This is an
replace the hazards entirely, for example, important task for mine planners. They have the
through automation to eliminate manual or best opportunity to eliminate a lot of potential
mechanized underground work. health and safety problems when they develop
2. Isolate the individual hazard, risk process, for the first conceptual solutions. Planners that don’t
example, by designing ventilation and layout realize this and neglect these matters can cause
so that the blasting fumes can’t be spread out- great harm for many years to the mining personnel
side the risk zone. and their company.
3. Change process technology and behavior, for
example, DTH-drilling with water hydraulics
rather than pneumatics to reduce dust
Special Problems Related to Deep
emissions.
Mining
4. Limit the hazard through enclosures and phys-
ical protection, for example, build concrete
Mining at big depths that is more than 1,000 m
borders and railings at the shaft openings.
below surface normally causes three major depth-
5. Isolate personnel from the hazard risk area, for
related problems that often are very difficult and
example, by supplying the mining vehicles
expensive to solve. The problems are:
with safety cabs with good climate control.
6. Risk is reduced by instructions, procedures,
• Increased rock stress resulting in seismicity
training, etc. For example, procedures for safe
and/or floor, wall or roof convergence, rock
handling of explosives.
bursts, structural collapses, falling rock,
etc. Instability may also cause blocked bore
holes for blasting, resulting in poor charging
Deep Mining, Health, and Safety Aspects 5
which can increase dangerous handling of qualified expertise on rock mechanics and rock
undetonated blasting agents and dangerous reinforcement should therefore always be
handling of boulders engaged in early mine design and further on all
• Increased bedrock temperature causing heat the way into production phases so that the risks
stress on miners. can be minimized.
• Prolonged transportation distances which A second significant problem is increased bed-
reduce effective working time and make evac- rock temperature at larger depth. In average, the
uation of the mine more critical. temperature increases with about 25 C for each
1,000 m (Fridleifsson et al. 2008). The warm
The first and most difficult of these problems is bedrock heats up the air causing a heat stress on
the rock stress increase by the increased gravita- underground personnel if air cooling is not avail-
tional weight of the overlaying rock and how it able. Cooling measures are very expensive but is
affects the rock masses surrounding all excavated necessary if miners working hours aren’t to be
openings: tunnels, shafts, ramps, etc. The drastically reduced. Systems for managing a hot
increased load can result in an increased risk for environment should therefore be considered
serious rock falls and rock bursts due to induced already in conceptual studies so that the basic
seismic activity. The consequences can vary from ventilation principles and design are appropriate.
minor to devastating and much effort must there- A third obvious depth-related problem is pro-
fore be paid to reduce the present risks, both longed transportation distances and transport time
proactively and reactively. The main cause for which reduces the effective working hours for the
rock bursts is high in situ stress which also can miners causing higher labor costs per ton mined
occur due to tectonic forces in any direction. Rock ore and makes fast emergency and rescue trans-
bursts therefore also can appear in shallow mines ports more difficult to achieve. In the large El
and in mines with high extraction ratio where Teniente new mine level project, there was, for
forces are redistributed and concentrated to example, a strong demand from the project man-
remaining pillars. ager to find design solutions to this problem that
There are a number of early design and plan- they had with the old transport system (Revuelta
ning factors that clearly affect the occurrence and et al. 2008).
severity of rock burst:
• Mining method References

• Sequencing of developing the underground
mine workings also including extraction of ore Fridleifsson IB, Bertani R, Huenges E, Lund JW,
• Pillar layout and geometry Ragnarsson A, Rybach L (2008). The possible role
• Blasting damages on the pillars and contribution of geothermal energy to the mitigation
of climate change. In: Hohmeyer O, Trittin T (ed) IPCC
• Presence of very strong rock in the openings scoping meeting on renewable energy sources,
• Rock and backfill used to stabilize mined out Luebeck, pp 59–80
areas Harms-Ringdahl L (2013) Guide to safety analysis for
accident prevention. IRS Riskhantering AB,
Stockholm
The most important preventive measure is a Human Engineering (2005) A review of safety culture and
carefully designed safe mine layout, but this is a safety climate literature for the development of the
difficult task since other demands on production safety culture inspection toolkit, RESEARCH
REPORT 36, First published 2005. ISBN 0 7176
and product quality, metal recovery, etc. must be
6144 X
fulfilled. Revuelta J, Reyes F and Pozo R (2008) El Teniente New
One must always consider that rock bursts and Mine Level Project. Paper presented at The First Inter-
structural collapses are complex high-risk phe- national Future Mining Conference, Sydney, Nov 2008
nomena that are very difficult to predict. Top
H
Hydrometallurgy the ability to deal with complex and low-grade

metallic ores, which are more abundant every day
Carlos Frias Gomez in open mines and in new discoveries.
Cobre Las Cruces, Spain A wide range of textbooks on fundamentals
and process applications of hydrometallurgy are
available (Habashi 1999; Havlik 2008; Free 2013;
Synonyms Schlesinger et al. 2011; Crundwell et al. 2011),
including also many proceedings from periodical
Hydroprocessing; Hydrometallurgical processing international symposiums and conferences
(International Symposium on Hydrometallurgy
2014; International Aluminium 2013; Copper-
Definition Cobre International 2013; Lead-Zinc Interna-
tional 2010; International Biohydrometallurgy
The role and importance of hydrometallurgy is 2013; International Nickel-Cobalt 2013) orga-
growing every day not only in the field of primary nized by well-reputed institutions such as The
raw materials but also in secondary materials and Minerals, Metals and Materials Society (USA),
recycling of scraps and wastes containing metals. Canadian Institute of Mining, Metallurgy and
Anyway, in line with the goals and objectives of Petroleum (Canada), and Gesellschaft der Meta-
this Encyclopedia, the content of this chapter will llurgen und Bergleute e.V. (Germany). In addi-
be mainly focused on hydrometallurgical technol- tion, specific journals (Hydrometallurgy Journal;
ogies and processes applied to the benefit of Minerals Engineering Journal; The Journal of the
metallic minerals. Minerals) are published since decades ago, which
Basically, hydrometallurgy consists in pro- provides the most advanced and comprehensive
cessing metallic minerals to yield high-purity scientific developments and applications in
and high-value metals through the use of water hydrometallurgical field.
or water-based solvents with or without microor-
ganisms’ interaction.
Hydrometallurgy and electrometallurgy are Historical Background
disciplines of the extractive metallurgy science;
here electrometallurgy is considered to be a part of Hydrometallurgy source is linked to alchemists
the hydrometallurgy. that tried the transmutation of some metals to
Compared with pyrometallurgy, the hydromet- gold. The modern hydrometallurgy was born in
allurgy is more environmentally friendly and has 1887 when two important processes were
DOI 10.1007/978-3-642-40871-7_28-1
2 Hydrometallurgy
invented: gold recovery through cyanide treat- frequently in the form of electrodeposited
ment and the Bayer Process for aluminum produc- cathodes or ingots.
tion (Habashi 2005).
Since the beginning of the twentieth century, Alternatives to process run-of-mine (ROM)
the development and application of numerous metallic ores by hydrometallurgical ways are con-
leaching processes was started. In particular, ceptually summarized in Fig. 1.
hydrometallurgy of copper had fast development Leaching is the essential hydrometallurgical
thanks to the antecedents of industrial scale cop- operation and is based on aqueous solutions
per recovery by means of iron scraps (the Cemen- chemistry, thermodynamic of the
tation process) in Rio Tinto mines (Spain) and in physicochemical systems, and chemical reactions
Germany. engineering that includes process and equipment
The First World War favored the development design. The thermodynamics of a reaction system
of zinc electrolytic process for brass production. will determine its capability to extract the valuable
During the Second World War many innovative metal from the metal-bearing ores while the yield
leachants and new solvents and specific equip- and rate of such a transfer will depend on the
ments were developed for military uses such as reaction mechanism and kinetic. The slowest
uranium and other radioactive elements recovery, reaction step will control the overall rate of the
separation, and purification. leaching process.
In 1960s and 1970s, bacterial leaching started Leaching conditions are adapted to metallic
to be applied for copper extraction from sulfide ores characteristics:
ores and copper solvent extraction (SX) and elec-
trowinning (EW) was extensively used; as a – Dump leaching. The uncrushed ROM ores are
result, currently, over 20% worldwide copper pro- stacked on a leach pad immediately after mine
duction is yielded through SX-EW routes. extraction. Next, the ore is irrigated with a
Nowadays, hydrometallurgical technologies solution that leaches the desired metal out of
are the key to extract scarce and added value rare the ore. The leach solution composition
earth elements and special metals for high-tech depends on the type of metal to be extracted,
applications such as solar panels manufacturing for example, cyanide solution to recover pre-
and displays and components for electronic cious metals and acid solution to recover cop-
devices. Besides, nanomaterials production is per metal. The dump leaching approach is
mainly based on hydrometallurgical and electro- normally used to treat low-grade ores assuming
metallurgical techniques (Handbook of Nano- that poor recovery rate is achieved due to big-
electrochemistry 2016). ger size materials.
– Leaching of ground ores. After ROM ores
comminution, the ground ore is sent to
Metallic Ores Hydroprocessing leaching stage where it is processed under suit-
able conditions:
Any hydrometallurgical application usually • Heap Leaching. The ore is stockpiled with
includes three sequential stages: or without agglomeration in underlined
pads and then the chemical solution is
(i) The metal of interest is transferred from the sprayed over the top ores, percolates
ores to the aqueous media by means of through the pads, and is collected down-
leaching. wards and sent to purification and further
(ii) The pregnant solution is then conditioned, metal winning. The heap leaching tech-
purified, and concentrated to fit recovery nique is broadly applied, for instance, in
requirements. Chile to leach copper oxides and also in
(iii) The metal is then recovered from the purified Nevada (USA) to extract gold by
solution as added value final product, most cyanidation. In case of metal sulfides ores,
Hydrometallurgy 3
Hydrometallurgy, Run-of-Mine Ores

Fig. 1 Conceptual diagram
summarizing metallic ores
hydroprocessing
alternatives
COMMINUTION
CONCENTRATION
FLOTATION
DUMP ORE CONCENTRATE

LEACHING LEACHING LEACHING
SOLUTION SOLUTION SOLUTION

PURIFICATION PURIFICATION PURIFICATION
METAL METAL METAL

WINNING WINNING WINNING
HIGH PURITY HIGH PURITY HIGH PURITY

METAL METAL METAL
the leach is carried out by bacterial-assisted – Leaching of concentrates. The ground ore is
oxidation, named heap bioleaching process. concentrated through different methods such
• Stirred Tank Leaching and Vat Leaching. as gravity, froth flotation, and magnetic sepa-
The metallic ore is contacted with the ration, etc., to remove the gangue materials and
leach solution composition in tank reactors to produce an upgraded concentrate that is fed
or vats to extract the valuable metal. Next, to the leaching process running at the required
solid and liquid are separated and a preg- conditions:
nant solution is obtained for further pro- • Stirred Tanks Leaching. The leaching reac-
cessing to yield finally the high-value tors can run at atmospheric pressure and
metal. This type of leaching process nor- below water boiling point, e.g., below
mally runs at atmospheric pressure and 95 C. This technique known as Direct
below water boiling point. On the other Atmospheric Leaching is applied in several
hand, chemical leaching or bioleaching zinc refineries in Europe and China to treat
approach is applicable for sulfides ores oxi- commercial zinc concentrates.
dation and/or leaching in agitated tanks. For • Autoclave Leaching. It is a high-intensity
example, this technique is used for direct process to oxidize metallic sulfides and is
atmospheric leaching of high-grade copper industrially used to process zinc concen-
ores, e.g., chalcocite ores. trates, copper concentrates, and also to
oxide gold sulfide minerals before treatment
4 Hydrometallurgy
through traditional cyanidation process. For By nature, leaching is a selective process, in

example, over the last 20 years, more than such a way that unwanted components remain
15 pressure oxidation plants were unattacked in the ore matrix and the metal value
implemented for gold extraction; those is released to the pregnant solution. However, the
autoclaves usually operate over 200 C reality shows that impurities and other elements
and the process is designed to be auto- (iron is a good example) are usually co-leached; in
thermally controlled. consequence, the efficient purification of the leach
• Bioleaching. In this process, bacteria like solution is critical for subsequent high-quality
Acidithiobacillus ferrooxidans catalyses metal production. The solution purification can
metallic sulfides oxidation and leaching in be achieved using one or a combination of the
large agitated tanks with injected oxygen. next known hydrometallurgical methods:
The technology is well proven in many
industrial plants, mainly in the field of – Precipitation
gold pyrite/arsenopyrite biooxidation prior – Carbon adsorption
to treatment in a cyanidation plant. Main – Solvent extraction
limitation of this technology is long – Ion exchange
residence-time requirement, usually 3–5 – Membrane separation: reverse osmosis, nano-
days. Recently, thermophile bacteria appli- filtration, ultrafiltration
cations have been developed running above – Electro-assisted techniques, e.g.,
70 C to reduce substantially bioleaching electrodialysis
time; however, process scale up to commer-
cial size failed. After purification and concentration or condi-
tioning, valuable metals are usually recovered by
Another less common technique is called “In- two ways:
situ Leaching” and is concerning with metals dis-
solution from minerals present in underground ore – Physicochemical process: crystallization,
body in place. This technique is less costly than cementation, etc.
other conventional metal extraction processes but – Electrochemical process: electrodeposition,
presents difficulties to control the leaching effi- etc.
ciency through leach solution injection and preg-
nant solution extraction. Normally, it is used to
treat low-grade ores, and there are several indus-
Key Applications
trial operations to extract mainly uranium and
copper metal.
The process flow sheets are properly adapted to fit
A critical issue in metallic sulfide ores is gen-
requirements of every specific ores and
eration of acid mine drainage (AMD) that is
concentrates.
formed when sulfide minerals in rocks are
Following is briefly described widely used
exposed to oxidizing conditions; such oxidation
hydrometallurgical industrial applications to
reactions are catalyzed and accelerated by the
extract base metals such as copper and zinc. See
bacteria present in the mine waters, producing
next Fig. 2 and 3.
sulfuric acid and releasing metals like iron, cop-
per, zinc, etc., to waters that are pumped out of the
– Hydrometallurgical processing of copper ores:
mine. Hydrometallurgy plays an important role to
• (Habashi 1999) Copper oxide ores. The
deal with those acidic waters and innumerable
copper bearing oxidized ores are easily
technologies and processes have been developed
leached in acidic media; therefore, they are
including active or passive treatment and chemi-
processed in dump leaching or heap
cal or biochemical methods.
leaching spread areas irrigated with diluted
Hydrometallurgy 5
sulfuric acid; copper metal is then released (Germany), all of them using Outokumpu
into solution, percolates through the pad, flash furnace.
and is finally collected in dedicated ponds.
Next, copper pregnant solutions are treated In copper electrorefining process, frequently
by means of solvent extraction and electro- there are other metals that are recovered as valuable
winning (Cu SX-EW), obtaining copper coproducts or by-products, e.g., Ni, Co, Au, and
cathodes. This technology approach is now- Pt. For instance, nickel goes into solution as ions
adays broadly used in Chile and USA cop- and then is extracted and purified to produce nickel
per mines. salts or nickel cathodes; other more noble metals,
• (Havlik 2008; Free 2013) Copper sulfide such as gold or platinum group metals fall to the
ores. The sulfidic ores do require chemical bottom of the cell as an “anode sludge” that is
oxidation or biological oxidation to leach collected and later processed to separate, refine,
and facilitate copper metal dissolution. For and recover those high added-value metals (Fig. 2).
instance, Acidithiobacillus ferrooxidans
and Leptospirillum ferrooxidans are two of – Hydrometallurgical processing of zinc ores:
the most important bacteria in heap • (Habashi 1999) Zinc oxide, carbonate, and
bioleaching of copper sulfide at ambient silicate ores. Those zinc-bearing ores are
temperature. In case of secondary copper not amenable to conventional processing
sulfides, e.g., chalcocite or covellite, heap applied to sulfide ores; however, it is dem-
leaching or bioleaching is usually applied onstrated that oxide, silicate, and carbonate-
for low-grade copper ores, while atmo- based zinc ores can be suitably processed
spheric leaching in stirred tanks is utilized through atmospheric leaching in sulfuric
for high-grade copper ores for instance in acid, followed by iron, aluminum, and silica
Las Cruces mine (Spain) and Sepon mine removal, and then, zinc is selectively extra-
(Laos). In case of chalcopyrite ores, which cted by solvent extraction and electrowin-
are more difficult to leach, new bioleaching ning (Zn SX-EW), enabling production of
technologies are currently under develop- SHG zinc. The plant of reference in this
ment in some places, such as Escondida field is Skorpion mining-metallurgical
mine in Chile (Gentina and Acevedo plant in Namibia, yielding 150,000 tpa
2013). Once the copper metal goes to solu- zinc cathodes.
tion, then solvent extraction and electrowin- • (Havlik 2008) Zinc sulfide ores and concen-
ning techniques (Cu SX-EW) are employed trates. Over 80% of the world’s zinc is pro-
to yield copper cathodes. duced from sulfidic zinc ores (ZnS) by
• (Free 2013) Copper concentrates. Typically, using hydrometallurgical techniques after
commercial copper concentrates contain concentrate roasting. The pressure leaching
mainly chalcopyrite and bornite minerals, of zinc concentrates was initially developed
etc. and are normally treated through copper by Sherritt Gordon in Canada, and later, it
smelting (e.g., in flash furnace) and further has been applied worldwide in many other
electrorefining techniques; at the end of the hydrometallurgical plants, having the
process, pure copper is collected on cath- advantage to do not produce sulfur dioxide
odes. It is remarkable that over 70% of or dusts, but instead it produces elemental
worldwide copper metal production is sulfur. In the roasting process, the concen-
obtained through smelting and electrolytic trate is brought to a temperature of more
refining ways; for example, large and mod- than 900 C where zinc sulfide converts
ern copper smelters include Codelco Norte into the more active zinc oxide or calcine
(Chile), Jiangxi Copper Corp. Guixi and sulfur dioxide, which subsequently is
(China), and Aurubis Hamburg converted to sulfuric acid. The zinc calcine
6 Hydrometallurgy
Cu Ores
[1] [2] [3]

Sulphide ores
Oxide ores Sulphide ores or concentrates
DUMP ATMOSPHERIC
HEAP
OR HEAP OR PRESSURE ROASTING
BIOLEACHING
LEACHING LEACHING
Gases
SOLVENT SOLVENT SOLID/LIQUID

LEACHING
EXTRACTION EXTRACTION SEPARATION
Residue
SOLVENT SOLID/LIQUID
ELECTROWINNING ELECTROWINNING
EXTRACTION SEPARATION
Residue
SOLVENT
ELECTROWINNING
EXTRACTION
Cu CATHODES Cu CATHODES
ELECTROWINNING
Cu CATHODES
Cu CATHODES
Hydrometallurgy, Fig. 2 Copper metal extraction through hydrometallurgical processing
is leached with recycled electrolyte to indium. Those by-products are currently much
extract zinc content; next, zinc sulfate solu- appreciated because they are utilized for photo-
tion is subjected to purification with zinc voltaic solar panels manufacturing (Fig. 3).
dust to remove impurities like copper, cad-
mium, cobalt, etc., before being finally sent
to electrowinning to render zinc cathodes.
Future Directions
Atmospheric leaching of zinc concentrates
has been implemented in several refineries
Within the extractive metallurgy field, the role of
in Finland, Norway, and China aiming to
hydrometallurgy will be more and more relevant
increase zinc capacity production but
in the future because metallic ores become more
avoiding incremental acid generation.
complex and having lower grade.
On the other hand, the hydrometallurgy sci-
In zinc hydrometallurgical processes, there are ence has to face important challenges in the
some metals recovered as valuable by-products twenty-first century, such as:
such as cadmium, germanium, gallium, and
Hydrometallurgy 7
Zn Ores
[1] [2]
Oxide, silicate ores Sulphide ores
or concentrates or concentrates
ATMOSPHERIC
PRESSURE
OR PRESSURE ROASTING
LEACHING
LEACHING
Gases
SOLID/LIQUID SOLID/LIQUID ATMOSPHERIC

LEACHING
SEPARATION SEPARATION LEACHING
Residue Residue
SOLVENT IRON SOLID/LIQUID SOLID/LIQUID

EXTRACTION REMOVAL SEPARATION SEPARATION
Residue Residue
SOLID/LIQUID IRON
ELECTROWINNING
SEPARATION REMOVAL
Residue
ZINC DUST SOLID/LIQUID

Zn CATHODES PURIFICATION SEPARATION
Cements Residue
ZINC DUST
ELECTROWINNING
PURIFICATION
Cements
ELECTROWINNING
Zn CATHODES
Zn CATHODES
Hydrometallurgy, Fig. 3 Zinc metal extraction through hydrometallurgical processing
– Development of more eco-efficient and bioleaching and bioremediation

energy-efficient technologies, process, and applications, etc.
equipment. Some examples includes: – More effective recovery/separation methods
(i) conductive polymers for electrolytic appli- covering diverse areas: (i) more resistant and
cations, (ii) new catalytic reactors, (iii) hydro selective membranes for specific requirements;
process intensification to improve plant and (ii) next generation of high-selectivity extra-
equipment efficiency and markedly shrinking ctants for diverse application, on one side,
their size, (iv) faster and more cost-effective massive metals production, and on the other
8 Hydrometallurgy
side, rare metals and special metals efficient Habashi, FA (2005) Short history of hydrometallurgy.
recovery; (iii) less toxic reagent to replace cya- Hydrometallurgy Journal 79: 15–22, Elsevier B.V
Handbook of nanoelectrochemistry: electrochemical syn-
nide for gold recovery, etc. thesis methods, properties, and characterization tech-
– Increased linking and collaborative approach niques. Editors: Mahmood Aliofkhazraei, Abdel Salam
in between hydrometallurgy and nanotechnol- Hamdy Makhlouf. Springer International Publishing,
ogies and nanomaterials development, produc- Switzerland, 2016. ISBN-10: 3319152653, ISBN-13:
9783319152653
tion, and utilization, e.g., use of nanoparticles Havlik T (2008) Hydrometallurgy: principles and applica-
to achieve more efficient and selective impuri- tions, 1st edn. Editor: Woodhead Publishing series in
ties removal. metals and surface engineering, ISBN-10:
– To achieve industrial applications of new 1845694074, ISBN-13: 978–1845694074
Hydrometallurgy Journal. Editor-in-Chief: Jochen
hydrometallurgical technologies based, for Petersen, Elsevier B.V
instance, on ionic liquid materials for electro- International Aluminium Conference (2013) Last event:
chemical processes and metals winning. 28th international aluminium conference, 17–19 Sept
2013, Geneva
International Biohydrometallurgy Symposium (2013) Las
event: IBS’2013, 20th international
References biohydrometallurgy symposium, 8–11 Oct 2013,
Antofagasta
Copper-Cobre International Conference (2013) Last event: International Nickel-Cobalt Symposium (2013) 3–7 Mar
2013 copper-cobre international conference, 1–4 Dec 2013, San Antonio
2013, Santiago Chile International Symposium on Hydrometallurgy (2014) Last
Crundwell F, Moats M, Ramachandran V, Robinson TG, event: Hydro’ 2014, 7th international symposium on
Davenport WG (2011) Extractive metallurgy of nickel, hydrometallurgy, 22–25 June 2014, Victoria
cobalt and platinum group metals, 1st edn. Editor: Lead-Zinc International Symposium (2010) Last event:
Elsevier B.V., ISBN-10: 0080968090, ISBN-13: 2010 lead & zinc international conference, 3–6 Oct
9780080968094 2010, Vancouver
Free ML (2013) Hydrometallurgy: fundamentals and Minerals Engineering Journal. Editor in Chief: B.A. Wills,
applications, 1st edn. Editor: Wiley. ISBN-10: Elsevier B.V
1118230779, ISBN-13: 9781118230770 Schlesinger ME, King MJ, Sole KC, Davenport WG
Gentina JC, Acevedo F (2013) Application of bioleaching (2011) Extractive metallurgy of copper, 5th edn. Editor:
to copper mining in Chile. Electronic Journal of Bio- Elsevier B.V., ISBN-10: 0080967892, ISBN-13:
technology 16(3) Issue of 15 May 2013 9780080967899
Habashi FA (1999) Textbook of hydrometallurgy, 2nd edn. The Journal of the Minerals, Metals and Materials Society.
Editor: Métallurgie Extractive Québec, ISBN-10: Editor: Maureen Byko, Springer International
2980324779, ISBN-13:9782980324772 Publishing
A
Argentina: Energy Policy preliminary comments on the Argentine legal and

political system should be made.
Tomás Lanardonne and Brian D. Burstein Argentina is a sovereign, federal, and demo-
Perez Alati, Grondona, Benites, Arntsen & cratic country. It has a civil law jurisdiction due to
Martinez de Hoz (h), Buenos Aires, Argentina its colonization by Spaniards rather than English.
The territory is divided into 23 provinces and one
federal capital city (the city of Buenos Aires).
Argentina is a rich country in terms of natural Argentine’s supreme law is the Argentine Consti-
resources. Its wide territory and natural environ- tution. The national state is divided into three
ment makes Argentina a suitable location to branches:
develop diverse energy projects.
In the economic field, Argentina has reached in (i) An executive branch, headed by a president,
2015 a gross domestic product (GDP) of, roughly, elected by direct vote.
US$540 billion. It has a total population of 42.98 (ii) A legislative branch, composed by a Federal
million. In the last 10 years, its average GDP per Congress, consisting of a 72-seat senate and
capita reached US$12.501, while its annual a 257-seat Chamber of Deputies, elected by
growth has fluctuated between a 0,5 % and a direct vote.
9,5 %, with an average of 4,63 % (See World (iii) An independent judiciary, divided in federal
Bank). The unemployment rate in 2014 (the last and provincial courts, each of them compris-
published rate) stood at 8.2 %. The annual infla- ing lower courts, court of appeal, and
tion rate in the last years has ranged between 20 % supreme courts. The supreme judicial
and 30 %. In the foreign exchange market, and power of Argentina is the Federal Supreme
expressed in Argentine peso (AR$) per one Court of Justice.
United States dollar (US$), the current rate of
exchange oscillates the AR$ 15.5. Finally, Each province has its own constitution, elects
Argentina’s foreign exchange reserves are in the its own governor and legislators, and appoints its
order of US$ 32 billion (Ibídem). own judges without the Federal Government’s
The purpose of this section is to explore Argen- interference. Substantial conflicts between the
tine background, policy, and regulatory frame- provinces or jurisdictional issues between two or
work with regard to the main natural resources more provinces are decided by the Federal
developed in the country: (1) oil and gas, (2) elec- Supreme Court.
tricity, (3) renewable energies, and (4) mining. The Argentine Constitution entitles the Argen-
Before immersing into their specifications, some tine Congress to enact the codes concerning,
DOI 10.1007/978-3-642-40871-7_29-1
2 Argentina: Energy Policy
among others, civil, commercial, and mineral Section 2 fourth paragraph of the
matters. Re-provincialization Law), but the provinces are
Since 1871 Argentina has been governed by the authorities that enforce such regulations (See
the same civil code, with only partial revisions. In Section 2 first paragraph of the
November 2014, the new Civil and Commercial Re-provincialization Law). In this context, the
Code of Argentina was enacted. In August 2015, emerging challenge on these days is to create a
said code finally entered into force (See Law N suitable political, economical, and legal environ-
26,994, as amended by Law N 27,077). ment in seeking to attract adequate investments to
The federal executive branch, through the Min- operate the oil and gas flourishing industry.
istry of Energy and Mining, establishes and Most of the companies who immerse in oil and
enforces the federal energy policy (See Decree gas exploration and exploitation projects in
N 13/2015). Argentina do it through joint ventures, mainly to
boost technical and economic resources, and also
to divide business risks (See Nallar Dera 2010). In
Oil and Gas Argentina, the parties to the worldwide known as
joint operation agreement (JOA) (The Association
Historically, the exploration and production rights of International Petroleum Negotiators (AIPN)
on reservoir fields used to be exclusively in the constantly develops JOA’s model contracts to be
hands of Yacimientos Petrolíferos Fiscales (YPF), used all around the world, which includes alterna-
the main state-owned company. Private compa- tives and variations on common issues. See¸ in
nies played a less important role in the hydrocar- this sense, Roizen 2012) generally incorporate
bon activity. This reality radically changed, what is locally known as a transitory union of
mainly, since the 1990s. During those years, companies, a sort of statutory joint venture (UTE
YPF was partially privatized, its exclusive rights or Union Transitoria de Empresas) (See Casal
were removed, and the ownership on hydrocarbon 2015; Massimino 2014).
resources passed from the national state to the UTEs are created by contract. Argentine law
provinces. Thus, one of the primary objectives in establishes that UTEs constitute neither legal enti-
restructuring the Argentine hydrocarbons industry ties nor corporations, nor any kind of individual
was to promote competition. In 2012, the national capable of holding legal rights or obligations.
state expropriated YPF’s majority shares, retaking Hence, UTEs have a purely contractual nature.
control of the company. UTEs are types of joint venture agreements
Nowadays, Argentina owns one of the most whereby each member thereof preserves its indi-
prominent shale plays in the world, Vaca Muerta¸ viduality and autonomy (See Section 1442 of the
turning its energetic potential to a substantial Argentine Civil and Commercial Code).
increase. Argentina’s Law N 17,319 (the Federal
In sum, oil and gas resources nowadays belong Hydrocarbons Law) (The Federal Hydrocarbons
to the provinces, where the hydrocarbons Law was recently amended by Law N 27,007
resources are located (except offshore deposits (the Oil Reform), by which many issues on,
extending beyond 12 nautical miles which belong among others, unconventional exploration and
to the Federal State) (See Section 1 of Law N exploitation concessions, tendering procedures,
17,319 (the Federal Hydrocarbons Law) as royalties, promotional regimes, were significantly
amended by Section 1 s paragraph of Law N modified. Also, the entering into force of the new
26,197 (the Re-provincialization Law)). Unlike Argentine Civil and Commercial Code is starting
other federal countries with abundant hydrocar- to cause several consequences on the hydrocarbon
bon resources (e.g., Australia or Canada) the Fed- industry.) is the main regulatory framework of the
eral Government has the exclusive authority to hydrocarbons industry. It conceives a system of
regulate the oil and gas legal framework (See production concessions awarded by the state
Section 3 of the Federal Hydrocarbons and (federal or provincial, depending on the location
Argentina: Energy Policy 3
of the resources), through which companies hold “CAMMESA”), which absorbs the differences
exclusive rights to explore, develop, exploit, and between purchases by distributors at seasonal
take title of the production at the wellhead, in prices and payments to generators for energy
exchange for a royalty payment and the applica- sales at the spot price.
tion of a general taxation regime.
On October 31, 2014, the Argentine Congress The operation of the WEM is administered
passed the Oil Reform. It aims to improve the CAMMESA. It was created in July 1992 by the
investment conditions for the Argentine oil indus- Federal Government, which currently owns 20 %
try by means of: (i) extending exploration and of CAMMESA’s capital stock. The remaining
production terms, (ii) creating a special type of 80 % is owned by various associations that repre-
concession for unconventional hydrocarbons pro- sent wholesale electricity market participants,
jects, (iii) capping royalties and extending bonus including generators, transmitters, distributors,
fees, (iv) reducing government-take in special large users, and electricity brokers.
types of projects, and (v) reinstating the right to
export a percentage of oil and gas production
Term Market
while maintaining abroad the export proceeds,
Generators are able to enter into agreements in the
among other benefits. The reform entered into
term market to supply energy and capacity to
effect on November 8, 2014 (See¸ in this sense,
distributors and large users. Distributors are able
Lanardonne and Máculus 2014).
to purchase energy through agreements in the
term market instead of purchasing energy in the
spot market. Term agreements typically stipulate a
Electricity
price based on the spot price plus a margin.
On December 1991, the Argentine Congress
passed Law N 24.065 (the Federal Electricity Spot Market
Law), the main actual regulation on the industry.
(For more information on the Argentine historical Spot Prices
electricity regulation, see Sobre Casas 2003; The 2002 emergency regulations had a significant
Palacios 2014.) impact on energy prices. Among the measures
Pursuant to the Federal Electricity Law, the implemented pursuant to the emergency regula-
Federal Government established the wholesale tions were the pesification of prices in the spot
electricity market (or WEM) in 1991, which con- market and the requirement that all spot prices be
sists of: calculated based on the price of natural gas, even
in circumstances where alternative fuel such as
• A term market in which generators, distribu- diesel or fuel oil is purchased by generators to
tors, and large users enter into long-term agree- meet demand due to the lack of supply of
ments on quantities, prices, and conditions natural gas.
freely agreed upon by the parties. Prior to the 2001 crisis, energy prices in the
• A spot market, in which prices are established spot market were set by CAMMESA, which
on an hourly basis as a function of economic determined the price charged by generators for
production costs, represented by the short-term energy sold in the spot market of the WEM on
marginal cost of production measured at an hourly basis. The spot price reflected supply
Ezeiza 500 kV substation, the system’s load and demand in the WEM at any given time, which
center, and demand. CAMMESA determined using different supply
• A seasonal stabilization fund, managed by and demand scenarios that dispatched the opti-
Wholesale Electricity Market Administration mum amount of available supply, taking into
Company (“Compañía Administradora del account the restrictions of the transmission grid,
Mercado Mayorista Eléctrico S.A.” or in such a way as to meet demand requirements
while seeking to minimize the production cost and Stabilization Fund

the cost associated with reducing risk of system The seasonal stabilization fund managed by
failure. CAMMESA absorbs the difference between pur-
The spot price set by CAMMESA compen- chases by distributors at seasonal prices and pay-
sated generators according to the cost of the last ments to generators for energy sales at the spot
unit to be dispatched for the next unit as measured price. When the spot price is lower than the sea-
at the Ezeiza 500 kV substation, which is the sonal price, the stabilization fund increases, and
system’s load center and is in close proximity of when the spot price is higher than the seasonal
the city of Buenos Aires. Dispatch order was price, the stabilization fund decreases. The out-
determined by plant efficiency and the marginal standing balance of this fund at any given time
cost of providing energy. reflects the accumulation of differences between
In addition to energy payments for actual out- the seasonal price and the hourly energy price in
put at the prevailing spot market prices, generators the spot market. The stabilization fund is required
would receive compensation for capacity placed to maintain a minimum amount to cover payments
at the disposal of the spot market, including to generators if prices in the spot market during
standby capacity, additional standby capacity the quarter exceed the seasonal price. Billing of all
(for system capacity shortages), and ancillary ser- wholesale electricity market transactions is
vices (such as frequency regulation and voltage performed monthly through CAMMESA, which
control). acts as the clearing agent for all purchases
between participants in the market. Payments are
Seasonal Prices made approximately 40 days after the end of each
The emergency regulations also made significant month.
changes to the seasonal prices charged to distrib- The stabilization fund was adversely affected
utors in the WEM, including the implementation as a result of the modifications to the spot price
of a cap (which varies depending on the category and the seasonal price made by the emergency
of customer) on the cost of electricity charged by regulations issued since January 2002, pursuant
CAMMESA to distributors at a price below the to which seasonal prices were set below spot
spot price charged by generators. prices resulting in large deficits in the stabilization
Prior to implementation of the emergency reg- fund. This deficit has been financed by the Federal
ulations, seasonal prices were regulated by Government through loans to CAMMESA.
CAMMESA as follows: As a result of the permanent imbalance
between the seasonal prices paid by electricity
• Prices charged by CAMMESA to distributors distributors and the spot price, the seasonal stabi-
changed only twice per year (in summer and lization fund was depleted and power generators
winter), with interim quarterly revisions in case were ceased to be paid in full for their energy
of significant changes in the spot price of sales. Since September 2003, by means of Reso-
energy, despite prices charged by generators lution SE 406/2003 the Federal Government
in the wholesale electricity market fluctuating established a priority payment system to distribute
constantly. power generators’ receivables in the WEM. In
• Prices were determined by CAMMESA based accordance with said resolution, capacity pay-
on the average cost of providing 1 MWh of ments and generation margins rank below certain
additional energy (its marginal cost), as well as other items. The balance of what is owed to the
the costs associated with the failure of the generators and what is actually collected by them
system and several other factors. is computed as a credit of the generators against
• CAMMESA would use seasonal database and CAMMESA.
optimization models in determining the sea-
sonal prices and would consider both antici-
pated energy supplies and demand.
Renewable Energies practice neutralized due to two related circum-

stances: first, the premium levels were relatively
Electricity Generation low when compared to those in other countries;
In December 2006, the Argentine Congress pro- second, and most importantly, electricity prices in
mulgated Law N 26,190, which established the general did not represent the actual costs of the
“National Promotional Regime for the use of system and were under substantial government
renewable energies destined to the production of interference.
electrical energy,” and declared of national inter- These problems were later on solved through
est the generation of electrical energy from renew- the launching of an ambitious tender program,
able energy sources which is destined to the through which the state energy company
provision of a public service or to investigation (ENARSA) presented bids for the granting of
for technological development and fabrication of renewable energy “power purchase agreements”
equipment with that purpose. (PPA).
Law N 26,190 widened the scope of the Under this mechanism, the generator acts as
renewable energies included in the promotional the “seller” in the corresponding PPA with the
regime established by Law N 25.019 (national state owned company Energía Argentina S.A.
regime of wind and solar energy) and maintained (ENARSA), who acts as the buyer (See Cassagne
the “Feed-in Tariff” system and the tax benefits 2014/2015). Then, under another contract,
established by the aforementioned law. ENARSA acts as the seller of the corresponding
The objective of Law N 26,190 is to achieve energy before the wholesale electricity market,
that an 8 % of national consumption of electrical which is represented by CAMMESA.
energy comes from renewable energy sources, by For the entry into force of these contracts, the
the year 2017. generator must be awarded in the bid called by
The law establishes a promotional regime to ENARSA, and after being selected its offer must
attract investments in the field of renewable ener- be approved by the Energy Secretariat, which will
gies. This promotional regime is composed by: then instruct CAMMESA to make a contract with
(i) tax benefits, (ii) a “Feed-in Tariff” system, and ENARSA. In parallel with this, ENARSA makes
(iii) an invitation by the national government to the contract with the generator.
the provinces and the city of Buenos Aires to also The List of Terms and Conditions of the Inter-
encourage the development of renewable energy national and Domestic Public Tender ENARSA
projects through provincial and municipal tax No. 001/2009 for the Supply of Electricity from
benefits. Renewable Sources (Pliego de Bases y
The tax benefits contemplated in Law N Condiciones de la Licitacion Publica Nacional e
26,190 are: (i) anticipated rebate of the value Internacional ENARSA N 001/2009 de Provision
added tax (Impuesto al valor agregado), or alter- de Energia Electrica a partir de Fuentes
natively, the possibility to practice an accelerated Renovables) establishes that the term of the con-
depreciation when calculating the income tax tract is of 15 years and enters in force since the
(Impuesto a las Ganancias) regarding the assets notification of the subscription of the wholesale
or infrastructure works involved in the project and electricity market supply contract (Contrato de
(ii) the assets which correspond to the application Abastecimiento MEM) between ENARSA and
authority approved investment projects will not be CAMMESA.
included for the calculation of the alternative min- The price under the PPA is in dollars, fixed, and
imum income tax (Impuesto a la Ganancia Mín- for supplied energy (US$/MWh), and the “made
ima Presunta) for a 3-year period as from the available power” (potencia puesta a disposición)
project’s start-off. is not remunerated. In the case of biofuel plants,
The Feed-in Tariff system promoted by this the price is variable and the remuneration is for the
law fixes premiums for eligible renewable energy “made available power” (potencia puesta a
technologies. However, this possibility was in disposición)
In summary, the Feed-in Tariff system and the principle, foreign investments and local invest-
tax benefits provided in Law N 26,190 fell short ments corresponding to legal entities which do
to foster the required investment to develop not have agricultural production (producción
Argentina’s renewable energy potential, particu- agropecuaria) as their main activity are excluded
larly with the existing electricity depressed prices from the Promotional Regime and (ii) the price of
resulting from the present government interfer- the biofuels sold by the companies which are
ence in energy prices. Thus, the great majority of under the Promotional Regime are regulated by
existing renewable energy projects are comprised the application authority.
in the special renewable energy government spon- As of today, most Argentine biofuel plants
sored program in which the state-owned company have been projected to satisfy the needs of foreign
ENARSA purchases electricity at fixed prices markets and do not enjoy the benefits of the Pro-
way above average spot prices. motional Regime.
Biofuels
The New Renewable Energy Law
Even though Law N 26,190 regulates renewable
On September 23, 2015, the National Congress
energies, it expressly excludes biofuels (Law N
passed a bill to amend the aforementioned Law
26,093 defines biofuels as bioethanol, biodiesel
26,190 (Law 27,191). Many of its provisions need
and biogas produced from raw materials of agri-
to be supplemented by regulations issued by the
cultural, agribusiness or organic wastes origin.),
president through the Ministry of Energy and
which have a different legal framework and are
Mining.
regulated by Law N 26,093, passed on
Law 27,191 establishes as a short-term target
April 2006.
that renewable energy should supply 8 % of the
In order to foster an effective demand of
energy demand by December 31, 2017. It also
biofuels, Law N 26,093 provided the
establishes a long-term target: 25 % by December
denominated mandatory blending, that is, the
31, 2025. This would entail the installment of
mixing of fossil fuels (gas oil or petroleum, as
2700 MW by 2017 and 9000 MW by 2025. For
the case may be) with biofuels (biodiesel as well
reference purposes, in 2014 the share of renew-
as bioethanol) in a minimum percentage of 5 %,
able energy in domestic electricity consumption
measured over the total quantity of the final prod-
was only at 1.5 %.
uct, for all the liquid fuel to be commercialized
To accomplish these targets, Law 27,191 intro-
within Argentina.
duces some amendments to the tax benefits
Law N 26,093 created a temporary Promo-
awarded to renewable energy projects as per the
tional Regime through federal tax benefits. The
original version of Law 26,190. Tax benefits men-
tax benefits are the same as those established by
tioned below are even better if the project is car-
Law N 26,190, but Law N 26,093 adds a few
ried out before December 31, 2017. Now, eligible
more: (i) water infrastructure tax (Decree 1381/
investors would enjoy the following:
01), (ii) Tax on liquid fuel and natural gas (Law N
23,966), and (iii) tax on the transfer or import of
(i) Anticipated devolution of value added tax.
gas oil (Law N 26,028) are not applicable to the
(ii) Accelerated depreciation when calculating
biodiesel and bioethanol produced in order to
the income tax in respect of the assets or
comply with the mandatory blending, or the bio-
infrastructure works involved in the project.
diesel or bioethanol used by the government or by
(iii) The assets allocated to these projects shall
private companies located on waterways or lakes
not be included for the calculation of the
(especially within national parks or ecological
applicable minimum presumed income tax
reserves).
(Ganancia Mínima y Presunta).
The Promotional Regime has not been effec-
(iv) Exemption from import taxes until Decem-
tive attracting investments for two main reasons:
ber 31, 2017.
(i) it has a limited scope of application: in
(v) Exemption from specific charges/taxes, mineral resources within a specific territory and
fees, or royalties (whether national, provin- furthermore the right to obtain a development
cial, or municipal) until December 31, 2025. concession if a discovery is made during the
(vi) Extension of the tax loss carry-forward exploration term. The general provisions of the
period from 5 to 10 years for purposes of Mining Code do not apply to oil and gas deposits.
calculating Income Tax. In addition, the mining of ores used in the nuclear
(vii) Exemption from income tax on dividends if industry (uranium and thorium), although subject
those are allocated to new renewable pro- to the Mining Code, must comply with additional
jects in Argentina. specific regulations (See Pigretti 1992).
The law considers development concessions
Finally, Law 27,191 establishes a “purchase (including the mine and its deposits, as well as
obligation” in head of large users registered as the buildings, machinery, cars, etc. used in the
agents in the WEM and large customers of distri- development of the mine) to be property distinct
bution companies (with consumption above from the title to the surface land on which they are
300 kW/h). The difference between large users located. Once the discoverer’s rights are incorpo-
and large customers is that the former contract rated into public deeds and registered with the
directly with power generators while the latter do Registry of Mines, they provide title to the devel-
it through the distribution company serving their opment concession. Development concession
relevant geographic zone. titles are transferable, mortgageable, irrevocable,
and are regulated by similar civil law rules to
those regulating real estate (Isola-Federico and
Mining Palavecino 2000). Mortgages may be granted
over such rights, and, once extracted, minerals
The Andes mountain range is one of the Argen- being movable property may also be pledged as
tine’s most prolific mineral deposits. The basic security for financing proposes.
statute which governs mining is the Mining Sampling and prospecting may be conducted
Code. The Mining Code was enacted by Law freely (no government permit or concession is
No. 1,919 of 1886 and was amended several required), except in areas where mining conces-
times thereafter. sions have already been granted to third parties, or
As in most Latin American countries, Argen- in fenced or cultivated areas, urban areas, areas
tine law is based upon the principle that all min- reserved for national defense, or areas reserved for
eral deposits are state owned. Each province or the public use. In these cases, written permission from
Federal Government maintains the eminent the surface owner, concession holder or relevant
domain in respect of the minerals located within authority, is required.
their respective jurisdictions. However, persons
and corporations may obtain property concessions Distribution of Regulatory and Enforcement
from such bodies to explore and develop those Powers
deposits and may freely dispose of the minerals Mining laws and regulations are enacted by the
extracted within the territory of the concession. Federal Government, and enforced by the Federal
Section 8 of the Mining Code establishes the Government, each provincial government, and, to
general principle that the right to explore and a lesser extent, each municipality.
develop mines and dispose of them as owners is The basic legal framework governing mining
granted to private individuals and companies, in rights (including the Mining Code) has been
accordance with the provisions of this Code. enacted by the Federal Congress. The enactment
The Mining Code provides for two basic types of procedural regulations is, however, vested in
of mining concessions: (i) The exploration con- each provincial legislature. Each province orga-
cession and (ii) the development concession. The nizes its own mining authority which deals with
first one grants the right to explore and search for the granting and registration of exploration and
development concessions and compliance with permutable or permutitic minerals. The owner of
mining regulations (including safety and, in most the surface rights has a preferential right to
cases, environmental standards). deposits within this category but must have its
Regulations in connection with tax incentive claims officially delineated.
programs are enacted either by the Federal Con- The third class of mines includes mines where
gress or the provinces depending upon whether minerals of an earthy or rocky nature which are
the relevant tax is imposed by the Federal Gov- used in the construction and ornamental industries
ernment or the provinces. The main mining tax are extracted. These deposits belong to the surface
incentive program has, however, been enacted by owner.
a federal law to which the provinces have adhered.
The registration and enforcement powers under
this law are vested in the National Mining References
Secretary.
Casal D (2015) Overview of the operating agreements in
Categories of Mines the hydrocarbon activity. Revista Argentina de Derecho
de la Energía, Hidrocarburos y Minería 1:1–33
There are three classes of mines according to the
Cassagne E (2014/2015) Legal and contractual analysis of
type of mineral discovered. the development of generation of renewable energies in
First class mines are those in which the follow- Argentina. Revista Argentina de Derecho de la Energía,
ing minerals are mined: gold, silver, platinum, Hidrocarburos y Minería 3:133–193
Isola-Federico AG, Palavecino M (2000) Temas actuales
mercury, copper, iron, lead, tin, zinc, nickel,
de derecho minero. editorial Universidad, Buenos
cobalt, bismuth, manganese, antimony, wolfram- Aires
ite, aluminum, beryllium, vanadium, cadmium, Lanardonne T, Máculus A (2014) La reciente reforma a la
tantalum, molybdenum, lithium, and potassium. Ley de Hidrocarburos. Revista del Colegio de
Abogados de la Ciudad de Buenos Aires, tomo
Certain fuels (such as mineral coal, lignite, anthra-
74(2):55–73
cite coal, and solid hydrocarbons) and nonmetals Massimino LF (2014) The natural gas system in Argentina:
(such as arsenic, quartz, feldspar, mica, fluorite, regulation, emergency and current situation. Revista
calcareous phosphates, sulfur, borates, and pre- Argentina de Derecho de la Energía, Hidrocarburos y
Minería 1:63–84
cious stones) are also included in this category.
Nallar Dera DM (2010) Regulación y control de los
These mines belong to the state which grants servicios públicos. editorial Marcial Pons, Buenos
concessions over such mines. Aires, pp 155–194
Second class mines are divided into two cate- Palacios M (2014) Constitution and electricity. Revista
Argentina de Derecho de la Energía, Hidrocarburos y
gories: the first type comprises metallic sands and
Minería 1:133–193
precious stones which are found in river beds, on Pigretti EA (1992) Derecho de los recursos naturales,
the banks of running water streams, or at the editorial La Ley, Buenos Aires, pp 349–456
facilities of abandoned mines. Minerals falling Roizen DP (2012) Certain argentine law considerations
regarding the 2002 AIPN JOA Model Contract.
into this category may be mined by anyone with-
J World Energy Law Bus 5(2):139–147
out having to obtain a concession. The second Sobre Casas RP (2003) Los contratos en el mercado
type includes saltpeter, salines, peat bogs, metals eléctrico, editorial Ábaco de Rodolfo Depalma, Buenos
not included in the first class and low-grade alu- Aires, pp 119–151
World Bank. http://data.worldbank.org/country/argentina;
minous soils, abrasives, ochres, resins, steatite,
http://data.worldbank.org/indicator/FI.RES.TOTL.CD;
barium sulfate, low-grade copper ores, graphite, http://data.worldbank.org/indicator/NY.GDP.DEFL.KD.
fine white clay, alkaline salts or earthy alkaline ZG
salts, amianthus, bentonite, zeolite, and
C
Colombia: Energy Policy (Electricity) Resources
César Fabián Romero Roa As of December 2013, net effective installed

CEPMLP – University of Dundee, Dundee, UK capacity in the Colombian National
Interconnected System was 14,559 MW. During
that same year, the National Interconnected Sys-
General Information on Colombia tem generated 62,196.6 GWh, divided in 41,835.9
GWh (67 %) from hydraulic plants, 16,838.6
According to the National Administrative Depart- GWh (27 %) from thermal plants (coal-based
ment of Statistics, the Republic of Colombia has a and gas-based), and 3,522.0 GWh (6 %) from
continental area of 1,141,748 km2 and minor plants (including renewable projects) and
928,660 km2 of sovereign maritime area. It is cogenerators (XM SA ESP 2013a). Demand in the
located in the north-western corner of South National Interconnected system during 2013 was
America, sharing international waters with Costa 60,890 GWh (XM SA ESP 2013b).
Rica, Haiti, Jamaica, Dominican Republic, the From 2004 to 2012, the statistics are showed in
United States, and Nicaragua, and boundaries Tables 1, 2, and 3 (UPME 2014a).
with Panamá, Venezuela, Ecuador, Brazil, and Power exports and imports are from and to
Peru. Its official language is Spanish, and its pre- Ecuador, as well as from and to Venezuela. It has
dominant religion is Catholicism, even though been developed as showed in Table 4 (UPME
freedom of religion is guaranteed under its Con- 2014a).
stitution (República de Colombia 1991; DANE According to the Ministry of Mines and
2015). Colombia is divided into 6 regions, Energy, the Colombian electric sector suffered
32 departments, and 1101 municipalities, all significant changes, particularly with Acts
within the constitutional protection over indige- 142 (República de Colombia 1994a) and 143 of
nous and ethnical territories (DANE 2014). 1994 (República de Colombia 1994b), which
During 2013, Colombia generated a gross allowed the participation of private actors, vertical
domestic product (GDP) of US$ 378.4 billion in disintegration, separation of generation, transmis-
and gross national income (GNI) per capita of sion, distribution, and commercialization business
US$ 11,960. Population for the same year was units; the creation of a wholesale electricity mar-
48,321,405 (The World Bank 2015), making it ket; and an indicative planning in generation and a
the third country with the largest population in mandatory planning in transmission. These Acts
Latin America (DANE 2014). also changed the state’s role in regulation, plan-
ning, and control of the power sector (UPME
DOI 10.1007/978-3-642-40871-7_31-1
2 Colombia: Energy Policy (Electricity)
2014a). Generation and commercialization are For years 2014–2019, the goals could be
regulated free markets, whereas transmission and fulfilled through the reliability criteria,
distribution are regulated monopolies (CREG N. established through existing regulation, and
A.). based on the reliability charges. The
As of 2010, there are 41 electricity generators, 2020–2028 period goals will require an
9 transporters, 29 distributors, and 69 traders increase of installed capacity, with 17 different
(CREG N.A.). scenarios. It also recommends the execution of
eight new transmission projects within the
National Interconnected System for guarantee-
Colombia’s Electric Power Policy ing securities of supply and demand.
Conception Moreover, this plan considers a generation
matrix diversification, with a modeling meth-
The Ministry of Mines and Energy and the Mining odology for renewable sources. Results show
and Energy Planning Unit (hereafter UPME) that power generated from renewables can
established the power policy in two documents, reduce marginal costs, move expensive gener-
as follows: ation based on other sources, and provide secu-
rity of supply.
1. The 2006–2025 National Energy Plan (MME 3. The 2013–2017 Power Coverage Indicative
2007): Herein was established the short-term Expanding Plan (UPME 2014c): It estimates
and long-term plans and related items for the public and private investments in order to uni-
energy sector, with specific studies regarding versalize power coverage, based on the need
electricity. It pointed out the elements that will for power service in municipalities in 2012,
be used as orientation tools for decision- power coverage estimates on municipality
making, with a long-term vision that allows level; planning methodology, and technical
to secure supply of energy and a regional and economic criteria for assessing the best
integration. power service alternative in municipalities
Currently, the Ministry of Mines and that do not have it, either in the National
Energy and the UPME are working in a new Interconnected System or through isolated ser-
National Energy Plan, with a 2050 long-term vices; number of housing that are able to be
vision. Its main purpose is to reach an efficient interconnected in both technical and economic
internal and external energy supply, with a way, and tariff impact.
minimal environmental impact and great gen- The commented plan found that, as 2012,
eration value for regions and population. It has 470,244 houses do not have power services.
specific objectives – a diversified and reliable Power coverage on these requires an estimate
offer, demand with efficient prices, energy effi- investment of COP $4.3 billion, 88 % for the
cient goals, universal provision of services, expansion of the National Interconnected Sys-
more regional and global integration, and valu- tem, and the rest for diesel-based isolated
able generation options around the energy solutions.
sector – and two transversal objectives. It is important to point out that since 2013
2. The 2014–2028 Generation and Transmission network operators are obliged to present their
Reference Expanding Plan (UPME 2014b): coverage expansion plan, according to the
A long-term plan based on the current power Ministry of Mines and Energy Resolutions
infrastructure, future projects, and power demand 1801456 and 90066.
projections. It considers the primary sources of
energy available in the country (coal, natural gas, Lastly, the National Planning Act is passed
hydrocarbons, hydraulic, and renewables) and every 4 years, and it contains the general policies
expansion – transmission – projects within the of each government, including the power sector.
country, Ecuador and Central America.
Colombia: Energy Policy (Electricity) 3
Colombia: Energy Policy (Electricity), Table 1 Power generation 2004–2012 (in GWh)
Year Hydro Gas Coal Eolic Others Total
2004 39,848.7 6,899.6 1,634.3 50.7 128.5 48,561.8
2005 40,979.0 7,198.2 2,085.6 49.6 117.4 50,429.8
2006 42,557.9 7,030.7 2,590.8 63.0 97.7 52,340.0
2007 44,242.0 6,324.6 2,903.7 49.9 105.8 53,626.0
2008 46,160.9 5,615.1 2,486.1 53.9 79.0 54,395.0
2009 40,837.4 10,840.5 3,691.9 57.7 538.1 55,965.6
2010 40,557.5 12,025.8 3,477.4 38.6 786.0 56,885.3
2011 48,427.5 8,106.9 1,599.8 41.3 440.7 58,616.2
2012 47,581.7 9,213.7 2,492.6 54.9 645.9 59,988.9
Colombia: Energy Policy (Electricity), Table 2 Net effective installed capacity 2004–2013 (in MW)
Year Hydro Coal Gas Eolic Others Total
2004 8,925.8 692.0 3,580.8 20.0 208.5 13,427.1
2005 8,948.1 694.0 3,496.7 10.0 206.5 13,355.2
2006 8,947.4 701.6 3,459.7 18.4 152.4 13,279.5
2007 8,991.1 701.6 3,549.6 18.4 152.4 13,413.1
2008 8,996.6 701.6 3,551.6 18.4 209.4 13,477.5
2009 8,997.1 701.6 3,571.4 18.4 220.4 13,508.9
2010 9,257.4 701.6 4,029.4 18.4 240.3 14,247.1
2011 9,718.3 702.6 3,746.4 18.4 241.8 14,427.5
2012 9,778.1 997.0 2,484.4 18.4 1,136.3 14,414.1
2013 9,875.5 1,002.0 1,850.4 18.4 1,812.3 14,558.5
Regulatory Framework the National Operation Council, and the Trading

Auxiliary Council (Moreno 2012).
The Ministry of Mines and Energy National is in Articles 365 and 367 of the 1991 Constitution
charge of power policy and the regulation of are the basis of the current power regulatory
power public service; nevertheless, the UPME is framework (República de Colombia 1991).
responsible for power planning, in both the These rules are developed by Acts 142 (República
National Interconnected System and the de Colombia 1994a) and 143 of 1994 (República
Non-interconnected Zones. The Commission for de Colombia 1994b), which organize the institu-
Electricity and Gas Regulation (hereafter CREG) tional structure and establish the main principles,
is the regulatory agency for promoting competi- namely liberalization, privatization, regulation,
tion and monopoly control in the power sector. free market, and planning (Moreno 2012).
The Superintendence of Public Services is respon- According to the regulatory framework, these
sible for controlling the power market. are the main characteristics of the Colombian
There are other authorities in charge of the tech- power market (Moreno 2012; Corredor and
nical and commercial management of the power Fonseca 1999):
system: the National Centre of Dispatch (hereafter
CND), the Administrator of Trade Exchanges • Generation is both in charge of public and
System – labor developed by XM (http://www. private institutions.
xm.com.co/Pages/home.aspx) – (hereafter ASIC),
4 Colombia: Energy Policy (Electricity)
Colombia: Energy Policy (Electricity), Table 3 Power demand 2004–2013 (in GWh)
Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Total 47,011.1 48,828.9 50,814.6 52,853.2 53,870.6 54,678.9 56,145.3 57,231.7 59,369.7 60,890.3
Colombia: Energy Policy (Electricity), Table 4 Power exports and imports 2004–2013 (in GWh)
Exports Imports
Year Ecuador Venezuela Ecuador Venezuela
2004 1,681 35 13
2005 1,758 16 21
2006 1,609 1 27
2007 877 38 1
2008 497 102 26
2009 1,077 282 21
2010 798 10
2011 1,295 249 8
2012 236 478 7
2013 662 715 29
• The Act 143 of 1994 (República de Colombia expansion is conditioned to public tenders.
1994b) guarantees that no title or governmental On the other hand, there are open access and
authorization is required for power generation freedom of network expansion in regional and
and trading. local distribution systems.
• Generation, transmission, distribution, and • Tariffs depend on regulated and nonregulated
commercialization are vertically separated customers. Nonregulated customers have free-
activities in the National Interconnected Sys- dom of tariffs, based on competition between
tem, with two exceptions: the vertical integra- generators and traders, and through short-term
tion of commercialization with generation or and long-term contracts, taking into account
distribution, within the same firm or its affili- that transportation and distribution prices are
ated companies, and firms constituted before regulated. In this case, customers – that con-
1994 are authorized to keep their integrated sume more than 55 MWh per month – and
activities, with an accounting separation. traders are allowed to agree the terms and con-
• Bilateral contracts, such as power purchases ditions for power quantities and prices.
agreements, are allowed. There is a wholesale
power market, in which generators must offer On the other hand, tariffs for regulated cus-
their prices and capacity availability for each tomers are established according to the tariff for-
hour to the ASIC, who guarantees power mula approved by the CREG every 5 years.
exchanges between generators and traders The Act 1715 of 2014 (República de Colombia
(XM SA ESP 2015). There are short-term 2014) regulates the integration of
(duration less than 24 h) and long-term nonconventional renewable energies to the
(duration more than 24 h) power trade markets. National Interconnected System. It has some
• Transmission and distribution are regulated rules for the promotion of power generation
activities. There is a right for open access on through renewable sources. It is still in the process
a nondiscriminatory basis, upon payment. In of being developed through decrees and
the National Interconnected System current administrative acts.
network expansion is free, but new network
Colombia: Energy Policy (Electricity) 5
International Aspects República de Colombia (1991) Constitución Política.

http://wsp.presidencia.gov.co/Normativa/Documents/
Constitucion-Politica-Colombia.pdf
Colombia is a member of the IAEA since 1960, República de Colombia (1994a) Ley 142, “por la cual se
member of the World Trade Organization since establece el régimen de los servicios públicos
1995, member of IRENA since 2015, in the pro- domiciliarios y se dictan otras disposiciones.” http://
cess of being a member of the OECD, and current www.secretariasenado.gov.co/senado/basedoc/ley_0142_
1994.html
candidate country of the EITI since 2014. It is República de Colombia (1994b) Ley 143, “por la cual se
neither member of the OPEC nor the IEA. establece el régimen para la generación, interconexión,
It is a member of the Andean Community. It is transmisión, distribución y comercialización de
also a member of MIGA and ICSID. It has signed electricidad en el territorio nacional, se conceden unas
autorizaciones y se dictan otras disposiciones en
several FTAs, with the US, the EU, Chile, Canada, materia energética.” http://www.secretariasenado.gov.
among others. It signed the International Energy co/senado/basedoc/ley_0143_1994.html
Charter. República de Colombia (2014) Ley 1715 “Por medio de la
cual se regula la integración de las energías renovables
no convencionales al Sistema Energético Nacional.”
http://www.secretariasenado.gov.co/senado/basedoc/ley_
References 1715_2014.html
The World Bank (2015) Colombia. http://data.worldbank.
org/country/colombia
Comisión de Regulación de Energía y Gas CREG (N. Unidad de Planeación Minera Energética UPME (2014a)
A.) El Mercado Eléctrico Colombiano. http://www. Boletín estadístico de minas y energía 2000–2013.
creg.gov.co/images/contenidos_estaticos/documentos/ http://www.upme.gov.co/Boletines/Boletin%20Estadistico
mercado_electrico_colombiano.pdf %202000-2013.pdf
Corredor P, Fonseca A (1999) Colombian electricity mar- Unidad de Planeación Minera Energética UPME (2014b)
ket In: Hammons T, Corredor P, Fonseca A, Melo A, Plan de Expansión de Referencia
Rudnick H, Calmet M, Guerra J (eds) Competitive Generación – Transmisión 2014–2028. http://www.
generation agreements in Latin Americam systems upme.gov.co/Docs/Plan_Expansion/2015/Plan_GT_2014-
with significant hydro generation. Power Eng Rev 2028.pdf
IEEE 19(9):4–12 Unidad de Planeación Minera Energética UPME (2014c)
Departamento Nacional de Estadística DANE (2014) Atlas Plan Indicativo de Expansión de Cobertura de Energía
Estadístico de Colombia, Tomo I – Demográfico. http:// Eléctrica 2013–2017. http://www.upme.gov.co/Siel/
sige.dane.gov.co/atlasestadistico/Pdf/Tomo_I_Demo Siel/Portals/0/Piec/Libro_PIEC.pdf
grafico.pdf XM SA ESP (2013a) Informe de Operación del SIN y
Departamento Nacional de Estadística DANE Administración del Mercado – Presentación. http://
(2015) Colombia en Cifras. http://www.colombiestad. informesanuales.xm.com.co/2013/SitePages/operacion/
gov.co/index.php?option=com_colcifras&task=grinfo& 1-1-Presentacion.aspx#
Itemid=58 XM SA ESP (2013b) Informe de Operación del SIN y
Ministerio de Minas y Energía MME (2007) National Administración del Mercado – Demanda de energía
energy plan 2006–2025. http://www.upme.gov.co/ nacional. http://informesanuales.xm.com.co/2013/
English/Docs/PLAN_ENERGETICO_NAL_EN.pdf SitePages/operacion/3-1-Demanda-de-energia-nacional.
Moreno LF (2012) Regulación del mercado de energía aspx
eléctrica en América Latina: la convergencia entre XM SA ESP (2015) Portfolio of Services – MEM Admin-
libre competencia e intervención estatal, 1st edn. istration. http://www.xm.com.co/english/PortfolioOf
Universidad Externado de Colombia, Bogotá Services/Pages/OperationofSINandMarketAdministration.
aspx
S
Slovenia: Mineral Policy Need of Minerals
Gorazd Žibret Slovenia is highly dependent on the imports of

Geological Survey of Slovenia, Ljubljana, minerals and energy, especially on the import of
Slovenia metals, oil, and gas. However, aggregates, mate-
rials for the construction industry (cement, lime,
clay, ornamental stone, etc.), and some industrial
General Information on Slovenia minerals (chert, calcite, quartz sand, etc.) are
extracted within the country. One third of the
The Republic of Slovenia is the Central European electricity production comes from the domestic
country with approximately two million inhabi- source – from the Šoštanj coal-fired power plant
tants. It is a small country – its size is 20,273 km2. and adjacent underground lignite mine. There is
Slovenia gained its independence from the SFR no detailed analysis about the dependence of the
Yugoslavia in 1991 and established a parliamen- economy to the imports of raw materials, specially
tary democracy. The capital is Ljubljana. GDP per made for Slovenia. Statistical Yearbook of the
capita in 2014 was 18,100 €. Slovenes represents Republic of Slovenia states that Slovenia spent
the majority of the population (83 %) and while 3.3 billion € on imports of mineral fuels and
other minorities include Italian and Hungarian. lubricants (including coal, petroleum and petro-
The dominant religion is Roman leum products, natural and manufactured gas) and
Catholic. Currency is euro. The main export prod- 18 million € on metal ores in 2012 (SI-STAT
ucts of Slovenia are automotive products, phar- 2013). It is expected that Slovenia faces similar
maceuticals, cosmetics, electric and electronics situation regarding the dependence of its economy
equipment, iron/steel alloys and products, alumi- on raw materials import as it is in other EU
num and aluminum alloys and products, tires, countries.
home appliances, furniture and other wood prod-
ucts, electricity, etc. The economic importance of
transport and tourism sectors increased in the Historical Overview of Mining
recent years. in Slovenia
Mining and smelting on the territory of Slovenia has

a long history. Archaeological artifacts from the
Bronze Age, representing different tools for mining,
were found next to the known mineralization
DOI 10.1007/978-3-642-40871-7_39-1
2 Slovenia: Mineral Policy
occurrences in Pohorje area (Tržan 1989). During started in a period between the eighteenth and the
the Iron Age period (Hallstatt, 800–300 B.C.), nineteenth century to provide energy needed,
numerous evidences of iron mining and smelting, since mining and smelting processes used a lot
such as casts, tools, etc., were found. Smelting and of wood and large areas around mines were
forgery have been widespread. The land was rich completely deforested. The construction of rail-
with bog iron ore, which can be found and picked ways in 1850 brought boom to the iron smelting
from the ground. It can be speculated that high activities and coal mining, and the mining reached
natural background levels of manganese in this its peak between 1850 and 1900 when taking into
area made iron products famous of its quality. This account the number of known mining pits. The
was also recognized by the Roman Empire, and the production of other metals, such as Pb, Zn, Hg,
province, called Noricum, has maintained indepen- Cu, and Sb, has also gained in its importance. The
dence and the status “hospitum publicum” (friends most important was the Idrija mercury mine, and
of Rome) for a long period before its actual annex- because of the strategic importance of mercury in
ation. After annexation of this land into the Roman that time, the mine itself contributed as much as
Empire, the beginning of the exploitation of lead 5 % of the Habsburg Empire’s annual budget. In
and copper ore started. the beginning of the twentieth century, many
The exploitation of the biggest ore deposits on mines have been closed down due to the limited
the territory of Slovenia started in the medieval ore quantities and low ore grade, with the excep-
period. The main branch was iron smelting and tion of the short-term impulsion in the period of
forging. The ore was collected on the surface and the First World War because of the lack of base
inside small mining shafts. First written evidence metals supply. Only coal mining remained an
of iron ore mining dates back to 1381. This is the important mining branch and it contributed up to
Ortenburg mining order for Savske Jame iron ore 42 % of total Yugoslavian coal production at that
mines, which is direct evidence of mining north of time (Markič 2007).
the town of Jesenice. Mining activities at this Between the world wars, almost all metal pro-
location took place for more than 600 years. Mer- duction in the territory of Slovenia ceased, espe-
cury was found in Idrija in 1490 and mining took cially after the great depression started in 1929.
place until 1991. The Idrija mine produced around Only the Mežica Pb-Zn mine remained opera-
13 % of total historical world Hg production, and tional, and the Idrija and Litija mines were
it is UNESCO world heritage site today. First reopened before the start of the Second World
written evidence of mining in the Mežica area War. After the Second World War and the arrival
dates back to 1424. In 1556, Agricola published of the communism, the emphasis was put on the
his work De re Metallica, where smelting activi- mineral prospection, but no new large metal
ties in theMežica area were reported. The mine deposits were discovered. The only exception
reached its peak between two world wars when it was the opening of the Žirovski vrh uranium
contributed 1 % to annual world lead production. mine; mining took place here from 1982 until
Another historic mining site should be 1990. As the ore processing capacities have
mentioned – the Litija mine. Iron slag in the area exceeded the mining capacity, a lot of metal ores
dates back to the Roman period. A tombstone was imported from other mines in Yugoslavia. In
from 1537 in the church in the town of Šmartno more recent times, due to the low prices of metals
pri Litiji, 2 km southeast from Litija, dedicated to and bigger environmental awareness, all mines
a chief miner Christof Brukherschmid, carries the and smelters were closed. Nevertheless, larger
inscription: “God bless noble mining.” It provides mines still have the capacity to be reopened,
direct evidence on how important the mining was because not all of the reserves have been
in that period. In the second half of the eighteenth exploited.
century, Litija mine was one of the largest lead From the times of the Roman Empire until
mine in Europe. Beside metal mining and present, 49 different mines and 25 ore processing
smelting, coal mining on the territory of Slovenia plants have been recognized on the Slovenian
Slovenia: Mineral Policy 3
territary. Four of these were large (Idrija, Mežica- Different types of metal-bearing ores are found
Topla, Litija, and Žirovski vrh). Thirty-three his- in a variety of tectonic environments and in dif-
torical ironworks are documented, three of these ferent stratigraphic units. The oldest sulfide min-
are still operational (Jesenice, Štore, Ravne na eralization is from Paleozoic, where many
Koroškem), Fig. 1 (Budkovič et al. 2003). Despite Carboniferous and Permian polymetallic mineral-
large-scale mining activities ceased today (with ization belts exist. The most important ore bodies
the only one exception – the Velenje lignite are connected to Triassic tectonic events which
mine), mining gave boost for many other indus- caused felsic magmatism and hydrothermal min-
trial activities, which are important industrial eralization in the host rocks (Drovenik
branches in Slovenia today, such as production et al. 1980). Younger mineral deposits with sedi-
of construction materials, metallurgy, electrical mentary (mainly bauxite, coal and manganese)
industry, glass manufacturing (common from the while hydrothermal vents are also present. Peg-
sixteenth century) and ceramics (started in 1746; matite veins in NE area of Slovenia are connected
Kos and Žargi 1991), chemical industry and to Oligocene magmatism. Mineralization
others. containing the following known metals is com-
mon in the territory of Slovenia: Fe, Hg, Pb, Zn,
Cu, U, Sb, and Ag.
In the late 80s or early 90s, the largest opera-
Current Situation of Mining in Slovenia
tional metal mines, especially Idrija, Žirovski vrh
and Future Outlooks
and Mežica, were finally closed down due to the
extremely low price of the mineral resources on
The current status (year 2014) of mining activities
the world market and increased environmental
and mineral occurrences in Slovenia is:
awareness. These two events gradually decreased
the economic feasibility of mining operations and
– 130 locations of known coal occurrences, 23 of
not the minerals depletion itself. At the same time,
them were mined in the past, one underground
almost no investments in mineral exploration
lignite mine is still active (Markič 2007)
deeper than approx. 300 m below the surface
– Known occurrences of uranium ore deposit,
were made, with only few exceptions related to
one uranium mine operational between 1982
the exploration of natural gas. The current knowl-
and 1990
edge concerning metal deposits today relies only
– 16% of Slovenian territory is geothermally
on data from few large mines and scattered and
perspective (Senegačnik and Šolar 2014),
incomplete data about mineral prospections of
especially eastern part of the country in the
smaller deposits. The geochemical data acquired
Pannonian basin (Nádor and Lapanje 2010)
in the past commonly does not comply with
– 152 known occurrences of metal mineraliza-
today’s standards. This means that many impor-
tion (Hg, Pb, Zn, Cu, Sb, Fe, Mn and bauxite),
tant minor and trace elements were not analyzed,
63 smaller metal mines, and four larger metal
because the focus of past prospection were mainly
mines, none of them is operational today
on primarily base metals (Fe, Cu, Zn, Pb, U, Al).
(Budkovič 2010)
World’s demand on metals and minerals has also
– 44 active extraction sites for production of
changed drastically in the past decades, and what
materials for construction industry, 16 active
was considered as impurity 50 years ago is now
extraction sites of industrial minerals,
regarded as a critical mineral today (for instance,
115 active aggregates extraction sites
Ge, Sb, Li, etc.). All of this indicates that the level
(Senegačnik and Šolar 2014)
of knowledge about metal deposits in Slovenia is
– Very small production of oil and natural gas in
not adequate for present needs.
the eastern part of Slovenia
Slovenia: Mineral Policy, Fig. 1 Locations of the past metal mines and smelters (Reprinted by the permission of
authors and publisher Geological Survey of Slovenia from Budkovič et al. 2003)
Mining Legislation 1. Energy resources (coal, geothermic resources,

oil and gas, radioactive mineral resources)
History of mining regulations in Slovenia started 2. Metal mineral resources (iron ore, bauxite,
with the regulations connected to coal mining zinc, lead, chromium, nickel, etc.)
activities in the eighteenth century when a taxa- 3. Non-metal mineral resources (“industrial
tion benefits for glass, bricks, and iron manufac- minerals”):
turers for using coal instead of wooden-based – Mineral resources for manufacturing indus-
fuels were adopted. This boosted coal production try (bentonite, quartz sand, tuff, calcite,
in the area and local dukes kept authorities over mica, china clay, chert, phosphates, etc.)
the mining rights, assembling mining courts and – Mineral resources for the industry of con-
monitoring of activities. The mining headquarters struction materials (brick clay, materials for
for the majority of the present territory of Slovenia the cement industry, natural and ornamental
was established in Leoben in 1866, as well as the stone, etc.)
local office in Celje in the 30s of the eighteenth – Mineral resources for construction
century. After the revolution in 1848, the first (aggregates and sand and gravel)
mining law of the Habsburg Monarchy was 4. Other mineral resources (gemstones, sea salt,
adopted in 1854, establishing regional mining all types of secondary resources as by-products
authorities in Ljubljana, Celje, and Celovec of mining and all other possible natural mineral
(Klagenfurt). This law was changed in 1871 and resources)
remained relatively unchanged until the collapse
of the Habsburg Monarchy in 1918. The Mining Act defines:
Mining authority competences were the fol-
lowings: mining permits, mining survey, mining – Managing authorities on national levels,
water management, miner’s rights, resolving dis- National Mining Strategy (including the neces-
putes, etc. After the establishment of the Kingdom sity to establish the list of the strategic
of Yugoslavia, the head mining authority for Slo- resources), and Mining Registry framework
venia was moved to Ljubljana, with an office in – Competent bodies in the minerals manage-
Celje, and remained operational in a similar way ment, including mining rights holders, compe-
as before. In 1929, part of the mining office com- tent bodies for mining design, and audit
petences was taken over by the Ministry of Min- procedures
ing and Forests (Ribnikar 1981; Cerovac 2012). – Prospection of mineral resources, procedures
After the Second World War, the past mining to obtain prospecting right, and public procure-
authority was dismantled and the Ministry of ment procedures
Industry and Mining took over all mining-related – Exploitation of mineral resources, permitting
competences. All minerals, mining properties and process including public procurement proce-
mines were nationalized. The mining legislation dures to obtain mining right
of SFR Yugoslavia was adopted in 1966 and in – Financial obligations of the holders of mining
1975. Slovenia acquired independence in 1991 right and guarantee funds
and adopted its own mining law in 1999 (Zakon – Cancellation procedures for mining rights
o rudarstvu – ZRud), embedding the principles of – Exploitation of the resources of strategic
the EU directives (Cerovac 1999). The improved interest
version of the Mining Act was adopted in 2010 – Obligations before and during the mineral
and corrected later on (ZRud-1 2014). resource extraction and processing, including
The Mining Act (ZRud-1) sets up that all min- health and safety procedures, mining rescue
eral ownership and competences are within the services, technical leadership, monitoring and
domain of the Republic of Slovenia. The Mining other components
Act regulates the extraction of following energy – Obligations for mine closure
and mineral resources: – Technical documentation in mining
– Services in mining, with an emphasis of the Right can be extended after expiry of the contract
regulated services, procedures to obtain autho- or can cease to exist. However, to do all necessary
rizations for experts to prepare technical docu- restoration works according to the mine plan is a
mentation, technical supervision of mining, legal obligation of mining right holder.
and revision The Mining Act defines four special cases when
– Mining inspection, penalties. public tendering procedure is not obligatory: if the
interested person (legal or physical) has finished
The core document that allows mining on a with the prospection works and he was the holder
designated area and of designated mineral of the prospection rights; if the interested person is
resource is the Mining Right, which is given to the owner of the land (plots) or he has the appro-
the legal or physical person by the government of priate contract with the owners of the plots; if the
the Republic of Slovenia. The procedure begins interested person wants to modify the existing
with the proposal for the Concession Act, which exploration/exploitation permit (including the
can be done either by the Ministry in charge for expansion of mining plots or increasing the permit-
the mining or by the interested party. At that stage ted extraction depth); or if an previously
the consistency with the spatial planning acts, undiscovered mineral resource is found during the
especially on the municipality level, must be extraction on existing mining area and the mining
proven. Spatial planning is driven by the spatial right holder wants to extract it.
planning legislation (ZUreP-1 2002). The defini-
tion of the mining area at municipality level must
comply with other relevant aspects of planning: The National Mining Strategy
residential, farming, forestry and tourism areas,
economy, infrastructure of public importance, The National Mining Strategy has not been
environmental protection and natural conserva- adopted yet (April, 2015), therefore the “National
tion, cultural heritage conservation, landscaping, Mineral Resource Management
sport, recreation areas, and protection from natu- Programme – General Plan” is still valid since
ral hazards. Spatial planning process includes the 2009. It sets up the general guidelines for mineral
participation of public on multiple levels. resource management. Four levels of importance
If certain area where minerals should be of mineral resources are defined: strategically
extracted is consistent with spatial planning acts, important, important for industry, important for
Concession Act is published, and the Mining the region (unique), and other resources. The Gen-
Right can be obtained through mining concession eral Plan sets up the general orientation for min-
procedure. This tender defines information about erals management, based on the sustainable
the mining area, duration of mining right, quantity development principles. This includes the princi-
of the permitted exploitation, the type of mineral ples of “wise-use” (with the emphasis of the bal-
resource, environmental protection, health and ance between impacts on the environment, society
safety constraints, as well as the minimum finan- and economy), fostering competitiveness of min-
cial obligations for a mining right holder and other ing sector, promoting communication and partner-
parameters. Bidders must prepare a mine plan, ship and implementing coherency to other
which is an obligatory supplement. The essential regulations. However, this program does not
part of the mine plan is the plan for restoration define mineral priority areas, but it provides gen-
works when mining ends. An auction is required eral guidelines on how to define new mining
for the selection if more than one application is areas, covering economic, environmental and
submitted. The successful bidder must prove that societal aspects. It also emphasizes the local sup-
it can legally use the land (signature of the con- ply of aggregates and other mineral resources,
tract with owners of the plots) before actual sig- needed for the construction in large quantities.
nature of the Mining Right document. Mining Mining sites should be within the supply radius
of 20–30 km, should have enough reserves
(at least for the 15 years of operation), and should International Membership
have suitable annual production (at least
30,000 m3). Limestone quarrying should be clus- Slovenia is the member of more than 250 different
tered, while dolomite quarrying should be international organizations, including: United
scattered. Nations, European Union, The Organisation for
Economic Co-operation and Development
(OECD), NATO, International Monetary Fund,
World Bank, European Investment Bank, Euro-
The Mineral Resources Classification
pean Bank for Reconstruction and Development,
System and Reporting Standards
etc. It is also a member of different research orga-
nizations, including European Space Agency
Since Slovenia was a part of Eastern Bloc in the
and CERN.
past, the classification system follows the Soviet
system for classification of mineral resources that
incorporates the degree of geological knowledge
about deposit, as well as economic feasibility of Concluding Statement
extraction. When an ore body is discovered, it is
classified as resource. Resources are subdivided Very complex tectonic settings, poor knowledge
into three categories (D2, D1, and C2), with the about deep geological structures, and inadequate
increasing geological knowledge about deposit, knowledge about geochemical composition of the
ore mineral occurrence, quantities, area, as well as the abundance of known sites of
etc. Resources C2 with the highest level of geo- mineralization on the surface might suggest the
logical knowledge must be proved also by explor- possibility of the existence of undiscovered ore
atory techniques, such as drilling. bodies and that there might be the potential for a
Resources can be classified as reserves when renaissance of mineral exploration and exploita-
the level of geological knowledge further tion in Slovenia.
increases. Three categories of reserves are
defined, indicating different confidence levels in
geological knowledge and quality parameters
References
(A – 85 %, B – 70 %, and C1 – 50 % of confidence
level). Reserves A and B must also be evaluated in Budkovič T (2010) Baza rudišč Republike Slovenije (The
the sense of suitability for processing and extrac- database about ore deposits in Slovenia). Paper
tion. According to their economic, societal, and presented at the 3rd Slovenian Geological Congress,
legal feasibility for the extraction, Reserves A, B, Bovec, 16–18 Sept 2010
Budkovič T, Šajn R, Gosar M (2003) Vpliv delujočih in
and C1 are divided further. On-Balance Reserves opuščenih rudnikov kovin in topilniških obratov na
are the resources where their exploitation is eco- okolje v Sloveniji (Influence of abandoned metal
nomically feasible, and there are no legal barriers mines and smelters to the environment of Slovenia).
for the extraction. Potentially On-Balanced Geologija 46(1):135–140 (in Slovenian with English
abstract)
reserves are currently not feasible to extract; how- Cerovac M (1999) Slovensko rudarstvo in rudarska
ever, it is expected that they will become on- zakonodaja pred vstopom v Evropsko Unijo
balance reserves in the near future. Off-balance (Slovenian mining industry and mining legislation
reserves are those where certain economic or before becoming a full member of the EU). RMZ
46(2):215–218
legal obstacles for their extraction exist. Extrac- Cerovac M (2012) Zgodovina rudarstva in rudarskih
tion reserves are the resources where mining oblasti v slovenski pokrajini od 17. stoletja do
waste are taken into account. samostojne države Slovenije v 21 stoletju (The history
of mining and mining authorities on the territory of
Slovenia from the 17th century until Slovenian’s inde-
pendence). SRDIT – Zbrana gradiva članov sekcije za
zgodovino Montanistike, Ljubljana, 4 pp
Drovenik M, Pleničar M, Drovenik F (1980) Nastanek (Mining authorities between 1858–1945 and the impor-
rudišč v SR Sloveniji (The origin of Slovenian ore tance of keeping the historical archives). Arhivi
deposits). Geologija 23(1):1–157 (in Slovenian with 4(1–2):53–60
English abstract) Senegačnik A, Šolar S (2014) Stanje na področju
Kos M, Žargi M (1991) Gradovi minevajo, fabrike mineralnih surovin v Sloveniji v letu 2013 (Mineral
nastajajo – Industrijsko oblikovanje v 19. stoletju na resources in Slovenia in 2013). Miner Surovine
Slovenskem (Castles ends, manufacturing plants 10:10–13
emerges – industrial design in the 19th century on the SI-STAT (2013) Statistical yearbook 2013. Statistical
territory of Slovenia). Narodni muzej, Ljubljana, Office of the Republic of Slovenia, Ljubljana
199 pp Tržan B (1989) Pohorje – prazgodovinski rudarski revir?
Markič M (2007) Premogi v Sloveniji ter prikaz njihovih (Pohorje – prehistoric mining field?). Časopis za
nahajališč na šestih izbranih kartah (Coals in Slovenia zgodovino in narodopisje 25(2):238–260
and coal occurrences plotted on the six selected the- ZRud-1 (2014) Zakon o rudarstvu (s popravki) (The Min-
matic maps). Miner Surovine 3(1):149–165 ing Act (with amendments)). Off Gaz Repub Slov
Nádor A, Lapanje A (2010) Transboundary geothermal 14:1373–1412
resources of the Mura-Zala basin – joint thermal aquifer ZUreP-1 (2002) Zakon o urejanju prostora (s popravki)
management of Slovenia and Hungary. Eur Geol (The Spatial Planning Act (with amendments)). Off
29:24–27 Gaz Repub Slov 110:13057–13083
Ribnikar P (1981) Rudarsko glavarstvo 1858–1945 in
pomen njegovega arhivskega gradiva za zgodovino
S
Serbia: Mineral Policy emigration. Ethnically, the Republic of Serbia is

a multinational community. In addition to Serbs
Vladimir Simić (83.3%), the largest minorities are Hungarians,
Faculty of Mining and Geology, Department of then Romani and Bosniaks. More than six million
Economic Geology, University of Belgrade, people belongs to the Orthodox Church (comprise
Belgrade, Serbia 84.6% of the total population). The second largest
group are the Catholics, with 350,000 (5%), while
the third is Islamic religion, with more than
General Information on Serbia 220,000 members (3%). The vast majority
(88.1%) of the population in Serbia considers the
Serbia is a landlocked country. Eastern and west- Serbian language as their mother tongue; other
ern part of Serbia is mostly mountainous region, recognized minority languages are Hungarian
while northern part (Vojvodina) and central part is (3.4%), Bosniak (1.9%), and the Roma (1.4%,
lowland with developed agriculture. The climate all data from Statistical Yearbook of Serbia 2013).
is temperate continental. Serbia borders with Hun- Serbia has a republic constitution, with free
gary, Romania, Bulgaria, FYR of Macedonia, public primary and secondary school system,
Albania, Montenegro, Bosnia and Herzegovina, medical care and social care, as well as almost
and Croatia. The land area (88,360 km2 according free graduate studies at the state-owned universi-
to World Bank data) data should be considered as ties. Primary school enrollment (% gross) is
provisional. The preparation of the digital cadas- 101 and secondary 94 (in 2013). Terrestrial pro-
tre plan for the territory of the Republic of Serbia tected areas cover 6% of national territory.
is under way; thus, it is still not possible to take In 2014, GDP was 43.87 billion USD, while
over final data on certain municipalities’ land GDP per capita is amounted to 6153 USD. GDP
area. The border length data should be used pro- growth in 2013 and 2014 was 3% and 2%, gross
visionally because borders toward former Yugo- capital formation in 2014 was 16%, exports and
slav Republics were only administrative, i.e., not imports of goods and services 44% and 54%,
marked or strictly defined. respectively. Time required to start a business
The population of Serbia in 2014 was was 12 days (all data from World Bank data
7,129,428. In the period between two last cen- 2015).
suses (2002 and 2011), there was a decrease in Energy use (kg of oil equivalent per capita) in
the total number of population of the Republic of 2011 was 2237, CO2 emissions were 6 Mt per
Serbia of 4.15% (311,139 persons), which is pri- capita in 2010, electric power consumption in
marily the result of a negative birth rate and 2011 amounted to 4490 kWh per capita, and
DOI 10.1007/978-3-642-40871-7_41-1
2 Serbia: Mineral Policy
annual inflation (GDP deflator) in 2013 was 5% documents which should, according to the law,
and in 2014 was 2%. In 2014, agriculture, indus- regulate the procedure of classification of
try, services, etc. (all value-added) made 9%, resources/reserves. Russian-based system in Ser-
30%, and 61% of GDP, respectively. Mining bia includes the following categories of reserves
industry makes around 2% of GDP in the last (according to increasing level of geological
years. Serbian total export and import in/from knowledge and confidence): explored reserves
ten most important countries in 2013 is summa- – A, B, and C1 categories, and potential reserves,
rized in Table 1. C2, D1, and D2 categories. Explored reserves are
classified in two classes (consideration of mining,
metallurgical, economic, marketing, legal, envi-
Need of Minerals ronmental, social factors): on-balanced
(economic) and off-balanced (potentially eco-
Serbia produces/covers most of the necessary nomic) reserves. Level of geological knowledge
mineral commodities from domestic resources and confidence is based on the distances between
like copper, lead, and zinc. Important mineral exploration works and the sampling intervals. In
commodities supplied from import are oil and Serbia, like in many other countries in Southeast-
gas, iron ore, bauxite, and brown and hard coal ern Europe, it is mandatory to have official
for industry and household consumption. Official approval of the State Commission on Reserves
statistics do not cover production of all mineral in order to open a quarry and open pit or any
commodities as seen in Table 2. Potential new other mine, as presented in regulatory framework
mineral commodities that may be exploited (Fig. 1). UNFC classification system is not used in
include boron minerals and lithium. Serbia. Most of the data related to mineral
The production of electricity in Serbia mostly deposits are not publicly available as confidential
comes from coal-fired thermal power plants and data owned by license holders.
from hydro energy. Coal production for generat-
ing electric power is under state control (EPI –
Electric Power Industry of Serbia), as well as
Mineral Policy Conception of Serbia
production of brown and hard coal (JP PEU
Resavica Company). Net output capacity of EPS
Currently, Serbia has no mineral policy; however,
in 2014 was 7124 MW, electricity generation
Serbia has several other relevant documents that
31,963 GWh, and coal production 29.2 Mt (EPS
exist related to mineral resources: the National
2015).
Sustainable Development Strategy of the Repub-
Copper ore exploitation and copper production
lic of Serbia 2008 (Official Gazette of the Repub-
is based in Eastern Serbia and is also controlled by
lic of Serbia 57/08), Waste Management Strategy
the state (RTB BOR Company). Lead, zinc, and
of the Republic of Serbia for period 2010–2019
other mines were privatized, as well as almost
2010 (Official Gazette of the Republic of Serbia
entire production of industrial minerals and
29/10), National Strategy on Sustainable Usage of
rocks and mineral waters.
Natural Resources and Goods 2012 (Official
Gazette of the Republic of Serbia 33/12), and
Proposal of the Strategy on Development of Ener-
Classification of Mineral Reserves
getics of the Republic of Serbia until 2025
(website is available in references) with projection
Serbia officially uses PERC and/or JORC classi-
until 2030. The only document which could be
fication of mineral resources and reserves since
regarded as a basis for Mineral policy conception
the Law on Mining and Geological exploration
is the Proposal of the Strategy on Mineral
was accepted by Parliament in 2011. However, in
Resources Management of the Republic of Serbia
practice, the previous Russian-type system of
until 2030 (website in references), in which
classification is still used, as there are no legal
Serbia: Mineral Policy 3
Serbia: Mineral Policy, Table 1 Export and import of Serbia in 2013

Export, 2013 Import, 2013
Country Value, EUR Mio % of total Country Value, EUR Mio % of total
Italy 1790.7 16.3 Italy 1776.5 11.5
Germany 1306.5 11.9 Germany 1697.8 11.0
Bosnia and 904.1 8.2 The Russian 1429.1 9.2
Herzegovina Federation
The Russian Federation 799.9 7.3 China 1136.0 7.3
Montenegro 641.8 5.8 Hungary 763.9 4.9
Romania 590.9 5.4 Poland 731.9 4.7
Macedonia 433.7 3.9 Kazakhstan 671.9 4.3
USA 368.6 3.4 Austria 474.9 3.1
Slovenia 359.8 3.3 France 453.6 2.9
Croatia 313.1 2.8 Romania 438.4 2.8
All data on export and import (From Statistical Yearbook of Serbia 2014)
Serbia: Mineral Policy, Table 2 Production of selected mineral commodities in Serbia (in tons unless otherwise
marked)
Commodity/year 2005 2006 2007 2008 2009 2010 2011 2012 2013
Copper ore, g.w., kt 6005 5775 6867 8680 9896 10,665 12,216 14,346 16,673
Cu metal, refined 30,100 40,000 30,600 32,800 18,875 21,240 25,251 32,229 32,606
Gold, refined (kg) 335 450 500 500 452 356 1032 900 866
Pig iron, kt 1115 1529 1485 1582 1008 1265 1226 312 365
Crude steel, kt 1286 1837 1478 1662 1097 1254 1324 346 396
Pb-Zn ore, g.w., kt 162 172 198 202 225 219 412 420 482
Palladium (kg) 19 15 15 15 38 22 4 22 25
Platinum (kg) 3 2 2 2 12 6 3 2
Selenium (kg) 8315 7500 7500 7500 19,075 10,592 12,947 13,200 15,727
Silver, mine output, Ag 2648 2200 4150 4000 2500 4820 4750 5224 5764
content (kg)
Cement, kt 2276 2565 2677 2843 2232 2130 2095 1831 1592
Gypsum, crudee, kt 45 45 45 45
Lime, kt 400 377 320 292 251 239 274 239 279
Nitrogen, N content of 111 80 85 47 53 84 132 130 130
ammoniae, kt
Salt, all sources 35,000 29,847 30,023 30,115 28,783 30,816 23,144 16,506 13,704
Sand and gravel, 12,000 13,700 13,900 13,800 5790 6950 6532 6167 4884
excluding glass sand
(000 m3)
Coal, bituminous, kt 65 65 66 66 69 108 142 141 155
Brown coal and lignite, 34,928 36,720 37,007 38,519 38,828 38,490 40,636 38,587 40,687
kt
Natural gas, gross 320 282 274 282 283 427 616 672 660
production (Mm3)
Petroleum, crude, kt 648 653 639 636 663 865 1020 1124 1164
Petroleum, refinery 2582 2508 2502 2462 2227 2130 1760 1740 1740
products, kt
Source: USGS – The mineral industry of Serbia for 2013. Table includes data available through July 10, 2014. e estimated,
g.w. gross weight, kt thousand tons
Serbia: Mineral Policy,

Fig. 1 General procedure
for mineral exploration and
exploitation in Serbia
mineral policy is mentioned on one page in a regulations described by Tiess (2011), so the most
general descriptive way. important changes are summarized here. Geolog-
ical exploration and mining in Serbia is under
jurisdiction of the Ministry of Mining and Energy
and is predominantly based on one-stop-shop, as
Regulatory Framework
the majority of permits are issued by the same
ministry. The ownership of all mineral resources/
Regulatory framework in Serbia is based on the
commodities is public. The approvals and permits
Law on Mining and Geological Exploration from
are issued by the Ministry of Mining and Energy
2015 and set of environmental laws since 2004.
for all mineral resources. All approvals and per-
General rules of the legislative process have not
mits for the territory of the autonomous region of
changed substantially compared with the previous
Serbia: Mineral Policy 5
Vojvodina are issued by the Regional Secretariat International Memberships

for Energy and Mineral Resources. In each case,
the necessary documents are the same. However, Serbia is a member of the following international
in the new Law on Mining and Geological Explo- institutions: UN, OSCE, World Bank, UNCTAD,
ration (Official Gazette of the Republic of Serbia WHO, EU candidate country, and observer in
101/15), strategic mineral resources were defined, WTO (IndexMundi 2015).
including oil and gas, coal, copper and gold ores,
lead and zinc ores, oil shales and boron, and
lithium ores. The possibility to define other stra- Concluding Statement
tegic mineral resources is possible without com-
plicated procedure, just based on the opinion of Serbia is not a big country but does produce
the ministry in charge for mineral resources. comparatively large number of mineral commod-
The general procedure for exploitation of the ities and quite considerable amounts of several
new mine/quarry is divided into four steps: geo- commodities like coal, copper ore, quartz sand,
logical exploration, approval of exploitation, and ceramic clays. The potential for growth in
approval of execution of mining operations, and mining sector is realistic, but the mineral industry
approval for the use of mining facilities (Fig. 1). as whole is underdeveloped – there is not enough
There are no differences in procedures for explo- industry to consume the minerals. Although the
ration and exploitation of strategic mineral mineral industry is important to Serbia, there is no
resources, but access to land is easier as expropri- mineral policy, mineral strategy, and other impor-
ation can be performed if necessary. tant documents that shall secure the further devel-
The procedure to transfer the exploration and opment of mineral industry in Serbia. Some steps
exploitation permits and approvals has been have been applied to make access to mineral
defined in 2012 (Instruction 2012). resources easier by declaring the strategic mineral
Royalties for utilization of mineral resources commodities, but it is still rather important to
are defined by the Law on Mining and Geological prepare at least modern mineral strategy which
Exploration (2015): will serve as a basis for further improvements in
the whole mineral industry.
• For coal and oil shales 3% of income.
• For liquid and gaseous hydrocarbons 7% of
income. References
• For radioactive raw materials 2% of income.
• For all metallic raw materials 5% of net smelter EPS (2015) Annual report 2014, Electric power industry of
Serbia. 88 p
income.
IndexMundi (2015) Serbia international organization partici-
• For technogenous (secondary) raw materials pation. Available via http://www.indexmundi.com/serbia/
created by exploitation or mineral processing international_organization_participation.html. Accessed
1% of income. 5 May 2015
Instruction on conditions and way of transfer the explora-
• For industrial minerals 5% of income.
tion and exploitation permit for mineral resources and
• For all types of salt and salt waters 1% of geothermal energy (2012) Official Gazette of the
income. Republic of Serbia 119/12 (in Serbian)
• For underground waters from which mineral Law on Mining and Geological Exploration (2015) Official
Gazette of the Republic of Serbia 101/15 (in Serbian)
resources are produced 3% of income.
National Strategy on Sustainable Usage of Natural
• For geothermal energy 2% of income. Resources and Goods (2012) Official Gazette of the
• For construction materials, royalty is paid per Republic of Serbia 33/12 (in Serbian)
ton of excavated raw material according to the National Sustainable Development Strategy of the Repub-
lic of Serbia (2008) Official Gazette of the Republic of
decision of the Government of the Republic of
Serbia 57/08 (in Serbian)
Serbia issued each year and is between 0.15 Proposal of the Strategy on Development of Energetics of
and 0.5 EUR/t. the Republic of Serbia until 2025 with projection until
2030 (in Serbian). Available via http://www.gs.gov.rs/ Statistical Yearbook of the Republic of Serbia (2014) Sta-
lat/strategije-vs.html. Accessed 5 May 2015 tistical Office of the Republic of Serbia, Belgrade. 439
Proposal of the Strategy on Mineral Resources Management pp
of the Republic of Serbia until 2030 (in Serbian). Avail- Tiess G (2011) Legal basics of mineral policy in Europe: an
able via http://www.gs.gov.rs/lat/strategije-vs.html. overview of 40 countries. Springer, Wien, pp 301–309
Accessed 5 May 2015 Waste Management Strategy of the Republic of Serbia for
Statistical Yearbook of the Republic of Serbia (2013) Sta- period 2010–2019 (2010) Official Gazette of the
tistical Office of the Republic of Serbia, Belgrade. 425 Republic of Serbia 29/10 (in Serbian)
pp World Bank data (2015) Available via http://data.
worldbank.org/country/serbia. Accessed 5 May 2015
U
United Kingdom: Mineral Policy extracted onshore in Britain, including relevant

planning policy and regulation.
J. M. Mankelow and C. E. Wrighton With the exception of oil, gas, coal, gold, and
British Geological Survey, Mineral Resources and silver, the state does not own mineral rights in the
Policy team, Keyworth, Nottingham, United United Kingdom. The mineral rights to gold and
Kingdom silver in most of the United Kingdom are owned
by the Crown and managed by the Crown Estate.
The right to exploit minerals in the foreshore and
General Information on the United on the seabed within the limits of national juris-
Kingdom diction is also vested in the Crown, and, apart
from oil, gas, and coal, these resources are also
The United Kingdom consists of Great Britain managed by the Crown Estate. Mineral rights for
(England, Scotland, and Wales) and Northern Ire- other commodities are generally held in private
land and occupies an area of approximately ownership, and information on mineral rights,
244,000 km2. It has a population of 64.1 million where available, is held by the Land Registry
(2013) (Office for National Statistics (ONS) 2014a) together with details of land surface ownership.
which is predicted to grow to over 73 million by
2037 and 86 million by 2087 (ONS 2014b).
Onshore and offshore mineral production contrib- Need for Minerals
uted £34 billion, or two percent, to Gross Domestic
Product (GDP) in 2012. Table 1 summarizes the The United Kingdom has an economically impor-
2013 population and economic statistics for coun- tant mineral industry, with oil, gas, and construc-
tries of the United Kingdom. tion being the dominant sectors by tonnage
The United Kingdom is fortunate in having (Table 2) and value (Table 3). The United King-
both abundant and a wide range of indigenous dom produces a wide range of construction
mineral resources, and their extraction and use minerals – aggregates (from both onshore and
have played an important role in the development offshore), brick clay, cement-making raw mate-
of the economy. Detailed information on individ- rials, gypsum, building stone and slate, and a
ual minerals can be found in a series of Mineral number of industrial minerals – kaolin, ball clay,
Planning Factsheets (British Geological Survey, silica sand, potash, industrial carbonates, fluor-
various). These provide succinct overviews of spar, and barites. Many of these minerals support
each of the economically important minerals downstream, value-added industries, and some,
like kaolin, ball clay, and potash, also serve
DOI 10.1007/978-3-642-40871-7_43-1
2 United Kingdom: Mineral Policy
United Kingdom: Mineral Policy, Table 1 Population and GDP statistics for countries of the United Kingdom
Country 2013 population (million) 2013 GVA (£ per capita)
United Kingdom – of which 64.1 20,873
England 53.9 24,091
Northern Ireland 1.8 17,948
Scotland 5.3 21,982
Wales 3.1 16,893
Source: Office for National Statistics, licensed under the Open Government Licence v.3.0
GVA gross value added, is the difference between the value of the output (e.g., sales revenue) and the cost of bought-in
inputs used to produce it (fuel and other raw materials but not labor). There is a close link between GVA and GDP
United Kingdom: Mineral Policy, Table 2 Production of major sectors of the mineral industry in the United Kingdom,
2008–2012
Production (thousand tonnes)
2008 2009 2010 2011 2012
Energy minerals – of which 153,231 140,431 133,650 112,487 98,033
Coal 18,054 17,874 18,416 18,627 17,047
Oil, including natural gas liquidsa 65,497 62,820 58,047 48,571 42,052
Primary gasa 69,680 59,737 57,187 45,289 38,934
Construction minerals – of which 236,833 187,695 174,223 184,731 169,169
Primary aggregates 213,469 170,852 155,903 165,915 151,425
Other construction minerals 23,364 16,843 18,320 18,816 17,744
Industrial minerals 24,112 19,470 22,856 23,144 22,437
Metallic mineralsb 0 0 0 0 0
Total 414,176 347,596 330,729 320,362 289,639
Source: United Kingdom Minerals Yearbook, British Geological Survey (2013)
a
Oil equivalent
b
0 – small volume
United Kingdom: Mineral Policy, Table 3 Value of major sectors of the mineral industry in the United Kingdom,
2008–2012
Value (£ million)
2008 2009 2010 2011 2012
Energy minerals – of which 39,072 27,618 31,702 34,810 31,961
Coal 1,154 973 1,002 1,345 1,131
Oil, including natural gas liquids 27,306 19,075 23,110 25,505 22,975
Natural gas 10,612 7,570 7,590 7,960 7,855
Construction minerals – of which 2,193 1,654 1,684 1,693 1,535
Primary aggregates 1,844 1,425 1,377 1,410 1,279
Other construction minerals 349 229 307 283 256
Industrial minerals 566 935 1,154 1,043 922
Metallic minerals 4 6 10 11 5
Total 41,835 30,212 34,550 37,557 34,422
United Kingdom: Mineral Policy 3
important export markets. Moreover, the United Secondary Resources and Recycling
Kingdom’s onshore mineral potential still attracts The United Kingdom has a good record of
interest, such as the current development of a increasing the production of recycled (49.2 mil-
world-class tungsten deposit in Devon lion tonnes, 2012) and secondary aggregates (11.2
(Drakelands Mine), proposals for a new potash million tonnes, 2012), with the highest consump-
mine in the North York Moors National Park, tion (29 % of total aggregate consumption) in
and the ongoing evaluation of the nation’s shale Europe (Mineral Products Association 2013),
hydrocarbon potential (UK Minerals Forum although effective capacity is now being
2014a). approached (Waste and Resources Action
Minerals are the largest material flow in the Programme 2006). Other secondary materials uti-
United Kingdom economy. In 2012, the mineral lized within the United Kingdom include cemen-
industry extracted some 290 million tonnes of titious materials (pulverized fuel ash and blast
saleable material (Table 2) of which 190 million furnace slag), desulphogypsum, glass cullet, iron
tonnes was from onshore. The total value of min- steel and copper scrap, and aluminum and lead via
erals extracted, on an ex-works basis, was some secondary production. Total consumption of these
£34 billion (Table 3). other secondary materials was 8.4 million tonnes
in 2012 (UK Minerals Forum 2014a).
Overseas Trade
Despite the significant domestic production set
out above, the United Kingdom has become Classification of Mineral Reserves
increasingly dependent on imports for minerals
and mineral-based products, particularly for There is no prescribed use of a particular system of
energy minerals and metals. The move from reporting for mineral resources and reserves in the
being a major, long-term, net exporter of energy United Kingdom. Both the PERC (Pan-European
minerals (coal and then oil and gas) to a major Reserves and Resources Reporting Committee)
importer has been particularly rapid, and with Standard and Australian JORC (Joint Ore Reserves
declining offshore reserves of both oil and gas, Committee) Code are used by the mineral industry
this trend is unlikely to be reversed (UK Minerals in the United Kingdom. It is conventional in the
Forum 2014b). Net imports of oil (and oil-based United Kingdom when referring to reserves of
products) and gas were £15,244 million in 2012, nonenergy minerals, and particularly primary
and those for coal were £3,018 million. aggregates, to include only those with a planning
The United Kingdom is almost entirely depen- permission for extraction.
dent on imports for the supply of metals. One
exception is the contribution made by recycled
(secondary) metals. Imports of metal ores and Mineral Policy Conception of the United
scrap were £4,198 million, compared with exports Kingdom
of £4,488 million in 2012, almost all of which was
scrap. The central government role in planning is under-
The United Kingdom is virtually self-sufficient taken by the United Kingdom Parliament (for
in construction minerals and also produces and England), the Scottish Parliament, the National
exports a number of industrial minerals, notably Assembly for Wales, and the Northern Ireland
china clay (kaolin), ball clay, potash, and salt. Assembly. This is a result of a transferral of plan-
Kaolin is the second most important mineral ning powers from the United Kingdom Parliament
export after oil. Imports of nonmetallic minerals after referendums took place in Scotland and
and mineral-based products were £29,771 mil- Wales in 1997 and in both Northern Ireland and
lion, and exports were £25,230 million in 2012. the Republic of Ireland in 1998. Since 1999, these
Table 4 summarizes United Kingdom imports parliaments and assemblies have had devolved
and exports by tonnage for selected minerals. responsibility, to varying degrees, for the
United Kingdom: Mineral Policy, Table 4 United Kingdom imports and exports by tonnage for selected
minerals, 2012
2012
Imports Exports Net imports
(Thousand tonnes)
Natural gas (oil equivalent) 46,482 13,651 32,832
Oil and oil-based products 67,012 38,910 28,102
Coal 42,099 537 41,561
Sand and gravel 519 4,572a 4,053
Crushed rock 1,273 4,251 2,978
Ball clay 8 567 558
Barites 88 19 69
Cement and cement clinkers 1,667 346 1,321
Kaolin (china clay) 89 1,039 951
Fluorspar 20 0b 20
Gypsum (includes plasters) 538 25 513
Potash (potassium chloride product)c 161 440 279
Salt 418 396 22
Silica sand 138 88 49
Total 160,512 64,843 95,669
a
Mainly marine dredged
b
0 – small volume
c
BGS estimate
production of legislation on planning (Directgov attracting planning controls additional to those in

2011). The legislation issued by these bodies general planning law. Some of these characteris-
determines mineral policy and guidance at a tics are:
national level. The policies and guidance are sub-
sequently implemented by local planning • Minerals can only be worked where they natu-
authorities. rally occur and there is a limited choice of
Planning policy for minerals within the United location.
Kingdom is concerned with maintaining adequate • Although working may take place over a long
and steady supplies of those minerals which can be period of time, mineral working is not consid-
indigenously produced and which support national ered as a permanent use of land.
economic activity, without unacceptable adverse • Working may have adverse environmental
impacts on the natural and historic environment, effects. Sites, therefore, need to be carefully
amenity, or human health (Wrighton et al. 2014). controlled during the process of extraction.
The winning and working of minerals, whether • On cessation of mineral working, the land
by surface or underground methods, including the requires treatment to make it suitable for ben-
disposal of mineral waste, require planning per- eficial after-use.
mission (license to operate). The control of min-
eral working in the United Kingdom is exercised Onshore
through land-use planning legislation In England, government policy for minerals is
implemented through relevant policy rather than included in the National Planning Policy Frame-
through specific mining legislation. Mineral work published by the Department for Communi-
extraction, which has a number of special charac- ties and Local Government (DCLG) (DCLG
teristics, tends to be treated as a special case, 2012). Similar policy is provided by the Scottish
Government and the Welsh Government. In Scot- guidance for marine activities. With regard to
land, the equivalent document is Scottish Plan- marine sand and gravel, the plans should ensure
ning Policy (Scottish Government 2014). In provision for the long-term supply of sand and
Wales, the relevant policy documents are Plan- gravel and take into account the need to safeguard
ning Policy Wales (Welsh Government 2016) and mineral resources from sterilization by other
Mineral Technical Advice Notes on Aggregates forms of development (HM Government
(National Assembly of Wales 2004) and Coal et al. 2011).
(National Assembly of Wales 2009). In Northern
Ireland, minerals policy is provided in the Strate-
gic Planning Policy Statement for Northern Ire- Regulatory Framework
land (Department of the Environment for
Northern Ireland 2015). The planning system in the United Kingdom is
In general, key objectives of mineral policies essentially organized through two levels, central
within the United Kingdom are to: government and local government, in the form of
local planning authorities (Moore 2010). The cen-
• Conserve and safeguard mineral resources tral government role in planning is undertaken by
from unnecessary sterilization and secure sup- the United Kingdom Parliament (for England), the
plies of the materials needed by society and the Welsh Government, the Scottish Government,
economy from environmentally acceptable and the Northern Ireland Assembly. The legisla-
sources tion issued by these bodies determines policy and
• Limit the impact of mineral extraction on local guidance at a national level. The policies and
communities, the environment, and the built guidance are subsequently implemented by local
and natural heritage planning authorities, through documents which
• Promote efficient use and appropriate reuse set out a plan for development for the authority
and recycling of suitable materials, minimizing area and help guide decisions on planning
the net requirement for new primary extraction applications.
• Achieve high standards of restoration and ben- A local authority with responsibility for min-
eficial after-use when working has ceased eral planning, including deciding planning appli-
cations for a license to operate, is called a mineral
Offshore planning authority (MPA). In Wales, Scotland,
Recent legislation has implemented changes to and some parts of England, the responsibility for
how planning in the United Kingdom marine mineral planning resides with unitary authorities
environment is undertaken. The Marine and (single tier of local government), which deal with
Coastal Access Act 2009 (HM Government all planning issues within their areas. In those
2009) and the Marine (Scotland) Act 2010 parts of England with two tiers of local govern-
(Scottish Government 2010) introduced a new ment (counties and districts), MPAs are the county
system for marine planning and licensing with a councils. In Northern Ireland, local authorities
move away from a historically sectoral-based per- (councils) have responsibility for implementing
mit system to a more holistic plan-led one such as mineral planning policy and deciding planning
applied onshore (Bide 2013). For England, a new applications for a license to operate.
body, the Marine Management Organisation At the local level, the planning system is
(MMO), has been created and tasked with formu- divided into two fundamental functions:
lating spatial plans and associated policies. The
Scottish Government, Welsh Government, and 1. Development planning: this establishes poli-
Department of Environment for Northern Ireland cies and plans to guide future development
are responsible for this in their respective marine (“development plans”) which will influence
areas. These plans, currently being developed, decisions on individual site planning applica-
will provide detailed policy and associated spatial tions. Development plans translate central
government policies to the local level. There is Key planning documents for England, Scot-
a mandatory requirement that all MPAs land, Wales, and Northern Ireland are shown in
(in England and Wales) prepare Minerals (and Fig. 1.
Waste) Local Plans, which set out the policies
and proposals against which planning applica-
tions are determined. Minerals Local Plans are
International Memberships
one of a series of documents that form the
Development Plan. Similar requirements exist
The United Kingdom is a member of the Euro-
in Scotland and Northern Ireland where local
pean Union, G20 International Forum, Interna-
planning authorities are required to incorporate
tional Monetary Fund, Organisation for
mineral policies in a Local Development Plan.
Economic Co-operation and Development,
United Nations: United Nations Conference on
Development plans are produced through an
Trade and Development, World Bank, and World
extensive process of consultation with prospec-
Trade Organization.
tive developers and the general public. They are
The then United Kingdom Prime Minister, Tony
of increasing importance since there is a presump-
Blair, outlined the idea of the Extractive Industries
tion in favor of proposals (planning applications)
Transparency Initiative (EITI) in a speech intended
that accord with the development plan unless
for the World Summit on Sustainable Development
material considerations indicate otherwise. The
in Johannesburg in September 2002. In 2013, dur-
planning system is, therefore, plan led with rele-
ing its presidency of the G8, the United Kingdom
vant development plans providing a clear guide to
Government announced it would implement the
mineral operators and the public where mineral
EITI. Subsequently, the Government submitted its
extraction is likely in principle to be acceptable
candidacy application and implementation work
and where not acceptable and thus provides the
plan in August 2014, and since October 2014, the
basis for decisions on individual planning appli-
United Kingdom has the status of a candidate
cations. This helps to give certainty to both the
country. The United Kingdom is scheduled to pub-
mineral industry and local residents in respect of
lish its first EITI report by April 2016.
proposals for extraction.
Development plans are reviewed at regular
intervals (at least every 5 years) to assess whether
some or all of it may need updating. Such updates Concluding Statement
are necessary to take account of new information
and changing circumstances. Within the United Kingdom, management of the
nation’s finite mineral resources is undertaken
2. Development management: this involves tak- through a strategic, plan-led approach. National
ing decisions on planning applications submit- and local policies for minerals aim to ensure an
ted by prospective mineral developers and adequate, steady, and secure supply of minerals.
enforcing the conditions under which the indi- The overall aim of mineral planning is, therefore,
vidual sites proceed. All modern planning per- to meet the justified need for minerals to support
missions have operating and restoration the national economy, as far as practicable, at the
conditions attached so that the cost of meeting least social, economic, and environmental cost.
environmental standards is met by the operator. Wherever possible, areas of designated landscape,
Operating conditions are imposed to control nature conservation, or heritage value are
the environmental impacts of mineral working, protected from mineral development.
and restoration and aftercare conditions are
imposed to ensure that land worked for min-
erals is suitable for a beneficial after-use.
United Kingdom: Mineral Policy, Fig. 1 Key onshore et al. (2014). *Largest city regions only. **These may be
planning documents in the United Kingdom based on separate documents or combined in one plan
Cullingworth and Nadin (2006) and Wrighton
References Directgov (2011) Devolved government in the

UK Available via http://webarchive.nationalarchives.
Bide, T (2013) Safely acquiring new resources. Mineral gov.uk/20121015000000/http://www.direct.gov.uk/en/
Planning, Haymarket Business Publications. Issue Governmentcitizensandrights/UKgovernment/Devolved
138, p 8 government/DG_073306. Accessed 25 Apr 2015
British Geological Survey (2013) United Kingdom min- HM Government (2009) Marine and Coastal Access Act
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25 Apr 2015
S
Spain: Mineral Policy million inhabitants and a density of 92 inh./km2.

The labor force of 23 million is primarily
Manuel Regueiro y González-Barros employed in the service sector. The official lan-
Instituto Geológico y Minero de España guage is Spanish throughout Spain, while Cata-
(Geological Survey of Spain), Madrid, Spain lan, Valencian, Galician, and Basque also have
official status in their respective autonomous
communities.
General Information on Spain The Central government is a parliamentary
representative democratic constitutional monar-
Spain (officially the Kingdom of Spain) is a sov- chy under the Head of State King Felipe VI. The
ereign state located on the Iberian Peninsula in main political parties are the center-left PSOE
southwestern Europe. With a landmass of (Socialist Party) and the center-right PP (Popular
504,782 km2, Spain is the second largest country Party). Spain runs a decentralized form of govern-
in the European Union and the world’s 51st largest ment made up of 17 self-governing autonomous
country. As well as the Spanish mainland, the communities and two autonomous cities. The
country also consists of the Balearic Islands in autonomous communities also have their own
the Mediterranean and the Canary Islands off the elected governments. These communities are
west coast of Africa. Spain is bordered to the north responsible for local education, health, culture,
by France, Andorra, and the Bay of Biscay and social services and account for 38% of public
(Cantabrian Sea); to the east by the Mediterra- spending compared to just 18% of central
nean; to the south by the Mediterranean and government.
Gibraltar; and to the west, Portugal and the Atlan- Developing a plan for mining in modern times
tic Ocean. It also has land borders with Morocco started in Spain with the advent of the Law of
via Melilla, Ceuta, and Peñón de Vélez de la 11 February 1969 which approved the II Eco-
Gomera. nomic and Social Development Plan. Such a
Spain has the ninth largest economy in the plan included a National Mining Research Pro-
world and the fifth largest in Europe (Oficina de gram which gave way to the National Mining
Información Diplomática 2012). The main sector Plan which is noted in the Mining Law of 1973.
of economy includes tourism, metal production, In 1977 a National Mineral Raw Materials Supply
automotive industry, shipbuilding, food pro- Plan was established by an act to promote mining,
cessing, and textile. Its main natural resources and finally in 1978 Royal Decree 2857/1978
are industrial minerals and rocks, coal, and a vari- approved the General Mining Regulations which
ety of metallic ores. It has a population of 46.3 stated that studies should be regularly to update
G. Tiess et al.(eds.), Encyclopedia of Mineral and Energy Policy,
DOI 10.1007/978-3-642-40871-7_44-1
2 Spain: Mineral Policy
permanently the National Mining Research Pro- The indisputable need of mineral raw material
gram and of Mining Revaluation. That same year supply and understanding how to adapt this
1978, the Spanish Constitution was approved by demand to the environmental and sustainability
the Parliament and by the citizens by means of a criteria required by modern societies has led the
referendum. Later the different Statutes of the EU to launch in 2008 the powerful Raw Materials
Autonomous Governments were passed. After Initiative, followed in 2011 by the strategy “Fac-
this and progressively, the mining responsibilities ing the challenges of the raw materials markets.”
were transferred to the Autonomous Governments A strategy which is already being implemented
including legislative capacity. All previous with project calls under the H2020 program.
national plans and programs were then suspended. The Spanish mining sector is today in an out-
Thus, since1978, the successive Spanish govern- standing position to take advantage of this unique
ments have not approved any National Plan opportunity, thanks to its extraordinary mining
regarding exploration, research of supply of min- potential, a potential that has made Spain a
eral resources. world-class producer of many mineral raw mate-
In spite of this, some Autonomous Govern- rials. Spain is the only European producer of
ments, using their legislative capacity, have sodium sulfate and hosts 70% of the world sepio-
passed legislation on mining planning in their lite resources; it’s the main fluorspar producer in
territories, and some have designed Mining Europe, the world’s fifth largest gypsum producer
Regional Policy and Development Plans, which and the first in Europe, the world’s second largest,
will be review later on. and the only European producer of celestine. It
It is clear that even though the Constitution also possesses the largest European feldspathic
establishes in article 149.1.25 the exclusive com- sand reserves for the production of feldspar.
petence of the state in all related with basic mining Regarding metals, Spain also hold several
legislation, and in article 149.1.13 its exclusive European records: the second European producer
right to define the bases and the coordination of of nickel, third in tungsten, and fourth in copper
the economic activity of the nation, it seems diffi- and zinc-bearing minerals and refined copper and
cult that the Spanish State will formulate, at this the first European zinc metal producer. Further-
stage, a new National Mining Plan or a National more, Spain stands out for its dimensional stone
Mineral Supply Plan. In fact, a much needed production, being the seventh world producer as
legislation, such as a new Mining Law, to super- well as leading the global roofing slate sector.
sede the current pre-constitutional 1973 Law, The Spanish mining sector has suffered a
which obviously did not consider the Autono- severe blow during the financial crisis that has
mous Governments, and is now partially obsolete, affected the EU since 2007. The value of mineral
has not been approved in this last 42 years, production dropped from 4465 M€ in 2007 to
although several drafts have been produced (the 3244 M€ in 2012, a sharp reduction of 27.4%.
last try was in February 2015), which did not meet Employment in mining sector also went down a
the necessary consensus among the multiple 47% reduction in the same period, from a staff of
actors involved. 45,301 to 24,000 (Marchan and Regueiro (2014).
According to the Spanish Geological Survey data
(op cited), the value of mineral raw materials
produced in the country for 2013 amounts to
Need of Minerals 3254 M€ (Table 1).Mining production has also
suffered during the crisis but is now recovering
Spain has a long mining tradition particularly in fast.
the production of gold and other metals by cul- Although this gross production only represents
tures as old as the Phoenician or Tartessians. Min- a scant 0.3% of the national GDP, it is important to
ing was especially intense in Roman times and has remember the added value that such raw materials
extended up until today. production represents, as value multiplies by a
Spain: Mineral Policy 3
Spain: Mineral Policy, Table 1 Trends in the mining production value (thousand €)
2008 2009 2010 2011 2012 2013 2014 2015*
Energy mineral resources 574 603 543 623 522 362 418 250 453 174 466 120 387 270 258 182
Metallic ores 45 485 179 416 396 538 492 632 716 872 819 060 708 329 867 663
Industrial minerals & rocks 2 859 028 2 339 663 2 064 376 1 882 222 1 661 312 1 550 150 1 535 146 1 607 139
Dimensional stone 635 691 458 464 443 868 457 198 412 046 419 430 386 400 387 708
TOTAL 4 114 807 3 549 581 3 427 144 3 250 302 3 244 404 3 254 760 3 017 145 3 120 692
Source: Data from 2008 to 2013: IGME. Mining Panorama 2013. Data from 2014 to 2015: Ministry of Energy, Tourism and
Digital Agenda. *Estimated
factor about 5 when injected in the industrial the exploitation of the deposit. Aznalcóllar mine
system. For example, the value of ornamental closed after the environmental disaster of 1998,
stone gross production in 2012 was 412 M€, but regarding the current economic situation, it is
while the sector turnover was 1698 M€. In the expected to be reopened by a consortium of Grupo
case of metals, prices have remained on the high México and the Andalusian company Magtel. The
side during the last few years. For instance, the iron Mine of Alquife, in Granada, which was once
copper of one single mine was worth on the mar- the largest iron deposit in Europe exploited since
ket more than 600 M€, that is to say 83.6% of the the tenth to eleventh centuries and industrially
total value of the national gross production of developed since the beginning of the twentieth
metallic minerals in 2012 (Marchan and Regueiro century until its closure in 1996, might start pro-
2014). duction next year by the German company
In recent years there has been a notable Simons.
increase in copper prices due to a higher demand The Regional Government of Andalusia con-
by the new technologies sector and also by devel- siders the mining sector as key and strategic and
oped countries, and Andalusia has positioned hopes that after the first wave of mine openings,
itself as the most important southern European others will follow. For this reason, the mining
mining area and as such is attracting companies cadastre has reorganized and updated, and 1000
from all around the world. Just in 2015 in Anda- research permits covering around 675.000 ha
lusia, five metallic mining projects have recently have been offered for competitive bidding.
been approved (Matsa-Sotiel, La Magdalena, Rio In Castile-Leon and Extremadura, there are
Tinto, Aznalcóllar, and Alquife). Most of them are exploration permits for W, Sn, and other sub-
located in the famous Pyritic Belt, an area of stances, but less advanced. Galicia, in the north-
250 kilometers long and 40 kilometers wide tra- west, has several Au exploration areas, and a poten-
versed by polymetallic sulfides (copper, zinc, tial mine in Corcoesto (A Coruña) owned by the
lead, silver, and iron). These deposits have been Canadian Edgewater, which has been halted due to
exploited in the past but in the 1990s were aban- strong opposition from environmentalists, simi-
doned due to market conditions, leaving potential larly, in Salave (Asturias), Asturgold, also from
mineral resources behind. Canada, was not able to obtain all the environmen-
Currently two companies are exploiting sev- tal permits from the Autonomous Government, in
eral deposits: Cobre Las Cruces, First Quantum spite of having declared 1,683,000 oz. indicated
Minerals, operates a huge opencast copper mine and measured Au reserves.
and a hydrometallurgical process plan, located Spain can boast of an excellent geological
20 km north of Seville, while Matsa-Trafigura knowledge and infrastructures, thanks to the
runs a mining project in Huelva (Aguas Teñidas). works and free accessible maps and mining data-
Rio Tinto, the exploitation that placed Andalusia bases produced by the Geological Survey of Spain
in the top of the mining world in the nineteenth (www.igme.es). The country has well-developed
century, will soon be reopened as the Cypriot and modern infrastructures, available and afford-
company EMED received the green light to start able skilled workers in all the mining fields, the
ever-increasing interest in many regions for pro- mining sector by the technological moderniza-
moting sustainable mining, a good foreign inves- tion, the inclusion of innovative processes and
tors’ environment, and a long-term political knowledge.
stability in the country. Spain has now overpassed • Favor the maintaining and creation of quality
a long economic crisis, and it is growing at a employment and the increase of added value
higher pace than any other EU country (IMF by the development and consolidation of the
Country Report No. 15/232 2015). All of which mining sector, promoting the design of new
means that Spain today represents an excellent products and applications.
business opportunity for mining companies from • Favor the environmental integration of the
all around the world. mining activity and its compatibility with
other activities based in territorial resources.
• Diffuse and facilitate the access to the mining
Classification of Mineral Reserves sector knowledge.
• Modernize the administrative management in
In Spain there is no compulsory mineral reporting those environments where the autonomous
code. Usually reserves and resources are indicated administration has competences.
in the annual official mining plan by private com- • Reinforce training, qualification, and safety in
panies, using various internationally accepted the mining sector.
codes. The Geological Survey of Spain (IGME)
has traditionally used an adapted version of the To reach those objectives four strategies,
USGS Circular 831 of 1980 in its reports and 11 activity lines and 64 actions were identified;
inventories, which includes proven, probable, the strategies defined were promoting mining
and possible reserves. In general IGME also con- activity, environmental integration of the mining
siders in its reports as proven reserves those activity, modernization of public services and
declared by the mining companies in their annual training, qualification, and safety in the sector.
official reports to the regulator. All the rest of The PORMIAN is an opportunity to promote the
resources included in IGME’s inventories or industry of this sector, to make more efficient and
other mining research sources are usually consid- competitive the traditional mining operations and
ered resources. to generate processing industry which will pro-
vide value added to the industry.
Mineral Policy Conception

A Proposal of National Mining Policy
Andalusian Mining Strategy
In 2010 the Andalusian Government approved the It seems reasonable that in the framework of the
Mineral Resources Planning of Andalusia EU Mineral Policy included in the Raw Material
2010–2013 (PORMIAN) in order to “enhance Initiative, Spain should develop its own national
the value of the mining sector and bring forward mining policy, as already suggested by Moya
the existing potential to improve the competitively, (2012), Carrasco (2011) and Galán (2011). Such
the productivity and the employment with sustain- policy should start with a major modification of
ability criteria” (Junta de Andalucía 2010, the Mining Law and all related legislation (land
Vázquez Sánchez 2011). use planning and environmental legislation in par-
The objectives of the plan were: ticular) to adapt it to the reality of the country and
the State of the Autonomous Governments,
• Contribute to the support and improvement of which, in fact, have the competences in mining
the competitively and productivity of the throughout the country.
The Mining Law should thus be agreed with the importance of the raw materials in
the Autonomous Governments under certain everyday life.
premises: Another key issue should be the improvement
of technologies that will improve the efficiency of
1. Land use planning should include a specific the exploitation and processing of mineral raw
provision regarding the mineral resources materials, for this a technological mining research
potential, so that such potential is taken into plan should be put in place which should be
account when deciding a certain use of the financed by the government and leaded by the
land. Thus, any new municipal planning must Spanish Geological Survey and other related
compulsorily include a map with the available research institutions, to improve national research
mineral resources information produced by the capacities and the technological development in
mining authority or the Spanish Geological this field. The plan should be managed and coor-
Survey which should be used in the planning. dinated by the Geological Survey of Spain, as a
2. Unifying permitting procedures in one single national independent research center with more
permitting office, which will be in charge of than 160 years of experience in the field of mineral
dispatching the applications to the various raw materials.
administrative offices where the different per- In order to design and fulfill the plan, the
mits must be issued. Geological Survey of Spain would establish the
3. Including the current state organization and adequate links with the industry, using the
establish a clear distribution of responsibilities existing model of the European Technology Plat-
in mining procedures, from national to local form on Sustainable Mineral Resources
authorities. (ETPSMR) and probably creating a similar instru-
4. Including the principles of sustainable mining ment in Spain, as proposed by the National Con-
management, circular economy, and social cor- federation of Mining and Metallurgical
porate responsibility. Enterprises (CONFEDEM 2015). Such origina-
5. Modification of the maximum size of exploration will serve as a link between the geological
tion permits. survey and the industry; the financial support of
6. Changes in the type of resources included in the initiative could come from the Ministry of
the different section, making a more detailed Economy and Competiveness and from the Min-
definition in view of the current knowledge. istry of Industry Energy and Tourism and
7. Include a classification of reserves and channeled through the Geological Survey as it
resources using international standards. happened in the past.
8. Automatic freedom to register permits in zones
where permits have been canceled.
9. Regulation of the benefits that local communi- Regulatory Framework
ties should receive from hosting mining
operations. Mining operations in Spain are governed by the
Spanish Mining Law 22/1973, of 21 July, and its
Apart from the renewal of the mining and regulations approved by Royal Decree 2857/
environmental legislation, there is a need to 1978, of 25 August. These laws are applicable to
develop a new national exploration plan for criti- the whole country. The exploration and produc-
cal minerals, which should previously be tion of hydrocarbons are regulated by the Hydro-
established for the national economy, by means carbons Law 21/1974. Permits regarding natural
of life cycle analysis carried out by the Geological oil and gas are governed by specific regulations
Survey of Spain. The general mining policy (mainly Act 34/1998, of 7 October, on hydrocar-
should also include an outreach program to bons). However, principles and procedures are
explain to all citizens starting at schools level on similar to the ones under mining laws. As of
today, since Act 25/2009, of 22 December, there Mining activities must be expressly authorized
are no special rules or requirements applicable to or conducted under a concession. Section A and
foreign applicants for authorizations or conces- B minerals can be exploited by means of a previ-
sions governed by mining laws. Each of the ous authorization. Minerals under Sections C and
17 Spanish Autonomous Regions may enact addi- D can be exploited by means of a previous con-
tional mining rules provided the basic mining cession. Requirements for concessions are stricter
system governed by national provisions is than the requirements set forth to obtain an
respected. According to Law 22/1973, all mineral authorization.
deposits and geological resources within Spain
are public domain goods. Therefore, mining activ- Rights to Use Surface of Land
ity must be preceded by the corresponding permit The holder of a mining right must reach an agree-
or concession. The specific permit/concession ment with the landowner in order to occupy the
empowering mining activity depends on the type land for carrying out the mining activity. The
of mineral commodity (“mineral section”). holder of an authorization for Section B minerals
The Law 22/1973 sets forth four sections: as well as the holder of an exploration permit, an
Section A, resources and deposits of low eco- investigation permit, or a mining concession for
nomic value and restricted geographic marketing, Sections C and D minerals, is entitled by law to
such as gravel, sand, or ornamental rocks, etc.; occupy the surface of land necessary to carry out
Section B, mineral and thermal waters, subsur- the mining activity under said titles. Therefore,
face/underground structures, and deposits (waste) when an agreement with the landowner is not
arising from previous mining activities; possible, the holder of mining titles can initiate
Section C, resources and deposits not included the expropriation procedure. The expropriation
in Sections A, B, and D; and Section D, coal, (or temporary occupation) requires the previous
radioactive minerals, geothermal resources, bitu- payment of a price by the holder of the mining
minous rocks, and mineral deposits or geological right to the landowner. The price will be finally
resources of interest for energy. decided by a public technical committee. On the
Mining exploration and exploitation permit- contrary, the holder of an authorization for
ting for each resource type are as follows Section A minerals shall only benefit from the
(Urbano 1998): expropriation procedure under specific
circumstances.
• Section A resources
– Authorization of use Transfer of Rights
• Section B resources The transfer of rights on Sections A and
– Authorization of use of mineral or thermal B minerals must be duly approved by the
waters Regional Government in view of the transfer
– Authorization of use of mining waste title and provided that the assignee has legal
– Authorization of use of underground capacity.
structures Direct transfer of reconnaissance and explora-
• Section C and D resources tion permits and mining concessions of Sections
– Exploration permits C and D is also subject to prior authorization by
– Investigation permits the Regional Government. This authorization
– Mining concessions should be granted upon compliance of certain
legal requirements, such as the legal capacity of
Specific rights to conduct exploration are not the assignee, a verification of its technical and
required for minerals under Sections A and B. The economic solvency, the viability of the financial
exploration of minerals under Sections C and scheme of the mining activity, the payment of the
D could be preceded by an exploration permit applicable tax, or the constitution of certain guar-
issued by the Regional Government. antees, among others. Although it is not expressly
provided by law, in principle, and on a general 3. Exploitation concession. Provides the right to
basis, this prior authorization could also be exploit resources of the Section C –except
requested in case of change of control. those which have been previously reserved by
Government authorizations only have effect the state – and applying all mining techniques
from an administrative point of view, thereby not available. The concession can have from 30 to
affecting any civil rights and obligations arising 9000 ha, and the concession is granted for
from legal acts executed by individual parties. 30 years which can be extended two times up
to a maximum of 75 years.
Permitting Procedures
Since mining activities are mainly transferred to The law established two subtypes of mining
the Regional Governments (except in those cases concessions: (A) direct exploitation concession,
where the area requested includes territory of two a concession obtained without preliminary inves-
or more Regional Governments, as in these cases tigation, by proving the existence of the resources,
the mining law assigns the permitting to the Min- and (B) exploitation concession derived from
istry of Industry), all the permitting procedures are an investigation permit. A concession obtained
performed in the Provincial Mining Authorities. by proving the existence of a resource inside a
The administrative procedure to obtain authoriza- previous investigation permit.
tions for Sections A and B resources is simpler The mining procedures are processed in the
than the administrative procedure to be complied Provincial Mining Authorities using the mining
with to apply for, and obtain, concessions for square as the minimum mining property unit. All
Sections C and D minerals. As said, requirements mining rights are based on mining square
to obtain concessions are stricter than those (“cuadricula”) as the minimum property unit. It
required to obtain an authorization. As a conse- is defined by as a volume of unlimited depth,
quence, the time to obtain a concession is usually bordered by 20 seconds of both longitude and
longer than the time for authorizations. latitude (475 x 615 m), covering an area approx-
The most commonly requested procedures imately 30 ha.
listed here are related to the resources of The typical procedures for the various permits
Section C. Three types of administrative conces- are as follows:
sions are established:
Exploration Permit
1. Exploration permit. Provides the right to After a formal application is presented at the Pro-
carry out studies and preliminary reconnais- vincial Office, the application will be registered in
sance works of regional scope, using all type the Exploration Permits Register. Later an explo-
of techniques except those which might alter ration program has to be presented and processing
the surface of the land. The objective of this fees paid. If the permit is granted, it will be
type of studies is to establish the possibilities of published in the National Official Bulletin and in
finding a mineral resource in a certain area. The the Provincial Official Bulletin.
surfaces which can be permitted go from 9000
to 90,000 ha for a period of 1 year which can be Investigation Permit
extended one more. Similarly a formal application has to be presented
2. Investigation permit. Provides the right to at the Provincial Office of the Council of Industry
carry out all types of research in order to define of the Autonomous Government. If the permit
the existence of resources of the Section C so extends in several provinces, the application
that later a mining concession can be obtained. should be presented in the provincial office of
The permitted surface can extend from 30 to the province were the surface is larger. Later the
9000 ha, and the permit can last for 3 years that applicant has to present an investigation program,
can be extended for another three and excep- and the regulator will require a deposit of 10% of
tionally for additional periods. the total investment of the first year of
investigation which should be paid in 15 days. of minerals or any other geological resources
The application will be announced by the Provin- might be of special interest for the social and
cial Delegation in the National Official Bulletin economic development or for the national
and in the Provincial Official Bulletin and will be defense.
sent to the municipalities affected by the applica- State reserves can be: (A) special, for one or
tion. There will be a period of 15 days after pub- several resources in all the Spanish territory and
lication to accept allegations. The owner of an for a maximum of 5 years; (B) provisional, for the
investigation permit must start the investigation exploration of zones and areas defined by mining
works 6 months after the permit is awarded and squares and of one or several resources; and
maintain the activity following the plan presented (C) definitive, for the exploitation of the evalu-
in the plans of works. Investigation permit can be ated resources in areas inside a provisional
transferred as a whole or partially, provided that reserve.
the acquiring firm fulfills the legal requirements Provisional and definitive reserves will be
and the development of the working plan is valid for periods no longer that those of explora-
guaranteed. tion, investigation permits, or concessions. State
reserves will not alter the mining rights of others
Exploitation Concession Derived from an acquired before the reserve was declared. The
Investigation Permit state can request to those owners to carry out the
In this case also a formal application has to be research at the same pace than the state. The
presented with the designation of the land located research in state reserves can be carried out
inside a previous investigation permit and a report directly by the Spanish State or its Autonomous
with the geological description of the deposit, Entities (such as the Geological Survey), by pub-
research carried out and results, resources and lic tender among Spanish or foreign companies or
reserves, a feasibility study, and an exploitation by a consortium between the state and the entities
project. If the concession is awarded, the applicant cited above. In any of the mentioned modalities,
has 15 days to pay the fees corresponding to the the state will award simultaneously to the research
issuing of the mining concession. The mining permission, the right to exploit, by contract or the
authorities shall publish the resolutions in the reserved resources.
National Official Bulletin and in the Provincial
Official Bulletin. Mining concessions are regis- Environmental Legislation
tered in the Mining Registry and in the Property Mining activity must be carried out in compliance
Right Register. with the legislative norms to protect the environ-
ment, and reclamation process is statutory for any
Direct Exploitation Concession site affected by mineral exploitations. Thus the
For direct exploitation concessions also a formal mining project to be presented to the mining
application with the designation of the land authorities must be complemented by an environ-
located inside the concession must be presented. mental impact assessment project.
Later a general exploitation plan must be pre- The current basic legal framework at a national
sented to the regulator as well as an economic level is contained in:
and feasibility studies and guarantees. The rest
of the procedure is equivalent to the concession • Law 21/2013 of 9 December of Environmental
derived from an investigation permit. Assessment
• Law 6/2010, of 24 March, that modifies the
State Reserves consolidated text of the Environmental Impact
The Spanish Government can establish zones of Assessment of projects law approved by Royal
state reserves of any extension in the national Legislative Decree 1/2008, of 11 January
territory, territorial seas, and continental shelf • Royal Legislative Decree 1/2008, of
where the exploitation of one or several deposit 11 January, approving the consolidated text of
the Environmental Impact Assessment of Land Use and Municipality Permits

projects Municipal/regional zoning regulations are
• Royal Decree 975/2009 of 12 June on the adopted to maintain reasonable land use planning
management of extractive industry wastes and and land classification. Zoning regulations must
reclaiming of the space affected by mining allow mining activities in the area where the mine
activities is to be. In addition, municipal clearance (usually
• Royal Decree 1131/1988 of 30 September in the form of a municipal license) is required to
approving the Regulation for the execution of conduct mining activities. Although the activity
the RLD 1302/1986 license is not a zoning license, it is most common
• Royal Legislative Decree 1302/1986 of that the local authority checks whether mining
28 June of Environmental Impact Assessment activities are possible in that specific area before
granting the activity license. The construction of
Each Autonomous Government has issued ancillary facilities (e.g., beneficiation facilities)
their own environmental legislation; this means requires a work license by the local authority.
that depending on the place the exploitation is
carried out, attention must be made to the regional Closure Process
legislation in force. The main requirement concerning the closure of
mines is the implementation of a restoration plan.
Environmental Impact Assessment
The restoration plan must be submitted to, and
The EIA is the technical document that must be
approved, by the regional body prior to the com-
presented by the applicant of a mining concession
mencement of the mining works. The approval of
and is the basis upon with the Environmental
such plan shall be issued jointly with the exploi-
Impact Declaration must be issued. The content
tation concession. As explained above, when
of an EIA of a mining operation should include a
dealing with resources located in the territory of
description of the project and its activities, a study
more than one Autonomous Regions, the National
of the alternatives technically viable and justifica-
Government is the relevant body in mining rights.
tion of the alternative adopted; an environmental
Therefore, in these cases, the approval of the
inventory and description of the key ecological
restoration plan corresponds to the General Direc-
and environmental interactions; a justification and
torate of Miner. Operators are obliged to carry out
evaluation of the impacts, both of the proposed
restoration works on the area affected by the min-
solution and of the alternatives; the establishment
ing activity. Before undertaking investigation and
of the protecting and corrective measures; an envi-
exploitation works, operators shall present finan-
ronmental monitoring program; and a summary.
cial guarantees to the Regional Government to
Mining activities (exploration, investigation, or
cover restoration obligations. Restoration obliga-
exploitation) require the obtaining of a municipal
tions are enforceable from the end of the exploi-
clearance (usually in the form of a municipal
tation. The restoration and definitive
license) which, among other aspects, deals with
abandonment of the activity must be approved
environmental matters from the municipality’s
by the competent authority, following, within
perspective. Also, mining activities exceeding
1 year, a final in situ inspection.
certain parameters may need to undergo an envi-
ronmental impact assessment. In addition, and
depending on the specific characteristics of the Fiscal Stimulus to Mining
activity (e.g., its location, or whether the activity The corporate income tax taxes the income of
may affect a protected area), a specific authoriza- private enterprises in Spain, and is regulated by
tion may be required, such an integrated environ- the following legislation:
mental authorization, an authorization to
discharge wastewater, or an authorization to man- • Law 27/2014, of 27th September on Corporate
age hazardous waste. Income Tax (BOE, 28-november-2014)
• Royal Legislative Decree 4/2004, of 5th March United Nations Industrial Development Organiza-
approving the consolidated text on the Corpo- tion (UNIDO); and World Trade Organization
rate Income Tax (BOE, 11-march-2004) (WTO).
Chapter VIII of the law includes article 91 on

the freedom to amortize all the investments in Concluding Statement
10 years since the beginning of the operation.
And also includes article 91 referring to the deple- Spain holds large mineral reserves for future
tion allowance (exclusively for resources of the exploitation that can promote various forms of
sections C, D, and B, which allows the reduction development, increase the employment rate, and
of the consolidated tax base). The depletion allow- improve the national standard of living.
ance shall not exceed 30% of the total consoli- In summary the priority of the National Mining
dated tax base. The amounts used to reduce the tax Policy should be double folded to improve the
base should be only employed in activities such as accessibility of mineral resources to national and
exploration of new mineral deposits and other international investors, thus promoting the explo-
geological resources, research on processing ration and exploitation of our national mineral
improvements, research in the geological knowl- resources and at the same time improving the
edge of the deposits and estimation of reserves, relation of the mining world with the society that
and acquisition of stocks of firms carrying out the is serving, by exploring and exploiting resources
cited activities, provided that the stocks are in an sustainable and environmentally
maintained during 10 years, laboratory and acceptable way.
research equipment applied to the mining opera-
tions and reclaiming operations. The investment
must be made during the following 10 years after References
the reduction in the tax base has been made.
Carrasco Galán J (2011) Gestión eficiente de los recursos
minerales una estrategia española de materias primas
generadoras de empleo y riqueza. Revista Industria y
International Membership minería 389:7–19. ISSN 1137–8042
CONFEDEM (Confederación Nacional de Empresarios de
Minería y Metalurgia) (2015) Estrategia Española de
Spain takes part in many international organisa-
materias primas minerales. Available via http://www.
tions, of which the most relevant are Council of confedem.org/es/confedem/actividades/estrategia_espa
Europe (CE); Economic and Monetary Union nola_materias_primas_minerales. Accessed 30 Apr
(EMU); European Investment Bank (EIB); 2015
Galán JC (2011) Gestión eficiente de los recursos
European Organization for Nuclear Research
minerales: una estrategia Española de materias primas
(CERN); European Space Agency (ESA); generadora de empleo y riqueza. Industria Minera
European Union (EU); International Organization 389:7–19
for Standardization (ISO); North Atlantic Treaty Gobierno de España. Ministerio de Asuntos Exteriores y de
Cooperación. Dirección General de Relaciones
Organization (NATO); Nuclear Energy Agency
Económicas Internacionales. Oficina de Información
(NEA); Organization for Economic Cooperation Diplomática (2012) Spain’s positioning leadership
and Development (OECD); Paris Club; Schengen key factors. Dec 2012
Convention; United Nations (UN); United International Monetary Fund (2015) Country report
no. 15/232. Available via http://www.imf.org/external/
Nations Conference on Trade and Development
pubs/ft/scr/2015/cr15232.pdf. Accessed 30 Apr 2015
(UNCTAD); United Nations Educational, Scien- Junta de Andalucía. Consejería de Economía Educación y
tific, and Cultural Organization (UNESCO); Ciencia (2010) Plan de Ordenación de los Recursos
Minerales de Andalucía 2010–2013 (PORMIAN). http:// Moya Esponda J (2012) Estrategia española para las
www.juntadeandalucia.es/economiainnovacio materias primas minerales. Revista Industria Minera
nyciencia/pamdoc/_archivos_/pormian/PORMIAN. 3–4. vol II. p 23
pdf. Accessed 30 Apr 2015 Urbano Vicente R (1998) Guía para la investigación de los
Marchan C, Regueiro M (2014) Panorama Minero 2013. recursos minerales en España. IGME, Madrid, p 167
Instituto Geológico y Minero de España. NIPO: Vázquez Sánchez E (2011) El Plan de Ordenación de los
728140031. Available via http://www.igme.es/ Recursos Minerales de Andalucía 2010-2013
PanoramaMinero/PMLin.htm. Accessed 30 Apr 2015 (PORMIAN). Industria Minera 389:20–23
F
Finland: Mineral Policy displayed a slight decrease in consecutive years

from €191.9 billion in 2011 (Statistics Finland
Jussi Pokki 2015). Finland ranked 25th place in GDP per
Ore Geology and Mineral Economics, Geological capita in 2014, behind 13 other European coun-
Survey of Finland (GTK), Espoo, Finland tries (Wikipedia 2015b). Of the value added by
industries, primary production (agriculture, for-
estry, fishery) comprises 3 %, secondary produc-
General Information on Finland tion (including mining and quarrying) 27 %, and
services 71 %. Mining and quarrying alone have
Finland, located in Northern Europe, is one of the comprised 0.3–0.5 % of the value added by indus-
world’s northernmost countries (Fig. 1). Finland tries during recent years (Statistics Finland 2015).
remained largely an agrarian country until the The trade balance of Finland was positive
1950s. Thereafter, it rapidly developed an between 1991 and 2010, but negative from 2011
advanced economy while building an extensive to 2014 (Customs 2015).
Nordic-style welfare state, resulting in widespread
prosperity. Finland is a top performer in numerous
metrics of national performance, including educa- Need for Minerals
tion, economic competitiveness, civil liberties,
quality of life, and human development. The pop- Mining
ulation of Finland in 2014 was 5.471 million. The From the late 1970s until 2007, the total mining of
average population density (18 inhabitants per ores (metallic and industrial minerals) in Finland
km2) is the third lowest of any European country. amounted to about 15–20 million tons
The World Economic Forum ranks Finland’s (Mt) annually. Thereafter, a boom in mining of
higher education and training first in the world metallic ores started, resulting in a record high of
(WEF 2013). Around 33 % of residents have a 37 Mt in ore mining in 2013. This boom was
tertiary degree. initiated by the Talvivaara mine, which was able
In 2014, Finland’s real gross domestic product to utilize low-grade ore due to a new bioleaching
(GDP) was €186.5 billion, very close to that of method. Several other metallic ore mines also
2006 (all values calculated with 2010 as the ref- started production, and even after the temporary
erence year). From 2000 to 2008, the real GDP cease of mining at Talvivaara, ore mining
annually increased, but in 2009, the GDP amounted to 30 Mt in 2014. Mines in Finland
decreased by 8 % after a record high in 2008 are shown in Fig. 1 and mining in 2014 is sum-
(€198.0 billion). Recent development has marized in Table 1. Since the early 1980s, the
DOI 10.1007/978-3-642-40871-7_45-2
2 Finland: Mineral Policy
Finland: Mineral Policy, Fig. 1 Active mines in Finland in 2014

Finland: Mineral Policy 3
Finland: Mineral Policy, Table 1 Overview of mining value (€864 M), with gold in second place
in Finland in 2014 (Source: GTK 2015a) (€272 M) (GTK 2015b). Considering the produc-
Ore Number tion in 35 European countries (EU-35; Brown
mined of mines et al. 2014), the mine production of cobalt,
Metal ores 13.4 Mt 11 PGM, nickel, ferrochrome, and gold in Finland
Carbonate rock 3.7 Mt 14 is particularly significant on the European scale.
Other industrial minerals 12.0 Mt 6
Calcite and dolomite are the industrial minerals
Industrial rock 125 kt 2
having the largest production levels in Finland.
Soapstone 282 kt 6
Their annual production has varied between 5 and
Gem (amethyst) 5t 1
3 Mt since the early 1970s. Since the year 1980s,
Total 29.5 Mt 40
apatite has been the second most important indus-
trial mineral in terms of production, closely
followed by pyrite. Currently, the annual produc-
annual amount of ore mined has been the highest tion of pyrite exceeds that of apatite, both reaching
in the Siilinj€arvi apatite mine, only exceeded dur- a record high in 2014 (1035 kt and 946 kt, respec-
ing 2009–2011 by the Talvivaara mine. Siilinj€arvi tively). Pyrite is mainly originating from the
apatite ore typically constitutes about 70 %, car- Pyh€asalmi mine, and apatite is produced at
bonate rocks 20–25 %, talc ore 5 %, and indus- Siilinj€arvi, the only producer of phosphate rock
trial rocks and soapstone for dimension stones among the EU 35 countries (Brown et al. 2014).
both 1–2 % of all industrial mineral ores mined Phosphate rock is defined as a critical raw material
annually. by the EU (European Commission 2014). Finland
is also one of the biggest producers of talc and
wollastonite in Europe. Quartz, feldspar, mica,
Mineral Production and magnesite sand are also produced in Finland
From 2010 onwards, the amount of metals annu- (GTK 2015a).
ally produced from the Finnish mines has been
unparalleled since the late 1980s. Of the metals Aggregates
produced during 2000–2014, 80 % consisted of The aggregate industry forms the largest sector of
ferrochrome, 12 % of zinc, 6 % of copper, and the extractive industry in Finland in terms of pro-
2 % of nickel (GTK 2015b). Ferrochrome is production volumes, number of personnel, and net
duced at the Kemi mine, currently showing revenue. The per capita consumption of aggre-
record-high production (441,000 t in 2014). gates in Finland is also one of the highest in the
Most of the zinc and copper produced during EU, which is the combined effect of the relatively
2000–2014 originated from the Pyh€asalmi mine, large area of the country, low population density,
and Talvivaara has been the largest nickel pro- extensive road network, use of studded tires in
ducer. Of the precious metals produced during winter, and extensive road, railway, and housing
2000–2014, 74 % consisted of silver, 24 % of construction in urban areas. The Precambrian
gold, and 2 % of platinum group metals (PGM). crystalline bedrock is generally a good but hetero-
The annual production of silver is about 10–14 t, geneous source of rock aggregates. However,
most of it originating from the Pyh€asalmi mine. there is a shortage of outcrops suitable for the
Annual gold production soared from 2 t in 2008 to production of aggregates with the best strength
8 t in 2014, mainly as a result of the production at properties. The annual consumption of aggregates
the Kittil€a mine. In 2012, Finland became the has declined to 80–90 Mt from 113 Mt in 2008. Of
leading mine producer of PGM in the EU owing the total consumption, 60 % consists of hard rock
to the Kevitsa mine, which produced 1060 kg of aggregates and 40 % of glaciofluvial sand and
platinum and 808 kg of palladium in 2014. Con- gravel. The proportion of superficial deposits
sidering the production volumes and market being extracted is decreasing, as they typically
prices in 2014, ferrochrome showed the highest also form important groundwater areas. Whereas
mining has concentrated in the northern and cen- greater than the domestic mine production; for
tral parts of the country, the most important sites copper and nickel, these ratios were 3 and
for the extraction of aggregates are located in 2, respectively. These ratios have displayed
southern Finland, close to the Helsinki and Tam- decreasing trends due to increased domestic
pere regions. The total extraction of 12 Mt of mine production, but this increased mine produc-
marine sand close to Helsinki during 2004–2006 tion has not resulted in a decrease in imports of
is the only example of the significant use of these concentrates. The decrease in the total mass
marine mineral resources in Finland in recent of imported metallic concentrates during the most
years (Pokki et al. 2014). recent years is due to the decrease in imports of
iron ore concentrates, which are not produced in
Dimension Stones Finland. During 2010–2014, annual imports of
Since 2000, the annual production of dimension metallic concentrates ranged from €1.6 to 1.9
stones has varied between 0.5 and 0.8 Mt, of billion or 4.1 to 5.3 million t. The import of copper
which 70–80 % consists of granitic rocks and concentrates clearly has a higher value than that of
about 20 % of soapstone. Small amounts of nickel, zinc, or iron, whereas the mass of imported
schists are also produced. The rapakivi granite iron concentrates is more than double the com-
batholith in SE Finland is the most important bined mass of imported zinc, copper, and nickel
area for the production of dimension stones, concentrates. In 2014, the value of imports of
while soapstones are produced in Eastern Finland. metal ore concentrates was 15 times greater than
From 2000 to 2009, production followed an the value of their exports. Among other imported
increasing trend, which thereafter turned to a extractives, coal is the most important, both in
decreasing trend. Rapakivi granite, a special type value and tonnage, followed by kaolin and lime-
of homogeneous granite, comprises about 65 % stone (ULJAS 2015; Pokki et al. 2014).
of the dimension stones produced; 90 % of these In the statistics available since 1995, the annual
rapakivi granites are extracted from SE Finland exports of metallic ore concentrates (in mass)
and 10 % from SW Finland (Pokki et al. 2014). have been highest from 2011 onwards, reflecting
increased domestic mine production. This growth
Secondary Raw Materials is even more evident in value due to the develop-
Pyrite is used in the production of sulfuric acid, ments in metal prices. The export of zinc concen-
needed in the manufacture of phosphoric acid and trate dominated in 2010 and 2011, but the increase
fertilizers from the apatite concentrate at in the export of nickel concentrate made the latter
Siilinj€arvi. Two huge secondary reserves, roasted dominant in later years. Precious metals formed
pyrite and gypsum, have formed in the process, the bulk of exports of metal ore concentrates dur-
and during recent years, over a million tons of ing 2003–2007, when the exports of nickel and
roasted pyrite have annually been exported, to be zinc concentrates were nearly halted. Exports of
used in the production of steel. This represents an metallic gold increased from €87 million in 2011
enormously successful utilization of secondary to €387 million in 2012 (Customs 2013), which
resources. The value of roasted pyrite exported probably reflects the production of doré bars at the
during 2010–2014 (€189 million) is 45 % of the Kittil€a gold mine. Granitic dimension stone, talc,
value of metal ore concentrates exported from (unroasted) pyrite, rock aggregate, and peat are
Finland during the same years, the mass being other extractives with significant exports from
more than tenfold greater than the mass of metal Finland (ULJAS 2015; Pokki et al. 2014).
ore concentrates (ULJAS 2015).
Foreign Trade Classification of Mineral Reserves

The metal industry in Finland is heavily depen-
dent on imports of metal ore concentrates. In The largest ore reserves in Finland include iron
2014, the smelter production of zinc was 7 times (45 Mt Fe), chromium (12 Mt Cr2O3), and sulfur
(2 Mt S), followed by copper (932 kt Cu), nickel minerals policy and the development of the min-
(453 kt Ni), zinc (146 kt Zn), cobalt (33 kt Co), erals sector in a way that satisfies the needs of both
lithium (28 kt LiO2), and lead (11 kt Pb). Reserves society and business. According to the strategy,
of precious metals include 421 t Ag, 195 t Au, 33 t Finland aims to be a global leader in the sustain-
Pt, and 25 t Pd. The in situ value of the reserves is able utilization of mineral resources by 2050, and
€6.7 billion for nickel and €6.4 billion and €5.2 the minerals sector is one of the key foundations
billion for gold and copper, respectively, calcu- of the Finnish national economy. Three strategic
lated by using annual (2014) World Bank Com- objectives were defined to facilitate implementa-
modity Price Data. In addition, the Talvivaara tion of the minerals strategic vision: (1) the pro-
mine has huge resources of nickel, zinc, copper, motion of domestic growth and prosperity,
and cobalt, but the amount of corresponding (2) solutions for global mineral chain challenges,
reserves has not been specified. The reporting and (3) mitigation of environmental impacts. In
codes used are JORC or NI43-101, with the addition, 12 action proposals were highlighted
exception of the Fennoscandian Review Board relating to four themes: (1) strengthening the min-
standard used for chromium. erals policy, (2) securing the supply of raw mate-
Finland shows excellent potential for iron, all rials, (3) reducing the environmental impact of the
the reserves being associated with mining pro- minerals sector and increasing its productivity,
jects. The chromium reserves are located in and (4) strengthening R&D capabilities and
Kemi mine and the sulfur reserves in Pyh€asalmi expertise.
and Hitura mines. Kevitsa mine has the largest The extractive industry and the related refin-
reserves of copper, nickel, and cobalt and ing, technology industry, and research and devel-
Pyh€asalmi mine that of zinc. The lithium- opment offer significant growth opportunities for
containing spodumene resources in Finland are Finland. Further dialogue between the extractive
among the most significant in Europe, and their industry and its stakeholders led to an action plan,
production is planned to start in the coming years. “Making Finland a leader in the sustainable
The largest silver reserve is associated with the extractive industry” (MEE 2012). The plan
Taivalj€arvi mine project, followed by Pyh€asalmi includes measures to be taken by the industry in
mine. Kittil€a mine forms by far the largest gold order to obtain society’s support for its activities.
reserve and Kevitsa mine the largest PGM Proposals for improving the operating conditions
reserves. of the extractive industry are made with regard to
administration, training, and infrastructure. In
addition, the action plan proposes a more active,
Mineral Policy Conception open exchange of information and experiences.
According to the report “Building an Intelli-
The national natural resource strategy of Finland gent and Responsible Natural Resources Econ-
entitled “Intelligently powered by nature” omy,” submitted to Finnish Parliament, the
(SITRA 2009) was one of the world’s first natural resource policies must be based on a
national natural resource strategies to combine deep understanding of the ways in which natural
all natural resources under a shared strategic resources should be utilized and conserved to
framework. One of the objectives was to compile ensure success in the future (MEE 2011a). The
a strategy focusing on the long-term demand for updated version of this report (MEE 2014) con-
minerals and rock aggregates. This led to the tains the policies, strategic aims, and the principal
compilation of Finland’s Minerals Strategy activities that are aimed at making Finland the
(GTK 2010). The aim of the strategy was to antic- path setter in the sustainable natural resources
ipate international and domestic development economy. The sustainable use of natural resources
trends in the minerals sector over the next few increases well-being and competitiveness while
decades and to make recommendations creating the conditions to uncouple economic
concerning the formulation of a sustainable growth from the non-sustainable use of natural
resources and from the growth of environmental or private interests. A mining permit remains valid
stress. until further notice or can be granted for a fixed
term with a maximum of 10 years. The validity of
a fixed-term permit can be extended as necessary
Regulatory Framework in order to exploit the deposit. Prior to the com-
mencement of mining activities, the operator is
The Mining Act, renewed in 2011, lays down obligated to deposit collateral, for the purpose of
provisions for the exploration and exploitation of termination of mining and after-care measures.
a deposit containing mining minerals and the ter- The mining permit holder is obliged to pay €50/
mination of related operations (MEE 2011b). The ha annually to the landowners and 0.15 % of the
term “mining minerals” refers to specific chemical value of exploited mining minerals in metal ores,
elements and minerals, marble, and soapstone. and reasonable compensation for other exploited
Exploitation of other rocks types, as well as the mining minerals.
extraction of superficial deposits such as gravel,
sand, and clay, are governed by the Land Extrac-
tion Act (Ministry of the Environment 1981). International Membership
Operations carried out under the Mining Act
must comply with other legislation. The environ- Finland joined the United Nations in 1955 and
mental aspects of exploration and mining activi- established an official policy of neutrality. It
ties are also governed by environmental joined the Organisation for Economic
legislation. A water permit issued under the Co-operation and Development (OECD) in
Water Act is usually also required. The necessity 1969, the European Union in 1995, and the
to acquire other permits is assessed on a case-by- Eurozone at its inception in 1999. Finland is the
case basis. only Nordic country using euros (Wikipedia
The Mining Act ensures the priority of exploi- 2015a). Finland is also a member of the World
tation for the operator discovering a deposit, as Bank and World Trade Organisation.
well as compensation for the landowners.
Prospecting work that does not cause more than
minor inconvenience or disturbance may, in most
Concluding Statement
cases, be performed without a permit. The opera-
tor may reserve an area for a maximum of 2 years During the twenty-first century, Finland has
in order to obtain priority for applying for an
become one of the most interesting exploration
exploration permit. Similarly, an exploration per-
and mining countries in the European Union. The
mit gives priority to the permit holder when apply- change has been driven by the good potential to
ing for a mining permit. An exploration permit
find and develop mineral deposits combined with
can be obtained for a maximum of 4 years and it
the excellent infrastructure and information base
can be extended for periods of 3 years at maxi- and favorable politics. In the Fraser Institute’s
mum, so that it can be valid in total for 15 years.
Annual Survey of Mining Companies in 2014,
An extension is only possible if exploration has
Finland was ranked as the most attractive jurisdic-
been effective and is justified. The longer the total tion in the world for mining investment and in
duration of the permit, the higher the fee per
second place in policy attractiveness.
hectare that must be paid to the landowners.
A mining permit is required for the establish-
ment of a mine and exploitation of the mining
minerals and by-products in the area. The mining References
permit holder must ensure, e.g., that mining activ-
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mitted to parliament by the Finnish government. Full data edition. 551 p. Available via http://www3.
Publications of the ministry of employment and the weforum.org/docs/WEF_GlobalCompetitivenessReport
economy. 60 p. Available via http://www.tem.fi/files/ _2013-14.pdf. Accessed 30 Apr 2015
29319/TEM_5_2011_netti.pdf. Accessed 20 Apr 2015 Wikipedia (2015a) Finland. Available via http://en.
MEE (2011b) Mining act. Ministry of employment and the wikipedia.org/wiki/Finland. Accessed 20 Apr 2015
economy. Available via http://www.finlex.fi/en/laki/ Wikipedia (2015b) List of countries by GDP (PPP) per
kaannokset/2011/20110621. Accessed 20 Apr 2015 capita. Available via http://en.wikipedia.org/wiki/List_
MEE (2012) Making Finland a leader in the sustainable of_countries_by_GDP_(PPP)_per_capita. Accessed
extractive industry action plan. Available via http:// 20 Apr 2015
P
Poland: Mineral Policy Polish currency is Polish Zloty (PLN), with

current exchange rates ca. 4.0–4.1 PLN/€ and
Krzysztof Galos 3.6–3.7 PLN/US$ (May 2015). GDP of Poland
Department of Mineral Policy, Mineral and amounted to ca. 1,660 billion PLN (ca. 390 billion
Energy Economy Research Institute, Polish €) in 2013, while GDP per capita ca. 42,500 PLN
Academy of Sciences, Kraków, Poland (ca. 10,120 €), i.e., 67 % of average EU purchas-
ing power parity. GDP of Poland has been contin-
uously increasing since 1992 (a total growth of
General Information on Poland +155 %). GDP annual growth has been varying
since 2008 between 1.7 % and 4.8 % per year
Poland is located in the heart of Europe, between (3.3 % in 2014). Public debt constituted 55.7 %
Germany, Czech Republic, Slovakia, Ukraine, of GDP in 2013. Unemployment rate decreased to
Belarus, Lithuania, and Russia, with access to 10.3 % in 2014. Inflation rate decreased to 0.9 %
the Baltic Sea. Poland is a parliamentary republic, in 2013 and 0.0 % in 2014. In 2013, there were
with two chambers of Parliament (Sejm, Senat), 4.9 million pupils, 1.6 million students, 17.4 mil-
governed by the Council of Ministers, with Pres- lion economically active persons, 1.8 million reg-
ident of the Republic of Poland as head of the istered unemployed persons, and 9.0 million
state. Lowlands constitute northern and central retirees and pensioners. Twelve percent of
part of Poland, while uplands and mountains employees work in agriculture and forestry,
(Carpathians, Sudetes) its southern part. The 30 % in industry and construction, and 58 % in
total area of Poland is 312,679 square services. In 2013, exports from Poland amounted
km. Poland is divided into 16 provinces, with to 638.6 billion PLN (152.8 billion €), imports to
Warsaw as capital. Total population was ca. 38.5 Poland were 648.2 billion PLN (155.1 billion €),
million in 2013, being stable for over 20 years, but while trade balance 9.5 billion PLN ( 2.3 bil-
in 2030 it is expected to decline to under 37 million €).
lion. Over 60 % of the Polish citizens live in urban
areas. Poland is ethnically very homogenous, with
over 99 % of Poles, 0.4 % of Germans, 0.3 % of Need of Minerals
Eastern Slavs, and less than 0.1 % other national-
ities. Among religions, Roman Catholicism dom- Poland has never been self-sufficient in minerals.
inates ca. 87 %, with 1.3 % share of Orthodoxy It is still an important producer of hard and brown
and 0.4 % share of Protestantism. The rest falls coal, coke, steel, copper, zinc, lead, silver, and
for other minor religions and unbelievers. many industrial minerals, e.g., salt, sulfur, soda
DOI 10.1007/978-3-642-40871-7_48-1
2 Poland: Mineral Policy
ash, limestone, lime, cement, gypsum, mineral concentrates, refined lead, rhenium and ammo-
aggregates, etc. (Smakowski et al. 2014). Poland nium perrhenate, selenium, refined silver, refined
ranks as European Union’s: 1st producer of hard zinc, calcined soda, and elemental sulfur. In 2013,
coal, coke, copper concentrates, silver, and the highest positive values of trade balance in
helium; 2nd producer of refined copper, sulfur, mineral commodities exported from Poland were
and soda ash; 3rd producer of lignite, zinc and recorded for: refined copper (+7,653 million
lead concentrates, cadmium, and selenium; 4th PLN), silver (+2,720), iron and steel scrap
producer of quartz sand; 5th producer of cement, (+1,980), zinc (+508), gold (+447), hard coal
lime, gypsum, and feldspar raw materials; 6th (+214), sulfur (+147), refined lead (+122), and
producer of zinc, lead, salt, limestone, and mineral lead concentrates (+114).
aggregates; and 7th producer of natural gas and Poland is strongly dependent on imports of
steel. It is also the only EU producer of rhenium crude oil and natural gas (accounting for over
(Galos et al. 2012a, b; Table 1). 80 % of the total value of mineral commodities
Total mining output in Poland in 2011 climbed imports), aluminum and alumina, iron-ore con-
to 574 million t, while in the next 2 years it centrates, ferroalloys, phosphate rock, potash
decreased to 470 million t in 2013, mostly due to salts, etc. Ca. 70 of over 140 mineral commodities
reduction of mineral aggregates output from consumed in Poland come exclusively from
333 to 232 million t. Output of fuels (mostly abroad. In the case of dozen or so other commod-
coal) constitute ca. 30 % of total output, output ities, imports meet minimum 50 % of the domes-
of metallic ores ca. 7 %, while output of industrial tic demand. Except for crude oil and high-
and construction minerals the remaining 63 %. In methane natural gas, the most important of them
2013, the total value of the domestic mineral are: the majority of metals and/or their concen-
production was estimated at 61.0 billion PLN, trates (except for copper, gold, lead, selenium,
with 53 % share of fuels, 31 % share of metallic silver, zinc, pig iron, and raw steel), andalusite
raw materials, and 16 % share of industrial and and relative minerals, barite, bentonite, borates,
construction minerals. Total value of fuels pro- bromine, white-firing clays, fluorite, graphite,
duction amounted to ca. 32.2 billion PLN, 71 % magnesite and magnesia, perlite, phosphates,
of which was the value of hard coal production. phosphorus, potassium salts, and titanium min-
Total value of metallic raw materials production erals. This indicates how thoroughly the Polish
amounted to ca. 18.8 billion PLN, 72 % of which economy is dependent on imported minerals,
accounted for copper production. Total value of especially on the high-processed ones. Among
industrial and construction minerals was esti- the mineral commodities imported to Poland
mated at ca. 10.1 billion PLN, with 40 % share over the last several years, in 2013 the total trade
of cement and 27 % share of mineral aggregates. balance was influenced the most by the following:
High values were also recorded for lignite, natural crude oil (trade balance 55,774 million PLN),
gas, crude oil, silver, zinc, lead, limestone, and natural gas (ca. 26,300), iron ore and concen-
lime (Smakowski et al. 2014). trates ( 2,160), aluminum and aluminum alloys
There are only ca. 20 mineral commodities ( 1,728), potassium salts ( 1,007), copper con-
exported in significant quantities from Poland, centrates ( 800), anode and blister copper
including: hard coal, coke, refined copper, refined ( 404), phosphates ( 383), and zinc concen-
silver, zinc, lead concentrates, refined lead, cad- trates ( 331).
mium, selenium, rhenium and ammonium The trade balance for mineral commodities has
perrhenate, some ferroalloys, cement, refractory been consistently negative in Poland since 1995.
clays, glass sand, lime, calcined soda, dimension The deficit in 2012 deepened to over 75 billion
stone, elemental sulfur, and sulfuric acid. The PLN, with some improvement to 71 billion PLN
highest shares of exports in mineral’s total sales, in 2013. The main reason for the imbalance is the
30 % or more, have been reported for coke, cad- steady increase in the volume and value of crude
mium, refined copper, ferroalloys, lead oil and natural gas imports. The fuels group has
Poland: Mineral Policy 3
Poland: Mineral Policy, Table 1 Mineral production (’000 t except where stated)
Commodity 1990 2000 2008 2013
Hard coal 147,400 103,331 84,345 77,017
Lignite 67,584 59,487 59,668 65,849
Coke 13,671 8,972 10,075 9,360
Crude oil 163 653 755 962
Natural gas (million m3) 3,867 4,956 5,451 5,883
Copper in concentrates 329 454 429 429
Zinc in concentrates 153 157 132 77
Lead in concentrates 45 51 48 16
Copper, electrolytic 346 486 527 565
Zinc, metal 132 173 143 146
Lead, metal 65 56 108 145
Aluminum, metal 46 56 68 16
Silver, refined (t) 832 1,148 1,221 1,197
Gold, refined (kg) 10 367 902 1,066
Cadmium (t) 373 6 603 460
Selenium (t) 20 65 82 80
Pig iron 8,353 6,492 4,934 4,014
Ferroalloys 212 75 93 86
Steel 13,625 10,498 9,727 8,199
Salt 3,317 3,493 3,401 4,056
Sulfur, elemental 4,877 1,500 988 835
Soda ash, synthetic 956 1,000 1,120 1,055
Limestone 41,338 42,115 46,837 52,713
Cement clinker 10,309 11,559 12,443 10,855
Cement 12,518 15,096 17,207 14,831
Lime 3,200 2,376 1,952 1,710
Gypsum and anhydrite 916 2,423 3,077 3,852
Dolomite 4,989 2,032 2,079 1,865
Glass sand 859 1,532 2,398 2,343
Foundry sand 1,194 1,055 806 930
Quartz 33 52 7 6
Quartzite 189 177 72 88
Feldspar 34 165 644 513
Kaolin 48 90 166 166
Refractory clays 523 153 169 118
Source: Smakowski et al. (2014) (and previous editions), on the basis of data from the Central Statistical Office
been showing deepening trade deficit from 41 seven billion PLN in 2013. The negative financial
billion PLN in 2009 to the record 82 billion PLN results of the trade in industrial minerals
in 2012, with slight improvement to 77 billion approached to almost 2.5 billion PLN in 2011,
PLN in 2013. Permanently positive value of the with improvement to 1.6 billion PLN in 2013
trade balance in the group of metals increased to (Smakowski et al. 2014).
over nine billion PLN in 2011, due to growth of
international prices of refined copper (one of the
principal Polish export commodities), but in the
following 2 years this value decreased to over
Classification of Mineral Reserves Register of perspective mineral resources in

Poland, most recently published in 2011
In Poland, code of mineral resources reporting (Wołkowicz et al. 2011).
exists since 1952, being updated a few times
(lately in 2001). It is used for resources evaluation
only. The resources/reserves volumes – depending Mineral Policy Conception of Poland
on reliability and accuracy of geological data – are
classified in Poland into five categories: A, B, C1, Mineral policy in Poland is not yet a complex
C2, and D, and according to technical recoverabil- public task, governed by one central authority, as
ity as well as supposed economic value are divided it is in some EU countries (Tiess 2010, 2011),
into “balance” resources (zasoby bilansowe, sup- because some competences are dispersed between
posed technically and economically mineable) and five ministries (Nieć et al. 2014). Coherent regu-
“out of balance” resources (subeconomic), lation of mineral resources management, espe-
reported in Geological documentation of mineral cially regarding deposits covered by so-called
deposit. The distinction of resources and reserves, mining property of the State Treasury, should be
as presented, e.g., in JORC Code or CRIRSCO one of the basic components of the future domes-
template, was not formally defined. In the Polish tic mineral policy (Galos et al. 2012c; Nieć
classification system, the “industrial reserve base” et al. 2014). In case of such State-owned deposits,
(zasoby przemysłowe) and predicted State Treasury can dispose its ownership rights
recoverable – “operational” – reserves (zasoby through establishment of mining usufruct, with
operatywne) are distinguished within the balance proper compensation related to it. Collecting of
resources. The “industrial reserve base” is a part of benefits from State-owned deposits is actually
resources being considered as suitable for mining realized also indirectly, through tax on extraction
through defined technology and in predictable eco- of some minerals (Cu-Ag ores, hydrocarbons)
nomic conditions. The predicted recoverable introduced in 2012 and special hydrocarbon tax
reserves are – in general – calculated as a part of (in force since 2016) (Stefanowicz and Galos
industrial reserve base, taking into account 2014).
expected recovery coefficient on the basis of for- Competition between mining use of lithosphere
mer mining experience and data. The both “reserve with State-owned mineral deposits and other uses
base” and predicted recoverable reserves are of laying above land properties, as well as compe-
presented in the Deposit development plan that tition within lithosphere – regarding licenses for the
has features of prefeasibility study (Nieć 2010). same mineral or for different minerals in the com-
The Polish classification system can be common space – are still increasing in Poland. There is
pared with other ones through UNFC. However, it a lack of so-called collision standards in Polish law
is not so easy to harmonize it with the JORC regulations, and also these are related to the protec-
Code – CRIRSCO template, or with PRMS sys- tion of mineral deposits (Stefanowicz 2013).
tems (for hydrocarbons) due to differently used The most important postulated short- and
terminology. Elaboration of guidelines for trans- medium-term activities for improvement of min-
ferring Polish mineral volume categorization into eral resources management in Poland should be:
international CRIRSCO resource/reserve preparation of coherent strategy of mineral
reporting standard and “resources” and “reserves” resources management, introduction of legal pro-
classes is advisable (Nieć and Sobczyk 2013). tection of mineral deposits, preparation of the list
Data on mineral resources in Poland are listed of strategic mineral deposits with their protection
in public on annual basis in the Register of mineral against competitive direction of land use
resources of Poland published by the Polish Geo- (Nieć 2003), and introduction of one central
logical Survey (Szuflicki et al. 2014). Data on authority responsible for all tasks related to min-
additional prognostic resources (hypothetical or eral resources management. Postulated mineral
speculative) are periodically presented in the policy of Poland should be based – among
others – on: development of domestic mineral and anhydrite, and gemstones. Deposits of other
deposits with sufficient resources volumes and minerals belong to land property owner (Art. 10).
mineral quality, possibility of identifying new In case of deposits which are “mining property” of
resources to replace exhausted ones, ensuring the State Treasury, State Treasury can dispose its
access to mineral deposits in foreseeable future, ownership rights through establishment of mining
removing barriers that preclude or substantially usufruct, with proper compensation related to
restrain mining, and forecast of possible scenarios it. Establishment of mining usufruct must be pre-
of domestic minerals demand (Nieć et al. 2014). ceded by tender, but company which recognized
Selected issues related to mineral resources mineral deposit takes precedence in such case
management in Poland are currently dispersed in (Art. 12–16). Company with valid mining license
a few government documents, e.g., Strategy for for fuels has the right to demand redemption of the
Innovation and Efficiency of the Economy property within deposit borders (Art. 19).
(approved on 15th January 2013), Strategy on Licenses are required for both prospecting and
Energy Security and Environment (15th April exploration works and for mining. They can last
2014), and National Spatial Development Con- from 3 to 50 years (Art. 21). Such licenses related
cept until 2030 (13th December 2011). Poland’s to mineral deposits which are “mining property”
nonenergy minerals security issues (but not com- of the State Treasury are issued by the Minister of
plex mineral policy of Poland) is currently being the Environment, licenses for open-pit mining
developed by the Ministry of Economy, with par- without explosives at the level of up to
ticipation of Ministries of Environment, of Infra- 20,000 m3py in the area of up to 2 ha are issued
structure and Development, of Foreign Affairs, by district head (Starosta), while the remaining
and of Science. Assumptions for the Action Plan licenses by province marshal (Marszałek
for Poland’s security in the area of non-energy województwa) (Art. 22). To obtain mining license,
minerals were accepted by the Minister of Econ- company or private person must show their rights
omy in March 2015 (Assumption. . . 2015), but to land property and information on land use in
final Action Plan has not been finished until the local land use plan of commune; have appropriate
end of 2015. environmental decision; and give the proposed
Deposit development plan with details on type
and size of operation, resources utilization rate,
Regulatory Framework mining area, and mining terrain (Art. 24–26).
Granted mining license sets all abovementioned
New Geological and Mining Law (GML) was parameters, as well as its duration. License does
enacted on 9th June 2011, replacing previous not exempt from the requirements specified in
Act from 1994. In general, it deals with all geo- separate regulations, including obtaining neces-
logical and mining works, as well as with under- sary decisions (Art. 30). License can be trans-
ground storage of wastes and substances. It does ferred or – in some cases – withdrawn (Art.
not deal with waters, except for treatment waters, 36–37). 2011 GML in its 2014 amendment intro-
thermal waters, and brines. It also does not apply duced also separate mechanisms of hydrocarbon
to extraction of up to 10 m3 per year of sand and licensing, compliant to EU regulations (Art.
gravel for own needs (Art. 1–5). It is strongly 49a–49zw).
underlined in GML that geological and mining GML established rules of prospecting and
works or underground storage must be in accor- explorations license fees, extraction fees (paid
dance with provisions of local land use plan of 60 % for commune and 40 % for the National
commune (Art. 7). New GML introduced Fund of Environmental Protection and Water
so-called mining property of the State Treasury. Management), and fines for breaking of GML
List of minerals, deposits of which are included rules (Art. 133–143). Payment for mining usu-
into this “mining property,” includes all fuels, fruct for State-owned mineral deposits is
metallic ores, sulfur, rock salt, potash salt, gypsum established separately in mining usufruct
agreement between State Treasury (Minister of copper and sulfur; third producer of lignite, zinc
the Environment) and license holder. In case of and lead concentrates, cadmium, and selenium;
Cu-Ag ores and hydrocarbon extraction, addi- and the only producer of rhenium. Total value of
tional extraction tax is also paid (separate act, domestic minerals production in 2013 amounted
see the following list). to ca. 61.0 billion PLN (ca. 14.4 billion €), min-
GML also deals, e.g., with professional geo- erals exports – ca. 30.8 billion PLN (7.2 billion €),
logical and mining qualifications, rules of geolog- but minerals imports – ca. 102.1 billion PLN
ical and mining works, responsibility for mining (ca. 24.0 billion €), while negative minerals trade
damages, mining areas register, geological admin- balance – ca. 71.3 billion PLN (ca. 16.8 billion €).
istration, and state geological survey. The basis for mining activity in Poland is new
Mining activity in Poland must also be com- Geological and Mining Law of 9th June 2011,
pliant with provisions of numerous other legal though minerals production activity must also be
acts. The most important of them are: compliant with numerous other acts related to
taxes, land use planning, environmental protec-
• Civil Code of 23 April 1964 tion, water, and wastes. Mineral policy in Poland
• Act on Liberty of Economic Activity of 2 July is not yet a complex public task, governed by one
2004 central authority, as some competences are sepa-
• Act on Tax on Some Minerals Extraction of rated between numerous ministries. However,
2 March 2012 selected issues related to mineral policy are cur-
• Act on Land Use Planning and Space Manage- rently dispersed in a few government documents,
ment of 27 March 2003 including Strategy on Energy Security and Envi-
• Nature Conservation Law of 16 April 2004 ronment (2014), National Spatial Development
• Environmental Protection Law of 27 April Concept until 2030 (2011), and Action Plan for
2001 Poland’s security in the area of non-energy min-
• Act on Protection of Agricultural and Forest erals (under preparation).
Land of 3 February 1995
• Water Law of 18 July 2001
• Act on Wastes of 14 December 2012
References
• Act on Extractive Wastes of 10 July 2008
Assumptions for the Action Plan for security of Poland in
the field of non-energy minerals. Ministry of the Econ-
International Memberships omy of the Republic of Poland, Warszawa, 2015,
19 pp. Available via: http://www.mg.gov.pl/node/
23408. Accessed 30 Apr 2015
Poland belongs to European Union since 2004, to Galos K, Nieć M, Radwanek-Bąk B, Smakowski T,
NATO since 1999, to OECD since 1996, to WTO Szamałek K (2012a) The mineral security of
since 1995, to OSCE since 1994, to IMF and Poland – assessment of non-energy mineral resources.
World Bank since 1986, to UNCTAD since Bull Pol Geol Inst 452:33–42 (in Polish with English
abstract)
1964, and to United Nations since 1945. Galos K, Nieć M, Radwanek-Bąk B, Smakowski T,
Szamałek K (2012b) The mineral security of Poland
within EU and in the world. Bull Pol Geol Inst
Concluding Statement 452:43–52 (in Polish with English abstract)
Galos K, Nieć M, Radwanek-Bąk B, Smakowski T,
Szamałek K (2012c) The mineral security of
Poland is still an important producer of hard and Poland – barriers in meeting the State’s needs for
brown coal, coke, steel, copper, zinc, lead, silver, non-energy minerals. Bull Pol Geol Inst 452:53–58
salt, sulfur, limestone, lime, cement, gypsum, and (in Polish with English abstract)
Geological and Mining Law. Act of 9th June 2011 (Dz.
many other minerals. In EU it is the largest pro- U.2011.163.981)
ducer of hard coal, coke, copper concentrates,
silver, and helium; second producer of refined
Nieć M (2003) Problems of mineral deposits protection. research in competitive areas. Bull MEERI PAS
Prz Geol 51(10):870–875 (in Polish with English 85:309–324 (in Polish with English abstract)
abstract) Stefanowicz J, Galos K (2014) Directions of mineral
Nieć M (2010) International resources and reserves classi- resources management from the point of view of the
fication systems. Górnictwo i Geoinżynieria – Kwart State Treasury as owner of mineral deposits covered by
AGH 34(3):33–49 (in Polish with English abstract) mining property. Bull MEERI PAS 88:251–264
Nieć M, Sobczyk J (2013) Coal seam resources/reserves. (in Polish with English abstract)
Polish, UNFC and JORC Code (CRIRSCO) classifica- Szuflicki M, Malon A, Tymiński M (eds) (2014) Register
tion. In: Proceedings of the 4th session EGRC UNECE, of mineral resources of Poland as of 31st December
Geneva, 23–26 Apr 2013. http://www.unece.org/index. 2013. PIG-PIB, Warszawa, 468 pp. (in Polish)
php?id=31719#/. Accessed 30 Apr 2015 Tiess G (2010) Minerals policy in Europe: some recent
Nieć M, Galos K, Szamałek K (2014) Main challenges of developments. Resour Policy 35:190–198
mineral resources policy of Poland. Resour Policy Tiess G (2011) Legal basics of mineral policy in Europe: an
42:93–103 overview of 40 countries. Springer, Wien, 394 pp
Smakowski T, Galos K, Lewicka E (eds) (2014) Minerals Wołkowicz S, Smakowski T, Speczik S (eds) (2011) Reg-
yearbook of Poland 2013. PIG-PIB, Warszawa, 567 pp ister of perspective mineral resources in Poland as of
Stefanowicz J (2013) Competition problems in the search 31st December 2009. PIG-PIB, Warszawa,
for and identification of mineral deposits – exclusive 261 pp. (in Polish)
U
Ukraine: Mineral Policy Moldova to the southwest; and the Black Sea
and Sea of Azov to the south and southeast,
Boris I. Malyuk respectively. Ukraine is a unitary republic under
Center for International Cooperation, SRDE a semi-presidential system with separate powers:
“Geoinform of Ukraine”, Kyiv, Ukraine legislative, executive, and judicial branches. Its
capital and largest city is Kyiv. Ukraine is
industrial-agricultural country. It produces nearly
Synonyms all types of transportation vehicles and spacecraft.
Antonov airplanes and KrAZ trucks are exported
Natural resource management; Raw material to many countries. Ukraine has long been a global
supply breadbasket because of its extensive, fertile farm-
lands. The majority of Ukrainian exports are
marketed to the European Union and CIS. The
Definition country imports most energy supplies, especially
oil and natural gas, while 25 % of the natural gas in
The mineral policy is a set of provisions devel- Ukraine comes from internal sources. The country
oped and being implemented by the government 2013 GDP was $179.572 billion, and 2014 GDP
of Ukraine in the field of sustainable management was $132.343 billion (EconomyWatch 2016).
of mineral resources.
Needs of Minerals
General Information on Ukraine
The minerals of Ukraine are supposed to be pretty
Ukraine has an area of 603,700 km2, making it the valuable in the world context. About 20,000
largest country entirely within Europe and the deposits and occurrences of 117 mineral types
46th largest country in the world, the population are discovered in the subsurface of the country,
of about 44.5 million, and population density of which cover roughly 8300 deposits and 1100
about 80 people per sq. km (Ministry of Foreign inventory objects by 98 mineral types are of com-
Affairs of Ukraine 2016; Wikipedia 2016). mercial value and recorded in the State balance of
Ukraine is a sovereign country in Eastern Europe mineral reserves, while more than 3300 deposits
since 1991, bordered by Russia to the east and are in production. The mineral statistics is being
northeast; Belarus to the northwest; Poland and collected on the annual basis by SRDE
Slovakia to the west; Hungary, Romania, and “Geoinform of Ukraine,” subordinated to the
DOI 10.1007/978-3-642-40871-7_49-1
2 Ukraine: Mineral Policy
State Geological and Subsurface Survey of by the Cabinet of Ministers of Ukraine more than
Ukraine. 15 years ago (“Classification. . .” 1997). The fig-
The mineral industry contributes significantly ures of mineral reserves admissible for mineral
to the country’s GNP. The mineral extraction and permitting procedures have to be approved by
use account for 48% of the country industrial the State Commission of Ukraine on Mineral
potential and up to 20% of labor resources. Reserves subordinated to the State Geological
These figures resemble those of the developed and Subsurface Survey of Ukraine
countries with strong extractive industry where (“Statement. . .”, 1994, No.865).
20–40% of total investments and up to 20% of
labor forces is concentrated.
By 2010, Ukraine was producing considerable Mineral Police Conception of Ukraine
amounts of coal (1.7% of the world’s production);
saleable iron (4.5%) and manganese (9%); ores, The mineral policy conception of Ukraine is
uranium, titanium, zirconium, and graphite (4%): defined by the Mineral Development Program
kaoline (18%); bromine, mineral pigments, and up to the year 2030 (hereafter – MDP-2030)
industrial metallurgy raw materials (quartzite, (Law of Ukraine 2011). The MDP-2030 has
flux limestone, and dolomite); chemical raw mate- been developed in compliance with the Constitu-
rials (native sulfur, rock, and potassium salt); tion of Ukraine (1996) which states in Article
dimension stones (granite, gabbro, labradorite); 13 that “The land, its minerals, air, water and
glass sand; etc. Ukraine also produces hydrocar- other natural resources within the territory of
bons, brown coal, peat, cement raw materials, Ukraine, the natural resources of its continental
infusible and refractory clays, construction raw shelf and exclusive (maritime) economic zone, are
materials, iodine, boron, diverse mineral waters, the property of the Ukrainian people. On behalf of
precious stones and gemstones, piezo-quartz, the Ukrainian people, the property rights are being
etc. The nickel ores, gold, scandium, hafnium, implemented by the bodies of state authority and
amber, zeolite, and phosphate raw materials are local self-government within the limits
also produced in minor amounts. established by this Constitution.”
Deposits of nontraditional mineral types for On behalf of the State, the MDP-2030 is
Ukraine – chromium, lead, zinc, copper, molybde- chartered by the Ministry of Ecology and Natural
num, beryllium, lithium, tantalum, niobium, REE, Resources of Ukraine and managed by the State
fluorspar, apatite, combustible shales, bischofite, Geological and Subsurface Survey of Ukraine.
and others – are studied in various extents. The government costs allocated to MDP-2030
Over the last 10–15 years, the real possibilities for the period 2011–2030 are estimated to UAH
are confirmed in order to grow further reserves of 26.1 billion (USD 3.3 billion by the time of the
hydrocarbons, to discover and explore deposits of mentioned law approval) and other costs
new for Ukraine minerals – gold, chromium, copper, (investments) to UAH 162.9 billion (USD 20.4
lead, zinc, molybdenum, rare and rare earth ele- billion).
ments, lithium, niobium, tantalum, phosphorites, The MDP-2030 consists of five sections:
fluorite, gemstones, etc. Mining and enhanced
extraction of these minerals provides opportunities I. General statements
to increase the export potential of the state. II. Program objectives
III. Program tasks and activities
IV. Mechanism of program implementation
Classification of Mineral Reserves V. Funding amounts and sources
The State Balance of Mineral Reserves accounts The basic statements of the Mineral Policy of
the mineral quantities under Russian reporting Ukraine are described in Sections I and
codes although the UNFC codes were approved II. Specifically, in Section I it is noted that secure
Ukraine: Mineral Policy 3
supply of national economy needs with mineral – Value and non-recovery of natural mineral
resources and their efficient use comprise one of resources requires their rational and efficient
the major factors to overcome the critical state in use. Extensive methods of mining, processing,
economy of Ukraine. The mineral resources base and consumption of minerals based on novice
(hereafter – MRB) is the totality of explored and achievement of science and technology are the
preliminary evaluated mineral reserves and con- integral components of the global technical
comitant components which may be used in econ- revolution.
omy branches under provisions of economic – Scientific and technical progress in all
benefit at the level sufficient for the expanded branches of mineral industry and strong com-
reproduction ensuring economic security of the petition between mineral producers in the
state. countries with market economy preclude,
However, because of the hard situation in the despite of all forecasts, transition to active use
national economy suffering geological mapping, of low-grade ores. Conversely, over the last
prospecting, and exploration, the rate and amount 10–20 years, the trend for extensive mining
of the own MRB reproduction do not match the and processing of the highest grade ores is
country demands. observed in these countries for the vast major-
Insufficient funding is resulted in the decreas- ity of mineral types.
ing of exploration works by three to four times. – Further growth, even slowed, of total con-
Ever since 1994 explored reserve growth of most sumption of minerals and their processed prod-
strategic minerals does not offset their extraction. ucts in the countries with market economy,
Further delay in efficient measures will cause despite of their more rational use. Experience
deficiency of some own minerals and decreasing of developed countries (Japan, USA, South
national interests security. Besides traditional Korea, Italy, and others) indicates that increas-
import of oil, gas, some base and rare metals, ing in the general social-economic develop-
coking coal, magnesite, fluorspar, and feldspar, ment rate is inevitably accompanied by the
Ukraine already brings from abroad the sulfur, increasing in mineral consumption. Their con-
commodity which prior to 1992 was exported sumption per capita does slowly but progres-
from Ukraine in the amount of 1.5–2.9 Mt sively rise up, and this trend, according to the
per year. expert assessments, will be retained in the
The hard economic situation of Ukraine since coming decades. This is why these countries
the independence time is mainly caused by the continue investments in the geological explo-
lack of own cheap energy sources. To date, the ration in the own territories and the territories
only way out from this situation is to give priority of developing countries.
for development of new energy technologies – The global trends over the last 10–15 years
based on essential Ukrainian reserves of hard indicate that the highest rate in the mineral
and brown coal, rich in organic matter shales extraction and consumption is characteristic
(“shale gas”), peat, and considerable increasing for the energy resources, alloying metals and
in the nonconventional and alternative energy some base and rare metals, precious metals and
source usage. diamonds, as well as agricultural raw
The complex geological study of the territory materials.
of Ukraine (including Ukrainian parts of the Black
and Azov seas) and natural and anthropogenic The Section II defines the goal of the
changes of geological environment with perma- MDP-2030 to be securing national economy
nent monitoring are also important. demands in minerals through own mining, reduc-
In view of the global trends in mineral con- ing dependence of Ukraine from the import of
sumption, the challenges in secured mineral sup- mineral resources, and increasing the country
ply for economy are related to the following
factors:
export potential from the own extraction of min- Considering the ways and approaches to solve
erals highly demanded in the world market. problems, the MDP-2030 assumes that the chal-
The goal of the MDP-2030 completely corre- lenge of MRB of Ukraine development as the
sponds to the modern European principles of sus- material ground for the national economy growth
tainable development – securing contemporary requires reliable system approach, where the best
mineral demands ensuring future generation version assumes balanced resources of the state
demands. and private business coupled with innovative-
By the industrial-economic value, the mineral investment mechanism establishment in subsur-
types of the MRB of Ukraine are subdivided in the face use. This will be made possible by increasing
following categories: efficiency of the state influence on the develop-
ment of geological sector, introducing new effi-
Category A – mineral types which are extensively cient business forms, increasing employment in
being mined in Ukraine, with considerable the mineral industry, increasing its contribution to
explored reserves of mineral and components, the national economy, reducing its dependence on
and are subject to export or can be expected to the import of some mineral types, and strengthen-
become export ones aiming foreign currency ing the country export potential.
income and government revenue within It is expected to solve the problems by means
short time. of:
Category B – mineral types, which are currently
being mined in Ukraine in limited amounts, – Focusing efforts, including financial resources,
whose operating expenses ensure marginal in the priority directions of MRB development,
economic profitability level, development is in prospecting and exploration of mineral
complicated by environmental problems, deposits, first of all those strategically impor-
explored reserves in deposits are insufficient tant for the national economy.
or exhausted, new deposits are weakly studied, – Accelerating geological studies using modern
but demands for these minerals are caused by tools for collection, management, and pro-
industrial development. Deficiency in these cessing of geological information and intro-
mineral types is covered by the import. ducing new methods and technologies in the
Category C – mineral types, whose deposits are prospecting and exploration of mineral
known in Ukraine, their reserves (including deposits
significant) are explored, but mineral produc- – Introducing differential approach to assess-
tion is limited or lacking at all. According to ment of mineral reserves and perspective
the technical-economic calculations, the given resources, introducing rational mining
mineral types in the current national economic methods for complex mineral deposits and
situation are not competitive in comparison to extraction of concomitant components, and
the imported minerals and cannot be profitably reproduction of resource potential in the
processed at the domestic enterprises under regions with extensive mineral extraction
available technologies. At the same time, – Accelerating international cooperation in the
demands for these minerals can be restored field of geological study, rational use, and pro-
through the novice technologies of beneficia- tection of subsurface
tion or preliminary processing of
respective ores. The Section III concerns particular program
Category D – mineral types, whose deposits are tasks and activities. The major program task is
currently out of production in Ukraine, weakly sustainable priority-driven securing of mineral
studied, but in perspective may become impor- supply for the increasing national economy
tant for the national economy in view of demands. There is developed MRB of many min-
demands from other branches of industry. eral types in Ukraine and essential perspectives
for MRB growth, significant geological sector, – Geological mapping of the territory of
extractive and processing industries, and consid- Ukraine
erable potential of skilled, highly qualified labor – Hydrogeological, engineering-geological
forces. Under conditions of increasing integration and ecological-geological works
processes and globalization, further development – Geological exploration in the continental
of the national geological sector is required. shelf and in the exclusive (marine) eco-
The major MDP-2030 tasks are defined by the nomic zone
priority-driven directions of MRB development – Study of deep subsurface
listed below as follows: – Geophysical researches (geophysical
researches in forecasting the earthquakes,
1. Energy resources (oil, gas, condensate, coal, regional geophysical surveys)
uranium (Category A); methane of coal – Technical upgrading
deposits (Category B); shale gas (Category C))
2. Metal mineral resources: The Section IV is devoted to the mechanism of
– Ferrous metals (iron ores, manganese ores MDP-2030 implementation. The following issues
(Category A); chromium ores (Category D)) are taken into consideration:
– Base and alloying metals (titanium
(Category A); nickel and cobalt (Category 1. Legal framework
B); aluminum (Category C); copper, lead 2. Scientific support
and zinc, tin, tungsten, molybdenum 3. Stages of program implementation:
(Category D)) Stage 1: 2011–2012
– Rare and rare earth metals (tantalum and Stage 2: 2013–2020
niobium, rare earths, and yttrium Stage 3: 2021–2030
(Category C); lithium, zirconium and haf- 4. International cooperation
nium, scandium (Category D)) 5. Expected results of program implementation
– Trace elements (rhenium (Category D))
– Precious metals and diamonds (gold and The Section V depicts the MDP-2030 funding
silver (Category C); platinum group metals, requirements by the implementation stages (see
diamonds (Category D)) Section IV, point 3) to be as follows (government/
3. Nonmetallic mineral resources: other investments):
– Nonmetallic raw mineral commodities for
metallurgy (flux limestones and dolomites, Stage 1: 2011–2012 – UAH 1.7 billion/UAH 10.7
bentonite clays (Category C); fluorspar, billion
refractory raw materials, magnesite, high- Stage 2: 2013–2020 – UAH 8.9 billion/UAH 55.9
alumina raw materials (Category D)) billion
– Fertilizer and chemical raw materials Stage 3: 2021–2030 – UAH 15.4 billion/UAH
(native sulfur, potash (Category B); apatite, 96.4 billion
phosphorites (Category D))
– Other non-ore raw materials (primary kaolin
and silica clay, limestones for sugar industry, Regulatory Framework
gravel and aggregate quarry-stone materials
(Category B); barite, graphite (Category C); The MDP-2030 is supported by the range of spe-
gemstone raw materials, glauconite, quartz- cific legislative documents of Ukraine listed in
ites and quartz sand for metallurgy and glass separate sections of References. All these legisla-
manufacturing, feldspar, technogenic raw tive documents in original Ukrainian language,
materials (Category D)) which undergo various changes from time to
4. Geological, ecological-geological, and other time, are always accessible in the latest version
studies of the territory of Ukraine: at the permanent Legislation Portal of Verkhovna
Rada (Parliament of Ukraine). Besides that, the ▶ Mineral Resources

English translations of the mineral-related docu- ▶ Mining
ments are available from the author of given arti-
cle upon request (in the version by certain
fixed date). References
In English
International Membership EconomyWatch (2015) GDP current prices. Available via
http://www.economywatch.com/economic-statistics/
Ukraine/GDP_Current_Prices_US_Dollars/. Accessed
Ukraine is a member of United Nations (one of the 15 Dec 2016
UN founders and current member of UN Security Ministry of Foreign Affairs of Ukraine (2016) Available
Council) and the WTO and permanently via http://mfa.gov.ua/en/about-ukraine/info/general-
facts. Accessed 21 Apr 2016
expresses the intents to join the European Union
Wikipedia (2016) Ukraine. Available via https://en.
and NATO. The EU-Ukraine Association Agree- wikipedia.org/wiki/Ukraine. Accessed 21 Apr 2016
ment has been signed in 2014. The State Geolog-
ical and Subsurface Survey of Ukraine is an In Ukrainian
associate member of EuroGeoSurveys, the Geo- “Classification of mineral reserves and resources of the
logical Surveys of Europe (www.eurogeosurveys. State fund of subsurface” of 05.05.1997 No. 432.
Available via http://zakon4.rada.gov.ua/laws/show/
org), and the mineral information of Ukraine will
432-97-%D0%BF. Accessed 21 Apr 2016
become more and more accessible through partic- Constitution of Ukraine (1996) Available via http://
ipation in the range of international projects like zakon4.rada.gov.ua/laws/show/254%D0%BA/96-%
OneGeology, Minerals4EU, etc. Specifically, the D0%B2%D1%80. Accessed 21 Apr 2016
Law of Ukraine (2011) Mineral Development Program up
mineral data of Ukraine (reserves and resources,
to the year 2030. Available via http://zakon4.rada.gov.
production, export and import figures) have been ua/laws/show/3268-17. Accessed 21 Apr 2016
contributed to the European Mineral Yearbook to “Statement on procedure of the State expertise and
be launched in 2015 in the frame of Minerals4EU appraisal of mineral reserves” of 22.12.1994 No. 865.
project. Partially the outcomes of international
cooperation are expressed at the website of
SRDE “Geoinform of Ukraine” (www.geoinf.
Other Legislative Documents of Particular
kiev.ua).
Relevance to Minerals (In Order of Approval)
The Code of Ukraine on Subsurface of 27.07.1994
No. 132/94-VR. Available via http://zakon4.rada.gov.
Concluding Statements ua/laws/show/132/94-%D0%B2%D1%80. Accessed
21 Apr 2016
The Law of Ukraine “On Gas (methane) of Coal Deposits”
Ukraine appears to have been underexplored and of 21.05.2009 No. 1392-VI. Available via http://
underestimated by the Western mineral business, zakon4.rada.gov.ua/laws/show/1392-17. Accessed
which is still weakly informed about Ukrainian 21 Apr 2016
The Law of Ukraine “On Mining and Processing of Ura-
mineral potential and undergoes considerable dif-
nium Ores” of 19.11.1997 No. 645/97-VR. Available
ficulties entering Ukraine. It is expected that the via http://zakon4.rada.gov.ua/laws/show/645/97-%
situation will be progressively getting better and D0%B2%D1%80. Accessed 21 Apr 2016
compliant with the Western standards since the The Law of Ukraine “On Oil and Gas” of 12.07.2001
No. 2665-III. Available via http://zakon4.rada.gov.ua/
trend of Ukraine toward the European Union is
laws/show/2665-14. Accessed 21 Apr 2016
obvious. The Law of Ukraine “On Production Sharing Agreements”
of 14.09.1999 No. 1039-XIV. Available via http://
zakon4.rada.gov.ua/laws/show/1039-14. Accessed
21 Apr 2016
Cross-References The Law of Ukraine “On the State regulation of mining,
manufacturing and use of precious metals and precious
▶ Exploration stones and control over operations with them” of
18.11.1997 No. 637/97-VR. Available via http:// “Procedure for Handling of Geological Information” of
zakon4.rada.gov.ua/laws/show/637/97-%D0%B2% 13.06.1995 No. 423. Available via http://zakon4.rada.
D1%80. Accessed 21 Apr 2016 gov.ua/laws/show/423-95-%D0%BF. Accessed 21 Apr
The Mining Law of Ukraine of 06.10.1999 No. 1127-XIV. 2016
Available via http://zakon4.rada.gov.ua/laws/show/ “Procedure for the auctions on selling the special permits
1127-14. Accessed 21 Apr 2016 for subsurface use” of 30.05.2011 No. 594. Available
via http://zakon4.rada.gov.ua/laws/show/594-2011-%
D0%BF. Accessed 21 Apr 2016
Some Other Regulations are Top-Down
“Procedure of granting the special permits for subsurface
Derivatives in Development of the Laws use” of 30.05.2011 No. 615. Available via http://zakon4.
Mentioned Above and Comprise rada.gov.ua/laws/show/615-2011-%D0%BF. Accessed
the Resolutions of the Cabinet of Ministers 21 Apr 2016
“Procedure of the explored mineral deposits transfer into
of Ukraine (CMU) Addressed to the
commercial exploitation” of 14.02.1995 No. 114.
“Approach for starting price calculation in auction selling
of special permit for subsurface use” of 15.10.2004
No. 1374. Available via http://zakon4.rada.gov.ua/
“Procedure of the State inventory of mineral deposits,
laws/show/1374-2004-%D0%BF. Accessed 21 Apr
reserves and occurrences” of 31.01.1995 No. 75. Avail-
2016
able via http://zakon4.rada.gov.ua/laws/show/75-95-%
“Approach of calculation of the value of mineral reserves
and resources in deposit or subsurface area to be per-
“Statement on Procedure of definition of quota for extrac-
mitted for subsurface use” of 25.08.2004 No. 1117.
tion of some minerals” of 22.12.1994 No. 862. Avail-
able via http://zakon4.rada.gov.ua/laws/show/862-94-
1117-2004-%D0%BF. Accessed 21 Apr 2016
%D0%BF. Accessed 21 Apr 2016
“Criteria to define insufficient mineral reserves” of
“Statement on Procedure of mineral reserves write-off
11.08.2000 No. 1257. Available via http://zakon4.rada.
from the inventory of mining enterprise” of
gov.ua/laws/show/1257-2000-%D0%BF. Accessed
21 Apr 2016
gov.ua/laws/show/58-95-%D0%BF. Accessed 21 Apr
“Lists of the State-rank and local-rank minerals” of
2016
“Statement on Procedure of mining allotments assignment”
gov.ua/laws/show/827-94-%D0%BF. Accessed 21
of 27.01.1995 No. 59. Available via http://zakon4.rada.
Apr 2016
gov.ua/laws/show/59-95-%D0%BF. Accessed 21
“Method of estimation the total calculated amount of min-
Apr 2016
eral extraction” of 03.10.1997 No. 1099. Available
via http://zakon4.rada.gov.ua/laws/show/1099-97-%
I
Ireland: Mineral Policy Acts

The sole and exclusive power of making laws for
Gerry Stanley the state is vested in the parliament subject to the
Geological Survey Ireland, Dublin, Ireland obligations of European Union membership as
provided in the Constitution of Ireland. All pri-
mary legislation starts life as a Bill which is a
proposal for legislation. Once a Bill has been
General Information on Ireland
passed by both houses, the prime minister pre-
sents the Bill to the president for signing into law.
Ireland is a country on an island off the northwest-
ern fringe of Europe. Ireland’s territory extends
into the Atlantic Ocean with its marine territory Statutory Instruments
(880,000 km2) – over 12 times that of its land area Secondary legislation, in the form of statutory
(70,273 km2). The capital city and seat of govern- instruments, is governed by the Statutory Instru-
ment is Dublin. ments Act 1947. There are five main types of
statutory instrument: orders, regulations, rules,
bye-laws, and schemes. Statutory instruments
Government
are not enacted by the Oireachtas but allow per-
Ireland is a parliamentary democracy. The
sons or bodies to whom legislative power has
national parliament (in the Irish language,
been delegated by statute to legislate in relation
Oireachtas) consists of the president
to detailed day-to-day matters arising from the
(an tUachtarán) and two houses: a House of Rep-
operation of the relevant primary legislation.
resentatives (Dáil Éireann) and a Senate (Seanad
Éireann). The Constitution of Ireland is the basic
law of the state which outlines the fundamental Population
rights of the citizen. The executive power of the Information on demographics is taken from the
people is exercised by the government (an Rialtas) most recent census – 2016. The total population of
which consists of between seven and 15 ministers. Ireland in 2016 was 4,761,865. Table 1 provides a
The leader of the government is known as the breakdown of population in terms of male/female
prime minister (Taoiseach). Legislation in Ireland and urban/rural.
may be primary (Acts) or secondary (statutory
instruments).

DOI 10.1007/978-3-642-40871-7_50-1
2 Ireland: Mineral Policy
Ireland: Mineral Policy, Table 1 Breakdown of population in Ireland in terms of male/female and urban/rural
Male Female Total
2,354,428 (49.4%) 2,407,437 (50.6%) 4,761,865
Urban Rural Total
2,985,781 (62.7%) 1,776,084 (37.3%) 4,761,865
Source: CSO 2017
Language Gross Domestic Product (GDP)

The principal language used in Ireland is English The GDP for Ireland in 2016 is estimated at €293
although Irish is the first official language. billion. This represents a growth of 5.2% (in GDP)
Approximately 1.5% (of those >3 years of age) over 2015 – the highest growth rate in Europe.
speak Irish on a daily basis. Other languages spo-
ken in the home (in decreasing order) are Polish, Employment
French, Romanian, Lithuanian, Spanish, German, Persons in employment in Ireland stands at
Russian, Portuguese, Chinese, and Arabic. 2,045,100 (Q1 2017) and employment has been
rising steadily since 2011. The unemployment
Economic rate has been falling since 2011 and currently
Ireland is a modern knowledge-based economy (May 2017) stands at 6.4% (CSO 2017).
focusing on services, the agricultural and food,
and high-tech industries such as pharma-chem, Climate
medical devices, and information and communi- Ireland has a temperate climate. The dominant
cations technologies (ICT). The Irish economy is influence on Ireland’s climate is the Atlantic
heavily dependent on exports from the food and Ocean. The average annual temperature is about
high-tech sectors and foreign direct investment, 9 C. In the middle and east of the country, the
especially for the latter. The construction sector in summer mean daily maximum temperature is
Ireland has been severely affected by the recession about 19 C and the winter mean daily minimum
and the 2008–2013 Irish banking crisis. However, temperature is about 2.5 C.
the sector returned to growth in 2014.
Exports Ireland’s Mineral Production

The country is one of the largest exporters of
pharmaceuticals, medical devices, and software- Ireland is a significant global producer of zinc,
related goods and services in the world. Ireland’s ranking 11th in the world, and of lead, silver,
main economic resource is its large area of farm- and alumina (Table 2).
land (although many farms are small). In 2015 Ireland’s annual production of minerals for the
Ireland exported approximately €11 billion years 2004– 2013 is given in Table 3. Today,
worth of food and drink products (about 10% of Ireland is internationally renowned as a major
Ireland’s exports), mainly as cattle, beef, and dairy zinc-lead mining province. Over the last
products. 40 years, a number of significant base metal dis-
Ireland is a major exporter of zinc to the EU coveries have been made, including the giant ore
and mining also produces significant quantities of deposit at Navan, Co. Meath (>100 Mt). Zinc-
lead and alumina. In addition, the country has lead ores were also produced in recent times at
significant deposits of gypsum, limestone, and Lisheen in Co. Tipperary (closed in 2015) and at
smaller quantities of copper, silver, gold, barite, Galmoy in Co. Kilkenny (closed in 2012). Previ-
and dolomite. ous producers include Silvermines and Tynagh.
The combined output from these mines has made
Ireland: Mineral Policy 3
Ireland: Mineral Policy, Table 2 Significance of Irish mineral production

World importance European importance National importance
Zinc Alumina Cement
Lead Gypsum
Silver Crushed rock
Sand and gravel
Source: Geological Survey of Ireland, unpublished information
Ireland one of the largest zinc and lead producers Development Bill has been introduced to the
in Europe. In addition, Ireland has also mined Houses of the Parliament. There are also a number
copper at Avoca and Gortdrum and barite at of Regulations which have been made under
Ballynoe, Lady’s Well, Benbulben, and Tynagh the Acts.
in recent times.
Scope
Legislation and regulations covering mineral
Classification of Mineral Reserves exploration and development in Ireland encom-
pass the minerals listed in the schedule to the main
EMD requires that all mineral reserves and Act (Table 4). Those shaded (oil shale and natural
resources be reported using the PERC Standard gas) in the Table have been removed from the
or another CRIRSCO-aligned code. schedule in subsequent amendments to the Act.
Petroleum and natural gas are covered by separate
legislation.
Policy Acts
The Acts are:
The Irish Government’s mineral policy is:
To support the development of Ireland’s mineral Minerals Development Act, 1940
resources in an environmentally and socially This is the principal Act and deals with definition
responsible way, recognising the economic contri-
bution that mineral extraction can make, through of minerals, mineral ownership, prospecting
the provision of well-paid secure jobs in rural areas licenses, state mining leases, arbitration, etc.
that often have relatively limited employment
opportunities. Petroleum and Other Minerals Development Act,
1960
This Act ceased the application of 1940 Act to
Ireland’s Mineral Legislation Petroleum and also made a number of other
amendments to that Act.
The Minister for Communications, Climate
Action and the Environment has statutory respon- Minerals Development Act, 1979
sibility for regulation of exploration for and devel- This Act vests in the minister the exclusive right to
opment of all minerals, other than stone, clay, work privately owned minerals and provides for
sand, and gravel. The Minerals Development permitting of the working of those minerals by
Acts, 1940–1999 are the principal legislative third parties, subject to payment of compensation.
instruments which govern activity in this area.
These Acts are to be consolidated in a new Min- Minerals Development Act, 1995
erals Development Act which will also update and This Act deals with renewals of prospecting
modernize many of the provisions of the existing licenses and application fees for state mining
Acts. At the time of writing, the Minerals facilities.
4
Ireland: Mineral Policy, Table 3 Mineral production in Ireland from 2004 to 2013. Figures indicated with * are estimates
Year
Commodity Units 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Alumina Tonnes 1,500,000* 1,800,000* 1,800,000* 1,800,000 1,228,500 806,000 1,211,600 1,249,300 1,250,600 1,264,689
(Al2O3
content)
Lead, mine Tonnes 63,800 72,200 61,800 56,800 50,200 49,500 39,100 50,700 47,400 42,950
(metal
content)
Lead, Tonnes 19,600 22,500 21,700 22,500 20,000 19,000 19,000 18,000 16,000 17,000
refined (metric)
Silver, mine Kilograms 5,200 10,500 12,900 9,650 7,172 5,267 3,818 6,109 9,454 7,822
(metal
content)
Zinc, mine Tonnes 438,300 445,400 425,800 400,900 398,200 385,700 342,500 344,000 337,500 326,700
(metal
content)
Finished Tonnes 4,900,000* 4,700,000* 4,700,000* 3,910,000* 2,720,000* 2,290,000* 1,700,000* 1,573,000 1,450,000
cement
Gypsum Tonnes 650,000* 700,000* 700,000* 700,000* 600,000* 400,000* 300,000* 300,000* 200,000* 200,000*
Crushed Tonnes 60,000,000* 94,000,000* 96,000,000* 90,000,000* 60,000,000* 50,000,000* 40,000,000* 25,000,000* 22,000,000* 21,000,000*
rock
Sand and Tonnes 40,000,000* 40,000,000* 64,000,000* 40,000,000* 25,000,000* 15,000,000* 10,000,000* 7,000,000* 7,000,000* 9,000,000*
gravel
Source: Exploration and Mining Division, and Geological Survey Ireland, unpublished
Ireland: Mineral Policy
Ireland: Mineral Policy, Table 4 The schedule of minerals covered by minerals development legislation in Ireland
(Minerals Development Act, 1940). Those highlighted in gray have been removed from the schedule by the Petroleum and
other Minerals Development Act, 1960
Alum Shales Fireclay Nickel, Ores of

Anhydrite Flint and Chert Oil Shale
Antimony, Ores of Fluorspar Platinum, Ores of
Apatite Ganister Potash Mineral Salts
Arsenic, Ores of Gem minerals Quartz Rock
Asbestos minerals Gold, Ores of Radioactive Minerals
Ball Clay Graphite Refractory Clays
Barytes Gypsum Rock Phosphates
Bauxite Iron, Ores of Rock Salt
Beryl Kaolin Roofing Slate
Bismuth, Ores of Laterite Serpentinous Marble
Bitumens Lead, Ores of Silica Sand
Calcite Lignite Silver, Ores of
Chalk Lithomarge Strontium, Ores of
China Clay Magnesium, Ores of Sulphur, Ores of
Chromite Magnesite Talc and Steatite or Soapstone
Coal Manganese, Ores of Tin, Ores of
Cobalt, Ores of Marble Titanium, Ores of
Copper, Ores of Mercury, Ores of Tripoli
Corundum Mica Tungsten, Ores of
Cryolite Mineral Oils Witherite
Diatomaceous Earth Mineral Pigments Zinc, Ores of
Dolomite and Dolomitic Molybdenite Natural Gas
Limestone
Monazite Felspar
Minerals Development Act, 1999 Minerals Development Regulations, 1979

This Act clarifies state ownership of certain min- These deal with the application procedures and
erals and addresses the transfer of the right to fees for licenses, leases, and compensations under
compensation under the 1979 Act. the Acts.
Minerals Development (Amendment) Regulations,

Energy (Miscellaneous Provisions) Act 2006
1994
Part 9 of this Act contains provisions relating to
These deal with changes to fees.
the rehabilitation of lands affected by mines and
former mines and for the compulsory acquisition
Minerals Development (Application Fees for
of lands for the purposes of such rehabilitation.
Certain State Mining Facilities) Regulations, 1996
These deal with fees for certain state mining
Regulations facilities.
In addition to primary legislation, Regulations
have been made under the Minerals Development
Acts. The Regulations cover matters such as fees, Regulatory Framework
information to be provided with PL applications,
procedures for claiming compensation, etc. The The information provided here is a summary of
principal Regulations currently in force are: the main aspects related to conducting mineral
exploration and development in Ireland. Any application will be the committed expenditure
body (corporate) wishing to carry out exploration for that license. Such expenditures should at
or development for minerals is strongly advised to least meet the standard expenditure levels. Incen-
consult with the relevant authorities and espe- tive licenses have reduced commitments (see
cially the Exploration and Mining Division below).
(EMD) of the Department of Communications, The main features of the prospecting license
Climate Action and the Environment. The Explo- system are:
ration and Mining Division (EMD) is responsible
for the administration of regulatory aspects of 1. Application
Ireland’s minerals industry by means of a system
of a prospecting licenses and mining leases and To apply for a prospecting license, you must sub-
licenses. mit the following:
• Completed prospecting license application
Exploration (Information Summarized from form
EMD 2013a) • Application fee of €190 per area
Exploration is carried out through a prospecting • If the area has never been licensed before a
license (PL) that gives the holder the right to map indicting the area being applied for
explore for specified minerals over a certain All applications are processed on a “first-come,
area. Only license holders are considered for min- first-served” basis (except for competition
ing facilities to develop such minerals within the ground), and if an application is successful,
license area. A prospecting license typically the applicant will receive a letter of offer stat-
covers some 35 km2 the boundaries of which ing the terms and conditions of the prospecting
typically follow the Ordnance Survey of Ireland license.
townland boundaries.
Licenses are described as either standard or 2. Issue
incentive. An incentive license is one upon
which exploration has not been carried out for Before a license is issued, the proposed offer of a
4 years or areas currently licensed for certain license will be advertised in newspapers circu-
minerals but available for exploration for other lating in the local area. This allows anyone
minerals. Otherwise, it is a standard license. with concerns about exploration 21 days to
There is also a category of ground which is submit a representation or observation (either
described as open ground. This is ground which positive or negative) for consideration before
has never been licensed. In addition, a license that the granting of the prospecting license.
is surrendered or expires is listed in the regular
three monthly update on licenses issued by EMD 3. Duration
(normally on February 1, May 1, August 1, and
November 1 of each year). There is a general A prospecting license is normally issued for
invitation to interested parties to submit applica- 6 years, with the option of renewal if the holder
tions for these licenses within two calendar has met the terms and conditions of the license.
months. Any and all applications for such licenses
are treated on an equal basis, and the EMD makes 4. Fees and expenditure
a decision on which applicant, if any, should be
awarded the license. Such licenses are called com- A licensee must commit to minimum exploration
petition licenses. Standard and competition expenditures on the license as listed in Table 5.
licenses are treated equally from a fees point of In addition, each issue, review, or renewal must
view; there are minimum expenditure levels set be accompanied by a consideration fee
for standard licenses, but in the case of competi- (Table 5).
tion licenses, the proposed expenditure in the
Ireland: Mineral Policy, Table 5 Consideration fees and minimum expenditure requirements for prospecting licenses
Minimum expenditures (per period)
Reporting period Standard or competition Incentive Open ground
First period (years 1–2) €10,000 €2,500 €2,500
Second period (years 3–4) €15,000 €5,000 €3,750
Third period (years 5–6) €20,000 €10,000 €5,000
Fourth period (years 7–8) €30,000
Fifth period (years 9–10) €30,000
Sixth period (years 11–12) €37,500
Seventh period (years 13–14) €50,000
Eighth period (years 15–16) €50,000
Ninth period (years 17–18) €50,000
Tenth period (years 19–20) €62,500
Consideration fees
Standard or competition Incentive or open ground
First 2 years €750 €375
Second 2 years €875 €375
Third 2 years €1,500 €500
After the sixth year, a fee of €2,500 is payable for each subsequent 2-year term for each category of license
Source: EMD
5. Validation and reporting If a license is allowed to expire or is surrendered, the

license area will be entered into the next available
During a license period, two reviews are under- Prospecting License Area Competition.
taken to ensure that exploration programs meet
the conditions of the license. These reviews 8. Exploration information
require license holders to submit exploration
reports for the previous 2 years of work. These Exploration reports submitted to EMD are kept
reports must also be accompanied by a Confi- confidential until the license is surrendered or
dential Work Summary Form and a Statement after 6 years, whichever is the sooner. EMD
of Qualification Form. EMD publishes guid- makes these reports available on its website.
ance on the preparation of reports. This assists exploration companies assess a
license and eliminates expensive duplication of
6. Renewal exploration effort. Other information is available
from the Geological Survey of Ireland on its
After 6 years and before the license is due to website.
expire, a company may apply to have the
license renewed by submitting a Prospecting
Mining (Information Summarized from EMD
License Renewal Application Form. If the
2013b)
license holder does not wish to renew the
Three main permits are required before a new min-
license, the license holder must submit a Pro-
eral development can take place:
specting License Expiry /Surrender Form and
return the original license document.
• Planning permission
• An integrated pollution control (IPC) license
7. Expiry or surrender
• A state mining lease or license
Planning Permission within 4 weeks of the decision. Any appellant

Any development, whether related to minerals or may request An Bord Pleanála to hold a public
not, requires planning permission under the Plan- hearing into the matter.
ning and Development Act 2000. Further infor- • An Bord Pleanála’s statutory objective is to
mation on the physical land use planning system determine appeals within 18 weeks. However,
can be obtained from the Department of Environ- where the Board does not consider it possible
ment, Heritage and Local Government and details or appropriate to reach a decision within
of procedures from the relevant local planning 18 weeks (e.g., because of delays arising from
authorities. An environmental impact statement the holding of an oral hearing), it shall inform
must accompany applications for developments the parties of the reasons for this and shall state
involving the extraction of minerals under the when it intends to make the decision.
Minerals Development Acts. The consent of the • The decision of An Bord Pleanála is final and
Minister for Communications, Energy and Natu- no challenge may be made to the decision other
ral Resources is also required to make a valid than to its legal validity. A person wishing to
planning application for such minerals. In essence challenge the validity of a Board decision may
the process is as follows: do so by way of judicial review only.
• An application is submitted to the relevant

Integrated Pollution Control (IPC) License
local authority.
An IPC license is required for any development
• The planning authority has 2 months to con-
involving scheduled minerals. IPC licenses aim to
sider the application. Third parties may make
prevent or reduce emissions to air, water, and land,
representations to the local authority (for or
to reduce waste, and to use energy/resources effi-
against) on the application. At the end of this
ciently. Applications are made to the Environmen-
period it may:
tal Protection Agency (EPA). The EPA provides
– Grant permission – with conditions.
guidance on the process (EPA 2012).
– Refuse permission – giving reasons.
The EPA Act 1992, as amended, provides a
– Request further information – which nor-
definition of environmental pollution as follows:
mally should be provided within 1 month.
• If the response to the application is the last and The direct or indirect introduction to an environ-
mental medium, as a result of human activity, of
the applicant provides the requested informa- substances, heat or noise which may be harmful to
tion, then the local authority has a further human health or the quality of the environment,
2 months to make a determination. Third result in damage to material property, or impair
parties may make representations to the local or interfere with amenities and other legitimate
uses of the environment and includes –
authority (for or against) on the application. At
the end of this period, the local authority must (a) Air pollution for the purposes of the Air Pollu-
tion Act 1987;
make a determination taking the application,
(b) The condition of waters after entry of pollution
any responses made by the applicant to a matter within the meaning of the Local Gov-
request for additional information, any repre- ernment (Water Pollution) Act 1977;
sentations made by third parties into account, (c) In relation to waste, the holding, transport,
and the relevant development plan for the area. recovery or disposal of waste in a manner,
which would, to a significant extent, endanger
It may: human health or harm the environment and, in
– Grant permission – with conditions. particular:
– Refuse permission – giving reasons. (i) Create a risk to the atmosphere, waters,
• The applicant or any third party can appeal the land, plants or animals,
(ii) Create a nuisance through noise, odours
local authority’s decision (to grant or to refuse) or litter, or
or any of the conditions attached to a decision (iii) Adversely affect the countryside or places
to grant permission to An Bord Pleanála (The of special interest,
Planning Appeals Board – a central authority) or
(d) noise which is a nuisance, or would endanger practicable, to limit, abate, or reduce an emis-
human health or damage property or harm the sion from the activity.
environment.
• Necessary measures will be taken to prevent
accidents in the carrying on of the activity and,
A license will only be granted if the emissions
where an accident occurs, to limit its conse-
from the development comply with or will not
quences for the environment and, in so far as it
result in the contravention of:
does have such consequences, to remedy those
For air quality
consequences.
• Necessary measures will be taken upon cessa-
• Any relevant air quality standard specified
tion of the activity (including such a cessation
under Section 50 of the Air Pollution Act,
resulting from the abandonment of the activity)
1987 (Environmental Specifications for Petrol
to avoid any risk of environmental pollution
and Diesel Fuels) (Amendment)
and return the site of the activity to a satisfac-
Regulations 2004.
tory state.
• Any relevant emission limit value specified
under Section 51 of the Air Pollution
In addition, the developer shall address the
Act, 1987.
following in his/her application: minimization of
• The Air Quality Standards Regulations, 2011
waste, energy efficiency, and propose an accept-
(S.I. No. 180/2011).
able environmental management plan using an
appropriate environmental system. It is a normal
For water
practice to include regular reporting of environ-
mental performance and to report any and all
• Any relevant quality standard for waters, trade
exceedances of conditions to the EPA and any
effluent, and sewage effluent and standards in
other relevant authority.
relation to treatment of such effluent prescribed
under Section 26 of the European Communi-
ties Environmental Objectives (Surface Mining Lease or License
Waters) Regulations, 2009 (S.I. No. The right to work minerals is vested in the Minis-
272 of 2009). ter for Communications, Energy and Natural
• The European Communities Environmental Resources under the Minerals Development Act
Objectives (Ground Water) Regulations 2010 1979. The minister may issue a state mining lease
(S.I. No. 9 of 2010). for minerals in state ownership or a state mining
license for minerals not in state ownership to work
For noise the minerals. As a matter of policy, the minister
will only accept an application from the holder of
• Any regulations under Section 106, of the EPA a valid prospecting license, state mining lease,
Act, 1992, as amended. license, or permission over the area in question.
Mining leases are negotiated on a case-by-case
Generally basis as required by Section 26 of the Minerals
Development Act 1940 which also applies to
• Any standard for an environmental medium licenses under the Minerals Development Act
prescribed under regulations made under the 1979 (see Section 17 of the 1979 Act).
European Communities Act, 1972, or under While the information that will be required to
any other enactment. support an application may vary according to the
• Any emissions from the activity will not cause individual circumstances, applicants are advised
significant environmental pollution. to consult the Exploration and Mining Division.
• The best available techniques will be used to The following is a generic list for a base metal
prevent or eliminate or, where that is not mine of what is required in an application:
• Mineral and land ownership of the area: Details of the applicant including, for a limited
(a) Area for which a facility is being sought. company, a memorandum and articles of
This should be clearly related to mineral association, a recent balance sheet, and
reserves/resources. shareholders, together with the evidence
(b) Any information available to the applicant that the applicant has the financial and tech-
on mineral ownership, whether it is in state nical capacity to undertake the proposed
or private ownership and details of any title development, and is a fit and proper person
searches. to hold the mining lease/license. The appli-
(c) Any information on land ownership within cant should be a body corporate registered
the application area, and specifically which in the Republic of Ireland.
land is in the control of the applicant. Folio • Application fee: the appropriate application fee
numbers should be provided if possible. as set out in S.I. No. 259 of 1996 – Minerals
• Minerals Development Regulations (application fees for
Tonnage and grade of mineral reserves, certain state mining facilities).
together with details of their calculation. • Governing law
Sufficient information should be provided This lease or license agreement shall be
so that the department can verify that the governed by and construed in accordance
estimate is reasonable. with the laws of Ireland. The courts of Ire-
• Development plan and feasibility study land shall have exclusive jurisdiction to set-
(i) Mining and processing plans tle any disputes which may arise out of or in
These should include the development connection with the lease or license
and production schedules, employment, agreement.
and equipment.
(ii) Estimated capital and operating costs The mine lease or license will contain terms
The total estimated capital cost and and clauses as the minister and the applicant agree
annual operating costs showing the main and would normally cover such items as:
elements should be provided together
with their basis. • Duration of the facility (a fixed term related to
(iii) Sales the predicted length of the operation).
Proposed concentrate output, and
grade of concentrate, including any sig- Financial payments, normally consisting of a
nificant penalties. Projected metal prices fixed annual fee, plus a royalty payment related to
and treatment charges. tonnage produced or revenue – royalties are indi-
(iv) Sources of capital vidually agreed. An example of royalty terms (for
That is, equity, loans, grants. the Lisheen Zn-Pb mine) is presented in Table 6:
(v) Financial projections including cash flow
projections for the mine life • Efficient and continuous working to ensure
Note: The level of information will optimum development
normally be similar to that required for • Provisions to protect the rights and safety of
third-party funding. third parties
• Mine closure plan (of which site rehabilitation • Sureties to ensure that the site can be fully
is an element) rehabilitated on closure
• Tax clearance certificate • In cases involving private minerals, indemnifi-
It will normally be necessary to furnish a tax cation of the minister against successful com-
clearance certificate before a state mining pensation claims
facility is issued.
• Applicant
Ireland: Mineral Policy, Lisheen

Table 6 The financial
Lease for 30 years under the 1940 Act
terms for the Lisheen Mine
as agreed between the Dead rent (index linked)
Minister of Year 1 €63,486
Communications, Energy Year 2 €126,973
and Natural Resources and Year 3 onwards €380,921
the Lisheen Mine Ltd After closure €25,394
Royalty (per cent of revenue)
Until 31 December 2000 1.75%
1 January 2001–31 December 2007 1.5%
Thereafter 3.5%
Corporation Tax (World Trade Organization), and OECD

Corporation tax on mining operations is charged (Organisation for Economic Co-operation and
at a rate of 25%. On-site surface processing is Development).
considered to be part of mining operations. How- The Institute of Geologists of Ireland is a
ever, these operations attract special allowances, founding member of the Pan-European Reserves
as listed below: and Resources Reporting Committee (PERC)
which supports the use of the PERC Standard
• Exploration expenditure (one of the CRIRSCO-aligned codes).
• Development expenditure
• Plant and machinery
• Industrial buildings
Concluding Statements
• Acquisition of scheduled mineral assets
• Mine closure and rehabilitation
Ireland’s mineral policy and legislative frame-
• Marginal mine allowance
work is supportive of mineral development that
takes into account economic, environmental, and
Other Requirements
social concerns into account. The Irish regulatory
Under the Mines and Quarries Act, 1965, there are systems frequently scores highly in the annual
statutory obligations with regard to safety, health, Fraser Institute survey of mining companies and
and welfare, provision of adequate plans, for the past 3 years has been ranked in first place
etc. Other permits may also be needed, e.g., for for “Policy Perception Index” – an index that
the use of explosives from the Department of takes into account the following: uncertainty
Justice and for fire safety from the local authority. concerning the administration of current regula-
tions, environmental regulations, regulatory
duplication, the legal system and taxation regime,
International Memberships uncertainty concerning protected areas and dis-
puted land claims, infrastructure, socioeconomic
The Department of Communications, Energy and and community development conditions, trade
Natural Resources is a member of the Interna- barriers, political stability, labor regulations, qual-
tional Lead and Zinc Study Group. ity of the geological database, security, and labor
Ireland is a member of the European Union and and skills availability.
the European single currency (the Euro).
Ireland is also a member of the following inter-
national bodies: UNCTAD (United Nations Con-
ference on Trade and Development), WTO
References Exploration and Mining Division (EMD) (2015).

Fiscal framework, p 4. http://www.dcenr.gov.ie/natural-
Central Statistics Office (CSO) (2017) Census 2016. http:// resources/Lists/Publications%20Documents/Exploration
www.cso.ie/en/census %20and%20Mining/Fiscal_Framework_Feb%202015.
Environmental Protection Agency (EPA) (2012) Integrated pdf
pollution prevention and control (IPPC) licensing,
application guidance notes, p 38. http://www.epa.ie/
pubs/forms/lic/ipc/IPPC%20Application%20Form% Websites Containing Useful Information
20Guidance%20Note%202012%20v4.pdf An Bord Pleanála website (Planning Appeals Board) http://
Exploration and Mining Division EMD (2013a) Mining in www.pleanala.ie/
Ireland, p 2. http://www.dcenr.gov.ie/natural-resources/ The Department of Environment, Community and Local
Lists/Publications%20Documents/Exploration%20and Government website http://www.environ.ie/
%20Mining/Mining_in%20Ireland_2013.pdf The Environmental Protection Agency website http://
Exploration and Mining Division EMD (2013b) Mineral www.epa.ie/
exploration in Ireland, p 2. http://www.dcenr.gov.ie/ The Exploration and Mining Division website http://www.
natural-resources/Lists/Publications%20Documents/ mineralsireland.ie/
Exploration%20and%20Mining/Exploration_in%20 The Geological Survey of Ireland website http://www.gsi.ie/
Ireland_2013.pdf
F
France: Energy Policy transport account for some 60 % of the final

energy consumption, with the remainder being
W. Eberhard Falck used for private and the wide variety of commer-
MinPol, Saint-Cloud, France cial activities, such as heating and lighting.
78 % of the electricity is produced in nuclear
power-stations, 11 % by hydropower, 3.9 % in
General Information on France coal-fired and 3.8 % in natural gas-fired power
stations, 1.3 % arise as by-product in industries
France consists of 95 “Départements” on the using fossil fuels, and the remaining 1.3 % come
mainland and the five overseas departments from, e.g., wind-turbines.
(DOM) of Guadeloupe, Martinique, French- As heating amounts to 44 % of France’s
Guaiana, Réunion, and Mayotte. Statistical data energy expenditure, improvement of existing
usually include these five DOM. buildings and the construction of energy-efficient
In 2014, France (mainland and DOM) had a buildings is one of the French policy priorities.
population of around 66 million (INSEE no year), Since 2002, the transport-related energy con-
together with a nominal GDP of 2.060 billion sumption remains at a stable 32 % of the total (but
Euro; this translates into a per capita GDP of 50 % of the fossil fuel). The total number of cars
32.229 Euro (IMF 2015). remained stable at around 32 million, but the ratio
France has the fifth largest economy in the between diesel and petrol engines continues to
world (World Bank no year) and ranks no. 4 in increase, with the number of diesel-powered cars
wealth, with 2.44 million millionaires (Credit surpassing that of other cars in 1997. This has
Suisse 2014). implicitly led to a reduction of specific CO2-emis-
sions. The (partial) taxation of carbon-emissions
Need of (Nonrenewable and Renewable) from cars has fostered the adoption of engines
Energy Resources with relatively low emissions. However, most
The gross energy consumption in France rose recently, local governments, e.g., that of Paris,
from 228 Mtoe in 1990 to 277 Mtoe in 2005, but announced restrictions for diesel-powered vehi-
since then has fallen off and remained stable since cles in order to reduce fine particle emissions.
2009 at around 260 Mtoe (Eurostat). This pattern Considering the low cost and carbon emission of
is attributed to the economically difficult situation electricity generated in nuclear power-stations,
of the last few years. At the same time the energy France also fosters the adoption of electrical and
intensity is steadily declining, indicating an hybrid vehicles.
increase in energy efficiency. Industry and
DOI 10.1007/978-3-642-40871-7_53-1
2 France: Energy Policy
Following EU targets, fuel for automotive generating-mix away from the dominance of
application has to contain a 10 % contribution nuclear power towards a share of only 50 % by
from renewable sources, i.e., ethanol or plant- 2025. This political decision also triggered a more
derived oils. The sources for these agro-fuels are intensive debate on the solutions for the manage-
89 % domestic and the remainder is bought in ment of the high-level radioactive waste. The new
from other countries around the world law on energy had a second reading the National
(Observ’ER 2015). Assembly in May 2015 and foresees the reduction
Nuclear Energy constitutes a major economic of the nuclear share. In July 2011 a Strategic
sector with several hundred thousand employees Nuclear Industry Committee (CSFN) was set up
and exports worth of several billion euros. France that includes representatives from the industry
has a full nuclear fuel cycle established, but the itself, its supply and service industry, as well as
uranium used in French power-stations originates trade unions and is tasked with strengthening the
mainly in Niger, Canada, and Australia (all small relations between the partners.
domestic mines have been closed). Enrichment Hydroelectric power. Its rapid modulation
and fuel production takes place in La Hague. capabilities, annual reserves of 7,500 billion liters
Spent fuel is also being reprocessed in France on the national territory and its renewable and
and the resulting Mixed Oxide (MOX) fuel is non-CO2 emitting dimension make it a major
reused in the power stations. A deep geological asset for the French electricity portfolio. With
repository for high-level waste is currently being 25.4 GW of installed capacity and a production
investigated at Bure (Lorraine). The energy needs of 75.7 TWh in 2013, hydropower comes second
of the enrichment and reprocessing plants are met behind nuclear power for electricity generation
by nuclear power, which overall results in the (accounting for about 11 %) and is the most
worldwide lowest carbon emissions per kWh important form of renewable energy in France.
electrical energy generated and makes France the Riverine hydroelectric power plants provide
lowest carbon emitter among the industrialized base-load electricity owing to their lack of storage
nations. Frances large nuclear base-load electric- capability. More than 85 % of the 2000 plants are
ity generating capacity makes it a net exporter and small with less than 10 MW capacity, but their
an important player in supply security and grid production represents approximately 37 TWh per
stability for Western Europe. In 2013, a total of year or more than half of the French hydroelectric
79.4 TWh were exported, but only 32.2 TWh production. On the other hand, around 30 large
imported. Thus a reduction of nuclear capacity hydropower stations located along the major riv-
will also influence the energy policies of France’s ers, such as Rhone and Rhine account for the
neighbors. difference. At suitable locations, excess electrical
As the nuclear power-stations are largely writ- energy is used to pump water into storage reser-
ten off, electricity for private consumers and voirs, allowing to generate extra electricity during
industry is cheap compared to most of Europe. peak-hours with start-up times in the order of
The cost of uranium, through volatile, contributes minutes only. In France, ten such hydropower
to less than 1 % of the generating cost in nuclear plants are available with an installed capacity of
energy systems. This results in a very stable elec- 4500 MW. Overall, hydroelectric power plants are
tricity price in France and a price that is the lowest a major element for providing network security
in the European Union. However, the policy of owing to their output being able to be modulated
providing private and industrial customers with quickly as demand fluctuates over the day and
cheap electricity may undermine the industries seasons. In 2013, an assessment of the hydroelec-
capability to renew its infrastructure and may be tric potential on French territory was carried out
unsustainable in the medium term (IEA 2010). using standardized evaluation methods jointly by
Following the events in Japan in 2011, the newly the State and electricity producers. This potential
elected French president began to embark in 2013 was estimated at around 12 TWh/year, of which
on a re-orientation of the French electricity
France: Energy Policy 3
would be 10.3 TWh/year at new and 1.7 TWh/ development concerns the use of wave and tidal
year at existing sites. energy.
Oil and Gas. France produces less than 10 %
of its needs of oil and gas and none in the French
mainland. Liquid and gaseous fossil fuels are Energy-Related Research
imported. Agrofuels are mainly used for automo-
tive applications and have developed into a con- France spent in 2012 a total of 1.1 billion Euros on
siderable business. energy-related research, namely, 447 M€
Coal. France has only limited resources of (=41 %) on new energy technologies, 543 M€
solid fossil fuels, mainly hard coal in the Lorraine (=49 %) on nuclear technologies, 66 M€
area. Currently France does not mine any coal and (=6 %) on fossil fuel-related technologies, while
the small number of coal-fired power plants, rest was spent on transversal research tasks. The
which contribute with 3–5 % to the electricity Alliance Nationale de Coordination de la
needs, is run on imported coal. Recherche pour l’Énergie (ANCRE) coordinates
Wind power. In 2014, wind turbines with a the research activities of the various public insti-
capacity of around 8.3 GW had been installed in tutions (ANDRA, BRGM, CDEFI, CIRAD,
France. Reflecting suitable wind conditions the CSTB, IFREMER, IFSTTAR, INERIS, INRA,
installations concentrate in five regions. The INRIA, IRD, IRSN, ISTEA, LNE, ONERA)
wind-based electricity production amounted to (Panorama 2014).
around 15.2 TWh in 2013. Growth rates in the
wind power have begun to stagnate in recent years
though planning permission had been filed for Classification of Reserves
nearly additional 6 GW by the end of 2013.
Biomass makes an important contribution The reserves of (energy) minerals in the mainland
(85 %) to renewable heating requirements, of France are comparatively limited and occur-
followed by hydropower. Individual wood burn- rences are mainly small.
ing is the most important contributor. France has Data are not currently collected on primary raw
abundant forests that could be used for energetic materials resources and reserves in France. Sec-
applications, but resource use conflicts between ondary data collected on legacy metallic com-
this and other uses of wood have to be resolved. modities and coal do not comply with an
The direct combustion of biomass in small-scale internationally recognized code, although a
facilities, however, can lead to air-quality issues national code is used for reporting. There is no
due to the release of particles (PM10) and gaseous obligation for exploration and mining companies
pollutants, e.g., PAH. In 2012 France had to report resource and reserve data (EC 2016). The
843 MW capacity for electricity generation from Bureau de Recherches Géologiques et Minières
solid biomass (mainly agricultural residues, such (BRGM) and various ministries collate data on
as straw, reflecting the importance of agriculture energy and non-energy mineral resources (see
in France) installed, while biogas-based installa- below).
tion had a capacity of 247 MW. By 2020 the There have been some occurrences of uranium
installed respective capacities are planned to be of commercial interest, but these were mined out
increased by 180 and 42 MW. and the various uranium mine sites have been
Other renewables are mainly still at a concep- closed and remediated. AREVA, the state-
tual or experimental stage. France supported for controlled nuclear supply company, has extensive
many years research on the use of deep geother- interests in the uranium mines of inter alia Niger
mal wells for electricity production. The sale of and Canada, securing the supply for the domestic
heat-pumps to private customers for residential nuclear reactors.
heating stagnates in recent years. Another area of The production of oil and gas in the mainland
of France from limited reserves in the Île de
France and Aquitaine regions has continued to 6 Mtoe, the 2020 objective remains very ambi-
decline for many years and is now suspended tious. At the same time, the plan foresees an
altogether. After the last gas field Lacq closed in increase of the renewable energy contribution
the autumn of 2013, virtually all the natural gas per annum of 20 Mtoe by 2020.
consumed is imported. To the contrary, there is This plan is complemented by plans that inte-
on-going exploration in the overseas territory of grate regional development with energy policies
French Guiania with 55 active concessions. and environmental protection (Plans Climat-
The production of hard coal ceased when the (Air)-Énergie Territoriaux PCAET). In 2007, the
last mine in the Lorraine region closed in 2004. Ministère de L’Écologie, du Développement
The state-owned production company Durable et de L’Énergie (http://www.
Charbonnage de France was dissolved in 2007 developpement-durable.gouv.fr) was created to
(CC 2009). address energy and environmental issues in an
The annual reserves for hydroelectric power integrated way.
generation are in the order of 7,500 billion liters The GHG emissions of France from electricity
on the national territory. production are among the lowest in the world, so
France also has a considerable potential for that the strategy of reducing emissions from the
wind power from both on-shore and off-shore transport sector focuses on an increased use of
installations. electricity. The government Hollande fosters the
Concerning forestry-related renewable energy increased use of “decarbonized” sources of
sources, France ranks on the third place in Europe energy. However, in 2015 a new energy legisla-
and on the first place for agricultural energy tion is being debated that foresees a capping of
sources (agrofuels, biogas). This makes France 50 % on the nuclear energy contribution by 2025.
the second biggest producer of renewable ener- It is not yet clear, whether this will be achieved by
gies in Europe. fostering “renewables” or by imposing sanctions
on the nuclear side. Such a capping will make
targets to further reduce GHG emissions more
Energy Policy Conception of France ambitious.
The French plan for renewable energy devel-
The French energy policy has been coupled opment expects to increase their use to meet the
closely to the aim of reducing GHG and fossil heat demand (+10.5 Mteo from 2005) as well as
carbon emissions, while at the same time to assure the production of electricity (+6.8 Mteo) and
adequate energy supply. The goal of the French increasing the contribution of biofuels to the
government is a 75 % reduction of CO2 emissions energy needs of the transport sector (+3.7 Mteo).
by 2050 and a reduction of GHG emissions from For heat, the biomass sector will be the largest
the transport sector to 1990 levels by 2020 (“Loi contributor to the goal with a production of 16.5
Grenelle 2”, LOI n 2010-788). France is follow- Mteo in 2020. For electricity, wind energy and
ing since 2011 first national adaptation plan hydropower will contribute the targets 5 and 5.5
(PNACC), with the ambitious objective to reduce Mteo, respectively. Incentives to achieve these
its energy consumption to 131.4 Mtoe at user level targets are tax rebates and purchasing guarantees
and the primary consumption to 236.3 Mtoe by the state-owned electricity company (EdF).
by 2020. The objective of replacing 7 % of the fossil
This also reflects the transposition of the EU fuel by agrofuels was achieved in 2013, and the
Directive 2012/27/EU (CEU 2012) that had to be target was increased for 2014 to 7.7 % for diesel
effected by 05.06.2014. A plan for the transposi- and 7 % for petrol. These agrofuels make an
tion, detailing the measures by sector, was sub- important contribution to the European targets of
mitted to the European Commission on 10 % renewable fuels in the transport sector by
24.04.2014. As the reduction in consumption 2020. The use of untaxed agrofuel is only permit-
between 2007 and 2012 amounted to only ted for agriculture, public transport, and public
services. The exoneration from the TICPE (Taxe government maintains that it benefits the
Intérieure de Consommation sur les Produits (domestic) customers, as EU wholesale electricity
Énergétiques; Douane 2013) was permitted tariffs are generally higher than those in France.
according to the EU Directive 2003/96/CE Tariffs. The electricity and gas market is over-
(CEU 2003) in order to compensate for the higher seen by the Commission de Régulation de
production costs of agrofuels but has been gradu- l’Énergie (CRE) as independent regulatory body,
ally phased out until the end of 2015. but the government retains the final decision on
Biomass currently contributes to 60 % of all the tariffs.
final renewable energy consumption. The Plan Nuclear Energy. The Loi Grenelle 2 also pro-
National d’Actions pour les Énergies vides the framework for regulating nuclear energy
Renouvelables (PNA EnR) foresees a stabiliza- systems in France. Following the events at
tion at this level until 2020. Fukushima in 2011, laws and regulations
The environmental legislation (“Loi Grenelle pertaining to the safety and security of nuclear
2”, LOI n 2010-788) promotes the injection of installations were subject to a review at EU and
biogas into the natural gas network. The law is national level. A French regulation of 07.02.2012
supported by subsidiary regulations that inter alia sets out the safety management, public informa-
regulate the tariffs paid to the biogas producers. tion, risk management, the management of envi-
Biogas is further favored by purchase guarantees ronmental and health impacts, the management of
for coproduced electricity. A register to document radioactive wastes, as well as management of
the origins of biomethane was set up in 2013. At emergency situations. The management of radio-
the end of 2013, three producers regularly injected active waste is more specifically addressed by the
biomethane into the gas network. Plan National de Gestion des Matières et Déchets
The national committee for off-shore renew- Radioactifs (PNGMDR). The plans are reviewed
able energies (Comité National sur les Energies every 3 years, and current plan covers the period
Renouvelables en Mer, CNEM), which was set up 2013–2015.
in November 2013 by the Ministry for Ecology, Renewables. Over the past 10 years, a large
Sustainable Development and Energy, proposed a number of legal instruments to regulate and foster
roadmap for off-shore wind energy exploitation. the development of renewable energy option have
been put into place, partly in response to European
Regulatory Framework Commission policy instruments. The various EC
As across the European Union, the French regula- Directives pertaining to energy and related envi-
tory framework strongly reflects government poli- ronmental policies have been transposed into
cies with respect to economic development and national legislation, namely, Directives 2009/28/
environmental protection (LOI n 2005-781). CE et 2009/30/CE on renewable energies and
The overarching instrument in France here is the biofuels were transposed into the Energy Law
Loi Grenelle 2, having both regulating as well as (articles L.661-1 to L.661-9) by Ordonnance
policy setting objectives. No. 2011-1105 of 14.09.2011.
Ownership. Though the energy market is fully The life cycle environmental impacts of energy
open to competition in line with European Union carriers based on renewable sources slowly gain
Directives, it is dominated by (partly) state-owned attention. The decree No. 2011-1468 of
companies, namely, Electricité de France (EdF), 09.11.2011 (DÉCRET n 509 2011-1468) con-
Gaz de France (GdF-Suez, since April 2015 cerns the sustainability of biofuels. Similarly, the
ENGIE SA), Total (oil and gas), and AREVA Ordonnance No. 2014-355 of 20.03.2014 sets out
(uranium), and therefore, competition in reality inter alia the licensing procedures for wind power
is rather limited. This means that energy carriers, installations considering their environmental
conversion, and distribution as well as tariffs are impact and competing land-uses.
at least partially controlled by the government. The (subsidizing) tariffs by which wind-
While this hinders full market competition, the generated electricity is compensated for feeding
into the national grid were fixed by an Arrêté of References

17.06.2014.
^
ARRETÉ du 17.062014 fixant les conditions d’achat de
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l’électricité produite par les installations utilisant
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C
Czech Republic: Mineral and Energy Germans (0.2 %), Silesians (0.1 %), and Romani
Policy (0.1 %). As the “nationality” was an optional item,
a substantial number of people left this field blank
Martin Sivek1, Jakub Jirásek1, Pavel Kavina2 and (27.8 %) – Czech Statistical Office (2015).
Jaromír Starý3 The Czech Republic ranked 28th in the world
1
Institute of Geological Engineering, Faculty of in the Human Development Index of 2013
Mining and Geology, VŠB, Technical University (United Nations Development Programme
of Ostrava, Ostrava-Poruba, Czech Republic 2014). The quality of institutions is illustrated by
2
Department of Raw Materials and Energy Policy, Democracy Index, used by the Economist Intelli-
Ministry of Industry and Trade of the Czech gence Unit. The Czech Republic is ranked 25th
Republic, Praha, Czech Republic most democratic state in the world with a score of
3
Czech Geological Survey, Praha, Czech 7.94 (The Economist Intelligence Unit 2015). The
Republic economic development is illustrated by the steady
growth of GDP per capita. The latest figure of
GDP at purchasing power parity per capita is
General Information on the Czech 30445 Int$ in 2014 (The World Bank 2015).
Republic The Czech Republic belongs to a group of
countries with a long history of mining in its
The Czech Republic is a landlocked country with territory. That is the reason why many of its
area of ca 78,900 km2 and land population of deposits are already exhausted or why their output
approximately 10.5 million. Czechoslovakia is declining. With regard to ore deposits, the
experienced 40 years of communist rule and Czech Republic is a net importer as in the case
returned to democracy only in 1989. During the of liquid and gaseous hydrocarbons. The Czech
dramatic transformation period of the 1990s, it has Republic is essentially self-sufficient in bitumi-
peacefully split into Czech and Slovak Republics. nous coal and lignite, but their recoverable
Their transition toward Western-type democracies reserves are limited. The Czech Republic has
culminated in 2004 when they both joined the long ranked among major producers of uranium
European Union. ore. Today, only a single underground mine is
According to preliminary results of the 2011 operating near the end of its life span, and the
census, the majority of the inhabitants of the future of uranium mining in the territory of the
Czech Republic are Czechs (64.3 %), followed country is being deliberated. As far as industrial
by Moravians (4.9 %), Slovaks (1.4 %), Ukrainian minerals are concerned, the Czech Republic has
(0.5 %), Poles (0.4 %), Vietnamese (0.3 %), reserves of some minerals that have traditionally
DOI 10.1007/978-3-642-40871-7_59-1
2 Czech Republic: Mineral and Energy Policy
been mined in its territory (such as limestone, ore-mining operations gradually ceased by the
kaolin, clays, bentonite, silica sand, feldspar, and beginning of 1994. There are no metal ores that
others); however, a number of them must be are currently being mined in the CR, and all con-
imported. All of the mentioned factors increase sumption is covered by imports. The reserves at
the importance of formulating the mineral and ore deposits were subsequently reevaluated
energy policy of the Czech Republic, as does the according to new conditions of usability, and
continued interest in expanding and strengthening with a few exceptions (such as some gold ore
the mineral and energy security of the country. deposits), originally economic reserves were
reclassified as potentially economic and, in some
cases, even removed from the Register of
Need of Minerals Reserved Mineral Reserves of the Czech
Republic.
The Czech Republic, mainly the part consisting of The Czech Republic has limited resources of
the Bohemian Massif, is very diverse and rich in mineral fuels. Significant deposits and resources
ore resources and deposits. However, most of of coal and uranium ore occur in the territory of
the rich and accessible ores in the territory of the the country, but there are only small reserves and
country have been exhausted due to long-term and resources of crude oil and natural gas. The essen-
intensive mining. This applies in particular to the tial energy mineral of the Czech Republic is coal,
ores of silver, tin, iron, copper, lead, zinc, and also nearly 50 million tonnes of which are produced
partly to gold and antimony ore. Yet the Czech and from which about 57 % of electricity and
Republic still has large reserves of gold, tungsten, 58 % of heat are generated. With around 40 million
and lithium ore. The geological structure and tonnes, lignite accounts for the largest production
existing knowledge realistically indicate the volume and is consumed almost exclusively
occurrence of promising resources of some rare domestically to produce electricity and heat.
elements such as rubidium, cesium, zirconium, Even though bituminous coal accounts for only
and hafnium. They are mostly by-products in the 17–18 % of the total coal production, only a part
deposits of other metals such as uranium and of it is consumed domestically and more than half
lithium. By contrast, significant deposits and is exported. However, the Czech Republic also
resources of the platinum-group metals; of alumi- imports about two million tonnes of bituminous
num, magnesium, titanium, chromium, nickel, coal annually. The total domestic resources of coal
and cobalt ores; of REE; and of some other pre- are high; however, mineable reserves are very
cious metals cannot be assumed to occur in the limited. The average lifespan of lignite reserves
Czech Republic (CR). The seemingly large regis- is about 20 years and even shorter in the case of
tered reserves of manganese consist of very poor bituminous coal, roughly 15 years. The CR is the
and difficult-to-process ores. The level of mining only country in the EU (not counting the smaller
and its development was influenced over the long production in Romania, where uranium is recov-
term by the so-called limit costs for metals that ered as a by-product of ore extraction) that still
were promulgated by central authorities, which produces uranium ore, though only from the
subsidized ore mining from 1965 to 1988. This Rožná deposit. The annual production of around
also affected the volume of geological and mainly 200 tonnes of metal has, in recent years, theoret-
industrial reserves. In connection with the ically (the produced concentrate is exported and
changes that occurred in the Czech Republic in finished fuel cells are imported) covered roughly
1989, the government adopted a concept of phas- one-third of domestic needs. Due to intensive
ing out ore mining and processing in 1990, which mining, most of the richer vein-type uranium
was based on a gradual but radical reduction in deposits were exhausted prior to 1990. By con-
subsidized mining and processing of ores so that trast, subeconomic resources of uranium ore in
subsidies would not be provided since 1993. As a sandstone-type deposits are still very large,
result of the termination of subsidies, all despite having been mined as well. The geological
Czech Republic: Mineral and Energy Policy 3
structure and current exploration of the Czech The term construction minerals applies to all
Republic exclude the occurrence of large and sig- minerals that are used in the construction industry,
nificant deposits of crude oil and natural gas. The such as in road, railway, and building construc-
reserves of both of these raw materials in the tion, and in the manufacture of concrete, mortar,
Czech Republic are small and their production bricks, and blocks. In the Czech Republic, con-
covers about 1–2 % of the country’s needs. There- struction minerals are subdivided into reserved
fore, the vast majority of both of these two impor- (owned by the state) and non-reserved (owned
tant energy and chemical raw materials must be by the land owner) minerals. Minerals for the
imported. production of building materials, primarily car-
Industrial minerals include a wide range of bonates, are classified in the Czech Republic
minerals and rocks used directly or after among industrial minerals. The Czech Republic
processing in various industrial and agricultural has vast proved reserves of reserved and
sectors. There are many industrial minerals in the non-reserved deposits of construction minerals.
Czech Republic and their importance varies. The They are however being depleted quickly, espe-
total resources of most of the important industrial cially in the case of sand and gravel, primarily due
minerals are relatively large: however, the mine- to the construction of industrial zones and the
able reserves of the highest quality and most expansion of satellite towns, road networks,
accessible minerals are limited. As in the case of etc. A total of 55–60 million tonnes of construc-
ore mining, the mining of fluorite-barite ores tion minerals are produced annually, which is
ceased in the first half of 1994. Graphite mining nearly 45 % of all minerals (the largest volume),
was terminated later on, at first in September yet production has declined by nearly 30 % in the
2003 at the South Bohemian deposits and in past 5 years. Crushed stone accounts for the larg-
2008 at the last worked deposit in North Moravia est share of production – reserved and
(the mineral that was mined earlier continued to non-reserved deposits annually produce around
be used over the next 2 years). Kaolin is tradition- 30 million tonnes and three million tonnes,
ally one of the most important domestic industrial respectively. In the case of sand and gravel,
minerals. The Czech Republic ranks among the reserved and non-reserved deposits annually pro-
leading producers in Europe and the world with an duce around ten million tonnes and eight million
annual production of crude and beneficiated kao- tonnes, respectively. Brick clays and related min-
lin of around 3–3.5 million tonnes and 0.55–0.65 erals are produced to a lesser extent – around 1.3
million tonnes, respectively. The Czech Republic million tonnes from reserved deposits and 0.3
is also one of the leading European and world million tonnes from non-reserved deposits – and
producers in the output of various types of clay, in the case of dimension stone, about 0.4 million
bentonite, feldspar, silica sand, and diatomite. tonnes from reserved deposits and 0.1 million
Clay production declined significantly and cur- tonnes from non-reserved deposits.
rently ranges around 0.5 million tonnes annually,
which is similar to foundry sand with about 0.4
million tonnes annually. The production of ben- Classification of Mineral Reserves
tonite, feldspar, diatomite, and glass sand has been
stable over the long term and ranges around 0.2 The Czech mineral reserves/resources classifica-
million tonnes, 0.4 million tonnes, 30–40 thou- tions were adopted from the former USSR classi-
sand tonnes, and about 0.9 million tonnes, respec- fication, and it is not compatible with international
tively. The production and reserves of carbonates classifications (UNFC, JORC, PERC ETA.). The
account for the largest volume of all industrial effective Czech Mining Act divides the classifica-
minerals. Around 4.5 million tonnes of high- tion of geological reserves (total resources) at
purity limestone and 5–6 million tonnes of other reserved deposits according to degree of explora-
types of limestone and corrective additives for tion into the categories of explored reserves
cement production are produced annually. (prozkoumané zásoby) and prospected reserves
(vyhledané zásoby) and, according to exploitabil- Republic was drawing closer to joining the Euro-
ity conditions, into economic reserves (bilanční pean Union, but also at a time when the mining
zásoby) and potentially economic reserves industry was being phased out, primarily in the
(nebilanční zásoby). Economic reserves are suit- member states of the European Union. This period
able for existing technical and economic condi- was characterized by relatively low mineral
tions in exploiting a reserved deposit. Potentially prices, which subsequently began to rise only to
economic reserves are currently unexploitable due start declining again after 2008. Many interna-
to being unsuitable for existing technical and eco- tional political changes occurred in the global
nomic conditions of exploitation, yet assumed to economy since the establishment of the first
be exploitable in the future in consideration of mineral policy of the Czech Republic in 1999.
expected technical and economic development. A general upward pressure was put primarily on
The term reserves as used, by contrast, in standard the consumption of energy minerals, which lead
international classifications represents only the among other things to increased political self-
parts of economic-explored resources which are confidence of mineral-producing countries. Issues
available for immediate or developed extraction. that increasingly came to the forefront concerned
All other registered parts are resources, not the energy and mineral security of countries. The
reserves. initial orientation of mineral policies toward
energy minerals was gradually expanded to
include metals and even some industrial minerals.
Legislative Basis for the Mineral Changes in the mineral markets also influenced
and Energy Policy of the Czech Republic the European Union’s approach to minerals. In
2008, specifically on 3 November 2008, the Euro-
The Czech Republic drafted its first mineral pol- pean Commission issued the communication
icy at the end of the 1990s. The document called COM (2008) 699, which outlined a new inte-
the “Mineral and Mineral Resources Policy” was grated strategy “The Raw Materials
approved by Czech Government Resolution Initiative – Meeting our critical needs for growth
No. 1311 on 13 December 1999. The mineral and jobs in Europe.” It contains measures to
policy was defined in this document as “the sum ensure access to minerals for the European indus-
of all activities involving the exploration for and try, which is considered to be of vital importance.
use of domestic mineral resources, including Together with the other factors mentioned previ-
sources of secondary minerals, their efficient and ously, this document, which was taken into
rational use, and the acquisition of minerals account by the Czech government on 30 March
abroad for the purpose of securing the economy.” 2011, accelerated efforts to draft an updated min-
In an addendum to the resolution, the government eral policy. This prompted proposals that have yet
imposed 13 tasks addressing the main objectives to be approved by the Government of the Czech
of the mineral policy and set deadlines for their Republic due to some politicized mineral policy
completion. The set objectives and deadlines for objectives. This is exemplified by a proposal from
their completion were assessed in Czech Govern- 2012 (Mineral Policy of the Czech Republic
ment Resolution No. 1239 on 10 December 2003, 2012), which was discussed at the meetings of
which approved the “Report on the Implementa- the Government Council for Energy and Mineral
tion of the Mineral and Mineral Resources Strategy. However, it is still not clear when the
Policy.” Since then, the basic concept of the min- new mineral policy of the Czech Republic will be
eral policy has essentially been implemented, finalized and approved. The document was
even though it has neither been evaluated further divided into two sub-documents. The first section
nor updated (Mineral Policy of the Czech Repub- entitled the “Secondary Mineral Policy” was final-
lic 2012). ized, successfully passed the mandatory SEA pro-
The mineral policy approved in 1999 was cess, and was approved by the government. The
established during a period when the Czech second part is the actual mineral policy, which is
still being dealt with and debated because it con- Basic Characteristics of the Mineral
tains some sensitive issues such as a proposed Policy of the Czech Republic
new locality as a substitute for the Rožná uranium
mine nearing the end of its life span or problems The main objective of the national mineral policy
involving important reserves of lignite, which are is to secure an abundant supply of mineral
still blocked by administrative restrictions. resources for the nation’s economy. These
The energy policy of the Czech Republic was resources may come from domestic sources or
initially drafted as a part of the mineral policy. The from imports. The ratio between the two groups
growing problems of European countries, includ- is then to a certain extent an indicator of a nation’s
ing the Czech Republic, in securing energy mineral security. As mentioned in the section
resources heightened the significance of the regarding the mineral resource base of the CR,
energy policy, which became an independent our country depends on the imports of all primary
issue. In the Czech Republic, this development metallic raw materials, of the vast majority of crude
resulted in the establishment of independent doc- oil and natural gas and of some specific industrial
uments entitled the State Energy Concept. The minerals. In the case of these commodities, the
first of these documents was the “State Energy most important factor is the sufficient diversifica-
Conception of the Czech Republic,” which was tion of supplies, specifically the diversification
approved by Czech Government Resolution of source areas as well as transport routes. The
No. 211 on 10 March 2004. The document Czech Republic has dealt with this relatively well
outlined the state energy concept and defined tar- as far as crude oil and natural gas is concerned,
gets and instruments for meeting those targets. It which of course does not mean that there is no
also included a comprehensive energy scenario of room for improving the diversification further and
the state energy concept. Every 3 years, the Min- thus for strengthening the country’s energy secu-
istry of Industry and Trade evaluates the achieve- rity. The nation’s stocks also play a role in the case
ment of the objectives of the state energy concept. of minerals, on whose imports our country
In recent years, several updated versions of the depends. With regard to those minerals that are in
State Energy Concept were produced, the last of sufficient supply in the territory of the Czech
which is from 2013. The proposal includes a Republic, it is essential for the mineral policy to
vision and priorities of the Czech energy sector, create conditions for their economic use, which is
including a scenario of its development until 2050 fully in line with the European Raw Materials
(the scenario includes a detailed strategy up to Initiative. This is one of the three pillars that intro-
2030 and a strategic balance sheet for duce a higher degree of use of domestic (European)
2030–2050). The document was thoroughly mineral resources in order to reduce the frighten-
discussed by the aforementioned Government ingly high import dependence and thus intimida-
Council for Energy and Mineral Strategy and tion of the EU.
passed through interdepartmental proceedings A very important part of the national mineral
and the difficult SEA process, including a public policy is its soft areas, in particular the need to
hearing and international debate. It is expected to conduct high-quality geological surveys of our
be adopted by the government in the next few territory, with a particular focus on new, modern,
months. However, the next step in the develop- super-strategic raw materials of the EU, for whose
ment of nuclear energy in the CR remains existence or extent of occurrences in our area the
unresolved. Czech administration does not possess relevant or
rather hardly any information. Another level of
the national mineral policy should be to provide
support for the work conducted by Czech explo-
ration companies abroad. This should involve both
diplomatic and information support and primarily
financial support for projects that have a great
export-oriented potential and that may strengthen difference between total export and import of
the mineral security of the CR in the future. Last but electricity. This value represents 21.1 % of net
not least, it is necessary to mention the support of electricity produced that year in the Czech
science and research in the field of mineral resource Republic. This is largely the result of the Czech
management, particularly the research into the use Republic’s appropriate energy mix (Fig. 1), which
of new minerals, new modern applications of tradi- safeguards a significant portion of the domestic
tional minerals, advanced nondestructive explora- mineral resource base for electricity generation
tion methods, material-saving technologies, smart and partly also for heating. Lignite and, to some
recycling, etc. extent, also bituminous coal still account for a
significant share of heating and so does nuclear
energy in the case of electricity as well as hydro-
Basic Characteristics of the Energy Policy power plants and other renewable resources. The
of the Czech Republic share of electricity produced from crude oil and
natural gas is very low. In addition to lignite,
Formulating and updating the energy policy is an natural gas plays an important part in heating as
extremely important task for the Czech Republic well, and crude oil and petroleum products to a
with regard to its heating industry and electricity lesser extent. The orientation toward the domestic
generation. As previously mentioned, the energy mineral resource base, primarily in electricity gen-
policy is closely connected to the mineral policy eration, is the main reason for the Czech Repub-
because they basically share an identical basis. lic’s low energy dependence and also largely the
This mainly involves the evaluation of the mineral main reason for the differences in the energy mix
resource base of the country and the objective of the Czech Republic and European Union
analysis of the possibilities for supplying missing (Fig. 1).
minerals. At the same time, it is important to bear The Czech Republic currently faces a major
in mind that the evaluation of the domestic min- decision regarding the future orientation of its
eral resource base should be conducted from a energy strategy. At the present time, electricity
geological and mining technology perspective generation is based on two pillars: coal-fired and
and should also take into account the overall eco- nuclear power plants. Changes in the mineral
nomic impact of mining. resource base of the Czech Republic, primarily
In comparison with the majority of the member the time constraints or administrative restrictions
states of the European Union, meeting the energy on lignite, are prompting a decision on the future
needs of the Czech Republic presents a number of of Czech energy, including nuclear energy. The
specific features (Kavina et al. 2009). This is best changes are also the main reasons why the Czech
observed by comparing their energy dependence. Republic will be forced to adjust its future energy
In 2013, the energy dependence of the entire strategy and also its current best energy mix
European Union (EU-28) amounted to 53.2 %. (Sivek et al. 2012a), which was chosen more or
However, that same year, the energy dependence less in the 1970s. Since then, the reserves and
of the Czech Republic was 27.9 %. It should be consequently also the life span of lignite deposits
noted that the Czech economy reached this value have decreased significantly. The future develop-
in a situation where it is basically a net importer of ment of uranium mining in the Czech Republic
crude oil and natural gas. The reason for this value remains similarly in question. According to his-
is mainly the situation in electricity generation, in torical statistics, the Czech Republic is prominent
which the Czech Republic is presently completely in global rankings with a total production of
self-sufficient, and even part of its production is 111 thousand tonnes of uranium, which were pro-
exported. According to data from the Energy duced between 1946 and 2009. However, mining
Regulatory Office of the Czech Republic (2015), was terminated at all vein-type deposits (with the
the balance of cross-border electricity flows in exception of the Rožná deposit) in the 1990s and
2014 amounted to 16 924.6 GWh, which is the also at sandstone-type deposits in 1993. Uranium
a 18,3% 20,1% b 41,3 %

6,0%
1,9 %
3,9%
0,1%
10,3%
2,5 %
3,9%
35,3 %
10,3 % *
29,5% 4,3 % *
5,1 % ** 7,3 % **
1 3 5 7
2 4 6
Czech Republic: Mineral and Energy Policy, power plants, (2) bituminous coal power plants, (3) natural
Fig. 1 Comparison of sources from which electrical gas power plants, (4) crude oil power plants, (5) nuclear
energy is produced. (a) in EU member states (in 2007), power plants, (6) renewable energy sources, *hydropower,
(b) in the Czech Republic (in 2013) (Source: Eurostat **other RES, (7) other power stations
(2010); Energy Regulatory Office (2014)). (1) Lignite
production therefore declined from an annual pro- need for a realistic assessment of the options and
duction in the range of 2000–2900 tonnes of ura- methods for developing renewable energy sources
nium per year to 222 tonnes of uranium in 2012 in the Czech Republic must also be taken into
(Starý et al. 2013). The estimated lifespan of the account with regard to the new energy policy
last deposit Rožná amounts to several years. How- (Sivek et al. 2012b), particularly those sources
ever, the Czech Republic still has a sound poten- that are economically viable such as smaller pho-
tial for uranium resources. In order to maintain its tovoltaic installations on the roofs of houses or
unique know-how in the uranium industry in industrial sites.
Europe and to maintain its ability to produce this The open questions mentioned regarding the
highly strategic mineral, the preparation for the future development of energy in the Czech
exploitation of a similar deposit, employing con- Republic are the main tasks that must be the
ventional underground mining, is realistically subject of the proposed updated state energy con-
being considered as a substitute for the Rožná cept and national mineral policy as well. In order
deposit that is about to be exhausted. According to maintain its existing level of energy security
to statistics (Starý et al. 2013), the total uranium and not to increase its energy dependence dramat-
resources recorded in the Czech Republic ically, the Czech Republic must resolve the fun-
amounted to 135 214 tonnes as of 31 December damental question regarding the future orientation
2012. However, about 85 % of these are registered of the structure of electricity generation as it pon-
as potentially economic resources (partly due to ders the future development of its energy portfolio
an administrative recalculation of reserves in con- in the electricity generation sector. It’s a question
nection with the phaseout of uranium mining). involving coal or nuclear power as the future for
The activation of the mentioned resources electricity generation in the Czech Republic. The
requires renewed mineral exploration and also State Energy Policy of the Czech Republic that
new technical and economic evaluations of pro- was approved in March 2004 and a government
spective deposits as well as the use of the latest expert committee for assessing the future energy
technologies for their possible exploitation. The
needs of the Czech Republic in 2008 came to covered by local deposits of sand and gravel,
similar conclusions: aggregates, crushed stone, and brick clay.
When creating its energy strategy, the Czech
1. Not to delay the planned construction of new Republic may take advantage of the fact that
nuclear reactors, including a realistic evalua- despite a considerable drop of the exploitation of
tion of the role of domestic uranium deposits mineral raw materials at the end of the last cen-
with regard to their integration into the ura- tury, the production of the majority of energy raw
nium cycle materials has been preserved in its territory.
2. To consider the possibility of increasing the
availability of domestic lignite
References
Other choices regarding the energy mix for
electricity generation would substantially increase COM (2008) 699 final. The raw materials
the energy dependence of the Czech Republic and initiative – meeting our critical needs for growth and
thereby weaken its energy security. jobs in Europe. Commission of the European Commu-
nities, Brussels
Czech Statistical Office (2015) Preliminary reports on
2011 census – 2015, Prague. Available via https://vdb.
International Memberships czso.cz/vdbvo2/faces/cs/index.jsf?page=profil-uzemi.
Accessed 11 Nov 2015
Energy Regulatory Office (2014) Yearly report on opera-
The Czech Republic is a member of the United tion of the Czech electricity grid for 2013, Prague.
Nations (as Czechoslovakia charter member, as Available via http://www.eru.cz/documents/10540/
the Czech Republic since 1993), the European 462820/Annual_report_electricity_2013.pdf/34a35d27-
Union (since 2004), NATO (since 1999), WTO 9c58-4c79-99d1-f0fbc5eac06a. Accessed 4 Nov 2015
Energy Regulatory Office (2015) Monthly reports on oper-
(since 1995), OECD (since 1995), OSCE (since ation of electric power system of the Czech Repub-
1993), and the Council of Europe (as the Czech lic – 2014, Prague. Available via http://www.eru.cz/
and Slovak Federative Republic since 1991, as the cs/3787. Accessed 4 Nov 2015
Czech Republic since 1993). Eurostat (2010) Europe in figures: Eurostat yearbook 2010.
European Union, Luxembourg
Government Resolution No. 1311/1999 regarding the min-
eral and mineral resources policy (in Czech)
Concluding Statement Government Resolution No. 1239/2003 approving the
report on the implementation of the mineral and min-
eral resources policy (in Czech)
Ore deposits in the territory of the Czech Republic Kavina P, Jirásek J, Sivek M (2009) Some issues related to
are mostly exhausted by long mining. The only the energy sources in the Czech Republic in the Czech
exceptions are some gold, tungsten, and uranium Republic. Energy Policy 37:2139–2142
Mineral Policy of the Czech Republic (2012) Ministry of
deposits. Of the future interests, here might also
the industry and trade, Prague (in Czech)
be some deposits containing lithium minerals. Sivek M, Kavina P, Jirásek J, Malečková V (2012a) Factors
Exploration of industrial minerals deposits is influencing the selection of the past and future strate-
stable. Production is mostly focused on traditional gies for electricity generation in the Czech
Republic. Energy Policy 48:650–656
ones, such as kaolin, refractory clay, bentonite,
Sivek M, Kavina P, Malečková V, Jirásek J (2012b) Czech
industrial sands, limestone, and feldspars. Domes- Republic and indicative targets of the European Union
tic demand for construction minerals is mostly
for electricity generation from renewable sources. via http://www.sudestada.com.uy/Content/Articles/

Energy Policy 44:469–475 421a313a-d58f-462e-9b24-2504a37f6b56/Democracy-
Starý J, Sitenský I, Mašek D, Hodková T, Kavina P (2013) index-2014.pdf. Accessed 11 Nov 2015
Mineral commodity summaries of the Czech Republic The World Bank (2015) GDP per capita, PPP (current inter-
2013 (statistical data to 2012). Czech Geological Sur- national $). Available via http://data.worldbank.org/
vey, Prague indicator/NY.GDP.PCAP.PP.CD?order=wbapi_data_
State Energy Conception (approved by the Government of value_2014+wbapi_data_value+wbapi_data_value-
the Czech Republic resolution no. 211 of 10 Mar 2004) last&sort=asc. Accessed 11 Nov 2015
(2004) Ministry of the industry and trade, Praha United Nations Development Programme (2014) Human
(in Czech) development records. Available via http://hdr.undp.org/
The Economist Intelligence Unit (2015) Democracy index en/content/table-1-human-development-index-and-its-
2014. The Economist Intelligence Unit Ltd. Available components. Accessed 11 Nov 2015
P
PEN Currency of Peru – Nuevo

Peru: Energy Policy
sol
PERUPETRO Is the national oil company
Abel Venero
PERUPETRO S.A. entitled
Santiváñez Abogados, Lima, Peru
with the property of the
hydrocarbons located in
Peru (not to be confused
Abbreviations
with the other national oil
company PETROPERU
BCRP Peruvian Central
S.A. that operates as a
Bank – Banco Central de
private company)
Reserva de Perú
PROINVERSION Is the national agency for
COES System operator for the
the private investment
Peruvian interconnected
promotion in
electric system
Peru – Agencia de
INEI Peruvian Statistics and
Promoción de la Inversión
Informatic
Privada
Agency – Instituto Nacional
USD Dollars of the United States
de Estadística e Informática
of America
MBD Thousand barrels per day
MEF Peruvian Ministry of
Economy and
Finance – Ministerio de
General Information on Peru
Economía y Finanzas
The Republic of Peru is a country located in
MINEM Peruvian Ministry of
western South America. The country’s GDP in
Energy and
2013 amounted to PEN 546,908 million (BCRP
Mines – Ministerio de
2015), and it is expected to grow at a 6.4 % rate
Energía y Minas
during the period between 2015 and 2017 (MEF
OSINERGMIN Energy and mining
2015).
industries
The population in Peru is multiethnic including
regulator – Organismo
native Peruvians and descendant of Europeans,
Supervisión de la Inversión
Africans, and Asians. According to INEI, in
en Energía y Minería
2001, the majority of the population (58.1 %)

DOI 10.1007/978-3-642-40871-7_62-1
2 Peru: Energy Policy
classified as mestizo and secondly as belonging to economically feasible. In turn, these reserves
the Quechua ethnic group (30.1 %) (Berrocal and are classified as:
Valdivia 2007). The official languages of the – Developed Proven Reserves: These are
country are Spanish and, in the areas where pre- resources technically feasible to be
dominant, Quechua, Aymara, and other native extracted.
languages (Constitution, Art, 48). – Nondeveloped Proven Reserves: These are
resources that could achieve technical
feasibility.
Background
According to the reserves report of 2013, the
As seen in Fig. 1 below, in 2012, the energy mix of evolution of the reserves in the past 10 years is as
the country relied heavily in petroleum and natu- follow (MINEM 2015):
ral gas liquids for covering the transportation, Oil (MMSTB) Natural gas (TCF)
industrial, commercial, and household energy Year Proven Probable Possible Proven Probable Possible
demands. 2004 379.32 411.64 5073.19 11.50 5.20 13.20
In recent years, Peru has become a net energy 2005 382.87 438.11 5418.09 11.90 6.80 11.60
exporter, accounting -14 % of its total energy use 2006 415.77 692.03 5317.64 11.80 6.80 11.60
2007 447.38 661.07 4907.03 11.80 6.80 11.20
from energy imports in 2011 (The World Bank
2008 532.66 640.47 4637.85 12.20 6.30 12.60
2015). This situation has developed in recent
2009 530.90 805.91 1952.70 12.00 14.00 19.30
years. It is important to notice that the exporter 2010 582.03 941.89 1828.65 12.50 10.60 20.60
condition was recently acquired when the natural 2011 579.16 800.96 1674.97 12.70 8.80 7.50
gas fields located in Camisea came into produc- 2012 632.91 668.25 700.03 15.40 7.70 5.10
tion in 2005. 2013 741.22 363.02 400.94 15.00 6.50 5.40
Primary Sources
In the case of renewable sources, Peruvian
The previous statistic does not reflect that current
legislation provides a promotional regime for
oil demand in the country outbalances the local oil
power generation from renewable sources, being
production. In fact the current demand of oil
photovoltaic solar generation the only primary
amounts to 209 MBD thus requiring the import
renewable source (Legislative Decree 2008). The
of 85 MBD of oil and 48 MBD of diesel. Thus, the
most important features of this regime are the
commercial trade balance regarding oil and oil
priority dispatch of these plants and the possibility
products accounts a deficit of -3,000 MMUS$
of these plants to obtain a guaranteed income
(MINEM 2013b).
through a tendering process. Such guaranteed
Regarding hydrocarbons resources, these are
income comprises of the earnings from the spot
classified according their feasibility. Then, Peru
market and a subsidy for the difference between
hydrocarbons are classified as (MINEM 2002):
those earnings and the guaranteed price. The sub-
sidy is covered by a levy collected from all the
• Possible Reserves: Resources with the least
electricity consumers in the country through the
certainty of existence and economic feasibility.
transmission lines tariffs, making the plant’s
• Probable Reserves: Resources with a low level
owner to bear no risk regarding the difference
of certainty over their existence, which is
between the spot market price and the guaranteed
insufficient information for determining its
income.
economic and technical feasibility.
• Proven Reserves: The existence of resources is
proved with a reasonable certainty given the Secondary Sources
geologic and engineering information. Addi- Regarding the electric industry, Peru has an inte-
tionally, the extraction of these resources is grated electric system interconnecting almost all
Peru: Energy Policy 3
Peru: Energy Policy, Fig. 1 Peruvian Energy Mix 2012. yareta, chaff, and biogas. Solar energy participation is
Notes: (1) After transformation and/or after losses except minimal as well as electricity use in transportation. PJ =
for power generation. (2) Nonenergetic consumption is not Joule15 (Source: MINEM 2012 (original in Spanish))
considered. (3) Biomass includes firewood, dung and
of the country’s regions; however, there are some Natural Diesel-

isolated systems located in the periphery of the Year gas Hydro Coal residual Other TOTAL
regions (MINEM 2013a). The country does not 2012 15,340.47 20,848.60 555.51 354.10 222.50 37,321.18
have any important interconnection with neigh- 2013 17,027.32 21,128.56 836.59 254.24 422.72 39,669.43
boring countries having only marginal exports to

and imports from Ecuador (63 GWh exports in
2009) (CIER 2011). Finally, the sources available for electric gen-
In 2013, the installed power capacity for the eration can be classified as renewable sources
interconnected system reached 7813.1 MW. The according to law. Alongside the photovoltaic
production of electricity from the available capac- solar as the renewable primary source, mini
ity in the last 10 years evolved according to the hydro plants (>20 MW) as well as wind, waves,
following (COES 2015): and geothermal plants are considered renewable
energy secondary sources (Legislative
Natural Diesel- Decree 2008).
Year gas Hydro Coal residual Other TOTAL
2001 744.15 16,807.05 338.78 0.00 0.00 17,889.98
2002 1006.39 17,224.47 845.93 581.07 0.00 19,657.86
2003 1229.89 17,731.94 859.44 867.29 0.00 20,688.56 Energy Policy Conception of Peru
2004 2170.13 16,692.62 993.56 2046.37 0.00 21,902.68
2005 4071.78 17,100.84 830.88 997.99 0.00 23,001.48
Peru has an official long-term energy policy
2006 4296.30 18,670.71 880.98 914.79 0.00 24,762.78
2007 7316.05 18,588.46 840.14 510.29 0.00 27,254.93
(2010–2040) approved by the Supreme Decree
2008 9318.67 18,010.23 909.28 1320.53 0.00 29,558.71 064-2010-EM focused on nine objectives such
2009 9266.79 18,751.67 930.17 858.93 0.00 29,807.55 as: 1. Diversification of the energy matrix, 2.
2010 11,446.53 18,964.56 1066.92 871.34 77.48 32,426.83 Competitive energy provision 3. Universal access
2011 13,462.19 20,404.12 732.36 531.45 87.31 35,217.43 to energy supply 4. Efficiency in the energy
(continued)
production and uses, 5. Suficiency in the energy Regulatory Framework

production 6. Minimum environmental impact
and low carbon emission 7. Deployment of a Primary Sources
natural gas industry, 8. Strenghtening of the According to the Pervuvian Constitution, the nat-
energy sector institutional framework and 9. Elec- ural resources are owned by the nation embodied
tric integration with other countries in the region. in the State (Peruvian Constitution, Art. 61). In
However, only objective number 3. Universal contrast, for the hydrocarbons resources, these,
access to energy supply has a detailed framework, once extracted, are property belongs to the com-
the Universal Energy Access Plan (The Universal pany PERUPETRO in order it could negotiate and
Energy Access Plan has been approved by Minis- execute contracts for the exploration and produc-
terial Resolution 203-2013-MEM/DM, in effect tion of hydrocarbons with private companies
since May 28, 2013), for its achievement includ- (Hydrocarbons General Law, Art. 8).
ing specific economic mechanisms and objective The contracts for the exploration and produc-
goals. The current framework of this goal will be tion are classified into three types: (i) License
in effect until 2022. Contract, granting the property of the resources
Alongside the long-term energy policy stated to the contractor in exchange for a royalty pay-
by MINEM, Peruvian energy sector counts with ment, (ii) Service Contract, in which the contrac-
an implicit energy policy based on the provision tor serves PERUPETRO S.A. and is paid with part
of infrastructure to achieve energy security. Revis- of the production, and (iii) other approved by
ing the experience in the sector since the entry in MINEM. PERUPETRO S.A. mainly holds
effect of Law 29970 – Energy Security Law in License Contracts and any atypical (in 2015,
2011, the provision of energy infrastructure over- 75 contracts in total and solely five are the Service
shadows any other policy goal. This predomi- Contract type) (PERUPETRO 2015).
nance has been caused by MINEM and On the other hand, PERUPETRO S.A. grants
OSINERGMIN which were granted with large the contracts by means of public offerings or
powers to create tariff mechanisms in order to through direct negotiation (Hydrocarbons General
fund new energy infrastructure such as the new Law, Art. 11). Any contract and its amendments
Southern Peru Gas Pipeline (The funding mecha- must be ratified by MINEM and MEF by means of
nism for the Southern Peru Gas Pipeline has been a Supreme Decree (Hydrocarbons General Law,
approved by MINEM with the Supreme Decree Arts. 11 and 12).
005-2014-EM published February 7, 2014. The Once the resources are extracted, the contrac-
mechanism consists in the collection of levies tors own the resources, having total freedom for
from all the electric consumers in order to cover any commercial operation. Notwithstanding such
the difference between the gas transport tariff and principle, in the case of the natural gas from
a guaranteed income granted through a bidding Camisea, the License Contract contains a domes-
process (USD 7,3280 654,511.00)) as well as new tic gas obligation to the contractor meaning that
electric capacity. (The funding mechanism for the resource may not be exported if the supply to
new capacity consists in the collection of levies the national gas market is not guaranteed.
from all the electric consumers in order to cover Regarding environmental regulation, any
the difference between the regulated capacity activity regarding exploitation of hydrocarbons
price and a guaranteed price granted through bid- requires an environmental certification which
ding processes. These levies are in effect by can vary from a brief declaration of the mitigation
Supreme Decree 038-2013-EM, published in activities to an extensive environmental impact
October 17, 2013.) These powers have been assessment depending on the depth of the
used extensively causing a general increase in activity’s environmental impact (Supreme Decree
the energy bills. 039-2014-EM. Regulation for the Environmental
Protection in Hydrocarbon Activities).
Peru: Energy Policy 5
Secondary Sources the efficient wheeling prices that the secondary

The electric industry in Peru is unbundled into line investors (mainly the distribution companies)
three main activities: generation, transmission, are entitled to charge their users.
and distribution. The commercialization to regu- Finally, for the case of the distribution activity,
lated users is exclusive for the distribution com- the potential investors have to obtain an adminis-
panies which are entitled to collect regulated trative and perpetual concession granting exclu-
tariffs from these users. On the other hand, free sivity for the deployment of medium and low
users may be customers of generation or distribu- voltage circuits in a territory. The concession
tion companies at their free will, with the capabil- grants the exclusive right to supply electricity to
ity to negotiate their energy prices. A regulated all the regulated users in its territory, as well as the
user has a peak annual demand below 200 kW obligation to interconnect any electric user that
while a free user peaks at 2500 kW. The users requires to be connected to their grid. The tariffs
demanding between 200 kW and 2500 kW may for the distribution services are set every 4 years
choose whether they are qualified as regulated or by OSINERGMIN using an efficient company
free users; however, they shall stay at least 3 years model.
in the user category chosen before changing its
quality.
In order to generate electricity, an interested International Aspects
investor has to overcome diverse administrative
barriers to the entry. In the case of thermoelectric Peru is a member of the International Atomic
plants, at the investor request, the authority issues Energy Agency since 1957.
an authorization once the project environmental Peru is a member of both the Andean Nations
certification has been obtained by the investor. Community (Comunidad Andina de Naciones)
Additionally, the filing includes a timetable for and the Union of South American
the construction of the plant, technical informa- Nation – UNASUR that are focused to improve
tion, and a performance bond. On the other hand, the institutional framework focused on a future
for the case of hydroelectric and renewable power regional interconnection; however, these arrange-
plants, the investor requires obtaining an admin- ments do not include concrete controls or stan-
istrative concession which is granted after filing dards in relation to environmental matters in
the requirement including the environmental cer- relation to energy use.
tification, the water allocation permits, technical Finally, Peru is also a member of the Latin
information, and a performance bond. Both the American Energy Organization – OLADE since
generation authorization and concession are its creation in 1973.
perpetual.
For the transmission activity, COES elaborates
a quinquennial transmission plan every 2 years Conclusions
which is revised by OSINERGMIN and finally
approved by MINEM. The plan details all the The current discussions in Peru regarding the
backbone transmission lines and associated infra- energy policy are mainly about the strategies for
structure required for the system expansion in the improving the levels of foreign private investment
studied period. Once the plan is approved, in the energy sector, as well as delivering energy
PROINVERSIÓN is required to organize and at the lowest price for households and small busi-
conduct auctions to grant 30-year concessions of nesses. As stated before, the regulatory frame-
the planned transmission lines to private investors work has been adjusted to resemble a
awarding those with the lowest annual cost competitive market; however, the main issue to
including CAPEX and OPEX. In the case second- tackle, in the author’s opinion, is improving the
ary transmission lines, OSINERGMIN approves a efficiency levels of the institutions in charge of the
mandatory quinquennial plan setting beforehand sector. In this case, improving the check and
balances mechanisms between institutions as well MEF (2015) Revised multiannual macroeconomic
as the proper definition of functions will boost the framework 2015–2017, p 3. Available at MEF web
page. http://www.mef.gob.pe/contenidos/pol_econ/
attractiveness of the country for private marco_macro/MMM2015_2017_Rev.pdf. Accesed
investment. 5 Feb 2015
MINEM (2002) Glossary, acronyms and abbreviations for
the hydrocarbons subsectors. Regulation approved by
Supreme Decree 032-2002-EM, enacted october 23th,
References 2002
MINEM (2012) Energy Efficiency Department. Energy
mix 2012. http://www.minem.gob.pe/_publicacion.
Peruvian State. Hydrocarbons General Law (Law 26221)
php?idSector=12&idPublicacion=470. Accesed
published in August 20th, 1993.
5 Feb 2015
Peruvian State. Legislative Decree 1002. Legislative
MINEM (2013a) Plan Energético Nacional 2014–2015.
Decree for the Promotion of Renewable Energy Gen-
MINEM, Lima
eration published in May 2nd, 2008
MINEM (2013b) General directorate of hydrocabons. 2013
Peruvian State. Peruvian Constitution. Enacted in Decem-
Annual reserves book. Available at: http://www.minem.
ber 30th, 1993.
gob.pe/minem/archivos/file/Hidrocarburos/publicaciones/
BCRP (2015) GDP since 1950. In: Historical annual data.
Libro%202013.pdf. Accesed 5 Feb 2015
Available at BCRP web page http://www.bcrp.gob.pe/
MINEM (2015) 2013 Executive yearbook. Available at:
estadisticas/cuadros-anuales-historicos.html. Accesed
http://www.minem.gob.pe/_publicacion.php?idSector=
5 Feb 2015
6&idPublicacion=482. Accesed 10 Feb 2015
Berrocal L, Valdivia M (2007) Etnicidad, Antecedentes
PERUPETRO (2015) Company’s webpage. Available at:
Lingüisticos y la Salud Materna Infantil en el Perú.
http://www.perupetro.com.pe/listadotestimonios/relacion.
INEI. Lima
jsp. Accesed 5 Mar 2015
CIER (2011) Síntesis informativa energética de los países
The World Bank (2015) Energy imports, net (% of energy
de la CIER. CIER, Montevideo
use). In: DATA. Available at The World Bank web page
COES (2015) Executive Directorate. 2013 Annual statis-
http://data.worldbank.org/indicator/EG.IMP.CONS.ZS/
tics. Available at: http://www.coes.org.pe/wcoes/coes/
countries/1W-PE?display=default. Accesed 10 Feb
salaprensa/estadisticas/estadistica2013.aspx. Accesed
2015
10 Feb 2015
R
Russian Federation: General in new (Eastern Siberia, the shelf) and in tradi-
Information on Mineral Policy tional centers of production (Western Siberia, the
Volga-Ural region) become aggravated.
Nuriia G. Nurgalieva and Vladimir V. Silantiev The considerable reserve in the search backlog
Kazan (Volga Region) Federal University, Kazan, formation is not only in the growth of the physical
Russia volume of exploration work, but also in improve-
ment its effectiveness, self-descriptiveness, and
reliability.
According to the “Resolution VII of All-Russian At present, the mineral policy of Russian Fed-
Congress of Geologists, 24–26 October, 2012” eration is governed by the “Strategy of the geo-
(2013), mineral resources complex of Russia pro- logical industry development until 2030” (2012)
vide more than 50 % of the revenues of the federal and the “Reproduction and use of natural
budget. Thanks to the previous and present work resources” state program (2014).
of geologists, Russia continues to be the raw According to these documents, geological
power of both resource potential and for the pro- industry provides mineral resources, energy and
duction of mineral raw materials. At the same economic security of Russian Federation, and ful-
time, the stable operation of extractive industries fillment of its geopolitical interests over the
is only possible if the process of resources alloca- oceans, the Arctic, the Antarctic, and on the con-
tion, evaluation and exploration continuously tinental shelf of Russian Federation.
compensates depleted deposits of raw materials Geological industry is inextricably linked with
in place. extraction, primary processing, transportation,
Maintenance of the amount of financing during and sales of mineral resources as well as its use
the crisis helped to keep positive gross data on by power producers, metallurgy and chemical
reserves growth of some minerals, especially industry, construction, and agriculture.
hydrocarbons. However, these results were Geological sector is administrated by the Min-
obtained mainly through additional exploration istry of Natural Resources and Environment; Fed-
and revaluation of previously discovered fields. eral Subsoil Use Agency and its territorial bodies;
New discoveries are constrained by a sharp the Federal Service for Supervision of Natural
decline in the volume of regional research and Resources; and its territorial bodies.
search operations that do not exceed 25 % of the Powers of government authorities of Russian
1991 level. Federation in the field of subsoil use regulation
Problems of quantitative and qualitative char- include fund management of mineral resources of
acteristics of explored reserves of hydrocarbons as common minerals, subsurface resources of local
DOI 10.1007/978-3-642-40871-7_63-1
2 Russian Federation: General Information on Mineral Policy
importance, as well as participate in the develop- – Improvement of the geological subsoil survey
ment and implementation of state programs, geo- and reproduction of the mineral resource
logical study, and reproduction of the mineral system
resource base and participate in the determination – Increasing the investment prospects of geolog-
of the conditions to use mineral deposits on its ical study and reproduction of the mineral
territories. resource
Coordinating body, providing interaction of – Improvement of data collection, processing,
federal executive bodies, executive bodies of sub- analysis, storage, and use of geological infor-
jects of Russian Federation, and other bodies and mation system
organizations in the study and use of mineral – Improvement of the scientific and technical
resources, is the Government Commission on support of geological exploration
fuel and energy complex and reproduction of – Creation of conditions for the introduction of
mineral resources base. innovative technologies
Preparation and interpretation of geological – Improvement of training and retraining system
information is made by mining companies and
scientific and industrial organizations working It is told in the Resolution of the Council of the
on the geological study and use of subsoil. Federal Assembly of Russian Federation “On the
Collection, processing, storage, and provision state geological study and reproduction of the
of geological information are provided by an mineral resource base” (2014) that in order to
extensive network of organizations under the ensure a comprehensive geological study and
jurisdiction of the Federal Agency for reproduction of mineral resources database a com-
Subsoil Use. pany ROSGEO was founded.
The main volume of scientific research and The document stressed that despite the positive
experimental development in the field of geolog- trend in the field of reproduction of mineral
ical study and reproduction of the mineral resources, the acute problem of exhaustion search
resource base are run by branch scientific organi- backlog due to low volumes of geological map-
zations, institutions of the Russian Academy of ping, prospecting, and thematic and applied
Sciences, and higher educational institutions. research work does not bridge the gap. Among
The strategic goal of the geological sector until other unresolved issues, there were marked lack of
2030 is to create high-performance, innovation- general geological knowledge of the country, lack
oriented system of geological study and reproduc- of reserve in the state of large and medium-sized
tion of the mineral resource base by “Strategy of mineral deposits, reducing size of the newly dis-
development of the geological industry until covered mineral deposits, incompleteness organi-
2030” (2012). The main objectives of the policy zational form of the public sector geological
in respect of the mineral resource base are to industry and poor technical condition of its mem-
ensure the country’s economic reserves of min- ber organizations exploration, the loss of a signif-
erals and geological information on mineral icant part of the scientific and technological
resources. These goals are achieved by solving capacity, aging, and shortage of staff.
problems on improvement of geological explora- It was also pointed out that foreign companies
tion in Russia and its continental shelf and the have stepped up its activity in the Russian market
Arctic and Antarctic, obtaining geological infor- of services in the field of geology. It brings to
mation, ensuring the reproduction of the mineral increase of dependence of domestic geological
resource base and the rational use of mineral organizations on supplies of imported equipment
resources base. and software and decrease of the level of national
According to the “Strategy of the geological control over the use of geological information.
industry development until 2030” (2012), priority Under these conditions, the state policy has to
areas of geological branch are the following: be sent on multiple extension of geological
Russian Federation: General Information on Mineral Policy 3
survey, exploration and evaluation activities, the ▶ Russian Federation: State Regulation and Min-
development of new deposits, areas, regions, and ing Law Development
provinces, all kinds of minerals, making maxi-
mum use of domestic equipment, technology,
and software processing of geological References
information.
In this regard, the Government of Russian Fed- Resolution “On the state geological study and reproduction
of the mineral resource base” (Moscow, June 18, 2014,
eration and the State Duma of Russian Federation
№ 257-SF) (in Russian) (2014) The Council of the
proposed to provide an additional Federal Assembly of Russian Federation. http://coun
budget allocation in geology, efforts to reform cil.gov.ru/activity/documents/44118
research organizations, to support exploration State Program of Russian Federation “Reproduction and
use of natural resources” No 322 on April 15, 2014
work, and to improve legislation on subsoil use.
(in Russian) (2014) Ministry of Natural Resources and
Environment. https://www.mnr.gov.ru/regulatory/
detail.php?ID=134261
Cross-References Strategy of the geological industry development until 2030
Environment. https://www.mnr.gov.ru/regulatory/
▶ Russian Federation: Energy Strategy detail.php?ID=129117&print=Y
▶ Russian Federation: Mineral Policy – General VII All-Russian Congress of Geologists (2013) Resolution
Assessment VII All-Russian congress of geologists (in Russian).
The Federal Agency for Subsoil Use (Rosnedra).
▶ Russian Federation: Regulatory Framework of
http://www.rosnedra.gov.ru/article/6418.html
Mineral Policy
R
Russian Federation: Need of Minerals markets, defined by both its size and its growth
potential. The country’s exploration potential is
Svetlana O. Zorina difficult to assess, but there are valid reasons for
Kazan (Volga Region) Federal University, Kazan, believing that the known deposits are just a frac-
Russia tion of those to be discovered. Business Monitor
International forecasts the value of the Russian
mining sector to grow to US$259 billion by
2015, even with the global slowdown in demand.
Russia is the largest country in the world; it covers Russia holds the world’s second largest recover-
a vast amount of topographically varied territory able coal reserves (estimated some 200 billion
(17.1 million square kilometers) (Karavanova tons) and is the world’s third largest exporter of
2010). According to Cherkasov and Rundqvist black coal. The Russian program for the develop-
(2007), Russia’s mineral resources, in relation to ment of the coal industry provides for an increase
world resources, are impressive. In the area of in output from 334 tons in 2011 to 430 million
energy resources, Russia has 12% of the coal tons in 2030.
world’s explored reserves. Russia has 40% of the Russia is ranked among the world’s leading
world’s platinum, 90% of the palladium, 35% of producers and is regarded as a leading regional
the niobium, 80% of the tantalum], 50% of the producer of such mineral commodities as alumi-
yttrium, 28% of the lithium, 15% of the beryllium, num, arsenic, asbestos, bauxite, boron, cadmium,
and 12% of the zirconium. Russia’s share of other cement, coal, cobalt, copper, diamond, fluorspar,
metals used in industry is 36% of the nickel, 27% gold, iron ore, lime, magnesium compounds and
of the iron ore, 27% of the tin, 20% of the cobalt, metals, mica (flake, scrap, and sheet), natural gas,
16% of the zinc, and 12% of the lead. Russia also nickel, nitrogen, oil shale, palladium, peat, petro-
has agrochemical ores, ranking first in the world leum, phosphate, pig iron, platinum, potash, rhe-
in deposits of potassium salts and second for nium, silicon, steel, sulfur, titanium sponge,
apatite and phosphorite. Russia has the largest tungsten, and vanadium (Safirova 2013;
diamond resources in the world and ranks third U.S. Geological Survey Mineral commodity sum-
in gold. maries 2015).
According to MINEX Russia 2014, Russia In 2011, the total value of Russian exports was
ranks among the top ten countries in terms of $522.0 billion, which was a 30.4% increase com-
mineral reserves, with highly developed service pared with the value of exports in 2010. Mineral
industry and large-scale engineering production. products made up 71.1% of the total value of
It is one of world’s most important emerging Russian exports, and crude oil alone contributed
DOI 10.1007/978-3-642-40871-7_64-1
2 Russian Federation: Need of Minerals
34.8% to the total value of exports. Petroleum products, 2.9%. In 2011, 14.6% of all investment
products accounted for another 18.3%; natural in the economy was directed to the mining and
gas, 12.2%; and ferrous metals, 4.7%. Among quarrying industry, of which 91% was invested in
ferrous metals, the leading categories were semi- mining and quarrying of fuel and energy products
finished products made from carbon steel (31.3%) (Federal’naya Sluzhba Gosudarstvennoy
and flat-rolled iron and steel (27.2%). Other min- Statistiki 2012; Safirova 2013).
eral products that contributed significant amounts In 2011, Russia’s production of mineral com-
to Russia’s export revenue were bituminous coal modities was largely stable and demonstrated
(2.2%), aluminum (1.3%), nickel (0.9%), com- modest growth compared with that of 2010
plex mineral fertilizers (0.8%), nitrogen fertilizers (Table 1) (Safirova 2013).
(0.7%), products made out of ferrous metals At the end of 2011, Russia had 17,200 enter-
(0.63%), and ferrous ores and concentrates prises engaged in mining and quarrying, which
(0.62%). The major export partners of Russia in was a 0.58% decrease compared with the number
2011 were the Netherlands (which received of enterprises active in mining and quarrying in
12.1% of Russia’s exports), China (6.8%), Ger- 2010. Of these enterprises, 7,100 were engaged in
many (6.6%), Italy (6.3%), Ukraine (5.9%), Tur- extracting fuel minerals, and the other 10,100
key (4.9%), Belarus (4.8%), Poland (4.1%), and were engaged in mining nonfuel minerals. Out
the United States (3.2%) (Federal’naya Sluzhba of all mining and quarrying enterprises, only
Gosudarstvennoy Statistiki 2012; Safirova 2013). about 200 were owned by the central and munic-
In 2011, Russia imported $8,423 million worth ipal governments, 15,300 were owned by Russian
of products made of ferrous metals (which consti- citizens, and about 400 were either owned by
tuted 2.6% of the total imports), $7,314 million foreign companies or were jointly owned by
worth of ferrous metals (2.3%), and $3,685 mil- domestic and foreign entities (Federal’naya
lion worth of petroleum products (1.1%). The Sluzhba Gosudarstvennoy Statistiki 2012;
major import partners of Russia were China Safirova 2013).
(which supplied 15.8% of Russia’s imports), Ger- The mining industry is strategically important
many (12.3%), Ukraine (6.6%), Japan (4.9%), the and is one of the most important industries in the
United States (4.8%), Belarus (4.7%), Italy Russian economy. Extractive industries taken
(4.4%), France (4.3%), and the Republic of together constitute 33% of Russia’s GDP and
Korea (3.8%) (Federal’naya Sluzhba account for 60% of federal budget revenues.
Gosudarstvennoy Statistiki 2012; Safirova 2013). Despite the fact that Russia has massive quantities
In 2011, mining and quarrying contributed of unexplored and unproved reserves – its poten-
4.95 billion rubles ($168.5 million), or 10.7%, to tial is hampered by the fact that between 30% and
the total value added in the economy, and the total 70% of those reserves are not exploitable in the
value of output from mining and quarrying in current economic condition. One of the main rea-
current prices was 8,031 billion rubles ($273.3 sons for this is the fact that the Russian mining
million), or 14.7% of the gross domestic product industry is mostly using mining methods and
(Federal’naya Sluzhba Gosudarstvennoy Statistiki technology that dates from the Soviet period. In
2012; Safirova 2013). order to compete on the global stage, the priority
During 2011, the value of mining and quarry- for the Russian mining industry and responsible
ing production increased by 1.9%. Mining and government institutions will be to modernize the
quarrying of fuel and energy products increased operations, increase productivity, invest in new
by 1.3%, nonenergy minerals increased at a rate of technology, and build the infrastructure required
4.8%. Among the nonmining industrial sectors, to bring new projects and raise the efficiency of
production of chemicals increased by 5.2%; met- production, as well as to create a more stable
allurgy and production of finished metal products, climate to support the investment into the sector.
2.9%; production of other nonmetal mineral prod- The other trend that will shape the development of
ucts, 9.3%; and that of coke and petroleum the industry will be increased globalization and
Russian Federation: Need of Minerals 3
Russian Federation: Need of Minerals, Table 1 Russia: Production of some mineral commodities (Safirova 2013)
Commodity 2007 2008 2009 2010 2011
Metals
Aluminum, ore, and concentrate
Alumina (thousand metric tons) 3,333 3,112 2,794 2,857 2,868
Bauxite 5,775,000 5,675,000 5,775,000 5,475,000 4,495,000
Arsenic, white 1,500 1,500 1,500 1,500 1,500
Chromium, chrome ore, marketable 776,681 913,000 416,194 400,000 400,000
Copper, ore, recoverable Cu content 740,000 750,000 676,000 703,000 673,474
Gold, mine output, Au content 156,975 172,031 192,832 189,000 199,650
(kilograms)
Iron ore, gross weight 105,000,000 99,900,000 92,000,000 95,900,000 104,000,000
Steel, crude 72,389,000 68,700,000 59,800,000 66,800,000 68,100,000
Lead, mine output, recoverable Pb 50,000 60,000 70,000 97,000 94,500
content
Lead, metal, refined 94,000 80,000 73,000 89,000 86,700
Magnesium: magnesite 1,200,000 1,200,000 1,000,000 1,200,000 1,200,000
Mercury 50 50 50 50 50
Molybdenum, in concentrate 3,300 3,600 3,800 3,800 3,900
Nickel, laterite ore, sulfide 279,770 266,569 261,791 269,277 264,000
concentrate
Nickel products, metal 248,363 242,409 237,270 243,676 245,869
Platinum (kilograms) 27,000 25,000 24,500 25,000 25,900
Silver, mine output, Ag content 911,332 1,132,166 1,312,567 1,145,150 1,150,000
(kilograms)
Silver, secondary recovery (ditto) 265 265 228 408 393
Tin, mine output, Sn content 2,500 1,500 1,200 160 300
Tin, metal, smelter, primary and 4,200 2,300 2,000 400 500
secondary
Titanium sponge 34,150 34,950 26,600 18,621 25,000
Tungsten, concentrate, W content 3,400 3,000 2,300 2,800 3,500
Zinc, mine output, recoverable Zn 185,000 204,000 225,000 269,000 275,000
content
Zinc, metal, smelter, primary and 260,000 260,000 225,000 260,000 267,280
secondary
Industrial minerals
Asbestos, grades I–VI 1,025,000 1,017,000 1,000,000 1,000,000 1,000,000
Barite 63,000 63,000 63,000 60,000 63,000
Cement, hydraulic 59,939,000 53,548,000 44,266,000 50,400,000 56,200,000
Bentonite 500,000 500,000 500,000 500,000 500,000
Kaolin concentrate 140,000 107,500 90,300 105,000 120,000
Diamond, gem (carats) 23,300,000 21,925,000 17,791,400 17,800,000 20,140,000
Diamond, industrial (ditto) 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000
Diatomite 30,000 28,000 30,000 32,000 33,000
Feldspar 45,000 45,000 45,000 45,000 45,000
Graphite 14,000 14,000 14,000 14,000 14,000
Gypsum 3,000,000 3,600,000 2,900,000 2,900,000 3,000,000
Limestone 6,910,000 7,420,000 7,000,000 7,000,000 7,000,000
Mica 100,000 100,000 100,000 100,000 100,000
Phosphate rock, gross weight 11,400,000 10,400,000 9,500,000 11,000,000 11,000,000
Salt, all types 2,200,000 1,800,000 1,600,000 1,800,000 1,800,000
(continued)
4 Russian Federation: Need of Minerals
Russian Federation: Need of Minerals, Table 1 (continued)

Commodity 2007 2008 2009 2010 2011
Soda ash 2,900,000 2,800,000 2,322,000 2,670,000 2,822,000
Talc 170,000 160,000 160,000 160,000 160,000
Mineral fuels and related materials
Coal, anthracite (thousand metric 8,662 6,383 7,100 8,700 10,000
tons)
Coal, bituminous (ditto) 2,092,016 216,049 200,982 236,300 248,000
Coal, lignite (ditto) 71,143 82,485 69,011 76,600 76,800
Natural gas, marketed (million cubic 653,000 663,000 583,610 651,000 671,000
meters)
Oil shale 1,200,000 1,200,000 1,200,000 1,300,000 1,300,000
Petroleum, crude (thousand 42-gal 3,570,000 3,550,000 3,590,000 3,530,000 3,578,000
barrels)
Petroleum, refinery products (ditto) 1,840,000 1,910,000 1,910,000 2,010,000 2,080,600
internalization of the key players, with western balanced development and efficiency of the min-
companies entering Russia and the Russian mining industry.
ing champions focusing more on the West. There
are plenty of opportunities for international com-
panies especially services and equipment sup-
References
pliers, mining companies interested in exploring
investment opportunities in Russia, particularly in Cherkasov S, Rundqvist D (2007) Raw materials and Rus-
precious metals, as well as representatives of cap- sian infrastructure. Exec Intell Rev 34(38):43–47
ital markets and banking industry (MINEX Russia Federal’naya Sluzhba Gosudarstvennoy Statistiki [Federal
2014). State Statistical Service] (2012) Rossiyskiy
Karavanova NB (2010) The illustrated encyclopedia. Rus-
Russian mining sector consists of a variety of sia. Cities. People. Traditions. Eksmo, Moscow, 304 p
businesses spanning from exploration and extrac- MINEX Russia (2014) 10th Mining and exploration forum
tion to processing of minerals. This sector deter- (7–9 October 2014, Moscow) www.minexrussia.com
mines the economic and social development of the Safirova E (2013) The mineral industry of Russia. U.-
S. geological survey minerals yearbook – 2011. Rus-
country and makes a real contribution to the sia – 2011 [Advance Release]: 38.1–38.21
buildup of its foreign exchange reserves. There- U.S. geological survey mineral commodity summaries
fore, one of the main tasks of the state in today’s (2015) U.S. geological survey: 196
difficult economic conditions is to ensure
R
Russian Federation: Mineral Reserves based on the CRIRSCO Template (The Interna-
tional Template for Reporting of Exploration
Svetlana O. Zorina Results, Mineral Resources, and Mineral
Kazan (Volga Region) Federal University, Kazan, Reserves) and the Guidelines on Alignment of
Russia Russian Minerals Reporting Standards and the
Institute of Geology and Petroleum Technologies, CRIRSCO Template, agreed by FGU “GKZ”
Kazan Federal University, Kazan, Republic of and CRIRSCO on 28 September 2010 (Moscow)
Tatarstan, Russia (Russian Code 2014).
The NAEN Code is applicable to all solid
minerals, for which Public Reporting of Explora-
tion Results, Mineral Resources, and Mineral
The Russian Code for the Public Reporting of Reserves is required by the relevant regulatory
Exploration Results, Mineral Resources, and authorities.
Mineral Reserves (NAEN Code) was published To facilitate converting the Russian classifica-
firstly in 2011. It was revised in 2014 with regard tion categories of resources and reserves, which
to the latest changes in the CRIRSCO Template are used in Russia, into the NAEN Code catego-
(Russian Code 2014). It has been prepared by ries, it might be used as the guidelines on align-
“National Association for Subsoil Examination” ment of Russian minerals reporting standards and
(NAEN), industry research centers, and regional the CRIRSCO Template as background material
centers for subsoil survey of Russia, as well as the to give an indicative mapping of the Russian and
Society of Russian Experts on Subsoil Use CRIRSCO classification systems as presented in
(OERN), with participation of the Committee for Fig. 1.
Mineral Reserves International Reporting Stan- According to NAEN Code, “Modifying Fac-
dards (CRIRSCO) and the Pan-European tors” are used to convert mineral resources to
Reserves and Resources Reporting Committee mineral reserves and consist of mining, metallur-
(PERC). gical, economic, marketing, legal, environmental,
The NAEN Code has been developed in accor- social, and governmental assessments (Russian
dance with general criteria of the world mining Code 2014).
community (Australia, Canada, South Africa, The definition of “mineral resources” used in
Chile, Great Britain, and others), taking into Russia differs slightly from the terminology
account the Russian State system of subsoil accepted in world literature. According to the
(subsurface) use management, classification, and 1992 Federal Law “On Subsoil,” the subsoil is a
accounting of solid minerals. The NAEN Code is part of the Earth’s crust located under the layer of
DOI 10.1007/978-3-642-40871-7_65-1
2 Russian Federation: Mineral Reserves
Russian Federation: Mineral Reserves, Fig. 1 A map- (categorization) of mineral resources and mineral reserves
ping of the Russian and CRIRSCO classifications (Russian Code 2014)
soil, under the bottom of water bodies, and geological evidence and sampling. An inferred
extending down to the furthest point where geo- resource has a lower level of confidence than
logical research and exploitation are possible that applying to an indicated mineral resource
using current technologies (Federal Law 1992). and must not be converted to a mineral reserve.
Mineral resources are any component of the An “indicated mineral resource” (Fig. 1) is a
subsoil – in the form of solid, liquid, or gaseous part of a mineral resource for which quantity,
matter – that could be extracted for industrial use, grade or quality, densities, shape, and physical
including not only minerals but also ores, oil, and characteristics are estimated with sufficient confi-
natural gas. Reserves of mineral resources are dence to allow the application of modifying fac-
concentrated in the Earth’s subsoil (Federal Law tors in sufficient detail to support mine planning
1992; Kotov 2002). and evaluation of the economic viability of the
Mineral resources can be estimated mainly on deposit. An indicated mineral resource has a lower
the basis of geological data with some supplemen- level of confidence than that applying to a mea-
tary materials from other disciplines. The term sured mineral resource and may only be converted
“mineral resource” covers potentially commercial to a probable mineral reserve.
mineralization, including dumps and tailings, The indicated mineral resource category is
which has been identified and estimated through approximately equivalent to the resources of cat-
exploration and sampling and within which min- egory C2 of the Russian classification system,
eral reserves may be defined by the consideration which are identified in deposits of all complexity
and application of modifying factors (Russian groups and the resources of category C1 in zones
Code 2014). of detailed study at deposits of the fourth com-
An “inferred mineral resource” (Fig. 1) is a part plexity group (see clause 2.2 and Table 1 from the
of a mineral resource for which quantity and grade Guidelines on Alignment of Russian Minerals
or quality is estimated on the basis of limited
Russian Federation: Mineral Reserves 3
Russian Federation: Mineral Reserves, Table 1 The data of the ministry of natural resources and environment on the
reserves of Russian Federation on some minerals in Russia in 2000–2012 (BRICS 2014)
Main mineral reserves 2000 2005 2010 2011 2012
Coal (billion tons) 277 270 273 273 274
Iron ore (billion tons) 102 99 99 99 101
Manganese ore (million tons) 155 188 232 232 232
Copper (million tons) 85 85 90 93 91
Lead (million tons) 20 20 20 20 19
Zinc (million tons) 61 61 61 61 60
Bauxite (million tons) 1,540 1,474 1,437 1,431 1,427
Tungsten (1,000 tons) 1,717 1,690 1,481 1,470 1,568
Tin (1,000 tons) 2,302 2,278 2,262 2,222 2,168
Antimony (1,000 tons) 296 265 315 317 318
Gold (1,000 tons) 9 8 12 13 15
Silver (1,000 tons) 110 112 112 114 116
Graphite mineral (million tons) 88 88 88 88 88
Reporting Standards and the CRIRSCO technological conditions. Extracted mineral

Template). resources are considered to be industrial products:
A “measured mineral resource” (Fig. 1) is a they cannot be reproduced and are therefore cate-
part of a mineral resource for which quantity, gorized as nonrenewable resources (Kotov 2002).
grade or quality, densities, shape, and physical Mineral reserves (Fig. 1) require consideration
characteristics are estimated with confidence suf- of the modifying factors affecting extraction and
ficient to allow the application of modifying fac- should be estimated with input from a range of
tors to support detailed mine planning and final disciplines and in any case with substantiation of
evaluation of the economic viability of the the effects of possible changes in these factors.
deposit. Measured mineral resources may convert to
Geological evidence is derived from detailed either proved mineral reserves or probable min-
and reliable exploration, sampling, and testing eral reserves.
and is sufficient to confirm geological and grade A “mineral reserve” is the economically mine-
continuity. able part of a measured and/or indicated mineral
A measured mineral resource has a higher level resource. It includes diluting materials and allow-
of confidence than that applying to either an indi- ances for losses, which may occur when the mate-
cated mineral resource or an inferred mineral rial is mined and is defined by studies at
resource. It may be converted to a proved mineral pre-feasibility or feasibility level as appropriate
reserve or under certain circumstances to a prob- that include consideration of realistically assumed
able mineral reserve. modifying factors. Such studies demonstrate that
An approximate equivalent of measured min- extraction could reasonably be justified.
eral resource in the current Russian classification In order to achieve the required level of confi-
system is integrated “resources of category C1(A, dence in the mineral resources and all of the
B),” the tonnage and grade of which are estimated modifying factors (technical, economic, environ-
only from geological criteria without consider- mental, governmental, regulatory, etc.), it is
ation of modifying factors. expected that studies to at least a pre-feasibility
Russia’s active reserves are composed of level (in the Russian system, the TEO of Provi-
resources that are economically feasible to sional Conditions, the TEO of Permanent Condi-
develop under current economic and tions, the TEO of Construction, or the Mining
4 Russian Federation: Mineral Reserves
Project document) will have been carried out prior resources of appropriate category depending
to determination of the mineral reserves. The upon the level of geological confidence (Russian
study will determine the mining enterprise devel- Code 2014).
opment plan (the mine plan, the mineral pro- A “probable mineral reserve” (Fig. 1) is the
cessing flow sheet, infrastructure, etc.) that is economically mineable part of an indicated and,
technically achievable and economically viable in some circumstances, a measured mineral
and from which the mineral reserves can be resource.
derived. The competent person when possible The confidence in the modifying factors apply-
should disclose commodity product prices and ing to a probable mineral reserve is lower than that
methods of their determination, used in the applying to a proved mineral reserve.
reserve estimate. When the products are sold by A probable mineral reserve has a lower level of
continuing contracts, the contract prices should be confidence than a proved mineral reserve but is of
used in the reserve estimate. sufficient quality to serve as the basis for a
Reclassification of mineral resources to min- company’s decision on the exploration and devel-
eral reserves may be done at any of the following opment of the deposit with full consideration of
stages of mining project development (Russian risks.
Code 2014): An approximate equivalent of probable min-
eral reserve in the Russian classification system is
– The deposit is being mined or the mining pro- balance (economic) exploitation (recoverable)
ject exists. reserves of an estimated and fully explored
– The deposit has been prepared for commercial deposits, for which geological knowledge meets
development; all the required operation per- requirements imposed on integrated category
mits from the relevant authorities have been CB1B(A, B) and category CB2B at deposits of
received and the product sales contracts have the 1stP, 2ndP, and 3rdP complexity groups and
been concluded. integrated category CB2B(CB1B) at deposits of
– The deposit has been prepared for commercial the 4thP complexity group, and technical and
development, and there are reasonable expec- economic calculations and consideration of mod-
tations of such operation permits and/or ifying factors have been carried out in framework
contracts. of TEO of provisional conditions (Russian Code
2014).
In all cases, for mineral deposits within the A “proved mineral reserve” (Fig. 1) is the
Russian Federation, mineral reserve estimates economically mineable part of a measured min-
should be based on geological information of a eral resource. A proved mineral reserve implies a
company, which has passed the legal procedures high degree of confidence in the modifying
of the State Audit and Resources approval factors.
(Russian Code 2014). A proved mineral reserve represents the
In the Russian classification system (applicable highest confidence category of reserve estimate
for State regulatory purposes to all mineral both from technical and economic viewpoints.
deposits within the Russian Federation), resources An approximate equivalent of proved mineral
are subdivided in economic significance into two reserve in the Russian classification system are
basic groups (categories): balance (economic) and balance (economic) exploitation (recoverable,
off balance (potentially economic). commercial) reserves of a fully explored deposit,
Off-balance (marginal or potentially eco- for which geological knowledge meets require-
nomic) Russian resources, not having analogues ments imposed on integrated category C1(A, B),
in the CRIRSCO system, retain the status of Rus- and technical and economic calculations and con-
sian resources, and after eventual economic sideration of modifying factors have been carried
extraction, they may be interpreted as mineral out in framework of TEO of permanent conditions
Russian Federation: Mineral Reserves 5
or TEO of construction (mining project) (Russian Reserves of Russian Federation on some minerals
Code 2014). in Russia in 2000–2012 (BRICS 2014).
The NAEN Code provides for a direct relation-
ship between indicated mineral resources and
probable mineral reserves and between measured References
mineral resources and proved mineral reserves. In
other words, the level of geological confidence for BRICS: joint statistical publication: 2014; Brazil, Russia,
India, China, South Africa (2014). IBGE, Rio de
probable mineral reserves is similar to that
Janeiro, 212 p
required for the determination of indicated min- Federal Law No. 2395-1 of February 21, 1992 ‘On Sub-
eral resources. The level of geological confidence soil’, as amended and supplemented
for proved mineral reserves is similar to that Kotov V (2002) Russia’s mineral resources:
reconfiguration of institutional framework. Interna-
required for the determination of measured min-
tional Conference on National Assets (8–11 January,
eral resources. Inferred mineral resources are 2003, Tagaytay City, The Philippines). Conference
always additional to mineral reserves. Paper series 9: 1–25
The Table 1 shows the data of the Ministry of Russian code for the public reporting of exploration results,
mineral resources and mineral reserves (NAEN Code)
Natural Resources and Environment on the
(2014). Edition 2014. NAEN, Moscow, 107 p
R
Russian Federation: State Regulation and legal regulation in the field of study, use,
and Mining Law Development reproduction and protection of mineral resources,
safe working practices associated with the use of
Nuriia G. Nurgalieva and Vladimir V. Silantiev natural resources, as well as monitoring; Federal
Kazan (Volga Region) Federal University, Kazan, Agency for Subsoil Use and its territorial bodies
Russia providing public services for geological study that
manage state property, licensing of subsoil, state
registration and state expertise of reserves, infor-
The history of the formation and development of mation and project exploration works; Federal
mining law and state regulation of mining busi- Service for Supervision of Natural Resources
ness in Russia was described in detail from the and its territorial bodies exercising state control
fifteenth century to the final days of the USSR in over geological study, rational use and protection
1991 in Kursky and Konoplyanik (2006). This of mineral resources.
history includes three periods: before Peter the Coordinating body, providing interaction of
Great (fifteenth to seventeenth centuries), “tsarist” federal executive bodies, executive bodies of sub-
Russia (1700–1917), and the postrevolutionary/ jects of Russian Federation and other bodies and
Soviet era (1917–1991). Government bodies organizations in the study and use of mineral
began to exercise special functions of mining resources, is the Government Commission on
business regulation by the end of the sixteenth fuel and energy complex and reproduction of
century; in the beginning of the eighteenth cen- mineral resources base. The activity of these insti-
tury, special regulatory bodies were created tutes is also regulated by Federal Law “On Pre-
(Kursky and Konoplyanik 2006). Subsequently, cious Metals and Precious Stones” dated
such functions were relegated to the jurisdiction 26 March 1998 (the “Precious Metals Law”) and
of certain ministries in the Russian Empire and Federal Law “On the Procedure for Making For-
then to a number of USSR ministries and at pre- eign Investments in Business Entities of Strategic
sent to a number of Russian Federation ministries. Importance for the National Defense and Security
According to the “Strategy of the geological of the Russian Federation” dated 7 May 2008 (the
industry development until 2030” (2012) and “Strategic Investments Law”) (King and Spalding
Federal Law “On Subsoil” dated 1992 and latest 2012).
updated 2015 (2015) governance structure of the Currently, there is no clear delineation of
mineral resource base at the federal level includes: responsibilities of the state and business in the
Ministry of Natural Resources and Environ- field of reproduction of the mineral resource
ment, performing the functions of public policy base of Russian Federation. Exploration and
DOI 10.1007/978-3-642-40871-7_67-1
2 Russian Federation: State Regulation and Mining Law Development
evaluation of mineral deposits are carried out both or borrowed funds is his property and actually
at the expense of the federal budget under the state falls out of circulation for an indefinite period
order and at the expense of subsoil users on a (Law of Russian Federation 2015).
licensed basis (King and Spalding 2012). Such questions as collection and storage of
Exploration licenses are generally awarded by primary geological information are still not
a decision of a special commission formed by the solved.
Federal Agency for Subsoil Use (or its regional The main body of scientific research and exper-
department) and representatives of certain local imental development in the field of geological
authorities. study and reproduction of the mineral resource
Most geological organizations functioning in base run branch scientific organizations, institu-
the form of federal state unitary enterprises and tions of the Russian Academy of Sciences, and
joint stock companies are managed with minimal higher educational institutions.
involvement of the Federal Agency for Subsoil Training of specialists in the geological profile
Use (Law of Russian Federation 2015). of Russian Federation carried out in 34 institutions
Information and analytical industry support of higher education, including 18 technical uni-
includes following procedures: collection and versities, academies and institutes, and 20 col-
processing of geological information and its stor- leges. Training is carried out in 15 specialties of
age; creation of consolidated information and ana- higher education and eight field of vocational
lytical products required for public fund education (Law of Russian Federation 2015).
management of mineral resources; providing geo- Improving governance in the field of geologi-
logical information and information-analytical cal study, reproduction and use of mineral
products to consumers; preparation and interpre- resources base is based on the optimization of
tation of geological information made mining the organizational structure of the industry and
companies, scientific and industrial organizations the geological development of the principles of
working on the geological study and use of sub- program-oriented planning of geological explora-
soil; collection, processing, storage, and provision tion. Optimization of the organizational structure
of geological information for use provided with an of the geological sector aims to achieve the fol-
extensive network of organizations under the lowing objectives (Strategy of the geological
jurisdiction of the Federal Agency for Subsoil industry development 2012): ensuring state con-
Use (Law of Russian Federation 2015). trol over the strategically important industry;
The basic summary information and analytical improving the efficiency of placement and execu-
products of importance for the public fund man- tion of the state order in geological study and
agement of mineral resources are: state balance of reproduction of the mineral resource base; ensur-
mineral reserves; State cadastre of deposits and ing the optimal functioning of the state system of
occurrences of mineral resources of Russian Fed- licensing of subsoil; better quality of work in the
eration; State Register of geological exploration field of geological study and reproduction of the
of mineral resources, subsoil, granted for mining mineral resource base; more effective manage-
and for purposes not related to the extraction and ment of the property complex geological explora-
subsoil licenses; a summary of federal statistical tion organizations; creation of conditions for the
observation, reflecting the volume of completed modernization of geological exploration organi-
exploration work in physical and monetary terms zations in accordance with their specialization;
(Law of Russian Federation 2015). formation of a common information space, con-
At present, the content of geological informa- solidating a flow of information different depart-
tion, its completeness, availability and efficiency ments related to the problems of governance and
of use do not fully meet the needs of geological investment in the field of geological study, repro-
prospecting, development and management deci- duction and use of the mineral resource base;
sions. In particular, the geological information strengthening human resource capacity of organi-
obtained by the subsoil user through their own zations specializing in types of work and
Russian Federation: State Regulation and Mining Law Development 3
minerals; and creation of conditions for the diver- stock companies of the Federal State Unitary
sification of the mineral resource to ensure the Enterprises, joint horizontal scientific and indus-
country’s economy through the expansion of trial relations (Strategy of the geological industry
Russia’s presence in the international market for development 2012).
geological services. It is necessary to specify the State regulation in the geological sector
functions and responsibilities of the public sector includes the following functions: geological
geological industry, as well as to delineate the examination and identification of the resource
contribution of the state and business in the repro- potential of the promising areas of Russian Fed-
duction of the mineral resource base. Depending eration, its continental shelf, and inland water
on the type of minerals, area of geological explo- areas, as well as the bottom of the oceans, the
ration and other factors, this limit can be shifted in Arctic and Antarctic; localization and assessment
one direction or another (Strategy of the geologi- of the resource potential of the unallocated subsoil
cal industry development 2012). fund in developed and emerging areas for the
In the sphere of reproduction of the mineral purpose of reproduction of mineral reserves; oper-
resource base of hydrocarbons, contribution of ation of the public licensing system; implementa-
state is requested to finish on a regional stage of tion of state expertise of mineral resources,
exploring new oil and gas provinces (research, technical development projects and projects of
drilling appraisal wells, geophysical work on a minerals exploration work; control reserves and
regional scale, including seismic). More detailed mineral resources, works, subsoil and licenses;
geophysical surveys, including the preparation of monitoring of subsurface condition; and control
promising structures for drilling and self- and supervision of the geological survey of sub-
exploratory drilling should be the responsibility soil and rational use of mineral resource (Strategy
of the oil and gas companies and financed at their of the geological industry development 2012).
expense (Strategy of the geological industry The private sector mining industry will be
development 2012). supported by the strengthening of the role of
In the sphere of reproduction of the mineral small enterprises in exploration and mining with
resource base of solid minerals state order in some local financial profit. This optimizing will be
cases may include geological prospecting stage, taken by the following actions: simplification of
and sometimes (for fields that are of government procedures for obtaining licenses to explore at
and military-strategic importance) – the explora- their own or borrowed funds (including the intro-
tion stage (Strategy of the geological industry duction of declarative principle) and allowing the
development 2012). free market turnover exploratory licenses; provid-
Restructuring of the geological industry is ing free access to geological information obtained
planned in the form of the following measures: through the federal budget, budgets of Russian
transformation of the Federal State Unitary Enter- Federation, and extra-budgetary sources; and
prise information and expert profile in public development of market mechanisms to attract
institutions under the jurisdiction of the Federal risk capital (stock exchanges, financial institu-
Agency for Subsoil Use; development of scien- tions and other mechanisms) to finance explora-
tific organizations carrying out research and ana- tion work (Strategy of the geological industry
lytical support to carry out the Federal Agency for development 2012).
Subsoil Use of public functions on geological
study and reproduction of the mineral resource
base, as well as improved management principles;
Cross-References
and consolidation of specialized by type of geo-
logical exploration and mining geological organi-
▶ Russian Federation: Energy Strategy
zations in the form of a joint stock company in the
▶ Russian Federation: General Information on
authorized capital of which must be transferred to
Mineral Policy
the open joint-stock and transformed into joint
4 Russian Federation: State Regulation and Mining Law Development
▶ Russian Federation: Mineral Policy – General Law of Russian Federation “On Subsoil” (in Russian)
Assessment (2015) Electronic fund legal and scientific and techni-
cal documentation. http://docs.cntd.ru/document/
▶ Russian Federation: Regulatory Framework of 9003403
Mineral Policy King and Spalding (2012) Overview Russian mining reg-
ulation. An American law firm King & Spalding. http://
www.kslaw.com/imageserver/kspublic/library/publica
tion/russianmining.pdf
References Strategy of the geological industry development until 2030
Kursky A, Konoplyanik A (2006) State regulation and Environment. https://www.mnr.gov.ru/regulatory/
mining law development in Russia from the 15th cen- detail.php?ID=129117&print=Y
tury to 1991. J Energ Nal Res Law 24(2):221–254
R
Russian Federation: Regulatory about the Federal Agency for Subsoil Use
Framework of Mineral Policy (2014), the Federal Service for Supervision of
Natural Resources (2013) and the Ministry of
Vladimir V. Silantiev and Nuriia G. Nurgalieva Natural Resources and Environment (2015).
Kazan (Volga Region) Federal University, Kazan, The key strategies include: Strategy of the geo-
Russia logical industry development until 2030; Energy
Strategy of Russia for the period up to 2030; The
development strategy of the metallurgical indus-
Regulatory framework for subsoil use in Russian try of Russian Federation for the period up to
Federation includes regulating documents on col- 2020; Strategy of socioeconomic development of
lection, analysis, and provision of information the Far East and the Baikal region for the period
about the subsoil. up to 2025; Strategy for socioeconomic develop-
These documents are grouped into several sec- ment of Siberia until 2020; Strategy of socioeco-
tions: general; provisions; strategy; administrative nomic development of the North Caucasus
regulations; regulation of payments; programs on Federal District until 2025.
geological study and reproduction of the mineral The key administrative regulations include
resource base; licensing; control of subsoil use; Administrative Regulations of the Federal
geological and economic evaluation of mining Agency for Subsoil Use of public services for
facilities and investment projects for its develop- issuing permits for construction, reconstruction,
ment; state registration and check geological or major repairs are planned for the purpose of
study; state registration of mineral reserves; and execution of works related to subsoil use; Admin-
recording, storage, and transmission of istrative Regulations of the Federal Agency for
information. Subsoil Use of public services by placing reserves
Full list of all the documents can be found on of minerals to conditionally or substandard
the information system to regulate the use of min- stocks; Administrative Regulations of the Federal
eral resources on the link http://geol.irk.ru/isr/. Agency for Subsoil Use the execution of state
Below it is represented as a brief description of responsibilities for maintaining the state list of
key documents from the mentioned resource. deposits and occurrences of minerals and state
The key document in the “general” is the law of balance of mineral reserves; Administrative Reg-
Russian Federation “On Subsoil” (2015). ulations of the Federal Agency for Subsoil Use the
The key provisions of the Government of state function for the organization of the
Russian Federation, the regulations on the Minis- established procedure of tenders and auctions for
try of Natural Resources and Environment, are subsoil use; Administrative Regulations of the
DOI 10.1007/978-3-642-40871-7_68-1
2 Russian Federation: Regulatory Framework of Mineral Policy
Federal Service for Supervision of Natural It aims to distribute functions between the Fed-
Resources for the execution of state function for eral Agency for Subsoil and its territorial bodies;
the implementation of state control over geologi- to establish form of right to use subsoil for the
cal study, rational use, and protection of mineral purpose of exploration and development of min-
resources. eral deposits; to determine the list of facilities
Regulation of payments is made on the basis of provided in the subsoil; to prepare the conditions
regulations and orders of the Russian Government and procedure for tenders and auctions for subsoil
and the relevant agencies (Ministry of Finance, use; to consider applications for the finding of the
Ministry of Natural Resources and Environment, discovery of minerals; to issue and renew licenses
Federal Agency for Subsoil Use, Ministry of for subsoil use.
Taxes and Duties). These regulations govern the Control of subsoil use is governed by the Gov-
charge for geological information on mineral ernment of Russian Federation and the Federal
resources; claim procedure and conditions for State Statistics Service, as well as the Order of
the use of geological and other information on the Ministry of Natural Resources and the Federal
mineral resources, in the public domain; claim a Service for Supervision in the sphere of subsoil
method for determining a specific amount of pay- use (four documents). These documents assert
ment for geological information on mineral state control and statistical monitoring of geolog-
resources, the resulting state study of the subsoil; ical study, rational use and protection of mineral
claim for compensation for the position of state resources.
spending on exploration and evaluation of mineral Section “Geological and economic evaluation
resources in the provision of the right to use sub- of mining facilities and investment projects of
soil for the purpose of exploration and mining in their development” includes adjustable docu-
the case of establishing whether the discovery of ments of the Ministry of Natural Resources
mineral subsoil user, work on geological studies at (eight documents); rules of the formulation of
the expense of their own (including borrowed) project documents on technological development
funds. of oil and gas deposits, RD 153-39-007-96; guide-
Regulation of geological study and reproduc- lines for the design of oil and gas deposits; guide-
tion of the mineral resource base programs are lines for planning, accounting, and calculation of
made on the basis of orders of the Ministry of cost of production at plants for production of gas;
Natural Resources and “Rosnedra,” which govern guidelines on the composition and rules of regis-
performance of work at the expense of the federal tration submitted to the state examination mate-
budget (in total 16 orders), the Resolution of The rials for feasibility studies of conditions for the
Council of Federation of the Federal Assembly of calculation of reserves of mineral deposits; guide-
Russian Federation, target program for rehabilita- lines for the feasibility study of conditions for
tion of mineral resources of Russian Federation, deposit of solid minerals (other than coal and oil
monitoring of subsurface territory of Russian Fed- shale); guidelines on the composition and rules of
eration, on geological exploration work and gen- registration submitted to the state examination
eral geological special destination for regional materials for the feasibility study of oil recovery
exploration of mineral resources of land, the con- rates; guidelines on the composition and rules of
tinental shelf of Russian Federation, the Arctic registration submitted to the state examination
and Antarctic (three programs), order and a list materials for the feasibility study of gas recovery
of state programs (two documents of the Govern- rates; norms of technological design of
ment of Russian Federation), the Guidelines for gas-producing enterprises and underground gas
the development and implementation of state pro- storage stations.
grams of Russian Federation. State register of geological exploration of min-
Licensing regulation is made by the Ministry eral resources provides instructions for account of
of Natural Resources and Rosnedra (11 Orders geological, hydrogeological, geotechnical, geo-
and 5 Regulations). physical, ecological and geological and
Russian Federation: Regulatory Framework of Mineral Policy 3
geochemical study of Russian Federation; resources, the system of standards in the field of
methodical recommendations on accounting eco- geological study.
logical and geological and geochemical study;
guidance on the groundwater storage; Orders of
the Ministry of Natural Resources and Rosnedra Cross-References
approving the order of state registration and the
state register of geological exploration of mineral ▶ Russian Federation: Energy Strategy
resources, as well as the registration of geological ▶ Russian Federation: General Information on
exploration of mineral resources; and instruction Mineral Policy
on the state registration of geological exploration ▶ Russian Federation: Mineral Policy – General
of mineral resources (six documents). Assessment
State registration of mineral reserves includes ▶ Russian Federation: State Regulation and
orders, decrees, instructions, regulations, and Mining Law Development
guidelines (of 13 documents), concerning the
state examination and accounting for changes in
inventories of mineral deposits; reporting by References
enterprises geological industry; classification of
reserves and resources of oil and combustible Law of Russian Federation “On Subsoil” (in Russian)
(2015) Electronic fund legal and scientific and techni-
gas, solid minerals; and statistical observations
cal documentation. http://docs.cntd.ru/document/
of the territorial balance of mineral reserves. 9003403
Accounting, storage, and transmission of infor- Regulations on the Ministry of Natural Resources and
mation consist of eleven documents, including the Environment (in Russian) (2015) Ministry of Natural
Resources and Environment. http://www.mnr.gov.ru/
Federal Law “On Information, Information Tech-
mnr/statute/
nologies and Protection of Information” and the The position of the Federal Agency for Subsoil Use
State program of Russian Federation “Information (in Russian) (2014) Federal Agency for Subsoil Use.
Society (2011–2020)” and also the orders, regula- http://www.rosnedra.gov.ru/page/11.html
The position of the Federal Service for Supervision of
tions, guidelines, instructions on use and transfer
Natural Resources (in Russian) (2013) Federal Service
of information on mineral resources; Instructions for Supervision of Natural Resources. http://rpn.gov.ru/
on improvement and development of an informa- node/120
tion system to regulate the use of mineral
R
Russian Federation: Energy Strategy External challenges are characterized as the

stagnation or low growth of demand for Russian
Vladimir V. Silantiev and Nuriia G. Nurgalieva energy resources; the transition from resource
Kazan (Volga Region) Federal University, Kazan, globalization to regional energy self-sufficiency;
Russia increased competition, including through the use
of alternative and unconventional energy
resources; and external economic and technolog-
Energy strategy (ES) determines development of ical sanctions (Mastepanov 2014).
the energy sector of the country and the state The central idea of ESR-2035 is the transition
energy policy. from resource to resource-innovative develop-
In the last decade in Russian Federation, a ment of fuel and energy complex based on full
number of documents on Energy Strategy of Rus- use of domestic resources and innovative capabil-
sia (ESR) were accepted in which priorities, ref- ities through the formation of long-term techno-
erence points, and the directions of energy sector logical chains with their saturation innovative
development were put by the Government of Rus- technologies (Mastepanov 2014; Gromov et al.
sian Federation to 2035 (2014) and 2050 (Gromov 2011).
et al. 2011). The aim of the ESR-2035 is the creation of
The draft revised ESR for the period up to 2035 innovative and efficient energy sector for sustain-
was developed by the Institute of Energy Strategy, able economic growth, improving the quality of
together with the Energy Research Institute of the life and promotion of its external economic posi-
Russian Academy of Sciences and Analytical tions (Mastepanov 2014).
Center for the Government of Russian Federation In common energy sector, development is
and submitted to the Ministry of Energy of Russia projected as: the formation of oil and gas com-
(Mastepanov 2014). plexes with the development of production, trans-
New challenges force to form new conceptual port, and social infrastructure in Eastern Siberia
content. Two groups of key challenges were dis- and the Far East; the development of the hydro-
tinguished: internal and external. Internal chal- carbon potential of the continental shelf of the
lenges include slow postcrisis development of Arctic seas and the North of Russia; the develop-
the economy and the increasing dependency of ment of energy efficient technologies; and the
the budget on fuel and energy complex; the development of the domestic energy
increase of energy prices for end consumers; and infrastructure.
the need for rapid technological modernization for Strategic initiatives in the oil and gas industry
improvement of the energy sector efficiency. comprise the following points (Belogoriev
DOI 10.1007/978-3-642-40871-7_70-1
2 Russian Federation: Energy Strategy
et al. 2011; Bushuyev 2014; Gromov 2014; Cross-References

Mastepanov 2014): the stabilization of oil produc-
tion; the creation in the East of the country of the ▶ Russian Federation: General Information on
infrastructure for 20–25 % of total production and Mineral Policy
40 % of exports of oil and oil products; the ▶ Russian Federation: Mineral Policy – General
increase of oil recovery factor up to 40–45 %; Assessment
the preparation of explored reserves, infrastruc- ▶ Russian Federation: Regulatory Framework of
ture, and technologies for development of the Mineral Policy
Arctic shelf; the creation in the East of the country ▶ Russian Federation: State Regulation and
of the infrastructure for 15–20 % of total gas Mining Law Development
production and 35–40 % of exports of gas; the
increase of gas production of 35–45 %; the deep
processing of up to 25–30 % of produced gas; the
References
implementation of already planned projects:
“South stream,” “Power of Siberia,” and the cre- Belogoriev AM, Bushuev VV, Gromov AI, Kurichev NK,
ation of LNG plants; the liquefaction (LNG) up to Mastepanov AM, Troitskiy AA (2011) Trends and sce-
8–11 % of produced gas; the extension of the narios of the world energy sector development in the
Unified Gas Supply Systems to Eastern Siberia first half of the 21st century (in Russian). Energya,
Moscow, 64 p
and the Far East; the development of oil and gas Bushuyev VV (2014) Russian Energy (selected papers,
infrastructure in the Far East, including the devel- reports, presentations). In three volumes. Vol. 3,
opment of oil and gas fields of Sakhalin oblast World Energy and Russia (in Russian). Energya,
(on the continental shelf of the Okhotsk sea) and Moscow, 415 p
Energy strategy of Russia for the period up to 2035
oil deposits on the territory of the Republic of (in Russian) (2013) Ministry of Energy of Russian
Sakha (Yakutia) (Talakan and adjacent fields); Federation. http://minenergo.gov.ru/aboutminen/
continued implementation of the projects energostrategy
“Sakhalin-1” and “Sakhalin-2”; the construction Gromov AI, Mastepanov AM, Bushuev VV (2011) Chap-
ter No 2 and chapter No 3. In: World energetics-2050
of the refinery in Primorsk region; modernization (White book) - Bushuev VV, Kalamanov VA (eds) (in
of oil terminals in Nakhodka and De-Kastri; the Russian). Energya, Moscow, pp. 47–92. http://www.
formation of the Yakut gas Centre (on the basis of energystrategy.ru/editions/docs/WB_2050_1_100.pdf
the Chayanda field, with the prospect of develop- Gromov AI (2014) The concept of energy strategy in
Russia for the period up 2050. J. Energeticheskaya
ment of adjacent fields – Srednebotuobinskoe, politika (in Russian), 2-2014. http://www.
Taas-Urjahskoe, Verhnevilyuchanskoe, and energystrategy.ru/press-c/source/Gromov_2-14.doc
others); the construction of new LNG plants in Mastepanov AM (2014) ESR-2035. Paper presented at the
Vladivostok and Sakhalin; completion of con- seventh Japan–Russia Energy and environment dia-
logue, Niigata, 30 Oct 2014. http://www.erina.or.jp/
struction of the gas pipeline “Power of Siberia”; wp-content/uploads/2014/12/A-MASTEPANOV.pdf
the gasification of the Southern Federal District;
and the formation of oil, gas and petrochemical
clusters, large gas processing facilities and chem-
ical plants.
R
Russian Federation: Voluntary and professional competence. Noncertified orga-

Standards to Russian Mining nizations are increasingly unable to obtain state or
Industry municipal order; they have less chance of soft
loans or large investment.
Vladimir V. Silantiev and Nuriia G. Nurgalieva ISO certification positions the company as
Kazan (Volga Region) Federal University, Kazan, solid organization that respects to quality control
Russia and guarantee the quality and safety of their ser-
vices or products. Quality management is also
useful for optimizing existing workforce of the
In the market, economy with its inherent compe- company.
tition and the struggle for consumer confidence Voluntary standardization develops mineral
and business success play greater role for the complex.
quality of products and services. The need to According to Shvarts et al. (2015) use of ISO
improve the quality of production makes compa- 14001 is fixed in 11 oil and gas companies and
nies and organizations increasingly use methods 17 mining companies. Sustainability reporting in
and rules of standardization, metrology, and accordance with requirements of the Global
certification. Reporting Initiative (GRI) was observed in five
International Organization for Standardization oil and gas companies and three mining
(ISO) includes enterprises, institutions, and com- companies.
panies dealing with standardization. ISO 14001 standards were chosen as being the
Federal Agency of Technical Regulating and most widespread environmental certification.
Metrology (Rosstandart) is the representative In the developing countries and in rapidly
body of Russian Federation in ISO (see http:// growing economies such as Russia, national cer-
www.gost.ru/wps/portal/en). tifications are not wholly trusted by middle class
Certification to the ISO system for Russian consumers, companies, and investors in OECD
companies and organizations is voluntary. But and other international bodies. There are two rea-
increasingly, foreign companies – potential sons why national certifications are not trusted.
partners – not even begin negotiations if their The first is that there are risks of lower local
Russian colleagues do not know what the standard standards being applied compared to international
ISO 9000, 9001 is (ISO 9000, 9001). voluntary systems, and the second is that corrup-
Voluntary ISO certification is considered the tion and/or politically driven implementation
sign of the quality of products or services to the takes place (Shvarts et al. 2015).
consumer, an additional guarantee of reliability
DOI 10.1007/978-3-642-40871-7_71-1
2 Russian Federation: Voluntary Standards to Russian Mining Industry
According to the ISO Survey 2010, Russia group, Atompredmet Gold, TMK) are usually pri-
stood in 18th place according to the number of vately owned. Ninety-four percent (94 %) of these
ISO 14001 certificates obtained (Shvarts companies (excluding Petropavlovsk plc) have
et al. 2015). In 2012, however, Russia was ranked acquired ISO 14001 standard (Shvarts
34th. The reason for this drop in ranking was that et al. 2015). Of these, 65 % (Severstal, Norilsk
some other countries experienced a significant Nickel, UC Rusal, EuroChem, Metalloinvest,
increase in the number of ISO 14001 certificates, Magnitogorsk Iron and Steel Works, Novolipetsk
while the number in Russia did not just stagnate Steel, Polymetal International, Polyus Gold,
but fell by 863. This can be explained by the fact Uralkali, Petropavlovsk plc) have a sustainability
that recently Russian authorities have started issu- report done in accordance with GRI principles.
ing ISO 14001–2007, this certificate equals to Only 16 % of the companies (Severstal,
ISO14001–2004. Thus, as many organizations Metalloinvest, Polus Gold), however, went
have “local” ISO 14001 certificate, they cease to through the GRI public assurance procedure. As
inform International Standards Organization can be seen, the difference between self-reported
about the amount of issues certificates. Based on GRI (65 %) and publicly assured GRI (16 %) is
the evidence of Russian certification bodies, there markedly greater than is the case with oil and gas
is no dramatic decrease of ISO issue. This is the companies. The assumption is that mining com-
reason why it is difficult to give an assessment of panies use GRI sustainability reporting more as a
the major decline in numbers of ISO 14001 cer- marketing tool rather than for other reasons (e.g.,
tificates in Russia after 2010 (Shvarts et al. 2015). minimization of environment risks or responsibil-
According to the Federal State Statistic Service ity toward the environment) and that Russian
the oil and gas industry contributes 71.1 % to mining companies have less of a presence on the
Russian exports and is nowadays the base of the more environmentally aware internal markets in
Russian economy. OECD countries when compared with Russian oil
All of the analyzed (Shvarts et al. 2015) com- and gas companies (Shvarts et al. 2015).
panies (Gazprom, Lukoil, Rosneft, TNK BP, Nonprofit organization “Association of Rus-
Surgutneftegaz, Tatneft, Gazpromneft, Novatek, sian Oil and Gas Field Services Providers”
Slavneft, Rusneft, Bashneft) have ISO 14001, (Soyuzneftegazservice) can be also considered as
and 73 % (Gazprom, Lukoil, Rosneft, TNK BP, an example of organizations that actively
Tatneft, Gazpromneft, Novatek, Bashneft) of involved in the issues of standardization and tech-
them have self-reported GRI. It is also worth nical regulation for oil and gas industry.
mentioning that 45 % of the companies (Rosneft, This organization developed the project of the
TNK BP, Tatneft, Novatek, Bashneft) have pub- national standard of Russian Federation “Mud-
licly assured reports. This can be explained by the logging of oil and gas wells.” Launching the
fact that a significant portion of the companies TC431 (the Technical Committee on Standardiza-
have a major presence on European (Gazprom tion No 431 “Exploration, use and protection of
and Lukoil and to a lesser degree Rosneft) and mineral resources”) was the important step of
North American (Lukoil) markets and are pushing Soyuzneftegazservice to develop new and harmo-
to comply with international environmental stan- nize the existing international industry standards.
dards and requirements of intergovernmental and The TC431 adopted the Project of the national
private financial institutions from OECD coun- standard “Oil and gas wells (2006). Rules for
tries (Shvarts et al. 2015). mud-logging” developed by the
Russian mining companies (Severstal, Evraz Soyuzneftegazservice experts. Report of proceed-
Group, Norilsk Nickel, UC Rusal, EuroChem, ings at TC431 meeting is found on http://www.n-
Metalloinvest, Magnitogorsk Iron and Steel g-s.ru/ (Industry Standardization 2015).
Works, Novolipetsk Steel, Polymetal Interna- At the same time the organization launched the
tional, Polyus Gold, Uralkali, Petropavlovsk plc, project on translation and harmonization of two
Chelyabinsk Zink Plant, Ferrexpo plc, Koks interesting ISO standards on field testing of
Russian Federation: Voluntary Standards to Russian Mining Industry 3
drilling fluids: water-based fluids (ISO approach to hydrocarbon reserves record) are
10414–1:2001) and oil-based fluids (ISO examined.
10414–2:2002). “Association of Russian Oil and Gas Field
All “Association of Russian Oil and Gas Field Services Providers” is guiding the technology
Services Providers” activities and researches for unification procedure (according to the structure
oil and gas industry are within the international of the relevant Coordination Boards) based on
standards harmonization. This nonprofit organiza- the open Wellsite information transfer standard
tion’s members scrutinize the standards of the markup language (WITSML).
following international organizations: Interna- One of the main issues of the WITSML stan-
tional Organization for Standardization (ISO); dard is to provide with the real-time seamless flow
International Electrotechnical Commission of well site information between operators and
(IEC); Institute of Electrical and Electronics Engi- service companies to speed the decision-making
neers (IEEE); International Telecommunication process. Soyuzneftegazservice is likely to contrib-
Unit (ITU); and Not-for-profit consortium, ute its efforts to the WITSML developers and their
“Energistics.” activities.
“Association of Russian Oil and Gas Field The dynamics of environmental voluntary
Services Providers” has met the successful expe- standards implementation is expected to remain
rience of the Norwegian standardization, specifi- mostly the same or not in dependence of the
cally Norsok. Russian economy continues or does not continue
Every year “Association of Russian oil and to integrate into the world’s economy. At the same
Gas Field Services Providers” is forming the Rus- time, Russia-China economic cooperation is
sian “service” delegation for the United Nations growing, and this could be one of the reasons for
Economic Commission for Europe Working Party the decline in the environmental standards
on Regulatory Cooperation and Standardization (Shvarts et al. 2015), particularly those that are
Policies (WP6). The main focus of the WP6 is to state-owned and probably for a short-term
encourage the development, adoption, and use of perspective.
agreed technical regulations and standards, as
well as conformity assessment procedures in all
56 states – members of the UNECE WP6. WP6 is References
working together with the WTO Committee on
Technical Barriers to Trade. On the panel ses- Industry Standardization (2015) Association of Russian oil
and gas field services providers. http://www.n-g-s.ru/
sions, the ongoing problems of oil and gas and
index.php?option=com_content&view=article&id=
ecology safety, means of combating 50&Itemid=84&lang=en
counterfeiting, regulatory practice for equipment Shvarts E, Bunina J, Kniznikov A (2015) Voluntary envi-
for explosive environments, voluntary certifica- ronmental standards in key Russian industries: a com-
parative analysis. Int J Sustain Dev Plan 10(3):331–346
tion, and oil and gas metrology issues (common
R
Russian Federation: Mineral There can be noted growth of sites of geolog-

Policy – General Assessment ical exploration and scale. In addition to the upper
layers of the Earth’s crust in the sphere of geolog-
Vladimir V. Silantiev and Nuriia G. Nurgalieva ical research now involved the upper lithosphere,
Kazan (Volga Region) Federal University, Kazan, the territory of the Russian continental shelf and
Russia the deep of the oceans. This was made possible
thanks to the deep and ultra-deep drilling,
increased accuracy of geophysical research, espe-
Mineral resources base is natural competitive cially various seismic methods, advances in
advantage of the national economy and industrial experimental petrology and mineralogy, and
sector of Russia, the donor of the Russian econ- study of deep core, as well as advances in the
omy, ensuring its development and transition to a physics of rocks at high temperatures and
new technological order. Economic and geopolit- pressures.
ical interests of Russia and in the long run will Oil and gas deposits of sedimentary basins of
depend significantly on the state of the mineral Russia are sufficiently studied at depth of
resource base, on which the reproduction of mod- 3.5–4.5 km. Deeper investigations on the territory
ern technological level is the central task of geol- of Russian Federation and obtaining of new data
ogy. The solution to this problem is determined by on oil and gas potential of the continental shelf of
detailed geological study of the territory of the Russian Federation become more and more
country, efficiency and quality of exploration relevant.
work at all stages of their implementation – from Despite high level of total reserves of minerals
regional studies of the subsoil to mineral in the country there is a shortage of certain types
exploration. of mineral raw materials, which have to be
Russia has considerable mineral resources imported because of the lack of deposits or
most used in the world of minerals. According to adverse geological and geographical distribution
the “Strategy of the geological industry develop- of high-quality ores, as well as the availability of
ment until 2030 (2012)” the annual volume of technological complexities of mining and mineral
production in such kinds of mineral raw materials processing.
such as oil, natural gas, coal, iron ore, aluminum, According to the “Strategy of the geological
copper, nickel, gold, diamonds, platinum group industry development until 2030 (2012)” devel-
metals, phosphorus ore, and potash, in terms of opment of mineral resource base is influenced by
value is more than 30 % of the gross domestic the following constraints:
product of Russian Federation.
DOI 10.1007/978-3-642-40871-7_72-1
2 Russian Federation: Mineral Policy – General Assessment
– Absence of modern geological and carto- staff in the economically active age group up to
graphic basis for a number of promising 40 years. In addition, the outflow of personnel is
regions of Russia, which hinders leading fore- constantly increasing, and more than 10 % of the
casting research and exploration works. emerging jobs remain vacant. According to vari-
– A significant decrease in the number of the ous estimates, the shortage of young engineers,
reserve objects on which it would be possible economists and managers, and other specialists
to receive a dramatic increase in reserves of with higher education in geology is more than
extensively mined minerals in the coming 20,000 people.
years. The “Strategy of the geology industry devel-
– A high proportion of hard to recover reserves. opment in Russia until 2030” (2012) is based on
– The current system of state regulation of sub- the following targets: an increase to 70 % the
soil use does not create sufficient conditions proportion of exploration work carried out inno-
for attracting investments in the subsoil geo- vation to provide geological organizations with
logical exploration. highly qualified specialists; ensuring growth in
– The existing public procurement system does funding from extra-budgetary sources due to the
not allow for continuous implementation of increase of investment attractiveness of explora-
full cycle of exploration work on the detection tion work in relation to the level reached in 2015
of promising areas to open and start the devel- to 20 %, in 2020 to 40 %, and in 2030 to 50 %;
opment of deposits, the duration of which is ensuring the reproduction of mineral raw mate-
from 5 to 15 years. rials, taking into account current and future needs
for proven reserves, which, in accordance with the
The relative contributions of government and basic instruments of strategic planning of socio-
business in geological exploration in monetary economic development of the country will be,
terms is an average of 1–20, for hydrocarbons respectively, on average per year for 2020 and
and 1–5 for solid minerals, respectively. 2030 years:
On state statistics documented in the “Strategy
of the geological industry development until 2030 Oil – from 500 up to 530 million tons
(2012)” staffing industry made at the expense of Natural gas – from 780 up to 900 billion cubic
specialist training in the geological profile of Rus- meters
sian Federation in 34 institutions of higher educa- Gold – from 220 up to 250 tons
tion, including 18 technical universities, Iron ore – from 190 up to 200 million tons
academies, and institutes and 20 colleges. Train- Copper – from 1250 up to 1400 thousand tons
ing is carried out in 15 specialties of higher edu- Nickel – from 440 up to 450 thousand tons
cation and eight fields of vocational education.
Total number of students-geologists is about It is planned increasing the level of scrutiny of
18,000. People, including university students, Russian Federation, its continental shelf and
are about 16,000. Students of technical schools inland water areas through general geological
are about 2,000. Annual graduation of specialists work and special purposes by 2020 up to 50 %
with higher geological formation is about 2,500 and by 2030 up to 70 %.
people, with average geological State program “Reproduction and use of natu-
formations – about 500 people. According to ral resources” (2014) shows the amount of finan-
recent data, 30–50 % of graduating geologists cial support the implementation of the activities
do not work in the specialty field. Over the last envisaged up to 2020 in the field of geology and
15 years, the number of geological industry spe- mineral resources of the federal budget of almost
cialists with higher education decreased by almost 326 billion rubles, including about 255 billion
1.5, increased the number of people of retirement rubles from 2015–2020.
age, and simultaneously decreased the number of
Russian Federation: Mineral Policy – General Assessment 3
Strategic priority in the implementation of the Cross-References

program is to ensure energy security for economic
and social development through involvement in ▶ Russian Federation: Energy Strategy
the development of unconventional oil (regional ▶ Russian Federation: Regulatory Framework of
formations: Abalakskaya, Bazhenovskaya, Mineral Policy
Domanikovskaya, Kuonamskaya, Inikanskaya, ▶ Russian Federation: State Regulation and
Khadumskaya) with annual capacity of at least Mining Law Development
20 million tons by 2020; to provide annual pro-
duction growth of deposits on the continental
shelf of Russian Federation to the achievement
References
by 2030, the maximum annual level of oil and
condensate at least 65 million tons and natural gas Resolution of the Government of Russian Federation
230 billion cubic meters; the accumulated produc- “Reproduction and use of natural resources”
tion volume in 2030 in the amount of 380 million (in Russian) (2014) Ministry of natural resources and
tons of oil and condensate and 1.76 trillion cubic environment. https://www.mnr.gov.ru/regulatory/
detail.php?ID=134261
meters of gas. Strategy of the geological industry development until 2030
The mineral policy also includes the expansion (in Russian) (2012) Ministry of natural resources and
of small scale geological survey (on 7.5 % annu- environment. https://www.mnr.gov.ru/regulatory/
ally); the opening of the new reserves which detail.php?ID=129117&print=Y
completely compensate depleted reserves; the
increase in the number of exploration and mining
licenses up to 80 % in 2020.
P
Poland: Energy Policy The Polish currency is the Polish zloty (PLN).
The exchange rates (May 2015) is around PLN/€
Lidia Gawlik and Eugeniusz Mokrzycki 4.0–4.1 and PLN/USD 3.6–3.7 GDP is at the level
Mineral and Energy Economy Research Institute, of around PLN 1.6 billion (1.6 1012 PLN) con-
Polish Academy of Sciences, Krakow, Poland sistently rising since 1992.
General Information on Poland

Need of (Nonrenewable and Renewable)
Resources
Poland (official name: the Republic of Poland) is
located in Central Europe on the Baltic Sea. The
The structure of primary energy consumption in
total area is 312,679 km2. This postcommunist
Poland is very specific, with a high dependence on
country joined the European Union in 2004.
solid fossil fuels – 56 % (Fig. 1). The structure is a
Poland is a parliamentary democracy, defined by
result of the possessed high reserves of hard coal
the Constitution of 2 April 1997, which declares a
and lignite and a result of historical directions of
separation and balance between the legislative,
the country development.
executive, and judicial powers. The legislative
An increase of energy consumption can be
power belongs to the Parliament (two
observed after joining the EU (Table 1) – by
chambers – Sejm and Senate), the executive
14 % over a period of 10 years. In 2013 – after
power is vested in the President and the Council
the growth since 2010 – it declined to 4888.1 PJ.
of Ministers, and the judicial power is vested in
Meanwhile, the production of primary sources has
courts and tribunals.
decreased (Table 2). In 2013, it was lower by 9 %
The neighboring countries are: Germany – to
compared to 2004 year, mainly due to the
the west, Czech Republic and Slovakia – to the
decreased production of hard coal and gas.
south, Ukraine and Belarus – to the east, Lithuania
Coal (both steam and coking) remains the most
and the Kaliningrad Oblast (a Russian
important energy carrier produced in Poland, with
exclave) – to the north-east.
a share amounting to 61.3 % in 2013. Lignite
With its population of over 38.5 million per-
takes second place (18.3 %). The increasing role
sons, Poland is the sixth most populous member
of renewables (the production doubled within
of the UE. The country is ethnically homogeneous
10 years and it consisted in nearly 12 % of the
with over 99 % Poles and only small minorities of
total primary energy production in 2013) is the
other nationalities.
result of the need to comply with UE

DOI 10.1007/978-3-642-40871-7_73-1
2 Poland: Energy Policy
Renewables Other Renewable energy sources are dynamically

8,1% 1,2% developing (Table 4), but the potential for
Natural gas exploiting such resources is lower than in other
13,0% regions of the EU due to less favorable climatic
and geographical conditions. Considerable good
Steam coa1 conditions for development have biomass and
33,6%
wind, moderate – geothermal energy (Gawlik
et al. 2012).
Crude oil In 2013, 2380 PJ of secondary energy sources
23,2% were produced. Poland is a net exporter of sec-
ondary energy (net trade balance in 2013: 291 PJ).
Lignite
12,4% Coking coal The main export products are coke and semicoke,
8,5% heavy fuel oil, nonenergy products, and motor
gasoline. The main imported secondary energy
Poland: Energy Policy, Fig. 1 Consumption of primary
energy sources in Poland in 2013, % products are: liquefied petroleum gas (LPG);
electricity (536 PJ), automotive diesel oil
(477 PJ), heat (296 PJ), and motor gasoline
energy-climate obligations as well as the rising (159 PJ) are the main consumed secondary energy
environmental awareness of the society. products.
Poland is a net importer of primary energy The national power system consists of separate
(Table 3). branches: generation, transmission, distribution,
The coal mining industry, in spite of large and trade. The entire above are functionally
reserve base, is in a bad economic condition. connected for the process of continuously supply-
The production of coal is relatively expensive, ing electricity to customers.
and prices on the world markets are low. The The total installed capacity in Polish genera-
amount of coal produced decreased while the tion systems in 2013 was – 38,646.7 MW (ARE
amount of coal imported at low prices was higher 2014), which is 2432.5 MW (more than in 2010).
than the amount of coal exported (especially in The majority of the capacities are based on steam
2011). The energy generation sector is the largest coal (20,089.6 MW) and lignite (9420.5 MW).
consumer of hard coal (68 % of steam coal). There are also gas-fired boilers (880.5 MW). The
Twenty-eight percent of hard coal was consumed capacity of hydro and wind power plants is
by manufacturing (especially coking coal) and 3116 MW, of which 1706 MW is in pump and
15 % by households. storage power plants. The total installed capacity
Lignite production has been on the rise since dedicated for renewable energy sources use is
2010. It is the least expensive fuel, and it is thus 2764 MW (over a 90 % increase compared to
used for the electricity and heat generation sector. 2010). Sixty-eight industrial CHPs, which pro-
Crude oil reserves in Poland are low and the duce heat and electricity mainly for industrial
domestic production covers less than 4 % of the purposes, are also present.
demand for this energy carrier which has been The length of 700, 400, and 220 kV power
growing steadily (34 % in the last 10 years). It is lines in the Polish transmission system is
used mostly in refineries. 13,519 km. The Polish transmission system is
In 2013, the production of natural gas in connected to the transmission systems of neigh-
Poland constituted some below 30 % of annual boring countries with high voltage intersystem
consumption of this fuel. The consumption level lines.
has steadily been increasing, especially in house- Electricity production in 2013 was 164.4 TWh
holds (23 % of total natural gas consumption). (Table 5) and the domestic consump-
Sixty-three percent of natural gas is used by tion – 158 TWh (ARE 2014; Grudziński and
industry. Stala-Szlugaj 2014).
Poland: Energy Policy 3
Poland: Energy Policy, Table 1 Global consumption of primary energy sources, PJ

Primary Year
energy
source 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Steam coal 1480.6 1577.2 1648.9 1613.5 1576.5 1490.0 1644.0 1603.3 1442.6 1486.3
Coking coal 402.8 330.1 382.9 402.1 384.5 293.0 363.9 352.4 345.6 374.5
Lignite 540.8 532.8 526.9 500.0 532.7 509.9 484.8 524.2 532.1 550.0
Crude oil 767.9 772.8 852.1 851.0 894.2 861.8 970.6 1027.2 1068.9 1028.8
Natural gas 497.5 512.2 518.1 518.2 525.3 505.0 536.1 537.5 569.8 574.7
Renewable 180.7 187.5 196.6 202.0 233.4 263.3 306.0 333.9 362.2 359.2
energy
Other 14.2 19.1 33.7 31.0 21.5 18.1 23.8 49.3 66.1 54.6
Total 3884.6 3931.7 4159.2 4117.8 4168.1 3941.1 4329.2 4427.8 4387.2 4428.1
consumption
Source: CSO (2014a)
Poland: Energy Policy, Table 2 Indigenous production of primary energy sources, PJ

Primary Year
energy
source 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Steam coal 1868.0 1933.2 1870.8 1714.6 1661.9 1599.8 1491.3 1469.0 1539.1 1484.1
Coking coal 487.3 416.5 430.5 402.1 355.4 252.8 344.0 338.3 348.6 358.9
Lignite 541.1 533.2 527.3 500.0 532.8 510.0 483.9 525.5 533.1 549.1
Crude oil 37.3 35.4 33.9 30.6 32.3 29.0 29.2 26.3 28.9 41.1
Natural gas 164.5 162.6 162.5 163.1 154.5 153.9 154.6 161.2 163.6 160.1
Renewable 180.7 190.4 200.0 203.1 226.8 253.4 288.0 312.8 356.1 357.5
energy
Other 14.2 13.1 28.1 26.7 21.7 18.0 23.8 49.3 69.5 54.7
Total 3293.1 3284.4 3253.1 3040.2 2985.4 2816.9 2814.8 2882.4 3038.9 3005.5
production
Source: CSO (2014a)
83.7 % of the electricity in 2013 was produced Classification of Reserves

from solid fuels (49.6 % from coal and 34.1 %
from lignite). The other fuels used in the power The Polish classification of mineral resources is
sector are natural gas (3.2 %). The share of elec- different from the international classification but
tricity from renewable energy sources has steadily is based on similar principles. In the Polish clas-
increased from 2 % in 2004 up to 10.4 % in 2013. sification of mineral resources, the classes of
The share of biomass is the highest – 46.43 %, resources are distinguished in a hierarchical man-
followed by wind – 35.18 %, water – 14.29 %, ner, based on their usefulness. The amount of
and biogas – 4.04 % out of all the renewable minerals defined as “geological” resources are
sources. Other renewable energy sources are of divided to the “balance” resources (zasoby
lower importance: municipal waste, biofuels, and bilansowe) (those which are technically and eco-
solar energy account for less than 1 %. nomically minable) and “off-balance” resources.
The “industrial reserve base” (zasoby
przemysłowe) is distinguished from the “balance”
Poland: Energy Policy, Table 3 Trade balance of primary energy sources, PJ

Primary Year
energy
source 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Total 599.9 706.2 876.4 1053.4 1292.3 1228.3 1419.4 1591.8 1514.2 1368.5
In which:
Steam 397.6 330.8 263.3 168.0 23.0 18.3 35.7 151.0 55.3 33.8
coal
Coking 72.6 75.4 64.7 2.9 53.6 15.8 39.5 17.9 0.5 0.1
coal
Crude oil 730.4 752.4 829.8 875.4 872.8 844.6 955.1 998.7 1031.4 975.1
Natural 339.9 357.2 372.6 345.4 382.1 340.1 371.5 403.6 420.4 426.3
gas
Biofuels 0.0 1.9 3.0 0.1 6.6 90.8 18.3 21.2 6.4 1.0
Source: CSO (2014a)
Poland: Energy Policy, Table 4 Consumption of renewable energy sources, PJ

Year
Primary energy source 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Biomass 170.1 174.4 181.1 184.0 198.9 217.3 245.6 265.9 292.6 286.1
Biogas 1.9 1.9 2.6 2.7 4.0 4.1 4.8 5.7 7.0 7.6
Biofuels 0.4 2.3 4.1 4.4 18.5 27.8 37.1 39.1 34.5 30.9
Water 7.5 7.9 7.4 8.5 7.7 8.6 10.5 8.4 7.3 8.8
Wind 0.5 0.5 0.9 1.9 3.0 3.9 6.0 11.5 17.1 21.6
Solar energy 0.0 0.0 0.0 0.0 0.1 0.3 0.4 0.4 0.5 0.6
Geothermal energy 0.3 0.5 0.5 0.4 0.5 0.6 0.6 0.5 0.7 0.8
Other 0.0 0.0 0.0 0.1 0.7 0.7 1.0 2.4 2.5 2.8
Total 180.7 187.5 196.6 202.0 233.4 263.3 306.0 333.9 362.2 359.2
Source: CSO (2014b)
Poland: Energy Policy, Table 5 Production of electricity by fuels, TWh

Year
Specification 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Total electricity production 154.2 156.9 161.7 159.3 155.5 151.7 157.7 163.5 162.1 164.6
In which from:
Hard coal 90.5 86.9 93.4 92.8 85.7 83.2 87.8 87.3 80.5 81.6
Lignite 52.2 54.7 53.4 51.0 53.2 50.2 48.7 52.5 54.1 56.2
Natural gas 4.9 5.1 4.6 4.5 4.7 4.8 4.8 5.8 6.3 5.2
Other nonrenewables 3.5 6.3 6.0 5.6 5.3 4.8 5.5 4.8 4.3 4.5
Renewable energy sources 3.1 3.9 4.3 5.4 6.6 8.7 10.9 13.1 16.9 17.1
In which:
Biomass 0.77 1.40 1.83 2.36 3.36 4.90 5.90 7.15 9.53 7.92
Biogas 0.08 0.11 0.16 0.19 0.25 0.32 0.40 0.45 0.56 0.69
Wind 0.14 0.13 0.26 0.52 0.84 1.07 1.66 3.20 4.74 6.00
Water 2.08 2.20 2.04 2.35 2.15 2.37 2.91 2.33 2.03 2.43
Source: ARE (2014), CSO (2014b)
resources; these in turn are divided to “recover- The legal act concerning the management of
able” reserves (zasoby operacyjne) and losses. domestic resources is the Geological and Mining
The difference compared to the UNCF classifica- Law (GML 2011) which establishes the rules and
tion of mineral resources in Poland results in the conditions of commencing, running, and closing
information not being comparable with other activities connected with geological works,
countries that use international classification, extracting minerals from deposits, and under-
without specific recalculations (Nieć 2010; Nieć ground storage of substances and wastes.
et al. 2012). Compliance with the EU climate and energy
package was implemented in Polish law, in:
• The Act on Bio-Components and Liquid

Energy Policy of Poland
Bio-Fuels of 25 August 2006
• The Act on Stock of Crude Oil, Petroleum
The legal framework for energy management in
Products and Natural Gas and the Procedures
Poland are set in the Energy Law (EL 1997), in the
in Case of a Threat of Energy Safety and Dis-
amendments of which the EU directives
ruption on the Petroleum Market of 16 Febru-
concerning common energy market in the energy
ary 2007
were implemented, inter alia:
• The Energy Efficiency Act of 15 April 2011
• The Act on Renewable Energy Sources of
• Council Directive 90/547EEC of 29 October
3 April 2015
1990 on the transit of electricity through trans-
mission grids. OJ L 313. 13/11/1990.
p. 0030–0033 The development of the energy sector and
• Council Directive 91/296/EEC of 31 May energy security are the main concern of the Gov-
1991 on the transit of natural gas through ernment and a key issue of all strategic decisions,
grids. OJ L 147. 12/06/1991 p. 0037–0040 as it was stated in the diagnosis of the country
• Directive 96/92 EC of the European Parliament development: Poland 2030. Development chal-
and of the Council of 19 December 1996 lenges. Challenge No. 5: Energy and climate
concerning common rules for the internal mar- safety. According to the Energy Law, the Council
ket in electricity. OJ L027. 30/01/1997 of Ministers is responsible for the development
p. 0020–0029 and implementation of the energy policy, which
• Directive 98/30/EC of the European Parlia- should be reviewed and updated every 4 years.
ment and of the Council of 22 June 1998 The document “Energy Policy of Poland by 2030”
concerning common rules for the internal mar- (ME 2009) was adopted by the Council of Minis-
ket in natural gas. OJ L204. 21/07/1998 ters on 10 November 2009.
p. 0001–0012 According to this document, the main goal is to
• Directive 2001/77/EC of the European Parlia- ensure stable fuels and energy supplies at a level
ment and of the Council of 27 September 2001 that guarantees meeting domestic needs at prices
on the promotion of electricity produced from acceptable for the economy and the society,
renewable energy sources in the internal elec- assuming the optimal use of domestic deposits of
tricity market. OJ L 283. 27/10/2001. energy resources, and through diversification of
p. 0033–0040 sources and directions of the supply of crude oil,
• Directive 2009/31/EC of the European Parlia- as well as liquid and gas fuels. The objective
ment and of the Council of 23 April 2009 on would be achieved through the implementation
the geological storage of carbon dioxide. OJ of six subgoals, for which detailed courses of
L140. 5/06/2009. p. 0114–0135 action are prepared and described. These are:
improvement of energy efficiency, increase of
fuel and energy supply security, diversification
Poland: Energy Policy, Table 6 The demand for particular energy sources according to the Polish Energy Policy, Mtoe
Year
Specification 2006 2010 2015 2020 2025 2030
Hard coal 43.8 37.9 35.3 34.6 34.0 36.7
Lignite 12.6 11.2 12.2 9.4 11.2 9.7
Crude oil and petroleum products 24.3 25.1 26.1 27.4 29.5 31.1
Natural gas 12.3 12.0 13.0 14.5 16.1 17.2
Renewable energy 5.0 6.3 8.4 12.2 13.8 14.7
Other fuels 0.7 0.7 0.9 1.1 1.4 1.6
Nuclear fuel 0 0 0 2.5 5.0 7.5
Total – primary energy 97.8 93.2 95.8 101.7 111.0 118.5
Source: ME (2009)
of the energy production structure through the 2014 (ME&ME 2014) confirms the goals stated in
introduction of nuclear power, development of the Energy Policy concluding that:
renewable energy sources, the development of
competition in the fuel and energy markets, and • The increase of the energy efficiency is the
the reduction of the impact of energy production priority for the Energy Policy of the country.
on the environment. • Coal will continue to be the key fuel in the
One of the most important issues is the diver- power sector.
sification of the demand for primary energy • The security of imported fuels’ continuous
sources and – at the same time – continuous use deliveries will be strengthened.
of domestically produced coal and lignite • Activities will be continued to introduce
(Table 6). nuclear energy in Poland.
The expected rise of the primary energy con- • Renewable energy sources will be developed
sumption is foreseen to be covered by the in order to comply with EU standards.
increased use of natural gas, renewables, as well • There will be an expansion and modernization
as by commissioning nuclear power plants. The of generation and transmission infrastructure
stable consumption of coal and lignite would for fuel and energy.
mean a reduction of their share in total primary
energy consumption. The new document on the Energy Policy until
Since 2009, many conditions have changed 2050 is currently at the preparation stage. The
and there is a necessity to update the document, project of the document (Project 2014) contains
taking the recent developments concerning the the assessment of the implementation of the pre-
climate and energy policies for the next years vious energy policy, information on its relations
into account (EC 2013), the internal conditions with other strategic documents at national and
in the hard coal mining industry (Gawlik and European levels, a description of the current
Lorenz 2014; Gawlik and Mokrzycki 2014), ris- energy sector, discussion on the conditions affect-
ing coal imports (Olkuski 2013), the fact that the ing potential directions of the energy sector trans-
decisions concerning the commissioning of formation during the relevant period, a review of
nuclear power plant are delayed and not finalized the available energy forecasts, as well as a
yet (ME 2014), as well as the new situation in the description of potential scenarios of Polish energy
global gas markets (Aguilera and Radetzki 2015). sector development. The defined motto for the
Nevertheless, the recent strategic document Energy Policy by 2050 is to create conditions for
accepted by the Council of Ministers in 15 April the permanent and sustainable development of the
national economy to meet the energy needs of
businesses and households and ensure energy Energy Regulators Regional Association
security with respect to the environment. (ERRA), and Gas Regional Initiative South/
South East (GRISSE).
Regulatory Framework
Concluding Remarks
The State Treasury is the owner of energy
resources in Poland. The Energy Regulatory The future of the Poland’s Energy Policy depends
Office (ERO) is the central body of state admin- on the final conclusions and decisions of the Euro-
istration nominated on the basis of the Energy pean Union concerning the climate and Energy
Law, responsible for regulation in the energy sec- Policy until 2050. The possibility of using domes-
tor as well as promotion of competition. The tic coal and lignite resources in the long term will
duties and powers of the President of the ERO depend on the cost of CO2 emission and the avail-
are closely related to the state policy in the field of ability of clean coal technologies (Gawlik 2013).
operation of the power companies, the concept of
the market, and requirements under the obligation
to adjust Polish law to EU law.
References
Licenses to conduct business in the field of the
broadly defined mining of energy resources Aguilera RF, Radetzki M (2015) The shale revolution:
include: exploration and prospecting as well as global gas and oil markets under transformation.
the exploitation of coal, coal-bed methane, natural Gospodarka Surowcami Mineralnymi – Miner Resour
Manag 31(1):5–26 – in Polish with English abstract
gas, and crude oil. The licenses are issued by the
ARE (2014) Statistics of Polish power sector. Central Sta-
Ministry of Environment. tistical Office, Agencja Rynku Energii (ed) Warsaw
The enterprises involved in economic activity (an former annuals) – in Polish with English subtitles
in the mining industry are state owned as well as CSO (2014a) Energy statistics in 2012, 2011. Central Sta-
tistical Office, Warsaw (and former annuals). Publica-
private companies, operating at equal rights.
tions available on www.stat.gov.pl. Accessed 20 Apr
The prices of energy fuels (hard coal, petro- 2015
leum) are market prices. Lignite is not traded. CSO (2014b) Energy form renewable sources in 2013.
Produced in mines, it is used in the nearby located Central Statistical Office, Warsaw – in Polish
EC (2013) A 2030 framework for climate and energy
power plant. The prices for this commodity are
policies. Green paper. COM(2013) 169 final. European
established between the mine and the power plant. Commission (EC)
Electricity prices and natural gas prices for con- EL (1997) Energy Law. Act of 12 April 1997
sumers are regulated by the state. The President of (Dz. U. 1997.54.348)
Gawlik L, Lorenz U (2014) How much coal for the power
the Energy Regulatory Office (ERO) is the main
sector? Polityka Energetyczna – Energy Policy
regulating body. J 17(3):19–32 – in Polish with English abstract
Gawlik L (ed) (2013) Coal for Polish energy sector in 2050
perspective – scenario analysis. Mining Chamber of
Industry and Commerce, Katowice, 300 p – in Polish.
International Aspects http://www.giph.com.pl/giph/attachments/article/278/
Wegiel_dla_polskiej_energetyki_2050_GIPH_MINPAN.
Poland belongs to many international organiza- pdf. Accessed 3 May 2015
tions and associations related to fuel and energy, Gawlik L, Mokrzycki E (2014) Scenarios of coal utiliza-
tion in power engineering in Poland in the light of EU
such as: World Energy Council (WEC), European
climate policy. Przegląd Górniczy 5:1–8 in Polish
Association for Coal and Lignite (EURACOAL), with English abstract
Council of European Energy Regulators (CEER), Gawlik L, Mokrzycki E, Uliasz-Bocheńczyk A (2012)
European Regulators Group for Electricity and Current state and prospects of electricity generation in
Poland until 2030 [in:] WEC Central and Eastern
Gas (ERGEG), Conseil International des Grands
Europe Energy Forum – FOREN 2012, pp 1–35-en,
Reseaux Electriques (CIGRE), Agency for the p 1–9. http://www.min-pan.krakow.pl/pliki/pracownie/
Cooperation of Energy Regulators (ACER), pzr/s1-35-en.pdf. Accessed 10 May 2015
GML (2011) Geological and Mining Law. Act of 9 June Nieć M (2010) International resources and reserve classi-
2011. (DZ. U. 2011.163.981) fication system. Górnictwo i
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in the Polish fuel and energy balance. Polityka Polish with English abstract
Energetyczna – Energy Policy J 17(3):49–66 – in Pol- Nieć et al (ed) (2012) Documenting methodology of
ish with English abstract deposits of solid minerals. Part IV. Resource estima-
ME (2009) Energy policy of Poland by 2030. Ministry of tion. Ministry of the Environment and National Fund
Economy (Ministerstwo Gospodarki), Warsaw – in for Environmental Protection and Water Management,
Polish Krakow – in Polish
ME (2014) Polish nuclear power programme. Ministry of Olkuski T (2013) Hard coal import dependence of Poland.
Economy (Ministerstwo Gospodarki), Warsaw Gospodarka Surowcami Mineralnymi – Miner Resour
ME&ME (2014) Energy security and the environ- Manag 29(3):115–130 – in Polish with English abstract
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C
China: Mining Policy – Nonmetals is employed by the construction industry (USGS

2014). Even though the NMMPI represents a vital
Raynold Wonder Alorse and J. Andrew Grant sector of the Chinese economy, it is important to
Centre for International and Defence Policy, note that the activities associated with the produc-
Queen’s University, Kingston, ON, Canada tion and consumption of nonmetals necessitate a
significant use of energy, which in turn affects
negatively the environment in various forms,
Introduction including water pollution, air pollution, and emis-
sions of carbon dioxide (CO2) – with the latter
The process of mining takes mineral, metal, or contributing to climate change (Chow 2007).
rock (in the form of sand, gravel, building stone, Despite its importance for economic growth, the
etc.) from the earth’s surface and makes it avail- nonmetal sector poses a great challenge to sus-
able for human usage mainly as a material but also tainable development efforts.
in the form of chemicals (Intergovernmental
Forum Secretariat 2013). Balraj and Grant
(2011: 297) provide a succinct overview of the China and the Nonmetal Mining Industry
nonmetal mining industry, including specific
products and market channels: China is a major player in the nonmetal mining
The nonmetals mining industry excavates such industry. For instance, China is presently the larg-
minerals as dimension stone (e.g., granite, lime- est nonmetallic mineral producer in the world and
stone, marble); crushed and broken stone (e.g.,
one of the leading consumers of four major non-
cement rock, sandstone); clay and ceramic (e.g.,
fire clay, China clay); sand and gravel (e.g., pebble, metallic mineral products: cement, refractories,
silica); and chemical and fertilizer minerals (e.g., plate glass, and ceramics (Hui and Kavan 2014).
nitrogen, potassium, phosphate). Some materials According to a report published by the Ministry
are sold in large regional markets (e.g., limestone)
of Land and Resources of the People’s Republic
and others, because of high transportation costs, are
mainly sold in local markets (e.g., sand, construc- of China, in collaboration with the Department of
tion stone, and gravel). Science and Technology and Chinese Academy of
Land and Resource Economics, 172 kinds of min-
The nonmetallic mineral products industry
eral resources were discovered in China. Of this
(NMMPI) processes certain industrial minerals,
variety of mineral resources, some 92 were differ-
that is, minerals that are neither metals nor fuels,
ent kinds of nonmetallic minerals, such as graph-
into useful products for society at large. More than
ite, sulfur, and sylvite.
50% of the total value of these nonmetal products
DOI 10.1007/978-3-642-40871-7_75-1
2 China: Mining Policy – Nonmetals
Clearly, China is rich in many mineral nonmetallic mineral proven reserves in China are
resources, including nonmetals. For instance, of a large scale.
China is the main producer and consumer of Hui and Kavan (2014, 8013) find that China’s
graphite, a valuable mineral with special charac- NMMPI is a typical energy-intensive sector. They
teristics required in many existing and future tech- assert that “from 1994 to 2010, energy consump-
nologies. In 2002, China was the world’s largest tion in the NMMPI increased from 125 million
producer of ceramics, mostly for sanitary ware metric tons of coal equivalent (mtce) to 277 mil-
and porcelain (Wilson 2004). Furthermore, lion mtce”. Cement production in China is a par-
China’s cement industry, which produced 1,868 ticularly large emitter of carbon dioxide. In fact,
million metric tons (Mt) of cement in 2010, its cement production processes emit more carbon
accounts for nearly half of the world’s total dioxide than any other type of industrial pro-
cement production (Ministry of Industry and cesses, accounting for nearly 4% of global carbon
Information Technology 2011). Moreover, China emissions (Hui and Kavan 2014). Since China’s
is the world’s largest refractory materials pro- large-scale construction boom beginning in the
ducer, consumer, and exporter. In recent years, 1990s, there has been a substantial increase in
the refractory industry of China has made substan- nonmetallic mineral production. Figure 1 below
tial progress with respect to product quality and (adapted from Hui and Kavan 2014) displays the
technological innovation, while satisfying the indexed outputs of four main nonmetallic mineral
demand of high-temperature industries products (cement, plate glass, daily ceramics, and
(Refractory China 2015). refractories) in China from 1991 to 2011, which
Even though there have been efforts to address depicts the rapid growth in nonmetallic mineral
the environmental and health challenges related to sectors. The growth in the nonmetal mining indus-
these nonmetallic minerals, there still remain try has been facilitated by demand in China’s
major challenges for the industry. The country’s expanding manufacturing sectors as well as accel-
economic pattern of growth – which has been and erated urbanization and attendant construction
continues to be energy- and natural-resource needs.
intensive – is environmentally unsustainable. As
such, the Chinese government has announced that
it is seeking to establish a more energy-efficient China’s Mining Policy
and ecologically-friendly economy by applying
innovative production processes and promoting Going Global
the development of new strategic industries. For China is a relative newcomer to the global mining
example, the Chinese government recently stage, but in recent years, under its “go global”
announced plans to reduce carbon emissions policy, China has become much more aggressive
from energy-intensive production sectors, such in pursuing raw materials from different parts of
as cement, chemicals, nonferrous metals, and the the world (Humphries 2015). The objectives of
like (USGS 2012). the “go global” policy include “(1) to support
national exports and expand into international
markets; (2) to push domestic firms to internation-
alize their activities as a means of acquiring
An Overview of China’s Nonmetals and
advanced technologies; and (3) to invest in the
Output
acquisition of strategic resources” (Humphries
2015: 2). China’s outbound direct investment in
China has a wide variety of nonmetallic mineral
the mining sector can be seen as a resource secu-
resources. Presently, there are more than 5,000
rity issue. However, not all observers and analysts
nonmetallic mineral ore production bases with
are particularly cheerful about China’s rise as a
proven reserves in China (Ministry of Land and
major trader and source of foreign direct invest-
Resources of China 2012). Most of these
ment. For instance, in recent years, considerable
China: Mining Policy – Nonmetals 3
Non-Metallic Mineral Products Output in China from 1991-2011

250
200
150
100
50
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Cement Plate Glass Daily Ceremics Refractories
China: Mining Policy – Nonmetals, Fig. 1 Nonmetallic mineral product output in China from 1991 to 2011 (Adapted
from Hui and Kavan (2014, 8014))
interest has grown regarding China’s emergence According to the Brundtland Report of the
as a major importer and investor in extractive United Nations World Commission on Environ-
sectors, particularly in African countries (Grant ment and Development (1987: 8), sustainability is
et al. 2014a: 273–274; Alden and Alves 2014). defined as meeting “the needs of the present with-
Some analysts have even called Chinese develop- out compromising the ability of future generations
ment assistance to Africa “rogue aid,” claiming to meet their own needs.” As a guide to institu-
that it is provided in exchange for unfettered tional design and political practice, sustainability
access to fuel minerals and nonfuel minerals allows for the integrated pursuit of economic
(including nonmetals) whose extraction is guided growth and environmental preservation (Lafferty
by nondemocratic and nontransparent governance and Meadowcroft 2000: 12). In 2002, the United
practices (Hendrix and Noland 2014). Nations Environment Programme published Ber-
lin II Guidelines for Mining and Sustainable
Development, asserting that sustainable develop-
Legislative and Environmental Frameworks
ment is indeed possible in mining sectors so long
According to the Mineral Resources Law of
as “social, economic and environmental aspects of
China, adopted in 1986, all mineral resources
a particular project are balanced in such a way that
belong to the state, pursuant to the Chinese Con-
long-term benefits may accrue to all stakeholders”
stitution. Specifically, the State Council controls
(Botin 2009). This suggests that environmental
the mineral resources on behalf of the state
sustainability focuses on the sharing of natural
(MacBride and Bei 2001). MacBride and Bei
resources, and those stakeholders must act as
(2001) also note that in recent years, measures
trustees for the present and future generations in
have been taken to revise China’s mineral strategy
terms of the quality of land, air, water, and other
in order to strengthen the mineral sector and
elements of the natural environment. Although
achieve economic and social development goals.
partially motivated by geopolitical maneuvers,
However, the Chinese government has allocated
China has nonetheless cited environmental impact
relatively little attention to sustainable develop-
concerns as the rationale for reducing exports of
ment goals within its mining policy discourses.
its rare earth minerals (Grant et al. 2014b: 15).
That said, sustainability is a notoriously fluid con-
The main environmental laws applicable to the
cept and can be interpreted in the context of
mining industry in China focus primarily upon
development and mining in many ways and there-
environmental protection, prevention, and control
fore merits some elaboration.
of environmental pollution by solid waste,
4 China: Mining Policy – Nonmetals
prevention and control of water pollution, and Looking Forward

prevention and control of radioactive pollution
(Getting the Deal Through 2012: 59). In terms of China’s Five-Year Plan (2011–2015), and future
the implementation of these laws, administrative Five-Year Plans, anticipate rapid urbanization, an
departments under the local council governments expanding middle class, and increased product
(or above the county-level) play key roles in the manufacturing of high-value, high-quality goods
enforcement of and compliance with as well as attendant levels of increased consump-
environmental laws. tion (Humphries 2015). China’s continuing efforts
to promote urbanization and industrialization will
likely pose a governance challenge and continue
NMMPI’s Energy Efficiency and Emissions
to drive up demand for raw materials and con-
Reduction Efforts
sumer products in the long run. While some have
Cong and Wei (2010) observe that after the
posited that China’s growing urbanization and
Copenhagen climate conference in 2009, the Chi-
industrialization will bring economic opportuni-
nese government set an ambitious target: by 2020,
ties to millions of its citizens, other observers such
the carbon dioxide emissions per unit of GDP
as Humphries (2015) have suggested that govern-
should be reduced by at least 40%, setting 2005
ment officials, investors, and consumers should be
as the base year. This goal has led to a shift toward
mindful of the environmental impact and sustain-
adopting and implementing new production tech-
ability issues of raw materials such as nonmetals
nologies. For example, the cement industry has
throughout the entire supply chain.
started to implement more efficient processing
technologies, like using an advanced dry-
processing method to replace traditional methods.
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China’s Oil Industry and Policy figure grew to 11.5 % by 2015 (BP 2016, p. 8;
CNOOC 2009, 2016).
Janet Xuanli Liao By 2015, China was still the world’s fifth larg-
CEPMLP, University of Dundee, Dundee, est oil producer with 215 million tonnes (mts) of
Scotland, UK oil production, after Saudi Arabia, the USA, Rus-
sia, and Canada. However, with the depletion of
domestic oil fields, the growth of China’s oil pro-
China’s Oil Situation and Oil Companies duction remained modest against rapid growth in
oil consumption. Between 2004 and 2015,
China is one of the largest oil producers and oil China’s oil production grew from 174.5 to about
consumers in the world. Over the past half a 215 mts, while its oil consumption jumped from
century, China has undertaken the route from a 308.6 to nearly 560 mts during the same period of
net oil exporter to a net oil importer and has also time. In 1993, China became a net oil importer,
become the world’s largest energy consumer since and by 2013 China surpassed the USA as the
2010. China’s oil industry was started in 1959 world’s No. 1 oil importer with 346 mts of oil
with the discovery of the Daqing Oil Fields in imported against 326.9 mts by the USA
Northeast China. Together with further discover- (BP 2014, 2016) (Fig. 1).
ies of the Shengli Oil Fields (in Shandong Prov- There are three major state-owned oil compa-
ince) and Dagang Oil Fields (near Tianjin), China nies in China: the CNOOC, the China National
became self-sufficient in oil supplies in 1965 and Petroleum Corporation (CNPC), and the China
soon developed into a net oil exporter for nearly Petrochemical Corporation (Sinopec). Authorized
three decades. In 1989, the Tarim Basin oil fields by the State Council, CNOOC was established in
were uncovered in the Xinjiang Uyghur Autono- 1982 to assume the overall responsibilities for the
mous Region of Northwest China, making the exploitation of oil and gas resources offshore
country the tenth largest oil reserve nation in the China in cooperation with foreign partners.
world by the end of 1992 (BP 2003, p. 4). In the CNOOC was smaller in scale and with a shorter
1980s, China also discovered offshore oil fields in history in China’s oil sector but was more
the Bohai Bay and the South China Sea, although dynamic and modern in its management and oper-
the contribution of offshore oil production has ational styles.
remained limited. In 2008, China National Off- By contrast, CNPC and Sinopec used to be
shore Oil Corporation’s (CNOOC) oil production directly managed by the Ministry of Petroleum
accounted for only 5.2 % of China’s total, and the and the Ministry of Petrochemicals, respectively,
between the 1960s and the late 1980s. Following
DOI 10.1007/978-3-642-40871-7_77-1
2 China’s Oil Industry and Policy
China’s Oil Industry 1200

and Policy,
Fig. 1 China’s oil 1000
situation, 1994–2015 (mts)
(Source: adapted from the
800
BP Statistical Review of
World Energy, 2009, 2016)
600
400
200
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Production Consumption Imports
the government reforms in 1982 and 1988, the were made to break business territories among the
administrative functions of the two oil giants NOCs. CNPC and Sinopec were allowed to con-
were largely removed, but their respective domi- duct offshore exploration and production busi-
nance over China’s upstream and downstream ness, while CNOOC received the rights for
remained largely intact. In order to promote com- onshore development. Some non-state-owned oil
petition between the national oil companies companies were also granted rights for oil
(NOCs), CNPC and Sinopec were restructured, imports, and the retail market of oil products was
in May 1998, as vertically integrated corpora- opened to foreign oil companies (Kong 2006).
tions. The restructuring was believed to provide There are a few smaller NOCs that have emerged
the NOCs with more capacity to cover financial in China as well, such as the Sinochem Corpora-
losses caused by price regulation through the use tion, the CITIC Group, and the Yanchang Petro-
of profits from other parts of their operations leum, but they have not enjoyed much influence in
(Tu 2012) and probably also to create “national China’s oil sector.
champions” to compete internationally. However, Still, CNPC is by far the largest oil producer in
since few new players were allowed into the Chi- China. Among the top ten oil fields (in terms of
nese markets, the monopolies held by CNPC and production) in China in 2014, ranked by the Inter-
Sinopec in the upstream and downstream did not national Petroleum Economics, CNPC owned
fade away but were only replaced by regional six: Changqing, Daqing, Tarim, Xinjiang, South-
dominance: divided by the Yangtze River, west, and Liaohe. Sinopec owned only two
CNPC controlled the north against Sinopec ruling (Shengli and Zhongyuan) that left one each for
the south (Fig. 2). CNOOC (Bohai) and Yanchang (Yanchang)
Between April 2000 and February 2001, the (please refer to Fig. 2, IEA). Likewise, Sinopec
three Chinese NOCs – CNPC’s subsidiary still enjoyed an advantageous position in terms of
PetroChina, Sinopec, and CNOOC – were listed refinery capacity. In 2013, Sinopec controlled
on the international stock markets. This move 42.39 % of oil refineries in China, followed by
could have allowed the NOCs to better integrate CNPC with 27.35 % and CNOOC by 5.14 %; the
their operation and efficiency with the interna- remaining 25.12 % was shared by local and pri-
tional system; however, as the majority of their vate refineries (Jin and Zhu 2014, p. 22). In 2016,
shares were owned by the Chinese government, CNPC and Sinopec were ranked by Fortune
they were not really commercial companies but Global 500 as the third and fourth by total reve-
still enjoyed a dominant position in China’s oil nues, respectively, followed by CNOOC ranking
market. It was only in 2004 that further efforts the 109th (The Fortune 2016).
China’s Oil Industry and Policy 3
China’s Oil Industry and Policy, Fig. 2 China’s major oil fields (Source: IEA (2000), China’s worldwide quest for
energy security, p. 6)
China’s Oil Imports and Main Sources et al. 2002). Yet the perpetual increase in oil
of Supply demands and the geopolitical concerns over the
Middle East stability have pushed China’s oil
According to the statistics by China’s State Plan- search globally since the new century.
ning Commission (renamed in March 2003 as the However, as a newcomer on the international
National Development and Reform Commission oil markets, Chinese NOCs were often compelled
[NDRC]), between 1992 and 2002, China’s GDP to deal with the countries that had high political
growth was 9.7 % annually in average, while risks and which the international oil giants wanted
China’s oil consumption rose by 5.8 % per year to avoid, such as Sudan, Iran, and Syria. This
against a 1.7 % increase of domestic oil produc- triggered a lot of controversy in China’s oil diplo-
tion. Such an imbalance in oil consumption and macy. Chinese NOCs have had noticeable success
production forced China to give up the Maoist in cooperating with some other oil producers,
“self-reliance” principle in oil supplies. From the such as Russia, Saudi Arabia, Angola, and
late 1990s, the Chinese government decided to Kazakhstan, but the process has also been fraught
pursue a “going-out” strategy, and Chinese with challenges on political and foreign policy
NOCs were encouraged to invest overseas to grounds.
help ensure the nation’s oil security. At the initial Chinese NOCs also wished to cooperate with
stage, Chinese NOCs focused mainly on the “belt international oil majors, as suggested by the
regions,” namely, Russia, Central Asia, Middle attempt by Sinopec and CNOOC to purchase the
East, and North Africa (Andrews-Speed BG stake in Agip KCO group in March 2003 and
CNOOC’s plan of taking over UNOCAL in Octo- China’s Strategic Petroleum Reserves
ber 2005 (Liao 2006, pp. 44 and 48). These efforts
all ended up as failures due to distrust by the Despite its ever-growing reliance on oil imports,
western parties. Only after the 2008 financial cri- China did not start building a strategic petroleum
sis did Chinese NOCs obtain a better opportunity reserves (SPR) program until 2003: largely due to
to expand their global portfolio to Europe, North the relatively low oil prices – below US$20 per
America, and Australia, usually through direct barrel – throughout the 1990s (BP 2003, p. 14).
acquisition when possible. According to the Inter- The building of oil reserves was mentioned in the
national Energy Agency (IEA 2014), between tenth Five-Year Plan (FYP) (2001–2005), but no
2011 and 2014 alone, the three Chinese NOCs action was taken until the US invasion of Iraq that
had spent a total of US$73 billion in upstream led to a rapid rise in the international oil price. In
investments around the world. 2003, the Chinese government launched the SPR
By 2014, Chinese NOCs had a presence in built outs, with a plan to construct facilities that
more than 40 countries, with a US$270 billion can hold 500 million barrels of crude oil by 2020
investment for oil projects, and controlled about in three phases, involving an investment of RMB
7 % of crude oil output worldwide (CPPC 2015). 100 billion. In December 2007, the National Cen-
This shift not only has smoothed investments and tre for Petroleum Storage was set up to manage the
purchases, according to an IEA report, but has SPR and was later subordinated to the National
also furthered China’s mastery of the techniques Energy Bureau, founded in March 2008.
it hopes to use for domestic production (IEA Between 2003 and 2008, phase I of SPR was
2014). Still, China is highly reliant on the Middle constructed in four bases, in Zhenhai, Zhoushan
East for its oil supplies. As shown in Fig. 3, (both in Zhejiang Province), Dalian (Liaoning
among China’s top ten oil producers in 2015, six Province), and Huangdao (Shandong Province).
were from the Middle East, a region accounting In November 2014, the Chinese Bureau of Statis-
for more than half of the country’s oil imports, tics announced that phase I facilities were filled
followed by Africa (19 %) and Russia (Tian 2016, up, with a capacity of 91 m barrels of crude oil,
p. 47). equivalent to 16 days of China’s oil imports (Jiang
2014). In 2009, construction on phase II of SPR
was commenced involving eight bases: Tianjin,
Zhanjiang, Huizhou (both in Guangdong Prov-
ince), Jintan (Jiangsu Province), Shanshan,
Others Saudi Arabia Dushanzi (both in the Xinjiang Uyghur Autono-
[PERCENTAGE] [PERCENTAGE] mous Region), Jinzhou (Liaoning Province), and
Lanzhou (Gansu Province) (see Fig. 4).
Brazil
[PERCENTAGE] With a designed capacity of 168 m barrels,
Iraq 10%
Venezuela phase II was planned to be completed by 2015,
[PERCENTAGE] and phase III was also under construction and
Oman expected to finish by 2020, adding another
Russia [PERCENTAGE]
[PERCENTAGE]
500 m barrels of crude, equivalent to 100 days
Iran of oil imports (Xuan Jiang 2014). However,
[PERCENTAGE] according to a recent Bloomberg report, comple-
Angola
Kuwait tion of phase II would be completed by 2020,
[PERCENTAGE]
[PERCENTAGE] according to the 2016-2020 Five Year Plan
UAE released in March, and the ending date of phase
[PERCENTAGE]
III was also uncertain. As China has reportedly
increased oil imports by 8.8 % in 2015, to a record
China’s Oil Industry and Policy, Fig. 3 Sources of
China’s oil imports, 2015 (Source: adapted from Tian of 335.5 mts, against the low oil price in more than
2016, p. 47) a decade, analysts believed that China might have
China’s Oil Industry and Policy, Fig. 4 Chinese SPR and commercial inventory sites (Source: Meidan et al. 2015,
p. 10)
reached its current storage capacity limit, and it 2020 according to plans, we will definitely see a
would take time to build up anew very different scenario.
(Bloomberg 2016).
In addition to the government oil storage, the
three NOCs were also encouraged to build more
Conclusion
commercial oil storage. In February 2015, the
NDRC issued a directive requiring the establish-
Chinese oil consumption has almost doubled over
ment of a minimum commercial stock of crude oil,
the past decade, and it is estimated that the figure
according to which the NOCs should keep crude
will grow by another 67 % by 2035 against a 3 %
oil reserves equivalent to at least 15 days of their
decline of domestic oil production. China’s
designed processing capacity. By early 2015,
dependence on oil imports will also rise from
China’s crude oil reserves were only good for
60 % in 2015 to 75 % in 2035 – higher than the
22.7 days, including 8.9 days for SPR and
USA’s at its peak in 2005 – though the share of oil
13.8 days for commercial reserves (CNPC 2015).
in China’s energy mix will remain unchanged at
The Chinese government also welcomed pri-
around 18 % (BP 2035). China has managed its
vate companies to participate in the bidding for
oil supply so far despite the challenges it has
SPR facilities since 2010, though no breakthrough
encountered domestically and internationally.
was made until August 2013, when the Tianlu
However, it remains a question to Beijing as to
Energy Company (in Zhejiang Province) was
whether its current policy on oil security is sus-
granted a license to serve the SPR from the Chi-
tainable, taking into account factors not only on
nese Ministry of Commerce, with its two crude
energy security but also on environmental protec-
storages’ facilities (CNPC 2015). Figure 5 below
tion, climate change, and geopolitics. Beijing has
shows a general picture of China’s SPR by 2015,
taken various measures to promote the develop-
but once the three phases of SPR are completed by
ment of renewable energy, which will reach 15 %
Asof2011/12 As of today
District Province Builder Size Compleon
Compleon date Phase date
Dushanzi Xinjiang CNPC 19 2011 Jul-Sep Phase II 2011Jul-Sep

Lanzhou Gansu CNPC 19 2011 Nov-Dec Phase II 2011 Nov
Tianjin Phase 1 Sinopec 20 2014 H1 Phase II 2014 H1
Zhoushan Zhejiang Sinopec 19 Not provided Phase II 2014 H1
Jinzhou Liaoning CNPC 19 2011-2012 Phase II 2014 H1
Shanshan Xinjiang CNPC 39 Not provided Phase II 2014
Huangdao Shangdong Sinopec 30 2012-2013 Phase II 2014 H2
Tianjin Phase 2 Sinopec 20 2015 H1 Phase III 2015 H1
Caofeidian Hebei Sinopec 38 Not provided Phase III 2020
Huizhou Guangdon CNOOC 31 2012-2013 Phase II 2015?
Jintan Jangsu CNPC 16 Not provided Phase II 2015?
Yangpu Hainan Sinopec 31 Not provided Phase III 2015?
China’s Oil Industry and Policy, Fig. 5 Chinese SPR sites, 2010–2015 (in million barrels) (Source: Meidan et al. 2015,
p. 10)
China’s Oil Industry China’s GDP growth rate

and Policy, %, inflation-adjusted
Fig. 6 China’s GDP
16
growth rate, 1980–2015
(Source: BBC 2016) 14
12
10
8
6
4
2
0
1980 1985 1990 1995 2000 2005 2010 2015
Source: National Bureau of Statistics of China B B C
in China’s energy mix by 2020 and 20 % by 2030. a better balance between its economic develop-
The 13th FYP (2016–2020) has also reduced ment and environmental protection for the nation
China’s GDP growth rate to below 6 % annually and for the world as a whole (Fig. 6).
from 8 % in the 12th FYP. As a matter of fact,
China’s economic development in 2015 was
recorded as slowest in 25 years (BBC 2016), and References
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C
China: Natural Gas in natural gas consumption was dramatic from

2003–2014 (with an annual growth rate of
Xunpeng Shi 16.9%). Gas consumption increased from just
Australia-China Relations Institute, University of 24.5 bcm per year (bcm/y) in 2000 to 182.4 bcm
Technology Sydney, Sydney, NSW, Australia in 2014 (Fig. 1). In 2012, China became the
world’s third-largest gas consumer after the
United States and Russia (Fig. 1). However,
growth in China’s demand for natural gas has
Given its size, growth, prosperity, and ongoing slowed in recent years. Annual consumption in
efforts in liberalization of its internal gas market 2015 was 197 bcm, only up by 4.7% from 2014,
and building natural gas trading hubs, China is almost a half of the grow rate of 2014 over 2013
likely to be a game changer in the regional and (8.6%) (BP 2016).
global gas markets. With current consumption of The share of natural gas in the energy mix is
about 200 billion cubic meters (bcm), China is the also low. In 2015, natural gas only accounted for
world’s third-largest gas consumer, and its gas about 5.9% of total primary energy supply, which
consumption is projected to grow to about was still below the international average of 24%
600 bcm by 2035 (BP 2015). (BP 2016). In the power generation sector, gas
only accounted for 2% of the generation fuels in
2013 (IEA 2015).
Production and Consumption According to the Energy Development Strat-
egy Action Plan (2014–2020) released by the
For almost four decades during China’s rapid State Council (2014) in November 2014, the
industrialization, natural gas remained behind share of natural gas will be raised above 10%, or
coal, oil, and hydropower. The growth in natural 360 bcm/y in 2020. Many observers (BP 2015;
gas consumption was slow in the period Reuters 2012) predict that China’s gas consump-
1980–1995 (with an annual growth rate of 1.5%) tion will reach at least to 550 bcm/y in 2035, with
and modest from 1996 to 2002 (with an annual natural gas representing 12% of the global energy
growth rate of 7.9%) (Shi and Variam 2015). mix by 2035. However, in the power generation
The twenty-first century, however, witnessed sector, gas is only expected to account for 8% by
an emphasis on developing natural gas as the “fuel 2040 in the IEA’s New Policy Scenario (IEA
of the future,” with an importance on its lower 2015).
emission intensity among fossil fuels and promo-
tion of it as a solution to urban pollution. Growth
DOI 10.1007/978-3-642-40871-7_78-1
2 China: Natural Gas
200 6
180
5
160
140 4
120
3
Bcm
100
2
80
60 1
40
0
20
0 -1
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Production Consumption China's consumption in world total (right)
China: Natural Gas, Fig. 1 Evolution of the gas sector in China (Sources: BP 2016)
Natural Gas and LNG Import projected to increase from 77 bcm in 2015 to
160 bcm in 2035 (Shi and Variam 2015). Central
As China’s domestic production lagged behind Asia (Turkmenistan) remains the largest pipeline
consumption, importation of gas started in 2006 import source. However, Russian gas increases
and grew dramatically (Fig. 2). The first import of dramatically from as early as 2019.
natural gas was in the form of LNG, which This increase in pipeline imports and domestic
amounted to 20.16 megatonnes (Mt) in 2014. production (341 bcm in 2035) result in decreased
Pipeline gas imports started in 2010, bringing dependence on LNG imports, as seen in Fig. 4.
gas from Turkmenistan and other Central Asian Based on forecasts from IEA, US Energy Infor-
countries in 2010 and from Myanmar in 2014. In mation Administration (EIA), and China National
2013, pipeline gas imports overtook LNG Petroleum Corporation (CNPC), China’s LNG
imports, and in 2014, pipeline gas accounted for imports in 2035 are forecasted to reach only
52.5% of the total natural gas imports (Fig. 2). In 34 bcm. Australia remains the dominant supplier
2015, China is the world’s third largest LNG of LNG to China after 2030, while South-East
imports, only after Japan and South Korea Asian LNG exporters (mainly due to their
(GIIGNL 2016). In 2014, China was the sixth decreased export capacity) are expected to lose
largest pipeline gas imports (Ratner et al. 2016). market share (Fig. 4).
Qatar and Australia are China’s major LNG
import sources. In 2014, 19.84 Mt. (82%) of this
imported LNG were from Australia, Qatar, Indo-
Policy and Regulation
nesia, and Malaysia that have signed long-term
contracts with China. The remaining 18% of sup-
China’s national gas policy emerged in the past
plies was purchased from Yemen, Equatorial
decade with the rapid development of the natural
Guinea, Nigeria, and other countries through the
gas sector. The policies include upstream devel-
spot market (Fig. 3).
opment such as of shale gas and coalbed methane
China’s total natural gas import is projected to
(CBM), liberalization of LNG imports, midstream
increase to about 200 bcm in 2035 when pipeline
regulation featuring third party access, and down-
gas import will be the largest source of imports
stream regulations such as environmental projects
(Fig. 4). China’s pipeline import capacity is
that substitute coal with natural gas. Involvement
China: Natural Gas 3
China: Natural Gas, Fig. 2 China’s imports of natural gas, 2006–2014 (Source: China Customs data, cited from Qian
and Jiang (2015))
China: Natural Gas, Other

Fig. 3 China LNG import Egypt
PNG Algeria 5%
1%
sources, 2014 (Source: 1% 1%
Pang 2015) Nigeria
2%
Equatorial
Guinea
4% Yemen
5%
Qatar (Ct)
34%
Malaysia (Ct)
15%
Indonesia
(Ct) Australia (Ct)
13% 19%
of the private sector and liberalization of pricing the operation of monopoly industries, thus creat-
are applied to the whole supply chain. These pol- ing a level playing field between state and private
icies aim to encourage exploration, production, companies; network and operations (marketing)
infrastructure development, efficient utilization, will be separated and thus could encourage private
and competition in the gas sector. investment in monopoly sectors such as pipelines;
According to a reform package issued after the restrictions on market access to competition-
Third Plenary Session of the Eighteenth Commu- based operations will also be removed, such as
nist Party of China (CPC) Central Committee in those in the downstream gas sector; pricing of gas
November 2013, the principles related to the nat- will be liberalized, and there will be no interven-
ural gas sector and their implications are the tion in any prices that can be determined by the
administrative monopoly and will be removed, markets (except network prices) (the 18th Central
and thus access to some upstream resources for Committee of CPC 2013). The “Energy Revolu-
non-state-owned companies will be improved; the tion” advocated in mid 2014 calls for restoration
government’s function will be regulation and not of the commodity characteristics of energy
China: Natural Gas, Fig. 4 China’s pipeline and LNG imports (bcm) (Source: Reproduced from Shi and Variam (2015))
products, which indicates that gas may be with consideration given to economic disparities
depoliticized and become a product open to and local distribution costs (IEA 2013). As resi-
more competition; market-based energy pricing dential gas tariffs are regulated by local govern-
mechanisms could be established; and there will ments, uniform reforms are not possible and the
be changes in governance and improvements in central government’s policy goals may not be
the regulatory system. achieved at the local level.
The regulation of natural gas is divided With its increasing interests on overseas energy
between the central government and local govern- markets, due to both imports and outbound invest-
ments along the supply chain: the central government as evidenced by the Belt and Road Initiative,
ment, with the National Development and Reform China has signed the “International Energy Char-
Commission (NDRC) as the administrative ter” in 2015 and become more active in reforming
agency, regulates gas prices from wellhead to the the global energy governance (Andrews-Speed
city-gate terminals (wellhead prices, processing and Shi 2015).
fees, and transportation tariffs). Offshore gas
prices, which accounted for 10 per cent of domes-
tic gas output, at the wellhead are not strictly
Gas Pricing Reform
regulated by the NDRC as offshore acreage has
been open to foreign cooperation since the 1980s
Like the pricing of other energy commodities, gas
and therefore is subject to a more market-driven
pricing has experienced transformation from the
pricing system. Similarly, LNG prices are not
planned to the market economy. Under the cost-
subject to regulation. However, the sale of LNG
plus pricing mechanisms that prevailed until
(after regasification) via long-distance pipeline
2011, the ex-factory prices, including wellhead
would be subject to the uniform city-gate price
prices and processing fees, were often set
regulation (Chen 2014). The provincial and local
according to production costs and could differ
governments regulate local distribution charges
among producers and consumers (Chen 2014).
(including connection fees) and end-user prices
(Currently, gas prices include ex-factory (plant)
(Chen 2014). After the wholesale transaction, the
prices, transmission prices, city-gate prices, and
price is adjusted by the provincial government
end-user prices. In this chapter, unless mentioned
otherwise, “gas price” refers to the wholesale markets while network transmission prices will be
price.) The fragmented prices discouraged invest- regulated by the government; network infrastruc-
ment in production and infrastructure and cannot ture and its transparent and nondiscriminatory
accommodate increasing imports of LNG (IEA TPA will be gradually established; and laws and
2013). regulations on gas pipeline projection will be
To address these challenges, the Chinese Gov- advanced. A detailed review could be found at
ernment introduced a trial netback market-value Shi and Variam (2015).
pricing mechanism at the end of 2011 in Guang-
dong and Guangxi provinces to replace the
fragmented, cost-plus onshore gas-pricing Pipeline and Third-Party Access (TPA)
regime. Under this new regime, the cite gate
prices are linked to the import prices of alterna- The midstream, the pipeline, is dominated by
tives (40% of LPG and 60% of heavy fuel oil) and national oil companies and provincial grid com-
no longer differentiated among different sources panies. China’s pipeline transmission is neither
(Shi and Variam 2015). This market-oriented sufficient nor open. China only had about
netback pricing regime was extended to the 75,000 km of long-distance gas transmission
“incremental gas volume,” the volume that pipelines by late 2014 (Su 2014). Although the
newly generated in addition to the previous cost- Energy Development Strategy Action Plan
plus volume (“existing volumes”), nation wide in (2014–2020) projects that the backbone of natural
2013 (NDRC 2013). In 2013 and 2014, the gov- gas pipelines will extend to at least 120,000 km by
ernment steadily raised the prices of “existing 2020, China seems to have a long way to go to
volumes” three times, and the price levels in develop its network infrastructure to the level of
both categories eventually converged to a fully Germany or the United States (Shi and Variam
oil-linked gas price from April 1, 2015. From 2015).
April 1, 2015, netback pricing replaced the cost- Furthermore, CNPC is the dominant player
plus pricing as the mechanism to price gas for here, owning 80% of the transmission pipeline
nonresidential use (NDRC 2015). network (IEA 2012). CNPC has made moves to
Pricing reform for the residential sector was privatize its pipeline assets, and its privatization
announced in March 2014, although still not mar- plan is quite radical. East-West Pipelines (EWPs)
ket oriented. According to this reform plan, gas started to undergo privatization by PetroChina, a
for the residential sector will be priced progres- subsidiary of CNPC, in 2012. It was further
sively: the price will be higher the greater the reported in January 2015 that the PetroChina
consumption, and all cities connected to gas pipe- board had approved the plan to fully privatize its
lines must establish the three-tiered tariff by the Shanghai-based PetroChina Eastern Pipelines
end of 2015 (NDRC 2014). The regulation of (CNPC News Center 2015). Once completed,
prices – and thus limited pass-through of gas the pipelines would be completely unbundled
costs to residential end-users – will remain a from PetroChina’s market activities.
long-term challenge to market liberalization. As for LNG receiving terminals, the first pri-
This prevailing cross-subsidization among gas vately owned LNG import terminal, the Zhoushan
end-users could distort the markets and could be LNG terminal, owned by ENN, was only
counterproductive for gas use in the industry and approved in January 2015 and may be completed
commercial sectors (IEA 2012). by 2017 (Platts 2015).
In the latest policy on energy issued by the The regulation of TPA was announced in
State Council (State Council 2014) – that is, the February 2014, mandating gas pipeline operators
Energy Development Strategy Action Plan provide nondiscriminatory TPA whenever they
(2014–2020) – pricing reform and liberalization have spare capacity. The regulation also allows
for competitive prices are specified: ex-plant downstream distributors to negotiate directly with
prices and retail prices will be determined by the upstream suppliers over gas supply, while pipeline
operators may provide only transmission services according to a media report in January 2015,
(NEA 2014). The TPA regulation, however, has a there was no successful experience of private
major limitation in that it mandates TPA only investment in the shale gas development
when the operator has spare capacity, which is (Reuters 2016). The market remains dominated
difficult for third parties to monitor. The current by large state-owned enterprises (SOEs). It is esti-
shortage of network capacity renders the concept mated that 80% of the shale gas resources were
of TPA useless. It is also not clear who will judge controlled or owned by state-run companies, i.e.,
where there is a surplus capacity. Furthermore, CNPC (China National Petroleum Corporation),
process, terms of conditions, and tariffs for the China Petrochemical Corporation (Sinopec), and
TPA are not publicly available (and may have Shaanxi Yanchang Petroleum Co. Ltd., in 2013.
not been determined by the NEA). Nevertheless, The midstream is still in the early days of
in the case of LNG import terminals, the first privatization, and plans for full ownership
successful TPA happened in December 2014, unbundling are not clear. According to the deci-
when EEN received 6 Mt. of LNG through the sions of the Central Committee of the CPC (the
PetroChina-operated Rudong LNG terminal in 18th Central Committee of CPC 2013), privatiza-
China’s eastern Jiangsu Province (Platts 2014). tion is the politically preferred direction for state-
owned companies, creating momentum for privat-
ization of the Big Three. For example, Sinopec
Market Structure announced in September 2014 that it had sold
almost 30% of its retail unit, comprising a whole-
The Chinese gas industry is dominated by big sale business, more than 30,000 petrol stations,
three major national oil companies (NOCs): more than 23,000 convenience stores, as well as
China National Petroleum Corporation (CNPC), oil-product pipelines and storage facilities
China National Offshore Oil Corporation (Aldred and Zhu 2014).
(CNOOC) and Sinopec (While the major oil and In the downstream sector, there are no nation-
gas companies are partially privatized, the state is ally dominant players. A variety of domestic sup-
still the majority shareholder of these compa- pliers with various ownership structures (Some
nies.). About 75% of China’s natural gas is pro- companies are privately owned – such as ENN
duced by CNPC, which is also the biggest owner Energy Holdings and China Gas – while others
and operator of transmission pipelines (with about belong to local governments.) exists, often
90% share). CNOOC was the first company to supported by local governments. These distribu-
import LNG and it is likely to remain the main tion companies usually receive gas at the city gate
LNG importer (IEA 2014). CNOOC also has and have limited direct access to gas sources (IEA
exclusive marketing rights and buys offshore gas 2012). These distribution companies may have
from its production-sharing contract partners at monopoly power in their local market, often
the wellhead (Chen 2014). Shaanxi Nanchang owning the local gas pipeline, as is the case with
Petroleum (Group) was the only local oil and gas ENN Energy Holdings. These distributors face
enterprise apart from the big three national oil new competition from the Big Three NOCs,
companies that is qualified to undertake explora- which are currently trying to take over some of
tion and development (IEA 2012). Other small the domestic markets (IEA 2012). Such integra-
and medium-sized gas producers have a small tion attempts may give the Big Three larger mar-
share in production due to their limited market ket power and thus impede competition (Shi and
access: they have to either sell their supplies to Variam 2015).
CNPC or develop the gas for local consumption.
Gas imports, such as LNG, are, however, not
restricted (IEA 2012).
Although auctions have been implemented to
allocate the exploration rights for shale gas,
Conclusion References
Despite rapid growth in the early 2000s, the level Aldred S, Zhu C (2014) Sinopec to sell $17.5 billion retail
stake in privatization push. Reuters, Hong Kong/
of gas consumption in China is still relatively low.
Beijing
While the domestic production will be increased, Andrews-Speed P, Shi X (2015) What role can the G20
from sources including shale gas, increased play in global energy governance? Implications for
import is expected. Nevertheless, the import of China’s presidency. Global Pol 7:198–206
BP (2015) Energy Outlook 2035. British Petroleum,
LNG, although will be significantly increased
London
before 2020, will be not as much as pipeline gas, BP (2016) Statistical review of world energy 2016. British
when the Russia export comes to the Chinese Petroleum, London
market. Chen M (2014) The development of Chinese gas pricing:
drivers, challenges and implications for demand. OIES,
In the recent years, China has determined to
Oxford
liberalize its natural gas sector by removing CNPC News Center 2015 To gradually advance mixed
administrative monopoly, unbundling the gas sec- ownership for network assets, CNPC Plans to Sell the
tor, and allowing markets to determine resource Eastern Pipeline Company (in Chinese)
GIIGNL 2016 The LNG industry-GIIGNL annual report,
allocation and prices. However, a legal framework
2016 edn. International Groupd of Liquified Natural
is still absent from China’s gas regulatory frame- Gas Importers, Paris
work and there is a lack of an independent and IEA (2012) Gas pricing and regulation: China’s challenges
holistic gas regulator. While nonresidential gas and IEA experience. IEA, Paris
IEA (2013) Developing a natural gas trading hub in Asia:
prices are determined at the city gate level by
obstacles and opportunities. International Energy
netback pricing mechanism, it is still arguable Agency, Paris
that this mechanism does not necessarily reflect IEA (2014) The Asian quest for LNG in a globalizing
the gas market fundamentals and the frequency to market. International Energy Agency, Paris
IEA (2015) World energy outlook 2015. IEA, Paris
adjust the prices are not transparent. Furthermore,
NDRC (2013) Circular on natural gas price adjustments
the residential gas prices are still regulated. (Fagai Jiage [2013] no 1246) (in Chinese). NDRC,
The transmission pipeline in China are still far Beijing
from sufficient for an interconnected market and is NDRC (2015) Notice on streamlining prices for non-
residential uses (in Chinese). NDRC, Beijing
largely owned by one company. Although the rule
NEA (2014) Administrative Measures on Opening up Fair
on third-party access has been announced in 2014, Access to the Oil and Gas Pipeline. NEA, Beijing
there is little successful cases due to a lack of Pang M (2015) Review of China’s gas import in 2014
information on available capacity, tariffs and (in Chinese). Caijing Energy, Beijing
Platts (2014) China’s ENN receives first LNG cargo. Platts,
terms of condition, and no transparent operational
Singapore
procedure. Platts (2015) China’s first private LNG import terminal
While privatization of the big gas company and project in Zhejiang delayed. Platts, Singapore
unbundling are expected under the current Qian X, Jiang X (2015) 2014 development report for oil
and gas industry in China and abroad. Oil Industry
marketized reform plan, no concrete progress
Press, Beijing
has been seen. Unbundling is under debate. How- Ratner M, Nelson GM, Lawrence SV (2016) China's nat-
ever, auction has been introduced to the allocation ural gas: uncertainty for markets. Congressional
of exploration rights in the case of shale gas, Research Service
Reuters (2012) CNPC sees China’s gas consumption tre-
despite it is difficult to find blocks that are attrac-
bling by 2030
tive to the private investors, especially in the Reuters (2016) REFILE-China struggles to find prospec-
current low oil prices period. tive blocks for third shale auction -govt sources
Shi X, Variam HMP (2015) China’s gas market
liberalisation–the impact on China–Australia gas
trade. In: Song L, Garnaut R, Cai F, Johnston L (eds)
China’s domestic transformation in a global context.
ANU Press, Canberra, pp 137–174
State Council (2014) Energy development strategy action The 18th Central Committee of CPC (2013) Decision of
plan (2014–2020) (in Chinese). General Office, State the central Committee of the Communist Party of China
Council PRC, Beijing on some major issues concerning comprehensively
Su N (2014) Major energy Infrustructure Accellerated. deepening the reform, Xinhua News Agency, Beijing
China Energy Newspaper, Beijing
C
China: Coal Industry standard coal equivalent, and total coal consump-
tion is capped at 4.2 billion tons. In addition, the
Tao LV share of coal in total energy mix is limited with
School of Management, China University of less than 62%, which indicates that coal will con-
Mining and Technology, Xuzhou, China tinue be China’s main energy source at least until
2020 (Fig. 1).
General Information
Coal Industry Layout
China is located in the east of Asia and on the west
coast of the Pacific Ocean with a land area of China’s abundant coal resources are distributed
about 9.6 million square kilometers. Since the unevenly between its coal rich northern and west-
reform and opening-up that was started in ern regions and resource scarce southern and east-
December 1978, China’s economy has developed ern parts. According to BP 2014 Data, China’s
rapidly, GDP reached 4.86 trillion (constant 2005 proved coal reserves were 114,500 million tons at
US$) in 2013 from 0.186 trillion (constant 2005 the end of 2013, ranking the third in the world,
US$) in 1978, with an average annual growth rate next to the USA and Russia. The western region
of 9.77. Today, China is the world’s second largest accounted for about 85% of China’s total reserves,
economy. With the rapid economic growth, including nine provinces of Inner Mongolia,
China’s energy consumption continuously Shanxi, Xinjiang, Gansu, Ningxia, Qinghai, Yun-
increased, making it the world’s largest energy nan Guiyang, and Sichuan. Among them, the con-
consumer. China’s primary energy consumption ditions of coal resource in northwest area are
increased from 396.2 million tons oil equivalent particularly good and suitable for large-scale
in 1978 to 2852.4 million tons oil equivalent in mechanized mining, especially the Zhundong
2013, with an average annual growth rate of and Hami coalfields in Xinjiang, which have the
5.80%. Among them, coal consumption characteristics of shallow seam and large thick-
accounted for more than 65% of total primary ness of coal seam, are suitable for large-scale
energy consumption, and oil consumption open-pit mining. In the past several decades of
accounted for around 20%. The Energy Develop- the exploitation of coal resources, as coal
ment Strategy Action Plan (2014–2020) sets the resources in eastern China have gradually dried
targets for the development of the coal industry in up, coal resources in the central region have been
China by 2020. It puts a ceiling on the annual highly exploited and the main front of coal mining
primary energy consumption at 4.8 billion tons has been gradually transferred to the western
DOI 10.1007/978-3-642-40871-7_79-1
2 China: Coal Industry
2500.0 90.0%
Million tonnes oil equivalent 80.0%
2000.0 70.0%
60.0%
1500.0
50.0%
40.0%
1000.0
30.0%
500.0 20.0%
10.0%
0.0 0.0%
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
coal consumption (left vertical axis) proportion of coal (right vertical axis)
proportion of oil (right vertical axis) proportion of gas (right vertical axis)
China: Coal Industry, Fig. 1 China’s primary energy consumption and energy consumption structure
region (Li et al. 2015; Chen and Wu 2012; Ma accounting for 37% of the total national coal pro-
et al. 2009). duction; and coal production in the western region
In 1949, the coal industry focused mainly on reached 132.56 million tons, accounting for 21%
the eastern region (ten major coal-producing prov- of the total national coal production.
inces, including Heilongjiang, Jilin, Liaoning, With coal production gradually shifting west-
Beijing, Hebei, Shandong, Jiangsu, Zhejiang, ward, the central and western regions which had
Fujian, and Guangdong), whose production was rich coal resources and good mining conditions
about 21.53 million tons, accounting for 66.4% of gradually became the focus of development of
the national coal production, and coal production China’s coal industry. In 2008, the coal produc-
in Liaoning province reached 5.44 million tons, tion in the western region reached 1171.31 million
ranking first in China. Coal production in the tons, accounting for 43% of total national coal
central region (including Shanxi, Henan, Anhui, production, and the western region surpassed the
Hunan, Hubei, and other provinces) was 6.79 central region for the first time, becoming a major
million tons, accounting for 21% of total national supplier of coal and an important area of commer-
coal production, and coal production in the west- cial coal. The same year, coal production in the
ern region (including Inner Mongolia, Ningxia, central region reached 1073.90 million tons,
Gansu, Qinghai, Sichuan, Yunnan, Guizhou, accounting for 40% of the nation’s total coal pro-
Guangxi, and some other provinces) was 4.11 duction, and coal production in the eastern region
million tons, only accounting for 12.7% of the declined to 465.90 million tons, accounting for
total national coal production (China National 17% of total national coal production (Table 1).
Coal Association 2009). In 2013, China produced 3.68 billion tons of
After the reform and opening-up, with further raw coal. As China’s coal production continued
adjustment of China’s coal industry, the scale of moving to the central and western regions (the
coal mining in the central and western regions production in the central region accounted for
increased sharply, while coal production in the 34% and in the western region accounted for
eastern region accounted for only a small portion 55% of total national production in 2013), coal
of the national coal production. In 1978, coal production in the east appeared to decline to 11%
production in the eastern region reached 260.52 of total national coal production (China National
million tons, accounting for 42% of the total Coal Association, 2014).
national coal production; coal production in the The Coal Industry Policy (Revised Draft)
central region reached 225.62 million tons, issued in 2013 proposed to control the mining
China: Coal Industry 3
China: Coal Industry, Coal production Proportion (%)

Table 1 Coal production
Eastern region 465.9 17
distribution of China in
2008 (unit: million ton) Central region 1073.9 40
Western region 1171.31 43
intensity of coal resources in the eastern region, The first stage was from 1978 to 1993. The
stabilize the coal production scale in the central main content of coal industry policies was raising
region, and strengthen the exploration of coal the coal output. In this period, the coal industrial
resources in the western region. In addition, the concentration gradually declined. The index of
construction of large-scale coal bases and enhanc- CR4 declined to 7% in 1993 from 9% in 1984;
ing the sustained and stable supply capacity of the index of CR8 declined to 12% in 1993 from
coal were necessary. The Coal Industry Policy of 16% in 1984 (Tang 2011). In 1985, the state made
2013 also includes recommendations/instructions great efforts to support the development of Town-
for strategic coal bases. Accordingly, the ship and Village Coal mines, and at the same time
Shendong, Shanbei, Huanglong (Longdong), and sought to bring into effect a long-term contract
Ningdong should construct several large-scale regime for the Major State Coal mines and the
modern coal mines, especially focusing on build- Local State Coal mines. These expansionary pol-
ing a number of 10-million-ton coal mine groups. icies motivated the local and farmers to build coal
The Jinbei, Jinzhong, and Jindong should accel- mines. By the mid-90s, the coal output of Town-
erate the upgrading and integration of the coal ship and Village Coal mines had reached more
mines and construct new large modern coal than 600 million tons. But there were some prob-
mines moderately. The Jizhong, Luxi, Henan, lems resulting from these expansionary policies in
and Double-Huai (Huainan and Huaibei) should the coal industry: for example, the Township and
do the exploration of deep resources wells, con- Village Coal mines blossomed everywhere, the
struct continuous coal mines, and restrict the con- coal production layout was disordered, commer-
struction of new wells over 1000 m. The cial coal production was in surplus, the coal mine
Mengdong base should give priority to the con- safety situation deteriorated, and the ecological
struction of large opencast coal mines. The environment was damaged.
Yungui base should speed up the construction of The second stage was from 1994 to 2001. Coal
large and medium-sized coal mines and integrate industry policies focused on closing small-scale
and close small-sized coal mines vigorously. As coal mines. The coal industry concentration sig-
an important energy base for strategic reserves in nificantly increased. The index of CR4 increased
China, Xinjiang should implement protective to 14.2% in 2001 from 7.18% in 1994; the index
exploitation. of CR8 increased to 21.3% in 2001 from 11.3% in
1994 (Tang 2011). The excessive development of
Townships and Villages Coal mines caused a con-
siderable waste of resources, environmental pol-
Coal Industry Admittance and
lution, and frequent security accidents and the
Concentration
imbalance between coal supply and demand.
After 1998, China adopted a new policy of
Since the reform and opening-up of China, the
exercising macro-control over national total coal
coal industry concentration has declined as a
production, reducing the burden of coal enter-
way of boosting coal production and then gradu-
prises and improving the competitive environ-
ally increased for enlarging industrial scale and
ment of coal companies in the market. Specific
improving production efficiency (Shen et al.
measures under this policy include closing down
2012; Wang 2012; Yu et al. 2012).
small-scale coal mines which were illegally enterprises with more than 10 million tons of
exploited, had an unreasonable layout, and were production was 52, with total production of 2700
not satisfying the conditions for safe production; million tons, accounting for 70% of the whole
encouraging coal export; rectifying the coal mar- country’s production. Among them, 17 coal enter-
ket operation order; practicing the system of prises’ production was between 30 and 100 mil-
examination and approval of coal operation qual- lion tons. Eleven coal enterprises have stepped
ification; reform of coal taxes; and closing down into the world’s top 500 enterprises.
some resource-exhausted mines.
The third stage was from 2002 to the present.
The main content of coal industry policies were Market-Oriented Reform of Coal
resources consolidation, closing small-sized
mines, and building large coal mine groups. Another development that took place after the
Coal industry concentration significantly reform and opening-up was on coal price policy,
increased. The index of CR4 increased to which has since then been adjusted in line with the
25.24% in 2013 from 14.1% in 2002, the index economic growth.
of CR8 increased to 37.59% in 2013 from 21.4%
in 2002 (Li 2014). 1. Coal was purchased and sold uniformly
In 2005, the State Council of China issued (1953–1978)
Opinions on Promoting the Healthy Development
of the Coal Industry. In 2007, the National Devel- In this period, as productive material, coal was
opment and Reform Commission proposed the allocated by state. The government implemented a
11th Five-Year Plan for the Development of Coal policy of purchasing and supplying coal uni-
Industry. The two policies supported the collabo- formly. The coal price was only for internal set-
rations of coal mine enterprises in different sectors tlement and accounting in the coal enterprise.
and different regions. In 2013, the National Coal price was set on the basis of comparing
Development and Reform Commission and with other productive material.
National Energy Administration commonly
developed and issued the abovementioned Coal 2. Coal price was gradually deregulated
Industrial Policies (Revised Draft), which set the (1979–1992)
minimum standard of coal enterprise scale and
newly built and revamped coal mine scale (Table In this period, the coal price within the plan
1 and Table 2). increased gradually, and the coal price of Town-
The coal corporate annexation reorganization ship and Village Coal mines and Local State Coal
has enjoyed remarkable achievements, and the mines which were out of the plan were gradually
coal supply structure dominated by large-sized deregulated. The price of coal produced beyond
coal enterprises groups has been established on a the production capacity of the Major State Coal
sound basis. The number of coal mines in Shanxi mines was also gradually deregulated.
declined from 4278 in 2005 to 1063 in 2010; raw To reverse the loss situation for a long time in
coal production increased from 551 million tons coal enterprises, the State Council started to
in 2005 to 741 million tons in 2010. The number readjust the coal price nationwide in 1979; the
of coal mines in Inner Mongolia declined from price of raw coal increased from 15.91 yuan per
1368 in 2005 to 551 in 2010; raw coal production ton to 20.98 yuan per ton. In 1983, the govern-
increased from 260 million tons in 2005 to ment implemented the rising price policy for the
787 million tons in 2010. The number of coal coal beyond the planned output for 22 Dominated
mines in Henan declined from 530 in 2005 to Coal mines. In 1984, the price of out-of-quota coal
30 in 2010. In 2013, the number of coal output was deregulated (Yang et al. 2012). In
China: Coal Industry, Table 2 The minimum standard of coal enterprise scale and newly built and revamped coal mine
scale
The minimum standard of coal enterprise scale Coal mine scale of newly built and revamped
Shanxi, Inner Mongolia, North of Shaanxi 3 million Shanxi, Inner Mongolia, 1.2 million
tons/year Shaanxi tons/year
Fujian, Jiangxi, Hubei, Hunan, Guangxi, 0.3 million Chongqing, Sichuan, Guizhou, 0.15 million
Chongqing, Sichuan tons/year Yunnan, etc. tons/year
Fujian, Jiangxi, Hubei, Hunan, 0.09 million
Guangxi, etc. tons/year
Other regions 0.6 million Other regions 0.3 million
tons/year tons/year
1986, the government guidance price consisted of government only set the price of coal used for
two parts, the uniform producer price and an generation of electricity.
increase on the basis of the uniform price. In In 2002, the government canceled the refer-
1987, the government added the directional plan, ence price of coal used for generation of electric-
implementing the price mark-up and negotiated ity. The generation coal price was determined by
price policies for coal beyond their verified pro- the market when the coal price was stable, but the
duction capacity and planned production capacity. government implemented a temporary interven-
In 1992, the government liberalized the coal pro- tion on the generation coal price when coal prices
ducer price of national uniform allocation coal fluctuated wildly. In 2004, the government intro-
mines, which would be regulated by market duced the policy of a price linkage mechanism. In
forces. And at the same time, the price of direc- 2005, the government stopped directly interfering
tional coal was liberalized, out of the maximum with the generation coal price. In 2007, the gov-
price of unplanned coal. The coal price had three ernment canceled the coal ordering system which
forms: the state’s mandatory price, the state’s had existed for more than 50 years, and turned
instructive price markup of overproduction, and “the Coal Ordering Meeting” to “Connection
the regional price difference; the negotiated price Meeting for National Key Coal Suppliers,
of the marketable coal was not included in the Demanders and Shippers,” highlighting the status
state plan. of coal enterprise as a principal part of the market,
and the number of industry participants in the
3. Coal marketization process (After 1993) ordering Meeting fell from eight to three, includ-
ing power, fertilizer, and residents. Suppliers,
In 1993, the government deregulated the coal demander, and the shippers completed the orders
producer prices of the major state coal mines in according to the framework program, and the coal
northeast China, east China, and Hunan province. price was set through consultation between the
In 1994, the coal price in the whole coal market supplier and the consumer. In 2008, the govern-
was liberalized. There was no difference between ment convened the “Video Meeting instead of the
the planned price and the unplanned price. In Connection Meeting for National Key Coal Sup-
1996, the coal market stepped into the stage of pliers, Demanders and Shippers.” In 2009, the
the double-track system for coal price, which “Video Connection Meeting” was canceled, and
meant that the government started to convene the National Development and Reform Commis-
annual contract meetings for major coal and sion developed instructions of Coal Connection
power companies and issue a reference price for Framework. Accordingly, the coal suppliers and
generation coal. In the double-track system, the the consumers made the orders all by themselves
on the China Coal Market Network and set the coal and exported 7.51 million tons of coal; thus
price through consultation among them. In 2010, net imports are 320 million tons of coal.
according to the National Development and Despite the rapid development, China’s coal
Reform Commission’s instructions, the Annual industry still faces a number of significant, deep-
Inter-provincial Coal Connection Framework rooted contradictions and problems at the same
plan was formed. During this time, the difference time. First, the task of structural adjustment and
between the market price and the contract price for transformation of development mode is still ardu-
generation coal was increasing, hence the dual- ous. Second, the development of coal resources,
pricing system became a serious problem. On environmental protection, and the sustainable
20 December 2012, along with the Opinions on development of economy and society are facing
Deepening Reform of Generation Coal Market severe challenges. Third, coal production capacity
issued by the State Council of China, the dual- construction is ahead of time, and there still exist
pricing system for generation coal was aban- contradictions between surplus in supply of short-
doned, which meant that the reform of the coal term coal market and shortage in supply of long-
market made substantial progress (Sun 2015). term coal market.
The future of China’s coal industry will be
focused on the following important development
Summary and Prospect goals (Project Team on the Energy Development
Strategy of China in Medium- and Long-Term 2011):
In the course of 30 years of reform and opening-
up, China’s coal industry achieved some remark- 1. Strengthening the coal structural adjustment
able results, effectively supporting the sustained and promoting the reform of the coal market
and healthy development of the nation’s economy. further.
These achievements can be summarized as fol-
lows: (1) Structural adjustment made further pro- China will insist on relying on large-scale coal
gress. Large base, large groups, and large modern bases, promoting the merger and reorganization of
coal mines became the subjects of the national coal enterprises, developing large enterprise
coal production, and coal industry concentration groups with international competitive strength
has been significantly increased. (2) Technological and increasing industrial concentration. In addi-
innovation capability has been significantly tion, China will stick to a deepening of the reform
enhanced and some breakthroughs have been of the coal market, strengthening the construction
made in the basic theory and key technology of the national coal market trading system,
research. (3) Substantial progress has been made improving the coal storage and distribution sys-
in market-oriented reform, and the coal market tem, developing a modern coal logistics and ser-
was continually completed and perfected. vice industry, and promoting the development of a
(4) The long-term effective mechanism of coal coal economy depending on the quality and effi-
mine safety was constantly improved, promoting ciency, instead of the scale and speed.
work safety situation. The number of deaths
declined from 6001 in 1978 to 1067 in 2013 and 2. Optimizing the layout of coal development and
mortality (per million tons) declined from 9.94 in enhancing the long-term stable support capa-
1978 to 0.288 in 2013 (China National Coal Asso- bility of coal supply.
ciation, 2009; China National Coal Association,
2014). (5) The pace of international exchanges China will continue adhering to the general
and cooperation speeded up, and the scope and idea of “controlling the east, stabilizing the center
field of opening-up continues to expand. Since and developing the west” by the layout of the coal
China became a net coal importer in 2009, coal exploitation. (Project Team on the Energy Devel-
imports have been increasing significantly year by opment Strategy of China in Medium- and Long-
year. In 2013, China imported 327 million tons of Term 2011) With the continuous growth in energy
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potential and strategy of coal resource in China. Res Sci
02:224–230 (In Chinese)
3. Promoting the development and utilization of
Project team on the Energy Development Strategy of China
clean and efficient coal. in Medium- and Long-Term (2011) Research on the
energy development strategy of China in medium- and
The development and utilization of clean and long-term (2030, 2050) (Energy conservation • coal).
Science Press, Beijing (In Chinese)
efficient coal will be an important direction of
Shen L, Gao T, Cheng X (2012) China’s coal policy since
China’s coal development in the future. 1979: a brief overview. Energy Policy 40:274–281
According to the Energy Development Strategy State Council (2005) Opinions on promoting the healthy
Action Plan (2014–2020) of the State Council, development of the coal industry.http://www.gov.cn/
zwgk/2005-09/08/content_30251.htm (In Chinese)
China will adhere to the economical, clean, and
Sun X (2015) Transformation way of China coal industry
Safe strategy to accelerate the development of under new normal state. Coal Econ Res 01: 32–35 + 61
clean coal technology and improve the ratio of (In Chinese)
efficiency and concentrated power generation Tang J (2011) An empirical analysis of market concentra-
tion in coal industry of China. Xi’an University of
coal and construction of large coal-electricity
Science and Technology, Xi’an (In Chinese)
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Strategy Action Plan refers to the necessity to national comparison study. Econ Res Guid 25:162–168
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should also significantly reduce the direct burning
of coal dispersed and encourage the use of clean
coal and coal in rural areas.
China: Steel Industry section points out the new challenges that the
industry faces now and the strategies that the
Ligang Song industry is likely to take to make the necessary
Crawford School of Public Policy, Australian adjustment to the way that the industry develops
National University, Canberra, Australia in future followed by conclusions.
Introduction The Steel Industry Development: An

Overview
The development of China’s steel industry has
been phenomenal in the past 30 years in terms of The steel industry epitomizes traditional industri-
both the speed and the scale of the industry’s alization. The major economies of the United
growth and development. By 2014, the Chinese Kingdom, France, Germany, Japan, Korea, and
crude steel output reached 823 million tonnes the United States experienced stages of develop-
accounting for just above 50% of the total global ment where the steel industry played a pivotal role
steel outputs in that year (Song and Liu, 2012). in transforming their economies. The role of the
The purposes of this chapter are to provide some steel industry in this development is more than
historical background of the industry develop- symbolic; the technology and ready availability of
ment including its rapid expansion over the the steel products enabled further economic
reform period, discuss the key issues involved in growth and development. Industries essential for
the structural changes of the industry, and how the industrialization and modernization, such as
industry copes with the new challenges in China’s machinery and building infrastructure, were able
move towards economic rebalancing. This chap- to grow and expand.
ter consists of three sections accordingly. The first China has a long history of iron and steel
section provides an overview of the Chinese steel production. Hartwell (1962, 1966, 1967, cited by
industry. The second section highlights the major Findlay and O’Rourke 2007) described the
achievements in China’s steel industry develop- remarkable expansion in Chinese iron and steel
ment during the reform period, and the third production during the Northern Song dynasty (the
period 960–1126 CE): “The scale of total produc-
This chapter was prepared based on Chapter 1 in Ligang tion, and of the levels of output and employment
Song and Haimin Liu (ed.), The Chinese Steel Industry’s
in individual plants, was far in excess of anything
Transformation: Structural Change, Performance and
Demand on Resources published by Edward Elgar in 2012 attained by England in the eighteenth century, at
with changes and updating. the time of the Industrial Revolution.” Hartwell
DOI 10.1007/978-3-642-40871-7_80-1
2 China: Steel Industry
estimated that iron production in China in 1078 northeast, 23% in the east and north, and 7% in
was of the order of 150,000 tonnes annually: The the hinterland. In the 30 years following the
entire production of iron and steel in Europe in founding of the PRC, the steel industry was
1700 was not much above this, if at all (Hartwell regarded as a pivotal link for industrialization.
1967). The growth rate of Chinese iron and steel With the help of the former Soviet Union, an
production was no less remarkable, increasing overall complete steel industry system was
12-fold in the two centuries from 850 to 1050 formed with “three big, five middle and
(Findlay and O’Rourke 2007, p. 65). Iron pro- 18 small” steel enterprises (3 big: Anshan,
duced during this time was used primarily for Wuhan, and Baotou Iron and Steel Company;
agricultural and military purposes. A thousand 5 middle: Taiyuan, Chongqing, Beijing
years ago, China was the largest iron producer in Shijingshan, Maanshan, and Xiangtan steelworks;
the world, but for historical and institutional rea- 18 small: Handan, Jinan, Linfen, Xinyu, Nanjing,
sons the iron and steel industries were not fully Liuzhou, Guangzhou, Sanming, Hefei, Jiangyou,
developed until centuries later. Wulumuqi, Hangzhou, Echeng, Lianyuan,
The development of China’s modern steel Anyang, Lanzhou, Guiyang, and Tonghua steel-
industry can be traced back to the establishment works.), but this burgeoning steel industry devel-
of Hanyang Iron Works in 1890 (Hanyang Iron opment faced further setbacks with the
Works was established in 1890 and went into implementation of the “Great Leap Forward”
operation in 1894. It was the first integrated iron and later the “Cultural Revolution.”
and steel works in modern China and was also one The highly centralized planned economic sys-
of the largest in Asia, with an annual output of tem hampered the development of productive
60,000 tonnes of steel.). In the following 58 years forces in the steel industry, albeit after having
to 1948, China’s total accumulated pig iron output played a major role in restoring production in the
reached 22 million tonnes and crude steel nearly 1950s. Consequently, the industry saw very slow
7 million tonnes. The highest individual year was technological progress. In 1978 China’s total steel
1943, with iron production reaching 1.3 million production was only 32 million tonnes, less than
tonnes and steel 0.9 million tonnes. During this 3 weeks of current output levels. The per capita
period, the steel industry was located mainly in steel production was merely 33 kg, a fifth of the
the Anshan area of Northeast China, producing world average levels. The industry’s technology,
more than 90% of the country’s total steel output. equipment, product variety, and quality, as well as
The wars which wracked the country for much of technical and economic indicators, all lagged far
the 1940s, almost ruined the steel industry. When behind the developed countries. For example,
the People’s Republic of China (PRC) was when the world average ratio of open-hearth
founded in 1949, the national total production of steel-making to total steel-making fell below
pig iron was only 250,000 tonnes. In the same 20% in the late 1970s, China’s ratio still stood at
year, the country’s production of steel was 35.5%. While the ratio of continuous casting was
158,000 tonnes, accounting for 0.2% of the more than 50% in Japan and 30% in Europe, in
world’s total steel production and ranking 26th China it was merely 3.5%. As a result of obsolete
in the world. technologies, out of total production, the energy
The production recovered quickly however, consumption per tonne of steel was as high as 2.52
and by the end of 1952 the country had restored tonnes of standard coal, with the yield of crude
and expanded 34 blast furnaces and 26 open steel in rolling finished steel around 74% (The
hearths. The national total production of iron, ratio increased to 94% in 2010.). Furthermore,
steel, and rolled steel in 1952 was 1.9, 1.4, and 28% of the steel consumption relied on imports
1.1 million tonnes, respectively, topping all pre- in 1978, costing foreign exchange earnings. The
vious records. Meanwhile, the regional distribu- reform and opening-up policy of 1978 brought
tion of steel production showed no significant China into a new era of growth and development.
changes, with 70% being produced in the
China: Steel Industry 3
The development of the steel industry since then and foreign capital. At the same time, steel enter-
can be divided broadly into three stages. prises were permitted to make independent deci-
The first stage was the early period of reform sions and undertake technical innovations. These
and opening-up, running from 1978 to 1992. This reforms adjusted the power–responsibility–favor
stage is characterized as a gradual transition from relations between the state and enterprises. This
a highly centralized planned economy towards an made it clear that the enterprises were the princi-
early form of socialist market economy. Experi- pal point of interest.
ments on enterprise autonomy, profit contracts, The steel industry also worked towards open-
and managerial responsibility systems were car- ing up. During the 14 years from 1978 to 1992,
ried out in the steel industry. Shoudu (Capital) more than 700 advanced technologies were intro-
Steel Corporation, the first batch of large state duced and US$6 billion in foreign capital was
enterprises experimenting with extended utilized. In particular, two modern large steel
decision-making powers, implemented the mana- enterprises, Baoshan Iron and Steel Corporation
gerial responsibility system of contracting in (launched in 1978 and put into operation in 1985)
1981. The new system brought firm and worker and Tianjin Seamless Steel Tube Corporation
initiatives into play. As a result, the firm’s steel (launched in 1989 and put into operation in
output and economic performance improved 1996), were established. Meanwhile, many old
quickly. Afterwards, the contracted responsibility steel plants were rebuilt and restructured. These
system spread step by step across the industry. By notable changes to the technology structure of the
the end of 1992, 103 out of 110 key steel enter- country’s steel industry saw the gap between it
prises had implemented managerial responsibility and world-class practices narrow.
system reforms. During this reform stage, China This initial stage (1978–92) saw significant
changed from a rigid system of state-fixed prices achievements. By 1992, there was a 1.6-fold
and centralized purchase and sales to allowing increase in the steel production; the domestic mar-
steel enterprises to purchase raw materials in the ket share had increased by 17%, the ratio of open-
market. It also allowed them to sell a certain hearth steel-making to total steel-making was
proportion of planned production, and all the reduced to 11%, the ratio of continuous casting
excess steel products, through their own channels to the total rose to 30%, and the total production
at market prices, which were usually higher than energy consumption per tonne of steel output fell
the planned prices. The country gradually lowered to 1.6 tonnes of standard coal or by 62%. Despite
the ratio of mandatory planned rolled steel, greater autonomy granted to enterprises under the
reaching 20% in 1992. These measures boosted contracted responsibility system, China’s steel
incentives for production in the industry. enterprises were still subordinate to the govern-
These steel enterprises were allowed to use ment. Further, varying contractual conditions
retained profits for their expansion, bonuses, and together with the dual-track steel price system
employee welfare payments. The industry’s caused a disparity among steel enterprises in
retained profits in 1992 reached 5.8 billion yuan, terms of performance. This disparity induced
accounting for 56% of total profits. Of retained some firms to bargain with the government,
profits, 3.8 billion yuan was used for enterprise distorting the market’s role in resource allocation.
development, providing 26% of funds sourced The second stage was the early period of
from both the government and enterprises for establishing a socialist market economy from
upgrades and renovation. The average annual 1993 to 2000. In this stage, the main focus of
incomes for workers in the steel industry China’s reform was the setting up and improve-
increased from less than 500 yuan in 1978 to ment of market systems. The key to this was
around 3800 yuan in 1992. Financing for invest- establishing a complete modern enterprise
ment in the industry was transformed from relying system – separating the roles of government as
heavily on state allocations before 1978 to relying the owner and manager of state-owned enterprises
on the enterprise itself by self-raising, bank loans, (SOEs), and making the enterprises the true
market entities responsible for their own profits structural adjustment of the steel industry. By the
and losses. As for the steel industry, mandatory end of 2000, open-hearth steel-making was
plans for production and sales were abolished in almost eliminated, 5 years earlier than planned;
1993, and the dual-track steel price system ended. the ratio of continuous casting reached 87%, sur-
Thereafter, steel enterprises made their own deci- passing the 75% target and catching up with to
sions on production and sales based on market world averages; and the total energy consumption
demand. The steel market developed rapidly in per tonne of steel output fell to 885 kg of standard
all parts of China. With the development of the coal, a decrease of 56% from 1992.
securities markets, transforming into a joint-stock The third stage has been the deepening of
company and listing on the stock markets became reform and fast economic growth period since
the new financing channel for a Chinese steel 2001. With the new century, the Chinese iron
enterprise. By the end of 2000, there were and steel industries experienced significant and
27 steel enterprises listed in the domestic and/or influential external developments. Following
international securities market. This raised signif- China’s entry into the World Trade Organization
icant investment funds for development, and more (WTO), market laws and regulations were geared
importantly improved companies’ corporate gov- towards reaching international standards, integrat-
ernance and management skills. At the same time, ing the steel industry further into the world mar-
the steel industry not only continued to utilize ket. China’s manufacturing share increased from
foreign capital to upgrade obsolete technology about 5% in the mid-1990s to over 17% of the
but also utilized overseas resources to make up world’s total manufacturing in 2009. Over the
for the domestic scarcity of raw materials. Total reform period, the urbanization ratio rose to 46%
imports of iron ore reached 70 million tonnes in in 2010, rising from only 19% back in 1978,
2000, increasing nearly eightfold compared with transferring nearly 300 million people from rural
1978. Some enterprises began to buy or set up to urban areas. This large-scale urbanization
jointly owned iron ore production bases in Peru boosted the investments in housing and infrastruc-
and Australia. ture (According to the data from China Iron and
During this period the steel industry faced Steel Association (CISA), the housing sector con-
many challenges, including continuously declin- sumed more than 50% of steel produced in recent
ing steel prices, chain debts, and the periodic years.). All these developments led to the rapidly
return of overcapacity. It also went through a increasing demand for steel from domestic
difficult macroeconomic environment, with over- sources. For example, steel consumption
heating just before the Asian financial crisis and increased by 16% per annum from 2000 to 2010.
then a fall in output in the aftermath. Nevertheless, In meeting this rising demand, the industry’s total
the steel enterprises streamlined their businesses, investment increased from 36.7 billion yuan in
readjusted their product mix, and carried out tech- 2000 to 453.1 billion yuan in 2010, with an annual
nical innovations around energy savings and cost growth rate reaching 28.5% over this period. Steel
reductions. As a result, the industry’s technologi- production rose as a result. According to the fig-
cal bases and ability to adapt to market changes ures from the Statistical Yearbooks, in 2010 the
improved greatly. ferrous metal industry accounted for 4.6% of the
Along with the steel enterprises’ own efforts, total industrial employment, 8.3% of the total
the Chinese government offered them supporting industrial value added, 25% of total industrial
policies, such as debt-to-equity swaps and dis- energy consumption, and between 10% and 16%
counts for technological transformation. These of the total emissions of the main pollutants from
policies helped China become the world’s largest the industry sector.
steel-producing country in 1996, with total output Further trade liberalization has led to the sharp
surpassing 100 million tonnes. Its steel production reduction of import duty as well as the complete
in 2000 reached 128 million tonnes, a decrease of abolition of quantitative import restrictions,
59% from 1992. This stage saw the fastest which has exposed steel enterprises to the fierce
competition of the international market. China’s also undertaking outward direct investment in the
rapid economic growth led to rapidly increasing mining sectors in order to secure stable and long-
demand for steel from domestic sources. The term resource supplies (Song et al. 2011).
increased competition from the market entry of
those non-state firms has forced the large and
medium state-owned steel firms to deepen the Industrial Achievements in the Reform
corporate reform, to include shareholding and Period
the separation of government functions from
management. Any shortage of steel in China may now be
To further separate government functions from consigned to history. Since the reform and
enterprise management, the Bureau of Metallur- opening-up of 1978, and especially since 2000,
gical Industry at both state and local level was China’s steel production capacity has expanded
dissolved. Instead, the China Iron and Steel Asso- rapidly. The industry underwent a period of
ciation, a self-regulatory organization of the steel extraordinary growth in both total sales and total
enterprises, acted as a bridge between enterprises profits which increased at an average annual rate
and government. Steel enterprise reform proof 32% and 44% respectively over the period
ceeded towards developing a more diversified 2001–07 (The profit rate from sales grew by an
ownership structure. By the end of 2010 more average of 9.1% per annum over the same
than 50 steel enterprises were listed on stock mar- period.). The end of 2010 saw China’s total steel
kets and 50% of large and medium-sized steel production reach 630 million tonnes, 18 times the
enterprises, in terms of operating revenue, were output in 1978. The crude steel production grew at
transformed into joint-stock companies. Private an annual growth rate of 17.2% after 2001.
steel enterprises also grew rapidly. Non-state China’s share of global steel production increased
enterprises accounted for about 45% of the total from 4.4% in 1978 to 15% in 2000 and to 45% in
output of the steel industry in 2010. Reorganiza- 2010, a share which has been unprecedented in the
tion and mergers and acquisitions (M&As) have entire history of industrialization (For a historical
also been part of the process of industrial comparison, the United Kingdom was the largest
agglomeration. steel producer in the world before the 1890s. In
The steel industry is accelerating its pace of 1885, the United Kingdom’s steel output
globalization. The China Iron and Steel Associa- accounted for about 30% of the world total steel
tion and the largest steel enterprises became mem- output. That top position was then taken by the
bers of the World Steel Association (WSA) at the United States from 1886 to 1971, and then the
end of 2004. They have taken part in worldwide former Soviet Union from 1971 to the late 1980s,
dialogue and negotiations and adopted common and Japan for only a brief period in the early 1990s
actions as a response to resource, environmental, (Yang 2010).).
and market changes. The rapid expansion of steel In the past, China relied on imported steel to fill
production has forced the industry to utilize over- the supply shortfall. Gross imported billet and
seas resources on an unprecedented level. rolled steel in the period from 1978 to 2004
Imported iron ore now accounts for two thirds of amounted to 478 million tonnes. After deducting
the total consumption in the steel industry. For exports, net imports were 352 million tonnes,
example, to produce 567 million tonnes of steel accounting for 12.6% of China’s total consump-
in 2009, China’s steel industry consumed 850 mil- tion of crude steel. Increasing exports and
lion tonnes of iron ore, of which 602 million decreasing imports of steel products found China
tonnes were imported in that year, raising its realizing a rough balance in 2005, becoming a net
import dependence ratio for iron ore to 74%. The exporter of steel products in 2006. Such an his-
share of China’s consumption of iron ore in world toric change implies that China’s steel industry is
total iron ore consumption increased from 20% in capable of meeting the needs of the country’s
2000 to 56% in 2009. Many steel enterprises are economic development. It also suggests that the
international competitiveness of Chinese steel example, since 1978 the overall ratio of rolling
products has improved immensely. steel being produced has increased to over 95%
Iron and steel production quality and variety from 75%; total production energy consumption
have increased dramatically. Currently, China’s per tonne of steel has fallen from 2.5 tonnes of
self-sufficiency rate in most steel products standard coal to 605 kg of standard coal; freshwa-
exceeds 100%. Only some high-value-added ter consumption per tonne of steel has fallen to
products, such as cold-rolled ordinary steel 4 tonnes; and labor productivity per tonne per
board (strip) and electric steel, are net imported. person-year has increased from 33 to 400 tonnes.
Most steel products used in the industry – such as
machinery, automobiles, shipbuilding, home
appliances, oil, electricity, and railways – are New Challenges and Industrial
homemade. The product qualities are sufficient Readjustment
to meet the basic needs of those industries. Some
varieties have even reached internationally The market-oriented industry, corporate reform
advanced levels. China’s steel exports have grad- and opening-up policy have been the decisive
ually shifted from producing long products to factors in the development of China’s steel indus-
producing higher-value-added sheets and pipe try. Enterprises were released from the rigid cen-
products. The industry has also achieved tralized planning system, boosting
enhanced standards in terms of technology and competitiveness (enhanced in large part by the
equipment, and an increased localization rate. low cost of labor) and allowing the development
The accumulated fixed-asset investments of of profit-making incentives, leading to enhanced
the steel industry, which were a mere 60 billion performance. The establishment and development
yuan in the first 30 years from 1949, reached 2.6 of the market system enabled and urged steel
trillion yuan from 1978 to 2010. In addition to the enterprises to face the challenges of market com-
establishment of world-advanced steel petition, which again improved their productivity
enterprises – such as Baoshan Iron and Steel Cor- and efficiency. China’s rapid economic growth
poration and Tianjin Seamless Steel Tube Corpo- provided a huge demand for steel products,
ration, and some private steel enterprises – most of which gave impetus to the rapid growth and
those investments went to the upgrading of out- expansion of the industry.
dated equipment and the restructuring of old steel Despite these achievements, China’s steel
enterprises. From 1978 to 2010 the number of industry still faces many challenges which
large blast furnaces over 1000 m3 in volume demand deepened reform and consolidation. The
grew from 10 to 260, of which 28 were over state historically has dominated the steel industry.
3000 m3; the ratio of continuous casting grew The transformation of state-owned enterprises in
from 3.5% to 98%, which is above the world the past turned many steel enterprises into market
average. The modern steel industry is encouraged players. However, they are still constrained by the
to rely more on autonomous innovation rather traditional state-dominant system in orienting
than depend solely on the introduction of new development strategies, making investment deci-
techniques and equipment. By 2010 small and sions, conducting M&As, restructuring,
medium metallurgical equipment has been appointing senior managers, and employing
domestically produced, while the localization workers. As a result, the industry’s overall eco-
rate of large metallurgical equipment reached nomic performance remains behind the developed
over 90%. countries, by some margin. Private steel enter-
The industry also experienced a remarkable prises, although more flexible, require further
rate of technological progress, resulting in improvement in implementing modern technolo-
improved technical and economic indicators. gies, following codes of conduct and upgrading
Many indicators of domestic productivity are management skills according to market
outstripping those of developed countries. For principles.
Market competition is the catalyst for improv- with capital misallocation, low quality standards,
ing the overall quality of the steel industry, but the duplication of construction effort, and blind
way competition has worked in it has been com- expansion of production capacity, as well as struc-
plicated by the cyclical fluctuations of the macro- tural overcapacity. These problems are intrinsi-
economy. In times of prosperity, steel enterprises cally related to issues of wasteful investment,
have tended to assess the market prospects over- inefficiency in material use (including energy,
optimistically and expand production blindly. water, and electricity), and environmental prob-
This has resulted in large amounts of over- lems. Such industrial segmentation also hampers
investment and backward production capacity the technological progress as smaller firms lack
being utilized. In times of weak demand, disor- the resources for research and innovation. The
derly competition by cutting prices has occurred, industry needs further structural reforms to
and the industry has sometimes relied upon gov- address these problems at the microeconomic
ernment intervention to alter the supply–demand and industrial levels, and the government needs
balance. These patterns of behavior and fluctua- to do its part by strengthening the existing regu-
tions have added to structural adjustment costs, latory system with respect to market entry and the
slowed down technological progress, and wasted environment, and reforming its relationship with
social resources. enterprises.
The domestic market is still segmented and the The industry faces the pressure of rising costs
degree of industrial concentration quite low. In of production resulting from the high prices of
2000, the share of steel output by the top energy, water, and iron ore in addition to the rising
10 firms and the top 4 in total output were costs of labor and transport on which the industry
49 and 32%, respectively. The years to 2006 saw heavily depends (World iron ore prices (the long-
a falling ratio of industrial concentration, to 35% term contract prices) rose by 8.9% in 2003, 18.6%
for the top 10 and 19% for the top 4, owing to the in 2004, 71.5% in 2005, 19% in 2006, and 9.5% in
large number of small firms entering the market 2007. In 2008, the prices rose by 65% for Brazil-
seeking to meet the rising domestic demand for ian ore and 79.8% for Australian (CISA report,
steel. The benefits of industrial consolidation in 2008).). These rising costs of production have
responding to the problems associated with the further squeezed the profit margin for the industry.
use of materials, energy, and the environment When the industry passes on the price rises to the
thus led to the ratio of industry concentration consumers, it affects future demand for steel. To
rising again, in 2010 increasing to 49% for the cope with this, the strategy for the industry needs
top 10 and 28% for the top 4 (the latter is still to be shifted from an emphasis on pure expansion
below the level of 2000). Despite the progress of scale to a focus on optimization of the structure
made, the industry concentration ratio is far of production including the product structure
below that of the developed countries, which through industrial upgrading and technological
ranges between 70% to 80% for the top 4 or change. The industry is also compelled to reduce
5 (For example, Japan’s top 5 firms produce the costs of production, increase productivity and
79% of the total steel output; Korea’s top 2 firms international competitiveness through, for exam-
produce 80% of its total output (Yang 2010).). ple, an increase in industrial research and devel-
The rapid increase in demand for steel products opment (R&D) and improved corporate
and the rising profitability of the industry stimu- management. The introduction of advanced for-
lated the entry of many non-state small firms, eign technologies, equipment, capital, and
usually supported by local governments for the resources has also helped the industry to realize
purposes of increasing local employment and tax- a leapfrogging developmental path.
ation. These small firms tend to use backward An offsetting factor which helps the industry to
production capacities and technologies, adding reduce resource intensities, including primarily
further difficulties to restructuring the industry. the use of iron ore in producing steel in the future,
This is the root cause of the problems associated is that there will be an increasing proportion of
steel demand which is met by scrap. China is still proportion of backward and low-level production
at the phase of industrialization where the accu- capacities being utilized in the industry.
mulated stock of steel is not sufficiently large for China has to rely on exports to absorb the
more scrap to be recovered and used in steel- surplus of steel after meeting domestic demand.
making. In 2008, the proportion of electric fur- The share of steel exports in total world steel
naces using scrap for making steel was only 9% of production has experienced both rising and falling
total steel production in China, which was far trends in recent decades. In 1975 the share was
below the world average level of 31%. In the 23%, then rose to a peak of 40% in 2000. It fell to
same year, the proportion in the United States 34% in 2008 and further to 26% in 2009 (World
was 58%, while the proportion in the European Steel Association 2010) (The quick fall in the
Union (15 countries) was above 40% (Yang 2010) share of exports of steel in total production in
(The world average proportions of electric fur- 2009 over the previous year may be due largely
naces in steel-making were gradually increasing to the impact of the global financial crisis (GFC).).
over time, rising from 14% in 1970 to 22% in In contrast to this trend, China has been a net
1980, then further to 28% in 1990 and to more exporter of steel since 2005. In 2008, Chinese
than 30% in 2006 (CISA report, 2008).). net exports were 40.7 million tonnes of steel,
China paid an excessive environmental price and ranked number one in the world, followed
for the rapid development of its industries, includ- by those of Japan (32.4 million tonnes), Ukraine
ing the steel industry, with an environmental ram- (26 million tonnes), and Russia (23 million
ification well beyond its border. China became the tonnes). In the same year, the United States was
largest global carbon emitter in 2007 (an estimate the world’s largest net importer of steel (12.7
by the World Steel Association shows that China’s million tonnes) followed by the European Union
steel industry was ranked number one in terms of (27 countries) with 11.4 million tonnes, United
its carbon emissions among all the steel industries Arab Emirates (10 million tonnes), Thailand (9.4
in the world in 2007. China’s emission share million tonnes), and South Korea (8.8 million
accounted for about 51% of the total emissions tonnes) (World Steel Association (2010).).
emitted by world steel industries in 2007 followed Exporting steel products to world markets
by the European Union (12%), Japan (8%), helps ease the problem of industrial overcapacity.
Russia (7%), the United States (5%), and others However, an increase in exports of steel has made
(17%) (CISA report, 2008).), and yet the country industrial restructuring (including ownership
is still in the middle phase of industrialization reform, industrial concentration, and technologi-
(according to the current level of per capita cal progress) a less urgent task. It has also made
income) with the growth and expansion of the the tasks of reducing the resource and pollution
manufacturing sector (especially heavy indus- intensities of the industry more difficult. Further-
tries) generating more emissions. China needs, more, China’s exports of steel are causing trade
and has an obligation to achieve, emission reduc- frictions with others, especially those to the devel-
tion targets as part of the global effort in oped countries such as the United States and the
confronting the challenge of climate change. The European Union. The government has adopted
government needs to be clear about the scale, various measures such as the imposition of export
pattern, and pace of growth, which will meet taxes and the reduction of export tax rebates for
China’s future demand for steel while ensuring certain products in order to limit the increase in
that the industry’s development is conducive to exports of steel. However, the industry’s low cost
environmental protection. At the moment, the and other advantages will continue to run their
government’s macroeconomic control policies course, despite the fact that the government
and regulatory measures curb the development intends to see the role of the steel industry as
of large enterprises but leave the small ones and essentially to meet domestic demand. The chal-
low-level projects unaffected. This leads to a high lenge therefore is how the Chinese government
could bring steel production back into line with
the changes in domestic demand without relying rebalancing. Resource scarcity, demographic
too much on exports. change, climate change, and global imbalances
China will continue to be the largest steel pro- are global shared concerns. The Chinese govern-
ducer in the world for the time being, driven ment is responding to these changes by trans-
largely by the ongoing process of urbanization, forming the model of its growth and
industrialization, and her integration with the development (Song 2010). Accordingly, the
global economy. China’s level of per capita requirements for the steel industry have also
income needs to be tripled from the current level changed, as is reflected in a lower level of
before the peak level of metal intensity is attained, resource intensity, the higher variety and quality
something which is forecast to happen around of steel products, and an increasing environmental
2024. By then, China’s total steel output will be constraint. These changes call for optimizing the
in the vicinity of 1 billion tonnes (McKay et al. industrial structure, enhancing technological pro-
2010). This prospect of China’s future metal gress, improving corporate management, and,
intensity and the magnitude of its output raise an most fundamentally and crucially, deepening the
important question as to how the world supplies of structural reform of the steel industry, including
key resources including energy and minerals, as its ownership and concentration.
well as the environment, will accommodate the
continual growth in China. As Garnaut has said
(2012), “one only has to identify the possibility of Conclusions
China absorbing more resource-based products
than the currently developed world to raise some The rapid expansion of China’s steel industry in
fundamental questions about ‘limit to growth.’” meeting the rapid increases in demand in China
The steel industry can do its part in overcoming since 2000 contributed largely to the recent “super
this limit to growth in the process of China’s resource boom” over the period 2003–2013, in
modernization as the industry is scale-capital- which world prices of all the key commodities
resource and pollution-intensive. In fact, the such as iron ores reached unprecedented levels.
industry will be compelled to do so because in Since 2012, the Chinese economy started slowing
recent years the Chinese government has promul- down following the fall in its potential growth
gated a number of key laws and regulations with rates and the imperative for economic
respect to energy use and the environment such as rebalancing. This includes reducing price distor-
the “Environmental Protection Law,” the “Law tions in resource markets; cooling down of the
for Prevention of Air Pollution,” the “Law for housing markets; structural changes for higher
Prevention of Water Pollution,” the “Law for Pre- value-added production, which has lower
vention of Solid Waste Pollution,” and the “Law resources and emission intensities; and greater
for Energy Saving.” Given the current level of the diversification into services and consumption-
industry development, it is a challenging task for driven growth. As a result, the demand for steel
the industry to comply fully with the requirements products has eased worsening the problem of
of these laws (The International Iron and Steel overcapacity of the steel industry prompting the
Industry Association (IISI), at a meeting held in industry to go through a painful period of
Berlin, Germany, in October 2007, published the readjustment. However, at the same time, even if
statistics on its members’ CO2 emissions. IISI’s demand moderates, it is still likely for China to
180 members have agreed on the plan for reduc- sustain a relatively high level of resource intensity
ing CO2 emissions. According to the data, only in production for a certain period similar to the
20% of the steel production in China could meet pattern of change in Japan and Western Europe,
the requirements set by IISI in 2006 (CISA even after the peak of steel intensity had been
2008).). reached. Underscoring these are China’s unfin-
The world economy has entered a period of ished process of urbanization, further room for
development requiring huge adjustment and infrastructure development, industrial upgrading
towards more sophisticated industrial sectors Findlay R, o’Rourke KH (2007) Power and plenty: trade,
(China’s State Council unveiled a national plan war, and the world economy in the second millennium.
Princeton University Press, Princeton/Oxford
in 2015, which is called “Made in China 2025.” It Garnaut R (2012) Australia’s China resources boom. Aust
is a 10-year action plan designed to transform J Agric Resour Econ 56(2):222–243
China from a low-end to a high-end manufactur- Hartwell R (1962) A revolution in the Chinese iron and
ing giant. It covers 10 sectors (People’s Daily coal industries during the northern sung, 960–1126
AD. J Asian Stud 21(2):153–162
online, 22 May 2015): new information technol- Hartwell R (1966) Markets, technology, and the structure
ogy; numerical control tools and robotics; aero- of enterprise in the development of the eleventh- cen-
space equipment; ocean engineering equipment tury Chinese iron and steel industry. J Econ Hist
and high-tech ships; railway equipment; energy- 26(1):29–58
Hartwell R (1967) A cycle of economic change in imperial
saving and new energy equipment and vehicles; China: coal and iron in Northeast China, 750–1350.
power equipment; new materials; biological med- J Econ Soc Hist Orient 10(7):102–159
icine and medical devices; and agricultural McKay H, Sheng Y, Song L (2010) China’s metal intensity
machinery. This new strategy, coupled with the in comparative perspective. In: Garnaut R, Golley J,
Song L (eds) China: the next twenty years of reform
international strategy of “one belt and one road,” and development. Australian National University
supported by the formation of the Asian Infra- E-Press/Brookings Institution Press, Canberra/Wa-
structure Investment Bank (AIIB), reflects a com- shington, DC, pp 73–98
prehensive approach to a new growth model Song L (2010) China’s rapid growth and development: an
historical and international context, paper prepared for
which has an important implication for future the 34th PAFTAD conference on China in the World
demand for metals.), continued exports with Economy, Peking University, Beijing, 7–9 Dec
more metal contents such as automobile and Song L, Liu H (2012) Steel industry development and
machinery, and future revived housing transformation in China: an overview, chapter 1. In:
Song L, Liu H (eds) The Chinese steel Industry’s trans-
development. formation: structural change, performance and demand
on resources. Edward Elgar, Cheltenham, pp 1–16
Song L, Yang J, Zhang Y (2011) State-owned enterprises’
outward investment and the structural reform in China.
References Chin World Econ 19(4):38–53
World Steel Association (2010) World steel in figures
China Iron and Steel Association (2008) On the path of 2010. World Steel Association, Brussels
restructuring the Chinese steel industry. A Report Yang L (2010) Studies on the sustainability of China’s steel
published by the Association, Beijing industry under the constraints of iron ore resources.
Metallurgical Industry Press, Beijing
J
Japan: Oil Policy on oil reached to 78 % of the primary energy

consumption, among which 87.8 % was from the
Janet Xuanli Liao Middle East (Koyama 2002, pp. 39–48, 74). Prior
CEPMLP, University of Dundee, Dundee, to the first oil crisis in 1973, Tokyo focused on
Scotland, UK ensuring stable oil supply at the lowest possible
cost but eventually was forced to accept higher
costs to ensure stable oil supply in the aftermath of
Introduction the oil crisis. The Japanese government also
reinforced the efforts to obtain greater autonomy
Japan is the world’s fifth largest energy consumer in oil production (Jishu Kaihatsu), as the country
since 2015, after the USA, China, India, and Rus- relied heavily on international oil majors for its oil
sia. Since the country has few domestic natural supply.
resources, Japan has relied entirely on imports of Since there was no state-owned oil company in
oil and gas to meet its demand over the past half a Japan (A state-owned upstream company, the
century. In 2015, Japan ranked as No. 4 in oil Japan Petroleum Exploration Co., Ltd. (JAPEX),
imports (after the USA, China, and India), No.1 was established in December 1955, but in April
in liquid natural gas (LNG) imports, and No. 2 in 1970, it was reorganized as a private company and
coal imports, second only to China (BP 2016, was listed on the Tokyo Stock Exchange in
pp. 19, 23, and 28; Mundi 2016). As shown in December 2003. http://www.japex.co.jp/english/
Fig. 1, petroleum (oil and gas) and coal together company/history.html), the Japanese government
have accounted for 92 % of Japan’s primary set up a special agency in 1967 – Japan Petroleum
energy in 2015; therefore, how to ensure security Development Corporation (JPDC) – as the parent
of energy supply became a serious challenge for organization for promoting the exploration and
the Japanese government, far greater than for development of primarily overseas oil resources.
other major energy consumers, including China Its primary role at the time of establishment was to
and the USA. provide the necessary funding and liability guar-
During the first couple of decades after the antees for overseas oil exploration. In 1972, JPDC
WWII, Japan relied on domestic sources for added natural gas to its scope of business in order
76 % of its energy supply, with coal accounting to diversify energy sources. In 1978, under the
for 45.8 % and hydropower for 21.2 % of primary new name Japan National Oil Corporation
energy consumption. Starting from the 1960s, (JNOC), it commenced oil stockpiling
Japan switched its primary energy supply from (JOGMEC history). However, due to the loose
coal to oil, and by the early 1970s, its reliance alliance between the JNOC and private
DOI 10.1007/978-3-642-40871-7_81-1
2 Japan: Oil Policy
Renewable 3% Japan’s Energy Efficiency

Nuclear
0.2% Hydro
Japan is one of the most energy-efficient nations
5% in the world, thanks to the policy and regulations
adopted by the government since the first oil cri-
sis. At the initial stage, energy efficiency was
viewed primarily a matter of energy security;
Oil 42% therefore, a series of policy measures made since
Coal 27%
1971 were mainly focused on industries. Even in
the first comprehensive energy legislation, the
Energy Conservation Act enacted in 1979, the
emphasis was still on taking fiscal measures to
Gas 23% encourage rational use of energy in energy-
intensive industries, such as utilities, machinery,
buildings, and factories (Ogawa et al. 2010,
pp. 4–12). Thereafter, Tokyo formulated addi-
tional regulations on energy conservation and effi-
Japan: Oil Policy, Fig. 1 Japan’s energy mix, 2015 ciency enhancement, and the scope was also
(Source: adapted from the BP 2016) expanded to consumers and transportation
sectors.
companies, the government was unable to ensure In the wake of the Rio Earth Summit in 1992, a
real control over the private oil companies; as a new feature appeared in Japan’s energy policy: the
result, the government’s target for 30 % of “auton- consideration of environmental protection. Japan
omous oil production” by 1985 has never been then revised the Energy Conservation Act in
achieved (Koyama 2002, pp. 45–48), even until 1993, 2002, 2005, and 2008, respectively
today. (Ogawa et al. 2010, p. 3), to reflect the three
That being said, the Japanese government had guiding principles (3Es) for energy demand and
also taken some other measures to ensure security supply: energy security, environment (i.e., climate
of oil supply, including enhancement of energy change mitigation), and economic efficiency (i.e.,
efficiency, establishment of strategic oil stock- lower energy cost). Under energy security, the
piles, and energy diplomacy, and these strategies diversification of primary energy resources and
proved highly successful. As shown in Fig. 2, increasing self-sufficiency was listed as key
Japan’s oil consumption between 1980 and 2015 issues. On environmental protection, three factors
had declined in absolute terms, and the trend also were highlighted: preventing the greenhouse
showed a decrease since the mid-1990s. With effect, preserving the regional environment, and
much improved energy circumstances, Tokyo transforming society toward recycling. In terms of
pursued a more sensible energy strategy from the economic efficiency, activating market mecha-
1990s onward, focusing on “optimal balance nism and promoting deregulation policies to facil-
between supply and cost” (Kashiwagi et al. itate the above two principles were viewed as the
2004). In the new century, Japan further shifted key points (Ogawa et al. 2010).
to a more environmentally friendly energy policy, As a result of these policies, Japan’s energy
and, in February 2004, the JNOC was integrated efficiency was enhanced by approximately 40 %
with the Metal Mining Agency of Japan into the between 1973 and 2009, as shown in Fig. 3, mak-
Japan Oil, Gas, and Metal Corporation ing the country the most energy efficient in the
(JOGMEC). world prior to the 2011 Fukushima nuclear acci-
dent. Likewise, Japan’s oil demand has steadily
decreased since the mid-1970s, from 5.27 million
barrels per day (bpd) in 1973 to 4.47 million bpd
Japan: Oil Policy 3
Japan: Oil Policy, Fig. 2 Japan’s oil imports and consumption (kb/d), 1980–2015 (Source: adapted from the BP
Statistical Review of World Energy, various years)
Japan: Oil Policy, 1.7

Fig. 3 Primary energy use
per real GDP of Japan 1.6
(Mtse/1 trillion yen)
(Source: Nagata 2014) 1.5
1.4
1.3
1.2
1.1
0.9
1973 1979 1985 1991 1997 2003 2009
in 2011, and its oil imports also dropped from measures for the summer, on 31 May 2016, MITI
5.48 million bpd to 4.49 million bpd during the again announced that the Inter-Ministerial Liaison
same period of time (BP various). Even after the Council for the Promotion of Energy and
Fukushima accident, which forced suspension of Resource Conservation Measures was held and
all 54 nuclear reactors, Japan’s oil consumption made a decision on the summer energy conserva-
only showed a modest increase to 4.53 million tion measures. According to which a summer
bpd in 2013 but then declined again to 4.15 million energy conservation campaign would be launched
bpd in 2015 (BP 2016, p. 9). from June to September, led by the government
On 24 May 2013, Tokyo amended the Energy but appealing for public cooperation as well in
Conservation Act for the fifth time, calling for carrying out measures in electricity saving and
establishment of the Top Runner Program for energy conservation (ARNE 2016).
building materials and for measures on the Given the fact that considerable achievements
demand side during peak demand (say factories, Japan have made over the last four decades, some
transportation), and these measures were promul- believed that it would be unrealistic to see Japan
gated as Act No. 25 at the end of May (ARNE making major gains in energy efficiency in the
2013). In order to promote energy conservation future, while minor gains could still be possible
4 Japan: Oil Policy
(Vivoda 2012). Yet the counter argument, for an amount equivalent to 61 days of oil consump-
instance, by IEA, suggests that there is tion (Okabe 2001).
“unrealized energy efficiency potential” in four In 1974, the International Energy Agency
sectors: about 80 % in buildings and in power (IEA) was created and then required its member
generation, respectively, and about 60 % in trans- states to establish a strategic petroleum reserve
port and in industry as well, as indicated in Fig. 4. (SPR) equivalent to 90 days of consumption. As
DeWit also argued that, in Japan’s case, “heating a founding member of the IEA, Japan issued the
and cooling equipment have the highest potential OSA in 1975 as the legal mechanism for its SPR
to curb energy in office buildings” (DeWit 2013, building, which required that the private sector
p. 2), which might partially explain the reason should establish 90 days’ worth of oil stockpiling
behind MITI’s recent summer energy conserva- and that the government SPR should start in 1978
tion campaign. under the leadership of JNOC. By 1998, Japan’s
government oil SPR reached 50 million kiloliters
(mkl), equivalent to 85 days of Japan’s oil con-
sumption (Okabe 2001).
Japan’s Strategic Oil Reserves
In 2006, OSA was amended to request the
government to increase the volume of SPR
Japan’s oil stockpiling system was initiated after
(while allowing the private sector to reduce the
the first oil crisis, comprising of two elements.
stockpiling obligations), and it also introduced
One is the government strategic oil reserves that
government oil product reserves, such as gasoline,
was built from 1978, as stipulated by the Oil
kerosene, fuel oil, and diesel oil – prior to this the
Stockpiling Act (OSA) issued on 27 December
government only had crude oil in its SP-
1975. The other is the stockpiling by the private
R. Thereafter, the government stockpiling showed
sector that was encouraged by the government in
constant increase and reached 47.5 mkl in Decem-
1971 but became a legal obligation under the OSA
ber 2014, equivalent to 114 days of Japan’s oil
in 1975 (OSA 1975). Prior to the oil crisis in 1973,
consumption. The industry stocks declined com-
the Japanese government already encouraged pri-
paratively but were still equivalent to 84 days of
vate companies to build oil stockpiling and set a
oil consumption (35.1 mkl) at the end of 2014
target for 45 days by the end of 1971 and 60 days
despite the stipulations that they could have
by 1974. This target was reached ahead of sched-
lower than 70 days of reserves (PAJ 2015,
ule: by 1973, stockpiling by private had reached to
Energy efficiency potential used by sector in the New Policies Scenario

100% Unrealised energy
efficiency potential
80%
Realised energy
efficiency potential
60%
40%
20%
Industry Transport Power Buildings

generation
Two-thirds of the economic potential to improve energy efficiency
remains untapped in the period to 2035
Japan: Oil Policy, Fig. 4 Energy efficiency potential by sector and prospect by 2035 (Source: Andrew DeWit 2013)
Japan: Oil Policy 5
Oil Stockpiling Obligation Trends: Volume and Days (fiscal year end)
Unit: 10,000kl, (days)
10,000 9,080 Joint oil strage projects Stockpiles
8,953 9,043
(163) (168) 8,670 8,590
(150) 8,614
8,278 (184) 8,301 8,343 (185) 8,406
(177) 8,147
(142) (199) 8,075 (197) (193)
(193) (199)
8,000 7,098
(2)
6,984
(100) (127)
6,048
5,954
(88)
Private Stockpiles
(90)
6,000
(90) (81) (90) (92) (88) (74) (78) (78) (77) (81) (84) (79) (84) (83) (83) (80)
4,000
Government Stockpiles
2,000
(7) (10) (35) (54) (76) (85) (90) (99) (102) (115) (114) (113) (102) (110) (117)
0
1977 1978 1980 1985 1990 1995 2000 2005 2007 2008 2009 2010 2011 2012 2013 2014
Japan: Oil Policy, Fig. 5 Japan’s oil stockpiling, 1977–2014 (Source: PAJ 2015, p. 24)
pp. 22–23). Currently, the government stockpiling Arabian Oil Company in 2010. Such schemes
is still dominated by crude oil (97.1 %), with 2/3 would allow the producers to reserve their crude
stored in ten national stockpiling bases and the oils in Japan and use them commercially under
rest in tanks leased from the private sector across normal times, while in an emergency, Japanese oil
Japan. The private stockpiling scheme is stored by companies receive preferential crude oil supply
private oil companies in 16 domestic private ter- from their reserves under this agreement (PAJ
minals (PAJ 2015; IEA 2013). As shown in Fig. 5, 2015, p. 23).
Japan’s total SPR in 2014 reached 8,147 mkl, In October 2012, MITI announced two further
equivalent to nearly 200 days of its oil consump- amendments of OSA. One was about mobiliza-
tion, making the country one of the top oil tion, meaning that national stockpiled oil and LP
stockpiling holders in the world, second only to gas would be allowed to be released not only in
the USA. the event of a shortage of oil supply from overseas
Starting from 2007, Tokyo formulated a new but also in the event of an oil supply shortage in a
scheme of oil stockpiling – jointly with foreign specific area of Japan due to a disaster. The other
countries. As the Japanese stockholding law stip- was that oil refiner-distributors oblige to cooper-
ulates that all government/compulsory stocks ate with each other to supply oil to the affected
must be held domestically (IEA 2014), in a bilat- people in the event of a disaster (ARNE 2012).
eral stockholding agreement signed between
Japan and New Zealand at the end of 2007, New
Zealand was allowed to have bilateral
Japan’s Energy Diplomacy
stockholdings in Japan. Meanwhile, Japan also
promoted joint stockpiling projects with
Apart from the abovementioned two measures,
oil-producing countries, such as the Abu Dhabi
the Japanese government has also pursued energy
National Oil Company in 2009 and the Saudi
diplomacy to help secure Japan’s oil supply.
6 Japan: Oil Policy
Japan: Oil Policy, Japan’s crude oil imports by source, 2014 (11 months)
Fig. 6 Sources of Japan’s
oil supply in 2014 (Source:
http://www.marcon.com/ Rest of world
print_index.cfm? 11%
SectionListsID=93& Russia
PageID=403) 8%
Iran Saudi Arabia
5% 34%
Kuwait
7%
Qatar
11% UAE
24%
eia Sources: Japan’s Ministry of Finance, Global Trade Information Serivces
Among the focal points, the Middle East has leverage over the oil flow into Japan, as well as the
played a major role for Japan’s oil supply since oil pricing, especially at a time of war in the
the 1960s. Tokyo has taken two kinds of measures Middle East. Tokyo has also established emer-
to cope with the high risks associated with its gency and security measures for the Japanese oil
heavy reliance on Middle East oil supply. One business, such as state insurance to cover damage
was its attempt to strengthen ties with the oil states at the time of an unexpected event or the provision
in the Middle East amid the oil crisis in of loans on a favorable term to support oil projects
1973 – until then Japan relied on the USA to pursued by the Japanese companies by the Japan
ensure its oil supply, which became unviable Bank for International Corporation (JBIC)
with the arise of the Arab oil embargo. Japan (Miyagi 2008). Japan’s intention to obtain oil
then took an orientation independent of the US from Russia had also ended as a failure due to
policy by setting a fixed allocation of 10 % for the competition with China and the political mistrust
Middle East states in its budget of Official Devel- between Tokyo and Moscow (Liao 2008).
opment Assistance (ODA). The hope was to facil- As a result, Japan has not managed to move
itate its oil supplies through the support for away from its reliance on the Middle East oil,
infrastructure building in the region (Miyagi which still counted 81 % of its total imports by
2008, p. 45). 2014, as shown in Fig. 6. In 2015, Japan’s reliance
The other was the efforts made to reduce on the Middle East crude further grew to 83 %
Tokyo’s dependence on Middle East oil by diver- (BP 2016), making the region not only the most
sifying its sources of energy supply from East important source of oil supply but also a venue to
Asian countries and Russia. However, as the com- strengthen Japan’s international role. This
petition for oil sources became severe, particularly explains why Abe has made three trips to the
due to the emergence of large economies such as Middle East since he was elected in December
China and India, particularly since China turned 2012, visiting more than a dozen of countries
from an oil exporter into a net importer in 1993, there, including Iran (Miller 2016).
Japan has increasingly pursued strengthening of
ties with the leading and influential oil producer:
Saudi Arabia. The rationale was that having a
share in the oil production would mean having a
Japan: Oil Policy 7
Conclusions BP Statistical Review of World Energy (BP) (2016). http://

www.bp.com/content/dam/bp/pdf/energy-economics/
statistical-review-2016/bp-statistical-review-of-world-
Japan has made remarkable achievements in energy-2016-full-report.pdf
ensuring the security of its oil supply over the DeWit A (2013) Abenomics and energy efficiency in
past few decades using various means, including Japan. Asia-Pacific J. 11(6), No. 2, 11 Feb, pp. 1–14.
enhancing energy efficiency and establishing size- IEA (2014) Chapter 4: emergency response systems of
individual IEA countries, Japan. Energy Suppl Secur
able strategic oil reserves and active energy diplo- 2014, pp. 271–286. https://www.iea.org/media/
macy. Largely due to these measures, together freepublications/security/EnergySupplySecurity2014_
with the development of nuclear energy, Japan’s Japan.pdf
oil consumption has shown a constant decline Index Mundi (2016) Coal imports by country. http://www.
indexmundi.com/energy.aspx?product=coal&graph=
alongside its economic growth. Japan has also imports&display=rank
become the most energy-efficient country in the International Energy Agency (IEA) (2013) Oil and gas
world today, thanks to its successful energy effi- security: Japan. OECD/IEA, Paris
ciency strategy. Japan Oil, Gas and Metals National Corporation
(JOGMEC), History. http://www.jogmec.go.jp/
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Japan has faced more uncertainties in its future Kashiwagi T et al (2004) The new direction of Japanese
energy mix: the role of nuclear will certainly be energy policy and the role of gasification. http://www.
reduced and even be phased out in the long run, gasification.org/Docs/2004_Papers/ 18KASH.pdf
Koyama K (2002) Japan’s energy strategies towards the
yet the room for Japan to future improve energy Middle East. PhD dissertation, University of Dundee
efficiency is much limited than before. Therefore, Liao JX (2008) Politics of oil behind Sino-Japanese energy
the development of renewable energy seems the security strategies, Asia paper. The Institute for Secu-
most feasible option for Japan, to safeguard its rity and Development Policy, Stockholm
Miller JB (2016) Japan’s strategic ties with Iran. 18 Feb.
energy supply and to fulfill its international com- http://studies.aljazeera.net/en/reports/2016/02/
mitment to CO2 reduction. It may be a challenging 201621864717335576.html
and costly task but will be proved as worthwhile Miyagi Y (2008) Japan’s Middle East security policy:
for the country in the long run. theory and cases. Routledge, London/New York
Nagata T (2014) Japan’s policy on energy conservation.
12 Mar. https://unfccc.int/files/bodies/awg/application/
pdf/2_japan.pdf
Ogawa J, Noda F, Yamashita Y (2010) Japan’s energy
References management policy experiences and their implications
for developing countries. https://eneken.ieej.or.jp/data/
Agency of Natural Resources and Energy (ANRE) 3357.pdf
(2012) Amended oil stockpiling act to be enforced in Oil Stockpiling Act (OSA) (1975) http://www.japaneselaw
november: for strengthening the structure for supplying translation.go.jp/law/detail/?id=65&vm=04&re=02.
oil and LP gas in the event of disaster. 30 Oct. http:// 27 Dec
www.meti.go.jp/english/press/2012/1030_01.html Okabe T (2001) Petroleum stockpile policy in Japan.
ANRE (2013) Act to partially amend the act on the rational Presentation. http://www.egcfe.ewg.apec.org/publica
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the diet and promulgated. http://www.meti.go.jp/ okabe.pdf
english/press/2013/0708_03.html Petroleum Association of Japan (PAJ) (2015) Petroleum
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summer energy conservation Campaign from June to data/paj2015.pdf
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0531_02.html post-Fukushima. Energy Policy 46:135–143
J
Japan: Natural Gas also declined severely. The lost nuclear capacity
has then been largely replaced by natural gas,
Janet Xuanli Liao making its share grow from 19 % in 2010 to
CEPMLP, University of Dundee, Dundee, 23 % in 2015 in Japan’s energy mix (BP 2016,
Scotland, UK pp. 41 and 23) (Fig. 1).
Meanwhile, there is no well-connected domes-
tic gas pipeline system in Japan nor cross border
Introduction pipelines. The existing gas pipelines are either
serving a few domestic gas fields along the west-
Natural gas is one of the most important fuels in ern coastline or linking the LNG terminals to
Japan’s primary energy supply, accounted for demand areas. The total length of gas pipelines
23 % of Japan’s total energy consumption in by 2012 was 249,786 km, of which only 4,772 km
2015, after oil (42 %) and coal (27 %). Japan has was high pressured (above 1.0 MPa) (IEA 2014,
limited natural gas reserves domestically from p. 284). Currently, there are 36 LNG receiving
numerous small fields, discovered and developed terminals in operation: 30 for imports and 6 for
by Inpex since 1979. Japan’s proved natural gas secondary supplies from imports terminals (see
reserves were 738 billion cubic feet (bcf) as of Fig. 2). With the rising demand for natural gas,
January 2015, according to the Oil and Gas Jour- two new terminals were commissioned in Japan in
nal (OGJ), and its natural gas production has also 2015, and two terminals were under construction
been low and flat for more than a decade (EIA (GIIGNL 2016).
2016). As a result, Japan relies on liquid natural
gas (LNG) imports for virtually all of its natural
gas supply and is also the world’s largest LNG Japan’s Natural Gas Supply
importer, accounting for 35 % of the global mar-
ket (BP 2016, p. 25). Since the Fukushima Daiichi As mentioned above, Japan is heavily dependent
nuclear accident in 2011, the share of nuclear on imported LNG to meet its demand due to
energy has decreased dramatically from 13 % to limited domestic natural gas production. In the
a mere 0.2 % by 2015 in Japan’s primary energy wake of the “3.11” nuclear accident, LNG pro-
supply, and its 30 % share in electricity generation vided about 50 % of Japan’s additional power
generation caused by the loss of nuclear energy,
so its imports of LNG jumped to 107 mts in 2011
I am very grateful to Dr. Tetsuo Morikawa from the
Institute of Energy Economics, Japan, for kindly providing against 95 mts in 2010. By 2015, Japan’s LNG
part of the materials used in this article. imports reached 118 mts (down from 123 mts in
DOI 10.1007/978-3-642-40871-7_82-1
2 Japan: Natural Gas
Japan: Natural Gas, 600

Fig. 1 Japan’s energy
mix, 2003–2015 (in Mts)
(Source: adapted from the 500
World Energy, various 400
years)
300
200
100
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Gas Oil Coal Nuclear Hydro renewable
䞉 LNG terminals (in operation)

䞉 LNG terminals (planned or under construction)
/ 䞉 Satellite stations (in operation or under construction, with a
total storage capacity of at least 300 m3)
䞉 Satellite stations for coastal vessels (in operation)
䞉 Satellite stations for coastal vessels (planned or under
construction)
䞉 Major pipelines 䞉 Pipelines planned or under construction
䞉 Selected route 䞉 Route for improved security
䞉 Selected route (high-pressure
- line with medium--
pressure one)
Japan: Natural Gas, Fig. 2 Japan’s gas infrastructures (Source: Morikawa 2014)
Japan: Natural Gas 3
Japan: Natural Gas,

Fig. 3 Japan’s LNG Other
[PERCENTAGE]
imports by source (Source: Nigeria Russia
adapted from the BP [PERCENTAGE] [PERCENTAGE]
Statistical Review of World
Energy 2016, p. 28.)
UAE
[PERCENTAGE]
Australia
Qatar [PERCENTAGE]
[PERCENTAGE]
PNG
[PERCENTAGE] Malaysia
[PERCENTAGE]
Brunei
[PERCENTAGE]
Indonesia
[PERCENTAGE]
2014 though), with Australia being the largest LNG prices and allowed spare capacity from the
supplier, accounting for 22 % of its total imports, supply side but have also enabled consumers to
followed by Malaysia at 18 %, Qatar at 17 %, and request for increased flexibility in the LNG market
Russia at 9 %, respectively (BP 2012, 2016) (Corbeau and Ledesma 2016).
(Fig. 3). In May 2016, Japan’s Ministry of International
Trade and Industry (MITI) proposed three princi-
ples for Japan’s future LNG trade: (1) Ensure
supply and demand stabilization, which means
Long-Term LNG Contracts and Spot/
that long-term contracts will be minimized while
Short-Term Deals
the share of short-term and spot contracts will be
increased. (2) Create more reasonable price via
Japan’s LNG import has been largely based on a
changing the destination clause and utilizing
number of long-term contracts following the tra-
reselling and arbitrage trading. (3) Pricing should
ditional way of LNG trade, and by 2013, the total
show stabilization and transparency in order to
contracted amount reached around 66 mts
reflect LNG supply and demand. MITI also
(Morikawa 2014). However, the recent few years
wanted Japan to become an LNG trading hub in
have seen an increase of Japan’s LNG imports by
Asia, engaging in price formation and dissemina-
spot and short-term deals, as they were less costly
tion (MITI 2016).
than Japan’s long-term contract prices. This led to
a triple growth of short-term and spot LNG trade
in the Asia Pacific market since 2010, as indicated
by Fig. 4 below (EIA 2016). The main reasons Regulatory Policies
behind include an oversupply in the LNG market
since 2014, with Qatar and US LNG joining the General Energy Policy
market, against China’s economic slowdown and Japan’s energy policy is principally formulated
restart of Japan’s nuclear reactors, plus the global and implemented by the Agency for Natural
falling oil prices. These have not only led to lower Resources and Energy (ANRE) under the
Japan: Natural Gas,

Fig. 4 Asia Pacific natural 2010
gas trade by country and Japan
contract type, 2010–2014 2014
(bcf/d) (Source: EIA 2016) Long term Short term
2010
South Korea
2014
2010
China
2014
2010
India
2014
2010
Taiwan
2014
0 2 4 6 8 10 12
Ministry of Economy, Trade and Industry Under which, about 60 % of the gas market was
(METI). Prior to the Fukushima accident, Japan liberalized, and consumers with more than 0.1
lay its principal energy policy in the Basic Energy million m3 demand could choose their suppliers
Plan of 2010, which proposed to increase nuclear (Morikawa 2014).
energy to 50 % in Japan’s power generation by In June 2015, the Japanese Diet further enacted
2030, to help the country tackle both energy inse- two bills to finalize the liberalization of the elec-
curity and global warming. Since the Fukushima tricity and city gas industries, which led to full
disaster, an intensive “national discussion” has liberalization of Japan’s electricity market in April
been conducted over the role of nuclear power in 2016, and the retail market for natural gas will
Japan’s future energy mix (Morikawa 2014). On follow suit in April 2017. The purpose of the
16 July 2015, MITI published a “Long-Term reform was to completely separate power trans-
Energy Supply and Demand Outlook” to reset mission and distribution sections from the
Japan’s energy structure in 2030. Adding the nation’s nine major power firms, which had
“safety” factor into Japan’s old “Three enjoyed regional monopolies. It was also aimed
Es” – energy security, economic efficiency, and to increase competition among power suppliers
environmental protection – the new plan has beyond traditionally demarcated service areas
reduced the share of nuclear power to 20–22 % and to make it easier to transmit electricity gener-
in Japan’s power generation by 2030, with LNG ated from renewable energy sources (JT 2015;
accounting for 27 %, followed by coal (26 %) and Morikawa 2016).
renewables (22–24 %) (METI 2015).
Gas Utilities Industry Law and Gas Market Supply and Demand Outlook
Liberalization
Japan’s city gas industry is governed by the Gas According to IEEJ prediction in 2015, Japan’s
Utilities Industry Law, which was first formulated primary energy consumption by 2030 would be
in 1957. The Law had not been amended signifi- about 489 million kl (mkl), against an annual
cantly until the 1990s. However, as gas market economic growth at 1.7 % in average, compared
liberalization is being implemented, the Law was with 361 mkl in 2013. Among Japan would have
amended in 1995, 1999, and 2003 to accommo- 24.3 % of energy self-sufficiency (with 13–14 %
date the expansion of liberalization coverage. of renewable and 10–11 % of nuclear), and the
Japan: Natural Gas 5
Mtoe
500
450
400
350
300
250
200
150
100
50
0
2011 2020 2030 2040
Coal Oil Natural Gas Nuclear Others
Japan: Natural Gas, Fig. 5 Japan’s primary energy supply outlook (Source: Morikawa 2014)
rest would be supplied by oil (32 %), coal (25 %) reach 21 % and 29 % in 2020 and 8 % and 38 % in
and natural gas (18 %). Energy efficiency was 2040, respectively (Morikawa 2014) (Fig. 5).
expected to be improved by 35 % by 2030
(Toyoda 2015).
In terms of Japan’s future LNG consumption,
Challenges for Supply Security
the IEA predicted a constant demand at about
100 bcm (74 mtpa) until 2040, while METI
Generally speaking, Japan’s LNG imports have
announced in 2015 that Japan’s LNG imports
not experienced any dramatic supply disruptions
would drop to 62 mtpa by 2030, assuming a
so far. Nevertheless, it is not completely free from
significant restart of nuclear. Contracted LNG
supply shortage. Recent examples include the
supply was believed to peak by 2017 at 90 mtpa
under-delivery from Indonesia in the 2000s
and then decline progressively to 35 mtpa by 2030
onward, due to lack of transparency and poor
(Corbeau and Ledesma 2016). An IEEJ source
coordination of legislation across government
forecast is that Japan’s power generation will
(IEA 2008: 26) and a shutdown for 8 months of
increase by 0.5 %/year to reach 1,192 TWh in
Malaysia’s Tiga project in 2003. Both of these
2040, while nuclear situation is expected to influ-
caused certain problems for Japan’s LNG supply
ence natural gas supply significantly. The share of
(IEA 2004).
natural gas in total energy mix is expected to
Another case was the de facto nationalization
decrease toward 2020 since the partial nuclear
of Russia’s Sakhalin 2, where Russia took over
comeback will suppress the load factor of
control of its first LNG project. With Russia’s
gas-fired power plants. Nevertheless, natural gas
dissatisfaction on the production-sharing agree-
demand will increase again after 2020 to reach
ment terms, the project’s cost escalation and envi-
107 mtoe (119 bcm) by 2040 m. IEEJ also antic-
ronmental violations became a major point of
ipates that nuclear will replace natural gas for
contention between the Russian authorities and
power generation to a certain extent toward
Sakhalin Energy (Krysiek 2007: 20). Under grow-
2020, and the reverse is to happen after 2020.
ing pressure, Sakhalin Energy agreed to hand over
The shares of nuclear and natural gas should also
the controlling stake to Gazprom in 2006.
Recognizing the local concerns over environmen- GIIGNL (2016) The LNG industry in 2015, Annual report
tal damages, Itoh argues that bringing this issue to 2016. http://www.giignl.org/sites/default/files/PUB
LIC_AREA/Publications/giignl_2016annualreport.pdf
the forefront during the criticism of Sakhalin International Energy Agency (IEA) (2004) Security of gas
Energy was a pretext for Gazprom to be included supply in open markets: LNG and power at a turning
in the project (Itoh 2011: 53). Because of this point. OECD/IEA, Paris
series of actions, the original project start-up was International Energy Agency (IEA) (2008) Energy policy
review of Indonesia. OECD/IEA, Paris
delayed about 2 years until 2009. International Energy Agency (IEA) (2014) Energy supply
According to the Medium- and Long-Term security 2014. OECD/IEA, Paris
Natural Gas Outlook 2016 by Cedigaz, the inter- Itoh S (2011) Russia looks East – energy markets and
national gas association, natural gas will play an geopolitics in Northeast Asia. Center for Strategic and
International Studies
increasing role as a bridge fuel toward a longer- The Japan Times (JT) (2015) Electricity and gas liberali-
term, increasingly renewable-based energy sys- zation. Editorial, 5 July
tem. The Outlook believed that “Looking forward Krysiek TF (2007) Agreements from another era – production
to 2035, the total primary energy consumption is sharing agreements in Putin’s Russia, 2000–2007. Oxford
Institute for Energy Studies. http://www.oxfordenergy.
forecast to grow at a moderate rate of 1 %/year in a org/wpcms/wp-content/uploads/2010/11/WPM34-Agree
context of increased energy efficiency. In this mentsFromAnotherEraProductionSharingAgreementsin
context, gas stands as the fastest-growing fossil PutinsRussia2000-2007-TimothyFentonKrysiek-2007.
fuel over 2014–35 (+1.6 %/year). In contrast, the pdf
Ministry of Economy, Trade and Industry (MITI) (2015)
growth of oil and coal is expected to slow sharply, Long-term energy supply and demand outlook. http://
with respective annual rates of 0.2 % and 0.1 %.” www.meti.go.jp/english/press/2015/pdf/0716_01a.pdf
Gas will therefore increase its relative share in the Ministry of Economy, Trade and Industry (MITI)
global primary energy supply to 23.9 % in 2035 (2016) Strategy for LNG market development: chal-
lenges and countermeasures towards the creation of
from 21.4 % in 2013 (OGJ 2016). flexible LNG market and developing an LNG trading
Hub in Japan. May 2nd. http://www.meti.go.jp/english/
press/2016/pdf/0502_01a.pdf
References Morikawa T (2014) Japan’s Gas Industry. An unpublished
paper
Morikawa T (2016) International and domestic natural gas
BP Statistical Review of World Energy (2012) http://www. situation. IEEJ e-Newsletter, No. 77, 19 January. p. 6
bp.com/content/dam/bp-country/de_at/pdfs/20120620_ Oil and Gas Journal (OGJ) (2016) Cedigaz: global gas
statistical_review_of_world_energy_full_report_2012. demand to rise 1.6%/year over 2014–35. 1 July. http://
pdf www.ogj.com/articles/2016/07/cedigaz-global-gas-dema
BP Statistical Review of World Energy (2016) http://www. nd-to-rise-1-6-year-over-2014-35.html
bp.com/content/dam/bp/pdf/energy-economics/statis U.S. Energy Information Administration (EIA)
tical-review-2016/bp-statistical-review-of-world-energy- (2016) International energy outlook 2016, Chapter 3,
2016-full-report.pdf “Natural Gas”. http://www.eia.gov/forecasts/ieo/nat_
Corbeau A-S, Ledesma D (2016) LNG markets in transition: gas.cfm
the great reconfiguration. https://www.kapsarc.org/wp-
content/uploads/2016/05/LNG-Markets-in-Transition_
A-Corbeau-and-D-Ledesma.pdf
J
Japan: Nuclear Policy Initiation of Japan’s Nuclear Industry
Janet Xuanli Liao Japan’s first set of nuclear laws was introduced
CEPMLP, University of Dundee, Dundee, UK in 1955, with three set of decrees: the Atomic
Energy Basic Act, the Atomic Energy Commission
Establishment Law, and the Law to introduce a
Keywords partial revision to the Prime Minister’s Office
Japan; METI; Nuclear energy; Fukushima; Establishment Law. The Atomic Energy Basic
Low carbon Law explicitly set up the principle of research,
development, and use of nuclear energy for peace-
ful purposes, which was of special significance as
Introduction
the peaceful use of nuclear energy had not become
an international norm at the time (JAEA 2010: 1).
Japan started to develop nuclear energy from the
Under the three principles of nuclear power
1950s, despite its painful experience at the end of
use – democratic methods, independent manage-
WWII. After a few decades of research and devel-
ment, and transparency – the Japanese govern-
opment, Japan became the world’s third biggest
ment established several nuclear energy-related
user of nuclear power by 2010, after the United
organizations in 1956, including the Atomic
States and France, with 55 reactors nationally that
Energy Commission (AEC) (aimed to promoted
generated a third of Japan’s total electricity
nuclear power development), Japan Atomic
demands (METI 2006a: 5). Prior to the
Energy Research Institute (JAERI), and the
Fukushima nuclear accident in March 2011,
Atomic Fuel Corporation. Prior to this, a research
Japan’s Ministry of Economy, Trade and Industry
program for peaceful use of nuclear energy was
(METI) planned to make nuclear power counting
already launched by Tokyo in 1954, involving a
for 30–40% in its energy mix by 2030, and for
budget of ¥235 million, plus a 15 million yen
60% by 2100 (WNA 2015). However, such an
funding for uranium resource survey (JAEA
ambitious strategy became unattainable after the
2010: 2). In 1957, a research reactor brought
Fukushima accident, as Japan was forced to shut
from the United States began to operate, which
down all of its nuclear reactors by September
set up the basis for Japan’s nuclear power devel-
2013 (BBC 2013) (see Fig. 1): the role of nuclear
opment. In July 1966, Japan’s first imported com-
seems still uncertain in Japan’s future energy mix.
mercial nuclear power reactor (from the United
Kingdom), Tokai-1, became operational until
March 1998 (WNA 2012: 2).
DOI 10.1007/978-3-642-40871-7_83-1
2 Japan: Nuclear Policy
Japan: Nuclear Policy, Fig. 1 Japan’s net electricity generation by fuel, 2010–2015 (Source: Patel 2015)
However, Japan’s nuclear power industry only hand, the electric power utilities were fully occu-
started to make real progress from the late 1970s, pied with making immediate responses to deregu-
due to three main reasons: (1) public objection to lation, and thus also tended to delay high-risk,
and distrust of nuclear power; (2) Japan’s limited long-term investment strategies. As a result,
capacity of nuclear power production; and (3) the nuclear plant makers reduced their investments in
two oil crises in the 1970s. Against this back- technology development and focused on survival
ground, the 1970s–1980s had witnessed a high strategies, and there were only six new reactors
speed in the construction of nuclear reactors: built in the 1990s (METI 2006b: 7).
there were 41 new reactors built between 1970
and 1989 (37 became operational), in contrast to
the seven new reactors that were built during the Japan’s Nuclear Power in the New
1960s (two became operational) (Aldrich 2012: 4). Century
Unfortunately, such phenomena did not last
long. Following the Three Mile Island accident in Japan resumed its attention to nuclear power
the United States in 1979 and the 1986 Chernobyl development in recent years, for the purpose of
disaster in the former Soviet Union, the widespread “achieving a stable energy supply while
public opposition forced the United States and addressing environmental issues.” Indeed, faced
other Western countries to withdraw from the with skyrocketing oil prices in the new century
nuclear fuel cycle and the construction of new and constant growth of oil demand from the
nuclear power plants. In the meantime, the stable emerging economies, METI was highly
and low oil prices throughout the 1980s made concerned about Japan’s “lowest ratio of energy
energy security less challenging, together with self-sufficiency” among the OECD countries:
Japan’s energy market liberalization and enhanced discounting nuclear power, Japan could only rely
energy efficiency (METI 2006b: 5). This change on 4% of domestic energy supply, in contrast to its
had, to a certain extent, hindered the development 40% self-reliance in food (METI 2006b: 7;
of nuclear energy. On the one hand, the govern- Aldrich 2012: 4).
ment began to make deregulation of the electricity In 2001, the Nuclear and Industrial Safety
market as its priority and avoided taking initiatives Agency (NISA) was created as a nuclear regula-
in long term nuclear energy strategy. On the other tory body under METI. In the following year,
Japan: Nuclear Policy 3
Tokyo announced that it would increase reliance Nuclear Power After the Fukushima
on nuclear energy substantially in order to achieve
greenhouse gas emission reduction goals set by The devastating earthquake and tsunami on
the Kyoto Protocol (WNA 2012: 3). In 2004, 11 March 2011, which hit the Fukushima Daiichi
Japan’s Atomic Industrial Forum (JAIF) released nuclear power plant (owned by TEPCO) and
a report on the future prospects for nuclear power, broke its four reactors, has caused huge damage
suggesting that the country’s nuclear capacity to Japan’s nuclear industry. In the immediate after-
would reach 90GWe by 2050, doubling both math, the Cabinet under Prime Minister Naoto
nuclear energy capacity and the share in the Kan decided to eliminate Japan’s reliance on
energy mix (WNA 2012: 3). In October 2005, nuclear energy, in line with the public opposition
Tokyo further issued a Framework for Nuclear to nuclear power. Tokyo was also forced to shut
Energy Policy, which was the first long-term down the remaining 50 nuclear reactors for safety
plan drafted after the Atomic Energy Commission checks eventually. By early May 2012, all the
(AEC) and was incorporated into the Cabinet nuclear reactors were offline and Japan was
Office. With shared goals set among the Cabinet nuclear-free for the first time since the 1970s (JP
Office, the Ministry of Education, Culture, Sports, 2012). Although two reactors in Oi near Osaka
Science and Technology (MEXT) and the METI, area were restarted in July that year; they were
the Framework became an extremely strong shut down again for maintenance in September
monolith (METI 2006b: 8). 2013 (BBC 2013).
Soon after, the Nuclear Energy Subcommittee On 14 September 2012, the Cabinet under
(NES) of the METI Advisory Committee deliber- Prime Minister Yoshihiko Noda officially adopted
ated concrete actions for achieving the basic a new long-term energy strategy calling for elimi-
goals: (1) nuclear power generation would con- nation of nuclear power dependency by the end of
tinue meeting at least 30–40% of electricity sup- the 2030s. Also in September, the Nuclear Regula-
ply even after 2030; (2) the nuclear fuel cycle tion Authority (NRA) was established under the
should be further promoted; and (3) aiming at Ministry of the Environment to replace NISA,
commercializing practical FBR cycle (METI which was criticized for its lack of independence
2006a: 1). The government policy was supported under METI’s heavy influence (Fukasawa and
by public opinion as well. According to a survey Okusaki 2012). In November 2013, NRA further
conducted in December 2005, despite the reserva- announced new safety standards for nuclear
tions held by 66% over nuclear safety, 75% of the facilities but no indication was given on when to
responses supported to further increase nuclear complete the safety checks for all the reactors
power (to 55%) or to maintain it at the current (Kyodo 2013).
level (20%) (Machi 2006: 57). On the other hand, appeals to restarting nuclear
In April 2007 the government selected reactors have been made by energy experts, gov-
Mitsubishi Heavy Industries (MHI) as the core ernment bureaucrats at the METI, and, of course,
company to develop a new generation of fast by the nuclear industry itself. Their key concerns
breeder reactors (FBR) to further advance its were that it would be unrealistic for Japan to phase
nuclear power industry. In 2010, METI again out nuclear energy without instigating new prob-
issued an electricity supply plan showing that lems, such as likely electricity rate hikes and dif-
nuclear capacity would grow by 12.94 GWe by ficulties in maintaining the balance between
2019, and the share of nuclear electricity supply energy supply and low carbon commitments.
would grow from 2007s depressed 262 TWh Indeed, nuclear power had played a significant
(25.4%) levels to about 455 TWh (41%) in 2019 role in helping to reach Japan’s target on green-
(WNA 2012: 4). house gas (GHG) reduction, which had been set to
fall to 1990 levels, that is 25%, by 2020, at the
Copenhagen COP in 2009. Yet against the
changed scenario of nuclear-free energy, Tokyo
had to replace its initial target with a 3.8% reduc- Kagoshima Prefecture, in August and November
tion of GHG by 2020 from 2005 levels at the 2013 2015, after a 4-year suspension. According to
Warsaw COP, meaning a 3.1% increase from the Yoshihide Suga, chief cabinet secretary, “it is
1990 levels (Blumenthal et al. 2014). Meanwhile, important for our energy policy to push forward
as shown by Fig. 2, nuclear power was believed to restart of reactors that are deemed safe” (FT 2015).
be able to keep the cost of Japan’s power genera- In February 2016, NRA further cleared the
tion at lower levels. According to a report by the No. 3 and 4 reactors at Takahama plant (under
Financial Times, since 2011 the average price of the Kansai Electric Power Co.) in Fukui Prefec-
electricity in Japan to offices and factories had ture for a resumption of operations. However, due
risen about 29% and the price for households by to the objection of the local residents, in March
roughly 19% (FT 2015). 2016, the Fukui District Court ordered Kansai
Despite continuing opposition by a majority of Electric to keep the two reactors offline. But in
the Japanese public, Tokyo decided to restart early April 2016, the Fukuoka High Court
No. 1 and No. 2 reactors at the Kyushu Electric rejected a lawsuit that would have suspended
Power Co.’s Sendai nuclear power plant, in operation of the Sendai plants, and the Fukui
court later lifted its own injunction as well.
These mixed rulings from the regional courts
Cost of power generation could suggest how divided Japan remains on the
¥ per kWh Nuclear nuclear issue. On 20 June 2016, the NRA
operational level
approved 20-year license extensions for Kansai
13 Electric Power Co.’s Takahama 1 and 2. Since
None
Low 12 both of the reactors had been in service for more
than 40 years, they are required to take additional
Mid 11 safety measures and are not expected to be revived
High earlier than autumn 2019 (Asahi 2016).
10
Full
In April 2016, Shikoku Electric Power Co. also
9 obtained NRA’s approval to restart its No 3 reactor
8 in Ikata plant, Ehime Prefecture, and fuel-loading
2010 11 12 13 14 15*
work was started from 24 June for it to be opera-
tional by late July (Yomiuri 2016). Moreover, a
Japan: Nuclear Policy, Fig. 2 Cost of power generation few more nuclear reactors will be restarted shortly
(Source: FT, 22 October 2014) (NEI 2016), which is opposed by the Japanese
Japan: Nuclear Policy, 600

Fig. 3 Japan’s energy mix,
1994–2015 (mtse) 500
(Sources: adapted from the
400
World Energy, various
years)
300
200
100
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
oil Natural Gas Coal Hydro Nuclear Energy Renewables

Japan: Nuclear Policy 5
public but seems necessary for Japan to ensure its Japan’s power generation in 2030, against the
mid- and long-term energy demands. As shown in previous target of 50%, and the share of LNG is
Fig. 3, by 2015, renewable energy only accounted set at 27%, followed by coal at 26% and renew-
for 3% in Japan’s primary energy consumption, ables at 22–24% (METI 2015). However, whether
far behind the Fukushima nuclear capacity at 13% nuclear energy can be phased out completely
against its total primary energy. Therefore, until beyond 2030 will be largely dependent on the
renewables can overtake the role played by development of the renewable energy, which has
nuclear energy, Japan will be unable to meet the faced a lot of uncertainties, not least, technologi-
challenges posed by both economic development cally and financially.
and by tackling the climate change without the
support of nuclear energy.
References
Conclusions Aldrich DP (2012) Post-crisis Japanese nuclear policy:
from top-down directives to bottom-up activism. Anal-
The above discussion has shown that nuclear ysis from the East-West Center, No. 103. Jan. www.
power has been given special attention by the eastwestcenter.org/download/4342/33250/api103.pdf
Asahi Shimbun (Asahi) (2016) Editorial: license renewal of
Japanese government to help gain the country’s aging reactors betrays promise, fuels concerns. 21 June
energy independence. Since the 1970s, Tokyo has BBC (2013) Japan halts last nuclear reactor at Ohi. 15 Sept.
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extent, the carbon-free nuclear energy had also Financial Times (FT) (2014) Japan: power switch weighs
on Abe. 22 Oct
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renewable energy. salmon.com/inla_2012/10147.pdf
Japan Atomic Energy Agency (JAEA) (2010) Review and
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government was forced to revisit its nuclear strat- proliferation. Sept. www.jaea.go.jp/04/np/activity/
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out nuclear energy in Japan’s energy mix given Japan Times (JT) (2012) Japan nuke-free for first time
since ’70. 5 May
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past 5 years, there have been intensive national trust on quake anniversary. BBC Energy Monitory.
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few decades, in order to ensure its energy self- Nuclear Energy National Plan’. Report by METI’s
sufficiency and to avoid severe economic penal- Nuclear Energy Subcommittee. June. Available at http://
www.enecho.meti.go.jp/english/report/rikkokugaiyou.pdf
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It has reduced nuclear power to 20–22% in
Nuclear Energy Institute (NEI) (2016) Japan nuclear World Nuclear Association (WNA) (2012) Nuclear power
update. 5 July. http://www.nei.org/News-Media/News/ in Japan. http://www.world-nuctablear.org/info/inf79.
Japan-Nuclear-Update html. Updated 30 Sept 2012
Patel S (2015) Sendai-1 reactor restart marks Japan’s WNA (2015) Nuclear power in Japan. http://www.world-
nuclear rebirth. 11 Aug. http://www.powermag.com/ nuclear.org/info/Country-Profiles/Countries-G-N/Japan/.
sendai-1-reactor-restart-marks-japans-nuclear-rebirth/ Updated 23 July 2015
Yomiuri Shimbun (Yomiuri) (2016) Fuel-loading work
begins at Ikata reactor. 24 June
B
Brazil: Energy Policy Need of Nonrenewable and Renewable

Resources
Lívia Amorim
Researcher at FGV CERI, Rio de Janeiro, Brazil The energy mix relies 41 % on renewables and
59 % on nonrenewables (EPE 2014). Total pri-
mary energy consumption is 12.095 quadrillion
General Information on Brazil Btu, 8th largest consumer, and production is 9.758
095 quadrillion Btu, 10th largest producer (EIA
Brazil is the 5th largest country of the world and 2012). In 2014, the growth of energy supply was
the 1st in South America with a total area of 80 % driven by oil and products and natural gas
8,515,767.049 km2 (IBGE 2014). In 2014, it had (Table 1).
a GDP of US$ 1.73 trillion and total population of According to 2013 data, the industry and trans-
202,033,670 inhabitants, being 85.43 % concen- portation were responsible for approximately
trated in urban areas and 14.57 % in rural areas. 66 % of total energy consumption in Brazil
Brazilian HDI (2013) is 0.744 (US HDI is 0.914) (EPE 2014), but industrial consumption reduced
and unemployment level in 2015 is 7.9 %. The 0,5 % and is expected to shorten more due to the
GDP per capita ranges US$ 11.199 (IBGE 2014). economic crisis the country is facing.
The main economic activities are agriculture According to data published by the World
and extractive industries. Bank, the last balance of energy imports for Brazil
Former Portuguese colony, Brazil is a secular was made in 2011 and the net percentage of
presidential republic with a strong catholic tradi- energy use was 8 % at the time (World Bank
tion. The political system is multipartidary and the 2015).
legislative power is bicameral (congress and sen- The electricity supply is currently compounded
ate). The country lived a military dictatorship by different sources, being hydropower the one
from 1964 to 1985 and on the last twelve years with the highest share on the system (62,21 %).
is being governed by the left-oriented party Besides hydro, Brazil also has installed capacity
PT. Dilma Rousseff was the former president of of fossil thermal power plants (18,07 %), wind
the Ministry of Mines and Energy. (4,05 %), solar (0,01 %), biomass (8,61 %), and
nuclear (1,37 %). Also, 5,65 % of the supply
comes from electricity imports from Paraguay,
Argentina, Venezuela, and Uruguay (ANEEL
2015).

DOI 10.1007/978-3-642-40871-7_84-1
2 Brazil: Energy Policy
Brazil: Energy Policy, Table 1 Brazilian Energy Mix emissions or of a specific source in the energy
Source 2013 2012 matrix (wind, gas, etc.).
Renewables 121.5 119.8
Electricity 37.1 39.2
Sugarcane biomass 47.6 43.6 Regulatory Framework
Firewood and charcoal 24.6 25.7
Other renewables 12.3 11.4 Petroleum
Nonrenewables 174.7 163.6 As in most countries, the federal government
Oil 116.5 111.4 owns the resource in place and since 1995 (after
Natural gas 37.8 32.6 the Constitutional Amendment no. 9/95) can
Coal 16.5 15.3 award licenses to private companies to explore
Uranium (U3O8) 3.9 4.3
and produce oil and gas in the country. Currently,
Source: EPE. National Energy Balance. 2014 after the pre-salt discovery and a change in the
legal framework, there are three E&P regimes in
the country: (a) concession regime, for areas out-
side of the pre-salt polygon; (b) production shar-
Brazil: Energy Policy, Table 2 Brazilian Energy Policy ing regime for areas in the pre-salt polygon and
Goals other strategic areas, where Petrobras has the
Principles and objectives of the National Energy Policy exclusive operation and minimum participation
Preserve the national interest of 30 % on the blocks; and (c) onerous assign-
Promote the development and the growth of labor market ment to Petrobras of blocks on the pre-salt area
and the maximization of resource recovery (up to a limit of five billion boe.
Protect consumers’ interest, including in respect to price, With regard to the petroleum policy and regu-
quality, and availability of products lation, the following institutional bodies are
Protect the environment and promote the conservation of involved (Table 3):
energy
Imports and exports of oil and gas are by Con-
Guarantee the supply of oil products throughout the
national territory stitution a monopoly of the Federal Union and
Promote the increase of natural gas use on an economic require a license to be made by a private party.
basis Distribution of petroleum requires an authoriza-
Identify the most adequate solution for the supply of tion and is regulated by ANP, except price. Pipe-
electricity in the various regions of the country line natural gas distribution is regulated by local
Utilize alternative energy sources through the economic states and is remunerated by tariff set by an inde-
use of available inputs and applicable technologies
Promote free competition pendent regulator (for the states which have) or by
Attract investments in energy production other body defined by law. Petrobras, the Brazil-
Promote the growth of the country’s competitiveness in ian NOC, is an important vehicle of energy policy
the international market implementation in the country. Although not for-
mally entitled to play such role, as a “national
champion” controlled by the federal government,
Petrobras has been – and continues to be – used to
Energy Policy Conception of Brazil execute relevant policies in the sector, as subsidize
gasoline prices or natural gas prices supplied for
The general framework for Brazil’s energy policy electricity generation (see information on Ther-
is established by Law no. 9.478/97 (Petroleum moelectricity Priority Program (PPT)).
Act) (Table 2):
These are the governing principles of Brazilian Uranium
energy policy. Besides that, there is not an official In Brazil, the exploration of all the activities
document that sets specific goals to be reached by encompassed by nuclear power value chain is
the country’s energy policy, as a percentage of also exclusive of the federal government, from
Brazil: Energy Policy 3
Brazil: Energy Policy, Table 3 Institutional Bodies enrolled in Petroleum regulation in Brazil
Source Role/function
Ministry of Mines and Energy (MME) The ministry has several competences, represents the central government
on E&P awarding contracts, sets up the level of local content required, the
minimum percentage of the Union on the profit oil
National Council for Energy Policy CNPE is a council linked to the presidency and shall propose actions to
(CNPE) drive the energy policies of the country. One of the main roles of CNPE is to
define the rhythm and the content – the blocks – of the E&P bidding rounds
in the country
National Agency of Petroleum, Natural ANP is the independent regulator for oil and gas upstream, midstream, and
Gas, and Biofuels (ANP) part of the downstream in Brazil. Besides other roles, ANP is responsible
for implementing the country’s energy policy, granting authorization for
some activities in the chain (e.g., natural gas processing and
commercialization) and more recently (after the Natural Gas Act – Law
11.909/09) to establish transport pipelines tariffs
Pre-salt Petroleum SA (PPSA) PPSA is the state-owned company created to represent the Union’s
interests on the production sharing contracts. The company has veto
powers on the operating committee of the PSCs and is also responsible for
auditing the costs submitted by the operator to be recovered on the cost oil
enrichment to mining and nuclear electricity gen- term. The contracts known as CCEAR are signed
eration. Currently, exploitation of uranium is del- between the seller (generator) and the buyer
egated to the state-owned company Brazilian (distribution company) and normally are from
Nuclear Industries (INB). Nuclear electricity gen- 15 to 30 years in length. The Brazilian Electricity
eration is exclusively operated by Eletronuclear, a Regulatory Agency (ANEEL) regulates the con-
subsidiary of Eletrobras. Brazil has now three tract. For hydropower, the generators receive the
nuclear power plants: Angra I, Angra II, and price bided in the auction and shall supply a fixed
Angra III. amount of electricity. For thermal power, the seller
receives a two-part tariff: (i) a fixed revenue which
remunerates the capital cost and pays for avail-
Electricity
ability of the plant for dispatch and (ii) a variable
All the electricity activities (generation, transmis-
part, which passes through the O&M variable
sion, distribution, and commercialization) are reg-
costs and fuel costs.
ulated by the federal government. Transmission
Brazil is a wide country and the electricity
and distribution are granted under a concession
system installed capacity is 136,341.49 MW
regime and the concessionaires are remunerated
(ANEEL 2015). The country is connected from
by tariff.
north to south by an interconnected transmission
There are two “environments” to trade electric-
system that lengths 116,767.7 km, denominated
ity in Brazil, the so-called “Regulated commer-
“interconnected national grid,” and known under
cialization environment” (acronym in Portuguese
the acronym SIN. Such aspect of the system
ACR) and the free trade environment (acronym in
allows for the optimization of the dispatch of the
Portuguese ACL). Under the free trade environ-
resources available. The system is operated by the
ment, suppliers (generators or not) are free to
non-lucrative operator ONS which is responsible
bilaterally sell electricity under a negotiated
for coordinating the operation of the grid. The
price and have open paid access to the transmis-
following map shows the existing and
sion and distribution grid. Under the ACR, the
projected – 2015’s horizon – gridlines (Fig. 1):
government organizes auctions every year in
order to buy electricity to meet the demand of
the distribution companies (DISCOs) on the long
4 Brazil: Energy Policy
Brazil: Energy Policy, Fig. 1 Brazilian transmission grid (Source: Brazilian Transmission Grid. ONS. Available at:
http://www.ons.org.br/conheca_sistema/mapas_sin.aspx)
International Aspects Another important international energy-related

initiative that Brazil is involved is the Initiative for
On what relates to nuclear power, Brazil is a Integration of the Regional Infrastructure of South
member of the International Atomic Energy America (IIRSA), launched in 2000. IIRSA
Agency (IAEA) since 1957. gathers 12 Latin American countries toward inte-
The country is also a signing party to gration through transportation, energy, and tele-
Mercosur, established by the Treaty of Asuncion communication projects. IIRSA aims to promote
in 199. Among other principles, the Treaty pro- coordination and integration between the coun-
vides that the country will work together to elim- tries also by the legal and regulatory framework
inate physical, commercial, and other political- involved in binational/multinational investments
regulatory barriers to promote the free trade of in the region.
goods and services between the member states
(Argentina, Brazil, Paraguay, Uruguay, and
Venezuela).
Brazil: Energy Policy 5
Concluding Statement Historically reliant on hydropower generation,

due to environmental and social restrictions, Bra-
Brazil is currently facing a deep and severe polit- zil is not investing on large reservoir hydropower
ical and economic crisis, with a strong and direct plants. As a result, the need for sources which are
impact over energy activities in the country. The firm and easily dispatchable is growing. Due to
oil and gas sector is one of the most affected by the the increase in energy prices, natural gas (LNG) is
corruption scandal involving Petrobras and its rising as a competitive option for electricity gen-
contractors. On the other side, the power sector eration. The country has now three LNG terminals
went from a threat of shortage in supply in 2014 in operation, all belonging to Petrobras. After the
and 2015 – a blackout – to a scenario of excess two last electricity auctions to add new capacity to
supply in the second half of 2015 and 2016. Also, the system, three large thermal LNG plants have
early 2015, the country experienced a substantial been contracted (approximately 3850 MW) and
rise in electricity tariffs for end consumers (up to three new LNG terminals. This is also a challenge
70 %) as part of the so-called “tariff realism” to the country, which will have to redesign con-
policy. tracts and adapt system operation rules to this new
This dramatic scenario is calling for regulatory reality.
reforms in Brazil and for incentives to attract
investors. Recent announcements by the govern-
ment anticipate that there might be changes on the
References
pre-salt legal framework, especially with regard to
Petrobras’s exclusive right to conduce operations ANEEL (2015) BIG. Databasis of Electricity Generation.
(and 30 % minimum share) and to local content Available on: http://www.aneel.gov.br/aplicacoes/
rules (to be adjusted to levels more realistic to the capacidadebrasil/Combustivel.cfm. Accessed Jan 2016
pace of domestic industry development). Further- IBGE (2014) Available on: http://www.ibge.gov.br/home/.
Accessed Jan 2016
more, Petrobras announced the sale of important EIA (2012) Brazil Country Analysis. Avaliable on: https://
assets, such as the thermal power plants and par- www.eia.gov/beta/international/analysis.cfm?iso=BRA
ticipation on the distribution companies EPE (2014) Brazilian Energy Balance 2013. Available on:
(Petrobras has now participation on 18 of the https://ben.epe.gov.br/downloads/Relatorio_Final_BEN_
2014.pdf
27 existing gas distribution companies in Brazil). The Natural Gas Act. Law no. 11.909/09
The market also speculates that Petrobras will sell The Petroleum Act. Law no. 9.478/97
part of or all the natural gas transportation assets. The Power Sector Act. Law no. 10.848/04
This movement can be an important change to the Tolmasquim M (2011) Novo Modelo do Setor Elétrico
Brasileiro. Editora Synergia, Rio de Janeiro
local market, since Petrobras continues to be a de World Bank (2015) Data. Energy imports. Available on:
facto monopolist, even after the opening of the http://data.worldbank.org/indicator/EG.IMP.CONS.ZS.
market in 1995. Accessed Jan 2016
Finally, with regard to electricity generation,
the country is undergoing a considerable change.
DOI 10.1007/978-3-642-40871-7_88-1
Coal Bed Methane (CBM)

Dipak Ranjan Datta*
Geological Survey of India (GSI), Kolkata, India
Coal Bed Methane, in short, well known as CBM, is actually methane (CH4) gas produced during formation
of coal and is stored within coal beds – stratified sedimentary deposit consisting predominantly of
hydrocarbon derived from plant debris of geological past through a process called coalification (details
in) – occurring at considerable depth under sediment load pressure. In the past methane gas within coal was
considered a hazardous one causing so many fire accidents while mining out coal from underground mines
as it is highly combustible, and the miners used to adopt so many preventive measures to avoid fire accident
for safe mining. In the recent past around the 1990s, a new technology is developed to extract methane gas
from coal beds before mining out coal deposit. At the same time having significant heat value, methane gas,
thus extracted, is utilized as a nonconventional energy resource which is otherwise very much eco-friendly.
Thus the new technology played a dual purpose – eliminating chances of fire accident from the hazardous
gas and discovering sources of alternate energy resources partly fulfilling the demand of the energy crisis.
This way it has attracted attention of geoscientists of the world who were deeply engaged in the develop-
ment, evaluation, and exploitation of CBM. USA, Australia, Canada, and China took the leading role in this
line and became successful and came out with the commercial production within a short time.
The amount of coal bed methane (CBM) entrapped in a coal bed is a joint function of several geological
parameters. Coal bed being a stratified deposit occurs in association with other sedimentary rocks
(sandstone, shale, siltstone, etc.) and behaves mostly like a tabular sheet/lensoidal body having certain
thickness and spreading over a relatively extensive area occurring at some depth from the ground level.
This type of coal bed with a minimum thickness and having economic viability is termed as “coal seam.”
The quantity of methane gas generated and stored in a coal seam is a complicated and complex process
which is mainly controlled by depth of occurrence of the seam, its thickness, geometry (lateral behavior
characteristics), rank (stage of coalification process) and petrographic composition of coal seams derived
from detailed analysis under microscope, cleat properties (cracks/fractures mostly developed during
coalification), etc. (Spears and Caswell 1986; Tremain et al. 1991; Laubach et al. 1998).
A coal seam characteristically performs mainly three significant roles with respect to CBM – it
generates methane gas, stores the gas within its body, and allows to transmit it through the coal bed.
Thus a coal bed is a unique reservoir having three major functions as mentioned above and also
characterized by excessive storing capacity which is three to seven times that of any other conventional
reservoir of the same dimension (Chandra 1997).
For better understanding the controls of CBM which are very much essential for proper and systematic
evaluation of CBM potentiality of an area forming part of the process of CBM exploration, these may be
described one by one in brief.
Generation of methane is intimately associated with the coal forming process and takes place in two
successive stages during coalification. These two significant stages are (1) biogenic and
(2) thermogenic. Their products are known as biogenic and thermogenic methane. The biogenic methane
along with other compounds of negligible quantity like CO2, H2S, N2O, N2, etc. evolves in this first stage
known as humification, which involves biogenic degradation of buried plant materials at temperatures
less than 50 C resulting in the formation of low-rank coals (peat to subbituminous). As the low-rank coal
Dipak Ranjan Datta: retired

Page 1 of 3
DOI 10.1007/978-3-642-40871-7_88-1
is subjected to greater depth of burial and higher heat flows during progress of coalification it is converted
into bituminous coal, generating additional methane, carbon dioxide, and water. This methane produced
at a temperature greater than 50 C is known as thermogenic methane. However, scientists all over the
world are much more interested in thermogenic methane as its rate of generation is very high. In the higher
stage of coalification more than 5,000 c.ft./ton of methane (volume of methane available from unit mass of
coal) is generated (Ayers and Kelso 1989; Cooper and Scidile 1995). Maximum expulsion of methane
occurs during transition from High Volatile Bituminous ‘A’ to Low Volatile Bituminous coal at 150 C
(details in). This thermogenic stage can produce much more methane gas beyond the capacity of the coal
bed to store it resulting in migration of the excess gas to other noncoal reservoirs, if available. However,
storing capacity increases with the increase in confining pressure, i.e., greater depth of burial of the coal
bed due to gradual subsidence of the coal-bearing basin. The above stage of coalification may very well be
assessed in a relatively quick mode by study of reflectance of vitrinite under oil (Ro %), a microconstituent
of coal which is indicative of rank and commonly used as a measure of thermal maturity (under the
purview of coal petrographic studies). For a commercial CBM project, the typical range of thermal
maturity of coal varies from 0.7 % to 2.0 % (Chandra 1997; Cooper and Scidile 1995).
A coal bed not only generates methane gas but also behaves as a very good reservoir for the same
storing much more quantity of methane gas than any other conventional reservoir as already described.
This unique behavior of coal is due to a special property of having preponderance of microporosity
(detailed in “Microporosity” and “Adsorption”). More than 95 % of the total methane gas of coal remains
adsorbed (Gray 1987) along the internal surface of the micropores of the coal occurring at depth, i.e.,
under the influence of load pressure and only about 5 % in the macropore system as free gas. Adsorption
capacity of coal has a positive relationship with the total internal surface area of these micropores.
More the internal surface area of these micropores, more is the adsorption capacity of the coal. It may
be mentioned that out of the three organic microconstituents of coal (vitrinite, inertinite, and liptinite
identifiable under microscope in polish section under oil), vitrinite has a greater proportion of micropores
(GRI Manual 1996) and thus possesses a higher methane adsorption capacity due to availability of more
micropores resulting in more internal surface area in it. So far as internal surface area is concerned it is
worthy of mention that 1 lb of coal is reported to show internal surface area varying from 100,000 square
feet to more than 1,000,000 square feet (Jones et al. 1988). However the above discussion suggests that
vitrinite-rich coals, with compositional makeup determined petrographically under microscope, are
supposed to contain more gas implying significance of petrographic composition of coal.
The adsorption capacity of coal also increases with increase in depth of occurrence, i.e., burial pressure
implying enhancement of its rank. Therefore higher-rank coals are supposed to have more gas content
than lower-rank ones, and it is well established by Kim (1987).
With the fundamentals of coal bed methane as described so far, control of seam thickness and its
geometry for CBM potentiality may easily be visualized. When there are many coal seams having similar
rank, compositional makeup, and depth of occurrence, the thickest one with maximum volume of coal
would obviously show more gas content than others. Similarly a seam with regular geometric shape is
supposed to contain more gas than an irregular-shaped coal body. Depth of occurrence, seam thickness,
subsurface behavior pattern, and geometry of a coal seam are determined through exploration techniques,
which is a must for assessment of CBM potentiality of an area.
Instead of having sufficient gas content, a coal seam will not be viable for commercial production until
and unless it possesses an optimum permeability (capacity to transmit gas and fluid through a coal bed).
Permeability (detailed in) of the coal bed is a prerequisite to allow transmission of gas and liquid through
coal bed for successful production of CBM. Macroporosity (mainly cleat, fractures, and interconnected
macropores) plays a significant role in regulating permeability of a coal bed forming drainage path for the
gas and fluid to flow through the coal bed.
Page 2 of 3
DOI 10.1007/978-3-642-40871-7_88-1
References
Ayers WB, Kelso BS (1989) Knowledge of methane potential for coal bed methane resources grown but
needs more study. Oil Gas J 87:67–76
Chandra K (1997) Nonconventional hydrocarbon resources like coal bed methane and gas hydrates:
exploration imperatives to India. Int J Geol 69(4):261–281
Cooper JL, Scidile J (1995) Controls on exploration: proceedings of Petrotech, New Delhi
Gas Research Institute (1996) In: Saulsberry JL, Schafer P, Schraufnagel RA (eds) A guide to Coal Bed
Methane Reservoir Engineering, Gas Research Institute 1996. Chicago, Illinois, USA. pp 1.1–7.27
Gray I (1987) Reservoir Engineering in Coal Seams: Part I-The Physical Process of Gas Storage and
Movement in Coal Seams. SPERE. pp. 28–34
Jones AH, Bell GJ, Schraufnagel RA (1988) A review of the physical and mechanical properties of coal
with implications for coal bed methane well completion and production. In: Fassett JE (ed) Geology
and coal bed methane resources of the northern San Juan Basin, Colorado and New Mexico, Rocky
Mountain Association of Geologists guidebook. Rocky Mountain Association of Geologists, Denver,
pp 169–181
Kim AG (1987) Estimating methane content of bituminous coalfields from adsorption data.U.S. Bureau
of Mines, Report of Investigations, 82455
Laubach SE, Marrett RA, Olson JE, Scott AR (1998) Characteristics and origins of cleat: a review. Int
J Coal Geol 35:175–207
Spears DA, Caswell SA (1986) Mineral matter in coals: cleat mineral and their origin in some coals from
the English Midlands. Int J Coal Geol 6:107–125
Tremain CM, Laubach SE, Whitehead HH (1991) Coal fracture (cleat) patterns in Upper cretaceous Fruit
land Formation, San Juan Basin. Colorado and New Mexico: implications for exploration and
development. In: Schwochow S, Murray DK, Fahy MF (eds) Coal bed Methane of Western North
America. Rocky Mountain Association of Geologists, Denver, pp 49–59
Page 3 of 3
C
Coalification Development of coal through peat to anthracite

involves complex chemical changes. Extensive
Shankar Nath Chaudhuri studies on this evolutionary path led to number
Geological Survey of India (GSI), Kolkata, India of correlations and classifications. Seyler’s coal
classification depicts correlation among funda-
mental coal elements, including carbon, hydro-
Coal is formed after decomposition of vegetal gen, oxygen, volatile matter, and calorific values.
matter. The vegetal matter is transformed into It is considered to be a fundamental foundation for
peat, lignite, subbituminous, high, medium, and future classification of coal.
low volatile bituminous coal, semianthracite, and
Coalification Process.
anthracite (in order of increasing rank) at different
PLANT DEBRIS
stages of biochemical and geochemical coalifica-
tion processes. HUMIFICATION
MINERALISATION
HUMUS FLUID ASH
(NO BURRIAL)
Biochemical Coalification GELIFICATION
Mainly bacterial activities are predominant in this GEL
process. Humification, i.e., biogenic degradation METAMORPHISM
of buried plant materials, takes place here.

COAL
Maceral type, its morphology, and relative pro-
portion are set at this stage. Generation of bio-
genic methane takes place at a temperature less In the initial biochemical stage, both chemical
than 50 C in this process. and microbial agencies are involved in the decom-
position of the plant debris owing to which the
entire part of the plant matter may be converted to
coal substance. Most plant organs are composed
Geochemical Coalification of tissues with characteristic cell structures. The
bulk of the wood cell walls are constituted of
This process enhances the rank of coal. Tempera- cellulose, while outermost middle lamellae are
ture and pressure are main factors here. Genera- composed of lignin (Liess 1958). Carbon content
tion of thermogenic methane takes place at a in isolated lignin and cellulose from coniferous
temperature more than 50 C at this stage.
DOI 10.1007/978-3-642-40871-7_92-1
2 Coalification
wood was determined as 63.2 % and 44.4 %, bireflectance (anisotropy) of vitrinites and
respectively (Francis 1961). This strongly favors liptinites increase, and the fluorescence properties
the view that lignin-rich cell walls of wood tissues of liptinites and huminites/vitrinites change in a
represent precursors of fusain. The cellulose part characteristic way. Similarly the rank range of
of the plant tissues is not destroyed totally but a high volatile bituminous coals is characterized
part of the cellulose extract is likely to be utilized by the process of bituminization which starts dur-
by the microorganism for metabolism, and sub- ing the subbituminous coal stage. This process is
stantial part of it is carried away under high pH comparable to the formation of oil from kerogen
condition to a basin as a chemical sediment of in petroleum source rocks (Teichmuller 1974a, b).
humic composition, which under acidic condition The change of porosity during coalification
is precipitated as complex humic acid (Sandor and should be mentioned. In the early rank stages,
Smith 1950). porosity decreases due to increasing overburden
The coalification process produces water and pressure. During the bituminization process, the
carbon dioxide during lignite and low-rank coal remaining pores are filled with oil bitumen. This
formation, while in low-rank bituminous coals may be the reason of minimum porosity in the
with more than 29 % volatile matter, mainly car- coking coal stage. As the pore-filling bitumen is
bon dioxide is evolved followed by methane with volatilized due to higher coalification tempera-
small amount of heavier hydrocarbons, carbon tures, the porosity increases again and reaches a
monoxide, and nitrogen. As the low-rank coal is late maximum at the stage of meta-anthracite.
subjected to greater depth of burial and higher Change in the macerals during coalification
heat flow during progress of coalification, it is was examined through different techniques. It
converted into bituminous coal, generating addi- was observed that with progressive increase in
tional methane. This methane produced at a tem- rank, there is an increased aromatic character in
perature more than 50 C is known as vitrinite and inertinite and a shift toward greater
thermogenic methane. aromaticity from liptinite to inertinite with inter-
Maximum expulsion of methane occurs during mediate stage at vitrinite.
transition from high volatile bituminous A to low
volatile bituminous coal at 150 C.
Coal metamorphism is a function of heat and References
pressure acting over a period of time. Among the
three primary factors, heat is generally considered Francis W (1961) Coal – its formation and composition.
Edward Amold, London, 806pp
to be the most important. Increased heat at greater
Hilt C (1873) Sitzungsber. Aach.Bez. V.D.I, 4
depths of burial has been considered the primary Liess W (1958) The fine structure of lignified cell wall.
factor (Hilt’s law, after Hilt 1873). For Indian Cellulose Research Symposium II, CSIR, India
coals progressive increase in maturation in terms pp 29–36
Sandor J, Smith RH (1950) Formation of humus and its
of vitrinite reflectance with depth has been
relations to coal. In: Bangham DH (ed) Progress in coal
established (Sengupta and Bardhan 2005). science. Butterworth Scientific Pub, London
During coalification, distinction may be made Sengupta S, Bardhan B (2005) Petrographic atlas of Indian
between chemical, physical, and petrological coal, vol 7, Geological Survey of India Publication
Catalogue series. Geological Survey of India, Kolkata,
changes. All changes vary in the different rank
149pp
stages. The main chemical reactions are those of Teichmuller M (1974a) Entstehung und
condensation, polymerization, aromatization, and Verander. . .. . .. . ..-Fortschr. Geol. Rheinid
the loss of functional groups containing oxygen, U. Westf.24-65-112
Teichmuller M (1974b) Generation of petroleum like sub-
sulfur, and nitrogen. The carbon content
stance in coal seams as seen under the microscope. In:
increases, but not linearly. The main physical Tissot B, Bienner F (eds) Advances in organic geo-
changes are those of porosity, density, and hard- chemistry 1973. Technip, Paris, pp 321–348
ness. Under microscope, the reflectance and the
C
Coal Macerals LIPTINITE MACERALS
PRIMARY LIPTINITE SECONDARY LIPTINITE

Shankar Nath Chaudhuri SPORINITE
Geological Survey of India (GSI), Kolkata, India SPORANGIA EXSUDATINITE
CUTINITE BITUMINITE
RESINITE
Coal is a heterogeneous natural substance ALGINITE
SUBERINITE
consisting of a number of constituents. Microscop-
FLUORINITE
ically basic coal constituent is maceral which is
synonymous to minerals in inorganic rocks. How-
Further subdivision of individual maceral
ever, there is a difference between mineral and
groups is done based on physical and optical
maceral. Minerals are generally inorganic crystal-
characters which include structure and texture,
line in nature and has got a definite chemical com-
morphology, mode of occurrence, gray value/
position, whereas a maceral is a noncrystalline
reflectance, etc. Definition of macerals for bitumi-
organic substance and its composition may vary
nous coals was first brought out in the Interna-
widely. Inorganic substances like mineral matter,
tional Handbook of Coal Petrology in 1963. Since
shale, clay, and silt are also inherent constituents of
then it was felt necessary to update the definitions
coal. These constituents are recognized by the mor-
by ICCP. As a result, a new nomenclature of the
phology, texture, and gray level or reflectance of
vitrinite group of macerals was evolved (ICCP
macerals. Macerals are classified into three major
System 1994a, b).
organic groups, viz., vitrinite/huminite, liptinite/
exinite, and inertinite, and one inorganic group,
Maceral group – defined by level of reflectance
i.e., shale + mineral matter. Association of
Maceral subgroup – defined by degree of
macerals constitutes microlithotype. These constit-
destruction
uents are classified based on mono-, bi-, or
Maceral – defined by morphology and degree of
tri-assemblage of the constituents.
gelification
Vitrinite Group
Vitrinite is a coalification product of humic sub-

stances which essentially originates from the

DOI 10.1007/978-3-642-40871-7_93-1
2 Coal Macerals
tissues of roots, stems, barks, and leaves com- Detrovitrinite: It is a subgroup of vitrinite
posed of lignin and cellulose. Depending on the consisting of finely fragmented vitrinitized plant
process of decomposition, degree of gelification, remains occurring either isolated or cemented by
and rank, cell structures are preserved in vitrinite. amorphous vitrinitic matter. The maceral of this
Color and reflectance of vitrinite change progres- subgroup is derived through the strong decay of
sively with rank. Transformation of vegetable tis- parenchymatous and woody tissues of stems,
sues is set in successive stages, namely, roots, and leaves originating from herbaceous
humification, gelification, and vitrinization and arborescent plants composed of cellulose
(Stach et al. 1982). The most significant processes and lignin. By chemical decay and mechanical
of vitrinite formation from precursors are humifi- attrition, the former structures have been broken
cation and gelification. Humification involves down. Large amounts of detrovitrinite indicate a
slow progressive oxidation, which may be accel- high degree of cell-tissue destruction, especially
erated by addition of oxygen. In the presence of of cellulose-rich herbaceous plant material. Two
oxygen, the lignin is first attacked by wood- macerals are under this subgroup:
destroying fungi and then aerobic bacteria and is
converted into humic substance (Sengupta 2013). (i) Vitrodetrinite: It occurs as discrete small
Vitrinite group includes a group of macerals vitrinitic fragments of varying shape that
whose color is gray and whose reflectance is gen- become discernible when surrounded by
erally between that of the associated darker non-vitrinitic material.
liptinites and brighter inertinites over the rank (ii) Collodetrinite: It occurs as a mottled vitrinitic
range in which three respective maceral groups groundmass binding other coal components.
can be readily recognized. The term huminite in It also occurs as impersistent band with
low-rank coal, i.e., lignite or brown coal, is syn- <50 m thickness.
onymous to vitrinite in medium- to high-
rank coal. Gelovitrinite: It is a subgroup of vitrinite
Vitrinite group embraces three subgroups and consisting of colloidal infillings of vitrinitic mate-
six macerals which are based on structure, texture, rial in former voids. It is derived from the contents
morphology, and mode of occurrence. of plant cells or from humic fluids formed from
Telovitrinite: It is a subgroup of vitrinite, com- plant tissues during decay and diagenesis and
prising vitrinites with preserved botanical cell subsequently precipitated as colloidal gels within
structures which may or may not be visible. The voids or cavities of source material. Two macerals
maceral of this subgroup is derived from the par- are under this subgroup.
enchymatous and woody tissues of roots, stems,
barks, and leaves composed of cellulose and lig- (i) Gelinite: It is homogeneous and structureless
nin and originating from herbaceous and arbores- infilling of cracks and other voids.
cent plants. Large amount of telovitrinite indicates (ii) Corpogelinite: Homogeneous and discrete
a high degree of cell-tissue preservation under bodies representing cell infillings.
wet, possibly low-pH conditions within forested
peatlands or forested wet raised bogs (Diessel
1992). Two macerals are under this subgroup: Inertinite Group
(i) Telinite: It consists of clearly recognizable Inertinite is a maceral group that comprises
cell walls of more or less intact plant tissue. macerals whose reflectance in low- and medium-
It occurs as persistent band with >50 m rank coals and in sedimentary rocks of
thickness. corresponding rank is higher in comparison to
(ii) Collotelinite: It is homogeneous, with a more the macerals of the vitrinite and liptinite groups.
or less structureless appearance. It also occurs The inertinite group of macerals originates from
as persistent band with >50 m thickness. the same plant constituents as of vitrinite that are
Coal Macerals 3
altered and degraded under oxidizing condition parenchymatous and xylem tissues of stems, her-
before deposition or by biochemical processes at baceous plants, and leaves, which are composed
the peat stage. They exhibit higher degree of aro- of cellulose and lignin. It is formed in the peat
matization and condensation. Chemical composi- stage by weak humification, dehydration, and
tion of inertinite suggests higher carbon and lower redox processes.
oxygen and hydrogen content compared to Funginite: High-reflecting single- or
vitrinite (Van Krevelen, 1993). multicelled fungal spores, sclerotia, hyphae, and
On the basis of plant cell structure and mor- mycelia (stomata, mycorrhiza) and other fungal
phology, seven macerals are classified under remains are included in this class. It occurs as
inertinite group. Contrary to vitrinite, the round or oval bodies of varying size having light
inertinite classification can be applied to the gray to white color. It may occur as an irregular
organic matter of all coalification stages from cellular structure which is referred to as the
peat to high-rank coal, and the subdivision of the plectenchyme type of sclerotinite (Tayler and
maceral group is simpler since there are no Cook 1962). It has strong relief and hardness
subgroups. with smooth or crenulated border. In tertiary and
Fusinite: It is a maceral of the inertinite younger deposits, funginite consists mainly of
maceral group, showing highly reflecting, well- roundish unicellular to multicellular oval forms.
preserved cellular structure of at least one com- Funginite is derived from fungal spores, sclerotia,
plete cell of parenchyma, collenchyma, or scle- mycelia, and other fungal tissue.
renchyma. Only the cell walls of high-reflecting Secretinite: It is composed of commonly
tissues are called and counted as fusinites. These round, vesicled to non-vesicled, and equant to
cell walls are often thinner than the cell walls of elongate bodies without obvious plant structure
the corresponding humotelinite/telovitrinite and with high reflectance. It has higher relief than
semifusinites. Fusinite occurs either as regular macrinite. It is pale gray to yellowish white and
and well-preserved tissues (sieve plates and bor- non-fluorescing. It does not fuse during coking
dered pits can sometimes be recognized) or as but may contribute to coke strength when dis-
arc-shaped fragments of former cell tissues persed in fused matrix.
(bogen structure). Depending on the plant source, Macrinite: It occurs either as an amorphous
the degree of microbial destruction, and the ori- matrix or as discrete, structureless bodies of vari-
entation of the section, the cell cavities display able shapes, which are commonly elongated when
varying sizes and shapes. The cell lumens may viewed perpendicular to bedding.
occasionally be filled with mineral matter, Macrinite may appear as a groundmass or in
gelinite, or liptinite macerals (ICCP 1994). the form of bands or lenses when viewed in sec-
Fusinite originates from lingo-cellulosic cell tions cut perpendicular to bedding. It does not
walls. The botanical affinities of fusinites can be possess a characteristic shape. The reflectance
established in cases where the cell structure is well may vary in broad range within the same coal
preserved. but is always higher than that of accompanying
Semifusinite: It is a maceral of the inertinite vitrinite.
maceral group that shows intermediate reflectance Micrinite: Very small rounded grains sepa-
and structure between humotelinite/vitrinite and rated from other small inertinitic fragments, viz.,
fusinites in the same coal or sedimentary rock. inertodetrinite, by an upper size limit of 2 mm.
Cell lumens are only vague or partially visible. Aggregates of micrinite differ from macrinite by
The cell lumens vary in size and shape even in the their granularity. Because of the small size of
same particle, but they are generally smaller than individual grains, it is not possible to quantify
those of the corresponding tissues in fusinites. the amount of micrinite exactly by maceral anal-
Wood-derived semifusinites display better pre- ysis. Only aggregates of micrinite can be properly
served plant cells or cell walls than leaf-derived accounted for. Micrinite appears to be relatively
semifusinites. Semifusinite originates from the reactive in most coal-reforming processes.
4 Coal Macerals
However, on accounts of its small size and low respectively. The exoexine displays normal fluo-
proportion in most coals, little is known about its rescence in contrast to the much stronger fluores-
practical importance. cence color of intexine. Spores can be subdivided
Inertodetrinite: It occurs as discrete small into mico- (<200 m) and megaspores (>200 m).
inertinite fragments of varying shape and size Sporangia: It is an association of spores, also
(>2mm < 10 mm). Inertodetrinite has a variety known as spore capsules. A sporangium is filled
of phytogenic precursors all of which have been with thin-walled spores of different shapes and
subjected to some degree of fusinitization. sizes. On polished surface, they are brownish
Depending on the different inertinite precursors, gray. However, gray level varies with increase in
gray level and reflectance vary significantly rank. The outer wall of a sporangium may exhibit
within the same coal. It increases the mechanical dentate pattern.
strength of the coke. In general, its technical prop- Cutinite: It originates from cuticular layers
erties depend on the kind of inertinite macerals and cuticles, which are formed from the proto-
from which it derived. plasts within the outer walls of the epidermal
layer of leaves, stems, and other aerial plants
(Sengupta 2013). It occurs as thin gray lenticular
Liptinite Group bands under normal reflected light and exhibits
yellowish color with lower intensity under
It originates from relatively hydrogen-rich plant fluorescence mode.
material, viz., spore, pollen, resin, cutin, suberin, Resinite: Generally it occurs as infilling within
wax, balsam, latex, fat, and oil, as well as from the cell cavities of textinite/telinite/fusinite as well
bacterial degradation products of protein, cellu- as isolated mass and thick bands within different
lose, and other carbohydrates. It has got strong macerals of Gondwana and tertiary coals and lig-
fluorescence property. nites. It can be of different shapes and sizes within
Some of its members like alginate, cutinite, vitrinite or inertinite bands. Under fluorescence
sporinite, and suberinite have considerable mode, resinous bodies display pale to bright yel-
paleoenvironmental significance. Moreover, low and orange red color.
liptinite group contributes in coke formation. Alginite: These are remains of algal bodies.
Generally liptinite contents are small in Gond- This maceral has a characteristic shape of round
wana coal, but high hydrogen content within it and oval bodies and occur as inclusion in collinite
influences the technological properties of coal. In or as infilling within cell lumens of telinite. It is
coal to oil process (CTL), liptinite-rich coals are dark gray under normal reflected light and shows
essentially suitable. greenish yellow color under fluorescence mode.
Primary liptinites: Macerals of liptinite group Suberinite: Suberin, a layer of cell walls in the
consist of coalified plants or parts of plants. cork tissues, is usually preserved and recognized
Sporinite: The skin of spores and pollen are as suberinite. Depending on the content of fatty
preserved as sporinite in the process of coalifica- acid, suberinite shows a weak reddish fluores-
tion. Due to its abundance in coal, it is the most cence color.
important maceral among the liptinite group. Fluorinite: It displays unusually strong fluo-
Most of the spores are flattened and compressed rescence and radiation of short wavelength, but
in morphology. Thin-walled as well as thick- because of its appearance as black color in normal
walled spores are common in Gondwana coals. reflected light, it was earlier mistaken for lenses of
Spore walls can be differentiated as outer wall or clay. Besides its lensoidal appearance, it also
exine and inner wall or intine. The exine is com- occurs as small circular, elliptical, or oval-shaped
posed of sporine, while the intine is composed of bodies which are very commonly associated with
cellulose. The exine may or may not be sculp- cutinite macerals. Its striking optical properties
tured. The exine can be layered with an outer justify its separation from resinite maceral.
and inner skin called exoexine and intexine
Coal Macerals 5
Coal Macerals,
Fig. 1 Photomicrograph of THREE MACERAL GROUPS
different maceral groups
LIPTINITE
VITRINITE
INERTINITE
Secondary liptinites: Macerals of liptinite References

group derived from thermal condensation and dis-
sociation reaction. Diessel CFK (1992) The problem of syn-versus post depo-
sitional marine influence on coal composition. In: Pro-
Exsudatinite: It is generated by migration or
ceedings of the advances in the study of the Sydney
expulsion of bitumen in coal as filling in cleats, Basin, 26th Newcastle Symposium, pp 154–163
small fractures, or pores. The expulsion of bitu- ICCP (1994) The new inertinite classification. Fuel
men is related to catagenesis wherein droplets/ 80(2001):459–471
ICCP System (1994a) Methods for the petrographic anal-
oozing from cleats and fractures is observed.
ysis of bituminous coal and anthracite- part 3: method
Bituminite: Bituminization takes place with of determining maceral group composition-ISO 7404-
rising rank in the brown coal to subbituminous 33:1994. ISO, Geneva
coal range. These liptinite macerals form from ICCP System (1994b) Methods for the petrographic anal-
ysis of bituminous coal and anthracite- part 5: method
plant oils. It does not possess any morphological
of determining Microscopically the reflectance of
identity. It occupies whatever empty space avail- vitrinite-ISO 7404-53: 1994. ISO, Geneva
able at the time of its formation. This is essentially Sengupta S (2013) Coal geology and its application in
required for coal to oil technology (Fig. 1). industrial use, 1st edn. Srinivas Press, India
Stach E et al (1982) Stach’s text book of coal petrology,
3rd edn. Gebr.Borntrager, Berlin/Stuttgart, 535pp
Tayler GH, Cook AC (1962) Sclerotinite in coal-its petrol-
ogy and classification. Geol Mag 99:41–52
Van Krevelen DW (1993) Coal. Elsevier, Amsterdam
M
Microlithotype Inertite: It consists primarily of macerals of

fusinites, semifusinites, and secretinite. It is inert
Shankar Nath Chaudhuri and without caking power and acts as dilutent
Geological Survey of India (GSI), Kolkata, India during carbonization. It has low tendency to spon-
taneous combustion.
Liptite: It consists of 95 % assemblage of
The individual microconstituents in coal or liptinite group of macerals. It contributes in coke
macerals rarely occur by themselves but are formation due to its reactive nature during carbon-
mostly in association with each other. Such asso- ization. It also gives rise to high yield of
ciation of macerals is termed as microlithotype. by-products during carbonization. This is an
Broadly, they are divided into three groups, essential constituent for coal liquefaction
namely, monomaceral, bimaceral, and trimaceral, technology.
based on whether a microlithotype contains Durite: Consists of 95 % of inertinite and
macerals of one, two, or three maceral groups. liptinite. The proportion of these two macerals
All microlithotypes bear the suffix “ite” so as to may vary widely. It improves coke strength only
distinguish them from macerals. An area of when finely dispersed.
50 50 m is considered on the polished surface Vitrinertite: It consists of at least 95 % of
of coal perpendicular to the bedding plane for vitrinite and inertinite in varying proportion.
microlithotype analysis. Mono-, bi-, or trimaceral This microlithotype is further subdivided into
microlithotypes are classified as per the content of vitrinertite-V and vitrinertite-I depending on the
major and accessory macerals. For example, prevalence of vitrinite and inertinite, respectively.
microlithotype vitrite must contain 95 % vitrinite. Duroclarite: It is an assemblage of three
In addition to the maceral content, 20–60 % (vol) macerals, viz., vitrinite, liptinite, and inertinite in
of silicate or carbonate minerals or 5–20 % (vol) order of abundance, and each should exceed 5 %.
sulfide minerals redefine the microlithotype as a Clarodurite: It is an assemblage of three
carbominerite. The following table describes the macerals, viz., inertinite, liptinite, and vitrinite in
classification of microlithotypes. order of abundance, and each should exceed 5 %.
Vitrite: This microlithotype consists of Carbominerite: Microlithotypes are generally
collinite and collotelinite as majority with vitrinite contaminated with minerals. Twenty to sixty per-
content at least 95 %. In caking coal with greater cent (vol) of silicate or carbonate minerals or
than 18 % volatile matter, it contributes to coking 5–20 % (vol) sulfide minerals redefine the
ability due to its high swelling property and microlithotype as a carbominerite. Other nomen-
plasticity. clatures depending on the composition of
DOI 10.1007/978-3-642-40871-7_94-1
2 Microlithotype
Microlithotype,
Fig. 1 Photomicrographs ASSOCIATION OF THREE MACERAL GROUPS
of microlithotype –
duroclarite (vitrinite +
liptinite + inertinite),
inertite and vitrite
MONOMACERAL INERTITE
MONOMACERAL VITRITE
minerals and association between 20 % and 60 % carbopolyminerite (with various minerals) (Stach
(vol) are carbergilite (with clay minerals), et al. 1982) (Fig. 1).
carbopyrite (with pyrite), carbankerite (with car-
bonate minerals), carbosilicate (with quartz), and
Microlithotype 3
MICROLITHOTYPE
MONOMACERAL BIMACERAL
VITRITE(>95% CLARITE TRIMACERAL
VITRINITE) (VITRINITE+EXINITE) DUROCLARITE
LIPTITE(>95% DURITE (VITR+EXN+INRT)
LIPTINITE) (INERTINITE+EXINITE) CLARODURITE
INERTITE(>95 INTERMEDIATES (INRT+EXN+VITR)
INERTINITE) VITRINERTITE(V)
VITRINERTITE(I)
Microlithotype, Fig. 2
References
Stach E et al (1982) Stach’s text book of coal petrology,

3rd edn. Gebr.Borntrager, Berlin/Stuttgart, 535pp
C
Coal, Cleat System The formation and orientation of cleat devel-

oped in a coal bed are closely related to the coali-
Dipak Ranjan Datta fication process and begins in its early stage. These
Geological Survey of India, Kolkata, India are controlled by at least two diagenetic factors,
viz., (a) the progressive compaction of humic mat-
ter, when it is deeply buried and (b) tensional forces
Cleats are natural opening mode fractures within the coal resulting from decreasing volume
(belonging to meso- to macroporosity) systemat- or shrinkage of the coal as coalification progresses
ically developed in coal bed and occur as two (McCulloch et al. 1974).
different sets which are at right angle to each The cleat network within a coal bed acts for the
other. Characteristically both are subvertical in passage of methane gas and liquid and accounts
orientation and perpendicular to the coal bed for most of the permeability and much of the
(Laubach et al. 1998; Clarkson and Bustin porosity (macro) of coal bed gas reservoirs.
1997). Bunch of subparallel aligned fractures
form a set. The subparallel cleats as a set exhibit
uniformity in strike within an outcrop or borehole Classification
core as well as in regional scale. Within a set,
individual cleats behave separately each of When viewed on plan, coal bed shows two dis-
which is characteristically three dimensional tinct sets of cleat which are oriented perpendicular
entity having limited length, depth extension, to each other. Out of the two sets, the set
and width. consisting of cleats which are throughgoing and
The importance of coal beds, being a good gas have the most prominent form is known as face
reservoir, has attracted the attention of geoscien- cleat. Cleats of the other set, which form later and
tists all over the world to deal with the character- abut against face cleat, are termed as butt cleat.
istics and origin of cleat. Knowledge of the When viewed across the bed along a section
properties of cleats is essential, because of their oblique to two sets of cleat, the traces of these
great influence on recovery of methane and the two types become parallel to one another making
local and regional flow of hydrocarbons and water it impossible to differentiate these two types. So
(Smyth and Buckley 1993; Clarkson and Bustin these two sets can only be differentiated on plan
1997; Pashin et al. 1999; Scott 2002; Pitman view of coal bed (Plate 1).
et al. 2003). In sectional view, i.e., across coal bed, classi-
fication of cleat is based on the nature of its
Dipak Ranjan Datta Retired. extension across different layers of coal. These
DOI 10.1007/978-3-642-40871-7_96-1
2 Coal, Cleat System
(Close and Mavor 1991). Height is the vertical

extension of cleat opening and its dimension is
measured along a direction perpendicular to bed-
ding. It varies widely depending upon the cleat
types. Spacing between two cleats (of same set) is
a distance between them at right angle to the cleat
surface and has inverse relation with cleat fre-
quency (Plate 2). Frequency is the number of
cleats developed in unit length measured perpen-
dicular to cleat surface. Mineralization along
cleat opening by secondary minerals during geo-
logical processes plays a very significant role in
Coal Bed Methane (CBM) production as it creates
Coal, Cleat System, Plate 1 Photograph of coal sample
blockage in the gas flow through the cleat system.
showing two sets of cleat Mineralization, i.e., precipitation of authigenic
mineral, commonly clays, quartz, and calcite,
(Spears and Caswell 1986; Daniels and Altaner
are – (1) Master Cleat when it extends across 1990) in the cleat opening or its infilling by
different lithobands, (2) Primary cleat when organic material or resin may block fracture
develops/extends from top to bottom of a particu- porosity. Thus it reduces the ability of the cleats
lar litho-band (mainly vitrinite), and (3) Tertiary/ to conduct fluid and gas causing reduction in
Secondary cleat when developed partially within permeability of the coal bed. In case of coal min-
a litho-band (Clarkson and Bustin 1997; Laubach ing such minerals affect coal quality, but for coal
et al. 1998). bed methane sealing of the cleat opening by min-
eralization seriously hampers the production rate
of methane gas (Plate 3).
Cleat Properties/Parameters
The overall picture of a cleat system developed in Micro-Cleat

a coal bed may be assessed by detailed study on
different properties of cleats in considerable pop- Study of cleat under microscope (micro-cleat) dif-
ulation. Individual cleat of both the sets is charac- fers at many points from that in outcrop scale. In
terized by the following attributes – (1) Length, polished section (perpendicular to bedding), both
(2) Aperture width, (3) Height, (4) Spacing/Fre- the face and butt cleats are subparallel to one
quency, (5) Mineralization along cleat opening, another. These subparallel cleats are aligned per-
and (6) Cleat trend. pendicular to bedding traces and thus both the
Length is the dimension parallel to the cleat cleats appear as transverse to bedding. Apparent
surface and bedding. It is measured on the bed- length of a cleat is seen in polish section but cleat
ding plane along the intersection of the cleat sur- height in 3D perspective (Datta 2005). The master
face and bedding and varies widely up to several cleats cutting across all the layers as seen micro-
tens of centimeters. Aperture width of the cleat scopically appear to be mega-cleats when observed
opening is measured perpendicular to the cleat in outcrop. Cleat height of primary cleat indirectly
surface. Estimates of cleat width range from represents the thickness of vitrite layers present
0.001 to 20 mm (Gamson et al. 1993). Cleats within a coal (Paterson et al. 1992; Clarkson and
mostly having aperture less than 0.1 mm are Bustin 1997). Thus the study of cleat properties,
scarcely visible in naked eye and need micro- i.e., height, aperture, spacing, cleat frequency (nos./
scopic study. It is generally observed that cleats cm), nature of cleat filling, etc., under microscope
with large apertures tend to have large heights gives much more detail information.
Coal, Cleat System 3
Coal, Cleat System,

Plate 2 Photomicrograph
of coal polish section
showing cleats and their
different properties
Coal, Cleat System,

Plate 3 Photomicrograph
of coal polish section
showing cleat net work
completely filled up with a
mineral - pyrite
Control of Cleat Development (Ro – 0.25–0.38 %) to 0.2 cm in anthracite

(Ro > 2.6 %) (clearly indicates a direct relation-
Cleat development generally indicates how ship between cleat development and rank (Law
intensely it is formed within a coal bed and is 1993). However, this is valid up to a rank (Ro –
defined by its frequency/spacing. A number of 1.35 %) as evidenced by detailed study which
factors have been cited which affect cleat devel- shows cleat frequency decreases with further
opment. These factors include coal composition, increase of rank (Su et al. 2001). Cleat develop-
rank, depth of occurrence and layer, thickness. ment defined by cleat spacing also varies with coal
Based on outcrop and drill core data from North type and ash content (Spears and Caswell 1986;
American coal, it is found that face cleat spacing Tremain et al. 1991; Law 1993). Bright coal
ranges from approximately 22 cm in lignite lithotypes (vitrain) generally have smaller cleat
4 Coal, Cleat System
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coal lithotypes (durain) (Kendall and Briggs spacing: implications for the prediction of permeability
in coal. In: Proceedings of international coal bed meth-
1993; Stach et al. 1982). Coals with low ash ane symposium II, Alabama, pp 435–442
content tend to have smaller cleat spacing/higher Laubach SE, Marrett RA, Olson JE, Scott AR (1998) Char-
frequency than coals with high ash content indi- acteristics and origins of cleat: a review. Int J Coal Geol
cating ash content inversely varies with cleat 35:175–207
McCulloch CM, Deuj M, Jerran PW (1974) Cleat in bitu-
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Close J, Mavor M (1991) Influence of coal composition microlithotype sequences in the Bulli Seam, Australia
and rank on fracture development in Fruitland coal gas and revelance to permeability for coal gas. Int J Coal
reservoirs of the San Juan Basin. In: Schwochow SD Geol 22:167–187
(ed) Coal bed methane of Western North America. Stach E, Mokowsky MT, Teichmuller M, Taylor GN,
Rocky Mountain Association of Geologists Field Con- Chandra D, Teichmuller R (1982) Stach’s text book of
ference Guidebook, Colorado, pp 109–121 coal petrology. Gebruder Borntraeger, Berlin/Stutgart,
Daniels EJ, Altaner SP (1990) Clay mineral authigenesis in pp 140–150
coal and shale from the anthracite region, Su X, Feng Y, Chen J, Pan J (2001) The characteristics and
Pennsylvenia. Am Mineral 75:825–839 origins of cleat in coal from Western North China. Int
Datta DR (2005) Cleat system and its significance in the J Coal Geol 47:51–62
light of coal bed methane. Scientific Communication. Tremain CM, Laubach SE, Whitehead HH (1991) Coal
News Coal Wing Geol Surv Ind 25(1):28–31 fracture (cleat) patterns in Upper Cretaceous Fruitland
Gamson PD, Beamish BB, Johnson DP (1993) Coal micro- Formation, San Juan Basin. Colorado and New Mex-
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Kendall PF, Briggs H (1993) The formation of rock joints methane of Western North America. Rocky Mountain
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53:164–187
I
India: Energy Policy dependent on primitive technology. After the

decline of the Mughals, western, central, and
Shibananda Sengupta1 and Debasish Shome3 parts of south and north India were integrated
1
Geological Survey of India, Kolkata, India and administered by the Maratha Empire. After
3
Department of Geological Sciences, Jadavpur the loss at the Third Battle of Panipat, the Maratha
University, Kolkata, India Empire disintegrated into several confederate
states, and the resulting political instability and
armed conflict severely affected economic life in
General Information About India several parts of the country, although this was
compensated for to some extent by localized pros-
The citizens of the Indus Valley civilization, a perity in the new provincial kingdoms. This
permanent settlement that flourished between period was followed by British Era
2800 BC and 1800 BC, practiced agriculture, (1793–1947). From the beginning of nineteenth
domesticated animals, used uniform weights and century, British East India Company’s gradual
measures, made tools and weapons, and traded expansion and consolidation of power brought a
with other cities. Evidence of well-planned major change in the taxation and agricultural pol-
streets, drainage system, and water supply reveals icies, which tended to promote commercialization
their knowledge of urban planning, which of agriculture with a focus on trade, resulting in
included the world’s first urban sanitation systems decreased production of food crops (Kumar
and the existence of a form of municipal 2005).
government. India is presently the second most populated
The Mughal economy functioned on an elabo- country in the world with 1.3 billion people (as in
rate system of coined currency, land revenue, and 2016). It occupies 2.4% of the world’s land area.
trade. Gold, silver, and copper coins were issued Rural population accounts for 72.2%. It is politi-
by the royal mints which functioned on the basis cally divided into 36 Provincial States.
of free coinage. The political stability and uniform It has more than two thousand ethnic groups.
revenue policy resulting from a centralized They belong to different religious philosophy.
administration under the Mughals, coupled with Total population is divided on different religious
a well-developed internal trade network, ensured groups namely Hindu (79.80%), Islamic
that India, before the arrival of the British, was to a (14.23%), Christian (2.3%), Sikhs (1.72%), Bud-
large extent economically unified, despite having dhist (0.7%), Jain (0.37%), and others (0.89%)
a traditional agrarian economy characterized by a (Ghosh and Singh 2015).
predominance of subsistence agriculture
DOI 10.1007/978-3-642-40871-7_97-1
2 India: Energy Policy
India is a member of trade organizations, national output (MoC 2005). Despite this increase
namely WTO, UNO, SAPTA, BRICS, G20, in production, the existing demand exceeds the
SAARC, and SCO. supply. India currently faces coal shortage of
The economy of India is the seventh largest 23.96 MT. This shortage is likely to be met
economy in the world measured by nominal GDP through imports mainly by steel, power, and
and the third largest by purchasing power parity cement sector (MoC 2005). India exports insig-
(PPP). The country is classified as a newly indus- nificant quantity of coal to the neighboring coun-
trialized country, one of the G-20 major econo- tries. The traditional buyers of Indian coal are
mies, a member of BRICS, and a developing Bangladesh, Bhutan, and Nepal.
economy with an average growth rate of approx-
imately 7% over the last two decades. Maharash- Power
tra is the wealthiest Indian state and has an annual Access to affordable and reliable electricity is
GDP of US$220 billion, nearly equal to that of critical to a country’s growth and prosperity. The
Portugal, and accounts for 12% of the Indian GDP country has made significant progress towards the
followed by the states of Tamil Nadu (US$140 augmentation of its power infrastructure. In abso-
billion) and Uttar Pradesh (US$130 billion). lute terms, the installed power capacity has
India’s economy became the world’s fastest grow- increased from only 1,713 MW (megawatts) as
ing major economy from the last quarter of 2014, on 31 December 1950 to 118,419 MW as on
replacing the People’s Republic of China. Mass March 2005 (CEA 2005). The all India gross
impoverishment and destitution of farmers, and in electricity generation, excluding that from the
the short term, led to numerous famines. captive generating plants, was 5,107 GWh
(gigawatt-hours) in 1950 and increased to
565,102 GWh in 2003/2004 (CEA 2005).
Need of Primary and Renewable Energy requirement increased from 390 BkWh
Resources (billion kilowatt-hours) during 1995/1996 to
591 BkWh (energy) by the year 2004/2005, and
India is well endowed with both primary and peak demand increased from 61 GW (gigawatts)
renewable energy resources. Coal, oil, and natural to 88 GW over the same time period. The country
gas are the three primary commercial energy experienced energy shortage of 7.3% and peak
sources. India’s energy policy, till the end of the shortage of 11.7% during 2003/2004. Though,
1980s, was mainly based on availability of indig- the growth in electricity consumption over the
enous resources. Coal was by far the largest past decade has been slower than the GDP’s
source of energy. However, India’s primary growth, this increase could be due to high growth
energy mix has been changing over a period of the service sector and efficient use of electricity.
of time. Per capita electricity consumption rose from
India now ranks third among the coal produc- merely 15.6 kWh (kilowatt-hours) in 1950 to
ing countries in the world. Being the most abun- 592 kWh in 2003/2004 (CEA 2005). However, it
dant fossil fuel in India till date, it continues to be is a matter of concern that per capita consumption
one of the most important sources for meeting the of electricity is among the lowest in the world.
domestic energy needs. It accounts for 55% of the Moreover, poor quality of power supply and fre-
country’s total energy supplies. quent power cuts and shortages impose a heavy
Through sustained increase in investment, pro- burden on India’s fast-growing trade and industry.
duction of coal increased from about 70 MT
(million tonnes) (MoC 2005) in early 1970s to Coal
382 MT in 2004/2005. Most of the coal produc- The Indian coal industry was nationalized in the
tion in India comes from open pit mines contrib- early 1970s. While the production of coal
uting to over 81% of the total production, while increased from 70 MT (million tonnes) at the
underground mining accounts for rest of the time of nationalization to 382 MT in 2004/2005;
India: Energy Policy 3
the national coal industry has always been proof about 6.5% during the last 10 years. Industries
ducing less coal than the actual demand leading to such as power generation, fertilizer, and petro-
a shortage situation. The situation became more chemical production are shifting towards natural
serious as emphasis increased on coal-based gas. India’s natural gas consumption has been met
power plants in last few years. The shortages led entirely through domestic production in the past.
to backing down of many power plants. Loss of However, in the last 4/5 years, there has been a
generation due to short supply of coal during the huge unmet demand of natural gas in the country,
year 2004/2005 was estimated at 3,588 million mainly required for the core sectors of the econ-
units. Against a projected demand of 405.1 MT omy. To bridge this gap, apart from encouraging
by the Planning Commission, indigenous coal domestic production, the import of LNG
supply in 2004/2005 was 387.2 MT. Coal (liquefied natural gas) is being considered as one
accounts for over 50% of India’s commercial of the possible solutions for India’s expected gas
energy consumption and about 78% of domestic shortages. Several LNG terminals have been
coal production is dedicated to power generation. planned in the country. Two LNG terminals have
This dominance of coal in India’s energy mix is already been commissioned: (1) Petronet LNG
not likely to change till 2031–2032. Since prices Terminal of 5 MTPA (million tonnes per annum)
were de-controlled, the sector has become profit- at Dahej, and (2) LNG import terminal at Hazira.
able primarily as a result of price increases and the In addition, an in-principle agreement has been
rising share of open cast production. India would reached with Iran for import of 5 MTPA of LNG.
need to augment domestic production and encour-
age thermal coal imports to meet its energy needs. Role of Nuclear and Hydro Power
Such a cost advantage of imported coal over India has to realize development of nuclear power
imported gas is likely to continue for some time with vast thorium resource to become indepen-
in the future. dent as far as energy requirement is concerned in
another 25 years. With present trend in view, it can
Oil and Natural Gas be predicted that even if a 20-fold increase takes
The latest estimates indicate that India has around place in India’s nuclear power capacity in next
0.4% of the world’s proven reserves of crude oil. 15 years the contribution of nuclear energy at
The production of crude oil in the country has best be expected to be 4.0–6.4%.
increased from 6.82 MT in 1970/1971 to India is poorly endowed with Uranium. Avail-
33.38 MT in 2003/2004 (MoPNG 2004). The able Uranium supply can fuel only 10,000 MW of
production of natural gas increased from the pressurized heavy water reactors (PHWR).
1.4 BCM (billion cubic meters) to 31.96 BCM Further, India is extracting Uranium from
during the same period. The quantity of crude oil extremely low grade ores (as low as 0.1% Ura-
imported increased from 11.66 MT during 1970/ nium) compared to ores with up to 12–14% Ura-
1971 to 81 MT by 2003/2004. Besides, imports of nium in certain resources abroad. This makes
other petroleum products increased from 1 MT to Indian nuclear fuel 2–3 times costlier than inter-
7.3 MT during the same period. The exports of national supplies. The substantial Thorium
petroleum products went up from around 0.5 MT reserves can be used but that requires that the
during 1970/1971 to 14 MT by 2003/2004. The fertile Thorium be converted to fissile material.
refining capacity, as on 1 April 2004, was In this context, a three-stage nuclear power pro-
125.97 MTPA (million tonnes per annum). The gram is envisaged which consists of setting up of
production of petroleum products increased from pressurized heavy water reactors (PHWRs) in the
5.7 MT during 1970/1971 to 110 MT in 2003/ first stage, fast breeder reactors (FBRs) in the
2004. second stage, and reactors based on the Uranium
India’s consumption of natural gas has risen 233-Thorium 232 cycle in the third stage. It is also
faster than any other fuel in the recent years. envisaged that in the first stage of the program,
Natural gas demand has been growing at the rate capacity addition will be supplemented by
electricity generation through light water reactors Today, India has one of the highest potentials for
(LWRs), initially through imports of technology the effective use of renewable energy. India is the
but with the long-term objective of indigenization. world’s fifth largest producer of wind power after
PHWR technology was selected for the first stage Denmark, Germany, Spain, and the USA. There is
as these reactors are efficient users of natural a significant potential in India for generation of
Uranium for yielding the plutonium fuel required power from renewable energy sources – small
for the second stage FBR program. The FBRs will hydro, biomass, and solar energy. The country
be fuelled by plutonium and will also recycle has an estimated SHP (small-hydro power) poten-
spent Uranium from the PHWR to breed more tial of about 15,000 MW. Installed combined elec-
plutonium fuel for electricity generation. tricity generation capacity of hydro and wind has
increased from 19,194 MW in 1991/1992 to
Hydropower 31,995 MW in 2003/2004, with a compound
India’s hydel resources are estimated to be growth rate of 4.35% during this period (MoF
84,000 MW at 60% load factor. The current utility 2005). Other renewable energy technologies,
based installed capacity is 32,326 MW and the including solar photovoltaic, solar thermal, small
average annual generation over the last 3 years hydro, and biomass power are also spreading.
(2002–2005) was a 74 Billion Kilowatt hour Greater reliance on renewable energy sources
(BkWh) giving a load factor of 29%. At such a offers enormous economic, social, and environ-
load factor an installed capacity of 1,50,000 MW mental benefits.
including some 15,000 MW of small hydel plants The potential for power production from cap-
(size <25 MW) may be justified given the avail- tive and field-based biomass resources, using
able potential hydroelectric energy. All new pro- technologies for distributed power generation, is
jects should be designed with this objective in currently assessed at 19,500 MW including
mind. Such a strategy would ensure that hydro is 3,500 MW of exportable surplus power from
maximally used for meeting peak loads. In addi- bagasse-based cogeneration in sugar mills
tion, there are possibilities of importing hydro- (MNES 2005).
power from Nepal and Bhutan whose combined
economically feasible potentials are estimated to
be in excess of 55,000 MW. Future Scenario
The accelerated hydro development plan aims
to build 50,000 MW of new capacity by Increasing pressure of population and increasing
2025–2026. Problems of environment and ecol- use of energy in different sectors of the economy
ogy and the social problems of resettlement of is an area of concern for India. With a targeted
project-affected people have delayed develop- GDP growth rate of 8% during the Tenth Five-
ment of hydro projects, particularly those that Year Plan, the energy demand is expected to grow
involve large storage dams. Of the 50,000 MW at 5.2%. Driven by the rising population,
planned, 31,000 MW shall come from run of the expanding economy, and a quest for improved
river (ROR) schemes where these problems are quality of life, the total primary energy consump-
more manageable. However, the available energy tion is expected to about 412 MTOE (million
varies from month to month and peaking capacity tonnes oil equivalent) and 554 MTOE in the ter-
is minimal. It is estimated that 19,660 MW of minal years of the Tenth and Eleventh Plans,
ROR schemes generate 2 BkWh of energy in a respectively (Planning Commission 1999).
lean month and 13 BkWh in a high inflow month, The International Energy Outlook 2005 (EIA
giving load factors of 14–90%. 2005) projects India’s gas consumption to grow at
an average annual rate of 5.1%, thereby reaching
Renewable Energy 2.8 trillion cubic feet by 2025 with the share of
Renewable energy sources offer viable option to electric power sector being of 71% by that time.
address the energy security concerns of a country. Coal consumption is expected to increase to
315 MT over the forecast period. In India, slightly To encourage private investment in the sector,
less than 60% of the projected growth in coal the government provides many different types of
consumption is attributed to the increased demand incentives to promote NCE, including accelerated
of coal in the electricity sector while the industrial depreciation allowances, capital cost subsidies,
sector accounts for most of the remaining interest rate subsidies, exemption or reduction in
increase. The use of coal for electricity generation excise duty, exemption from central sales taxes,
in India is expected to increase by 2.2% per and customs duty concessions on the import of
annum during 2002–2025, thus requiring an addi- material, components, and equipment used in
tional 59,000 MW of coal-fired capacity. Oil NCE projects. These incentives have resulted in
demand in India is expected to increase by 3.5% significant success in promoting investments
per annum during the same time (Tables 1 and 2). in NCE.
Apart from the central government, various
state governments also provide financial and fiscal
incentives for the promotion of NCE. Many states
Policies for Development of Renewable
have come out with preferential tariffs as well as
Energy in India (2000)
quota for grid-connected NCE generated electric-
ity. Some of the salient features that encourage
Programmatic emphasis in MNES (then Depart-
industrial development and foreign investments
ment of Non-conventional Energy Sources) dur-
are listed below.
ing the 1980s was on the development,
dissemination, and demonstration of various
• Promotion of medium, small, mini, and micro
renewable energy technologies. The program
enterprises for manufacturing and servicing of
was led by government subsidies. In 1993, in
various types of NCE systems and devices.
order to give the required focus on commerciali-
• Industrial clearances are not required for
zation and market orientation, and in order to have
setting-up of an NCE industry.
greater involvement of the private sector, empha-
• No clearance is required from Central Electric-
sis shifted towards policies, planning, and institu-
ity Authority (CEA) for power generation pro-
tional linkages to promote renewables within
jects up to Rs 1,000 million.
specific application sectors. This was accompa-
• A 5-year tax holiday is allowed for NCE power
nied by a shift from subsidies to indirect fiscal
generation projects.
incentives such as low-interest loans for specific
• Soft loans are available through IREDA for
applications, diversified financing packages for
NCE equipment manufacturing.
consumers, accelerated depreciation allowances
• Facilities for promotion of Export Oriented
(recently reduced from 100% to 80%), reduced
Units are available for the NCE industry.
duties and taxes, and remunerative power-
• Financial support is available to NCE indus-
purchase prices.
tries for R&D projects in association with tech-
In 2000, a comprehensive policy for all-round
nical institutions.
development of the sector, encompassing all the
• Private sector companies can set up enterprises
key aspects, was formulated by MNES, having
to operate as licensee or generating companies.
the following broad objectives.
• Customs duty concession is available for NCE
spares and equipment, including those for
1. Meeting the minimum energy needs through
machinery required for renovation and mod-
RE
ernization of power plants. Excise duty on a
2. Providing decentralized energy supply in agri-
number of capital goods and instruments in the
culture, industry, commercial, and household
NCE sector has been reduced or exempted.
sectors in rural and urban areas
• Foreign investors are encouraged to set up
3. 10% of additional grid power generation
RE-based power generation projects on BOO
capacity to be from NCE by 2012.
basis.
India: Energy Policy, Table 1 Production of primary energy sources of conventional energy in India
Source Unit 1970/1971 1980/1981 1990/1991 2001/2002 2002/2003 2003/2004
Coal and lignite MT 76.34 119.02 228.13 352.6 367.29 389.11
Crude oil MT 6.82 10.51 33.02 32.03 33.04 33.38
Natural gas BCM 1.45 2.36 18.00 29.71 31.40 31.95
Nuclear power BkWh 2.42 3.00 6.14 19.48 19.39 17.78
Hydro power BkWh 25.25 46.54 71.66 73.7 64.10 75.33
Wind power BkWh – – 0.03 1.97 2.10 3.40
Source: MoC (2005) and CEA (2005)
MT million tonnes, BCM billion cubic meters, BkWh billion kilowatt-hours
India: Energy Policy, Table 2 Estimated energy demand

Demand (in original units) Demand (MTOE)
Primary fuel Unit 2006/2007 2011/2012 2006/2007 2011/2012
Coal MT 460.50 620.00 190.00 254.93
Lignite MT 57.79 81.54 15.51 22.02
Oil MT 134.50 172.47 144.58 185.40
Natural gas BCM 47.45 64.00 42.70 57.60
Hydro power BkWh 148.08 215.66 12.73 18.54
Nuclear power BkWh 23.15 54.74 6.04 14.16
Wind power BkWh 4.00 11.62 0.35 1.00
Total commercial energy 411.91 553.68
Noncommercial energy 151.30 170.25
Total energy demand 563.21 723.93
Source: Planning Commission (2002)
MT million tonnes, BCM billion cubic meters, BKWh billion kilowatt-hours, MTOE million tonnes oil equivalent
Energy Policy of India sector growth (Planning Commission 2006).

Increasing energy consumption associated pri-
A National Energy Fund (NEF) should be set up marily with activities in transport, mining, and
to finance energy R&D. Our expenditure on R&D manufacturing in India needs rethinking India’s
excepting for atomic energy, which as of today energy production (Chopra 2004).
provides less than 3% of our total electrical energy Recent steep fall in international oil prices due
supply, is miniscule compared to what industry to shale oil production boom would tilt the energy
and governments spend in developed countries. policy in favor of crude oil/natural gas.
In general, India’s strategy is the encourage-
ment of the development of renewable sources of
energy by the use of incentives by the federal and
References
state governments. Other examples of encourage-
ment by incentive include the use of nuclear CEA (2005) Annual Report of the Central Electricity
energy (India Nuclear Cooperation Promotion Authority, Government of India, New Delhi
Act), promoting wind farms, such as in Chopra SK (2004) Energy policy for India: towards sus-
Muppandal, and solar energy (Ralegan Siddhi). tainable energy securities in India in the twentyfirst
century. Oxford and IBH Publishing, New Delhi, India
A long-term energy policy perspective is pro- Ghosh A, Singh V (2015) India’s Religious Census 2011:
vided by the Integrated Energy Policy Report Hindus below 80% for the first time. Indian Express.
2006 which provides policy guidance on energy- Retrieved 27 Jan 2015
EIA (2005) Report of the Energy Information Administra- MNES (2005) Annual Report of the Ministry of Non
tion, Government of India, New Delhi Conventional Energy Sources, Government of India,
http://www.indiaenergyportal.org/engstats/chart6.htm New Delhi
http://www.indiaenergyportal.org/images/overview_ Nehru J (1946) The discovery of India. Penguin Books
table2.gif Planning Commission (1999) Tenth and Eleventh Plan
http://www.indiaenergyportal.org/overview_detail.php Document of the Government of India, New Delhi
http://www.worldometers.info/world-population/india- Planning Commission (2002) Tenth Plan Document
population/ Chapter 7.3 on Energy, Government of India, New
https://en.wikipedia.org/wiki/Energy_policy_of_India Delhi
Kumar D (2005) The Cambridge economic history of Planning Commission (2006) Report of the “Expert Com-
India, volume II: c. 1757–2003. Orient Longman, mittee on Integrated Energy Policy” Government of
New Delhi, p 1115 India, Planning Commission
Mishra RK, Nagendra Kumar VB (2012) India’s energy Raychaudhuri T, Habib I (2004) The Cambridge economic
transition. Academic Foundation India history of India, volume I: c. 1200 – c. 1750. Orient
MoC (2005) Annual Report of the Ministry of Coal, Longman, New Delhi, p 543
Government of India, New Delhi Report of the “Expert Committee on Integrated Energy
MoF (2005) Economic Survey, Government of India, New Policy” (2006) Government of India, Planning
Delhi Commission
MoPNG (2004) Annual Report of the Ministry of Petro-
leum and Natural Gas, Government of India, New
Delhi
C
Coal Rank Classification Reflectance Measurement (Ro%)
Shankar Nath Chaudhuri It is an optical property of coal determined under a

Geological Survey of India (GSI), Kolkata, India polarized microscope. A monochromatic light
with a wavelength of 546 nm reflected from a
specified area of well-polished vitrinite, measured
The rank of a coal is characteristic of the stage under oil immersion using a photo multiplier, is
reached by it in course of coalification. The devel- compared with light reflected under identical con-
opment from peat through the stages of lignite, dition from a number of standards of known
subbituminous, and bituminous coals to anthra- reflectance. Enough readings on different vitrinite
cite and meta-anthracite is termed coalification. surfaces are taken and mean value is determined.
Coalification or coal metamorphism is a function It is the most important parameter for rank deter-
of heat and pressure acting over a period of time. mination of coal. If the measurement is taken
Among the three primary factors, heat is generally under plane polarized light, it is considered as
considered to be the most important. Increased “random” values. If the measurement is done
heat at greater depths of burial has been consid- under cross nicols, two readings may be available
ered the primary factor (Hilt’s Law, after Hilt on rotation of the microscope stage. The maxi-
1873). mum and minimum readings are recorded for
Rank or maturity of coal indicates its coalifica- synthesis of such anisotropic grain. This
tion stage which can be determined by reflectance bireflectance character is important for coal
measurement studies of vitrinite (Ro%), estima- where the difference of reflectance is more than
tion of moisture, volatile matter, and carbon 0.02 % between maximum and minimum
hydrogen content. readings.
Fundamental and technological properties of Vitrinite is the best reference maceral for deter-
coal depend primarily on the rank of coal. mining rank of a coal due to the following
Exact determination of rank always has been reasons:
one of the most important subjects of coal science
and research. It is universally accepted that rank 1. It is the most abundant and, therefore, the most
determination by measurement of reflectance on representative maceral.
vitrinite is the best method so far developed.

DOI 10.1007/978-3-642-40871-7_99-1
2 Coal Rank Classification
Coal Rank Classification, Table 1 Rank classification of coal (Taylor et al. 1998; Diessel 1992)
Vitrinite reflectance (%)
Random
% Carbon % Volatile matter Gross specific energy Diessel Teichmuller
Rank stage (daf) (daf) (MJ/kg) (1992) (1982)
Peat 60 >60 14.7 0.2 0.26
Lignite 71 52 23 0.4 0.38
Subbituminous 80 40 33.5 0.6 0.42 C
0.49 B
0.65 A
High volatile 86 31 35.6 0.97 0.65 C
bituminous 0.79 B
1.11 A
Medium volatile 90 22 36 1.47 1.5
bituminous
Low volatile 91 14 36.4 1.85 1.92
bituminous
Semianthracite 92 8 36 2.65 2.58
Anthracite 95 2 35.2 6.55 5

2. Its characteristic change is fairly continuous Ru ¼ Rs x Sinyu 2 =Sinys 2
and commensurate (proportionately) with the
course of coalification.
3. It is relatively easy to isolate visually under where
microscope.
Ru = reflectivity
However, even vitrinite is not a completely U = unknown sample
homogeneous substance. In consequence, it is S = standard
desirable to consider telocollinite/collotelinite for y = Angular reading
determining rank in coal.
Calibration of a reflectivity measuring appara- Bireflectance or anisotropy character of a coal
tus follows Fresnel’s equation (1998): sample is studied under microscope with 90 rota-
tion of stage. It is an optical behavior of coal. In
h i some special cases, it shows anisotropy if the
R ¼ ðn 1Þ2 =ðn þ 1Þ2 x 100
measurement is taken under cross polarized
light. Generally, high-rank coals (with some con-
where ditions) display a clear anisotropy.
Like reflectance measurement estimation,
R = reflectivity moisture, volatile matter and carbon, hydrogen,
n = refractive index oxygen content with gross calorific value, and
swelling number are also significant for rank
If ys and yu are the angular reading for the parameter as indicated in Seyler’s coal classifica-
standard substance and unknown substance, tion (Table 1).
respectively, and Rs and Ru represent the reflec-
tance coefficient (expressed as percentage),
Coal Rank Classification 3
References Taylor, G.H, Teichmuller, M, Davis, A, Diessel, C.F.K.,

Littke, R and Robert P (1998) Organic Petrology,
Diessel CFK (1992) Coal bearing depositional systems. Gebruder Borntraeger, Berlin,704p
Springer, Berlin, 721pp Teichmuller, M (1982) Fluoreszenzmikroskopische
Fresnel’s equation (1998) In: Taylor GH, Teichmuller M, Anderungen von Liptiniten und Vitriniten mit
Davis A, Diessel CFK, Littke R, Robert P (eds) Organic zunehmendem Inkohlengsgrad und ihre Beziehungen
petrology. Gebruder/Borntraeger, Berlin/Stuttgart, zu Bitumenbildung und Vorkokungsver halten.In
371–373pp English SOC.Org.Petrol.Spec.Pub.1(1984):pp74.
Hilt C (1873) Sitzungsber. Aach. Bez. V.D.I, 4
C
Coal, Trace Elements behaving as nutrient to the plants, are found in

the first four periods of the system.
Shantosh Kumar Mishra According to plant physiology, some elements
RRL Bhubaneswar, CSIR- Institute of Minerals are indispensable as nutrient for the growth of the
and Materials Technology, Odisha, India plants. Of these, oxygen is associated as free mol-
ecules, anions, and water, hydrogen as undissoci-
ated water, and carbon as product from
With ever-increasing demand of solid fossil fuel, photosynthesis or as water-soluble carbonates. In
distribution of trace elements in coal has become a addition, N, S, P, K, Ca, Mg, and Fe are consid-
great concern as it is a big environmental con- ered as mineral nutrients.
straint. Two aspects – mode of occurrence and Goldschmidt (1944) determined concentration
distribution of trace elements – are significant. of rare elements from plant ashes, obtained by
Trace elements may either be due to primary bio- burning wood from the Central German forest.
genic concentration in the plants or precipitation/ The study of coal ash by Goldschmidt revealed
sorption during the formation of coal. that many coals contain an exceptionally high
The depositional environment during amount of certain trace elements. Accumulation
peatification and diagenesis plays an important of different elements is sometimes plant
role in the formation of trace elements in coal. specific. For example, aluminum is concentrated
Trace elements associated with plant materials in the plants of Lycopodiaceae family; silicon is
undergo chemical changes causing alteration in concentrated in monocotyledon and sodium and
organic combinations. The formation of insoluble chlorine in halophytes.
metal sulfides is a result of the reduction of sulfate Trace elements, both organic and inorganic
to sulfide due to bacterial action. components, are enriched manifolds in the fly
Syngenetic elements are likely to be deriva- ash after combustion. Volatile elements, like As,
tives of organic matter, However, such elements Cd, Cu, Ga, Pb, Zn, etc., are adsorbed into outlet
are unlikely to remain in its original form during as the flue gas. Some of them are preferentially
coalification process which involves change in concentrated in fine particulates within fly ash.
hydrogen ion concentration (pH), oxidation Nonvolatile elements tend to be incorporated
reduction potential (Eh), and microbial effect. In into slag. The adsorbed trace elements in fly ash
an attempt to draw the relationship between are a matter of serious concern since they affect
biophile elements and the periodic table, Thatcher the biosphere on many counts. Some of the ele-
(1934) established that almost all elements, ments may be discussed for their impact on human
population.
DOI 10.1007/978-3-642-40871-7_100-1
2 Coal, Trace Elements
Arsenic: It occurs in chemically bound forms minerals of its own. It is mostly associated with
and in acid-leachable (sorbed) forms. Sulfide form silicate minerals in coal and occurs in very trace
is common in coal. It may occur either as organic amounts. Among the lithotypes, durain shows the
or inorganic compounds which have syngenetic or highest concentration of Hf in most Indian coals.
epigenetic origin. Arsenic may be associated with Beryllium is strongly lithophilic. Among the
organic components of coals when it is difficult to lithotypes, vitrain shows the highest and durain
remove. When arsenic is inorganically bound, the lowest Be concentration.
mostly in pyrite, it is easier to remove by conven- Caesium occurs as absorbed cations with
tional coal cleaning methods. However, part of it K-rich and clay minerals.
is retained in association with constituents of solid Thorium, uranium, and tungsten: Thorium
waste – fly ash. When the fly ash is discharged in and uranium are trace elements of great environ-
ash pond, the arsenic is leached and water medium mental importance. These are frequently absorbed
is contaminated with arsenic. Habitats using by clay minerals. Uranium is a strong lithophilic
arsenic-bearing groundwater are vulnerable to element. Its occurrence in coal has been reported
diseases like hyperpigmentation (flushed appear- from all parts of the world. Radioactivity in coal is
ance, freckles) and hyperkeratosis (scaly lesion on mainly caused due to uranium and thorium. Swaine
the skin). (1990) opined that average content of those two
Fluorine: In some Chinese coal samples, con- elements is as low as 0.5–10 ppm. Finkelman
centration of fluorine is high. High fluorine con- reported abundance of uranium up to 2.1 ppm in
tent in Late Permian coals from Guizhou province American coal. Bregger and Schoff (1955)
of China has been reported where coals are asso- suggested that uranium is derived from circulating
ciated with hydrothermal fluids along tectonic groundwater where it may travel as uranyl ion.
faults (Zhang 2002). Tungsten concentration varies between 0.5 and
Zinc: Zinc (Zn) in nature replaces Fe2+ and 2.71 ppm. In some Indian coal samples, fusain
Mg2+ in silicates and oxides. Clay minerals and shows the highest (10.80 ppm) amount of tung-
the sediments containing organic matter readily sten followed by vitrain (7.63 ppm).
adsorb Zn. Lanthanum, cerium, and samarium: Out of
Barium and chromium: Generally, barium different light rare earth elements, only lanthanum
(Ba) occurs in high concentration in coals of dif- (La), cerium (Ce), and samarium (Sm) contents in
ferent stratigraphic horizons of the world. In India, selected samples were determined. The bulk sam-
20–2413 ppm of Ba in Tertiary and Permian coals ples from both NE and NW India contain almost
from NE India, NW India, and East Bokaro has equal concentration of La (25.6 ppm). Maximum
been reported (Mukherjee et al. 1982). In both the concentration of La is recorded in durain followed
seams, except vitrain, all other lithotypes contain by clarain (Mukherjee et al. 1982).
appreciable amounts of Ba. It is probably contrib- Cerium is reported in ash of some Indian coals.
uted by a number of mineral forms like silicates, Among the lithotypes, durain and clarain have
oxides, carbonates, and sulfates. more Ce than the other two lithotypes.
Chromium (Cr) is very common in coals of all Samarium concentration in some Indian coals
ages and ranks. Mukherjee et al. (1982) reported is recorded as 3.68 and 5.33 ppm, respectively.
38–153 ppm Cr in coals from Lower Gondwana These are higher than the world coal average data.
formations. Clarain and durain contain high concentration of
Rubidium and scandium: Among the Sm in both the cases.
lithotypes, the concentration of rubidium (Rb) is
more in durain and clarain than other lithotypes.
In coal, generally K-bearing minerals like ortho- Cross-References
clase and clay are the sources of Rb.
Hafnium, beryllium, and caesium: Hafnium ▶ Trace and Minor Elements in Coal
is a strong lithophilic element and does not form ▶ Trace Elements in Coal
Coal, Trace Elements 3
References the Geological Survey of India. Geological Survey of

India, Calcutta, 119pp
Bregger IA, Schoff JM (1955) Germanium and uranium in Swaine, DJ (1990) Trace Elements in Coal. Butterworths,
coalfield wood from Devonian black shale. Geochem London
Cosmochem Acta 7:287–293 Thatcher RW (1934) Proposed classification of the chem-
Goldschmidt VM (1944) The occurrence of rare elements ical elements with respect to their functions in plant
in coal ashes. Lecture delivered to the British Coal nutrition. Science 79:463
Utilization Research Association Zhang J (2002) Trace element abundances in major min-
Mukherjee KN, Raja Rao CS, Choudhury AN, Pal JC, Das erals of Late Permian coals from Southwestern Gui-
M (1982) Trace element studies in the major Tertiary zhou Province, China. Int J Coal Geol 53(1):55–64
and Gondwana coalfields of India, vol 49, Bulletins of
C
Coal, Permeability (D)/millidarcy (mD). The principle that governs

how fluid moves in the subsurface is called
Dipak Ranjan Datta Darcy’s Law. It defines the ability of a fluid to
Geological Survey of India (Retired from GSI), flow through a porous media such as rock. It is
Kolkata, India based on the fact that the amount of flow between
two points is directly related to the difference in
pressure between the two points, the distance
The capability or specifically the capacity of a between the points, and the interconnectivity of
coal bed to transmit gas or fluid through it is flow pathways in the rock between the points.
generally expressed as permeability (Chandra The permeability of a coal bed is dependent
1997). This is one of the most significant charac- upon the mega- and macroporosity of the coal,
teristics of coal-bed reservoir in relation to the i.e., cleats and fracture system which plays a sig-
CBM exploitation. nificant role for production of methane gas
Availability of the passage or drainage path in (Bustin 1997; Laubach et al. 1998; Pashin
the coal bed is essential for movement of gas and et al. 1999). Cleat/fracture system varies markedly
fluid through it. If drainage path is available, the depending upon composition and rank of coal.
desorbed gas accumulated at distant points flows Compositionally vitrite-rich (bright) coals are
toward the exit/outlet point and accumulates there more permeable than dull coal which is due to
to come up to the surface level following the exit/ greater abundance of cleating in the vitrite-rich
outlet passage. In such a case, the coal bed is said coals (Smyth and Buckley 1993). Clarkson and
to be permeable. On the other hand, if the coal bed Bustin (1997) recorded the following order of
is not permeable (without any drainage path), the decreasing permeability, in average, with coal
desorbed gas fails to move and reach to the bore lithotype – bright (4.1 mD), banded (0.79 mD),
hole point which results in nonrecovery of fibrous (0.50 mD), banded dull (0.14 mD), and
methane gas. dull (0.016 mD). It is well understood that rank-
So permeability of a coal bed is the most vital wise, high-rank coal (up to Ro 1.35 %) having a
parameter for coal-bed methane (CBM) recovery higher degree of cleat development, i.e., cleat
and its production. At the same time, it is most frequency, should be more permeable than the
significant for prediction of reservoir performance low-rank counterpart. Above this rank
during production of CBM. Flow/movement of (Ro 1.35 %), cleat frequency decreases with fur-
gas and fluid along the available drainage path ther increase in rank indicating decrease in per-
within the coal bed is guided by Darcy’s law, meability (Su et. al. 2001). This behavior pattern
and permeability is measured in terms of darcy of cleat development is a very significant one and
DOI 10.1007/978-3-642-40871-7_101-1
2 Coal, Permeability
should be carefully taken into consideration at the It is to be mentioned that aperture width of a
time of evaluation of reservoir characteristics in coal changes when a core sample is brought to the
relation to permeability. Thus semianthracitic to surface from its subsurface occurrence (in situ
anthracitic coal having very high Ro% may not be condition) as a coal matrix shows plasticity at
potential from the production point of view as its high pressure and temperature when it occurs in
permeability decreases. the coal bed at depth. Little information is avail-
The orientation, continuity, interconnectivity, able on in situ cleat aperture (Laubach et al.,
and frequency of these structures (cleats), in addi- op. cit), which may differ a bit when the sample
tion to coal rank and composition, are important is studied in our crop or in laboratory.
parameters in assessing permeability during the Harpalani and Chen (1995) suggested the fol-
production of coal-bed gas. When all fractures/ lowing formula to determine permeability of coal.
cleats occur in isolation without interconnection
among them, flow rate would be limited by matrix K ¼ a3 =12s
permeability and there will be no enhancement of
permeability due to the fracture/cleat. Network [K = permeability, a = aperture, s = spacing]
geometry and connectivity of fractures/cleats in In the formula two parameters, i.e., aperture
a system are very significant for the permeability width and spacing, are taken into account.
enhancement. Coal-bed permeability may be Study on fractured carbonates established an
three to ten times greater along the face cleat equation of permeability in terms of aperture
direction in comparison to any other directions width and spacing of fractures (Lucia 1983).
indicating the strong preferred orientation and

greater length of interconnected fractures in that K ¼ 84:4 105 w3 =z
direction (McCulloch et al. 1974). On a local
scale, cleat connectivity results from their cross- [K = permeability in darcy, w = fracture aper-
cutting and abutting relations. Vertical connectiv- ture in cm, and z = fracture spacing in cm].
ity of cleat network is commonly restricted due to Scott (1999) used the above formula for perme-
confinement of small cleats at interfaces between ability in coal, though it does not take into account
coal types and large cleats at coal-non-coal-bed the geometric distribution of microcleats and their
interfaces. possible contribution for permeability.
Microcleat study renders good scope of study-
ing many more aspects like aperture width, height,
spacing, cleat type, frequency, degree of intercon-
nectivity, and mineralization along cleat opening Importance of Permeability in Coal-Bed
(Solano-Acosta et al. 2007; Datta 2005; Datta Methane Investigation
et al. 2007). Each of these properties has signifi-
cant control for permeability of a coal bed. Of Coal beds which are heterogeneous with respect
these, aperture width, height, and frequency to composition and fabric are responsible for sig-
(inverse of spacing) are directly proportional to nificant vertical and lateral variation in permeabil-
permeability. Population % of primary, master ity and thus may be important in making
cleat, and interconnected cleat system enhances production decision in the extraction of hydrocar-
permeability because of higher degree of intercon- bons from coal. Permeability is the most impor-
nectivity. If the open space of cleat is filled in by tant parameter in the prediction of reservoir
secondary minerals, the drainage path is blocked/ performance. Average permeability influences
sealed and hence it reduces permeability. This the production rate, whereas permeability hetero-
way population % of non-mineralized cleat is geneity has a bearing on efficiency. Thus the suc-
directly proportional to permeability. Based on cessful production of coal-bed methane is, in
the above said relation, permeability of coals major part, dependent upon the knowledge and
may be qualitatively assessed. understanding of the cleat system.
Coal, Permeability 3
References Lucia FJ (1983) Petrophysical parameters estimated from

visual description of carbonate rocks: a field classifica-
Bustin RM (1997) Importance of fabric and composition tion of carbonate pore space. J Petrol Tech 35:629–637
on the stress sensitivity of permeability in some coals, McCulloch CM, Deul M, Jeran PW (1974) Cleats in bitu-
Northern Sydney Basin, Australia: relevance to coal minous coalbeds. U S Bur Mines Rept Invest 7910:23
bed methane exploration. AAPG Bull 81:1894–1908 Pashin JC, Carroll RE, Hatch JR, Goldhaber MB
Chandra K (1997) Nonconventional hydrocarbon (1999) Mechanical and thermal control of cleating
resources like coal bed methane and gas hydrates: and shearing in coal examples from the Alabama
exploration imperatives to India. Int J Geol coalbed methane fields, USA. In: Mastalerz M,
69(4):261–281 Glikson M, Golding SD (eds) Coalbed methane scien-
Clarkson CR, Bustin RM (1997) Variation in permeability tific, environmental and economic evaluation. Kluwer,
with lithotype and maceral composition of Cretaceous Dordrecht, pp 305–327
coals of the Canadian Cordillera. Int J Coal Geol Scott AR (1999) Improving coal gas recovery with
33:135–151 microbially enhanced coal bed methane. In:
Datta DR (2005) Cleat system and its significance in the Masterz M, Glikson M, Golding SD (eds) Coal bed
light of coal bed methane. Scientific Communication. methane scientific, environmental and economic eval-
News Coal Wing Geol Surv Ind 25(1):28–31 uation. Kluwer, Dordrecht, pp 89–110
Datta DR, Chaudhuri SN, Chakrabarti NC (2007) Assess- Smyth M, Buckley MJ (1993) Statistical analysis of the
ment of permeability based on micro cleat studies of microlithotype sequencesin the Bulli Seam, Australi
coals in certain seams of Koiyantar block, East Bokaro and revelance to permeability for coal gas. Int J Coal
Coalfield, Jharkhand. Abstract paper presented at Geol 22:167–187
National Seminar on Energy Scenario 2020, June Solano-Acosta W, Mastalerz M, Schimmelmann A (2007)
2007, Nagpur, Organised by Gondwana Geological Cleats and their relation to geologic lineaments and
Society, Gond Geol Magz 9:76 coalbed methane potential in Pennsylvanian coals in
Harpalani S, Chen G (1995) Influence of gas production Indiana. Int J Coal Geol 72:187–208
induced volumetric strain on permeability of coal. Su X, Feng Y, Chen J, Pan J (2001) The characteristics and
Geotech Geol Eng 15:303–325 origins of cleat in coal from Western North China. Int
Laubach SE, Marrett RA, Olson JE, Scott AR (1998) Char- J Coal Geol 47:51–62
acteristics and origins of cleat: a review. Int J Coal Geol
35:175–207
C
Coal-to-Liquids (CTL) Bituminite loses its fluorescence at a stage

corresponding to vitrinite reflectance (Ro) of
Shankar Nath Chaudhuri about 0.8–0.9 %. During bituminization
Geological Survey of India (GSI), Kolkata, India petroleum-like substances are generated not only
from liptinites but also from perhydrous vitrinites.
The onset of bituminization appears to cause the
Petroleum precursors are found in coal, although diagenetic or geochemical gelification or
in far lower concentrations than in oil source vitrinization which takes place between the
rocks. Similarly, as they are converted and incor- brown and hard coal stages. The first formed
porated into kerogen in the source rock, in coals bitumen is believed to serve as a fluid component
they are apparently found mainly as hydrogen- in a new colloidal system in which the solid part is
rich, aliphatic edge groups on the humic sub- represented by the stable aromatic groups of
stances. To a lesser extent, the precursors are huminite/vitrinites. Thus the hydrogel brown
present as macerals of liptinite group, mainly coal changes into the bitumogel hard coal
alginite, resinite, bituminite, cutinite, and (bituminous coal) during the stage of subbitumi-
liptodetrinite. It is observed that bituminization nous coal. Bituminization also explains why
takes place with rising rank in the brown coal to low-rank bituminous coals (Ro 0.4–0.7 %) are
subbituminous coal range. This is because suitable for hydrogenation. Hirsch (1954), on the
petroleum-type hydrocarbons are formed at this basis of X-ray studies, described the liquid struc-
stage from components of waxy leaf cuticles, ture of bituminous coals. Coal as a source rock for
pollen, and spore coatings by chemical reactions. oil has become a modern concept since
Petroleum source rocks are able to generate petro- petroleum-like substances were detected in Aus-
leum from included organic matter. Their content tralian coals (Brooks and Smith 1967). Since then,
of organic carbon may be less than 1 %. On the pyrolysis studies, mainly Rock-Eval pyrolysis,
other hand, coals with almost 100 % of organic revealed that coals have a potential in petroleum
matter may be source rocks not only for gas but formation (Durand and Oudin 1979; Teichmuller
also for oil (Durand and Paratte 1983; Littke and Durand 1983; Cook and Struckmeyer 1986;
et al. 1990). In oil source rocks with type II Murchison 1987; Bertrand 1989). A modern con-
organic matter, the liptinite maceral bituminite is cept of the evolution of coal as a source and
commonly quantitatively very important and reservoir rock for oil and gas was published by
highly oil prone. In the immature and early mature Levine (1993). Fluorescence microscopy has
stages, bituminite is characterized by a relatively proved to be of the greatest importance in relation
weak fluorescence and a positive alteration. to hydrocarbon exploration. Compared with
DOI 10.1007/978-3-642-40871-7_102-1
2 Coal-to-Liquids (CTL)
chemical or other microscopical methods, it has Brooks JD, Smith JW (1967) The diagenesis of plant lipids
the advantage that all factors which are decisive during the formation of coal, petroleum and natural gas.
Geochim Cosmochim Acta 31:2389–2397
for oil and gas proneness can be estimated Cook AC, Struckmeyer H (1986) The role of coal as a
directly, namely, type, abundance, distribution, source rock for oil. In: Glenic RC (ed) Australian oil
and maturation stage of the organic matter exploration symposium. Petroleum Exploration Soci-
(Teichmuller 1979). This is true also for the opti- ety of Australia, Melbourne, pp 419–432
Durand B, Oudin JL (1979) Exemple de migration des
cally unresolved organic substances in untreated hydrocarbures . . .. . .. In: Proceedings of the 10th
source rocks, that is, substances which are finely World Petroleum Congress. I Bukarest, Wiley, Chich-
distributed between and within minerals (clay ester, pp 1–9
interlayer spaces). This part of the organic matter, Durand B, Paratte M (1983) Oil potentials of coals, a
geochemical approach. In: Brooks J (ed) Petroleum
which may well be the majority, can be detected geochemistry and exploration of Europe. Blackwell,
indirectly by the fluorescence properties of the Oxford, pp 255–265
mineral bituminous groundmass (Teichmuller Hirsch PB (1954) X-ray scattering from coals. Proc R Soc
and Ottenjann 1977). Senftle et al. (1987) found Lond 226:143–169
Levine JR (1993) Coalification: the evolution of coal as a
good relationship between the atomic ratio H/C source rock and reservoir rock for oil and gas. In: Law
and the amount of fluorescing liptinites plus fluo- BE, Rice DD (eds) Hydrocarbon from coal,
rescing amorphous material (fluoramorphinite). vol 38, American Association of Petroleum Geologists
Both high H/C ratios and large amounts of fluo- studies in geology series. American Association of
Petroleum Geologists, Tulsa, pp 39–77
rescing organic matter indicate high oil proneness. Littke R, Leythaeuser D, Radke M, Schaefer RG
Conversion of coal to liquid requires an (1990) Petroleum generation and migration in coal
increase in the hydrogen-to-carbon ratio of coal, seams of the Carboniferous Rhur Basin, north west
which can be achieved either by direct or indirect Germany. In: Advances in organic geochemistry
1989. Organic geochemistry, vol 16. pp 247–248
liquefaction. Murchison DG (1987) Recent advances in organic petrol-
ogy and organic geochemistry: an overview with some
Direct liquefaction adds gaseous hydrogen to reference to ‘oil from coal’. In: Scott AC (ed) Coal and
slurry of pulverized coal- and recycled coal- coal-bearing strata: recent advances. Special Publica-
tion Geological Society of London, vol 32. pp 257–302
derived liquids in the presence of catalysts. The Senftle JT, Brown JH, Larter SR (1987) Refinement of
process is efficient, but further refining is organic petrographic methods for kerogen characteri-
needed to achieve high-grade fuel zation. Int J Coal Geol 7:105–117
characteristics. Teichmuller M (1979) Beispiele fur die Anwending
fluoreszenzmikroskopischer Methoden . . .. . .. . .. . ...
Indirect liquefaction first gasifies coal using oxy- In: C.R. 8th congress international strategy geol.
gen and steam to form “syngas” (a mixture of Carbonifere. 1975, 4, Moscow, pp 79–89
mostly hydrogen and carbon monoxide). Teichmuller M, Durand B (1983) Fluorescence microscop-
Using the “Fischer-Tropsch” process, the syn- ical rank studies on liptinites and vitrinites in peat and
coals, and comparison with results of the Rock-eval
gas is purified and catalytically combined to pyrolysis. Int J Coal Geol 2:197–230
produce high-quality, ultra-clean products. Teichmuller M, Ottenjann K (1977) Art und Diagenese von
liptiniten und lipoiden soften in cinsm. . .. . .. Erdol u
Kohle 30:387–398
References
Bertrand PR (1989) Microfacies and petroleum properties

of coals as revealed by a study of North Sea Jurassic
coals. Int J Coal Geol 13:575–595
C
Coal, Porosity semianthracite, and anthracite (Stach et al. 1982;

Chandra et al. 2007; Sengupta 2013).
Dipak Ranjan Datta Coal pore system is of great significance in
Geological Survey of India (Retired from GSI), relation to coal bed methane (CBM) because
Kolkata, India pore system controls storage of methane gas in
it, flow of gas and fluid through it, adsorption/
desorption, etc. (Chandra 1997). Thus proper
Porosity in general is the measure of void or pore understanding and knowledge of pore system is
space present within a solid and is represented by essential for evaluation of CBM potentiality.
volume percentage of void in the solid. Coal pore system classification is mainly based
A substance with pore space or void is known as on dimension and shape of pores and partly on
porous substance. Presence of pores in a solid their genesis. It consists of several categories
affects its density or specific gravity and in many which are described one by one. Based on diam-
ways influence physical properties of the sub- eters of pores, Xodot (1966) classified pores into
stance. Volume percentage of void is inversely four types – (1) micropores with diameter
proportional to the density/specific gravity of the <0.01 mm (millimicron), (2) small pores with
solid, i.e., a solid with profuse void is less dense diameter in between 0.01 mm and 0.1 mm,
and vice versa. It is a significant parameter con- (3) mesopores with diameter 0.1 mm and 1.0 mm,
trolling physical properties of a solid and plays and (4) macropores with diameter >1 mm. Gan
some important role in various applications. et al. (1972) classified it slightly differently and
Coal – solid fossil fuel – the main energy described micropores (0.4–1.2 nm), transitional
resource of the world, is derived from gradual pores (1.2–30 nm), and macropores (>30 nm)
burial of plant debris of the geological past using nanometer (nm) scale. According to the
through complex biochemical and geochemical International Union of Pure and Applied Chemis-
processes (coalification) acting over a prolong try (IUPAC) (1982), pores may be categorized as
time span. Thus coal is the product of coalification (1) micropores (<2 nm), (2) mesopores
process and represents an organic solid material (2–50 nm), and (3) macropores (>50 nm). Based
composed predominantly of hydrocarbons. Like on scanning electron microscopy (SEM), Zhang
inorganic solid, coal also exhibits certain proper- (2001) suggested genetic classification of coal
ties, e.g., density, hardness, color, streak, porosity, pores into primary, metamorphic, epigenetic, and
etc. Coalification process produces various prod- mineral pores.
ucts which are in order of higher rank which are So far as porosity is concerned, coal is highly
peat, lignite or brown coal, bituminous coal, porous and heterogeneous in nature in comparison
DOI 10.1007/978-3-642-40871-7_103-1
2 Coal, Porosity
to other inorganic substance, which makes coal to phenomenon as well as adsorbed gas storage,
inherit some special properties to behave as a and the success of a CBM project depends on
unique reservoir for CBM. Pore characteristics proper functioning of these mechanisms (for
generally change with rank of coal. For low-rank details, see “▶ Coal Bed Methane (CBM)”). At
bituminous coals, vitrinite is more microporous the same time, flow of methane gas along with
and less macroporous than their equivalent fluid through coal bed (permeability) is guided by
inertinite. With rank increase, mesoporosity of drainage path established by macropore system
vitrinite reduces considerably in comparison to like cleat, fracture, crack, and interconnected
that of inertinite (Crosdale et al. 1998). Thus pores (see “▶ Coal, Permeability”). Minor quan-
peat and lignite show predominance of tity of methane gas is also stored as free gas in the
macropores, whereas anthracitic coal contains macropores of coal (Crosdale et al. 1998; Zhang
predominant micropores. Analysis of coal 2001).
through a new technology – atomic force micros- The meso- to macroporosity of coal bed con-
copy (AFM) – indicates that nanopores are mainly sists of cleat/fracture network, phyteral (related to
metamorphic and intermolecular pores. The for- the structures of the plant organs), and matrix
mer pores are commonly rounded and elliptical porosity (Gamson et al. 1993) and holds a minor
increasing quantitatively with increase in rank. portion of methane (5 %) as free gas. The distri-
The intermolecular pores show marked change bution as well as size, shape, and continuity of
in form and their size of low-rank coal is bigger these microstructures, responsible for
than high-rank coal. The number of macroporosity, differs from one coal lithotype to
intermolecular pores decreases with increase in another. The phyteral and matrix porosity is gen-
rank (Yao et al. 2011). Porosity of coal is a signif- erally associated with duller coals, whereas frac-
icant attribute possessing some characteristic feature porosity is typical of brighter lithotype.
tures which are very much useful in different Macroporosity plays a significant role in regulat-
domains of coal industry. ing permeability of a coal bed.
Coal pores include multivarious types like cell
lumens derived from cellular structure of plants,
crack, and fracture developed in coal during and
References
after coalification process belonging to micro- to
mesopore systems which are generally visible Chandra K (1997) Nonconventional hydrocarbon
under microscope and space between hydrocar- resources like coal bed methane and gas hydrates:
bon molecules belonging to micropores, generally exploration imperatives to India. Int J Geol
not visible under microscope and through 69(4):261–281
Chandra D, Chaudhuri SG, Choudhury N (2007) Coalifi-
SEM. All these types occur together in coal in cation process. In: Chandra’s textbook of applied coal
various proportions depending upon the nature petrology. Jijnasa Publishing House, Kolkata,
of coal as already stated. This is worth mentioning pp 20–26
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coal bed methane (CBM) potentiality. Gamson PD, Beamish BB, Johnson DP (1993) Coal micro-
It is well established that bulk of methane gas structure and micro permeability and their effects on
(>95 %) is stored within coal bed reservoir under natural gas recovery. Fuel 72:87–99
Gan H, Walker PL, Nandi SP (1972) Nature of porosity in
overburden pressure and occurring at greater American coals. Fuel 51:272–277
depth through the mechanism of adsorption IUPAC (1982) Manual of symbols and terminology.
(Chandra 1997). With decreasing/releasing pres- Appendix 2, part I, colloid and surface chemistry.
sure, the adsorbed gas is released (known as Pure Appl Chem 52:2201
Sengupta S (2013) Coalification process. In: Coal geology
desorption) and accumulates in low pressure and its application in industrial use. Srinivas Press,
zone. The micropores present in coal play the India, pp 36–44
vital role in controlling adsorption/desorption
Coal, Porosity 3
Stach E, Mokowsky MT, Teichmuller M, Taylor GN, Yao SP, Jiao K, Zhang K, Hu WX, Ding H, Li MC, Pei WM
Chandra D, Teichmuller R (1982) Stach’s text book of (2011) An atomic force microscopy study of coal
coal petrology. Gebruder Borntraeger, Berlin/Stutgart, nanopore structure. Chin Sci Bull 56(25):2706–2712
pp 140–150 Zhang H (2001) Genetic type of pores in coal reservoir and
Xodot BB (1966) Coal and gas outburst. China Industry its research significance (in Chinese). J Coal Sci Eng
Press, Beijing, pp 27–30 26:40–44
C
Coal, Adsorption More than 95 % of methane gas particularly

the thermogenic category occurs within coal
Dipak Ranjan Datta matrix in adsorbed state within the micropores,
Geological Survey of India (Retired from GSI), and as a result coal bed acts as a special reservoir
Kolkata, India having much higher gas storing capacity than any
other conventional reservoir Chandra (1997). This
special reservoir property is attained by coal by
Adsorption refers to the phenomenon by which virtue of having abundant micropores whose
gas molecules are aligned and arranged in layered internal surfaces play a major role for adsorption.
form along the internal surface of the micropores Quantity of methane adsorbed in a coal is a
under the influence of pressure. After methane gas function of pressure at a fixed temperature
is generated at the time of coalification, it reaches (isotherm). With increasing pressure, more and
to the coal matrix full of micropores following the more methane molecules are accommodated
drainage path formed by macropore system and forming one layer after another along the internal
migrates into it through diffusion passing from surface of the micropore. This process continues
one pore to the other where adsorption takes till the space within micropore is fully occupied
place in the micropores. by methane molecules arranged in layered fash-
In context to coal bed methane (CBM), adsorp- ion. At this stage no more gas can be accommo-
tion refers to the mechanism of gas storage within dated in the pore indicating that it has attained the
coal bed. The methane gas generated during coal- saturation level (Kim 1987; Chandra 1997) or it is
ification is stored in the coal bed mainly in three saturated with methane gas.
different ways – (a) as adsorbed molecules in the Experimentally adsorption test is carried out in
micropores, (b) as free gas in the meso- to a well equipped and sophisticated laboratory. So
macropores (cleat, fracture, cell lumens, etc.), far as the principle of the experiment is concerned,
and (c) as gas dissolved in groundwater. Out of a coal sample is placed within a closed chamber/
these three, the first category is the most signifi- container having attachments for injecting gas
cant one as it is mainly responsible for storage of with pressure regulator in order to increase pres-
huge quantity of thermogenic methane gas in coal sure within the chamber. At the same time, a
bed and makes it a unique reservoir (Crosdale temperature controlling device is also attached in
et al. 1998). The remaining two categories have order to maintain a fixed temperature throughout
negligible contribution (about 5 % only) for the duration of experimentation. A certain quan-
methane storage. tity of gas is injected into the chamber and allowed
to be adsorbed at some pressure. This way more
DOI 10.1007/978-3-642-40871-7_104-1
2 Coal, Adsorption
and more gas with increasing pressure is subjected coals with similar compositional makeup and
to adsorption at the same temperature. A situation depth of occurrence.
arrives when no more gas is absorbed instead of Similarly coal occurring at greater depth, i.e.,
increasing pressure. This stage suggests that the under higher load pressure, should also contain
sample is saturated with gas indicating the highest higher-order methane gas. The role of rank and
gas storing capacity of the sample. It brings out a pressure with the gas content – both having direct
curve called adsorption isotherm when quantity of relation with gas content – is well established by
adsorbed gas is plotted against pressure. Kim (1987).
The above experiment and the resultant Thus it is interesting to note that the adsorption
adsorption isotherm curve of a coal are very is intimately associated with many geological
much useful in deciphering maximum methane parameters like petrographic composition, rank
gas content (cc per g/m3 per kg/standard cubic or thermal maturation, depth of coal seam
feet (scf) per ton) at infinite pressure. It also helps (lithostatic pressure), etc. So proper and system-
to understand gas content of a coal bed at varying atic evaluation of the abovementioned parameters
pressure. needs to be carefully done in order to decipher
As adsorption predominantly or solely controls methane gas content and CBM potentiality of
thermogenic gas storage in a coal bed, availability an area.
as well as abundance of micropores, magnitude of
their internal surface area, and overburden pres-
sure are the prime factors for CBM content of a
References
coal bed.
As vitrinite, one of the three organic microcon- Chandra K (1997) Nonconventional hydrocarbon
stituents of coal, is reported to have abundant resources like coal bed methane and gas hydrates:
micropores than others (Chandra 1997), vitrinite- exploration imperatives to India. Int J Geol
rich coal is indicative of higher gas content in 69(4):261–281
Crosdale PJ, Beamish BB, Valix M (1998) Coalbed meth-
comparison to inertinite-rich coals having more ane sorption related to coal composition. Int J Coal
or less the same rank and depth of occurrence. Geol 35:147–158
It is stated (see “▶ Coal, Porosity”) that high- Kim AG (1987) Estimating methane content of bituminous
rank coals are abundant in micropores than coalfields from adsorption data. U.S. Bureau of Mines,
Report of Investigations, 82455
low-rank ones. Hence high-rank coals are also
suggestive of more gas content than low-rank
C
Coal, Desorption Desorption of methane from the core will start as

soon as it starts coming up from the coal bed
Dipak Ranjan Datta through the hole. The amount of desorbed gas
Geological Survey of India (GSI), Kolkata, India released during the time span of lifting the core
from the drill hole is not possible to store and
measure as it is lost in the way of coming out to
Desorption is a process opposite to adsorption. the surface. This is known as lost gas. The time
Methane is stored through adsorption within span for lifting the core sample from the coal bed
micropores in coal matrix with increasing pres- to the surface is recorded for indirect calculation
sure in a coal bed. In the reverse way, with reduc- of lost gas which is carried out after completion of
tion in reservoir pressure, the adsorbed gas is desorption test. As soon as the core reaches to the
released from the micropores and it migrates surface, instantly it is put within a closed container
through coal matrix – a process called (canister) so that desorbed gas released from the
diffusion – to reach to drainage path defined by coal core is stored within the canister. Desorption
coal macropore system. This phenomenon is within the canister continues for several
known as desorption (Harpalani and Schraufnagel days – span of which varies depending upon gas
1990a, b; Crosdale et al. 1998). content of the core sample. The volume of
During CBM exploration, various investiga- desorbed gas stored in the canister is measured
tions and tests are generally carried out in order at regular time intervals over these days of desorp-
to evaluate potentiality of an area before imple- tion test with recording of both the time and vol-
mentation of commercial production of methane ume of desorbed gas. The process continues till
gas. Of these very significant one is desorption desorption is complete, i.e., when no more gas is
test which is carried out during test drilling. released from the sample and stored within the
Desorption test is a device of measuring gas con- canister. Total volume of the gas thus measured
tent of a coal based on the principle of desorption during the entire period of desorption test is called
phenomenon and is a direct method of gas mea- desorbed gas. Then the core sample is taken to
surement. There are many indirect methods to laboratory in order to carry out another test where
estimate gas content of a coal using empirical the sample is crushed within a closed cylinder. It
formula (Kim 1987; Chandra 1997; Chandra results in release of some quantity of gas trapped
et al. 2007). within the core sample which could not come out
While drilling a coal bed occurring at depth, through desorption. This released gas obtained
coal core of certain length is taken out to the after crushing is stored in the closed cylinder and
surface with due care consuming minimum time.
DOI 10.1007/978-3-642-40871-7_105-1
2 Coal, Desorption
its volume is measured. It is known as residual which governs the transport of mass through dif-
gas. fusive means. In this case it is concerned with
The above test results in a set of data (time diffusion in solid coal, where the diffused gas
vs. desorbed gas content). When desorbed gas gets accumulated in the cleat opening of the coal
content is plotted against square root of desorption bed. With time accumulation of gas and fluid
time, it gives rise to a typical curve very much gradually develops pressure and it starts flowing
similar to adsorption isotherm. In this case it is through the coal bed following the available
called desorption isotherm. The gas which was drainage path formed by the cleat system present
lost during lifting the core, i.e., lost gas can easily in it (Mavor et al. 1992; Smyth and Buckley
be estimated through extrapolation of the curve 1993). This flow of fluid along the drainage path
using the lost time recorded during lifting the core is controlled by Darcy’s law. Flow of gas from all
sample. Now the sum of these three components, different points of the coal bed is directed towards
i.e., lost gas (Q1), desorbed gas (Q2), and residual the borehole point at depth. Later when water is
gas (Q3) is the total volume of methane gas pumped out, the gas follows the borehole passage
contained in the coal core sample. and automatically comes out to the surface where
Mass of the core sample is determined before it is collected in a suitable container or directly
crushing it for determination of residual gas. The sent to the user end through pipe line.
total volume of gas (Q1 + Q2 + Q3) thus obtained
is divided by mass of the coal core sample and it
gives gas content of the coal sample which may be References
expressed differently using different units, e.g.,
cc/g or m3/t in C.G.S system or scf/t (standard Chandra K (1997) Nonconventional hydrocarbon
resources like coal bed methane and gas hydrates:
cubic feet per ton of coal) in F.P.S system.
exploration imperatives to India. Int J Geol
Desorption isotherm gives actual gas content 69(4):261–281
of a coal bed, whereas adsorption isotherm (see Chandra D, Chaudhuri SG, Choudhury N (2007) Applica-
▶ Adsorption) indicates gas storing capacity or tion of petrographic study in the prospecting of coal bed
methane (CBM). In: Chandra’s textbook of applied
saturation level. Comparison of these two param-
coal petrology. Jijnasa Publishing House, Kolkata,
eters of a sample is very much significant and pp 288–303
indicates whether a coal is saturated or under Crosdale PJ, Beamish BB, Valix M (1998) Coal bed meth-
saturated which are essential in course of CBM ane sorption related to coal composition. Int J Coal
Geol 35:147–158
exploration.
Harpalani S, Schraufnagel RA (1990a) Measurement of
Principle of CBM exploitation/extraction is parameters impacting methane recovery from coal
mainly based on desorption phenomenon along seams. Int J Min Geol Eng 8:369–384
with movement of fluid and gas through the Harpalani S, Schraufnagel RA (1990b) Shrinkage of coal
matrix with release of gas and its impact on permeabil-
coal bed.
ity of coal. Fuel 69:551–556
Reduction in seam gas pressure to below satu- Kim AG (1987) Estimating methane content of bituminous
ration when punctured by drill hole causes desorp- coalfields from adsorption data. U.S. Bureau of Mines,
tion (release of gas due to withdrawal of confining Report of Investigations, 82455
Mavor MJ, Close JC, Pratt TJ (1992) Review of recent US
pressure) of methane from micropores of coal
coalbed natural gas reservoir research. In: Beamish BB,
matrix. The released methane initially diffuses Gamson PD (eds) Symposium on coalbed methane
through apparently impervious coal matrix and research and development in Australia (Townsville),
migrates towards the open space of cleat and James Cook University of North Queensland,
vol 2, pp 109–152
fracture system. The release of methane molecules
Smyth M, Buckley MJ (1993) Statistical analysis of the
from the micropores and its movement through microlithotype sequences in the Bulli Seam, Australia
coal matrix takes place following a phenomenon and relevance to permeability for coal gas. Int J Coal
known as diffusion. It is guided by Fick’s law, Geol 22:167–187
C
Coal Bed Methane (CBM) Reservoir geoscientists of the world who are engaged in
Property the development, evaluation, and exploitation of
CBM. USA, Australia, Canada, and China took
Dipak Ranjan Datta the leading role in this line and become successful
Geological Survey of India, Kolkata, India and came out with the commercial production
within a short time.
The amount of coal bed methane (CBM)
Coal Bed Methane (CBM) is methane (CH4) gas entrapped in a coal bed is a joint function of
produced during formation of coal and is stored several geological parameters. Coal being a strat-
within the coal bed – stratified sedimentary ified deposit occurs in association with other sed-
deposit consisting predominantly of hydrocarbon imentary rocks (sandstone, shale, siltstone, etc.)
derived from plant debris of geological past and behaves mostly like a tabular sheet/lensoidal
through a process called coalification– occurring body having certain thickness and spreading over
at considerable depth under sediment load pres- a relatively extensive area occurring at some depth
sure. In past, methane gas within coal was consid- from the ground level.” Quantity of methane gas
ered as hazardous causing so many fire accidents generated and stored in a coal seam is a compli-
while mining out coal from underground mines as cated and complex process which is mainly con-
it is a highly combustible and the miners used to trolled by depth of occurrence of the seam, its
adopt so many preventive measures to avoid fire thickness, geometry (lateral behavior characteris-
accident for safe mining. In recent past around tics), rank (stage of coalification process) and
nineties, a new technology is developed to extract petrographic composition of coal seams derived
methane gas from coal bed before mining out coal from detailed analysis under microscope, cleat
deposit. At the same time having significant heat properties (cracks/fractures mostly developed
value methane gas, thus extracted, is utilized as a during coalification), and so on (Spears and
nonconventional energy resources which is other- Caswell 1986; Tremain et al. 1991; Laubach
wise very much ecofriendly. Thus the new tech- et al. 1998).
nology played a dual purpose – eliminating A coal seam characteristically performs mainly
chances of fire accident from the hazardous gas three significant roles in respect of CBM – it gen-
and discovering sources of alternate energy erates methane gas, stores the gas within its body,
resources partly fulfilling the demand of energy and allows transmitting it through the coal bed.
crisis. This way it has attracted attention of Thus coal bed is a unique reservoir having three
major functions as mentioned above and also
Dipak Ranjan Datta Retired. characterized by excessive storing capacity
DOI 10.1007/978-3-642-40871-7_106-1
2 Coal Bed Methane (CBM) Reservoir Property
which is 3–7 times than that of any other conven- Coal bed not only generates methane gas but
tional reservoir of the same dimension (Chandra also behaves as a very good reservoir for the same
1997). storing much more quantity of methane gas than
Generation of methane is intimately associated any other conventional reservoir as already
with the coal-forming process and takes place in described. This unique behavior of coal is due to
two successive stages during coalification. These a special property of having preponderance of
two significant stages are – (1) biogenic and microporosity. More than 95 % of the total meth-
(2) thermogenic. Their products are known as ane gas of a coal remains adsorbed (Gray 1987)
biogenic and thermogenic methane. The biogenic along the internal surface of the micropores of the
methane along with other compounds of negligi- coal occurring at depth, i.e., under the influence of
ble quantity like CO2, H2S, N2O, N2, etc. evolves load pressure and only about 5 % occurs in the
in this first stage known as humification which macropore system as free gas. Adsorption capac-
involves biogenic degradation of buried plant ity of a coal has a positive relationship with the
materials at temperature less than 50 C resulting total internal surface area of these micropores.
in the formation of low rank coals (Peat to More the internal surface area of these micro-
subbituminuous). As the low rank coal is pores, more is the adsorption capacity of the
subjected to greater depth of burial and higher coal. It may be mentioned that out of the three
heat flows during the progress of coalification, it organic microconstituents of coal (vitrinite,
is converted into bituminous coal, generating inertinite, and liptinite), vitrinite has a greater
additional methane, carbon dioxide, and water. proportion of micropores (Chandra 1997), and
This methane produced at a temperature greater thus possesses a higher methane adsorption
than 50 C is known as thermogenic methane. capacity due to availability of more micropores
However, scientists all over the world are much resulting in more internal surface area in it. So far
more interested in thermogenic methane as its rate as internal surface area is concerned, it is mention
of generation is very high. In the higher stage of worthy that 1 lb of coal is reported to show inter-
coalification more than 5000 c.ft./t of methane nal surface area varying from 100,000 square feet
(volume of methane available from unit mass of to more than 1,000,000 square feet (Jones
coal) is generated (Ayers and Kelso 1989; Cooper et al. 1988). However, the above discussion sug-
and Scidile 1995). Maximum expulsion of meth- gests that vitrinite rich coals are supposed to con-
ane occurs during transition from High Volatile tain more gas content implying significance of
Bituminous “A” to Low Volatile Bituminous coal petrographic composition of coal.
at 150 C (details in Coal, Coal Bed Methane The adsorption capacity of coal also increases
(CBM)). This thermogenic stage can produce with increase in depth of occurrence, i.e., burial
much more methane gas beyond the capacity of pressure implying enhancement of its rank. There-
the coal bed to store it resulting in migration of the fore higher rank coals are supposed to have more
excess gas to other non-coal reservoir, if available. gas content than lower rank ones and it is well
However, storing capacity increases with the established by Kim (1987).
increase in confining pressure, i.e., greater depth With the fundamentals of coal bed methane as
of burial of the coal bed due to gradual subsidence described so far, control of seam thickness and its
of the coal bearing basin. The above stage of geometry for CBM potentiality may easily be
coalification may very well be assessed in a rela- visualized. When there are many coal seams hav-
tively quick mode by study of reflectance of ing similar rank, compositional makeup, and
vitrinite under oil (Ro%), a microconstituent of depth of occurrence, the thickest one with maxi-
coal which is indicative of rank and commonly mum volume of coal would obviously show more
used as a measure of thermal maturity. For a gas content than others. Similarly a seam with
commercial CBM project, the typical range of regular geometric shape is supposed to contain
thermal maturity of coal varies from 0.7 % to more gas than an irregular shaped coal body.
2.0 % (Chandra 1997; Cooper and Scidile 1995). Depth of occurrence, seam thickness, subsurface
Coal Bed Methane (CBM) Reservoir Property 3
behavior pattern, and geometry of a coal seam are Cooper JL, Scidile J (1995) Controls on exploration: pro-
determined through exploration techniques which ceedings of Petrotech., B.R.Pub.Corp., New Delhi
Gray I (1987) Reservoir Engineering in Coal Seams: Part I
is a must for assessment of CBM potentiality of - The Physical Process of Gas Storage and Movement
an area. in Coal Seams. SPERE. pp. 28–34
In spite of having sufficient gas content, a coal Jones AH, Bell GJ, Schraufnagel RA (1988) A review of
seam will not be viable for commercial production the physical and mechanical properties of coal with
implications for coal bed methane well completion
until and unless it possesses an optimum perme- and production. In: Fassett JE (ed) Geology and coal
ability (capacity to transmit gas and fluid through bed methane resources of the northern San Juan Basin,
coal bed). Permeability of the coal bed is a pre- Colorado and New Mexico. Rocky Mountain Associa-
requisite to allow transmission of gas and liquid tion of Geologists Guidebook, Colorado, pp 169–181
Kim AG (1987) Estimating methane content of bituminous
through coal bed for successful production of CB- coalfields from adsorption data. U.S. Bureau of Mines,
M. Macroporosity (mainly cleat, fractures, and Report of Investigations, 82455
interconnected macropores) plays a significant Laubach SE, Marrett RA, Olson JE, Scott AR (1998) Char-
role in regulating permeability of a coal bed acteristics and origins of cleat: a review. Int J Coal Geol
35:175–207
forming drainage path for the gas and fluid to Spears DA, Caswell SA (1986) Mineral matter in coals:
flow through the coal bed. cleat mineral and their origin in some coals from the
English Midlands. Int J Coal Geol 6:107–125
Tremain CM, Laubach SE, Whitehead HH (1991) Coal
fracture (cleat) patterns in Upper cretaceous Fruitland
References Formation, San Juan Basin. Colorado and New Mex-
ico: implications for exploration and development. In:
Ayers WB, Kelso BS (1989) Knowledge of methane poten- Schwochow S, Murray DK, Fahy MF (eds) Coal bed
tial for coal bed methane resources grown but needs methane of Western North America. Rocky Mountain
more study. OGU 87:67–76 Association of Geologists Guidebook, Colorado
Chandra K (1997) Nonconventional hydrocarbon pp 49–59
resources like coal bed methane and and gas hydrates:
exploration imperatives to India. Int J Geol
69(4):261–281
P
Pyrometamorphosed Coals coal. For long decades, researchers studied the

and Changing Properties characteristic changes in different parameters of
thermally metamorphosed coal. These parameters
Indrani Bhattacharyya involve physical, chemical, optical, petrographic,
Department of Geology, Jadavpur University, geochemical, and structural properties of coal.
Kolkata, India Intensity of pyrolysis of coal varies with various
factors like dimension of intrusive body, original
rank of coal, etc. Thermal effect on coal gradually
Dominant coal deposits were formed in Gondwa- diminishes away from the intrusive contact with
naland and Euro-American provinces in the coal. A brief outlook on changing character of
Carboniferous-Permian period. Occasionally, different parameters of pyrometamorphosed coal
these coals are traversed by two types of igneous will be given in this topic. Discussions will be
intrusive. One is dolerite/basalt in composition, restricted to bituminous coal mainly. In steel
while the other type is mica-lamprophyre. Doler- manufacturing and thermal power industry,
ite and basalt are basic intrusives in composition mainly bituminous coals are used. Brown coal
occurring mainly as dykes often with huge thick- and anthracite coal behave in a different way
ness. They affect the coal seam for a small area on than bituminous coal on thermal intrusion. With
both sides. Mica-lamprophyre or mica-peridotite, loss of moisture, formation of new organic and
a mica-rich ultrabasic rock having high tempera- inorganic compounds is common due to cracking
ture and mobility, frequently shows ramifications of brown coal, but it does not undergo plastic or
along the fractures within the coal seam. Mica- softening stage on heating as bituminous coal and
lamprophyre dykes or sills are not so much thick, retain microstructures of original plant. Anthracite
but they show a devastating effect on coal due to also undergoes little or no plastic stage or soften-
this diversification within the coal seams. As a ing stage on heating. However, it forms meta-
result of igneous intrusion, a vast area of coal anthracite and shows chemical, optical, and other
besides the intrusive body is thermally altered. properties of coal near to graphite. It may retain
This thermal alteration of coal due to igneous original anthracite texture and may show high
activity is called pyrometamorphism or pyrolysis optical anisotropism.
of coal. Pyrolysis renders a genuine problem in
mining activity in any underground or
opencast mine.
Pyrometamorphosed coal shows a very differ-
ent character than normal or thermally unaffected
DOI 10.1007/978-3-642-40871-7_109-1
2 Pyrometamorphosed Coals and Changing Properties
Changing Properties of rock. However, macerals are highly inhomoge-

neous in character unlike minerals. Broadly, three
Different parameters of coal altered due to thermal groups of macerals are present within the coal.
metamorphism are discussed below. These are vitrinite, liptinite/exinite, and inertinite.
In normal coal, they may form monomacerite
Physical Property band or may combine with other macerals to
Coal is an organic sedimentary rock of inhomo- form di-macerite or trimacerite band under micro-
geneous composition. With an unaided eye, coal scope. But in thermally metamorphosed coal, the
shows alternate banding of dull and bright com- banding nature is destroyed and replaced by coke
ponents. Bright bands include vitrain dominantly, mosaic structure. Normal banding of macerals
clarain, and fusain. Fusain generally is found in appear in coal when thermal effect is minimum.
patchy or lensoidal form. Dull band is composed Below 300 C macerals hardly show any
of durain mainly. In thermally affected coal, this alteration.
banding nature is changed. Coal adjacent to the Near the intrusive contact, the main petro-
intrusive contact loses its banded nature; becomes graphic constituent found is coke mosaic struc-
dull, hard, compact, and porous; and shows ture. Individual mosaic unit is pleochroic and
columnar joints. Numerous cracks and fractures strongly anisotropic with high reflectance and
are developed within the coal along which tarry shows brushy extinction on rotation of the micro-
matter as well as igneous rock material intrudes. scope stage. Mosaic structure forms the ground-
This part of coal is burnt and called “natural coke” mass of naturally carbonized coal or coke at the
or jhama or cinder coal. As the distance increases expense of vitrinite and exinite. Other compo-
from the intrusive contact, bands appear, but they nents like inertinites are embedded within this
are ruptured and folded. Intensity of folding and mosaic groundmass. Depending on the condition
faulting gradually decreases away from the of pyrolysis, mosaic structure may be fine,
intrusive-coal contact. Finally, parallel and con- medium and coarse with different shape like acic-
tinuous banding is found where intrusive effect on ular, equant etc. (Jones and Creaney 1977). In
coal is negligible. According to the nature of laboratory, mosaic structures are formed not
banding, three thermally affected zones may be below 470 C (Kisch and Taylor 1966).
recognized: (1) highly affected, (2) moderately Due to influence of heat exerted by igneous
affected, and (3) least/unaffected (Fig. 1). intrusive, original components of coal get either
transformed into new materials or altered their
normal character. Pyrolytic carbon or flow struc-
Petrographic Property
ture, coke vein, graphitoid spherolith, and
Microscopically, recognizable constituents of coal
mesophase spheres fall within the first category,
are called macerals. Macerals are like the minerals
Pyrometamorphosed Intrusive rock

Coals and Changing cinder coal or jhama
Properties, Highly affected coal
Fig. 1 Schematic
presentation of different
thermally altered zones + Moderately Least affected
within coal seam (not to
affected coal or unaffected
scale) + coal
+
+
Pyrometamorphosed Coals and Changing Properties 3
while vitrinite, with high reflectance, fissures or pores (Stach et al. 1982) forming
intermingling of inertinite, and mosaic are the graphitoid spheroliths. The temperature of forma-
examples of the second category. tion of these features is found above 500 C.
Coke veins are fluidized carbonaceous veins Mesophase spheres are small circular bodies
produced by restricted melting of coaly substance found as inclusions within remnants of unaltered
near the intrusive followed by solidification on isotropic vitrinite scattered on the mosaic ground-
cooling (Sanyal 1984). These veins contain vesi- mass (Plate 1e). Individual sphere shows brushy
cles with their elongation parallel to the flow extinction. According to Stach et al. (1982),
direction of veins. Fluidized coke veins are mesophase spheres represent an intermediate
restricted to the adjacent area of the intrusive stage between mosaic grain and vitrinite.
contact (Plate 1b). Numerous vesicles or gas bubbles of different
Pyrolitic carbon or flow-type mosaic is formed size and shape are found scattered on the mosaic
from chemical cracking of volatiles in coal due to groundmass. They are produced by escape of
heat (Stach et al. 1982; Singh et al. 2007). This volatiles from macerals.
may be found in different shapes like granular, Semifusinite and fusinite (constituents of
needle, rod, ropy, or worm-like (Plate 1c). inertinite) generally remain unaltered in the pro-
Pyrolitic carbon may be formed in laboratory cess of pyrolysis. Occasionally, semifusinites
at/or above 500 C. along with cell cavities show intense folding due
Graphitoid spheroliths are carbonized compo- to compression induced by the intrusive
nents, nodular in shape having concentric layers (Plate 1a).
(Plate 1d). It is characterized by high reflectance Mineral matters: Numerous mineral matters
and strong anisotropism with the Brewster cross include siderite, pyrite, clay, quartz, and dolomite.
extinction. Due to heat, some parts of organic Dominant minerals near the intrusive contact are
components of coal get volatilized which on carbonate. Macerals show bending against large
cooling resolidify as tar- or pitch-like material in mineral matter (Plate 1f).
Pyrometamorphosed Coals and Changing Proper- cross.” (e) Mesophase spheres (small spheres shown by
ties, Plate 1 (20 20 oil). (a) Severe folding and flow- arrow) within vitrinite embedded within mosaic ground-
age of cell cavity within semifusinite. (b) Folded coke vein mass. (f) Distinct maceral banding (bent against clay clast)
with flow-oriented vesicle, strongly anisotropic. (c) of semifusinite (bright) and vitrinite (dull) in the least
Pyrolitic carbon forming ropy structure in mosaic ground- affected zone
mass. (d) Graphitoid spherolith showing the “Brewster
Chemical Property Thermal diffusivity, after a certain temperature,

Pyrolitic influence makes change in chemical increases with rising temperature due to aromati-
property of coal. The effect of heat is most at the zation (annealing) of carbon skeleton (Gosset
contact. As a result, a huge amount of volatile et al. 1996). Temperature of removal of moisture
matter (VM) which are mainly water, CO2, and and volatile matter as well as temperature of coke
SOx escapes from coal, and a relative amount of formation can be obtained from differential ther-
carbon increases. A high quantity of inorganic mal analysis (Sanyal 1984).
materials occurs near the intrusive contact. This
is reflected in the lowest VM% (DAF or dry ash Geochemical Properties
free basis) at the contact. VM% gradually Inorganic minerals as a whole show higher con-
increases away from the contact. The carbon concentration near the intrusive-coal contact. Among
tent and ash content show increased value near the these, carbonate minerals dominate which are
intrusive contact which gradually falls away from deposited epigenetically in the coke zone as a
the contact. Hydrogen content shows a decreasing result of reaction with hot intrusive rock with
trend while approaching the intrusive rock. organic component in coal. Clay and mica group
Beyond the thermal effect, all chemical values of minerals shows mineralogical change at the
remain almost constant. intrusive contact due to dehydration by heat effect
(Ward et al. 1989). Heat also breaks pyrite mole-
Optical Property cule to form Fe-oxide which can be well
In thermally affected coal where vitrinite is evidenced by Fourier transform infrared (FTIR)
transformed into mosaic grains, reflectance max- analysis.
imum [R (oil)max] is measured on individual According to Golab and Carr (2004)
mosaic grains. It shows a higher value near the Finkelman et al. (1998), geochemical elements
contact. A sharp fall in R(oil)max value which rather than mineral matter are more useful to
remains more or less uniform thereafter is noticed delineate different zones of alteration halo of a
when normal maceral banding appears. Thermally thermally altered coal. A group of geochemical
affected coal shows optical anisotropism which is elements show definite affinity with certain min-
the difference between reflectance maximum, eral groups. Depending on concentration of cer-
viz., R(oil)max and reflectance minimum, viz., tain elements within different parts of coal, it is
R (oil)min positions on rotation of the microscope possible to subdivide different thermally altered
stage. Low-rank coal does not exhibit anisotro- zones. This study may also help to mark the zone
pism (Stach et al. 1982). Anisotropism gradually having toxic elements of various kinds, leading to
dies out in the least affected part. Reflectivity environmental management.
measurements can be used to evaluate the temper-
ature of carbonization. It may also be used to Molecular Structure of Coal
determine elemental C% of coal of known rank Coal structure is composed of clusters of aromatic
(Chandra 1963, 1965; Ghosh 1967, 1968). Rela- ring attached with aliphatic/alicyclic chains/rings.
tionship of temperature with reflectance, resistiv- As coalification progress, aromatic ring becomes
ity, and hydrogen content and also the relation more condensed, and high aromaticity occurs
between D/T and reflectance and rank of coal (Ibarra et al. 1996). By Fourier transform infrared
were established by Johnson et al. (1963), (FTIR) analyses, aromatic ring structure of coal
Snyman and Barclay (1989). D implies distance along with other functional groups can be
from the intrusive contact, and T denotes thick- depicted. Aliphatic chain attached with aromatic
ness of the intrusive. moiety is susceptible to temperature change. Near
the intrusive contact, aliphatic chains are
Other Physical Properties destroyed reflected by total absence of aliphatic
Resistivity of coal decreases as the temperature of stretching. Aromatic stretching is observed as the
carbonization increases (Johnson et al. 1963). temperature increases toward the intrusive-coal
Pyrometamorphosed Coals and Changing Properties 5
contact. After some distance away from the different parameters of coal. On the basis of these
intrusive-coal contact, aliphatic stretching parameters, the unaffected part can easily be dis-
reappears. This implies that temperature effect tinguished from highly and moderately affected
on coal molecular structure is negligible at that coal. Upgrade of coal within highly affected zone
distance. So, FTIR may be used as another tool to is reflected by low VM%, high C%, high molec-
separate the normal or least affected coal from ular ordering, and high reflectivity. This knowl-
pyrometamorphosed one. edge may help in planning proper mining activity
Coal follows graphitization trend as coal matu- as well as better utilization of upgraded coal
rity increases that means that as temperature and within a highly affected zone.
pressure become high, coal molecules tend to
rearrange themselves according to the structure
of graphite. In pyrometamorphosed coal, this
References
graphitization trend is found near the intrusive
contact. The highest ordered structure occurs in Chandra D (1963) Reflectance of thermally metamor-
highly affected zone at certain distance away from phosed coals. Fuel 42:69–74
the intrusive body which can be revealed by x-ray Chandra D (1965) Use of reflectance in evaluating temper-
study of mineral-free coal (Shome and ature of carbonized or thermally metamorphosed coals.
Fuel 44(3):171–175
Bhattacharyya 2008). This zone shows plastic Finkelman RB, Bostick NH, Dulong FT, Senftle FE,
deformation stage of coal as revealed by petrog- Thorpe AN (1998) Influence of an igneous intrusion
raphy. At the immediate contact of intrusive, on the inorganic geochemistry of a bituminous coal
where jhama or burnt coal is present, coal shows from Pitkin County, Colorado. Int J Coal Geol
36:223–241
disordered structure due to high temperature. Ghosh TK (1967) A study of temperature conditions at
Molecular disordering also occurs within the igneous contacts with certain Permian coals of India.
coal away from the contact where temperature Econ Geol 62:109–117
effect is quite low. So, maximum graphitization Ghosh TK (1968) A study on the optical and chemical
characters of some coals carbonized in the laboratory.
within pyrometamorphosed coal can be found at Econ Geol 63:182–187
certain range of temperature. Below or above this Golab AN, Carr PF (2004) Changes in geochemistry and
temperature range, coal shows molecular mineralogy of thermally altered coal, Upper Hunter
disordering. This can be further supported by valley. Aust Int J Coal Geol 57:197–210
Gosset D, Guillous O, Papoular R (1996) Thermal diffu-
measuring stacking height and aromatic layer sivity of compacted coal powders. Carbon
diameter of coal molecules by x-ray study which 34(3):369–373
shows an increased value for the highly ordered Ibarra JV, Munoz E, Moliner R (1996) FTIR study of the
structure of coal (Khorasani et al. 1990). evolution of coal structure during the coalification pro-
cess. Org Geochem 24(6/7):725–737
Johnson VH, Gray RJ, Schapiro N (1963) Effect of igneous
intrusives on the chemical, physical and optical prop-
Conclusion erties of Somerset coal. Am Chem Soc Div Fuel Chem
7:110–124
Jones JM, Creaney S (1977) Optical character of thermally
From the above discussions, it is clear that igne- metamorphosed coals of northern England. J Microsc
ous intrusion within the coal seam influences dif- 109(Pt-1):105–118
ferent parameters of coal. Due to thermal effect, Khorasani GK, Murchison DG, Raymond AC
coal properties follow a different course than nor- (1990) Molecular disordering in natural cokes
approaching dyke and sill contacts. Fuel 69:1037–1046
mal coal. Intensity of thermal effect on coal is Kisch HJ, Taylor GH (1966) Metamorphism and alteration
dependent principally on the original rank of near an intrusive-coal contact. Econ Geol 61:343–361
coal and the quantity of heat as well as the rate Sanyal SP (1984) Petrology of natural coke associated with
of heating of the intrusive. However, in all cases, igneous intrusives in parts of the Raniganj coalfield,
vol 117, Memoirs of the Geological Survey of India.
the overall pattern of change is similar; only the Geological Survey of India, Calcutta
degree of alteration differs. Extents of different Shome D, Bhattacharyya I (2008) A study on pyrometa-
thermally altered zones vary when defined with morphosed coking coals from Jharia coal basin with
special emphasis on deterministic parameters sugges- Stach E, Mackowsky MT, Teichmuller M, Taylor GH,
tive of extent of thermal effect. J Geol Soc India Chandra D, Teichmuller R (1982) Stach’s textbook of
71:271–280 coal petrology, 3rd edn. Gebruder Borntraeger, Berlin/
Singh AK, Singh MP, Sharma M, Srivastava SK Stuttgart
(2007) Microstructures and microtextures of natural Ward CR, Warbrooke PR, Roberts FI (1989) Geochemical
cokes: a case study of heat affected coking coals from and mineralogical changes in a coal seam due to contact
the Jharia coalfield, India. Int J Coal Geol metamorphism, Sydney Basin, New South Wales, Aus-
71(2–3):153–175 tralia. Int J Coal Geol 11:105–125
Snyman CP, Barclay J (1989) The coalification of South
African coal. Int J Coal Geol 13:375–390
C
Coal, Chemical Behavior elementary percentage but on the basis of the

with Increasing Rank results of ultimate analysis. His ideas were further
extended in 1938 and this system is still regarded
Prabal Dasgupta as a standard method of coal classification.
Indian Association for the Cultivation of Science, There exists number of coal classification sys-
Kolkata, West Bengal, India tems in use today and new schemes are still being
introduced. Physicochemical properties of differ-
ent classes of coal, such as density, moisture con-
Rank of a Coal tent, volatile matter (VM), fixed carbon (FC),
calorific value, porosity, solubility, caking prop-
Coal is derived from vegetable matters. The veg- erty, reflectance, etc., are directly linked with the
etable matters first decompose and form peat. chemistry and hence the rank of coal under study.
Subsequently, peat is, under suitable geothermal Higher the rank of a coal, structurally it
condition, progressively converted to lignite, bitu- approaches the order of graphite and its VM,
minous, and anthracite. The process of conversion moisture content, and hydrogen content (%)
of lignite to anthracite is known as metamorphism diminishes. On the other hand, its calorific value,
or coalification. Position of a coal in this meta- carbon content, and reflectance increase as the
morphic series is its rank or degree of maturity. rank increases. In the following paragraphs, we
shall try to understand changes in
abovementioned parameters in terms of chemical
Classification of Coal changes associated with the transition from a
lower-rank coal to a higher one.
In past peat, lignite, bituminous coal, and anthra-
cite all were termed as coal. Although all are used
as fuel, they differ in color, chemical structure, Moisture
and physical characteristics. In 1850s a need for
classification of coal was felt and scientists all Every coal contains moisture. Presence of moisture
over the Europe and America tried to classify lowers the calorific value, and hence it is undesir-
coal either on the basis of composition of residue able. Lower the rank of a coal, higher is its mois-
left when coal is heated or in terms of oxygen ture (air dried) content. This trend is reversed as we
content or on the basis of some other parameters. reach anthracite. In case of anthracite moisture
Finally Seyler came out with a brilliant idea of content slightly rise after attaining 90 % carbon
classifying coal not only in terms a single content, depicted in Fig. 1. Coal, being a porous
DOI 10.1007/978-3-642-40871-7_110-1
2 Coal, Chemical Behavior with Increasing Rank
substance, physically absorbs water molecules volatile and nonvolatile products of thermal
forming Van der Waal’s bond with water mole- decomposition of coal under specified condition.
cules, known as physical absorption. Besides, dif- On dmmf (dry mineral matter free) basis, volatile
ferent mineral matters present in coal may contain matter represents only volatile products of organic
water of crystallization. Finally, lower-rank coals, moiety.
like peat and lignite, are richer in aliphatic chains Similarly, fixed carbon does not include ash.
containing polar groups like hydroxyl ( OH) and Fixed carbon contains nonvolatile part of other
carboxylic acid ( COOH), and water molecules elements too. Fixed carbon and volatile matter
are attached to these groups through hydrogen are interrelated to each other. The sum of volatile
bonding. matter and fixed carbon both expressed on dry and
When air dried in atmosphere, the external mineral matter free (dmmf) basis should be equal
moisture evaporates. It still contains some physi- to 100 %. If VM rises, FC should fall and vice-
cally adsorbed moisture, which can be removed versa. Coals become richer in aliphatic content as
on heating above 105 C. Loss in weight is a the rank goes down. Under specified condition
measure of moisture content. In case of peat and when it is made to decompose, more and more
lignite, decomposition starts at an earlier temper- aliphatic chains break down into smaller volatile
ature(less than 105 C). In such cases, different molecules.
method is being applied to determine moisture
content. Water molecules held through hydrogen
bond, particularly in case of lower-rank coal, may Carbon Content
not be removed by heating about 105 C. One
shall have to do away with polar functional groups Carbon content of a coal sample rises as the rank
responsible for hydrogen bonding, by heating to a of the coal rises. Among the macerals of the same
still higher temperature in absence of oxygen. coal, the exinite and vitrinite have almost similar
carbon content, while fusinite has higher carbon
content. Carbon content of a coal sample should
not be confused with its fixed carbon. In anthra-
Volatile Matter
cites, volatile matter is very small, but its carbon
content and fixed carbon values are almost equal.
Volatile matter and fixed carbon are, truly speak-
In case of peat or lignite, carbon content and the
ing, not constituents of coal. They represent the
value of fixed carbon vary widely. Oxygen con-
tent of a coal has a close relation with the rank of a
coal. It decreases as the rank increases. However,
neither nitrogen nor sulfur or phosphorous content
of a coal bear any relationship with the rank of
Inherent moisture, per cent
15
the coal.
10
Calorific Value
5 This is a fundamental property of all fuels. It

shows the amount of heat evolved by complete
combustion of a given mass of a fuel under spec-
ified condition. In case of coal, more generally
75 80 85 90 95
Carbon, per cent dmmf
used parameter is gross calorific value (GCV).
Higher the rank of a coal, higher is its GCV.
Coal, Chemical Behavior with Increasing Rank, There exists number of corelation for estimating
Fig. 1 Inherent moisture and carbon percent the GCV of a coal sample based on its proximate
Coal, Chemical Behavior with Increasing Rank 3
and/or ultimate analysis, such as Goutal’s or Porosity and Adsorption Activity

schuster’s formula. More recently, Central Fuel
Research Institution of India (Majumdar 2000) Coal is a porous substance with a fairly high
proposed number of formulae for calculating internal surface area. When it is brought in contact
GCV of Indian coals. Recently for commercial with a suitable organic liquid such as methanol, it
purpose the term Useful calorific value is often enters into very fine pores and the surface is wet-
used. ted. This process is exothermic and the heat of
wetting released is a measure of its surface area
and hence its porosity.
Porosity is found to vary with the rank in the
Solubility
same fashion as the moisture varies with rank.
There is initially a fall in porosity with rank till a
Only peat is slightly soluble in water since it
minimum of 89–90 % carbon content is reached.
contains soluble carbohydrates and pectin, while
Porosity again rises in the anthracite coals.
all other classes of coals are completely insoluble
Coals of different rank exhibit different extent
in water. Peat and lignite are partially soluble in
of adsorption activity. Different organic dyes and
alkali solution owing to the presence of humic
toxic metals like titanium, beryllium are absorbed
acid, which on acidification precipitates. Higher-
by coals of different rank to different extent.
rank coals do not contain humic acid but produce
them on oxidation. Oxidized bituminous coal is
therefore partly soluble in alkali. Dilute
hydrochloric acid dissolves the hemicellulose pre- Caking Property
sent in peat.
Concentrated hydrochloric acids dissolve most Many bituminous coals when heated are softened
of the mineral maters, while siliceous mineral and form a plastic mass that swells and resolidify
matters are removed by hydrofluoric acid. On into a porous solid. Coals that exhibit such behav-
such successive treatment, one may do away ior are called caking coal. Strongly caking coals
with all the mineral matters present but at the those yield solid products with properties suitable
cost of gamma band observed in powder x-ray for use in blast furnace are called coking coal.
diffractogram of certain variety of bituminous Peat, lignite, subbituminous coal, semianthracite,
coal (Shoening 1982). and anthracite are not caking coal. Many bitumi-
Simple organic solvents like benzene and mix- nous coals are also non-caking in nature. Caking,
ture of benzene and alcohol/chloroform dissolves swelling, agglutinating, and plastic properties are
waxes and resins present in peat (about 5 %) and interrelated.
lignite (about 20 %). High-boiling solvents like Among the macerals of the same coal, the
anthracene oil, tetralin, and basic solvents like fusinite is non-caking in nature, while exinite
pyridine, quinolin, ethylene diamine can dissolve has good caking property. Caking property of
considerable amount of coal. Organic mass of a vitrinite vary with the rank in the same way as
medium-rank bituminous coal, when preheated, that of the whole coal. Coal is a macromolecular
can be dissolved in chloroform. Medium-rank substance. The macromolecular structure of the
bituminous coals can also be dissolved in tetralin coal mass is thermally broken down on
or anthracene oil up to the extent of 85–95 % on cokification, and some products of relatively low
treatment at about 350–450 C in an autoclave. molecular weight remain in a softened state for a
The coal extracts are used in the production of sufficiently long time in the reaction zone. As a
liquid fuels or carbon electrodes. Solubility of result, the entire mass takes the form of a plastic
anthracite in the abovementioned solvents is matter which is converted into solid lump,
negligible. resolidified on further heating.
4 Coal, Chemical Behavior with Increasing Rank
Chemistry and Structure Nanostructured Materials
It is important to understand chemistry and struc- Due to their unique properties from the time of
ture of coal for effective utilization as feedstock of discovery in 1991 till date, carbon nanotubes
chemicals (Lino 2000). On the basis of experi- (CNTs) have found many applications. The most
mental results, it is believed that in case of lignite, important ones are as filler materials for making
polynuclear aromatic varities like phenanthrene composites which have unexpected mechanical
are connected to each other through aliphatic or strength, potential material to replace old-age sil-
ether linkage. In case of higher-rank coals, more icon in electronic devices, drug carrier for targeted
condensed polynuclear aromatic moieties are drug delivery, field emitters used in scanning elec-
connected through similar linkage. Oxidation, tron microscope, as sensors and as hydrogen stor-
methylation, and degradation have been widely age materials, and many others. The use of coal as
used for the investigation of coal structure. Ana- a starting material to make carbon nanomaterial
lytical techniques, especially Mass Spectroscopy, started in early 1990s, following the report of
have been used for the understanding of organic successful synthesis of fullerenes from coke by
species found as oxidation product. Artok Pang (Pang et al. 1991). After that several groups
et al. (1998) suggested that aliphatic bridges have reported synthesis of nanotubes from coal or
connecting more than two aromatic moiety coke, mostly using arc discharge. Qiu et al. (2003)
existed in Taiheiyo coal, because abundant synthesized high-purity single-walled carbon
polycarboxilic acids are formed due to oxidation, nanotubes (SWCNT) from anthracite by arc dis-
identified with gas chromatography/mass spec- charge method using iron catalyst. Graphene is the
troscopy (GC/MS). Kailuan bituminous coal was most recent and important member of carbon
oxidized by alkali/oxygen at 300 C and products nanostructure family. Graphene was synthesized
obtained were identified as benzene (Zhou et al. 2012) from chemically altered anthra-
polycarboxylic acid using high performance liq- cite coal by means of catalytic graphitization. Till
uid chromatography/mass spectroscopy (HPLC/ recently, SWCNT has been successfully synthe-
MS), mainly derived from bridged bond breaking sized by a group of Indian scientists using bitumi-
and ring opening. Analysis of oxidation products nous coal as starting material (Awasthi
of Shengli lignite using MS provides insight about et al. 2015). Very recently, carbon nanotubes are
its molecular distribution. Recently MS/GC anal- used as support to the Iron-based Fisher-Tropsch
ysis of oxidation product of Chinese bituminous catalyst (Xiong et al. 2015).
coal (You et al. 2015) reaffirms the presence of
aromatic moieties. As many as nine molecular Acknowledgments Author is indebted to Prof.
ions ranging from to pl change to subscript DebashisShome, Jadavpuruniversity, for his help in form
of suggestions. Author is also indebted to prof. Samir
forms were detected using GC/MS.
Sarkar and Universities Press for allowing him to repro-
duce one diagram from a book authored by Prof. Samir
Sarkar, publisher Universities Press.
FTIR Spectra
Peat and lignite are richer in aliphatics, and their References

FTIR spectra is easily identified by sharp bands
assigned as stretching modes of sp2and sp3CH Artok I, Murata S, Nomura M, Satoh T (1998)
Reexamination of RICO method. Energy Fuel
configurations in the range of 2800–3200 cm 1,
12:391–398
and their gasification properties can also be Awasthi S, Awasthi K, Ghosh AK, Srivastava SK,
predicted. In case of higher-rank coals, these Srivastava ON (2015) Formation of single and multi-
bands become less sharp.
Coal, Chemical Behavior with Increasing Rank 5
walled carbon nanotubes and graphene from Indian Shoening FRL (1982) X-ray structure parameters of coal.
bituminous coal. Fuel 147:35–42 Fuel 61:695–699
Lino M (2000) Network structure of coals and association Xiong H, Motchelaho MA, Moyo M, Jwell LL, Coville NJ
behaviour of coal derived materials. Fuel Process (2015) Effect of group I alkali promoters on Fe/CNT
Technol 62:69–101 catalyst in Fischer-Tropsch synthesis. Fuel
Majumdar BK (2000) Theoretical oxygen requirement coal 150:687–696
combustion: relationship with its calorific value. Fuel You C-Y, Fan X et al (2015) Molecular characterisation of
79:1413–1419 Chinese coal analyzed using mass spectrometry with
Pang LSK, Vassallo AM, Wilson MA (1991) Fullerenes various ionization modes. Fuel 155:122–127
from coal. Nature 352:480 Zhou Q, Zhao ZB, Zhang YT, Meng B et al (2012)
Qiu JS, Li YF, Wang TH et al (2003) High purity single- Graphene sheets from graphitized anthracite coal: prep-
walled carbon nanotubes synthesized from coal. Car- aration, decoration and application. Energy Fuel
bon 41:2170–2173 26:5186–5192
D
Democratic Republic of the Congo: economy as well as the control of inflation after
Mining Sector 2001. Since 2003 (after introduction of the new
Mining Code in 2002), there has been consistent
Sara Geenen1,2 and Stefaan Marysse3 growth (between 5 % and 9 % per annum except
1
Institute of Development Policy and for the year 2009, due to falling world prices and
Management, University of Antwerp, Antwerp, export quantities of copper and cobalt, the main
Belgium export goods) (Banque Centrale du Congo 2013).
2
Research Foundation Flanders, Brussels, Undoubtedly growth rates (the seventh highest
Belgium in the world) were triggered by booming mineral
3
University of Antwerp, Antwerp, Belgium production, which spectacularly recovered
through reforms led by the World Bank. Better
control of the money press and international mon-
General Information on Democratic itoring by the Bretton Woods institutions brought
Republic of Congo down inflation under two digit figures. The steady
increase of exports has sustained a stable free
The Democratic Republic of Congo (DRC) has exchange rate for more than a decade now,
taken its new name in 1997 after the demise of the which is a postcolonial record. However, absolute
reign of president Mobutu who governed auto- levels of production are still very low by interna-
cratically for over two decades. The last years of tional standards (700 dollar PPP per capita, ranked
Mobutu’s were characterized by hyperinflation 228 in the world). Formal employment is esti-
and negative economic growth. Laurent Kabila, mated to have risen from about 10 % in 2001 to
spokesman of the rebellion that set aside president some 28 % in 2014 (Marysse 2015). This means
Mobutu, became the new president, but the licens- that about two thirds of the active population have
ing of his (Rwandan) military chief of staff in to fend for themselves in the informal economy.
1998 sparked off a devastating war, commonly A due account of this informal economy may
called the “first international African war” change income figures, but cannot conceal huge
(1998–2003). After the murder of Laurent Kabila poverty and below standard functioning of the
in 2001, his son Joseph took over power and economy, even in comparison with less endowed
negotiated – under the aegis of the international economies in sub-Saharan Africa. Most observers
community – a peace agreement in 2003. This agree that neo patrimonial politics and deeply
also marked the start of a macroeconomic recov- rooted corruption (DRC is ranked last but one in
ery through opening up to the international com- the Transparency International corruption index)
munity. Chart 1 shows the growth rate of the are main reasons for this low performance.
DOI 10.1007/978-3-642-40871-7_112-1
2 Democratic Republic of the Congo: Mining Sector
600 10
500
5
400
300 0
200
-5
100
0 -10
2000 2003 2006 2009 2012
Inflation Growth
Democratic Republic of the Congo: Mining Sector, Chart 1 Inflation (in %) and growth (in %) 2000–2013 (Source:
Author’s composition based on IMF, DRC art. IV reviews)
Need of Minerals no significant imports of minerals or mineral

fuels.
The DRC holds extensive mineral wealth in its Industrial, large-scale mining (LSM) is
subsoil, with over 1100 substances that have mainly taking place in Katanga province (copper
been identified, 22 of which are at present eco- and cobalt) but is also coming up in North and
nomically usable (World Bank 2008). The coun- South Kivu, Maniema, and East Province (gold).
try is estimated to hold almost half of the world’s In Katanga, the national company Gécamines had
cobalt reserves and significant reserves of tanta- seen its production dwindling from 500,000
lum, tin, gold, and diamonds. In recent years, tonnes of copper in the 1970s to some 30,000 in
significant foreign private investments have 1990, when the most important mine (Kamoto)
been made in large-scale industrial mining, collapsed due to the lack of maintenance and
which has contributed to macroeconomic investment. The new foreign investments (see
growth. According to EITI figures from 2014, Chart 2) induced a boost in copper and cobalt
the mining sector accounted for 64 % of state production from 2006 onwards, to reach historic
budget (total of US $ 716.55 million), 99 % of record levels in 2014 (more than one million
total exports, 24 % of formal employment, and tonnes) (Banque Centrale du Congo 2013) and
13 % of GDP in 2012 (EITI 2014: 21). In 2012 falling back in 2015-2016. This makes the DRC
extractive companies in the mining sector the first copper exporter in Africa and the first
declared having paid US $1,043,117,978 to the cobalt exporter worldwide. The major companies
Congolese government, while declared govern- are Sicomines (20 % Gécamines, 80 % Chinese
ment earnings amounted to US $1,052,659,116 companies), KCC (Kamoto Copper Company,
of which 75 % went into the national treasury 20 % Gécamines, 80 % other, among which
and the rest to other public services (EITI 2014: Glencore/XStrata), TFM (Tenke Fungurume Min-
8). In 2012 the DRC produced 85,409 tonnes of ing, 80 % Freeport-McMoRan and Lundin Min-
cobalt (about 82 % of world production), ing, 20 % Gécamines), Frontier (95 % ENRC
619,301 tonnes of copper (3.5 %), 20,140,000 Congo, 5 % Congolese state), and MUMI
carats of diamond (22 %), 18,981 tonnes of cas- (Mutanda Mining, 60 % Glencore, 40 % other)
siterite (tin ore) (8 %), 257 tonnes of coltan (EITI 2014: 12–14 and 147–148). The spectacular
(tantalum ore) (38 %), and 2,546 kg of gold rise in copper and cobalt production has funda-
(0.1 %) (EITI 2014: 21 and USGS). In 2015- mentally altered the composition of exports. In
2016 production levels for all minerals decreased 2004 almost 57 % of all exports consisted of
because of falling commodity prices. There are diamonds (Chart 3). From 2004 onwards, copper
Democratic Republic of the Congo: Mining Sector 3
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Gécamines JV partners
Democratic Republic of the Congo: Mining Sector, Chart 2 Copper production 2001–2013 (in tonnes) (Source:
Marysse and Tshimanga 2014)
100.00
80.00
60.00
40.00
20.00
0.00
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Part cuco/ total exportation Part Pétrole brut/total exportation autres
Democratic Republic of the Congo: Mining Sector, Chart 3 Composition of exports 2004–2013 (Source: Author’s
composition based on data from Banque Centrale du Congo)
and cobalt have become more prominent both in miners, while an estimated 8–10 million people,
absolute and relative terms, taking up 85 % of all or 14–16 % of the total population, indirectly rely
exports in 2013. Of lesser but increasing impor- on ASM for their livelihoods (World Bank 2008).
tance are the exports from the eastern provinces. ASM is particularly important in the eastern Kivu
In 2011 and 2013, Banro Corporation (South provinces, a region that is recovering from violent
Kivu) and Kibali Gold (East Province), respec- conflict in the late 1990s to early 2000s, hence, the
tively, have started producing industrial gold, labeling of the region’s tantalum, tin, and tungsten
pushing volumes of exported gold to 6,125 kg, (3Ts) and gold as “conflict minerals” (see reports
against only 2,546 kg in 2012 and less than 500 kg by UN, Global Witness, Enough Project, Interna-
in the period 2006–2011 (Ministry of Mines tional Peace Information Service, and others).
2013). Other international companies (mainly Available estimates for the number of artisanal
Chinese and South African) are doing exploration miners in the Kivu provinces, taken from 2007
and starting up production in other eastern to 2010, respectively, put the figure between
provinces. 200,000 and 350,000 (D’Souza 2007; Pact
Artisanal and small-scale mining activities 2010). As the sector is largely “informal,” official
(ASM) are widespread over Katanga, North and production and export figures for artisanal pro-
South Kivu, East Province, Maniema, and Kasai. duction are not reliable, especially not for gold
They occupy an estimated 500,000 to 2 million with its high value per unit. Production of
artisanally mined gold in South Kivu and East payments for services required under the Mining
Province was estimated to be 12,000 kg in 2008 Regulations (MR). An interministerial decree
(World Bank 2008), the same year that official (2007), for example, identified 46 of those,
gold exports from South Kivu were recorded as required for various administrative authorizations
just 65 kg (Geenen and Radley 2014). Before the (idem). Yet the World Bank (2008: 20) also
effects of the de facto embargo in the region took acknowledges that in practice companies often
hold (a result of international legislation around pay much less and are able to negotiate more
“conflict minerals,” see below), official figures for favorable tax rates and exemptions with the gov-
South Kivu from 2008 recorded cassiterite ernment. Mazalto (2009) also points to clauses in
exports at 6,004 tonnes and coltan exports at the Mining Regulations that allow companies to
440 tonnes. Mineral smuggling still costs the gov- apply more liberal fiscal regimes (MR, T20, C1,
ernment significant revenue. According to the UN Art. 510 and 543).
Group of Experts, the loss in tax revenue in 2013 The law also explicitly recognizes artisanal
amounted to between US $7.7 million and 8.2 mining. It stipulates that the Minister of Mines
million for gold alone (UN 2014). may demarcate “artisanal exploitation zones”
(AEZ) in areas where “the technological and eco-
nomic factors are not suited for the site to be
Regulatory Framework industrially exploited” (MC, T4, C1, Art. 109).
The AEZ are to be determined and proclaimed by
A new Mining Code (MC) (Law n 007/2002 of ministerial decree upon the advice of the Provin-
11 July 2002) and Mining Regulations (decree cial Mining Division. Sites already covered by
n 038/2003 of 26 March 2003) replaced Law industrial mining titles cannot be transformed
n 81-013 of 2 April 1981. The Mining Code into AEZ. In turn, companies cannot acquire
differentiates between three modes of production, research permits inside the AEZ boundaries,
subject to different tax regimes and permit sys- except for demands by artisanal miners’ coopera-
tems: industrial mining, small-scale mining, and tives (“groupements”) (MR, T9, C2, Art.
artisanal mining. Every individual or company 234–237). These cooperatives can thus officially
wanting to engage in industrial or small-scale work in these zones and should ideally evolve into
mining can apply for a research permit (“permis small-scale, semi-industrial operations. Individual
de recherches”) which is valid for a period of miners who want to work in an AEZ need to buy a
4 years or 5 for non-precious minerals, possibly “carte d’exploitant artisanal” at the Provincial
being renewed up to 8 years. If the holder of a Mining Division (MR, T9, C1, Art. 223–231).
research permit finds promising deposits, he or The card is an official authorization to mine and
she may apply for an industrial exploitation per- has to be renewed every year. Artisanal miners
mit (“permis d’exploitation”), valid for a period of also need to comply with the regulations on secu-
30 years (renewable). Deposits that are judged not rity, hygiene, water use, and environmental pro-
suited for industrial mining may be covered by a tection specified in the “code of conduct for the
small-scale mining permit (“permis d’exploitation artisanal miner,” published as an annex to the
des petites mines”). The customs and fiscal regime Mining Regulations (MC, T4, C1, Art. 111–112;
applicable to industrial and semi-industrial pro- MR, T18, C2, Art. 416). According to the Code,
jects is uniform (MC, T9). According to the World artisanal miners can only sell their production to
Bank (2008: 19), the regime is “internationally registered traders (“négociants”) holding a “carte
competitive and reflects current best practice” de négociant” issued by the Provincial Governor
with an expected effective rate of taxation of (MR, T10, C2, Art. 242–250). These traders may
46 %. It includes, among others royalties, income sell to registered buyers (“acheteurs des produits
tax, customs duties, turnover tax, surface rights, miniers artisanaux des comptoirs agréés”) who are
and so on (MC, T9, C1-4). In addition to the taxes associated to an export office (“comptoir”) (MC,
foreseen in the Code, there are numerous fees and T4, C2, Art. 120; MR, T10, C4, Art. 258–265).
Democratic Republic of the Congo: Mining Sector 5
The following public services govern the min- HIPC (highly indebted poor countries) process
ing sector at the national level (MC, T1, C2, Art. that started after the reintegration of the DRC as
11–15; MR, T1, C3, Art. 7–14): Ministry of eligible member in 2001 paved the way for
Mines, Directorate of Geology (“Direction de renewed ODA from different donors and the set-
Géologie”), Directorate of Mines (“Direction des ting up of important reforms (macroeconomic
Mines”), Directorate for the Protection of the stability, growth, new Mining Code, reform of
Environment (“Direction chargée de la Protection public civil service, electronic payment of sala-
de l’Environnement Minier”), and Mining Regis- ries, etc.) and resulted in a debt cancelation of
try (“Cadastre Minier”) (MC, T1, C2, Art. 12). At 95 % in 2010. The DRC is also a member of
the provincial level, there is a Ministry of Mines UNCTAD and different regional organizations
too, with its administrative service, the Provincial (AU, SADCC, ICGLR, etc.) but its membership
Mining Division (“Division Provinciale des in EITI (Extractive Industries Transparency Ini-
Mines”). Finally there are a number of technical tiative) is especially worth mentioning. In 2013
services: CTCPM (“Cellule Technique de Coor- the DRC was temporarily suspended from EITI,
dination et de Planification Minière” or Technical but in July 2014 the EITI Board declared the DRC
Coordination and Planning Unit), CEEC (“Centre compliant with the requirements. OECD plays an
d’Evaluation, d’Expertise et de Certification des important role through its issuance of the “Due
substances minérales précieuses” or Center for diligence guidelines for multinational compa-
Evaluation, Expertise and Certification), and the nies,” which pertain to the DRC’s “conflict
Service for Assistance to Small-Scale Mining or minerals.”
SAESSCAM (“Service d’Assistance et
d’Encadrement du Small-Scale et Artisanal
Mining”). Concluding Statement
The government as well as international
donors have taken a series initiatives for reform The DRC holds extensive mineral reserves. Its
in the artisanal mining sector, which include mining sector, which developed during colonial
legal reforms (adoption of a traceability manual, times, came into crisis in the post-independence
mining ban, requirement for artisanal miners to period, with a complete downfall in industrial
form cooperatives) as well as supply chain production during the economic regress that
reforms (certification and traceability, due dili- started in the 1980s and the wars (1997–2003).
gence, Dodd-Frank act, and related legislation). In the meantime artisanal production has become
Some of these have created a “de facto embargo” an important source of livelihoods, although it
on Congolese exports since 2011, as companies contributes little to official state budgets. In
are reluctant to source from the region. A process recent years foreign investors have started up
to revise the 2002 Mining Code has been called again industrial production, which has already
off in early 2016 (under the pressure of large resulted in record volumes of copper and cobalt,
mining companies who did not agree with the making the country the first copper exporter in
planned revisions of the tax regime and referred Africa and the first cobalt exporter worldwide.
to the falling commodity prices to justify their There is also potential for large-scale exploita-
position). tion of other minerals, including gold and dia-
monds. The legislative framework is in
accordance with international standards, while
International Memberships implementation and good governance still
remain a challenge for the relatively weak state
The DRC is member of the Bretton Woods Insti- administration. Although macroeconomic
tutions (IMF and World Bank) which, together growth figures are impressive, poverty and
with the membership of the Club of Paris, are underdevelopment continue to be significant
instrumental in the country’s debt relief. The challenges.
References and development in the Democratic Republic of

Congo. World Bank, Washington, DC/Kinshasa
Banque Centrale du Congo (2013) Rapport annuel 2013. Marysse S, Tshimanga C (2013) La renaissance
Kinshasa spectaculaire du secteur minier en RDC: où va la
D’Souza K (2007) Artisanal mining in the DRC. Key rente minière? In: Marysse S, Omasombo J (eds)
issues, challenges and opportunities [briefing note]. Conjonctures Congolaises 2012. Politique, secteur
Communities and Artisanal and Small-scale Mining minier et gestion des ressources naturelles en RDCongo
(CASM), Kinshasa [Cahiers Africains]. Musée Royal de l’Afrique
EITI (2014) Democratic Republic of Congo. Executive Centrale, Tervuren, pp 11–46
Committee of the Extractive Industries Transparency
Initiative. Reconciliation report for the year 2012. For Additional Information on Artisanal
Extractive Industries Transparency Initiative report, Mining
Kinshasa Geenen S (2015) African artisanal mining from the inside
Geenen S, Radley B (2014) In the face of reform: what out. Access, norms and power in Congo’s gold sector.
future for ASM in the eastern DRC? Futures 62:58–66 Routledge, London
Marysse S, Tshimanga C (2014) Les trous noirs de la rente
minière en RDC. In: Marysse S, Omasombo J (eds)
Conjonctures congolaises 2013. Percée sécuritaire, For Additional Information on the Regulation
flottements politiques et essor économique. Initiatives Related to “Conflict Minerals”
L’Harmattan, Paris Areskog Bjurling K, Ewing J, Munje D, Purje H (2012)
Marysse S (2015) Croissance cloisonnée: note sur From Congo with (no) blood: recent developments
l’extraversion économique en RDC. In: Marysse S, relating to the sourcing of conflict-free minerals from
Omasombo J (eds) Conjonctures congolaises 2014. the Democratic Republic of Congo. MakeITFair
L’Harmattan, Paris Report. Finnwatch/Swedwatch, Helsinki/Stockholm
Mazalto M (2009) Governance, human rights and mining Carisch E (2012) Conflict gold to criminal gold: the new
in the Democratic Republic of Congo. In: Campbell face of artisanal gold mining in Congo. Southern Africa
B (ed) Mining in Africa. Regulation and development. Resource Watch, Johannesburg
Pluto Press, London/New York, pp 187–242 Johnson D (2013) No Kivu, no conflict? The misguided
Ministry of Mines (2013) Statistiques Minières. Exercise struggle against conflict minerals in the DRC. Pole
2013. Kinshasa Institute, Goma
PACT (2010) Promines study. Artisanal mining in the Manhart A, Schleiper T (2013) Conflict minerals. An eval-
Democratic Republic of Congo. Pact, Washington, uation of the Dodd-Frank Act and other resource-
DC/Kinshasa related measures. Öko-Institut, Freiburg
UN (2014) Letter dated 22 January 2014 from the Chair of OECD (2011) OECD due diligence guidance for responsi-
the Security Council Committee established pursuant ble supply chains of minerals from conflict-affected and
to resolution 1533 (2004) concerning the Democratic high-risk areas. Organisation for Economic Coopera-
Republic of the Congo addressed to the President of the tion and Development, Paris
Security Council. S/2014/42. UN Security Council, Perks R, Vlassenroot K (2010) From discourse to practice:
New York a sharper perspective on the relationship between min-
World Bank (2008) Democratic Republic of Congo. erals and violence in DR Congo. In: Cuvelier J (ed) The
Growth with governance in the mining sector. Report complexity of resource governance in a context of state
No. 43402-ZR. World Bank, Oil, Gas, Mining and fragility: the case of Eastern DRC. International Alert
Chemicals Department, Africa Region, Washington, and International Peace Information Service (IPIS),
DC London, pp 64–69
Resource Consulting Services (2011) US Legislation on
For Additional Information on Large-Scale conflict minerals. RCS private sector guidance on the
Dodd-Frank Act section 1502. Resource Consulting
Mining Services, London
Garrett N, Lintzer M (2010) Can Katanga’s mining sector Verbruggen D, Francq E, Cuvelier J (2011) Guide to cur-
drive growth and development in the DRC? J East Afr rent mining reform initiatives in Eastern DR-
Stud 4(3):400–424 C. International Peace Information Service (IPIS),
Herderschee J, Kaiser K-A, Mukoko Samba D (eds) Antwerp
(2012) Resilience of an African giant: boosting growth
O
Oil and Gas Projects in Sakhalin and the Japanese companies Mitsui (12.5 %) and
Mitsubishi (10 %). Both Rosneft and Gazprom
Mike Bradshaw have additional license blocks offshore of Sakha-
Warwick Busines School, Warwick, UK lin at various stages of development; the most
prospective are within the Sakhalin-3 blocks.
Definition
The Prehistory and Sakhalin’s Offshore
There has been oil production on the island of Oil and Gas Development
Sakhalin in Russia’s Far East, since 1928, when
a joint Russian–Japanese venture discovered oil As part of a strategy to secure access to natural
onshore, and the local oil company Sakhalinmor- resource, in the mid-1970s, the Japanese govern-
neftegaz (SMNG) has been producing onshore ment signed a number of long-term compensa-
since the 1930s. However, this entry concerns tion agreements with the Soviet Union
itself with the development of Sakhalin’s offshore (Bradshaw 1990). The Sakhalin continental
oil and gas projects that have their origins in the shelf project began in 1973–1974, and Japan’s
1970s and that are currently dominated by two Ex-Im Bank provided an initial $100 million
large-scale consortia involving Russian and for- (a further $70 million was provided in 1979) to
eign companies. The ExxonMobil subsidiary finance offshore exploration. The understanding
Exxon Neftegas Ltd (ENL) that has a 30 % was that once the development phase was
share operates the Sakhalin-1 project. The other reached, Japan would provide a further
shareholders are the Russian state-controlled oil $600–$800 million and in return would receive
company Rosneft via its affiliates RN-Astra 50 % of the oil and gas produced. The Japanese
(8.5 %) and SMNG-Shelf (11.5 %), the Japanese interest was managed through the SODECO con-
consortium Sakhalin Oil and Gas Development sortium. The exploration phase was successful
Company (SODECO) (30 %), and the Indian with the discovery of the Odoptu field in 1977
state-owned company ONGC Videsh Ltd. and the Chayvo field in 1979. However, the
(20 %). The Sakhalin-2 project is operated by development was complicated as far more gas
the Sakhalin Energy Investment Company than oil was found. There were plans to build a
(SEIC) – more commonly known as Sakhalin liquefied natural gas (LNG) plant at De-Kastri on
Energy – that is 50 % (plus one share) owned by the Russian mainland, but following the Soviet
the state-controlled company Gazprom. The other invasion of Afghanistan in 1979, the project was
shareholders are Shell (27.5 % minus one share) the target of US sanctions. Deteriorating
DOI 10.1007/978-3-642-40871-7_117-1
2 Oil and Gas Projects in Sakhalin
East–West relations and a falling oil price saw Early Oil and Separate Strategies
the Japanese partners withdraw in 1983, leaving
an outstanding debt to the Japanese government Initially, the two projects aimed to share a com-
of $276.6 million (Sagers 1995). Nonetheless, mon infrastructure; however, Sakhalin-2 surged
the Soviet partners continued their exploration ahead with an early oil strategy, while Sakhalin-
efforts and discovered substantial oil and gas 1 struggled with a more difficult exploration
reserves at the Lunskoye field in 1984, phase. In 1998, Sakhalin Energy installed the
Piltun–Astokhskoye field in 1986, and Molikpaq production platform offshore, and in
Arkutun–Dagi field in 1989. July 1999, the first offshore oil was produced
from the so-called Vityaz complex. Exports were
enabled via a storage tanker but were limited to
the six ice-free months a year. Meanwhile,
Production-Sharing Agreements Lead
Sakhalin-1 was finally making progress and
the Way in the 1990s
developed its own early oil strategy at the Chayvo
field using extended reach drilling technology
By the end of the 1980s, the offshore oil and
from onshore. This enabled both oil and gas pro-
gas potential of Sakhalin had been determined,
duction. Production at Chayvo started in 2004,
but the Soviet Union was in crisis, and the
and by 2005, oil was being transported to a new
domestic industry lacked the capital and tech-
terminal at De-Kastri on the Russian mainland.
nology to develop the reserves. But under the
The gas was sold to the local market in the Kha-
banner of Perestoyka, the Soviet Union was
barovsk region. The Yastreb drilling rig, built by
now open to foreign investment, and there
Parker Drilling, established many records for
was a renewed interest in Sakhalin’s offshore
extended reach drilling, accessing areas more
potential. In May 1991, a tender competition
than 11 km offshore.
was held to develop the non-SODECO fields,
In July 2003, in challenging political and eco-
and six companies or consortia submitted bids.
nomic circumstances, the shareholders of Sakha-
To complicate matters, the Soviet Union col-
lin Energy committed to its second phase
lapsed at the end of 1991, and in January 1992,
development that would see the installation of
the new Russian government awarded the ten-
two purpose-build platforms offshore and an
der to the McDermott–Marathon–Mitsui bid.
onshore processing facility and the construction
The consortia then expanded to include Shell
of oil and gas pipeline to the south of the island at
and Mitsubishi. Interest was also rejuvenated in
Prigorodnoye, location for an oil export terminal
the SODECO project from the 1970s, and a
and Russia’s first liquefied natural gas (LNG)
project now known as Sakhalin-1 emerged
plant (Abedlal 2006). At the time, the project
with Exxon as the operator, together with
was described at the world’s largest integrated
SODECO-II and the newly formed Russian
oil and gas project, and the total investment was
state oil company Rosneft and its local affiliate
in the region of $10 billion.
SMNG. To compensate for the outstanding
debts, the Arkutun–Dagi field was added to
the Odoptu and Chayvo fields of Sakhalin-1.
Environmentalism, Resource
Meanwhile, Sakhalin Energy was formerly cre-
Nationalism, and the Arrival of Gazprom
ated in April 1994, and in June of that year,
Russia’s first production-sharing agreement
The operating environment both onshore and off-
(PSA) was signed. In May 1996, Sakhalin
shore is extremely challenging and made even
Energy was granted a license to develop the
more demanding by complex politics on the
Piltun–Astokhskoye and Lunskoye fields.
island and in Moscow (Bradshaw 1998). Both
Sakhalin-1 received its PSA in June 1996
Sakhalin projects were exploring new territory
(Krysiek 2007).
and introducing new technologies to Russia’s oil
Oil and Gas Projects in Sakhalin 3
and gas frontier. Not surprisingly, the presence of build an LNG plant (Bradshaw 2013); but this
Shell and ExxonMobil attracted the attention of has now been delayed due to sanctions and the
the global environmental movement. Offshore, fall in the oil price that determines LNG prices in
the projects threatened the feeding grounds of Asian markets.
the endangered Western gray whale and onshore
the pipeline of the island’s salmon fishery. Sakha-
lin Energy’s shareholders were seeking project A New Era in Sakhalin’s Offshore
financing to spread the risk of escalating costs.
The European Bank for Reconstruction and The arrival of Gazprom triggered a new era in
Development led a consortium of financial insti- Sakhalin’s offshore oil and gas development.
tutions that became the target of the environmen- There have been other exploration projects offshore
tal groups (Lee 2005). Sakhalin, and in the 1990s, the so-called Sakhalin-3
In 2005, Sakhalin Energy’s shareholders blocks were allocated to foreign companies and
sought to bring Gazprom into the project, but Rosneft, but corporate mergers left ExxonMobil
this was thwarted when it was revealed that the controlling the block, and its attentions were
second phase costs had more than doubled to $20 focused elsewhere. In 2004, the licenses were
billion. During 2006 – using evidence from the revoked, and a new tender competition was prom-
environmental campaign – the Russian govern- ised. This never happened; instead, in 2008–2009,
ment heavily criticized the Sakhalin-2 PSA and Gazprom was awarded the non-Rosneft Sakhalin-3
threatened to revoke the project’s environmental blocks. Meanwhile, Rosneft had entered into a
approvals. In late December, the shareholders partnership with China’s Sinopec to develop its
agreed to sell 50 % plus one share to Gazprom, Sakhalin-3 Veninsky block. This is a modest pro-
and in April 2007, the Russian company took ject, but steady progress is being made.
control (Bradshaw 2007). In the midst of all this, In 2006, Gazprom launched its Eastern Gas
the project continued to make progress with the Program with grand plans for an integrated gas
two offshore platforms being installed in June pipeline system serving domestic customers and
2006 and July 2007. The TransSakhalin pipeline enabling increased exports to Asia (Shadrina and
was completed in October 2008, and the LNG Bradshaw 2013). Sakhalin-3 is now part of this
plant was inaugurated in February 2009. Since wider scheme. Following President Putin’s deci-
then, the project has established itself as a major sion to deliver gas to Vladivostok for the APEC
oil and gas exporter to Asian markets, with the summit in 2012, the Sakhalin–Khabarovsk–Vla-
majority if its output going to Japan (Bradshaw divostok (SKV) gas pipeline was built at great
2010). The LNG plant is operating above its speed and huge cost. The Russian share of gas
design capacity of 9.6 mtpa and accounts for production from the two PSA projects is now avail-
about 4 % of global LNG production. The project able, but Gazprom has also developed the
passed cost recovery in March 2012 when pro- Kirinskoye gas condensate field using a subsea
duction sharing began. production strategy. First, gas was produced in
The Sakhalin-1 project moved onto the Odoptu 2013, and the field is now connected to the SKV
field in 2009, and production there started in Sep- pipeline. However, there are significant gas
tember 2010. The latest phase saw the installation reserves in Sakhalin-3, and Gazprom is now con-
of the Berkut platform on the Arkutun–Dagi field, sidering various options to bring that gas to market.
where production started in 2015. By 2012, the
project had delivered a total of 10 bcm of natural
gas to the Khabarovsk region, but a second gas Prospects for the Expansion of Gas
phase envisaged the construction of a gas pipeline Exports
to China. This has not happened. Instead, follow-
ing the liberalization of LNG exports in 2103, The future development of the oil and gas projects
Rosneft and ExxonMobil started planning to offshore Sakhalin is uncertain (Bradshaw 2014).
4 Oil and Gas Projects in Sakhalin
The Sakhalin-1 project is now reaching its gas Bradshaw MJ (2007) The greening of global project
phase, but its plans for a 5 mtpa LNG plant are finance: the case of the Sakhalin-II oil and gas project.
Can Geogr 51:255–279
on hold. In 2015, the shareholders of Sakhalin Bradshaw MJ (2010) A new energy age in Pacific Russia:
Energy agreed to expand their LNG plant by lessons from the Sakhalin oil and gas projects. Eurasian
5 mtpa, but their own fields do not have sufficient Geogr Econ 51:330–359
reserves to supply a third train. Gazprom has Bradshaw MJ (2013) Russian LNG exports to Asia: current
status and future prospects. In: Bradshaw M,
various options to develop additional Sakhalin-3 Herberg M, Myer Jaffe A, Ma D, Tsafos N (eds)
gas: it could supply the third train of Sakhalin-2, it Asia’s uncertain LNG future. National Bureau for
could build an export pipeline to China, or it could Asian Research, Washington, DC, pp 37–50
supply a new LNG plant at Vladivostok. The Bradshaw MJ (2014) The progress and potential of oil and
gas exports from Pacific Russia. In: Oxenstierna S,
impact of Western sanctions has made Vladivos- Tynkkynen V-P (eds) Russian energy and security to
tok LNG difficult to finance, and the project is on 2030. Routledge, London, pp 211–262
hold (Henderson 2015). Sakhalin’s gas is not cur- Henderson J (2015) The political and commercial dynam-
rently part of the various pipeline deals with ics of Russia’s gas export strategy. Working paper
NG102. Oxford Institute for Energy Studies, Oxford
China, but this was offered as a possibility when Krysiek T (2007) Agreements from another era: production
President Putin visited China in September 2015. sharing agreements in Putin’s Russia 2000–2007.
To complicate matters further, in the summer of Working paper 34. Oxford Institute for Energy Studies,
2015, the US government added the Sakhalin-3 Oxford
Lee J (2005) Squaring off on Sakhalin: a “glocal” NGO
Kirinskoye field to the sanctions list, which has campaign against big oil. Centre for Applies Studies in
effectively stopped Shell cooperating with International Negotiations, Geneva
Gazprom to develop the field. Sagers MJ (1995) Prospects for oil and gas development in
Russia’s Sakhalin oblast, Post-Soviet. Geography
47:505–545
Shadrina E, Bradshaw M (2013) Russia’s energy gover-
nance transitions and implications for enhanced coop-
References
eration with China, Japan and South Korea. Post-Sov
Aff 29:461–499
Abedlal R (2006) Journey to Sakhalin: Royal/Dutch Shell
in Russia (A), Harvard Business School Case 704–040.
Harvard Business School, Cambridge, MA Useful Websites
Bradshaw MJ (1990) Soviet Far Eastern Trade. In: Rodgers Gazprom: http://www.gazprom.com
A (ed) The Soviet Far East: geographical perspectives Rosneft: http://www.rosneft.com
on development. Routledge, London, pp 239–268 Sakhalin-1: http://www.sakhalin-1.com/Sakhalin/Russia-
Bradshaw MJ (1998) Going global: the political economy English/Upstream/default.aspx
of oil and gas development offshore of Sakhalin. Camb Sakhalin Energy: http://www.sakhalinenergy.com/en/
Rev Int Aff 12:147–176 index.wbp
O
Oil Reserve Fund to pay external debt and accumulate currency

reserves.
Yelena Sidorova In 2004 the budget surplus was 4.1 %. Since
Primakov Institute of World Economy and 2004 the government became convinced of posi-
International Relations, Russian Academy of tive conjuncture in the oil market and a certain
Sciences; Moscow State Institute of International safety device was created. That was the Stability
Relations, Moscow, Russia Fund of the Russian Federation, as a part of fed-
eral budget. At the same time, a budget rule was
set forth in the Russian budget code. According to
Oil and gas income has always played an impor- this rule, when the oil price exceeds a certain
tant role for the Russian economy and its budget. ceiling (average world price for several years),
For decades the Russian economy can be the extra money will be transferred to the stability
described as “raw material export-oriented” one. fund (before 2008–2009 recession).
Stability Fund
Oil and Gas Revenues in the Budget
of the Russian Federation
The fund received revenues from oil export duties
and oil severance tax, when the Urals price was
During the past years of the twenty-first century,
above the ceiling. The stability fund was aimed to
oil and gas income has become the most signifi-
secure balanced budget in case the oil price falls
cant source of federal budget revenues (Table 1).
below the ceiling.
Several kinds of income belong to oil and gas
Initially this ceiling price in the budget rule was
revenues, natural resource extraction tax on crude
20$ per barrel, since 2006 – 26$. This budget rule
oil, natural gas, and gas condensate (severance
was suspended in 2008–2009 recession and the
tax), export duties on oil, gas, and petroleum
next 3 years of economic recovery (Why fiscal
products (Budget Code of the Russian
rule does. . .).
Federation).
If the revenues in the stability fund exceeded
Before the 2008–2009 recession, the Russian
500 bn rubles, the rest of the sum could be used for
fiscal policy was performed according to the prin-
other goals. In 2005 the surplus of 600 bn rubles
ciple of cyclical balanced budget. Budget surplus
was transferred to pay external debt of Russian
within the period of high prices on the world
Federation and to cover the deficit in the
commodity markets was used by the government
Pension Fund.
DOI 10.1007/978-3-642-40871-7_118-1
2 Oil Reserve Fund
Oil Reserve Fund, Table 1 Oil and gas income in Russia figures were 19.5 % and 31.2 %, respectively
Years % of GDP % of federal budget revenues (The Ministry of Finance of the Russian Federa-
2002 5.4 21.1 tion 2011, 2014).
2003 5.8 25.1
2004 6.9 30.3
2005 10.9 42.1 Reserve Fund and National Wealth Fund
2006 11.0 46.9
2007 8.7 37.3 The reserve fund (with maximum amount of 10 %
2008 10.6 47.4 of GDP), a part of the federal budget (as was the
2009 7.7 40.7 case of the stability fund), was created to guarantee
2010 8.3 46.1 that the state would serve its liabilities in case of
2011 10.1 49.6
falling cash flow from oil and income revenues to
2012 10.4 50.2
the federal budget. The reserve fund receives its
2013 9.8 50.2
money from different sources: not only from oil
2014 9.0 48.0
export revenues (as it was in case of the stability
2015a 45.0
a fund) but also from gas export revenues. The reserve
First 6 months of 2015
Source: Calculated on the data of Ministry of Finance of fund is aimed at securing the stability of economic
Russian Federation (Oil and Gas Revenues of the Federal development by reducing inflation pressure and
Budget) dependence on oil and gas revenues in the budget.
The national wealth fund is also a part of the
federal budget and was created as a part of the
sound mechanism to secure and maintain pension
An important task of the stability fund was to provision in the Russian Federation in the long
sterilize excessive liquidity, minimize inflation term (see Fig. 1). Major functions of this fund are
pressure on the economy, and minimize Russian to cofinance voluntary pension savings and to
dependence on volatile income from commodity balance the budget of pension fund of the Russian
export. The stability fund failed to lower the infla- Federation (which is constantly deficit).
tion pressure on the economy. During 2004–2006 In 2008 the so-called oil and gas transfer rule
intensity of inflation began to decline, but the rates (a certain share of oil and gas income of the
were too high, to make the use of credit in rubles federal budget) was adopted. According to this
to finance long-term investments reasonable. In rule, since 2011 oil and gas transfer was set at
2007–2008 inflation rates returned to rising trend. 3.7 % of GDP (Eder 2013). This rule was to
Until 2008 stability fund total revenues grew define the ceilings of expenditures in the future.
every year, with the amount in rubles equivalent to Since its adoption the target price was defined as
$157.4 bn. as of January 1, 2008. The money was $50 per barrel (Kudrin).
used for advance repayment of Russian external The year 2009 appeared to be quite difficult for
debt. The lower debt pressure on budget has been the Russian budget system – the country met the
achieved by reducing amount of finance necessary trough in the first half of 2009, when the budget
to pay percent and repay the debt. In 2008 the balance became deficit ( 6 % of GDP) for the first
government replaced the stability fund with the time for the past several years. The main reason for
reserve fund and the national wealth fund. that was the negative conjuncture on commodity
Revenues from oil and gas may not be regarded markets, downturn in business activity in Russia,
as a sound source of income due to high price and anti-crisis fiscal measures. Raising budget
volatility, which is caused by low price elasticity expenditures and sharp decline in budget revenues
of demand and supply of oil and gas. Severance resulted in substantial deficit, which was covered by
tax on gas on oil and gas in 2009 accounted for the means of the reserve fund.
13.4 % budget revenues, and export duties had The new budget rule, adopted in 2013, set “oil
exceeded 27.8 % of all revenues; in 2013 the basic price,” which is defined as moving average
Oil Reserve Fund 3
National wealth fund revenues dynamics in 2008-2016.

95
90
85
80
75
70
65
60
55
50
45
40
35
30
Feb 2012
Feb 2008
May 2008
Feb 2009
May 2009
Feb 2010
May 2010
Feb 2011
May 2011
May 2012
Feb 2013
May 2013
Feb 2014
May 2014
Feb 2015
May 2015
Feb 2016
Aug 2011
Nov 2011
Nov 2008
Aug 2009
Nov 2009
Aug 2010
Nov 2010
Aug 2012
Nov 2012
Aug 2013
Nov 2013
Aug 2014
Nov 2014
Aug 2015
Nov 2015
Август 2008
Oil Reserve Fund, Fig. 1 National wealth fund revenue dynamics in 2008–2016 (Source: calculated according to the
data of Ministry of Finance of Russian Federation, http://www.minfin.ru/ru/perfomance/nationalwealthfund/statistics/#)
for the last 5 years with annual growth of account Conclusions

period on 1 year, till it reaches 10 years. In con-
trast to the previous rules, the new one cuts the In 2010–2015 oil and gas revenues are used to
maximum amount of the reserve fund from 10 % finance budget expenditures only. In accordance
to 7 % of GDP (Eder 2013). After the fund is full, with the “Guidelines of budget policy for 2015
the additional oil and gas revenues are not in the and on the planned period of 2016 and 2017,” the
whole amount transferred to the national wealth share of oil and gas revenues in the budget will be
fund. Only half of the money goes to the national 43–46.6 %. In 2014–2017 budget total revenues
wealth fund and the other half is to the finance will decline from 19.9 to 18.1 of GDP, mainly due
infrastructure development. In 2013, when the to the fall in oil and gas income. Their share in
budget was planned, the oil price was about 91$ total revenues is planned to be cut from 9.9 % to
per barrel. When oil revenues fall, the money from 8.4 % of GDP (The Major Guidelines of Budget-
the reserve fund is used to cover the budget deficit ary Policy).
(see Fig. 2). Since 2010, due to budget deficit, the flow of
The activity of the reserve fund (as it was also oil and gas revenues to the reserve fund and
in the case of the stability fund) is regulated by the national wealth fund has been suspended. Since
federal law, budget and tax code of the Russian that time, the rest of oil and gas revenues can be
Federation, decrees and orders of the government transferred to the funds only after covering budget
of the Russian Federation, orders of the Ministry deficit. At the end of 2011, such scheme was
of Finance, and messages of the president of the prolonged till 2015. This sharpens the problem
Russian Federation. of influence of price volatility on the world
4 Oil Reserve Fund
Reserve fund revenues dynamics in 2008-2016.

145
140
135
130
125
120
115
110
105
100
95
90
85
80
75
70
65
60
55
50
45
40
35
30
25
Feb 2008
May 2008
Feb 2009
May 2009
Feb 2010
May 2010
Feb 2011
May 2011
Feb 2012
May 2012
Feb 2013
May 2013
Feb 2014
May 2014
Feb 2015
May 2015
Feb 2016
Nov 2008
Nov 2009
Nov 2010
Nov 2011
Nov 2012
Nov 2013
Nov 2014
Nov 2015
Aug 2009
Aug 2010
Aug 2011
Aug 2012
Aug 2013
Aug 2014
Aug 2015
Август 2008
Oil Reserve Fund, Fig. 2 Reserve fund revenue dynamics in 2008–2016 (Source: calculated according to the data of
Ministry of Finance of Russian Federation, http://www.minfin.ru/ru/perfomance/reservefund/statistics/volume/#)
commodity markets on the sustainability of Rus- References

sian budget system. The risks will also rise
because of prolongation of using the system of Budget Code of the Russian Federation
oil and gas transfer for financing budget expendi- Eder LV (2013) Oil and gas sector in the Russian economy
(http://www.ipgg.sbras.ru/ru/Files/publications/ibc/
tures. If such trend continues, both reserve fund mrr-2013-04-48.pdf)
and national wealth fund will be exhausted Execution of the Federal Budget and the Budgets of the
by 2018. Budgetary System of the Russian Federation for 2010.
We can observe slight decrease of the share of The Ministry of Finance of the Russian Federation.
Moscow, 2011. April. (http://rosfinnadzor.tatarstan.ru/
oil and gas income in the budget – its height was rus/file/pub/pub_82827.pdf)
reached in 2013 as 50 % of all income (Oil and Execution of the Federal Budget and the Budgets of the
Gas Revenues of the Federal Budget). Its share in Budgetary System of the Russian Federation for 2013.
2014 was 48 % of the federal budget, but still The Ministry of Finance of the Russian Federation.
Moscow, 2014. August
public finance in Russia is based on income from Kudrin A. The Government and the Central Bank Policy
natural resource extraction. But now raw material with a high dependence of Russia on the exports of raw
export-oriented model along with low-efficient materials (http://www.vedomosti.ru/opinion/news/
and imbalanced fiscal system is declared among 9693041/eksportnye_dohody_i_politika)
Oil and Gas Revenues of the Federal Budget. Appendix
the major threats to the national security in the 2. (http://www.minfin.ru/common/img/uploaded/library/
renewed “Strategy of National Security in the 2006/08/1895.pdf)
Russian Federation until 2020” (Strategy of “Strategy of National Security in the Russian Federation until
National Security). 2020”/ 31.12.2015 (http://kremlin.ru/acts/bank/40391)
Oil Reserve Fund 5
The Major Guidelines of Budgetary Policy for 2015 and Why fiscal rule does not prevent to spend oil and gas
the Planning Period of 2016 and 2017 (http://www. revenues//RBC. 20.05.2014 http://rbcdaily.ru/econ
minfin.ru/common/upload/library/2014/07/main/ONBP_ omy/562949991507124
2015-2017.pdf)
R
Russia-Ukraine Gas Conflicts The agreement was to be valid from 18 February

1994 until 31 December 2005. The agreement
Jack D. Sharples stipulated conditions for Russian gas exports to
European University at St Petersburg, Ukraine and the transit of Russian gas via
St Petersburg, Russia Ukraine.
Payment for gas supplies and for transit and
storage services were to be made on the basis of
The Impact of the Collapse of the Soviet “mutually agreed prices in US dollars,” while the
Union on Russia-Ukraine gas Relations parties had the right to review the price of gas
supplies and transit fees on an annual basis. The
Within the Soviet Union, the transfer of natural agreement also stipulated that Gazprom would
gas from Russia to Ukraine was an internal issue. enable the transit of natural gas from Turkmeni-
The dissolution of the Soviet Union in 1991 meant stan to Ukraine, for Ukrainian consumers. The
that gas trade between Russia and Ukraine would reexport of Russian gas from Ukraine was
now be carried out as bilateral trade between two prohibited (Collection of Legislation of the Rus-
independent states. This was no small challenge, sian Federation [SZRF], n.d.). Despite the agree-
given that Ukraine was entirely dependent on ment to pay for services “in US dollars,” the
Russian gas, and gas from Turkmenistan is deliv- reality was that Gazprom paid for gas transit by
ered via Russia, for its imports. Conversely, giving UkrGazProm gas supplies, as “payment in
approximately 85 % of Russia’s gas exports to kind.”
Europe were delivered via Ukraine. This mutual
dependency resulted in several disputes over
prices and debts in the period 1991–2015. Gas Trading and the Introduction
of Naftogaz (1996–1998)
The Intergovernmental Agreement In May 1996, a new gas trading system was intro-
of February 1994 duced, enabling a variety of gas traders to pur-
chase gas from Russia and Turkmenistan and
In 1994, the Russian and Ukrainian governments market it to Ukraine. However, in 1998, the sys-
signed an intergovernmental agreement that tem was dismantled. In its place, a vertically inte-
would be the foundation of Russia-Ukraine gas grated, Ukrainian state-owned gas company,
relations for the next decade (Collection of Legis- Naftogaz, was created as a successor to
lation of the Russian Federation [SZRF], n.d.). UkrGazProm to import gas wholesale. While
DOI 10.1007/978-3-642-40871-7_119-1
2 Russia-Ukraine Gas Conflicts
Russian gas was purchased from Gazprom, Turk- Gazprom (50 %) and the Ukrainian businessmen,
men gas was purchased via the Russian gas trader, Dmitry Firtash (45 %) and Ivan Fursin (5 %)
Itera, which purchased the gas from the Turkmen (Pirani 2007, p. 22; Fredholm 2008, pp. 18–24;
state-owned company, Turkmengaz, paid Pirani et al. 2009, p. 7).
Gazprom for transportation via Russia, and sold Therefore, by 2003, Ukraine was receiving gas
the gas in Ukraine (Fredholm 2008, pp. 11–16). from two sources: Firstly, from Gazprom as pay-
ment for gas transit services and secondly from
Turkmenistan via the gas trader, RosUkrEnergo.
The Intergovernmental Agreements The amount of gas that Naftogaz received from
of 2000, 2001, and 2002 Gazprom as “payment in kind” for transit services
was based on two key factors: The nominal price
The legal basis for Russia-Ukraine gas relations of Gazprom’s supplies and the nominal price of
was updated on 22 December 2000 by a new gas transit via Ukraine. Negotiations over these
intergovernmental agreement. The document stip- two prices would be the catalyst for the first major
ulated the amount of Russian gas that would be Russia-Ukraine gas dispute, in 2005–2006.
transited via Ukraine in 2001, the amount of gas
that Gazprom would provide to Naftogaz as “pay-
ment in kind” for this transit, and committed
Gazprom to providing transit services for natural The First Major Russia-Ukraine Gas
gas deliveries from Turkmenistan to Ukraine Dispute (2005–2006)
(Best Pravo n.d.).
Less than a year later, on 4 October 2001, the International oil prices rose significantly, from
two sides signed a supplementary intergovern- $25 per barrel in April 2003 to over $60 a barrel
mental agreement on gas transit via Ukraine in January 2006 (EIA 2015). This led to an
(Government of the RF 2001). This agreement increase in the oil-indexed gas prices that were
extended the provisions of the December 2000 being paid by Gazprom’s customers in Western
agreement to 2002 and to every following year Europe. This, in turn, generated greater and
until 2013 (inclusive). The only major change was greater differences between the prices paid for
the replacement of the ban on reexporting gas Russian gas by Gazprom’s European customers
from Ukraine with a steep export duty. and the nominal price paid by Naftogaz: “By late
Twelve months later, the two sides signed an 2005, the $50–80/mcm which the countries of the
agreement on strategic cooperation in the gas former Soviet Union were paying for Russian gas
industry (Government of the RF 2002). This contrasted sharply with European border prices of
agreement was supposed to mark the creation of 3–4 times that level” (Stern 2006, p. 6).
a Gazprom-Naftogaz consortium to manage In 2005, the Russian state-owned wholesale
Ukraine’s gas pipeline system, to ensure the stable gas exporter, Gazprom, decided to start charging
transit of Russian gas to Europe. However, the “European” prices for gas delivered to Ukraine.
agreement produced no concrete results, and the The January 2006 Russia-Ukraine gas dispute was
system remained under the sole control of the result of Gazprom’s attempts to impose higher
Naftogaz. prices on its Ukrainian counterpart, Naftogaz and
In late November 2002, Gazprom announced Naftogaz’s refusal to accept those higher prices.
that it would take control of gas deliveries from Following the expiry of the existing annual con-
Turkmenistan to Ukraine, in place of Itera. In tract at midnight on 31 December 2005, Gazprom
early December 2002, Gazprom signed a contract cut off supplies to Ukraine for 3 days, leading to
with EuralTransGas for the shipment of Turkmen supply shortfalls in several EU member states
gas to Ukraine. Then, in July 2004, (Stern 2006; Pirani 2007, pp. 23–25). Following
EuralTransGas was replaced by RosUkrEnergo. the signing of a new contract, supplies were
The shareholders in RosUkrEnergo were resumed.
Russia-Ukraine Gas Conflicts 3
The January 2006 Russia-Ukraine gas Finally, on 7 January, all supplies through Ukraine
Agreement were shut off, leading to major supply shortfalls in
several EU member states. Gas transit via Ukraine
To end the January 2006 dispute, a compromise was suspended for 13 days (Pirani et al. 2009,
agreement was reached in which the gas trader, pp. 19–22).
RosUkrEnergo, played a central role.
RosUkrEnergo would buy cheaper Turkmen gas
from Turkmengaz, mix it with more expensive
supplies from Gazprom, and sell the resulting The January 2009 Russia-Ukraine Gas
supplies at a compromise price to Naftogaz. In Agreement
this way, Gazprom received the price it wanted,
Naftogaz was able to pay a price lower than that The dispute was resolved when Naftogaz signed a
previously offered by Gazprom, and only new, 10-year supply and transit contract with
Turkmengaz would bear the commercial cost Gazprom. This replaced the annual gas supply
(Stern 2006; Pirani 2007; Fredholm 2008, contracts that had been used previously and the
pp. 24–31; Pirani et al. 2009). previous transit contract. According to the new
As a result of the January 2006 agreement, the contract, Gazprom would supply gas to Naftogaz
price at which Naftogaz imported gas from at European-level prices index-linked to interna-
RosUkrEnergo rose from $45 to $95. For its tional oil prices, discounted by 20 % for the first
part, Gazprom was selling gas to RosUkrEnergo year. This resulted in a gas price of $360 in 2009,
at $230 per thousand cubic meters, while rising to $450 in 2010. Further gas price changes
Turkmengaz was receiving a much lower price would be based on international oil prices. The
(Echo Moscow 2006). The continued increase in contract stipulated delivery volumes of 52 bcm
oil prices in 2006–2008 meant that gas prices also per year, with Naftogaz obliged to purchase at
continued to rise. By 2008, RosUkrEnergo was least 80 % of that volume (Pirani et al. 2009,
paying $180 per thousand cubic meters of pp. 26–29; Ukrainskaya Pravda 2009).
Russian-Turkmen gas, in comparison with Euro- The January 2009 agreement removed
pean gas prices of $368. The transit contract was RosUkrEnergo from the Russia-Ukraine gas
valid for 5 years, from 2006 to 2011, while the trade, with Gazprom agreeing to supply Naftogaz
volume and price of gas supplies continued to be directly. Gazprom also changed its contractual
negotiated annually (Pirani et al. 2009, pp. 6–10). relations with Turkmengaz. Instead of providing
transit of Turkmen gas via Russia to Ukraine,
Gazprom now insisted on buying the gas from
The January 2009 Gas Dispute Turkmengaz and reselling it to Ukraine. Thus,
Gazprom became the only supplier of natural gas
The agreement reached in January 2006 unraveled to Ukraine in January 2009.
during late 2008. Negotiations between Gazprom By the time the discount expired at the end of
and Naftogaz were centered on Naftogaz’s grow- 2009, the price of Brent Crude oil had rebounded
ing debts to Gazprom and continued disagree- from $43 a barrel in late 2008 to $76 a barrel in
ments over the price at which Naftogaz would late 2009 (EIA 2015). This caused Ukraine’s gas
purchase gas from RosUkrEnergo. The two sides import prices to rise. The economic recession in
again failed to renew their bilateral gas supply Ukraine in 2009–2010 also reduced Ukraine’s gas
contract before it expired at midnight on demand, meaning that the minimum purchase
31 December. In the absence of a new gas supply volume (80 % of 52 bcm) was more than Ukraine
contract, Gazprom halted all supplies for Ukrai- needed, yet the reexport of excess gas supplies
nian consumption on 1 January 2009. The follow- was prohibited. The combination of rising prices,
ing day, European energy companies began the end of the discount, and the contractual obli-
reporting a fall in volumes delivered via Ukraine. gation to purchase of excess volumes led
Naftogaz and the Ukrainian government to protest sold gas to Ukraine rose from $268 to $385 per
that they had been locked into an unfair contract. thousand cubic meters.
Following Russia’s annexation of Crimea and
its de facto unification with Russia, the Russian
The Kharkiv Accords of April 2010 Prime Minister, Dmitry Medvedev, announced the
cancellation of the Kharkiv Accords. Because
Following his election as Ukrainian President in Crimea was now part of Russia, he argued that
February 2010, Viktor Yanukovich sought a new the Russian government did not need to offer gas
gas price discount from Russia. The resulting discounts in return for leasing the Sevastopol
“Kharkiv Accords” stipulated that the Ukrainian naval base. This caused the price of Naftogaz’s
government would extend Russia’s lease on the Russian gas imports to rise by a further $100, to
Sevastopol naval base in Crimea (home of $485 per thousand cubic meters (Gazprom
Russia’s Black Sea Fleet) from 2017 to 2042. In 2014a).
return, the Russian government cancelled the Between February and June 2014, Naftogaz
export duty on gas exported to Ukraine, thus made sporadic payments to Gazprom, but not
giving Ukraine a 30 % discount (limited to $100 enough to clear its debts. Finally, on 16 June,
per thousand cubic meters) (Pirani et al. 2010). Gazprom switched to a “prepayment” regime in
Despite the new discount, the next four years its relations with Naftogaz. From now on,
saw constant disputes between Gazprom and Gazprom would only supply gas for which
Naftogaz over gas prices. In February 2011, oil Naftogaz had paid in advance. The practical result
prices returned above $100 a barrel and remained was the suspension of Russian gas deliveries to
at that level until the beginning of September 2014 Ukraine (Gazprom 2014b).
(EIA 2015). As a result, the price of Naftogaz’s In July 2014, both sides launched arbitration
gas imports from Russia remained high, at proceedings at the Arbitration Institute of the
approximately $428–500 per thousand cubic Stockholm Chamber of Commerce. Gazprom
meters between January 2012 and mid-2014. Dur- sought to recover its outstanding debts from
ing that time, prices in Western Europe remained Naftogaz. For its part, Naftogaz sought arbitration
at a level of $285–428 (East European Gas Anal- on gas prices and a possible refund for “overpay-
ysis 2014). ments” due to excessively high gas prices
since 2010.
The Long Gas Dispute of 2013–2015

The “Winter Package”
In December 2013, in the midst of the Kyiv pro-
tests, the Russian government ordered Gazprom On 30 October 2014, Gazprom and Naftogaz
to grant Naftogaz a 33 % discount on its gas agreed on an interim “winter package.” Naftogaz
prices, reducing them from $400 to $268 per agreed to repay $3.1bn of its outstanding debts in
thousand cubic meters (BBC 2013). The discount two tranches before the end of 2014. In return,
took effect on 1 January 2014 and bolstered Pres- Gazprom offered to resume supplies of 2 bcm per
ident Yanukovich but had to be renewed every month in November and December 2014 at an
quarter at Gazprom’s discretion. interim price of $378 per thousand cubic meters.
However, between November 2013 and March Both sides agreed that the two-tranche debt repay-
2014, Naftogaz repeatedly failed to pay for its gas ment referred to gas deliveries in November and
imports from Gazprom. In light of Naftogaz’s December 2013 and in April, May, and June 2014.
increasing debts and Yanukovich’s effective res- In the end, Naftogaz made its repayments and
ignation as President in February 2014, Gazprom prepaid for 1 bcm of gas on 5 December. As a
chose not to renew the discount when it expired on result, the flow of Russian gas to Ukraine restarted
1 April. As a result, the price at which Gazprom on 9 December (Gazprom 2014c).
Russia-Ukraine Gas Conflicts 5
Naftogaz considers the payment of $3.1bn to Echo Moscow (2006) Coглaшeниe oб уpeгулиpoвaнии
be the complete payment of all outstanding debts oтнoшeний в гaзoвoй cфepe. Echo Moscow, 9 January.
Available via: http://echo.msk.ru/blog/echomsk/
accumulated between November 2013 and June 564962-echo/. Accessed 20 Nov 2015
2014, based on a price of $268 per thousand cubic EIA (2015) Europe Brent Spot Price. Available via: http://
meters. Gazprom, however, considers the pay- www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&
ment of $3.1bn to be only a partial payment of s=RBRTE&f=D. Accessed 20 Nov 2015
European Commission (2014) Binding protocol regarding
Naftogaz’s debts, with further debts to be the conditions for gas delivery from the Russian Fed-
reclaimed through the arbitration process eration to Ukraine for the period from November 2014
(European Commission 2014). until 31st of March 2015. Available via: http://ec.
The “winter package” expired on 31 March europa.eu/archives/commission_2010-2014/oettinger/
headlines/news/2014/11/doc/20141030_trilateral_proto
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gas. On 12 October 2015, Naftogaz resumed Turkmenistan, and Ukraine: Agreements and disputes.
imports of gas from Gazprom on a short-term, Asian Cultures and Modernity Research Report No.15.
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thousand cubic meters from April. Gazprom press
release, 03 April. Available via: http://www.gazprom.
com/press/news/2014/april/article187802/. Accessed
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JonathanStern.pdf
R
Russian Energy Diplomacy example of such linkages. Russia is the only great
power where vital foreign policy interests coexist
Pami Aalto with strong energy business interests, in particular
School of Management/Politics, University of vis-à-vis Europe, the former Soviet Union area,
Tampere, Tampere, Finland and East Asia. No other great power is as impor-
tant energy exporter as Russia, which is the
world’s largest gas exporter, second in oil exports
Definition and third for coal exports. No other major energy
exporter possesses similar foreign policy interests
Energy diplomacy refers to the practices and as Russia does owing to its superpower legacy and
norms by which political institutions and large varied neighborhood.
energy companies cooperate to promote energy The principal actors of energy diplomacy are
trade. In significant energy producer countries the political institutions and energy companies.
such as Russia, political institutions and the They can decide to delegate some smaller and
main energy companies cooperate among them- narrower tasks to institutions acting as agents.
selves to secure the demand for exports of energy Formal rules and norms underpin the activities
commodities such as oil, oil products, natural gas, of both principal actors and agent institutions. In
coal, and uranium. In energy importer countries, the case of Russia, these actors are not always in
political institutions and large energy companies agreement with each other. As a result, experts
cooperate to secure the supply of energy imports. assess the performance of Russian energy diplo-
In the European Union, such cooperation also macy in varying ways depending on which
involves union level institutions. Hence, energy instances they look at.
exporters and importers practice energy diplo-
macy to support energy trade and investments.
Energy diplomacy comprises meetings, negotia- The Principal Actors of Russian Energy
tions, and agreements to build a political frame- Diplomacy
work for energy trade. The goal is to find a balance
between the supply and demand of energy. In Russia, the president is the strategic leader of
Because energy diplomacy is about the exten- energy diplomacy. This is especially true of the
sion of diplomatic practices into energy trade, it three terms of President Vladimir Putin
comprises a mixture of public and private actors (2000–2008, 2012—), who possesses deep
and interests, many of which can be interlinked. knowledge of the energy industry (Lough 2011,
The energy diplomacy of Russia is a prominent p. 1). The large Presidential Administration and
DOI 10.1007/978-3-642-40871-7_120-1
2 Russian Energy Diplomacy
the Government support the President. The Prime eventually, to tax these profits to support the state
Minister coordinates the more specific work of budget. This fiscal interest of the state is highly
several line ministries. The regional administra- significant as energy exports make up roughly half
tions of Russia’s various energy rich regions have of the state budget and over two thirds of the value
an interest in the economic, social, and environ- of foreign trade. These interests have to be bal-
mental consequences of the development of natu- anced with the state’s interests in political influ-
ral resources in their territory (Tkachenko 2007, ence in the countries in which Russian companies
pp. 170–76). supply and invest.
The Russian president oversees the strategic
operations of energy companies working on
energy exploration, production, transport, and The Agent Institutions of Russian Energy
trade. Because energy is a strategic sector of pol- Diplomacy
icy in Russia, the energy companies have to fol-
low the strategic objectives of political To promote the interests of Russian energy com-
institutions. The state retains the rights to issue panies, Russian political institutions mostly rely
licenses for the exploration, development, trade, on bilateral energy diplomacy. The bilateral agent
and export of all subsoil resources. Of the main institutions include the energy dialogs with the
energy companies, Rosneft is 70 % and Gazprom EU, Norway, USA, and China and less institution-
is 50 % state owned. Zarubezhneft is fully state alized summits and negotiations with individual
owned; Bashneft was renationalized in 2014, countries in all continents.
while Lukoil, Novatek, and Surgutneftegas are The most developed agent institution is the
mostly privately owned. Alongside accommodat- EU–Russian energy dialog. The parties have
ing the state’s interests, all these companies need agreed on an early warning mechanism to caution
to be profitable enough in order to produce ahead of any disruptions in supplies or demand
income to the state and other shareholders. and on respective mutual coordination. They pre-
The strategic coordination of energy diplo- pare scenarios for mutual energy trade in all mar-
macy in Russia is challenging because federal ket segments. Even though this institution has
institutions, the regions, and companies possess helped to depoliticize EU–Russian energy trade,
conflicting interests (Tkachenko 2007; it has not been able to contain the several energy
Filimonova 2013). Russian oil companies operate trade disruptions since 2006 (Romanova 2014).
on globalized free markets, but rely on the ser- Neither could this institution help much to delimit
vices of the state-owned monopolist oil pipeline the negative effects from the sanctions the EU set
transit company Transneft, the Russian railways, for long-term credit and exports of offshore and
and the state’s port infrastructure. Gazprom has a Arctic oil drilling technologies to Russia in 2014
monopoly in pipeline-based gas export. Novatek in response to Russia’s annexation of the Crimea
and Rosneft will challenge it when their exports of from Ukraine.
liquefied natural gas by tankers will start from the In multilateral energy diplomacy, Russia par-
Yamal Peninsula in 2017 and Sakhalin in 2018. ticipates in the great power institutions G8, which
Russian electricity companies work in principle in was suspended for the duration of the sanctions,
liberalized markets, while Inter RAO holds an the G20 and in the Gas Exporting Countries
import–export monopoly. Rosatom seeks to Forum (GECF). Russia’s main objective in these
export Russian nuclear power technology and institutions is to advance the interests of energy
materials. producers in the security of demand. This is in
The political institutions need to understand order to balance the consumer countries’ over-
the diverse interests, operating environments, whelming concern with the security of supplies
and business models of Russia’s energy compa- (Lesage et al. 2010, pp. 108–9). The G8 summit
nies. This is necessary in order to help the com- held in St. Petersburg in 2006 was a notable result
panies to gain profits from energy exports and, of Russia’s energy diplomacy in terms of the
Russian Energy Diplomacy 3
commitment made to the “interdependence” 6–31 % of natural gas exports are intended to
between the interests of producer, consumer, and go. Natural gas sales to China and the need to
transit states and to “better risk-sharing between further energy dialogs in Asia receive mention
all stakeholders in energy supply chain” (Energeticheskaia strategiia Rossii na period do
(G8 2006). The GECF’s Moscow declaration in 2014, pp. 21–22).
2013 also emphasized Russian interests in the In testimony of Asia’s increasing stature in
“absolute and permanent sovereignty” over Russia’s energy diplomacy, in May 2014,
resources, and Gazprom’s preference for long- Gazprom and the Chinese company CNPC agreed
term gas supply contracts to recover its invest- a sales and purchase agreement for mutual natural
ments, and “gas pricing based on oil/oil products gas trade starting in 2017 and eventually reaching
indexation to ensure fair prices” (GECF 2013). 38 billion cubic meters a year through Power of
Russia is an observer in the oil exporters’ Siberia pipeline (Motomura 2014). Earlier in
forum OPEC, a cartel seeking to control global 2014, the European Commission challenged
oil prices and markets. Russian experts also par- Russia’s bilateral agreements with several transit
ticipate in “Track Two” energy diplomacy meet- states of the Gazprom-led South Stream natural
ings. Russian energy companies also practice gas pipeline project to Southeast Europe, on
“soft diplomacy” by sponsoring team sports such grounds of possible violations of EU competition
as football and ice hockey. law. In autumn of 2014, Russia canceled the pro-
ject. The increasing regulation of EU energy mar-
kets, the at best mature demand in Europe, and
Formal Rules and Regulations in Russian political reservations following the
Energy Diplomacy Russian–Ukrainian conflict, coupled with grow-
ing demand in Asia, are driving Russian energy
In energy diplomacy, fewer multilateral agree- diplomacy toward the East to secure demand.
ments bind states than in many other sectors of The differences in the formal rules and regula-
policy. While Russia is a member of the World tions Russian actors encounter in the EU markets
Trade Organization (WTO), the WTO’s regula- and the emerging markets of Northeast Asia can
tion has only minor consequences for energy eventually erode as the latter are introducing more
trade. Since 2009, Russia does not apply the pro- competition into the energy sector (Aalto 2014).
visions of the multilateral Energy Charter Treaty, The development of multilateral energy diplo-
which is initially signed in 1994 but never ratified macy in this region, in particular cooperation
and which regulates trade, investment, transit, and among energy buyers initiated by Japanese actors,
energy efficiency and has a dispute settlement will set new constraints on Russia’s preference for
mechanism. Consequently, alongside bilateral bilateral energy diplomacy and agreements
supply agreements, declarations, and memoran- (Shadrina 2014; Vivoda 2014).
dums of understanding with customer and partner
countries, we find mostly domestic rules and reg-
ulations underpinning Russia’s energy diplomacy. Assessment
The Concept of the Foreign Policy of the Rus-
sian Federation intends to strengthen the country’s Expert assessments of Russia’s energy diplomacy
“. . . strategic partnership with major producers of vary greatly (Aalto et al. 2014). For some,
energy resources while actively promoting dialog Russia’s energy diplomacy especially toward its
with consumers and transit countries” (The Con- largest customers in the EU is “strategic, focused,
cept of the Foreign Policy of the Russian Federa- and consistent” (Dimitrova 2010). Some others
tion 2013). The draft Energy Strategy of Russia note how the fears, in particular in Eastern Europe
until 2035 targets diversifying Russia’s energy in the mid-2000s of an “energy superpower” Rus-
exports away from the main European markets sia, failed to fully emerge when oil prices declined
to the Asia where 12–23 % of oil exports and since then, as did the profits and clout of Russia
4 Russian Energy Diplomacy
and its Russian energy companies. This was facil- pipeline deliveries. Apart from these resource
itated by the lack of an overall strategy as to which and market-specific challenges, fitting the politi-
Russian actors exactly should do what, where, and cal interests with business interests remains a per-
when, despite the energy strategies (Monaghan sistently difficult balancing act. This was evident
2007). Some think Russian energy diplomacy is in how the EU–Russian differences over the
effective because of the direct involvement of the Ukrainian–Russian conflict of 2014 complicated
president, even though examples abound of how the advancement of those interests vis-à-vis both
Russian actors are still learning to balance the Ukraine and the EU.
political and economic or business interests
(Lough 2011, p. 4, 16). During 2000–2010, in Acknowledgements This article is supported by the
31 instances Russian state institutions used energy Academy of Finland Centre of Excellence ‘Choices of
Russian Modernisation’ (2012–17, Kivinen).
issues to promote political interests (Orttung and
Øverland 2011). In Europe, many efforts by the
Russian political institutions to promote the
investments of Russian oil companies resulted in
politicization preventing the conclusion of deals Cross-Reference
(Poussenkova 2012).
Any assessment of Russian energy diplomacy ▶ Gazprom
should differentiate between different markets. In ▶ Oil and gas projects in Sakhalin
the former Soviet area, the political interests have ▶ Russia-Ukraine Gas Conflicts
been very pronounced. Close partner countries ▶ Transit risks
such as Belarus and Armenia continued to enjoy ▶ Ukrainian Transit, its Role in Russian Gas
discounted prices for natural gas, while Ukraine Exports to Europe Russian Oil Companies in
lost its own preferred status in the early 2000s. In 2000-2014 EU-Russia Energy Dialogue: Rus-
each of the major markets, Russian energy diplo- sian Perspective Yukos Case
macy varies vis-à-vis particular countries owing
to the divide-and-rule policies whereby Russian
actors seek to discourage cooperation among the References
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faces several challenges. These include the jird.2012.29
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G
Gazprom Gazprom and the European Gas Market:

From Relations of Interdependence
C. Locatelli to Uncertainty in the European Gas
CNRS, GAEL, EDDEN, Univ.Grenoble, Market
Grenoble, France
Trade in gas between the EU and Russia started in
the late 1960s. The first contract was concluded
Given the scale of its reserves (16.8 % of the between the Soviet Union and Austria in 1968,
global total, according to BP) and output with the Federal Republic of Germany following
(605 Bcm in 2013), Russia is a major, perhaps suit in 1973, and then Italy and Finland the next
essential, supplier for the European Union and year. Only in the 1980s were the first major agree-
international markets. Its gas industry is domi- ments signed with EU countries, increasing the
nated by a powerful player, the Gazprom financial importance of these relations. In 2013 the EU
holding brought into existence by the reforms imported 163 Bcm, making it Russia’s prime
which followed the collapse of the Soviet Union export market; at the same time, with roughly
and its centrally planned economy. Gazprom 30 % market share, Russia is the EU’s main out-
occupies a unique position in the world market. side source of supply. However the degree of
In terms of reserves (70 % of the Russian Feder- dependence of the member states on Russian gas
ation’s gas reserves), output (487 Bcm), and imports varies. In terms of the volume imported,
exports (233.7 Bcm), it is the largest vertically Germany, France, Italy, and the United Kingdom
integrated gas company, with interests ranging are the key markets targeted by Gazprom strategy.
from exploration to transport. It has a monopoly Exports take three main routes. The traditional
on Russia’s Unified Gas Supply System (for long- one, with a capacity of 140 Bcm, passes through
distance domestic transport) and on exports by gas Ukraine. The Yamal-Europe gas pipeline
pipeline, thanks to Gazprom Export, a wholly (capacity 33 Bcm) crosses Belarus. Lastly Nord
owned subsidiary. As such it is an essential player Stream, which comprises two parallel lines (each
in the European gas market. with a capacity of 27.5 Bcm), is the first corridor
for exports from Russia not to cross any transit
countries. It goes straight to Germany, passing
under the Baltic. Finally mention should be
made of Blue Stream (capacity 16 Bcm), which
runs under the Black Sea.

DOI 10.1007/978-3-642-40871-7_123-1
2 Gazprom
The gas trade between the Soviet Union, then a few main issues. Such contracts are a major
Russia, and the EU developed on the basis of barrier to the entry of potential new players and
bilateral agreements in the form of long-term therefore inhibit the development of liquidity in
take-or-pay (TOP) contracts. These types of con- spot markets (Percebois 2008). The final destina-
tract and the various terms organizing the share- tion clause, the territorial restriction clause, and
out of risks with regard to price and volume the use restriction clause create entry barriers and
between the producer and the consumer, all the partition markets and limit their size and are an
way along the gas supply chain (Boussena 1999), encouragement to collusion among vendors and
made possible the development of mature, stable inhibit competition in the downstream sector
gas supply systems. They ensure that substantial (Nyssens et al. 2004; Nyssens and Osborne
investments are made in both production and 2005; Hirschhausen and Neuman 2008). As a
transport. The contracts are agreed between Euro- result, such clauses can no longer be included in
pean gas companies and Gazprom, the only Rus- natural gas supply contracts.
sian player operating in the European market. In attempting to assess the effect of long-term
When the Soviet Union collapsed, it inherited all contracts on its competition policy, the EU must
the TOP gas contracts which had been agreed with take into account not only the structure of the
European companies (the incumbents) such as market but also the types of companies involved
ENI, E.ON-Ruhrgas, and GDF Suez. in trading relations (Locatelli 2013). From this
The EU gas market has always been of prime point of view, Russia, through its state-controlled
importance for both the Gazprom and the Russian company Gazprom, is seen as a specific risk by the
state. Exports to this part of the world fulfill three EU for a number of reasons. As a result of trading
main functions. The first is to secure the profit- relations established under the former Soviet
ability of the company, given the low price of the Union, Gazprom has a huge market share (and is
commodity on the home market. Second in the more than a dominant player) in certain econo-
1990s, a period fraught by bartering and unpaid mies, for example, the Baltic states, Hungary,
bills, exports enabled the company to maintain a Poland, and Bulgaria. Gazprom’s profile – a com-
steady supply to the Russian economy. As the pany vertically integrated on its domestic market,
Russian gas market has evolved, these two con- with a transmission and export monopoly, major-
straints have become less pressing, but they are ity state-ownership (51 %) and ambitions to gain
still present, with a large gap between the prices a foothold in the downstream market in
on the two markets. Lastly these exports bring in Europe – is the second factor used by the EU to
substantial tax revenue for the state, hydrocarbons justify its perception of a “Russian risk.” Finally,
being a key variable for budget stability and eco- Russian legislation limiting foreign investment in
nomic growth for the country as a whole. One the development and production of Russian gas
may therefore expect the gas company to do its reserves is hampering attempts by European com-
best to maximize revenue (Stern 2014, p. 97), with panies to get involved in this part of the chain and
reference to its price strategy, qualifies Gazprom is thus adding to the perceived risks and uncer-
as a “revenue-maximized discriminating tainties associated with this country (Locatelli and
monopolist” (in terms of price and volume) from Rossiaud 2011).
the EU.
Liberalization of gas sales in the EU, which
seeks to create a single, competitive market, tends Gazprom Strategies to Adapt
to undermine the contractual modalities by which to the European Market
Gazprom organizes the major part of its supply to
the EU. In the eyes of the EU, long-term TOP The debate currently centers on one of the main
contracts or some of their clauses are seen as clauses of the TOP contracts, namely, indexation
contrary to the principles of competition. The of gas prices to those of oil and petroleum prod-
criticisms are only too well known and focus on ucts. In particular changes in the EU gas market
Gazprom 3
are casting doubt on this practice. Whereas the Russian gas was $387/mcm (or $10 per MBTU)
prices in TOP contracts followed the same trend (Uncomfortable bedfellows, Petroleum Econo-
as oil prices in 2009–2011, the prices of natural mist, June 2014.). Also, in some cases it reined
gas and liquefied natural gas on spot markets in its TOP clauses (Focus gaz Focus gaz, 2 July
plummeted due to surplus supply. This in turn 2014).
led to significant uncoupling between prices in Several variables weigh on Gazprom’s deci-
long-term contracts and on spot markets, sion whether to uphold prices or defend volume.
prompting most European gas companies to Its production costs (in particular compared to
demand the revision of their long-term contracts, alternative sources such as American LNG), posi-
particularly those with Gazprom. tion on its home market (the margin on domestic
Under these circumstances, if we continue to sales having improved, Locatelli 2014), and scope
assume that, much as any other gas supplier, for diversifying outlets into Asia (compensating
Gazprom’s prime objective is to maximize reve- for lower revenue from the EU market) will be the
nue, it may choose between two main strategies, determining factors for Gazprom when defining
which involve a different price-volume balance. It its strategy with regard to the EU. In the short
may opt to protect its market share, consequently term, it will nevertheless remain the firm’s pre-
focusing on volume; alternatively it may choose ferred export market, from which it derives a large
to uphold its prices. The strategy traditionally share of its profits, and witness the many projects
pursued by the Soviet Union – which Gazprom for boosting export capacity in this direction (see
perpetuated to a large extent through the 1990s Table 1).
and 2000s – gave priority to volume, in other
words seeking to increase (and consequently
defend) its market share in the EU. The period Asia: The Strategic Response to Shifts
between 2008 and 2012 saw a sudden break from in the European Gas Market
this policy. The refusal by Gazprom to renegotiate
the indexation formula in its long-term contracts In the long term, Gazprom and Russia’s strategic
reflects the shift to a strategy of upholding prices. response to shifts in the European gas market will
Over this period the average sales price of Russian be to export natural gas to Asia and more gener-
gas in the EU remained steady at around $400/ ally to diversify its export markets. This is not an
mcm. This resulted in a significant loss of market option in the short term because it entails the
share for the company, its customers preferring to development of new production centers in Eastern
resort to the spot markets, even if this meant Siberia and the Russian Far East, as well as the
invoking the flexibility clauses in their contracts. construction of extensive infrastructure. This pol-
In 2012 its gas exports to the EU fell by 5 %, icy was particularly encouraged in the early 2000s
whereas those from Norway increased. From this when the Russian government was reasserting its
point onwards, Gazprom started trimming its control over the industry. It coincided with a
prices to keep them competitive. But these adjust- growing awareness of the increasing scarcity of
ments were made without changing the principle long-term resources and the competition between
of prices being linked to those of oil (Stern 2014). large importing countries for access to hydrocar-
Two rationales governed price cuts. On the one bons. The policy has gained further credence
hand, Gazprom reduced the base price in the for- recently, with an increasingly competitive Euro-
mula, but maintained indexation on oil and petro- pean market and little prospect of growth in
leum products. This closed the gap between prices demand there due to economic recession and EU
resulting from indexation of TOP contracts and climate policy.
European gas hub prices. On the other hand, the The diversification strategy displays two spe-
firm granted some of its customer’s discounts, cific features, compared to Russia’s traditional
estimated at 10–20 % in the relevant literature. stance on exports. Firstly it is underpinned by a
Consequently, in 2013, the average price of dual approach to exports, by pipeline and in the
4 Gazprom
Gazprom, Planned increase in transport capacity 133

Table 1 Russian export
Nord Stream 3 27.5
capacity to
Europe – projects expressed Nord Stream 4 27.5
in Bcm Yamal-Europe 2 15.0
Blue Stream 3.0
Turkish Stream ?
Source: Russian gas: strategy and threats, Energy Economist, n 382, Aug 2013
Gazprom, Table 2 LNG projects in Russia

Capacity Target
Projects Main players Gas fields (Mt/year) Online markets
Vladivostok Gazprom Sakhalin 3, Kovykta, 3 trains, each 1 train: 2018 Asia
LNG Chayanda of 5 Mt 2 trains: 2020 including
3 trains: ? Japan
Yamal LNG Novatek (60 %), Yuzhno-Tambey 16.5 Mt 1 train: 2017 Europe and
Total (20 %), CNPC (Yamal) 2 trains: 2018 Asia
3 trains: 2019
LNG on Gydan Novatek Salmanovsk and Asia
Peninsula Geofizik
Sakhalin-1 Rosneft- Sakhalin-1 5 Mt 1 train: 2018 Asia Pacific
ExxonMobil Sea of Okhotsk
Sakhalin-2a Gazprom-Shell Sakhalin-2 or 5 Mt 1 train: 2018 China
Sakhalin-3
a
Sakhalin already produces 10.8 Mt of LNG per year for export to Asia, notably Japan
Sources: Russia pays high price for export prize, Petroleum Economist, October 2012; Russia reviews LNG export policy,
International Gas Report, n 718, 25 February 2013; IEA (2014). Russia 2014. OECD/IEA
form of LNG, the latter being the only option will be achieved by construction of the new
which allows real diversification of the export Power of Siberia pipeline, which will initially be
markets and create competition between different fed by development of the Chayanda gas field.
markets. Secondly this strategy tends to bring The pipeline will run as far as Vladivostok, via
Gazprom into competition with other Russian Khabarovsk. The two partners have signed a con-
gas producers. In 2014 Gazprom lost its monop- ventional long-term, TOP contract for the annual
oly on LNG exports to Asia and many competing delivery of 38 Bcm of gas during 30 years. For a
projects are underway. The main ones are long time, agreement was held up by the question
Sakhalin-1 (ExxonMobil-Rosneft), Yamal LNG of prices, Gazprom treating EU prices as a base-
(Novatek-Total), and Pechora LNG, originally line for all exports (Henderson 2011; Paik 2012).
operated by TNK-BP (but now in the hands of The two parties seem finally to have reached
Rosneft). Some of these projects are linked to the agreement on this issue. Only fragmentary data
construction of a gas pipeline to China, which is available. The terms of the contract are confi-
would also supply gas to a liquefaction plant in dential, but it is reportedly worth $400 billion,
Vladivostok serving several destinations, in par- which gives a preliminary idea of what the price
ticular Japan (see Table 2). of gas exported to China may be, somewhere
Apart from the LNG supply from Sakhalin-2, between $10–12 per MBTU. According to Hen-
the signature of an agreement between Gazprom derson and Stern (2014), this would satisfy both
and China National Petroleum Corporation, in parties, securing adequate profit margins for
May 2014, is the first concrete achievement of Gazprom with prices for CNPC equivalent to
the Russian firm’s diversification strategy. This those of its imports from Central Asia. In strategic
Gazprom 5
terms the deal is just as important for Russia as it is presented at the 1999 international conference on the
for China, allaying both parties’ concerns about role of Russian and CIS countries in deregulated energy
markets, Moscow International Energy Club, Centre de
energy security. Thanks to this move, Russia will géopolitique de l’énergie et des matières premières,
be able to reduce its overdependence on Europe Université Paris Dauphine, Paris, 6–7 December 1999
and secure demand. As for China, given the fore- Henderson J (2011) The pricing debate over Russian gas
seeable growth in demand for natural gas, diver- exports to China. Oxford Institute for Energy Studies,
Oxford, UK
sifying its supply sources and routes is a key Henderson J, Stern J (2014) The potential impact on Asia
feature of its policy on energy security, with Rus- gas markets of Russia’s eastern gas strategy. Oxford
sia playing an integral part alongside Central Asia. Institute for Energy Studies, Oxford, UK
For the time being, there is no question of the Locatelli C (2013) EU-Russia trading relations: the chal-
lenges of a new gas architecture. Eur J Law Econ
real competition between Gazprom exports to the 36(2):313–329
Asian and European markets, as they concern Locatelli C (2014) The Russian gas industry: challenges to
different gas fields and pipelines. However the the ‘Gazprom model’? Post-Communist Econ
apparent determination of the Russian state and 26:53–66
Locatelli C, Rossiaud S (2011) Russia’s gas and oil policy:
Gazprom to hasten the development of the “West- the emerging organizational and institutional frame-
ern” route – the Altai project – fed by reserves in work for regulating access to hydrocarbon resources.
Western Siberia, shows that such considerations In: IAEE Energy Forum 1st Quarter, pp 23–26
do play a part in Russian gas policy, though it will Nyssens H, Osborne L (2005) Profit splitting mechanism in
a liberalised gas market: the devil lies in the detail.
take time to take shape. Two points should be Comp Policy Newsletter 1:25–29
borne in mind in this respect. It may already be Nyssens H, Cultreta C, Schnichels D (2004) The territorial
taken as a given that the price on the European gas restrictions case in the gas sector: a state of play. Comp
market serves as an implicit benchmark for Policy Newsletter 1:48–51
Paik K (2012) Sino-Russian oil and gas cooperation: the
Gazprom sales to other markets. Similarly the reality and implications. Oxford University Press,
price at which Gazprom supplies to China will Oxford, UK
also serve as a baseline against which China’s Percebois J (2008) The supply of natural gas in the Euro-
other sources of supply will be assessed in the pean union. OPEC Energ Rev 32:33–53
Stern J (2014) The impact of European regulation and
future, particularly for LNG. With globalization policy on Russian gas exports and pipelines. In:
of natural gas markets, Russia can claim an impor- Henderson J, Pirani S (eds) The Russian gas matrix:
tant role in price formation for this commodity. how markets are driving change. Oxford Institute for
Energy Studies, Oxford, UK
von Hirschhausen C, Neumann A (2008) Long-term con-
tracts and asset specificity revisited: an empirical anal-
References ysis of producer-importer relations in the natural gas
industry. Rev Ind Organ 32:131–143
Boussena S (1999) New European gas market: gas strate-
gies of other present and potential suppliers. In: Paper
R
Russian Energy Outlook energy resources revenues and, secondly, high

reliance within the energy sector on foreign
Tatiana Mitrova technology.
Oil and Gas Department, Energy Research Building a policy in energy markets requires
Institute of the Russian Academy of Sciences, vision of the perspectives, in case of export depen-
Moscow, Russia dence of the energy sector – of the external energy
markets. One of the ways to build the vision of
perspectives is to use modeling of the energy
Russia is rich in energy resources: it holds 5,5 % markets. Economic modeling of the market trends
of world proved oil reserves, 16,8 % of world is a tool for analyzing future risks and challenges.
proved gas reserves, and 17,6 % of world coal Energy system is closely connected to the
reserves (BP 2014). Russia is the third largest economy, and thus prospects of energy demand
producer and consumer of energy in the world are linked to macroeconomic indicators, such as
after China and the USA, representing 10 % of GDP growth and demographic trends. Moreover,
global production and 5 % of global energy con- energy sector functions as a system with close
sumption. Russia is consistently ranked first in the interconnections between its geographical regions
world for gas exports, second for oil exports (through market integration) and segments
(though by 2040 it will be third after Saudi Arabia (through interfuel competition). Therefore, two
and Iraq), and third for coal exports (after Austra- essential features of modeling tools are (1) pres-
lia and Indonesia). Overall, Russia produces 1,47 ence of the macroeconomic trends and (2) sys-
billion tonnes and exports 630 million tonnes, temic approach. The Global and Russian Energy
representing 16 % of the global interregional Outlook to 2040, which assesses perspectives if
energy trade. This makes Russia the absolute the Russian energy sector in close interrelation to
leader in energy exports in the world (Grigoriev the international energy markets, used SCANER
et al. 2014). information and modeling complex (Makarov
This position is also a source of vulnerability. 2011). SCANER accounts for macroeconomic
The problems that Russia faces in relation to the trends and uses a systemic approach as the basis
external energy markets include changing dynam- for building its scenarios.
ics of demand in key regions where Russia is Below we will include projections received
targeting its supplies, volatility of energy prices, within the baseline scenario; for alternative sce-
and intervening effect of political factors on narios of the world’s energy development (there is
energy markets. This is a result of two specific a varying focus each year, so that thematically
features: firstly, Russia’s high dependence on scenarios differ respectively), refer to the outlooks
DOI 10.1007/978-3-642-40871-7_126-1
2 Russian Energy Outlook
published throughout 2012–2014 (Grigoriev et al. By 2040, the level of production will be
2012, 2013, 2014). 869 billion cubic meters of natural and associated
The baseline scenario is based on the IMF gas, 468 million tonnes of oil and condensate, and
economic growth forecasts up to 2018 (IMF 341 million tonnes of coal. Thus, the cumulative
2013) and ERIRAS’ GDP projections for the rest production of energy resources in Russia will
of the forecasting period (3,5 % annually in increase by 15 % (Fig. 3). Oil and gas will retain
2010–2040) and the UN projections of the popu- their dominant positions in the production of pri-
lation growth (0,9 % annually to nine billion by mary energy; there will be almost no change in
2040). (UN 2013) The main assumptions in the their overall share of 80 % in the energy mix.
baseline scenario are provided in Table 1. A slight decrease in the share of hydrocarbons
The key trends identified in the baseline sce- by the end of the period will be offset by increased
nario include the following. use of non-carbon energy resources (up from
Firstly, energy demand shifts to the non-OECD 7,3 % in 2010 to 9,3–9,7 % in 2040), primarily
countries. By 2040 they will account for 65 % of by nuclear energy.
world GDP and 69 % of world energy demand. The energy sector is expected to decrease its
OECD countries, which actively implement impact on the Russian economy by 2040. The new
energy-saving technologies, will increase their role of the energy sector in the Russian economy
aggregate energy demand by only 4,6 %, and the is illustrated by a reduction in energy sector con-
bulk of this growth will happen during the period tribution to GDP, share of energy resources in
up to 2030, with stabilization of the demand there- export revenues, share of energy resource exports
after. Europe and OECD Asia will even see a in GDP, and share in total volumes of investment,
decrease in energy demand. as well as in lower energy intensity of GDP (Min-
Secondly, the demand in the period from 2010 istry of Economic Development 2013).
to 2040 will grow for all forms of energy: oil by By 2040 the contribution of the energy sector
19 %, coal by 36 % (mainly in the period to to GDP will decrease from 29 % in 2010 to 16 %
2020), gas by 64 %, nuclear energy by 72 %, in 2040.
and renewable energy sources by impressive
93 % (Fig. 1).
The Oil Sector
Russia’s oil sector plays an essential role in
Russia’s economic development, as well as inter-
Russian Energy Sector Outlook national energy security and Russian energy secu-
rity. Current historically high levels of oil
The Russian energy sector was formed during the production (505 million tonnes in 2010, 517 mil-
Soviet era. The USSR was the world’s largest lion tonnes in 2012, see Table 2) are provided by
energy producer and the second largest consumer. brownfields. Production is expected to peak
After the collapse of the Soviet Union, the econ- around 2015 at 522 million tonnes and then
omy in general and the energy sector in particular decline to 468 million tonnes by 2040; such
have experienced a significant slump, with a fall decline is mainly going to come from decrease
of 40–50 % in the production of basic energy in production in Western Siberia (Fig. 4), partly
resources. By 2008, most branches of the industry offset by production growth in other regions. The
have almost achieved their pre-reform level and in share of Tyumen region in total production will
2012 have overcome the decline in the first wave decrease from 61 % in 2010 to 51 % in 2040
of the global crisis (Fig. 2). (Grigoriev et al. 2014).
In 2010, the levels of energy resource produc- From the corporate structure perspective, there
tion were at 649 billion cubic meters of gas, is a trend in increased share of oil production by
505 million tonnes of oil and condensate, and state-controlled companies (Rosneft, Gazprom
323 million tonnes of coal. Neft, Slavneft) as a result of asset concentration.
Russian Energy Outlook 3
Russian Energy Outlook, Table 1 Assumptions in the baseline scenario of the global and Russian energy outlook
in 2040
Aspect Assumptions
Technologies 1. Technologies that are already in use at present or those that have been officially approved
2. Gradually increasing competitiveness of new technologies and the continuation of the existing
trend for reduction of GDP energy intensity
Energy policy 1. Continuation of existing priorities in national energy policies and gradual introduction of plans and
programs that had already been announced at the end of 2013
2. Additional measures by energy-importing countries to improve energy security
Demographics Global population will increase by almost 2 billion to over 9 billion by 2040 (average annual growth
rate of 0,9 %)
GDP Global GDP will grow at an average annual rate of 3,5 %; by 2040, it will have increased 2,8 times
compared to the level in 2010
This cumulative output has increased to 50 % of Russian crude oil exports; its share will drop to
total crude oil production in 2013. less than 50 % by 2040. At the same time, the
In 2010, the volume of refining constituted importance of the Asian direction will increase: by
256 million tonnes. Oil refining volumes will 2040 Russian supplies to the Asia–Pacific will
grow until 2015 and decline thereafter, primarily exceed those to Europe, reaching 86 million
due to the dynamics in European demand for tonnes. Overall, there is expected to be a reduction
refined products. Refining in Russia will decrease in the interdependence between Russia and
to 270 million tonnes in 2020, again reaching the Europe in the liquid fuel market, with a simulta-
level of 280 million tonnes by 2040 (Fig. 5). neous reorientation of exports of crude oil to the
Russian exports of crude oil will decline from East (Korzhubaev 2011). As for the oil products,
245 million tonnes in 2010 to 185 million tonnes Western direction will maintain the most impor-
in 2040 as a result of reduction in oil production tant export market, despite the fall in exports in
and increase in refining. Throughout the next absolute terms (Fig. 7).
decades, a significant change in the geographic The changing situation in the domestic oil sec-
structure of oil exports is expected (Fig. 6). In tor (the need to deliver more oil to refineries) and
2010, Europe provided market for 73 % of reshaping of export geographical structure will
Russian Energy Outlook, 6000

Fig. 1 Global primary
energy demand growth by
5000
fuel, baseline scenario,
mtoe (Grigoriev et al. 2014)
4000
3000
2000
1000
0
Oil Coal Gas Bioenergy Nuclear Other Hydro
renewables
2010 Growth for the period of 2010-2040
130
120
110
100
90
80
70
60
50
40
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Gas production Electricity production Energy resources production
GDP Industry Oil production
Coal production
Russian Energy Outlook, Fig. 2 GDP (PPP), industry and energy resource production in Russia relative to 1990,
1990–2014, % (Grigoriev et al. 2014)
require reorganization of transport routes, recon- domestic and foreign demand for its gas. How-
struction of existing pipelines, and increase in ever, a number of problems concerning their
their capacity (estimated need for the eastern exploitation result from the declining output of
regions is 1,5–1,7 times increase in capacity). reserves that are currently operational and from
The most important project is East Siberia–Pacific the difficult climatic conditions and remoteness of
Ocean (ESPO) pipeline; it will deliver 65–70 mil- new areas of gas production from the centers of
lion tonnes of crude oil to Asian markets by 2020 consumption. The state of the gas industry’s
(Fig. 8). resource base allows for a substantial increase in
production, but this will require the involvement
of reserves with increased extraction costs
The Gas Sector
(Henderson 2014). Looking ahead to 2040, pro-
Gas production in Russia stands at around 650
duction of natural and associated gas will increase
billion cubic meters (649 bcm in 2010, 654,4
from 649 billion cubic meters in 2010 to 870 bcm
bcm in 2013, see Table 3). Traditional areas of
by 2040 (an increase of 33 %), and this will
gas production include Western Siberia (the main
mainly be provided by reserves (Grigoriev et al.
one, with production at Nadym-Pur-Taz region at
2014). Production will develop in the traditional
531 bcm in 2010) and the Northern European
regions as well as in the new oil and gas provinces
Russia.
of Eastern Siberia and the Far East, as well as in
The structure of gas reserves in Russia as a
the Caspian region (Fig. 9).
whole is favorable: Russia is able to cover

Fig. 3 Russia’s primary
energy production in by fuel
type, 2010–2040, mtoe 1400
(Grigoriev et al. 2014)
1200
1000
800
600
400
200
0
2010 2015 2020 2025 2030 2035 2040
Other Nuclear Hydro Coal Oil Gas
Russian Energy Outlook, Table 2 Russia’s oil sector – key data for 2012 (IEA 2014; ERIRAS/ACRF 2014)
Production Crude oil: 517 million tonnes/10,73 mb/d
Exports Crude oil total exports: 248,9 million tonnes
Europe: 74,4 %a
Asia–Pacific: 15,5 %a
Share of oil In total primary energy supply: 21,8 %
In electricity generation: 2,6 %
Domestic oil use by sector Transport: 35,8 %
Industry: 29,4 %
Refineries and energy own use: 17 %
Electricity generation: 10,2 %
Residential: 3,9 %
Commercial and public services: 3,7 %
a
Share in exports in 2010
In 2012, three companies represented the larg- projected to increase from 19,8 % in 2010 to
est part of Russia’s natural gas production: 27,1 % in 2040 (Grigoriev et al. 2014).
Gazprom (73,1 %), Novatek (12,6 %), and Two-thirds of the produced natural gas are
Rosneft (5 %) (IEA 2014). The share of indepen- consumed domestically; the main sectors of gas
dent producers in Russia’s total gas production is consumption are shown in Table 3.

Fig. 4 There seems to be a
mostake with colours. The
largest share is coming from
Western Siberia (darkest
colour in the graph itself), 500
and the legend suggests that
this colour represents
North-West (Grigoriev et al.
2014)
400
300
200
100
0
2010 2015 2020 2025 2030 2035 2040
Far East Eastern Siberia Western Siberia Volga-Urals
Southern regions, incl. Southern seas offshore North-West (incl. Kaliningrad)
At end of 2012, the total length of trunk pipe- tion of supplies in terms of markets and methods
lines and distribution pipelines in Russia – the of transportation (Stern 2014). At the same time,
Unified Gas Supply System (UGSS) – was the European market for pipeline gas will con-
168300 km. UGSS is owned and operated by tinue to account for around 50 % of Russian
Gazprom and its special transportation subsidi- exports in 2040. The share of eastward gas exports
aries (total of 17) (IEA 2014). By 2040, the length will grow from 6 % in 2010 to 30 % in 2040
of main trunk pipelines will increase by (Grigoriev et al. 2014).
25,000–27,000 km, including pipelines to new Importantly, the share of gas in total energy
export destinations (Fig. 10). exports will increase from 29 to 40 % in the
Natural gas exports take up more than a third of period from 2010 to 2040.
Russia’s gas production, and they will grow fur-
ther. Total exports of natural gas will increase The Coal Sector
from 223 bcm in 2010 to 310 bcm by 2040. Russia is one of the world’s largest coal resource
There is expected to be a significant diversifica- holders and producers. Most of Russia’s coal

Fig. 5 Russia’s oil refining
outlook by federal district,
2010–2040, million tonnes
(Grigoriev et al. 2014)
250
200
150
100
50
0
2010 2015 2020 2025 2030 2035 2040
Far Eastern FD Siberian FD Urals FD Southern and

Volga FD North-Caucasian FD
North-West FD Central FD
resources are largely concentrated in Siberia and exported 140 million tonnes of coal; exports in
the Far East regions. Kuznetsk Basin will remain 2040 are projected to increase to 170 million
the main area of Russia’s coal production; tonnes (Grigoriev et al. 2014). The main destina-
increased production is expected from Kansk- tions for coal supplies from Russia are Europe
Achinsk, Irkutsk, and the Far East in the period (exports via ports of Murmansk and Ust-Luga in
to 2040. Russia’s total coal production is expected Russia and Ventspils in Latvia as well as others),
to peak in 2025 at 380 million tonnes and then Japan, South Korea, and China (Vladivostok and
come down to 340 million tonnes in 2040 (Fig. 11, Nakhodka in Russia and Busan in South Korea).
Table 4). The major factor, which decreases competitive-
The main limitation for further production ness of Russian coal on international markets, is
growth is the capacity of external market rather large distances from production areas to main
than production capacity. In 2013, Russia ports (Fig. 12).

Fig. 6 Outlook of Russia’s CIS
crude oil exports by
Europe
destination, 2010–2040,
million tonnes (Grigoriev et Asia-Pacific
al. 2014) 200
150
100
50
0
2010 2015 2020 2025 2030 2035 2040

Fig. 7 Outlook of Russia’s CIS
oil product exports by Europe
destination, 2010–2040, Asia-Pacific
million tonnes (Grigoriev et 100
al. 2014)
80
60
40
20
0
2010 2015 2020 2025 2030 2035 2040
Russian Energy Outlook, Fig. 8 Russia's oil pipeline system (Grigoriev et al. 2014)
Russian Energy Outlook, Table 3 Russia's gas sector – key data for 2012 (IEA 2014; BP 2014)
Production Total: 654,4 bcm
Imports Total: 33 bcm
Exports Total: 219 bcm
Europe (pipeline): 72 %a
Former Soviet Union (pipeline): 21,7 %a
Asia (LNG): 6,3 %a
Share of natural gas In total primary energy supply: 51,8 %
Domestic gas use by sector Electricity generation: 62,5 %
Industry: 17,3 %
Residential: 8,2 %
Transport: 7 %
Other transformations: 4,4 %
Commercial: 0,7 %
a
In 2013 according to BP data

Fig. 9 Russia’s gas
production outlook by gas
producing province, 900
2010–2040, bcm (Grigoriev
et al. 2014)
800
700
600
500
400
300
200
100
0
2010 2015 2020 2025 2030 2035 2040
Other regions Yamal New Tymen Nadym-Pur-Taz
Far East Eastern Siberia European North and Northern Seas
Russian Energy Outlook, Fig. 10 Russia’s gas pipeline system (Grigoriev et al. 2014)

Fig. 11 Russia’s coal
production outlook by
basin, 2010–2040, million 350
tonnes (Grigoriev et al.
2014)
300
250
200
150
100
50
0
2010 2015 2020 2025 2030 2035 2040
European Region Kansk-Achinsk Kuznetsk Basin East Siberia Far East
Russian Energy Outlook, Table 4 Russia's coal sector – key data for 2013 (IEA 2014; BP 2014)
Hard coal: 274 mt
Production Lignite: 78 mt
Imports Total: 30 mt
Exports Total: 143 mt
Share of coal In total primary energy supply: 17,3 %
Domestic coal use Electricity generation: 62,4 %
Industry: 16,9 %
Residential: 1,2 %
Other transformations: 17,4 %
Commercial and public services: 2 %
Russian Energy Outlook, Fig. 12 Coal transport routes in Russia (Grigoriev et al. 2014)
References International Monetary Fund (2013) World economic out-

look 2013. Available for download via IMF website:
BP (2014) Statistical review of World energy. Available http://www.imf.org/external/pubs/ft/weo/2013/01/index.
at BP website http://www.bp.com/content/dam/bp/pdf/ htm. Accessed 28 Apr 2015
Energy-economics/statistical-review-2014/BP-statistical- Korzhubaev A (2011) Russia on the World crude oil and
review-of-world-energy-2014-full-report.pdf. Accessed petroleum product markets. In: Drilling & oil. Avail-
28 Apr 2015 able in Russian at: http://burneft.ru/archive/issues/
Grigoriev LM, Makarov AA, Mitrova TM (eds) 2011-05/3. Accessed 28 Apr 2015
(2012) Global and Russian energy outlook to 2040. Makarov AA (ed) (2011) SCANER: super complex for
ERIRAS/ACRF, Moscow active navigation in energy research. ERIRAS,
Grigoriev LM, Makarov AA, Mitrova TM (eds) Moscow
(2013) Global and Russian energy outlook to 2040. Ministry of Economic Development (2013) Forecast of
ERIRAS/ACRF, Moscow long-term socio-economic development of the Russian
Grigoriev LM, Makarov AA, Mitrova TM (eds) Federation for the period to 2030. MED, Moscow
(2014) Global and Russian energy outlook to 2040. Stern J (2014) Russian responses to commercial change in
ERIRAS/ACRF, Moscow European gas markets. In: Henderson J, Pirani S (eds)
Henderson J (2014) Sources of Russian gas supply. In: The Russian gas matrix: how markets are driving
Henderson J, Pirani S (eds) The Russian gas matrix: change. Oxford Institute for Energy Studies, Oxford,
how markets are driving change. Oxford Institute for pp 50–81
Energy Studies, Oxford, pp 252–257 UN (2013) World population prospects: 2012 revision.
International Energy Agency (2014) Energy policies Available for download via Population division of the
beyond IEA countries: Russia 2014. OECD/IEA, Paris department of economic and social affairs at: http://esa.
un.org/wpp/. Accessed 28 Apr 2015
A
RSGR Radiation Safety (General)

Australia, Western: Uranium Mining
Regulations 1983 (WA)
RWMP Radiation waste management plan
Tessa Herrmann Introduction

Central Desert Native Title Services Limited,
Perth, WA, Australia Mining is a highly significant part of Western
Australia’s economy. While in 2014–2015,
declining commodity prices had a significant
Abbreviations impact upon the contribution of mining to West-
ern Australia’s economy, the resources sector con-
ARPANS Australian Radiation Protection tinued to be a significant economic contributor to
Act and Nuclear Safety Act 1998 (Cth) the State, worth $5.9 billion in royalty revenue
ARPANSA Australian Radiation Protection (Department of Mines & Petroleum Western Aus-
and Nuclear Safety Agency tralia 2014–2015).
EIA Environmental Impact Assessment Uranium mining in Australia has generated
EP Act Environmental Protection Act heated debate (Wu et al. 2008). Australia, along
1986 (WA) with Canada and Kazakhstan, is one of the
EPBC Act Environmental Protection and world’s largest producers and is thought to have
Biodiversity Conservation Act the largest known uranium reserves in the world
1999 (Cth) (Commonwealth of Australia 2006). Uranium
Mining Act Mining Act 1978 (WA) mining in Australia is governed by a complex
MSIA Mines Safety and Inspection Act regulatory framework of parliamentary acts, reg-
1994 (WA) ulations, codes, and guidelines, administered at
MSIR Mines Safety and Inspection both a Federal and State/Territory level (Uranium
Mining 1978 (WA) Advisory Group 2012). In 2008, the Western
RCWA Radiological council of Western Australian Liberal Government overturned an
Australia 8-year ban on uranium mining, instituted by a
RSA Radiation Safety Act 1975 (Cth) previous Labor Government. In announcing the
policy change, the Premier of Western Australia
stated that this decision would unlock significant
All views expressed in this article are the author’s own, and royalty revenue and allow the State to play a
are not associated with Central Desert Native Title Services
greater role in the fight against climate change
Ltd

DOI 10.1007/978-3-642-40871-7_130-1
2 Australia, Western: Uranium Mining
(Wylynko 2009). However, despite a number The EPBC Act provides that a nuclear activity,
of identified reserves, no uranium mine are including the mining of uranium oxide concen-
operating in Western Australia to date. trate, cannot be undertaken without the approval
of the Commonwealth Minister for the Environ-
ment. While EIA undertaken by the Common-
wealth under the EPBC Act is confined to
International Obligations Affecting
matters affecting “the environment,” the effect of
Uranium Mining in Western Australia
a nuclear action upon people as an aspect of the
environment requires radiation risk to be
Australia is a party to the Convention on Nuclear
addressed (Government of Western Australia
Safety (adopted 17 June 1994; entered into force
Inter-Agency Working Group 2009).
24 October 1996) and became subject to the Con-
vention on Nuclear Safety on 24 March 1997.
However, Australia does not have any subject
Regulatory Framework Affecting
nuclear installations as construction or operation
Uranium Mining
of such installations is at present forbidden under
Commonwealth, State, and Territory legislation
The key WA statutes applicable to uranium min-
(Australian Radiation Protection and Nuclear
ing projects are the EP Act, the Mining Act, the
Safety Agency 2013).
RSA, and the MSIA. Each of these acts is accom-
Australia is also a party to the Joint Convention
panied by subsidiary regulations, the most signif-
on the Safety of Spent Fuel Management and on
icant of which are Part 16 of the MSIR and
the Safety of Radioactive Waste Management
the RSGR.
(adopted 5 September 1997; entered into force
Relevant to the gaining of approvals from the
on 18 June 2001), which it became subject to on
Western Australian government is the division of
3 November 2003.
regulatory authority between different agencies.
In Western Australia, the DMP is responsible for
administering the Mining Act, the MSIA, and the
Australia’s Federal Radiation Protection MSIR. The RCWA, an independent statutory
and Waste Management System authority reporting directly to the WA Minister
for Health, administers the RSA and associated
As a federation, regulation of nuclear actions in regulations. Pursuant to the EP Act, environmen-
Australia occurs at both a Commonwealth and tal impact assessments are conducted by the West-
State or Territory level. Uranium mining in Western ern Australian Environmental Protection
Australia is therefore governed by a framework of Authority, which makes recommendations to the
parliamentary acts, regulations, codes, and guide- Environment Minister. This complexity creates
lines at both Federal and State Territory levels, with significant overlap in regulatory functions
approvals for the establishment of a uranium mine between agencies. For example, a RMP is
being required from both governments. required to be approved by both the DMP
Two Commonwealth statutes are of particular (pursuant to the MSIA/MSIR) and the RCWA
relevance to uranium mining in Western Austra- (pursuant to the RSA).
lia: the ARPANS Act and the EPBC Act. The The RSA is the principal legislation governing
ARPANS Act establishes ARPANSA; although radiation protection in WA and applies to both
the ARPANS Act only directly regulates Com- ionizing and nonionizing radiation. The RCWA
monwealth activities, ARPANSA’s mandate is established under the RSA as an independent
includes promoting uniformity of radiation pro- statutory authority. The RSA provides that the
tection policies and practices throughout Austra- use, manufacture, storage, transport, sale, or pos-
lia, including through national standards and session of any radioactive substance is an offense,
codes (Uranium Advisory Group 2012). unless licensed by the RCWA.
Australia, Western: Uranium Mining 3
The RSGR stipulates that mining/milling of Conclusion

radioactive ores cannot take place except in accor-
dance with ARPANSA’s “Code of Practice and While there are a number of uranium projects in
Safety Guide for Radiation Protection and Radio- Western Australia at present, none have yet for-
active Waste Management in Mining and Mineral mally commented mining operations. Regulation
Processing,” thus incorporating national stan- of uranium mining in Western Australia involves
dards into WA regulation (s.27(5)(b) RSGR). a complex framework due to the involvement of
The Code requires proponents of uranium mines/ both Federal and State governments in the regu-
mills to present to the “relevant regulatory author- lation of “nuclear actions,” including mining of
ity” (in WA, the RCWA) a RMP prior to com- uranium. This complexity is enhanced by the
mencing any operations (r.16.7). Part 16 of the division of regulatory authority between a number
MSIR also requires an approved RMP before of State-based authorities and legislative
mining operations commence; proposed RMPs instruments.
must be submitted for the approval of the State
Mining Engineer, an officer within DMP.
References
Regulatory Framework Affecting Waste 1994 Convention on Nuclear Safety. Adopted 17 June
Management 1994, opened for signature 20 Sept 1994, entered into
force 24 Oct 1996
1997 Joint Convention on the Safety of Spent Fuel Man-
The same provisions of the RSA which require agement and on the Safety of Radioactive Waste Man-
licensing for a uranium mine also apply to waste agement. Adopted 5 Sept 1997, opened for signature
facilities; a tailing storage facility associated with 29 Sept 1997, entered into force 18 June 2001
Australian Radiation Protection and Nuclear Safety Act
a uranium mine will need to be covered by a 1998 (Cth)
license issued by the RCWA. The RSGR incorpo- Australian Radiation Protection and Nuclear Safety
rate the ARPANSA Code, which outlines that a Agency, Commonwealth Government of Australia
RWMP must be addressed “from the inception of (August 2013), ‘Australian National Report’
Australian Radiation Protection and Nuclear Safety
project planning” (Australian Radiation Protec- Agency (August 2005). Code of practice and safety
tion and Nuclear Safety Agency 2005). The guide: radiation protection and radioactive waste man-
RWMP must be developed together with the agement in mining and mineral processing: Radiation
RMP and must be updated throughout the project. Protection Series Publication No. 9
Commonwealth of Australia (December 2006) Uranium
If circumstances change significantly, then the mining, processing and nuclear energy – opportunities
RWMP must be revised and reapproved by for Australia? Report to the prime minister by the
the RCWA. uranium mining, processing and nuclear energy review
The MSIR also addresses the disposal of radio- taskforce (December 2006)
Department of Mines & Petroleum Western Australia
active waste as a result of mining. It contemplates (2014–2015) Annual report 2014–2015. Available at
that radioactive waste will, at least in part, be http://www.dmp.wa.gov.au/About-Us-Careers/Annual-
addressed within the RMP (see, for example, report-1453.aspx. Accessed 16 Feb 2016
r.16.34 MSIR). Additionally, the operator is Environmental Protection Act 1986 (WA)
Environmental Protection and Biodiversity Act 1999 (Cth)
required – prior to abandoning the mine – to Government of Western Australia Inter-Agency Working
obtain approval from the State Mining Engineer Group, Department of Mines and Petroleum (August
for a plan for “final management” of radiation, 2009). Review of regulatory adequacy for uranium
including the process for decommissioning and mining development in Western Australia
Mining Act 1978 (WA)
rehabilitation (r.16.35(1) MSIR). The plan is addi- Mines Safety and Inspection Act 1994 (WA)
tional to the requirement for a “mine closure plan” Mines Safety and Inspection Regulations 1995 (WA)
required as a condition of all mining leases Radiation Safety Act 1975 (WA)
granted pursuant to the Mining Act (s.82(1)). Radiation Safety (General) Regulations 1983 (WA)
4 Australia, Western: Uranium Mining
Uranium Advisory Group, Australian Centre for Wylynko B (2009) The regulation of Uranium mining in
Geomechanics (April 2012). Independent review of Western Australia: Ban Lifted. Mondaq Business Briefing.
uranium mining regulation: prepared for the depart- Available at http://www.mondaq.com/australia/x/86860/
ment of mines and petroleum, Western Australia Mining/The+Regulation+Of+Uranium+Mining+In+West
Wu J, Garnett ST, Barnes T (2008) Beyond an energy deal: ern+Australia+Ban+Lifted. Accessed 16 Feb 2016
impacts of the Sino-Australia uranium agreement.
Energy Policy 36:413–422
A
Australia: Landholder Rights right of veto or ability to determine whom may

to Subsoil Resources extract those minerals, beyond that of an ordinary
landholder. Private mineral ownership generally
Ross Mackay entails merely a right to benefit from royalties,
EDO NSW, Sydney, Australia compensation, etc. accruing from the extraction
of the resource (Mackay 2013).
It should be noted that the commonwealth
Abbreviations structure of Australia means there are significant
differences in the law governing rights to subsoil
ACT Australian Capital Territory resources between the different States and Terri-
NSW New South Wales tories in Australia (Forbes and Lang 1987;
NT Northern Territory Crommelin 2009).
Qld Queensland
SA South Australia
Tas Tasmania Ownership of Subsoil Resources
Vic Victoria
WA Western Australia Following on from the common law tradition
imported from the United Kingdom, the general
Introduction principle relating to ownership of land in Austra-
lia is the cujus est solum eius est usque ad coelum
In examining rights to subsoil resources in Aus- et ad inferos maxim: “whoever has the soil, also
tralia, there are two separate elements which must owns to the heavens above and to the centre
be considered. The first is the ownership of those beneath” (Hepburn 2015). However in Australia,
resources, noting the distinction between owner- as a consequence of practice in the disposition of
ship of land, minerals, hydrocarbons, and other land both by the government and by legislation,
subsoil resources, and the second are the tene- the more valuable subsoil resources are often not
ments, approvals, etc. which are required to held by the owner of the land in which they are
extract those subsoil resources. This entry deals located.
with the first element. It is important to note that The first disposition of land in Australia by the
ownership of minerals by a landholder in Austra- government (in right of the Crown) is normally by
lia does not normally (there are some limited a “Crown grant.” Subsequent to this Crown grant,
exceptions in WA) give any right or exclusivity land can pass hands many times through normal
for the exploitation of those minerals, nor any conveyancing procedures. The Crown grant often
DOI 10.1007/978-3-642-40871-7_134-1
2 Australia: Landholder Rights to Subsoil Resources
contained reservations from the grant (i.e., things was not a uniform rule. Regulations were passed
which the government reserved from the grant to in 1828 which announced an intention to reserve
remain the property of the Crown), including res- gold and silver from all Crown grants, to which
ervation of certain minerals and or other subsoil was added coal in 1831. However, by 1843, it
resources within the land (Crommelin 1983). appears that these minerals were not, in practice,
Anything thereby reserved does not pass with being reserved from all Crown grants as a matter
the title of the land and remains the property of of routine. Legislation was enacted in 1884 to the
the Crown. effect that all minerals were to be reserved from
In addition, all States and Territories have Crown grants from that time forward (Crommelin
passed legislation affirming ownership of all or 1987; Montoya 2012).
certain minerals and other subsoil resources In terms of formal State appropriation of min-
within their boundaries. The instances and effect erals, in addition to gold and silver as discussed
of such legislation are discussed separately in above, the government of NSW also legislatively
relation to each State and Territory below. acquired all rights to coal in 1981 (the exception
to which is coal which was vested in individuals
as part of the compensation process for this State
Minerals acquisition) and uranium in 2012 (Roth 2012).
Therefore, in NSW all in situ gold, silver, coal
Legislation has been passed in Several States have (with the exceptions outlined above), and uranium
enacted legislation to appropriate ownership of all are the property of the Crown. Other minerals may
in situ minerals within State boundaries, while be the property of either the landholder or the
other States have done so for certain minerals Crown, depending on whether they were reserved
only. in the original Crown grant (Bradbrook 1988). In
Where there is no such relevant legislation, the rare cases, they may be the property of a prior
ownership of minerals in a given parcel of land landholder of the land, in circumstances where
depends on whether minerals were reserved in the minerals were not reserved in the Crown grant,
original Crown grant and/or in subsequent deal- but were reserved by a previous landholder when
ings with the land. they conveyed the land.
The exceptions to this are silver and gold.
These are considered “royal metals” under the Queensland
English common law, which has since the six- In Qld, all minerals were legislatively appropri-
teenth century confirmed that all silver and gold ated in 1989, subject to the following exclusions:
in lands within the dominion of the Crown belong
to the Crown. This ruling has been subsequently • Coal in land alienated prior to 1910 where the
confirmed in the Australian context and has been Crown grant did not contain a reservation of
enshrined in legislation throughout the Australian coal
State and Territories, such that all in situ silver and • Any in situ minerals specifically alienated in
gold in Australia remain the property of the gov- fee simple by the Crown
ernment in right of the Crown (Badenhorst 2012).
Victoria
New South Wales Legislative appropriation of all in situ minerals in
Of the Australian States and Territories, NSW has Vic by the Crown occurred in 1990. There are no
the largest divergence in the historical treatment exceptions or exemptions in this appropriation.
of minerals in Crown grants of land and is the
most difficult for which to ascertain ownership of South Australia
in situ minerals. Legislative appropriation of all in situ minerals in
From 1788 to 1828, most Crown grants in SA by the Crown occurred in 1971. There are no
NSW did not reserve minerals; however, this exceptions or exemptions in this appropriation.
Australia: Landholder Rights to Subsoil Resources 3
Tasmania minerals to be reserved in Crown grants from

In Tasmania, prior to 1859, it appears that in most this point forward (Waasaf 1980).
cases only gold and silver were reserved from Legislative appropriation of all gold, silver,
Crown grants. From 1859 to 1905, there seems and other precious metals in situ within WA by
to have, generally, been no reservation of minerals the Crown occurred in 1978. All other minerals
from Crown grants. In 1905, legislation was intro- not divested by the Crown with land prior to 1899
duced to require all minerals to be reserved in have also been appropriated by that legislation
Crown grants from this point forward (Waasaf (Hunt 2009).
1980).
In 1911, by legislative amendment, all gold Northern Territory
and silver were appropriated by the Crown. The Legislative appropriation of all in situ minerals in
Crown also appropriated all other minerals in the NT by the Crown occurred in 1953.
State which had not been divested with land prior
to 1893 (although there was power for the gov- Australian Capital Territory
ernment to declare minerals in certain land exempt On creation of the ACT by cession from NSW in
from this appropriation). 1911, the Commonwealth government legisla-
In 1995, these legislative provisions were tively forbade the disposition of land in the ACT
replaced, and the Crown acquired all of the fol- by freehold sale. Therefore, the highest form of
lowing minerals within the State: tenure in the ACT is leasehold, which does not
entail ownership of subsurface minerals. Prior to
• Gold 1911, the law of NSW applied, and therefore the
• Silver discussion above in relation to ownership of NSW
• Atomic substances (uranium, thorium, and applies to land alienated in the ACT prior to 1911
others so declared from time to time) (Waasaf 1980). Accordingly, all in situ minerals
• Helium not disposed of prior to 1911 in the ACT are the
• Geothermal substances (underground sub- property of the Crown.
stances heated by natural processes above
40 C)
• Hydrogen Hydrocarbons
The legislation also provided that all minerals Hydrocarbons, which are petroleum, oil, gas, etc.,
in land divested by the Crown after 1995 remain are generally administered under separate legisla-
the property of the Crown. tion to minerals in Australia.
Therefore, the situation in relation to the All the Australian States and Territories,
above-listed minerals is clear; they are held by excluding the ACT, have passed legislation
the Crown. For other minerals, investigations confirming and/or appropriating Crown owner-
would need to be performed to determine whether ship of in situ hydrocarbons. Therefore, there is
they have passed with the land, bearing in mind no private ownership of in situ hydrocarbons in
the history detailed above. Australia (Hepburn 2015).
Other Subsoil Resources

Western Australia
The general practice in WA, prior to 1887, was to
In relation to non-mineral and non-hydrocarbon
reserve only gold and silver from Crown grants.
subsoil resources, the cujus est solum principle
After 1887, there was a wide discretion in the
retains a wider application, such that they will
reservation of minerals from Crown grants. In
normally be held by the owner of the title
1905, legislation was introduced requiring all
(Bradbrook 1988). There, however, may still be
4 Australia: Landholder Rights to Subsoil Resources
some instances where reservations within the sourced prior to the Crown acquiring sovereignty
Crown grant have an effect. These may include in Australia. They are determined and recognized
reservations of specific subsoil resources, or res- judicially, upon application to the Federal Court of
ervation of subsoil resources for a specific pur- Australia. There is no legislative impediment to
pose (e.g., rock and gravel for construction of native title rights and interests including a right to
public roads). minerals; however, the judicial requirements of
The definition of what a “mineral” and thereby proof that have developed in native title jurispru-
what subsoil resources are exempt from the dence mean that it is difficult to envisage native
regime relating to ownership of in situ minerals title claimants being able to make out a right to
is not uniform across the Australian States. The commercial exploitation of minerals (Meyers
definition of “mineral” in NSW legislation is et al. 1997; Hunt 2009).
expressed by an exhaustive list of all the sub-
stances considered to be minerals. In Vic, SA,
Tas, and WA legislation, minerals are inversely References
expressed through a list of what subsoil resources
do not constitute minerals. In Qld “minerals” are Badenhorst P (2012) Cadia Holdings Pty Ltd v State of
defined through a combination of the above. In New South Wales (2010) 269 ALR 204. De Jure Law
J 45(3):605–623
NT, the legislative definition of “minerals” is only
Behrendt L, Nettheim G (2015) Aborigines and Torres
general in nature (Carson 2010). Strait Islanders. In: Kirby M (ed) The laws of Australia.
In most States (the exceptions being SA and Thomson Reuters, Sydney
Tas), substances such as rock, gravel, etc. are gen- Bradbrook A (1988) The relevance of the Cujus Est Solum
doctrine to the surface landowner’s claims to natural
erally excluded from the definition of mineral.
resources located above and beneath the land. Adelaide
Despite coming under the definition of a mineral, Law Rev 11:462–483
rocks, gravel, etc. in Tas are determined by legis- Butt P (2001) Land law, 4th edn. Lawbook Co, Sydney
lation to be the property of the landowner in land Carson J (2010) Energy and resources. In: Dal Pont G (ed)
Halsbury’s laws of Australia. Butterworths, Sydney
divested by the Crown prior to 1995.
Crommelin M (1983) Resources law and public policy.
UWA Law Rev 15(1–2):1–13
Crommelin M (1987) Acquisition of natural resource inter-
Aboriginal Land ests by the state: the Australian position. J Energy Nat
Res Law 5(Suppl 1):3–26
Crommelin M (2009) Governance of oil and gas resources
In Australia, there exist two species of land inter- in the Australian federation. University of Melbourne
ests unique to Indigenous Australians: Aboriginal Law School Research Series 8
land rights and native title rights. Forbes J, Lang A (1987) Australian mining and petroleum
laws, 2nd edn. Butterworths, Sydney
Aboriginal land rights were created and are
Hepburn S (2015) Mining and energy law. Cambridge
managed under specific legislation, different in University Press, Sydney
each State. In most States the general rules sur- Hunt M (2009) Mining law in Western Australia, 4th edn.
rounding ownership of in situ minerals apply. The The Federation Press, Sydney
Mackay R (2013) Private royalties in New South Wales
exceptions are NSW, where ownership of land
and the state take thereof: are they valid? CEPMLP
under land rights legislation confers ownership Annual Review 15
of all in situ minerals excluding gold, silver, Meyers G, Piper C, Rumley H (1997) Asking the minerals
coal, petroleum, and uranium (NSWALC 2015; question: rights in minerals as an incident of native title.
Australian Ind Law Rep 2(2):203–250
Butt 2001), and Tas, where ownership of land
Montoya D (2012) NSW Parliamentary Research Service
under land rights legislation confers ownership Issues Backgrounder: a history of mineral and petroleum
of in situ minerals to a depth of 50 m, excluding ownership and royalties in NSW. Available via NSW
oil, atomic substances, and geothermal substances Parliament https://www.parliament.nsw.gov.au/prod/
parlment/publications.nsf/key/Ahistoryofmineraland
(Behrendt and Nettheim 2015).
petroleumownershipandroyaltiesinNSW/$File/A+history
Native title rights are the rights and interests in +of+mineral+and+petroleum+royalties+in+NSW,+Issue
land held under traditional laws and customs s+Backgrounder+Oct+2012.pdf. Accessed 23 Feb 2016
Australia: Landholder Rights to Subsoil Resources 5
NSWAboriginal Land Council (NSWALC) (2015) Aborig- Parliament, http://www.parliament.nsw.gov.au/prod/

inal land rights act amendments guide., Available via parlment/publications.nsf/key/Explorationandminingon
NSW Aboriginal Land Council, http://www.alc.org.au/ privatelandinNSW:abrieflegislativehistory/$File/e-brief.
media/99294/aboriginal%20land%20rights%20act% exploration+and+mining+on+private+land.pdf.
20amendments%20guide_print.pdf. Accessed 26 Feb Accessed 26 Feb 2016
2016 Waasaf T (1980) The private ownership of coal and other
Roth L (2012) NSW parliamentary research service minerals in NSW and other places. The Freehold Rights
E-Brief: exploration and mining on private land in Association, Sydney
NSW: a brief legislative history., Available via NSW
A
Australia: Parliamentary Agreements (e.g., the Mining Minister or Premier), and then
and Extractives a short covering statute which attaches the agree-
ment and records the legislature’s approval of the
John Southalan contract.
Centre for Energy, Petroleum and Mineral Law This form of regulation for large mines exists
and Policy, University of Dundee, Dundee, in various countries (examples listed below) and
Scotland is feasible in most parliamentary forms of govern-
University of Western Australia, Perth, Australia ment where the executive is chosen from the leg-
Western Australian Bar Association, Perth, islature. Parliamentary agreements have different
Australia names in different jurisdictions, sometimes called
state agreements, indentures, ratified agreements,
concessions, agreement acts, government agree-
Synonyms ments, or other names.
The main advantage of a parliamentary agree-
Agreement acts; Indentures; Ratified agreements; ment is transparency: as a parliamentary law, the
State agreements rights and obligations of each party are publicly
available (at least to the extent that occurs for
parliamentary laws in that jurisdiction). Parlia-
Definition mentary agreements have been lauded, by various
parties, as important in the development and reg-
A contract between an executive government and ulation of large mining projects: e.g., Hunt
a company which has been subsequently et al. (2015), 12–13, and Morgan (2007), 116.
approved by the legislature The main disadvantage of a parliamentary agree-
ment is creating a law especially for a single mine:
this can increase administration problems for reg-
Introduction ulators and decrease the equality of the law apply-
ing to everyone. These aspects have seen
“Parliamentary agreement,” in this entry, means parliamentary agreements criticized by various
the legislative approval of a contract between an parties: e.g., WA Gov (2002), 101, and Watson
executive government and a company to develop/ (2010), 7199.
operate a mine and associated facilities. Most Many existing (and ongoing) mining opera-
parliamentary agreements comprise a long con- tions are regulated under parliamentary agree-
tract between the company and the executive ments but it is uncommon for jurisdictions to
DOI 10.1007/978-3-642-40871-7_135-1
2 Australia: Parliamentary Agreements and Extractives
now use parliamentary agreements for new mines. similar to other forms of mining regulation at
The parliamentary agreement format, involving that time. More contemporary versions of parlia-
the legislature approving a government contract mentary agreements involve more attention to
with a company, is used in areas other than mining social and environmental impacts and less exemp-
regulation such as land development, transport tion from general laws: Southalan et al. (2015),
projects, and entertainment complexes: Southalan [17]. The Olympic Dam Agreement (referenced
et al. (2015), [13]. The jurisdiction which makes below) has been described as the “modern para-
most use of parliamentary agreements in regulat- digm” (Fitzgerald (2005), 687), and so its content
ing mining is Western Australia: Horsley (2013), is a useful guidance.
284. In Western Australia, over 60 current extrac- A parliamentary agreement need not, however,
tive projects currently operate under parliamen- have any specific content. As it effectively
tary agreements, accounting for about 80 % of the becomes a law of the parliament, the agreement
value of all minerals and petroleum produced: can cover anything on which the parliament is
Barnett (2014), 13. constitutionally able to legislate. The agreement
will usually grant (or confirm the grant of) the
relevant land interests required by the company
for its operations. Agreements also often reduce
Format of Parliamentary Agreements
the royalties/taxation which would otherwise
apply and sometimes impose a “stabilization”
The usual format for a parliamentary agreement is
arrangement to fix that arrangement for the future.
to provide a structure for the operations to be
proposed and approved in stages. This is known
as the “proposals procedure” and forms the core of
the agreement: Hunt et al. (2015), 16. This Key Legal Principles Involved in the Use
requires the company to submit a proposal and of Parliamentary Agreements
the relevant government agency to consider/ in Regulating Mining in Australia
request revision of that proposal, and, when the
government has approved the proposal, the com- The legal interpretation and implication of a par-
pany is then obligated under the agreement to liamentary agreement will, of course, depend on
implement it. The agreement will specify the pro- the law of the relevant jurisdiction (particularly
posals required, for example (as summarized in contract law, administrative law, and constitu-
Southalan et al. (2015), [8]): tional law). Various issues have arisen from dis-
putes and court cases decided in Australia, and the
• Provide feasibility study of $A for the whole principles drawn from these are summarized
operation. below:
• Submit a mine plan for a mine of B magnitude
and constructing that. • The basic effect of (and reason for) a parlia-
• Operate a mine to extract C tons/year. mentary agreement is that the legislature’s
• Provide mining infrastructure to process/trans- approval ensures the terms of the contract are
port D amount. valid. This removes any question of whether
• Ensure social infrastructure for E people. those terms contradicted an existing parlia-
• Have environmental management to ensure mentary law, or the government lacked the
F outcomes. necessary authority to contract. The legisla-
ture’s approval of the agreement authorizes
The content of a typical parliamentary agree- everything in the contract.
ment has changed over time. Earlier versions • The parliament’s approval, and legislation,
involved giving the company extensive land also prevents any future government from
with little control over operations, which was changing the agreement unless that occurs
Australia: Parliamentary Agreements and Extractives 3
through proper parliamentary process for agreement, the company must comply with
amending a statute. existing environmental law or vice versa). If
• The negotiation of contractual terms which are the matter is not addressed, and the court finds
effectively “rubber-stamped” by the legislature there is an inconsistency, the usual approach is
(without amendment) is not an illegitimate the more recent law prevails to the extent of the
abdication of the legislature’s role. Provided inconsistency.
the legislature has the constitutional power to • The legal structures in a parliamentary agree-
legislate on the matters addressed in the document do not alter international legal standards
ment, then the contract’s terms become valid and obligations. International investment
once parliament has followed its usual proce- treaties and international human rights require-
dures in passing the law. ments increasingly provide obligations for
• The corollary is that the legislature is also companies and governments. These apply
empowered to remove/change the terms in a regardless of what a parliamentary agreement
parliamentary agreement. The concept of “par- may establish as part of its domestic law.
liamentary supremacy” or “parliamentary sov- • If the terms of the parliamentary agreement
ereignty” requires that the legislature is free to establish any specific duty on the govern-
pass any law within its constitutional power. ment, and that is not met, the court can order
The legislature cannot “entrench” a law (e.g., the government to perform the action it has
the terms of parliamentary agreement) to pro- failed to do so. However, if the obligation is
tect it from future amendment. Accordingly, not expressed as a duty, then specific perfor-
contractual clauses which seek to prevent mance is not available, and the most the court
future amendment will not be enforced by the may order is some form of compensation
courts, even where the parliament approved payment.
those clauses.
• The terms of the contract between the govern- These above points summarize the key legal
ment and company do not have direct legisla- issues involved in the use of parliamentary agree-
tive enactment unless that is specified in the ments in regulating mining, at least in Australia.
covering statute. If that occurs (which is rare), There are certainly other aspects and consider-
then the terms have legal effect as if they were ations in the use of parliamentary agreements.
the sections in a statute. However if the usual A legislature may legally be able to unilaterally
arrangement applies, which is the statute sim- amend a parliamentary agreement, but there may
ply “approves” the contract, then the agree- be significant economic and political reasons to
ment remains a contract between the only amend with the company’s agreement.
government and company (albeit one which
cannot be held invalid because of any prior
law). This is significant for two reasons: inter- Conclusions
pretation and third parties. For interpretation,
where courts use different rules about Parliamentary agreements remain a significant
interpreting a contract or statute, that means structure in the regulation of many mining opera-
the document’s status must be determined tions, as described in Southalan et al. (2015), [9].
first. For third parties, the significance is that
In various jurisdictions, these agreements have pro-
a statute has legal force against all parties
vided the regulation (and therefore the structure for
within the jurisdiction; a contract does not. approval and development) of large mining and
• The parliamentary agreement can explicitly infrastructure projects where that was not otherwise
address its relationship to other laws, indicat- possible or feasible. Various experts and reports
reject any contemporary role for parliamentary
ing which law takes priority in the event of any
agreements, arguing that everything should occur
inconsistency (e.g., stating that regardless of under a general mining law which applies to every-
what is said in the new parliamentary one, everywhere in the jurisdiction. However, that
4 Australia: Parliamentary Agreements and Extractives
seems an unrealistic ideal considering the breadth of Hillman (2006) – journal article on the economic
a large mining project which may involve: and future implications of parliamentary agree-
ments in mining
(a) many decades-worth of exploration and Saunders and Yam (2004) – journal article on
extraction, rail, ports, roads, accommodation, public law implications of government regula-
power-generation, access, waste and tion through contracting
rehabilitation; Barberis (1998) – book on negotiating mining
(b) the physical and social ramifications of all agreements (generally, not just parliamentary
these; and agreements)
(c) the revenue and other benefits to the govern- Miranda (2007) – journal article on the public
ment and broader public. policy issues in government concessions
(of which parliamentary agreements are one
Few parliaments have the time and resources to form)
debate and finalise general statutory laws to regu-
late each of these issues, when it is not even known
if such a development will ever occur. A better use
of parliamentary and government resources would Examples of Parliamentary Agreements
be to: (1) identify and set fundamentals which
apply to every industrial development, including McArthur River Agreement (1992). McArthur
mining, which are ‘non-negotiable’, and (2) have a River Project Agreement Ratification Act
process which enables additional matters to be (79 of 1992) Northern Territory Parliament,
addressed only on the very rare occasions when Australia
they will arise and can respond to the particular Ok Tedi Agreement (1976). Mining (Ok Tedi
proposal which has arisen. Parliamentary agree- Tenth Supplemental Agreement) Act (9 of
ments can provide this second task. 2013), continuing various arrangements from
Mining (Ok Tedi Agreement) Act 1976, Papua
New Guinea Parliament, Papua New Guinea
General Works on Area Mt Goldsworthy Agreement (1964). Iron Ore
(Mount Goldsworthy) Agreement Act 1964
General works of use in learning more about (97 of 1964) Western Australian Parliament,
parliamentary agreements in mining regulation Australia
include: Natural Gas (Canning Basin Joint Venture)
Agreement (2012). Natural Gas (Canning
WA Gov (2004) – report by the Auditor General Basin Joint Venture) Agreement Act (2 of
of the Western Australian Government, about 2013). Western Australian Parliament,
the government’s management of parliamen- Australia
tary agreements Olympic Dam Agreement (1982) Roxby Downs
Southalan et al. (2015) – international study (Indenture Ratification) Act (52 of 1982).
emphasizing the importance of an increased South Australian Parliament, Australia
role for legislatures in the establishment and Queensland Nickel Agreement (1970) Queens-
use of parliamentary agreements land Nickel Agreement Act (33 of 1970)
Fitzgerald (2002) – book on the history and use of Queensland Parliament, Australia
parliamentary agreements in regulating mining Selebi-Pikwe Agreement (1978) Bamangwato
Southalan (2013) – chapter explaining the legal Concessions Limited Mining Lease Act (7 of
effect and interpretation of parliamentary 1970) Parliament of Botswana, Botswana
agreements in Australia Sierra Rutile Agreement (2001) Sierra Rutile
Agreement (Ratification) Act (4 of 2002) Sierra
Leone Parliament, Sierra Leone
Australia: Parliamentary Agreements and Extractives 5
References Morgan C (2007) Building lasting agreements with gov-

ernments. In: Morrison R (ed) Financing global min-
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Cape Town (ZAF), 5 Feb 2014 Rev 15(1):51–70
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Hillman R (2006) The future role for state agreements in ment Centre, Perth
Western Australia. Aust Resour Energy LJ 25:293 WA Gov (2002) Review of the project development
Horsley J (2013) Conceptualising the State, Governance approvals system – final report. Western Australian
and Development in a Semi-peripheral Resource Econ- Government, Perth
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Australia: Environmental Approvals needs to be considered in any assessment. Radia-

for New Resource Projects tion aspects are only one part of any impact
assessment for a project, and maintaining perspec-
Jim Hondros and R. Secen-Hondros tive is important.
JRHC Enterprises Pty Ltd, Stirling, SA, Australia
Radiation Assessment Framework

Introduction
To undertake a radiation assessment in a clear and
All new mining or mineral-processing projects
effective way, a practical framework consisting of
require some form of regulatory approval which
four steps can be used. These steps are:
is generally based on economic, social, and envi-
ronmental impact assessments. Experience shows
• Characterize the existing radiological environ-
that the approval process can be long and com-
ment (the “background”).
plex, involving many studies and taking many
• Quantify the incremental radiological concen-
years.
trations due to the project (the “project
For a project that involves the mining or
increment”).
processing of material uranium and thorium,
• Determine the impact of any increment (the
even if uranium and thorium are not the payload
“impact”).
of the material, the approval process is usually
• Outline the control measures (the “controls”).
more complicated, and an assessment of the radio-
logical impacts must be conducted. Radiation
Details on each of the steps are described
impact assessments are commonly conducted for
below.
projects producing uranium, thorium, or mineral
sands. However, more recently, the International
Atomic Energy Agency (IAEA) (IAEA 2006, Characterizing the Existing Radiological
2007, 2011, 2012, 2013) has identified other sec- Environment
tors where uranium and thorium may be present, The overall aim is to identify and quantify the
thereby also requiring assessment. preexisting environmental radiation concentra-
The word radiation conjures up different tions (also known as “baseline” or “background”
responses from stakeholders, regulators, and the radiation levels) that exist in the region of the
public. In many cases, the actual risk from radia- proposed project. This is important for the follow-
tion is far less than the perceived risk, and this fact ing reasons:
DOI 10.1007/978-3-642-40871-7_136-1
2 Australia: Environmental Approvals for New Resource Projects
• It provides confidence for stakeholders that the • Estimating the potential emissions from the
project is able to monitor radiation and under- various project components
stands the preexisting radiation levels in the • Determining how the emissions result in
areas where they are working. changes in environmental levels
• It provides a quantified measure of the natural
levels and the natural variation in radiation Once the proposed project is understood and
levels in space and time. sources of emissions are determined, the emis-
• It is important for determining the require- sions can be quantified by using standard emis-
ments for project closure and target radiation sion factors or experimentally determined factors.
levels for closure and rehabilitation. The emission source values together with other
non-radiological information such as general
Baseline radiation levels can be obtained from meteorological information are then used as
a range of sources, including published data or inputs in air quality modeling or fate and transport
existing company or project data, such as geolog- modeling.
ical information or water quality information. The outputs of the models are increments, usu-
However, it is more than likely that information ally expressed as concentrations.
about the existing environment will need to be For example, the project design may have an
obtained from a dedicated monitoring program. open-air uranium ore stockpile. The design pro-
Experience shows that monitoring should be vides the size and surface area of the stockpile and
conducted for a minimum period of 2 years to the average uranium grade. The emission of radon
ensure that seasonal variations are included. can be calculated from the surface area and the
Radiation-related information can be obtained in unit radon emission rate (which can be a reference
conjunction with other baseline or background mon- figure inferred from the uranium grade or experi-
itoring that is occurring or has occurred. For exam- mentally determined), and then the emission rate
ple, groundwater monitoring is usually conducted as is input into air quality modeling to show the
part of resource monitoring, and uranium, radium, incremental radon concentration at various loca-
and radionuclide analysis can be included in this. tions around the project.
For a new project, there are a number of radio- Another example is emissions to groundwater.
logical parameters that should be monitored, and This can be quantified by understanding the per-
these are shown in Table 1 along with methodolo- meability of the lining of a liquid waste retention
gies. Radiation monitoring, like all monitoring, system to determine a seepage rate and knowledge
must be undertaken in accordance with established of the radionuclide content of the liquid waste.
scientific procedures and with calibrated equipment. The seepage rate can then be used as input to a
groundwater fate and transport model to estimate
groundwater concentrations at various distances
Quantify the Incremental Radiological
from the emission source location.
Concentrations Due to the Project (the
“Project Increment”)
An important precursor to quantifying the project Determine the Impact of any Increment
increment is to accurately determine the radionu- The third step in the framework is the assessment
clide releases from the project. This provides the of impacts from the project emissions. The main
input information to calculate any change in the impacts occur to members of the public,
environmental radiation concentrations. nonhuman biota, and the environment.
In a practical sense, quantifying the increment
involves:
Members of the Public
The impacts to members of the public are deter-
• Understanding the project design and where
mined through standard dose assessment (IAEA
emissions may occur
2004). This involves identifying the potential
Australia: Environmental Approvals for New Resource Projects 3
Australia: Environmental Approvals for New Resource Projects, Table 1 Radiation monitoring methods
Radiation Monitoring methodologies
Gamma radiation Thermoluminescent detectors (TLD badges) or InLight (Landauer)
Handheld gamma monitor
Aerial radiometric survey
Radon Passive track etch detectors (radon cups)
Real-time electronic radon gas monitors
Air sampling (Lucas cells)
Accumulator drum (to measure radon exhalation)
Radon decay products (RnDPs) Spot sampling (Rolle method, environmental Rolle method)
Real-time electronic RnDP samplers
Radionuclides in dusts Personal dust pumps (low volume)
Medium- and high-volume air sampler (run from either main power or batteries)
Radionuclide deposition Dust deposition gauges
Radionuclides in soils Sampling of different soil types
Radionuclides in water Surface water and groundwater sampling
Radionuclides in flora and fauna Sampling of different species and tissues
exposure pathways and calculating exposures and detailed level of assessment is now generally
doses from the project increment (this does not required.
include the dose received from the naturally A recognized method for assessing the impact
occurring environmental background radiation to nonhuman biota is ERICA (http://www.erica-
because this is generally beyond the responsibility tool.com/). The ERICA software uses changes in
of the proponent to manage). The exposure path- media radionuclide concentrations as inputs to
ways for radiation are: calculate a risk quotient for a range of standard
species. The changes in media concentrations can
• Irradiation by gamma radiation be determined from the dust deposition contours
• Inhalation of the decay products of radon from the air quality modeling.
• Inhalation of radionuclides in dust In a similar matter, impacts to aquatic flora and
• Ingestion of project originated radionuclides in fauna can be calculated using ERICA. The media
flora, fauna, and water concentrations in these cases are the changes in
the water body and are calculated from dust depo-
To assess impacts to the public, it is usual to sition, runoff, and releases to the aquatic
identify a reference person (either hypothetical or environment.
real) to represent a community of people and Other modeling tools include the RESRAD
calculate the radiation dose that they would suite of software (https://web.evs.anl.gov/resrad/).
receive.
Environmental Changes
Nonhuman Biota Environmental changes, such as increases in
In recent years, the protection of plants and ani- groundwater radionuclide concentrations or
mals from radiation has become an additional radionuclide in air concentrations, are sometimes
consideration. Previously it was assumed that if considered to be “impacts” and may need to be
humans were protected, then plants and animals reported. While the actual impacts on the public or
would also be protected. The International Com- the environment may be negligible, the fact that
mission on Radiological Protection (ICRP) levels have changed is sometimes of importance.
revised this approach in ICRP 2003, and a more The changes in the environmental concentrations
4 Australia: Environmental Approvals for New Resource Projects
are determined from deposition, release, runoff, and stakeholders. Large, complex, and data-rich
and emission data as previously discussed. reports are seldom successfully communicated.
Care should be taken when reporting such The aim should be to present key information in
results as “impacts,” and baseline data is useful an accessible and technically competent manner.
in providing perspective on the magnitude of the
changes.
Conclusions
Outline the Control Measures (The “Controls”)
The assessment of impact is usually made against Radiation impact assessments are part of many
a set of standards, such as legislative limits. project assessments and approvals and can be
Where the standards are exceeded or the impact considered in a four-step framework as follows:
is deemed to be unacceptable, either the original
design is modified or specific controls are • Characterize the existing radiological
implemented and the impact is reassessed. conditions.
Even if the impacts do not exceed standards, • Quantify the incremental radiological concen-
the designs and controls that were used as the trations due to the project.
basis for the impact assessment of the project • Determine the impact of any increment.
must be described. These will include physical • Outline the control measures.
controls (such as scrubber systems on ventilation
exhausts and waste containment structures) and It is important to then adequately and succinctly
management controls (such as training programs describe the process and findings so that all stake-
for operators and systems audits). holders have a good level of understanding of the
These measures are usually described in more radiological impacts for decision making.
detail in the project radiation management plan
(RMP) and radioactive waste management plan
(RWMP). These plans cover such aspects as: References
• Process description including description of ICRP (2003) A framework for assessing the impact of
the processes producing radioactive waste ionising radiation on non-human species, ICRP Publi-
cation 91. Ann ICRP 33(3):213–214
• Details of the physical radiation control IAEA (2004) Occupational radiation protection in the min-
measures ing and processing of raw materials safety guide. IAEA
• Details of control and containment systems safety standards series No. RS-G-1.6. International
• Monitoring plans and methods for impact and Atomic Energy Agency, Vienna
IAEA (2006) Assessing the need for radiation protection
dose assessment measures in work involving minerals and raw mate-
• Details of training rials. Safety reports series No. 49. International Atomic
• Plans for dealing with incidents and Energy Agency, Vienna
emergencies IAEA (2007) Radiation protection and NORM residue
management in the zircon and zirconia industries.
• The system of periodic assessment of controls Safety reports series No. 51. International Atomic
• Details of record keeping system Energy Agency, Vienna
• Plan for decommissioning and closure of the IAEA (2011) Radiation protection and NORM residue
waste facilities management in the production of rare earths from tho-
rium containing minerals. Safety report series No. 68.
International Atomic Energy Agency, Vienna
IAEA (2012) Radiation protection and NORM residue
Presenting the Results management in the titanium dioxide and related indus-
tries. Safety report series No. 76. International Atomic
Energy Agency, Vienna
The most important part of an assessment is IAEA (2013) Radiation protection and management of
clearly communicating the aims, methods, and NORM residues in the phosphate industry Safety report
results of the assessment to the target audiences No. 78. International Atomic Energy Agency, Vienna
U
Ukrainian Transit: Its Role in Russian The remainder of Russia’s gas deliveries to
Gas Exports to Europe Europe in 2013 were delivered via Belarus (41.9
bcm or 28.4 %) and the Nord Stream pipeline
Jack D. Sharples (23.5 bcm or 15.9 %). Russia also delivered a
European University of St Petersburg, further 6.3 bcm (4.5 %) directly to Finland, Esto-
St. Petersburg, Russia nia, Latvia, and Lithuania.
The Importance of Russian Gas The Particular Importance of Russian Gas

and Ukrainian Transit for the EU Delivered via Ukraine for the Countries
of Central and Southeast Europe
The European Union currently imports two-thirds
of its gas consumption (Eurostat 2014). The EU The presentation of such EU-wide figures fails to
imports natural gas from a variety of sources. In capture the true importance of Ukraine as a transit
2013, the EU imported approximately 327.0 bil- country for Russian gas, which is essentially
lion cubic meters (bcm) of natural gas, most of regional. The countries of Western Europe, such
which was delivered by pipeline from Russia, as Spain, Portugal, Ireland, and the UK, have low
Norway, and Algeria. Russia is currently the larg- levels of dependence on Russian gas in general
est supplier of EU gas imports (43.2 % of the total and gas transit via Ukraine in particular. Con-
in 2013), followed by Norway (32.4 %), Algeria versely, the countries of Central and Southeast
(8.7 %), and Libya (1.7 %). Liquefied natural gas Europe (CSEE) exhibit much higher levels of
(LNG) imports accounted for the remaining dependence on imports of Russian gas delivered
14.0 %. via Ukraine. In the ten EU member states in Cen-
Russian gas is delivered to the EU by three tral and Southeast Europe, the shares of Russian
main routes: via Ukraine, Belarus, and the “Nord gas in total gas imports and final gas consumption
Stream” pipeline. These different routes are illus- are approximately twice the EU average (see
trated in Map 1 below. In 2013, Russia exported Table 1 below).
approximately 141.2 bcm of natural gas to the EU, These higher levels of dependence on specifi-
of which 69.5 bcm (49.3 %) was delivered via cally Russian gas also mean that the EU member
Ukraine (IEA 2015). Therefore, 21.3 % of EU states in CSEE are more exposed to the transit of
gas imports were delivered from Russia via Russian gas via Ukraine, as illustrated by Table 2
Ukraine in 2013. (below). All data given below are taken from gas
trade flows published by the International Energy
DOI 10.1007/978-3-642-40871-7_140-1
2 Ukrainian Transit: Its Role in Russian Gas Exports to Europe
Ukrainian Transit: Its

Role in Russian Gas
Exports to Europe,
Map 1 Russian gas export
pipelines (Source: Map
created by Dr. Jack
D. Sharples using data from
East European Gas
Analysis 2015; IEA 2015;
Gazprom 2015a, b;
Naftogaz Ukraine 2015;
Nord Stream AG 2015)
Ukrainian Transit: Its Role in Russian Gas Exports to Europe, Table 1 Gas import dependency and the role of
Russia in Central and Southeast Europe (2013)
Gas import Share of Russia in net Share of Russian gas in total
Country dependency imports consumption
Austria 83.5 % 63.5 % 53.0 %
Bulgaria 90.0 % 100.0 % 90.0 %
Croatia 29.6 % 0.0 % 0.0 %
Czech Republic 96.5 % 100.0 % 96.5 %
Greece 100.0 % 66.7 % 66.7 %
Hungary 79.3 % 100.0 % 79.3 %
Poland 65.9 % 76.8 % 50.6 %
Romania 15.9 % 86.7 % 13.8 %
Slovakia 98.3 % 98.2 % 96.5 %
Slovenia 100.0 % 41.2 % 41.2 %
Country 77.9 % 82.4 % 64.2 %
average
Regional total 69.3 % 82.4 % 57.1 %
Italy 89.0 % 42.5 % 37.8 %
Germany 86.7 % 37.9 % 32.9 %
EU-28 66.0 % 43.2 % 31.1 %
Source: All data from IEA Gas Trade Flows (IEA 2015) and IEA “Natural Gas Information 2014” (IEA 2014)
Agency (IEA 2015). These flows measure cross- regardless of whether that gas is reexported out
border movements. Therefore it is possible to of the country (known as “gross imports”). Table 2
examine all movements of gas into a country, clearly illustrates that the share of gas delivered
Ukrainian Transit: Its Role in Russian Gas Exports to Europe 3
Ukrainian Transit: Its Role in Russian Gas Exports to Europe, Table 2 Gas transit dependency in Central and
Southeast Europe (2013)
Gross gas imports Gross gas imports via Ukraine Ukrainian transit in gross
Country (bcm) (bcm) imports
Austria 48.9 41.3 84.4 %
Bulgaria 18.2 18.2 100.0 %
Croatia 1.3 0.0 0.0 %
Czech Republic 12.5 7.1 56.6 %
Greece 3.9 2.6 66.6 %
Hungary 10.1 6.3 62.5 %
Poland 42.7 3.8 9.0 %
Romania 19.7 19.6 99.4 %
Slovakia 53.1 52.6 99.0 %
Slovenia 1.9 0.0 0.0 %
Regional Total 115.7 82.3 71.1 %
Country 21.2 15.1 71.3 %
Average
Germany 165.2 0.0 0.0 %
Italy 61.5 30.6 49.8 %
EU-28 339.8 82.3 24.2 %
Source: IEA 2015
via Ukraine in the gross imports of the CSEE By contrast, Russian gas delivered via
region is almost three times the EU average. Ukraine flows into Poland, Slovakia, Hungary,
The different suppliers of EU gas imports also and Romania. From there, Russian gas is deliv-
target different regional markets within the ered onward to neighboring countries of CSEE:
EU. Norwegian gas primarily supplies Northwest the Czech Republic, Austria, Italy, Slovenia,
Europe (the UK, Belgium, France, Germany, and Croatia, Serbia, Bulgaria, and Greece.
the Netherlands), while Algerian and Libyan gas Non-Russian gas is also imported into the
deliveries primarily supply Southern Europe CSEE region from Europe via Germany to the
(France, Italy, Spain, and Portugal). LNG deliver- Czech Republic and Austria and via Italy to
ies primarily supply Western Europe (Portugal, Slovenia and Croatia. Of the countries of the
Spain, France, Italy, Belgium, Greece, and the CSEE region, only Greece currently imports
UK). gas in the form of LNG.
Map 1 below illustrates the various routes for
Russia’s pipeline gas exports to Europe. Pipelines
via Ukraine are highlighted in red. Pipelines that
Conclusion
avoid Ukraine are highlighted in green. These are
Nord Stream (from Russia to Germany via the
To conclude, while Russia is an important sup-
Baltic Sea), Yamal-Europe (from Russia to Ger-
plier of gas to many EU member states, gas transit
many via Belarus and Poland), and Blue Stream
via Ukraine remains particularly significant for
(from Russia to Turkey via the Black Sea). As the
Russian gas deliveries to EU member states in
map illustrates, Russian gas deliveries via the
Central and Southeast Europe, due to their current
Nord Stream and Yamal-Europe pipelines primar-
lack of alternate delivery routes for their Russian
ily supply Northwest Europe (Poland, Germany,
gas imports.
Belgium, Netherlands, France, and the UK).
4 Ukrainian Transit: Its Role in Russian Gas Exports to Europe
Cross-References Gazprom (2015a) Pipelines: Yamal-Europe. Available via:

www.gazprom.com/about/production/projects/pipelines/
yamal-evropa/. Accessed 10 Nov 2015
▶ Energy Diplomacy Gazprom (2015b) Pipelines: blue stream. Available via:
▶ Gazprom; Russian Federation-Energy Strategy www.gazprom.com/about/production/projects/pipelines/
▶ Transit Risks blue-stream/. Accessed 10 Nov 2015
▶ Ukraine-Mineral Policy IEA (2014) Natural gas information (2014) Available via:
http://wds.iea.org/wds/pdf/Gas_documentation.pdf.
Accessed 25 Feb 2015
IEA (2015) Gas trade flows in Europe. Available via: http://
References www.iea.org/gtf/index.asp. Accessed 25 Feb 2015
Naftogaz Ukraine (2015) Natural gas transportation. Avail-
East European Gas Analysis (2015) Major gas pipelines of able via: http://www.naftogaz.com/www/3/nakweben.
the former Soviet Union and capacity of export pipe- nsf/0/3375A8575C8884D0C22571010035B9D2?Open
lines. Available via: http://www.eegas.com/fsu.htm. Document&Expand=1&. Accessed 10 Nov 2015
Accessed 10 Nov 2015 Nord Stream AG (2015) Nord Stream: the pipeline. Avail-
Eurostat (2014) Natural gas consumption statistics. Avail- able via: https://www.nord-stream.com/the-project/
able via: http://ec.europa.eu/eurostat/statistics- pipeline/. Accessed 10 Nov 2015
explained/index.php/Natural_gas_consumption_statistics.
Accessed 5 Feb 2015
R
Russian Oil Companies Rosneftegas founded by 47 PAs replaced the Min-

istry of Oil and Gas Industry. Lev Churilov, the
Nina Poussenkova former minister, became its president. On January
Institute of World Economy and International 20, 1992, he presented the plan for transforming
Relations (IMEMO), Moscow, Russia the sector: 10–15 companies would be created
integrating the whole production chain, from oil
wells to fuel stations.
The 1990s Actual transformations began with the Presi-
dential Decree # 1403 on specifics of privatization
The history of Russian oil companies is divided and corporatization of state enterprises, produc-
into two different epochs. During the 1990s, tion and R&D organizations of oil production,
Russia’s oil production was rapidly declining refining and petroleum product supply of
(from 570 million tons/year in 1987 to 301 million November 17, 1992. The authorized capital of
tons/year in 1996), oil prices were low, and Russia newly established companies was split into 25 %
suffered from economic and social crises and of preferred and 75 % of ordinary shares; 51 % of
political instability; nonpayments and tax evasion ordinary shares (i.e., 38 % of the total capital)
were rampant. These were the years of “gangster were transferred to the state for a 3-year period.
capitalism,” when oil industry was aggressively Other shares were distributed between compa-
privatized, oligarchs were omnipotent, state nies’ employees and sold at voucher auctions.
authorities were weak, foreign companies were Foreigners could buy not more than 15 % of
invited to the sector to help restore production, shares, though this limitation was lifted in 1997.
and the state company Rosneft was in decline. Decree 1403 created LUKOIL, Yukos,
From 2000 onward, oil production was increas- Surgutneftegas, as well as Rosneft, Transneft,
ing, oil prices were rising, and life in Russia was and Transnefteproduct. Rosneft became manager
stabilizing. These were the years of authoritarian in trust of state shares in 259 (out of the total of
capitalism, resource nationalism, and creeping 301) oil enterprises.
renationalization in the sector, which witnessed Afterward, the creation of vertically integrated
further consolidation and the renaissance of oil companies (VIOCs) continued. In 1994–1995,
Rosneft. a Russian-Byelorussian oil company Slavneft, as
Market reforms in the oil sector began after the well as Sidanco, Sibneft, and Tyumen Oil Com-
collapse of the Soviet Union. Under socialism, oil pany (TNK), was established on the basis of
was produced and refined by production associa- Rosneft’s assets. Also, regional companies
tions (PAs). In October 1991, the state corporation (Eastern Oil Company, ONACO, and KomiTEK)
DOI 10.1007/978-3-642-40871-7_142-1
2 Russian Oil Companies
were founded, though they were soon acquired by to restore its influence at the post-Soviet space and
Yukos, TNK, and LUKOIL, respectively. In addi- establish energy dialogue with the CIS states. At
tion, two republican companies – Tatneft that time, LUKOIL largely determined (and
(Republic of Tatarstan) and Bashneft (Republic implemented) Russia’s policy toward the Caspian
of Bashkiria) – were formed. region.
Loans-for-shares auctions became an important LUKOIL was also the first to go to the “far
milestone in privatization of oil companies. To abroad”: to Iraq (where it planned to develop West
help the government overcome budget deficit, in Qurna-2 field), Tunis, Egypt, and Libya. It entered
March 1995 heads of the leading Russian banks European downstream buying refineries in Bul-
proposed to credit the government using as a garia, Romania, and Ukraine and became
pledge state stakes of the most attractive compa- involved in petrochemicals.
nies. In the oil sector, loans-for-shares auctions In Russia, jointly with Conoco, it launched the
were held exclusively for insiders. Rosneft’s appli- new petroleum province in Timan-Pechora, the
cation to the loans-for-shares auction for 40.12 % most promising oil region in the European part
of Surgutneftegas’ shares in November 1995 was of Russia.
not even accepted by organizers who claimed that In March 1993, Surgutneftegas was
bank guarantees were filled in incorrectly. established consisting of Surgutneftegas oil pro-
In December 1995, 51 % of Sibneft’s shares ducer, Kirishinefteorgsyntez refinery, and petro-
were purchased by Oil Financial Company of leum product distributors in the Northwest of
Boris Berezovsky and Roman Abramovich for Russia. The company is unique due to its leader,
$ 100.3 million; 51 % of Sidanco’s shares by Vladimir Bogdanov, who was appointed general
MFK and UNEXIM Banks of Vladimir Potanin director of Surgutneftegas PA in 1984 at the age of
for $ 130 million; and 45 % of Yukos’ shares by 32. The “Surgut Hermit,” as he became known,
MENATEP of Mikhail Khodorkovsky for does not like publicity and was never involved in
$ 159 million. LUKOIL and Surgutneftegas won major corporate scandals; Surgutneftegas is the
the auctions for 5 % of LUKOIL’s shares and only Russian VIOC that did not move its head-
40.12 % of Surgutneftegas’ shares, respectively. quarters to Moscow and did not divest of social
The government did not repay credits; as a infrastructure. Since the mid-1990s,
result, creditors sold off the pledged shares to Surgutneftegas did not have any tax debts to the
their affiliated companies. Subsequently, by budget and was never involved in tax optimiza-
1997 the state lost the controlling interest in tion. In contrast to other VIOCs, Surgutneftegas
main VIOCs, while the new generation of Russian did not establish joint ventures (JVs) with foreign
businessmen began to replace the “oil generals.” companies. It bought state-of-the-art foreign
LUKOIL (comprising Langepas, Urai, and equipment, but launched afterward its production
Kogalym PAs) was established in 1993 at the at Russian enterprises. Surgutneftegas began to
initiative of Vagit Alekperov, the former first dep- increase oil production already in 1996, while
uty minister of oil and gas industry. During the other VIOCs reported growth only in the early
1990s, LUKOIL was the undisputed leader of the 2000s. While its competitors acquired other com-
oil sector, thanks to Vagit Alekperov and the Rus- panies to increase output, Surgutneftegas focused
sian government, primarily Viktor Chernomyrdin, on raising oil recovery at mature fields and
who strongly supported the company. LUKOIL launching new fields that it discovered. Despite
was the real trailblazer: it was the first among its cautious attitude to foreigners, Surgutneftegas
Russian VIOCs to consolidate its shares in 1995, was flexible in responding to the new realities and
to enter the global capital market, and to invite a issued American depository receipts in 1997.
foreign company, ARCO, as a shareholder. However, it is still less transparent than its com-
During the 1990s, LUKOIL was the petroleum petitors and lags behind them in terms of improv-
ambassador of Russia. It began to work in ing corporate governance.
Kazakhstan and Azerbaijan. It was vital for Russia
Russian Oil Companies 3
Yukos was established in April 1993. Initially, Sidanco (Siberian-Far East Oil Company)
it consisted of Yuganskneftegaz and was established in May 1994 to supply East Sibe-
Samaraneftegaz, a group of refineries in the ria, the Far East, and Extreme North of Russia
Samara region, and eight petroleum product sup- with petroleum products. It consisted of
pliers in the European part of Russia. Purneftegaz, Kondpetroleum, Chernogorneft,
After loans-for-shares auctions, Yukos came Varyoganneftegaz, Udmurtneft, Saratov refinery,
under the control of MENATEP. At that time Angarsk Petrochemical Company, and several
Yukos was in a sorry state. In 1987–1995, oil petroleum product distributors. Sidanco became
production by Yuganskneftegaz fell from 70 mil- the leader among the world public companies in
lion tons/year to 27 million tons/year. In 1995, terms of proved oil reserves.
Yuganskneftegaz halted practically all drilling However, its troubles began immediately: in
activities; investments in production were nil. 1995, Purneftegaz, its jewel in the crown, was
Almost 60 % of consumers of Yukos’ petro- transferred to Rosneft.
leum products were insolvent agricultural farms. By the end of 1997, Vladimir Potanin’s
In 1993–1996, tax debts of Yukos grew by 2.8 Interros collected 96.5 % of Sidanco’s shares
times to exceed $ 2 billion. Residents of the town and began to look for new owners for the com-
of Nefteyugansk where headquarters of pany. First, the Cypriote offshore company
Yuganskneftegaz were located went on strike Kantupan purchased 40 % of its shares; afterward
because of huge wage arrears of Yuganskneftegaz. BP bought 10 % for $ 571 million.
Amidst this chaos, Mikhail Khodorkovskiy Then, Sidanco was attacked by TNK that
became head of Yukos on May 23, 1996, and started to acquire its key subsidiaries
began to transform the company modeling it on (Kondpetroleum and Chernogorneft) by buying
Western oil majors and to acquire other players, their receivables, forcing them into bankruptcies,
such as the Eastern Oil Company. and afterward purchasing them at huge discounts
In August 1995, Tyumen Oil Company to market prices.
(TNK) was established consisting of Nizhnevar- In Spring 1999, British Petroleum became the
tovskneftegaz, Tyumenneftegaz, Ryazan refinery, managing company of Sidanco and began to cut
and petroleum product distributors in the central costs, optimize management, and organize in the
economic region. Victor Paliy, general director of US opposition to TNK’s raid against Sidanco.
Nizhnevartovskneftegaz, became BoD chairman However, in 2001, TNK acquired Sidanco’s
of TNK. shares from Interros and Kantupan, and Sidanco
TNK was privatized in the mid-1990s. There ceased to exist as an independent company.
were several contenders for the company, the Sibneft was established in 1995 consisting of
strongest among them being Alfa Group. Victor Noyabrskneftegas, one of the best oil-producing
Paliy fought a fierce battle against the group, companies in Russia, and Omsk refinery, the big-
publicly criticizing privatization plans for gest and most modern in Russia. Presumably,
TNK. As a result of his campaign, Alfa (together Sibneft was created to help finance Boris Yeltsin’s
with Renova) had to pay an unprecedented election campaign of 1996. The high-profile bil-
amount of money for 40 % of TNK in 1997: $ lionaire Roman Abramovich entered the political
810 million. arena through Sibneft – he became its BoD mem-
Mikhail Fridman, Leonid Blavatnik, and ber in September 1996.
Viktor Vekselberg became BoD members of State company Rosneft replaced Rosneftegas
TNK in 1998; German Khan was appointed Corporation, and Alexander Putilov, former gen-
its CEO. eral director of Uraineftegas, became its president.
A complete privatization of TNK was delayed Transformed into an open JSC in April 1995,
because of default and changes of the government Rosneft was to exercise trust management of
and took place only in December 1999. state stakes in companies that were not included
in the new VIOCs, support R&D activities in the
sector, and represent state interests in production- begin upgrading their refineries, expand distribu-
sharing agreements (PSAs). tion networks, and cut costs.
Rosneft was consistently declining during the During the 1990s, VIOCs helped the govern-
1990s, since its assets were used to create new ment to satisfy the domestic demand for petro-
VIOCs. The establishment of Sibneft dealt it a leum products: the state controlled the amount of
particularly painful blow. Rosneft also lost the oil exports, thus regulating volumes of refining in
Moscow refinery and Mosnefteproduct. By the Russia. However, vertical integration creates the
mid-1990s, it consisted of several oil-producing problem of transfer prices used within the com-
subsidiaries, key of them being Purneftegas pany, including for purposes of tax optimization.
(producing 8.2 million tons/year in 1998) and Also, VIOCs monopolize certain regional markets
Sakhalinmorneftegas (1.6 million tons/year), and of petroleum products, which results in rising fuel
four refineries and 16 petroleum product distribu- prices. Besides, vertical integration hinders the
tors and was one of the smallest and weakest development of small and mid-size oil companies.
players in the sector. The Russian oil companies matured against the
During the 1990s, several unsuccessful background of privatization, liberalization of for-
attempts were made to privatize Rosneft. The eign trade, redistribution of assets, default, scan-
most scandalous attempt took place in 1998. In dals with minority shareholders, adverse
Spring, 75 % + 1 share of Rosneft was to be sold investment climate, and low oil prices. They man-
for $ 2.5 billion (a huge amount of money at that aged to turn around oil production decline (while
time): experts expected a fierce battle between virtually ignoring exploration and living off
YUKSI (the first attempt to merge Yukos and reserves discovered under socialism) and imple-
Sibneft that existed for 6 months) and two alli- ment corporate restructuring. VIOCs began to
ances (BP + Sidanco and Shell + LUKOIL + enter the global capital markets and acquire for-
Gazprom). But in March, Mikhail eign assets. During the 1990s, they grew into
Khodorkovskiy quit the game saying that the political and economic heavyweights that deter-
price was outrageously high. Afterward, foreign mined rules of the game in Russia.
investors simply ignored the auction.
The sale of Rosneft was postponed till October
1998. After the collapse of the stock market, the 2000–2015
government had to temper its expectations and
reduce the price to $ 1.6 billion. But because of The new life for the Russian VIOCs began after
the August default, this auction was also post- the 2000 elections of Vladimir Putin. He started to
poned indefinitely. appoint his friends and colleagues, mainly from
In October 1998, Sergey Bogdanchikov, for- the St. Petersburg mayor’s office and KGB, to the
mer head of Sakhalinmorneftegas, became presi- leading positions in the economy in general and in
dent of Rosneft: he had to salvage the company the oil sector in particular. Thus, Nikolai Tokarev,
that was falling apart. his colleague from KGB, became general director
The crisis of 1998 became a turning point for of the state-owned Zarubezhneft. Alexei Miller
the Russian oil industry. When the price of Urals was appointed CEO of Gazprom and Dmitry
dropped to $ 10/barrel in 1998, Russian oil export Medvedev and Igor Sechin deputy heads of the
became virtually unprofitable, and budget reve- presidential administration.
nues shrank. Oil generals warned the government: The “new guard” supported by Vladimir Putin
either reduce taxes or oil production will decrease began to gradually displace the “old guard.”
to the level that will undermine Russia’s energy Among oil generals of the 1990s, Vladimir
security. The government helped the oilmen, and Bogdanov, president of Surgutneftegas, who was
oil production even increased in 1999. Putin’s authorized person during the 2000 presi-
Ironically, the 1998–1999 crisis was a blessing dential elections, enjoys his particular trust. Prob-
in disguise for the oil sector. It forced VIOCs to ably that is why all forecasts about the imminent
Russian Oil Companies, Table 1 Oil production by key Russian VIOCs, 1995 and 1999, million tons
Company 1995 1999
Yukos 36.0 34.1
Eastern Oil Company 11.2 10.5
LUKOIL 55.5 53.3
KomiTEK 4.5 3.6
Surgutneftegas 33.3 37.5
TNK 22.7 20.0
Sidanco 22.8 19.5
ONACO 7.6 7.9
Sibneft 20.3 16.3
Tatneft 25.0 24.0
Slavneft 13.2 11.9
Rosneft 12.8 12.5
Bashneft 17.7 12.2
Other producers 24.1 41.7
Russia in total 306.7 305.0
Source: Neft I Capital
acquisition of Surgutneftegas by other players Russneft shares were arrested and a warrant was
remain unfulfilled. And nobody can answer the issued for the arrest of Mikhail Gutseriev. How-
question: who really owns the company? ever, by the mid-2010, all charges against him
During the 2000s, private companies were were dropped, and in 2013 Mikhail Gutseriev
gradually being acquired by state companies: returned to Russia and became the sole owner of
thus, in 2005 Gazprom bought 72.7 % of Sibneft Russneft.
from Millhouse Capital for $ 13.09 billion, and it TNK continued its expansion, acquiring 85 %
became Gazprom Neft. of ONACO and Lisichansk refinery, the most
Consolidation in the sector continued: amidst modern in the Ukraine.
public scandals, Slavneft was privatized in favor In 2003, TNK and BP joined their assets cre-
of Sibneft and TNK-BP in 2002. ating TNK-BP, the third biggest oil company in
In parallel to consolidation, a new company, Russia. Its owners were BP (50 %) and AAR
Russneft, was created in 2002 by an influential Consortium (Alfa Group with 25 % and Access
Ingush businessman Mikhail Gutseriev. He built Industries and Renova with 12.5 % each).
its business by buying small assets from other However, the powerful alliance soon faced seri-
players, e.g., Saratovneftegaz, ous problems. The Ministry of Natural Resources
Orsknefteorgsyntez, and Orenburgnefteproduct threatened to revoke a number of TNK-BP’s
from TNK-BP. In 2006, he declared his ambition licenses because of a very high share of idle wells
of achieving oil output of 100 million tons/year in the company. The alliance had to fight (and lost)
and was gradually moving to this target having with Gazprom for the giant Kovykta gas conden-
produced 14 million tons in 2007. However, in sate field with 2.2 trln. cub. m. of gas reserves
November 2006 the General Procurator’s Office located in the Irkutsk region.
initiated criminal investigations of the top man- In 2008, conflicts emerged inside the company
agers of Russneft’s subsidiaries accusing them of itself between BP and the Russian consortium
oil production in excess of established limits. In because of the differences in the development
Summer 2007, Gutseriev reached an agreement strategy. In 2013, TNK-BP was acquired by
with Oleg Deripaska on selling him Russneft and Rosneft.
moved to London. Soon after that, 100 % of
LUKOIL continued to consistently implement actively hired foreigners; an American, Steven

its strategy; however, it ceded its status of the Teady, became its COO. From Summer 1999 to
sector’s flagship to Rosneft. Despite its maturing Spring 2003, Yukos’ market capitalization grew
resource base, LUKOIL demonstrated impressive from $320 million to $21 billion.
progress in production sphere; thus, in 2004 it Yukos pursued a policy of aggressive acqui-
began development drilling at the Kravtsovsk sitions. In 2002 alone, it closed 12 deals worth
field in the Baltic Sea, the first solely Russian $1.2 billion having bought Arktikgas, Urengoil,
project at the continental shelf to reach the com- Rospan, Tomsk Petroleum, etc. After purchasing
mercial phase. Eastern Oil Company and East-Siberian Oil and
In 2004, ConocoPhillips bought 7.6 % of Gas Company, as well as a controlling interest in
LUKOIL’s shares for $1.9 billion and by 2006 Sakhaneftegas, Yukos became the key player in
increased its stake to 20 %. It established a JV the East of Russia.
Naryanmarneftegas with LUKOIL to develop the Yukos initiated oil cooperation with China.
Timan-Pechora province. However, in 2010–2011 Back in 1999, it planned to build the $2.5 billion
the US major sold its stake in LUKOIL because of Angarsk-Daqing oil pipeline to export crude to
the unfavorable investment climate in Russia. China.
LUKOIL continued to internationalize: cur- The merger with Sibneft became the most
rently, it is operating in the upstream of Azerbai- grandiose initiative of Yukos. The combined pro-
jan, Columbia, Cote D’Ivoire, Egypt, Ghana, duction of both companies in 2002 amounted to
Kazakhstan, Saudi Arabia, Uzbekistan, and 103 million tons, while by proved oil reserves,
Venezuela. YukosSibneft was to be second only to
LUKOIL is the only Russian VIOC to enter the ExxonMobil. Mikhail Khodorkovskiy planned to
USA: it has 229 stations there accounting for 5 % sell 25–40 % of YukosSibneft either to
of the retail market in the regions where it is ChevronTexaco or to ExxonMobil.
present. But in Spring 2003, Mikhail Khodorkovskiy
LUKOIL continues its expansion into Euro- came under attack of authorities. In July, Platon
pean downstream, though with certain difficulties: Lebedev, co-owner of Yukos, was arrested. After
in 2008, it bought 49 % of the ISAB refinery that, searches in Yukos began. In October 2003,
complex based in Sicily and in 2009 acquired Mikhail Khodorkovskiy was arrested and accused
45 % of the Zeeland refinery in the Netherlands of fraud and tax evasion on a grand scale. In May
from Total. 2005 Mikhail Khodorkovskiy and Platon
Yukos together with Sibneft began to intensify Lebedev were sentenced to 9 years in prison.
oil production using state-of-the-art technologies In 2008, the General Procurator’s Office
and highly qualified personnel. Subsequently, its charged Khodorkovskiy and Lebedev with theft
oil output increased from 49.5 million tons in and legalization of the Eastern Oil Company
2000 to 80 million tons in 2003. Yukos’ lifting shares, as well as theft of all oil of Yukos sold
costs drastically decreased to $1.5/barrel. through domestic offshores at transfer prices.
After a near bankruptcy during the 1998 crisis, They were set free only in 2014.
the company earned $3.7 billion profit in 2000, Rosneft began its turnaround in 2000: Vladi-
$3.1 billion in 2001, and $2.9 billion in 2002. This mir Putin needed a powerful state-owned oil com-
financial breakthrough was achieved through suc- pany to counterbalance the oligarchs. Supported
cesses in management, rising oil prices, use of by the new president of Russia, Sergey
“domestic offshores,” and transfer pricing. Bogdanchikov, president of Rosneft, began to
Having earned the reputation of a “bandit com- rebuild the company.
pany” in the 1990s due to scandals with minority In the early 2000s, Rosneft began to recapture
shareholders, Yukos focused on improving its its positions in production sphere, particularly
corporate governance and image during the strengthening its influence in the East of Russia.
2000s. It also was the first Russian VIOC that In addition to participation since 1995 in
Sakhalin-1 PSA project (implemented by operator In July 2004, Igor Sechin was appointed BoD
ExxonMobil (30 %), Rosneft (20 %), SODECO Chairman of Rosneft. Under his protection, the
(30 %), and ONGC (20 %)), the company company became invincible. Soon after that, the
acquired licenses for Sakhalin-3 and Sakhalin-5. new era in Rosneft’s development began following
In 2003, it bought Anglo-Siberian Oil Company its acquisition of Yuganskneftegaz for $ 9.35 billion.
that held a license for the giant Vankor field in Rosneft raised funds for buying
East Siberia with 500 million tons of proved Yuganskneftegaz from various domestic sources,
reserves (Rosneft commissioned Vankor in and also in early 2005, it received $6 billion from
2009). The acquisition of Severnaya Neft that the Chinese banks; in return, it was to supply
owned 15 licenses in Timan-Pechora province in CNPC with 48.4 million tons of oil up to 2010.
2003 was an important milestone in Rosneft’s Having acquired Yuganskneftegaz, Rosneft
renaissance. In 2005 Rosneft bought from was transformed overnight from a mid-size com-
TNK-BP a stake in the Verkhnechonsk field in pany with 21 million tons of production in 2004
the Irkutsk region. In 2007, it acquired all eastern into the second biggest Russian VIOC that pro-
assets of Yukos and in 2013 bought the entire duced 74.4 million tons of oil in 2005.
TNK-BP, thus becoming the king of the East. In 2006, Rosneft made the biggest IPO in Rus-
Rosneft, together with Gazprom, is also the sia selling 14.8 % of shares for $10.4 billion.
sole operator on the continental shelf of Russia Some 150,000 Russians became shareholders of
and in the Arctic. Rosneft. Foreign companies also participated: BP
Rosneft became a real national oil company invested $1 billion, Petronas $1.1 billion, and
that fulfills political and social functions delegated CNPC $500 million.
to it by the state and in return receives additional In 2006, Yukos was bankrupted, and Rosneft
benefits. Thus, it was commissioned to restore the bought almost all its oil assets. Subsequently, its
oil industry of Chechnya destroyed by war and to crude production volumes increased to 110 million
supply petroleum products for the state needs. In tons in 2007. It also became the leader among
2001, it was reappointed the authorized company global public oil companies in terms of liquid
of the government in the PSA sphere. However, it hydrocarbon reserves (in late 2010 its proved
suffered then a crushing defeat from Yukos that reserves under PRMS classification amounted to
was an active opponent of PSAs. 22.8 billion barrels of oil equivalent).
Rosneft also participates in oil projects with Following Yukos’ acquisition, Rosneft’s debts
political undertones in the “near” and “far” grew to $36 billion, and the state included it in the
abroad. Thus, in 2001 Rosneft began to work in list of strategic companies that can be bankrupted
Algiers, as Sergey Bogdanchikov was saying only under a special procedure.
purely for economic reasons. But it was in 2001 Rosneft is currently the driver of the expanding
that the political dialogue between the two coun- Russia-China oil cooperation. After the purchase
tries restarted. of Yuganskneftegaz, Chinese companies entered
Besides, Rosneft, together with other Russian the Russian oil sector with its assistance. In 2005,
VIOCs, entered Venezuela’s upstream. Participat- Rosneft invited Sinopec with 25.1 % to the
ing in five joint ventures with PDVSA, it also Veninsk block of Sakhalin-3 and in 2006 acquired
develops a whole spectrum of cooperation with through Sinopec Udmurtneft, subsidiary of
the Venezuelan NOC and provides funds to the TNK-BP. During Vladimir Putin’s official visit
state company, thus indirectly supporting the to Beijing in 2006, Rosneft and CNPC signed an
political regime in the country. agreement on cooperation in Russia and China. In
Currently, Rosneft that plans to become a the mid-2006, they established a JV Vostok-
global energy company operates in Algiers, Bra- Energy to work in Russian upstream. Another
zil, Canada, Norway, Vietnam, Venezuela, the JV will operate in Chinese downstream. Rosneft
UAE, and the USA. also actively lobbied the construction of the East
Siberia-Pacific Ocean (ESPO) oil pipeline and its (49 %) set up a JV to implement projects in East
spur to China. Siberia, and Rosneft signed agreements with Chi-
In February 2009, after lengthy negotiations nese companies on joint activities in the Barents
with the Chinese that Igor Sechin, vice-premier and Pechora seas.
in charge of the energy sector since 2008, In November 2014, Rosneft and CNPC signed a
conducted, Rosneft received a $15 billion Chinese framework agreement under which CNPC will
credit; it needed the money to repay debts incurred acquire a 10 % stake in Vankorneft, Rosneft’s sub-
after Yukos’ acquisition. In return, Rosneft will sidiary that develops the Vankor field. However,
supply CNPC with 15 million tons per year for the parties could not agree on asset price, and in
20 years. At the same time, Transneft, Russian September 2015, the Indian ONGC bought a 15 %
pipeline monopoly, obtained a $10 billion Chi- stake in Vankorneft for $ 1.3 billion. Consolidating
nese credit mainly to construct ESPO, including its cooperation with India, in March 2016 Rosneft
Skovorodino-Mohe spur to China. Rosneft enjoys signed an agreement with Oil India, Indian Oil and
a monopoly right to pump its crude to China Bharat Petroresources on selling them 29.9% in
through this spur. Taas-Yuryakh Neftegazdobycha that develops a
In May 2012, soon after the presidential elec- major Sredne-Botuobinsk field in East Siberia.
tions, Igor Sechin was appointed Rosneft’s presi- To develop the Arctic, Igor Sechin began to
dent. With him at the helm, Rosneft began to even actively expand relations with global majors.
more aggressively pursue its policy of acquisi- Rosneft (with 66.7 %) established JVs with
tions, rapprochement with China, and Arctic ExxonMobil, ENI, and Statoil. They envisage
development. joint activities in the Russian Arctic and in other
In March 2013, Rosneft closed the deal on areas of Russian continental shelf; foreign com-
buying 100 % of TNK-BP. It paid $16.65 billion panies will also help Rosneft with the develop-
for BP’s 50 % share in the company and provided ment of hard-to-recover reserves in Russia and
12.84 % of its own shares to BP. As a result, the will invite Rosneft to participate in their projects
major accumulated 19.75 % of Rosneft shares in other countries. In 2014, the JV between
and became its second biggest shareholder after ExxonMobil and Rosneft discovered a big oil
the Russian government. Rosneft also paid $27.73 field Pobeda in the Cara Sea.
billion to AAR for its share in TNK-BP. However, Rosneft’s activities were strongly
Thus Rosneft became the world’s biggest pub- affected by the international sanctions imposed
lic oil company in terms of hydrocarbon reserves against Russia, in particular, financial and sectoral
and production. sanctions. With its net debt of $ 39.9 billion at the
Since Rosneft had to borrow practically all the end of June 2015, it lost access to international
money to acquire TNK-BP, it turned again to capital markets. Its credit ratings were downgraded
China for funds. The Rosneft-Chinese relations and its market capitalization plunged. Practically
progressed particularly actively in 2013. Two all its JVs with foreign partners that focused on the
major oil export contracts were signed: on deliv- Arctic or shale resources were halted. As a result, it
eries of 360 million tons for 25 years with CNPC had to rely on China even more, inviting Sinopec to
worth $270 billion and on deliveries of 100 mil- its Yurubcheno-Tokhomsk and Russkoye fields
lion tons for 10 years with Sinopec worth and launching cooperation with ChemChina.
$85 billion. Rosneft and Transneft plan to expand In 2000–2015, the Russian oil sector coped
capacity of the ESPO spur to China to 20 million with creeping renationalization, consolidation,
tons/year after January 1, 2015, and 30 million adverse investment climate, and resource nation-
tons/year after January 1, 2018 (from 15 million alism. How will these trends affect Russian
tons/year). Also, Rosneft (51 %) and CNPC VIOCs that face the hard challenges connected
Russian Oil Companies, Table 2 Oil and condensate production by key Russian VIOCs, 2000, 2004, 2009, and 2014/
2015, mt
Company 2000 2004 2009 2014 2015
LUKOIL 62.1 84.0 92.1 86.5 85.6
Rosneft 13.4 21.6 116.2 190.8a 189.2
TNK-BP 30.8 70.5 70.2 – –
Gazprom Neft 17.1 33.9 29.8 33.6 34.3
Surgutneftegas 40.6 59.6 59.6 61.4 61.6
Tatneft 24.3 25.0 26.1 26.5 27.2
Bashneft 11.9 12.0 12.2 17.9 19.9
Slavneft 12.4 22.0 18.8 16.1 15.4
Russneft 8.7 12.6 8.6 7.3
Yukos 49.5 85.6 – – –
Other companies 61.1 35.4 56.1 85.3 93.6
Russia’s total 323.2 458.8 494.2 526.7 534.1
Source: Neftegazovaya Vertical
a
Not accounting for stakes in dependent and affiliated companies
with the current low oil prices, maturing resource Kommersant (2000–2015)
base, escalating production costs, intensifying Landes A (2003) YUKOS: enjoying growth. Renaissance
Capital, Moscow
global competition with NOCs and IOCs, as well Milov V (2005) Problems of energy policy, working papers
as international sanctions? of the Carnegie Moscow Center, Moscow, issue 4
Neftegazovaya Vertical (2000–2015)
Neft I Capital (1994–2015)
Poussenkova N (2004) From rigs to riches: oilmen
References vs. financiers in the Russian oil sector. In: The energy
dimension in Russian global strategy. J.Baker Institute
Alekperov V (2011) Oil of Russia: the past, present and publications, Houston
future. Creative Economics, Moscow Poussenkova N (2007) Lord of the rigs: Rosneft as a mirror
Gorst I (2007) LUKOIL: Russia’s largest oil company. In: of Russia’s evolution. In: The changing role of national
The changing role of national oil companies in interna- oil companies in international energy markets. J.Baker
tional energy markets. J.Baker Institute publications, Institute publications, Houston
Houston Simonov K (2005) Russian oil: the latest redistribution.
Gustafson T (2012) Wheel of fortune: the battle for oil and Eksmo, Moscow
power in Russia. The Belknap Press of Harvard Uni- Vedomosti (2000–2015)
versity Press, Cambridge, MA/London Yakunin V et al (2006) Energy vector of the eastern geo-
Henderson J (2012) Rosneft: on the road to the global NOC politics of Russia. Economics, Moscow
status? Oxford Institute of Energy Studies publication,
Oxford
T
Taxation of the Russian Oil Sector The royalty + tax system: basic equations
Gross revenue = Revenue generated from
oil and gas sales
Oleg Anashkin
Net revenue = Gross revenue
School of World Economy, Higher School of
- Royalty
Economics, Moscow, Russia Net income (%) = 100 % – rate of royalty
(%)
Taxable income = Gross revenue – royalty
From a practical perspective, any fiscal system – Operating cost
used in the world falls into either of the two – Intangible capital cost a
major categories: concessions (also widely Deductible – Depreciation allowances
known as a royalty + taxes or R + T) and con- (including field
abandonment cost)
tracts (also referred to as production sharing
Costs – Investment loans
agreements or PSA). (if stipulated by contract)
Each system has multiple types and variations, – Interest on loans
and some of them use their own specific terminol- (if stipulated by contract)
ogy as a result of certain conceptual, historical, – Loss carry forward
and geographic variances. However, the differ- – Bonusesb
ence in concepts boils down merely to a difference Net cash flow = Gross revenue
in the choice of words to describe very similar (after tax) – Royalty
economic processes. Their most significant differ- – Capital cost
ences could be tracked in the legal sphere because – Intangible capital cost
the acquisition of ownership right by mineral pro- – Operating cost
– Bonuses
ducers to their mineral production is a highly
– Taxes
indicative factor. However, from the economic
perspective, specifically, in terms of cash flow
a
In a number of systems, no distinction is made between
generation associated with each individual sys- the operating cost and intangible capital cost; both catego-
ries are subject to immediate and full deduction
tem, those differences appear noncritical. Below b
Bonuses are not always permitted to be treated as tax
follows a flowchart of basic equations in a typical deductible
R + T tax system.
The tax system currently in development and
use in Russia’s oil sector has the same structure as
that described above.

DOI 10.1007/978-3-642-40871-7_144-1
2 Taxation of the Russian Oil Sector
Taxation of the Russian Oil Sector, Table 1 List of major taxes applicable in Russia in 2015
Tax Name Tax Rate Name Base Tax Availability of Change in the tax
Rate, % options for the rate levied on
use of other exports of goods
rates (services), %
Value Added Tax VAT ratea 18* Yes** Yesb
c
Profit Tax Profit Tax rate 20 Yes** No
d
Personal Income Tax (PIT) PIT rate 13 Yes** No
Special** Tax Regimese
Uniform Agricultural Tax UAT rate 6 No No
(UAT)
Uniform Tax on Imputed UTII rate 15 No No
Income (UTII)
STS rate applied to 6 No No
Simplified Tax System income
(STS) STS rate applied to 15 Yes6 No
income less expenses
Mineral Production Tax on MPT rate See Table 2 Yes No
crude (MPT)
*
) Derived from 18% VAT and calculated as (18 / (100 + 18) * 100%)
**
) The case has essentially no bearing on the oil and gas sector
a
Article 164. Tax Rates. Chapter 21. Value Added Tax. RFTC, Parts 1 and 2
b
Subject to filing tax returns as stipulated in Article 165. Procedure for Confirming Eligibility to Zero-Rate Taxation.
Chapter 21. Value Added Tax. RFTC
c
Article 284. Tax Rates. Chapter 25. Profit Tax on Organizations. RFTC
d
Article 224. Tax Rates. Chapter 23. Personal Income Tax. RFTC. The same Article contains provisions for the use of
other tax rates
e
Section VIII Special Tax Regimes. RFTC
f
The RF constituent regions may have local legislation establishing differentiated tax rates under the Simplified Tax
System (income less expenses) at rates ranging from 5 to 15 %
To date, only three production sharing projects information and a general picture for you to eval-
(PSA) are in progress in Russia: Sakhalin-1, uate the system as needed.
Sakhalin-2, and the Kharyaginsky Field Develop- Please note that the subject of taxation is no
ment Project. For various reasons, no new projects less important than the tax rate applied thereto
of that type are expected in Russia any time soon. (Table. 1).
However, some expertise has already been gained
in that sphere.
Hence, in order to understand the tax system
Input Data in the Mineral Production Tax
applicable to Russia’s oil sector, we offer a high-
Calculation for Crude (MPT)
level summary of the 2015 tax rates used in Russia
as represented in the Russian Federation Tax
The tax base for the production of dehydrated,
Code, Parts 1 and 2 (hereinafter, RFTC).
desalted, and stabilized crude oil is determined
This summary does not claim to be exhaustive
on the basis of the mineral production amount
and fully accurate – if that is what you need,
measured in kind (as of January 1, 2007, pursuant
please refer directly to the language of the tax
to the RFTC, Chapter 26, Article 338 (as amended
laws. Nonetheless, it would provide some
by the Federal Law # 268-FZ of September
30, 2013)) (Table 2).
Taxation of the Russian Oil Sector 3
Taxation of the Russian Oil Sector, Table 2 MPT tax rates by effective periods thereof
Tax rate Tax rate,
effective period ruble/ton Justification
As of January 919 RFTC, Part 2 of August 5, 2000, # 117-FZ (as amended by the Federal Law #366-
1, 2017 FZ of November 24, 2014)
01/01/2016–12/ 857 RFTC, Part 2 of August 5, 2000, # 117-FZ (as amended by the Federal Law #366-
31/2016 FZ of November 24, 2014) (the earlier rate was 559 rubles/ton, as amended by the
Federal Law # 213-FZ of July 23, 2013; # 263-FZ of September 30, 2013).
31/2015 FZ of November 24, 2014) (the earlier rate was 530 rubles/ton, as amended by the
Federal Law # 213-FZ of July 23, 2013; # 263-FZ of September 30, 2013)
31/2014 FZ of July 21, 2011)
31/2013 FZ of July 21, 2011)
31/2012 FZ of July 21, 2011)
31/2011 FZ of July 27, 2006)
01/01/2005–12/ Federal Law # 126-FZ of August 8, 2001 (as amended by the Federal Law # 102-FZ
31/2006 of August 18, 2004)
01/01/2004–12/ 347 Federal Law # 126-FZ of August 8, 2001 (as amended by the Federal Law # 117-FZ
31/2004 of July 7, 2003)
01/01/2002–12/ 340 Federal Law # 126-FZ of August 8, 2001
31/2003
The tax rate will be multiplied by a factor production tax rate calculation are quoted from
reflecting the global oil price dynamics (Кц). (Кц the relevant letters of the Russian Federal Tax
is determined as per Article 342 of the RFTC Service. The tax rate with the application of the
(as amended November 24, 2014, with the effec- Кц factor as presented herein was calculated by
tive date of January 1, 2015).) The multiplication KonsultantPlus specialists based on the available
product will then be reduced by the Дм (the Дм data. Until the receipt of the Russian FTS data, the
value is determined as stipulated in RFTC, Article table only quotes average Urals price levels from
342.5) value reflecting the specifics of oil Rossiyskaya Gazeta.)
recovery. The Кд factor reflecting the complexity of the
A few comments on the Дм indicator: Pursuant oil recovery process and the Кдв factor reflecting a
to the above-referred Article of the RFTC, it is degree of depletion of a specific pool are calcu-
calculated by the formula Дм = Кндпи Кц lated pursuant to Article 342.2 of the RFTC; the
(1– Кв Кз Кд Кдв Ккaн), Кв factor reflecting a degree of depletion of a
Where Кндпи is 530 rubles in 2015 and specific subsoil area, the Кз factor reflecting the
559 rubles as of January 1, 2016. size of the oil reserve in a specific subsoil area,
The Кц factor is determined by taxpayers them- and the Ккaн factor reflecting the production
selves by the formula quoted in Table 3 below. region specifics and crude properties are deter-
The Кц factor calculated as described is mined pursuant to Article 342.5 of the RFTC.
rounded off to the fourth decimal place under the Without going into detail of all those sophisti-
applicable rounding rules. cated manipulations with the application of vari-
For instance, Table 4 below provides reference ous factors to calculate the value of Дм, it should
data for the mineral production tax calculation for be noted that the said factors were introduced for
crude oil. (The data in support of the mineral the purpose of granting some tax exemptions to
Taxation of the Russian Oil Sector, Table 3 Determination of the Кц, factor reflecting the dynamics of oil prices
Period Formula Justification
As of January 1, 2009 Кц = (Ц – 15) P/261, where Ц is an RFTC, Part 2 of August 5, 2000, # 117-FZ
average price level of Urals in the tax period (as amended by the Federal Law # 158-FZ of
in USD/barrela July 22, 2008)
P is average USD/RF ruble exchange rate in
the tax period as established by the RF
Central Bankb
From January Кц = (Ц – 9) P/261, where Ц is an RFTC, Part 2 of August 5, 2000, # 117-FZ
1, 2007, through average price level of Urals in the tax period (as amended by the Federal Law # 151-FZ of
December 31, 2008 in USD/barrel July 27, 2006)
From January P is an average USD/RF ruble exchange rate Federal Law # 126-FZ of August 8, 2001
1, 2005, through in the tax period as established by the RF (as amended by the Federal Law # 102-FZ of
December 31, 2006 Central Bankc August 18, 2004)
To January 1, 2005 Кц = (Ц – 8) P/252, where Ц is an Federal Law # 126-FZ of August 8, 2001
average price level of Urals in the tax period
in USD/barrel13
P is an average USD/RF ruble exchange rate
in the tax period as established by the RF
Central Bank 14
a
The average price level of Urals in the past tax period is calculated as an arithmetic sum of mean arithmetic values of the
buying and selling prices of crude on the global oil markets (Mediterranean and Rotterdam) in all trading days divided by
the number of trading days in the relevant tax period
The average price levels of Urals for the preceding month on the Mediterranean and Rotterdam markets are communicated
through the official media sources no later than on the 15th day of the following month under the RF government’s
established procedure
In the absence of the said data in the official media sources, the average price level of Urals on the Mediterranean and
Rotterdam markets is identified by taxpayers themselves
b
The average USD/RF ruble exchange rate in the tax period as established by the RF Central Bank is determined by
taxpayers themselves as a mean arithmetic value of the USD/RF ruble exchange rate established by the RF Central Bank
on all days in the relevant tax period
c
The data in support of the Mineral Production Tax rate calculation are quoted from the relevant letters of the Russian
Federal Tax Service.
The tax rate with the application of the Кц Factor as presented herein was calculated by KonsultantPlus specialists based
on the available data. Untilthe receipt of the Russian FTS data the Table only quotes average Urals price levels from
Rossijskaya Gazeta
Taxation of the Russian Oil Sector, Table 4 Sample data for MPT calculation
Average Tax Tax rate
Average price USD rate, multiplied by
level of Urals in exchange Factor ruble/ the Кц Factor, Justification (information
Period USD/barrel (Ц) rate (P) (Кц) ton ruble/ton source)
January 46.14 61.8773 7.3826 766 5655.0716 Rossiyskaya Gazeta, # 30, of
2015 February 13, 2015
Letter # ГД-4-3/2823@ of
the Russian Federal Tax
Service of February 24, 2015
February 57.31 64.6833 10.4856 766 8031.9696 Rossiyskaya Gazeta, #52, of
2015 March 13, 2015
Letter # ГД-4-3/4232@ of
the Russian Federal Tax
Service of March 17, 2015
projects dealing with hard-to-recover, highly vis- 1. With an average price of Urals on the global
cous, and low-permeability crude, depleted fields, markets (Mediterranean and Rotterdam) of up
or fields developed in other unconventional to US$ 109.5 per ton (inclusively) in the mon-
conditions. itoring period – zero rate
For conventional fields presently representing 2. With an average price of Urals on the global
a major portion of oil production in Russia, the markets (Mediterranean and Rotterdam)
value of the above factors will be 1, which means exceeding USD 109.5 per ton in the monitoring
that the Дм value for conventional developments period but staying below USD 146 per ton
will be 0. (inclusively) – up to 35 % of the difference
Notably, Russia has used a tax maneuver pri- between the average price of the said grade
marily for reasons of upcoming integration with of crude in USD/ton in the monitoring period
Kazakhstan and Belarus. The Eurasian Economic and USD 109.5.
Union Agreement envisions the creation of a com- 3. With an average price of Urals on the global
mon market of crude and products, and by 2018, markets (Mediterranean and Rotterdam)
the countries should have unified export duties in exceeding USD 146 per ton but stays below
place. In Kazakhstan and Belarus, export duties USD 182.5 per ton (inclusively) – up to
are lower. Hence, meeting its partners halfway USD12.78 per ton and 45 % of the difference
Russia lowers its duties to the needed level but between the average price of the said grade of
at the same time raises the MPT rates. crude in USD/ton in the monitoring period and
Theoretically, an analysis of changes in the tax USD 146
system and comparison of their impacts should be 4. With an average price of Urals on the global
supported by calculations using the basic equa- markets (Mediterranean and Rotterdam)
tions for a typical R + T model as described exceeding USD 182.5 per ton – up to USD
above, which calculations should be run before 29.2 per ton and 59 % (for all calendar months
and after the tax maneuver for a sample field in falling on a period from January 1 through
order to make conclusions of the tax impact on the December 31, 2014), 57 % (for all calendar
end result. months falling on a period from January
When designing the tax maneuver in question, 1 through December 31, 2015), and 55 %
the Russian government focused primarily on (for all calendar months falling on a period
avoiding the budget take shrink. Hence, we may from January 1 through December 31, 2016)
calculate the upper limit of the said impact. of the difference between the average price of
For that purpose, it was assumed that annual the said grade of crude in USD/ton in the
production levels will remain stable at 520 million monitoring period and USD182.5
tons of crude and all that crude will be produced
from conventional fields (the upper limit estimate, However, in the late 2014, the said law was
i.e., Дм = 0). amended, and a new language was approved of
We have also considered that in addition to Item 4 (the Federal Law # 366-FZ of November
changes in the tax system, major changes were 24, 2014 – new language was approved for Article
made to the crude export duty calculation for 2015 3.1.4 of the said law coming into effect 30 days
and beyond. after publication and applied to the calculation of
Specifically, pursuant to the approved legisla- customs duties on export crude levied as of Janu-
tion in 2014, the maximum duty rate should be ary 1, 2015):
calculated as follows (the version of November
2, 2013 (with amendments and additions effective 4. With an average price of Urals on the global
as of January 1, 2014) was drafted to incorporate markets (Mediterranean and Rotterdam)
the amendments made by the Federal Law #263- exceeding USD 182.5 per ton – up to USD
FZ of September 30, 2013): 29.2 per ton and 42 % (for all calendar months
falling on a period from January 1 through
December 31, 2015), 36 % (for all calendar – Multiple amendments, additions, and updates
months falling on a period from January to Chapter 26 of the RF Tax Code made over
1 through December 31, 2015), 30% (for all the last 5 years resulted in a threefold increase
calendar months as of January 1, 2017, гoдa) in its volume.
of the difference between the average price of – The amendments made to the mineral produc-
the said grade of crude in USD/ton and tion tax rate determination and enforcement
USD182.5 thereof gradually reduced to zero what was
initially considered its benefits, specifically,
Using the above information and considering simple calculation and easy administration we
that Russia annually exports half of its 520 million have seen during all those years. Now that
tons of crude production, calculations may be run benefit has essentially vanished for many
to show that with the Urals price of USD 60/bbl fields, the situation is likely to get worse.
and the estimated exchange rate of 62 rubles/ – There is a growing understanding in the RF
USD, the tax maneuver should have increased government of the need to look for other
fiscal load on oil producers by USD 14.7 billion more efficient methods for taxing the oil sector
a year (the upper limit estimate) (i.e., the maneu- to replace the MPT. For instance, consideration
ver has actually added USD 28.3 to the price of is presently given to the following concepts:
each ton (or USD 3.9 per barrel)). However, that – Potential tax on the financial result for pilot
by far does not mean that all that money will go to oilfields with the aim of creating an incen-
the state budget because a number of fields have tive for their development and production
the Дм factor reflecting the complexity of oil – Models involving taxation of added reve-
recovery above zero, i.e., they enjoy certain nue in addition to the tax on the financial
MPT tax allowances, which would reduce the result
budget take.
It should also be noted that the vertically inte- The proposals for pilot fields discussed at pre-
grated petroleum companies are in a position to sent include the profit tax, duties, and a 60 % tax
offset such additional costs through product on the financial result levied on the companies.
exports because export duties on petroleum prod- The expectation is that the tax base of the added
ucts were significantly reduced as well. revenue tax will be a free cash flow and that of the
Eventually, the losers were: financial result tax, the difference between the
crude sales revenue and the cost oil production
– Oil-producing companies other than vertically and processing to commercial specifications.
integrated ones having no refining facilities Capital investment should be deducted from
– Refining facilities other than those owned by the added revenue tax base at once, while from
vertically integrated petroleum companies hit the financial result tax base, they should be
by higher feedstock prices on the domestic deducted in stages. However, an option is pro-
market vided for early depreciation of those costs
– Individual consumers of petroleum products (another 10 % of invested capital will be allowed
on the domestic market also compelled to off- to add to the costs each year).
set higher prices of products produced from So far, specialists have failed to come to under-
more costly crude standing of how the fields eligible to the new tax
approach should be identified: whether to use it
The following observations add to the overall for the new fields or for the fields already enjoying
picture of the changes made in the tax system some MPT allowances or for all the fields indis-
applicable to Russia’s petroleum sector: criminately. Obviously the principle of nondiscri-
mination in the tax burden distribution should be
adhered to, for which purpose the law should
include some standard criteria by which any field and the road appears difficult. However, the
would be automatically recognized as eligible to upside is that the RF government understands
that new tax system. that the time has come when the existing tax
Regretfully, no such criteria have been system applied to the oil sector is outdated and
designed so far. We are just taking initial steps needs improvement.
C
Climate Policy in Russia the 1990 levels (Ministry for Economic Develop-
ment of the Russian Federation 2013). The energy
Yulia Yamineva sector is by far the largest contributor to the over-
University of Eastern Finland, Joensuu, Finland all greenhouse gas emissions with the share of
more than 80 %.
Climate change issues are peripheral on policy

agenda in Russia. This owes to many factors Russia in International Climate Policy
including abundant mineral resources, a generally
marginalized status of environmental and a related The Russian Federation is a party to the UNFCCC
fossil fuel lobby, issues, and limited domestic which is the main international agreement to
expertise on this topic (Yamineva 2013). In fact, address global climate change. Formally, in the
most developments in Russia’s national policy convention’s regime, Russia is considered to be a
specific to climate change were triggered by the developed nation with the resulting obligation to
need to conform to the requirements under the UN reduce its emissions; however, the country also
Framework Convention on Climate Change enjoys a status of “economy in transition” imply-
(UNFCCC) to which Russia is a party. ing a greater flexibility in meeting mitigation
commitments.
Russia is also a party to the Kyoto Protocol to
Emissions’ Status the UNFCCC which sets legally binding quanti-
fied emission reduction targets for developed
According to the International Energy Agency, countries. Interestingly, the Protocol entered into
Russia is the fourth largest emitter of carbon diox- force as a result of Russia’s ratification in 2004.
ide (CO2) in the world, after the USA, China, and (According to Article 25.1 of the Kyoto Protocol,
India (International Energy Agency 2013). the agreement would enter into force only after
Despite the apparently significant contribution to developed country parties accounting for at least
the world’s emissions, Russia’s own emissions in 55 % of their total carbon dioxide emissions of
fact decreased dramatically – by nearly 40 % – in 1990 join the treaty. Given the USA’s refusal to
the 1990s as its economy collapsed following the ratify the Protocol, Russia’s ratification had a
disintegration of the Soviet Union (Fig. 1). decisive role in the fate of the Protocol.) The
Although greenhouse gas emissions started ratification, heavily debated in Russia at the
slowly climbing up in the late 1990s as shown time, allegedly took place as a result of a behind-
by the figure, by 2013, they were still at 70 % of the-door bargaining with the EU in the promise
DOI 10.1007/978-3-642-40871-7_152-1
2 Climate Policy in Russia
Annual greenhouse gas (GHG) emissions fo Russian Federation

Query results for Party: Russian Federation - Years: All years - Category: Total GHG emissions excluding LULUCF/LUCF - Gas:
Aggregate GHGs - Unit: Gg CO2 equivalent
4,000K
3,500K
3,000K
1 Energy
2,500K
Gg CO2 equivalent
2 Industrial
Processes
3 Solvent and
2,000K Other Product Use
4 Agriculture
6 Waste
1,500K
7 Other
1000K
500K
0K
Base year 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Climate Policy in Russia, Fig. 1 Annual GHG emissions of the Russian Federation (1990–2012). (Source: UNFCCC
greenhouse gas emissions inventory database, available at http://unfccc.int/ghg_data/items/3800.php)
for a more advantageous treatment in the ascen- legislation pertaining to reducing emissions and
sion process for the World Trade Organization. an emission reduction target. In addition, policies
Under the Kyoto Protocol’s first commitment on increasing energy efficiency and renewable
period of 2008–2012, Russia as a developed energy and reducing emissions from associated
nation agreed to a quantified economy-wide target petroleum gas are relevant to the goal of mitigat-
to reduce its emissions. However, in reality, the ing climate change. The latter policies are not
target was defined in relation to 1990 which pre- always well coordinated with climate-specific leg-
ceded the collapse of the economy, and hence the islation and in fact were developed beforehand or
nation ended up with a nearly 40 % room for in parallel; yet, they directly address the most
emissions’ growth. emitting sectors in Russia.
Although still a party to the Protocol, Russia Climate doctrine is a policy and political docu-
did not take any emission reduction commitments ment which sets the framework for climate change
for its second commitment period of 2013–2020. mitigation and adaptation policies (Climate doctrine
Russia signed the Paris Agreement which was of the Russian Federation 2009). Largely declarative
adopted by Parties to the Climate Change Con- in nature, this document nevertheless carries a sym-
vention in 2015. There are indications that the bolic significance as it, for the first time for an
country will ratify the Agreement in 2019. official document in Russia, recognized the anthro-
pogenic character of current climate change.
Russia has an official greenhouse gas emission
Climate-Specific Policy and Legislation
target of not exceeding 75 % from the emissions
of 1990 in 2020 (Decree of the President of the
Russia’s domestic policy specific to climate
Russian Federation 2013). This target should be
change includes the Climate doctrine and
Climate Policy in Russia 3
considered against the background that in 2013 were submitted for approval with estimated emis-
emissions were still at 70 % of 1990 levels. The sion reductions of 380 million tons of CO2
government has also adopted a plan of actions to (Sberbank of Russia – Carbon Financing 2014).
implement the decree which includes develop- As Russia did not sign up for the second commit-
ment of a monitoring, reporting, and verification ment period of the Protocol, it could no longer
system for emissions, emission scenarios and mit- participate in the joint implementation scheme
igation potential, and measures to regulate green- after 2012.
house gas emissions including through state
subsidies, pilot projects, and international cooper-
ation on low-carbon development (Plan of actions Climate-Related Energy Policies
in support of reducing greenhouse gas emissions and Legislation
by 2020 to the levels of no more than 75 % from
the emissions of 1990, 2014). Three areas relating to the energy sector deserve
As for longer term, Russia suggested it would attention as significant for climate mitigation in
limit its emissions to 70-75% by 2030 from 1990 Russia. Policy developments – namely, increasing
levels, provided for the appropriate accounting of energy efficiency, renewable in these areas energy
the role of forests (Intended Nationally Determined promotion and reducing emissions from associ-
Contribution to the UNFCCC, 2015). This appears ated petroleum gas flaring – are not necessarily
to be a double safety net against strict international driven by climate change concerns but carry
obligations to reduce GHG emissions. important climate co-benefits. As far as climate
To implement the Paris Agreement, Russia change mitigation is concerned, experts widely
also plans to develop a system of state regulation believe that increasing the efficiency of the energy
of reducing GHGs but the exact instruments and sector is the most promising option for Russia due
policies to be used remain unclear at this point. to its high cost-effectiveness (McKinsey & Com-
Russia has no domestic emission trading pany 2009) and significant co-benefits of increas-
scheme although the possibility of one has been ing the competitiveness of the economy as well as
entertained for years. However, introducing a freeing up more fossil fuels for export. Indeed,
domestic emission trading scheme is unlikely in according to World Bank’s estimates of 2008,
Russia due to the low political feasibility of the Russia’s economy is one of the most energy-
idea and lack of demand for carbon credits in the inefficient economies globally with the energy
absence of a strict emission reduction goal efficiency potential assessed at 45 % (World
(Korppoo et al. 2014). Bank 2008). McKinsey & Company suggested
As a party to the Kyoto Protocol, in the first that the highest potential for increasing energy
commitment period, Russia could avail itself of the efficiency is found in residential and commercial
opportunity to use so-called flexibility mechanisms buildings, energy sector, industry, and road trans-
to assist in achieving emission reductions. One of portation. Indeed, increasing energy efficiency
the schemes – joint implementation – allowed has been a policy priority in Russia in the last
Russia to attract investments from another indus- years. This priority is supported by a myriad of
trialized country for emission reduction projects policy documents and legislation which are fre-
in exchange for carbon credits. Despite its appar- quently repetitive and sometimes contradict each
ent benefits, Russia largely missed on the oppor- other. According to official documentation, the
tunity. Legislative inertia and administrative country aims at decreasing the energy intensity
barriers prolonged the adoption of the legislation of its GDP by at least 40 % by 2020 compared
which would enable the scheme up to 2011 to 2007 (Concept for long-term social and eco-
(Directive of the Government of the Russian Fed- nomic development of the Russian Federation up
eration 2011). In the remaining time until the end to 2020, 2008). The main piece of legislation in
of the commitment period, 150 projects mostly on support for this goal is the federal law on energy
energy efficiency and development of renewables conservation and increasing energy efficiency
4 Climate Policy in Russia
adopted in 2009 which proposes such policy Siberia and the Far East renewables can serve as
actions as, for example, energy efficiency label- a cheaper and cleaner alternative to diesel
ing, phasing out energy-inefficient goods, energy (International Finance Corporation Renewable
audit, and energy efficiency requirements in the Energy Program in Russia 2011).
buildings sector and for state procurement Russia’s emissions from associated petroleum
(Federal law of the Russian Federation 2009). gas flaring are the highest in the world; about
Two other policy documents are important: the 75–76 % were utilized in 2011–2012 (Kiryushin
state program on energy conservation and increas- et al. 2013). The state policy to reduce these
ing energy efficiency (State Program of the Rus- emissions has followed a command-and-control
sian Federation 2010) and a more general state approach: the legislation of 2009 set a target for
program on energy efficiency and development of companies to utilize at least 95 % of associated
the energy sector adopted in 2013 (State program petroleum gas by 2012 and introduced increased
of the Russian Federation 2013). Prolific policy fines for excessive gas flaring (Directive of the
and legislative work demonstrates that energy government of the Russian Federation 2009). The
efficiency has indeed been a priority for the gov- fines had to be risen further in 2012 as compliance
ernment; yet, in reality, the implementation of among companies was poor and the target was
state programs and legislation has been delayed. missed (Directive of the government of the Rus-
Progress is hindered by several factors including sian Federation 2012). Although the current leg-
insufficient budget and institutional support, lack islation still aspires to reduce emissions from gas
of information and experience with financing and flaring to 5 %, there is no clarity on a timeline for
implementing energy efficiency projects, and this reduction. As reasons for the ineffectiveness
legislative gaps. of the current legislation, experts cite the exces-
Renewable energy, except large hydropower, sive reliance of state policy on targets and penal-
is currently at insignificant 1 % in the total energy ties for noncompliance instead of developing a
mix (main directions of the state policy in the area related infrastructure and introducing measures
of increasing electrical energy efficiency on the to stimulate companies to utilize associated petro-
basis of the use of renewables for the period up to leum gas (Kiryushin et al. 2013).
2020, 2009). There have been several policy
attempts to expand the use of renewables, in par-
ticular wind and solar energy, which however References
yielded almost no significant impact. Officially,
since 2009, Russia aims to increase the share of “Sberbank Russia” – carbon financing/Information on
renewables to 4.5 % by 2020 (main directions, Kyoto Protocol projects. http://sberbank.ru/moscow/
ru/legal/cfinans/sozip/. Accessed 11 Jan 2014
2009); but the country isn’t on track to meet the
Climate doctrine of the Russian Federation (2009) adopted
target. Two enabling schemes were proposed so by the order of the President of the Russian Federation
far: a premium-based scheme of 2009 which was No. 861-rp
never implemented in practice and a capacity- Decree of the President of the Russian Federation
(2013) “On reducing greenhouse gas emissions”
based scheme of 2013 (Directive of the govern-
No. 752
ment of the Russian Federation 2013) which is Directive of the government of the Russian Federation
assessed as more promising. Abundant fossil fuels (2009) “On the measures stimulating reduction of
and the lack of domestic expertise, financing, and atmospheric pollution by products of associated petro-
leum gas flaring” No.7
technologies are some of the key factors
Directive of the government of the Russian Federation
obstructing the progress on making renewables (2011) “On measures to implement article 6 of the
more prominent. Overall, renewable energy Kyoto Protocol to the UN Framework Convention on
development is not a cost-effective way to reduce Climate Change” No. 780
Directive of the government of the Russian Federation
greenhouse gas emissions (McKinsey & Com-
(2012) “On estimating fines for emissions from associ-
pany 2009) although the International Finance ated petroleum gas flaring and/or dispersal of associ-
Corporation states that in isolated regions of ated petroleum gas” No. 1148
Climate Policy in Russia 5
Directive of the government of the Russian Federation McKinsey&Company (2009) Pathways to an energy and
(2013) “On the mechanism for the promotion of renew- carbon efficient Russia: opportunities to increase
able energy use on the wholesale electricity and capac- energy efficiency and reduce greenhouse gas emissions
ity market” No. 449 Ministry for Economic Development of the Russian Fed-
Federal law of the Russian Federation (2009) “On energy eration (2013) Forecast for the long-term social and
conservation and increasing energy efficiency and economic development of the Russian Federation up
introducing amendments to specific legislative acts of to 2030
the Russian Federation” No. 261-FZ Plan of actions in support of reducing greenhouse gas
Intended Nationally Determined Contribution of the Rus- emissions by 2020 to the levels of no more than 75%
sian Federation to the UNFCCC (2015) from the emissions of 1990 (2014). Approved by the
International Financing Corporation Renewable Energy order of the government of the Russian Federation
Programme in Russia (2011) Renewable energy policy No. 504-r
in Russia: waking the green giant State programme of the Russian Federation (2010) Energy
International Energy Agency (2013) CO2 emissions from conservation and increasing energy efficiency for the
fuel combustion highlights period up to 2020. Approved by directive no. 2446-r of
Kiryushin PA, Knizhnikov A Yu, Kochi KV, Puzanova TA, the government of the Russian Federation
Uvarov SA (2013) Associated petroleum gas in Russia: State programme of the Russian Federation (2013) “Energy
“Do not burn but utilise!” Analytical report on eco- efficiency and development of the energy sector.”
nomic and environmental impacts of associated petro- Approved by directive No. 512-r of the government
leum gas flaring in Russia. WWF-Russia of the Russian Federation
Korppoo A, Upston-Hooper K, Yliheljo E (2014) climate The concept for long-term social and economic develop-
change mitigation in Russia: foreign policy, environment of the Russian Federation up to 2020
mental action or simple economics? In: Van Calster G, (2008) adopted by the order of the government of the
Vandenberghe W, Reins L (eds) Research handbook on Russian Federation No. 1662-r
climate change mitigation law. Edward Elgar Publish- World Bank (2008) Energy efficiency in Russia: untapped
ing, Cheltenham reserves
Main directions of the state policy in the area of increasing Yamineva Y (2013) Sustainable energy in Russia: a climate
electrical energy efficiency on the basis of the use of change perspective. In: report of the roundtable “Euro-
renewables for the period up to 2020 (2009) adopted by pean and Russian agenda towards efficient resource
the order of the government of the Russian Federation management and sustainable energy supply”, Konrad
No. 1-r Adenauer Stiftung, European University in St Peters-
burg, Russia, 13 December 2013
G
Ghana: Energy Policy investment climate has made it one of the pre-
ferred investment destinations in West Africa.
Kafui Abbey1 and Joseph Mante2 With a real GDP per capita estimated at US$
1
LLM Oil and Gas, Aberdeen, Scotland 3,864, Ghana ranks 140th out of the 188 countries
2
Robert Gordon University, Aberdeen, Scotland on the UNDP Human Development Index (based
on national income and composition of resources)
(UNDP 2015, p. 248). The country’s economy is
General Information on Ghana largely based on natural resource extraction, for-
estry, and agriculture, but in recent years, it has
Ghana (formerly known as the Gold Coast) is a also witnessed strong growth in the service sector
located in West Africa and it shares boundaries especially in the area of telecommunication. After
with Burkina Faso to the north, the Atlantic Ocean years of intermittent exploration and prospecting,
to the south, Togo to the east, and Cote d’Ivoire to 600 million barrels of light oil were discovered
the west. It has a total land area of approximately offshore in the West Cape Block in Ghana in
238,540 km2 and is demarcated into ten adminis- 2007, sparking a flurry of exploration activity. In
trative regions. Ghana’s estimated population is December 2010, Ghana joined the community of
27,341,565 made up of 50.9 % male and 49.1 % oil-producing countries with the commissioning
female, with a 1.82 % increase in the population of the Jubilee Oil Field operations. Intensive
compared to the previous year in 2015 petroleum exploration and production activities
(Countrymeters 2016). Forty percent of the pop- coupled with other economic activities in the
ulation are 15 years and below, while the elderly past decade led to significant economic growth
population (65 years and above) accounts for in Ghana. This growth pattern has slowed since
4.7 % of the total population (Ghana Statistical 2013 due to economic relapse attributable mainly
Service 2013, p. 64). Since 1960, the population to factors such as unreliable power supply, weak
of Ghana has more than tripled, and this has manufacturing, and high inflation.
implications for energy supply and consumption.
As a thriving multiparty democratic state
underpinned by a Constitution (The Constitution Energy Mix of Ghana
of the Republic of Ghana, 1992), it has a func-
tional government, a vibrant legislature, and a The main energy sources in Ghana are biomass,
reasonably independent judiciary. Ghana’s image electricity, and fossil fuels. Biomass or wood fuel
as a stable democracy, in a region noted for polit- constitutes the primary source of energy in Ghana
ical instability, coupled with an attractive constituting about 65.6 % of energy consumption
DOI 10.1007/978-3-642-40871-7_155-1
2 Ghana: Energy Policy
in the country. The main components of this natural direct form and, to a lesser degree, through
source of energy are charcoal, firewood, and solar panels and other solar-related equipment, the
other wood products such as sawdust and sawmill country’s range of renewable energy sources
residue. Many households and small businesses in remains largely underexploited. Solar generation,
the informal sector of the economy rely on this for example, contributed only 0.1 % of the total
source of energy for residential and commercial generation in 2015 (VRA 2016). But, there are
use. Activities such as baking, fish smoking, tra- indications that solar power generation and use
ditional soap making, brewing, and textile are currently being promoted – in 2015, a total of
manufacturing by these small enterprises depend 272 solar systems were installed in public facili-
almost entirely on the availability of biomass ties (National Budget and Economic Policy State-
(Energy Commission 2006). Fossil fuels ment 2016, p. 15). There are also efforts to
(petroleum products) constitute 26 % of total promote residential use of solar energy in Ghana
energy consumption in the country and represent through the Rooftop Solar Photovoltaic
an important source of energy for the transport, (PV) Program and the Capital Subsidy Scheme.
aviation, and manufacturing sectors of the econ- Under this program, 20,000 solar PV systems are
omy. Its main components include aviation fuel, to be installed on residential facilities across the
petrol (gasoline), DPK (kerosene), gas oil, and country (Energy Commission 2006). Figures 1
liquefied petroleum gas (LPG). Ghana is a net and 2 provide an overview of energy supply and
importer of crude oil and other refined petroleum consumption in Ghana between 2005 and 2014.
products and is often exposed to the instabilities of Increasing demand for energy, especially elec-
the international oil market. tricity, has created an energy supply deficit. This
The other major source of energy is electricity. crisis has persisted for more than a decade. Regu-
Since 1965, Ghana’s main source of electricity lar electricity imports from neighboring countries
was hydro until the construction of the first ther- such as Cote D’Ivoire and Burkina Faso to sup-
mal plant in 1998. There was a sharp drop in the plement power generated domestically at peak
hydro share of electricity from 91.5 % in 2000 to periods have not met required demands.
about 66 % in 2003, largely due to unfavorable
climatic conditions which affected water flow in
the Volta River, the main water source (Energy Energy Policy Conception of Ghana
Commission 2006). Since then, there has been a
gradual decline of the hydro share of electricity Ghana has implemented a number of policies
and a corresponding increase in the volume of relevant to the energy sector with the aim of
electricity generated from thermal sources. In the ensuring that adequate, reliable, and quality
2016 National Budget and Economic Policy energy is available to users. The main policies
Statement, there are clear indications of the cur- for the energy sector (power and petroleum) are
rent government’s intentions to expand thermal the Strategic National Energy Plan (SNEP) and
generation with the installation of three thermal the National Energy Policy (NEP).
facilities with total production capacity of about In 2001, the Ministry of Energy developed an
700MW and expansion of existing capacity Energy Sector Policy Framework document. The
(p. 15). Table 1 provides details of the current aim of this document was to provide a stable basis
installed electricity generation capacity. for future developments in the energy sector. This
Renewable energy in Ghana is defined broadly document was subsequently revised into the
to include solar, biomass, wind, hydro, and tidal SNEP in 2006. The SNEP presents an outlook of
sources (Energy Commission 2006, p. 8). How- energy in Ghana for the period 2006–2020 (the
ever, in this work, the term is used narrowly to SNEP period covers two decades for a number
cover solar, mini hydro, wind, and biomass of reasons, including the need for policy continu-
sources (National Energy Policy 2010). Apart ity; for the other reasons, see Energy
from solar energy which is utilized heavily in its Commission (2006) Strategic National Energy
Ghana: Energy Policy 3
Ghana: Energy Policy, Table 1 Installed electricity generation capacity as of 2014

Plant Fuel type Installed capacity Share (%)
Hydro
Akosombo Water 1,020 36.0
Bui Water 400 14.1
Kpong Water 160 5.7
Subtotal 1,580 55.8
Thermal
Takoradi Power Company (TAPCO) LCO/natural gas 330 11.7
Takoradi International Company (TICO) LCO/natural gas 220 7.8
Sunon Asogli Power (Ghana) Limited (SAPP) – IPP Natural gas 200 7.1
Cenit Energy Ltd (CEL) – IPP LCO 126 4.5
Tema Thermal 1 Power Plant (TT1PP) LCO/natural gas 110 3.9
Tema Thermal 2 Power Plant (TT2PP) DFO/natural gas 50 1.8
Takoradi T3 LCO/natural gas 132 4.7
Mines Reserve Plant (MRP) DFO/natural gas 80 2.8
Subtotal 1,248 44.1
Renewables
VRA Solar Solar 2.5 0.1
Subtotal 2.5 0.1
Total 2,831 100
Source: Ghana Energy Statistics 2015
Ghana: Energy Policy, 5,000

Fig. 1 Trend in primary
energy supply (ktoe) 4,000
(Source: Based on figures 3,000
from the Energy Statistics
2015) 2,000
1,000
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Wood Hydro Oil Natural Gas
Plan (2006–2020)–Main Report, p.17. Available the energy sector, as captured in the SNEP, is to
via: http://www.energycom.gov.gh/files/snep/ turn Ghana into an “energy economy” that ensures
MAIN%20REPORT%20final%20PD.pdf) based the production and distribution of high-quality
on the economic growth rates forecasted in the energy services to all sectors of the economy in a
Ghana Poverty Reduction Strategy II. (This is a sustainable manner, without compromising the
national economic policy document.) The plan environment. The objective to accelerate the
reviews the available energy sources and development and utilization of renewable energy
resources in Ghana and the ways to exploit them is complemented by a strategy targeting a 10 %
in order to ensure secured and adequate energy renewable energy share in Ghana’s energy mix by
supply to support sustainable economic growth 2020. Under the SNEP, a policy decision was
for both the present and the future. The vision of made to allow private sector participation in the
Ghana: Energy Policy, 4000

Fig. 2 Trend in final
energy consumed (ktoe) 3000
(Source: Based on figures
from the Energy Statistics 2000
2015)
1000
0
2005 2006 2007 2008 2009 2010 2011 2012 2013
Electricity Petroleum Biomass
energy generation and supply. The SNEP had both p. 11). To achieve this goal, it is expected that
demand and supply components focusing on key generation capacity will increase, while transmis-
consumption sectors (these sectors include indus- sion and distribution infrastructure is improved
try and transportation, commercial and services, through public and private sector investments. The
agriculture and fisheries, and residential users) renewable energy subsector has a two-prong goal,
and energy supply sources (these sources are elec- namely, to increase the share of renewable energy in
tricity, petroleum, wood fuels, and renewables), the energy mix and to help mitigate the deleterious
respectively. The latter component contains indi- aspects of climate change. There are specific policy
vidual source-specific plans to help achieve the directions on biomass, wind and solar, mini hydro,
main goals of the SNEP. Under the plan, total and waste to energy conversion.
energy expenditure is expected to rise from On the petroleum subsector, the goal is “to
about US$4.3–4.6 billion, 13–14 % of GDP in sustain and optimise the exploitation and
2015, to US$5.2–5.6 billion, 8–9 % of GDP in utilisation of Ghana’s oil and gas endowment for
2020. Initial targets in the plans have not yet been the overall benefit and welfare of all Ghanaians,
achieved. present and future” (NEP 2010, p. 16). Ghana’s
The NEP (formulated in 2010; available petroleum sector is segmented into the upstream,
via: http://www.mofep.gov.gh/sites/default/files/ midstream, and downstream sectors. The
pbb/ENERGY%20POLICY-%20February%2013, upstream activities include exploration and pro-
%202010%20FINAL.pdf) essentially builds on the duction of petroleum. The midstream activities
ideas in the SNEP. It retains the country’s vision of include transportation of petroleum. The down-
becoming an “Energy Economy.” The main goal of stream activities include refining of petroleum by
NEP is to “make energy services universally acces- the country’s only petroleum refinery, Tema Oil
sible and readily available in an environmentally Refinery (TOR), the marketing and distribution of
sustainable manner” (p. 8). To achieve these goals, petroleum products by Oil Marketing Companies
ten specific objectives were set which include secur- (OMCs), and the premixing of petroleum product
ing long-term fuel supply for the thermal plants in for other industrial uses. Policy direction under
operation, modernizing and expanding energy this subsector is, thus, divided into upstream,
infrastructure, increasing access to modern forms midstream, and downstream. There are elaborate
of energy, and promoting private participation in the policy positions on the upstream and midstream
energy sector (NEP 2010, pp. 8–9). The NEP component. These include development and man-
divides the energy sector into three main subsectors, agement of hydrocarbons, strengthening the
namely, power, petroleum, and renewable sources. investment regulatory framework for the sector,
Under the policy document, each subsector has a and developing local content, participation, and
specific goal and policy direction. For the power capacity building in the subsector (NEP 2010,
subsector, the goal is to “become a major exporter p. 17). There are also directions on oil revenue
of power in the sub-region by 2015” (NEP 2010, management. The downstream component of the
policy focuses primarily on expanding the infra- Power Subsector

structure for the supply of petroleum products and
enhancing access. Hydroelectricity and thermal energy are the main
In 2009, the need for a standalone policy on the sources of power under this subsector. The gener-
petroleum subsector became apparent with the ation, transmission, and distribution of power
production of oil well underway in Ghana. from these sources are under the control of five
Another policy, the Fundamental Petroleum Pol- main state-owned entities (namely, the Volta River
icy of Ghana (FPPG), was formulated specifically Authority, the Bui Power Authority, and the
for this subsector. The main goal of this policy is Ghana Grid Company; the others are the Electric-
to transform the country into a net exporter of oil ity Company of Ghana and the Northern Electric-
and gas. The FPPG addresses fundamental ques- ity Distribution Company). The Volta River
tions on resource ownership and jurisdiction, fis- Authority (VRA) and the Bui Power Authority
cal and legal framework, relationships among (BPA) are mainly responsible for hydropower
actors in the petroleum sector, and sectoral insti- generation, with the former overseeing generation
tutional frameworks. The policy also provides activities at the Akosombo and Kpong hydroelec-
direction on principles of national participation, tric dams, while the latter is responsible for the
with clear emphasis on the monitoring of opera- 400 MW hydroelectric dam located at Bui, on the
tions of petroleum companies. This policy boundary between Brong-Ahafo and the northern
broadly sketches the government’s oil policy, regions of Ghana. Additionally, VRA is also
essentially committing it to pursuing sound man- responsible for some thermal plants located at
agement strategies that guarantee, among others, different parts of the country. In recent times,
optimal extraction, minimal environmental and some limited share of power generation, espe-
social disruption, and local development (Cavnar cially from thermal sources, has come from inde-
2008). The Policy serves as a “permanent guide- pendent power producers (IPPs).
line for governmental monitoring of the petroleum Until 2006, VRA’s functions covered transmis-
industry” (Draft Fundamental Petroleum Policy of sion and distribution activities as well. Pursuant to
Ghana 2009, s. 3.1). The NEP and FPPG have the Energy Commission Act, 1997 (Act 541)
been implemented for the past 5 years, and there (EC Act), and the Volta River Development
are clear indications that some aspects of these (Amendment) Act, 2005 (Act 692), the Ghana
policies have culminated in institutional and reg- Grid Company (GRIDCo) was incorporated in
ulatory reforms in the energy sector. For example, 2006 as a wholly owned state company with
in 2011, the Renewable Energy Act (Renewable exclusive responsibility for the operation of the
Energy Act, 2011 (Act 832)) was enacted to pro- National Interconnected Transmission system.
vide for the development, management, utiliza- Following the completion of an unbundling exer-
tion, sustainability, and adequate supply of cise involving GRIDCo and VRA in 2008, the
renewable energy (Renewable Energy Act 2011 transmission function was passed on to GRIDCo.
(Act 832), s. 1.). GRIDCo’s roles include bulk power purchase of
electricity from generators (both national genera-
tor and IPPs) and sale to distributors and bulk
Institutional and Regulatory Framework customers. Power producers expecting to be
connected to the transmission system must enter
Ghana’s energy sector is classified into two main into an electrical connection agreement with
subsectors: power and petroleum. The govern- GRIDCo.
ment, through the Ministry of Energy, oversees The Electricity Company of Ghana (ECG) and
the entire sector. The Ministry formulates energy the Northern Electricity Distribution Company
policies, oversees implementation by bodies (NEDCo) (previously known as the Northern
working under it, monitors, and evaluates Electricity Department, a subsidiary of the VRA)
policies. are responsible for distributing electricity to the
southern part of the country (Ashanti, central, (Beyond these legislations, there are subordinate
eastern, Greater Accra, Volta, and western legislations such as the Electricity Transmission
regions) and the northern regions, respectively. (Technical, Operational and Standards of Perfor-
With its large distribution network, ECG func- mance) Rules, 2008 (L.I.1934), and the Electricity
tions as an off-taker and guarantees the purchase Regulations, 2008 (L.I. 1937).) The Environmen-
of generated power by IPPs. tal Protection Agency Act, 1994 (Act 494),
The power subsector has two key regulating requires that projects in the power sector receive
bodies, namely, the Public Utilities Regulatory environmental clearance from the agency. Apart
Commission (PURC) (established under the Pub- from these laws, there are investment-related laws
lic Utilities Regulation Act, 1997 (Act 538)) and such as the Ghana Investment Promotion Centre
the Energy Commission (established under the Act, 2013 (Act 865), and the Free Zones Act,
Energy Commission Act, 1997 (Act 541)). The 1995 (Act 504) (as amended), which provide
PURC has oversight responsibility for the provi- investment incentives to entities who wish to par-
sion of utility services by public utilities including ticipate in the sector. There are laws on incorpo-
those in the power subsector. It plays key roles in ration of companies such as the Companies Code,
economic regulation, quality assurance, promo- 1963 (Act 179), and the Incorporated Private Part-
tion of competition among utility providers, and nership Act, 1962 (Act 152), which entities seek-
price regulation. The Energy Commission, the ing to register their companies to participate in the
other regulator, is responsible for granting sector will need to be aware of.
licenses to power generators, transmitters, and The current regulatory framework has liberal-
suppliers (it plays a similar role in the petroleum ized generation and distribution of power, thereby
sector in the areas of refining, storage, bulk distri- making it possible for IPPs and distributors to
bution, sale, and marketing – see the Energy participate in the process together with the
Commission Act, 1997 (Act 541)). The core established state-owned entities. Entities seeking
object of the Commission is “to regulate and to participate in this sector must meet the citizen-
manage the utilisation of energy resources in ship criterion (for individuals) or be incorporated
Ghana and co-ordinate policies in relation to under the laws of Ghana (for corporate entities)
them” (Energy Commission Act, 1997 (Act (Energy Commission Act, 1997, s. 12). The
541), s.1(2)). licensing regime does not exclude the state-
There are several laws and regulations which owned entities (except those expressly exempted
collectively comprise the regulatory framework like the VRA). For instance, the EC Act allows
for the power subsector. Some of these laws set relevant state-owned utility companies to apply
up the relevant institutions and their roles in the for and be granted license for transmission or
sector, while others provide detailed information wholesale supply of electricity and gas to distri-
on regulatory issues such as licensing and stan- bution companies and “bulk customers” (Energy
dard setting. For instance, the Volta River Devel- Commission Act, 10997 (Act 541), ss. 23–25).
opment Act, 1961 (Act 46) (as amended) The participation of foreign entities in the sec-
(amended by the Volta River Development tor is also permitted. Those intending to take
(Amendment) Act 2005 (Act 692)), and the Bui advantage of this window will need to be aware
Power Authority Act 2007 (Act 740) established of the constitutional provision – Article 181 (5) –
the main hydropower generating entities and their which requires that any international business or
respective roles. The Renewable Energy Act, economic transaction to which the State is a party
2011 (Act 832), provides for the development, requires parliamentary approval before it can
management, and utilization of renewable energy become effective. This applies to power purchase
sources. The EC Act and the Public Utility Regu- agreements as well, as highlighted in the recent
latory Commission Act, 1997 (Act 538), set out Supreme court cases of A-G v Faroe Atlantic
the laws relating to the technical and economic Company Limited (the Faroe Atlantic Case)
regulation of the power sector, respectively. ([2005–2006] SCGLR 271) and A-G v Balkan
Energy (Ghana) Limited & Ors (the Balkan company, or entity can engage in the exploration,
Energy Case) ([2012] 2 SCGLR 998). development, or production of petroleum without
signing a petroleum agreement with GNPC and
the Government of Ghana to that effect. The prac-
Petroleum Subsector: Institutional tice in Ghana is that Petroleum Sharing Agree-
and Regulatory Framework ments (PSA) is used. However, since petroleum,
like any other mineral in its natural state in or upon
There are five key institutions involved in the land or water in Ghana, is the property of the
regulation of the petroleum sector. The Ministry republic and vested in the president on behalf of
of Energy has the overall oversight responsibility the people (the Constitution of the Republic of
for the sector. It is assisted in this role by the Ghana 1992, article 237 (6)), any transaction
Petroleum Commission (established under the which involves the granting of rights for the
Petroleum Commission Act, 2011 (Act 821)) exploitation of petroleum requires parliamentary
which focuses on the upstream sector, the ratification (the Constitution of the Republic of
National Petroleum Authority (NPA) Ghana 1992, article 268).
(established by the National Petroleum Authority The Ministry of Finance, with the approval of
Act 2005 (Act 691 for the downstream sector, and parliament, has the responsibility of setting the
the Ghana National Petroleum Corporation applicable levels of taxes, charges, duties, or lev-
(GNPC) which has pioneered oil exploration in ies in order to achieve revenue targets for the
Ghana for several decades and is currently national budget. The margins for the distribution
involved in the upstream sector as a statutory companies are fixed annually through negotia-
commercial venture. Then there is the Environ- tions with the companies and are usually higher
mental Protection Agency (EPA) (Environmental for kerosene because it is consumed in remote
Protection Agency Act, 1994 (Act 490)) which rural areas (ESMAP 2006).
functions cut across all sectors.
The Petroleum Commission’s functions
include issuing licenses to operators and prospec-
International Aspects
tive operators, managing the use of petroleum
resources, and coordinating policies that relate to
Ghana, although not a member of the Organiza-
these functions. The NPA’s main function is to
tion for Economic Co-operation and Develop-
ensure efficiency, growth, and stakeholder satis-
ment (OECD), joined the OECD Development
faction in the sector through regulation and mon-
Centre on 6 October 2015. This center “helps
itoring. For instance, it monitors and regulates
decision makers find policy solutions to stimulate
petroleum prices in accordance with the pre-
growth and improve living conditions in develop-
scribed pricing formula and grants licenses to
ing and emerging economies” (OECD 2015).
service providers and marketing companies
Ghana is also a member of the Economic Com-
engaged in a business or commercial activity in
munity of West African States (ECOWAS) which
this downstream arena. The EPA is empowered to
promotes regional energy cooperation and inte-
manage, control, and monitor compliance of envi-
gration. In terms of the environment, Ghana is a
ronmental regulations within the petroleum
signatory to the United Nations Framework and
industry.
Kyoto Protocol. In 2003, the Government of
The GNPC (GNPC is akin to a National Oil
Ghana formally committed itself to implementing
Company (NOC)) is vested with exclusive power
the Extractive Industries Transparency Initiative
to intervene in the upstream sector as a “commer-
(EITI). However, until 2013 Ghana was only a
cial venture” and “undertake the exploration,
signatory for the mining sector and did not submit
development, production and disposal of petro-
its audits for oil and gas to the EITI (Ministry of
leum” (Petroleum (Exploration and Production)
Finance 2014).
Law, 1984 (PNDCL 84), s. 2(1)). No person,
Concluding Statements Anang T (2015) The sad story of Ghana’s cocoa industry
and the way forward. Ghana business news. Available
via https://www.ghanabusinessnews.com/2015/06/22/
There are varied challenges with the energy sector the-sad-story-of-ghanas-cocoa-industry-and-the-way-
in Ghana. Most of these are catalogued in the forward/
various policy documents. In recent times, BFT online Ghana (2015) The power sector, prospects &
Ghana has experienced persistent, irregular, and way to go. Available via http://thebftonline.com/fea
tures/opinions/16126/the-power-sector-prospects-way-
unpredictable power outages. Although the coun- to-go.html
try experienced similar power outages in 1983, Cavnar A (2008) Averting the resource curse in Ghana: the
1994, 1997–1998, and 2006–2007, none was as need for accountability. Ghana Center for Democratic
intense as the current situation. This energy crisis Development Ghana. Briefing Pap 19:3
Countrymeters (2016) Ghana population. Available via
threatens not only GDP growth but also public http://countrymeters.info/en/Ghana.%20
safety. The crisis has been attributed to Edjekumhene I, Cobson-Cobbold JC (2011) Low-carbon
overdependence on hydropower facilities which Africa. KITE, Ghana
are now plagued with low water levels. Edjekumhene I, Amaka-Otchere ABK, Amissah-Arthur H
(2006) Ghana: sector reform and the pattern of the poor
(Increasing energy demand due to changes in (energy use and supply). Paper presented at the Inter-
demographics, scheduled, and unscheduled main- national Bank for Reconstruction and Development
tenance of some power plants and low tariffs Meeting on Energy Sector Management Assistance
which are not cost reflective have been the other Program, Washington, DC.
Energy Commission (2006) Strategic national energy plan
reasons cited.) The government in attempt to solve (2006-2020)–main report. Available via http://www.
this problem is attracting more private sector par- energycom.gov.gh/files/snep/MAIN%20REPORT%
ticipation into the sector through IPPs who have 20final%20PD.pdf
begun to enter the electricity generation market Eshun G, Austin K (2016) Ghana: oil & gas regulation 2016.
International comparative legal guides. Available via
previously dominated by the public sector. How- http://www.iclg.co.uk/practice-areas/oil-and-gas-regula
ever, the industry is still beset with uncompetitive tion/oil-and-gas-regulation-2016/ghana#chaptercontent5
tariffs and the absence of credible off-takers. It is Ghana Statistical Service (2013) 2010 population & hous-
expected that with strong demand, a clear regula- ing census: national analytical report. Available
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national_energy_policy.pdf
Government of Ghana (2015) The budget statement and
economic policy of the government of ghana for the
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UDGET%20-%20HIGHLIGHTS.pdf
This section provides information Institute of Economic Affairs (2010) Natural resource man-
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pdf
G
Ghana: Mineral Policy the 2010 population census are the Akans who
form 47.5% of the population, followed by
Joe Amoako-Tuffour Mole-Dagbon 16.6%, Ewe 13.9%, and
African Center for Economic Transformation Ga-Dangme 7.4%, with the others (Gurma,
(ACET), Cantonments, Accra, Ghana Guan, Grusi, Mande-Busanga) making up
approximately 15%. The top three languages
widely spoken are Twi, Ewe, and Fanti.3
About Ghana According to the 2010 population census,
about 74% of the population (over 11 years)
1. Officially called the Republic of Ghana, Ghana is literate, about one-fifth can read and write in
is a sovereign unitary presidential constitu- English language, and about 71.2% of the pop-
tional democracy, located along the Gulf of ulation profess the Christian faith, followed by
Guinea and the Atlantic Ocean, in the subre- Islam (17.6%). A small proportion of the pop-
gion of West Africa.1 Ghana has a land mass of ulation profess traditional religion and 5.3%
238,535 km2 and shares boundaries with Cote are officially not affiliated to any religion.
D’Ivoire on the west, Togo in the east, and 3. Ghana has a youthful population of nearly 40%
Burkina Faso in the north. Established in the under 15 years and a small elderly population
1900 as the British Gold Coast, it gained inde- of 4.7% (65 years and over). Urbanization is
pendence in 1957 and is considered one of the sharply on the rise as the proportion of the
more stable countries in the subregion since its population living in urban areas increased
transition to parliamentary multiparty democ- from 43.8% in 2000 to 50.9% in 2010. About
racy in 1992.2 41% of the economically active population
2. A multicultural nation, Ghana has a population (aged 15 years and over) identify themselves
of approximately 27 million (2014), growing at as skilled agricultural, fishery, and forestry
an estimated rate of 2.4% annually, with a workers. Approximately 65% of the economi-
variety of ethnic, linguistic, and religious cally active population are self-employed. The
groups. The major ethnic groups according to private sector remains the largest employer,
accounting for 93% of the economically active
1
Wikipedia, accessed June 1, 2016.
2
BBC Monitoring www.bbc.com/rev/worldAfrica.
Prepared by Joe Amoako-Tuffour Director of Research,

3
African Center for Economic Transformation, Ghana. Ghana Statistical Service.

DOI 10.1007/978-3-642-40871-7_165-1
2 Ghana: Mineral Policy
persons, of which the private informal sector and accounts for 95% of Ghana’s mineral
remains the largest employer (86%) of the eco- revenue.
nomically active population.
Classification of Reserves
7. Ghana is endowed with a range of minerals,
The Economy though only a few are actively exploited. Gen-
erally, these resources are categorized into tra-
4. Gold, cocoa, and recently oil and gas form the ditional and nontraditional minerals. The latter
backbone of Ghana’s economy. Ghana’s econ- include gold, diamond, manganese, and baux-
omy began a sustained recovery in the mid- ite. The rest constitute nontraditional minerals.
1980s (following a near collapse in the 1970s) Though Ghana reportedly has various geolog-
that continued through the 2000s due to ical data collection, especially in relation to the
improvements in macroeconomic manage- traditional mineral sector, data on reserves are
ment, high commodity prices, and in recent very difficult to come by. The US Geological
years, the advent of oil production and related Survey only report reserves data for gold on
investments in mining and oil. The economy Ghana in its flagship Mineral Commodity
grew from its annual average of 6.5% in the Summaries. Ghana’s gold reserves of about
2000s to 14% in 2011. The overall real GDP 2000 metric tonnes constitute about 3.1% of
growth, however, has since lost its momentum, global gold reserves.4
slowing down to 7.9% in 2012 and trended 8. For bauxite, the Kibi reserves are estimated at
downward to 4% and 3.9% in 2014 and 2015, about 180,000 metric tonnes, while the
respectively, much of which can be attributed Anyinahin bauxite reserves range between
to persistent fiscal imbalances, mounting pub- 350,000 and 700,000 metric tonnes.5 It is
lic debt burden, and a widening infrastructure unclear the amount of reserves at Awaso
gap, especially energy. home of the country’s only bauxite mine.
5. According to the Ghana Statistical Service, the According to Wikipedia, Ghana’s manganese
services sector led by telecommunication, reserves exceed 60 million metric tonnes.
banking, and other financial services has However, KPMG International (2014)
become the main driver of growth in Ghana. reported (citing Consolidated Minerals, a
The sector contributes about 51.9% to GDP, Jersey-based company which owns 90% stake
followed by natural resource extraction at in Ghana Manganese Company) that as of June
26.6%, and agriculture which has continually 2011, the company estimated reserves of man-
slackened in recent years to about 21.8% as at ganese carbonate at 24.4 million metric tonnes
2015. Relative to sub-Saharan Africa norm, with a manganese content of 29%. Reserve
Ghana generally possess sound economics figures for diamonds are very difficult to
and business environment and fairly welcom- obtain.
ing to foreign direct investment. 9. Beyond the traditional minerals, Ghana’s non-
traditional minerals include salt, clay, iron,
phosphate, copper, nickel, chromium, and ura-
nium. Reserve figures on these minerals are not
Ghana’s Mineral Industry available at the time of this writing. The growth
index of mineral output in Ghana is captured in
6. Mining is a century old industry in Ghana.
Ghana remains the second largest gold pro-
ducer in Africa after South Africa and tenth 4
United States Geological Survey (2016).
largest globally. With an average annual pro- 5
The Chief Executive Officer of the Minerals Commission
duction of approximately 2.6 million ounces indicated in a conversation published on the website of
since 2003, gold is Ghana’s leading mineral Ghana Chamber of Mines in 2015.
Ghana: Mineral Policy 3
Ghana: Mineral Policy, Gold Diamond

Fig. 1 Growth index of
200% Manganese Bauxite
mineral output (Source:
ACET, GCM data with
2003 as base year) 150%
100%
50%
0%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: ACET, GCM data with 2003 as base year
Fig. 1. Gold is the only mineral with consistent in Ghana are created by the large-scale min-
rise in output since 2003. With the exception of ing and quarrying sector employing about
diamond, noticeable increase in production of 19,000 workers7 and more if the direct and
other minerals is due largely to privatization of induced effects are factored in. It is estimated
the state companies responsible for manganese by the Minerals Commission of Ghana that
and bauxite production. Exports from the sec- additional 1 million people (though difficult
tor have been on a steady rise since 2003 to confirm) are engaged in small-scale mining
peaking in 2012 due largely to the hike in activities across the country.
gold prices experienced in 2012 and to the 11. Ghana’s long history in mining and the setting
inflow of new foreign investments in the sector up of training institutions solely for mining
(Fig. 2). On the average, solid mineral exports has endowed the country with a large pool of
constitute 40% of all Ghana exports. Foreign skilled and semiskilled labor from which new
investment in the sector has been steady at an mining firms can tap into to develop new
average of US$776 million between 2003 and fields and operate mines. Indeed, most mining
2012 with keen investor interest in gold companies in the West African subregion tap
production. into these experts to train, develop, and oper-
ate mining field in other countries.
10. Ghana’s fiscal benefits from mining activities

General Approach to Mineral Policy
have been notable. Between 2003 and 2014,
the sector on average contributed 16% to the
12. Current policy direction in the mining sector
domestic tax revenue and also led in royalty
focuses on creating “an enabling environ-
and corporate income tax payments. For
ment” for the private sector to undertake
example in 2012, royalties and corporate
exploration and production activities. This
income tax payments were $916 million and
reflects a diminished role of the state in the
$228 million, representing approximately
mining sector and a focus on attracting inves-
16.9% and 4.2% of total tax revenues, respec-
tors into the sector. This policy approach was
tively.6 About 1.6% of all formal sector jobs
adopted as part of the mining sector reforms
6 7
https://eiti.org/files/2012-2013_final_Mining_Sector_ Ghana Living Standard Survey (GLSS6) conducted
Report.pdf accessed May 15, 2016. in 2014.
Ghana: Mineral Policy, 6000

Fig. 2 Mining sector
exports and imports (US$, 5000 Exports
millions) (Source: ACET
Ghana Chamber of Mines, 4000 Imports
Bank of Ghana)
3000
2000
1000
0
2009 2010 2011 2012 2013
Source: ACET Ghana Chamber of Mines, Bank of
Ghan
begun in the mid-1980s and in line with nearly three decades up to the early 1980, no
worldwide trends spearheaded by the World new mine was opened in Ghana.10
Bank.8 The decade prior to the reforms was 14. During the 1990s, the government continued
characterized by steady decline in mineral with the mid-1980s reforms. Again, reforms
production, macroeconomic instability, and focused on various fiscal incentives in order
lack of investment in the mining sector. to attract investment into the sector. Existing
Reforms were aimed at halting the decline in mines were rehabilitated with resources from
production by attracting financial resources to multilateral and bilateral donors. Some mines
existing mines for rehabilitation and upgrade were put on management contract in order to
of mine infrastructure, improving manage- improve efficiency. Most notably, Ashanti
ment practices in state-owned mines, and Goldfields obtained substantial funds to
instituting legal measures to attract invest- undertake expansion and rehabilitation.
ment in exploration for new mines and expan- Tarkwa gold mine, Prestea gold mine, and
sion of old ones.9 Akwatia diamond mine were given out to
13. The current approach contrasts sharply with various investors under management contract
the regime that emerged and operated for agreements.11 This was followed by divest-
almost two decades after independence, char- ment of the state from various mines in order
acterized by an active and strong state to focus on its role as a regulator in line with
involvement in all sectors of the economy, worldwide trends in the mining sector.12
including mining. The active role of the state 15. The period between 1983 and 1998 saw the
reflected developments in the developing establishment of new mines and rehabilitation
world at the time where permanent sover- of existing mines. By 1998 about 237 compa-
eignty was declared over natural resources. nies (154 Ghanaian and 83 foreign) were
By the mid- to late 1970s, attempts to attract
foreign investment into mining were unsuc-
10
cessful partly because of the threat of state Aryee (2001).
11
capture and partly for a host of other reasons, Akabzaa and Darimani (2001).
12
including the lack of foreign exchange to For example, in the case of Ashanti Goldfields, the state
rehabilitate and maintain existing mines. For reduced its stake from 55% in 1993 (through initial public
offering and subsequent sale of shares on the Ghana Stock
Exchange) to 19% in 1998. The Ghana Bauxite Company
8
saw the state’s stake fall from 55% to 20%. The govern-
World Bank (1992), Strategy for Africa Mining, World ment sold outright Dunkwa Goldfields and Ghana National
Bank Technical Paper 181, Washington D.C. Manganese Corporation. Other mines were given out on
9
Akabzaa and Ayamdoo (2009). contract and eventually sold to foreign interest.
prospecting for gold, while 23 were granted (PNDCL 218), PNDCL 219 (which established
mining leases.13 By 2007 there were about the Precious Minerals Marketing Corporation),
160 companies operating in the mining sector and a new Minerals and Royalty Regulations
followed by a period of mergers and acquisi- (LI 1349) (Tsikata 1997).
tions. The ownership structure of the 18. The Ministry of Lands and Natural Resources
remaining large mining companies is private, is entrusted with the management of Ghana’s
largely foreign-owned with government hold- land, forest, wildlife, and mineral resources.
ing a minority equity interest in all but The Ministry’s key mandate in relation to
Newmont mine. Much mining operations in mineral resources is in policy formulation
Ghana are in the hands of ten large foreign- and coordination; monitoring and evaluation;
owned mining companies who in turn engage validation of policies, programs, and projects;
the services of numerous contract mining and supervision of sector departments and
companies, mineral exploration companies, agencies. Established by the Minerals Com-
and companies that provide allied services.14 mission Law, 1986 (PNDCL 15), the Min-
16. The government has made various changes to erals Commission is the main government
the policy approach adopted in the mid-1980s, agency responsible for governance of the
especially in the areas of taxation to withdraw mineral sector.
some incentives offered to foreign investors. 19. Following the adoption of the 1992 Constitu-
The government has also introduced some tion, the Minerals Commission Act, 1993 (Act
regulations in the sector, compelling mining 450), was passed to reaffirm its multifaceted
companies to procure greater amounts of role in the mining sector. Act 450 further man-
inputs from the country (on the back of grow- dates the Commission as responsible for the
ing demands for local content). These changes day-to-day administration, regulation, and
are supported by the Africa Mining Vision management of Ghana’s mineral resources.
(AMV) and ECOWAS Minerals Development The Commission is mandated to advise the
Policy and by the government. In 2015, the sector minister on matters concerning mineral
government launched its maiden minerals and policy and on granting of reconnaissance
mining policy and is currently engaged in a license, prospecting license, and mining
process to develop a Country Mining Vision lease. Although originally conceived as a reg-
(CMV) in line with the AMV. ulator, the Commission has over time also
emerged as the promoter for the exploitation
of Ghana’s mineral resources.
Legislative and Regulatory Framework 20. The Precious Minerals Marketing Company
and Institutions (PMMC) was first established as Ghana Dia-
mond Marketing Board in 1963 to purchase
17. The change in policy direction in the mid- and market the country’s diamonds. PMMC
1980s was accompanied by changes in the was subsequently charged with providing
regulatory and institutional frameworks that official marketing services for small-scale
govern the sector. Notable among them were miners as a way of transforming the small-
the passage of the Minerals and Mining Law scale mining sector. PMMC operates gold
(PNDCL 153), PNDCL 154 (which established and diamond purchasing offices in Accra,
the Minerals Commission), the Mercury Law Tarkwa, and Bolgatanga and has licensed
(PNDCL 217), the Small-Scale Mining Law buying agents throughout mining areas in
the country. It operates a jewelry plant that
13 converts raw precious minerals into jewelry.
Minerals Commission Annual Report (1998).
14 21. The Office of Administration of Stool Lands
Joe Amoako-Tuffour (2013), Ghana’s Mineral Fiscal
Regime: A Baseline Study, Study prepared for the African (OASL) represents the group of traditional
Centre for Economic Transformation, Ghana. authorities and representatives of
communities on whose land mining activities content or localization drive that aims at
take place. Apart from the collection and increasing mining benefits that remain in the
onward distribution of mineral royalties to country. LI 2175 focused on compensation
stool lands, the relevance of the OASL in and resettlement, an area which produces sub-
mining sector governance is in compensation stantial conflicts around mining activities.
negotiation and resettlement after licenses are These changes, notwithstanding, the country
issued for mining activities be in reconnais- is still struggling to contain an explosion in a
sance, prospecting, and extraction. largely unregulated and environmentally
22. In 1994, the Environmental Protection Agency destructive artisanal and small-scale mining
was established and a new mining environ- activities. The Minerals Commission in 2016
mental guidelines were developed. The table decided not to recognize them as illegal oper-
in Annex 1 summarizes the evolution of legis- ators and begun the process to register them
lative and regulatory framework that applies to and support them in operating within the law.
the mining sector. Also in relation to the insti- However, the new government which came
tutional framework, the Ghana Extractive into office in 2017 signaled its determination
Industry Transparency Initiative (hosted by to stop the destructive impact of unregulated
the Ministry of Finance) has emerged as an small scale and illegal mining on the environ-
important actor in the mining sector. Its main ment, especially on water bodies, overturning
function is to collect information on tax reve- the perception that these mining activities are
nues from relevant government agencies as the linchpin to rural economic development.
well as mining companies, reconcile them, 25. Over the past decade, the sector has benefited
and share with the public with aim of increas- from sound policy and regulatory interven-
ing transparency in the mining sector. tions which compares well with best interna-
23. In 2006, the government consolidated some tional practices. Ghana scored 63 and placed
mining laws in the sector (particularly 15th out of 58 countries on the Natural
PNDCL 153 and PNDCL 218) into Minerals Resources and Governance index, which
and Mining Act (Act 703). Notable among coincidentally is the best score for any Afri-
the changes made to the regulatory frame- can country. Transparency and disclosures in
work were the concessions (largely fiscal) mining activities have also increased due to
granted to investors under the new mining Ghana’s ascension to the EITI initiative as at
law. The Act provided further reliefs (in the 2007. The mining code is fairly stable with
form of reduction in tax rates) that apply to minor fiscal revisions in 2010, 2013, and
the sector. Corporate income tax rate, reduced 2015. Government’s recent policy interven-
from 45 to 35% in 1994, was further reduced tions in the sector have focused on
to 25% in 2006. This was, in spite, of increas- streamlining small-scale mining operations
ing gold prices on the international markets. and promoting responsible mining in Ghana
The aftermath of the world financial crisis in to promote sustainable economic growth.
2008 (as well as change in government in
2009) ushered a new phase in the mining
sector characterized by some major changes Annex
to the mining code. Royalty rate was fixed at
5%, instead of a range from 3% to 6% when Annex 1 Chronological List of Legal
almost all companies were paying the lower Instruments and Guidelines that Applies to
rate of 3% (Government of Ghana 2011). the Mining Sector
24. In 2012, six regulatory instruments were 1. Supreme Military Council Decree 5, 1975
passed on the back of the Minerals and Min- 2. Investment Code of 1981 (Act 437)
ing Act. Two of those regulations (LI 2173 3. Minerals and Mining Law, 1986 (PNDCL
and LI 2174) support widespread local 153)
(a) The Minerals and Mining (Amendment) (c) Minerals and Mining (Compensation and
Act, 1994 Resettlement) Regulations, 2012
4. Minerals Commission Law, 1986 (PNDCL (LI 2175)
154) (d) Minerals and Mining (Licensing) Regu-
5. The Minerals and Royalty Regulations, 1987 lations, 2012 (LI 2176)
(L.I. 1349) (e) Minerals and Mining (Explosives) Regu-
6. Mercury Law, 1989 (PNDCL 217) lations, 2012 (LI 2177)
7. Small-Scale Gold Mining Law, 1989 (f) The Minerals and Mining (Health, safety
(PNDCL 218) and Technical) Regulations, 2012
8. Precious Minerals and Marketing Corpora- (LI 2182)
tion Law, 1989 (PNDCL 219) 26. Income Tax Act, 2015 (Act 896)
9. Minerals Commission Act, 1993 (Act 450) 27. Code of Practice for Small-Scale Gold Min-
10. Local Government Act, 1993 (Act 462) ing Operations
11. Office of the Administrator of Stool Lands 28. Ghana’s Mining and Environmental
Act, 1994 (Act 481) Guidelines
12. Environmental Protection Agency Act, 1994 29. Mine Closure and Post-closure Policies
(Act 490) 30. Guidelines for Corporate Social Responsibil-
13. Mining Environmental Guidelines, 1994 ity in Mining Communities
14. Water Resources Commission Act, 1996
(Act 522)
15. Operational Guidelines for Mineral Explora-
References
tion in Forest Reserves for selected Compa-
nies, 1997 Akabzaa TM, Ayamdoo CA (2009) Towards a fair and
16. Forestry Commission Act, 1999 (Act 571) equitable taxation for sustainable development financ-
17. Environmental Assessment Regulations, ing in Africa: a study on trends and nature of taxation in
1999 (L.I. 1652) Ghana’s extractive sector. ISODEC, Accra
Akabzaa T, Daramani A (2001) A study of impacts of
18. Review of Mining Environmental Guide- mining sector investment in Ghana on mining commu-
lines, 1999 nities. Report prepared for the technical committee on
19. Internal Revenue Act, 2000 (Act 592) structural adjustment participatory review initiative on
20. Environmental Guidelines for Mining in Pro- Ghana
Amoako-Tuffour J (2013) Ghana’s mineral fiscal regime: a
duction Forest Reserves in Ghana, 2001 baseline study. African Center for Economic Transfor-
21. Minerals and Mining Act, 2006 (Act 703) mation, Cantonments Accra
22. Ghana Revenue Authority Act, 2009 Aryee BNA (2001) Ghana’s mining sector its contribution
(Act 791) to the national economy. Resources Policy 27:61–75
Government of Ghana (2011) 2012 Annual Budget State-
23. Guidelines for the Preparation of Feasibility ment and Economic Policy. Government of Ghana,
study reports, 2009 Accra
24. Minerals and Mining (Amendment) Act 2010 KPMG Global Mining Institute, Ghana Country Mining
(Act 794) Guide 2014 Accessed 29 May 2016
Tsikata F (1997) The vicissitudes of mineral policy in
25. Minerals and Mining Regulations, 2012 Ghana. Resource Policy 23:9–14
(a) Minerals and Mining (General) Regula- United States Geological Survey. (2016)
tions, 2012 (LI 2173) World Bank (1992) Strategy for African mining, World
(b) Minerals and Mining (Support Services) Bank technical paper number 181 Washington DC:
The World Bank
Regulations, 2012 (LI 2174)
M
Mexico: Mineral Policy (http://www.inegi.org.mx/est/contenidos/proyectos/

ce/ce2014/default.aspx).
Gian Carlo Delgado Ramos Distribution of wealth is notoriously uneven.
Interdisciplinary Research Centre on Sciences and On the one hand, indigenous people (25 million
Humanities, National Autonomous University of self-identified) and women figure as the poorest
Mexico, Mexico City, Mexico among the 55.3 million inhabitants living in pov-
erty in 2014. On the other, from a total population
of 122 million inhabitants, 1% owned, that same
year, 21% of the national income (Esquivel 2015).
General Information on Mexico
Mexico covers an area of 1.96 million km2 and

Need of Minerals: Reserves, Production,
accounts for 11,593 km of coast line. Overlapping
Exports, and Imports
the Tropic of Cancer, Mexico is a megadiverse
country, holding between 10% and 12% of the
Mexico has five main metallogenic belts and three
known species worldwide across prodigious and
with a NW and SE orientation: Occidental Belt,
diverse ecosystems from arid deserts to tropical
Central Belt, and Oriental Belt. The remaining
rainforests and coral reefs.
metallogenic belts have an E-W orientation:
Mexico’s Federal Republic is composed of
Parras Belt and Volcanic Belt. Mineral deposits
32 states and 2457 municipalities. The govern-
are diverse, ranging from those known as
ment structure is comprised of the Presidency
epithermal deposits (such as those in Real del
and its secretariats, the Legislative which is
Monte, Fresnillo, or Taxco) to skarn (Mezcala,
arranged into a bicameral Congress (Senate and
Naica, Charcas), porphyry (Cananea, La Caridad,
Chamber of Representatives), and the Judicial
Cerro San Pedro), IOCG iron deposits (Peña
power. States also have their executive, legisla-
Colorada in Colima), and copper red-bed deposits
tive, and judicial branches.
(Las Vigas in Chihuahua), among other types. See
The country is the second largest economy in
Fig. 1 for the location of main mineral
Latin America. In 2015, the GDP almost reached
occurrences.
US$ 1.3 trillion. The primary sector of the econ-
Other mineral reserves include those of barite
omy generates 3.3% of the total GDP, secondary
(mainly in Nuevo León, followed by Coahuila and
activities (where mining is included) generates
Zacatecas with shared deposits in Jalisco-
32%, tertiary activities generates 59%, and the
Michoacán and Oaxaca-Puebla), titanium (such
remaining 5.9% corresponds to collected taxes
as the occurrences in Baja California, Baja
DOI 10.1007/978-3-642-40871-7_167-1
2 Mexico: Mineral Policy
Mineral Main deposits location

Gold Sierra Madre Occidental, mainly in Sonora, Zacatecas and Chihuahua, followed by Durango,
Guerrero, San Luis Potosí, Guanajuato, Baja California, Oaxaca, Sinaloa, Aguascalientes and the
state of Mexico.
Silver Sierra Madre Occidental and Oriental, mainly in Zacatecas followed by Chihuahua, Durango,
Sonora, Oaxaca, Guanajuato, San Luis Potosí, Mexico, Queretaro, Coahuila, and Guerrero.
Lead Zacatecas, Chihuahua, Durango, followed by Mexico, Aguascalientes and Oaxaca
Copper Copper and molybdenum occurrences are for the most part located in Sonora. Other less
Molybdenum productive occurrences, mainly of copper, are those of Chihuahua, San Luis Potosí and
Zacatecas.
Zinc Zacatecas, Chihuahua, Durango, followed by Mexico, Aguascalientes, Guerrero and San Luis
Potosí
Bismuth Coahuila
Manganese Mainly in Hidalgo with smaller occurrences in Veracruz
Iron Colima, Michoacán, Coahuila, Durango and Sonora
Phosphate Mainly Baja California Sur with other smaller occurrences in Tamaulipas.
Source: map of main mining projects by type of mineral elaborated with GeoInfomex (mapasims.sgm.gob.mx) and table based on data of
GeoInfomex and the Mexican Geological Service, including the 2014 Statistical Yearbook of Mexican Mining.
Mexico: Mineral Policy, Fig. 1 Major mineral occurrences in Mexico (selected minerals)
California Sur, Sonora, Tamaulipas, Colima, and salt; seventh in gold, selenium, plaster, and
Oaxaca, Guerrero, or Chiapas), lithium (Sonora diatomite; ninth in manganese and graphite; and
and Zacatecas), platinum (Sinaloa), and uranium tenth in world copper production (SGM 2016).
(mainly in Chihuahua, Nuevo Leon, Sonora, The value of mining production has increased
Durango, Oaxaca, and Baja California Sur). from MXN $ 45.2 billion (It refers to a thousand
The official geographical information system millions or 109) in 2002 to MXN $ 264.3 billion in
of mineral deposits, activities, and other mining- 2015; a value lower than that of 2012 – the best
related information is available at http:// year in the last decades when production value
mapasims.sgm.gob.mx/GeoInfoMexDB reached MXN $ 291.1 billion (SGM 2015, 2016).
Mining and metallurgic activities combined
reached MXN $ 417 billion in 2015, 37% more
Mineral Production
than in 2011 (SMG 2016). Precious metals
Mexico was in 2015 the worldwide leading pro-
represented 30.5%, industrial minerals 22.5%,
ducer of silver; the second in fluorite; third in
and nonmetallic minerals 47% (Ibid). In terms of
bismuth, celestite, and wollastonite; fifth in lead,
volume, mining productivity (comprises both
cadmium, barite, and molybdenum; sixth in zinc
Mexico: Mineral Policy 3
volume and cost basis) has increased 4.7% annu- imports (mainly aluminum [32% of the total],
ally during the period 2001–2012, more than the iron [13.3%], copper [10.3%]); and nonmetallic
double experienced during the 1990s when pro- minerals 29% (coal leading with 9.7% and sodium
ductivity increased only at a rhythm of 2% (DOF with 3.4%); and the remaining 4% corresponds to
2014). In 2015, Mexico extracted 1550 million precious metals (gold, palladium, silver, and plat-
tons of materials from the Earth’s crust, almost inum). Most of Mexico’s mineral imports, in
32% more than in 2014. Limestone, sand, basalt, terms of value, occurred from the USA (50.6%),
gravel, and other stone aggregates represented Europe (9.4%), India (6%), China (4.6%), and
89% of the total, mostly stimulated by the reno- Australia (4.2%) (SGM 2016). In relation to the
vation and expansion of domestic infrastructure metallurgic industry, production has increased
(based on SGM 2016). from 263.7 million tons in 2010 to 287.2 million
Main producer states in terms of value were tons in 2014 (SGM 2015). Major metallurgic pro-
Sonora (27.9%), Zacatecas (22.9%), Durango duction, in terms of weight, corresponded to ferro-
(10.1%), Chihuahua (8.7%), and Coahuila alloys with 88% of the total (Ibid). Apparent
(8.4%) (Ibid). Nevertheless, just ten municipali- national consumption of steel was 51 million
ties from three states generated 46.5% of the total tons in 2014, about 33% more than 2010 (Ibid).
value of the national mining production in 2014 Exports of raw materials and products from the
(SGM 2015). metallurgic industry reached a value of US$ 14.6
billion in 2015, while imports reached US$ 8.1
billion (SGM 2016). Mining and metallurgic trade
Exports and Imports
balance went from a deficit during 2001–2005 to a
Mexico commercialized 1% of minerals globally
surplus from 2006 onward. In 2015, surplus
in 2001, reaching 1.7% by 2012 (DOF 2014). The
reached a positive balance of US$ 6.4 billion,
volume of minerals mobilized in 2014 thru Mex-
yet it represented a reduction of almost 50% of
ican ports, for the most part – measured in terms of
surplus in relation to 2012 when the balance
value – gold (29.5%), copper (17.2%), silver
reached US$ 12.6 billion (based on SGM 2016).
(16.1%), and lead (10.9%), has been estimated at
Figure 2 shows the evolution of exports and
28.8 million tons. (Precious metals represented
imports between 2010 and 2015.
44% of exports value, industrial minerals 49%,
and nonmetallic minerals 7% (Ibid).) Exports
value in 2015 kept dropping, reaching US$ 14.6
billion in 2015 or 55% less than in 2012. Mining Industry Structure
More than half of 2015 mineral exports (52%)
had the USA as final destiny (mainly palladium Mining activities generated 0.98% of the total GDP
[99% of all volume exported], gold [92%], barite in 2015, while the metallurgic activities added
[81%], fluorite [40%], lead [28%], zinc [16%], 1.95% of the total GDP (https://www.camimex.
molybdenum [16%], and copper [14%]), 16.2% org.mx/index.php/secciones1/publicaciones/informe-
Europe (mainly bismuth [82%], fluorite [29%], anual/). Both recorded 344,912 direct jobs in 2015
molybdenum [26%], zinc [23%], and lead which is about 0.6% of Mexico’s economically
[17%]), 10.4% China (mainly copper [62%], sil- active population: 67.5% of jobs corresponded to
ver [41%], and lead [21%]), and 7% South Korea the metallurgic industry. Indirect employment has
(mainly molybdenum [33%], lead [18%], zinc been estimated at 1.7 million jobs.
[32%], and silver [12%]) (SGM 2016). There are around 3700 mining and mining-
The value of mineral imports in 2014 increased related companies in Mexico, including intermedi-
4% in relation to 2013, while in 2015, it decreased aries (www.desi.economia.gob.mx/DES/) which
from US$ 8.6 billion in 2014 to US$ 8.1 billion. by the end of 2015 served 1558 operating mines,
Industrial minerals represent 67% of Mexico’s
Mexico's mineral exports and imports, 2000 -2015

(based on SGM, 2016)
25,000
Exports
US million dollars
20,000 Imports
15,000
10,000
5,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Mexico: Mineral Policy, Fig. 2 Mexico’s mineral exports and imports, 2000–2015
1156 exploration projects, and 19 metallurgic facil- stock if the value of the target company exceeds
ities (www.camimex.org.mx). MXN $ 4 billion.
Extraction of gold, silver, lead, zinc, copper,
molybdenum, manganese, and cadmium is highly
or totally controlled by big-size companies (from National Mineral Policy
97% to 100% of total production); 84.6% of iron
extraction is carried out by big-size companies Mexico’s mineral potential is without question. In
and 14.8% by midsize companies; barite is extra- fact, the National Development Plan 2013–2018
cted 59% by midsize companies and the of the federal government considers mining and
remaining 41% by small-size companies (SGM metallurgic activities as strategic (DOF 2014).
2015, 2016). With that in mind, the Secretariat of Economy
Mexico is in the fifth position of the Behre elaborated the existing Mining Development Pro-
Dolbear’s 2015 ranking of countries for mining gram (approved in April, 2014; DOF 2014) which
investment (www.dolbear.com). By the end of proclaims four main goals:
2015, foreign mining production was carried out
in 927 locations by 267 foreign companies, 1. Increase investments and promote competi-
mostly from Canada and the USA (see Fig. 3); tiveness (e.g., by extending the Mexican Geo-
64% of the projects were associated with precious logical Service research with the purpose of
metals, 14% with polymetallic minerals, 13% delivering more precise information for invest-
with copper, and 6% with iron. ment decision-making and by increasing legal
Total investment in the mining sector, domestic certainty to sectorial investments while simpli-
and foreign, reached US$ 4.6 billion in 2015 and fying legal procedures)
US$ 4.8 billion in 2014, a cutback of 24.7% in 2. Procure funding for extractive activities and its
relation to 2013 and of 38.5% in relation to 2012 value of chain (e.g., thru the creation of
(year of the highest investment ever). Total accu- regional mining clusters, by supporting mining
mulated investment from 2001 to 2015 is about councils at the state level and enhancing, diver-
US$ 46.8 billion. sifying, and expanding Mexico’s Mining
Foreign direct investment participation has no Development Trust (Fideicomiso de Fomento
limitations, yet a clearance is required for those Minero) portfolio and terms credit, as well as
investors who intend to exceed 49% of the capital other public and private funding options
Mexico: Mineral Policy,

Fig. 3 Foreign mining
Foreing mining companies in
companies in Mexico, 2014 Mexico, 2014
South
Japan UK Korea Others
2% 1% 1% 6%
China
5%
Australia
3%
USA
17%
Canada
65%
3. Support the growth and capitalization of small- 44.8% of the national territory (or 877,717 km2);
and midsize mining and metallurgic businesses increase the amount of loans allocated and the
(private and socially owned) (It refers to micro number of companies assisted; and reduce the
mining undertakings, family owned or cooper- time necessary to evaluate and issue mining titles
atives. It’s mainly focused but not limited to (from 140 days to 90 days).
construction materials and stonework.), Despite the intentions to strengthen the value
including actions for transferring know-how chain of the mining sector, there is a continuity on
and for the introduction of new efficient and an export-led scheme (as the data presented above
sustainable technologies shows). Improving conditions for exporting as
4. Modernize the sector’s regulation and proce- many minerals as possible is clearly a motivation.
dures to increase its accountability (Ibid) (This can be as well concluded from the outlook
studies carried out by the Mexican Geological Ser-
In addition, special interest has been expressed vice at the state level, available online: www.gob.
in relation to the advancement of the exploitation mx/sgm/articulos/consulta-los-panoramas-mineros-
of industrial materials, particularly iron and rare estatales. Data from the National Chamber of the
earth deposits; on the promotion of high impact Iron and Steel Industry of Mexico show an increas-
mining projects (which are not defined); and ing negative trade balance (Mexico is currently
regarding the need for expanding the financial exporting 4.3 million tons and importing 13.7 mil-
support to metal processing plants, smelters, and lion tons of steel, mainly to assemble vehicles),
collection facilities, as well as to those economic decreasing investments in the sector (from US$
agents involved in the commercialization of min- 2557 million in 2013 to US$ 1311 million in
erals and mineral concentrates. 2015) and a persistent reduction in employment
The metrics proposed for evaluating the Pro- created since 2010 (www.canacero.org.mx/Es/
gram are reach 45 points in the Behre Dolbear’s assets/infografia.pdf).) Yet there is a lack of public
index (in 2013 Mexico had 43.1 points; by 2014 it transparency and accountability by the government
already has 46 points); expand the geological agencies regarding future minerals demand, national
cartography at a 1:50,000 scale, from 35.8% to production and export capacity building, and the
associated socioecological implications. At the of Economy. Mining concessions grant the right
same time, there is not a clear-cut vision to for exploiting all types of minerals, excluding oil
strengthen the relationship between mining and the and gas and radioactive materials. Titles for min-
metallurgic-mechanical industry. Thus, the possibil- eral exploration and exploitation are granted for
ities to foster national value-adding processes, in a 50 years, renewable for a second period of the
sustainable and socially responsible manner, are same length. In both cases, a first-come, first-
certainly not being fully pursued, specifically in served approach has been established for allocat-
those areas where most of the value is generated ing titles, yet mining rights and surface rights are
but also in relation to know-how and innovation in separated. (Mining rights are separated from sur-
manufacturing machinery (currently imported from face rights; therefore, companies must buy or rent
Germany, Japan, and the USA). This issue may land with the expressed consent of landowners.
change as more attention is paid to the domestic Mining companies may have access to the surface
market because of an eventual reduction of com- of the area covered by the mining title through
mercial relations with the USA. This seems to sug- temporary occupation, a sort of mandatory lease
gest the “made-in-Mexico” initiative (February (see: www.economia.gob.mx/files/comunidad_
2017) and the intentions of Giant Motor’s negocios/industria_comercio/informacionSectorial/
(controlled by Carlos Slim’s financial services con- minero/guia_de_ocupacion_territorial_0513.pdf).)
glomerate) of manufacturing a made-in-Mexico During 2001 to 2012, 28,807 titles were
electric vehicle by 2018. approved, covering 61.7 million ha. Only
A long-term vision Program may be part of a 198 titles or 0.68% of total titles granted allowed
profound transformation of Mexico’s productive the control of 34.6% of land area concessioned to
matrix, one aimed toward a more knowledge- mining activities during that period (DOF 2014).
intensive, low-carbon, and sustainable economy, Between 2013 and 2015, almost 3000 new titles
a context in which energy consumption efficiency or renovations were granted (for a full list of such
and recycling are two key actions to confront titles, see www.siam.economia.gob.mx/es/siam/
environmental constraints, material supply risk, 2015).
and reserve depletion. However, currently there Mining activities are regulated by multiple
is not a specific federal program for metal and laws, the core one being, the Ley Minera of 1992
scrap recycling despite the fact that the country (latest amendment: August, 2014) (see www.
disposes of about 1.1 million tons of metals annu- diputados.gob.mx/LeyesBiblio/pdf/151_110814.
ally of which only 39% are in the best case pdf) and its latest rules of procedure of 2012
recycled (SEMARNAT 2013). Due to Mexico’s (Reglamento de la Ley Minera; latest amendment:
low technological development in the metal October 2014). Environmental aspects are regu-
recycling sector, a great part of the collected lated by the Ley General de Equilibrio Ecológico
metals – formally and informally by waste y Protección al Ambiente (latest amendment:
pickers – are exported and processed elsewhere. May, 2016) (see www.diputados.gob.mx/
Major challenges therefore are the high degree of LeyesBiblio/pdf/148_130516.pdf) and five envi-
informality, the lack of sufficient data, and a weak ronmental standards (NOM-120-SEMARNAT-
regulatory framework. 2011, NOM-141-SEMARNAT-2033,NOM-155-
SEMARNAT-2007, NOM-157-SEMARNAT-
2009, NOM-159-SEMARNAT-2011); water con-
Regulatory Framework cessions and regulations are regulated by the Ley
de Aguas Nacionales (latest amendment: March,
According to Mexico’s Federal Constitution, min- 2016) (see www.diputados.gob.mx/LeyesBiblio/
erals are property of the nation, and thus, its pdf/16_240316.pdf) Water concessions and land
exploration and exploitation can only be carried ownership are separated. Water concessions are
out thru concessions granted by the General granted by Comisión Nancional de Agua for
Direction of Mining Regulation of the Secretariat 5–30 years, and may be extended for the same
period. Concession holders may transfer rights Mining companies must pay a conventional
after the approval of the Commission; land tenure income tax (ISR – impuesto sobre la renta); a
and other related aspects are regulated by the Ley special mining tax on income before tax, depreci-
Agraria (latest amendment: April, 2012) (see ation, and interest of 7.5%; and an additional tax
www.diputados.gob.mx/LeyesBiblio/pdf/13.pdf); of 0.5% on gross revenues generated from gold,
waste management is regulated by the Ley Gen- silver, and platinum mining. An additional 50%
eral para la Prevención y Gestión Integral de los fee may be charged by the government to all non-
Residuos (latest amendment: May, 2015) (see explored or exploited concessions during two
www.diputados.gob.mx/LeyesBiblio/pdf/263_ consecutive years. During 2015, mining compa-
220515.pdf); mining rights and fees are regulated nies paid MXN $31,780 million in taxes and
by the Ley Federal de Derechos (latest amend- duties (www.camimex.org.mx). In 2006, the
ment: December, 2016) (see www.diputados.gob. total amount of taxes paid by mining companies
mx/LeyesBiblio/pdf/107_071216.pdf); foreign was MXN $12,060 million, in 2009 MXN
direct investment is regulated by the Ley de Inver- $17,537 million, and in 2012 MXN $ 22,267
sión Extranjera (latest amendment: December, million (Camimex 2015).
2015) (see www.diputados.gob.mx/LeyesBiblio/
pdf/44_181215.pdf). Other regulatory instru-
Land Access and Social Conflicts
ments are the Federal Civil Code (latest amend-
Mexico has three types of land property: private,
ment: December, 2013) (see www.diputados.gob.
public (of the State), and social. About 53% of
mx/LeyesBiblio/pdf/2_241213.pdf) and the Ley
land is social property (composed by 2344 com-
General de Desarrollo Forestal Sustentable
munal units and 29,441 ejidos, all covering more
(related to sustainable forestry; latest amendment:
than 100 million hectares of which 62 million are
May, 2016) (see www.diputados.gob.mx/
forests, jungles, and scrublands) (Reyes et al.
LeyesBiblio/pdf/259_100516.pdf), among others
2012). This land property implies a complex and
such as those regulations related to labor condi-
uncertain relationship between landowners and
tions (NOM-023-STPS-2003), archeological
mining companies, particularly in those cases
preservation, and regular taxation.
where indigenous communities are involved
(as there are specific indigenous rights recognized
Rights and Royalties in Mexico’s legal framework in accordance with
Rights must be paid for all mining concessions to the ILO Convention 169). Obtaining, and even
the federal revenue service (Servicio de more, maintaining the consent of landowners –
Administración Tributaria). Concessions are beyond the legal consent and procedures – can be
established in terms of land area, not on the type an everyday challenge and may derive into a
of extracted mineral. Applications for titles, stud- social conflict.
ies, and resolution fees are determined by the Other disputes may rise from tensions related
extension of the area involved. In 2016, the annual to the amount of fees and land rents to be paid by
fees per hectare for exploration and extraction mining companies to landowners, complaints
were established as low as MXN $ 571 (about about potential or existing environmental degra-
US$ 28) for up to 20 hectares and as high as dation, water access and use, population displace-
MXN $ 177,495 (about US$ 8658) for more ment, or even the disappearance and murder of
than 50,001 hectares. Renovations pay only 50% social leaders. See some study cases at the Latin
of the amount previously indicated. Other fees American Observatory of Mining Conflicts
apply as well for a diversity of specific legal pro- website (basedatos.conflictosmineros.net/ocmal_
cedures such as registering to mining societies, db) or the Environmental Justice Atlas website
notarial notifications, cartography, etc. (see Arti- (ejatlas.org).
cle 64 of the Ley Federal de Derechos).
Mexico’s International Memberships Montreal Protocol (1987), the UN Convention on

Climate Change (1994), and the related Paris
Mexico is a member of the International Monetary Agreement (2016), among others.
Fund, the World Bank, G20, UN – Conference on
Trade and Development, World Trade Organiza-
tion, Organization for Economic Co-operation
References
and Development, Inter-American Development
Bank, World Intellectual Property, and Interna- Camimex (2015) Informe annual 2015. Cámara Minera
tional Labour Organization (including the ratifi- Mexicana, México. www.camimex.org.mx/index.php/
cation of C169 in Indigenous and Tribal Peoples secciones1/publicaciones/informe-anual/informe-anual-
Convention), among other international institu- 2015/. Accessed 8 Feb 2017
DOF (2014) Programa de Desarrollo Minero 2013–2018.
tions and organizations. Diario Oficial de la Federación. Mexico, 9 May. www.
The country has signed several free trade dof.gob.mx/nota_detalle.php?codigo=5344070&fecha=
agreements including the North American Free 09/05/2014. Accessed 8 Feb 2017
Trade Agreement – NAFTA (1992) and an agree- Esquivel Hernández G (2015) Desigualdad extrema en
México. IGUALES/Oxfam, México
ment with the European Union (1997). Bilateral Reyes JA, Gómez JP, Muis RO, Zavala R, Ríos GA,
Investment Treaties have been signed with almost Villalobos O (2012) Atlas de Propiedad Social y
three dozen countries from all continents, omit- Servicios Ambientales en México. Instituto
ting Africa. All of them impact mining and meta- Interamericano de Cooperación para la Agricultura.
Cooperación Técnica Registro Agrario Nacional –
llurgic activities somehow. Additionally, some Instituto Interamericano de Cooperación para la
memorandum of understanding related to mining Agricultura, México
cooperation has been signed with China, South SEMARNAT (2013) Informe de la situación del medio
Korea, and Cuba. ambiente en México. Compendio de estadísticas
ambientales. Edición 2012. México. http://apps1.
Mexico is not yet a member of the Extractive semarnat.gob.mx/dgeia/informe_12/pdf/Informe_2012.
Industries Transparency Initiative, but efforts are pdf. Accessed 8 Feb 2017
under way since mid-2014 (www.gob.mx/cms/ SGM – Servicio Geológico Mexicano (2015) Anuario
uploads/attachment/file/58733/EITI-M_xico_Avan Estadístico de la Minería Mexicana, 2014. México’s
Federal Government. México
ces_Febrero_2016.PDF). SGM – Servicio Geológico Mexicano (2016) Anuario
The country has signed and implemented mul- Estadístico de la Minería Mexicana, 2015. México’s
tiple environmental multilateral agreements, Federal Government. México
including the Stockholm Declaration (1972), the

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Encyclopedia of Mineral and Energy Policy

Energy Production and Geoconservation

Fig. 1 Earth’s energy resources and category of observation/production for geoconservation

Global Reference Documents and Initiatives

Ruban DA (2005) Geologitcheskie pamjatniki: kratkij obzor klassiﬁkatsionnykh priznakov (Geological

Mining and Geoconservation

Regional Geological Heritage

Mine Stability from their nature always introduce permanent

• Global stability (prevention of mine working

mass which results in the emission of a seismic Mine Stability Analyses

Probability Some Injury but no Short sick Long sick Permanent

Risk level Need for action during planning

Risk level Need for action during production

R3 Reasonable risk reduction needed within a week

R5 Work is not permitted until risk is reduced to an acceptable level

• Mining method References

Hydrometallurgy the ability to deal with complex and low-grade

Hydrometallurgy, Run-of-Mine Ores

DUMP ORE CONCENTRATE

SOLUTION SOLUTION SOLUTION

METAL METAL METAL

HIGH PURITY HIGH PURITY HIGH PURITY

through traditional cyanidation process. For By nature, leaching is a selective process, in

[1] [2] [3]

SOLVENT SOLVENT SOLID/LIQUID

Hydrometallurgy, Fig. 2 Copper metal extraction through hydrometallurgical processing

SOLID/LIQUID SOLID/LIQUID ATMOSPHERIC

SOLVENT IRON SOLID/LIQUID SOLID/LIQUID

ZINC DUST SOLID/LIQUID

Hydrometallurgy, Fig. 3 Zinc metal extraction through hydrometallurgical processing

– Development of more eco-efﬁcient and bioleaching and bioremediation

Argentina: Energy Policy preliminary comments on the Argentine legal and

while seeking to minimize the production cost and Stabilization Fund

Renewable Energies practice neutralized due to two related circum-

Colombia: Energy Policy (Electricity) Resources

César Fabián Romero Roa As of December 2013, net effective installed

Regulatory Framework the National Operation Council, and the Trading

International Aspects República de Colombia (1991) Constitución Política.

Slovenia: Mineral Policy Need of Minerals

Gorazd Žibret Slovenia is highly dependent on the imports of

Mining and smelting on the territory of Slovenia has

Mining Legislation 1. Energy resources (coal, geothermic resources,

Serbia: Mineral Policy emigration. Ethnically, the Republic of Serbia is

Serbia: Mineral Policy, Table 1 Export and import of Serbia in 2013

Serbia: Mineral Policy,

Vojvodina are issued by the Regional Secretariat International Memberships

United Kingdom: Mineral Policy extracted onshore in Britain, including relevant

production of legislation on planning (Directgov attracting planning controls additional to those in

References Directgov (2011) Devolved government in the

Spain: Mineral Policy million inhabitants and a density of 92 inh./km2.

Mineral Policy Conception

the Environmental Impact Assessment of Land Use and Municipality Permits

Chapter VIII of the law includes article 91 on

Finland: Mineral Policy displayed a slight decrease in consecutive years

Finland: Mineral Policy, Fig. 1 Active mines in Finland in 2014

Foreign Trade Classification of Mineral Reserves

mineralsuk/statistics/europeanStatistics.html. Accessed www.tem.ﬁ/en/current_issues/pending_projects/strategic

Poland: Mineral Policy Polish currency is Polish Zloty (PLN), with

Classification of Mineral Reserves Register of perspective mineral resources in