Mining and energy projects are capital-intensive, long-term investments. Their legal value depends largely on the validity of the licence held and on the permits attached to it being complete. Acquiring a site often in fact means taking over a licence and the obligations attached to it. Administrative law, company law and contract law are therefore intertwined in this sector.
Mining licences
Exploration and operation of mines are governed by Mining Law No. 3213. Mines are under the authority and disposal of the State; exploration and operating rights are exercised through licences granted by the General Directorate of Mining and Petroleum Affairs (MAPEG). The process begins with an exploration licence; once the reserve has been established, it moves on to the operating licence and operating permit stages. The licence holder's obligations include submitting activity reports on time, depositing guarantees and paying the State royalty. Failure to meet these obligations may result in administrative fines or cancellation of the licence.
Transfers of licences are subject to MAPEG approval. In site acquisitions, the legal status of the licence, its boundaries, any overlaps with other licences, unpaid State royalties or fines and cases concerning the site should be examined. Where the acquisition is made through a share transfer of the licence-holding company, the same review is carried out together with all of the company's obligations.
Environmental, forest and pasture permits
Most mining and energy projects are subject to the EIA process under Environment Law No. 2872 and the Environmental Impact Assessment Regulation. Incentive, approval, permit and licence procedures for the project cannot be completed until an "EIA positive" or "EIA not required" decision is obtained. As actions against EIA decisions may be filed in the administrative courts, particularly by people living around the project area, conducting the process in accordance with procedure is decisive for the project's future. Activities in forest areas are separately subject to permission under Forest Law No. 6831, and activities in pasture areas under Pasture Law No. 4342.
Energy and petroleum
Electricity generation, transmission, distribution and trading are carried out under licences obtained from the Energy Market Regulatory Authority (EPDK) under Electricity Market Law No. 6446. Generation from renewable sources is governed by Law No. 5346 on the Use of Renewable Energy Resources for Electricity Generation. Petroleum exploration and production activities are subject to Turkish Petroleum Law No. 6491. In these areas, pre-licence and licence procedures, connection agreements and the opinions of the relevant authorities determine the project timetable.
Common disputes
Disputes in the sector usually arise with the authorities and between partners. Licence cancellations, reductions of licence boundaries, administrative fines and EIA decisions are heard by the administrative courts; licence transfer agreements, royalty-based operating arrangements (rödovans, the transfer of operating rights to a third party for consideration) and partnership disputes are heard by the civil courts or in arbitration. It is important in this respect that rödovans agreements comply with the conditions in the Law and regulation and with the obligations to notify MAPEG.
Our firm's work in this sector
We work on legal due diligence in site and company acquisitions, drafting licence transfer and rödovans agreements, and applications and actions against administrative acts. In this work we draw on our practice in Commercial and Corporate Law, Mergers and Acquisitions, Dispute Resolution and Tax and Customs Law.
Main topics
- Mining exploration and operating licences (Mining Law No. 3213)
- Licence transfers and site acquisitions
- EIA process and environmental permits (Law No. 2872)
- Forest, pasture and public land permits
- Electricity market and renewable energy licences
- Actions against licence cancellation and administrative fines
Frequently asked questions
Can a mining licence be transferred to another company?
Yes, but the transfer is subject to MAPEG approval. The transferee must meet the conditions required by the Law, and the status of the financial obligations relating to the licence must be clarified.
Can an action be filed against an EIA decision?
EIA decisions are administrative acts and may be the subject of annulment actions in the administrative courts. The time limit is determined by matters such as announcement or notification of the decision; the project owner's participation in these actions is also important.
What is a rödovans agreement?
It is an agreement under which the licence holder transfers operating activity over all or part of the licence area to a third party for consideration. Rödovans agreements that do not comply with the conditions in the legislation may create sanction risks for the licence holder.
Can mining be carried out in a forest area?
Mining activity in forest areas is subject to a permit under Forest Law No. 6831. The permit process should be planned together with the licence and EIA processes.
How is mining carried out if the land in the licence area belongs to someone else?
A licence does not confer ownership of the land. For privately owned property, an agreement by sale or lease is first sought with the owner. If no agreement is reached, Article 46 of Mining Law No. 3213 provides for expropriation; the procedure and determination of compensation follow Expropriation Law No. 2942. The owner can challenge the amount in the action for determination of compensation. As expropriation takes time, land acquisition should be scheduled separately when planning operations.
Legislation and sources
- Mining Law No. 3213 (in Turkish)
- Environment Law No. 2872 (in Turkish)
- Electricity Market Law No. 6446 (in Turkish)
- General Directorate of Mining and Petroleum Affairs
- Energy Market Regulatory Authority
The information on this page is general and does not constitute legal advice. As legislation may change, the current rules must be assessed separately for your particular situation.