Minerals Flashcards
The Quarries Regulations 1999 (SI 1999 No.2024)(as amended)
H&S regulation specific to quarries, enforced by HSE.
Repeals and modifies parts of:
- Mines and Quarries Act 1954
- Mines and Quarries (Tips) Act 1969
- Mines and Quarries (Tips) Regulations 1971
- Fatories Act 1961.
Town and Country Planning Act 1990
Core legislation for planning applications are required for construction and change of use at sites.
Mines and Quarries Act 1954
Sets out the general duties of mine and quarry owners, emphasizing safety, health, and welfare.
To ensure safe and compliant operations in mines and quarries.
Water Resources Act 1991
Management and protection of water bodies are not adversely affected
Regulates:
- water quality,
- abstraction,
- discharge
Planning and Compensation Act 1991
- Amends town and country planning law.
- Addresses land acquisition for public works and related compensation.
- Introduced procedures to enforce planning permission breaches, like injunctions
Planning and Compulsory Purchase Act 2004
Substantially reforms the town planning and compulsory purchase framework
Speeds up the planning process and identifies simplified planning zones in regional strategic plans.
Abolishes Local Plans and Structure Plans, introducing Local Development Frameworks
Town and Country Planning (Minerals) Act 1981
Introduced time limits for mineral planning consents.
Repealed and incorportated in TCPA 1990.
NPPF
- Ensure a steady supply of minerals and use them efficiently.
- Set policies for safe mineral extraction and consider environmental impacts.
- Prioritize benefits of mineral extraction; restrict coal unless benefits are clear.
UK’s Mining Waste Directive
Regulation of waste from extractive industries.
Star Stone Quarries, Inc. v. Garland [1990]
Dispute over mineral rights, environmental concerns, and regulatory compliance in quarrying.
- Clear land ownership and mineral rights are vital for mineral extraction permissions.
- Adherence to local and national regulations, with a focus on environmental assessments and mitigation in sensitive areas.
- Emphasis on conducting operations ethically, responsibly, and in line with sustainable minerals management principles.
West Lake Quarry & Material Co. v. Schaffner [1992]
Missouri quarry challenged tax assessment on equipment; court upheld assessment.
Understanding tax incentives for equipment and clear differentiation between “mining” and “manufacturing” influence financial planning and regulatory oversight.
Cactus Canyon Quarries v. MSHR [1986]
Health and safety case law in the USA.
Emphasis on adhering to safety standards and regulatory compliance.
The case offers insights on legal principles, the significance of good relations with regulatory bodies, and the importance of comprehensive risk assessments.
Bocardo SA v Star Energy UK Onshore Ltd [2010]
- Issue of trespass.
- Star Energy extracted oil beneath Bocardo’s land.
- Supreme Court ruled in favor of Bocardo; minimal compensation awarded.
Star Energy Weald Basin Limited v Bocardo SA [2010]
- Related to the above case.
- Determined appropriate damages for trespass.
- Damages based on trespasser’s use value, not landowner’s loss.
Why is it important to regulate quarries?
- ensures sustainable extraction of minerals.
- Ensures the safety of workers
- prevents environmental degradation,
- mitigating potential conflicts over land and mineral rights.
How are extraction methods regulated?
Quarry Regulations: Establish safety and health standards for quarry operations, ensuring safe working conditions and practices.
Town and Country Planning Act (TCPA) 1990: Requires planning permission for mineral extraction, ensuring that environmental and social impacts are considered.
Environmental Impact Assessment (EIA) Regulations: Mandates assessments for significant quarrying projects to evaluate and mitigate environmental impacts.
Abstraction License, Discharge Consent
How are environmental impact assessments used in a minerals management context?
Assessment Scope: EIAs evaluate the effects of mineral developments on various factors during both construction and operation.
Environmental Factors: EIAs analyze the current and potential future state of the environment, emphasizing biodiversity conservation.
Mitigation Measures: EIAs outline steps to counteract negative environmental impacts and detail forecasting methods and challenges.
Schedule 1:
* Quarries and open-cast mining where the surface of the site exceeds 25 hectares
Schedule 2:
* All development except the construction of buildings or other ancillary structures where the new floorspace does not exceed 1,000 square meters.
* Extraction of minerals by fluvial or marine dredging: All development.
Schedule 3:
* criteria for determining whether Schedule 2 developments require an EIA.
What are the key principles of the RICS Professional Standard Valuation of mineral-bearing land and waste management sites (2023)
Valuation Methods: Wasting assets, like minerals, are valued using methods such as capitalizing royalties over the resource’s lifespan. - DCF.
Associated Assets:Valuations often include specialized buildings, site improvements, and equipment, typically valued via depreciated replacement cost.
Considerations: Factors like resource type, extraction rates, geology, and financials play a crucial role in valuation.
What is the option, lease/purchase process?
- Exclusivity Agreement: Ensures the seller won’t negotiate with other buyers for a specified period.
- Option Agreement: Legal document for the right to purchase the quarry at a later date. Draft lease terms.
- Regulatory Approvals: Obtain necessary permits and licenses.
- Due Diligence: Research on quarry’s reserves, permits, and liabilities.
- Lease Agreement: Temporary rights to operate and extract minerals.
Key terms of mineral (and waste) leases?
- Demise
- Parties involved
- Lease Duration: Specified time period for the lease.
- Minerals Specified: Types of minerals allowed for extraction.
- Payments & Royalties: Financial terms and fees.
- Rights & Obligations: Duties of both lessor and lessee.
- Regulatory Compliance: Adherence to local regulations.
- Termination & Renewal: Conditions for ending or extending the lease.
- Restoration Requirements: Post-extraction site rehabilitation.
- Liabilities & Indemnities: Responsibility for damages or issues.
Doulting Quarry
On Doulting Quarry, how did you deal with the limited information when constructing a DCF?
Ensured the client understood the difficulty.
RICS Guidelines: Followed RICS standards for valuation.
Economic Factors: Considered market demand, price, and currency issues.
Expert Consultation: Sought opinions from industry experts.
Informed Assumptions: Made assumptions based on available data.
Conservative Projections: Used cautious estimates to account for uncertainties.
Sensitivity Analysis: Tested how changes in variables impact valuation.
Regular Updates: Reviewed and updated the DCF model as needed.
Doulting Quarry
Explain the asset’s financial aspects.
Limited financial data with uncertainty over secured mineral reserves.
Considered mineral selling price and volumes, operational costs, environmental liabilities, and margins at current production levels.
Doulting Quarry
How did you assess the potential mineral reserves on site?
Reviewed geological appraisals based on recognized reporting codes and consulted with experts
Doulting Quarry
Why did you consider the valuation was optimistic?
Didn’t see the valuation report.
Limited financial and geological information, potential planning restrictions, suggested overestimation.
Didn’t align with my high-level information.
Agents familiar with this asset and region stated they had suspicions.
Doulting Quarry
Explain your review of the planning and environmental conditions.
Highways restrictions due to residential receptors across the road.
Previous permission to move the access was rejected.
Doulting Quarry
What were the opportunities that the site presented?
Potential for extracting valuable dimension stone, infilling the void, residential development.
Biodiversity net gain.
Commercial development in the void
Doulting Quarry
What is a dimension stone quarry?
A quarry where large blocks of stone are extracted for architectural and decorative purposes,
Doulting Quarry
Explain the site limitations to me.
Potential restrictions from planning and environmental conditions, uncertainty over mineral reserves, and potential post-restoration environmental obligations.
Doulting Quarry
How did these impact operational efficiency?
Environmental and planning conditions that could limit extraction methods, reduce operational efficiency, and constrain expansion.
Doulting Quarry
What limitations were there on future development?
Planning restrictions and potential environmental concerns could hinder expansion or introduction of new extraction methods.
Doulting Quarry
How did you report to your client on this?
Advised the client to consult a RICS-regulated firm familiar with dimension stone quarries, highlighting financial, operational, and regulatory concerns.
Doulting Quarry
Was this a development appraisal?
Yes, it was an evaluation of the quarry’s potential for acquisition and development, considering factors like rehabilitation/restoration requirements and residual income.
Doulting Quarry
How did you assess the H&S culture?
Observed on-site practices, noting concerns about the existing health and safety culture. Recommended a comprehensive review of safety protocols.
Doulting Quarry
What changes needed to be made?
Enforce use of PPE
Doulting Quarry
Why did you recommend that your client did not pursue this opportunity?
Due to financial, operational, and regulatory concerns, and the client’s inexperience with dimension stone quarries. Advised the client to focus on their expertise in the sand and gravel industry.
Faringdon Quarry
On Faringdon Quarry, how did you use financial analysis to recommend a course of action to the client?
Evaluated economic viability from extended operations and inert recovery to enhance stakeholder returns.
Faringdon Quarry
Why did you advise early engagement with the MPA?
Recommended proactive discussions with the Mineral Planning Authority to streamline planning and negotiate report requirements.
Faringdon Quarry
How did you advise on extending the operational life of this quarry?
2034 deadline based on projected mineral extraction rate and remaining reserves
Faringdon Quarry
How did you advise on complying with planning and permitting regimes?
Emphasized adherence to the Minerals and Waste Local Plan and Environmental Permitting regime
Faringdon Quarry
How did you advise on the potential extension area?
used geological surveys and sampling to evaluate mineral quantity and quality.
Faringdon Quarry
Why did you reject this eventually?
Poor mineral quality in the extension area.
Deemed not economically viable for extraction.
Hook
On Hook, how did you advise the client on the risks of greenfield quarry development?
Highlighted environmental risks from potential habitat disruption.
Pointed out regulatory challenges and associated costs.
Emphasized the unpredictability of greenfield site development timescales.
Hook
How did you assess the client’s needs?
Engaged in consultations to understand client’s operational goals and financial thresholds.
Analyzed client’s capacity for long-term investment and risk tolerance.
Hook
Explain the site limitations to me.
Limited mineral reserve size reduced potential output.
Proximity to processing site increased transportation costs.
Regulatory environment posed potential for additional costs and delays.
Hook
What were the opportunities that the site presented?
Untapped mineral reserve in a greenfield site.
Potential for establishing a new operational base.
Opportunity for diversification into new mineral types.
Hook
Talk me through the process of constructing the DCF.
Gathered data on potential revenues from mineral extraction.
Deducted projected costs including regulatory, operational, and transportation.
Applied discount rate to future cash flows to determine present value.
Hook
What key cost and revenue assumptions did you use?
Assumed steady mineral prices based on market trends.
Projected regulatory costs based on similar projects and local regulations.
Estimated transportation costs based on distance to processing site.
Hook
Why did regulatory costs make the project uneconomical?
Regulatory costs, including licensing and environmental compliance, were high.
Combined with limited reserves, these costs reduced potential profit margins.
Hook
What was the required rate of return and why?
greater than 30%
Hook
How did you account for financing costs?
Included interest on potential loans or financing in the DCF.
Considered potential equity financing and associated costs.
Hook
Explain the timescales involved.
Estimated timescales for regulatory approvals, site preparation, and extraction.
Considered potential delays from environmental and community challenges.
Hook
Why did you negotiate an EA?
To secure exclusive rights to assess the site’s potential without competition.
Provided a window to conduct thorough assessments without external pressures
Hook
What planning policy did you advise on?
Reviewed local and national planning policies related to mineral extraction.
Advised on compliance and potential challenges based on these policies.
Hook
What surveys did you advise instructing, and why?
Recommended intrusive surveys to accurately gauge mineral quality and quantity.
Emphasized the importance of thorough assessment before investment.
Hook
Why was the site unviable?
Combination of small reserves, high costs, and regulatory challenges.
DCF analysis indicated that the site wouldn’t meet desired return on investment.
