Legal Alerts/21 Feb 2023

UPDATE: Amendments to the Mining Act to Enter into Force in June 2023

The Finnish Government has proposed to reform the Finnish Mining Act of 2011 as discussed in our earlier Legal Alert (available here). On 20 February 2023, the Finnish Parliament adopted the said amendments to the Mining Act with last-minute additions proposed by the Parliament’s Finance Committee. Both the proposed amendments discussed in our earlier Legal Alert and the new additions that will be discussed below will enter into force on 1 June 2023.

Extending the validity of an exploration permit

Under the current Mining Act, exploration permits can be renewed up until they have been in force for a total period of 15 years. While this period will remain unchanged, extending the validity of an exploration permit will be subject to landowner consent once the exploration permit reaches its 10^th anniversary.

The threshold for renewal will be met if the owners of at least half of the properties comprising the total surface area of the exploration area consent to the renewal. As a long-stop measure, the Government can award the renewal, provided that the project satisfies the requirement of public interest.

According to the Parliament’s Finance Committee’s last-minute revisions, landowners are to be allocated a reasonable amount of time to respond when their consent is sought, and their consent must be given in written form.

While the additions made by the Finance Committee are not extensive, it should be stressed that, from 1 June 2023 onwards, the requirement of landowner consent will be applied to all renewal applications that have been lodged after 1 June 2023 and concern permits that have been valid for ten years.

Regulatory additions to enhance national security

During the parliamentary assessment of the proposed amendments to the Mining Act, the Parliament’s Finance Committee stressed that the recent changes in the global operating environment, such as Russia’s unprovoked and unjustified invasion of Ukraine, emphasise the need to re-evaluate national mining legislation, especially from the point of view of national security.

The Finance Committee therefore introduced new provisions that address this concern:

From 1 June 2023 onwards, exploration and mining permit applications can be rejected if the activities are considered to jeopardise national defence, the security of supply, the operation of infrastructure necessary for society, or some other equivalent national security interest.

With regards to all mining permit applications, the Mining Authority will seek the opinion of relevant security authorities, such as the Ministry of Interior, the Ministry of Defence, or the Finnish Security and Intelligence Service. If these authorities raise concerns about national security, the matter will be referred to the Ministry of Employment and the Economy for a final assessment.

The procedure will be applied also to exploration permit applications if the Mining Authority considers the activities under the permit to potentially jeopardise national security.

Applications concerning the assignment of a permit to a third party can also be blocked on grounds relating to national security with a similar procedure.

Permits can also be cancelled if the Mining Authority and the Ministry of Employment and Economic Affairs come to the conclusion that the activities carried out under the permit constitute a national security breach.

These provisions and procedures will apply regardless of the operator’s nationality.

Mineral rights and national security – what comes next?

Mineral rights not only provide preferential and exploitation rights to their holders but may also hold considerable economic value and enable permit holders to engage in commercial activity. The new regulations, which provide the possibility to revoke mineral rights without an unambiguous regulatory scheme in place, have the potential to create complicated legal knots from an investment protection perspective, not to mention constitutional questions that may arise in connection with these procedures.

It should be stressed that although mineral rights can be revoked based on national security concerns, the concept of national security is not unequivocally defined by law. In addition, the Parliament's Constitutional Committee did not have the opportunity to evaluate the last-minute national security amendments even though they have a strong connection to certain basic rights secured under the Constitution.

This circumstance of no pre-constitutional control in the Parliament for the added provisions may open up avenues for national courts to assess their constitutionality in cases where these provisions could be used to promote other interests than national security. It is also necessary to emphasise that, under the requirement of proportionality, exceptions to basic rights should only be adopted if the objective in question cannot be achieved in any other way.

Bearing this in mind, the situation begs the question of whether a less restrictive measure could have been adopted to tackle this important issue. For example, permits could have been allowed to be assigned to an operator that fulfils the conditions from the point of view of national security.

We will continue to monitor the situation and provide updates as the new Mining Act enters into force. If you have any questions, please feel free to contact any of the Borenius attorneys listed in this Legal Alert or those with whom you usually work.