I move: "That the Bill be now read a Second Time."
Ireland has a rich tradition of mining extending back over 4,000 years and I am glad mineral extraction is still an important economic activity. In the modern era there have been many successful mineral developments which have benefited this country in terms of revenue and well paid employment. Many of these jobs have been created in relatively underdeveloped rural areas with little or no other employment.
For a small country, we have been very successful in the discovery of mineral deposits which have resulted in a number of important mines currently in operation. Our geology holds out the promise of further economically viable mineral discoveries if we continue to encourage investment in exploration.
Many Irish companies are active in this field, some of whom have made some of the most notable discoveries. However, junior exploration companies often need to form alliances with larger and more experienced partners to bring their discoveries to the next phase. It is important to encourage such partnerships with international players who bring to this country the benefits of their worldwide experience and expertise in the most up to date methods of mining and environmental protection. We also welcome responsible international mining companies exploring in Ireland on their own behalf.
When considering any country as a potential area for exploration, any major mining company will naturally be very interested in the geology and the track record of previous explorationists. There is no doubt that Ireland has its attractions in that regard. However, a less obvious but equally significant element in a company's decision to invest its exploration budget in a country is the stability of that country's political system, a clear set of laws and, in particular, confidence in the method of determining mineral rights ownership. It is essential for a potential investor to be assured that the system will allow it to obtain legal title to work the minerals it discovers. The Minerals Development Acts are intended to cater for this and have done so with various amendments since 1940.
However, every system throws up complications from time to time and it is important that these are addressed when they arise, especially if they introduce uncertainty or delays. It is to deal with some such complications which have recently come to light during the processing of mining leases and licences that I have proposed this Bill. When enacted the Bill will remove some anomalies arising from the application of the Acts, particularly the position of some minerals vested in the Irish Land Commission. This is a technical measure which does not involve changes in policy and which has no adverse implications for anyone.
The principal purpose in bringing forward this Bill is to deal with the question of certain mineral rights which were acquired by the Irish Land Commission by a variety of means. Section 2 is the relevant provision which is intended to amend the definition of State minerals in the Minerals Development Act, 1940. To give the background to this provision, I must explain certain aspects of mineral rights and ownership which are at the best of times complicated, even to those familiar with them.
There are several categories of mineral rights which can be broken down into two essential classes – private minerals in private ownership and State minerals as defined in the Minerals Development Act, 1940. It is, and has been for a very long time, Government policy that all the State's mineral resources should be developed for the mutual benefit of the State and private developers. The Minerals Development Acts, 1940 to 1995, provide the regulatory framework which enables the development of minerals, whether State-owned or privately owned. I must make clear that the range of minerals covered by these Acts does not include stone, sand, gravel or clay. Minerals in private ownership are covered by the Minerals Development Act, 1979, to which I will refer later.
The 1940 Act deals with State-owned minerals. It empowers the Minister to issue State mining leases to those who discover economic deposits of State minerals. State minerals are defined in section 5 of that Act as:
(a) any minerals and any exclusive mining right which, at the date of passing this Act, belong to or are the property of the State or the People, and are vested . in the State or in any Minister of State;
(b) any minerals and any exclusive mining right which, on or after the passing of this Act become, by any means, the properly of or vested in the State or the People or become vested in a Minister of State, as on and from the date upon which they become such property or become so vested.
Mineral rights were usually acquired by the State through dealings conducted by the Irish Land Commission under the Land Acts, 1903 and 1923. Other minerals and mining rights were vested in the Congested Districts Board and were acquired by the commission at the time of that board's dissolution under the Land Law (Commission) Act, 1923.
It was normal practice that, whenever the Land Commission divided lands it had acquired on the break up of the big estates, or assisted tenants in direct purchase from landlords, the associated mineral rights were reserved by the commission. In the case of dealings under the 1923 Act, these mineral rights became vested in the State as provided for in that Act. However, where the dealings were done under the 1903 Act, the situation was different and more complicated.
In 1931, the Mines and Minerals Act was passed which provided, inter alia, that, from then on, minerals acquired by the commission under the 1903 Act would also become vested in the State. However, for acquisitions by the Land Commission under the 1903 Act which had taken place before 1931, and for Congested District Board acquisitions, the mineral rights remained vested in the commission rather than the State. It had always been assumed that all such mineral rights were also State minerals within the terms of the Minerals Development Act, 1940. Based on this assumption, successive Ministers have, in good faith, granted State mining leases under the 1940 Act which included these minerals.
However, in the course of the investigation of mineral titles for the Lisheen mine, County Tipperary, it was brought to the attention of my Department that this assumption is likely to have been incorrect. The advice of the Chief State Solicitor's office and the Attorney General's office was sought. Both agreed that, under the definition of State minerals as it stands in the 1940 Act, even though the Land Commission is an arm of the State, it should possibly have been regarded for mineral ownership purposes as a private body. This is the essence of the problem. This distinc tion could call into question the power of the Minister to grant leases and cast doubt on the validity of leases already granted.
Section 2 of the Bill provides that the rights vested in the Irish Land Commission will be deemed to be, and to always have been, State minerals for the purposes of section 5(a) of the 1940 Act. This will mean that there can be no doubt that all minerals acquired by the Land Commission are State minerals and that all such leases granted by me or my predecessors will be valid.
To illustrate the type of complication this situation can give rise to, I can give the example of the major new zinc and lead mine at Lisheen, north Tipperary. This deposit is being developed by Ivernia West, an Irish company, with its joint venture partner, Minorco. Minorco is part of the Anglo American Corporation, one of the largest and most successful mining conglomerates in the world. I was very pleased to grant a State mining lease to the companies in October 1997 but, before I could do so, extensive research had to be carried out into the question of who holds the mineral rights. As I have said, it was during the course of this title investigation that the question of the status of the Land Commission minerals came to light. It transpired that, while most of the minerals forming the Lisheen deposit were clearly State minerals within the meaning of the 1940 Act, a significant proportion was acquired by the Land Commission under the 1903 Act.
Quite understandably, the two companies were interested in developing the whole deposit which they had found, having spent large amounts of money on exploration and land acquisition. They would not have been concerned with the subtle distinctions between State minerals and Land Commission minerals. The companies applied to the then Minister for a State mining lease over the orebody which, unknown to them, was a combination of 1903 Act and 1923 Act minerals. In examining the feasibility of the project, the applicants based all assumptions concerning the economics of the development on the entire deposit, as did my Department in its consideration of the project's viability. My Department had no reason to distinguish between 1903 Act and 1923 Act minerals since the received wisdom, until the legal advice was obtained, was that they were State minerals. Even though the 1903 Act minerals were not earmarked for immediate attention, they formed an important part of the overall reserves so the position needed to be regularised to give the companies involved full security.
Therefore, I granted a State mining lease for the Lisheen mine in respect of all the minerals I could safely regard as State minerals, given the advice of the Attorney General's office. However, to satisfy the legitimate expectation of the developers that they would be able to mine the whole deposit as a unit, I built into the lease a commitment that it would be extended to include 1903 Act minerals if and when they became State minerals. On the advice of the Attorney General I arranged for the drafting of this Bill in order to allow me to follow through on that commitment as soon as possible.
This issue also has implications for another major mineral extraction operation, namely the open cast pit of Irish Gypsum Limited at Knocknacran, County Monaghan. A consolidated lease is under negotiation between the company and my Department to give the operators continued rights of working, but parts of this deposit comprise 1903 Act minerals. These had been the subject of spent leases but I was precluded from granting a new lease over them because they were not technically State minerals. The Knocknacran deposit is the sole supplier for the plaster and plasterboard factory at Kingscourt, County Cavan, and it also provides essential materials for cement manufacture. Continued use of Irish raw materials for these essential components of construction depends on renewal of the company's access to this element of the deposit.
I am also taking the opportunity the Bill provides to address two other issues which require attention. As I explained, while the Minerals Development Act, 1940, deals with minerals in State ownership, it is also in the national interest that minerals in private ownership be developed in an efficient and rational manner. A significant proportion of the mineral resources of the State are in private ownership. It would be impractical to have to make the distinction between State owned and privately owned minerals before undertaking an exploration programme, yet exploration companies need to know that a system exists to allow them to work whatever they find, subject to a proper development plan.
For this reason, a system to regulate the working of privately owned minerals was established under the Minerals Development Act, 1979. It vested in the Minister with responsibility for mining the exclusive right to work all minerals in the State, with very few exceptions, and, consequently, the right to permit the working of those minerals by private individuals or companies. In keeping with the constitutional protection for the rights of private property, this was made subject to a right to compensation to the owners of the minerals at the time that any minerals were worked. Section 20 of the 1979 Act conferred this right to compensation on the person who had an estate or interest in the minerals on 20 June 1979. However, it also provided that this right could devolve and be disposed of. The effect of this was that the right to compensation became separated from the ownership of the minerals.
Normal transactions of selling land rights can range from conveyance in full fee simple, where the buyer becomes the owner of everything from the centre of the Earth to the heavens, to simply granting a wayleave or easement, with several levels of transfer of rights in between. Therefore, it has been possible since 1979 for someone to sell land and minerals, or even just minerals, while retaining the right to compensation for the working of the minerals. The purchaser would then own the minerals, but this would be of no value to him as the right to work them is vested in the Minister and the right to compensation is vested in the previous owner. This situation is patently absurd and one of which I am sure most buyers and sellers of land are not aware, since they are concerned mainly with the surface rights and not with the abstruse position underground about minerals which may or may not have any value.
Matters become very complicated when I wish to grant a State mining licence for these minerals and it can result in long delays while the question of entitlement to mineral rights is sorted out. Under the procedures set out in the Minerals Development Act, 1979, I must give extensive public notice of my intention to permit the working of private minerals. I am also required to give direct notice to anyone who may appear to me to have an interest in the minerals to allow individuals an opportunity to establish their ownership. However, since the persons entitled to the compensation today are not necessarily the owners of either the minerals or of the land, they can be difficult to identify and may possibly be unaware of their entitlement. If nothing is done, the position will only become more difficult as the years pass.
Section 3 deals with this problem. It will ensure that, in future, the right to compensation for the working of minerals under Section 20 of the 1979 Act cannot be separated from the ownership of the minerals and that, on any future sale or conveyance of the minerals, the right to compensation will also transfer automatically. This means that the right to compensation will vest in the owner of the minerals at the time they are developed or mined, except where a sale or conveyance, which separated the right to compensation from the ownership of minerals, has already taken place since 1979 and the owner of those minerals has not acquired the right to compensation.
I am aware the problem remains for any land or mineral rights which may have been sold or disposed of between 1979 and now. I asked the Attorney General to consider making this provision retrospective but I am advised that it would be contradictory to the protection of the right to compensation contained in the Constitution. If land and mineral rights are sold in future following enactment of the Bill, the vendor could expect to obtain a price from the purchaser which would take account of the forgone compensation. That opportunity would not be available to previous vendors who have disposed of their mineral rights, and that in itself would be liable to compensation, so the problem would remain. Therefore, I must restrict this provision to future transactions but my Department will continue to consider ways to deal with this issue.
Section 4 deals with prosecutions for a variety of summary offences which are contained in the Minerals Development Acts. These make no pro vision for who may prosecute, so it is left to the Director of Public Prosecutions to bring all such prosecutions. I have been advised by the Chief State Solicitor that, in line with other legislation, it would be more appropriate and more efficient administratively if relatively minor offences could be pursued in the District Court by the Minister or by the Mining Board as appropriate rather than involving the DPP. This is a simple technical amendment, with a consequent provision in section 5 relating to expenses in bringing such cases.
I sought the approval of my Cabinet colleagues to introduce the Bill now since the issues are uncontroversial and relatively simple to deal with, although the legal points are complex and abstruse, and there is nothing to gain by leaving matters as they are any longer, especially since the changes do not involve any departure from the policies adopted by successive Governments to date. In fact, there is a distinct advantage in administrative efficiency and in streamlining mineral ownership and rights to compensation for working minerals. However, I am aware of the need to examine the overall policy in this area and a fundamental review of minerals policy and regulatory practice in the minerals sector is under way in my Department.
This process started with the examination of the industry in 1994 by the national minerals policy review group and its report was presented in April 1995. It had many valid points to make and a large range of recommendations, some of which have already been implemented. I see the report as a useful tool in assisting the formulation of policy. However, it can only be regarded as one input. While some recommendations have merit, others may not have been practical and others have been overtaken by changing circumstances, both fiscal and industrial. For example, the group recommended a corporation tax rate of 25 per cent for the industry. In the last budget a 25 per cent rate was announced for profits from mineral extraction, along with certain other categories of business, including non-trading income. However, the industry now sees the 12.5 per cent rate which will apply to the mainstream of business profits and, unsurprisingly, has reset its target. There are many arguments for and against the lower rate, not least of which is a package of favourable allowances which mining currently enjoys, and my colleague, the Minister for Finance, has promised to keep the matter under review. However, I do not propose to discuss this matter in detail, merely to cite it as an example of the way policies and recommendations can be overtaken by events.
It is my intention, following this policy review process, to bring forward more detailed legislative proposals within the next year. I hope these will address in a rational way many of the issues and outstanding recommendations contained in the report of the National Minerals Policy Review Group as well as many other issues my Department has examined in light of recent oper ational experience. My aim will be to have a clear set of legislative proposals designed to cater for the needs of the State and the developers of our nation's mineral resources so that these resources can be responsibly and sensibly exploited for our mutual benefit well into the next millennium. For now, however. the Bill, when enacted, will clarify the position regarding minerals which are clearly in public ownership but technically were not vested in the State.
I have already referred to Lisheen in County Tipperary and the commitment I gave to the joint holders of the State mining lease for that mine. Lisheen is a fine example of a modem mine development using best available technology. Before granting the lease I had to be satisfied that the project was robust, both commercially and physically, and that it was designed according to the highest environmental standards. The project underwent a rigorous examination by my Department with the help of external consultants of the highest international standing. This involved a detailed analysis of the project economics, ore reserve assumptions, development methods and costs, and a thorough examination of the environmental impact statement, with particular regard to closure planning. The project also required, and secured, planning permission and an integrated pollution control licence from the Environmental Protection Agency. As part of both processes, my Department was able to provide expert comments on the EIS and recommendations for conditions to be attached to both permits. This mine was a first for the EPA in that it was the first, not only in Ireland but in the European Union, to obtain an integrated pollution control licence.
Public awareness of and access to the permitting processes is also essential so that local communities and the general public can be reassured that successful projects are designed and implemented to the highest environmental standards. This does not mean that there will not be objectors, but there is at least a forum for objections to be heard. This is in addition to whatever briefing and listening a potential developer engages in with neighbours and others likely to be affected by the proposal. Such dialogue must be an integral part of prudent project design because it can result in an optimal proposal to the best advantage of all concerned going into the formal permitting arena. I was encouraged to learn, therefore, that with the planning application for a project as large as Lisheen there were only six appeals to An Bord Pleanála. This is testament not only to the preparation by the developers but also to the quality of the planning decision.
The Lisheen mine was designed to produce 1.5 million tonnes of ore per annum when fully operational. This level of output will support direct employment for more than 300 people. During development, however, up to 700 people will be employed on the project. As with any major employer in a rural region, there will be indirect spin-off benefits resulting from the spending power of the mine, and its employees, which will support the local economy and generate further employment. Production of zinc and lead concentrates is due to commence by the end of this year.
Lisheen is the second major mine to be developed in recent years. In neighbouring County Kilkenny, there is a smaller but still significant zinc and lead mine at Galmoy. This mine, operated by an Irish company, Arcon Mines Limited, was granted a State mining licence in 1995 and is now in full production, providing employment for more than 200 people. Galmoy was the first new base metal mine in Ireland since Tara began operations in the 1970s. I granted two State mining licences to Tara in 1998 to work private minerals adjacent to the existing lease area outside Navan. Tara is the largest zinc and lead mine in Europe and the new licences will help to ensure that it will continue in production for many years to come.
Along with other natural resources, our mineral deposits are an important national asset and there is great potential for further discoveries. My aim is to ensure that deposits of minerals continue to be found and developed in a responsible way, for the mutual benefit of the nation and private investors. I place considerable emphasis on the word responsible because we must ensure that these activities are undertaken with particular regard to environmental protection. Our system of environmental checks and balances is intended to ensure that this is the case and we have led the way in Europe with our integrated pollution control licence system.
It is also essential that exploration and mining are undertaken with due sensitivity to the needs of local communities. Miners have to be good neighbours and must make a positive contribution to counterbalance the right to deplete a finite resource. This can be done in many ways, including payment of royalties and taxes to the State, contributions towards infrastructure and indeed job creation. In supporting responsible exploration and development we can have a mining industry which can be to the benefit of both the developers and the State as a whole and in this way mining can be made compatible with the principles of sustainable development.
To foster further exploration we need to maximise inward investment in the minerals exploration sector in tandem with investing in indigenous exploration and service companies. This puts us in direct competition with other countries with similar if not better geological conditions, all trying to persuade explorationists to invest their limited exploration budgets. Many of these countries, which used to be hostile to foreign companies developing their mineral resources, are now actively seeking such investment.
Ireland has done well against this background in attracting a good share of exploration investment. This is due in no small measure to the success of Tara, Galmoy and Lisheen. The geology here holds out the possibility of further discoveries and all three of our major base metal mines have increased their identified reserves through extensive exploration programmes. To continue to support this activity it is essential to have a rational legislative framework to regulate the industry.
The legislative measures contained in the Bill are part of an ongoing effort to keep legislation and practices in the minerals sector up to date and relevant to the modern industry. The particular issues addressed require urgent clarification and I, therefore, recommend the Bill to the House.