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Portugal - Exploration and Mining (2000)

Executive Summary

Portugal is today one of the more privileged and relevant European countries in terms of exploration, exploitation and valuation of mineral resources.

Conceded Areas for Prospecting and Exploration

This privileged context can be explained by various factors notwithstanding an obvious favourable Geo-Mining framework and a long history of metal mining. Of these factors, the new mining law since 1990 as well as the privatisation and social market economy ruling of mining deserve to be highlighted.

As such, Portugal has seen as authentic exploration boom in the 90's with both major and junior companies coming from Canada, North America, Europe and Australia to start the search for gold and base metals. In reality, there occur various auriferous showings and deposits in a variety of metalogenetic scenarios of which the epithermal, structurally - controlled, vein - type mineralizations predominate. However, the spot-light falls on the Iberian Pyrite Belt; producer of massive polymetallic sulphides, that is one of the most important mining provinces and within which occur, on the Portuguese sector, various orebodies such as the worldclass Neves Corvo orebody.

Neves Corvo has become a reference for the role the IGM plays in the valuation and promotion of mineral resources by developing various research tasks in the fields of exploration, evaluation, characterisation and beneficiation. The IGM also carries out the organisation and management of the information generated by its activities as well as from the activities developed by private exploration companies. A further task involves the licensing for private companies, which is unusual for geological surveys, that has proved very important in a country with the characteristics of Portugal.

Finally, general other factors make Portugal more attractive in this sector: an excellent road communication network , the fact that it is a member of the Economic Community; one of the most important world markets , as well as a high technical and linguistic level help by the country's workforce.


Investments in Prospecting and Exploration

A Long Tradition in Mining

The mining of mineral resources in Portugal was initially carried out by the Phoenicians, but was intensely and mainly developed by the Romans.

The first mining operations would have taken place in "gossan" type oxidation zones (for copper, zinc, lead, gold and silver) and gold-bearing placers. The Romans would later intensely exploit gold and polymetallic sulfide vein deposits. To better comprehend the size of the work involved, one need look no further than Três Minas, to the north of Vila Real, from which approximately 10 million tons of material was extracted; and in Aljustrel (southwest of Beja), mine shafts reached a depth of 120 metres.

PRODUCTION OF MINERAL SUBSTANCES AND MINERAL MASSES (TONS)

SUBSTANCES

1978

1985

1990

1995

1997

Tungsten Conc.

1 873

2 977

2 343

1 510

1 791

Titanium

325

227

43

---

---

Iron

54 521

73 210

14 080

14 535

18 905

Tin Conc.

403

379

4 779

8 466

6 511

Copper Conc.

1 370

1 183

661 594

536 724

444 063

Gold & Silver Conc.

1 806

1 614

1 645

---

---

Berilium

5

2

---

---

3

Niobium / Tantalum

7

---

---

---

---

Pyrite

313 845

355 519

98 290

---

---

Uranium Conc.

114

139

131

22

20

Coal

180 101

238 414

264 924

---

---

Kaolin

73 555

104 055

108 392

203 571

216 075

Feldspar

21 582

29 011

77 329

(1)  134 334

(1)  93 347

Lithium

1 200

130

(1)  20 775

(2)  8 740

(2)  6 838

Quartz

122 200

135 228

5 675

11 795

9 177

Diatoms

2 700

1 600

2 270

1 780

1 540

Barite

620

1 094

1 480

---

---

Talc

1 709

4 998

11 535

8 706

8 236

Rock Salt

325 385

462 962

661 640

587 288

595 997

SUBTOTAL

1 103 321

1 412 742

1 936 925

1 517 471

1 405 503

MINERAL MASSES

33 600 285

36 085 756

50 735 960

63 621 915

87 086 334

TOTAL

  34 703 606

  37 498 498

  52 672 885

  65 139 386

  88 491 837

(1) Includes feldspathic sands and feldspar/quartz mixture
(2) Pegmatite with lithium

Then followed a lengthy break in the mining of mineral resources in Portugal which was only occasionally interrupted, the exploitation of alluvial gold in Adiça near Lisbon during the XII century is one example of this.

From the middle of the last century, coinciding with the start of the industrial revolution, mining once more became an important industry in Portugal, with the first mining concessions being granted in 1836.

By the end of the XIX century, approximately 300 concessions had been awarded, the main substances exploited being polymetallic sulfides (Aljustrel, S. Domingos), tungsten and tin (Panasqueira), and antimony and gold (Valongo/Gondomar).

At the start of the XX century, there was a marked increase in coal annual production.

 

Main Mining Concessions (Situation as of 31/12/1999)

The two world wars, particularly the Second World War, led to a great demand for tungsten, which in turn led to increased exploration and exploitation of not only this element but tin as well, as these two elements are generally related spatially and/or structurally. Production of the concentrates of these substances peaked during 1942 at 5700 tons for tungsten and 4400 tons for tin, the main producing mines being Panasqueira, Borralha, Argozelo, Montesinho, Vale das Gatas and Ribeira.

The country also possesses important uranium deposits, with approximately 4200 tons of U308 produced between 1950 and 1990.

From the start of the fifties but mainly in the eighties, exploration underwent somewhat of a boom in Portugal at first including tungsten and tin in the centre and north of the country and later concentrating to precious metals and base metals, the latter sought principally in the Pyrite Belt in the south, where a remarkable number of mineral masses have been discovered: Moínho (1955), Feitais (1963), Estação (1968), Gavião (1970), Salgadinho (1974), Neves Corvo (1977) and Lagoa Salgada (1992).

The most important of these discoveries, in which the IGM (Geological and Mining Institute) has always played an important role, was the Neves Corvo deposit: since the mine came into operation, Portugal has become the largest producer of copper (1988) and tin (1990) in Europe as well as tungsten from the last operational mine (Panasqueira).

Portugal is also an important producer of ornamental rocks, particularly marble, even at the international level.

 


Neves Corvo Mining Complex

Portugal's Geology

Iberian Geotectonic Units

 

From a geological viewpoint Portugal is a considerably diverse and complex country, these characteristics providing it with important potential in various mineral resources.

The territory can be subdivided, in geological terms, into 2 large groups: the Hesperian Massif and the Epi-Hercynian Covering, the latter including the western and southern Meso-Cenozoic borders, and also the basins of the Tagus and Sado rivers.

The Hesperian Massif, in which predominantly metallic mineral resources occur, can in turn be divided into various geotectonic units, as described below:

  • Galicia - Trás-os-Montes Zone - This is characterised mainly by the existence of two mafic and ultramafic polymetamorphic massifs known as Bragança and Morais. The surrounding formations date chiefly from the Silurian period and are characterised by the existence of acid and basic volcanic rock, which make contact with the massifs via larger thrust systems. Binary granite, "alkali" and porphyritic granite, biotite and "calcalkali" granite also occur. The chrome, platinum and, possibly, copper, nickel and cobalt potential of the Morais and Bragança massifs is worth stressing, as is the potential for tungsten, tin, precious metals, litium uranium and, probably, polymetallic sulfides in the surrounding formations. This unit is also very important, concerning ornamental granites, like in Viana do Castelo, Braga, Porto and Vila Real areas and also some talc deposits occur at the Morais and Bragança massifs.
  • Central - Iberian Zone - This is mainly characterised by the predominance of the formations of the so-called Schist-Greywacke Complex, consisting of a flysch-type series dating from the Cambrian and Late Precambrian period. There are also large areas of "alkali" and "calcalkali" granitoids, in which various types of granite can be distinguished. Worth highlighting is the occurrence in the Douro-Beiras sector of continental formations from the Carboniferous period, where various coal mines have been exploited (Douro Carboniferous Belt).

Also worth mentioning in this geotectonic unit are important mineralisations of tungsten and tin, normally associated with the contact between the granite and the metasediments, and the existence of precious metals, frequently associated with arsenic and antimony, as in the Valongo/Gondomar Gold-Antimony Belt, for example. There are also important mineralisations of uranium, many of which have been exploited, which are related with late tectonic and metallogenetic phenomena that have affected the post-tectonic "calcalkali" granite.

Important feldspar occurences are mostly associated to granitic massives, like in Viseu (where ornamental granites are very relevant) and Guarda areas, not only here but also in Galicia - Trás-os-Montes (Chaves, Braga) and in Ossa-Morena (Évora) Zones.

  • Ossa - Morena Zone - This is an extremely complex and diverse unit which begins with a polymetamorphic Precambrian, followed by Cambrian and Silurian formations, and ends with a flysch sequence from the Late Devonian period.

Contact with the Central - Iberian Zone is carried out via an important shear zone which stretches from Oporto to Cordoba (Spain) (Blastomylonitic Belt).

With regard to magmatism, the NE sector has a predominance of granitic rocks, chiefly "calcalkali", porphyritic, biotitic, similar to those in the north and centre.

To the south, the basic character of the intrusions gradually increases, with "calcalkali" becoming predominant: gabbros, diorites, serpentinites and anorthosites (which form the recently named Beja ophiolite complex), various different porphyries, and later intrusions comprising gabbrodiorites, granodiorites, tonalites and granites (which constitute what is known as the Évora Massif).

The most important mineral occurrences are base metals, which are associated with the Cambrian-Ordovician volcanic sedimentary complex, precious metals, chiefly related with the Precambrian formations, and tungsten and tin in the Sta. Eulália granitic complex, not to mention the potential for chrome, nickel, cobalt and platinum in the basic and ultrabasic rocks on the north and south margins of this zone.

With regard to non-metallic minerals, this geotectonic unit is rich in ornamental rocks, particularly marble, specially in the Estremoz-Borba-Vila Viçosa anticline , as well as in granites, like in the Portalegre district.

  • South - Portuguese Zone - The Ossa - Morena Zone and this unit are joined by the Ferreira-Ficalho thrust (partially over the Beja-Acebuches complex), which runs approximately E-W to the east and NW-SE to the west.

The South - Portuguese Zone is characterised by the existence of a volcanic sedimentary complex (VS) from the Late Devonian - Early Carboniferous period, overlain by a Culm flysch sequence; underlying this complex is the so-called "Phyllite-Quartzite Group". The oldest formations in this zone date from the Early Devonian period and belong to the "Pulo de Lobo" Formation, which includes phyllites, quartzites and rare acid and basic volcanic rocks. The acid volcanic rocks in the volcanic sedimentary complex constitutes the metallotect of the massive polymetallic sulfides that are characteristic of the Iberian Pyrite Belt, the most important metallogenetic province in Portugal in which the Lousal, Aljustrel, Neves Corvo and S. Domingos mines are located.

A final word for the Epi-Hercynian Covering, where non-metallic resources, namely limestones in Maciço Calcário Estremenho and in Algarve, kaolin in Viana do Castelo, Braga, Porto, Aveiro, Coimbra and Santarém regions, clays in Aveiro, Leiria, Lisboa, Santarém and Faro areas, sands in Coimbra, Leiria, Lisboa, Santarém and Setúbal districts, gypsum and salt in the centre and in the south and diatomites in Rio Maior, are very important.

Geological Map of Portugal

 


Base metals are the most important mineral resource of the country, especially the ones occurring on the polymetallic massive sulphide deposits of the Iberian Pyrite Belt. On that world famous mining district a total of 30 deposits (11 in Portugal and 19 in Spain), with more than 1120 Mt, were discovered between 1950 and 1998, averaging 1,2 deposits/2 years, which is an amazing exploration performance index.

Up until the eighties, the prospecting of massive polymetallic sulfide deposits was mainly carried out in areas where formations of the Volcanic Sedimentary Complex (VS), potential bearers of sulfide masses, outcropped or were expected to lay at depths not significantly exceeding 300 metres.

The discovery of Neves-Corvo allowed a new deposit type to be defined for the Iberian Pyrite Belt (IPB), in which the levels of base metals, Cu and Sn in particular, are extraordinarily high. As this type of mineral deposit can be economically exploited at depths of more than 500 metres, there was a change of strategy on the part of several mining companies in respect of the geological-structural characteristics of the areas they wished to explore. From that moment on, prospecting at great depths thus became viable, as the discovery of a deposit with similar characteristics would support the necessary investment.

These facts, coupled with the scientific and technological breakthroughs that took place during the eighties (in respect of both the geology and metallogeny of the IPB, and the geophysical techniques applied - advances in high sensitivity airborne magnetometry and time domain electromagnetics, as well as data processing), meant that prospecting in this metallogenetic province moved into areas where the VS ocurred at great depths bellow the flysch sediments and/or the Tertiary.In recent years this trend continued, the number of companies prospecting in such areas has risen as technological advances and computer data processing have boosted their ability to detect mineral masses at hitherto reachable depths and/or in particular adverse geological contexts such as conductive overburden.

The most striking recent development in the exploration of base metals has been the discovery, by the IGM, of the polymetallic sulphide deposit of Lagoa Salgada.

In reality, the activity developed by the IGM from 1991 onwards, in the Lower Sado Basin, North of the Grândola Fault, NW limit of the IPB, resulted in the breakdown of that psychological barrier.

Inclusively, this part contributed that in Spain the extreme NW of this important metalogenic province, characteristically similar to these of the NE Sector (Tertiary sediment cover of variable thickness upon Palaeozoic formation), that culminated in the discovery, in 1994, of the Las Cruces orebody near Seville.

It is obvious that the discovery of Lagoa Salgada and posterior exploration by the IGM in this sector of the IPB has catalysed the interest of exploration Companies. This area is presently one with higher potential and therefore most attractive and soughy after by private operators.

A further word on the present evaluation studies of the Aljustrel orebody in view of its reopening for the exploitation of Zn, Pb and Ag must be addressed. These studies began through an exploration and research contract that was signed, initially for the Estação orebody and subsequently to encompass the Feitais and Moinho orebodies. For these orebodies, a new recent press release, has defined reserves of combined measured, indicated, and inferred resource of 24.3 million tonnes of 5.70% zinc, 1.82% lead, and 63 grams per tonne silver.

A significant copper resource has also been defined at both Feitais and Moinho, with a total indicated and inferred tonnage of 8.9 million tonnes grading 2.07% copper, 1.01% zinc, 0.32% lead, and 16 grams per tonne silver, at a 1,5% copper cut-off.

On a final note of the precious metals, that occur in various metalogenetic scenarios as has been referred previously and per which there is good potential although there is no current production.

Main Gold Deposits

 

With respect to the known auriferous mineralization, the following results should be higlighted:

  1. In the Castromil deposit previously explored by both public and private operators, Connary Minerals has investigated vein-type gold mineralization hosted in silicified intra-granitic zones related to a shear zone. Connary Minerals has thus defined that the proven reserves in Covas de Castromil are 2,147 Mt probable reserves with an average grade of 1,9 g/t Au and reserves of 0,27 Mt with 1,8 g/t Au. In another area termed Serra da Quinta, probable reserves have been calculated at 0,743 Mt with 2,8 g/t Au.
  1. In the Jales/Gralheira area, the EDM/SM Bourneix Consortium (known later as EDM/Target Europe) has defined in this zone that is characterised by Au-quartz veins hosted in granites (Jales) and a shear zone with several mineralised structures in Silurian schists (Gralheira), resources of 633 300 tons with an average grade of 7 g/t Au.
  1. In the Montemor-o-Novo area where gold mineralization occurs in silicified tabular zones hosted in a Precambrian volcano-sedimentary sequence, the Sociedade Mineira Rio Artezia has defined resources (later augmented by Moriminas) of 4,45 Mt with an average grade of 2,81 g/t Au, of which 46% are defined, 45% inferred and 9% potential.
  1. In Penedono, where gold occurs in a parallel series of 0.5 to 2.2 meter wide vertical quartz veins, underground channel sampling made by the spanish company Rio Narcea, identified a zone assaying 30.0 grams per tonne gold over a strike length of 72 meters with an average width of 1.56 meters. This high grade zone forms part of an interval assaying 18.4 grams per tonne over a strike length of 128.5 meters with an average width of 1.68 meters.

Producing Areas of Ornamental and Industrial Stones

Producing Areas of Industrial Minerals

IGM Role

The IGM has, through the years, contributed decisively to the inventorying, exploration, beneficiation and promotion of the national mineral resources by developing and implementing several tasks in this respect. These tasks have had as a corollary, the discovery and/or valuation of various ore deposits.

The IGM is also responsible for the licensing of exploration and research activities in Portugal as well as their technical accompanyment. If so requested, the IGM may provide technical and administrative advice concerning the drawing up and sub mission of the applications, providing drafts and models, information concerning available areas or those licensed, and the IGM may allow consultation of technical documentation and maps in the archives. The prospecting and exploration contracts and mining contracts usually follow the form of existing models.

At the end of each contract, the respective operator delivers to the IGM all data relative to its exploration and research activity including any drill cores that may have been drilled.

The IGM has thus had to organise the geo-mining information produced not only by private operators but also that resulting from its own exploration and research activities. This information has been implemented and developed in various databases, some of them are available on our website. A few examples of these various databases follow.

SIORMINP Database

Information System of Portuguese Occurrences and Mineral Resources

The IGM has been developing a national information system about he occurrences, resources as well as areas with mining potential that is has termed the Sistema de lnformação de Ocorrências e Recursos Minerais Portugueses [(SIORMINP); information system of Portuguese occurrences and mineral resources].

The main objectives that led to the conceivement of SIORMINP were:

To better the geoscientific, technical and economic knowledge of the occurrences, resources and mineral reserves; promote the mining development, within the national territory, by selecting and diffusing of information to the companies of areas with mining potential; contribute to territorial classification.

Presently, SIORMINP contains information on more than 1200 occurrences, resources and mineral reserves as well as areas with mining potential.

This information, edited in reports which emphasise data on economic geology, is complimented with the stored data in 3 bibliographic, 1 drilling, 1 on areas of exploration and research, 1 archive of reserve databases as well as the inventories of the Portuguese occurrences of Au, Sin & W that is accessible from the main base. SIORMINP also allows the visualisation of large geotectonic units, areas for exploration and research, areas targeted for drilling and the location of Au, Sin & W occurrences.

 


Distribution of the Portuguese Mineral Occurrences described in the SIORMINP


Geomist Project

Geomist stands for geological and mining information system on the Iberian Pyrite Belt. It is a web-based service, which is the result of a European funded project lead by the geological surveys of Portugal and Spain. Under Esprit project n. 24481, a transborder geological and mining web site was set up. It is based on state of the art database, GIS and web technology.

It offers metadata, data and interactive map services of a wide range of geological, geophysical, drill-hole, remote sensing, mineral occurrences and exploration data. The pilot project has been finished in 1999 but the IGM servers are being enhanced with new data and further development of new 3-D and text mining services.

Geomist provides both a web browser interface and an ArcView based one, with increasing degrees of functionality. So, not all services are available on the web-based interface. The concept is being extended to cover other geographical areas of Portugal on the basis of the data models and services already available.

Historical data on mineral exploration on the IPB may be revised across Portugal and Spain, for instance by recreating the concessions granted throughout the years, querying boreholes drilled by a particular company and locating mineral occurences in the vicinity. Specific layers, such as an aeromagnetic map, may be displayed, so as to visualize Paleozoic volcanic axis buried under Tertiary cover, and overlaid with point datasets such as boreholes or mineral occurrences. Other layers, such as geology maybe turned on in order to know about the formations and tectonic features around areas of interest.

 

Example of interactive mapping with aeromagnetic map backdrop, overlaid by mineral occurrences, of which data may be seen on adjacent window.

Dataset drillholes with map highlighting user choices in one window and frames with data from those records in another window.

Legal Framework

The legal framework governing activity involving the prospecting, exploration and exploitation of geological resources was entirely modernised as from 1990 with the publication of Act nº 90/90 of 16th March which defines the main provisions concerning the discovery and exploration of geological resources (with the exception of oil). This regime is regulated by six other Acts published on the same date, specific to each type of geological resources:

  • ore deposits (Act nº 88/90);
  • hydro-mineral resources (mineral and mineral-industrial waters - Acts nºs 86/90 and 85/90);
  • geothermal resources (Act nº 87/90);
  • mineral masses or quarries (Act nº 89/90);
  • and spring waters (Act nº 84/90).

In accordance with this legislation and as a result of Constitutional requirements, the following geological resources are State owned:

  • ore deposits (including all metallic and radioactive ores, coal, graphite, pyrites, phosphates, asbestos, talcum, kaolin, diatomite, quartz, feldspar, precious and semi-precious stones, potassium salts and rock-salt);
  • hydro-mineral resources (natural mineral waters and mineral-industrial waters);
  • geothermal resources.

The remaining resources, as follows, are not State owned and may be privately owned: mineral masses (clays, limestones, marbles, gypsum, granites, sand and in general all the ornamental stones and those used in building not included under the ore deposits category), and spring waters.

Mineral licensing will generally follow in the wake of an application submitted by the applicant for the granting of one of four different mineral licenses in accordance with the type of activity to be undertaken and the type of resource, depending on whether or not it is State owned:

  • administrative prospecting and exploration contract;
  • administrative mining contract;
    in both cases covering certain resources within those which are State owned (ore deposits, and hydro-mineral or geothermal resources)
  • quarry operating licence in respect of mineral masses; and
  • spring-water operating licence.

Applications for prospecting and exploration contracts and mining contracts are addressed to and decided by the Minister for the Economy (ME) (or by his Secretary of State for Industry and Energy (SEIE)), submitted to and processed by the Geological and Mining Institute (IGM) which will also monitor the exercise of the operations covered by the contracts.

Spring-water operating licence applications are processed and decided by the IGM.

Applications for quarry operating licences are processed and decided by the Regional Delegations of the ME (DREs) or by the Municipal Authorities, depending on whether the operations are medium/large or small scale.

In processing these mineral licenses other departments of the Administration involved in the environment and spatial planning are consulted as are the municipal authorities of the area covered by the application. These entities are also responsible for monitoring the matters indicated. The DREs are responsible for inspecting mining operations.

Although mineral and environmental legislation contains imperative provisions concerning the assessment of the environmental impacts of the activity (mandatory for all operations located in areas of protected landscape identified in the law and for operations covering more than 5 hectares or with a production volume grater than 150,000 tonnes), landscape reconstruction, protection and safety, there are additional specific regulations concerning these matters ( noise, dust, underground waters etc,) and specialised departments that supervise their application.

In accordance with the provisions of the law, if the environmental impact assessment (where required under the law) is refused by the Minister of Environment the mining licence should not be granted.

If so requested, the IGM may provide technical and administrative advice concerning the drawing up and submission of the applications, providing drafts and models, information concerning available areas or those licensed, and the IGM may allow consultation of technical documentation and maps in the archives. The prospecting and exploration contracts and mining contracts usually follow the form of existing models.

The following summarise the principal features of these two administrative contracts, the regime of which is governed by law.

Prospecting and Exploration Contract, and Mining Contract Regime

Prospecting and Exploration Contracts

Prospecting and exploration rights cover the minerals specified in the contract and the area set forth therein (which, save exceptional cases, may not exceed 1,000 km2).

The total duration of the contract, including prorogations, should not, usually, exceed 5 years (3 years in the case of hydro-mineral and geothermal resources). Contract periods are negotiable and usually include an initial period of 1 to 2 years followed by 3 or 3 one-year extensions, if consistent with the minimum work programme and budget. With the exception of those areas in respect of which a mining contract application has been lodged, the Licensee should abandon a part (usually 50%) of the area contracted for on the occasion of each prorogation to the prospecting and exploration contract.

The contract stipulates the general work programmes and minimum investments as agreed in advance, to be implemented by the Licensee over the duration of the contract in question (balances of investments made larger than the established minimum figures established for a given contract period may, however, be carried forward to the next period). The general schedule is complemented every year by detailed programmes and the respective budget. They are monitored via presentation of half-yearly progress reports the last of which should be drawn up as the final report of the work and investments undertaken, presented together with the main conclusions.

The reports and technical data provided by the Licensee are considered confidential during the duration of the contract.

Non-compliance with these minimum commitments may lead to refusal of prorogation or to cancellation of the contract by decision of the Minister after prior notice to and consultation with the Licensee.

The contract also stipulates payment of an annual mining rights surface fee, fixed or variable, in proportion to the size of the area granted (PTE/km2). The nature and amount to be stipulated are negotiable.

Pursuant to prevailing legislation, the Sate, in the event of a commercial discovery, guarantees the granting of a mining concession (involving entering into a proper contract) in respect of the resources discovered within the scope of the prospecting and exploration contract provided that the Licensee is not at fault with regard to compliance with legal and contractual obligations, provided always that an application is submitted to the effect, accompanied by the necessary information (including presentation of a mining plan compatible with good mining practice and with environmental protection requirements).

The prospecting and exploration contract also contains provisions concerning the duration of the operating contract and the payment of a royalty (usually a percentage of sales F.O.B./Mining area).

Cancellation of the prospecting and exploration contract resulting from non-compliance with legal or contractual obligations is subject to the rules and procedures established by law. Renunciation of rights or complete abandon by the Licensee of the area under concession is allowed provided that the Licensee's commitments have been complied with or that the justification submitted is accepted.

Assignment of prospecting and exploration rights is subject to the prior consent of the Minister following an application lodged by the Licencee, accompanied by information concerning the capacity of the intended Licensee to continue operations and to meet contractual commitments, particularly those in respect of the schedule of work and investment which must be up to date.

Occupation of land to set up the prospecting and exploration work shall be preceded by the consent of the owners of the land in question, which, if refused without due grounds, may be granted by the courts at the Licensee's request.

Mining Contracts

The concession contract entitles the Licensee the sole right to exploit the specified resources within the area set forth in the contract. The duration of the contract is stipulated on the basis of the estimated duration of the resources under normal operating conditions in accordance with the geological report, preliminary feasibility study and mining plan submitted together with the application. It covers an initial period and 1 or 2 prorogations.

Mining operations shall proceed in accordance with a general plan of work approved or revised (as necessary) and with yearly work programmes, and in a manner consistent with applicable regulations and good mining and environmental practice. For operations larger than 5 hectares or 150,000 tonnes (and all scale of operations if located in areas of protected landscape identified in the law) an environmental impact assessment and a protection plan must be submitted to be approved by the Environment Ministry as a condition for the award of the contract. In accordance with the provisions of the law, if the environmental impact assessment is refused by the Minister of Environment the mining licence should not be granted.

The Licensee shall appoint and register the technical manager in charge of the mining operations.

Notice of suspension of mining operations must be given to the Minister and consent obtained, and the suspension may not last longer than authorised, unless renewal thereof shall have been requested and granted, if justified.

Unauthorised suspension of mining operations may lead to cancellation of the contract if the Licensee, following a reasonable period of notice, shall not have put an end to the suspension or presented acceptable justification.

Cancellation of the contract for non-compliance with legal and contractual conditions is subject to the rules and procedures established by law.

The contract also stipulates annual payment of a royalty, generally in the form of a percentage of the values of the F.O.B./Concession sales. Conditions governing the periodic review (usually every 5 or 10 years) of this percentage and its suspension or reduction whenever justified to ensure continuation of operations are also governed by the provisions of the contract.

Assignment of mining rights is subject to the prior consent of the Minister, as mentioned above in connection with assignment of prospecting and exploration rights.

The Licensee is entitled to apply for expropriation for public service of the land necessary to the mining operations in the event that agreement cannot be reached with the respective land owners.

Doing business in Portugal

As in any other industrial activity, exploration and mining operations may be undertaken by natural persons or bodies corporate and, particularly, by companies, the latter being the form usually adopted by operators.

Applicants for prospecting and exploration licences and mining licences must, in accordance with legislation, submit together with their applications full identification and other information confirming their technical and financial capacities and their experience in the operations they intend to undertake.

Applications shall also include, as applicable, a prospecting and exploration work programme and the respective budget, or a mining plan. Following submission of a properly drawn up application the candidate is invited to present a bank guarantee, usually in the sum of PTE 150,000, designed to ensure pre-contractual good faith (the guarantee to be returned to the candidate as soon as the application is accepted or rejected by the Minister). There follows negotiation of the contract and the publication in the press of notice of the application so that any claims may be lodged within 30 working days.

With regard to the candidature of non-residents a local agent should be appointed to simplify contacts with the IGM during the processing of the application and negotiation of the contract.

For non-residents to carry on mining activity (or any other activity) in Portugal several formalities must be complied with, including:

  • commercial registration of the permanent establishment to be set up (usually in the form of a branch) or the incorporation of a local company in accordance with the provisos of the Companies Code.
  • This permanent establishment must be set up if the activity to be undertaken lasts for more than one year;
  • registration of the investment with ICEP - (Investments. Trade and Tourism of Portugal). However, if the matter is one of a project of special interest to the national economy (including, in particular, investments of a value equal to or greater than PTE 5 billion) it may also be necessary to enter into a foreign investment contract, in accordance with the provisos of Act nº 321/95 of 28th November and Regulatory Decree 2/96 of 16th May.

Mining companies are subject to the tax regime applicable to commercial and industrial activity as a whole, including the IRC Code (Corporation Tax Code). Recently, tax law has allowed an annual provision to be set aside into a fund to pay for future expense incurred in implementing the landscape and environment recovery plan of the site of the operations.