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The Right of the Research Permit Holder to Compensation for Irregular Mineral Exploitation by the Surface Owner

Mineral resources, according to Article 20, IX of the Federal Constitution, are the property of the Union, which, due to the impracticality of direct exploitation, authorizes private individuals to carry out mining activities, regardless of the ownership of the land where the deposits are located (surface owners).

In this context, as is known, there are various regimes for the exploitation of mineral substances provided for in the Mining Code – namely: concession regime, authorization regime, licensing regime, artisanal mining permit regime, and monopolization regime. The research authorization is the mineral exploitation regime aimed at enabling work to define the deposit, evaluate it, and determine the feasibility of its economic exploitation.

The authorization title that grants the private individual the right to conduct research on the deposit is the "research permit," granted by the Director-General of the National Department of Mineral Production (DNPM). Much is questioned about the rights (or expectations) arising from obtaining this authorization title.

In a landmark ruling on the subject, Special Appeal 1471571, the Third Chamber of the Superior Court of Justice (STJ) held that the private individual holding the research permit for mineral deposits is entitled to compensation for material damages resulting from irregular exploitation by third parties.

In the concrete case, the private individual obtained in 2002 the right to research tin for six years in an area located in the municipality of Ariquemes (RO). In 2006, the surface owner illegally extracted tons of ore. Thus, the research permit holder filed a reparatory action seeking compensation for the losses suffered due to the irregular extraction.

After proceedings in the 1st and 2nd instances, the prevailing understanding of the STJ was that irregular exploitation causes harm to the research permit holder, thus requiring compensation by law.

At that time, it was noted that although the 1988 Federal Constitution assigned ownership of mineral reserves to the Union, following a global trend recognizing the existence of national interest, the Constituent Assembly, also recognizing the economic importance of minerals in private activity, opted to safeguard the possibility of private exploitation of deposits, provided that the individuals are Brazilian.

For these reasons, the STJ concluded that once research for mining purposes is authorized, the permit holder gains the subjective and exclusive right to future mine exploitation, as a result of the priority right provided in Article 11 of the Mining Code, notwithstanding Union ownership.

This leads to several implications to be observed in similar cases. Firstly, the decision touches on the discussion regarding the rights arising from the research permit: whether they are effective concerning future mining operations or merely expectations.

Those who argue that the title in question represents merely an expectation of the right to mine assert that the research permit does not legally guarantee its holder economic-financial rights over the deposit. According to this view, it is an expectation precisely because it is a geologically random activity, and thus, there are no guarantees that, despite holding a permit to conduct research, the miner would effectively be able to mine the deposits at a later time.

However, apart from the doctrinal and jurisprudential controversy on the matter, the practical implications of the STJ's adopted position must be considered. The first, which appears positively relevant to us, concerns maintaining the economic value of the mining title.

As is well known, the economic potential of deposits is assessed through prognoses conducted during prospecting. Thus, it is evident that one of the main components of valuing the mining title held by the permit holder corresponds to the mineral reserve of the deposit covered by the title. Consequently, it is evident that irregular exploitation by third parties (in this case, the surface owner) directly interferes with the permit holder's patrimonial sphere, as it reduces the deposit's economic potential and will manifestly depreciate the market value of the title.

In this regard, the decision under review seems correct to us, as it allows for compensation for the damages caused to the permit holder's patrimonial sphere due to the depreciation of the mining title resulting from irregular exploitation at the site, in accordance with relevant legal dictates and especially in harmony with the civil liability institute.

Conversely, the decision may raise controversies regarding other aspects. Consider, for example, the analogous invocation of the creation and implementation of Conservation Units (UCs) of the integral protection group in areas already covered by a research permit or another authorization title. As is known, creating UCs is one of the measures that, when imposed on private individuals, potentially makes it impossible for them to exploit the property's economic potential and thus creates barriers to large-scale projects (see our article "The Creation of Conservation Units as a Restrictive Measure").

The understanding would also evidently apply to UCs which, although of a sustainable use nature, are equivalent to integral protection ones, such as Extractive Reserves and Private Natural Heritage Reserves (RPPNs).

Therefore, considering the position recently adopted by the STJ in the present case, this understanding should also be expanded, in favor of judicial coherence, to analogous cases, requiring compensation for the research permit holder for the creation of certain Conservation Units in the research title area when the research and future deposit exploitation are hindered by the UC's creation.

Thus, the understanding established by the STJ is commendable, as it provides greater legal certainty to the research permit holder by ensuring the maintenance of the economic value of their title.

However, it remains to be seen whether the Public Administration will henceforth act in harmony with the ruling, extending its application to other cases where the understanding is also appropriate, as alluded to in this essay.

Alexandre Sion, Maria Carolina Faria Dutra, and Caio de Pádua are lawyers at Sion Advogados (www.sionadvogados.com.br), specializing in infrastructure projects such as mining, oil & gas, and civil construction.