New regulation on mining licenses in Uzbekistan

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Uzbekistan’s Cabinet of Ministers has approved a new Regulation “On the procedure for issuing licenses for the right to use subsoil plots”, including plots containing strategic types of minerals (gold, silver, copper, lead, zinc, tungsten, hydrocarbons, coal, rare metals and rare earth, etc.) (hereafter referred to as the Regulation). The previous regulation, which was approved by the President in 2007, expired in June of this year.

Types of licenses

  • Geological exploration (including pilot production);
  • Mining (production);
  • Use of technogenic mineral formations, etc.

Authorized licensing authorities:

  • The State Committee of the Republic of Uzbekistan on Geology and Mineral Resources (hereafter referred to as the State Geology Committee) is the licensing authority for all types of rights to use subsoil plots. There is an exception for the right to build and operate underground structures for the storage and disposal of waste, which is issued by the State Committee of the Republic of Uzbekistan on Ecology and Environmental Protection.

Licensing procedure

The main method is an online auction in accordance with the list of subsoil areas, which is formed annually by the State Geology Committee. However, there are several cases when licenses can be issued as a result of direct negotiations:

  • According to presidential or governmental decisions or “road maps” approved by them;
  • In the event of failure of online auctions for 1 year;
  • If the legal entity, which financed the geological exploration of mineral resources fully or partially, assigns the exclusive right to extract minerals from a prospected field to another person in agreement with the State Geology Committee;
  • For some facilities for hydrocarbon raw materials and other strategic types of minerals that have significant commercial potential, as well as under separate agreements – by selecting the best offers on the basis of competitive bidding in cooperation with the State Commission to develop conditions for the use of subsoil resources.

Thus, the licensing of the exploration and production of oil and gas can be granted through direct negotiations, and for other fields only in cases of "significant commercial potential". It should be noted that the Regulation does not provide a definition for “significant commercial potential”.

Moreover, the Regulation introduces the concept of “separate (investment) agreements”, according to which, along with the product-sharing agreement and concession agreements, exclusive rights to subsoil use can be granted to investors.

In addition to the procedure for conducting auctions and direct negotiations, the Regulation governs the assignment of the right to subsoil use.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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