Lithium Power International Ltd (fka LTHHF)

[Dr_Vonschellan]

Latest_armchair analysis_of TC_(Supreme Court)_Codelco/Maricunga case
doesn't really confirm any "hard" decision per se... but it does clarify some nebulous issues a bit further.
Analysis follows below bar.

The Doctor
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"On the right to extract lithium covered by belongings derived from the Mining Code of 1932"
http://webcache.googleusercontent.com/search?q=cache:UajdexDo4pwJ:https://www.elmercurio.com/legal/noticias/opinion/2023/03/02/912058/derecho-extraer-litio-salar-maricunga.aspx&hl=en&gl=us&strip=0&vwsrc=0
by Alvaro Anriquez and Ernesto Vargas March 2, 2023

In this column we take charge of the point made by the professor of Mining Law Cristián Quinzio, by way of justifying the assumption that gives rise to our previous opinion, that is, that any belonging to the current CM 1932 and whose measurement and manifestation record have been registered before January 1, 1979 has lithium not reserved to the State within its purpose...

Motivated by the controversy generated by a request from Codelco regarding a Special Lithium Operation Contract (CEOL) in the Maricunga Salar, at the end of 2022 we argued in this same media that a conflict between, on the one hand, holders of 1932 Mining Code (CM 1932) properties with lithium not reserved to the State and, on the other hand, of a CEOL that grants exclusivity to its holder to exploit the lithium within its coverage could be resolved by applying a CEOL that grants exclusivity to its holder to exploit the lithium within its coverage.This could be solved by applying the logic with which private law deals with conflicts between holders of incompatible rights with respect to the same object. This view has deserved two different answers. The first one, by the distinguished professor of Mining Law, Cristián Quinzio, questions one of the assumptions of our proposal. The second, authored by Professor of Public Law Marcelo Mardones, implicitly doubts the rationality of resorting to Private Law to solve the conflict.

In this column we only take up the point made by Professor Quinzio, by way of justifying the assumption that gives rise to our previous opinion, that is, that any CM 1932 property in force and whose act of measurement and manifestation have been registered before January 1, 1979 has lithium not reserved to the State within its object. In a future column we hope to refer to the opinion of Professor Mardones.

The assumption

Professor Quinzio rightly identifies that our column starts "from the assumption that the holders of mining properties in the Salar de Maricunga, with whom the conflict with the CEOL holder could arise, are entitled to non-reserved lithium". In his opinion, the real problem would be to determine - in accordance with the relevant Mining Law rules - whether such assumption corresponds to the reality of the Salar: if it were not, as Professor Quinzio seems to suggest, our thesis would be irrelevant, since there would be no collision of rights whatsoever.

However, as we explain in the following paragraphs, our assumption is not unfounded: Chilean Mining Law does indeed recognize the right to exploit lithium to the holders of the belongings that are the subject of this column. Explaining why requires understanding that the transitional regime of the current mining property system modified the object of the CM 1932 appurtenances to make them compatible with its own principles, in particular, with a design whose policy is that each appurtenance grants its holder the right to exclusively exploit all the concessionable substances located within its coverage. While these are technical rules of mining law, understanding them is of interest for a number of general problems, including the application of the law over time and the transit between ownership systems.

The logic of CM 1932 and DL 2886.

The CM 1932 recognized at least two types of appurtenances: those of the first paragraph of art. 3°, which could be granted on a large number of substances detailed in the same Code, including lithium ("Pertenencias del Inciso Primero") and belongings of the second paragraph of the same article, which were granted on other fossil substances ("Pertenencias del Inciso Segundo"). The Decree Law 2886 of 1979 (DL 2886) reserved lithium to the State, by removing it from the list of substances of the first clause of art. 3° CM 1932 and adding it to the list of substances reserved to the State by art. 4° CM 1932. However, in its art. 5° the same DL exempts from this reservation the lithium existing in Pertentions (definition: attempting to impress by affecting greater importance) of the first clause which, at the date of its publication "have their act of measurement registered, are in force, and whose manifestation, in turn, has been registered before January 1, 1979". Therefore, it is commonplace to affirm that any First Clause Property that complies with the requirements of timeliness and validity established by DL 2686 authorizes its holder to exclusively exploit the lithium within its coverage. Consequently, if such belongings exist in the Maricunga Salt Flat, an eventual modification to the CEOL of Codelco's subsidiary in the sense of authorizing it for the exclusive exploitation of lithium in that salt flat, would generate the collision of rights that is the assumption of our thesis.

The problem is that, according to our best understanding, in the Salar de Maricunga there are only Second Subsection Pertentions that meet the requirements of art. 5 of DL 2686. Under CM 1932, these properties only allowed their holder to exploit the substance for which they had been granted, among which lithium was not included. Therefore, at the time of its enactment, DL 2886 could not be interpreted in the sense of exempting the Pertenencias del Inciso Segundo from the legal reservation of lithium, for the simple reason that they did not give the right to exploit such substance. In line with the above, DL 2886 only exempted from the lithium legal reserve the Pertentions of the First Section.


Transition from the CM 1932 law to that of the current regime.

The object of the Second Clause Pertentions changed as a result of the transitory norms of the mining regime emanating from the 1980 Constitution, the Organic Law of Mining Concessions (LOCCM) and the 1983 Mining Code (CM 1983). Pursuant to such norms, the Pertenencias del Inciso Segundo incorporated, with exclusivity, all the substances that had not been granted to them but that were accessible at the time of their incorporation that were within their coverage.<br><br>

This incorporation derives from the design of the policy underlying the current mining regime: to grant the holder of any property exclusivity for the exploitation of all concessionable substances within its coverage. This policy was incompatible with the regulation of the CM 1932, since it allowed overlapping mineral properties for the exploitation of different mineral substances. Therefore, the CM 1983 explicitly repealed "any legal or regulatory provision contrary to or incompatible with the precepts of this [new] Code" and its art. 244 repealed only the CM 1932.

Regarding lithium, art. 3° LOCCM establishes that it is not subject to mining concession, without prejudice to the mining concessions duly constituted prior to the declaration of non-concessibility made by DL 2886.In turn, article 5 of DL 2886 identifies the properties that are exempted from the state lithium reserve, referring to article 3 of CM 1932. The question, then, is how to read art. 5 DL 2886 when the norm to which it refers has been repealed. In other words, the question to be answered is which are the properties that are exempted from the state reserve of lithium.


Application of mining law over time.

The problem under analysis is one of application of the law in time: to determine the legislation applicable at the present time to properties constituted under a repealed law. This problem was directly solved by the transitory provisions of the LOCCM and the CM 1983, which regulate the status of the mining rights acquired under the CM 1932 (previous law) during the validity of the CM 1983 (later law).

With respect to the Second Subsection Perquisites, these rules operate as follows:

(a) Art. 1° Trans. LOCCM establishes that the mining concessions existing at the entry into force of the CM 1983 shall subsist under the rule of the latter, but that, as to their enjoyment and charges and as to their extinction, the provisions of said Code shall prevail. That is to say, the rights granted to its holder by both the First and Second Clause Pertentions must be determined according to the CM 1983 and not to the CM 1932.

(b) Taking into account the new exclusive and all-encompassing nature of mining property, art. 2° Trans. LOCCM ordered the CM 1983 to determine the manner in which the mining concessions existing at the entry into force of that Code and not overlapping with others would be extended to the substances that were not originally granted within its coverage.

(c) In compliance with the above, No. 5 art. 1° Trans. CM 1983 provides that the sole ownership constituted, without distinguishing on which substance, incorporates to its object, first, "all the substances that were not granted" and, second, "those that, by virtue of Law No. 18,097 [LOCCM], become concessionable". Thus, said numeral includes the new principle of single and all-encompassing concession and applies it without contemplation to the CM 1932 belongings, openly empowering its holders to exploit all the substances located within its coverage.

(d) Regarding the identification of "all the substances that were not granted", it must be taken into account those that had the nature of concessionable at the time the respective ownership was constituted. This is the criterion adopted by the LOCCM (art. 11 N°2) and the 1983 CM (art. 53 sub. 2º), and it was also the approach followed by the CM 1932 (art. 82). For the rest, the alternative identification criterion (i.e., the entry into force of the LOCCM) makes the last part of the referred No. 5 redundant, and should therefore be discarded.

(e) The same principle justifies the rule enshrined in No. 7 art. 1 Trans. CM 1983 for a different application condition, namely, cases of overlapping of CM 1932 concessions. Pursuant to this rule, among other things, as from the entry into force of the CM 1983, the Second Clause Tenement that prevails over a First Clause Tenement with which it is juxtaposed (the latter tenement, which consequently expires) becomes unique in the granted coverage and entitles its holder to exploit any concessionable substance found therein. That is to say, any of the substances that appeared in inc. 1º and 2º of the repealed art. 3° CM 1932 at the time of constitution of the surviving appurtenance.

In Conclusion, the reference made by article 5 of DL 2886 to the repealed paragraph 1 of article 3 CM 1932 must be understood to be made to the transitory provisions of the LOCCM and of the CM 1983. These provisions establish, in what is relevant, that the holders of Second Clause Pertentions incorporate to them, among others, all the substances that had not been granted to them, but that were available at the time of their constitution. Consequently, the Pertentions of the Second Paragraph that "have had their act of measurement registered, are in force, and whose manifestation, in turn, has been registered before January 1, 1979" incorporate to them the lithium located within their coverage. This solution is in full harmony with the principle of the LOCCM and the CM 1983, according to which each property (i) is unique with respect to the area on which it is located (prohibition of overlapping) and (ii) entitles its holder to exploit all the concessionable substances located within its coverage (all-encompassing nature).

The eventual granting to Codelco's subsidiary of an exclusive CEOL for the exploitation of lithium in the Salar de Maricunga, consequently, would produce a collision of rights with the holders of mining rights derived from both First and Second Clause Pertentions in that salar. Determining how that collision should be resolved is an urgent problem. In our view, private law provides the best conceptual apparatus to do so.

Álvaro Anríquez Novoa is assistant professor in the Department of Law Sciences at Universidad Chile and partner of ANVP Abogados, while Ernesto Vargas Weil is assistant professor in the Department of Private Law at the same university, Spencer-Fairest Teaching Fellow in Law at Selwyn College, University of Cambridge and partner of ANVP Abogados.* Álvaro Anríquez Novoa is assistant professor in the Department of Law Sciences at Universidad Chile and partner of ANVP Abogados.