Opinion: How can mineral rights be simplified?

Do mineral rights prevent domestic exploration and extraction of critical resources, hindering progress on the UK's Critical minerals strategy? If so, how can these barriers be overcome?

These were the questions that the British Geological Survey, on behalf of UK Research and Innovation, asked Knights and Harper Macleod to prepare a report about. I was the principal author of the report on English and Welsh law and Pamela Todd at Harper Macleod led on Scottish issues.

On top of this, lawyers and surveyors are routinely involved in the sale and purchase of freehold minerals, leases and licences for extraction, due diligence for the acquisition of companies and stock market flotations.

But the critical minerals strategy nonetheless commits the government to 'review mineral rights-related barriers to exploration and extraction of critical minerals and explore ways to improve the accessibility of mineral rights information to expedite critical mineral development'.

As I prepared the report, consulting minerals businesses, landowners and mineral owners, business and professional organisations, consultants and land registries, it became apparent that searching for critical minerals is more speculative than it is for clay, aggregates and most industrial minerals because the baseline geological information is likely to be less helpful.

Furthermore, while the wider minerals sector is generally searching for large quantities over a relatively small area, finding critical minerals often involves looking for relatively small quantities over a large area. This may require significantly more due diligence about mineral ownership compared to that in the broader minerals sector, and with a less certain outcome.

At present, an unregistered title to freehold land in England and Wales will prima facie include all substrata to the centre of the Earth with the exception of gold, silver and platinum, petroleum, gas and other hydrocarbons owned by the Crown, and coal, which is vested in the Coal Authority.

However, even if there is no immediate evidence of separation between freehold mineral ownership and the surface freehold interest, or registration of any freehold minerals interests in the land if evidence of ownership is produced to that effect, then separate ownership of freehold minerals will be valid and enforceable.

While it is not compulsory to register freehold titles to minerals separated from the surface, voluntary registration is possible and many of the larger freehold owners of such minerals have done so. Title to freehold minerals at HM Land Registry is likely to be qualified as to not guaranteeing there are no rights affecting the title arising before a specific date.

A registered title to freehold land will prima facie include all substrata to the centre of the Earth, with the same exceptions as for unregistered freeholds. However, HM Land Registry's guarantee of title will not apply to any separate third-party ownership of freehold minerals, whether or not any note of that ownership appears on the register of title to the surface or the freehold mineral ownership is itself registered.

A registered surface title may identify that some minerals are excepted and not included in the ownership of the surface; however, information in the register may be little more than a reference to the existence of separate mineral ownership, with no particulars about how that arose or reference to any particular document. Even if some particulars are included, they are unlikely to indicate who the current owner of those freehold minerals might be.

As well as separate freehold ownership of minerals, they may be owned by the lord of the manor, particularly if land was formerly of copyhold tenure. However, in this case the surface owner would usually be entitled to a right of possession, and minerals could not be worked without their consent.

Since October 2013, manorial rights to minerals should have been protected by a notice, which should include details of the person registering the notice and the nature of the rights claimed in the relevant surface title. If no notice is registered and the surface title is transferred for a valuable consideration – money or money's worth – the manorial rights – including ownership of minerals – will cease to have effect.

All of this means that while we have a comprehensive system for registering title to surface freeholds this is not the case for freehold minerals owned separately from the surface.

Bodies such as the Crown Estate and the Church Commissioners, as well as many private estates and mineral owners, have voluntarily registered ownership, but this situation is far from universal. In many respects, the register is incomplete or totally lacking in information and far from a transparent record of freehold land and mineral ownership.

However, HM Land Registry opposed compulsory registration given the effort that would be involved in dealing with mineral applications, principally on the grounds that this would divert resources from other projects.

The government's response to the report was not published until 2021, but it too rejected the compulsory registration of minerals on the basis that it 'is not part of HM Land Registry's specific business strategy commitments'.

Yet implementing the Law Commission's proposals would provide a well-researched, balanced and manageable start to compulsory registration of freehold minerals. It would benefit all those involved in the mineral sector, and indeed surface owners and developers. The government's rejection, however, hardly seems consistent with the objectives of the critical minerals strategy that it subsequently published.

The 1966 Act was designed to deal with issues that might prevent or hinder the development of UK mineral resources. Under the act, operators can for instance acquire searching or prospecting rights and working rights, removing legal restrictions and letting down surface to dig and work the minerals.

Acquiring such rights is a two-stage process: an initial application is made to the secretary of state to establish whether there is a prima facie case, and if successful the application is referred to High Court where the substantive issues will be decided.

The grant of rights must be expedient in the national interest, and one of the following four grounds must also be established.

• The persons able to work the minerals are too numerous or have conflicting interests.
• The persons able to grant the rights cannot be ascertained or found.
• The persons who can grant the rights do not have the necessary powers of disposition by defect in title, legal disability or otherwise. 
  
• The persons having the power to grant the rights refuse unreasonably to grant them, or demand terms that in the circumstances are unreasonable.

On the face of it, the act appears to be useful for those seeking and working critical minerals, and deals with some of the uncertainties created by any lack of available information on mineral ownership. Given the critical minerals strategy is public policy, the national interest in the exploitation of such resources would not appear too difficult to establish.

However, applications for the grant of rights pursuant to the act are rare – there have been just two since 2015, according to the Department for Business, Energy & Industrial Strategy before its abolition earlier this year.

They are not straightforward, either, and can take two years or more before judgement. This is not a quick fix and, particularly where early-stage exploration rights are being sought, is slow and expensive.

In addition, jurisdiction for applications could be transferred from the High Court to the Upper Tribunal (Land Chamber), which might reduce the complexity and cost of the process, and make use of the specialist knowledge of latter's legal and surveyor members.

Where there is disagreement on the terms of any search for working minerals, jurisdiction seems to be the only option, on the basis that the landowner or mineral owner is acting unreasonably.

In the report, I suggest allowing jurisdiction where negotiations have been taking some time – six months may be appropriate – without agreement being reached, irrespective of unreasonableness. This would prompt resolution by the tribunal where necessary; but the very existence of the provision should encourage negotiation in the first place, possibly supported by alternative dispute resolution.

A further suggestion that could help at the exploration stage is that, if an operator could produce evidence of a licence or agreement with the surface owner where there is also evidence of unidentified third-party mineral ownership, then an application could be made to the relevant government department for a licence that would permit the rights granted by the surface owner to be exercised in respect of any minerals owned by an unidentified third party. There would be no compulsion to make the application, but it may be useful to those exploring for critical minerals.

If these progressive changes could be made, they would remove some of the uncertainty and lack of transparency around freehold mineral ownership, dealing with its consequences to allow commercially viable mineral exploitation.

Of course, caution is needed when dealing with these issues, as there are potential unintended consequences for landowners and mineral owners and operators and surface developers. However, if the Law Commission's 2018 proposals were followed with proper resourcing, implementation should not be a problem.