The Mining Concession Procedure
Concerning general questions referring to mining concession procedure please contact email@example.com. Concerning any particular issue referring to any area tendered in a given concession bid please contact the e-mail address found in the concession Call for Tender to be purchased from the Mining and Geological Survey of Hungary (hereinafter referred to as: MBFSZ).
The legal background for mining concessions:
- Act CXCVI. of 2011 on national assets,
- Act XVI. of 1991 on concession,
- Act XLVIII. of 1993 on mining ,
- Government decree No. 203/1998 on the implementation of Act XLVIII. of 1993 on mining ,
- Government decree No. 103/2011 (VI. 29.) concerning complex vulnerability and loading capability assessment of natural occurrences of mineral resources and geothermal energy,
- Ministerial decree No. 8/2014 on the mining concession tender procedure
The minister for national development as being responsible for mining affairs may lease – upon a concession contract concluded with either a native or foreign, natural or legal entity, or any transparent organization as the winner of the concession tender:
1) on a closed area
aa) the exploration, development and exploitation of mineral resources,
ab) the exploration, recovery and utilization of geothermic energy.
2) the establishment and operation of transmission pipelines for crude oil, crude oil products, as well as other hydrocarbon gases with the exception of natural gas.
The decisions of the minister in connection with the concession tenders are prepared by MBFSZ.
The progress of concession procedure
1. Selection of closed areas
MBFH shall review the area of the country in every five year in respect of potential mineral resources and qualify them as closed. Later on, the president of MBFSZ shall publish such areas qualified as closed in the Official Gazette. Areas being qualified as closed may be selected for Call for Tender upon the vulnerability and loading capability assessments and the decision of the minister, any mining right may be obtained in the frame of concession.
2. Vulnerability and loading capability assessments
As regarding closed areas, MBFSZ shall carry out vulnerability and loading capability assessments. Based on such assessments, the minister shall announce the concession tender for those areas being favourable for exploiting mineral resources or recovering geothermal energy for energetic purposes. The assessment reports on vulnerability and loading capability are accessible on the official website of MBFSZ in Hungarian. The maps of these possible future concession areas can be found here: hydrocarbons and geothermal energy.
The following assessment report on vulnerability and loading capability is available in English:
3. The Concession Call for Tender
The minister shall publish a public concession call for tender for areas selected for concession at least 90 (ninety) days prior to the first date of the period for submitting concession applications in two countrywide daily newspapers and in the Official Journal of the European Union.
4. The Concession tender
The concession call for tender shall contain all requirements and conditions of submission to be complied with by the tenderers.
a) Conditions for the submission of tender
The submission of tender shall only be available by purchasing the tender documentation.
The submitted tender shall be valid if requirements set in the Concession Call for Tender are complied with.
According to the requirements and aspects specified in the concession call for tender, the tenderer shall
a) present the financial ’state-of-the-art’ existing on submitting the tender,
b) verify data of financial reliability as determined in the call for tender,
c) present the experiences acquired in the field of activities subject to concession, technical and professional preparedness,
d) notify of data to be considered as business secret,
e) present technical solutions to be applied within the frames of the call,
f) present how the ownership structure of the concession company with his participation will be like if winning the tender, and
g) may present other important aspects in respect of the concession activity.
The precondition of participating in the call for tender shall be the confirmed payment of participation fee prior to submitting the tender.
b) The consideration of tenders
The minister shall consider those applications complying with the conditions of the tender. The minister shall set up a committee for evaluating the tenders.
The Evaluating Committee shall reject the tender without substantial examination if the tenderer
a) has not purchased the detailed tender documentation,
b) has not paid the total sum of the participation fee and the tendering guarantee considering the deadline,
c) has not complied with the conditions determined for the formal requirements of the consignment in the call for tender,
d) failed to send the tender until the deadline as set in the call.
The Evaluating Committee – in cases pursuant to the call for tender – shall call upon the tenderer to supply the defect within 8 (eight) days from the opening of the tenders.
The Evaluation Committee shall reject the tender and the tender shall be invalid if the completion of it has not been delivered within 8 (eight) days or due to improper completion, it is not adequate for qualification.
The procedure for the tender shall be ineffectual if
a) there is no valid tender,
b) none of the submitted tenders fulfils the conditions set in the call for tender,
c) the rules for incongruity determined in the governmental decree on the implementation of Act XLVIII. of 1993. on mining have been broken in the course of evaluating the tender,
d) any of the tenderers has committed an act seriously offending the other tenderers’ interests or the clarity of the procedure.
e) the approval of the offer made by the winner of the tender would result in significant loss in the property.
The Evaluating Committee shall assess the tender applications and suggests the winner person of the tender for the minister. Based on the suggestion of the Committee the minister shall come to a decision concerning the grant of the concession. The result of the tender must be published and all the applicants must be informed about it.
c) Entering into the concession contract
The minister shall enter into the concession contract with the winner of the tender. The concession contract period can be 35 years at most where the deadline may be prolonged once with the half of the concession period time.
The concession contract must contain an agreement on the content of work programme and the guarantees for completion. The technical operation plan for exploration approved by the Mining Authority must contain all tasks undertaken in the work programme established in the concession contract. The minister in the contract may stipulate the reimbursement of costs relating to the completion of the work programme in case the entitled to concession fails to fulfil his obligation undertaken in the contracted work programme.
d) The concession fee
In exchange for performing any mining activity subject to concession, a certain concession fee must be paid or an alternative compensation must be provided to the state. The concession contract must contain the agreement concerning the amount of the concession fee, the way of accomplishment of payment. The minister shall set the minimal amount of concession fee to be presented in the call for tender but the applicant may offer a higher amount.
e) The concession royalty
In exchange for exploiting any mineral resource upon a concession contract, the Hungarian State shall be entitled to mining royalty. The lowest rate of the mining royalty payable on the basis of the concession contract shall be fixed individually in accordance with the decision of the responsible minister for each tendered area. The minister shall publish the lowest rate of the mining royalty both in the Call for Tender and the tender announcement. Such published lowest rate may be overbid by the tenderer in the tender. The undertaken mining royalty shall be laid down in the concession contract and be subject to regular payment in the course of the concession.