Commentary to article 12. Minerals and their classification according to the Code of the Republic of Kazakhstan “On Subsoil and Subsoil Use”
1. Natural mineral formations and organic substances containing useful components, the chemical composition and physical properties of which allow them to be used in the field of material production and consumption directly or after processing, are recognized as minerals.
2. According to their economic significance and in order to establish appropriate conditions for subsurface use, minerals are divided into the following groups::
1) groundwater;
2) hydrocarbon minerals (hydrocarbons);
3) solid minerals.
3. Oil, crude gas and natural bitumen are recognized as hydrocarbons.
Crude oil, gas condensate, and hydrocarbons obtained after refining crude oil and processing oil shales, oil tar sands, or tar sands are recognized as oil.
Crude oil is any hydrocarbons, regardless of their specific gravity, extracted from the subsurface in a liquid state at normal atmospheric temperature and pressure, including those formed from crude gas by natural condensation.
Crude gas is any hydrocarbons, regardless of their specific gravity, extracted from the subsurface in a gaseous state at normal atmospheric temperature and pressure, including crude natural, associated, shale gas, coalbed methane, as well as non-hydrocarbon gases contained in their composition.
Associated gas is a multicomponent mixture of hydrocarbons and non-hydrocarbon gases found in the oil in a dissolved state in reservoir conditions and released from it when pressure decreases.
Coalbed methane is a multicomponent mixture of hydrocarbons and non-hydrocarbon gases with a predominant methane content, which is in a gaseous state at normal atmospheric temperature and pressure, extracted from coal deposits.
Natural bitumen is recognized as minerals of organic origin with a primary hydrocarbon base, lying in the subsurface in solid, viscous and viscous-plastic states, the extraction of which in natural conditions by borehole methods is technically impossible.
4. Natural mineral formations, organic substances and their mixtures that are in a solid state in the bowels or on the Earth's surface are recognized as solid minerals.
Solid minerals are divided into ore and non-metallic. Ore solid minerals are native metals, ores of ferrous, non-ferrous, rare, radioactive metals and rare earth elements. The remaining solid minerals are considered non-metallic.
Non-metallic solid minerals used in their natural state or with minor processing and purification for construction and other economic purposes and widely distributed in the subsurface are recognized as widespread. Common minerals include:
metamorphic rocks, including marble, quartzite, quartz-feldspar rocks;
igneous rocks, including granites, syenites, diorites, gabbro, rhyolites (liparites), andesites, diabases, basalts, volcanic tuffs, slags, pumices, volcanic glasses and vitreous rocks (perlite, obsidian);
sedimentary rocks, including pebbles and gravel, gravel-sand (sand-gravel) mixture, sands and sandstones, clays and clay rocks (loams, siltstones, mudstones, clay shales), table salt, gypsum rocks, marls, limestones, including shells, cretaceous rocks, dolomites, limestone-dolomite rocks, siliceous rocks (trepel, flask, diatomite), natural pigments, peat;
therapeutic mud.
__________________________________________________________________________________________
(Odilov T.A., Mukhamedov R.N.)
1. Definitions of the concepts of "minerals" and their groups were previously provided for in the 1992 Code on Subsoil and Processing of Mineral Raw Materials, the 1996 Law on Subsoil and the 2010 Law on Subsoil, however, for the first time the legislator divides minerals into groups.
The concept of minerals given in the Subsoil Code generally coincides with the same concept in the expired legislative acts in the field of subsoil use, with a small but important addition regarding the content of useful components.
When defining the concept of "minerals", the legislator establishes the criterion of "usefulness", which is expressed in the content of useful components in a fossil mineral formation or organic matter. In other words, a fossil mineral formation or an organic substance formed naturally is useful for extraction only if it contains a useful component or useful components whose chemical composition and physical properties allow such a fossil to be used in material production, consumed directly (i.e. it is in the same form in which it was withdrawn) or after processing.
A useful component is an integral part of a mineral, which also includes an unhealthy part. In some cases, a mineral may consist only of a useful component (for example, a diamond).
"Useful components" should be understood as a chemical compound or a chemical element. For example: carbon in diamonds (100%) and in coal (from 60% to 95%), iron compounds Fe2O3 or FeCO3 in iron ores, copper compounds CuS or Cu2O in copper ore. Moreover, the useful component at different stages of the technological process (for example, during enrichment and further conversion) may change in composition of the compound under the influence of physical or chemical factors, while retaining the key chemical element representing the greatest economic value.
The "usefulness" of certain compounds in a mineral at different stages of the technological process depends on economic and technological factors. For example, compounds of sulfur, arsenic, and phosphorus are unhealthy impurities in iron ores, sulfur, phosphorus in coking coals, sulfur in energy coals, etc. However, if at any stage of the technological process, due to economic or technological factors, it becomes possible to purposefully allocate a traditionally unprofitable part in an economically advantageous way to generate additional profit, then this part can be considered useful in each individual case.
Technological factors and the stage of the technological process also determine the extraction of components from minerals that have traditionally (since Soviet times) been considered useful (due to the approach of calculating reserves adopted since Soviet times), but along with the main useful component. Such accompanying "useful" components usually include compounds or metals extracted in relatively small quantities (for example, silver) at later stages of the technological process. For example, rare earth metals or their compounds, if technologically possible, are usually isolated (extracted) only at the stage of chemical and metallurgical conversion. In an economic sense, these useful components have no independent industrial significance, that is, they do not form the economic basis for the formation of a deposit.
Thus, according to these examples, a mineral is related to a useful component in the following way: ore is a mineral, and the chemical elements or their compounds contained in it are useful components. A mixture of hydrocarbons in various proportions with water, organic nitrogen and sulfur compounds, organometallic compounds of vanadium and nickel, and mineral salts
and salt solutions, commonly called oil, is a mineral, and the mixture of hydrocarbons contained in it is a useful component.
However, as described above, useful components, depending on the technological process, are not always natural, i.e. they arise naturally due to the effects of physico-chemical factors, or they are not always contained only in natural resources or a useful industrial product. Due to imperfect technologies and scientific and technological progress, such components can also be found in waste generated at each stage of the technological process: mining, mining and processing, and chemical and metallurgical. For example, metal compounds contained in tailings (TMOS) of mining and processing plants or in metallurgical slags (TMOS of chemical and metallurgical industries) may differ from compounds of the same metal in ore (minerals) as a result of chemical and physical influences. In certain economic circumstances and taking into account the content of these wastes, these components may also become "useful", thereby forming a man-made deposit, which can also be studied and developed within the framework of subsurface use (see the commentary to paragraph 5 of Article 13).
2. Previously existing legislation on subsurface resources provided for the concept of "mineral raw materials", which, in accordance with subclause 68 of Part 1 of Article 1 of the 2010 Law on Subsurface Resources, meant "... a part of the subsurface extracted to the surface (rock, ore raw materials and others) containing a mineral (minerals)…". It followed from the definition that minerals are only an integral part of mineral raw materials. This was fundamentally wrong.
This concept was of an economic nature and was established for tax purposes. In other words, the concept of "mineral raw materials", which was originally developed for taxation purposes, as a similar designation for minerals in the field of subsurface use, was subjected to regulatory distortion.
Currently, the concept of "mineral raw materials" has been preserved in the current version of the Tax Code of the Republic of Kazakhstan (paragraph 45, paragraph 1 of art.1) and in practice, for tax purposes, it is applied not only to traditional mining operations from the subsurface, but also in cases of extraction of minerals or useful components from TMO, thereby confirming that mineral raw materials are nevertheless understood in a broad sense.
This is a mountain mass containing minerals (extracted directly from the subsurface) and TMO.
3. Minerals are divided into the following groups: groundwater, hydrocarbon minerals (hydrocarbons) and TPI. The division of minerals into groups is based not on the classification of minerals generally accepted in geology (fuels, ores, mining and chemical raw materials, etc.), but on differences in regulatory regimes. This is indicated by the phrase "in order to establish appropriate conditions for subsurface use ...".
The inclusion of groundwater as a group of minerals in the Subsurface Code is conditioned solely by the possibility of conducting prospecting and evaluation works for groundwater provided for in the Special Part of the Subsurface Code (paragraph 1 of Article 86) under a license for geological exploration of subsurface. The commented article does not contain a more detailed classification of groundwater due to its presence in the RC RK (pp.12, 14, 17, 18-1, 19 part 1 of art. 1).
4. In the 2010 Law on Subsoil, there was some confusion of terms used, which raised a number of questions in practice. For example, clause 72 of Article 1 of this Law established that crude oil, gas condensate, natural gas and associated gas, as well as hydrocarbons obtained after refining crude oil, natural gas and processing of oil shales or tar sands, are oil. Thus, in fact, the term “oil” was equated to hydrocarbons, despite the fact that the wording “oil and gas” was often used in the text of the 2010 Law.
According to paragraph 88 of this article, natural gas was understood to mean hydrocarbons that are in the gaseous phase at normal atmospheric temperature and pressure, including fatty gas, dry gas, associated gas remaining after extraction or separation of liquid hydrocarbons from fatty gas, and non-hydrocarbon gas extracted together with liquid or gaseous hydrocarbons.
The concepts of “dry gas” and “fatty gas” were not disclosed in the legislation on the subsoil in 2010, which also introduced some uncertainty. Thus, in the oil and gas industry, natural gas is usually divided into dry and fatty, depending on its component composition. Gas with a predominant content of methane (CH4) and a slight admixture of ethane (C2H6) and propane (C3H6) is classified as dry gas, and with a high content of ethane, propane and other high molecular weight hydrocarbons is classified as fatty. In this case, the free gas, which is not dissolved in liquid hydrocarbons, is mainly dry, and
associated (dissolved in oil found in deposits) - mainly has a “fatty composition".
On the other hand, dry gas can also be understood as natural combustible gas from the group of hydrocarbons, characterized by a sharp predominance of methane in the composition, a relatively low content of ethane and low (up to 1%) heavy hydrocarbons obtained by purifying natural gas from heavy hydrocarbons, water vapor, hydrogen sulfide, and mechanical impurities in complex treatment plants. gas and gas processing plants.
In other words, commercial gas can be recognized as dry gas in terms of the Law of the Republic of Kazakhstan “On Gas and Gas Supply” (clause 34 of Article 1). Similarly, “associated gas remaining after extraction or separation of liquid hydrocarbons from fatty gas” can be classified as commercial gas, which in fact also means the processing process. associated gas and its improvement to marketable condition. At the same time, extending a number of provisions of the 2010 Law to commercial gas would not only go beyond its scope, but would simply be incorrect (including recycling requirements, etc.).
Within the framework of the Subsoil Code, these issues were partially regulated, and as a result, an internally consistent conceptual framework was built, which, however, does not cover all types of hydrocarbons.
As can be seen from the diagram, the term “crude gas”, which was introduced to replace natural gas, excluded processed (brought to marketable condition) gases and added such current types as shale gas and coalbed methane.
At the same time, there is some inaccuracy regarding liquid hydrocarbons, since the definition of “crude oil” implies that it also includes gas condensate (any hydrocarbons extracted in a liquid state), while in the group concept of “oil” gas condensate is present on a par with crude oil.
5. Paragraph 4 of Article 12 provides for the concept of TPI, which includes mineral formations, organic substances and their mixtures in a solid state. Along with other groups of minerals, TPI are objects of natural origin, as evidenced by the word "natural".
Unlike groundwater or hydrocarbons, TPI can also be located on the earth's surface or in the soil layer. Such a feature of their location in nature is provided for in the definition of the concept of TPI, thereby also extending the legal regime of subsurface use to such TPI located on the earth's surface and in the thickness of the soil layer.
The division of TPI into ore and non-metallic generally corresponds to the division accepted in the scientific community. In order to identify minerals related to ore and non-metallic, the legislator forms, first of all, a list of ore minerals, logically defining all minerals not included in this list as non-metallic.
The division of solid minerals into ore and non-metallic is not accidental. It has a Special meaning in paragraph 3 of art. 210 and paragraph 27 of art. 278, and earlier, before the amendments to the Code on the Subsoil, which entered into force on March 1, 2021, it was important for the institution of retention status (Chapter 29). In addition, this division makes it possible to provide separate regulatory mechanisms in the Special Part devoted to mining operations, if necessary in the future, without changing the supporting structure of the General and Special Parts and general approaches. For example, such a division made it possible to amend Article 210 by the Law of the Republic of Kazakhstan dated December 26, 2019, providing for separate rates of annual minimum costs for operations for the extraction of ferrous ores in paragraph 3.
6. In Part 3, paragraph 4 of the commented article, the legislator identifies OPI among non-metallic minerals as a separate subgroup of TPI. Availability
As a separate subgroup, OPI also has regulatory significance. For example, a separate type of license for subsurface use is provided for the extraction of OPI only.
In foreign practice, OPI is referred to as aggregate (for example, in Canada) or the generic term stone (translated from English as "stone") (for example, in Victoria, Australia).
Prior to the adoption of the Subsoil Code, a specific list of OPI was established by the subordinate legislation and was divided into 3 categories, which included minerals such as local building materials, non-metallic raw materials for metallurgy and other non-metallic raw materials.
As a disadvantage, this list included materials that are not minerals as such (for example, molding sands and crushed stone). This approach generally went against the concept of a mineral as a mineral formation or organic matter that arose naturally.
In order to strengthen the stability of the OPI institute, the legislator abandoned their classification at the subordinate level, consolidating it at the level of the law. In addition, the legislator established mandatory criteria for defining and classifying minerals as common, including their new classification, instead of a classification based on the scope of application of the OPI.
Thus, the Subsurface Code establishes the following distinctive features of OPI: 1) the possibility of their use in their natural form after removal from the subsurface or with minimal processing or purification, excluding the extraction of useful components; 2) the possibility of use in construction or other economic (production) activities as raw materials; and 3) widespread in the subsurface. The presence of all three features together makes it possible to classify certain non-metallic minerals as widespread.
Taking into account these features, the legislator classifies OPI according to their origin (genesis) into three groups: metamorphic, igneous and sedimentary, listing their main types (in the original version of the Code on Subsoil, this classification was absent, unlike the NK RK). Medicinal mud is singled out separately, since it has a different origin.
The list of the main types of OPI by group is given in order to clarify and provide an example of the most common types.
A similar classification of OPI is presented in paragraph 1 of Article 748 of the Tax Code of the Republic of Kazakhstan. A separate MET rate is set for each group.
Almost all the OPI listed in Part 3, paragraph 4 of the commented article are presented in the plural. This approach is explained by the fact that a separate type of OPI has several additional varieties. For example, the use of the word "granites" suggests that all types of granite belong to igneous rocks.
The list of the main types of OPI is not exhaustive, since in reality there may be more than a hundred of them (in the original version of the Subsoil Code, unlike the NK RK, the list was exhaustive, creating contradictions between the two laws and risks in law enforcement). It is impossible to establish a complete list of OPI in the legislation. Therefore, if necessary, the provided methodology (mandatory features of the OPI) makes it possible to determine the relevance of a non-metallic mineral to common ones, taking into account their classification. Such a determination is of great practical importance in order to obtain an appropriate mining license (TPI or OPI) and apply the appropriate MET rate. Clarification on the issue of the relevance of non-metallic minerals to common ones from the point of view of the assigned mission and tasks is carried out in practice by the authorized body for the study of subsurface resources.
7. In the list of OPI, peat and therapeutic mud are obviously not widespread in the territory of the Republic of Kazakhstan, in fact, they do not possess the mandatory signs of OPI. It is also questionable whether medicinal mud is classified as a mineral in principle.
In these cases, the legislator used a legal fiction in order to apply the legal regime of "classical" OPI to peat and therapeutic mud, avoiding (from the point of view of practical necessity) the establishment of a legal institution that separately regulates relations between peat extraction and the use of therapeutic mud.
8. Despite the fact that the commented article has resolved a number of contradictions that existed in the previously existing legislation on subsoil and subsoil use, the legal technique of presenting the norms, as well as the content of individual paragraphs, require further improvement.
Thus, the issue of attributing saline solutions of groundwater containing elevated concentrations of useful components (for example, lithium) to one or another group of minerals within the existing framework needs to be clarified.
classifications. Such salt solutions are extracted from the subsurface not for use as final raw materials, but for the purpose of further extraction of useful components from them. In this case, water is used as a kind of carrier of useful components, therefore it is not extracted for consumption purposes. Considering that in this case, the real purpose of extracting underground brines from the subsurface is the useful components contained in them, usually metal elements, it can be concluded that the TPI regime is generally applied to these brines. However, due to their liquid state of aggregation and based on the definition of TPI, the question of the formal validity of the inclusion of underground brines in the TPI group naturally arises.
In paragraph 2 of the commented article, the legislator refers to groundwater as a separate group of minerals. The attribution of groundwater to minerals is a forced legal device due to the regulation of relations on the search and evaluation of groundwater by the Code on Subsoil. At the same time, it is worth noting that the relations on the extraction (withdrawal) of groundwater during the development of the Subsoil Code were removed from the sphere of regulation of legislation on subsoil and subsoil use and transferred to the sphere of water legislation, which is quite natural, since previously the "line of demarcation" of legislation on subsoil and water legislation unjustifiably "passed" through the volume of water extraction per day (50 cubic meters), which in no way correlated with the essence of the relationship.
Groundwater, together with surface waters, constitute a separate special natural resource – water, which in an objective sense is not a fossil.
The tradition of regulating the search, assessment and extraction of groundwater by legislation on subsoil use has developed historically during the Soviet period. The attempt to completely transfer the scope of groundwater regulation during the reform of legislation on subsoil and subsurface use during the development and approval of the Subsoil Code did not find proper understanding among relevant government agencies due to the views and problems of transferring the staff of the hydrogeological unit.
It seems advisable to regulate the exploration (i.e., search and evaluation) of groundwater, along with its extraction, exclusively by water legislation, following the example of non-CIS countries (primarily OECD countries), in which relations on the search, evaluation and extraction of groundwater are not regulated by legislation on subsurface use, but are derived into separate laws, the subject of which is relations on about water resources
fully By building a regulatory architecture in this way, the legislator, as a rule, focuses the issues of studying and managing water resources in one law or in a complex of interrelated laws and in one department. This approach is becoming particularly important and relevant in the light of climate change and the inevitability of water problems in the Central Asian region, according to UN estimates.
Constitution Law Code Standard Decree Order Decision Resolution Lawyer Almaty Lawyer Legal service Legal advice Civil Criminal Administrative cases Disputes Defense Arbitration Law Company Kazakhstan Law Firm Court Cases
Kazakh Association of Organizations of the Oil and Gas and Energy Complex KAZENERGY
Nur Sultan 2022
The Kazenergy Association expresses its sincere gratitude for the support in preparing the commentary to the following companies: North Caspian Operating Company NV, NC KazMunayGas JSC, Mangistaumunaygas JSC, Karachaganak Petroleum Operating BV, White & Case Kazakhstan LLP, Haller Lomax LLP)", "Erlicon CG" LLP, "Signum Law Firm" LLP. © Kazenergy Association, 2022 © team of authors, 2022 © authors, 2022
Dear readers!
We offer you a scientific and practical commentary prepared by a group of Russian specialists with extensive practical experience in legislation on subsoil and subsoil use and who participated in the preparation of the Code on Subsoil and Subsoil Use.
Subsurface use is a very complex and specific area of public relations, the regulation of which has its own historical background and takes into account the technological specifics of the process of subsurface development, as well as environmental, commercial, legal and other features of exploration and development of deposits.
Kazakhstan's legislation on subsoil and subsurface use has passed through several stages in its development, and has always been based on a balance of interests between the state and subsurface users, transparency, striving for the maximum possible degree of protection of the rights and legitimate interests of investors, ensuring sustainable social, economic and environmental development of the country.
The Code "On Subsoil and Subsoil Use", adopted at the end of 2017, was developed taking into account many years of accumulated experience and law enforcement practice, as well as the results of extensive discussions with experts working in the industry.
It reflects specific, important measures on the part of the state to increase the investment attractiveness of exploration and further reduce administrative barriers.
Nevertheless, practice and legislation do not stand still, constantly evolving, taking into account new challenges facing both the subsurface use industry and the economy as a whole.
In this regard, this commentary is intended to serve as an aid for a wide range of interested persons – specialists working in the industry, in
understanding the meaning of the norms, their historical context, the interrelationship and mutual influence of the various provisions of the Code.
We also hope that studying the commentary will serve as an incentive for new generations of young domestic specialists to work scientifically and practically in this important industry, for the benefit of the development of our country, current and future generations of Kazakhstanis.
Sincerely, U. Karabalin, Deputy Chairman of the Kazenergy Association, Hero of Labor of Kazakhstan
