Mining Law "Lease-Based" (Royalty) Operating Models: Legal Character, Procedure, Contract Design and Current Legislative-Jurisprudential Framework (2026)
In mining law, "lease" typically refers to a royalty agreement. A royalty is the arrangement where the license holder, without transferring the license, has production and operational activities carried out by a third party in exchange for a specified fee. Different from license transfer, the royalty is recognized by the Mining Law and Mining Regulations, but requires careful contract design. The royalty operator may be held responsible for labor, occupational health and safety, and environmental management as much as the license holder; however, public law obligations may remain on the license holder. Fee calculation, production obligations, guarantees, termination and liquidation procedures, OSH compliance, rehabilitation obligations, oversight and evidence arrangement are critical elements of a royalty agreement. This article systematically examines the legal character, procedure, critical clauses in contract design, dispute typology, and current legislative-jurisprudential framework of royalties.