Mining Law "Lease-Based" (Royalty) Operating Models: Legal Character, Procedure, Contract Design and Current Legislative-Jurisprudential Framework (2026)

LEASE-BASED (REDEVANCE) OPERATING MODELS IN MINING LAW: LEGAL NATURE, PROCEDURE, CONTRACT DESIGN AND CURRENT LEGISLATION-CASE LAW FRAMEWORK (2026)

1. Introduction: What does "lease" mean in mining law?

In everyday language, when "leasing a mining field" is mentioned, what is usually meant is not the use of real property (land/field) through a lease agreement. This is because mines in Turkish law are not treated as property elements that can be freely disposed of as "subsurface assets on a piece of land" subject to private ownership; mining activity proceeds on the axis of licensing and public oversight.

In practice, when "lease" is mentioned, the most common model is where the license holder, without transferring the license (at least formally), has a third party carry out mineral production and operation, and in return generally receives a per-ton fee or a fixed fee/revenue share. The established name for this model in the mining sector is redevance.

This article aims to systematically present the redevance model referred to as lease in mining law, its differences from license transfer, the procedure of the transaction, critical clauses in contract design, the liability regime, and current legislation and case law trends (as of 2026).

2. Conceptual framework: License transfer – operating permit – redevance distinction

"Granting use" of a mining field to a third party arises in three separate dimensions:

(i) License transfer (complete transfer): The owner of the license changes. This is not a transaction completed solely through a private contract; it produces a legal consequence that has an administrative dimension and must be recorded in the mining registry.

(ii) Operating permit: This is the permit layer required for actual commencement of operating activity. The transfer of the operating permit is explicitly restricted in the Mining Law.

(iii) Redevance (license "lease"): The license holder, without transferring the license, has a third party carry out production/operation activity in exchange for a certain fee. Since the redevance holder employs workers at the site, conducts production, and carries out shipment in practice, the dimensions of occupational health and safety, environment, administrative sanctions, and liability toward third parties become prominent.

Establishing this distinction correctly is important; because an incorrectly structured "lease" relationship may create risks of being evaluated as a de facto transfer before the administration and may produce serious consequences especially regarding work accidents/environmental violations/license obligations.

3. Legislative basis (official texts): Mining Law and Mining Registry

At the center of right ownership and transactions such as transfer in mining law is the "mining registry." The publicity of the mining registry and the effect of registration are explicitly regulated:

MINING LAW – Article 38

Article 38 – The mining registry containing technical and financial matters related to all mining rights and activities is maintained by the General Directorate in the manner specified in the regulation. Transfer, succession, attachment, pledge and mortgage or termination of mining rights are recorded in this registry. The mining registry is public. Interested parties may request that registry records be shown in the presence of one of the mining registry officials. It cannot be claimed that records in the mining registry are unknown. Rights to be acquired over mines do not take effect unless registered.

Source: https://www.mevzuat.gov.tr/

This regulation produces two consequences:

1. Transactions that change ownership such as license transfer cannot produce sound results through a "private contract" alone without the mining registry and administrative process dimension.
2. In relationships such as redevance where "license transfer" is not made, if the contract effectively converts into a transfer, serious disputes may arise before the administration/court.

Regarding the transferability limit in terms of the operating permit-license relationship, this limit is clearly drawn in the Mining Law:

MINING LAW – Article 27

Article 27 – The operating permit cannot be transferred. The operating license may be transferred as a whole within the framework of principles to be specified in the regulation.

Source: https://www.mevzuat.gov.tr

This article shows that transfer of the "operating permit" layer is not possible; whereas the "operating license" can be transferred as a whole. Therefore, when "leasing," the right layer being transferred/granted for use must be carefully designed.

4. Legal nature of redevance: How do court decisions define redevance?

Since the redevance agreement does not have a fully defined, closed regime in the Mining Law, case law is of great importance in terms of private law nature. In case law, redevance is also referred to as "mining operating license lease" and its function in practice is described:

BURSA 1ST COMMERCIAL COURT OF FIRST INSTANCE Case No. 2020/875, Decision No. 2023/36

The miner who is the license holder receives from the third party a fixed fee decided periodically or based on the ore obtained in exchange for transferring the operating right in this license. The agreement made between the license holder and this third party who temporarily acquires the mining operating right is a mining operating license lease agreement, and its name in the mining sector and legal practice is the Redevance Agreement. The redevance agreement is a lease agreement within the scope of the product lease provisions of the Turkish Code of Obligations that enables natural or legal persons who acquire the right to search and operate mines, the ownership of which belongs to the state, to transfer these rights to third parties.

Source: Bursa 1st Commercial Court of First Instance, Case No. 2020/875, Decision No. 2023/36

Similarly, it can be seen in Court of Cassation decisions on redevance disputes that evaluation may be made by analogy with provisions similar to product lease/revenue lease. The statutory definition of product lease also provides a basis for this view:

TURKISH CODE OF OBLIGATIONS – ARTICLE 357

ARTICLE 357 – Product lease is the agreement by which the lessor undertakes to grant the lessee the use of a thing or right that yields products and the collection of products in exchange for a consideration.

Source: https://www.mevzuat.gov.tr

This definition is consistent with the redevance agreement where "product" is mineral production and "consideration" is structured as per-ton redevance, fixed fee, or revenue share.

On the other hand, case law also notes the tension along the lines of "indivisibility of mining rights" and "transfer of license authorities by contract." This shows that although redevance exists in practice, it may generate risks depending on the structure of the contract:

10th Civil Chamber 2014/11151 Case, 2015/4153 Decision

...license holders transfer mineral extraction and sales rights to private individuals through certain private law contracts and for a certain fee. Through this method called redevance, license holders lease mineral extraction and sales rights to third parties who produce as subcontractors through fixed-term contracts.

Source: 10th Civil Chamber 2014/11151 Case, 2015/4153 Decision

In conclusion: redevance is neither a "completely prohibited" nor a "completely free and risk-free" area. The practice exists; case law recognizes it; however, when contract design and distribution of administrative obligations are not correctly structured, disputes become more serious.

5. Procedure of redevance: Mining Regulation and registry/audit dimension

In order for redevance to be traceable from the perspective of mining administration as well, the Mining Regulation has introduced certain rules regarding redevance transactions. In particular, making more than one redevance agreement in the same area, the term of the agreement, and the financial competence of the redevance holder come to the fore:

MINING REGULATION – Article 101 (Redevance transactions) (Selected paragraphs)

(6) In redevance agreements, the end date of the agreement, including possible extensions, is stated as day/month/year. More than one redevance agreement cannot be made in the same area even if there is a level/floor difference.

(7) Those who will operate as redevance holders: a) Legal entities; ...must meet the conditions related to the use of mining rights in Article 6 of the Law and the financial competence conditions determined in this Regulation... b) Natural persons must meet the full amount of financial competence through a bank reference letter...

(8) In the event that the parties jointly request the deletion of the redevance agreement from the mining registry records, these records are deleted from the mining registry. ...Redevance agreements whose terms have expired are deleted from the mining registry.

(9) ...in redevance agreements, administrative, financial, and legal responsibilities arising from mining activities to be conducted in these areas regarding the Labor Law, occupational health and safety belong to the redevance holder. However, this situation does not eliminate the technical, financial, and legal responsibilities of the license holder arising from the Law.

Source: https://www.mevzuat.gov.tr

This regulation simultaneously confirms the two most critical points in practice:

• The redevance holder assumes administrative/financial/legal responsibilities in terms of labor and OHS dimensions (Article 101/9).
• Despite this, the technical/financial/legal responsibilities of the license holder arising from the Law do not completely disappear (last sentence of Article 101/9).

This dual structure causes redevance agreements to have the nature of "risk management agreements": the agreement both shares production revenue and attempts to manage administrative and compensation risks through contractual mechanisms.

6. How is "leasing" (redevance) done step by step? Practical procedural flow

The typical flow to be followed in the field and in the contract for a redevance transaction is as follows:

Step 1 – Legal mapping and permit matrix extraction: A "permit matrix" is created on topics such as license type (exploration/operation), existence of operating permit, coordinates of the field, existing facilities, environmental permits, OHS organization, explosive materials permits. If this step is performed incompletely, even if the redevance holder begins production, bottlenecks occur in administrative processes and the economic balance of the contract is disrupted.

Step 2 – Technical and financial competence review (due diligence): The financial competence, equipment fleet, engineering staff, past work accident/SSI/criminal record of the redevance holder candidate is evaluated. Competence indicators such as the bank reference letter mentioned in Mining Regulation Article 101/7 can also be attached to the contract as "preconditions."

Step 3 – Preparation of contract draft (redevance agreement) and annexes: The contract annexes must be strongly structured: coordinate sketch/map, production program, quality/analysis procedure, weighing system, shipment documentation, guarantees, penalty clauses, termination procedure, insurance policies, OHS plans.

Step 4 – Establishment of audit and reporting system: In redevance agreements, the most frequent disputes arise from measurement problems such as "how much was produced," "what quality," "what sale price/revenue." Therefore, evidence infrastructure such as scale receipts, dispatch slips, sampling protocol, independent analysis laboratory, and camera recordings is the core of the agreement.

Step 5 – Submission to administration/registry registration and entry into force: Since Mining Regulation Article 101/8 provides mechanisms such as deletion of the redevance agreement from mining registry records, the correct execution of the registration process of the agreement before the administration (if any) is important. Since the specific procedures here may vary depending on the nature of the agreement, the type of license, and the current practice of the administration, the MAPEG practice should be checked separately before the transaction.

7. Critical provisions in contract design: Core clauses for "a good redevance"

A redevance agreement must be more complex than a classic lease agreement. Because its subject is not only "granting use" but also an activity carrying production performance, public obligations, and high compensation risk.

The following clauses must be specified in detail in the agreement (otherwise disputes become inevitable):

(1) Subject, field definition, and certainty of boundaries: The coordinate list, working levels, facility areas, stock areas, and waste dump areas must be clearly incorporated. Sanctions and termination mechanisms in the event of "overflow outside the field" must be regulated.

(2) Term and extension regime: Mining Regulation Article 101/6 indicates that the end date must be clearly written as day/month/year and possible extensions must be taken into account. Term extensions should be tied to conditions of production targets, renewal of guarantees, and continuation of administrative permits.

(3) Production program and minimum production commitment: Minimum production, penalty clauses in case of underproduction, force majeure/unexpected event provisions, and how technical breakdowns and permit delays will be managed must be written.

(4) Fee (redevance) calculation method: If per-ton fee: weighing point, moisture/grade correction, loss and separation conditions. If revenue share: the effect on revenue of items such as invoice, returns, discounts, freight, refining/crushing-screening expenses.

(5) State royalty, license fee, and public debts: Since the license holder may remain the addressee before the administration, mechanisms such as immediate termination + collection from guarantee + recourse in case the redevance holder fails to pay public debts should be provided.

(6) Occupational health and safety (OHS), labor and SSI recourse risk: Mining Regulation Article 101/9 places OHS and labor responsibility on the redevance holder; however, it also states that the license holder's responsibilities do not completely disappear. Therefore, in the agreement, the redevance holder's obligation to obtain insurance, compensation of the license holder in case of work accident, assumption of administrative fines, and recourse provisions must be written in detail.

(7) Environmental obligations, waste/overburden management, and site closure: In mining, overburden, residue, and slag management is separately addressed in the Mining Law:

MINING LAW – Article 36 (Selected part)

During mining ...activities; ...overburden, beneficiation residue piles, and slags, if they do not constitute environmental pollution concerns, are separately preserved as they come out of the last process they underwent. The amounts, physical characteristics, analysis reports of properly taken samples, and dump areas of these residues and overburden piles are shown in activity reports, plans, and maps.

Source: https://www.mevzuat.gov.tr

This framework must be adapted to the agreement; overburden dump areas, reporting and binding nature of sample/obtained analyses, and distribution of responsibility in case of environmental penalty must be clarified.

(8) Audit, access to information, and evidence system: The license holder's right of access/audit to the field is the basic safety valve of the redevance. It is recommended that scale receipts, dispatch slips, analysis reports, inventory count minutes, and electronic records be tied to an evidence agreement.

(9) Guarantees and risk mitigation packages: Bank guarantee letter, cash deposit, pledge/assignment, penalty clause, accelerated termination, and precautionary measure conditions must be designed together. Particularly when production stops, the continuation of the license holder's administrative obligations makes strong guarantees necessary.

(10) Termination, liquidation, and exit from site: When the redevance ends, "liquidation" steps such as stocks, overburden, facility dismantling, rehabilitation work, evacuation of workers, reports to be given to the administration must be planned in detail.

8. Current legislative highlights (2025–2026): Rehabilitation and institutional structure

With the 2025 amendments, new definitions such as the concept of rehabilitation and rehabilitation fee calculation are seen to have entered the system more prominently in the Mining Law. This requires redevance agreements to structure the burden of "site closure/improvement" more concretely.

New concepts in the definitions section (especially rehabilitation and account structure) increase the need for clear writing on who will bear which costs in the agreement:

• Rehabilitation
• Rehabilitation Fee Calculation
• Collection Authority
• Board (regarding permit decisions)

These headings show that redevance has gained importance not only in terms of production economics but also in terms of "post-activity costs" and follow-up of public receivables. (This section is related to the 2025 additions in the Definitions article.)

9. Dispute typology: Where do lawsuits most often arise?

Redevance disputes generally concentrate on the following headings:

(i) Fee calculation disputes: Tonnage/quality/grade/moisture correction; sale from stock; claims of underreporting of sale price to third parties.

(ii) Breach of production commitment: Failure to maintain minimum production, unauthorized stoppage of production, engineering/equipment inadequacy.

(iii) OHS and work accidents: Employer status of the redevance holder, SSI recourse actions, compensation actions, administrative fines.

(iv) Environmental and site damage: Unsuitability of overburden dump areas, failure to perform rehabilitation, administrative sanctions.

(v) "De facto transfer" disputes: The agreement being structured so as to produce the result of a license transfer, the license holder completely withdrawing from oversight.

Some of these disputes require technical expert examination. Therefore, structuring the evidence infrastructure of the agreement (scale, analysis, camera, reports) from the outset directly affects the outcome in lawsuits.

10. Practical recommendations: Legal and operational "best practices"

As the practical output of the article, the following package is recommended:

1. Agreement + operations protocol must be prepared together: Not just a legal text; weighing-analysis-shipment procedures must be attached as technical annexes.
2. Guarantees must be multi-layered: A single penalty clause is often insufficient. Bank guarantee letter + cash deposit + insurance + recourse provisions must be designed together.
3. OHS and environmental compliance must be made "mandatory": Mechanisms such as the agreement not entering into force unless OHS documentation is submitted (suspension condition) can be established.
4. Audit must be "actual" not "nominal": If the license holder appears not to be exercising the right of audit, de facto transfer disputes grow; furthermore the defense of "I did not know" subsequently weakens.
5. Liquidation and exit plan must be written: When the agreement ends, stocks, overburden, facilities, workers, reports, and rehabilitation work must be listed one by one.

11. Conclusion / Summary

In mining law, "lease" most often appears as a redevance agreement. Redevance is not a complete transfer of the license, but since a third party actually conducts production, it simultaneously carries public law and private law dimensions. While the Mining Regulation emphasizes the redevance holder's responsibility arising from labor and OHS, it also explicitly states that the technical/financial/legal responsibilities of the license holder arising from the Law do not completely disappear. For this reason, a redevance agreement must be designed as a comprehensive "risk management agreement" that manages not only fee sharing but also oversight, public obligations, guarantees, OHS/environmental risks, and post-activity liquidation together.