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Mining in Sweden – legislation and the latest trends

Update and trends

2012 was another busy year for the Swedish mining industry, with solid numbers in production, exploration investments and extended exploration permits. The area comprising northern Sweden, Finnish Lapland, northern Norway, and north-western Russia is extremely rich in minerals and is still underexploited. International capital has found its way to this area and new business ventures are being launched by Canadian, Australian, UK and other international companies.


The target minerals


Sweden is by far the biggest producer of iron ore in the EU and is also among the leading producers of copper, zinc, lead, gold and silver. In 2010, 60 per cent of the exploration permit applications concerned prospecting for copper, zinc, lead and nickel. Exploration for other minerals such as molybdenum, wolfram, vanadium, tellurium and lithium was of interest for some foreign prospectors. 


The principal environmental laws and bodies that regulate the mining industry


The Swedish Minerals Act (1991:45) is the principal law regulating the mining industry and it governs the procedure for acquiring exploration permits and exploitation commissions on land, irrespective of who owns the land to be explored or exploited. Detailed provisions of the application process and fees can be found in the Minerals Ordinance (1982:285). 


The Environmental Code lays down the general environmental framework in Sweden. With respect to mining operations, permits under the Environmental Code are granted by the Land and Environmental Court. The Environmental Code is applicable in matters concerning the granting of a concession, which means that an Environmental Impact Assessment (EIA) must be appended to an application for a concession. A permit for exploitation must always be granted under both the Minerals Act and the Environmental Code. 


Other relevant legislation is the Planning and Building Act (2010:900) that contains provisions regulating building and construction. Exploration work can be affected by the Off-road Driving Act (1975:1313) and the Cultural Heritage Act (1988:950). 


Applications for exploration permits and exploitation concessions under the Minerals' Act are administered by the Mineral Inspectorate. The County Administrative Board takes part in the environmental evaluation of applications for exploration permits and exploitation concessions. The Swedish government makes decisions in matters of particular public interest. The local municipality is responsible for permissions in accordance with the Planning and Building Act. Permissions required by the Environmental Code are handled by the Land and Environmental Court. Supervision of compliance with the environmental conditions is usually carried out by the County Administrative Board and by the municipality's Environment and Health Board. 


Classification system for reporting mineral resources and mineral reserves


A stand-alone framework called the Fennoscandian Review Board Standard (FRB standard) is recommended for use by the Swedish Miners Association and has also been adopted by the corresponding organisations in Norway and Finland. The classification system is based on the international template for the public reporting of exploration results, mineral resources and mineral reserves that is created by the Committee for Mineral Reserves International Reporting Standards (CRIRSCO) with the purpose of creating mutual international standards. The FRB standard is subsidiary to national legislation. The FRB standard is similar in comparison to the CIM Standards, the JORC Code and the SAMREC Code since all the standards are based on the international template for the public reporting of exploration results, mineral resources and mineral reserves. 


State control over mining rights


All minerals that are covered by the Minerals Act (1991:45) are listed in the Act. Any minerals not listed belong to the landowner. Minerals of interest for mining are among the ones listed. The reason for this policy is that landowners in general are considered not to have the capacity needed for exploiting mineral resources on their land. The same rules apply to all types of landowners, whether it is the state, private entities or individuals. Exploration permits can be granted for exploration on land (real property) belonging to any type of landowner, both private and public. 


Public information and data


The Geological Survey of Sweden (SGU) collects basic geological data concerning Sweden's bedrock geology and properties of rock. Information related to prospecting obtained through government surveys and private exploration, is accessible through The Mineral Resources Information Office (MINKO). Most information is accessible online where maps can be produced on request for specific purposes and received in digital form or as hard copies. The national drill core archives are located at MINKO and contain over 4000 kilometers of drill cores that can be used for analysis. The results from such analysis have to be submitted to MINKO and will be made public after a period of time. When an exploration permit is terminated without the granting of an exploitation concession within the exploration area, the holder of the permit must submit a summary report within three months. 


To acquire mining rights


Both exploration and exploitation permits are granted under the Minerals Act (1991:45) to qualified applicants entirely irrespective of who owns the land to be explored or exploited. 


An exploration permit is granted for a specific area of land where there is some likelihood of a successful discovery being made. The area covered by the permit must be of a suitable shape and size and no larger than it can be explored by the permit-holder in an appropriate manner. An exploration permit gives access to land for exploration work that does not harm the environment or prejudice the use of the land and entails a preferential right to an exploitation concession. The rule is such that the party that applies first is given priority and therefore it is required that the first application is complete and will not need to be supplemented at a later time, as this can result in complications for the assessment of which party that applied first. 


If there is a possibility of the exploration work having a significant impact on the environment, a notice of consultation in accordance with the Environmental Code (1998:808) must be sent to the supervisory authority (The County Administrative Board). Before exploration work begins, the permit-holder must prepare a working plan. The plan must contain a description of the work planned, a timetable, and an assessment of any impact on private rights and public interests. The plan must be communicated to all landowners and any other affected parties. A working plan enters into force if there are no objections. It will also enter into force if the applicant and the objecting party agree to the plan. If they cannot agree, the matter may be adjudicated by the Mining Inspectorate, who in some cases can establish conditions for the exploration work. 


Before any work may be commenced, the exploring party is obligated to provide security for compensation for any damage and encroachment by exploration work. An applicant for an exploration permit is required to pay an application fee as well as an exploration fee. The amount is decided according to the extent of the area subjected to exploration. For more information regarding fees, see below. 


To commence mining exploitation a concession has to be acquired. An application is considered by the Mining Inspector together with the


County Administrative Board. Processing an exploitation concession takes approximately 12-18 months. As a cardinal rule, concessions are valid for 25 years, but can be extended. A concession is valid for a fixed area, which is determined on the basis of the shape and extent of the deposit, the purpose of the concession, and other circumstances. Concession is granted if the found mineral deposit shows a probability of profitable exploitation and if the location and nature of the deposit does not render it inappropriate to grant the requested concession. The Environmental Code is applicable in matters concerning the granting of a concession. The holder of an exploration permit is entitled to a preferential right to acquire an exploitation concession. 


The permitting process for a mining project under the Environmental Code


The granting of a permit for mining operations under the Environmental Code (1998:808) is governed by the same rules as other business operations with an environmental impact. The details for the permit under the Environmental Code, such as noise levels, storage sites, damming up water deposits, are decided during the permit process carried out by the Land and Environmental Court. Supervison of compliance with the environmental conditions imposed is usually carried out by the County Administrative Board and by the municipality's Environment and Health Board. 


The first step to acquiring a permit is the consultation process. It takes place between the company wishing to engage in activities with an environmental impact and parties environmentally affected by the operations and agencies and organisations concerned with environmental issues. 


An Environmental Impact Assessment (EIA) has to be prepared. The purpose of the EIA is to describe the environmental impact that the proposed mining project will have. The description is made so that the reviewing bodies (the County Administrative Board or the Environmental Court) can assess whether the project should be allowed from an environmental point of view. The applicant must provide information in the EIA regarding any alternative sites for the proposed operation, together with a justification of why the proposed site was selected. The applicant must also provide a description of a zero option, the consequence of not starting the proposed operations. 


After the hearing and EIA have been carried out, the application for a permit under the Environmental Code can be submitted to the Land and Environmental Court. The Land and Environmental Court determines whether the information gathered and presented in the consultation and environmental assessment phases is detailed enough to proceed with a ruling. During the initial phase of the proceedings, any affected parties may submit supplements to the application. The complete information will then be sent for review and comments to any affected party. Before the main hearing begins, the applicant will have the opportunity to address any comments made during the consultation process. 


The complete process for obtaining a permit under the Environmental


Code takes approximately three to five years depending on the size of the operation and where it is to be carried out. 


Fees related to exploitation concession


An application for exploitation concession commands a fee of SEK 80 000 for each area covered by the application. 


The holder of an exploitation concession must pay an annual minerals fee to the landowners of the concession area and to the State. The fee is 2 pro mille of the average value of the concession miner­als mined, 1.5 pro mille of which is paid to the landowners to be distrib­uted among them in proportion to their share of the concession area. The remaining 0.5 pro mille is paid to the State to be used for research and development in the field of sustainable development of mineral resources. The fee is estimated after consideration of the amount of mined ore, the amount of minerals in the ore and the average price of the mineral during the year or after an equivalent value. 


Fees related to mineral exploration


The application fee is SEK 500 for each exploration area and each additional 2,000 hectares of each area. The explora­tion fees are related to the area of interest. 


The exploration fee varies with a certain amount per hectare for various minerals and for different parts of the license period. The fee increases with the period of investigation. 


All fees must be paid in advance for the exploration period or the extended period. If an area is reduced in size during the exploration period, the fee will be partially reimbursed.


The closure and remediation process for a mining project


The closure and remediation process is handled in the Environmental Code (1998:808) permit process through the details for the permit. If deemed necessary a security will have to be provided to cover for potential damages to the environment and closure of the mining operations. All types of security are approved as long as they are satisfactory for their purpose. The applying party must show that the suggested security is satisfactory and if a security cannot be provided a permit will not be granted.


The Sami communities


The Swedish Husbandry Act (1971:437) regulates reindeer conditions in Sweden. The Act establishes that the indigenous Sami population has a reindeer herding right. Sami's rights to compensation is regulated in the Swedish Minerals Act and the Swedish Environmental Code. 


Sweden has not ratified the ILO Convention No. 169 that gives the indigenous population the right to profit from mines in Sami areas whenever possible. There are no such provisions in Swedish law.


Social Impact Assessments


In most countries, the requirements related to disclosure and consultation are included in the legislation that relate to the need to perform Environmental Impact Assessments (EIAs). The EIA requirements are increasingly being coupled with Social Impact Assessments (SIA) as there is a growing consensus of the need for an integration of social and environmental issues when performing impact assessments. There are no provisions regarding SIA's in Swedish law. 


The Equator Principles are a set of guidelines, developed by financial institutions for managing environmental and social issues related to project financings, including in respect of mining and metals projects. Several Swedish banks are following the principles. 


Need for reform


In many ways, Sweden has an excellent legal framework for mining with highly competent authorities, free from corruption, and with a general positive attitude to the industry. In particular, there are no obstacles to foreign companies entering the Swedish market on a level playing field with domestic investors. There is, however, a major problem on the Swedish market which is not apparent from a simple study of the laws - the backlog of cases at the environmental courts. There is a serious shortage of staff needed to handle the great number of permit applications and appeals now building up as a result of the mining boom. In particular the northern Environmental Court of Umeå, where a majority of the applications are handled, now needs at least two years to process an application. It is obvious that this state of affairs runs a risk of hampering investments into Sweden unless measures are taken by the government to expand the resources of the courts. The problem has been acknowledged and in March 2012, the Swedish parliament instructed the government to produce a new comprehensive minerals strategy including appropriate means of dealing with the workload in the courts.


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