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Editorial

Press releases and law firm thought leadership

This page is dedicated to keeping readers informed of the latest news and thought leadership articles from law firms across the globe.

If your firm wishes to publish press releases or articles, please contact Shehab Khurshid on +44 (0) 207 396 5689 or shehab.khurshid@legalease.co.uk

 

Foyen has advised Mandalay Resources in 32 Million USD share issue

Foyen has advised Canadian mining company Mandalay Resources Corporation inits marketed public offering of shares (subscription rights) on the Toronto stock exchange for aggregate gross proceeds of 43 million CAD (32 MUSD).Mandalay is the 100 % owner of the Bjorkdal gold mine in northern Sweden and the transaction has required legal opinions regarding all companies and permits in the Swedish business operation.

Foyen recruits lawyer from the Court of Appeal

Foyen Advokatfirma has recruited lawyer Erika Stjärnström from the Göta Court of Appeal. Erika has joined the law firm's Construction business sector, writes Foyen in a press release.

Proposal regarding mining waste could prove a costly business for mining operators

On June 1, 2017 the Swedish Government decided to instruct an investigatory committee to analyze the potential actions or measures necessary to efficiently ensure that sufficient collateral security is in place in mining operations for remediation and other restorative measures. The investigation adopted the name the “The investigation into financing regarding mining waste” and was submitted to cabinet minister Karolina Skog in June 2018 (SOU 2018:59).

The Environmental Code contains general provisions regarding collateral security and guarantees concerning, for example, environmentally hazardous activities. The provisions also include remediation after mining operations wherein collateral security is provided to the State. To avoid that the State and, ultimately, taxpayers are forced to bear the cost of remediation in cases where a mining company, for example, goes bankrupt and the collateral security provided is insufficient to cover costs, the investigation has looked into alternative ways of providing collateral security that is more in line with the actual remediation (post-treatment) costs incurred by mining operations. In light of this, the investigation proposes that changes be made to the Environmental Code and the Minerals Act, and that a new law and associated regulations regarding financial collateral security for mining operations is introduced. The investigation has identified what it considered to be four key areas for reducing the State’s risk regarding remediation in mining operations.

The proposals made by the investigation committee can be summarized as follows:

Clarification of the purpose and objective of collateral security

According to the investigation committee the purpose of collateral security for remediation needs to be clarified. This recommendation has been made as, in the present preliminary work, it is stated that the purpose of collateral security is to minimize the risk of taxpayers bearing the cost of any potential remediation. The investigation also considers that the objective of providing collateral security is not sufficiently clear.

The committee therefore suggest that:

  • The amount of security shall be calculated to adequately cover any expected costs of remediation with a comfortable margin,
  • The requirements for remediation must be documented in a special post-treatment plan, wherein it is clearly stated what the post-treatment plan will achieve,
  • The post-treatment plan must be tried in conjunction with the process for a mining permit according to the Environmental Code and revised at least every five years,
  • The amount of collateral security should cover the cost of remediation in a situation wherein the operator is unable (for example due to bankruptcy) or unwilling to pay for post-treatment costs at a time until the next permit revision date. As it stands today, collateral security is usually set for the expected life time of the entire mining operation,
  • The amount of collateral security should be revised every five years, there after a new amount of collateral security should be determined for the next five-year period,

Mining operations should not be given permission to be carried out unless adequate collateral security has been provided. The investigation committee concluded that the current system regarding required collateral security is not sufficiently clear and therefore has proposed the revision of how the required amount of collateral security is calculated. The committee suggest that:

  • The operator must show that moraine of sufficient quality is available in the immediate area, if this is not the case the costs for soil improvement measures including transport must be considered and taken into account. According to the investigation this is due to the fact that it is assumed that high quality moraine is available in the immediate area when calculating the amount of collateral security needed,
  • The calculation should include an “uncertainty surcharge” - the amount of collateral security should, with 75 per cent probability, cover the cost of remediation. It is proposed that any costs surplus to this will be passed on to the State,
  • The calculation should take explicit account of future price and wage developments,

The requirement for separate collateral security under the Minerals Act should be removed for companies that provide collateral security for mining operations. Based on current regulations there are no restrictions regarding the type of collateral security that is considered acceptable. The investigation does not present any examples wherein the form of collateral security has posed a problem in connection with a claim. However the investigation still considers that the uncertainty that exists regarding the form of collateral security considered acceptable poses problems for both operators and the State. For this reason the committee proposes that only two types of collateral security be accepted:

  • Bank guarantees with standardized conditions as determined by the State,
  • Collateral security in the form of a cash deposit
  • Limitations on the amount and form of collateral security

In today's system, the collateral security is tried by the Land and Environmental Court and examined in conjunction with the application for a mining permit in accordance with the Environmental Code. The investigation committee is of the opinion that this implies an excessively fragmented governmental responsibility. The Land and Environmental Court makes decisions regarding both the amount and form of the collateral security, the State is often being represented in these cases by the Swedish Environmental Protection Agency or any of the relevant County Administrative Boards, which lack specialist competence in the field. This, according to the investigation committee, weakens the State’s ability to protect its interests.

The investigation committee therefore propose that:

  • The Land and Environmental Court is relieved of the task of deciding on the amount of the collateral security and that this task is transferred to the Swedish National Debt Office who will act as the supervisory authority regarding collateral security concerning mining waste remediation,
  • The review of post-treatment plans should be carried out by the Land and Environmental Court regarding renewing or amending permits for mining operations according to the Environmental Code and by the County Administrative Board regarding revisions.

We at Foyen see a number of major challenges with the proposals made by the investigation into financing regarding mining waste remediation. The first concern being the intention to limit the possibilities concerning the lodging of collateral security, even though the investigation committee has been unable to conclude that alternative forms of collateral security, in addition to those currently proposed, have caused problems. Furthermore, we have serious concerns regarding the proposal that collateral security should include a 75% uncertainty surcharge. This will amount to significantly higher costs for the mining operators. Additionally, the calculation of collateral security is based on the assumption that an external party will perform the remediation, which does not reflect reality in many cases. The proposals made by the investigation committee may even create complications in the judicial examination procedure carried out in the court system.

Overall, the investigation has exaggerated, at the expense of the operator, a remediation situation that, even in the worst-case scenario, is unrealistic.

It remains to be seen where the investigation committee’s proposals will lead after a proposal for new legislation is referred to the Legislative Council for consideration which may ultimately lead to a new government bill. Whatever the outcome we will be following the next steps with interest.

Do you have questions about mines or mining activities, for example questions regarding permits, agreements or land access?

Email: Pia Pehrson, Partner/Advokat, Foyen Advokatfirma pia.pehrson@foyen.se

Email: Björn Eriksson, Associate, Foyen Advokatfirma bjorn.eriksson@foyen.se

Foyen advised OX2 in the construction of the Nordic region's largest unsubsidised wind power project

The renewable energy company OX2 has been engaged to construct four wind power farms with 25 wind power plants (107.4 MW) in Finland. This will be the largest unsubsidised wind power project to date in the Nordic region.

Careless limit values threaten the Mining Industry

By lawyer/partner Pia Pehrson and associates Pelle Stubelius and Ludvig Gustafson, Foyen Advokatfirma

DEBATE. The Swedish Agency for Marine and Water Management suggests new limit values regarding uranium and copper and other substances. There is however, according to Pia Pehrson, Pelle Stubelius and Ludvig Gustafson at the Swedish law firm Foyen Advokatfirma, a risk that part of this proposition will prevent Swedish industry and mining operators from continuing their work.

Reforms for improved environmental legislation required

By Pia Pehrson, partner, and Pelle Stubelius, associate; Foyen Advokatfirma

Sweden will soon have a government which will have a greater focus on environmental matters. There are a number of legislative actions that need to be focused on, but there are also some propositions that should be disregarded.

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.

 

A better environment – reduced emissions – Industrial Emissions Survey SOU 2011:86

September 2012 - Projects, Energy & Natural Resources. Legal Developments by Delphi.

More articles by this firm.

Industrial activities are of great importance to Europe’s financial wealth. Industrial emissions, however, cause environmental pollution and industrial emissions constitute a major part of Europe’s total emissions to air, water and soil. Consequently, there is a need for regulation of industrial operations at an EU level. Partner Erica Nobel and associate Christina Hellström comment on the new legislation and the possible consequences thereof.

When responsibility has a price

The Supreme Court makes clear that a party that has started to clean up contamination caused by another party is also deemed to be a business operator. This gives rise to joint and several liability for the original contamination. The fact that remedial work was intended to reduce the environmental impact is of no importance.

Procedural complexities to consider before appeal of permit

Procedural complexities to consider before appeal of permit to conduct environmentally hazardous operations.

A modern PBL

A new planning and building act (Sw. plan- och bygglag) (”new PBL”) becomes
effective on 2 May this year and replaces the current planning and building act from
1987 (“old PBL”). The following article briefly highlights some of the more central
changes.

Growing Corporate Environmental Debt

The environmental code, when introduced in 1999, increased corporate liability for cleaning up contamination. In the first place, the person who operated or operates the contaminating business is responsible for the clean up.

New court hierarchy for cases under the Environmental Code and the Planning and Building Act

The environmental courts were established in 1999 in conjunction with the Environmental Code taking effect. The court assumed the role which the Concessions Board for environmental protection and the water courts had had as licensing authorities. The property courts history is considerably older than the environmental courts, since they were founded in 1969.

Changes in Swedish legislation on wind power

– the opportunity the energy sector has been waiting for?

Getting the Deal Through: Construction - 2009

Must foreign designers or contractors enter into a joint venture with a local contractor to design, build and be paid for their work? Does the law require that the local contractor control the joint venture?

There is no such requirement. A foreign contractor wishing to undertake a project can choose to establish a branch office, a subsidiary or contract through its company domiciled abroad.

Increased liability in new Swedish environment law

The Swedish government has presented a bill to bring into force EC Directive 2004/35/EC of the European Parliament and the Council, of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage.

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