Royalty Agreements In The Turkish Mining Sector

Mining rights (i.e. exploration and operation licenses) cannot be divided into smaller shares and transferred to third parties since there is an accepted public interest in the rational and economic operation of license fields in their entirety. However, the players in the mining sector require funding and the prohibition of division of mining rights creates an important obstacle. Therefore, the sector players utilize royalty agreements as funding tools, whereby a license holder transfers its operating right to a third party in return for a royalty payment. In practice, royalty agreements are not the only tools for funding and other arrangements such as mining right transfers and pledge agreements are also utilized. However, it is safe to say that royalty agreements are used on a more frequent basis.