On August 6, 2024, a new regulation for the assignment and transfer of mining concessions (the “Regulations“) of the National Mining Company (the “ENAMI“)[1] was issued, which replaces the one published in 2023[2]. The following are the main elements of this new regulation:

1. The types of procedures by which the assignment and transfer are carried out are: i) direct[3], for mining concessions that have been part of a commercial agreement between ENAMI and a third party[4] , and ii) by public tender, for other concessions[5].
2. To carry out the assignment and direct transfer, ENAMI’s commercial partner must previously submit a letter of notification of execution of assignment and transfer[6] and submit the following documents to obtain authorization to initiate the process:

a) Report of the commercial agreement, indicating (i) the mining concession, (ii) the person to whom it will be transferred and (iii) the confirmation of compliance with the obligations of the commercial agreement[7].

b) Results of the valuation[8] of the mining concession.

c) Certificate of compliance with mining tax obligations.

d) Report with the express recommendation to continue or not with the process. If the recommendation is positive, the Board of Directors of ENAMI must authorize the assignment and transfer. With this, the Manager of ENAMI will proceed to the direct transfer. If the recommendation is negative, the process will be declared void.

3. To carry out the assignment and transfer by public tender a report of relevance in the technical, economic, environmental, social and legal aspects must be drafted[9], which must recommend whether or not it is appropriate to move forward.

4. If the recommendation is favorable, the Manager of ENAMI must request the authorization of the Board of Directors to initiate the process and arrange for the formation of a multidisciplinary team to prepare the bases of the public tender.

5. The bases must contain: i) the minimum requirements that the bidder must present, ii) the bid evaluation and qualification system, iii) the prohibitions to participate[10], with special emphasis on the conflict of interest with entities in the mining sector[11], iv) a timeline of the process, v) the bidder’s data and vi) a confidentiality agreement.

As can be seen, the Regulations establish new provisions that were not found in the previous ones, such as the following, which are described in the order in which they would be practiced in the established process:

1. The call for public tender will be open and made by publication on ENAMI’s website, with information on the mining concessions[12].
2. A bid evaluation committee must be formed, whose members cannot have a conflict of interest and must submit a report with the qualification and recommendation of the bidders[13].
3. Bids will be received physically at the place and date indicated in the bases, with the specific content determined in the bases and the requested documents attached[14].
4. The technical requirements are verified by an evaluation commission in order to issue a report in which they will recommend which bidders continue in the process[15].
5. Payment of the participation fee and a confidentiality agreement must be signed for the bidders[16].
6. An analysis of economic offers and upward auction must be carried out, where the evaluation commission must determine the best bid, and the other participants will have the opportunity to improve their bid or ratify their offer. A final report must contain the corresponding result:

(i) Declaration of nullity of the process due to the failure to submit bids, when they do not meet the requirements, if they are considered inconvenient or when the contract is not signed due to causes by the successful bidder[17].

(ii) Declaration of cancellation of the process[18] due to ENAMI not needing the transfer of the concession, the need to substantially reform the process or for violation of any of the processes established in the Regulations does not persist.

(iii) In the event that there is only one qualified bid, the bidder must increase the bid by the percentages provided for in the Regulations[19].

7. The award must be defined by a reasoned decision. An authorization must be requested from the Sectoral Ministry for the assignment and transfer and then the assignment and transfer contract with the winning bidder can be signed.

With respect to the assignment and transfer contract, the Regulation establishes the requirements and forms that must be met:

1. It must be held within a maximum period of 45 days from the registration of the authorization resolution of the Sectoral Ministry in the Mining Registry[20].
2. It must include: the valuation of the concession, a certificate of validity of the concession, an affidavit from the assignee stating that he or she is not disqualified by the Constitution and the Law, the resolution authorizing the assignment and transfer protocolized and registered in the Mining Registry and other aspects provided for by the applicable sectoral regulations[21].
3. The contract must be registered in the Mining Registry[22].
4. It must include the following clauses[23]: anti-corruption, term for the payment of the advance in accordance with the bases of the public tender, termination or subrogation of rights and obligations towards the new mining owner in cases where there is a mining operation contract.
5. Finally, and unlike the previous regulation, 3 options of guarantees are established [24] that the awardee must render in favor of ENAMI, which the parent company of the winning bidder may submit, which must be unconditional, irrevocable and available for immediate collection:

(i) Unconditional guarantee, granted by a bank or financial institution.

(ii) Bond instrumented in an insurance policy.

(iii) Certificates of deposit issued by a financial institution, endorsed for security to the order of ENAMI.

For more information, please do not hesitate to contact us.

This bulletin contains a summary of legal developments of interest, and therefore cannot be considered as provided advice. If you have any questions, please contact the AVL Abogados team.

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[1] Resolution No. ENAMI-ENAMI-2024-0018-RLS.

[2] Resolution No. ENAMI-ENAMI-017-2023-RLS, Official Gazette No. 425 of October 26, 2023.

[3] Art. 5.

[4] Document signed between ENAMI and a third party that generates rights and obligations.

[5] Art. 7.

[6] Document in which the subscriber of the commercial agreement notifies the General Manager of ENAMI of the intention to initiate the assignment process, once the obligations have been fulfilled.

[7] The names of the concessions, cadastral codes, areas, location, date when it was granted and registration of the mining title, identification of the legal entity to which the rights will be transferred, and the economic value must be specified.

[8] Estimate of the financial value of a mining asset, from a report that meets international standards. (Art.4 numeral 25).

[9] Art.7.1.

[10] Art.7.2 second item.

[11] Art. 7.2 third and fourth paragraphs.

[12] Art. 7.5.

[13] Art. 7.4.

[14] Art. 7.6.

[15] Art. 7.8.

[16] Art.  7.9.

[17] Art. 7.11.

[18] Art. 7.12.

[19] Art. 7.13.

[20] Art. 8.

[21] Art. 9.1.

[22] Art. 10.

[23] Art. 12.

[24] Art. 13.