The Dutch Ministry of Economic affairs proposes to amend The Dutch Mining Act.
The Mining Act regulates extraction of natural resources on the Dutch main land and the Dutch continental shelf and state profit share (in Dutch: “staatswinstaandeel”) Over the past decades, an extensive infrastructure has been built for exploration and exploitation of natural resources. The depletion of the natural resources will lead to the disposal and removal of this infrastructures. The proposal aims to ensure dismantling will take place and that the re-use of certain parts of the infrastructure is safeguarded. Furthermore, the proposal aims to ensure that there are sufficient incentives to identify and extract the remaining reserves.
The above proposal to amend the Dutch Mining Act was published for consultation. We would like to address two specific issues of the proposal below:
Widening of the investment allowance scheme from 25% to 40%
Currently, investments in assets for the exploration and exploitation of natural resources benefit an additional deduction of 25% (in Dutch: “investeringsaftrek marginale velden”). This additional deduction is only available for investments relating to marginal fields. In order to qualify as marginal field one has to fulfil a fairly long approval procedure.
In order to provide an incentive it is intended to increase the investment deduction from 25% to 40%. The incentive will not only be available for investments in marginal fields but apply to any investment relating to the exploration and exploitation. This would also eliminate the uncertainty and avoids undue loss of time when taking the necessary investment decisions. We feel this is a welcome improvement for future business.
Exemption of the removal obligation for re-usable platforms
Under the current Mining Act any mining platform has to be fully removed in case they are no longer in operation. Nevertheless, there are no measures to ensure the financials are there to ensure the removals can be paid for. By means of a Decommissioning Security Agreement and a Decommissioning Security Monitoring Agreement it should be ensured that the financial means and the financial security, is sufficient for decommissioning and abandonment. By means of exemption to the main rule, it should be prevented that infrastructure is dismantled and should be kept for re-use.
Further amendments should be made in the applicable rules and regulations to further clarify this exemption and the financial implications for involved parties.
Please contact Jimmie van der Zwaan or Berend van Holthuijsen for more information.