Legal amber production has increased eightfold in three years. This is the result of simplifying business and increasing responsibility for illegal mining, says Roman Opimakh, Chairman of the State Service of Geology and Mineral Resources. He explained how amber miners should cooperate with forestry, as well as how the new law on subsoil use will affect their activities.
– Hello, Roman Yevhenovych! Thank you for taking the time to talk to us. In December, it was three years since the amber law came into force. How do you assess its effectiveness so far?
– Good afternoon! Ukraine is one of the three countries with the largest deposits of this semiprecious stone. Most of what is mined in Ukraine is exported. There is a significant demand in Europe, China, and the Persian Gulf countries.
Unfortunately, for many years, amber was mined semi-legally or even illegally without any documents. The initiative that was adopted in December 2019 - we welcome it - has yielded very positive results that we can now observe.
In particular, legitimate amber production has increased significantly. In 2019, it amounted to 2 819 kg.in 2019, 6,354 kg in 2020, 19,466 kg in 2021, and 24,174 kg in 2022. That is more than eight times more than in 2019. We see a steadily growing trend.
Demand for special permits is high
- How many special permits were sold (a document granting the right to geological exploration with subsequent extraction of minerals - ed.)
- The demand for amber sites is quite high. For the period from 2020 to February 2023 at auctions was sold 80 special permits. Revenues from sales to the state budget amounted to over UAH 100 million.
The regions where amber is mined are Zhytomyr, Rivne, and Volyn regions.
65% of special permits were sold for sites in Rivne region.
Subsoil users receive special permits for geological exploration with subsequent production for a period of five years, which requires mandatory environmental impact assessment before commercial production begins, as well as land reclamation after production is completed.
The legislative initiative envisages amendments to a number of other regulatory acts, in particular, increasing liability for unauthorized mining. Amendments to the Criminal Code significantly increased liability for both illegal mining and failure to rehabilitate land plots.
Moreover, at the end of last year, the government approved a methodology for calculating damages for illegal mining. Starting in April 2023, the State Geocontrol will have the functionality to calculate these damages.
Special permits can be extended for another term
- The first special permits were sold for 5 years. There was a delay in the work of subsoil users for a year and a half. Is there any compensation for this period?
- The peculiarity of amber mining is that the deposits are located in forests. This is the nature of this stone. Subsoil users who have acquired special permits are in most cases forced to cooperate with forestry enterprises.
There were certain obstacles to which the government responded. In particular, in October 2021, a model agreement on amber exploration and production was approved. It allowed to resolve some of the issues related to access to land in forestry.
I can't say that it has worked systematically. The signing of such agreements is mostly an isolated incident. After all, there are issues related to the procedure for deforestation and compensation for timber.
In February 2023, the government adopted a procedure for deforestation not related to forestry. This also applies to areas where there are special permits for the development of mineral resources. We hope that this will significantly speed up the signing of easements and the conclusion of model agreements.
Regarding the timing. Recently adopted Law 2805 provides for amendments to the Subsoil Code. In particular, they allow extending special permits for geological exploration with pilot development and subsequent production - those five-year permits - if necessary one more time for the same period free of charge. In other cases, when the permit is granted for the purpose of geological exploration, including pilot commercial development of subsoil, there is no possibility to extend the special permit free of charge.
In other words, in the case of amber, given the complications that naturally arose but were not initially planned and delayed business, such an action is envisaged.
Accordingly, if subsoil users did not have time to approve the reserves, they will have the opportunity to extend the validity of special permits for another five years once more.
Subsoil users need to negotiate with landowners
- Often, licensees could not get approval from forestry enterprises. Sometimes forestry enterprises sabotaged the work of licensees. Are you aware of this problem? How did you try to solve it?
- This problem is known. We have repeatedly initiated working meetings involving both members of the relevant committee and representatives of the State Forestry Agency. There has been progress. I think it has finally been realized both in the model agreement and in this procedure.
Now it would be right for the business to analyze the procedure and give an answer: is everything okay, so that I am not being unfounded. The document has recently been adopted. I hope that everything should work.
In general, this is a widespread problem and concerns not only forestry land. Moreover, this situation is inherent not only in Ukraine but also in most countries of the world.
There is a difference between the ownership or right to extract minerals and the ownership of a land plot. In these cases, you need to negotiate and look for ways to cooperate.
In Ukraine, there are legal provisions that provide for the purchase of land to meet important social needs. This includes subsoil.
Adopted by law 2805 The initiative also provides for the right to withdraw municipal and state land for the purpose of conducting subsoil use activities. All these things are provided for by law.
Practice shows that it is better to reach an agreement and implement joint initiatives together than to go through the forceful method.
- So, where would you advise subsoil users to apply?
- First of all contact the landowner or land user.
The environmental impact assessment is to be accelerated three times
- Don't you think that some of the procedures that subsoil users undergo are outdated or stretched over time?
- As for the protection of inventory, we are working to speed up the procedure, but it is not time-critical - you can do a development project and so on in parallel, i.e. do several processes in parallel.
Regarding the environmental impact assessment. There is already an initiative developed by the Ministry of Ecology and supported by the government that has been registered in the Parliament. This is the draft law No. 8410. It concerns amendments to the law on environmental impact assessment in terms of accelerating and automating all procedures. According to the authors, it is should speed up the procedure from 219 to 67 days.
- How is the communication between the State Service of Geology and Subsoil, the Ministry of Environment and the State Forestry Agency established?
- There can be no complaints from the State Service of Geology and Mineral Resources. We have excellent cooperation. If there is a need to hold a joint meeting on issues that are cross-cutting between several institutions, or at the initiative of a business association, we are ready to take part in such a working event.
Special permit, limit, price - innovations of the Law 2805
- What should amber miners expect from the new law on subsoil use?
- I emphasize once again that there is an opportunity to extend the "through" permit once, which other subsoil users do not have.
The limit on the maximum size of the land plot to be put up for auction is removed. That is, there is no limit of 10 hectares. Now you can nominate a larger plot and purchase it at an open online auction.
The initial price for such a lot will be increased, and this is due to the analysis of the data we have received from the auctions over the past three years. That is, if the initial price for one hectare was UAH 34 thousand, we are thinking of raising it to UAH 86 thousand.
Amber business: systematic work is underway
- The main goal of the 2019 Amber Law is to legalize the amber business. Have you managed to overcome the "black diggers"?
- As far as I can tell from open sources, such problems are still present, but on a much smaller scale than in 2019-2018. This is evidenced by the relevant business. Systematic work is underway to increase its transparency.
This is all the result of the fact that we have, firstly, made it easier to start and run this business, and secondly, increased responsibility and introduced elements of control over it.
-Thank you!
-Thank you for your attention to our activities.
Watch the video of the interview at the link below.