Arizona University establishes global mining law centre

By Myles McCormick
Published: Saturday, 26 September 2015

The new Global Mining Law Centre at the University of Arizona seeks to position itself as a feeder for the next generation of mining lawyers and executives. The decision to open the school was made amidst an environment where the scope of legal expertise required by the mining sector is growing, Myles McCormick, Reporter, finds.

Regulation 

The University of Arizona campus in Tucson, where the the new global mining law centre is situated.

The Global Mining Law Centre at the University of Arizona in the US last month opened its doors to would-be lawyers and mining executives looking to study in-depth legal aspects of the mining industry.

The centre aims to ensure continuity of expertise in a sector where on-the-job learning was once the norm. 

"Those of us practicing for a long time have always asked where the next generation will come from," the mining centre’s director, John Lacy, told IM.

The school seeks to train mining lawyers – in-house practitioners and those representing mining companies at external firms – alongside executives and engineers within mining companies to improve their understanding of the often complex legalities of the industry. 

Lacy said that there are few law schools that teach mining law. But while he emphasised the work done by the Rocky Mountain Mineral Law Foundation (RMMLF) – a Colorado-based collaborative educational non-profit institution – he said that in the US, "you don’t have the ability to go to one place and get the range [of legal training]".

This is something that the Global Mining law Centre (GMLC) aims to rectify. 


An expanding role

The traditional legal knowledge required from mining lawyers is wide ranging, covering areas from fundraising (capital markets, private funding and farm-outs); joint venture arrangements; project development and approvals; construction and infrastructure contract negotiation; and settling offtake agreements. 

In the public sector, the range of issues can extend from the provision of legal assistance on granting titles to counselling state-owned mining companies and negotiating agreements, to issuing administrative permits, as well as general oversight and enforcement.

But this spectrum of practice areas, while already sizeable, is expanding, according to experts.

One area of growth stems from the ever increasing number of mining jurisdictions, Janet Bewsey, a senior associate with mining recruitment specialist Swann Global, told IM. John Mollard, global head of mining at law firm Baker and McKenzie, also highlighted increased regulatory risk in many of the regions where mining projects are located.

"We have seen more sponsors engaging with government to find new ways to collaborate in terms of strategies to counter regulatory uncertainty," he said. 

Ana Basitida, lecturer, at Dundee University’s Centre for Energy Petroleum and Mineral Law and Policy (CEPMLP) and director of an LLM programme in Mining Business Management at Argentina’s Universidad Catolica de Cuyo, added that mining law has expanded with the development of areas of law and regulation applicable to "expectations from a broad range of stakeholders on the impacts and developmental outcomes of the activity".

"Mining lawyers must [now] be acquainted with – or work closely with lawyers with expertise in – environmental law, human rights law, local planning, infrastructure construction, and legal issues arising from building links between the mining industry and other sectors of the economy," she said. 

Mollard likewise points to the need for expertise in areas relating to community concerns, indigenous rights, sustainability, development approvals and sovereign risk, anti-bribery and anti-corruption (ABC) legislation compliance (which includes the US Foreign Corrupt Practices Act and the UK Bribery Act), and third party access to infrastructure. "The breadth of legal expertise required by the mining industry in recent years has grown significantly in recent years," he said. 

Supply and demand

In spite of the swelling scope of legal issues in the mining sector, given the current cash-strapped state of the industry, it might be expected that mining firms would avoid seeking expensive legal advice and that now might be a poor time to set up a school focused on mining law.

But this has not been the case at the CEPMLP, where Bastida said demand for courses remains steady. 

"There is an understanding mining is a cyclical industry and many professionals choose to invest in education at times of low prices," she said.

Lacy argued that the cyclical nature of the industry provides all the more reason for training executives in mining legalities. 

"Issues arise when you get a collapse in the industry and senior people take early retirement. Mid-level executives then move in to replace them," he said. These employees may not have the knowledge of the sector’s legalities accumulated by their predecessors."

"Now is the time for [these employees] to go back to school [so that they are better prepared for such an eventuality]," Lacy said.

Demand for lawyers in the mining industry has not been as adversely impacted by the downturn in mineral prices as might be expected. 

In terms of the current state of demand for legal expertise, Mollard said: "There has definitively been a reduction in capital raising, IPOs and related legal services over the last 12 months." 

"In addition," he added, "a number of mines have been put on care and maintenance, therefore associated operational legal advice is reduced."  

However, Mollard maintained that other sources of demand in the sector increase during industry slumps, going some way towards compensating for the more obvious demand reductions: "We are still seeing some activity in the M&A sector and insolvency engagements," he said. 

In this sense, according to Mollard, "There is often a trade-off in commodity cycle downturns." 

Knowledge gap?

While there is no doubt that mining law is a specialist and growing area, there is some disagreement in the industry as to whether there is a gap in understanding. 

Groups such as the Australian Mining Petroleum Law Association (AMPLA) and the RMMLF in the US play an important role in providing key resources to speciality lawyers, housing tailored expertise in relation to a number of areas within the sector.

But Bastida told IM that a knowledge gap exists in the industry in the form of a lack of "a well rounded understanding of the interests and expectations of a range of stakeholders in a global setting".

Lacy was unwilling to go as far as saying that such a gap exists. He felt there was nevertheless a requirement to be abreast of the ever more complex topic. "Like so many things, from an executive standpoint you need to make sure you know what’s going on."

But the utility of a course like GMLC’s to executives is greatly dependent on its content, Bewsey told IM. Key areas she mentioned included host country mining codes and permitting, legal knowledge surrounding financial products and environmental matters.

Bewsey also noted the growing number of mining jurisdictions globally and questioned whether such a programme could address enough of these to create a solid foundation for mining management.

She added that while mining companies generally are not highlighting legal expertise as a key factor in their executive search, juniors tend to place emphasis on bringing lawyers onto their boards in non-executive capacities – as they might with finance and accounting professionals – to provide expertise in their given field. 

This allows juniors to circumvent their lack of capacity to employ in-house council, as their more established counterparts might.  

Lacy nonetheless stressed the need for a singular location to familiarise lawyers and executives with this niche area of the legal system. 

In the past, he said, such familiarity with the intersection of the mining and legal worlds had to be acquired by lawyers and executives on the job. 

Nowadays, schools like the CEPMLP and GMLC provide a crucial role in fostering this awareness among their students. "This is a growing area where, if you don’t understand, you are in trouble," he said.