The Bureau of Land Management NEWS |
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The Bureau of Land Management NEWS |
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Last updated: 04/04/03
On July 6, the Bureau of Land Management published a policy in the Federal Register regarding its process to calculate the price of a mineral when determining the validity of a mining claim. The policy relies on the prices for minerals set in the free market and avoids the speculative approaches that have reduced the reliability and authority of claim validity determinations in the past.
BLM's Mineral Commodity Pricing Policy: simplifies things for everyone involved, from mineral examiners to industry; eliminates inconsistent approaches taken by mineral examiners, administrative law judges, and the Interior Board of Land Appeals; makes determining mining claim validity more predictable; will not increase costs for industry; and uses publicly available commodities price information.
FACT SHEET
Notice of Policy on Mineral Commodity Pricing and Opportunity for Comment
SUMMARY: The BLM is instituting a policy for calculating the mineral commodity price to use when determining whether a mining claim contains a "discovery" of a valuable mineral deposit. The policy is necessary to establish a consistent approach in determining claim validity. The policy statement will be published in the Federal Register and effective July 6, but BLM will accept public comments for 60 days (through Sept. 5). BLM will consider the comments and decide whether or not to amend this policy statement.
BACKGROUND: When determining the validity of mining claims, Federal land management agencies conduct examinations of your asserted discovery to evaluate whether the mineral deposit can be removed and marketed at a profit given the production costs and the prevailing market on a given date.
An essential element in determining whether a mineral deposit is marketable is the market value of the mineral commodity. For the most part, the commodities subject to the Mining Law - gold, silver, copper, lead, zinc, etc. - have widely reported spot market prices and are traded on public exchanges. Many of these minerals, especially those with volatile prices, are also the subject of "futures" trading based on the projected future market price for the mineral. The major exchanges for mineral commodities are the London Metals Exchange, the New York Commodities Exchange (COMEX) and the Chicago Board of Trade.
Neither BLM nor the Department has ever addressed the mineral pricing issue in published regulations or established a formal policy in handbooks or manuals. Instead, over the years, mineral examiners, administrative law judges, and the IBLA have followed an ad hoc approach. The methods have ranged widely, but fall into two basic categories: using the market price on a given date, or averaging the market price over several years.
This diversity of approaches to mineral pricing is not good policy. It creates uncertainty in the process - for mineral examiners, for claimants, and for others. The BLM is adopting the following Statement of Policy (summarized below) on the proper method to determine the market price of the mineral at issue. This policy relies on the prices for minerals set in the free market and avoids the speculative approaches that have reduced the reliability and authority of claim validity determinations in the past.
GENERAL POLICY: Basically, the BLM will use a six-year average pricing method. To determine the mineral commodity price to use on any specific marketability date, the BLM mineral examiner will begin with an average of the commodity price of the mineral for the month in which the marketability date occurred. The examiner will then average that price together with: (a) the monthly average commodity prices for each of the 36 months before the marketability date; and (b) the monthly average commodity futures prices for each of the 36 months after the marketability date. Commodities not publically traded or covered by present and future contracts (forward sales) are not covered by this policy. In these cases, actual contract conditions will be used.
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