Facing the global challenges in mining activities: adoption of legislation and mining policies in Albania

Dr. Sokol Mati1

1Board adviser at Beralh ShA; Lector at the Faculty of Geology and Mines, Polytechnic University, Tirana, Albania.

Vol 3 n 4, 2017

À propos de l’auteur

Prof. SOKOL MATI,  has a PhD degree from the Faculty “Arte Mineraria” of the University “La Sapienza” in Rome, Italy. He got the title “Professor” on 2001 for his contribution as an author and coauthor in more than 190 studies and projects realized in the field of mineral processing, recycling technologies, mineral and mines assets evaluations, mineral database and promotion, mining legislation and strategy. He is the author and coauthor of more than 65 publications in different mining literature and magazines such as “Mining Journal”, “Mineral Engineering”, etc. Currently he is working as a board adviser at BERALB-ShA Company, and is a permanent Lector at the Faculty of Geology and Mines of the Polytechnic University in Tirana, Albania.

Abstract: This article gives a review of legislation adoption and mining strategy of Albania towards the global mining policies. It addresses the evolution of these policies as a continuous process, with the evaluation of all its components, territorial planning, re-evaluation of mineral reserves, specific mineral strategies, partnered state-private business, efficiency of legal acts, obligations of mining institutions, national and regional employment policy and environmental issues, as well as the social aspects in mining areas. It assesses to what extent mining activities in Albania, compared to mining activity in the Balkan region and internationally, may ensure a sustainable and long term development through effective investments. The long- term strategy of minerals of Albania carried out under political and institutional reforms toward integration of the country in the EC structures aims at developing the mining industry as a profit source for the country, for employment and sustainable development. The article discusses the issues facing the development in mining activity. These aspects of governance must be addressed through institutional structures of mining service and legislation that will create a clear vision for the role of the mining industry in the future.

Résumé : Cet article donne un aperçu de l’évolution de la législation et de la stratégie minière de l’Albanie par rapport aux politiques minières mondiales. Il traite de l’évolution de ces politiques en tant que processus continu, avec l’évaluation de toutes ses composantes, l’aménagement du territoire, la réévaluation des réserves minérales, des stratégies minérales spécifiques, des entreprises étatiques et privées, l’efficacité des actes juridiques, les obligations des institutions minières, la politique de l’emploi et les questions environnementales, ainsi que les aspects sociaux dans les zones minières. Il évalue dans quelle mesure les activités minières en Albanie, par rapport à l’activité minière dans la région des Balkans et à l’échelle internationale, peuvent assurer un développement durable et à long terme grâce à des investissements efficaces. La stratégie minière de long terme de l’Albanie, réalisée dans le cadre de réformes politiques et institutionnelles vers l’intégration du pays dans les structures de l’UE, repose sur l’idée d’une industrie minière comme une source de profit pour le pays, pour l’emploi et le développement durable. L’article traite des problèmes liés au développement de l’activité minière. Ces aspects de la gouvernance doivent être abordés par des structures institutionnelles du service minier et de la législation qui créeront une vision claire du rôle de l’industrie minière dans le futur.

Mots-clés : mines, politique, Albanie, Europe, réglementation, loi, développement durable.

Keywords : mining, policy, Albania, Europe, regulation, law, sustainable development.

Introduction

Mineral deposits are anomalies in the earth crust, geographically fixed and not renewable. Furthermore, mineral deposits have a finite size. In the case of some minerals, and in particular metal ores, the size of the exploitable deposit is often determined by economic factors such as metal prices and cost of production. Deposits, which are not profitable to tap under current circumstances, may become profitable in the future. Protection of mineral deposits is a long-term investment within the context of sustainability. Some universal considerations for sustainable development include maintaining environmental capital; preventing the degradation of land, air and water quality; the efficient production and use of natural resources; a decreased rate of emissions of greenhouse gases; an increased recycling; and prevention, minimization and safe disposal of wastes.

The need to maintain a secure, sustainable supply of minerals made mining activities one of the important sectors for investments during the last decade. The future mineral supply is a grand challenge. Taking into consideration the development of the mining sector worldwide, economic growth in highly populated countries such as Brazil, Russia, India, China (BRIC phenomena) and others emerging countries over the past two decades, is paramount in addressing new trends in the mining industry. Given the large quantities of minerals required by industries, the geographic location of mineral deposits, market distortions in mining sector, limitation on exploration and extraction facing increased competition for different land uses and a highly regulated environment, it is foreseeable that the demand for minerals will keep growing significantly. This could put pressure on the supply with minerals especially for metal ores. It must be underlined here that the EU is highly dependent on imports of metallic minerals, as its domestic production is limited to about 3% of world production and its consumes is more than 25 %.

Albania is a country with an important mineral wealth in the Balkan region; it is looking at the mining industry as a major profit source of profit and employment for the country along the lines of sustainable development of the economy. Chrome, copper, nickel, titanium and magnetite are some of the main riches of Albania. Legislation rules and policies still need improvement in order to keep up with the global mining development and its challenges. How has the legislation evolved along the transformation of the mining sector in Albania ?

History of Mining Activity in Albania

Development of mining industry in Albania went through four stages: The first stage covers ancient times until the beginning of the 20th century. Traces of minerals exploitation are found in the Mirdita area with the Roman exploitation of bitumen in the hills of Selenice, and later by the Ottomans at the Vllahna site (in the Has region). At the end of 19th century the exploitation of mineral resources was introduced into the legal course by Sultan decree (1862) regulating mining activity. Classification of minerals, royalty as percentage of the ore sold value and concept of granting concessions for a period of 40 years up to 99 years was set in this decree, which was amended in 1870.

The second stage includes the period up to the end of World War II.  It is considered as the period when mining activities are largely documented. Many distinguished foreign geologists have compiled different maps, published monographs, scientific articles, etc. In 1903, Vinassa De Regny published in Vienna the first geological map at 1:200 000 scale, for the northern regions of Albania. In 1912 were published in Rome the geological map of Vlora region at 1:200 000 by A. Martelli. This period is marked by two important events. In 1922 the first Geological Map of Albania was compiled : J. Bourcart built the Geological Map of Southeast Albania on the same scale of 1:200 000. It was published in Paris in 1922, with the monograph Frontiers of Albania administered by France[1]), the first of its kind in the Balkans. In 1929, the Law On Mining of the Albanian Kingdom was signed, and paved the way for the exploration and exploitation of mineral resources. The third stage covers the period from 1944 to 1994: mining activity was organized with state-owned companies. Geology, mining and processing sciences were developed along the extraction activities. Mineral exploration, exploitation and processing became a key component and a solid foundation of the Albanian economy, generating substantial revenues. It is during this period that the exploitation of chrome, copper, ferronickel and coal were intensively developed. In the 1970s and 1980, Albania was the world 3rd largest producer of chromites. The fourth stage starts after 1994, shortly the regime change, with the approval of the first Mining Law:  it saw the transition from the centrally-planned economy, into one based on the free market. Although the production of the mining industry almost collapsed when the country shifted to a market economy during the 1990s, the mining industry recovered and realized a significant development after its privatization and a market-oriented economic reform.. Different reforms have been undertaken in restructuring, privatization, legislation, regulatory framework, institutional strengthening, inspection, fiscal and electronic government. A new regulation package for mining activities was approved in 2010 and 2011, based on the new mining law Nr.10 304, dated July 15, 2010,  “For the Mining Sector in the Republic of Albania”.

Basis of the Albanian Mining Strategy

The core principle of sustainable development is to improve human well-being and to sustain those improvements over time. Sustainable development includes economic prosperity, environmental health, social equity for the present generation and equal opportunities for future generations. The sustainable development in Albanian mining policy is addressed in legislation programs and action plans as a balance on three pillars:

  • Investment development through better legal framework, so as to reduce the administrative barriers, finalize the process of privatization, promote industrial activities with higher value added, strengthen institutions dealing with businesses, ensure well-management of natural and human resources, by inciting, supporting, encouraging the development and increment of domestic production, education and training for entrepreneurship. The government calls for a better coordination of development programs among countries in the region with a view to taking into account the principles of transparency.
  • Investments and development must remain friendly to the environment. This objective can be achieved through the enforcement of mitigation measures, rehabilitation processes, strengthening of supervision on remediation, monitoring and post monitoring processes, an improvement of work safety, by application and implementation of advanced, less polluting technologies, for a clean environment and nature, to minimize as much as possible the effects on life of communities.
  • iii) Social aspects, through the involvement and understanding of community. Development must integrate transparency, civil society involvement, taking into consideration profits and damages to the community as an approach to fight poverty. Growth must encourage the creation of new jobs, infrastructure improvement, support the health and education systems, particularly for the areas with poor economic activity, for a better life of the citizens.

Basis of the Albanian Mining Legislation

The basis of the mining legislation for the free market economy are set by the Mining Law of Albania approved on 1994, and the new legislative package approved in 2010-2011 with the law 2010 law previously mentioned. New concepts were introduced, stressing the need for a mining strategy, territory planning, GIS and the setting up of a database of the mining industry. The legislation calls for the clarification of approval processes, roles and responsibilities of government institutions, improved transparency and accountability, the participation of communities and the obligation related to the implementation of environment friendly technologies. Regulations make provisions for improved health protection and the safety in mining activities; the monitoring and supervision of post mining activities including mining closure, management of abandoned mines, conservation, rehabilitation, etc in order to improve the Investment Climate through Reforming the Policy, Legal and Regulatory Frameworks.[1], [2],[10], [12].

The new legislation intends to adopt mining policies in the direction that extraction activities, will become a supporting pillar for the economy. The mining policy should create an investment environment for international investors to start production and bring the sector to its economic potential, stimulate the transfer of technologies and knowledge, develop modern infrastructure and generate foreign exchange earnings. Mining is considered a core industry able to stimulate a sustainable economic development, help create jobs, reduce poverty, and become a major contributor to the macro-economy and local community development.[4], [5].

Figure 1. Main components (or building blocks) of the institutional and legal framework for the sustainable development and strengthening of the mining sector in Albania

EC Policies for Minerals.

The European Commission set out targeted measures to secure and improve access to raw materials for the EU based on three pillars:

  1. Ensure access to raw materials from international markets under the same conditions as other industrial competitors;
  2. Set the right framework conditions within the EU in order to foster sustainable supply from European sources;
  3. Boost overall resource efficiency and promote recycling to reduce the EU’s consumption of primary raw materials and decrease the relative import dependence.

It is important for Albania as a country that aspires to be part of the EU, but also for the other Balkan countries also aspiring to get membership, to adopt mining strategies and policies in accordance with the European policies for mining sector development but at the same time to reach  a win-win situation for both parties.[7],[8],[3].

During the last decade, and especially in the last five years, the mining market was characterized by a high instability, especially for metals. Many small mining companies terminated their activities due to a rapid decrease in metal prices, a decrease that reached 40-45 % for some metals such as copper, nickel, etc. Worldwide market forces today are far from typical. Increased governmental intervention in the form of mining industry nationalization or new tax and royalty regimes, coupled with inadequate infrastructure and dearth of skilled talent, have made it exceptionally difficult for companies to build new mines or expand existing ones to boost available supplies. These trends are creating a supply shortage that challenges mining companies and invites them to rethink their operational strategies. Currently, mining companies continue to face difficulty-attracting financing. Business priorities and challenges have dramatically changed. For instance, companies were most concerned with securing supply, managing commodity price volatility, and ramping back up in response to rising demand; today, top priorities are attracting financing, finding new supply markets, and engaging with local stakeholders in an effort to secure a license to operate. In other words, strategically all mining companies have adapted recently to challenges encountered in the development of mining activities such as hedge funds, competition between large and small companies, corporate social responsibility concepts on doing business, increased pressure for environment-friendly processes, highly regulated environment, tighter rules for access to capital for business with high risk, geographic location of mineral deposits, market distortions, limitation on exploration and extraction facing increased competition for different land uses, global recession. To help organizations take a forward-looking approach to their business planning in the face of these new market realities, have been identified ten of the top issues which will influence the global mining sector most in the coming year, presented in order of priority:

  1. The fickle face of financing: international investment fuels the sector;
  2. When supply can’t match demand: volatility is the new normal;
  3. Securing a social license: engaging stakeholders takes center stage;
  4. New taxes, new regulations and new governments: political agendas take center stage;
  5. How to invest more strategically: the need for a long-term plan;
  6. The lost generation: the war for talent rages on;
  7. At the end of the rainbow: maintaining the search for that elusive pot of gold;
  8. A tough environment: climate change disclosure and adaptation are getting harder;
  9. Working with no backbone: inadequate infrastructure hampers growth;
  10. Rethinking industry fundamentals: exploring new revenue opportunities.

Need for adoption of policies to face these global challenges

Based on an evaluation of all these components, it is necessary for the Albanian mining policy to take into consideration global trends in the sector, but also, the European Union’s policies and strategies as well as the mining policies in other Balkan countries. [6],[9],[11].

A stable macroeconomic situation with positive growth in the mining sector needs increasing the volume of Foreign Direct Investments, through efforts to implement a number of fiscal and legislative reforms, and improve the business climate, so as to keep developing new deposits and improve efficiency of active extraction sites. The economic importance of extractive industries requires a new approach in policies to balance mining activities with environmental and social issues.

As a conclusion, our response on the situation shall have as objectives to:

  • Develop a dynamic steady growth and sustainable development of the mining sector friendly to environment, certified from community for a maximum profit of Albanian citizens,
  • Guarantee an efficient mining structure, and encourage private investments in the sector,
  • Offer alternatives based on diversity of mineral resources,
  • Be prepared for transformation and restructuring,
  • Consequently work for better life and transparency towards the public,
  • Coordinate and cooperate with the Mining Programs of the country, with those regional and more,
  • Encourage investment in high technology, treatment of minerals and re-evaluation of mineral potential
  • Realize promotion, efficient supervision, monitoring, post monitoring, competitiveness, and modernization, by asserting  the state as the inalienable proprietor of mineral resources

References bibliographiques

Mati, S. (2006). Minerals Promotion Strategy of Albania”. Communication workshop organized from ITNPM, Tirana, Albania.

Mati, S. (2011). Strategy of Albanian Mining Industry Development for the next 15-Year-Period. Official newspaper Nr.109, 2011. Tirana.

Mati, S. (2009).European Mining Strategy and mining legislation in Albania. Communication, Workshop organized under TAIEX programme from EC. Tirana, Albania.

Mati, S. (2010). Mining activity and new mining law- Albania. Promotion Investment seminar, Tokyo, Japan.

Mati, S. (2010). New legislative package for mining industry-2010-2011. Chief of working group.

Kavina, P. ; Bomberovic, V. Mati , S.  Potential to Grow – Albania (2010). Mining Journal, July 30, 2010, p.21, www.mining-journal.com.

Mati, S. (2009). Strategy for industrial minerals –Albania. SARMA  – EC- Programme. Meeting Sustainable Aggregates Resource Management European Territorial Co-operation 2007 – 2013 Split, Croatia March 2009.

Mati, S. (2010). Mining policy for a sustainable development of mining activities. (SARMA  – EC- Programme. Workshop in Tirana, Albania 2010).

Mati, S. (2011). Albania- An emerging country. Mining Journal July 29, 2011, p. 14, www.mining-journal.com).

Mati, S. (2012). Sustainable development of Mining Activities in Albania (in Albanian). Tirana: PEGI Publishing house. ISBN:978-9928-124-50-0.

Mati, S. (2014). Minerals in Balkans. Monograph (Archives of the company Nesko Metal Sanayi Ve Ticaret Anonim Sirketi).

Mati, S. (2014). Minerals and Mining Activity in Albania and Kosovo. Tirana: PEGI Publishing House. ISBN: 978-9928-175-43-4.

Notes de bas de page

[1] Les confins albanais administrés par la France (1916-1920) : contribution à la géographie et à la géologie de l’Albanie moyenne, Librairie Delagrave, Paris, 1922, 307 p. PhD thesis in Natural Sciences.