Mineral rights – what farmers need to know

A flurry of innovative mining projects in the UK has placed a new focus on the question of who owns the mineral rights associated with land.

In the south-west of England, Cornish Lithium and Imerys British Lithium are now both well-advanced with plans to extract lithium, which will be used in the manufacture of batteries for storage and electric vehicles.

They estimate that commercial-scale lithium production should be a reality within the next three to five years.

See also: Making a will – what farmers should consider

Other initiatives include Anglo American’s Woodsmith Project near Whitby in North Yorkshire – formerly owned by Sirius Minerals – where a polyhalite fertiliser mine is being developed.

Scott Mitchell, partner in the rural real estate department of law firm Stephens Scown, says such projects have led to an increase in enquiries about mineral rights, although they relate to a much wider range of materials than in the past.

“Twenty or more years ago, in Cornwall, minerals were frequently mentioned in the context of tin or kaolin [china clay] and still are, but currently it is often about lithium,” he says.

“It is difficult to predict what may come next, but I suspect there may, over time, be increasing pressure to source more of our mineral needs closer to home, rather than importing from a distance.

“This may result in more questions from both mineral and surface landowners.”

What are mineral rights?

These are the rights to exploit, mine or produce mineral products, such as sand, gravel, clay and stone, which lie beneath the surface of land.

The owner of the land, if they also own the mineral rights with that land, can sell or lease those rights separately from the ownership of the surface land.

However, in the past, vast areas of mineral rights were severed from the ownership of the surface land, says Scott.

This often occurred where traditional landed estates – especially in mining districts such as Cornwall – sold off farms but kept the mineral rights.

To find out what is covered, it is vital to review the document by which the minerals were severed.

Some documents are very specific as to what is severed – for example, china clay – but many are phrased in a much more wide-ranging way.

Gold or silver deposits are owned by the Crown and known as “Mines Royal”. The Crown also owns oil and natural gas.

In addition, most unworked deposits of coal are owned, as a result of the 1994 Coal Industry Act, by the Coal Authority.

How do I check if I own the mineral rights on my land?

The starting point is to review the registered title to the surface land, or if unregistered, then the deeds forming the “chain of title”.

Although there is a general presumption that minerals beneath land are owned by the surface owner, it can often be difficult to provide complete certainty. For example, if a property has somehow been registered without the deed severing the minerals being sent to the Land Registry.

What do you do if the ownership is unclear?

Typically, farmers may find the registered title to the surface land is silent on the subject. If the question of minerals ownership is significant, then it can pay to review the pre-registration deeds to see if they contain any pertinent information.

 A search at the Land Registry for minerals-only titles is also important.

Voluntary freehold minerals registrations (not including the surface land) have been extensive in recent years following the enactment of the Land Registration Act 2002, which required landowners to register their historic manorial rights and interests to protect those rights for the future.

How long can this process take?

A registered surface title with the relevant information recorded in the Property Register – or where there is a separate registered freehold minerals title – can provide immediate clarity.

“At the other extreme, there are examples where it has taken years of archive research, public and private, to establish minerals ownership by reference to archived documents,” says Scott.

If the mineral rights do not belong to the landowner, what happens if the holder of the rights wants to exercise them?

This will depend on the wording used when the mineral rights were severed from the ownership of surface rights.

In particular, farmers will want to look at what ancillary rights have been detailed, allowing for entry on to and occupation of the surface land for:

• prospecting
• test drilling or excavations (trial pits)
• the sinking of shafts
• stacking of ore raised to the surface
• laying roadways and railways, etc.

If the ancillary rights exist, then mining may proceed, although it will need a raft of consents – in particular a mineral planning permission – which can be challenging.

Is the owner of the surface land eligible for compensation?

Compensation is frequently provided for in the severing document, but sometimes it can be at a low level – £50-100/acre in some Victorian documents – and all too frequently, it is not provided for at all.

Taking out legal indemnity insurance can be an answer for those exposed to the risk of mining without compensation.

This type of cover varies with the circumstances, but could, for example, cover the loss of value in the land, resulting from the extraction.

If a third party owns the mineral rights, is there anything this might prevent a farmer doing?

In some instances, developing land can provoke a “trespass to minerals” claim from the owner of the mineral rights.

For example, this might occur where there is a need to dig foundations, especially substantial ones, such as for a wind turbine.

This has sometimes resulted in a ransom-type claim, preventing development unless substantial monies are paid to the minerals owner. 

If a landowner is approached to sell mineral rights, what should they be aware of?

The best advice is to retain an experienced and specialist minerals agent to negotiate for you.

An experienced one should ensure the farmer receives a good rate for any initial prospecting licence, subsequent minerals lease or on any sale.

Farmers should also talk to their accountant or other tax adviser to think through and manage the implications.

For example, land leased with mineral rights for mining or quarrying will no longer be agricultural in character, and so will not qualify for agricultural property relief, while a sale result in a liability to pay capital gains tax.

“Sign nothing without advice and ask as many questions – including about intentions and timescales – as you can think of,” advises Scott.

Are there any other pitfalls to be avoided?

In mining districts, it would be unwise to acquire land without first checking the position on mineral rights, and also obtaining a mining search to check on the presence of old shafts.

“I was told of a recent incident where machinery had to be recovered after it sank back into an excavation that apparently had not been properly filled in when workings were abandoned some two hundred years ago,” warns Scott.