Economic Utilization Plan (EAP)

24 de Junho de 2021

The Economic Utilisation Plan (PAE) is an important and mandatory document for the exploitation of mineral deposits. According to the National Mining Agency (ANM), this document is part of the Mining Application and is mandatory under Article 38 of the Mining Code.

The PAE is atechnical report that provides information on the stages of extraction, processing, commercialisation, mine closure and, finally, the economic viability of the project. As such, it is drawn up by a Mining Engineer, legally qualified by CREA, who has the necessary knowledge to prepare it.

In today's text, we'll discuss:

Economic Utilisation Plan: its duties
Drawing up the EAP: Guidelines and necessary documents
Additional information for the EAP
Economic Viability Study How to prove it?
Modifications to the SAP: How to proceed?

Economic Utilization Plan: its tasks

The Economic Utilisation Plan (PAE) is an essential document for any mining project and is a fundamental requirement for the Mining Application. The PAE must include the mine project, covering aspects related to the extraction, processing and commercialisation of the mineral reserve.

The PAE is mandatory under theMining Code(Decree Law No. 227, 1967), and regulated by theMining Code Regulations(Decree No. 9.406, 2018). The document must be drawn up and signed by a legally qualified technician, accompanied by the respective Technical Responsibility Certificate (ART), presented in original or certified copy.

In short, the PAE must be drawn up by a Mining Engineer, authorised by CREA, containing all the information relating to the mine project. In addition, it must contain a description of the beneficiation facilities, indicators relating to reserves and production, a mine closure plan and economic feasibility studies for the project. It is worth emphasising that the PAE must contain information that is compatible with all the data approved in the Final Exploration Report (RFP).

Drawing up the PAE: Guidelines and necessary documents

As seen above, the PAE must cover the main stages of the project's planning in order to obtain the Mining Concession. As such, we will address the main points that must be included in the Application for Mining Authorisation and the Economic Utilisation Plan (PAE).

It should also be noted that there are particularities depending on the substance in question. For this, we recommend consulting mining legislation and, if necessary, hiring a qualified professional or company.

Application for Mining Authorization

Article 38 of the Mining Code lists the main information required for the application for a mining authorisation. It is addressed to the Minister of Mines and Energy. This application must be made by the holder of the mining authorisation, or their successor, accompanied by the following items:

I - Certificate of registration with the National Department of Trade Registration, of the organisation set up;

II - Designation of the mineral substances to be mined, indicating the Research Licence granted and approval of the respective Research Report;

III - Name and description of the location of the field intended for mining, listing it precisely and clearly, all elements such as rivers and streams, roads, topography, as well as neighbouring mining concessions, if any, and indication of the District, Municipality, County and State, as well as the name and residence of the owners of the land or squatters;

IV - Graphical definition of the intended area, delimited by a geometric figure made up, obligatorily, of straight line segments, in accordance with the rules stipulated in the Mining Code, and also the territorial properties concerned, with the names of the respective landowners, as well as a situation plan;

V - Servitudes that the mine must enjoy, when the area to be mined includes areas outside the defined polygon;

VI - A plan for the economic utilisation of the deposit, with a description of the processing facilities;

VII - Proof of the availability of funds or the existence of financing commitments, necessary for the implementation of the economic utilisation plan and operation of the mine.

Economic Utilization Plan

With regard to the PAE, the main information is listed in Article 39 of the Mining Code, which must be presented in two copies. These are

I - Explanatory memorial: Document that serves as the exclusive source of the location of your area in the ANM database. If you want to know more, go to this text.

II - Projects or preliminary projects relating to:

a) the mining method to be adopted, making reference to the scale of production initially envisaged and its projection;

On this topic, it is essential to address the mining plan, including the mining method to be used, the planning and development of the mine, the expected production, the unit operations involved (drilling, blasting, loading and transport), as well as a mining flowchart.

b) lighting, ventilation, transport, signalling and work safety;

This part mainly concerns the Mining Regulatory Standards (NRM's), established by Ordinance 237/2001. When designing a mine, compliance with the legislation is essential, and sanctions may be imposed in the event of non-compliance. Thus, for Ventilation, we have NRM 06, Lighting, NRM 11, Signalling, NRM 12 and NRM 13, and for Safety, NRM 22.

c) surface transport and ore processing and agglomeration;

This necessarily involves the project for transporting and processing the ore. The aim is to specify the equipment that will be used, as well as the process routes, inputs and the layout of the mine.

d) energy, water supply and air conditioning installations;

This topic describes the electrical installations, water and air supply pipework.

e) the hygiene of the mine and its workings;

This section should specifically discuss safety conditions at work, always taking into account the conditions laid down in NRM 22.

f) housing and living conditions for all those who live on the mining site;

Still linked to NR 22, this part describes the buildings that support the mine's operations, such as offices, workshops, restaurants, as well as safety items.

g) facilities for capturing and protecting water sources, adduction, distribution and utilisation, in the case of mineral water;

This topic must be present in the case of mineral water exploration and exploitation. The main legal provisions in this case, apart from the CM, are the Mineral Water Codeas well as Ordinances No. 231/1998 and No. 374/2009. Therefore, the design of the installations must be presented, observing the use of authorised materials such as PVC and stainless steel, as well as the conditions for protection and storage.

h) the construction of a tailings dam, if any, or an increase in its height, where the use of the upstream raising technique is prohibited (Included by Law No. 14,066 of 2020).

Present a project for the construction of the tailings disposal structure. An observation in the case of dam construction is that the EAP must contain an Emergency Action Plan, in conceptual form drawn up by the entrepreneur.

Additional information on the PAE

In addition to the above information, the following items are also required:

Economic feasibility study;
Data on the labour force to be employed;
Plan for controlling environmental impacts in mining;
Work schedule;
Rescue and salvage plan;
Risk management plan;
Mine closure plan;
Occupational health and medical control plan.

Economic Feasibility Study: How to prove it?

Analysing the economic viability of the project is the initial step in verifying that it can be implemented. For the purposes of proving the availability of funds, Ordinance 155/2016 establishes, in Article 124, the admission of documents:

I - Certificate of financial capacity issued by a financial institution;

II - Proof of installation of the equipment needed to capture or exploit the ore;

III - Proof of the availability of machinery and equipment, owned by the company or third parties, sufficient to carry out the plan for the economic utilisation and operation of the mine;

IV - Balance sheet and accounting statements for the last financial year endorsed by a legally qualified professional.

It is worth noting that, at the ANM's discretion, surveys may be carried out using documents I and II, mentioned above. In addition, it is important to itemise, after this proof has been provided, the forecast for payment of CFEM, in accordance with your production projections.

The importance of the other additional items mentioned above should also be emphasised. The plan for controlling environmental impacts in mining needs to be well prepared, in compliance with the environmental agencies, as well as a concise and executable mine closure plan.

Changes to the PAE: How to proceed?

The Economic Utilisation Plan (EAP) can be modified during the course of the mining work. With greater knowledge of the deposit, changes may be identified, or economic market conditions may require modifications to the scale of production. However, according to Article 51 of the CM, this change must be submitted to the ANM for approval of the new PAE.

According to Article 67 of the Mining Code Regulations, mining in disagreement with the economic utilisation plan carries a fine of R$3,293.90.

How can DMT help you?

Given the importance of this document, it is clear that you need to build a PAE that is consistent with your project and in line with your research report. Furthermore, any changes need to be assessed by the ANM, thus avoiding activities that are at odds with the best use of the deposits, and without jeopardising mine closure operations or subsequent exploitation.

DMT is a company that provides mineral consultancy services, with a multidisciplinary and qualified technical team to help you or your company with mining processes. If you need to carry out an economic utilisation plan and other services in the minerals area, please contact us. Get to know our services.

Interested in the subject? Check out other texts on our blog!

References

National Mining Agency website, Pernambuco
Jazida website
Lessons and material Julieta Calegari - Mining Law

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