Legal and Economic Basis for Performing Mining Activities in Southeast Europe

Discussion, comparison and evaluation of Southeast European mining legislation, general and mineral economic indicators

Textbook 2009 201 Pages

Law - Civil / Private / Trade / Anti Trust Law / Business Law



1 About this book
1.1 Background
1.2 Horizontal and vertical synergetic approach
1.3 Methodology

1 Introduction and geographical key data
2 Introduction
2.1 Economic area Europe - marketing area European Union
2.2 Geographical definitions
2.3 Importance of the European mineral potential
2.4 Factors influencing investment in the mining sector
2.5 Legal basis for performing mining activities
3 Geographical key data

II Economic basis
4 General economic indicators in Southeast Europe
5 Economic indicators of Southeast European countries
6 Importance of the mining industry
6.1 Metallic mineral resources
6.2 Industrial minerals
6.3 Energy resources
6.4 Construction aggregates
7 National mine production

III Legal basis
8 Form of government and administrative division
8.1 Constitutions
8.2 Forms of government
8.3 Administrative divisions
9 Overview of existing mining laws
10 Mineral rights
11 Mineral resources categories
12 Existing permits and licenses
13 Competence of public authorities
14 Obtaining mining licenses
15 Rights and obligations
16 Mining programs
17 Penal provisions
18 Fees and royalties

IV Integrated comparison and conclusion
19 Integrated comparison
20 Conclusion

V Appendix

A Mine production figures



Mineral resources are essential for the existence and the development of our modern society. Metal resources (e.g. iron, manganese, aluminium, PGM) are used for the production of a wide range of merchandise. Industrial minerals are broadly used for pharmaceuticals, chemical products etc. Energy, which is also as essential for our society as metals and industrial minerals, is also provided on a very large scale by non-renewable mineral resources, like natural gas and coal. The European Union represents a territory of low mineral potential. Of course there are several exceptions, like Poland having a high production of copper, Sweden of iron, Finland of chromium, Germany of several industrial minerals etc. Overall, the European Union is not able to cover the needs of the domestic industry from domestic deposits and is therefore highly dependent on imports of mineral resources (especially for metals and energy minerals). The mineral potential of Western Europe has been used on a very high scale because the mineral wealth was already known in ancient times, whereas the deposits in Southeast Europe have not been exploited on such an extended scale. Both economic and legal situation of many Southeast European countries are not well known in the Western world. As far as the mining industry is concerned, this fact is caused by the changing po­litical situation during the last decades, the therewith connected underdeveloped mining industry and a high complexity of legal requirements (for mining activities, environmental protection, con­cession policy, investment policy, labor and fiscal legislation, etc.). In 2007, Bulgaria and Romania became members of the European Union and therefore they represent the first Southeast European countries being accepted into the European Union. Furthermore Croatia, Macedonia and Turkey are considered candidate countries, all located in Southeast Europe. The increasing importance of Southeast Europe for the enlargement of the European Union may also upgrade the economic situation and therefore the mining sector, resulting in a reduced import dependence of mineral resources. However, it is essential to upgrade the Southeast European mining industry, which, for several reasons, should preferably be done by foreign companies already having experience in min­ing. Two parameters are essential for investments in the mining industry, the existence of mineral deposits on the one hand and a consistent legal framework on the other hand. This books deals with both issues. The aim is to give general and detailed information on the overall economic, mineral economic and legal situation in Southeast European countries as well as to evaluate and compare both issues. This book combines information and research data, which was collected for more than two years and forms the basis for a solid line of discussion as well as for horizontal and vertical integrated evaluation and comparison.


At this point, I want to thank three people for their support. I want to thank my parents, Astrid and Thomas, for supporting the development of my career. Furthermore, I want to express my gratitude to my companion Eva Christina for reviewing this book. I want to dedicate this book to all of you!

List of Figures

1.1 Horizontal and vertical approach

1.2 Important legal aspects to perform mining activities

2.1 EU in the global GDP ranking 2008

2.2 Composition of the European Union’s GDP

2.3 Candidate and potential candidate countries of the European Union

2.4 Economic alliances in Europe

2.5 Candidate and potential candidate countries of the European Union

2.6 Advanced, emerging and developing economies in Europe

2.7 GDP of EFTA member countries

2.8 GDP of European CIS member countries

2.9 Territorial subdivision of Europe

2.10 Geographic location of BRIC, N-11 and MAE

2.11 GDP real growth rate in BRIC, N-11 and MAE

3.1 Location of SEE countries

4.1 GDP in SEE

4.2 GDP in Europe 1

4.3 GDP in Europe 2

4.4 GDP per capita in SEE

4.5 GDP composition in SEE

4.6 Labor force composition in SEE

4.7 GDP composition in comparison with GDP per capita

4.8 GDP and industrial production growth rate

7.1 Albanian chromite production 1987 - 2006

7.2 Aluminium, iron ore and steel production in Bosnia and Herzegovina from 1990 to 2007

7.3 Composition of the Bulgarian energy supply

7.4 Composition of the Croatian energy supply

7.5 Mineral occurrences in Kosovo

7.6 Composition of the Macedonian energy supply

7.7 Composition of the Montenegrin energy supply

7.8 Composition of the Romanian energy supply

7.9 Composition of the Serbian energy supply

7.10 Composition of the Turkish energy supply

9.1 Scope of SEE mining laws

19.1 Fictional mining legislation evaluation

19.2 Fictional mining legislation evaluation 2

19.3 Albanian mining legislation evaluation 1

19.4 Albanian mining legislation evaluation 2

19.5 Bulgarian mining legislation evaluation 1

19.6 Bulgarian mining legislation evaluation 2

19.7 Croatian mining legislation evaluation 1

19.8 Croatian mining legislation evaluation 2

19.9 Cypriot mining legislation evaluation 1

19.10 Cypriot mining legislation evaluation 2

19.11 Kosovarian mining legislation evaluation 1

19.12 Kosovarian mining legislation evaluation 2

19.13 Macedonian mining legislation evaluation 1

19.14 Macedonian mining legislation evaluation 2

19.15 Romanian mining legislation evaluation 1

19.16 Romanian mining legislation evaluation 2

19.17 Serbian mining legislation evaluation 1

19.18 Serbian mining legislation evaluation 2

19.19 Turkish mining legislation evaluation 1

19.20 Turkish mining legislation evaluation 2

A.1 Metal production in Albania

A.2 Industrial mineral production in Albania

A.3 Energetic mineral production in Albania

A.4 Cement production in Albania

A.5 Iron ore, aluminium and steel production in Bosnia-Herzegovina

A.6 Manganese, lead and zinc production in Bosnia-Herzegovina

A.7 Industrial minerals and cement production in Bosnia-Herzegovina

A.8 Energetic mineral production in Bosnia-Herzegovina

A.9 Metal production in Bulgaria 1

A.10 Metal production in Bulgaria 2

A.11 Industrial mineral production in Bulgaria 1

A.12 Industrial mineral production in Bulgaria 2

A.13 Energetic mineral production in Bulgaria 1

A.14 Energetic mineral production in Bulgaria 2

A.15 Cement and crude steel production in Bulgaria

A.16 Bauxite and crude steel production in Croatia

A.17 Industrial mineral production in Croatia

A.18 Cement production in Croatia

A.19 Energetic mineral production in Croatia

A.20 Copper production in Cyprus

A.21 Bentonite and gypsum production in Cyprus

A.22 Cement production in Cyprus

A.23 Metal production in Macedonia

A.24 Precious metal production in Macedonia

A.25 Industrial mineral production in Macedonia

A.26 Lignite production in Macedonia

A.27 Crude steel and cement production in Macedonia

A.28 Aluminium and steel production in Montenegro

A.29 Salt and lignite production in Montenegro

A.30 Metal production in Romania 1

A.31 Aluminium production in Romania

A.32 Precious metal production in Romania

A.33 Industrial mineral production in Romania

A.34 Energy resources production in Romania

A.35 Cement and crude steel production in Romania

A.36 Metal production in Serbia

A.37 Precious metal production in Serbia

A.38 Industrial mineral production in Serbia

A.39 Energetic mineral production in Serbia

A.40 Crude steel and cement production in Serbia

A.41 Metal production in Turkey 1

A.42 Metal production in Turkey 2

A.43 Metal production in Turkey 3

A.44 Metal production in Turkey 4

A.45 Industrial mineral production in Turkey 1

A.46 Industrial mineral production in Turkey 2

A.47 Cement production in Turkey

A.48 Energy resources production in Turkey

A.49 Lignite production in Turkey

List of Tables

2.1 Economic alliances in Europe

3.1 Summary of geographical indicators

7.1 Metal production in Albania

7.2 Industrial mineral production in Albania

7.3 Energetic mineral production in Albania

7.4 Metal and products thereof production in Bosnia and Herzegovina

7.5 Industrial mineral production in Bosnia and Herzegovina

7.6 Metal production in Bulgaria

7.7 Industrial mineral production in Bulgaria

7.8 Energy resources production in Bulgaria

7.8 Energy resources production in Bulgaria

7.9 Mineral resources production in Croatia

7.9 Mineral resources production in Croatia

7.10 Mineral resources production in Cyprus

7.11 Metal production in Macedonia

7.12 Industrial mineral production in Macedonia

7.13 Lignite production in Macedonia

7.13 Lignite production in Macedonia

7.14 Mineral production in Montenegro

7.14 Mineral production in Montenegro

7.15 Metal production in Romania

7.16 Industrial mineral production in Romania

7.17 Energetic mineral production in Romania

7.18 Metal production in Serbia

7.18 Metal production in Serbia

7.19 Industrial mineral production in Serbia

7.20 Energetic mineral production in Serbia

7.21 Metal production in Turkey

7.22 Industrial mineral production in Turkey

7.23 Energetic mineral production in Turkey

8.1 Constitutions in SEE as of April 2009

9.1 Mining Laws in SEE

10.1 Mineral righhts in SEE

12.1 Exploration areas in Macedonia

12.2 Mining permits, licenses and concessions in SEE

12.2 Mining permits, licenses and concessions in SEE

13.1 Competent authorities in SEE

14.1 Procedures for obtaining mineral rights in SEE

14.1 Procedures for obtaining mineral rights in SEE

18.1 Fees for prospecting permit in Cyprus

18.2 Fees and rents for mining lease in Cyprus

18.3 Quarry license type A pays and rents in Cyprus

18.4 Quarry license type B pays and rents in Cyprus

18.5 Royalties in Cyprus

18.6 Royalties in Serbia

20.1 Evaluation of mineral potential and legal consistency

Chapter 1 About this book

1.1 Background

The author of this book used to work at University of Leoben (Montanuniversität Leoben) with specialization on mineral economy, mining law and policy. During that period the author already published books on the topic of investments in the Southeast European mining sector. Mineral law and policy is a very new research topic. The research work focused on general and applied mineral policy, law and economics and the connections and relations between them. An extensive professional and private research process of the author aimed at the compilation and evaluation of the Southeast European mining legislation. After nearly one year of work the first results were published. Four books in German language discuss the economic and legal basis for investments in the Southeast European mining sector. The focus of these books was turned to legal aspects because the existing legislative structure represents one of the most important factors influencing investment decisions.

This book represents a summary and evaluation of the previously conducted works. For this pur­pose the economic, mineral economic and legal situation (as far as mineral resources are directly concerned) will be discussed, compared and evaluated.

1.2 Horizontal and vertical synergetic approach

This book’s particularity is the horizontal and vertical approach. The performance of mining ac­tivities requires to consider many different issues. The most important factor is the existence of an occurrence of a mineral resource (deposit). All these issues will be clearly identified in the next section.

The horizontal approach is ensured by discussing both economic and legal issues in one book as well as by adducing all countries in parallel. This allows a direct comparison. The vertical integrated approach is represented by an in-depth discussion of the subject. Economic and legal basis will be discussed separately. The separate issues which will be mentioned and which comprise the vertical approach are subject of the following section. The general idea of the approach is illustrated in figure 1.1.

Horizontal integration

parallel discussion of countries: Albania, Bulgaria, Croatia, Cyprus, Kosovo, Macedonia, Romania, Serbia, Turkey

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Figure 1.1: Horizontal and vertical approach

1.3 Methodology

This book is subdivided into four major parts:

1. Introduction and key geographical data
2. Economic basis
3. Legal basis
4. Conclusion and summarizing thoughts

The first part of the book introduces the term Southeast Europe along with the categorization of European territory into regions. The Southeast European region, which is one part of Europe, is precisely defined. Furthermore the marketing area Europe is opposed to the marketing area Euro­pean Union. The European Union is discussed specially because Romania and Bulgaria, which are situated in Southeast Europe, are members in the EU. In addition Croatia, Macedonia and Turkey are candidate countries for the EU membership and are all situated in the sphere of influence of Southeast Europe. Many other Southeast European countries are potential members of the EU. However, the term Europe is not equal to the term European Union. It is important for this book to mention other economic alliances in Europe. Furthermore the developing status (developing, emerg­ing, advanced and most advanced) of Europe is shown in a global context. For the introduction it is important to briefly mention Europe’s mineral potential and supply situation. The potential role of the Southeast European countries shall be highlighted. Economic and legal basis represent very significant issues for investment processes in mining. The introduction compiles description of the different factors influencing investment in mining activities, especially the legal aspects. The end of the introductorily part represents a short discussion of some important geographical data which shall describe the often unknown geographic situation of the Balkan peninsula as well as Turkey and Cyprus.

The second part of the book deals with the economic basis. First, general economic aspects like GDP and its composition will be discussed for the whole Southeast European region. Data of Aus­tria and the European Union (average data of all member states) are mentioned for comparison. Afterwards a detailed portfolio on basic economic information will be given for each country, inter alia (i.a.) GDP, GDP composition, GDP growth rate, labor force, labor force composition, informa­tion on agricultural and industrial production as well as a trade balance. The mining industry will also be discussed in general and in detail. The general importance of the Southeast European mine production will be shown by citing production data and the share in world production. Detailed information on each country contains mining production of the last years and short information on the structure of the mining industry.

The focus of this book is turned to the legal basis which is discussed in the third part. There are several very important legal aspects to be considered. Not all of them are discussed in this book because it would overstretch the scope. The introduction to the legal basis is established by a com­parison of active constitutions, forms of government and administrative divisions. This information is relevant for the implementation of the mining (as well as other) legislation because for different provisions or activities different authorities (local or national) can be responsible. The discussion of active mining laws in Southeast Europe shall lead over to the mining specific part of the legal basis. Besides the year of application of the law, the scopes will be compared as well. The further discussion of several provisions of each mining law is based on the administrative procedures for starting and performing mining activities (see figure 1.2).

First of all it is important to know whose domain mineral resources (mineral rights) are in. The cat­egorization of mineral resources into different categories is also connected to mineral rights because there may be different mineral rights for different mineral groupings. The mineral categorization is also important for the application of a license or permit, fees and royalties. Resulting from the different mineral categories and different mining works which are covered by law, a wide range of concessions, licenses and permits exist. It is very significant to distinguish all these administrative documents and (as mentioned before) different application processes and especially authorities. Both the competent authorities and the different application and permitting procedures will be discussed in detail in this book. After the relevant authorities have granted a license or permit, several rights and obligations result from them. Together with existing mining plans and programs established rights and obligations are the most important provisions for performing mining activ­ities. A licensee, permittee or concessionaire has to pay several penalties (when charged guilty of an offense), fees and royalties which are also requirements for the performance of mining. All these legal aspects are discussed and nearly all of them (except rights and obligations, mining programs and financial terms) are compared for each country in the same sequence as they were mentioned in this chapter. This book does not contain information on the termination of mining activities (including rehabilitation).

The fourth and last part of this book deals with an integrated comparison and evaluation of the economic and the legal basis. As far as the legal basis is concerned, a common approach is uti­lized: every mining law is evaluated by conducting a content analysis and derivating therefrom the complexity of the mining law. Together with the actuality and the scope of the mining law it is possible to compare these very important legal issues in Southeast Europe. In addition a summary of the general economic and the mining economic situation is implemented. These two parts are connected and countries with a high level of legal consistency and high mineral potential, and therefore a high mining development possibility (which may also be important to improve the general economic situation) can be identified.

Figure 1.2: Important legal aspects to perform mining activities

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Chapter 2 Introduction

2.1 Economic area Europe - marketing area European Union

The European Union (EU) is the world’s largest marketing area. In 2008 the European Union’s gross domestic product (GDP) accounted for 14.82 trillion US$ [15][1]. Hence, the European Union ranks first in global context outperforming the United Stats of America, China and Japan (see figure 2.1). The same year the EU achieved about 21.33% of the global GDP. Still, it is important to note that the European Union represents a political union of 27 European countries. Within the union Germany, the United Kingdom, France, Italy and Spain are the economically most important countries. These five countries accounted for 85.12% of the European Union’s GDP in 2008 [15]. Figure 2.2 shows a break-up of the European Union’s gross domestic product in 2008.

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Figure 2.1: EU in the global GDP ranking 2008 (Data source: CIA)

Many other European countries are not members in the European Union. Most of them are situated in Southeastern and Eastern Europe. The EU faces further enlargement, especially in the South­eastern European region. Macedonia[2] and Croatia as well as Turkey are candidate countries for joining the European Union [30]. The former two may become members of European Union in the foreseeable future. The accession of Turkey to the European Union is controversial although official accession negotiations started in 2005. In 2008, Turkey would have been the sixth most important economic region within the European Union [15]. All other Southeast European countries that are not members in the EU are potential candidate countries and already signed the Stabilization and Association Agreement (see figure 2.3).

The economic importance of Southeast European countries will be discussed in part II of this book.

In summary, it is important for this section to mention that all candidate and potential candidate countries (except Turkey) form the Central European Free Trade Agreement (CEFTA; [11]). Nor­way, Switzerland, Iceland and Lichtenstein represent the remaining members of the European Free Trade Agreement (EFTA). Except Switzerland, all EFTA member countries are represented in the European Economic Area [29].

Finally, the Eastern Partnership, which was initiated by the European Union in May 2009, shall be mentioned. The Eastern Partnership is a treaty of association and aims at political and economic assistance for six Eastern European countries: Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine [26]. The Russian Federation and Kazakhstan are not members of the Eastern Partnership. All members of the Eastern Partnership (except Georgia) are also united in the Commonwealth of Independent States (CIS; [25]).

Figure 2.4 and table 2.1 show a summary of all existent European economic/trade alliances in Europe. Figure 2.5 categorizes Europe according to further EU enlargement: European Union (blue), EFTA (violet), Stabilization and Association Process (light green), candidate countries (dark green), Eastern Partnership (orange).

Table 2.1: Economic alliances in Europe

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Figure 2.4: Economic alliances in Europe (Source: Own work)

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Figure 2.5: Candidate and potential candidate countries of the European Union (Source: http://en.wikipedia.org/wiki/FuturmenlargemenUoLthmEuropeamUnion)

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Many European economies are well-developed. An indicator for economic development is the com­position of the gross domestic product. In the European Union, the agricultural sector accounted for 2.0% of the GDP in 2008. The proportion of the industrial (27.7%) and the service sector (66.7%) were much higher [18]. The European Union’s economy in average is well-developed. Within the Union, a big economic difference from west to east can be noticed. The International Monetary Fund (IMF) published a list of advanced, emerging and developing economies [52]. Within the Union Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slo­vakia are not categorized as advanced economies. Some European Union member countries are major advanced economies: Germany, France, Italy and the United Kingdom. In Europe Norway, Iceland and Switzerland represent advanced economies. All other European nations are attributed to emerging and developing countries. Figure 2.6 shows a summary of advanced (blue), emerging and developing (orange) countries.

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Figure 2.6: Advanced, emerging and developing economies in Europe (Source: http://en.wikipedia.org/wiki/Developing_country)

This subchapter has so far discussed the categorization of European economic/trade organizations, the basis of the European economy and the European Union’s intentions within the European Neighbourhood Policy and Stabilization and Association Agreement. Finally, the GDP of missing European countries shall be mentioned (except Southeast European countries; see figures 2.7 and 2.8).

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Figure 2.7: GDP of EFTA member countries(Data source: CIA)

Figure 2.8: GDP of European CIS member countries(Data source: CIA)

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2.2 Geographical definitions

In this book, some geographical terms will be used, which shall be discussed in this section. These terms result from the territorial subdivision of Europe. Sometimes the European and the Asian continent together are referred to as Eurasia. It is difficult to define a border line between Europe and Eurasia. At this point, the current popular border line is used: Ural Mountains, Ural river, Caspian Sea, Caucasus Mountains, Black Sea and the Bosporus. Within the meaning of this defini­tion parts of Turkey, Russia, Armenia, Georgia, Azerbaijan and Kazakhstan are situated in Europe. All European countries and European parts of other countries build the European marketing area which was already discussed in chapter 2.1.

Just like the definition of a border line, the territorial subdivision of Europe is not standardized. The classification of the CIA World Factbook shall be used. Europe can be divided into (see also figure 2.9):

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Figure 2.9: Territorial subdivision of Europe (Source: http://en.wikipedia.org/wiki/Europe)

- Northern Europe (blue)
- Western Europe (turquoise)
- Central Europe (light brown)
- Southern Europe (light green)
- Southeastern Europe (brown)
- Southwestern Europe (red)
- Eastern Europe (dark pink)

In addition, parts of Asia are shown in light pink and violet, parts of the Middle East (Cyprus) in dark green and parts of Southwestern Asia (especially Turkey and Eastern Partnership members) are also highlighted. For this book, the Southeastern region of Europe is important; it comprises the following countries:

- Albania
- Bosnia an Herzegovina
- Bulgaria
- Croatia
- Kosovo
- Macedonia
- Montenegro
- Romania
- Serbia

All these countries are situated in the area of the Balkan peninsula. Greece, which is located at the very south of this peninsula, is assigned to Southern Europe. Besides the Balkan countries, two more non Southeastern European countries will be discussed in this book:

- Turkey (because of its candidate status to the EU)
- Cyprus (most Southeastern EU member country)

2.3 Importance of the European mineral potential

As discussed in chapter 2.1, the European Union is the world’s largest economic area. Mineral resources are essential for the development and the existence of a modern economy and society. The European Union is not able to satisfy its need for mineral resources from domestic deposits. The Western and Southern European mineral potentials have been decreasing for a long time due to historic use back in ancient times. However, the mineral resources richness of Southeastern and Eastern Europe have not been used on such a large scale [46, p. 15]. The European Union is dependent on mineral resources imports to balance the difference of domestic production and need. Those imports play a very important role for energetic and metallic resources. The dependence of the European Union from imports was shown up in early January 2009, when Russian natural gas imports via the Ukraine stopped because of the Russian-Ukrainian gas dispute. Since the winter season that year was very cold, the lack of gas led to a disability to heat [50, p.305]. Some countries, like Germany and Austria, were able to minimize the effects of the missing gas imports through domestic production or the use of gas reserves.

In recent years, the global demand for mineral resources increased constantly. Developing countries,

such as the so called BRIC countries[3], require a lot of mineral resources for the development of their economies. Another group of countries is called Next Eleven (N-11-countries). N-11 comprises eleven emerging countries whose economies may develop similar to the BRIC countries in the early 2000s. BRIC and N-11 countries will become the most important marketing areas in the 21st century. Figure 2.10 displays the world’s most important economic areas. Current major advanced economies (MAE) are shown in orange, BRIC countries in green and N-11 in red. Figure 2.11 lists the GDP’s real growth rate of BRIC, N-11 and major advanced economies. Thus it appears that major advanced economies demonstrate a low GDP growth rate, whereas BRIC and N-11 countries obtain rates up to 9.80%.

Since investments in mining operations and the development of new mining sites may take several years, the mining industry is conditionally able to react on the increased mineral demand. Since the development of emerging economies has entered an unprecedented dimension, more and more people demand for an almost unchanged amount of mineral resources. Therefore prices on mineral resources increased rapidly. The explosion of mineral prices ended in late 2008, when the global financial crisis took control of industry (especially automotive industry) and consequently the min­ing sector [49].

Due to the increasing global population and the constant economic development of emerging and developing countries the European Union and other countries dependent on mineral resources imports face an increasingly difficult market situation for covering their mineral demands. Some mechanisms to decrease import dependence exist. One possibility is the increased use of domestic (European) deposits, as far as they can be exploited economically. The attention shall be turned to exploration activities in all of Europe and the development or modernization of mining opera­tions in Southeastern and Eastern Europe. So far Bulgaria and Romania are the only Southeastern European countries which are members in the European Union. All currently existing candidate countries (Turkey, Macedonia and Croatia) are situated in the area of influence of Southeastern Europe. Further enlargement of the EU in Southeastern Europe and preceding bilateral and multi­lateral trade agreements may improve the EU’s access to Southeastern European mineral potential. The current situation of the mining industry on the Balkan peninsula needs to be improved. Foreign companies may play an important role in the development of the mining sector because foreign investors possess adequate financial, managerial and operational knowledge for performing mining activities on European standard level.

2.4 Factors influencing investment in the mining sector

Foreign direct investment (FDI) in the mining sector may play an essential role to develop the Southeast European mining industry. There are a lot of parameters that influence investments in the primary sector. Georg Agricola stated in his second book of de re metallica that ‘before a miner begins to mine the veins, he must consider seven things, namely the situation, the conditions, the water, the roads, the climate, the right of ownership, and the neighbors. There are four kinds of situations: mountain, hill, valley, and plain’ [2][1]. All these parameters which were established in the 16th century are still valid today. They can be summarized and extended to:

- availability of mineral resources
- legal framework
- investment climate
- current situation of infrastructure
- general economic indicators
- cost of investment
- additional supplementing parameters (language, form of government, etc.)

In this book the legal framework and general economic indicators shall be discussed.

2.5 Legal basis for performing mining activities

The legal framework for performing mining activities can be divided into primary, secondary and other relevant legal provisions. Primary provisions comprise all legal acts that directly concern the execution of mining works. The term mining works in this book consists of:

- prospection work with all relevant actions
- exploration work with all relevant actions
- exploitation work with all relevant actions
- mineral processing
- various other work regulated by mining laws

Secondary legal acts do not regulate mining activities in a direct way, but established provisions may concern mining activities. Examples for a secondary legal provision are all relevant nature pro­tection laws and regulations, spatial planning provisions, concession acts, etc. Other legal provisions concern employment law, industrial law, social legislation, etc.

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Chapter 3 Geographical key data

This chapter overviews important geographical and demographic key data on all SEE countries. Their location is shown in figure 3.1.

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Figure 3.1: Location of SEE countries (Source: Own work)


Albania borders the Adriatic and Ionian Sea (Mediterranean Sea) on 362 km. Furthermore, it is bordered by Montenegro, Kosovo, Macedonia and Greece (border totals 717 km). Albania’s national territory comprises of 28,748 sq km [12]. Two thirds of the interior is mountainous, while the main population centers lie on the coastal plain stretching from Shkoder in the north to Vlore in the south [33].

The Albanian population of 3,600,000 is concentrated in the capital Tirana, Durrës, Elbasan, Vlore and Shkoder [82]. In 2005, 45.00% of the Albanian population were accummulated in urban areas. This percentage is expected to have grown to 51.20% by the year 2015 and to 60.70% by 2030 [37]. 95% of the Albanian population are Albanians, 3% are Greek and the remaining 2% are Roma, Serbs, Macedonians and Bulgarians [12].

Bosnia and Herzegovina

Bosnia and Herzegovina is surrounded by Serbia, Montenegro and Croatia. The border line totals to 1,538 km. Bosnia and Herzegovina also has a small access to the Adriatic Sea (20 km near Neum). Bosnia-Herzegovina has an area of 51,209 sq km [13]. The Bosnian-Herzegovinian landscape varies from high altitude central mountains to arable land in the north and Mediterranean vineyards in the south, with most of the major towns being located in valleys [34].

Bosnia and Herzegovina has a population of about 4,610,000. The biggest cities are Sarajevo, Banja Luka, Bosanski Samac, Tuzla and Zenica [83]. 45.30% of the Bosnian population live in urban area. This percentage is prognosed to rise to 61.00% by 2030 [38]. In Bosnia and Herzegovina many ethnic groups live side by side. 48.0% of the total population are Bosniaks, 37.1% Serbs, 14.3% Croats and 0.6% ethnic minorities. The official languages are Bosnian, Croatian and Serbian [13].


The Bulgarian state covers an area of 110,910 sq km. Bulgaria borders Greece, Macedonia, Romania, Serbia and Turkey on a total border line of 1,808 km. Bulgaria possesses a 354 km coastline to the Black Sea [14]. Bulgaria’s relief is mostly mountainous with lowlands in the north and southeast. Bulgaria’s most important mountain chains are the Balkans and Rhodopes [48].

The Bulgarian population of 7,200,000 people consists of Bulgarians (83.9%), Turks (9.4%), Roma (4.7%), other ethnic groups (including Macedonian, Armenian) [14]. 70.50% of the total population are concentrated in urban areas [39]. The most important cities are Sofia, Plovdiv, Varna, Burgas, Ruse, Sttara Zagora, Pleven, Sliven and Dobrich [84].


Croatia has a very long coastline with the Adriatic Sea (5,835 km) and furthermore a very long total border line (1,982 km), which is shared with Bosnia and Herzegovina, Hungary, Serbia, Montenegro and Slovenia. Croatia covers an area of 56,542 sq km and has a very geographically diverse relief with flat plains along the Hungarian border and low mountains and highlands near the Adriatic coastline and islands [16].

Croatia’s population has significantly increased in the late 1990s and early 2000s. The population’s rise settled at about 4,490,000. 59.90% of the Croatian people live in urban area [40], especially in the big cities Zagreb, Split, Rijeka, Osijek and Zadar [85]. Croatia is inhabited by Croats (89.6%), Serbs (4.5%) and a lot of other ethnic minorities (5.9%; including Bosniak, Hungarian, Slovene, Czech and Roma) [16].


Cyprus is the southeasternmost member country of the European Union. Geographically it can be allocated to the Middle East. Cyprus is an island in the Mediterranean Sea. Therefore Cyprus has no border line with another country except 150.4 km with two large-area British military bases (Akrotiri 47.4 km, Dhekelia 103 km). The total coastline of Cyprus is 948 km. The Cypriot terrain is affected by a central plain with mountains to the north and south and several smaller plains in the area of the Southern coast[17].

Cyprus comprises a state territory of 9,250 sq km. The population is about 796,700 as of 2008. 69.50% of the total population live in urban areas [41], especially in the cities of Nicosia, Lemesos and Larnaca [86]. In Cyprus Greek (77% of population) and Turk (18% of population) people live alongside [17], which caused many conflicts in history (for details see chapter 8).


Kosovo, which became independent in 2009 (see chapter 8), with a covered area of 10,887 sq km is one of the smaller nations in Southeast Europe. It is located landlocked between Albania (112 km border line), Macedonia (159 km border line), Montenegro (79 km border line) and Serbia (352 km border line) [19]. The Kosovarian relief is dominated by central plains and surrounding mountain ranges [45].

1,800,000 people live in Kosovo. Most of them (88%) are Albanians. The biggest minority are Serbs (7%) [19]. The biggest population centres are Pristina, Prizren, Urosevac and Pec [87].


Macedonia, sometimes Former Yugoslav Republic of Macedonia (FYROM), like Kosovo, is a land­locked nation. It is situated between Albania, Bulgaria, Greece, Kosovo and Serbia with a total border line of 766 km. Macedonia has a total area of 25,333 sq km. Its territory is mountainous with deep valleys and basins and three large natural lakes. The Vardar river bisects the country [20].

59.70% of the Macedonian population of 2,066,700 are concentrated in urban areas [42]. The biggest cities are Skopje, Kumanovo, Bitola, Tetovo and Prilep [88]. The total Macedonian population con­sists of Macedonian (64.2%), Albanian (25.2%), Turkish (3.9%), Roma (2.7%), Serb (1.8%) and other (2.2%) people [20].


Montenegro seceded from Serbia-Montenegro in 2006, leaving the Serbian territory landlocked. To­day, Montenegro borders Albania (172 km), Bosnia and Herzegovina (225 km), Croatia (25 km), Kosovo (79 km) and Serbia (124 km). Montenegro has a 293.5 km coast line with the Adriatic Sea. With a total territory of 14,026 sq km it is slightly larger than the former Serbian province of Kosovo. The Montenegrin territory is dominated by mountains, plateaus and canyons. Along the coastline a narrow plain can be found [21].

Montenegro’s population mounts up to 672,180. Many ethnic groups live together in Montene­gro: Montenegrin 43%, Serbian 32%, Bosniak 8%, Albanian 5%, others (Muslims, Croats, Roma) 12% [21]. Podgorica, the capital of Montenegro, is the most important city. Another significant population centre is Niksic [89].


With a total covered area of 237,500 sq km Romania is the second biggest country in Southeast Europe. Romania shares its 2,508 km long border line with Bulgaria, Hungary, Moldova, Serbia and the Ukraine. Furthermore Romania has access to the Black Sea (coastline of 225 km). Romania has a diverse relief which includes plains (e.g. Danube river plain), basins, deltas and mountain ranges [22].

Romania has a population of 22,215,000. Most of the population are Romanians (89.5%) but there are also big minorities like Hungarians (6.6%) and Roma (2.5%) [22]. More than 54.70% of the population is concentrated in agglomeration centres [43] like Bucharest, Cluj-Napoca, Constanza, Craiova, Galati, Iasi, Timisoara et cetera [90].


Serbia is a landlocked country in the Central Balkans. Its covered area is 77,474 sq km. Therefore Serbia is one of the bigger countries in SEE. Serbia shares its 2,026 km border line with Bosnia and Herzegovina (302 km), Bulgaria (318 km), Croatia (241 km), Hungary (151 km), Kosovo (352 km), Macedonia (62 km), Montenegro (124 km) and Romania (476 km) [23]. The landscape ranges from flat plains in the north to hilly and mountainous regions in southern Serbia [35].

Serbia has a population of about 7,379,000. The big minority of Albanians founded their own nation within the republic of Kosovo. This fact causes that Albanians are not one of the most important ethnic groups in modern Serbia. the Serbian population consists of Serbs (82.9%), Hungarians (3.9%), Romany (1.4%), Yugoslavs (1.1%), Bosniaks (1.8%), Montenegrins (0.9%) and others (8%) [23] . The biggest cities in Serbia are Belgrade, Novi Sad, Nis and Kragujevac [91].


Only a small part of Turkey belongs to the European continent. Turkey is surrounded by the Black Sea, the Aegean Sea and the Mediterranean Sea. Famous parts of Turkish territorial waters are the Bosporus, the Marmara Strait and the Dardanelles. The Turkish coastal line totals 7,200 km. On land, Turkey borders Armenia (268 km), Azerbaijan (9 km), Bulgaria (240 km), Georgia (252 km), Greece (206 km), Iran (499 km), Iraq (352 km) and Syria (822 km). The Turkish physical appearance comprises narrow coastal plains, high central plateaus and several mountain ranges [24] .

About 76,805,500 people live in Turkey. It is estimated that 80% of the population belong to the Turkish and the remaining 20% to the Kurdish people [24]. 67.30% of the total population live in urban areas. This percentage is supposed to increase to 77.70% by 2030 [44]. The largest cities in Turkey are Istanbul, Ankara, Izmir, Bursa, Adana and Gaziantep [92].


Table 3.1 shows a summary of geographical indicators.

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Today the southeast European region (SEE) is one of the poorest regional geographical markets in Europe. In chapter 2.1, basic economic indicators of the European Union and other European na­tions were discussed. In the following chapter a short overview of the Southeast European economy shall be given. Figure 4.1 lists the GDP in Southeast Europe in the year 2008 and figures 4.2 and 4.3 demonstrate a comparison of the GDP in SEE to Europe (SEE countries marked in orange). Rank order concerning the GDP varies when looking at the GDP per capita (see figure 4.4).

Figure 4.1: GDP in SEE (Data source: CIA)

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Figure 4.4: GDP per capita in SEE (Data source: CIA)

An important indicator for economic development is the composition of the GDP (see figure 4.5). The higher an economy is developed, the lower the proportion of the agricultural sector. The mining industry belongs to the industrial sector. The GDP composition of Montenegro was not available. The Austrian and European Union’s compositions are mentioned for comparison. In some countries, e.g. Kosovo and Albania, a high percentage of the agricultural sector can be recognized. The importance of the agricultural sector can moreover be underlined by the distribution of labor force (see figure 4.6). The labor force in the agricultural sector plays an important role especially in Albania, Serbia, Romania and Turkey. Figure 4.7 shows the relation between GDP composition and GDP per capita. GDP per capita is sorted in ascending and GDP composition by share of the agricultural sector in descending order. From this comparison the following conclusion can be drawn: the higher the GDP per capita, the lower the percentage of the agricultural sector in GDP composition.

A distinguishing mark of developing and emerging countries is a high GDP growth rate. Figure 4.8 lists all GDP growth rates in SEE. It is evident that most SEE countries have a high growth rate. In 2008, Romania had the 23rd biggest GDP growth rate in the world.

Mining and the succeeding industrial sectors (e.g. steel industry) may play an important economic role for the development of a regional economy. The industrial production growth rate is an im­portant indicator for the health of a nation’s industry. In contrast to the GDP growth rate the industrial production’s growth is not connected to the development status of a nation. In Southeast Europe no direct general correlation between GDP and industrial production growth rate can be observed. Figure 4.8 lists both GDP and industrial production growth rate.

More detailed information of SEE economy can be obtained from chapter 5.


[1] All information about the GDP is listed in international US$ (PPP-$). All data correspond to 2008 except otherwise noticed.

[2] Accession negotiations with Macedonia have not started yet. Macedonia has the status of a candidate country.

[3] Brazil, Russia, India, China


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Title: Legal and Economic Basis for Performing Mining Activities in Southeast Europe