Contract mining agreement is the contract between two parties, who are the owner of the mine and the contract miner. The owner of coal mine or any other mineral mine can engage a second party to work as an independent contractor in his mine. To do the same, both the parties need to sign a contract called the mining agreement. So, this agreement establishes the business relationship between both the parties, explain the additional terms and conditions, responsibilities and agreement terms, etc. Through this contact, the owner provides the right to work in the mining area for a specific period in exchange for a particular amount. This agreement between the mine owner and contract miner also safeguards the rights of both the parties. Each of the parties can extend the contract period if they wish to.
When do you need the Contract Mining Agreement?
Whenever the owner of the mine decides to let some other mine contractors work or run a program on his mine, he needs to sign this agreement. It assures both the parties about their legal rights and helps them understand the terms of that particular agreement in detail.
Purpose of Contract Mining Agreement
The parties involved in any mining project are bound to go through the arrangement or Contract Mining agreement to understand and practice specific rights and liabilities related to the mining project. Apart from that, they also understand and become liable to abide by the norms related to the environment and the people involved in the mining land. The agreement is a proof of the consent of the parties and their settlement about the laid-out rules. Written documents are necessary to avoid any violation of the terms mentioned in the agreement.
Inclusions in Contract Mining Agreement
A contract mining agreement mentions the profile of the owner of the mine and the profile of the mine contractors. This contract elaborately explains the terms and conditions of the agreement, the total duration or validity of the deal, the exchange or agreement value, the rights, and liabilities, etc of both the parties.
A composed method for the synergistic application of accessible workers, their expertise, and apparatus are needed for a successful mining project. A contract mining agreement initiates the project and marks its starting point. The entire project and the progress depend on this contract, or this contract is the foundation of the whole mining project.
General Clauses to be included in a Contract Mining Agreement
- Details of both the parties
- Exploration area or the area allocated to the mine Contractor
- Program of activities
- Rights of Both Parties
- Liabilities of the parties
- Agreement amount
How to Draft Contract Mining Agreement?
- An agreement language should always be simple and understandable by the parties. The best way to draft an agreement is to follow a generic form which can be modified later.
- Proper identification and supporting documentation of both parties is essential.
- The tenure of the deal needs to be mentioned in the first paragraph of the contract.
- Use numbers to highpoint all the different and vital sections.
- Explain the technical and legal terms. In the future, it will be easier to comprehend the details of the contract mining agreement.
- Use the punctuation marks correctly. Or else, it can alter the whole meaning of a sentence.
- The authorization on every page is essential. It proves that the parties have gone through every aspect, and there is no chance of contingency. Parties can go for notarization if they need it.
- The observation and comprehending ability of both parties can vary. So elucidation the perplexing terms is essential.
- Future amendments should be documented under the agreement of both the parties.
- The vital points to include in a contract mining agreement are clauses concerning unexpected adversarial environmental and physical situations, machinery troubles, labour issues, and some other fundamental regulations as well.
Benefits of Contract Mining Agreement
- Like any other agreements, Contract mining agreement safeguards the rights of the parties involved in the agreement.
- It also controls the business relationship between the parties.
- It manages unforeseen risks associated with the particular mining project.
- The contract helps to mitigate cost, explains the responsibilities of labour settlement, machinery break downs.
- Contract Mining Agreement assures that the demands and rights without any violation and future legal issues.
- It creates mutual trust and carries out the flow of the project without any interruption.
Types of Contract Mining Agreement
Generally, private companies get the exploration and mining rights. There are two essential types of the mining contract. The standard form of mining agreement is known as Exclusive Prospecting Licences and Mining Licences. Apart from that, the Production Sharing Agreement, Mining Development Agreement, and Community Development Agreement are also the essential types of modern-day Contract Mining Agreements.
Sample for Contract Mining Agreement
A sample of the agreement can be downloaded from below.
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