Mines, minerals and mayhem – The silent threat to your development project?

Mines and minerals have always been a key consideration of land ownership. However, in recent years the financial and legal implications of these rights have become a growing concern for developers.

The general assumption is that when you own land, you own all the surface of it, the subsurface below it and airspace above it. However, when land is transferred the rights to any mines and minerals beneath its surface such as coal, oil, gas and precious metals can be retained, excepted or reserved by a third party. This can create a situation where the landowner does not always have control over the subsurface, potentially leading to disputes over land use, development and exploitation of minerals.

In the past, these issues were isolated. However, increasing legal awareness and an evolving landscape of land use have made mines and minerals a more central issue in property disputes, with some experts referring to them as the ‘new rights of light’.

The increasing threat of mines and minerals claims for developers

If developers only acquire surface rights for construction or development, and not the rights to the underlying mines and minerals this can lead to complex disputes, particularly where third parties with these rights decide to assert them. A third party may claim that a developer has interfered with their rights (for example, the foundations of a development could be a trespass) or the owners of the mines and minerals may decide they want to extract them. Developers can therefore find themselves being held to ransom as a third party may use their rights to create a subterranean ransom strip. This can inevitably cause financial and legal implications for developers and may even cause a development to become unviable.

Some of the legal and financial consequences developers should consider are:

Legal claims

As the volume of claims associated with mines and minerals rises, developers must be prepared for both the financial and legal repercussions. Whilst some of the claims may be unfounded or settle before escalating to court proceedings, developers must be aware that there is always a possibility settlement is not reached. If a settlement is reached, they may need to pay the claimant a settlement sum. If claim cannot be resolved developers may face lengthy litigation and unplanned litigation costs.

If no resolution can be found inevitably development may have to halt and built out projects may not be saleable.

Insurance

As insurers become more cautious about the potential for claims involving mines and minerals, developers are seeing higher insurance premiums to cover against mines and minerals risks. We can expect to see insurance policies evolve, with higher excesses and more exclusions. Developers should consider tailoring their insurance policies to cover against specific potential loss scenarios related to these risks on a case-by-case basis.

The role of funders

Developers are not the only ones who will need to be concerned about mines and minerals claims. Funders such as banks and investors may be more cautious about financing projects with unresolved mines and mineral rights risks. Developers will need to demonstrate how the risks are being managed, and that suitable insurance coverage is in place to protect against potential claims.

Mitigating risks

To avoid the pitfalls of mines and minerals claims developers must conduct thorough due diligence and check for any reserved mineral rights before acquiring land.

Obtaining expert legal advice will assist developers in navigating the complexities of these rights. We can for example, carry out due diligence to identify any rights and their extent and help you obtain bespoke insurance policies with the relevant coverage.

In the event of a dispute our Real Estate Disputes team may also be able to assist with litigation or helping to resolve issues.

The Road Ahead

As we move further into 2025, it is predicted that issues with mines and minerals and associated claims will continue to grow in importance. Developers must take proactive steps to safeguard their development projects. By understanding the risks, securing the right insurance and working with their solicitors, developers have the tools to better manage the risks and keep their projects on track.

If you want to discuss this topic with our team of experts please do get in touch at info@ts-p.co.uk or call 01892 510000.