REGULATIONS GOVERNING THE UTILIZATION OF IRON OXIDE ORES, WITH THE EXCEPTION OF OCHRES (Translation from "Diario Oficial" of September l8th., 1952) MIGUEL ALEMAN, Constitutional President of the Mexican United States, to its inhabitants, KNOW YE; That, exercising the powers granted to the Executive of the Union by Section I of Article 89 of the Political Constitution of the Mexican United States, and pursuant, furthermore, to Articles 126 and 129 of the Mining Law, I have seen fit to issue the following REGULATIONS GOVERNING THE UTILIZATION OF IRON OXIDE ORES, WITH THE EXCEPTION OF _OCHRES_ Article 1. The special concessions covering mining reserves and relating to substances embraced by these Regulations shall be granted taking into account the technical ability and financial resources of the applicant, as well as the purpose for which the ore is to be used. Article 2. The ore shall be destined mainly for consumption in the iron and steel plants of the concessionnaire, located in the country. Article 3. The concessionnaires shall be under the obligation of supplying the needs for the ore of other consumers in the country whenever the latter so request them and lack sources of supply of their own, at market prices and whenever such concessionnaires have a surplus after meeting their own needs over a minimum 20-year period, in the opinion of the Ministry. Article 4. No concessions applied for to supply plants which have already their sources of supply shall be granted, whenever such plants can meet their needs directly or indirectly over a reasonable period of time, it being considered that, in such cases, the granting of the concessions would not benefit the general interests of the country. Article 5. The concessions shall embrace two periods: the first, consisting of two years' exploration work and the second period, which shall embrace the remainder of the term set in the concession, to explit the claim, in the event that a commercially utilizable deposit should have been found. The following requisites shall be specified in the concessions in connection with the aforesaid periods: I. The concessionnaire shall be under the obligation of making an original investment for exploration purposes. This investment shall amount to a minimum of $5,000.00 (pesos) per hectare. This obligation must be guaranteed by a deposit in cash in Nacional Financiera or by a bond executed by an authorized company. The deposit or bond shall amount to 20% of such investments. II. Within sixty days following the date the concession is granted, the concessionnaire shall be under the obligation of presenting to the Ministry of Economy, for its approval, a project of the exploration works, which may be drilling, cuts, shafts, tunnels, etc., in addition to geological and topographic studies. III. In the event that the superficial area granted is 20 hectares, the minimum investment for mining operations shall never be less than $750,000.00 (pesos), which investment must be increased by $10,000.00 (pesos) minimum for each 10 hectares or fraction in addition to the original 20 hectares. All works connected with this investment must be carried on within a maximum period of two years, reconed from the date the exploitation period commences. IV. If the concessionnaire has no smelter, he must build a plant which can treat a yearly minimum of 30,000 tons of ore. This plant must be built within four years from the date the exploitation period starts. V. Apart from the minimum output established for royalty purposes in the second paragraph of Article 8, the concessionnaire shall be under the obligation of producing a yearly minimum volume of ore, which output shall be fixed after hearing the views of the Mining Development Commission and taking into account the size of the deposit, the capacity of the plant or the concessionnaire's contracts with other consumera. Article 6. The concession shall be considered as terminated if the concessionnaire has not discovered a commercially exploitable deposit at the end of the two year exploration period. Article 7. The concessionnaires, after obtaining authorization from the Ministry, may export yearly a quantity equal to the treatment capacity during one year of the existing or proposed smelter, and provided the net value of the exportations is used for building a steel plant or the enlargement of an existing one. Article 6. The concessionnaires shall be under the obligation of paying a royalty to the Mining Development Commission. This royalty shall amount to a minimum of 3% for exploitations where the ore is intended for steel plants in the country and 6%, as a minimum, when the ore is to be exported. The royalty shall be determined an the value of the ore output. A minimum output shall be specified for payment of the royalty, based on the importance of the deposit. The concessionnaire must pay the royalty on this volume, whether the output reaches this minimum or not. Article 9. The royalty may be paid in cash or in ore, at the choice of the Mining Development Commission. If collected in money, the form of estimating the production shall be specified, which may be a half-yearly average of the sale price of iron ore in the country, or, lacking such a price, the public quotation in the United States. If paid in ore, the delivery point and other supplementary data shall be specified. 2 Article 10. It shall pertain to the Mining Development Commission to supervise the output for the payment of the royalty, at the expense of the concessionnaire. Article 11. As regards technical ability, the applicant for the concession must prove that he is a miner or the owner of a mining concern and with sufficient experience or has technical personnel which is adequate for the mining works, in the opinion of the Ministry of Economy. As regards financial resources, proof must be furnished that he has the necessary capital. The plans for the works and installations and for the exploitation and treatment systems must be drawn up by a Mining Engineer holding a degree and registered as a mining expert at the Ministry of Economy. Article 12. The life of the concessions shall be a maximum of thirty yrers, renewable for additional twenty year periods, provided the concessionnaire is in a position to continue complying with his obligations and that the renewal would not be detrimental to public interests, in the opinion of the Ministry of Economy. The renewal shall only be granted covering a sufficient area to enable the concessionnaire to have the necessary ore for his own consumption needs over a twenty-year period. Article 13. The minimum area which can be granted to a single individual or company shall be 20 "pertenencias" (#), and the maximum area, covered by one or all the concessions granted, and located throughout the Republic of Mexico, shall be 500 "pertenencias" (#). Article 14. The concessions referred to in these Regulations shall only be granted to Mexicans and to Mexican companies. The provisions of the preceding paragraph and of Article 4 shall be applicable to transfers of concessions. Article 15. Failure to comply with any of the obligations which concessionnaires undertake according to the requisites specified in Articles 4 and 8 and Sections I, II, III, IV and V of Article 5 of these regulations shall furnish grounds for the respective concessions to be declared forfeit. The causes provided for in Section II of Article 22 of the Regulations governing National Mining Reserves shall also be causes for forfeiture of the concession. Article 16. The Mining Development Commission must abide by the rules contained in these Regulations, insofar as concerns fundamental requisites, in all contracts which it makes for the deposits of this type which form part of its assets. Article 17. The provisions of the Regulations governing National Mining Reserves now in force shall govern in everything not provided for in these Regulations. (#) 1 "pertenencia" is equal to 1 hectare. 3 TRANSITORY ARTICLES First. The bases dated September 29, 1941 for the utilization of iron oxide deposits shall be repealed from the date these Regulations go into force. Second. These Regulations shall go into force on the date of their publication in the "Diario Oficial" of the Federation. Issued at the seat of the Federal Executive Power, in the City of Mexico, Federal District, on September 15, 1952. (Sigd) MIGUEL ALEMAN ANTONIO MARTINEZ BAEZ, Minister of Economy