The state of the aggregates industry in Britain is reflected in much of Europe. Robert Camp discusses some of the issues that will be facing the sector this year
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These show that in Britain, aggregates sales volumes were flat during 2011 and remain 30% below pre-recession levels.
Infrastructure projects, such as road constructions, have fallen foul of budget cuts, and while the British Government included additional road and infrastructure spending in its autumn statement last year, the majority of spending is from 2013/14 onwards and will have little impact over the next 18 months.
The latest construction output figures, indicating modest growth in 2011, nevertheless suggest that the construction market remains fragile and the view from the MPA is that demand for construction and mineral products will decline in 2012.
Despite the present lack of demand, the industry is also concerned about the lack of consented minerals for future extraction. It seems to me that aggregate companies (although strapped for cash) are still looking to secure extraction sites: my firm has continued to receive instructions to enter into options, either for purchases or mineral leases. That said, recent figures suggests that overall land banks are in decline in many areas and the MPA has warned that there is “a growing risk that supply strains will emerge particularly once real growth gathers pace.”
The problem seems to stem from the UK planning system and the costs and significant delays built into the planning process. The UK’s mineral planning regime is plan led, but by the end of January, 2012 only 37% of the mineral planning authorities in England had adopted a core planning strategy, and only 15 of the 93 other minerals development plan documents, including the all-important site allocations, have been adopted.
There has also been uncertainty over whether statutory bodies may have to disclose commercially sensitive information. The Environmental Information Regulations 2004 implemented the EU Council Directive on public access to environmental information. In the UK, mineral planning authorities are required to undertake an annual survey to collect information on the production (output) and the total quantity of mineral reserves for each mineral type in its region. Why? Because of a very good reason: the levels of industry activity would have an impact on planning policy.
Companies have been willing to provide this information on a confidential basis. However, in the case of one authority, a request was made for it to provide detailed information concerning a particular company – it included reserves and production loss information which might be of interest to competitors of the operator and its customers. The request was refused by the planning authority, first on the grounds that the information had been given in confidence and second that such information was exempt from disclosure. While the ultimate decision was to preserve confidential information, the tribunal that heard the case also stated that there may be individual circumstances to justify over-riding a duty of confidence.CONTACT
Robert Camp heads the minerals team at Stephens Scown solicitors in the UK which has more than 70 years’ experience representing mining and minerals clients. He can be contacted on +44 (0)1392 210700 or email %$Linker:
Concerns are also being expressed in the industry over the resilience of water resources, supply and the steps that European governments may be taking in this respect. In Britain, the Government published a White Paper in December 2011 entitled ‘Water for Life’, which in its own words is intended as “a call to action”, describing what the UK Government calls its “vision for future water management.”
Of most concern to those in the minerals sector are the proposals to reform the water abstraction regime and the potential impact this would have on what is both an energy and water-intensive industry.
The White Paper makes it clear that water is scarce and in the Government’s opinion too much is being extracted. It also alludes to the fact that the present licensing system “does not reflect the relative scarcity or abundance of water, and charges do not vary to reflect competing demands for water.”
The implication is clear: abstractors will have to take much less and pay (perhaps much) more. Important too is the statement that the Government does “not intend to fund compensation for any losses individual abstractors incur in the change to the new regime.”
And so it is clear that although there are a number of major issues facing the industry in 2012, not least from a planning and resource perspective, the over riding concern must be, it seems, the much wider issue of the European financial crisis which continues to impact upon an already struggling aggregates sector.
