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BCMG: The next year is crucial for the mining industry in Bulgaria

BCMG: The next year is crucial for the mining industry in Bulgaria

The Bulgarian Chamber of Mines and Geology (BCMG) is a nationally representative non-governmental organization in the field of underground resource extraction and related activities, established in 1991.

The Chamber is a member of the Bulgarian Chamber of Commerce, the Confederation of Employers and Industrialists in Bulgaria, the European Association of the Mining Industry, Metal Ores and Industrial Minerals (EUROMINES), and the European Association for Coal and Lignite (EURACOAL). The Bulgarian Chamber of Mines and Geology supports the UN Global Compact and is an active member of the Bulgarian UN Global Compact Network.  Associate Professor Dr. Eng. Ivan Mitev is Executive Director of the Chamber.

Associate Professor Mitev, what are your expectations regarding the impact of the new Critical Raw Materials Act, and how would it affect the Bulgarian extractive industry?

The impact  is very clear. In Europe, only 3% of the raw materials we use in our industry, production, and final products in the economy and daily life are extracted locally. However, on a global scale, we use 30% of the world's strategic and critical raw materials. In other words, we are 10 times dependent on external supplies and relationships with countries outside the European Union. The main goal of this law on critical and strategic raw materials is to achieve at least 10% local extraction by 2030. How can this be achieved? By clearly defining strategic projects with all the useful minerals specified in this new law. Several principles and rules need to be introduced at both the European and national levels through the respective legislation. These strategic projects should be considered projects for the benefit of society, not projects for private interests. Because projects benefiting society will lead to economic independence and reduce dependence on external supplies.

In Bulgaria, we have a unified body for the management of underground resources, situated in the Ministry of Energy. This unified body communicates through administrative procedures and coordinates approval regimes with other agencies in terms of ecology and agriculture. However, the efficiency and compactness of these processes need to be enhanced. Why? Because the indicators laid out in the new law on critical raw materials are related to the deadlines for issuing work permits – around 24 months for extraction and 12 months for processing and recycling materials. These are extremely tight deadlines. As of today, obtaining a mining permit in Bulgaria takes from four to seven or eight years, so efficiency needs to be increased significantly. Provisions are needed to expedite various parts of the permitting process, and the coordination processes between different agencies need to be thoroughly analysed. Of course, this process should happen in dialogue with businesses and in collaboration with the Bulgarian Chamber of Mines and Geology as the sole representative of the business.

We need to work together to prioritise these strategic raw materials. This involves all stakeholders – the state, businesses, and society. We need to work together because these projects are not only of interest to a specific region, concessionaire, or just the state issuing concessions. In reality, over 80% of concession revenues stay in the regions in various forms – taxes, fees, concession fees. In Bulgaria, there are cities and villages that have been improved precisely thanks to these concession revenues. Therefore, the mining industry should not be seen as a "dirty" industry. That is a thing of the past; all new projects at the national and European levels are environmentally friendly. Yes, they disturb the landscape, but then there is reclamation, and there is no harmful impact on the environment.

Do you expect these trends to affect the dialogue between business and the state?

On a national level, over the years, we have had a successful model of dialogue. At times it is fruitful, at times less so, but overall, the dialogue between the Ministry of Energy and the industry organisation has been successful. What needs improvement are the coordination regimes that accompany the respective processes. Yes, it is challenging – the subject matter is not widespread, experts in the government institutions are few, and the volume of information is quite large. We need to think in this direction, structure specialised units at all stages of the process. Good practices need to be drawn from international experience on how these activities are coordinated between different agencies, and all ministries involved in coordination regimes must have strictly defined duties.

It is extremely important to prioritise exploration activities. Currently, we are working with information collected based on geological surveys from the 1960s to the 1980s. We are not working with up-to-date information both in Bulgaria and across the European Union. Currently, exploration activities are entirely the responsibility of the investor, but the state does not even support this process organizationally. Exploration activities are a high-risk investment. Not always will the money you invest justify expectations, even in many cases, it is precisely the opposite. But companies do not give up, and there are international funds dedicated to this. In this aspect, Bulgaria needs to have the right vision of how this process should happen. The time is ripe.

Have we been late in taking measures in this direction?

No, we haven't. Bulgaria is a mining country with extensive traditions in extraction. These traditions currently present us with a unique opportunity to develop our industry as it was during the mining boom in Europe. I am not talking about a political regime. Purely technologically, in the 1940s and 1950s, there was a boom in the development of the industry and Bulgaria kept pace with the times. Now, the cyclical nature of history puts us in such a situation again. Now is the right moment for us to ride this wave. If, in the next year, we do not take the appropriate steps to optimise the regulatory framework for improved dialogue between the state, industry organisations, businesses, and society—to present the need as a public interest, not just private or state—we will not  catch this wave, we will be in a trailing position again. We have the conditions and the foundation to enter new markets in Europe.

Is it possible for private businesses to seize the moment alone, through investments?

Private businesses increase investments in exploration and research annually, but in limited territories where the respective company operates. There are companies conducting exploratory activities in other regions, but these projects progress at a slow pace. Many projects fail. On one hand, the exploration process itself is sabotaged due to a lack of understanding of the public interest in these projects. Society has not yet grasped that exploration does not automatically mean extraction. Exploration is the litmus test for any investor, whether local or foreign.

You have described challenges that are not new to the business. In the context of focusing on the importance of the mining industry for the green transition, are there new challenges?

There are two new challenges. The quality of ores is not at the level it was a hundred years ago, both on a national and European level. Many deposits, especially on a national scale, have significantly lower concentrations of valuable minerals. In the case of metals like copper, a crucial component in our daily lives, concentrations can be as low as 0.3% against an average concentration of 1.5%-2% elsewhere in Europe. This is a significant challenge for exploiting existing ores and discovering new ones. When this challenge is accompanied by extraordinary costs and extended investment timelines, the entire 20 or 30-year exploitation period of a deposit becomes unprofitable.

The other challenge is public attitudes. Not only in Bulgaria but also in other countries like Portugal, Spain, and Sweden, public attitudes against the mining industry and raw material extraction are very negative. Society does not support extraction, but the reality is that we cannot exist, or at least not at the current pace of development, without extracting raw materials. Therefore, companies engaged in exploration, extraction, and processing face high costs in working with the public. We must realise that raw material extraction is not an industry that harms nature. Nowadays, it primarily preserves water and habitats because they are necessary for both the population and the companies themselves. Without them, there can be no extraction. Without water, there can be no extraction. So water and nature are important for all of us, and companies in the industry invest millions annually to improve environmental conditions and purification facilities. A good example is Smolyan, where so-called wastewater is in fact purified industrial water with chemical parameters suitable for drinking. Normatively, it is categorised as wastewater, and it is challenging to explain to the local community in the region that it is not waste and is not polluted.

Are you optimistic about the development of the industry in this new context? Will society be able to take advantage of the opportunity?

I sincerely hope so, at least based on what we have as a foundation. I genuinely believe that we can build on what already exists. Bulgaria is a country with an existing mining strategy and a standard for the sustainable development of mining companies. Currently, the industry is once again focused on providing a clear horizon regarding investment policy. There is no better moment than the present. I would like to conclude with a fact—only 1.5% of the entire territory of Bulgaria is engaged in mining, while in most European countries, it is about 3%. In other words, Bulgaria needs to catch up with other countries. So, from this perspective, we have an opportunity.