Austria is home to the largest underground tungsten ore deposit in the Western world, the largest talc deposit in Central Europe and the largest siderite deposit in the world. The industry extracts raw materials in a sustainable way and produces products in various innovative forms. The industry extracts and processes mineral raw materials such as ores (iron ore, tungsten, micaceous iron ore) and industrial minerals (magnesite, salt, talc and leucophyllite, graphite, kaolin, etc) according to customer-specific specifications. The Austrian mining industry is engaged in extracting raw mineral materials in more than 1,200 mines on the surface and 40 underground. Among the highly specialised Austrian companies are the world market and technology leaders with products in demand worldwide.

The Austrian legal system is based on a civil law tradition and is structured in hierarchical layers. The legal system follows a tier system of laws, which decrees that the laws and regulations must comply with the standards set by the higher tiers. The Austrian Federal Constitution, individual constitutional laws, and the EU Acts of Accession are in the top tier. General federal laws and laws of the federal provinces are in the lower tiers. Statutory authorities can enact regulations or individual administrative rulings (Bescheid) in accordance with the aforementioned laws.

Austria adopted the EU legal framework after entry to the EU on 1 January 1995.

Since January 1, 1999, the primary legal basis for Mining Law has been the Mineral Resources Act (Mineralrohstoffgesetz – "MinroG", BGBl. I No 38/1999, as amended by Federal Law Gazette I No 86/2021). According to this law, the exploration, extraction, and processing of mineral raw materials require a permit from the district authorities (or, in the case of underground extraction, from the Federal Ministry of Finance). Several secondary legislations are based on the MinroG. Such regulations determine, for example, the mining police, responsible persons, boundaries of the mining claim, and transportation of persons in mines or drill hole mining have been enacted by the competent authorities.

The MinroG differentiates between (i) mining rights for raw materials ("free for mining", bergfreie mineralische Rohstoffe), (ii) federal mineral resources (bundeseigene mineralische Rohstoffe) and (iii) other mineral resources ("landowner", grundeigene mineralische Rohstoffe).

"Free for mining" mineral resources are mineral resources which, with a few exceptions, are not subject to the landowner's right of disposal and may be explored and extracted by anyone who meets certain mining law requirements. These include, for example, iron, gypsum, coal, and magnesite.

The Federal Government owns federal mineral resources. They include rock salt and hydrocarbons. The exploration rights, the right to extract and store such mineral resources, lie ex lege with the Federal Government. However, the Federal Government has transferred its rights to private actors.

"Landowner" mineral resources are all other mineral resources and are the property of the relevant landowner.

The rights to prospect, extract and store rock salt and hydrocarbons ("mining rights") for federal mineral resources lie by law with the Austrian Federal Government. However, the Federal Government has the right to transfer the mining rights as a package to a third party. According to Section 69 of the MinroG, these rights may be transferred to "natural or legal persons or partnerships, who have the necessary technical and financial means to conduct mining activities". The Austrian Federal Government may transfer the mining rights as a package by public law agreement. The formalities, the appropriate fee (Feldzins), and the royalties (Förderzins) are governed by a separate contract according to Section 70 of the MinroG.

In practice, the Austrian Federal Government has transferred all its mining rights to private entities and does not prospect, extract or store itself. The mining rights to rock salt have been ex lege transferred to the Österreichische Salinen Aktiengesellschaft (Austrian Salinen Stock Company) or any legal entity within the group, which was privatised in 1997.

The Austrian Constitution determines the relevant competencies of the Federal Government and the nine provinces. According to Art 10 of the Austrian Constitution, mining is a federal competence. Based on this competency, the Federal Government enacted the MinroG.

The mineral rights vary depending on the kind of mineral resources ("free for mining", federal mineral resources, or landowner). Mineral rights for "free for mining" mineral resources derive from the law. The mining authority may grant any natural or legal person or partnership under commercial law a mining license (mineral rights). Regarding federal mineral resources, the mineral rights are ex lege with the Federal Government and may be transferred by contract to natural or legal persons. Mining rights for landowner mineral resources also derive from the law.

Mineral rights have the status of immovable property and are registered in the catalogue of mining property.

For prospecting/exploration and extraction activities, two different authorities issue the corresponding permits: Districts (Bezirkshauptmannschaft) for landowner minerals and the Federal Ministry of Finance (Bundesministerium für Finanzen) on behalf of the national mining authority (Montanbehörde) for “free for mining” minerals and federal mineral resources. The responsibility of the district administrative authority concerns only the surface extraction and processing of landowner minerals.

The development and exploration of discovered natural deposits of "free for mining" raw materials require mining permits granted by the Federal Minister of Finance. Mining permits are also required to be able to mine deposits of landowner raw materials and to appropriate them.

The exploration for and extraction of federal mineral resources, the search for and exploration of hydrocarbon-bearing geological structures to be used for the storage of liquid or gaseous hydrocarbons, and the storage of such hydrocarbons in hydrocarbon-bearing geological structures is reserved for the federal government.

The competent authority for the exclusively surface extraction and processing of "landowner" mineral raw materials is the district administrative authority unless expressly provided otherwise.

For all other activities to which the MinroG applies, the Federal Minister of Finance (mining authority) is responsible.

According to the MinroG, an exploration permit is required to prospect for "free for mining" mineral resources. Such an exploration permit is awarded for the current and the following calendar year. An extension for another five years is possible. Once a natural occurrence has been explored and approved as mineable, the competent authority may issue a mining license. Such a mine license is the basis for a future extraction license (mining permit/mineral right).

Mineral rights have property status and are reflected in the catalogue of mining property (Bergbuch). The security of tenure is guaranteed by the catalogue of mining property and the requirement to notify the authorities of any transfer of mineral rights. Once the competent authority grants a mining permit (mineral rights), it also reports it to the competent mining court, which administers the catalogue of mining rights. 

The transfer of mineral rights depends on the approval of the competent authority. The mining permit's assignment to another person must be notified to the authority. The competent authority then must approve the assignment.

The owner of mineral rights may abandon the mining permit and decommission the plant at any time. The competent authority has to be notified in writing of the abandonment. The notification of abandonment must include a mine closure plan and other relevant documents regarding the mine.

According to the Austrian Constitution, responsibilities for environmental issues are divided between the Federal Government and the provinces. The Federal Government is exclusively responsible for certain environmental issues (eg, waterways). For other areas, the Federal Government is only the legislator, but the provinces are responsible for administering environmental law adopted on a federal level (indirect federal administration – mittelbare Bundesverwaltung) for waste management or forestry, etc. Other areas, such as nature conservation, are exclusive responsibilities of the provinces. Moreover, EU Regulations and Directives relating to environmental issues have to be considered.

Environmental laws contribute to environmental protection insofar as they intervene in human behaviour by means of regulatory instruments such as:

• Behavioural regulations in the form of prohibitions and requirements.
• Forms of official supervision.
• Prescription of permit reservations and conditions.
• Reservations of notification.

In the process of licensing, the MinroG states that the owner of the land must be involved in the process. Moreover, the provincial authority is involved with regard to land use planning, protection of nature and environment and other aspects. Depending on the surface area of the mine, an environmental impact assessment (EIA) is necessary. Additional permits might be necessary for smaller (less than five hectares) mines (water permit, nature conservation permit, waste management permit or forest permit). 

Additionally, the institute of the Environmental Impact Assessment (Environmental Impact Assessment Act 2000 - UVP-G 2000) serves to, with the participation of the public and on a professional basis:

• identify, describe and assess the direct and indirect effects that a project has or may have on lifeforms and their habitats, on soil, water, air and climate, on the landscape and material and cultural assets, taking into account the interactions of several effects with each other;
• examine measures by which harmful, nuisance or burdening effects of the project on the environment are prevented or reduced or favourable effects of the project are increased;
• present the advantages and disadvantages of the alternatives examined by the project applicant, as well as the environmentally relevant advantages and disadvantages of not carrying out the project;
• and in the case of projects for which the possibility of expropriation or interference with private rights is provided by law, to present the environmentally relevant advantages and disadvantages of the location or route variants examined by the project applicant.

An EIA has to be conducted when the surface area is greater than ten hectares for hard rock quarries or 25 hectares for sand and gravel. The competent authority may refrain from undertaking an EIA procedure for an area of up to ten hectares, provided that the prospected activity does not conflict with environmental protection.

In addition to the national parks, Natura 2000 areas and nature reserves, several other landscapes are worthy of protection (divided into different categories of protected areas).

A mining license for the extraction above the surface of landowner mineral resources may not be issued in areas which are (i) national parks, (ii) nature reserves or (iii) other protected areas.

The issue of community relations in a mining project is addressed by performing an EIA (which includes consultations with the community regarding their concerns about the project and its potential consequences). Moreover, the landowner, the respective local authority and the community have to be involved in the licensing procedures.

This is not applicable in Austria.

Austria has no specially protected communities (such as indigenous peoples).

Community development agreements are not usual in Austria.

General ESG and ESG reporting guidelines have been introduced for all companies (and their supply chains) with the potential to cause negative effects on the environment or the community. Companies within the mineral sector are subject to these guidelines and regulations.

The "European Lithium" company and its "Wolfsberg Lithium" project are examples of lacking environmental and community relations/consultation in Austria. Countless delays have pushed the intended start date from 2022 to 2024 with no end in sight. Reasons for this include fears about the quality of the drinking water around the mining site. Since these delays were not communicated transparently, the Austrian Financial Market Authority (FMA) imposed a fine of 160,000 euros. European Lithium was listed on the Vienna Stock Exchange; therefore, this was considered a "violation of the prohibition of market manipulation" by the FMA, which considered European Lithium's information policy to be misleading towards shareholders. Consequentially, the company has withdrawn from the Vienna Stock Exchange, leaving behind open questions and distraught investors.

Austria has committed itself to fight CO₂ emissions and climate change while implementing several initiatives to deal with these issues. The mining industry is restricted on all sides by these initiatives, their underlying sustainability goals, and the strict standards set to achieve them. The preservation of the environment in all its facets takes precedence, and several procedures are in place to facilitate this. Renewable resources and sustainable mining methods are prioritised, while potentially problematic projects are heavily scrutinised and adapted. This results in a highly regulated, relatively safe, and yet very innovative mining industry which operates in strict accordance with the rules and guidelines set forth by the various national and EU climate initiatives.

The "Industrial Emissions Directive " (Directive 2010/75/EU of the European Parliament and of the Council of November 24, 2010) regulates the prevention and reduction of pollution resulting from industrial activities to achieve a high level of environmental protection. For the Austrian mining industry, this directive was implemented in the MinroG. It stipulates implementing and using so-called "Integrated Pollution Prevention and Control" (IPPC) mechanisms to better combat pollution and, therefore, climate change.

The United Nations has set itself the goal of securing sustainable development worldwide at the economic, social and ecological levels and published these 17 Sustainable Development Goals (SDGs) on January 1, 2016, under the title "Transforming our world: 2030 Agenda for Sustainable Development."

The European Commission published the EU Principles for Sustainable Raw Materials in July 2021. These principles aim to align Member States' understanding of sustainable raw material sourcing (from exploration to post-decommissioning) and processing activities in the EU and to set the general direction for achieving the SDGs.

In 2021 the Austrian Federal Government presented the Master Plan Raw Materials 2030, which proposes solutions to the challenges Austria is facing with regard to raw materials. This master plan includes a section on SDG and foresees the development of an SDG atlas which shows the potential and contributions of the Austrian raw materials sector regarding global sustainable development goals.

In 2021 the Austrian Master Plan Raw Materials 2030 was adopted by the competent ministry. It proposes solutions to respond to the challenges of this decade and to ensure Austria's secure supply of primary and secondary mineral raw materials from Austria and abroad. With a comprehensive package of measures, the Master Plan lays the foundation for Austria's resilient development. This also includes measures to ensure the supply of energy-transition minerals such as lithium.

The largest lithium deposit in Europe is in the Austrian Koralpe. There is an ongoing initiative to ensure that an Environmental Impact Assessment is conducted prior to the unearthing of the minerals by the owner of the mining site. However, due to conflicts between the communities and the landowner, lithium mining has not started yet (see Wolfsberg Lithium).

In Austria, three levels of authority may create and levy taxes on individuals, companies, branches of non-resident companies and permanent establishments, namely, the Federal Government, the Provinces, and the Municipalities.

The main Austrian taxes applicable to individuals, companies, branches of non-resident companies and permanent establishments are as follows. Income in connection with mining rights under the Mineral Resources Act is not subject to Section 30 of the Austrian Income Tax Act 1988 and, if taxable, is generally subject to the standard tax rate.

Moreover, royalties, storage fees and an appropriate land use fee have to be paid to the Federal Government for the exploration, extraction, and storage of federal mineral resources.

Federal Taxes

Income tax/corporation tax

The income tax law (ITL) subjects all income from Austria or gained within Austria to tax. Non-residents are taxed only on their Austrian source income. The Austrian corporation tax rate is set uniformly at 24% of the taxable income. In 2024, it will be reduced to 23%.

In general, taxation of foreign income is based on regulations for avoiding double taxation. Special tax relief is called "Schachtelbegünstigung" (international affiliation privilege: IAP). The Austrian IAP determines that no Austrian corporation tax will be imposed on dividends and capital gains paid to an Austrian holding company if certain requirements are fulfilled. Under certain conditions, losses caused by the liquidation or by the bankruptcy of the foreign company may be considered.

These conditions are:

• Direct investment of an Austrian company in a foreign company, amounting to at least 10%.
• The foreign company must be comparable to an Austrian company.
• Minimum holding period of one year.
• Abuse clause must not be met.

Mineral oil tax

Mineral oils, motor fuels and heating fuels produced in Austria are subject to mineral oil tax. This also entails an obligation to obtain approval for the production, storage, processing and/or untaxed transfer ("under duty suspension") of certain mineral oils (and in particular to obtain a "tax warehouse approval") and to submit a mineral oil tax return.

Provincial Taxes

Nature conservation tax

Most Austrian Provinces require the payment of a so-called "nature conservation tax" (Naturschutzabgabe) for the extraction of raw materials. This provincial tax is usually calculated by the quantity of raw materials extracted and payable per year. The amount per ton varies between EUR 0.06 and EUR 0.90, depending on the raw materials extracted.

Municipal Tax

Companies have to pay a municipal tax in any municipality where the company has a permanent business establishment. The tax is payable monthly and amounts to 3% of the tax base. The tax base includes:

• the monthly gross salaries paid to employees at a business establishment in Austria;
• the monthly salaries and other remuneration of any kind given to (shareholder-) directors of capital companies;
• for foreign temporary workers: 70% of the recruitment fee;
• for persons allocated for service by a public body: compensation for salaries; and
• the monthly salaries and other remuneration of any kind paid to freelancers.

There are no special tax incentives for mining investors and projects in Austria. General tax incentives may be found in section 4.1 Mining and Exploration Duties, Royalties and Taxes. No tax stabilisation agreements are available in Austria.

There are no special tax rules regarding mining projects; thus, the general taxation legislation applies also to mining projects.

Capital gains are fully included in the taxable income and are taxed at the corporation tax rate. Capital gains on sales of shares in foreign companies are exempt from Austrian income tax under certain circumstances. Capital gains and losses resulting from the alienation of shares in a foreign corporation are tax-exempt. Write-offs and write-ups are tax-neutral if at least 10% of the equity in the international participation is held directly or indirectly for an uninterrupted period of at least one year by an Austrian corporation and the legal form of the foreign participation is comparable to Austrian corporations.

Capital gains of a non-resident corporation resulting from the alienation of shares in an Austrian corporation (GmbH or AG) are taxable in Austria at the ordinary CIT Rate. It is applicable whenever the shareholding amounts to at least 1% of the corporation's capital at any time during the five preceding years.

However, double tax treaties may deny Austria the right to tax capital gains if the OECD Model provision for capital gains was negotiated. In case the capital gains were realised at the level of a permanent Austrian establishment of the non-resident seller, the capital gains are part of the income of the permanent establishment and subject to tax under the general rules.

In Austria, the main features for attracting investment for mining are a stable and long-lasting mining legal framework, the general stability of the Austrian market and the potential of the raw materials in the Austrian soil, such as lithium, hydrocarbons, and others.

Domestic interests must be safeguarded when competitors outside the EU invest in strategically important resources in Austria. The Investment Control Act provides for inspection obligations on the part of the Federal Government to safeguard state interests in the disposal of company shares and assets in strategically important areas. Raw materials are included in this.

There is no EU mining law, but there are numerous points of contact, especially those relating to environmental protection (especially the EIA Directive and the Industrial Emissions Directive 14), waste management, employee protection and regulations on the marketing of mining equipment.

Any form of debt and equity financing is available. There are no restrictions on the sources, though general AML and sanctions compliance restrictions will apply.

Domestic and international securities markets play a major role in financing mining operations in Austria. Many of the most prominent companies in the mining sector are publicly listed on the Stock Exchange and draw funding from various investors. Furthermore, foreign-listed (or dual-listed) companies that draw investments from overseas are also present in the mining sector.

The most suitable securities available for mining tenements and related assets in the context of exploration, development and mining finance in Austria are mortgages. Since mining rights are considered immovable property and registered in the catalogue of mining property, a mortgage is the most common way of security. The MinroG entails special rules on how to proceed if a mining license is abandoned and the mining property has been subject to a mortgage.

A mortgage is a right in rem constituted as security over immovable assets that continue in the control and possession of the debtor. Although mortgages are also created over other types of assets (eg, vessels and aeroplanes), they are typically created over immovable assets, including real estate, mining concessions and fixtures thereto. A mortgage provides interest to the extent of the secured debt obligation over the real property and the fixtures thereto in respect of which the mortgage is granted. In insolvency proceedings, the mortgagee has a special preference in respect of the real property over which the mortgage is granted.

The next couple of years will bring a whole host of changes to the mining sector. On the one hand, the ever-increasing density of climate change regulations will continue to heighten the hurdles faced by new mining ventures. Being subject to international, European and national law means that every new guideline and regulation will eventually consolidate into national law and ultimately limit access to the minerals market for aspiring mining ventures. On the other hand, an equally increasing demand for energy-transition materials paired with significant lithium reserves provides ample motivation for such ventures to adapt to these new regulations in order to enter the Austrian minerals market. Projects such as "Wolfberg Lithium" will have to step up to the plate and utilise their licenses or be faced with new sustainability and environmental impact legislation, which will undoubtedly further complicate the process of moving towards a sustainable future.