Joint Venture in Mining: Definition, Forms, and Legal Aspects in Australia

RUNNING HEAD: Joint Venture
Joint Venture

Joint Venture 1
Contents
Mining Joint Venture.......................................................................................................................2
Legal Definition of a Joint Venture.................................................................................................3
Forms of Joint Venture....................................................................................................................4
Legal Aspects of a Joint Venture in Australia.................................................................................5
Bibliography....................................................................................................................................7

Joint Venture 2
Mining Joint Venture
Mining Joint Venture can be defined as the joint venture agreements used for the purpose of
exploring and developing the mining sites by the joint venture partners. It is one of the most
popular forms for small minors for raising funds for developing green and brownfield mining
projects1. Mining joint ventures requires the incoming party to farm- in along with making the
payment of pre- agreed exploration expenditure for its ownership interest. It provides the owner
of the mining tenements with expertise, valuable capital along with guaranteed market for
products in few cases2.
Nowadays, the falling prices of the commodities, lack of competitive finance along with the
sufferings of mining companies from high levels of debt has resulted in the financial struggle for
the mining companies. However, in order to fight with non- availability of credit and high costs,
joint ventures are considered by the miners for the purpose of developing the projects3.
In case of incorporated joint venture, the project is undertaken by an association of participants
for a separate legal entity. Therefore, all the characteristics of an incorporated entity are born by
incorporated joint venture. The participants of the joint venture i.e. the shareholders, receive
dividends as a result of sale of the mining products and not from the sale of the product itself. In
the same way, unincorporated joint venture is based on the contractual relationship among the
participants of the joint venture. No separate legal identity is possessed by an unincorporated
joint venture. Only some of the mining expenditures are offered tax deductibility along with the
potential for the offsetting of tax losses against assessable income in the starting stages of
mining.
1 Charltons, Mining Joint Venture Agreements, <https://charltonsnaturalresources.com/en/joint-venture-
agreements>.
2 Richard W. Roeder, Foreign Mining Investment Law: The Cases of Australia, South Africa and Colombia
(Springer, 2016) 37.
3 G. Jaenickle, A Joint Venture Agreement for Seabed Mining (Springer Science & Business Media,
2013) 36.