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The Guide to Mining Arbitrations - First Edition

Arbitration under Long-Term Mining Offtake Contracts and Royalty Arrangements

Introduction

Long-term gas sales agreements have attracted considerable attention in arbitration literature, particularly in the context of price reopener arbitrations. In comparison, mining offtake, royalty and streaming agreements have attracted less attention, even though the resulting arbitrations can be of a similar order of magnitude and complexity. Over the past 10 years, bespoke strategies and expertise adapted to these kinds of disputes have developed in international arbitration practice, with a number of practitioners gaining substantial experience in the sector.

This chapter addresses arbitrations arising from contracts between mines and purchasers of minerals or other commodities under longer-term ‘offtake’ arrangements. It also explores the disputes that can arise from bespoke mining financing agreements linked to a mine’s supply of product.

Disputes commonly arising from offtake and bespoke mining financing contracts include:

  • pricing disputes;
  • supply and volume disputes;
  • force majeure and hardship disputes;
  • royalty and profit share disputes;
  • quality disputes; and
  • shipping and transport disputes.

The frequency and complexity of the first four of these categories has increased materially in the past 10 to 12 years as a result of price volatility for certain minerals and commodities. That volatility arose from general global economic uncertainty and, for some products, the fluctuating demand from Chinese buyers. In addition, Chinese buyers can sometimes approach long-term contracting commitments in a way that is alien to foreign miners selling the minerals or commodities. For several minerals, the determination of price, quality and quantity commitments, and excuses for non-delivery (hardship or force majeure) had been relatively stable for many years. For many bulk mineral commodities, supply into the internationally traded market was previously dominated by a small number of large players, which contributed to this ‘contractual stability’.

The shift from relative stability to, for some commodities in particular, a sharply volatile pricing environment puts pressure on both buyers and sellers under long-term offtake pricing arrangements. If market prices plunge for any reason, buyers may find themselves bound by a long-term offtake contract that prices a mineral very substantially above short-term spot prices – occasionally to the point that a buyer can no longer afford to stay afloat if it continues to pay based on the pricing mechanism specified under its contract. Conversely, in a rising spot market, sellers may find themselves bound by a long-term agreement that substantially underprices a product. A seller may therefore try to force a realignment of the pricing mechanism so that it is closer to market prices, or find excuses to reduce or defer the volumes that it is required to sell at prices below market.

Significant pricing pressures will infect and therefore test other terms of the contract, such as hardship or force majeure (which buyers or sellers alike may attempt to invoke to avoid the consequences of impossible pricing terms), volume commitments (which buyers and sellers may seek to undermine to minimise the volumes impacted by pricing terms that are unsustainably out of tune with the market), and the calculations of distributable profits or revenue shares under royalty and profit sharing arrangements (as the mines or investors seek to exploit ambiguities in accounting metrics or calculation methodologies to compensate for losses caused by the price volatility).

Finally, shipping disputes in the mining sector – while certainly not unique to this industry – have also increased, not only as a by-product of the general strain on buyers and sellers, as described above, but also because of direct volatility in shipping market prices.

The increased frequency of disputes under various forms of long-term offtake contracts, and the very substantial amounts of money often at stake, have seen a commensurate increase in their sophistication and technical complexity. Unsurprisingly, therefore, significant care needs to be taken in (1) the selection of arbitrators with the desired experience and approach for any particular case; and (2) the design of the arbitral procedure, to ensure that it is both efficient and effective in terms of ensuring that the tribunal has access to the right information and expertise to perform its functions properly. Where pricing and hardship or force majeure are concerned, arbitrators will need to make special efforts properly to understand the case early on so that they are able properly to direct and design evidentiary processes such as those relating to experts and the production of documents. If all these factors are given due consideration, international arbitration is an exceptionally effective means of resolving complex offtake and mine financing-related disputes.

Types of mining offtake agreements

Mines need to sell what they produce. Sales contracts include: (1) long-term offtake agreements, with a duration of between two and 20 years; (2) short-term contracts; and (3) single cargo spot contracts. A mine will typically seek a balance between spot or short-term, and long-term offtake arrangements. Longer-term contracts provide the mine with a steady and reliable stream of revenue and can be important for obtaining financing in the early stages of a mine’s life. Short-term and spot contracts allow mines to attract new customers, experiment with new products or product mixes, and take advantage of attractive short-term price increases.

In general, the longer a contract’s term, the more valuable it is for both the mine (which secures a steady source of income) and the buyers (who secure a steady source of supply). However, in general terms, the longer a contract is, the higher the chances are of something going wrong during its performance. As noted above, pricing and other market conditions can fluctuate. Buyers and sellers alike can see material changes in their operating conditions and costs, not to mention evolutions and unforeseen changes in legal and environmental restrictions. Far fewer disputes arise from spot or very short-term offtake contracts and, when such disputes arise, they are typically of a much lower value and less complex, and rarely require the same level of expertise and tailored procedural tools. This chapter accordingly focuses on long-term offtake agreements and bespoke mine-financing arrangements.

Types of bespoke mine financing contracts

New mining projects typically need financing to fund their developing and ramping-up periods. Buyers can obtain better contracting conditions when they are willing to commit to significant upfront purchases or risk-sharing arrangements with start-up mines.

As mentioned above, mines may enter into long-term offtake agreements with buyers even before the mine is a hole in the ground. Such long-term commitments can help to reassure potential financiers funding the mine’s start-up period. Sometimes the buyer may agree to substantial upfront payments to the mine.

Royalty agreements and streaming agreements are other forms of bespoke mine-financing arrangements.

Royalty agreements provide a state or a private party (the royalty holder) with the right to receive a portion of a project’s production in cash or in kind in exchange for upfront capital.[2] They typically cover the entire life of a mining project. Mining companies heavily rely on royalty agreements for certain metals as a form of financing to enable them to facilitate the development of new projects. Distinguishing terms of royalty agreements include the form of the royalty and the applicable royalty rate, which can vary significantly depending on the arrangements that particular parties make.[3]

Streaming agreements are similar to royalty agreements where the ‘royalty’ is in kind. Under a streaming agreement, the buyer purchases all or a portion of the mined mineral throughout the life of a mining project at an agreed price in exchange for upfront capital. The streaming company will usually make ongoing payments at an agreed rate for each unit of the mineral delivered during the life of the agreement, allowing the mine to fund its production.[4]

Both royalty and streaming agreements are inherently of a long-term nature and the comments above relating to the risks and potential for disputes therefore apply to them.

Pricing disputes

As noted above, arbitrations over the pricing of minerals under long-term contracts have become increasingly frequent because of shifts in market conditions, intense price fluctuations and the approach of certain Chinese buyers, which is unfamiliar to traditional sellers. Since the late 2000s, these conditions have led to a shift in the way certain minerals are priced. It has also led to a shift away from truly long-term contracts towards shorter terms (e.g., one to three years instead of five to 15). Where longer terms are maintained, buyers and sellers are looking for more precise and sophisticated pricing mechanisms given the difficulty, or indeed impossibility, to foresee how markets and pricing trends may evolve.

How are minerals priced under term contracts?

The base market price of commonly traded minerals on any given day, week or month can usually be found by referring to prices published on established exchanges or index providers. Examples of exchanges include the London Metal Exchange or COMEX in New York. Examples of index providers and price reporting agencies include Platts and Metal Bulletin for ferrous and non-ferrous metals, the London Bullion Market Association for precious metals and the NEWC Index published by globalCOAL for coal.

For a one-off spot sale of minerals (say, one shipment), buyers and sellers can negotiate a fixed price per tonne, with or without referring to an index price, with quality adjustments agreed depending on the particular product being sold, and then adjustments to the price based on the mineral actually delivered. Alternatively, buyers and sellers can agree that the price will be determined by reference to a price generated by one of the indices or exchanges on a given day, such as the day on which the delivery vessel completes loading.

There are numerous variations of these arrangements, such as utilising averages of the quoted index or exchange values over a certain quotation period. Discounts, premiums and other special adjustments to these published prices can then be agreed depending on the product itself (for example, a concentrate will be discounted against the price of a pure metal or ore) as well as the parties’ respective bargaining positions and other market conditions at play. Some of the published index prices may also themselves need to be adjusted to take account of factors that do not apply to the product being sold.

For term contracts, the general approach in the previous paragraph may serve as a starting point. For example, a term contract may provide that the price is fixed by reference to the previous three months’ average of an agreed published index price. That market base price is then adjusted for product specificities, actual delivered quality, and all other relevant factors that the parties may negotiate. Purely commercial terms, such as volume discounts or exclusivity premiums, are also more common compared with spot sale contracts. Junior or start-up mines in need of long-term offtake commitments to secure financing may offer even further discounts on bulk or long-term orders to attract the sort of commitments they need. By agreeing to grant a discount to a large offtaker, the mine developer not only secures a buyer for a long period of time; it can also more easily access funding to develop the mine.

What kind of pricing disputes arise under term contracts?

No matter how much effort goes into negotiating bespoke pricing terms in a long-term contract, and despite the fact that the price terms always track market prices somehow, market conditions and other circumstances can change. Where significant volumes are involved, or where those volumes represent a significant proportion of a seller’s output or a buyer’s needs, one side may suffer significantly if the initial pricing terms are maintained.

In certain industries (iron ore being a good example), disagreements over pricing are often resolved by good faith negotiations between the parties. But where that is not possible, disputes are inevitable. Pricing arbitrations arising from long-term gas sales agreements are well known.[5]

In the mining industry, pricing disputes may arise when a given benchmark, index or other pricing reference ceases to exist, becomes unavailable or otherwise changes so that it is no longer appropriate to use it for the contract in question. A party may also assert that bespoke price adjustments against the basic benchmark, index or reference are no longer correct and need to be changed.

When the index or benchmark disappears, the parties are of course forced to find a new solution – yet they may be diametrically opposed as to what that solution should be. One side may seek to apply a new index that has been published by index providers as a replacement for the previous one. The other side may consider that the new published index is calculated differently, is based on different spot sale inputs or will not work by reason of the parties’ bespoke pricing adjustments. In any of those situations the replacement reference may not be suitable for use in the parties’ agreement without certain new adjustments being included in the price formula.

The situation may be more delicate where the agreed index or reference that is designed to track market prices continues to be published but, for various reasons, is no longer an appropriate or correct reference to use for the product being sold or the parties’ particular circumstances. This may happen when, for example, an index provider changes the specifications underlying a relevant index or publishes a new index better suited to the product being sold. One side may then want to push for a change in the base index used in the contract, while the other may see an advantage in maintaining the originally agreed one.

The magnitude of such ‘price reopener’ disputes can reach several hundred million, or sometimes several billion, dollars, especially where they concern the sale of substantial quantities of a given mineral or other commodity over extended periods of time.

Similarly to long-term gas sale agreements, many long-term mining agreements will include price adaptation mechanisms, also called price review or price reopener clauses, requiring the parties to renegotiate elements or variables of the price formula, including the base benchmark or index used to determine the price. However, contrary to gas sales agreements, which have attracted much attention in recent years in relation to such clauses,[6] price review mechanisms in long-term mining offtake, royalty and streaming agreements have not been so widely commented on.

Price adjustment clauses in mining contracts may contain features similar or equivalent to those seen in long-term gas offtake agreements. The clause may require the parties to review (and, if necessary, amend) the price if certain conditions are satisfied. Any review and amendment of the price formula is ordinarily restricted to when a precise ‘trigger event’ specified in the contract occurs. There may be temporal limitations (e.g., a review can be requested only once per year), and market condition limitations (e.g., a substantial, unforeseen change that is beyond the parties’ control and likely to have long lasting effects not reflected or predicted in the original price formula).[7]

Offtake contract price review clauses can range from non-descript, vague provisions to highly prescriptive clauses obliging the parties to discuss and periodically review the pricing elements, with any adjustments having to fulfil predefined criteria.[8] The advantage of including prescribed criteria is more certainty for the parties as to precisely which elements in the price formula can be reviewed and under what circumstances. Clauses containing vague or unspecific references to price reviews can lead to great uncertainty and unexpected outcomes in arbitration proceedings.

Other key elements of price review clauses and price review arbitrations include the price adjustment guidelines. Price adjustment guidelines, described earlier, seek to adjust a published market price reference to the peculiarities of a product or the peculiarities of the parties’ respective positions and needs under a contract.[9] These terms do not concern commercial discounts or premiums, as such, but specifically devised adjustments that realign a market reference that may price a different but related product to the specificities of the product actually being sold. Subject to whatever else the price adjustment provisions of a contract may specify, those bespoke aspects of pricing terms are rarely allowed to be changed without an agreement of the parties. These terms often result from give and take between experts from the parties in contract negotiations and it is difficult to conceive of how an arbitrator’s decision could ever substitute for such agreements. Having said that, one cannot rule out situations where a change in market conditions, or a change in the way that a base index or reference is prepared, means that the initially agreed pricing equilibrium cannot be maintained without amending bespoke price adjustments.

Price review clauses typically permit or require a court or arbitral tribunal to fix the new pricing by applying the prescribed criteria. As with other disputes arising out of mining agreements, price reopener disputes are in most cases resolved through international arbitration. Such arbitrations commonly revolve around issues such as whether the price review process or trigger event was properly invoked, which parts of the pricing terms can be changed, and whether the parties negotiated in good faith and properly adhered to the requirements of their price adjustment process.

Price reopener arbitrations can become especially complicated where the applicable law does not empower the arbitral tribunal to adapt or adjust the price, or where the contract is particularly ambiguous or does not provide for an adjustment clause at all.[10]

An occasionally controversial issue concerns the legitimacy of arbitral tribunals to rewrite the parties’ bargain in the first place (i.e., establishing the limits of the arbitral tribunal’s role). As put by one commentator in relation to gas price disputes:

[w]hile price review arbitrations share many characteristics of commercial arbitrations, they are in many respects quite different. They require the tribunal to invade a space that is normally the preserve of the parties – the negotiated price. This requires a commercial perception that is beyond the experience, if not the reach, of many tribunals.[11]

Arbitral tribunals deciding pricing disputes may indeed arrive at decisions that are divorced from the reality or have nothing to do with what the players in the mining industry could possibly have envisaged or wished for.

To avoid unpredictable results, it is of course best to include strict criteria and guidance in price review clauses to pre-define the extent to which an overzealous arbitral tribunal can rewrite the parties’ bargain. Short of such drafting, the appointment of arbitrators and counsel with real experience in the sector can assist in reducing the risks.

Supply and volume disputes

Another area of intense disputes between miners and offtakers revolves around the quantities of product to be delivered.

Offtake agreements typically require the seller to sell and the buyer to buy a given volume of product on a yearly (or other) basis. Alternatively, the volume to be sold or purchased may correspond to a percentage of a mine’s total yearly production or a percentage of its production of a product (where the mine is producing several products) or quality of output. As another alternative, the contract may specify a minimum quantity to be purchased each year, with an option for the buyer to purchase additional quantities if the yearly production increases.

Not surprisingly, mines may need firm volume purchase commitments to secure financing or other investments. Similarly, buyers sometimes require fixed security of supply so that they can make commitments to their own customers.

Where the prices of minerals are fluctuating, sellers or buyers may have an interest in attempting to skew the interpretation of fixed volume commitments and presenting them as non-binding, or vice versa. These situations may lead to tense volume disputes. At the time contracts are negotiated, the parties may not focus on what the real effect of contractual volume provisions is and, in the light of limitation of liability clauses, what the real impact is of a failure to purchase or a failure to sell those volumes.

While still relatively rare in mineral contracts, price fluctuations and changing economic and regulatory environments in the past 10 years or so have led contracting parties to insert ‘take-or-pay’ or ‘deliver-or-pay’ type contractual obligations, whereby penalties are applied if the buyer fails to take, or the seller fails to deliver, a minimum quantity of product in a given time frame (these may be subject to force majeure, hardship or other limitations specified in the contract). Take-or-pay and deliver-or-pay provisions have historically been more commonly used in gas or petroleum sales contracts.[12] Their more recent adoption in the mining industry may generate disputes in the next decade.

Disputes under take-or-pay and deliver-or-pay clauses may be less complex than traditional volume disputes, where determining the damages due to the seller or buyer for a failure to respect volume obligations can be a complicated process, requiring industry as well as valuation experts.

Royalty and profit share disputes

Both royalty and streaming agreements require the parties to calculate profit shares and cost elements (although some state royalties are just a fixed or sliding proportion of the export price). Some offtake contracts may also include profit share elements in the pricing (i.e., where a part of the price of the product paid to the mine is a share of the buyer’s profit).

Royalty and profit share arrangements in any kind of mining contract can give rise to a special type of disputes that are peculiar to these arrangements. These disputes revolve around the accounting and valuation metrics that go into the formulae for calculating the profit shares or royalties. Calculating the real cost of producing a tonne of a particular product, or of mining and running a beneficiation facility for a given period of time or a given volume, are evidently open to much interpretation. Yet the stakes – and accordingly the differences between each side’s valuation of a royalty or profit share – can be materially different.

Royalty disputes often focus on the financial aspects of the parties’ royalty relationship, such as the calculation and payment of the royalty, including the determination of the production or proceeds as well as the offtake conditions if the royalty is to be paid in kind.[13] Disputes can also arise where the royalty agreement provides for extensive operating covenants and information rights, or where the assignment rights to mineral royalties are drafted ambiguously.[14]

When it comes to streaming agreements, the actual cost of production of a metal may turn out to be lower than the purchase price in the streaming agreement – and vice versa, the production cost of a metal may become higher than the purchase price specified in the streaming agreement. This again may lead to disputes between parties. Further, and as noted above, a common reason for launching arbitration (although not always fully spelled out by either party) is the price determination formula that may result in the contract price being significantly below or above the actual market price of the product at the time of delivery. Other disputes may result from an unfair (at least from the point of view of one party) allocation of risks associated with a given project, including operational, financial or political risks.[15]

Naturally, resolving disputes relating to royalty or profit shares can involve accounting rules and methodologies. This means that the choice of arbitrators may be an entirely different exercise to choosing arbitrators for mine-specific disputes, such as those relating to quality, pricing and volumes.

Quality disputes

The quality of a delivered mineral is usually critical to the buyer. Mineral offtake contracts therefore contain agreed physical and chemical product specifications. Depending on the product, desired physical properties may include size, shape, mass, and fineness or particle surface area.

Chemical composition of the material will naturally depend on what the purchased mineral is. Parties will first want to specify the level of the principal metal (e.g., iron or copper), so offtake contracts invariably include specific mechanisms to adjust the final price depending on the exact proportion of metal in the delivered ore. The metal in an ore may be present in an oxide (e.g., for iron) or a sulphide (e.g., for copper) form. In addition, there may be price penalties where the metal levels fall below a certain threshold. But the proportion of metal (or its oxide or sulphide form) in the delivered product is certainly not the only relevant chemical factor. The cost of processing it into metal will depend (among other factors) on what else is contained in the product delivered to the buyer. Contaminants that will typically be limited in terms of maximum percentages in iron ore contracts, for example, include silica, alumina, phosphorus and magnesium. If the agreed thresholds are exceeded, then the offtake agreement will typically include an agreed price adjustment or ‘penalty’ to compensate the buyer.

Mineral offtake contracts may include two sets of physical and chemical specifications, one being indicative (usually called the ‘expected’ specifications) and one being the ‘guaranteed’ specifications, outside of which the buyer will be allowed to claim price adjustments (also called penalties). The penalty amounts are often, but not always, negotiated and specified in the contract. In some agreements, or for some chemicals, the buyer and seller are left to negotiate or arbitrate about the compensation due to the buyer where the delivered product is outside any guaranteed specification.

For a mine operator, purifying and processing the raw mined mineral (called beneficiation) can be a very costly process. The more a product is purified, the higher the cost is likely to be. Increasing purity can also increase the proportion of product that is wasted. Therefore, mines aim in general to deliver product at the guaranteed specifications so that they avoid incurring price penalties but also avoid the additional costs of over-purification.

Price adjustments and penalty provisions are specifically negotiated based on numerous factors including geological studies, assessments of a mine’s beneficiation capabilities and, in particular, the buyer’s requirements. In principle, they are therefore not subject to revision as part of a price reopener arbitration process unless the parties have specifically agreed otherwise. Nonetheless, buyers and sellers alike have attempted to argue in arbitrations that quality penalty provisions can be the subject of a price reopener arbitration and that an arbitral tribunal can order changes to the penalty thresholds or penalty amounts.

On the one hand, where the market has changed so that products of a particular quality require a discount or premium that did not exist at the time of the contract, revising the quality penalties may be seen as an alternative to revising the price mechanism or adjusting applicable pricing indices. On the other hand, however, adjusting the penalties may be seen as an impermissible back-door method of adjusting the price terms in a way that was not intended. As noted above, ultimately such an argument will depend on the terms of the parties’ agreement and, where applicable, relevant industry practice. While forced adjustments to the penalties are rare in our experience, it is not impossible that they will become more frequent as mineral markets continue to become more volatile and competitive, and index providers publish a broader range of indices aimed at specific contaminants. Parties are therefore well advised to consider this issue at the time of drafting long-term mineral offtake agreements.

Also related to the quality of product is the question of whether a buyer can refuse to take delivery of a product that is outside the contractual specifications. Specific rejection levels are sometimes provided for in offtake agreements. Where they are not, however, this can be a cause for disputes. Where there is no specific contractual rejection threshold and no agreed penalties for the delivery of ‘off-spec’ product, the buyer may argue that the absence of penalty provisions entitles it to reject cargoes that do not meet the contractual specifications. Such a position will be more difficult where the contract provides for price adjustments on quality that are, at least arguably, the consequence of the seller delivering an ‘off-spec’ product.

Force majeure and hardship disputes

As explained above, commercial, economic, political and geological conditions can change over the course of a long-term agreement. The longer the term, the more likely that a material change in circumstances makes it hard or impossible for one of the parties to perform its end of the bargain.

Mines and associated beneficiation facilities are complicated operations. They can be subject to licensing controls, failings in equipment, floods, water or power shortages, industrial action, failings by suppliers, and all the usual other factors that can impact manufacturing operations. In addition, buyers and sellers of minerals can suffer situations of hardship. For example, a mine will have numerous fixed costs that cannot simply be scaled down when the market price falls below the mine’s per unit operating cost.

It is therefore not infrequent for mines to claim force majeure and, where the contract or law provides for it, hardship. While less frequent, buyers may claim force majeure or hardship based on the buyer’s circumstances and economic conditions where hardship applies.

Force majeure and hardship claims are fact-, contract- and applicable law-specific. The dispute between the parties may revolve around whether the criteria or conditions for triggering the force majeure or hardship (under the contract or the law) have been met.

Shipping and transport disputes

Many or most of the buyers of a mine’s products tend to be located far away from the mine, most commonly in other continents, or at least in other countries. This means that the minerals need to be transported. Shipping and other transport disputes have always arisen in the mining industry and will probably continue to do so. However, they are not specific to that industry and can be seen in virtually every industry or sector involving the purchase of goods, commodities or any other type of product that needs to be physically transported by sea or otherwise. The resolution of shipping disputes is its own somewhat specialised area, although it is one with well-developed practices and a plethora of experts.

Concluding remarks: does the process work?

Given the significant investments and expected returns involved in long-term offtake, royalty and streaming agreements, as well as the complexity of these types of contracts, disputes are inevitable. There is no question that arbitration, where utilised and piloted properly, is the natural and most popular method of resolving them.

Because of the long-term nature and relative complexity of these agreements, it is crucial that parties concluding them are assisted by specialist advisers familiar with mining law and industry practice. There are, indeed, many ways of drafting offtake, royalty or streaming agreements, including their pricing provisions and potential price review clauses. Parties will therefore be faced with a multitude of options during the negotiations, and their choices can have an impact on the disputes to come. It is therefore critical to ensure clear drafting and proper consideration of the most important provisions relating to price determination and revision, as well as quantity and acceptable excuses for non-delivery or non-purchase of the product.

Where disputes occur, they can be managed well and less well. Like gas pricing arbitrations, mining pricing and general supply disputes have given rise to specialist approaches that are starting to take on an existence of their own. This means that care should be taken in the selection of counsel, arbitrators, experts and procedural mechanisms in general.


Notes

[1] Simon Greenberg is a partner and Karolina Rozycka is a senior associate at Clifford Chance Europe LLP.

[2] See further Randy Shefman, Royalty Agreements, Rocky Mt. Min. L. Fdn. 2014; Mark T Nesbitt, ‘International Mining Tenure and Royalty Systems’, Rocky Mt. Min. L. Fdn. 2014; Karl J C Harries, Mineral Agreements and Royalties, vols 1—2 (Canadian Institute of Mining, Metallurgy and Petroleum 2003); Bruce C Kirchhoff and Karol L Kahalley, ‘International Mining Royalty Issues’ (2011) 57 Rocky Mtn. Min. Law Inst.; Stanley Dempsey and Randy L Parcel, ‘The Evolution of the Mining Royalty’ (2007) 53 Rocky Mtn. Min. Law Inst.; see also Mia Breytenbach, ‘Streaming, royalty agreements novel alternative funding structures for coal juniors’, in Mining Weekly, 2 February 2018, available at www.miningweekly.com/article/streaming-
royalty-agreements-novel-alternative-funding-structures-for-coal-juniors-2018-02-02/rep_id:3650.

[3] See further Christopher G Baldwin, ‘Comparing Royalties: NSR vs. NPI’, The Mining Journal, 16 July 2004; see also Randy Shefman, Royalty Agreements, Rocky Mt. Min. L. Fdn. 2014, p. 11; Christopher G Baldwin, ‘Understanding Royalty Structures’ in Structuring More Effective Mining Ventures (Conference Board of Canada, 17–18 February 2003), p. 3; Mark T Nesbitt, ‘International Mining Tenure and Royalty Systems’, Rocky Mt. Min. L. Fdn. 2014, pp. 28–30.

[4] See further Henry G Burnett and Louis-Alexis Bret, Arbitration of International Mining Disputes (Oxford University Press, 2017), paras. 8.37 and 8.41; Erik Goldsilver, Offtake Agreements and Streaming Agreements, Rocky Mt. Min. L. Fdn. 2014; Robert Loewen, Selective Commercial Observations on Sales, Offtake Financing and Streaming Agreements, Rocky Mt. Min. L. Fdn. 2014; John F Anderson and Jennifer Honeyman, ‘Stream financing: A primer’, 25 February 2013, available at www.stikeman.com/en-ca/kh/canadian-mining-law/stream-financing-a-primer.

[5] Jeremy Wilson and William Lowery, Pricing Provisions and the Gazprom-Naftogaz Dispute, Law 360, 11 July 2014.

[6] See generally Mark Levy, ‘Drafting an effective price review clause’ in Mark Levy (ed.), Gas Price Arbitrations (Globe Law and Business 2014); Pietro Ferrario, The Adaptation of Long-Term Gas Sale Agreements by Arbitrators, Chapter 1 (‘The Gas Market and the Relevant Agreements’), Chapter 3 (‘The Adaptation of Long-Term Gas Sale Agreements by Arbitrators Contracts Without an Adaptation Clause’), and Chapter 4 (‘The Adaptation of Long-Term Gas Sale Agreements by Arbitrators Contracts With an Adaptation Clause’), International Arbitration Law Library, Volume 41 (Kluwer Law International; Kluwer Law International 2017); Peter Roberts, Gas and LNG Sales and Transportation Agreements, Principles and Practice, 5th ed., Sweet & Maxwell, 2017; Jeremy Wilson and William Lowery, Pricing Provisions and the Gazprom-Naftogaz Dispute, Law 360, 11 July 2014.

[7] Pietro Ferrario, The Adaptation of Long-Term Gas Sale Agreements by Arbitrators, Chapter 3: The Adaptation of Long-Term Gas Sale Agreements by Arbitrators Contracts Without an Adaptation Clause, International Arbitration Law Library, Volume 41 (Kluwer Law International; Kluwer Law International 2017), pp. 4–5.

[8] Leon Firios and Kanaga Dharmananda SC (ed.), Long Term Contracts – Chapter 2 – Paying Up: Price Adjustment by Michelle Cole and Sharon Wilson, p. 47. See also Mark Levy, ‘Drafting an effective price review clause’, in Mark Levy (ed.), Gas Price Arbitrations (2014).

[9] See Leon Firios and Kanaga Dharmananda SC (ed.), Long Term Contracts – Chapter 2 – Paying Up: Price Adjustment by Michelle Cole and Sharon Wilson, p. 43.

[10] See, as regards long-term gas offtake agreements, Pietro Ferrario, The Adaptation of Long-Term Gas Sale Agreements by Arbitrators, Chapter 1: The Gas Market and the Relevant Agreements, International Arbitration Law Library, Volume 41 (Kluwer Law International; Kluwer Law International 2017).

[11] Mark Levy, ‘Drafting an effective price review clause’ in Mark Levy (ed.), Gas Price Arbitrations (Globe Law and Business 2014), p. 20.

[12] See, e.g., Michael Polkinghorne, ‘The Paris Energy Series No. 2: Predicting the Unpredictable: Gas Price Reopeners’ (White & Case, 17 June 2011).

[13] Henry G Burnett and Louis-Alexis Bret, Arbitration of International Mining Disputes, (Oxford University Press, 2017), para. 8.35.

[14] It may, for example, be unclear whether the royalty runs with the underlying mineral rights or requires specific assumption of the mineral rights by the buyer. See ibid., para. 8.35.

[15] See Henry G Burnett and Louis-Alexis Bret, Arbitration of International Mining Disputes, (Oxford University Press, 2017), para. 8.41.