Understanding Mineral Rights

We have been receiving a lot of questions from our readers regarding mineral rights after we wrote a piece a couple of weeks ago about unlocking the value of your property. We didn’t go into mineral rights in depth in that piece and given the interest we wanted to clear up some of the doubts and questions which you all have about what mineral rights are and how they can be bought and sold. To aid us with this we have had some input from the team at Ferrari Energy who operate out of Denver, Colorado, this business is a specialist in the field of mineral rights. Let’s take a look at what mineral rights are, and what that means for you.

Basic Explanation

To give you the most basic explanation of what mineral rights are, they are the rights of ownership of resources and minerals which can be found under the ground of your property or land. These include resources such as oil, silver, natural gas, copper, iron, and uranium, amongst others. The reason as to why mineral rights are an independent area of ownership is because in most cases the ownership of land or property falls under the category of surface rights, which only gives the rights to the surface of the soil and everything above, not below.

When it comes to placing foundations in the ground landowners do have the right to dig into the ground but they have no ownership claims over whatever, if anything, is found below the surface.

Buying and Selling

Generally speaking, the government are the owners of mineral rights of the land, or in some cases where there is a royal family it will be the monarch who has the ownership of these minerals. This is not to say that these mineral rights can’t be purchased because they can, and in return for the government allowing a business or an individual to mine certain minerals, they will receive a percentage of what is found under the earth.

If you have bought a property or a piece of land and you do own the mineral rights as part of the deal of purchase then you can see the rights to these minerals without having to sell the surface rights for your property. This can be a profitable way to make some money off the land and many companies even have the technology to mine these minerals without causing mass disruption.

Investing

If you want to invest in mineral rights then the best way in which to go about it is to invest in a company which has already secured the rights to minerals in a certain area of land. Investors in mineral rights will have to assume a high level of risk as any investment will depend on the presence of minerals underground and the ability of the company to actually be able to obtain those minerals. The market when it comes to minerals is also pretty volatile which is why there is also an additional layer of risk when it comes to the prices of markets such as oil and gas.