Subsoil Use in Uzbekistan (Investor Guide)

The new Law of the Republic of Uzbekistan “On Subsoil” dated October 31, 2024, No. ZRU-987, forms the legal basis for the sustainable development of mineral resources of the Republic of Uzbekistan through the attraction of market investments, modern regulatory methods, and management of geological data.

The Law regulates relations related to the possession and disposal of subsoil resources, as well as the use and protection of subsoil. At the same time, it does not regulate ordinary relations concerning the use of land, water, flora and fauna, or atmospheric air, except in cases directly connected with subsoil use, for example industrial underground waters.

The key principle for an investor is that subsoil and minerals in their natural occurrence are state property, but the state grants the right to use subsoil plots through permits. The subsoil plot itself may not be sold, donated, inherited, contributed to charter capital, pledged, or otherwise alienated. However, a permit for the right to use subsoil and lawfully extracted minerals may have independent property value.

An investor does not acquire ownership of the subsoil. The investor receives:

1. a permit for the right to use a subsoil plot;
2. the exclusive right to carry out a specific type of subsoil use within cadastral blocks;
3. ownership of minerals extracted in accordance with the procedure established by law;
4. subject to compliance with the conditions — the possibility to extend the permit, move from exploration to extraction, assign rights, pledge the permit, or use it as security;
5. access to geological information and public data through the cadastral system and the interactive geological portal.

The Law expressly states that a permit certifies the holder’s right to exclusive use of a subsoil plot, the size of which is determined by the number of cadastral blocks, for the established period and subject to compliance with the permit conditions.

Who May Be an Investor / Subsoil User

To obtain a permit, the applicant must be an eligible person. The Law provides that the applicant and subsoil user may include, in particular:

Category	Possibility of obtaining a permit
Individual — citizen of the Republic of Uzbekistan	Yes
Resident of the Republic of Uzbekistan	Yes
Legal entity established under the legislation of the Republic of Uzbekistan	Yes
Foreign company directly	As a rule, structuring through an Uzbek legal entity is required, unless otherwise provided by a special regime or legislative acts

A foreign investor is usually advised to establish or acquire an Uzbek legal entity in advance, through which the application will be submitted, participation in an auction/tender will be carried out, contracts will be concluded, personnel will be hired, and land and environmental approvals will be obtained.

Main Types of Subsoil Use

The Law distinguishes the following types of subsoil use:

No.	Type of subsoil use	Investment significance
1	Geological study of solid minerals	Search, evaluation, and exploration of deposits
2	Extraction of solid minerals	Industrial development of a deposit
3	Reconnaissance of hydrocarbons	Preliminary oil and gas prospecting works
4	Geological study of hydrocarbons	Exploration of oil, gas, and gas condensate
5	Extraction of hydrocarbons	Industrial extraction of hydrocarbons
6	Geological study for underground storage purposes	Preparation of an underground storage facility
7	Underground storage	Use of subsoil space for storage
8	Artisanal mining	Non-industrial extraction of precious metals and stones
9	Collection of samples of collectible materials	Limited non-industrial activity

Each type of subsoil use requires a separate permit, although the Law allows a permit to be issued simultaneously for several types of subsoil use.

Classification of Minerals

For an investor, it is important to correctly determine the object of the project, since the procedure, permit term, environmental requirements, plot size, extension regime, and scope of obligations depend on this.

Group	Examples	Investment significance
Ore minerals	gold, copper, lithium, iron, tungsten, zinc, rare-earth metals, etc.	Usually strategically significant projects with a high regulatory burden
Radioactive minerals	uranium, thorium, etc.	Enhanced control and special safety requirements
Energy minerals	coal, anthracite, peat, etc.	Connection with energy policy
Hydrocarbons	oil, natural gas, gas condensate, shale oil, etc.	Separate legal regime and participation of the Ministry of Energy
Non-metallic minerals	limestone, sand, gypsum, quartz, barite, glass raw materials, etc.	Often construction, industrial, and manufacturing projects
Precious metals and stones	gold, precious stones	Separate commercial and control significance

The Law expressly divides minerals into major and non-metallic minerals; major minerals include ore, radioactive, energy minerals, and hydrocarbons.

State Authorities with Which the Investor Works

Authority	Role for the investor
Cabinet of Ministers	State policy, procedure for granting plots, rules for subsoil protection, state control
Ministry of Mining Industry and Geology	Policy in the field of subsoil use, methodological documents, state programs, work with reserves
Ministry of Energy	Regulation of hydrocarbons, participation in the terms of use of oil and gas plots
National Committee for Ecology and Climate Change	Environmental expertise, environmental control, permits for certain types of underground storage
Inspectorate for Control in the Field of Mining Industry and Geology	Industrial safety, inspections, fines, suspension of works
Subsoil Use Center	Key authority for the investor: issuance, extension, reissuance, suspension, and termination of permits; cadastre; registration of reports; electronic map
Local executive authorities	Territorial programs, local control, interaction on land and social matters

For practical support of a project, the main administrative counterpart will usually be the Subsoil Use Center, since it keeps records of the subsoil fund, maintains the cadastral system, issues permits, and accepts reports from subsoil users.

Methods of Obtaining the Right to Use Subsoil

A permit may be issued:

1. on a “first come, first served” basis;
2. through an electronic auction;
3. through a tender;
4. through other additional methods provided by law or acts of the President / Cabinet of Ministers.

The Law defines an electronic auction as online bidding on a specialized electronic platform with equal access for participants.

In practice, this means that the investor must determine in advance whether the plot of interest is:

Plot status	Significance
Open cadastral block	Potentially available for submission of an application
Reserved plot	May be put up for auction, tender, or special procedure
Plot with an existing permit	Cannot be obtained without a transaction with the current subsoil user or termination of its rights
Plot where subsoil use is prohibited or restricted	High risk of refusal or impossibility of the project
Plot of state geological study	May temporarily not be open to a private investor

 

Cadastral System and Geological Information

The following are critically important for an investor:

1. cadastre of the state subsoil fund;
2. cadastre of permits;
3. cadastre of mineral deposits and occurrences;
4. cadastre of hydrocarbons;
5. cadastre of technogenic mineral formations;
6. interactive geological portal;
7. state balance of mineral reserves.

The cadastre of permits includes information on each permit: registration number, date of issue, subsoil user, deposit, type of permit, status, cadastral blocks, validity period, amendments, refusal, termination, or revocation of the permit. It also records information on payments, taxes, reports, insurance policies, and violations.

The interactive geological portal provides access to information in the field of subsoil use based on the cadastral system and GIS. It contains non-confidential data on active and abandoned mining sites, contaminated sites, mineral occurrences, reserves, geology, geochemistry, hydrogeology, and other data.

Confidentiality of Geological Information

The Law establishes an important balance between openness of data and protection of the investor’s trade secret.

Type of information	Regime
Basic information on issued permits	Available to the public
Information on security for liquidation of consequences	Available to the public
Total amount of reported expenses	May be disclosed
Local content, personnel training, socio-economic support	Not recognized as confidential
Geological information from subsoil user reports	Trade secret during the permit validity period
Geological information after expiration of the permit	May be disclosed
Information obtained at state expense	May be disclosed in the prescribed manner

Practical conclusion: the investor should establish in advance a data management system, internal classification of geological data, confidentiality agreements with contractors, a trade secret regime, and control over the transfer of data to state authorities. The Law provides that geological information from reports and documents received by state authorities is the subsoil user’s trade secret for the duration of the permit, but certain categories of information are not considered confidential.

Permit Terms

1. Solid Minerals

Type of permit	Initial term	Extension
Geological study of major solid minerals	Up to 5 years	Twice for 4 years each
Geological study of non-metallic minerals	Up to 2 years	Twice for 2 years each
Extraction of solid minerals	Up to 25 years	May be extended repeatedly, but each period must not exceed the initial term

When extending a permit for geological study of solid minerals, the number of cadastral blocks is reduced by 50%.

2. Hydrocarbons

Type of permit	Initial term	Extension
Reconnaissance of hydrocarbons	Up to 3 years	Once for up to 1 year
Geological study of hydrocarbons	Up to 5 years	Once for up to 4 years, with a 50% reduction in cadastral blocks
Extraction of hydrocarbons	Up to 25 years	Once for up to 25 years

A permit for geological study of hydrocarbons is issued for up to five years and may be extended once for up to four years; upon extension, the number of cadastral blocks is reduced by 50%. A permit for extraction of hydrocarbons is issued for up to 25 years and may be extended once for up to 25 years.

Step-by-Step Algorithm for Investor Entry into a Project

Stage 1. Initial Sector Selection

The investor must determine:

Question	Practical significance
Which mineral is of interest to the investor?	Determines the regime: solid minerals, non-metallic minerals, hydrocarbons
Is exploration needed, or is extraction already planned?	Different permits and document scope
Is there state data on the plot?	Affects the cost of due diligence
Is the plot free or occupied?	Determines the route: application, auction, transaction with the current subsoil user
Are there environmental, safety, or land restrictions?	May make the project impossible or expensive

 

Stage 2. Legal Structuring

Recommended structure:

1. establishment of a legal entity in Uzbekistan;
2. determination of the composition of participants and beneficiaries;
3. verification of beneficial ownership restrictions;
4. preparation of corporate governance;
5. preparation of financing;
6. conclusion of constituent documents / investment agreement;
7. preparation of documents for obtaining a permit or participating in an auction.

The Law defines a beneficial owner as a person who directly or indirectly controls or owns a legal entity; a person is automatically considered a beneficial owner if he directly or through related legal entities owns a share of 25% or more.

Stage 3. Geological and Legal Due Diligence

The investor must verify:

Due diligence block	What to check
Legal status of the plot	Whether the plot is free, whether there is an existing permit, prohibitions, restrictions
Cadastral blocks	Coordinates, adjacency, overlaps, area, availability
History of the plot	Previous permits, terminations, violations, state data
Geological information	Reserves, occurrences, reports, data quality, confidentiality status
Environment	Environmental protection, contamination, need for environmental expertise
Industrial safety	Risks of mines, quarries, drilling, tailings storage facilities, wells
Land and infrastructure	Access, roads, power lines, water, social zone
Taxes and payments	Subsoil use tax, rental payments, fees, auction payments
Licensing obligations	Minimum expenses, work schedules, reporting
Social obligations	Local content, personnel training, regional support
Project closure	Closure plan, security, reclamation

 

Stage 4. Obtaining a Permit

General procedure:

1. selection of a plot;
2. verification of availability of cadastral blocks;
3. preparation of an application;
4. preparation of technical, financial, and corporate documents;
5. submission of an application or participation in an auction/tender;
6. review of the application by the Subsoil Use Center;
7. issuance of the permit;
8. entry of information into the cadastre;
9. fulfillment of preliminary conditions before commencement of works.

Permits are issued electronically through the “License” information system and contain textual, graphic, and other annexes defining the main conditions of subsoil use.

Rights of the Investor-Subsoil User

1. General Rights

Right	Content
Exclusive use of the plot	The subsoil user receives the right to work within the specified cadastral blocks
Ownership of extracted minerals	Lawfully extracted minerals belong to the subsoil user
Extension of the permit	Subject to compliance with the law
Reissuance of the permit	In case of change of name, reorganization, change of minerals, extension, change of blocks, assignment
Assignment of rights	Possible subject to compliance with the law
Pledge / other security over the permit	Possible for project financing
Obtaining an extraction permit after exploration	Upon fulfillment of the requirements of the law
Protection of confidential geological information	During the permit validity period
Judicial protection	In case of unlawful refusal, termination, suspension, or other disputes

 

2. Ownership of Extracted Minerals

The investor acquires ownership only of those minerals that are extracted in accordance with the procedure established by legislation. Illegally extracted minerals belong to the Republic of Uzbekistan.

Obligations of the Investor-Subsoil User

Obligation	Practical significance
Comply with permit conditions	Violation may lead to suspension, refusal of extension, or termination
Perform the work program	Especially important for exploration and reconnaissance
Bear minimum expenses	For certain types of permits, annual minimum expenses are provided
Submit reports	Geological, production, environmental, and expense reports
Comply with industrial safety	Control by the Inspectorate
Obtain environmental conclusions	Before extraction and certain works begin
Ensure subsoil protection	Rational use and prevention of pollution
Keep records of geological information	Preservation of data and access for state authorities
Ensure liquidation of consequences	Closure plan, financial security, restoration of the plot
Comply with local content requirements	If provided by the permit conditions
Pay fees, charges, and taxes	Non-payment may lead to negative consequences

For hydrocarbons, the Law expressly provides that the subsoil user must, within 90 days from the date of issuance of the permit, submit a comprehensive work project for geological study, including a preliminary plan for decommissioning and liquidation of the consequences of the proposed oil and gas operations.

Environment and Industrial Safety

Before commencing mining activity, the investor must:

1. undergo state environmental expertise;
2. obtain a positive industrial safety conclusion;
3. prepare a deposit development project;
4. include in the project a preliminary plan for liquidation of consequences;
5. agree the necessary documents with competent authorities.

For extraction of solid minerals, the Law requires that, before commencing mining activities, the subsoil user undergo environmental expertise and obtain the necessary approvals in the field of safety, including a positive conclusion of the state environmental expertise and the Inspectorate.

For hydrocarbons, environmental expertise and safety permits are also required before extraction activities begin.

Deposit Development Project

The deposit development project is one of the key documents for an extraction project. It must include:

Section	Content
General project information	Deposit, mineral, boundaries, objectives
Technical solution	Extraction method, equipment, infrastructure
Production plan	Volumes, schedule, stages
Workforce	Personnel, qualifications, contractors
Occupational health and industrial safety	Accident prevention measures
Environment	Impact, monitoring, waste
Closure plan	Closure, reclamation, restoration
Financial and economic data	Economic feasibility, CAPEX/OPEX
Timeframes	Stages of construction, operation, and closure

The Law defines a deposit development project as a work project for the entire period of mining activity, approved by a technical consultant, including installation, operation, and closure of the mining site, technical implementation, timelines, workforce, occupational health, safety, and environmental protection.

Liquidation of Consequences and Project Closure

Liquidation of the consequences of subsoil use is one of the key risks for the investor.

The investor must consider in advance:

1. cost of reclamation;
2. dismantling of facilities;
3. closure of mines, quarries, wells, and tailings storage facilities;
4. restoration of the land plot;
5. environmental monitoring after closure;
6. financial security for liquidation;
7. liability for technogenic mineral formations;
8. waste obligations.

The Law contains a separate chapter on liquidation of the consequences of subsoil use, decommissioning of a subsoil plot, and restoration of the land plot after termination of the permit for main types of activities. All subsoil users are obliged to ensure the implementation of the necessary measures related to such closure and restoration.

Practical advice: the investor should include closure and reclamation costs in the financial model from the first day, not at the stage of completion of extraction.

Reissuance of a Permit

A permit may be reissued in the following cases:

Ground	Example
Change of the subsoil user’s name	Rebranding, change of company name
Reorganization	Merger, accession, transformation
Change in types of minerals	A new useful component is identified
Extension of term	Issuance of a new permit for the extended term
Change of cadastral blocks	Reduction, clarification, or change of the plot
Assignment of rights to another eligible person	M&A, farm-out, sale of the project
Pledge or other security	Project financing

The permit is reissued by the Subsoil Use Center within no more than 20 business days from the date of receipt of the application with the necessary supporting documents.

Extension of Permits

General practical rules:

1. the application must be submitted within the period established by law;
2. the requested extension period must correspond to the relevant article of the law;
3. there must be no material unremedied violations;
4. reporting, expense, project, and payment requirements must be fulfilled;
5. refusal to extend must be reasoned;
6. refusal on grounds not provided by law is prohibited.

The Subsoil Use Center notifies the subsoil user of extension or refusal to extend within 15 business days from the date of receipt of the application. If the permit term expires while the application is being reviewed, the permit continues to be valid for the review period.

Risk Grounds for Suspension, Refusal to Extend, or Termination

The investor must control the following risk areas:

Risk	Possible consequence
Failure to perform the work program	Refusal to extend, suspension, termination
Non-payment of fees, fines, or taxes	Termination or other sanctions
Violation of industrial safety	Suspension of works, fines
Violation of environmental requirements	Restriction or suspension of works
Submission of false information	Annulment or termination
Illegal extraction	Loss of ownership of extracted raw materials
Absence of a closure plan	Impossibility of commencing/continuing works
Unauthorized change of control	Risk of refusal to recognize the transaction or reissue the permit
Violation of auction terms	Risk of annulment of the permit
Failure to meet minimum expenditure requirements	Risk of sanctions under the permit

 

Features of Investments in Hydrocarbons

Hydrocarbon projects have a more complex regime because the Ministry of Energy participates in the regulation.

Main stages:

Stage	Permit	Term
Preliminary reconnaissance	Permit for reconnaissance of hydrocarbons	Up to 3 years + 1 year
Exploration	Permit for geological study of hydrocarbons	Up to 5 years + 4 years
Extraction	Permit for extraction of hydrocarbons	Up to 25 years + 25 years

For reconnaissance of hydrocarbons, the Law provides for a term of up to three years and one extension for up to one year.

For geological study of hydrocarbons, the investor must submit a work project, confirm financial and technical capabilities, and undergo environmental and industrial approvals. If the permit was issued following an auction and the geological study plan is not submitted within 90 days, such permit is automatically annulled.

Features of Investments in Solid Minerals

1. Geological Study

The investor obtains a permit for geological study for search, evaluation, and exploration. For major solid minerals, the term is up to 5 years; for non-metallic minerals, up to 2 years. Upon extension, the plot is reduced by 50%.

2. Transition to Extraction

After confirmation of the commercial value of the deposit, the investor must:

1. prepare a geological study report;
2. ensure approval of reserves;
3. prepare a development project;
4. undergo environmental expertise;
5. obtain industrial safety approvals;
6. obtain an extraction permit.

3. Extraction

A permit for extraction of solid minerals is issued for up to 25 years and may be extended repeatedly, but each extension period must not exceed the initial term.

Technogenic Mineral Formations

Technogenic mineral formations are waste from mining, mineral processing, and energy production containing useful components suitable for further use.

For an investor, this may be a separate commercial opportunity: processing of tailings, dumps, slags, and beneficiation waste.

Issue	Legal regime
Technogenic formations within the plot	Are appurtenances of the plot
Formed as a result of the subsoil user’s activities	Property of the subsoil user for the duration of the right of use
Left after expiration of the permit	Considered state property
Transfer to third parties	Possible, but does not release from liquidation obligations

The Law expressly provides that the transfer of technogenic mineral formations does not affect the existing obligations of the subsoil user to liquidate the consequences of subsoil use.

Documents That the Investor Should Preferably Prepare to Obtain a Permit

Document	Purpose
Corporate documents of the applicant	Confirmation of legal capacity
Information on beneficiaries	Control of ownership structure
Financial documents	Confirmation of ability to finance the project
Technical proposal	Justification of works
Work program	Exploration/extraction plan
Map of cadastral blocks	Determination of the plot
Data on experience and personnel	Confirmation of technical competence
Environmental materials	For expertise and impact assessment
Industrial safety plan	For approval by the Inspectorate
Preliminary closure plan	For assessment of closure obligations
Information on minimum expenses	For obligations under the work program

The new Law “On Subsoil” creates a more structured, investment-oriented model of subsoil use: through cadastral blocks, electronic permits, open data, the possibility of assignment and pledge of rights, protection of confidential geological information, and clear permit terms. However, the investor must take into account that the right to use subsoil is a strictly regulated right connected with constant reporting, environmental obligations, industrial safety, requirements for liquidation of consequences, and control over changes of owners/beneficiaries.