How to Negotiate Mineral Rights

Minerals are a valuable source of income.

Minerals are a valuable source of income. They are scarce resources with many potential buyers, making demand and prices high. Learning how to negotiate mineral rights is an important skill, and can make the difference between losing and securing a deal.

Instructions

1. Research the minerals. Learn the amount, type and quality of the minerals on offer. Approach dealers with a sample and ask about the market value of the minerals. Understanding the value and scale of the resource on offer allows you to know the appropriate price and to realize if the current owner is setting unfair conditions.

2. Set a maximum price. Have a maximum price in mind when you are negotiating. This helps you to plan your negotiations and to pick an appropriate level at which to start your negotiations.

3. List your assets. Mineral rights are not always exchanged for cash; deals can include property (particularly if minerals are situated in built-up areas) and other assets. Being prepared to offer one of your assets along with hard cash can clinch a deal.

4. Understand your competitors. Know the background of the mineral owner and the other players in the negotiation. Knowing their previous purchase history or the company's annual turnovers gives you an indication of the resources they have and how to price them out of the market.

5. Know your rights. Understand your legal right to access and purchase the minerals. Consult a specialist lawyer if you are unsure of the appropriate course of action.

Tips & Warnings

• Ask an external expert to oversee the negotiations. Having a neutral person present helps to keep the negotiations professional.

• Ask for written evidence of the quality and value of the minerals under negotiation.

• Check the quality of minerals before you buy to avoid being given an unfair price.

References

• Government of Alberta: Leasing Mineral Rights
• Geology: Mineral Rights

Resources

• Louisiana Royalities: Home