WHAT ARE MINERAL RIGHTS?

Having worked for a coal mining company for 18 years, I thought this would be an interesting post. Mineral rights refer to the ownership of the mineral estate which lies beneath the surface. Separate from the surface estate, the mineral estate comes with it’s own rights and rules for access AND they can vary from state to state! In areas where the mineral rights are valuable, they usually have been severed from the surface rights many years ago and typically are owned by wealthy people, companies, etc. However the sand and gravel generally belongs to the surface owner. The United States is one of the few countries whereby it’s citizens can own mineral rights. In most countries around the world, the government owns all the minerals. Just like the surface rights, mineral rights are described by a legal description. In most land purchases, the mineral rights are conveyed as well. 

(Survey conducted by the Realtors Land Institute).

If you own the property in ‘fee simple’ you would own the surface and mineral rights.

As a mineral owner you would be entitled to royalties as the minerals or gas are extracted. Royalty is defined as - A payment to the owner of the mineral rights for the privilege of extracting the minerals from the ground based on a lease agreement. The royalty payment is based on a portion of earnings from production and varies depending on the type of mineral and the market conditions. For example, coal royalties are based on a price per ton and Natural Gas is based on a price per cubic feet.

Mineral ownership is quite different from state to state and some states make it much easier for the mineral owner to access and extract the minerals than others.

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