§182-7  Lease.  (a)  Prior to the publicauction contemplated in section 182-4 or 182-5, or the granting of mining leasewithout public auction contemplated in section 182-5, the board of land andnatural resources shall cause a mining lease for the land in question to bedrawn.  The lease shall describe the land and shall contain, in addition tosuch other provisions which the board may deem appropriate, specific provisionsas provided in this section.

(b)  The term of the lease shall be sixty-fiveyears or for a lesser period at the discretion of the board.

(c)  The payments to the State as fixed by theboard shall be specified; provided that:

(1)  In the case of bauxite, bauxitic clay, gibbsite,diaspore, boehmite, and all ores of aluminum, the amount of royalties for eachlong dry ton of ore as beneficiated shall not be less than twenty-five cents orthe equivalent of the price of one pound of virgin pig aluminum, whichever ishigher, nor shall it exceed the equivalent of the price of three pounds of virginpig aluminum;

(2)  The rate of royalty for ore processed intoaluminous oxide in the State shall be set at eighty per cent of the rate ofroyalty for ore not processed to aluminous oxide in the State; and

(3)  The royalty shall be fixed at a rate which willtend to encourage the establishment and continuation of the mining industry inthe State.

The prices of virgin pig aluminum for thepurpose of determining the royalties under this section shall be the basicprice on the mainland United States market for virgin pig, not refined, f.o.b.factory.  The royalties shall be in lieu of any severance or other similar taxon the extracting, producing, winning, beneficiating, handling, storing,treating, or transporting of the mineral or any product into which it may beprocessed in the State, and shall not be subject to reopening or renegotiatingfor and during the first twenty years of the lease term.

In the event the lessee desires to mine otherminerals, the lessee, before mining the minerals, shall so notify the board inwriting, and the board and the lessee shall negotiate and fix the royalties forthe minerals.

Any other law to the contrary notwithstanding,thirty per cent of all royalties received by the State from geothermalresources shall be paid to the county in which mining operations covered undera state geothermal resource mining lease are situated.

(d)  The lessee shall covenant and agree thatthe lessee shall commence mining operations upon the leased lands within threeyears from the date of execution of the lease; provided that so long as thelessee is actively and on a substantial scale engaged in mining operations onat least one such lease on the same minerals, the covenant shall be suspendedas to all other leases held by the lessee.

Any interested party may, however, request thata mining lease contain a research period under which the lessees shall berequired to expend money in research and development to establish a method tomake economical the mining and processing of the mineral deposits contained inthe lease.  If the board determines that the research period would bebeneficial it shall fix the period of research and shall also fix a minimumexpenditure for labor performed or money spent by the lessee in research anddevelopment and the method by which the lessee shall establish that suchexpenditure in fact be made.  In such leases, the obligation to commence miningoperations within three years shall not commence until the expiration of theresearch period.

(e)  For the period of the lease the lesseeshall have the exclusive right of possession of the minerals leased and theexclusive rights to mine and remove the minerals by means which shall bereasonable and satisfactory to the board and to occupy and use so much of thesurface of the land as may reasonably be required, subject to the provisions ofsection 182-3.  The right to use the surface shall include the right to erecttransportation facilities thereon, construct plants for beneficiating, drying,and processing the minerals for electric power generation and transmission andsuch other uses as may be necessary or convenient to the winning and processingof the minerals; provided that the lessee shall comply with all water and airpollution control laws, and rules of the State or its political subdivisions.

(f)  The lessee may retain all mineralsseparated from the land as a part of the process of mining the mineralsspecified in the mining lease; provided that the lease may prescribe theaccounting and testing procedures by which the amount and quality of suchadditional materials shall be determined for the purpose of computing theexcise tax thereon. [L 1963, c 11, pt of §1; Supp, §99A-7; HRS §182-7; am L1978, c 135, §5; am L 1991, c 315, §1]