§182-7  Lease.  (a)  Prior to the public
auction contemplated in section 182-4 or 182-5, or the granting of mining lease
without public auction contemplated in section 182-5, the board of land and
natural resources shall cause a mining lease for the land in question to be
drawn.  The lease shall describe the land and shall contain, in addition to
such other provisions which the board may deem appropriate, specific provisions
as provided in this section.



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



(c)  The payments to the State as fixed by the
board 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 each
long dry ton of ore as beneficiated shall not be less than twenty-five cents or
the equivalent of the price of one pound of virgin pig aluminum, whichever is
higher, nor shall it exceed the equivalent of the price of three pounds of virgin
pig aluminum;



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



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



The prices of virgin pig aluminum for the
purpose of determining the royalties under this section shall be the basic
price 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 tax
on the extracting, producing, winning, beneficiating, handling, storing,
treating, or transporting of the mineral or any product into which it may be
processed in the State, and shall not be subject to reopening or renegotiating
for and during the first twenty years of the lease term.



In the event the lessee desires to mine other
minerals, the lessee, before mining the minerals, shall so notify the board in
writing, and the board and the lessee shall negotiate and fix the royalties for
the minerals.



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



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



Any interested party may, however, request that
a mining lease contain a research period under which the lessees shall be
required to expend money in research and development to establish a method to
make economical the mining and processing of the mineral deposits contained in
the lease.  If the board determines that the research period would be
beneficial it shall fix the period of research and shall also fix a minimum
expenditure for labor performed or money spent by the lessee in research and
development and the method by which the lessee shall establish that such
expenditure in fact be made.  In such leases, the obligation to commence mining
operations within three years shall not commence until the expiration of the
research period.



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



(f)  The lessee may retain all minerals
separated from the land as a part of the process of mining the minerals
specified in the mining lease; provided that the lease may prescribe the
accounting and testing procedures by which the amount and quality of such
additional materials shall be determined for the purpose of computing the
excise tax thereon. [L 1963, c 11, pt of §1; Supp, §99A-7; HRS §182-7; am L
1978, c 135, §5; am L 1991, c 315, §1]