Mineral Rights: What They Are and Why People Invest in Them

A variety of minerals can be found under the earth’s surface. They include fossil fuels like oil, natural gas, and coal, metals and metal bearing ores like gold, copper and iron, non-metallic minerals and mineable rock products such as limestone, gypsum, building stones and salt. They may also include sand, gravel, peat, marl, etc.
A mineral right is a right to extract a mineral from the earth or to receive royalty for letting the mining company extract minerals.
Depending on the jurisdiction in the United States that supports Mineral rights, land rights may be separated from mineral, mining, oil or drilling rights which are rights to remove minerals, oil, or even water that may be contained in and under land. The owner may choose to sell the underground minerals but may desire to retain the possession and control of the surface. This works out for the mining company since they don’t want to pay to acquire the property but are only interested in the minerals underneath that property. A typical agreement between the owner and the mining company involves the owner keeping the possession of the land whereas the mining company acquiring the rights to the subsurface. This transaction generally involves all mineral commodities either known or unknown that exist beneath the land or in other cases one party may limit the transaction to a specific mineral commodity.
A mineral right falls under property rights and may be sold, transferred, or leased in a similar manner as other property rights. They are distinct from surface rights or the right to the use of the surface of the land for residential, agricultural, recreational, commercial, or other purposes and may be sold or retained separately from the surface rights, in which case the mineral rights are said to be “severed.”
Unless severed interest is sold, leased, mortgaged, or transferred by recorded instrument within the 20-year period, severed oil or gas rights revert to the surface owner after twenty years.