Ownership rights stop at the surface when purchasing property in many countries. Landowners in the United States, however, have the right to develop and exploit that estate, including natural resources found below the ground. Ownership of underground assets is commonly called mineral rights or mineral estates.
The term mineral rights generally signifies the authority to explore, develop, extract, and market subsurface minerals. They often include crude oil, natural gas, coal, precious metals, non-precious or semi-precious metals, specialty or rare earth elements, and other solid materials like clay, gravel, sand, and stone.
Every property’s mineral rights are unique. As a result, there is no set way to maximize value. Two common paths are leasing and selling.
When leasing, a company rents the land for a set time to potentially extract minerals. If minerals are unearthed, the landlord receives a monthly royalty payment for an agreed-upon period. Leasing enables the landowner to earn more money if mineral prices increase over time. Outside factors can cause the value of subsurface minerals to swing wildly, though, and the lessor could potentially lose money over time. Examples include supply-and-demand changes, political instability, global pandemics, and varying commodity prices.