REVIEW OF THE QUEENSLAND MINERAL RESOURCES ACT 1989

Transcription

1 106 Legislative Notes (2005) 24 AMPLJ REVIEW OF THE QUEENSLAND MINERAL RESOURCES ACT 1989 Bruce Adkins and Peter Schmidt ** 1. INTRODUCTION On 29 October 2004 the Minister for Natural Resources, Mines and Energy, the Honourable Stephen Robertson MP, announced that a review of the Mineral Resources Act 1989 (Qld) ( MRA ) had officially commenced. The Queensland Department of Natural Resources and Mines ( DNRM ) is to work with stakeholders to ensure that the result is a practical, modern, simplified Act that meets the needs of not just our current stakeholders, but all those for the next ten to twenty years. The Minister has stated that the review will examine issues including certainty of owership of minerals, responsible stewardship, certainty of tenure, the possibility of tenures better matching the needs of permit holders, stakeholder rights, compensation, safety and health and efficient regulation and administration. The Queensland Resources Council (QRC), the peak representative body of the Queensland minerals and energy sector, after consultation with QRC members and stakeholders, has concluded that: the MRA is close to best practice with few examples of better policy initiatives found elsewhere. [The MRA] is also on par or better than other Australian and global legislation on all matters of policy delivery. As a result, the unanimous view of stakeholders is that the current legislative framework is not in need of a radical overhaul. There is clearly no underlying appetite for change 1 2. PROBLEMS WITH THE CURRENT MRA Whilst there may be no need for a radical overhaul of the MRA, and clearly there is no appetite for significant change of the kind recently seen in the context of Queensland s petroleum legislation, a range of matters exist which, if addressed as part of the review of the MRA, will enhance the future effectiveness of the MRA. Such matters include: issues associated with indicative approvals for the transfer of interests in exploration permits, mineral development licences and mining leases (for example, allowing indicative approvals to last for longer than 3 months, bringing the transfer of environmental authorities within the ** 1 Associate, Corrs Chambers Westgarth, Brisbane. Solicitor, Corrs Chambers Westgarth, Brisbane. QRC Submission Major Review of the Mineral Resources Act (December 2004) 2.

2 (2005) 24 ARELJ Review of the Queensland Mineral Resources Act indicative approval regime, and not requiring the consent of mortgagees to obtain indicative approvals); allowing the assignment of exploration permit and mineral development licence applications (which is currently not possible); clarifying that a mortgagee can transfer its interest in a mortgage for all tenement types (the DNRM currently does not allow assignment of mortgages over some tenements); reviewing the definition of restricted land and reducing the scope for landowners to hold miners to ransom; the validation of existing invalid mining leases; finalising a progressive rehabilitation policy, including issues such as certainty of criteria, benchmarks, timeframes and processes; abolition or modernisation of the marking out requirements required as part of the mining lease application process; reviewing the definition of mine ; enhancing the reliability and availability of information from the DNRM s MERLIN database; reconciling the inconsistency between tenements in respect of mortgages and caveats; and addressing inconsistencies between transfer forms for different tenements. Some of these issues are discussed in further detail below. Three month time limit on the validity of an indicative approval The MRA contains a regime whereby parties to a proposed transfer of an interest in a tenement can obtain a binding indication from the Minister as to whether or not a proposed transaction will be approved and, if so, the conditions attaching to the approval. These binding indications are generally referred to as an indicative approval. The MRA provides that an indicative approval for a dealing with: a mining lease (ML) under section 300(6) of the MRA; a mineral development licence (MDL) under section 198(5) of the MRA; or an exploration permit (EP) under section 151(4) of the MRA, only lasts for 3 months. In large transactions, where there are pre-emptive rights or other conditions precedent, or where there are particularly complex stamp duty issues, 3 months is often insufficient time to complete a transfer and it becomes necessary for the parties to make application for a fresh indicative approval.

3 108 Legislative Notes (2005) 24 AMPLJ This re-application process unnecessarily consumes the time and effort of both the parties to the transaction and the DNRM. Ideally, the time period of an indicative approval should be extended to 6 months (or longer) from the current 3 month limit. A pre-approval process for the transfer of an environmental authority (EA) The existing legislative and policy framework for the assignment of the EA associated with a ML, MDL or EP does not adequately address the legitimate interests of a purchaser. Currently it is necessary to lodge the application to transfer the EA with DNRM after the completion of the acquisition of the interest, together with the transfer for the relevant mining tenement. DNRM then passes the application to transfer the EA to the Environmental Protection Agency (EPA) for processing. In deciding whether to approve or refuse the transfer of the EA, the EPA must consider the suitability of the purchaser to hold the EA, including an assessment of the purchaser s ability to comply with the EA and the purchaser s past environmental record. This assessment occurs after the EPA has received the application from DNRM, and therefore after completion has occurred and after the purchaser has paid the purchase price. No formal process currently exists for the purchaser to obtain pre-approval of the transfer of the EA in advance of completion in the same way that pre-approval of the transfer of the mining tenement itself can be obtained. A purchaser could pay the purchase price, but then find the transfer of the EA to the purchaser is refused by the EPA. From a purchaser s perspective this is unacceptable, and represents a significant commercial risk. In light of this problem, the EPA is often prepared, upon request, to go outside the existing legislative and policy framework for the transfer of EAs, and to give, in effect, a quasi indicative approval for the transfer of the EA. Unfortunately, however, there is no one consistent approach adopted by the EPA, and instead the approach varies depending upon the District and the EPA officers you are dealing with. Some EPA officers will accept an application for transfer of an EA directly from the parties, rather than via DNRM, and will deal with the application in advance of completion. Despite the lack of legislative recognition of this process, the EPA prepares a new EA in the name of the party who will hold the EA after the transfer, and forwards this new EA to DNRM. A copy of the new EA is also sent by the EPA to the parties as evidence that the transfer of the EA has been pre-approved. The DNRM holds the new EA until the transfer of the relevant tenement is approved and registered following which the new EA is delivered to the parties. In other cases we have seen the EPA refuse to adopt the above approach, but they have instead issued a letter, in advance of completion, to the effect that the EPA considered the purchaser to be

4 (2005) 24 ARELJ Review of the Queensland Mineral Resources Act suitable to hold the relevant EA and that the EPA would process and approve the transfer of the EA to the purchaser at the appropriate time. As part of the review of the MRA, the interface with the Environmental Protection Act 1994 will need to be considered, and a workable pre-approval process for the transfer of EAs should be introduced. Mortgagee s consent to transfer of an interest in a mortgaged ML Under section 300(4) of the MRA, a holder of a ML who wishes to assign all or part of their interest in the ML must first apply in writing to the mining registrar for the Minister s approval of the assignment (ie. an indicative approval). However, section 300(5) of the MRA, a little known or else generally disregarded provision, provides that if the ML is mortgaged, then the application for an indicative approval must be accompanied by the mortgagee s consent. Despite section 300(5), the DNRM has, for at least the past 10 years, processed applications for indicative approvals without the consent of any mortgagees. Instead, the DNRM has included a condition in indicative approvals requiring the consent of the mortgagee(s) to be provided, or the mortgage to be released, at the time the transfer documents are delivered to DNRM for formal approval following completion. This was a sensible and pragmatic approach which worked well. However, a recent experience with a mining registrar refusing to process an application for indicative approval without the consent of the mortgagees highlights the need for the MRA to be amended to reflect the DNRM s approach to indicative approvals over the past 10 years. Obtaining the consent of mortgagees at the indicative approval stage, rather than at completion of the transaction, can be quite problematic. This is particularly the case where the mortgagees themselves have pre-emptive rights which have not expired or been waived. An expectation that the mortgagees would give their consent prior to their pre-emption rights expiring is unrealistic. Even where a mortgagee has no pre-emption rights, they will generally require commitments from the purchaser (which would typically only be provided at completion) in return for the giving of the consent. The mining registrar in the above experience eventually relented and provided a Clayton s indicative approval. That is, a letter from the mining registrar (as delegate for the Minister) stating that it was not an approval given under section 300(6) of the MRA, but that so long as the conditions set out in the letter were met (the conditions being typical of those found in an indicative approval), then the transfer of the interest in the ML would be approved under section 300(9) of the MRA. Section 300(5) of the MRA should either be deleted, or else amended so that the consent of any mortgagees (or the release of any mortgages) is not required to accompany an application for indicative approval, but is instead a condition of the indicative approval.

5 110 Legislative Notes (2005) 24 AMPLJ Transfer of Applications for Exploration Permits and Mineral Development Licences The MRA allows parties to formally transfer interests in ML applications, but not interests in applications for MDLs or EPs. This difference in approach exists with no apparent reason, and creates unnecessary complications in many resources related transactions. As a result, various practices have been adopted to work around the fact that interests in MDL and EP applications cannot be formally assigned under the MRA. These work around practices create an unnecessary level of complication. The MRA should be amended to allow interests in MDL and EP applications to be formally transferred in the same way that interests in ML applications can be transferred. Transfer by a mortgagee of its interest in a mortgage of a MDL or ML Section 198(1) of the MRA provides that, if certain conditions 2 are met: A mineral development licence, or an interest in a mineral development licence, may be assigned or mortgaged... Giving section 198(1) its plain meaning, there appears to be no reason why a mortgage of a MDL is not an interest in a MDL that may be assigned. However, we have had experience where attempts by mortgagees to transfer their interest in a MDL have been rejected by DNRM on the basis that the MRA does not authorise the giving of approval for the transfer of a mortgage over a MDL. Section 300(1) and (2) of the MRA, which deals with the assignment, mortgage or sublease of a ML, are in substantially the same terms as section 198(1) of the MRA. Regional offices of the DNRM (which handle MLs) accept that a mortgage over a ML is capable of being transferred. There is nothing in the wording of section 300(1) or (2) that would distinguish it from section 198(1) of the MRA. The MRA should be amended to clarify that the interest of a mortgagee in a mortgage can be assigned in respect of both MLs and MDLs. Restricted land Under section 238(2) of the MRA a mining lease may only be granted over the surface of land that is restricted land if the owner of the restricted land consents in writing to the grant of the mining lease. 2 That is, the Minister has approved the assignment or mortgage, the assignment or mortgage is made in the approved form and lodged with the DNRM, and the lodgement is accompanied by the prescribed fee.

6 (2005) 24 ARELJ Review of the Queensland Mineral Resources Act Restricted land is land that is: (a) (b) within 100 metres laterally of a permanent building used mainly as accommodation or for business purposes or for community, sporting or recreational purposes or as a place of worship; or within 50 metres laterally of: (i) a principal stockyard; (ii) a bore or artesian well; (iii) a dam or artificial water storage connected to a water supply; or (iv) a cemetery or burial place. The appropriateness of retaining the blanket protection of restricted land under the MRA needs further consideration and review given modern mining practices and the potential impact this can have on the economic and efficient mining of resources. The significance of this issue is particularly relevant where areas of restricted land end up as inaccessible islands in the middle of MLs, where the owner of the restricted land loses the right, for the duration of the ML, to access or use any land comprising the restricted land. For example, a privately owned dam, which is restricted land under the MRA, is situated within the area of a ML. A miner may be granted a ML over the entire property with the exception of the land underlying and within 50 metres of the dam. This hole in the ML, depending on the circumstances, could be a serious impediment to economic exploitation of the resource. It is questionable whether protecting the private dam in this scenario is the most appropriate outcome, as the property owner is excluded from the remainder of the property and therefore has no legitimate use for the dam. The existence of a homestead, dam or other privately owned infrastructure should not result in the owner having an effective power of veto over the grant of a mining lease over that land. The existence of such private infrastructure should simply be a matter that goes to compensation. The restricted land regime under the MRA needs to be reviewed in relation to matters such as: the delineation of what land makes up restricted land ; the rights of the owners of restricted land; and the mechanisms or processes available to miners to overcome limitations on the mining of minerals due to land being restricted land. Validation of existing invalid MLs The decisions of the Queensland Court of Appeal in United Plantations (Australia) Pty Ltd v. Arco Coal Australia Inc (No 2) 3 and Queensland Coal Pty Ltd v. Shaw 4 have raised doubts as to the validity (in whole or part) of existing MLs in Queensland which suffer from the same deficiencies as the MLs in those cases. 3 4 [1999] 1 Qd R 445. [2002] 2 Qd R 288.

7 112 Legislative Notes (2005) 24 AMPLJ Effect of the decision in United Plantations United Plantations is authority for the proposition that where a ML is granted under the provisions of the MRA for the purposes of an underground mine, the ML must include, at the time of the initial grant, surface rights over the entire area of land which will inevitably be subsided as a result of the mining operations intended to be carried out. Therefore, the ML would be invalid to the extent that surface rights were not obtained over areas that would inevitably be subsided. Prior to United Plantations it was considered within the mining industry, and indeed accepted by the DNRM, that there was no legal requirement to apply for or obtain surface rights over land intended to be mined by underground methods, irrespective of the likely impact of the underground mining on the surface of the land. Surface rights were generally not applied for except to the extent necessary for the surface facilities associated with the mine and for access to the underground workings. Consequently, many of the underground MLs issued after the commencement of the MRA, but prior to United Plantations, were issued without surface area rights over areas intended to be undermined even though such areas would inevitably subside. These MLs are, following United Plantations, in jeopardy of being wholly or partly invalid. Effect of the decision in Queensland Coal v Shaw The Queensland Court of Appeal s reasoning in United Plantations does not appear to apply to older MLs granted under the Mining Act 1968 (Qld) 5 due to the different provisions of the Mining Act 1968 (Qld). However, underground MLs granted under the Mining Act 1968 (Qld) potentially have their own invalidity issues. Under the Mining Act 1968 (Qld), a ML could not be granted in relation to private improved land unless either the consent in writing of every owner of the land was first obtained, or the ML was subject to a depth restriction below the surface of the land as determined by the Warden s Court. Where MLs were obtained for the purpose of underground mining, surface rights were generally not sought over areas to be undermined, and therefore the consent of owners was generally not obtained - on the basis that the lease would include a depth restriction determined by the Warden s Court. The Gordonstone (now Kestrel) ML, granted under the Mining Act 1968 (Qld) for the purpose of the Kestrel underground mine, was such a lease. The Queensland Court of Appeal in Queensland Coal v. Shaw found the Kestrel ML was invalid to the extent that it extended to the land owned by Mr and Mrs Shaw. The invalidity arose as the Shaws had not consented to the original grant of the ML and, while the Warden s Court had recommended a depth restriction be included in the ML, no depth restriction was actually included in the lease that was issued. The Queensland Government subsequently passed specific legislation validating the Kestrel ML. 5 Repealed on 1 September 1990 pursuant to s 1.5 and schedule 1 of the MRA.

8 (2005) 24 ARELJ Review of the Queensland Mineral Resources Act The problem with the Kestrel ML is not unique. Other underground MLs granted under the Mining Act 1968 (Qld) suffer the very same deficiency as did the Kestrel ML. A number of MLs could be affected as it appears that depth restrictions recommended by the Warden s Court were often not included in the MLs which subsequently issued. Notably, the Court of Appeal in Queensland Coal v. Shaw also appeared to question whether the ML had ever been validly granted in any event because a formal ML instrument had never issued. The lack of a formal ML instrument is not uncommon. The review of the MRA should consider provisions for the validation of: MLs granted under the MRA for underground mines where surface rights were not obtained, at the time of the initial grant, over areas that were intended to be undermined and which would inevitably be subsided by that undermining; and MLs granted under the Mining Act 1968 (Qld) for underground mines where, in respect of areas of private improved land, the consent of the owners was not obtained and the lease does not contain a depth restriction. Mining lease application process and marking out requirements The MRA prescribes specific marking out requirements for ML applications. The ongoing relevance of these requirements needs to be evaluated. Indeed, the QRC has suggested a move to a paperless tenure system and the concept of internet-based marking out. The requirements for marking out a ML application need to be re-evaluated with a view to the modernisation and streamlining of these requirements. Definition of mine Section 6A(1) of the MRA defines the term mine to mean to carry on an operation with a view to, or for the purpose of (a) (b) (c) winning mineral from a place where it occurs; or extracting mineral from its natural state; or disposing of mineral in connection with, or waste substances resulting from, the winning or extraction. With the resurgence of commodity prices the re-working of old tailings becomes an increasingly attractive proposition. It is not clear whether the current definition of mine includes the re-working old tailings. There is also uncertainty in relation to the application of the MRA to off-site mineral processing. The issue of whether rehabilitation associated with mining is itself mining has also arisen in recent cases. The status of rehabilitation as mining should also be clarified to promote certainty. Amendments to the definition of mine are needed to:

9 114 Legislative Notes (2005) 24 AMPLJ make it clear whether the re-working of old tailings is or is not mining; expressly include rehabilitation as part of mining; and clarify the extent to which off-site processing of minerals or ore will itself be mining. 3. CRYSTAL BALLING POLICY CHANGE Whilst it is clear that the mining industry does not believe there is any need for a radical overhaul of the MRA, and there is no appetite for significant change, it is not clear what the outcome of the MRA review will ultimately be. If the recent overhaul of Queensland s petroleum legislation is anything to go by, then unfortunately the mining industry has much to fear. The new Petroleum and Gas (Production and Safety) Act 2004 and the recent Geothermal Exploration Act 2004 may give some indication of potential shifts in Government policy in respect of the administration and management of mining in Queensland. For example in the new petroleum legislation we have seen: the introduction of a mandatory tendering process for all exploration tenements, and the resulting abolition of the ability to make over the counter applications for exploration tenements; the imposition of strict work obligations, and reduction / removal of the DNRM s flexibility to allow amendments to or deferral of work obligations; the formalisation of permitted dealings in tenements by defining specific dealings in tenements that are permitted, and providing that any other dealings are of no effect (thus limiting parties ability to contract in respect of tenements); increased administrative requirements (resulting in increased cost) including: - a lengthier and more complex legislative regime; - a greater level of prescription and less flexibility; - increased reporting requirements; - an increased number of approved forms, increased length of forms, and more extensive information requirements; and - an increased requirement to communicate with landholders; and the introduction of additional resource management requirements and processes for example under the Petroleum and Gas (Production and Safety) Act 2004 a formal regime was introduced regarding dealings with water. The Government s recent policy initiatives, as reflected in the Petroleum and Gas (Production and Safety) Act 2004, may indicate potential areas of change to the legislative regime for the management of mining and mineral tenements in Queensland.

10 (2005) 24 ARELJ Review of the Queensland Mineral Resources Act CONCLUSION The MRA is the cornerstone legislation for the Queensland mining sector, and its review presents both an opportunity and a reason for caution. The review of the MRA will require careful analysis of the strengths and weakness of the current legislative regime with a view to making improvements and enhancements. Whilst the mining sector is, in general, currently experiencing a more favourable period in the mining cycle, changes simply for the sake of change, and the imposition of increased administrative and regulatory requirements and complexity, must be avoided. The review of the MRA will set the legislative and policy framework for mining in Queensland for the next 10 to 20 years. Care will be needed to ensure a rational and considered approach is adopted for the review, rather than an overly exuberant process which ends up harming, rather than helping, the mining industry in Queensland. SAFETY OBLIGATIONS UNDER THE PETROLEUM AND GAS (PRODUCTION AND SAFETY) ACT 2004 Asher Lindsay The Petroleum and Gas (Production and Safety) Act 2004 (Qld) ( the Act ) and Petroleum and Gas (Production and Safety) Regulation 2004 (Qld) (Regulation) came into operation on 31 December The Act and Regulation together comprise over 800 pages. It is a detailed and complex legislative regime. The purpose of this article is to briefly summarise some of the safety obligations in the Act and Regulation. The summary is not intended to be exhaustive. 1. DEFINITIONS There are many defined terms in the Act and an understanding of these is necessary to appreciate the safety obligations imposed by the Act. However, this article does not attempt to provide all of the definitions. Although, an explanation of operating plant and coal mining-csg operating plant is necessary: (a) Operating plant is variously defined under the Act and Regulation. It includes: (i) a facility used to explore for, produce or process petroleum; (ii) a pipeline used to transport petroleum or fuel gas; (iii) an LPG storage facility; and/or Lawyer, Blake Dawson Waldron.