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2 Jul 13
Cash bidding for coal tenements - Repeal of RA 394

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A Queensland wide blanket ban on applications for new coal mining tenements has now been lifted.  In the near future, we should see:

  • the Queensland Government seeking tenders for the release of new coal exploration tenements, and
  • a ‘cash-bidding’ component for new tenders in areas the Government considers ‘highly prospective’.

RA 394 repealed

In January 2012, the Queensland Government gazetted Restricted Area 394 (RA 394), preventing any new applications for coal exploration or production tenements.  RA 394 covered all of Queensland, and was intended to be an interim measure to while the Government introduced a new competitive tendering system for coal exploration tenements.

The provisions for the new tender system were introduced into the Mineral Resources Act 1989 (Qld) (MRA) under the Mining and Other Legislation Amendment Act 2013 on 22 March 2013.   Since then, the provisions effectively lay dormant, while the Government worked through remaining issues including the manner in which applications for prospecting permits (which can also facilitate new mining lease applications) are to be managed. On 28 June 2013, by gazette, the Minister for Natural Resources and Mines lifted the moratorium. 

Competitive tendering

The new competitive tendering system for exploration permits will involve the following elements:

  • calls for tenders will be published in the Queensland Government Gazette
  • responses to tenders will need to contain all the usual information associated with an application, including a description of the works program proposed to be carried out and a statement specifying the estimated human, technical and financial resources proposed to be committed to the tenement, and
  • provisions for a cash bid component (accompanying the tender) where the Government considers the exploration tenements to be in ‘highly prospective areas’. 

The Minister has broad powers under the MRA to decide the process for and outcome of tenders.  This includes choosing a preferred applicant, compiling a shortlist of applicants for a further tendering process, or requesting further information from any of the tenderers.

Under the MRA there remains no restriction on applying for mining leases (MLs) from prospecting permits, and the competitive tendering provisions would not apply to such an application.  However, moving forward the Department of Natural Resources and Mines’ (DNRM) policy now states that the Minister will use discretionary powers under the MRA to reject such applications on public interest grounds if this is circumventing the intent of the competitive tender process.

ML applications from a prospecting permit will be generally accepted where an overlapping EPC or MDL holder consents to the new application, or where the applicant holds or has applied for an adjacent ML and the new ML application is required for access to or infrastructure for an existing project. 

The new system for coal now mirrors the tender process already in place for authorities to prospect for petroleum and gas tenements.

Because the new system involves further up-front costs being paid before a tenement granted, there may be an impact on smaller exploration companies, who may now be excluded by capital restraints from land considered highly prospective.

 

Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

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