Publications / Resources

19 Feb 13
Digging deeper into resources legislation - issues to watch in 2013

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As we settle quickly into 2013 and look forward to more favourable operating conditions for Queensland’s resources sector, we can’t ignore the challenging policy conditions that lie ahead. Resource companies need to start looking now at the impacts that recent or upcoming changes in legislation could have on current or proposed projects. From increased coal royalties to amended triggers for an EIS requirement, and from exciting new opportunities in uranium mining to extra costs and hurdles for junior explorers, navigating the regulatory requirements will require a clear understanding of changes in resources law.

In this article we highlight the major legislative and policy developments of 2012 which will significantly affect the Queensland resources industry in 2013.

Strategic cropping land (SCL)

The strategic cropping land trigger maps were updated in December 2012.  The amended maps will exclude some urban and coastal areas previously granted SCL status due to ‘technical errors’, including Mackay, Isaac, Whitsunday and Wide Bay Burnett regional plans.  Some existing major infrastructure projects will also be excluded.

The strategic cropping land scheme aims to protect land that is highly suitable for cropping from mining and other developments. SCL trigger maps define ‘protection areas’ and ‘management areas’ which identify potential SCL.  There are two protection areas – one in Central Queensland and one in Southern Queensland, and these are afforded the highest level of protection.

Projects in these areas should expect additional compliance costs, and potentially onerous mitigation costs or obligations.  In protection areas, the regime is a potential ‘project killer’.

Urban restricted areas

Restricted area (RA) 384 prevents the application for or grant of exploration tenements over sub-blocks, portions of which are located within two kilometres of Queensland towns with a population over 1,000.  This was introduced as an interim measure, and the former government intended to introduce legislation for a permanent restriction.

The current Queensland Government has not disclosed any moves towards legislative amendments. In the meantime, RA 384 continues, with no indication of when it might be replaced.

Cash bidding for exploration tenements

In October 2012 the Queensland Government announced a new competitive cash bidding process for companies seeking exploration permits for ‘highly prospective’ coal and petroleum and gas resources.

The move followed the former Queensland Government’s announcement declaring the whole of the State subject to transitional Restricted Area 394 (RA 394).  RA 394 prohibits new applications for coal tenure (excluding existing applications, applications of the same type as existing tenements and applications for a higher tenure and some additional exclusions).

Authorities to prospect for petroleum and gas tenements are already subject to a tender process, which will now also be introduced coal exploration permits.  Both will now involve a cash component at the application stage.  Legislative amendments to implement the changes were introduced as part of the Mining and Other Legislation Amendment Bill 2012 on 28 November 2012.  

Companies exploring for minerals other than coal, petroleum and gas will be unaffected by the changes at this stage, although the legislative changes do allow for cash bidding to be introduced for other minerals in due course.  The Government also stated that non-cash land releases in ‘green field’ and under-explored areas would continue, in an attempt to maintain exploration opportunities for junior explorers.  The government has yet to expand on their interpretation of the expressions ‘highly prospective’ and ‘green field’.

The move means further up-front costs to explorers, which will need to be paid even before a tenement is granted.  The industry remains concerned that the changes will adversely affect junior explorers, who will now be excluded from land considered ‘highly prospective’ by capital restraints.

Coal royalties increase

From 1 October 2012, amendments to the Mineral Resources Regulation 2003 (Qld) saw a rise in the rate of royalties for coal mined in Queensland.

A three tier system now applies to coal royalties.  A 7% rate will continue to apply to the value of coal up to $100 per tonne.  A rate of 12.5% will now apply to coal valued between $100 and $150 per tonne, and 15% for its value over $150 per tonne.  Previously a flat 7% rate applied.

Transfer duty changes

In late 2012, the State government passed the Fiscal Repair Amendment Act 2012.  That act introduced significant changes to the Duties Act 2001 concerning stamp duty for exploration tenements with effect from 13 January 2012.

Those changes mean that the transfer of exploration tenements and authorities to prospect for petroleum and gas will now incur transfer duty.  Further, the value of exploration tenements now forms part of a company’s landholdings when determining whether landholder duty applies to the transfer of interests in a company.  These changes will see the exploration industry bear an additional tax burden while the State replenishes its depleted coffers.

In other changes, it was also announced during late 2012 that an exemption for exploration and development expenditure incurred in relation to farm-in arrangements would be introduced.  At this time the scope and technical design of the proposed exemption has yet to be announced however it is expected this exemption may only provide limited savings to explorers given that farm-in expenditure is not often dutiable in any event.  As further details are released we will confirm the operation of this exemption.

Independent Expert Scientific Committee to examine CSG and coal projects

Commencing on 9 November 2012, the Environmental Protection Biodiversity Conservation Act 1999 (Cth) has been amended to require the Commonwealth or relevant State or Territory Minister to seek advice from the Independent Expert Scientific Committee on coal seam gas and large coal mining developments likely to have a significant impact on water resources and salt production and/or salinity, which may have an adverse effect on a matter of national environmental significance.  

Under the amendments, where the Minister has requested advice from the committee, the clock stops on the approval decision timeframes under the EPBC Act. This extends the time for the Minister to make a decision.   

This is an example of the Commonwealth involving itself in an area that is already heavily regulated by the State.  These amendments are informed by the new Bilateral Agreement for environmental approvals, which followed the fall out between the Federal and State governments over delays to the Alpha Coal mine environmental approval.

The new agreement aims to facilitate greater cooperation between the Queensland and Commonwealth governments, and reduce duplication in the assessment process.

The new agreement effectively introduces Commonwealth review and oversight to the approvals process as early as possible.  This means the Commonwealth will need to approve the terms of reference for any EIS requirements before they are provided to the project proponents.  The Commonwealth will also need to approve a ‘draft assessment report’ provided by the Queensland Government before it is provided to the proponents in final.  Ostensibly the Commonwealth will only be conducting their reviews in accordance with the requirements of the EPBC Act.  Early indications suggest the Commonwealth will set higher benchmarks for assessment and environmental impacts.

While the new agreement aims to reduce the risk of double handling of environmental approvals for projects, this is an example of the Commonwealth effectively extending its jurisdiction on the approvals process, which may cause further delays.

Amendments to EIS triggers

On 21 June 2012, the Department of Environment and Heritage Protection (DEHP) distributed its proposed new guidelines containing the triggers for an EIS requirement in approvals for Queensland projects.

The proposed guideline will remove a number of the current triggers for an EIS requirement. New applications will only trigger an EIS under the guideline if they involve mining of more than 2 million tones per year of unprocessed ore or 0.5 million tones per year of unprocessed materials from a floodplain or coastal hazard area.

Similarly, an amendment application for ‘brown field’ sites will automatically trigger the need for an EIS under the guideline if it involves an increase in production to the levels which would trigger an EIS for a new application, or a significant change to mining operations.

The change has removed a number of the criteria which previously triggered an EIS requirement (e.g. construction of 150 new dwellings, mining in a marine area or impacting on specified ESAs).  However, mines involving a new or unproven extraction process will also require an EIS.

Land access review

In February 2012, the Queensland Government released its 12-month review of the land access framework, compiled by the land access review panel.  The Panel made twelve recommendations to address deficiencies identified in the regime.  The Government released its response to the recommendations in December 2012, for the most part supporting the recommendations, and setting out a ‘six point action plan’ to progress the recommendations, which include:

  1. introducing a binding alternative dispute resolution regime into the Land Court framework;
  2. expanding the Land Court jurisdiction to hear conduct matters in addition to compensation disputes; and
  3. noting CCA agreements (or ‘opt out arrangements’) on the land title register.

The Government has indicated implementation of five of the six action items by ‘mid-2013’, with and all items by ‘end-2013’.  

Uranium mining

On 22 October 2012, Premier Campbell Newman announced that he will convene a committee to oversee the reintroduction of uranium mining into Queensland.  We also now know who will form the committee, and their terms of reference. The uranium industry is one that has been able to develop in a number of Australian States and Territories but has been absent from Queensland since the closure of the Mary Kathleen mine in 1982.

Despite this, there are a large number of uranium explorers in Queensland, and this announcement represents an important development.  This will be an exciting space to watch as the reintroduction of uranium mining gains traction.

Amendments to the Native Title Act

The Federal Government released a Bill to amend the Native Title Act on 28 November 2012, including:

  1. the opportunity for agreement to be reached to disregard historical extinguishment of native title in certain areas;
  2. the introduction of statutory ‘good faith negotiation requirements’ in relation to the right to negotiate, which will apply retrospectively, from 1 January 2013; and
  3. various changes surrounding the Indigenous Land Use Agreement processes.

While the issue of historical extinguishment is unlikely to affect the resources industry, some of the changes to Indigenous Land Use Agreement registration processes are positive.  We are pleased to note draft amendments which would have allowed any person who objected to the registration of an ILUA to obtain a copy of the document and any associated documents have been removed from the bill.

There remains concern in the industry around the Government’s attempt to define ‘good faith’, a requirement in the ‘right to negotiate’ process.

Common resources act

Driven by the its election undertaking to reduce red tape across the State by 20%, the Queensland Government has proposed reducing our current suite of resources legislation into one common resources Act.

In a discussion paper released to industry stakeholders, the DNRM sets out a staged process over the next four years to reduce five Acts and 150 years of divided regulation and treatment of tenures into one Act.

Previous attempts by governments to overhaul large pieces of legislation, such as the 1997 review of the Federal taxation legislation, have fallen well short of their desired outcome.  On this basis we will reserve judgment on the potential effectiveness of the reform until more information is available to us.

Recognition for Aboriginal and Torres Strait Islander people

The Aboriginal and Torres Strait Islander Peoples Recognition Bill 2012 (Cth) (Recognition Bill) was passed by the House of Representatives on 13 February 2013.  The Recognition Bill was introduced as an interim measure to holding a referendum on constitutional recognition for Aboriginal and Torres Strait Islander people, and will cease to have effect 2 years after its commencement.  As such, the referendum will not coincide with the federal election on 14 September 2013.  

The Government announced it will establish a Parliamentary Joint Select Committee to progress the constitutional recognition and further consider the Expert Panel’s recommendation that the referendum be held at a time where it is most likely to be successful.  The Prime Minister has also committed $10 million towards a campaign to promote constitutional change led by Reconciliation Australia.  

Moratorium on oil shale lifted

Finally, the Newman Government announced recently that the moratorium on oil shale mining in Queensland will be lifted.  The exception is the McFarlane oil shale deposit near Proserpine, for which the moratorium will continue until 2028.

The government has announced that existing operator Queensland Energy Resources Ltd, which has been running a pilot plant near Gladstone, will be able to proceed directly to commercial production. All other projects will be considered by the government on a project by project basis and will need to undertake trials prove their technology.

The industry will need to ensure that reviews of the environmental impact of potential projects are beyond reproach, as it will need to overcome significant opposition from environmental groups.

Regulatory and approvals lawyer Liam Davis recently spoke on a number of the above issues at the Mining 2012 Resources Convention in Brisbane. To view a video of Liam’s presentation please click here.

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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