Update on Mining Acts Review

June 22, 2017 / Winter Report 2017

In September 2016 the Honourable Tom Koutsantonis, Minister for Mineral Resources and Energy, announced a comprehensive review of South Australia’s Mining Act 1971 (‘the Mining Act’), Mines and Works Inspection Act 1920 and Opal Mining Act 1995 with a view to introducing a bill into State Parliament in mid-2017.

The review intends to ensure that South Australia (SA) has leading practice legislation to both enhance competitive investment and maintain our reputation as a safe and business friendly place to invest.  Although each of the three statutes under review has been amended at various times, previous changes have arisen out of a piecemeal approach rather than any coordinated, wholesale overview.

Key industry bodies and groups have welcomed the current review as a positive and timely process for the State to undertake. The Department of State Development (‘DSD’) news release states that the review of these mining laws will seek to accelerate delivery of economic and social benefits for all people of SA through increased investment and employment achievable through reduction in red tape. More specifically, DSD aims for the review to:

• improve SA’s ‘One Stop Shop’ model for resource developments;
• establish SA as a leading e-business practitioner in the world’s rapidly evolving digital economy;
• improve transparency and land access engagement, negotiation and court resolution processes;
• implement flexible financial assurance models that increase community confidence in mine closure and environmental rehabilitation performance and outcomes; and
• reinforce the existing strong environmental protections offered under the Mining Act.

In addition, DSD seeks measured amendments to the Mining Act to facilitate transparency through better access to relevant documents (such as licence and lease applications, the terms and conditions of grant of a licence or lease and approved Programs for Environmental Protection and Rehabilitation (‘PEPR’)) provided that those rights do not impose upon obligations of commercial confidentiality.

Some of the key questions being asked in relation to the Mining Act deal with how best to reduce red tape and at the same time achieve an appropriate balance of interests between landowners and proponents. In particular:

• Should landowners have a right to initiate negotiations in relation to exempt land (as explorers and operators currently do under section 9 AA(1))?
• Should the jurisdiction of the Warden’s Court be reinstated to deal with exempt land proceedings?
• Should the Form 21 Notice of Entry include a section relating to issues with declared equipment?
• Should the Minister be able to place conditions on a PEPR so that mining operations cannot commence until a particular point in time (for example, after payment of a bond or satisfaction of a compliance direction)?
• Should we move all tenements to the graticular block system and if so, by what method? SA currently uses a combination of Australian Geodetic Datum 1966 (for exploration licences) and Geocentric Datum of Australia 1994 (for production tenements).  DSD is likely to convert all production tenements to Geocentric Datum of Australia 2020 at some time after its release in 2018.
• Should we move to a caveat system such as that used in WA, where a ‘subject to claim’ caveat can prevent dealings with a tenement that is the subject of a potential farm-in?
• How are we able to decrease tenement assessment times and improve security of tenure, and create more consistent processes for surrender and cancellation of tenements?
• Would there be benefits to overlapping of mineral specific exploration licences? Other jurisdictions have particular tenements for particular minerals or classes of minerals so that one company can search for and extract what they want while freeing up rights for other operators to search for and recover different minerals in the same area.
• Would greater flexibility in relation to the size and shape of exploration licences benefit explorers? Allowing for the potential amalgamation or subdivision of exploration licences may also increase opportunities for exploration.
• Should we abolish the Mineral Claim to potentially improve the transition from exploration to mining?
• Should the forfeiture provisions which already apply to mineral claims, retention leases and mining leases also apply to exploration licences?
• Should the term of an exploration licence or mining lease be extended?

More generally, DSD is suggesting potential changes to mining tenement structure that aim to promote greater flexibility and efficiency. South Australian Chamber of Mines and Energy (‘SACOME’) CEO, Ms Rebecca Knol, has stated that SACOME are committed to initiatives that encourage multiple and sequential land use and to working with other sectors to achieve sustainable co-existence between mining and other land users. SACOME’s submission to DSD includes the following key recommendations:

• modernisation of process to improve operational efficiencies and make processes clear for all stakeholders;
• streamlining of the mining lease approvals process to make them more workable for industry and transparent for stakeholders; and
• improving access to land to ensure the process is efficient, effective and affordable for all parties.

SACOME is also in favour of reverting disputes under the Mining Act to the Warden’s Court, which is seen to be more accessible and cost effective in dealing with mining related disputes.

Grain Producers SA believes DSD has a distinct conflict of interest in both promoting and regulating mining and exploration and has called for an independent review panel to take charge of the Mining Act review. The group has lodged an extensive submission which calls for more rights for landowners to be able to prevent mining occurring on their properties and raising its concerns about the independence of the review. Their submission focuses on the exploration process being a huge disturbance to farmer’s businesses, not only in terms of physical and financial distress, but also emotional distress.

The consultation process came to an end in March 2017, with 131 groups making submissions to DSD. DSD is currently consolidating the submissions which will eventually be made public and it will then announce the next stage of community engagement and legislative schedule.

The Australian Bureau of Statistics records the value of SA’s mineral exploration expenditure for the twelve months post December 2016, at AU$49.4 million[1], while its mineral resource production was roughly AU$3 billion[2]. While there has been a continual decline in the State’s mining industry over the last decade, the agricultural sector has grown, with SA grain farmers harvesting a record 11.1 million tonnes of grain in 2016-2017 (an estimated value of about AU$2.2 billion at the farm gate)[3].  Despite the recent downward trend in mining related investment, the economic importance of SA’s mining industry cannot be understated. The SA State Government recognises the need for vigilance to update and enhance government mechanisms across the mining and agricultural industries to achieve better balance between sectors. The current Mining Acts review is a timely and important opportunity to improve mining legislation to encourage further investment and development in a measured and responsible manner for the benefit of all South Australians.

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[1] Australian Bureau of Statistics, 8412.0, Mineral and Petroleum Exploration, December 2016.

[2] Department of State Development, South Australian mineral resource production statistics for the six months ended 31 December 2016, Report Book 2017/00014.

[3] Primary Industries and Regions SA, Crop and Pasture Report SA, 2016-17 Crop Performance Summary and Final Crop Estimates, March 2017.

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This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.