Contributed By Gilbert + Tobin
The mining industry in Australia is governed under state legislation, meaning that there is broad similarity among some state and territory laws covering the same subject matter, but there can be important differences that affect mining projects across the different states and territories.
However, the following applies in all cases:
Mining of private minerals does occur, but, generally, private ownership of minerals occurs in relation only to grants made prior to 1900.
Contracts with a state for the exploitation of minerals can be entered into, but they are generally only enforceable if they are ratified by the legislature of the relevant jurisdiction.
External investment in mineral projects is broadly welcomed in Australia, but there is an approval process for the approval of "foreign" investment in certain circumstances.
Taxes and other imposts are payable in relation to mining operations.
Moving forward, the key legal developments are expected to be:
Australia (also known as the Commonwealth of Australia) is a federation formed in 1901 with six states (New South Wales, Victoria, Queensland, South Australia, Western Australia and Tasmania), two territories (Northern Territory and Australian Capital Territory) and a number of small external territories. Australia inherited its system of government from England, based on the Westminster parliamentary model, and is a common law jurisdiction.
Australia has three levels of government – federal, state or territory, and local – and foreign companies doing business in Australia must comply with laws made by all three levels. A business operating in a number of states and territories also needs to be aware that applicable state/territory laws can differ from each other, so the business may have to comply with different arrangements in different states or territories.
Mining is mainly regulated by state laws (although some federal and local laws apply to mining projects).
Although there is broad similarity among some state and territory laws covering the same subject matter, there can be important differences that affect mining projects across the different states and territories.
Upon settlement, common law principles applied to the grants of land by the Crown, so that any grant of title to a private land holder carried with it the rights to minerals in that land – other than “Royal Metals”, being gold, silver and other precious metals.
Subsequently, all minerals in un-granted land have been vested in the state in which they subsist, such that most mineral resources are vested in the state. The majority of mineral resources within Australia are vested in the state, with the exception of privately vested minerals that are the subject of freehold grants made prior to the vesting legislation. Typically, that is prior to 1900, but it varies from state to state.
As the owner of minerals vested in it, each state is the grantor and regulator of mining within its jurisdiction, but does not act as an owner or operator of mining operations.
In most Australian jurisdictions, the state grants rights to explore or mine on the basis of a ground rental and a royalty in relation to recovered metals.
The Australian Constitution vests limited powers in the Commonwealth, primarily those set out in section 51. Those powers do not include the granting or regulation of mining rights.
The broad powers of each state under its respective constitution authorise the granting and regulation of mining rights. However, the exercise of the power of grant is itself regulated by legislation, and administrative action in accordance with that legislation is subject to the rule of law.
Mineral rights in Australia do have the nature of property, and may be the subject of formal limitations on transfer, including the need to record (and in some cases register) such transactions in writing. The transfer of such interests may be subject to duty and taxes.
The granting authority is the state in which the minerals are vested. Unlike petroleum resources, there is no process of unitisation of mineral resources that straddle state boundaries – a miner needs to secure mining rights in each relevant jurisdiction.
Mining rights are granted under legislative authority in each state. Legislation determines the process of application and the person authorised to make the grant. Generally, senior departmental officers are authorised to grant certain types of exploration rights and minor infrastructure rights, but the grant of mining rights and the rights to construct significant infrastructure is reserved to the Minister.
Contracts for the grant and use of mineral rights are not effective unless they are supported by legislation. Some significant mineral developments are established under contracts that are ratified by the relevant state legislature.
The grant of tenure for mineral rights is secure, subject to compliance with the relevant legislative framework. While the specific mineral rights and length of tenure vary from state to state, the general framework is as follows:
Generally, compliance with the terms of the grant of mineral rights is all that is required to maintain the rights for their duration. There is no capacity for arbitrary cancellation or deprivation of mining rights following their grant. There is some capacity in certain jurisdictions to refuse a grant at the discretion of the Minister, but that power is used sparingly and usually for reasons that can be identified as being within the "public interest".
Mineral rights can be the subject of transfer; however, the transfer of mining rights is the subject of ministerial approval in most jurisdictions. Largely, the obtaining of ministerial approval to transfer is an administrative step, but there have been (limited) instances of restrictions being imposed on transfer. For example, the Queensland government required certain guarantees from the transferor of the Blair Athol coal mine to a much smaller operator to secure end of mine life obligations.
As noted, the transfer of mineral rights may be the subject of duty and taxes.
In Australia, environmental, planning and climate change laws are principally regulated through state and territory enacted legislation. Each legal framework is generally divided into two main categories:
Environment and climate change can also be regulated at the federal level, and the Environment Protection and Biodiversity Conservation Act 1999 (Cth) regulates development that is likely to have a significant impact on "matters of national environmental significance", through the implementation of an additional approval pathway. For example, a proposed development that is likely to have a significant impact on a nationally listed threatened species and/or ecological community will require approval from the Federal Government, in conjunction with the standard approvals required at the state or territory level.
In recent years, there has been a growing trend of both state and federal governments introducing complex pieces of legislation, policies and mechanisms, including increases to penalties, to regulate industry sectors and activities that have the potential to adversely affect the environment.
Furthermore, there has been an increased focus on mine rehabilitation and closure, driven in part by the failure of a number of projects before the end of life of the mine, and by a number of multigenerational projects beginning to approach the end of life phase.
There are environmentally protected areas in Australia, but the primary impact is operational, in that operations must be undertaken in accordance with all relevant environmental approvals.
Areas of particular environmental sensitivity can be protected under state and federal legislation, respectively. Several such areas are the subject of specific protections.
All developments (including but not limited to mining) are the subject of review for environmental impact to assess whether they will have a "major" impact on the environment or any aspect of it and, if so, whether and under what conditions the development can proceed. Under the relevant legislation, impact on aspects of the social environment (including communities and first peoples) can be relevant in addition to any impact on landscape, flora and fauna.
All mining rights are expressly or implicitly subject to the primacy of environmental laws. Accordingly, mining projects cannot proceed without environmental assessment and, if necessary, approvals. When they do proceed, it must be in accordance with environmental approvals. It is possible, albeit rare, for approvals to be withheld in their entirety.
Additionally, in most states it is unlawful to emit substances into the environment without approval. Those substances can include greater than "background" quantities of what might usually be considered innocuous substances, including water (regardless of whether or not it is contaminated in any way).
Operating without approvals or other than in compliance with granted approvals carries a risk of direction from government to cease operations, fines and prosecutions (including of responsible officers of a corporation). It does not, however, in most cases, carry any risk of forfeiture of the mining rights in question.
There is no specific legislation that requires community engagement.
However, communities have an active and important role as stakeholders in several approval processes, including in securing environmental and planning approvals.
Accordingly, it is good practice, although not legislatively mandated, for mining proponents to be significantly engaged with communities before and during approvals processes, and for the life of the relevant project.
Prior and informed consultation is not mandatory. However, as noted, communities have an active and important role as stakeholders in several approval processes, and it is generally considered prudent to undertake consultation. There is no requirement that such consultation be prior and informed, although there are good practical reasons to ensure that it is. Likewise, there is no obligation to secure consent (at all, or on a free, prior and informed basis), although consent can be facilitative of favourable and quick environmental approvals.
Native title describes the rights and interests of Aboriginal and Torres Strait Islander people in land under their traditional laws and customs. Native title matters in Australia are governed by the Native Title Act 1993 (Cth) (as amended) (NTA). Some states have also introduced complementary legislation that deals with certain aspects of native title.
Where a person proposes to do something that affects native title over land which is subject to a registered native title claim or determined native title rights or interests, the native title claimants or holders must be notified. This triggers certain processes under the NTA, including:
A grant of an interest in land being made without the appropriate process under the NTA being followed can result in the invalidity of that grant to the extent that it is inconsistent with the continued existence or enjoyment of any native title rights in the subject land.
Separate from the question of native title is the issue of the protection of sites and items of significance to Indigenous people, which is dealt with through various state and Commonwealth laws. Negotiations regarding matters of Indigenous heritage are often conducted contemporaneously with the negotiation of native title issues. The consent of the relevant government minister may be required if activities on the land could damage sites or items of significance.
The NTA also specifies the procedures by which people determined to hold native title can claim compensation. Such compensation is payable by the Crown in the first instance, but depending on the circumstances the Crown might have a right of recovery against a title holder.
Compensation may also be payable by a person as a result of agreements made pursuant to the “right to negotiate” or other grant process, and, depending upon the terms of the payment, this may be set off against any compensation payable to the native title party or to the Crown.
Subject to the comment under 2.5 Specially Protected Communities in relation to native title claimants, it is not usual to have community development agreements. Even in the case of native title claimants, it is not mandatory to enter into a community development agreement.
It may be prudent to engage with communities, including indigenous communities, to ensure that they are fully informed of the project in question and able to formulate reasonable and articulate positions in relation to it, as the practical option otherwise is to have to deal with a poorly articulated objection that delays project approval and which might potentially be avoided through engagement.
It is difficult to identify an example of a project that has a completely full and productive community engagement, or one that is uniformly bad. Moreover, one can have a negative engagement notwithstanding attempts to engage appropriately.
An example of a successful community engagement strategy is the "Super-pit" mine in Western Australia. The operations of the Kalgoorlie Consolidated Gold Mines are located within the town boundaries of Kalgoorlie and the operations (including blasting) are carried on notwithstanding the proximity of residential as well as industrial areas. Similarly, the Greenbushes Lithium Mine operated by Talison Australia has been a mainstay of the community economy for over 100 years, and manages environmental issues notwithstanding mining operations being within the boundaries of a state forest (being an area reserved for forest preservation).
The Australian Government has introduced a range of programmes and policies that are designed to support action on climate change, most of which presently have a limited impact on the mining industry.
Australia’s current key climate change policies are as follows:
These policies offer incentives for the mining industry to reduce greenhouse gas emissions, rather than penalising the industry for increases in emissions.
There are examples of mining companies "selling" emissions reduction through the Emissions Reductions Fund processes, under which the relevant regulator conducts purchasing processes to select eligible proponents of registered projects from whom eligible emissions reductions will be purchased (in the form of Australian Carbon Credit Units, or ACCUs). Generally, the regulator purchases ACCUs by conducting reverse auctions and at the lowest available cost. However, the regulator is also able to purchase ACCUs through other purchasing processes, such as a tender.
Following a purchasing process, the regulator will enter into a standardised contract with a successful seller for the purchase of carbon abatement.
The government’s total investment in the Emission Reduction Fund is currently AUD4.55 billion.
There is scope for the mining industry’s participation in the Emissions Reduction Fund to increase.
There is currently no climate change legislation specific to mining, nor is any currently proposed, in any Australian jurisdiction (ie, not in federal or state parliaments).
Climate change might be a relevant consideration under the existing environmental approvals mechanisms. Environmental approvals have been refused in relation to Gloucester Resources' "Rocky Hill" proposed coal mine, and there is concern that this approach might become more widespread: https://www.afr.com/companies/energy/wa-carbon-ruling-opens-door-to-endless-court-challenges-gt-20190312-h1cakh
The Federal Government has a target to deliver over 23% of electricity supply through renewable energy by 2020.
The Clean Energy Regulator administers two schemes that relate to the renewable energy target:
Both large-scale power stations and small-scale systems are eligible for certificates for every megawatt of renewable power that they generate. These certificates can be sold to wholesale purchasers of electricity to meet prescribed renewable energy obligations. There are also secondary markets for these certificates for entities such as financial institutions and other companies that purchase the certificates to partially or fully offset their emissions (to achieve "carbon neutral" status).
Recently, there have been a number of instances of mining companies constructing large-scale renewable power stations to supply power to mining projects (solar panels are common, given the abundance of sunlight in regional Australia where most mining projects are located).
There are various other federal programmes that support sustainable development, including:
The Australian tax system is known to be one of the most complex in the world. A basic description of the more significant taxes that may affect an exploration or mining project is set out below; please also refer to 4.3 Transfer Tax and Capital Gains for a description of transfer taxes that are also applicable.
Income tax is imposed on the taxable income of “taxable entities”, which are entities resident in Australia. Taxable entities generally include individuals, companies and limited partnerships (except certain venture capital limited partnerships). Despite its name, taxable income is broadly the accounting profits of the taxpayer that are subject to various modifications required by the tax law.
Income tax rate
For companies, the current rate (ie, for the 2018-2019 income year) is 30%, except companies that have less than AUD50 million of “aggregate turnover” (which includes the turnover of affiliated and connected entities) and derive no more than 80% of their income in passive forms are taxed at 27.5%.
Individuals are taxed on a scale of marginal rates. The maximum rate in Australia is currently 45% plus additional levies (such as the Medicare Levy, if applicable) for individuals who earn more than AUD180,000. Employers must withhold income tax on wages paid to employees.
Royalties are generally payable under mining legislation in all states and territories in respect of minerals derived from the relevant state or territory. Royalty rates and calculation methods differ between states and territories and between different commodities, but royalties are commonly calculated based on revenue or a value that uses a published indexed price.
Non-resident Withholding Taxes
Australia imposes dividend (30%), royalty (30%) and interest (10%) withholding taxes on payments to non-residents. The withholding tax rates may be reduced under a double taxation agreement, or as a consequence of exceptions under the domestic law.
In the case of dividends, distributions that are “franked” (ie, paid from after tax profits) or represent income derived from foreign business operations (ie, conduit foreign income) are generally not subject to withholding. A reduced withholding tax rate of 15% applies to certain trust distributions (ie, fund payments) made by qualifying managed investment trusts or attribution managed investment trusts (withholding MITs) to residents of information exchange countries. This rate is reduced to 10% where the withholding MIT holds interests in certain energy-efficient buildings. Fund payments exclude distributions of dividends, interest and royalties (which are subject to the standard withholding regime).
An interest withholding tax exemption also applies to interest paid in respect of certain publicly offered debt.
A number of tax incentives may be applicable for mining investors and projects, as follows:
In some states and territories, an agreement with the relevant state or territory may be made in respect of significant mining projects that include royalty concessions, stabilisation provisions or reduced administrative requirements. These agreements are passed as state or territory law.
CGT Exemption for Non-residents
Non-residents are generally not subject to Australian tax on the disposal of shares in a company (that are held on capital account), unless the company’s value is principally derived from Australian real property.
Managed Investment Trusts Regime
Subject to integrity rules, non-residents who hold interests in a qualifying withholding MIT are subject to a final withholding tax of 15% (or 10% where the withholding MIT holds an interest in certain energy-efficient buildings).
Conduit Foreign Income Rules
Subject to integrity rules, no Australian withholding tax is payable in respect of certain foreign-sourced income that is ultimately received by a non-resident through one or more interposed Australian corporate tax entities.
Research and Development (R&D) Tax Incentive
Australia provides a generous incentive programme for entities incurring eligible expenditure on R&D activities. Depending on the size of a business, claimants under the R&D programme may be eligible for one of the following incentives:
It should be noted that significant changes to the R&D incentive programme were announced as part of the Federal Budget on 8 May 2018. The major change is expected to include the introduction of an “incremental intensity threshold” that will increase the tax offset available to large businesses based on the proportion of their eligible R&D expenditure as a percentage of total business expenditure.
Venture Capital Investments
Australian venture capital investment vehicles may be structured as venture capital limited partnerships (VCLPs) or early stage venture capital limited partnerships (ESVCLPs), and receive favourable tax treatment for eligible venture capital investments. For VCLPs, benefits include tax exemptions for foreign investors (limited partners) on their share of any revenue or capital gains made on disposal of the investment by the VCLP, and concessional treatment of the fund manager’s carried interest in the VCLP. For ESVCLPs, the income tax exemption for VCLPs is extended to both resident and non-resident investors, plus investors obtain a 10% non-refundable tax offset for new capital invested in the ESVCLP.
Incentives are available for eligible investments made in start-ups known as Early Stage Innovation Companies (ESICs), which are generally newly incorporated entities with low income and expenses. Investments of less than 30% of the equity in an ESIC would generally qualify for a 20% non-refundable tax offset (capped at AUD200,000 per investor including any offsets carried forward from the prior year’s investment) and a ten-year tax exemption on any capital gains arising upon the disposal of the investment.
Capital Gains Tax
Capital gains tax (CGT) is not a separate tax but is broadly the income tax that applies to gains or losses calculated under the CGT rules in respect of “CGT events” (ie, disposals and certain other events).
A sale of corporate groups acquired in a leveraged buyout or by a private equity entity will generally be on revenue account (and not be subject to CGT concessions). Resident individuals and superannuation funds are typically entitled to a discount of capital gains of 50% for individuals, and 33% complying for superannuation funds. Non-residents are generally not subject to CGT except where the gain relates to land, interests in land or shares or rights in land-rich entities. Purchasers of land, interests in land or shares or rights in land-rich entities are required to withhold 12.5% from the payment of consideration to foreign resident sellers and pay this amount to the Australian Tax Office (ATO) (subject to certain exclusions and exemptions).
Stamp duty is levied by each state and territory government, and applies to a wide range of transactions. The party liable to pay the duty depends on the type of duty. Duty may be applied upon the following transactions:
Additional stamp duty applies to "foreign persons" (defined broadly to include foreign corporations and trusts) that purchase residential land in New South Wales, Victoria, Queensland, South Australia and Western Australia.
Goods and Services Tax (GST)
GST is a federal value-added tax on the supply of goods, services and any other things, and on the importation of goods. In general, an entity must be registered for GST if it carries on an enterprise in Australia and the value of its annual turnover is or exceeds AUD75,000. In general, a registered entity must pay GST of 10% on the consideration received for its taxable supplies and importations (but it is usual commercial practice to contractually pass on the GST liability to recipients), and can claim input tax credits (ie, refunds of GST) for the GST cost of its business acquisitions. In addition, foreign entities may be liable to pay GST on supplies of digital products and other services to Australian private consumers.
The key features of Australian jurisdictions from a legal perspective that are attractive for mining investment include:
Obviously, the political stability and domestic security of Australia are non-legal issues that contribute to it as a favourable investment jurisdiction.
Australia generally welcomes foreign investment. The Australian Government screens foreign investment proposals on a case-by-case basis to determine whether a particular proposal is contrary to the national interest. The kinds of proposals examined include both business investment proposals across all sectors of the economy and investment in land, in each case subject to materiality thresholds. Offshore proposals can be captured, so it is important to consider Australian regulatory requirements whenever a target has an Australian connection.
The main laws that regulate foreign investment in Australia are the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) and the Foreign Acquisition and Takeovers Regulation 2015 (Cth) (FATR) – together these give the Australian Treasurer the power to review foreign investment proposals that meet certain criteria and to block such proposals, or to apply conditions to the way such proposals are implemented, to ensure they are not contrary to the national interest.
Some relevant concepts in the FATA are described briefly below.
Mining or Production Tenement
A mining or production tenement is a type of Australian land for the purpose of the foreign investment framework. A mining or production tenement includes:
Acquisitions of interests in a mining or production tenement by foreign persons are notifiable and significant actions under the FATA regardless of value (ie, a zero threshold applies), other than direct acquisitions from the Australian government or acquisitions by relevant agreement country investors (Chilean, New Zealand and United States investors) that have a higher threshold.
Exploration or Prospecting Tenements
An exploration tenement is a right under federal, state or territory law to recover minerals, oil or gas in Australia from land or the seabed for the purpose of prospecting or exploring such minerals, oil or gas. Generally, it will be for a set period and will allow for activities including sampling, testing, drilling, surveys and prospecting. A foreign investor generally does not need to seek approval under the FATA to acquire an exploration tenement, regardless of the value of the tenement or who it is acquired from because an exploration tenement is generally not considered an interest in Australian land under the foreign investment framework. However, if the exploration tenement exceeds five years (including any extensions or renewals) and confers a right to occupy the underlying land, then the acquisition of that interest in the land may be a notifiable and significant action under the FATA, depending on the type of land (for example, agricultural land or commercial land), whether the tenement is being acquired directly from the Australian government, and the value of the interest in the land.
Australian Land Corporations
Acquisitions of securities in Australian land corporations may also be notifiable where the value of the company’s interests in Australian land (including mining or production tenements) exceeds 50% of the value of its total assets, subject to the applicable monetary thresholds. Entering into or terminating a significant agreement with the holder of a mining or production tenement, where the total value of the business exceeds the threshold and the action results in a change of control, is also a significant action. Significant agreements include those relating to the right to use or lease assets, or to participate in profits or management and control of the business.
On 31 October 2018, Australia ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11), which is a regional free trade agreement negotiated between 11 economies, with the other countries being Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The TPP-11 has been ratified by the other signatories (except Brunei, Malaysia and Peru), meaning that these signatory countries are now "agreement countries" for the purposes of the foreign investment framework. As such, higher monetary thresholds apply to private foreign investors from those countries in non-sensitive sectors.
Double Tax Agreements (DTAs)
Generally, resident entities are assessed on their worldwide income, while non-resident entities are only taxed on income derived from Australian sources. Australia has a highly developed network of double taxation agreements, the main function of which is to avoid the double taxation of income for enterprises.
The main sources of finance for exploration, development or mining projects in Australia are:
The key lending institutions in the Australian financial system consist of commercial banks, retail banks and investment banks (including branches and subsidiaries of foreign banks). Non-bank financial institutions also operate within the system.
As noted elsewhere, there is some concern as to how the recently observed increase in regulation will affect the risk appetite for institutional investors.
The Australian Securities Exchange is the main domestic securities market and represents a major source of financing for exploration, development and mining in Australia. Australian projects are financed through international securities markets (notably, but not exclusively, London and Toronto) to a lesser degree, but such financing still represents a significant option for projects in Australia.
Securities over mining tenements and assets are generally granted in favour of financiers of exploration, development and mining projects in Australia. Mortgages may generally be registered against mining tenements, and mining assets are usually the subject of fixed and floating charges.
There is a complex structure for the registration of securities over chattels under the Personal Property Securities Act 2009 (Cth), which is beyond the scope of this work to analyse. Under that legislation, unregistered security interests may not be enforceable.
As outlined above, foreign investment in Australia is regulated. The restrictions on foreign investment extend to the acquisition of interests in securities, businesses and land and so can, in theory, capture the taking and enforcement of security interests. Recent legislative amendments have broadened the exemptions available to both bank and non-bank lenders and domestic security trustees so that, in practice, most of these activities will now no longer be caught within Australia’s foreign investment net, so long as the assets acquired on enforcement are disposed of within the prescribed period of time.
From a purely legal perspective, the outlook for the mining sector remains strong in Australia, as a location from which to both undertake mining and fund mining in other jurisdictions. There have also been significant secondary processing proposals that are in the process of being effected, which are beginning to reposition Australia away from being solely a primary producer.
The key issues that will need to be dealt with in the next couple of years are anticipated to be:
As noted above, there has been a decision under which environmental approvals were refused, for reasons that have been widely reported as being based on climate change principles and carbon emission by the end user of the resource to be mined (thermal coal): https://www.caselaw.nsw.gov.au/decision/5c59012ce4b02a5a800be47f.
It is not yet clear whether that case will stand as a general precedent, but it is now clear that climate change and carbon emissions are relevant considerations to the administrative decision makers responsible for mining-related approvals. That said, this is not a strictly new development, as coal mining applications have been terminated on purportedly environmental grounds previously: https://www.abc.net.au/news/2012-07-24/margaret-river-coal-mining-applications-terminated/4151070.
Following the Federal Financial Services Royal Commission, the regulator has regularly referred to a "litigate first" approach to enforcement of regulatory infringement: see, eg, https://outline.com/SZNnua. The concern with this approach is that it will not be "business friendly", and will certainly increase the costs of compliance and likely also external legal spending in an environment of concern as to the regulator’s approach, whether or not it now proceeds on that path. Moreover, as has been observed, the next period in financial services regulation will be a particularly challenging one, not just for lenders but for regulators and legislators too. Great skill and restraint will be necessary on the part of all parties to make sure that rhetoric and misplaced or manufactured indignation do not inadvertently cause a retreat by financial institutions from risk that the economy depends on them assuming: see https://www.gtlaw.com.au/insights/hayne-asic-banks-penalties-price-shifting-risk.
First Peoples’ Compensation.
The Australian Courts did not recognise the potential for the continued existence of indigenous land rights under traditional laws and customs of Australia’s peoples until 1992. The subsequent legislative codification of that recognition under the Native Title Act 1993 (Cth) has also raised the possibility of compensation for the impact of grants made that affect the existence or enjoyment of traditional rights and interests.
The Australian Courts have now grappled with aspects of the scope of compensation and some limited observations in relation to mining titles may be made, as follows:
Rehabilitation and Mine Closure
There is an increased focus on mine rehabilitation and the liability for that. This may result in the imposition of bonds in addition to levies payable under relevant legislation.
First, there are a number of major mines that are approaching end of life and the rehabilitation obligation that triggers. While it is not uncommon for end of life mines to be transferred to relatively small operators to maximise the end of life return on the mining of diminished reserves, there is an obvious concern as to the capacity of such miners to undertake rehabilitation. There has been critical reportage on some transactions: see https://www.abc.net.au/news/2018-01-24/blair-athol-company-given-millions-in-surplus-enviro-funding/9353802.
Second, there has been an interesting and important development in relation to the ramifications of insolvency in the context of rehabilitation. In 2015, the Ellendale Diamond Mine closed, and the proponent subsequently went into liquidation. The liquidator disclaimed the mining rights applicable to the mine as "onerous property", given the rehabilitation obligations that attached to those rights. As a result, the mine is being dealt with under the State of Western Australia’s abandoned mines programme, and the rehabilitation liability has effectively fallen to the state: http://www.dmp.wa.gov.au/Environment/Ellendale-Diamond-Mine-19526.aspx.
As a result of these developments, one can expect:
One can also expect increased public scrutiny of similar decisions: see https://www.edoqld.org.au/ltg_seeks_reasons_for_blair_athol_mining_lease_transfer.
Overall, however, there appears to be increased optimism in the local mining industry, including in relation to undertaking secondary processing within Australia.