Australia: Requirements of mining lease applications under the spotlight

Resources and Energy Alert : 10 Apr 2012
Last Updated: 11 April 2012

By Martin Klapper, Partner and Damian Roe

A recent Land Court of Queensland decision demonstrates the importance of giving detailed and specific information about proposed activities when applying for mining leases.

The decision of President McDonald in Xstrata Coal Queensland Pty Ltd & Ores v Friends of the Earth - Brisbane Co-Op Ltd & Ors, and Department of Environment and Resource Management [2012] QLC 013 is the most recent judgment addressing the issues arising for those applying for a mining lease under the Mineral Resource Act 1986 (Qld) and the Environmental Protection Act 1994 (Qld).

Here, partner Martin Klapper and associate Damian Roe discuss the key provisions of the Mineral Resource Act, which all mining lease applications must satisfy, highlighted by the Xstrata case.

Key points

  • Failing to identify any prescribed improvements in a mining lease application may result in the exclusion of the area of those improvements from the mining lease area. An applicant for a mining lease must take care in submitting its application to ensure all improvements are identified, and that the consent of the relevant landowner is obtained.
  • An applicant for a mining lease may include locations for activities which are associated with, arise from or promote the activity of mining, but are not necessarily 'mining activities', within the mining lease application area.
  • Applicants for mining leases need to consider whether to address continued access to properties on and around the mining lease area in the proposed initial development plan.

Improvements within the area of an application for a mining lease

In order to comply with the Mineral Resource Act, a mining lease applicant must identify any prescribed improvements and get consent in writing from the owner of the land on which those improvements are situated. Prescribed improvements include permanent buildings such as residences or places of business, stockyards, bores, dams or other artificial water storages.

In the Xstrata case, the Land Court held that Xstrata failed to properly identify all prescribed improvements located on the objectors' land. Despite the non-compliance, Xstrata's mining lease application was not rejected. Rather, President MacDonald determined that the land on which the improvements were situated should be removed from the grant of the mining lease, as Xstrata had not obtained the relevant landowners' consent.

The objectors also argued that 'artificial water storage' included pipelines connected to the various dams, tanks and troughs on the property. President MacDonald found that this was not correct. However, because the inclusion of the areas of those pipelines would "defeat the evident purpose of s 238(2) which is to preserve the relevant improvements (in this case water storage facilities) and the specified area surrounding them from mining", President MacDonald recommended that the Minister exclude the area of the pipelines from the mining lease area.

Inclusion of buffer zones within an application for a mining lease

An applicant must also describe, in the prescribed manner, the boundaries of the mining lease application area.

A mining lease may be granted for specified purposes which are associated with, arise from or promote the activity of mining. The objectors in the Xstrata case argued that it was impermissible to include land in a mining lease for non-mining purposes - including areas set aside for infrastructure, environmental buffer zones and explosive storage and buffer zones.

President MacDonald rejected those objections, referring to the previous land court decision of Re Xstratax Coal Queensland [2010] QLC 29, where environmental buffer zones were included in mining lease areas. The Court determined that a mining lease application can include environmental buffers and exclusion zones for safety reasons associated with mining activity.

The objectors also submitted that the exclusion zones around pits, blasting areas and explosive storage zones were unreasonable and negatively affected pastoral land activities of grazing and farming. They argued that explosives should be stored in pits and periodically relocated during the life of the lease, rather than including additional land for that purpose in the lease.

These submissions were also rejected by President MacDonald, who held that the applicants provided "detailed and cogent evidence as to their need for additional land". Due to the need to safely store explosives, the areas required for safe blasting and explosive storage were upheld as part of the land which is integral to a mining lease.

Use of public roads

The objectors in the Xstrata case also argued that various public roads would need to be closed due to the grant of the mining lease, and that access to private properties would be restricted.

President MacDonald divided the affected properties into two categories: those within the mining lease application area, and those external to the mining lease application area.

The objectors situated within the mining lease application area submitted that the mining lease would deprive them of access to their properties, and the grant of the mining lease would result in the properties not having dedicated access. The applicant for the mining lease did not propose any alternative access for the landowners, as the properties were within the mining lease area.

The Court held that "public access [to the properties] should be maintained, as it is not in the public interest that properties be landlocked and landowners be deprived of access to their properties".

The owners of properties external to the mining lease application area submitted that they would incur an increase in operating expenses due to lack of access through the mining lease area, as well as diminished property value. The Court found that while that was the case, those objectors were not entitled to any compensation, as they were not within the area of the mining lease application.

President MacDonald indicated that the disruption to access could be looked at with reference to the Mineral Resource Act when considering whether there was any good reason to refuse the grant of the mining lease, but in these circumstances, did not refuse to grant the mining lease application on that basis.

For more information about the judgment in the Xstrata case, please read our previous Alert entitled Climate change objections not enough to stop proposed mining lease.

© HopgoodGanim Lawyers

Award-winning law firm HopgoodGanim offers commercially-focused advice, coupled with reliable and responsive service, to clients throughout Australia and across international borders.

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