Australia: Doing Business in Australia - Mining and Resources

Last Updated: 1 May 2012
Article by Tony Holland

Australia's resources industry is undergoing rapid expansion. Project developers should focus early on acquiring suitable engineering firms, mining contractors and construction firms because capacity in these sectors over the next 12 to 24 months is likely to be extremely tight.

The Australian resources market is also currently characterised by a high degree of takeover activity. Consolidation is likely to be seen in many sectors of the mining industry, including iron ore, gold and base metals.

State governments approach resource projects differently. Some states, eg Western Australia and Queensland, commonly use instruments known as State Agreements when developing significant mining, oil and gas projects. These are in addition to regulatory issues and are essentially contracts between the state and private developers where each commits to certain undertakings and obligations in relation to a project.

Under State Agreements, states will typically promise to grant certain rights, expedite processes and possibly also grant concessions in return for undertakings to develop a particular project within a certain time frame. Developers may also need to undertake to operate secondary processing, commit to community development plans and provide employment opportunities.

REGULATORY MATTERS

Developing mining, oil and gas projects in Australia requires a range of statutory approvals. Though not an exhaustive list, several key approvals are set out below.

Environment approvals

Environmental approvals may be required from both a state goverment and the Federal Government. Most states have an environmetal assessment process for resources projects, which can take as little as a few weeks or as long as several years, depending on the project's size and potential environmental impact.

An emerging issue is the impact of greenhouse gas emissions and the extent to which environmental regulatory authorities take these into account – an increasing occurrence in environmental impact assessments. See also the Real Property chapter.

Native title

Australian law recognises the native title rights of traditional, indigenous inhabitants in areas where those rights have not been extinguished, for example by the grant of freehold title. Registered native title claimants and determined native title holders have certain important procedural rights, which must be accommodated in the development of most resources projects. See also the Real Property chapter.

Emissions Trading Scheme

Australia will commence carbon pricing in July 2012. This will initially involve a fixed charge but is ultimately intended to move to an emissions trading scheme. These developments will significantly impact on the cost of developing and operating most resources projects. See also the Environment and Climate Change chapter.

Land access

States and territories have their own legislation dealing with rights of access to land and how land can be owned, leased, licensed, transferred and otherwise dealt with. These regimes usually comprise several pieces of interlocking legislation, which affect the grant of land for access to projects, the development of infrastructure such as pipelines, railways and ports and for general purposes. See also the Real Property chapter.

Mining legislation

Again, states and territories have their own legislation governing the grant of different types of rights to explore for and extract minerals from defined areas. Most states also have a network of specialist courts and tribunals overseeing and resolving disputes between parties as to their competing rights to minerals.

Petroleum legislation

State and territory legislation deals with the grant of rights to explore for and extract petroleum products. There is also federal legislation, which complements the state-based regimes.

Occupational health and safety

Specialist occupational heath and safety legislation at state and territory levels imposes significant obligations on companies and individuals. A notable feature is the imposition of personal liability on directors and senior officers of companies where there has been a failure to provide a safe system of work or other failure to comply with occupational health and safety legislation. Business systems and appropriate contractual arrangements must be in place to ensure compliance.

Enterprise Migration Agreements

The National Resources Sector Employment Taskforce foreshadowed that there would be skills shortages in the resources sector and recommended the introduction of Enterprise Migration Agreements (EMA). In May 2011, the Federal Government acted on those recommendations and introduced the EMA to help the resources sector meet its skills needs. The EMA is unique to major projects in the resources sector and will be an agreement between the Department of Immigration and either the project owner or prime contractor. It will act as an umbrella migration arrangement for the resources project. To be eligible, the resources project must have a capital expenditure of more than AU$2 billion and employ more than 1,500 workers. Under an EMA, occupations that are not eligible for standard migration programs can be sponsored, provided the project can justify a genuine need that cannot be met from the Australian labour market.

The EMA will set out the number of overseas workers who can be engaged on the project, why they are required and the training commitments that must be met by the project owner. Once the EMA is in place, the 457 visa applications associated with an EMA will be subject to expedited processing. Overseas workers sponsored under an EMA will be subject to the protections in the Migration Legislation Amendment (Worker Protection) Act 2008 (Cth).

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.


DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to www.dlapiper.com

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