When it comes to compensation for resources activities,
a deal struck between a resources company and an owner isn't
always set in stone. Compensation can be reviewed if there is a
material change in circumstance and may either increase or
Resources companies must understand the types of changes
that can trigger a compensation review. Only then can the full
costs of a project change be properly assessed.
Resource tenure holders and land owners and
occupiers1 are free to negotiate their own compensation
deal. If they can't agree, they can refer the determination of
compensation to the Land Court.
But the compensation story doesn't always end there. Either
party can apply to the Land Court for a review of compensation
where there is a material change in circumstances after the
original compensation was resolved.
A resources company may seek to reduce the amount of
compensation paid if its operations are scaled back or expansions
cancelled due to economic conditions.
On the flipside, owners or occupiers can seek more compensation
if the nature or scale of the resources activities on their land
The key is that the change must be "material". This
does not mean the change has to be "substantial" as cases
have decided that a change is material if it is
"pertinent" to what compensation should be awarded.
For a material change to arise two elements are needed. Firstly,
there needs to be a change event that is material or pertinent, for
example an extension or reduction in the term of the tenure or a
change in the nature of the operations. Secondly, the change event
must alter the impact of the activities on the land.
If these elements are established, the Land Court then considers
whether they are of such significance to justify an amendment to
the original compensation.
Based on the above, it would not be a material change of
circumstance if one party discovered that the impact from the
agreed activities was greater or less than expected provided that
the activities themselves have not changed.
Cases reviewing compensation in relation to resource tenures
have found that:
where an application for renewal of a mining lease was made but
subsequently withdrawn, the extension of the original mining lease
until the renewal application was withdrawn amounted to a material
change allowing compensation to be increased;
where a mining lease was surrendered early, this constituted a
material change because the time that the owners were impacted was
substantially shorter allowing compensation to be reduced;
a landowner failing to make a submission for compensation in
the first instance does not constitute a material change of
circumstance and the landowner was not entitled to a review of
compensation on that basis;
merely listing potential impacts of mining on the owner's
land does not constitute a material change of circumstance
(especially where there was nothing to suggest that those impacts
where not properly considered in the determination of compensation
by the Land Court in the first instance) and the landowner was not
entitled to a review of compensation on that basis; and
a change arising from the amalgamation of three environmental
authorities for three separate mining leases into one environmental
authority applying to all three mining leases which reduced the
maximum area of disturbance at any one time from 10 hectares on
each mining lease to 10 hectares for the project did constitute a
material change in circumstance but did not warrant a reduction in
the amount of compensation because the impact on any one mining
lease could still be 10 hectares of disturbance. (The Land Court
noted this was an unusual result arising because of the particular
wording of the legislation and a disconnect between the provisions
of the Mineral Resources Act 1989 (Qld) and the Environmental
Protection Act 1994 (Qld).)
The Mineral Resources Act 1989 (Qld) also gives an example of a
material change where a different method changes the impact of
mining operations under the lease.
Resources companies need to be alive to changes to their
operations or circumstances which give rise to compensation
potentially being reviewed – whether by them or the land
owners or occupiers.
When proposing changes to their operations, resource project
proponents should consider whether the compensation review rights
are likely to be triggered so that the full impacts of the proposed
changes can be properly assessed.
1In the case of mining leases, compensation
only needs to be resolved with owners of land not
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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It is a common misconception that the grant of mining tenure, whether it be an Exploration Permit, Mineral Development Licence or Mining Lease, will entitle the holder to access all land within it in order to explore or mine.
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