Australia: Mining Sector Update - November 2013


Welcome to the November 2013 edition of the Australian Mining Sector Update, a monthly publication prepared by Corrs Chambers Westgarth for clients and contacts who are interested in the Australian mining industry.

This publication brings together a brief summary of information on recently completed deals, market rumours, potential opportunities and relevant regulatory updates.


Further to our story in the October 2013 edition of the Australian Mining Sector Update, on 29 October 2013, ASX-listed minerals exploration, development and mining company Inova Resources announced that it has received notice from Shanxi Donghui Coal Coking & Chemicals Group that all Chinese regulatory approvals have been received in relation to Shanxi Donghui's takeover offer for all of the issued shares of Inova at a price of A$0.22 per share. Further, Shanxi Donghui has advised that it has waived all remaining conditions of its takeover offer, except the minimum 51% acceptance condition. Inova has also announced that it has not yet been informed whether its majority shareholder Turquoise Hill has accepted Shanxi Donghui's takeover offer, but that Inova will promptly inform shareholders as the takeover offer progresses. Shanxi Donghui's takeover offer is open until 14 November 2013, unless further extended by Shanxi Donghui. Inova has appointed Corrs to advise on the takeover offer.

ASX-listed Linc Energy announced on 3 October 2013 that its wholly owned subsidiary New Emerald Coal has entered into a sale and purchase agreement with the Blair Athol Coal Joint Venture (BACJV) to acquire the Blair Athol coal mine located in Queensland's Bowen Basin. Under the sale and purchase agreement, New Emerald Coal will pay no upfront amount and the BACJV will contribute to the anticipated statutory site rehabilitation requirements. Completion of the acquisition is conditional on commercial arrangements relating to New Emerald Coal's access to train-loading capacity, workforce accommodation and port and rail capacity to Abbot Point being finalised, which New Emerald Coal expects to take six months. The Blair Athol mine ceased operations in November 2012, but will be reopened following completion of the acquisition, with a production target of 3 Mtpa. Corrs advised Linc Energy in relation to this acquisition.

On 17 October 2013, ASX-listed Cockatoo Coal announced an equity raising of A$153 million consisting of three inter-conditional placements of new shares – a A$50 million placement to SK Networks Co, a A$43 million placement to Noble Group and a A$60 million placement to institutional and sophisticated investors (cornerstoned by Harum Energy Australia who has provided a A$20 million commitment). Existing Cockatoo Coal shareholders have also been invited to participate in a share purchase plan at an offer price of A$0.045 per share by subscribing for up to A$15,000 worth of new shares. Proceeds from the equity raising will be used to repay a A$95 million KEB Australia loan facility, while ANZ has fully underwritten a A$255 million senior secured project finance facility which will be used to fund the Baralaba Expansion project located in Queensland's Bowen Basin. Cockatoo Coal also announced that it has entered into a bid implementation agreement with Blackwood Corporation for Cockatoo Coal to acquire all of the issued share capital in Blackwood in an off-market takeover bid. Blackwood shareholders will be offered two new fully paid Cockatoo Coal shares for each Blackwood share held. The takeover offer is subject to a 52.1% minimum acceptance condition and the successful completion of the equity raising. Blackwood's directors have unanimously recommended that shareholders accept Cockatoo Coal's offer.

ASX-listed Rio Tinto announced on 25 October 2013 that it has reached a binding agreement to sell its 50.1% interest in the Clermont Joint Venture to GS Coal, a company jointly owned by Glencore-Xstrata and Japan's Sumitomo Corporation. Under the terms of the sale, management of the Clermont thermal coal mine will be assumed by Glencore-Xstrata. Mitsubishi Development, J-Power Australia and JCD Australia are the other partners to the Clermont Joint Venture and the sale of Rio Tinto's interest is conditional upon their agreement to particular terms, including those covering pre-emptive rights. Rio Tinto's interest will be sold for US$1.015 billion, with the sale expected to be completed by March 2014.

On 25 September 2013, ASX-listed MetroCoal announced that it has signed a merger implementation agreement with ASX-listed Cape Alumina under which the companies will merge to form a diversified bauxite and thermal coal business. The merger will be implemented through a scheme of arrangement where Cape Alumina shareholders will be offered approximately 1.12 MetroCoal shares for every Cape Alumina share held. This will result in Cape Alumni shareholders holding 55% of the merged company and MetroCoal shareholders holding 45%. The scheme of arrangement is conditional on Resource Capital Funds IV L.P (a major Cape Alumina shareholder) converting its A$5 million Cape Alumina convertible note into Cape Alumina shares at a price of A$0.12 per share. MetroCoal has also agreed to provide a A$3 million convertible note to Cape Alumina to assist with the progression of the Pisolite Hills bauxite project located in Cape York. The merged company will have an estimated market capital in excess of A$28 million and combined JORC compliant resources of 202.4 Mt of high-quality Cape York, export-grade bauxite and 4.2 Bt of thermal coal in Queensland's Surat Basin. The merger is expected to be finalised before the end of 2013.

ASX-listed Gujarat NRE Coking Coal announced on 16 October 2013 that a resolution authorising Jindal Steel & Power to acquire a majority stake in Gujarat has been unanimously passed by its shareholders. Jindal will subscribe to 328.5 million new shares in Gujarat and a further 328.5 million unlisted transferable options, exercisable within five years from their date of issue for no consideration. Jindal now has a 44.68% shareholding in Gujarat, which will increase to 53.62% following the exercise of the options.

Further to our story in the August 2013 edition of the Australian Mining Sector Update, on 14 October 2013, ASX-listed coal miner Rey Resources announced that the agreement with Hong Kong-based private investment company Crystal Yield Investments to acquire Rey Resource's Duchess Paradise coal project will not proceed and will be formally terminated. However, Crystal has agreed to subscribe for a further A$1.36 million placement in Rey Resources at a price of A$0.08 per share. This subscription means Crystal will hold 19.9% of the issued capital in Rey Resources, making Crystal a cornerstone investor.


According to the Wall Street Journal, public unlisted iron ore exploration and development company Aard Metals is considering selling its flagship Warrego project located in the Northern Territory. The Warrego project is said to hold 7.8 Mt of iron ore, 2.9 Mt of magnetite, as well as small quantities of gold and copper, and is approaching production stage. Any sale could reportedly terminate off-take agreements with Weistel International, an investment entity of China's Weifang Iron and Steel. Aura Capital advised Aard Metals when it considered a market listing in 2012 and has reportedly been engaged to advise on the potential Warrego project sale. Reportedly, the Warrego project could fetch approximately A$20 million.

According to the Press Trust of India, Indian state-run mining and power generating company Neyveli Lignite has shortlisted nearly 20 proposals to buy overseas coal assets from countries including Australia. Reportedly, the proposals were submitted under five different categories, including potential joint ventures, and the majority of the 89 proposals received came from Indonesia. Neyveli Lignite is reportedly expected to acquire up to three assets from the shortlist before December 2013 following the completion of its due diligence process.

Despite continued speculation that ASX-listed Whitehaven Coal may raise capital in the face of its decreasing share price, the Australian Financial Review has reported that Whitehaven's management is against raising capital. Reportedly, Whitehaven is anticipating an upturn in coal prices. Whitehaven Coal's largest shareholder Farallon Capital Management has thrown its support behind the A$767 million Maules Creek project, as well as behind Whitehaven Coal's board and management. Farallon became Whitehaven Coal's largest shareholder after buying Nathan Tinkler's stake in June 2013. Raymond Zage, Managing Director of Farallon's subsidiary Noonday Asset Management, has reportedly stated that "the Maules Creek opportunity for its metallurgical and thermal coal prospects, we still think is a very interesting story and are a believer in the project."

Further to our stories in the April, May, July and August 2013 editions of the Australian Mining Sector Update, the Montreal Gazette has reported that Teck Resources is becoming increasingly less likely to continue in the sale process for the acquisition of ASX-listed Rio Tinto's majority interest in Iron Ore Co. of Canada (IOC). Reportedly, the parties are unable to agree on an acceptable price, with Teck's valuation being considerably lower than Rio Tinto's. Newswire Round-up has similarly reported that China Minmetals is also likely to withdraw from the sale process due to Rio Tinto's unrealistic price expectations for its interest in IOC.


Legislation To Repeal the Carbon Tax Released

On 15 October 2013, the Federal Government released carbon tax repeal bills for public consideration. The raft of eight bills propose to:

  • abolish the carbon tax from 1 July 2014;
  • abolish the Climate Change Authority; and
  • expand the Australian Competition and Consumer Commission's (ACCC) powers to take action against businesses that engage in price exploitation following the carbon tax repeal.

Corrs has prepared a Thinking Piece discussing what the draft carbon tax repeal legislation means for businesses, which can be viewed here.

Minerals Resources Rent Tax Repeal and Other Measures Bill 2013 (CTH)

On 24 October 2013, draft legislation was released for the repeal of the Mineral Resources Rent Tax (MRRT). The Minerals Resources Rent Tax Repeal and Other Measures Bill 2013 (Cth) proposes to abolish the MRRT from 1 July 2014 by repealing the following Acts, in addition to making a number of consequential amendments:

  • Minerals Resource Rent Tax Act 2012 (Cth);
  • Minerals Resource Rent Tax (Imposition—Customs) Act 2012 (Cth);
  • Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth); and
  • Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth).

The Federal Government has announced that the repeal of the MRRT package will contribute more than A$13 billion worth of savings towards the Budget's bottom line on an underlying cash basis over the forward estimates.


New Coal Land Released in Queensland's Bowen Basin

The Queensland Government has called for tenders to explore for coal in seven areas located in the northern Bowen Basin which collectively cover nearly 1,300 square kilometres. This is the first land release for coal competitive tendering since the policy and legislative changes allowed for exploration permits to be granted through a tender process instead of their previous 'over-the-counter' application process. The Minister for Natural Resources and Mines Andrew Cripps has noted that applications for this land will be assessed on the competitiveness of the work programs submitted, as well as the associated technical and financial capabilities of the explorer, but that there will be no requirement for a cash bid to be made. Interested parties have until 2.30pm on Wednesday 5 March 2014 to lodge their application. Further information is available here.

Corrs Industry Publication – Australian Coal Companies – From Micro to Mid Cap

Australian Coal Companies – From micro to mid cap is a Corrs publication that analyses over 25 small- to medium-sized Australian companies that focus on coal exploration, development and production. By consolidating information from various sources, the publication provides a snapshot of the key projects pursued by each company and gives the reader an understanding of how these projects will be funded and operated, when they are likely to produce first coal, and whether they have access to critical infrastructure. The publication also identifies recent corporate and investment activities, and highlights potential opportunities which may arise for investors.

Corrs also produces similar publications for other resource industries, including:

  • Australian Iron Ore Companies – From micro to mid cap;
  • Australian Copper and Gold Companies – From micro to mid cap; and
  • Oil and Gas Companies – From early stage exploration to full-scale production.

For a copy of any of these publications, please email

Milestone Reached in Rio Tinto's Pilbara Expansion

ASX-listed Rio Tinto has reached a significant milestone in its expansion plan to integrate its operations in the Pilbara region, with Western Australia Premier Colin Barnett officially opening Rio Tinto's Cape Lambert wharf B on 2 October 2013.

Not only does this expansion increase Rio Tinto's overall capacity in the Pilbara region to 290 Mtpa, it is anticipated to expand Cape Lambert's port capacity by 130 Mtpa to 210 Mtpa. Of the 512.6 Mt of iron ore produced in Western Australia in 2012-13, Rio Tinto's production represented approximately half. Rio Tinto has further expansion plans, hoping to increase its overall integrated capacity in the region to 360 Mtpa, and so far, has already committed US$5.9 billion towards Pilbara infrastructure.

Landholders and Miners in Queensland Benefit From New Approvals Process

Queensland's Minister for Natural Resources and Mines Andrew Cripps has announced a streamlining overhaul to the assessment process for mineral and coal exploration permits which is intended to halve the time in which these permits are granted. It is estimated that exploration permits currently take an average of 22 months to be granted or rejected. Under the new process, the Department of Natural Resources and Mines has set customer service standards to decide:

  • all work programs in 90 days;
  • exploration permit applications subject to native title in 12 months; and
  • exploration permit applications not subject to native title in six months.

Minister Cripps noted that these changes will give more certainty to landholders and resources companies by allowing for earlier engagement, as resources companies will no longer need to wait until an exploration permit is granted before engaging with landholders about their proposed exploration activities. Further information on the new approvals process is available here.

Mining in Indonesia – Surveying The Minefield

On the surface, Indonesia seems an ideal destination for mining, combining an abundance of resources with the largest economy in South East Asia. Yet a global survey in 2012/13 found that out of 96 countries, Indonesia was the least attractive investment destination for the mining industry. Digging deeper, a review of Indonesia's legal framework for mining reveals reasons why. Corrs' secondee at leading Indonesian law firm Soemadipradja & Taher has prepared a Thinking Piece discussing mining in Indonesia, which can be viewed here.

Queensland Regional Plans and Strategic Cropping Land Review Released

The new Regional Plans for Central Queensland and Darling Downs have been released by the Queensland Government, in addition to the Review of the Strategic Cropping Land (SCL) Framework. The Regional Plans will identify and map Priority Agricultural Areas (PAA) which will be protected from incompatible resources activities. A resource development that intends to operate within a PAA will need to meet 'co-existence criteria' established to ensure no material loss of land, no threat to continued agricultural use and no material impact on irrigation aquifers or overland flow occurs. The Queensland Government is set to introduce a Regional Planning and Development Act into Parliament later this year which will provide for a single, integrated framework that addresses SCL and the implementation of the new Regional Plans. Further information is available at:

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.

Most awarded firm and Australian deal of the year
Australasian Legal Business Awards
Employer of Choice for Women
Equal Opportunity for Women
in the Workplace (EOWA)

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions