The Department of Resources & Energy's (DRE) Interim
Guidelines for the Allocation of Coal Resources February 2014
(Interim Guidelines) have been released in response to the 30
October 2013 Independent Commission Against Corruption (ICAC)
report, Reducing the Opportunities and Incentives for
Corruption in the State's Management of Coal
The Interim Guidelines are in response to one of the principal
recommendations of ICAC, that "the auction method should be
the preferred approach to allocating the State's coal
resources". Future allocations will be considered by a
steering committee comprising of representatives from Trade &
Investment, NSW Treasury and the Department of Planning &
Infrastructure (Steering Committee). Further recommendations will
be directed to the NSW Government Cabinet Standing Committee on
Resources and Land Use, for consideration and final approval by the
While the government is developing a final process to implement
ICAC's recommendations, the interim process for the allocation
of coal resources will apply.
How this will affect you
The high level implications of the Interim Guidelines
the time frames for implementation of a proposed development
involving unallocated coal (i.e. coal not within an existing
exploration or mining authority) will be affected. Early engagement
with DRE is encouraged to clarify the categorisation of any new
coal proposal and for an indication of the time frames
miners will be able to confirm whether all relevant interests
have been notified on DRE's register of requests for
the Interim Guidelines may be changed when converted to final,
the timing of payment (discussed below).
A high level overview of the Interim Guidelines
Categories of coal allocation areas
The coal allocation areas are categorised into four groups. This
is consistent with the Ministerial Guideline Allocation of
Future Coal Exploration Areas (version 3).
Coal allocation categories suitable for an allocation by
Categories which must be referred to by the Steering Committee
major stand-alone areas
substantial additions to existing mines
large areas which have limited or no exploration but have the
potential to contain large and significant coal resources, and
small areas unrelated to existing mines, which if released, are
likely to be of interest to a number of companies.
Coal allocation categories suitable for direct
Small areas likely to contain limited coal resources may be
considered for direct allocation as a minor addition to existing
The process for direct allocation is outlined, including
assessment by an Interim Resources Allocation Committee (IRAC). If
a request for a direct allocation is suitable, IRAC's
recommendation to the Minister is provided after consideration by
the Standing Committee.
Where a number of companies have registered an interest for an
allocation for the same area, a competitive allocation process will
be required in order for Ministerial consent to apply. Where there
are no registered competing interests, a direct allocation may be
made after applying the public exposure test.
Minor allocations to existing mines will be subject to
negotiated financial contributions and minimum contributions are
Unless allocated by auction or negotiation, financial
contributions will be payable in instalments with 20% on the grant
of planning approval and the balance payable in five equal payments
on the anniversary of the grant. Although the Interim Guidelines
stipulate that this only applies to payments being made where the
area is NOT awarded by competitive process, we expect that this
principle will also be applied to awards made following
This is laudable because, apart from the obvious benefit to the
developer, it will help to counter the community impression that an
entity awarded an area in return for a large financial contribution
should (commercially) expect the planning and other environmental
approvals to necessarily follow.
A refund of the cost of government exploration must be paid.
This may include exploration outside the allocation area and tender
assessment costs, if applicable.
Change in effective control of corporate entities that
are allocated areas
Prior Ministerial consent will be required for any changes in
effective control of the corporate entity or entities holding the
Requirement to develop resources
Where the conditions of the allocation are not met, or the
allocated resources are not developed within any specified time
frame, the coal title may be cancelled by the Minister without
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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