Australia: Understanding Overlaps - Mining Tenure vs. The Rest Of The World

By Tony Nunan, Solicitor

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.

The ability for miners to access their tenure in order to undertake activities is critical to the industry. While significant time and energy is quite rightly dedicated to resolving native title and cultural heritage issues before the commencement of mining operations, the same cannot always be said for addressing potential impediments that arise as a result of the overlap between mining and other tenures.

Miners should be aware of the overlaps that occur with other tenure and the impact of these overlaps on the miner’s ability to explore or produce from the area. The existence of an overlap with petroleum tenure, nature refuges, national parks, wild river areas or reserves such as aboriginal land leases are all likely to have an impact on the miner’s ability to access the area and conduct activities.

In some instances, such as an overlap with petroleum tenure, Queensland legislation encourages the miner to reach agreement with the holders of the overlapping tenure. However, in other instances, such as an overlap with a national park, mining tenure is unlikely to be granted at all.

This article summarises the impacts and impediments that arise as a result of overlaps of tenure that are likely to affect mining operations. It also provides examples of how these impediments can, if possible, be overcome under Queensland legislation.

All minerals in Queensland are the property of the State (s8 MRA).

In order to give effect to this reservation, the State, or a person authorised by the State, must be entitled to enter upon land where a mineral resource exists and extract the minerals, often at significant disturbance to the land. Such an activity generally is inconsistent with a landowner’s right to the quiet enjoyment of their land.

To facilitate the exploration for an extraction of minerals in Queensland, an entire system of mining tenure, separate to land tenure, has been created. This system of tenure is regulated by the Mineral Resources Act 1989 (MRA). The MRA enables the holder of tenure granted under that act or a previous act the extraordinary rights to enter upon land (whether it be private or state land) for the purposes of either exploring for or producing minerals. It acknowledges the impact that these activities may have on the land and its owner or occupier and places certain obligations on the holder of the mining tenure. These include obligations to:

1. pay compensation;
2. give notice of entry onto land; and
3. rehabilitate damage.

Prior to reviewing the impacts of overlaps between mining and other tenure, it is first necessary to understand the rights of the differing tenures granted under the MRA.

The MRA includes a hierarchical system of mining tenure which follows the general process of mine development including large scale exploration, defining resource areas, feasibility studies, testing and finally production. The MRA establishes differing tenure for each step in the process. The three main tenures granted under the MRA are described below:

Exploration Permits

Exploration permits (EP) are a tenure granted principally for the purpose of exploration.

EPs are granted over and by reference to graticular sub-blocks for a term of up to five years (s146 MRA). They generally cover large areas and enable the holder to undertake broad scale testing and exploration to obtain indicative results of where mineralisation occurs within the area of the EP. In order to prevent large tracks of land from being tied up by one explorer and to provide equitable access to land by other explorers, the holder of an EP must relinquish half of the area covered by the EP within two years after the grant of the tenure and a further half of the remaining area at the end of each subsequent year (s139 MRA).

An EP allows the holder to carry on an authorised exploration activities with or by such vehicles, vessels, machinery and equipment as may be necessary or expedient for the purpose of exploring for any mineral to which the EP applies and it enables the EP holder to enter any part of the land that is not the surface area of a restricted area for the purposes of facilitating the exploration of the mineral to which the EP applies (s129 MRA). A granted EP may be renewed, by application, for up to a further five years (s147A(2) MRA).

Prior to entering upon private land within the area of an EP for the first time, the EP holder must give the over of the land covered by the EP written notice of entry (s163 MRA). In addition, the MRA requires the holder of an EP to compensate the owner of land upon which the EP holder conducts authorised activities for any damage or injury suffered or incurred (s145 MRA). The compensation that is payable may be agreed between the EP holder and the landowner or, failing agreement, may be determined by the Queensland Land and Resources Tribunal (LRT).

An EP may be assigned to another person with the approval of the Minister (s151 MRA). Upon approval, any such assignment shall be entered into the register and on the EP document (s151(5) MRA). In contrast, an application for an EP can be assigned beneficially prior to grant, but such assignment will not be recorded in the register until the EPM has been granted and a formal transfer requested and approved.

Mineral development licences

A mineral development licence (MDL) provides its holder greater security of tenure than an EP and authorises more specific activities which enable feasibility studies and production testing to be conducted. However, a MDL does not authorise its holder to undertake commercial production of minerals.

A MDL authorises drilling, seismic surveys, mining feasibility studies, metallurgical testing and marketing, environmental, engineering and design studies in order to evaluate the potential for the development of a resource (s181(3) MRA). Unlike an EP, a MDL is granted over a specific area with reference to measured distances and compass bearings (s184 MRA ) rather than over graticular blocks. There is no requirement to relinquish areas of a MDL.

A MDL can only be granted over land comprised in the area of an EP or another MDL in respect of the same mineral if the applicant for the MDL (or at least one of the applicants) is also the holder of the EP or MDL over which the MDL is to be granted (s179 MRA). MDLs are generally granted for a period of up to five years (or such longer period as the Minister approves) (s192 MRA).

A MDL may be renewed if the renewal application is made no more than one year and no less than six months prior to the end of the then current term of the MDL (s197 MRA). The Minister may grant a renewal for not more than five further years (s197A(2) MRA).

Like the holder of an EP, a MDL holder is required to give landowners written notice of entry before entering upon the land for the first time under the MDL (s211 MRA ) and must pay compensation for any damage or injury suffered or loss incurred by the landowner (s191 MRA).

In order to encourage production from highly mineralised areas, the Minister may give a direction to a MDL holder that they must apply for a mining lease in order to commence actual mining operations within the area of the MDL (s225 MRA). A failure to apply for a mining lease may result in cancellation of the MDL (s225(3) MRA).

The holders of mining leases (ML) enjoy the right to enter upon land for the purposes of mining, processing, transporting and selling minerals. Not only does a ML grant its holder the right to enter upon private land for the purposes of extracting minerals, it also grants the holder rights to the minerals themselves. In return for the granting these rights, the holder of the ML is required to pay the state royalties on any minerals mined from the area of the ML (s311 MRA).

Unless otherwise approved by the Minister, a ML may be granted by the Governor in Council over contiguous land comprised in the area of a prospecting permit¹, an EP or MDL (in respect of the same mineral) if the applicant for the ML (or at least one of the applicants) is also the holder of the prospecting permit, EP or MDL over which the ML is to be granted.

Unlike an EP or MDL, where the MRA prescribes the authorised activities that may be undertaken under the authority of those tenure, the holder of a ML is entitled to carry out any activity authorised by the ML for the purpose for which the ML is granted or for any purpose permitted or required under the lease or by the MRA (s235 MRA). In addition to the rights to mine granted under the ML, and subject to the payment of any royalties to the person with property in the sand, gravel or rock, the holder is entitled to access any sand, gravel or rock for any purpose permitted under the ML (s236 MRA).

As a reflection of the significant rights granted to a ML holder and the possible impacts (both of a positive and negative nature) on the local area, the application process for a ML is quite onerous on the applicant. After satisfying the eligibility criteria for a ML application (s245 MRA), an applicant will receive a certificate of application (s252 MRA). The applicant must then deliver copies of this certificate to all the owners of land underlying the ML within five business days. Members of the public are able to make objections to the grant of the ML (s260 MRA). An objector who lodges a properly made objection to the grant of a ML will become a party to the LRT’s hearings regarding whether to recommend the grant of the ML (s268 MRA). Upon hearing any objections to the grant of the ML, the LRT will make a recommendation to the Minister regarding whether to grant the ML (s269 MRA).

The Governor in Council in deciding to grant or not to grant a ML will, following recommendations from the LRT to the Minister, determine the area to be held and the terms, rent and conditions on which the ML is granted. Failure to pay rent or royalties or to furnish all prescribed reports, returns, documents and statements may render the ML liable to be cancelled by the Minister.

Prior to the grant of a ML, the applicant must either agree compensation with the owners of land within the area of the ML or apply to the LRT to determine compensation (s279 and s281 MRA). Compensation is payable for the:

1. deprivation of possession of the surface of land of the owner;
2. diminution of the value of the land of the owner or any improvements thereon;
3. diminution of the use made or which may be made of the land of the owner or any improvements thereon;
4. severance of any part of the land from other parts thereof or from other land of the owner;
5. any surface rights of access;
6. all loss or expense that arises (s281 MRA).

A ML holder may apply for a renewal of the ML not more than 1 year and not less than 6 months prior to the expiration of the current of the ML (s286 MRA). The ML cannot be renewed unless compensation is agreed between the parties or determined by the LRT.

As noted above, the MRA grants holders of mining tenure extraordinary rights to enter upon and occupy land for the purposes of exploring for or producing minerals. However, while these rights may appear to be limitless, the government’s role in preserving the State’s natural environment and ensuring access to other valuable resources, has resulted in limitations being imposed on mining tenure.

These limitations are particularly severe in instances where mining activities are proposed in areas of high environmental significance or where the commercial production of petroleum is being undertaken.

While there may not be any way of overcoming these limitations, a thorough understanding of the impact of overlaps on mining tenure is essential before deciding to commit significant capital in order to undertake activities within an area. This is particularly important where a party is investing capital exploring an area where there may be a potential limitation on the grant of a mining lease.

The MRA restricts a person entering within the area of a reserve unless consent of the owner or the Governor in Council is obtained (s19,s54,s129(1), s181 and s238 MRA).

A reserve includes, but is not limited to, land that is a road; a state forest or timber reserve under the Forestry Act 1959; Aboriginal land under the Aboriginal Land Act 1991 taken to be a reserve because of section 87(2) or 87(4)(b) of that Act or a rail corridor (see definition of ‘reserve; in the Dictionary to the MRA).

If the consent of the owner of the land is refused or fails to be given within a reasonable time and the holder of the mining tenement considers the refusal to be so harsh as to be unreasonable, the EP holder may apply to the Minister for the consent to be given. The Minister may either refuse the application or recommend to the Governor in Council that the consent be given (s129 MRA). Prior to making a recommendation to the Governor in Council, the Minister must seek the view of the owner of the relevant land (s129(10) MRA).

A mining lease may not be granted over land that is a reserve unless the consent of the owner is obtained or the Governor in Council otherwise approves (s238 MRA).

In addition to the restrictions that apply to the area of a reserve, the holder of an EP or a MDL may only enter upon restricted land if the owner of the restricted land consents (s129(3) MRA s181(8) MRA). Unlike the provisions that apply for the area of a reserve, there is no ability to apply to the Minister or the Governor in Council to override the refusal of the owner of the restricted land to give consent. Restricted land includes land within 100 metres laterally of a permanent building used for accommodation, business purposes, community sporting or recreational purposes or as a place of worship. It also includes land within 50 metres laterally of a principal stockyard, bore or artesian well, dam, any other artificial water storage or a cemetery or burial place (See definition of ‘Restricted Land’ in the dictionary of the MRA).

The MRA prohibits the grant of a ML within the area of restricted land unless the consent of the owner of that land is obtained (s238 MRA). As there is no provision in the MRA to override this requirement for consent, the owner of restricted land has a right to veto the grant of the ML over that area and therefore holds significant leverage over the ML applicant.

As the MRA enables the grant of EPs for either minerals (EPM) or coal (EPC), an EPC may be granted over the area of a EPM and vice versa. While the overlap of a EPM and EPC has a limited effect on the parties conducting activities under their respective tenures, the existence of an overlapping EP may restrict the future grant of MLs. If a person applies for a ML where there currently exists an EP, MDL or another ML, then the applicant must obtain the written view of the holder of the other tenement regarding the application (s232 MRA). The views must be lodged with the Mining Registrar on or before the last day of objections, otherwise the applicant must provide a statutory declaration explaining the reasons why the views could not be obtained (s248(5) MRA). The Mining Registrar may reject the application for a ML if its area is covered by either an MDL or another ML.

The MRA excludes any land the subject of a current mining claim, MDL or ML from the area of a granted EP (s132 MRA). Further, upon termination of the mining claim, MDL or ML, this land will not automatically revert to the EP if the EP was granted after 23 December 1996.² In order to acquire the land that has expired from the mining tenure, a separate EP application must then be made and native title addressed.

In 2004, the Queensland Government introduced Queensland’s new petroleum regime in the form of the Petroleum and Gas (Production and Safety) Act 2004 (P&G Act). One of the most significant changes from the former petroleum regime that existed under the Petroleum Act 1923 (1923 Act) was the recognition that substantial overlaps between petroleum tenure and mining tenure now exist.

Overlaps between mining tenure and petroleum tenure impact on the rights of the mining tenure holder to conduct activities in the following ways.

While overlaps between mining tenements that are granted for minerals other than coal or oil shale and petroleum tenements are relatively rare, the holder of an EPM or MDL for minerals that overlaps a granted petroleum lease (PL)³ may only undertake authorised activities within the area of the PL with the written consent of the PL holder (s3(3) MRA).

In addition, the holder of an EPM or MDL for minerals that overlaps a granted authority to prospect (ATP)⁴ may only carry out an authorised activity for the EPM or MDL within the area of the ATP if either the ATP holder agrees in writing or the activity does not adversely affect the carrying out of an authorised activity under the ATP (s3(5) MRA).

The existence of a petroleum tenure within the area of an application for an EPM, MDL or ML for minerals will not limit or otherwise affect the power under the MRA to grant or renew the mining tenement (s3(2) MRA).

The P&G acknowledges that the rapid expansion of the coal seam gas industry in Queensland has resulted in significant overlaps between coal mining and a exploration tenure (granted under the MRA) and coal seam gas (CSG) production and exploration tenure (granted under the P&G Act or the 1923 Act). The P&G Act and amendments to the MRA (Chapter 7AA MRA ) (together known as the CSG regime) specifically regulate these areas of overlap.

As is the case for the overlap between an EPM or MDL for minerals and an ATP, if an EPC or MDL for coal overlaps an ATP, an authorised activity for the EP or MDL cannot be carried out within the area of overlap with the ATP if carrying out the activity adversely affects the carrying out of an authorised activity for the ATP and the authorised activity for the ATP has already started.

The most significant impacts of the CSG regime are likely to occur when an EP or MDL holder decide to apply for a ML which overlaps the area of either a granted ATP or granted PL (s318CH MRA).

If a ML application is made over land within the area of a granted ATP, the ML may only be granted with the consent of the ATP holder or if the ML applicant complies with the provisions of chapter 7AA division 2 of the MRA (s318AO MRA).

In addition to the normal application process for a ML, the applicant is required to complete a CSG statement and address the CSG assessment criteria (s318AP MRA ). If the ATP holder does not give its consent to the grant of the ML, the ML holder must give the ATP holder a copy of the application (including the CSG statement) and then use reasonable attempts to consult with the ATP holder in order to agree an appropriate arrangement that will enable coal mining and petroleum exploration to take place (s318AT MRA ). If an arrangement cannot be agreed, the ML holder is required to submit details of the consultation with the ATP holder to the Minister (s318AT(d) MRA). The ATP holder has the right to lodge submissions regarding whether or not the proposed ML should be given preference to any petroleum development within the area (s318AX MRA).

If after the consultation period has ended and any submissions by the ATP holder have been made agreement still has not been reached, the Minister is required to make a decision regarding which resource should proceed to production first (s318BA MRA). As part of this decision making process, the Minister must refer the matter to the LRT to make a recommendation regarding which resource should take preference. In making a recommendation, the LRT must consider the CSG assessment criteria and determine whether the proposed ML is in the public interest (s318BC(5) MRA).

While the P&G Act prescribes a set regime for consultation and enable the Minister to make a preference decision, practically most petroleum producers and coal miners reach commercial agreements whereby consent is given to the grant of a ML in return for future consents to the grant of PL’s over the same area. These agreements, known as co-development agreements, describe the timing and nature of the activities that each party may conduct within the area of overlap.

By far the greatest impediment on the grant of a ML imposed under the CSG regime is where a ML application overlaps the grant of a PL. The regime prohibits the grant of a ML within the area of a PL unless the parties enter into a coordination arrangement (s318CB MRA). While there is an obligation on the petroleum tenure holder to negotiate (s318CA MRA), there is no obligation to agree. This enables the PL holder the sole right to vito an application for a ML for coal within the area of the PL.

The creation and protection of national parks is regulated under the Nature Conservation Act 1994 (NCA). Under the NCA, national parks are to be managed to provide, to the greatest possible extent, for the permanent preservation of the area’s natural condition and the protection of the area’s cultural resources and values.

The purpose of the NCA is to conserve nature through the creation of a State-wide conservation strategy. The NCA achieves its purpose by prescribing certain protected areas (including national parks) and regulating activities that are proposed to be undertaken in the protected areas. Through the NCA processes, the government has taken the view that the rights of mining tenure holders are inconsistent with the management principles of many protected areas.

The most significant impact of the NCA on mining is the prohibition on the grant of mining interests (including EPs, MDLs and MLs) within the area of national parks in Queensland (s27 NCA MRA). While this is not a blanket prohibition (s34 and s35 NCA allow the grant of certain tenure providing it is in accordance with the NCA), any grant must be consistent with the management principles and any management plan approved for the area. In practice, the grant will only be allowed for low impact activities such as approved powerlines and pipelines.

Under the NCA, the Minister may confer ‘protected area’ status on a nature refuge if the landowner agrees to enter into a conservation agreement to preserve the area (s46(3) NCA). If such a declaration is made, the affected parcel of land will be subject to the conservation agreement between the State and the landholder. Conservation agreements are a negotiated agreement and can include agreed management principles for the area and prohibited land uses (s45(1) and s45(5) NCA). The conservation agreement binds all persons with an interest in the land, including the holders of mining claims, MDLs or MLs (s45(4) NCA). They do not bind the holders of EPs.

Conservation agreements may impose an obligation on the parties to the agreement not to enable mining or exploration within the nature refuge.⁵ As a ML holder is taken to have an interest in the land the subject of the nature refuge, the ML holder may be bound by the agreement and required to prevent mining within the area (depending on the terms of the conservation agreement). Such a condition would be inconsistent with the rights of the ML holder. There does not appear to be any clarity under either the MRA or the NCA regarding whether such a provisions would prevent mining activities.

A nature refuge is also considered to be a category C environmentally sensitive area under the Environmental Protection Act 1994 (EP Act). The holder of mining tenure within the area of a category C environmentally sensitive area is required to comply with the Code of Environmental Compliance for Exploration and Mineral Development Projects or the Code of Environmental Compliance for Mining Lease Projects (the Code), as applicable (http://www.epa.qld.gov.au/publications?id=448). The Code provides guidelines in respect of protected areas falling under the NCA. Prior to carrying out activities in category C environmentally sensitive areas, the holder of a mining tenure is required to consult with the relevant administering authority and the EPA (Condition 13 of the Code ). If it is determined through the consultation that additional conditions are necessary, the holder must comply with those conditions. Any additional conditions cannot prohibit exploration activities.

The Wild Rivers Act 2005 (WRA) is the most recent addition to the Queensland government’s suite of legislation enacted to preserve the natural values of the environment. The purpose of the WRA is to protect rivers that have all or almost all of their natural values intact (s3 WRA). This is achieved through the declaration by the Minister of wild river areas including ‘high preservation areas’, ‘preservation areas’, ‘floodplain management areas’ and ‘sub-artesian management areas’ (s3 WRA).

The WRA defines a ‘high preservation area’ as including the river itself, major tributaries, any special features in the wild river area and the area, stated in the declaration, of up to 1 km either side of those features (s41(1) WRA.). The remainder of the declaration area is known as the ‘preservation area’.

Prior to declaring a wild river area, the Minister, must prepare a declaration proposal which identifies among other things the area that the proposed declaration covers and the regulation or prohibition of certain activities (s11 and s12 WRA). The nature of any prohibition on activities, including mining activities, will depend on each individual declaration that is made.⁶

In addition to any restrictions imposed under a proposed declaration, exploration under an EP within a wild river area may only be carried out within the wild river high preservation area, other than watercourses or lakes, if the exploration is a low impact activity (s238(2) MRA. This provision was recently inserted by the Wild Rivers and Other Legislation Amendment Act 2007. Act No.8 of 2007).

Mining tenure grants its holder significant rights to explore for, undertake testing of and extract minerals. However, while these rights are significant, they are limited by the MRA and numerous other pieces of Queensland legislation.

These limitations may be overcome as simply as consulting with the appropriate government authority. However, the solution may be as complex as entering into a detailed co-development agreement to enable both mining and petroleum production from the land.

It is prudent for the holder of any mining tenure to fully understand the nature of any overlaps which are likely to, in any way, inhibit or limit the holder undertaking authorised activities under the tenement. Information regarding overlaps can be obtained by accessing the Queensland Department Mines and Energy’s interactive resource tenure mapping or by conducting searches of the mining tenement and any underlying tenure.

By doing so, the holder will be better appraised of its rights under its mining tenure and can ensure that activities are conducted lawfully and without impeding future development of the area.

© Hopgood Ganim

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