Australia: What Will Be The Impact Of The Mcarthur River Mine Case?

Last Updated: 11 September 2007
Article by Margaret Michaels and Sarah Riley

In Lansen and Ors v Northern Territory Minister for Mines and Energy [2007] NTSC 28, Justice Angel of the Supreme Court found that an approval granted by the Minister for Mines and Energy in respect of the existing underground McArthur River Mine to expand its operations to open cut mining was invalid under the Mining Management Act 1990 (NT).

The NT Government very quickly overturned the effect of the decision, making amendments to the McArthur River Project Agreement Ratification Act 1992 (NT) to retrospectively approve all mining activity at the mine. The decision, and the response from the NT Government, were highly controversial, receiving considerable media coverage and inciting three Labor ministers to cross the floor, and two independents to vote against the legislation.

Legislative framework

The McArthur River Project Agreement Ratification Act ratifies and comprises the agreement between the NT Government and Mount Isa Mines Limited to commence development of the McArthur River Project. This legislation provides that the terms of the agreement are paramount over contrary provisions in any NT legislation. By amending this piece of legislation, effectively, the Government was able to therefore override the application of other relevant NT mining legislation.

The Mining Act 1982 (NT) provides that an operator must apply for a mining interest, in order to carry out mining activities. The Mining Management Act ("the Act") provides for authorisation of mining activities, the management of mining sites and the protection of the safety and health of persons and of the environment on mine sites and for related purposes. It is this legislation which is most pertinent to this decision.

Section 35(1) of the Act declares that an operator must not carry out mining activities on the site unless the Minister has granted an Authorisation to do so. An Authorisation permits mining activities in compliance with its specific conditions, one of which is compliance with the current Mining Management Plan. The Management Plan must include:

  • the identification and description of mining activities
  • particulars of the implementation of the management system to address health and safety issues
  • particulars of the implementation of the management system to address environmental issues
  • a plan and costing of closure activities
  • particulars of the organisational structure; and
  • plans of current and proposed mine workings and infrastructure and other information required by the Minister.

In granting an Authorisation, the Minister must have regard to the mining interest held by the operator under the Mining Act in respect of the mining activities to which the Authorisation relates and any conditions of that mining interest and must ensure that the Authorisation is not inconsistent with the mining interest.

To change an Authorisation, the operator can apply to the Minister requesting a variation or revocation of an Authorisation, or the grant of a new one. The Minister is not allowed to vary an Authorisation unless the variation will have the effect of improving the protection of the safety or health of persons or the environment on the mining site. Alternatively, under section 41 of the Act, an operator may review and amend the mining management plan and submit this to the Minister for his or her acceptance.

Background to the decision

Since 1993, the mine has been operated as an underground mine. The operator of the mine, McArthur River Mining Pty Ltd (now owned by Xstrata) has been carrying out mining activities on the mine site under an existing Authorisation granted by the Minister in early 2003. The application for the existing Authorisation described the mining activities as "Underground lead/zinc/silver mine, processing plant and Bing Bong port facility".

In late 2006, the Minister controversially approved a proposal by Xstrata to convert the mine from an underground to an open-cut operation, by accepting an amended Mining Management Plan that provided for this change, and granted a further Authorisation which provided for further environmental audits and security safeguards. The method of the Minister's approval is the subject of the legal challenge.

Argument by native title claimants

The proceedings were brought by native title claimants to land and waters affected by the McArthur River Project, concerned mainly with the environmental impact to the McArthur River. They challenged the validity of the Minister's decision to approve the change in the method of mining on the basis that he acted in excess of his powers under the Act, claiming that the approval given by the Minister of a change from underground to open-cut mining via amendment to the Mining Management Plan was invalid since such approval can only be made by a variation or revocation and grant of an Authorisation under the Act. Alternatively, the Minister failed to comply with appropriate environmental assessments.

While acknowledging that section 41 of the Act does allow a change in mining activities to be approved by acceptance of an amended Mining Management Plan, the traditional owners argued that this can be achieved only within the terms of an existing Authorisation. This was the sticking point upon which Justice Angel was to deliver his decision.

Argument in response

The Northern Territory Minister for Mines and Energy, the Northern Territory Government and McArthur River Mining argued that the proper way to approve a change in the method of a mining activity was via an amendment to the Mining Management Plan since the "mining activities" authorised by an Authorisation must be carried out in compliance with conditions, one of which is compliance with the current Mining Management Plan in respect of those mining activities.

The definition of "mining activities" sets out various classes of activity, such as exploration for minerals, mining of minerals, processing of minerals and other matters. This definition does not limit the method by which mining activities may be carried out, that is, "mining of minerals" is still a mining activity, whether conducted by underground or open-cut method. The Mining Management Plan is therefore the relevant instrument that requires amendment and approval.

In addition, it was argued that Authorisations are not intended to authorise specific methods of mining. This is supported by the requirement that the Minister must have regard to the mining interest and any conditions held under the Mining Act in respect of the mining activities to which the Authorisation relates, and nothing in the Mining Act or the conditions restricts the method of extracting minerals.

Conclusion by Justice Angel

The proposed open cut mining operation is statutorily prohibited in the absence of an Authorisation. The Minister's acceptance of the amended Mining Management Plan was of no effect because the plan was not in respect of the mining activities to which the original Authorisation related.

In accordance with sections 35 and 36 of the Act, the Authorisation must be read together with, and subject to, the application for the Authorisation. The original Authorisation was not to carry out mining activities of whatever type, for whatever minerals and by whatever methods as may from time to time profitably be the subject of a Mining Management Plan acceptable to the Minister. Rather, the relevant Authorisation was for a mine of a particular generic description, namely that which was proposed in the application for an Authorisation, that is, an "underground lead/zinc/silver mine".

Impact of the decision

Northern Territory Governmental response to the decision shows that mining in the Territory is a Governmental priority, and it will act to support mining activities despite judicial disagreement. In the face of considerable backlash, however, it would be dangerous to assume that the Territory Government will take a similar path in the future. Bearing this in mind, the implication of the decision for mining operators is that they will be required to follow the letter of the law.

This decision may also instil a lack of faith by native title holders and traditional owners in the effectiveness of the Territory Government's environmental regulations. Since Aboriginal people own or control much of the land on which mining operations are carried out in the Territory, they may require further measures and assurances in contractual arrangements between them and the mine owners and operators before agreeing that mining take place on their land.

Although Justice Angel did not confirm the correct avenue under the Act to effect substantial changes to mining operations in the future, it appears that if a change is proposed and it is unlikely an existing Authorisation will cover it, the proper avenue under the Act would be a variation or revocation to the existing Authorisation, or an application for a new Authorisation. These avenues require revised Mining Management Plans or environmental assessments to be carried out, and accordingly, greater environmental transparency.

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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