Australia: Financial assurance and mine rehabilitation framework reform for Queensland

WHO SHOULD READ THIS

  • Mining and petroleum industry participants in Queensland.

THINGS YOU NEED TO KNOW

  • The Queensland Government announced broad policy reform proposals in relation to financial assurance and rehabilitation for the mining and petroleum sector.

WHAT YOU NEED TO DO

  • Industry participants are encouraged to consider where they, and their sites, would sit under the new regime.

Yesterday, the Queensland Government announced broad policy reform proposals in relation to financial assurance (FA) and rehabilitation for the mining and petroleum sector. Two discussion papers, Financial Assurance Framework Reform and Better Mine Rehabilitation for Queensland, are currently available here.

The regime represents an innovative approach to managing Queensland's existing rehabilitation risk management. The risk identified by the regulator and some commentators is that rehabilitation efforts to date have fallen below expectations.

Treasurer Curtis Pitt, Minister for Natural Resources and Mines Dr Anthony Lynham and Minister for Environment and Heritage Protection Steven Miles say that the reforms are the most significant upgrade to the resources sector FA and rehabilitation framework in almost two decades.

The reform suite, which will be announced progressively over the next year, includes:

  • a remodelled FA framework tailored to proponents based on size and risk level
  • a state-wide pooled FA fund
  • other options for providing FA (for example, allowing insurance bonds and overseas banking institutions)
  • updated rehabilitation calculations and roll back of FA discounts
  • regular monitoring and reporting measures for progressive mine rehabilitation, and
  • clear completion requirements and performance-based incentives.

Financial Assurance

The Financial Assurance Framework Reform creates a 'tailored solution' by classifying resource companies into four categories based on their risk profile and rehabilitation cost estimate. FA arrangements would be determined according to this classification, which may change with changing circumstances.

FA arrangement Description
Rehabilitation Fund A 'representative resource entity' (i.e. a company with an acceptable risk profile) will contribute an amount based on its risk profile to a state-wide rehabilitation fund spanning industries including mining and gas. The Queensland Government will be able to draw upon the fund pool if it is required to take on rehabilitation responsibility for one of these companies.
Selected Partner Arrangement A 'significant resource entity' (i.e. companies that represent 5% or more of the total rehabilitation liability in Queensland) with a low risk of financial failure will contribute funds to Government resource initiative, and the Government will take on the risk.
Third Party Surety A 'significant resource entity' with a higher financial risk profile, and 'other resource entities' will be required to provide third party surety for the full estimated rehabilitation amount. The possible forms of surety are being reviewed with a discussion paper scheduled to be released later this year.
Small Operator Arrangement A 'small operator' (i.e. a company with rehabilitation cost estimates totalling less than $50,000) will fall under the Rehabilitation Fund or Third Party Surety arrangements depending on the total amount of FA required.

Industry participants are encouraged to consider where they, and their sites, would sit under the new regime.

For example:

  • Particularly for a 'representative' or 'significant' resource entity (as defined above): is a contribution to a rehabilitation fund (which may exceed current FA maintenance costs) attractive, in the context that borrowing capacity would be improved when compared with the status quo where an FA is in place?
  • Does the introduction of offshore banking institutions and insurance bonds as a possible FA alternative create a more competitive marketplace, with potential resulting cost reductions and increased alternatives?
  • Where some form of third party surety is still required, discounts would under the papers no longer be available. Particularly for small operators or 'significant resource entities' with a higher financial risk profile: does this outweigh other potential benefits arising under the papers?
  • What specific triggers (e.g., credit rating thresholds) will be introduced to determine whether a particular entity (or perhaps a particular site) falls into the selected partner arrangement or third party surety arrangement, for example? Does this give rise to potential competitiveness concerns for operators captured by the third party surety regime?
  • What happens where a number of joint venturers, potentially falling into different categories under the new regime, jointly own and/or operate a mine? For example, if one party to a joint venture carries a higher financial risk than the others, would this potentially necessitate a third party surety borne by all? This matter and related issues have been flagged for further consideration later this year.

Sites in care and maintenance

The policy also foreshadows changes to Governmental management of mine sites in care and maintenance, to be announced for consultation in late 2017. Additional risk management at these sites is proposed, which, critically, may include the introduction of progressive rehabilitation requirements.

Mine rehabilitation

The Better Mine Rehabilitation for Queensland proposes a new policy for mine rehabilitation including:

  • life-of-mine plans for all site-specific mines including final rehabilitation outcomes for each area and time-based milestones for operation, care and maintenance, decommissioning and closure
  • monitoring, assessment and reporting on rehabilitation outcomes
  • enforceable requirements for progressive rehabilitation
  • clear completion and sign-off requirements
  • performance based incentives – to encourage early and progressive rehabilitation, and
  • good quality data to inform policy and regulatory implementation.

The discussion papers are open for stakeholder consultation until 5.00pm on 15 June 2017. Submissions can be made online here.

In the coming months, consultation will be undertaken on the remaining areas of reform:

Date Focus
Now FA framework
Mine rehabilitation in Queensland
Mid-late 2017 Range of surety providers
Late 2017 Abandoned Mine Lands Program
Late 2017 Management of sites in care and maintenance
Mid 2018 Other reforms

McCullough Robertson will continue to monitor, engage in, and provide updates on these developments.

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

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

Authors
 
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
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (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 www.mondaq.com

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 Mondaq.com’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.

Disclaimer

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.

Registration

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 by clicking here .

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 unsubscribe@mondaq.com 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.

Cookies

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.

Links

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.

Mail-A-Friend

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.

Security

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 webmaster@mondaq.com.

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 EditorialAdvisor@mondaq.com.

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 enquiries@mondaq.com.

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