Australia: Financial assurance and mine rehabilitation framework reform for Queensland


  • Mining and petroleum industry participants in Queensland.


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


  • 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.

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