Australia: Queensland takes significant next step towards financial assurance and rehabilitation reforms of mineral resource projects


  • All stakeholders in the Queensland resources sector, including Environmental Authority (EA) holders, providers of third party sureties, providers of resource sector site rehabilitation services.


  • From 1 July 2018, major changes to the financial assurance regime and the requirement to carry out progressive rehabilitation will occur if the Parliament supports the FA Bill.


  • Consider the implications for any projects at the feasibility or planning stage, particularly impacts on planning of final land forms.
  • Consider the timing and implications of any amendments to existing EAs, the plan of operations submissions and whether additional work is required to transition your current EA rehabilitation conditions to a Progressive Rehabilitation and Closure Plan (PRCP).

This week, Treasurer Curtis Pitt introduced the Mineral and Energy Resources (Financial Provisioning) Bill 2017 (Qld) (FA Bill) which, if passed, will make broad sweeping changes to the State's financial assurance (FA) and rehabilitation regime. The changes affect every resource project in Queensland and are expected to commence in mid 2018. The proposal was well telegraphed, having been flagged initially though a series of discussion papers released in May 2017. Key elements proposed are:

  • pooled rehabilitation fund – a fund is established to cover the rehabilitation costs if eligible companies default on rehabilitation obligations
  • ERC Decision – the estimated rehabilitation cost (ERC) decision replaces the FA decision, and will apply for an ERC period nominated by the EA holder of between 1-5 years. FA discounts are removed
  • scheme manager – the position of 'scheme manager' is established. The scheme manager is responsible for assessing a company's risk rating, and managing the rehabilitation fund
  • risk rating – companies will be allocated a risk rating and this will determine fund eligibility and contribution rates. A merits review is not available for this decision
  • corporate groups – companies (including corporate groups) with more than $450 million of the State's total rehabilitation liability in Queensland will only be eligible to the participate in the fund up to that threshold
  • method of providing FA – some companies will not qualify for the rehabilitation fund, as their rehabilitation risk is considered too high. They must provide an FA, which may be provided as an insurance bond, freeing up cash for those that currently have cashed backed guarantees
  • tenement transfer or change in control – a registered dealing or change in control will trigger a review of the risk allocation by the scheme manager. Otherwise, it is subject to an annual review
  • plans of operations – mining companies will no longer be required to submit a plan of operations, but they are retained for holders of petroleum leases
  • PRC Plan and PRCP Schedule – existing mines will be required to 'translate' their existing EA rehabilitation conditions into a binding progressive rehabilitation milestones. Every EA in Queensland will require amendment, and
  • residual voids and floodplains – areas that cannot support a post-mining land use will face particular scrutiny. For new mines, voids will not be approved in floodplains.

Key Issues - FA Reform

Established to fund rehabilitation if either a resource company fails to meet its rehabilitation obligations or if a tenement is disclaimed, the Financial Provisioning Scheme (Scheme) introduces major changes that affect every resource company operating in Queensland. Key aspects of the Scheme include:

  • it will be managed by a new statutory officer dubbed the Scheme Manager who will report annually on the Scheme, including on the Scheme's revenues and costs
  • all resource projects will be allocated by the Scheme Manager to either a very-low, low, moderate or high risk category. This will determine whether it sits in:
    • the Rehabilitation Fund Pool (Pool), or
    • the Surety Division
  • Selected Partner Arrangements for very large entities have been dropped, these entities may now have projects sit in both the Pool and Surety Divisions. If a corporate group's FA is above the fund threshold – proposed to start at $450 million, these will be assigned to the Pool up to the threshold with the remainder sitting in the Surety Division
  • KPMG have been engaged to design the risk assessment that will apply to resource projects under the Scheme. Its report, Design of the Risk Assessment Process for the FA Scheme ( Risk Report) recommends that risk not be based solely on external credit ratings, instead the Scheme Manager should consider:
    • the financial strength of the EA holder and its parent company
    • the remaining resource, and
    • the extent of rehabilitation effort on site.
    • This has carried through to the FA Bill, however much of the detail of the Scheme Manager's considerations will be deferred to the Scheme Manager Guidelines.
  • as expected, the amount paid to the Pool is calculated based on the ERC decision (which replaces an FA decision), and the risk allocation. As yet, Government has not made the contribution costs public however they may range from 0.5% to 2.5%. Without knowing the costs, it is difficult for companies to properly assess whether they are financially better off under the Scheme. Adding to this challenge, the previous FA scheme used a system of discounts to reduce the amount of FA payable by up to 30%. The Scheme removes this discount mechanism.

Form of surety

Currently FA is either in cash or by way of a bank guarantee provided by a regulated banking entity. The Scheme adds a third option – insurance bonds – which must be irrevocable, allow on-demand and unconditional payment and be governed by Queensland law. We anticipate that insurance companies will enter the market to provide these once the Scheme is established. The Government has decided not to add escrow arrangements or non-cash collateral.

Transition to the new scheme

  • the target date to commence the transition to the new Scheme is 1 July 2018, and existing resource projects will be transitioned into the new Scheme over a three year period, although there may be company/ project specific negotiations around transition, and
  • risk assessments will be conducted annually and EA holders who move, say, from the Pool to the Surety Division will be given a 12 month notice period.

Other key provisions

  • certain tenement transfers or a change in control (defined by reference to the Corporations Act 2001 (Cth), will trigger a review of the risk allocation by the Scheme Manager. The FA Bill establishes a mechanism for an indicative risk categorization – say where a company is considering purchasing an operation and requires certainty of the cost of being part of the Pool
  • a company must notify the Scheme Manager if production ceases for more than 6 months, effectively a notification of entering care and maintenance
  • the petroleum and gas sector will sit under the same Scheme as the mining sector
  • there will be no 'opting out' for those entities assigned to the Pool – despite some entities providing evidence they can achieve third party surety costs well below proposed Pool levies, and
  • industry FA calculators will be removed as an option.

The impact of the Scheme on joint ventures and other complex corporate structures has been a concern to a number of industry participants. The FA consultation report states that 'Government is working with legal and accounting advisors and industry members to ensure complexities such as JV arrangements are appropriately taken into account.' Otherwise, these arrangements are not given any special consideration in the FA Bill. There may be an opportunity to nominate a holder for the purpose of Pool eligibility – which may help some companies overcome the $450 million threshold, and centralise joint venture risk rating considerations.

Better Mine Rehabilitation

Life of mine plans have been renamed the 'Progressive Rehabilitation and Closure Plan' (PRCP). The Government is proposing to develop detailed guidance material on development of PRCPs and milestones with appropriate rehabilitation completion criteria, but for now we know that:

  • plans of operations – mining companies will no longer be required to submit a plan of operations, but they are retained for holders of petroleum leases
  • PRCP and PRCP Schedule – existing mines will be required to 'translate' their existing EA rehabilitation conditions into a binding progressive rehabilitation milestones. This change will require that every mining EA in Queensland is amended. The FA Bill allows for this transition to occur gradually over 3 years, with companies provided a notice to provide the PRCP and then 6 to 12 months to deliver the PRCP. The PRCP will be required as part of the environmental assessment for major new projects, usually through the EIS. Once approved, the PRCP Schedule is binding and it will be an offence not to comply with it. Amending a PRCP Schedule will follow a similar process as an EA amendment, including public notification requirements
  • non-use management areas – this concept has appeared in the FA Bill, and applies to areas that cannot be rehabilitated to a stable condition and suitable post-mining land use. The concept will particularly apply to mining voids, but could equally apply to other mining areas. Non-use management areas will require approval through the PRC Plan process, and
  • residual voids and floodplains – areas that cannot support a post-mining land use will face particular scrutiny. For new mines, voids will not be approved in floodplains.

Where to from here

Considerable detail has been deferred to supporting regulations and guidelines, making it difficult for industry to fully assess the overall impacts of the new Scheme and associated mine rehabilitation reforms.

The streamlining of the tailored solution into two divisions, the Pool and Surety Division, makes sense, as does the ability of larger entities to sit in the Pool, up to a limit. Those entities that believe they can achieve surety costs below proposed Pool levies will not be able to opt out. So, if you are assigned to the Pool, then all that remains in play is your risk assessment.

The pool should unlock cash and potentially borrowing capacity for companies with large amounts of cash tied up to back their guarantees.

While industry participants will be understandably focused on the financial impacts (positive or negative), there are also the 'social licence' benefits to be considered of moving beyond the long-running debate about whether the State carries sufficient FA to protect taxpayers.

The target date to begin the transition to the new Scheme is 1 July 2018.

Looking from the vantage point of October 2017 and an intervening election, the target commencement date for the new arrangements of 1 July 2018 seems ambitious.

While the Labor government remains well and truly committed to these reforms, it is unclear whether they would survive a change of government. Industry will remember that the LNP government's Risk Evaluated Financial Assurance model had been close to being implemented in 2015 when an election intervened and the incoming Labor government decided to put the changes on hold. Both parties have invested considerable effort and resources into FA reform. However, the lesson is that it is very difficult to complete implementation of a reform package inside a three year term of government. Bipartisanship is important if reforms are going to succeed.

While industry weighs up the pros and cons of supporting the reforms, it will also be looking ahead, at the potential implications of the State election.

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.

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

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

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
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (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

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’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.


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.


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 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.


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.


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.


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.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


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

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

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

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