Australia: Filling the void? NSW Government seeks to strengthen rehabilitation obligations for mine operators

Last Updated: 22 December 2017
Article by Claire Smith and Aaron Moss

The proposed reforms in the "Improving Mine Rehabilitation in NSW" discussion paper look set to further tighten the regulatory regime governing mining operations in NSW, by placing rehabilitation obligations at the core of all aspects of the mine cycle.

The NSW Government's " Improving Mine Rehabilitation in NSW" discussion paper proposes a range of policy measures which aim to place rehabilitation obligations at the heart of all stages of the mining lifecycle. Mining operators, and those contemplating establishing mine operations in NSW, should be keenly attuned to these developments which, if adopted, are likely to see mine operators shouldering an increased financial and regulatory burden.

The NSW Rehabilitation Reform Project

In New South Wales, rehabilitation obligations have traditionally been enforced through the imposition of conditions on development consents, as well as through the mining operations plan and security deposit regimes established under the Mining Act 1992 (NSW).

In 2017, this regime has come under increasing pressure. Earlier this year, the Audit Office of New South Wales in its report "Mining Rehabilitation Security Deposits" found that NSW's financial assurance regime had failed to ensure that the NSW government held funds sufficient to cover the full costs of undertaking rehabilitation in the event of wide-spread default by mines across the state. Concerns about the risks and uncertainties surrounding rehabilitation obligations were also at the heart of two Independent Planning Assessment Commission reviews which highlighted general community concern about the lack of successful rehabilitation of mining land in NSW.

In response, the NSW Department of Planning and Environment, Division of Resources and Geoscience launched the " Rehabilitation Reform Project". This "umbrella" project, which encompasses a range of particular policy measures, foreshadows a suite of new rehabilitation measures, including management standards, information tools, reporting requirements and performance management objectives, all of which are together designed to strengthen the regulatory regime surrounding rehabilitation in NSW.

On 1 December 2017, the Discussion Paper was launched as the latest aspect of the reform project.

What's proposed?

The Discussion Paper proposes a range of reforms which are designed to underpin and give effect to key parts of the reform project, by requiring mine-owners to address rehabilitation issues at all points throughout the mining cycle. Specifically, the Discussion Paper's key proposals include:

  • a set of rehabilitation standards for all significant mining projects, including a commitment to progressive rehabilitation and the development of standardised closure objectives;
  • a state-wide framework for the assessment of "final voids" in new mining projects;
  • requirements for mine closure and rehabilitation to be considered (and consulted on) as part of the mine operator's development application;
  • implementation of a binding system of "standard form" rehabilitation milestones as conditions of development consent; and
  • increased public access to information on mine operators' rehabilitation obligations and their performance against them.

Billing the discussion paper as the start of a "public conversation", the Department indicates that the measures proposed in the Discussion Paper are designed to inform policy and regulatory development to ensure that NSW mines operate consistently with best practice and deliver "appropriate social, economic and environmental outcomes".

What does this mean for mine operators?

If adopted, the Discussion Paper's proposals are likely to have a significant impact on all phases of the operation of both new, and existing, mines. However, we consider three proposals are likely to result in consequences of particular note.

Regulation of final voids

Firstly, in response to community concern about the adverse visual and environmental impact of "final voids", the Discussion Paper proposes the adoption of a "policy framework" which will greatly reduce their proliferation. Under the proposed policy framework, mines contemplating a final void will only be approved where proponents can demonstrate that the void cannot be removed, is capable of being beneficially re-used, and otherwise poses no threat the surrounding natural and human environment.

Mine operators are thus likely to come under increasing pressure to explore the possibility of backfilling final voids, or putting them to beneficial alternative use. These options are frequently logistically difficult, and significantly more expensive than the alternative options available. This is likely to increase the pressure on mine operators to consider alternative final landform designs when proposing new mines.

Rehabilitation and closure planning

Secondly, the Discussion Paper proposes that mine rehabilitation and closure plans be included as part of the mine's development application.

By requiring mine owners to plan for mine closure and rehabilitation at the commencement of the mining process, the Discussion Paper's reforms are likely to result in more meaningful community consultation, earlier in the development process. The Department hopes that this will result in clearer articulation of the relationship between the mine's progressive rehabilitation activities and its final objectives.

Mining operators, however, will need to confront difficult questions regarding rehabilitation far earlier in the planning process than they are ordinarily accustomed to. Such a shift in perspective is likely to require significant adjustment, and may require operators to make difficult predictions as to final land-use and rehabilitation before any mining activities have been undertaken.

Care and maintenance

Thirdly, the Discussion Paper recommends the development of a Departmental policy regarding mines which are placed into care and maintenance. In light of the Auditor-General's recommendations earlier this year, we consider that it is likely that any such policy will seek to limit the length of time a mine can be placed into care and maintenance, and more clearly define the circumstances in which a mine can be enter and exit this "hiatus".

This is relevant as substantive rehabilitation obligations are essentially suspended while the mine is in "care and maintenance" and, consequently, a mine operator's flexibility to determine the timing of that rehabilitation (in the case of uncertain economic circumstances) will also be curtailed.

Next steps

The proposed reforms in the " Improving Mine Rehabilitation in NSW" discussion paper look set to further tighten the regulatory regime governing mining operations in NSW, by placing rehabilitation obligations at the core of all aspects of the mine cycle.

In doing so, the Discussion Paper's proposals will require mine operators and project proponents to review their current operations, as significant changes are likely to be required.

The Discussion Paper is available to view on the Department of Planning and Environment's website. Interested parties are invited to make submissions to the Department, either by post or online. Submissions close on 16 February 2018. If you would like assistance with your submission, please do not hesitate to contact us.

RELATED KNOWLEDGE

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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