On 20 May 2020, the Mineral and Energy Resources and Other Legislation Amendment Act 2020  (Qld) (the MEROLA) passed in Queensland Parliament.  The changes introduced by the MEROLA have staggered start dates, with the first provisions already in effect from 1 July 2020.

This article explores some of the most significant changes included in the MEROLA and discusses their impact on the sector, while also suggesting possible steps to address some of the intended (and unintended) consequences of the changes.  All of the provisions considered in this article will come into effect from 7 September 2020.

Notably, the MEROLA has introduced industrial manslaughter provisions for the resources sector, a detailed summary of which can be found here.

Changes impacting M&A

The MEROLA will make two significant amendments with the potential to influence sales processes for resource projects.

Disqualified applicant or acquirer

MEROLA will provide a list of disqualification criteria.  If  the Minister decides an applicant is disqualified under the criteria, the Minister must reject the application to transfer, grant or tender for the resources authority.

An applicant may be a disqualified applicant if, among other things, they, or an 'associate' (which is broadly defined, see below):

(a)          has a history of non-compliance or has been convicted of an offence under relevant resource sector related legislation;

(b)          has, in the last 10 years, been convicted of an offence involving fraud or dishonesty;

(c)          is insolvent or under administration; or

(d)          has, in the last 10 years, been a director of a company subject to a winding-up order, or a controller or administrator is or was appointed.


(a)          in respect of a company applicant – a director, parent company or a director of a parent company; or

(b)          as a broader catch-all – a person who is in a position to control or substantially influence the applicant's affairs in connection with the resource authority.  This additional limb of the definition of 'associate' ensures that creative structuring alternatives cannot be used to avoid the new provisions.

The MEROLA will contain a process for anyone held to be a disqualified applicant by the Minister to dispute that disqualification, however, it is unclear how helpful this process might be.

This new criteria means that the Department will seek additional information in order to undertake increased due diligence on potential applicants, especially in situations where a joint venture or consortium is applying for a transfer or grant of a resource authority.  There is the potential for a whole group to be held as a disqualified applicant where one party or member is disqualified.

Change of control condition

The second change has been a long time coming.  Unlike other States (such as New South Wales and South Australia), in Queensland, you could previously carry out a share sale of a company holding a resources authority without the need to interact with or seek approval from the Department.

The Financial Provisioning Fund and Surety Scheme (the Scheme) was enacted last year and introduced a change of control event as a trigger for a risk allocation assessment.  However, this change of control review process does not give rise to an approval process for the resource authority itself, thereby creating a two-tier system – being that a party would need to notify and receive assessment under the Scheme for a change of control while being able to become the indirect owner of the resource authority with no similar oversight.

The MEROLA will partly address this issue.  Where a change of control (defined consistently under the Corporations Act concepts) occurs and the Minister becomes aware of such a change (this would occur in the ordinary course under the Scheme), the Department will carry out an assessment of the new controlling entity to confirm if it has the technical or financial capability to comply with the conditions of the resource authority.  If it does not, the Department may vary or impose new conditions on the resource authority.  The Department still has no ability to block the share transfer or otherwise taker control of a resource authority.  However the imposition of a new condition or variation of an existing one may adversely affect the viability of the overall project.

What does this mean for transactions?

Overall, these changes impact how M&A transactions in the resources sector proceed in the future.

Proposed sellers and purchasers will need to undertake due diligence on the purchaser's 'associates' at the very least by the time of the lodgment of any requests for transfer.  A party to a joint venture or a consortium will need to know if any of its partners would be a 'disqualified applicant' thereby making the proposed purchaser a 'disqualified applicant'.  Given the broad brush with which these amendments have been written, it would be sensible to include (in relevant joint venture and other consortium arrangements) warranties confirming there is no criteria under the MEROLA triggered by the relevant entity or its associates.

Further, joint venture and consortium documents should consider the implications if a party becomes a disqualified applicant or seeks to appoint a director, which would trigger these provisions during the time they hold a resource authority.  Although, the legislation does not provide for action once a resource authority has been granted or transferred, it could potentially impact a joint venture being granted a mining lease when expanding.

The change in control conditions also provide some transaction uncertainty for proposed share purchases, as the purchaser would have planned its future operation of the project located on the resource authority on the basis of the conditions in effect at the time before entering the transaction document.  Additional adverse conditions imposed by the Department could have significant economic impacts on the project value and the purchaser's planned operation of that project.

Unfortunately, no indicative approval mechanism has been included in the MEROLA which would allow a party to seek an indication of any additional conditions that the Department may impose prior to accepting the transfer of the shares in the resource authority holder.  However, we anticipate that the indicative approval mechanism contained in the Scheme's legislation (allowing a party to apply ahead of time to see what their risk allocation will be under the Scheme) may provide insight.  Relevantly, the criteria for this assessment is partly the technical and financial capability of the applicant.  As such, a proposed transferee applying for indicative approval under the Scheme and who receives an undesirable outcome could assume, to at least some extent, the Minister will utilise the new change of control provisions in the MEROLA and impose additional conditions.  The appetite for informal engagement with the Department in respect to this is unknown but will likely be tested early on.

Changes impacting mining tenements

Clarity for transport and infrastructure mining leases

Currently, the Mineral Resources Act 1989  (Qld) (MRA) allows a mining lease (ML) holder (or applicant) to apply for a further ML for transportation purposes associated with its mining activities (Transport ML), even where the ML holder does not hold an existing pre-requisite tenement for the relevant land.

Where a Transport ML is sought for land included in an exploration permit (EP) or a mineral development licence (MDL) held by a third party, that holder's consent does not need to accompany the Transport ML application – but the third party must be notified of the application having been made.  However, the MRA is currently silent on requirements for seeking a Transport ML for land already included in a third party's ML (Existing ML).

The MEROLA will helpfully clarify that a Transport ML application for land included in an Existing ML must be accompanied by the Existing ML holder's consent to the application.

In addition, the MEROLA will also contemplate a 'fall-back' where that consent cannot be obtained.  The Minister for Natural Resources, Mines and Energy (Minister) may grant a Transport ML where the:

(a)           Transport ML applicant cannot obtain consent from the Existing ML holder; and

(b)          Minister is satisfied the Transport ML activities are compatible with the Existing ML, and the co-existence of both MLs would optimise development of the State's resources and maximise benefit for Queenslanders (Co-existence Criterion).

A Transport ML granted in reliance with the Co-existence Criterion will be subject to a condition that the transport activities must comply with each relevant agreed co-existence plan (which will also be required for other overlapping tenements as outlined below) and a similar condition will be imposed on the Existing ML.  The MEROLA will provide a process for agreeing co-existence plans, including the ability to arbitrate a dispute preventing agreement.

Importantly, this fall-back will also apply to specific purpose ML applications for land the subject of a third party's EP, MDL, or ML.

This arrangement will not apply for land that is the subject of a call for mining lease tenders.

New competitive tender process to repurpose abandoned mine sites

The existing competitive tender process under the MRA, which currently only relates to EPs, will also be impacted by the changes, allowing the Minister to tender particular areas for ML applications.

Primarily, these amendments are intended to complement ongoing legislative reforms to facilitate re-commercialisation of legacy or 'abandoned' mine sites, although the legislation has not been drafted to limit tenders to this purpose.  The targeted release of particular legacy sites through a tender process will potentially enable innovative operators to capitalise on existing viable mineral resources, which would otherwise have been neglected, without requiring them to first obtain exploration tenure and comply with associated obligations.

Where an ML is tendered under this new process, tenderers and applicants will still be required to otherwise undertake the usual approval processes for a ML, including determining compensation, addressing native title requirements, and obtaining an environmental authority and any other permits or licences for the proposed activities.

The MEROLA will expand the existing 'abandoned mines' regime to add a range of activities to the definition of 'remediation activity', for which a person can seek authorisation to enter land which has ceased to be within a relevant resource tenure.  The regime will now also specifically contemplate a scenario where rehabilitation obligations remain in effect for land pursuant to an approval under the Environmental Protection Act 1994  (Qld) but the MRA provisions have caused the tenement to become non-current.

Development plans expanded to mineral ML holders

The MEROLA will amend the MRA to expand the requirement to prepare and comply with development plans for MLs.  Previously, these requirements have only applied to coal miners.

Once amended, the requirements for development plans will apply to MLs for 'prescribed minerals' under the MRA.  As it stands, the MEROLA will also amend the Mineral Resources Regulation 2013  (Qld) to define prescribed minerals as bauxite, clays, copper, diatomite, dimension stone, gold, gypsum, lead, limestone, magnesium rich materials, phosphate rock, silica, silver, tin, titanium minerals, zinc and zircon, where mined at or above certain quantities.

A key outcome of the expanded requirements is an increase in the State's oversight over activities conducted on mineral MLs and, in particular, a requirement for operators to engage with the State where proposing to enter into care and maintenance.  Notably, a failure to comply with certain requirements to prepare development plans where triggered can give rise to a process leading to cancellation of the ML.

Other changes for regulatory efficiency

The MEROLA will also make the following changes, designed to improve the efficiency of the regulatory framework:

(a)           giving the Minister power to decide what is 'excluded land' when granting or renewing an EP or MDL under the MRA, bringing the MRA in line with excluded land powers under the Petroleum & Gas Act (Production and Safety) Act 2004  (Qld).  Previously, the Minister only had the power to decide applications by EP and MDL holders to add excluded land into a tenement after its grant;

(b)           consolidating the conference provisions from relevant resources legislation under the Mineral and Energy Resources (Common Provisions) Act 2014  (Qld) (MERCP Act) as an avenue for landowners and tenement holders who wish to attend a conference to discuss relevant concerns with a departmental officer;

(c)           allowing for certain documents to be served electronically;

(d)           clarifying when a royalty return is not required to be provided with an application to transfer or surrender a mining claim or ML; and

(e)           requiring security to be paid before a grant of an ML.


The Queensland Government has committed to streamlining the legislative regime for resource authority administration and the mining sector generally.  The amendments explored in this article, which will be implemented by the MEROLA on 7 September 2020, are consistent with the policy goals announced to date and are arguably appropriate amendments for a sector that is increasingly focused on ensuring social licence to operate and the overall sustainability of mining projects.

As the MEROLA will add additional compliance obligations both in respect of operations and the sale and purchase of resource authorities, it is important that you seek advice to understand how these new obligations apply to you.  This is an important exercise as the success of future projects may be jeopardised by a failure to implement a robust compliance regime.

The MEROLA can be accessed here.

Many thanks to Deekshita Ardham and Grace Kaggelis for their assistance in preparing this insight. 

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.