Client Update: Environmental bond and mine rehabilitation reform in Queensland
15 May 2017
In brief: Major reforms to environmental bonds and rehabilitation requirements are proposed in two discussion papers released by the Queensland Government. All mining sector operators should understand how the reforms will impact their current and proposed operations. Partner Bill McCredie (view CV) and Senior Associate Gobind Kalsi report.
The proposed reforms in the Queensland Government's discussion papers will have the following consequences for operators in the mining sector:
1. The current environmental bond (ie financial assurance system) will be replaced with what is intended to be a 'risk based' system.
The outcome of the new system will be that the majority of mine operators in Queensland will make contributions into a pooled rehabilitation fund, rather than being required to hold bank guarantees for the estimated cost to rehabilitate disturbed land.
The amount of contribution will be calculated by the rehabilitation cost multiplied by the rate of relative financial risk.
The funding of rehabilitation liability is a significant ongoing cost for all mining operators. Accordingly, all operators should understand the benefits and risks of the proposed changes.
2. Operators undertaking mining activities that require site specific environmental authorities (ie full-scale mining activities) will be required to have a 'life of mine plan' that will include binding and enforceable milestones for mine rehabilitation.
A new regulatory regime will be introduced to support the proposed 'life of mine plan' including:
- a new definition of when mined land will be considered to be rehabilitated;
- a definition of when mined land is considered available for rehabilitation;
- the opportunity for public comment on the life of mine plan and any significant changes to the life of mine plan; and
- the life of mine plan will identify the post-mining land use for the land.
3. New requirements for mines placed into 'care and maintenance'.
Although not a primary focus of the discussion papers, the papers do flag new requirements for operations that are placed into care and maintenance.
A summary of the current system, proposed changes in the discussion papers and issues that may warrant consideration by the mining sector are identified in the table below.
|Current position||Proposed change||Some issues for consideration|
Environmental bonds (financial assurance)
The current approach to calculating environmental bonds will be replaced with what is intended to be a 'risk based' approach such that:
Rehabilitation requirements for mining activities requiring site-specific environmental authorities
In addition to the current rehabilitation requirements site specific environmental authorities* (ie full-scale mining activities) will be required to have a life of mine plan that will include binding and enforceable milestones for mine rehabilitation.
*The relevant discussion paper suggests there may be some streamlining opportunities available. For example, whether the life of mine plan may replace all or part of the Plan of Operations.
Care and maintenance requirementsObligations relating to placing operations into care and maintenance include:
The proposed reforms to the environmental bond (financial assurance) and mine rehabilitation are significant. All mine operators, financiers, joint venture partners and relevant financial institutions in Queensland should understand the proposed changes and consider whether to make submissions to ensure the regime reflects the complexity of business arrangements that underpin the mining sector.
- Bill McCrediePartner,
Ph: +61 7 3334 3049
- Ben ZillmannPartner,
Ph: +61 7 3334 3538
- Karla FraserPartner,
Ph: +61 7 3334 3251
- Eve LynchManaging Associate,
Ph: +61 8 9488 3911
- Gobind KalsiSenior Associate,
Ph: +61 7 3334 3310
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