Queensland Government implements framework for the deferral of rent for Queensland critical minerals projects 5 min read
As part of implementing a key action in the Queensland Resources Industry Development Plan, the Queensland Government has recently made amendments to Queensland's mining legislation to allow for deferral of rental payments on mining leases for specific critical minerals projects.
Queensland is a critical player in future minerals investment with a diverse range of critical minerals, significantly contributing to the Australian economy. This framework is yet another positive step from the Queensland Government to ensure the state's critical mineral industry continues to be supported and grow to its full global potential.
- When applying for a mining lease, proponents of specified critical mineral projects should consider whether they meet the requirements to request a deferral on the rent payable in the first year of their mining lease.
- Rent deferrals will be given where the proponent can show that an amount equivalent to the first year's rent will be spent on start-up and development costs to start mining.
- A rent deferral in essence enables the proponent of a specified critical mineral project to defer the payment of the first year's rent for a three-year period. Thereafter, payment of the deferred rent will be by way of five equal yearly instalments and constitute a condition of the mining lease.
The Queensland Government recently passed the Coal Mining Safety and Health and Other Legislation Amendment Bill 2022 (Qld), which inserted into the Mineral Resources Act 1989 (Qld) and Mineral Resources Regulation 2013 (Qld) the necessary framework to allow the Minister of Resources, in certain circumstances, to defer the rent payable in the first year of a mining lease for specified critical minerals.
Critical minerals are generally regarded as those metallic or non-metallic elements that are essential for the functioning of our modern technologies, economies or national security and where there is a risk that supply chains could be disrupted.
The Queensland Government has publicly stated its desire to encourage exploration for, and development of, critical minerals in the state, and this is one of a number of actions in the Queensland Resources Industry Development Plan supporting that policy.
- high purity alumina
Obtaining a rent deferral
The Minister must defer the payment of the first year's rent under a mining lease, where the Minister is satisfied upon grant that the holder of the lease:
- proposes to mine one of the critical minerals listed above under the lease;
- proposes to spend an amount equivalent to the first year's rent on start-up and development costs to start mining; and
- has requested deferral of the rent.
Payment of deferred rent
Where the Minister grants a rent deferral, payment of the deferred rent will be by way of equal yearly instalments and constitute a condition of the mining lease. Payment of the deferred rent instalments (equivalent to 20% of the deferred rent without interest or escalation) will commence on the third anniversary of the end of first year's rental period, with the last instalment due on the seventh anniversary of the end of the first rental period.
Any unpaid deferred rent will be regarded as a debt due to the Queensland Government.
If you have an early-stage critical minerals project in Queensland and you will soon be applying for a mining lease, or have recently applied for your mining lease but it is yet to be granted, you should consider whether you meet the requirements to obtain a rent deferral.