The Mineral and Energy Resources and Other Legislation Amendment Bill 2020 (Qld) (MEROLA) proposes another large suite of changes to Queensland's mining and energy legislation. This omnibus bill follows a series of substantial restructures and amendments to Queensland resources law, after MERCP (2014), MOLA (2016), MWOLA (2018), MERFP (2018) and NROLA (2019), a number of which themselves have not yet commenced into force.
The bill addresses the extension of industrial manslaughter laws to the mining and quarrying, oil and gas and explosives sectors. However, the bill also contains a number of additional significant structural changes to the operation of resources law in Queensland. The most substantial and relevant of these additional changes focus on:
Increasing the State's assurance of holders performing their rehabilitation liabilities, e.g.
- New transfer and change of control ministerial powers – more potentially sensitive information, transaction types and Ministerial conditioning powers are proposed in assessments of whether holders are suitably capable and responsible
- New and broader disqualification criteria for applicants – creating additional due diligence risk for both sellers and buyers in M&A transactions
- New development planning requirements for prescribed minerals mining leases – increasing the State's information and oversight of these mines particularly in relation to care & maintenance
Seeking to improve the efficiency of regulatory processes, e.g.
- New agreement and dispute resolution framework for certain overlapping resource applications – this now includes a forced arbitration process to enable 'agreed' co-ordination plans to be in place within nine months of grant
- Allowing competitive tenders for a direct mining lease grant in special circumstances – allowing more efficient use of the States resources
- Counting granted petroleum lease areas towards authority to prospect relinquishment obligations – bringing petroleum authorities in line with mineral authorities
The 255 page bill amends 14 Acts and two Regulations. Below is a summary and commentary on the most substantial structural changes to the legislation that are proposed in MEROLA other than the industrial manslaughter provisions.
Find out more about the industrial manslaughter provisions in MEROLA.
Increasing the State's assurance regarding rehabilitation liabilities
Tightened grip on transfers and changes in control + new disqualification criteria for applicants and transferees
A number of amendments are designed to reduce the risk to the State for transfers (or changes of control) of resource authorities – including mining, petroleum, geothermal and greenhouse gas authorities.
- The Minister must now also specifically consider whether a proposed direct transferee of a resource authority has the financial resources to fund the estimated rehabilitation costs (ERC) for the authority as determined under the Environmental Protection Act
When deciding a transfer application, the Minister is already required to consider whether the transferee has the human, financial and technical resources to comply with the conditions of the authority, which include rehabilitation obligations. This new additional requirement linked to the ERC could require applicants to provide more detailed information than was previously required. Unlike information provided to the Scheme Manager for the purposes of a risk category allocation decision, this potentially sensitive information would not be protected from disclosure under the Right to Information Act 2009. Non-assessable dealings (such as inter-company or inter-joint venture transfers) have been carved out of this requirement.
- The Minister may amend or impose authority conditions if there is an indirect transfer of a resource authority, such as a change in control of a holder, where the Minister considers the holder may not have the requisite financial or technical resources
The amendments brings the Minister's powers in line with:
- Existing powers held by the Department of Environment and Science to amend the conditions of the environmental authority; and
- The existing ability of the Minister to impose conditions on a transfer of resource authorities.
However, distinct from a proposed direct transfer, there is no ability for the holder of a resource authority to seek an indication from the Minister that no conditions will be imposed, before the change in control occurs.
These provisions would apply to a change in control occurring after commencement of these provisions, in relation to any resource authority granted either before or after commencement.
- Ad hoc existing powers to disqualify certain resource authority applicants for former contraventions and other transgressions have been both broadened and applied consistently across all prescribed resource authorities. Disqualified applicants cannot be an applicant for, or a transferee of, a resource authority.
The Bill proposes to insert a new chapter to the MERCP, providing a single overriding power for the Minster to disqualify an entity from the grant, tender or assignment of any prescribed resource authority. The prescribed authorities are:
- Under the Mineral Resources Act 1989 (Qld) (MRA): mining claims, exploration permits, mineral development licences and mining leases;
- Under the Petroleum and Gas (Production and Safety) Act 2004 (Qld) (P&G Act): authorities to prospect, petroleum leases, pipeline licences and petroleum facilities licences;
- Under the Petroleum Act 1923 (Qld) (1923 Act): leases;
- Under the Geothermal Energy Act 2010 (Qld): geothermal exploration permit and geothermal production lease;
- Under the Greenhouse Gas Storage Act 2009 (Qld): GHG exploration permits and GHG injection and storage leases.
(each Act a Resources Act)
It also broadens the set of considerations the Minister may take into account in making a decision to disqualify an entity. Once an entity is disqualified, it cannot be a successful applicant for any resource authority grant, renewal or transfer.
The considerations are quite broad and (in fact) open-ended. The considerations also apply to 'associates' of applicants, being, in summary a parent company of the applicant, a person in a position to control or substantially influence the applicant or a director of the applicant or a parent company. The considerations include whether the applicant or an associate:
- Has contravened a Resources Act;
- Has been convicted of relevant Queensland, interstate or federal resources legislation offences, fraud or dishonesty offences or disqualified from managing a corporation;
- Is insolvent or has within the prior 10 years been a director of an organisation that is or was the subject of a winding-up order, controller or administrator appointment; and
- Any other matter the Minister considers relevant.
Notably, this would present a new due diligence risk in resources M&A transactions, particularly for sellers. Parties will need to assess whether transactions are at risk of failing following signing or completion as a result of a transfer or change of control dealing application being rejected because of the disqualification (or potential disqualification) of a counterparty under these provisions.
Initial and later development plans and care and maintenance for minerals
The requirement for a development plan under the MRA is presently limited to coal and oil shale mining leases. The bill proposes 17 additional minerals that would carry this requirement, including bauxite, copper and gold where the mining lease forms part of a project from which the applicant proposes to mine above the prescribed threshold amount for the mineral. For example, a threshold amount of 500,000t is prescribed for bauxite, 1,000t for copper and 100kg for gold per year in any of the first 5 years of grant or renewal.
The Bill would also extend the later development plan provisions relating to care and maintenance to prescribed mineral mining leases. For example, when deciding whether or not to approve a proposed later development plan that provides for the cessation of or significant reduction in authorised activities:
- The Minister must consider whether the cessation or reduction is reasonable and whether the holder has taken all reasonable steps to prevent it (this mirrors the existing position in relation to development plans for coal mining leases); and
- The Minister may (in consideration of the public interest):
- approve the proposed plan but decide to defer the approval until the holder applies to surrender a part of the area of the mining lease – and under the provisions a failure to do so would result in the refusal of the proposed later development plan; or
- impose a condition on a mining lease requiring the partial surrender at stated times or intervals,
(again, mirroring the existing position in relation to development plans for coal mining leases).
Other Efficiencies For Regulatory Processes
New dispute resolution process for certain overlapping tenements
The Bill would introduce a new requirement for applicants for a transportation mining lease to obtain consent from the holder of any underlying production mining lease. However, the proposed new provisions provide a discretionary power for the Minister to grant:
- A transportation mining lease, without the underlying mining lease holders' consent
- A specific purpose mining lease, without the holder of any underlying exploration permit, mineral development licence, or mining lease.
Similarly, the Bill proposes to introduce new provisions to the P&G Act that allow the Minister to grant:
- Petroleum pipeline licences where they overlap pre-existing mining leases, geothermal leases or greenhouse gas leases
- Petroleum facilities licences where they overlap pre-existing mining leases, even if the consent of the pre-existing underlying authority holder has not been obtained by the applicant.
Where the relevant consent has not been obtained, the Minister may only grant the application if satisfied that:
- The activities of the new authority can be carried out in a way that is compatible with the activities to be carried out on the pre-existing authority, and
- The co-existence of the activities would optimise the development and use of the State's resources.
In addition, the authorised activities under the new authority can only commence once a co-existence plan has been 'agreed' with the relevant underlying authority holder. If a co-existence plan cannot be negotiated and agreed within 3 months of the grant of the new authority, the new authority applicant can refer the matter to arbitration to determine the terms of the agreed co-existence plan within 6 months. The content and lodgement requirements of co-existence plans are set out in the bill, including for example safety management, any compensation payable and how the activities optimise the development and use of the State's resources.
The relevant provisions apply whether the later mining lease, petroleum pipeline licence or petroleum facilities licence application was made before or after the amendments commence
Mining Leases available for direct grant by tender
The Bill would introduce a competitive tender process for direct grant of a mining lease by tender without prerequisite subordinate tenure. Under the amendment, the Minister may call for tenders for an application for a mining lease over any land that is not the subject of an application for or granted mining tenement (other than a prospecting permit).
The explanatory notes indicate that the intent of these provisions is to support the development of abandoned mine sites in a timely manner. The draft legislation does not limit the purposes for which the Minister may call for tenders in this way.
Excluded land power for MRA exploration and appraisal
The bill proposes to introduce a broad explicit head of power for the Minister to exclude land from the grant or renewal of an exploration permit or mineral development licence. This brings the Ministers excluded land powers under MRA in line with those existing in the P&G Act.
Petroleum Lease application area now count towards authority to prospect relinquishment requirement
Proposed changes to the P&G Act will allow the area of petroleum lease applications to be provisionally counted for the purpose of determining the mandatory relinquishment area under the related authority to prospect. This change brings the application of petroleum exploration relinquishment requirements into line with that of mineral exploration.
Timing
The bill has been referred to the State Development, Natural Resources and Agricultural Industry Development Committee. The committee has invited submissions from any interested party by 9.00am on 27 February 2020 and is due to table its report on 27 March 2020. The full Committee review timeline is set out below:
Submissions close: Thursday 27 February 2020 at 9.00 am
Public briefing: Monday 17 February 2020 at 11:30 am - Public briefing program
Public hearings:
Tuesday 3 March 2020 – Brisbane
Tuesday 3 March 2020 – Moranbah
Report due date: Friday 27 March 2020