30 May 2014

Building and Construction Industry Payments Amendment Bill 2014 (Qld)

On Wednesday, 21 May, the Queensland Government introduced the Building and Construction Industry Payments Amendment Bill 2014 (Qld) (Bill) to amend the Building and Construction Industry Payments Act 2004 (Qld) (Act) and referred it to an undisclosed Parliamentary Committee for review.

The Bill seeks to amend the Act to address the significant issues raised by stakeholders and align with the three key areas of reform, being:
  • Appointment of adjudicators and the adjudication process,
  • Amendments of the timeframes for claimants and respondents, and
  • Provision of additional information in the adjudication response.
The proposed amendments to the Act are:
  • The Queensland Building and Construction Commission will keep a central registry of claims to monitor performance and refer to adjudicators (resulting in a reduction of fees),
  • The time to make a claim will be reduced to 6 months from the date of the work being carried out,
  • For complex claims (i.e. more than $750,000 or claims for a latent condition or time related cost), a respondent will now have 15 days (currently 10 days) to provide a payment schedule. The time to respond will be increased to 30 days if the payment claim for a progress payment is served more than 90 days after the date for which a progress payment claim can be made,
  • A respondent will now have 10 days (currently 5 days) to provide an adjudication response and will be extended to 15 days for complex claims,
  • The definition of ‘business days’ will exclude the three days before Christmas up to 10 days after New Year’s Day, and
  • For complex claims, the respondent can include reasons for withholding payment (however, this can be taken into consideration by the adjudicator when apportioning the adjudication fees).

The Bill can be read here.
The Explanatory Notes can be read here.

For further information, please contact Jay Leary, Partner, Brisbane or your usual Herbert Smith Freehills contact.

21 May 2014

Insurers raising the bar on flood insurance claims

The Queensland 2010/11 wet season was even wetter than 2008, with insurers raising the bar on making insurance claims for flooded pits by increasing the policy excess, re-defining an ‘event’ to mean any single 72 hour period of rainfall, and placing commodity price caps on the coal prices on which the profit margin is calculated.  This meant that our client needed to identify production impacts off more than a million tonnes of lost coal and substantiate very low true variable costs of production in order to substantiate an insurance claim above the excess. After a considerable amount of work with mining engineers and forensic accounts, we were able to prepare a substantiated claim submission for submission to the insurers. Although insurers initially assessed the losses at below deductible, a reasonable approach was taken on both sides and a ‘settlement summit’ with the 3 lead insurers was arranged in Singapore in May 2014.

Why Singapore? As a half-way point between our Australian based client and the European based lead insurers, Singapore was chosen as a neutral venue where executives from both sides could come to meet with a singular focus on negotiating a resolution without the distractions of their home office. After several days of negotiations, the claim was settled for a gross value in the hundreds of millions before application of the excess.

Mark Darwin, the HSF partner who handled several flood coal mine claims, is now involved with the ‘Mining Insurance Group’ recently formed on the initiative of a number of London based insurers, brokers, adjusters and lawyers to seek to reach consensus on a re-draft of the standard ISR policy into a form more suitable to the mining industry. We will keep HSF Blog readers updated on developments.

If you would like to know more about this initiative please contact Mark directly on +61 7 3258 6632.

19 May 2014

Women in Mining

On 1 May 2014, with over 120 attendees, Herbert Smith Freehills (London office) hosted the inaugural "Copper: Bears vs Bulls" debate, organised by Women in Mining (WIM) in collaboration with the Association of Mining Analysts (AMA).

Copper is the highest value base metals product and offers the greatest diversity of use, and so has often been considered the 'bellwether' of the commodity market.  In comparison to other metals, copper offers the widest divergence of opinion as to its current status and future, and so the debate canvassed views on the outlook for copper demand and price in the short to medium term.

Chris Welch (Chairman of the AMA) moderated the debate, with panellists Paul Dewison (SNL Financial), Robin Bhar (Societe Generale) Olivia Ker (BlackRock) and Bruce Always (Thomson Reuters).

Some key discussion points emerged during the debate and Q&A from the floor:

  • There was a debate about whether copper consumption will increase or decrease in the future. Various factors such as a growing electronics market, general growth in building works in emerging markets and the potential uses of anti-bacterial copper for medical purposes were raised. 
  • This needs to be weighed against future available supplies of copper, both in the form of scrap/existing stock and in the form of new production.  
  • There was also a lot of discussion about the ability to bring new projects on line. Factors such as the decrease in exploration by mining companies, access to financing, availability of road/rail, power and water for projects, increased regulatory restrictions and political risks were discussed.

Jennifer Bell, a partner in the HSF London mining practice, who arranged hosting of the event with WIM together with Rebecca Major (partner in the HSF Paris office), commented "We were delighted to host this informative and lively debate, with so many industry participants, for WIM and AMA.  The panellists distilled complex issues to provide a real insight into the tensions in the copper market, both currently and in the mid-term".

For further information, please contact Jennifer Bell, Partner, London or Rebecca Major, Partner, Paris or your usual Herbert Smith Freehills contact.

12 May 2014

Warkworth Extension Project – Court of Appeal upholds LEC’s decision to overturn Part 3A approval

The NSW Court of Appeal has recently delivered a judgment upholding a decision by the NSW Land and Environment Court to overturn the Part 3A approval granted for the Warkworth Extension Project.

The judgment contains important lessons about objector merits appeals against mining projects and other major projects.

It raises the question:
‘What should you be doing to protect your projects?’

The full article, written by Peter Briggs is available here.

For further information, please contact Peter Briggs, Partner, Sydney or your usual Herbert Smith Freehills contact.

To view a full list of Environment and Planning Insights click here.

9 May 2014

Aurizon and Baosteel join forces in a bid for Aquila Resources

On Monday, 5 May, Aurizon announced a $1.4 billion joint off-market bid with Baosteel to acquire 100% of the share capital of Aquila Resources Limited.

Baosteel is one of China’s leading iron and steel producers and currently has a 19.7% stake in Aquila Resources. According to mining analyst, Adrian Prendergast, this move would give Baosteel a solid foothold in the Pilbara alongside Rio Tinto, BHP Billiton and Fortescue who are currently dominating the Pilbara.

Aurizon’s CEO, Lance Hockridge, and Baosteel’s Chairman, Dai Zhihao, said they believe the offer is compelling for Aquila’s shareholders because it provides them with certainty of value at an attractive cash premium.

Aurizon and Baosteel are confident that there will not be a counter bidder with a higher offer.

The deal is subject to approval from the Foreign Investment Review Board.

The announcement and investor presentation can be viewed here.

For further information, please contact Jay Leary, Partner, Brisbane, or your usual Herbert Smith Freehills contact.

5 May 2014

Paraguay set to re-enter Mercosur

On 29 June 2012, Argentina, Brazil and Uruguay elected to suspend Paraguay’s participation in the South American trade bloc, Mercosur, following removal of Paraguayan President, Fernando Lugo. Simultaneously, Argentina, Brazil and Uruguay admitted Venezuela as a full member of Mercosur, knowing that if Paraguay’s consent were to have been sought, it would have been rejected.

Paraguay is now set to re-enter Mercosur after President Cartes assumed office on 15 August 2013 and made the reintegration of Paraguay a top priority. President Cartes has had a policy of upholding the international rule of law and proceeded with a far-reaching campaign of diplomatic shuttling between capitals, resulting in a political solution at the end of 2013.

Paraguay’s adherence to democratic principles has not changed since 2012. Since the appointment of President Cartes, Argentina, Brazil and Uruguay have expressed their desire to reinstate the Paraguay to the Mercosur, which highlights the arbitrary nature of the decision to suspend Paraguay in the first place.

The treatment of Paraguay also illustrates a lack of harmony in what is intended to be a regional integration institution, lack of international support, and Mercosur’s dubious interpretation of a “democratic breakdown”. The issue of what can result in a country being suspended from Mercosur has not been resolved.

There are a number of questions over the institutional integrity of Mercosur. Mercosur will (like all countries) naturally encounter further domestic challenges; however, the international standards that Mercosur should endorse are yet to be defined.

The full article, written by Christian Leathley is available here.

For further information, please contact Christian Leathley, Partner, London or your usual Herbert Smith Freehills contact