Parliamentary Inquiry Report into FIFO and other long distance commuting work practices in regional Queensland released

On 9 October 2015 the Infrastructure, Planning and Natural Resources Committee released its “Parliamentary Inquiry report into FIFO and other long distance commuting work practices in regional Queensland” (Parliamentary Inquiry Report). Earlier this month, on 1 October 2015, the Government appointed FIFO Panel made its “FIFO Review Report” (Review Report) publicly available, after being provided to the Minister of State Development at the end of July 2015. Both reports form part of the Queensland Government’s FIFO Review, which aims to introduce choice for employees working at mines located near a resource town or regional community to live near their workplace.

Key recommendations

Both Reports recommend legislative reform to prescribe that a social impact assessment process be undertaken for major projects. If this recommendation is implemented it would likely involve the amendment of the State Development and Public Works Organisation Act 1971 (Qld) or the Environmental Protection Act 1994 (Qld). These pieces of legislation set out and facilitate approval processes for resource projects in Queensland.

The Review Report recommends that the Environmental Protection Act 1994 (Qld) be amended to require resource proponents to prepare appropriate workforce, procurement and accommodation plans for proposed resource activities as part of their environmental approval process. It further recommends monitoring and enforcement measures be put in place to ensure compliance with approved workforce, procurement and accommodation plans for new resource activities.

The Parliamentary Inquiry Report recommends that the government consider making changes to anti-discrimination legislation to prevent local workers in regional or mining towns being discriminated against on the basis of where they live for work. The Parliamentary Inquiry Report emphasises that workers should have a genuine choice of where they live for work. It also makes recommendations in relation to the minimum standards for the provision of substantial temporary and permanent accommodation for FIFO workers, such as room design and access to health services and recreational areas and that the standards advise against the practice of ‘motelling’ or ‘hot-bedding’..

Implications

Neither Report recommends any form of retrospective action to place limits on existing FIFO workforces. As such, current resource projects with FIFO workforces should not be impacted by changes flowing from the recommendations in the Reports.

The Parliamentary Inquiry Report recognises that some resource operations require total FIFO workforces due to their remoteness or during construction; indicating that future resource projects in remote areas with 100% FIFO workforces may still be acceptable.

Government response to these Reports is expected in early 2016. This may be followed by the introduction of new laws and regulations in regards to FIFO and non-resident workforces.

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

Update - Innovative Resources Tenures Framework, Queensland

On 12 October 2015, Herbert Smith Freehills attended the Queensland Department of Natural Resources & Mines workshop on the Innovative Resources Tenures Framework in Brisbane.
The purpose of the workshop was to discuss the Policy Position Paper, which was released in August 2015.  Submissions in response to the Policy Position Paper close on 30 October 2015.

Key information

The five key pieces of information we took away from the session were:

1. The new tenure framework will decrease the types of tenure available to proponents from 20 to 5, being: 
• Information Authorities,
• Exploration Authorities,
• Development Authorities,
• Production Authorities, and 
• Infrastructure Authorities. 


This is intended to create a less complex system which will be simpler to regulate with respect to overlapping areas.


2. For exploration authorities, there will be no maximum area size but parties will be required to provide justification for the size of the area applied for.
3. Default relinquishment will be 50%.  However, there will be potential for reduced or deferred relinquishment based on the performance of the proponent.
4. Feedback received by the Department indicates that the systems for production authorities and infrastructure authorities work well and there will be minimal changes to how these are regulated.
5. Companies will be required to review their native title agreements to ensure native title processes are not triggered under the proposed changes.

Next steps

There will be further consultation and opportunities for feedback as the reforms progress through the following stages:

• a regulatory impact statement due to be released in early 2016,
• the consultation Bill which will be introduced to Parliament (no timing given), and
• the Parliamentary Committee process during the passage of the Bill.

Timing

The Department indicated that it is hopeful that the transitional arrangements for exploration authorities will be prepared in late 2015, with full implementation of the reforms to be completed by the end of 2017.

Please contact William Oxby, Partner, Brisbane, +61 7 3258 6469 or Cassandra Duffy, Solicitor +61 7 3258 6456 if you require additional information or your usual Herbert Smith Freehills contact.

Mining and petroleum tenure reform in Queensland

Material changes are proposed to the tenures under which minerals and petroleum are explored for in Queensland. The Department of Natural Resources and Mines recently released a policy position paper titled ‘Innovative resources tenures framework’ (Reform Policy). Consultation with the industry and interested parties is proposed for September and October 2015. Importantly, submissions on the policy position paper are due 16 October 2015.

Separately, we note the recently altered status of the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld). As a consequence of the Mineral and Energy Resources (Common Provisions) (Postponement) Regulation 2015 (Qld) (Regulation), the balance of the Common Provisions Act will automatically commence on 27 September 2016 (if not commenced, amended or repealed beforehand). However, the release of the Reform Policy suggests that the Common Provisions Act will be amended or repealed before 27 September 2016.

The Reform Policy proposes to set maximum terms for exploration licences for minerals and petroleum with no renewals and a default relinquishment of 50% of the area at the prescribed time. Under transitional arrangements (to be developed further after consultation) renewals will be limited in duration, there is capacity to opt-in to the new framework and a change to ‘higher tenure’ may alter timelines and processes for projects to be developed in the short term.

We recommend that these reforms be closely monitored against a company’s matrix of tenure, having particular regard to: relinquishment; any long term retention proposals; and development horizons for projects.

Please contact William Oxby, Partner, Brisbane, +61 7 3258 6469, if you require additional information or your usual Herbert Smith Freehills contact.

Qld: Extension of termination date for the Queensland Rail 2008 undertaking

On 9 April 2015, Queensland Rail (QR) requested an extension to the termination date of the QR Network Access Undertaking (2008) June 2010 (2008 Access Undertaking) from the Queensland Competition Authority (QCA).

QR has requested that the 2008 Access Undertaking be extended until the earlier of:

• 30 June 2016, or
• the date on which the QCA approves a replacement access undertaking.

The QCA has already approved a number of extensions to the termination date of the 2008 Access Undertaking pending the approval of a replacement undertaking.

On 12 December 2014, QR withdrew its Draft Access Undertaking 1 (AU1) which was proposed to replace the 2008 Access Undertaking. QR are expected to submit a revised draft access undertaking this month.

QCA has commenced its investigation into QR’s most recent extension request and invites stakeholders of the 2008 Access Undertaking to make submissions by 5pm 4 May 2015.

To upload a submission, please click here.

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

BCIPA Amendments

On 9 April Tim Mander, the Minister for Housing and Public Works, released a media statement on the proposed amendments to the Building and Construction Industry Payment Act 2004 (Qld) (Amendments). The Amendments are intended to improve the process of resolving disputes by making it fairer and more transparent.

The Amendments have been approved by the Cabinet and are being debated by parliament mid-year. It is intended that the Amendments will apply to construction contracts entered into after midnight 1 September 2014.

The Amendments are:

• The Queensland Building and Construction Commission will keep a central registry of claims to refer to adjudicators,
• The time to make a claim will be reduced to 6 months from the date of the work being carried out,
• Different timeframes to respond will be offered for larger or more complex claims (e.g. there will be extra time to respond for claims of more than $750,000 or claims involving latent conditions or time costs),
• The payment schedule for large or complex claims will be due in 15 business days (not 10),
• The definition of ‘business days’ will exclude the three days before Christmas up to 10 days after New Year’s Day, and
• There will no longer be a requirement that a respondent’s Adjudication Response be confined to matters raised in its payment schedule.

View the media statement here.

View the Amendments fact sheet here.

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

Qld: Government releases Galilee Basin Development Strategy

On 7 November 2013, the Queensland Premier, Campbell Newman, released the Galilee Basin Development Strategy (Strategy). The Strategy acknowledges the long-term economic benefits that opening up the Galilee Basin to mining would bring to Queensland and is designed to support and encourage business and industry to develop key infrastructure across the region.

The Strategy details government initiatives aimed at early development of the southern and central Galilee Basin (with priority to be given to ‘first movers’). These initiatives include:

• lowering start-up costs by offering a discounted royalty period which will gradually ramp-up to full royalty by the end of the period,
• streamlining land acquisition, planning, approvals and red tape reduction by compulsorily acquiring land for projects, delivering project approvals in a timely way and consider declaring projects ‘prescribed projects’ to overcome unreasonably delays in obtaining project approvals,
• positioning Abbot Point as the Galilee’s gateway to the world by reserving the Terminal (T2) development site for a proponent to develop coal stockpiling and handling infrastructure, and
• supporting infrastructure development and corridors by supporting the development of localised water solutions, encouraging and assisting private investment in relevant electricity transmission and prioritising the development of roads critical to opening up the Galilee Basin.

No further details have been released at this stage.

Notably, the Strategy comes less than a week after approval of GVK’s Kevin’s Corner project which is expected to be Australia’s biggest coal project. Kevin’s Corner joins the adjacent Alpha Coal project which was approved in August 2012.

In addition, Aurizon has been developing an integrated rail transport and port solution for Galilee Basin coal over the past two years.

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

Qld: Draft Qld Ports Strategy proposes to concentrate port development in QLD to 5 key port areas

The Queensland Government released its draft Ports Strategy on Thursday 17 October 2013.

The draft Ports Strategy proposes to:

• declare that Brisbane, Mackay / Hay Point (in 2 separate zones), Gladstone, Townsville and Abbot Point ports will be the 5 priority port development areas (PPDAs) in Qld,
• limit port expansion and development to within these 5 PPDAs (by prohibiting capital dredging for deep water port facilities outside the PPDAs) until 2022,
• permit port and terminal expansion and development (including dredging) within the 5 PPDAs via a Government-facilitated staged and incremental expansion process, and
• require PPDA’s to comply with a set of master plan guidelines (the details of which have not yet been released).

The draft Ports Strategy aims to:

• achieve a balance between the ‘twin goals’ of sustainable economic port development and environmental protection, and
• preserve the Queensland Government’s commitment in the GBR Ports Strategy (which is based on UNESCO recommendation) to restrict port development outside Queensland’s established major trading ports within or adjoining the GBRWHA.

The draft implementing legislation is intended to be in place by next year.

The Queensland Government is also continuing its review of port governance and supply chain coordination and delivery across the Queensland port network.

The closing date for submissions is Friday 13 December 2013.

To review the draft Ports Strategy: Queensland Ports Strategy Draft for consultation

BCIPA – ‘construction work’ no longer applies to construction works on mining leases

The Queensland Supreme Court recently delivered a judgment indicating that the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA) does not apply to ‘construction work’ carried out on land subject to a mining lease. The case of Agripower Australia Ltd v J&D Rigging Pty Ltd & Ors, delivered on 25 June 2013 has significant implications for the mining and construction industries.

What happened?

The case concerned the Skardon River Mine at Cape York in Queensland. Land at the mine was subject to 2 mining leases. The Applicant, Agripower Australia Ltd (Agripower) owned the mining plant. The First Respondent, J&D Rigging Pty Ltd (J&D) was the operator of the mine.

Agripower contracted with J&D to dismantle and remove the mining plant. Approximately 5 months later, J&D delivered a BCIPA payment claim to Agripower for $3.1 million. Agripower resisted and contended it was not obliged to pay J&D’s payment claim because among other things, the contracted work was not ‘construction work’ for the purposes of BCIPA. As a result of the subsequent adjudication determination Agripower was ordered to pay J&D in excess of $2.5 million.

Agripower brought proceedings in the Queensland Supreme Court seeking a declaration that the adjudication decision was void because the contract work was not ‘construction work’ within the BCIPA meaning.

Decision

Justice Wilson determined that BCIPA payment claims only operate where ‘construction work’ is performed under a ‘construction contract’. The mining plant to be dismantled by J&D had to consist of structures or works forming part of land to fall within the scope of ‘construction work’.

Justice Wilson determined that the works agreed under the contract did not amount to ‘construction work’ because:

• mining leases create an entitlement for the leaseholder to extract minerals but  do not create an interest in land the subject of the mining lease;
• the mining plant did not form part of the land because there was a statutory removal obligation and the plant was put in place for temporary purposes; and
• the mining plant was not a fixture forming part of the land at common law.

The mining and construction industry has traditionally accepted that the BCIPA system applies to construction activities carried out at mine sites. The decision of Justice Wilson signals a clear departure from this approach.

2013 Budget – Changes affecting the mining sector

The Federal Government’s 2013-2014 Budget (the Budget) contains a number of changes to existing tax rules some of which are expected to have adverse implications on the mining sector.

Changes to accelerated tax depreciation arrangements

The Federal Government announced immediate changes to Australian tax laws which impact income tax deductions available to mining companies. The changes defer deductions for the cost of acquiring mining rights (e.g. exploration permits or mining leases) and information which is first used in exploration, from an immediate deduction to a deduction spread over:

• 15 years; or
• the life of the mine, whichever is shorter.

Although full details are yet to be released, the following expenditure will continue to be immediately deductable:

• costs of acquiring mining rights and information from government authorities;
• costs incurred in generating new information or improving existing information; and
• mining rights acquired under a recognised “farm-in, farm-out’ arrangement.

The changes apply to taxpayers who start to hold the mining right or information after 14 May 2013.

These changes may significantly impact the acquisition prices of exploration assets and also have the potential to inhibit junior mining companies ability to obtain investment through the sale of prospective interests to investors on a full or partial cash basis.

Practically, there are also a number of issues surrounding the 15 year or life of mine deduction mechanisms which are yet to be clarified.

Reduction in funding for mining and energy initiatives

Funding has also been significantly reduced to the following mining and energy initiatives in the Budget with:

• $500 million withdrawn over three years from the Carbon Capture and Storage Flagships Program;
• $370 million deferred over three years from the Australian Renewable Energy Agency;
• $274 million withdrawn over two years from the Coal Sector Jobs package;
• $88 million withdrawn over two years from the National Low Emissions Coal Initiative; and
• $29 million withdrawn over two years from the Coal Mining Abatement Technology Support package.

For further details, please visit the Federal Government Budget website. 

Committee to oversee QLD’s land access reform ‘Action Plan’ announced

As promised after the state election in 2012, the Queensland Government has confirmed the details of the committee that will advise them on the issues identified in the Six Point Action Plan to reform the state’s land access laws.

The seven member committee will be chaired by Dr David Watson, and will provide a forum for resource and rural industry bodies to resolve issues relating to resource sector development.

Other members of the committee include Wayne Newton, President, AgForce Grain Ltd; John Cotter, chair, Queensland Gasfields Commission; Dan Galligan, CEO, Queensland Farmers’ Federation; Matt Paul, Queensland Director, Australian Petroleum Producers’ and Explorers’ Association; Bernie Hogan, Regional Manager, Queensland, Association of Mining and Exploration Companies; and Andrew Barger, Policy Director, Queensland Resources Council.

The announcement also confirmed that the committee will specifically advise on:

1. a review of heads of compensation to ensure no erosion of property rights and the expansion of Land Court jurisdiction to include matters of conduct;
2. the introduction of an alternative dispute resolution process;
3. the introduction of a requirement that any Conduct and Compensation Agreement (CCA) to be noted on land title;
4. an option for parties to “opt out” of a formal land access agreement at the election of the property owner;
5. the development of standard CCAs for mineral, coal and coal seam gas industries; and the creation of a single resource for property owners and resource companies.

Queensland lifts ban on shale oil mining

Yesterday the Newman Government announced a new oil shale policy that it will allow the development of a commercial shale industry in Queensland but leaves in place the existing 20 year moratorium suspending development of the McFarlane oil shale deposit near Proserpine. 

The policy will set rigorous environmental controls on the industry and will allow existing oil shale operator Queensland Energy Resources Ltd (QER) to progress its trial plant at Gladstone to commercial stage.

The rights to several large oil shale resources in Queensland are currently held by QER, who will now be able to proceed directly to commercial production given their pilot plant near Gladstone had successfully demonstrated the viability of its processing technology.

To date, there has been extremely limited commercial application of oil shale in Australia and overseas and for this reason all proposed oil shale developments and activities will be subject to detailed environmental assessments on a project-by-project basis. Under the new policy, proposals will be assessed on their merits and will require a trial stage to determine the feasibility and environmental performance of any unproven technologies.

The approval process for any oil shale development will require operators to adopt best practice environmental management techniques and comprehensive monitoring of the process, and its emissions, wastes and impact on the community and environment. Existing and new operators in the oil shale industry will need to prepare full Environmental Impact Statements for their projects.

In Australia the largest oil shale deposits are in Queensland with oil shale deposits totalling more than 20 billion barrels, with major deposits located in areas such as Yarwun and Proserpine.

The oil shale industry has the potential to create a large number of new jobs in Queensland, including thousands of jobs in the construction phase of oil shale projects alone, and provide royalties and other economic benefits for regional communities and the broader economy.

Current trends and regulatory changes for the mining industry in QLD – a quick review

If announcements are anything to go by, the immediate future for the mining industry at a regulatory level is looking brighter. The Queensland Government has announced their intention to attempt to decrease the inefficiencies that currently exist at a compliance level in the resources sector.

Accordingly, the Queensland Government has recently enacted legislation to streamline and harmonise procedures for dealing with different types of resource interests, including exploration permits and mining leases.

The legislation reduces the initial terms of mining claims from 10 years to 5 years, and creates a new class of ‘non-assessable transfers’ (change of name, transfers of mortgages and subleases), that are not required to be assessed before being registered. The legislation also creates a new online platform, which aims to deliver information contained in mining and petroleum registers more efficiently.  

The Queensland Government has also announced its intention to minimise the red tape that exists in current legislation. The Office of Best Practice Regulation released a report in October 2012 recommending an immediate review of occupational health and safety legislation and workers’ compensation legislation that “impose red tape, increase the cost of business and reduce competition” with a view to reducing the burden of regulation by 20% over six years. 

Mining reforms introduced into QLD parliament

The Queensland Government has introduced legislation to give effect to the introduction of competitive tendering for coal, petroleum and gas areas, and the development of the Aurukun bauxite resource on Cape York.

The Queensland government announced on 9 October 2012 that a new competitive cash bidding process would apply to companies seeking the right to explore on highly prospective coal, petroleum and gas resources tenements. This new legislation amends the Mineral Resources Act 1989 (Qld) to allow for this to occur.

Minister for Natural Resources and Mines Andrew Cripps said “this new process of allocating exploration rights will deliver a consistent approach across the resources sector and ensure all Queenslanders benefit from the timely development of the state’s most resource-rich areas.”

The changes will be significant for coal and petroleum proponents – coal miners will no longer be able to rely on the first in first served process that has governed the grants of permits thus far. The change, whilst resulting in increased revenues for government, will make it more difficult for smaller miners to compete with the deeper pockets and greater balance sheets of the larger miners.

The new legislation also allows for expressions of interest in Queensland’s lucrative bauxite leases in far north Queensland. In relation to this issue, the Minister said that “given the vast area of the Aurukun bauxite resource it is possible that following the tender process the State may select more than one proponent to develop different parts of the resource area.”

Uranium ban overturned, but production is years away

The Queensland Government has announced that it will assemble a three member committee to oversee the reintroduction of uranium mining in Queensland.

Despite Australia boasting 31% of the world’s total minable uranium, uranium mining has been banned or contrary to government policy for the better part of 30 years in most states. In Queensland, uranium mining has not occurred since the closure of the Mary Kathleen uranium mine in 1982.

The Queensland Government has never prohibited exploration for uranium, nor has it banned uranium mining by legislation, it has simply made it clear that no mining leases for uranium would be granted as a matter of government policy. Some exploration for uranium deposits has continued in Queensland, with known uranium deposits valued between A$10 billion and A$18 billion. Valhalla, owned by Palladin Energy located 40 km north-west of Mt Isa is the largest known deposit, with significant deposits also located at the Westmoreland (Laramide Resources), Ben Lomund (Mega Uranium) and Maureen (Mega Uranium) deposits.

The relaxation of the federal government’s ‘no new mines’ policy, coupled with the announcement of uranium sales to India, led the Queensland government to move towards the reintroduction of uranium mining. Despite the possibility of A$900 million in royalties, the myriad international, federal and state environmental regulations mean that it could take at least four years for a mine to be developed in Queensland.

Queensland government calls for EOI in it’s lucrative bauxite leases

The Queensland government has called for expressions of interest in its lucrative bauxite leases in far north Queensland, but with a twist, the private sector must come up with initiatives to financially benefit Cape York indigenous communities. Initiatives could include traditional owners being given direct equity in the project, a cash payment or jobs and business opportunities on the mine.

Pechiney of France originally held the leases offered by the government, but these were removed from them in 2004. The tender for the Aurukun leases was later won by Chinese group Chalco, which agreed to the condition that it establish an alumina refinery at Abbot Point. The refinery was not economically viable, however, and the Queensland government again took the leases back.

With much of the same profitability issues that hampered Chalco’s refinery development in 2010 still in existence (weak macro economic conditions, low metal prices and a strong Australian dollar), it is unsurprising that the new Queensland government has decided to offer the leases without the requirement that the bauxite be refined in Queensland.

Premier Campbell Newman stated that “the Bligh Government ran a strategy whereby it would lease the bauxite to a company under the condition it established a refinery or expanded refinery capacity. Their strategy of leasing the bauxite under the conditions of establishing a refinery simply will not work.”

Despite the fact that Aurukun’s bauxite ore is not as high quality as Rio Tinto’s Weipa or that at the South of Embley project, there is still expected to be significant interest in the leases. Mr Newman further stated that

“… over the coming months we will now go to the market and seek fresh expressions of interest and by April next year we expect to shortlist bidders to participate in a tender process for the right to develop the resource.”

A decision is expected by the end of 2013.

Coal industry uproar over State budget’s increase in mining royalties

The LNP Government’s first State budget has caused a stir in the Queensland coal industry after last week announcing an increase in mining royalties of up to 50 per cent per tonne, to commence 1 October this year.

In an attempt to stabilise State debt levels, the government expects to raise $1.6 billion over four years by increasing the coal royalty from 10 per cent, to 12.5 per cent for coal prices above $100 per tonne and 15 per cent for coal prices above $150 per tonne.

Queensland Treasurer, Tim Nicholls, said the government is obliged to deliver extra money to fund mining infrastructure projects, such as RG Tanner, Abbot Point and Connors River Dam. He said that the State did not receive extra money in the Federal Government’s budget this year for the infrastructure. Mr Nicholls addressed the Mineral Resources Rent Tax (MRRT) and claimed “Queenslanders should receive the benefits of the resources they own, not the Commonwealth. As the value of State royalties paid is netted off against MRRT liabilities, the incidence of taxation ought not to increase”.

However, the MRRT presupposes that Queensland miners will face significant MRRT liabilities. It was designed during the peak of the resources boom to capture super profits. Queensland Resource Council’s Michael Roche dismissed the notion that coal companies will be able to offset the new State royalties against the MRRT obligations. He said, “it’s hard work to find a coal mine in Queensland making a profit, let alone a super profit”.

The coal industry has argued the increased coal royalty is another governmental tool, along with the MRRT and carbon tax, that is squeezing them from both sides, with coal prices slashed and their costs continuing to rise. The problem that coal producers face will be if there is a marginal difference between the spot price of coal that is over $100 and the cost of production.

According to Wilson HTM analyst, Andrew Pedler, the spot price of hard coking coal is around $US155 a tonne as opposed to about $US150 cost of production in Queensland. Mr Pedler said the notion of increased royalties does not take into account increasing costs; “it just takes notice of the top line”.

XStrata Coal claimed that a significant portion of the coal industry was unprofitable at current prices and that “there is a risk that the increase in royalties could result in production cutbacks in marginal operations.” He predicted that as a consequence, estimates regarding the amount of additional royalty revenue may be optimistic.

Yancoal took on a different attitude. Managing Director, Murray Bailey, acknowledged that the royalty change was concerning but said that the exchange rate was having a bigger impact on profits.

The government guaranteed that coal royalties in Queensland will not be increased for a ten-year period. However, this promise is seemingly flawed; constitutionally, it is not enforceable since a parliament cannot bind the next to not change the law.

This post is written by Freehills Mining Lead Partner Jay Leary

Streamlining Act receives assent!

Further to our recent blog, 10 August, the Queensland Government has taken a significant step towards its commitment to cut red tape for the resources sector by passing the Mines Legislation (Streamlining) Amendment Act 2012 (Qld) (Streamlining Act). The Streamlining Act received assent on 29 August 2012, however the sections that will substantially amend Queensland resources legislation have not yet commenced. The Streamlining Act aims to clarify the legislative framework relating to the compulsory acquisition of land in regards to resource interests, and implement part of the Government’s Streamlining Approvals Project.

The amending provisions that have already commenced aim to clarify the relationship between the compulsory acquisition of land and resource interests. A resumption notice for the taking of land does not extinguish interests (resource interests) under the Mineral Resources Act 1989 (Qld), Petroleum and Gas (Production and Safety) Act 2004 (Qld), Petroleum Act 1923 (Qld), Greenhouse Gas Storage Act 2009 (Qld) and Geothermal Energy Act 2010 (Qld) unless stated in the resumption notice. A resumption notice may provide for the extinguishment of a resource interest only to the extent that the interest is incompatible with the purpose for which the land was taken. If a resource interest is compulsorily acquired, no compensation is payable for the value of that resource.

Other provisions of the Streamlining Act which have commenced provide for the transportation and treatment of coal seam gas water, and other minor amendments. It is not yet known when the remaining provisions of the Streamlining Act will come into force.

Are you prepared for the new Streamlining Bill?

Companies operating in the Queensland energy and resources sector should prepare themselves for the commencement of these new laws and seek specific advice on the effect of these changes.

On 2 August 2012 the Queensland Parliament introduced the Mines Legislation (Streamlining) Amendment Bill 2012 (Qld) (Streamlining Bill) in an effort to cut red tape and streamline regulatory approval processes in the energy and resources sector.

The Streamlining Bill includes amendments to five pieces of Queensland resource legislation and aims to clarify the legislative framework relating to compulsory acquisition, tenure administration and approvals, health and safety and the emerging CSG/LNG industry.

For further information follow the link below

http://www.freehills.com.au/8355.aspx

New Queensland Government with new (and refreshing) change to mining related infrastructure

Although it is still early days, the Queensland Government has displayed a radically different and refreshing approach to mining infrastructure to that of the previous Labor government.

The previous government’s approach was light handed. It left planning of ports to GOCs, and believed that coordination was best achieved by the forces of competition and commercial resolution.

While in theory the previous government’s approach has merit, in practice it meant that infrastructure delivery was delayed while miners hedged their bets by applying for capacity at every planned port. This is turn lead to delays in QR Network’s ability to determine what coal systems needed expansion.

In a relatively short period the Queensland Government has made significant changes to key mining infrastructure projects. The most significant of these changes is the re-setting of development at Abbot Point T4-T9. The government seems to have taken a view that the planned MCF was not feasible (economically or environmentally) and that 6 terminals was overkill. Both of these views were correct.

The government’s changes to T4-T9 signals a radically different approach to mining infrastructure generally. In particular, that the government will be very hands on and will act decisively with a view to bringing on development. That new approach should be applauded.

The government do however face a number of challenges:

• Understanding a very complicated coal chain, including:
• unlocking capacity through coordination; and
• developing an efficient process for development of rail expansions (where SUFA will be crucial);
• Developing a new model for development of Abbot Point T4-T9;
• Water transportation issues.

This post is written by Freehills Mining Lead Partner Jay Leary.

Wiggins Island – something to be celebrated

As a person who spends a large amount of their time dealing with mining infrastructure, the rate of structural reform and progress in the area can be frustrating.  The Wiggins Island port project is however something to be celebrated.

It should be celebrated for the hard work and persistence of all of those involved - the miners, WICET, the State and GPC. Most of all it should be celebrated by all of the mining industry in Queensland (and further afield).

Wiggins Island will provide a great platform for future infrastructure investment. It will be a platform irrespective of your chosen model. Wiggins established a successful consortium. It has proved to the industry and the lending fraternity that a large infrastructure project can be financed by a large divergent group – a group of large and small miners. The model holds hope for the start-up miner, as well as the established miner in expansion mode.

The financial close of Wiggins Island has come at the right time. The demand for thermal and metallurgical coal remains strong. The pipeline of new and expansion projects (particularly having regard to the Galillee) is huge. That pipeline of development has an equally large pipeline of rail and port developments.

The State of Queensland has recently announced proponents for 6 new terminals at Abbot Point. Each one of those terminals will be wholly funded by the using miners. At least one of the proponents is a consortium of mining companies (again large and small).

Such a scale of development comes with many challenges. There is of course the challenge of finding a skilled workforce to develop the infrastructure. Input costs are forever rising.

The largest challenge however is one of coordination. For infrastructure to be brought on line efficiently, each part of the coal chain needs to be developed in sync. There is no point in developing a mine and port, without a rail solution.

Without coordination the industry faces uncertainty and inevitable delay. To date the Queensland mining industry has suffered as a result of a lack of coordination. For coordination to be effective the only party that can impose it is the Government. We keep our fingers crossed.

This article was written by Freehills Partner Jay Leary.