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Client Update: Review of Victorian mineral resources legislation

30 June 2009

In brief: The Victorian Department of Primary Industries is conducting a review of the Mineral Resources (Sustainable Development) Act 1990 and had released an issues paper to prompt public submissions. Now that submissions have closed, Partner Igor Bogdanich (view CV) and Lawyer Myra Stirling discuss some of the key discussion points raised by the paper, and the proposed next steps in the review.

The review

The review of the Mineral Resources (Sustainable Development) Act 1990 (Vic) (the MRSDA) is focused on the regulation of the Victorian minerals industry, and has the objective of ensuring the 'continued development of a sustainable and efficient earth resources sector in Victoria'. The issues paper, which outlines the current regulatory and policy framework for the minerals industry and sets out a number of discussion points to prompt submissions to the review, was released as the first step in the review process. The closing date for submissions was last Friday, 26 June 2009 and following the receipt of submissions, the DPI will now hold targeted consultations to discuss the key issues raised. These consultations will then form the basis of discussion papers that will outline specific areas identified for potential reform towards the end of 2009.

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Discussion points raised by the issues paper

The issues paper invited input on broad policy issues, as well as specific issues relating to the current regulatory regime imposed by the MRSDA.

Key discussion points raised in relation to broad policy issues stem from the principle that, given the potential for business impacts, regulation should focus on areas of 'most significant impact' (for example, impact on the environment and public health and safety), and areas where the benefits clearly outweigh the costs.

In light of this principle, the issues paper posed the question of whether there are aspects of the MRSDA that are too prescriptive, and whether opportunities exist to amend current provisions to provide industry with more flexibility in determining how best to comply. The use of market-based instruments and co-regulatory or quasi-regulatory approaches are canvassed as alternatives to 'black letter' regulation, and input is sought on how they could play a greater role in the regulation of the minerals industry.

Discussion points raised by the issues paper on the current regulatory regime imposed by the MRSDA cover 17 aspects of the regulation of mineral resources in Victoria. Discussion points of note include the following:

New titles

The issues paper canvasses whether the following new titles should be introduced:

  • A retention title (currently, in contrast to explorers/miners in other states who can apply for a retention licence, explorers/miners in Victoria have to rely on the renewals process for mining and exploration licences in order to hold tenure over a resource until it becomes economic).
  • A title for activities or infrastructure ancillary to mining, such as processing facilities, tailings dams, railways and slurry pipelines (currently, these activities are authorised under a mining licence or other legislation, whereas in some other states, a separate licence is available for these activities).
  • A title for the purposes of research and development or demonstration of technology, eg, a small scale pilot project, given that these activities may not meet the definition of 'mining' in the MRSDA.
Coverage of minerals by licences

The issues paper invited input on whether the universal coverage of minerals by exploration and mining licences in Victoria serves to encourage the full value of minerals in Victoria to be realised. It noted that while there is no provision for multiple licences that cover the same area but apply to different minerals, there is provision for licences to be specified to a particular depth stratum, such that different licences could be issued over the same area for exploration or mining at different depths. The issues paper cited as an alternative full-depth licences which cover specific minerals, which are commonplace in New South Wales and Tasmania.

Licensing process

Some of the discussion points raised by the issues paper on the licensing process are:

  • Is the assignment of priority to over-the-counter licence applications (which are the most common form of licence application) on a first-in basis appropriate, given the complexity of planning and other regulatory overlays and tightening expectations about the financial capability of applicants?
  • Has the requirement that a licence applicant be a 'fit and proper person' to hold a licence been effective in achieving a reputable industry, and should the term 'fit and proper' be defined more precisely (it is not currently defined in the MRSDA)?
  • Should licence determinations be reviewable by the Victorian Civil and Administrative Tribunal?
Approvals for exploration and mining activity

The issues paper also questioned whether the two-step process for the approval of exploration and mining activity (with obtaining a licence being the first step, and obtaining an approval to undertake work on the licence being the second) delivers regulatory efficiency, clarity and security of tenure. It noted that while advantages of the two-step system include the grant of licences within a shorter timeframe and earlier security of tenure, disadvantages of the system include that licences may be perceived to have a lesser status if work approvals have not been obtained.

In relation to the process for obtaining an approval to undertake work on a licence, which is potentially complex and time-consuming, discussion points raised by the issues paper include whether a simplified, less demanding approval process should apply to small-scale mining and exploration and to well-performed licensees, and whether the current approvals required could be streamlined.

Published 30 June 2009

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