Focus: Resources – June 2008

NSW Parliament enacts significant amendments to state mining legislation

In brief: When the Mining Amendment Act 2008 (NSW) commences later this year, mining companies operating in New South Wales will have to comply with an amended set of obligations and procedures. There will be new environmental regulation of mining operations; increased enforcement powers for authorities; and administrative changes to streamline compliance procedures. Partner Tony Wassaf (view CV) and Lawyer Caspar Conde discuss the new legislation and its implications for mining entities.

• Introduction
• Environmental regulation
• Enforcement
• Powers of entry and inspection
• Administration
• Implications for the mining industry

How does it affect you? The changes are expected to take effect by the end of 2008. Ecological sustainability and social interests will need to be addressed when seeking an exploration licence, assessment lease or mining lease. Applicants will need to submit a 'rehabilitation and environmental management plan'. Financial security may be required to cover the cost of possible effects outside the area of the relevant licence or lease. Private mining will require a licence or lease and be subject to the authorisations, conditions and directions that apply to other mining ventures. Inspectors will have extensive powers of entry, inspection and seizure, to ensure compliance with relevant obligations. When seeking a licence or lease, there will be no need to submit for consideration matters that have been assessed in a different context (eg a planning approval). The focus of any mining approval process will only be on the effect of the proposed operations.

Introduction

The Mining Amendment Act 2008 (NSW) (the Amending Act) was assented to on 20 May 2008. It is expected to commence by the end of this year. The Amending Act will amend the Mining Act 1992 (NSW) (the Mining Act) and other mining legislation. The Amending Act will introduce amendments in three general areas:

• environmental regulation;
• enforcement; and
• administration.

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Environmental regulation

Objects clause

The Amending Act will introduce a new 'objects' clause to the Mining Act. Objects clauses are important because when courts interpret legislation they are required to look to the purpose of that legislation to resolve ambiguities. If the purpose is set out in an objects clause, it is easier to predict a court's likely decision.

The new objects clause in the Mining Act will state that the Mining Act seeks 'to encourage and facilitate the discovery and development of mineral resources in New South Wales, having regard to the need to encourage ecologically sustainable development'. This will include, among other things, requiring the payment of security to provide for the rehabilitation of mine sites; ensuring effective rehabilitation of disturbed land and water; and ensuring that mineral resources are identified and developed in ways that minimise environmental impact.

Authorisations and conditions

Currently, the Mining Act has some generic provisions in Part 11 to allow the Minister or other relevant decision-maker to consider environmental matters when deciding whether to allow a particular activity, or the kinds of conditions that might be imposed on an activity. The Amending Act will introduce a much more prescriptive Part 11 into the Mining Act. The new Part 11 will require the decision-maker to have regard when evaluating applications for licences or leases, and when making other relevant decisions, to:

• the likely impact on the environment of proposed activities (including any impact outside the area for those proposed activities);
• the 'environmental performance' (see below) of the applicant and, if the applicant is a corporation, of any related corporation; and
• any guidelines approved by the Director-General of the Department of Primary Industries.

'Environmental performance' will be defined as whether the applicant has contravened environmental protection legislation or any other relevant legislation, or has held an approval under such legislation and that approval has been revoked. A corporation's environmental performance includes the behaviour of related corporations, directors and management.

The new Part 11 will expressly allow conditions on authorisations that require the applicant to carry out activities for various environmental purposes, including:

• the conservation of the environment generally;
• the protection of the environment from any harm arising from activities under the licence or lease (including activities to prevent, control or mitigate such harm);
• the rehabilitation of land or water that may be affected; and
• the offsetting of any adverse effects by the dedication or conservation of land for a public purpose, or by the rehabilitation of land or water other than that within the licence or lease.

Conditions will also be able to be imposed to require detailed reporting on compliance or non compliance with the above conditions. These reports will be able to be used for prosecutions and provided to other environmental protection agencies.

Rehabilitation and environmental management plans

As a condition of a mining lease, and as a possible condition of an assessment lease or exploration licence, applicants will be required to submit to the Director-General of the Department of Primary Industries a rehabilitation and environmental management plan for approval. The precise content of these plans is not yet known, although the plans will need to describe how the relevant activities will be carried out, how the land will be managed after those activities are finished, and how relevant conditions of approval are going to be met.

As with the licence or lease itself, when evaluating a rehabilitation and environmental management plan, a decision-maker will be required to have regard to:

• the likely impact on the environment;
• a person or corporation's environmental performance; and
• any published guidelines.

Generally, rehabilitation and environmental management plans will be for seven years.

Audits

The Amending Act will enable regular audits of licence- and lease-holders' activities under the licence or lease. The audits will be able to be required as a condition of the grant of a licence or lease. The information in a mandatory audit report will be able to be used by environmental protection authorities.

The Amending Act will also introduce provisions for voluntary audits: namely, audits commissioned or carried out voluntarily and without a contemporaneous obligation for a mandatory audit. The information in a voluntary audit report will be protected. This is to encourage entities to take stock of environmental performance and is consistent with other environmental legislation.

Definition of 'environment'

The Amending Act will introduce a new definition of 'environment' into the Mining Act, so as to include 'all aspects of the surroundings of humans, whether affecting any human as an individual or in his or her social grouping'. This mirrors definitions of 'environment' in the Environmental Planning and Assessment Act 1979 (NSW) and the Water Management Act 2000 (NSW).

The definition is significant because, as noted above, applications for licences and leases, and decisions on rehabilitation and environmental management plans, will be judged according to the likely impact 'on the environment'. Accordingly, the likely impact will not just be the impact on ecosystems and the like, but also on anything affecting an individual in a 'social grouping'.

We note that there is no definition of 'social grouping' in the Amending Act or the Mining Act, nor is there any discussion of the term in the Explanatory Note to the Amending Act. We think, however, that as a minimum the new definition of 'environment' will include such considerations as employment and the welfare of local communities.

Security

The Amending Act will introduce new provisions for security. Security will be able to be required for the fulfilment of obligations under an authorisation or direction. The Amending Act will clarify that security need not be for the land the subject of a licence or lease. In other words, security will be able to be required to protect against adverse effects of mining operations occurring in areas outside the area of those operations.

Private mining

The Amending Act will introduce new tenements for private mining: namely, an 'exploration (mineral owner) licence', an 'assessment (mineral owner) lease' and a 'mining (mineral owner) lease'. These may be granted only in respect of privately owned minerals, and to the owner of those minerals. The licence and leases are subject to the environmental and other matters set out above. A private owner may also apply for an ordinary licence or lease (rather than the 'mineral owner' licence or lease).

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Enforcement

Directions

As mentioned earlier, the Amending Act will introduce a new Part 11 into the Mining Act. This will contain a power for the Director-General of the Department of Primary Industries to issue directions to holders of licences and leases.

Directions will be able to be given in order to:

• give effect to a condition;
• address any adverse impact, or any risk of an adverse impact, of activities being carried out under a licence or lease;
• 'conserve the environment, protect it from harm... or to prevent, control or mitigate any such harm'; and
• rehabilitate land or water that is, or may be, affected by activities under a licence or lease.

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Powers of entry and inspection

The Amending Act will widen the powers of entry and inspection in Part 12 of the Mining Act. In particular, inspectors will be able to enter any premises that they reasonably suspect have been, are being, or are likely to be affected by operations under a licence or lease.

Inspectors will have wide powers, among others, to examine 'any works, plant, vehicle, aircraft or other article'; to seize property; and to copy records. Inspectors will also be able to question any person suspected on reasonable grounds to have knowledge required by the inspector for a purpose under the Mining Act. Inspectors will be able to apply for the issue of a search warrant in certain circumstances.

The New South Wales Government will be obliged under the Mining Act to compensate 'all interested parties' for any damage caused by an inspector in exercising a power of entry, unless the occupier obstructs or hinders the inspector.

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Administration

When assessing an application for a licence or lease, or when making a decision on a rehabilitation and environmental management plan, decision-makers will not be required to:

• consider or assess any matters that have already been, or are to be, considered by a Minister or public authority in connection with an approval which that Minister or authority has made or will make; or
• take into account the impact of the uses of any products obtained or derived from the minerals or other outputs from the mining activities (in other words, it is only the effect of the proposed mining activity that will be assessed).

The first of these changes will ensure that compliance procedures under the Mining Act are streamlined with other legislative requirements, and seems likely to reduce 'red tape'. The second of these changes will recognise that subsequent uses of minerals are governed in other legislative contexts, and accordingly seek to avoid any overlap between obligations under the Mining Act and those other contexts. Again, this seems likely to be of benefit to mining entities.

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Implications for the mining industry

The Amending Act is not expected to commence until the end of this year and, even then, all exploration licences, assessment leases and mining leases that are in force at that time will continue for their terms. Accordingly, there may be a reasonable amount of time before some mining entities need to have regard to the new obligations introduced by the Amending Act.
Once the Amending Act commences and is applicable, however, we think that the most significant implications for the mining industry will be the new requirements:

• for entities to address ecological sustainability and social interests when seeking a licence or lease;
• to submit a rehabilitation and environmental management plan; and
• not to submit for consideration matters that have been assessed in a different context.

The first two of these implications will likely lead to increased compliance procedures for entities; the third will reduce compliance procedures. The net result is difficult to speculate on, particularly because the ecological sustainability requirements are similar to other approval contexts and may already be undertaken by entities.

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For further information, please contact:

Tony Wassaf Partner, Sydney Ph: +61 2 9230 4783 Tony.Wassaf@aar.com.au		Scott Langford Partner, Melbourne Ph: +61 3 9613 8926 Scott.Langford@aar.com.au
Ben Zillmann Partner, Brisbane Ph: +61 7 3334 3538 Ben.Zillmann@aar.com.au		Nic Tolé Partner, Perth Ph: +61 8 9488 3762 Nic.Tole@aar.com.au
Gavin MacLaren International Partner, Singapore Ph: +65 6535 6622 Gavin.MacLaren@aar.com.au

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