Australia: Queensland mining and resources law: 2013 year in review

Introduction

Queensland mining and resources law saw numerous developments in 2013, driven primarily by the State Government's continued focus on developing Queensland's resources industry, as one of the four "pillars" of the State's economy. The newly elected Coalition Government at the federal level is also driving key reforms affecting the development of the Queensland resources sector.

2013 was a challenging year for many, with major projects shelved and capital raisings often stalled. It is hoped that the major legislative reforms, which are focused on reducing the regulatory burden and improving productivity, will encourage a more constructive 2014 for resource companies. This briefing provides a summary of some of the key legislative reforms affecting the Queensland resources industry in 2013.

Modernising Queensland's Common Resources Acts Program (MQRA Program)

A major development in 2013 was the proposal by the Queensland Government to replace the existing resources legislation with a single "Common Resources Act". The proposed reforms aim to reduce the regulatory complexity and inefficiency of Queensland's existing legislative framework for resources and aligns with the Government's ongoing Streamlining Approvals Project to reduce red tape for the mining and exploration industry. The MQRA Program encompasses the five existing resources Acts and their supporting regulations, namely the Mineral Resources Act 1989 (Qld) (MRA), the Petroleum and Gas (Production and Safety) Act 2004 (Qld) (P&G Act), the Petroleum Act 1923 (Qld) (1923 Act), the Geothermal Energy Act 2010 (Qld) and the Greenhouse Gas Storage Act 2009. The reform agenda does not, however, address the corresponding safety and health legislation or the royalty regime.

In November, the Government released a discussion paper on the reforms¹ and is seeking public feedback by January 2014.² A draft Bill is expected to be released shortly thereafter. The reforms are intended to be introduced incrementally over the next three to four years.

Galilee Basin

In November 2013, the Queensland Government released the Galilee Basin Development Strategy (Strategy). The Strategy details a range of Government initiatives aimed at accelerating the development of the southern and central Galilee Basin. It is anticipated that the Galilee Basin could become one of the world's largest coal producing regions.

According to the Strategy, to reduce initial investment costs for first movers, the Government will consider introducing a "ramp-up to full royalty" for an initial period. The Government will also consider declaring the Galilee Basin State Development Area in early 2014 and provide for compulsory land acquisitions to accelerate the development of rail corridors. To speed up project approvals, the Government is working towards a "one-stop-shop" assessment process. The Department of State Development, Infrastructure and Planning will provide project facilitation and case management and the Deputy Premier and Coordinator-General will be empowered to declare projects as "prescribed projects" to overcome any unreasonable delays.

The Port of Abbot Point has been declared as a Priority Port Development Area to position the port to develop the coal handling infrastructure necessary to support coal export from the Galilee Basin. The Government has reserved a parcel of land for the development of a Terminal 2 between the existing T1 and T3 sites. The Government also intends to develop the Abbot Point Master Plan to set out plans for industrial developments at the port and the requisite infrastructure needed to support these developments.

The Strategy also addresses water and power access and road investment priorities in the Galilee Basin.

On 10 December, the Federal Government approved 4 major projects at Abbot Point, further enhancing the region's trajectory towards major coal production and exportation. Environment Minister Greg Hunt approved the dredging of 3 million cubic metres of material for the development of three coal export terminals, the building of a new coal terminal, a new processing plant for coal seam gas on Curtis Island, as well as a proposed pipeline to that plant.

New Action Plan for Uranium Mining

On 13 September 2013, the Queensland Government released its action plan for the re-establishment of uranium mining, which had been banned in the State for 30 years. The Government is aiming to have all the necessary regulatory guidelines and protocols in place to begin assessing uranium mining applications from mid-July 2014. Key points from the action plan include:

• no new legislation will be required and there will be minimal impact on existing legislation;
• the Government prefers that uranium be exported through Adelaide or Darwin;
• the Government will decide the appropriate royalty rates and include them in the 2014-15 State budget; and
• uranium mining applications in Queensland (for at least the first two years) will be assessed by the Coordinator-General via the 'coordinated projects' process under the State Development and Public Works Organisation Act 1971.

New Regional Planning Laws

In October and November 2013, the Queensland Government unveiled its new framework for dealing with the competing interests of agriculture, infrastructure, urban development and resources development. The framework is contained in the new Regional Planning Interests Bill 2013 (the Bill) and the statutory regional plans for Central Queensland and the Darling Downs. The Bill will replace the existing Strategic Cropping Land Act 2012 (Qld) (SCL Act) and introduces a new requirement for resource projects which overlap with "areas of regional interest" to obtain a "regional interest authority". "Areas of regional interest" include priority agricultural areas (PAAs), priority living areas, strategic environmental areas and strategic cropping land (SCL), as identified by the statutory regional plans or trigger maps.

The requirement to obtain a regional interest authority will also apply to existing projects. Existing projects will need to check whether any exemptions will apply. Exemptions include:

• projects that have already obtained a protection decision or have been certified as code compliant under the SCL Act;
• small scale mining activities carried out on SCL or PAA provided that the activity is carried out and the land restored within a 12 month period;
• activities carried out on PAAs that are the subject of a voluntary agreement with a landowner where the activities are not likely to have a significant impact on the PAA;
• small scale mining activities within the meaning of the Environmental Protection Act 1994 (Qld); and
• where the resources activity is being carried out in accordance with a resource activity work plan, (which includes a plan of operations), and where the land was not in an area of regional interest when the work plan took effect.

On 20 November 2013 the Queensland Government released a draft Cape York Regional Plan with public consultation open invited until March 2014. The draft regional plan identified 24 Strategic Environmental Areas within the Cape York Region that contain regional significant value for bio-diversity, water catchments and ecological function. The draft regional plan prohibits activities which risk irreversible or widespread impact to the ecological integrity of those identified areas. The impact of designating Strategic Environmental Areas has already begun to be felt in the region with Cape Alumina suspending work on its $1.2 billion Pisolite Hills venture on western Cape York following the Government's declaration of the Steve Irwin Wildlife Reserve as the state's first strategic environmental area.

Overlapping Tenures

Following the 2012 White Paper developed by industry on overlapping tenure, on 28 November 2013 the Queensland Government confirmed its position on the transitional arrangements that will apply in respect of overlapping petroleum and coal tenure under draft legislation to be tabled in early 2014. The new framework will apply to existing exploration and future production leases granted after the commencement of the new legislation, except where coordination arrangements have been agreed to under the current regime, or a petroleum lease is being converted from 1923 Act tenure to a P&G Act tenure. Existing production tenements subject to overlapping applications after the commencement of the legislation will be subject to the existing framework, albeit with an option to opt-in to the proposed framework.

Transitional arrangements will apply to the 'Grandfathered Production Tenure Applications' (i.e. all production leases granted subsequent to the commencement of the new legislation, but prior to 31 December 2016) as follows:

• a 15-year notice period will apply if a coal mining lease application is lodged over an overlapping petroleum lease in the defined area (outlined in Schedule 5 of the White Paper);
• this 15-year period may only be shortened with the consent of the petroleum lease holder; and
• the coal mining lease holder will retain the 'right of way', but would be subject to the extended notice period where the application relates to the defined area.

The White Paper obligation to exchange relevant operational activity throughout the period of overlap will apply, and an option for the parties to agree to fully opt in to the proposed overlapping framework by negotiated agreement, will be offered.

An information paper outlining matters not covered in the above transitional arrangements is expected to be provided shortly, and draft legislative amendments are expected to be released for consultation purposes in early 2014.

Queensland Mine Safety Framework

In September 2013, the Queensland Government released the Queensland Mine Safety Framework Regulatory Impact Statement (Consultation RIS).

The Consultation RIS was developed following a 2012 consultation paper and discussions between Queensland and the other major mining states of NSW and WA about ways to harmonize mine safety laws under a national framework and lower the compliance burden for companies operating in different States.

The Consultation RIS proposed two options for change:

• amendments to the existing Coal Mining Safety and Health Act 1999 (Qld) and the Mining and Quarrying Safety and Health Act 1999 (Qld); to align the legislation with the Model Work Health and Safety Act and the national mine safety framework; or
• new mine safety regulations based on the Model Work Health and Safety Act and key provisions from the national mine safety framework.

The Department of Natural Resources and Mines prefers the first option. The proposed reforms include:

• an increase in the number of coal industry safety and health representatives from 3 to 4 and greater clarity on their role;
• a requirement for all mines to have a single safety and health management system covering employees and contractors;
• a requirement that 16 statutory roles be certified by a board of examiners for competency;
• improved stone dusting and water barrier requirements for underground coal operations to minimise the risk of fire or explosion;
• standardised management of fatigue, drugs, alcohol and fitness for work across the coal and quarry sectors;
• a longer limitation period for prosecutions; and
• changes to offences, penalties, imprisonment provisions and additional possible court orders following a prosecution.

Following the industry consultation process which ended in November, a Decision Regulatory Impact Statement will be prepared.

Stamp Duty

Following the 2012 announcement of the new requirement to pay stamp duty on the transfer exploration tenures from 13 January 2012 onwards, on 27 June 2013 the Commissioner of State Revenue released an administrative ruling which outlines how the transfer duty exemption for farm-in transactions will be administered by the Office of State Revenue.³

In summary, transfer duty will not apply to the transfer of an exploration tenement under a farm-in agreement where the only consideration for the transfer is an amount spent on exploration or development. However, transfer duty will be payable to the extent any other consideration is paid under the farm-in agreement. The exemption applies to both deferred farm-in agreements (ie. where the transfer of the interest occurs after the agreed exploration or development costs are paid), or up-front farm-in agreements (where the interest is transferred up front, and is subject to subsequent payment of agreed exploration or development costs).

We can assist with structuring agreements to fit within the exemption.

Developments at the Federal Level relevant to Queensland

Carbon Price Mechanism Repeal

In line with its commitments prior to the Federal election in September 2013, the Coalition Government introduced a package of 'carbon tax' repeal bills into Parliament on 13 November 2013. If passed, the repeal bills would result in the end of Carbon Pricing Mechanism (CPM), as well as several institutions established under the Clean Energy Legislative Package introduced in 2011, including the Climate Change Authority and Clean Energy Finance Corporation. At the time of writing, the repeal bills were being considered by the Senate but they are expected to be rejected given that Labor and the Greens have said they will not support the bills. Assuming this position continues, the repeal bills are unlikely to be passed at least until after 1 July 2014 when the composition of the Senate changes.

If the repeal bills were to be passed in their current form, the CPM would continue operating for the balance of the current 2013-2014 compliance year and the compliance deadline of 2 February 2015 would still apply. Regardless of the outcome of the repeal process, the National Greenhouse and Energy Reporting Scheme (NGERS) and the Carbon Farming Initiative (CFI) will continue to operate under the banner of the current Government's Direct Action Plan.

In parallel with the repeal process, the Government is developing its alternative policy framework under the Direct Action Plan. The Emissions Reduction Fund (ERF) will be the centrepiece of this framework and the key mechanism for delivering the Government's commitment to reduce Australia's greenhouse gas emissions by 5 per cent from 2000 levels by the year 2020. The Government has said that the ERF will be an incentive based scheme under which the Government will purchase the lowest-cost emissions abatement through a reverse auction process. There remain many unknowns regarding the detailed design of the ERF and its interaction with other policies. It is expected that further details will be provided in a Green Paper which the Government has said will be released in December 2013. This will be followed by the release of a White Paper (and possibly exposure draft legislation) in early 2014.

Repeal of the Mineral Resource Rent Tax

The Federal Government's Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 passed through the House of Representatives in November and is now before the Senate. With the Greens and Labor opposing its repeal, it is anticipated that the repeal will not pass through the Senate until the Senate changeover in July 2014. The MRRT which came into effect in July 2012 collects 22.5 per cent of iron ore and coal producers' profits.

PPSA and New ASX Rules

The 2 year transitional period under the Personal Property Securities Act 2009 (Cth) will end on 30 January 2014. Proponents should ensure that all security interests are perfected before this date in order to protect and preserve the priority of those interests. We can assist with finding, perfecting and registering security interests.

Finally, the new ASX rules providing enhanced disclosure rules for mining companies, which were announced in late 2012, came into effect on 1 December 2013.

Footnotes

¹See Queensland Government Department of Natural Resources and Mines ' Modernising Queensland's Resources Acts: Discussion paper on legislative framework issues', November 2013.
²See Queensland Government Department of Natural Resources and Mines, Legislative Framework Issues Discussion Paper
³See https://www.osr.qld.gov.au/legislation-rulings/public-rulings/duties/duties-pdfs/da000-12.pdf

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