Australia: New bill proposes major amendments to resources tenure regime in Queensland

The introduction of the Natural Resources and Other Legislation Amendment Bill 2019 on 26 February 2019 saw key amendments proposed to the laws governing mineral, energy and petroleum tenure in Queensland. Notable amendments are proposed to the Mineral Resources Act 1989 (Qld) (MRA), the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) and the Petroleum and Gas (Production and Safety) Act 2004 (Qld) (PGA).

15-year cap for mineral and coal exploration permits

Significant changes proposed to the MRA and the PGA include capping the overall life of mineral and coal exploration permits (EPs) to 15 years, generally comprising of an initial term of five years with three renewals. Where an ‘exceptional event’ that affects the whole resource exploration industry, such as a natural disaster or global financial crisis, has disrupted an exploration program, an extension of up to three years on the final term may be granted.

Although the changes are not intended to apply retrospectively to existing EP holders, these holders will still be affected as EPs are currently open to an unlimited number of renewals. The transitional provisions proposed by the Bill allow existing EP holders a maximum of 10 years of renewals starting from their first renewal post commencement.

Activities and outcomes-based work programs

Further proposed amendments to the MRA introduce two types of work programs for EP holders and authorities to prospect (ATPs) – the existing activities-based or new outcomes-based approach, depending on the nature of the tenure. The activities-based program maintains the current requirements under the MRA, however tenure holders will need to provide a year by year description of resources that will be committed to the exploration work.

The new outcomes-based work program will require tenure holders to create a document detailing:

  • the outcomes proposed
  • the strategy for pursuing the outcomes
  • the data and information to be collected during the exploration term
  • the estimated human, technical and financial resources that will be committed during the term (which is an existing requirement under the MRA).

The explanatory memorandum (EM) to the Bill notes that the Department of Natural Resources, Mines and Energy is seeking to understand the type of information and data the holder will collect during exploration, rather than the activities that will be conducted to achieve the outcomes, in order to assess whether the work program is appropriate for the area.

The EM provides that this new outcomes-based program is intended to provide flexibility in planning and conducting exploration to the tenure holder and will generally be accepted for non-competitive, non-tender applications. The outcomes-based program is intended to allow authority holders to respond to on-ground findings and adjust their exploration strategies without prior approval from the Department.

The EM clarifies that the default position for an application in competitive tenders will remain an activities-based program and exploration authorities awarded on this basis will be conditioned with this type of work program for at least their initial term. The Minister will, however, have a discretion to change the type of work program that is required for a particular competitive process, for example, in a tender process on greenfield land. The call for tenders in a competitive process must specify whether the tender is required to be accompanied by an outcomes-based work program or an activities-based work program.

After the initial term, authority holders applying for a renewal may lodge with the work program of their choosing. This same choice will be afforded to ‘over the counter’ or non-competitive applications.

Existing programs of work are not intended to be affected by the Bill and are to continue for the term of the relevant permit, with variations of the program according to the MRA in its current form allowed.

A new relinquishment regime for EPs and ATPs

Significantly, the Bill proposes to reduce the frequency of EP and ATP relinquishments. In particular, it is proposed that the exploration area to be relinquished be streamlined at 50%, with coal and mineral explorers relinquishing after five years and petroleum and gas explorers after six years.

Coal and mineral explorers will further have to relinquish 50% of the area remaining after five years within 10 years of the date the permit was granted. Those EP holders that have converted an area of their EP to a mineral development licence or mining lease may count this area towards their relinquishment requirement.

The transitional provisions of the Bill provide that ATPs for petroleum and gas exploration granted before the amending provisions commence will not be affected by these relinquishment requirements, but holders will continue to relinquish at a minimum of 8.33% per annum. On the other hand, holders of EPs may be affected by these requirements depending on the status of their authority.

The Bill proposes that existing EP holders in their first term who have:

  • not relinquished 40% of their area before the legislation commences must reduce their area by 50% at the end of five years and the remaining area by 50% at the end of 10 years
  • relinquished 40% of their area before the legislation commences will not be required to further reduce their area, but must reduce the remaining area by 50% at the end of 10 years.

Existing EP holders in their second or later term who have:

  • relinquished 40% of their original area and a further 50% of the remaining area before the legislation commences must reduce the remaining area by 50% within five years of their EP being renewed after the legislation commences
  • not relinquished 40% of their original area and a further 50% of the remaining area at the end of five years and before the legislation commences must reduce their area by 50% at the end of their current term and also reduce the remaining area by 50% within five years of their EP being renewed after the legislation commences.

Minister’s powers

The Bill includes powers for the Minister to impose, vary or remove conditions of an EP at any time without application from the authority holder. This will include variations in relation to the relinquishment requirements set out above. This power is proposed to be available to the Minister only where a variation of conditions is required due to an exceptional event that affects the entire resources industry.

Other amendments

Under specific amendments to the PGA, the amalgamation of either multiple potential commercial areas or petroleum leases will be allowed, and the current area limitations will be removed for these authorities.

Additionally, the Bill proposes that an application for a variation of conditions (EPs) or special amendment of conditions (ATPs) for exploration authorities may only be lodged in exceptional events or where the exploration authority forms part of an exploration project.

The Bill has been referred to the State Development, Natural Resources and Agricultural Industry Development Committee for detailed consideration. In its current form, the Bill introduces a range of significant amendments to the resources tenure management system in Queensland with transitional provisions that will, if passed, affect existing exploration authority holders and applications for exploration authorities and renewals.

Existing resource tenure holders and those seeking to apply for a resources tenure in the future need to be aware of the potential impacts this Bill may have on their activities.

© Cooper Grace Ward Lawyers

Cooper Grace Ward is a leading Australian law firm based in Brisbane.

This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.

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