Key Points:
The simplified application process for mineral development licences and/or mining leases is retained and multiple mining proponents will be permitted.
As many will now be aware, the Queensland Government has recently announced its intention to sell bauxite leases in the Aurukun community area in Cape York, far north Queensland. In order to facilitate this, the Minister for Natural Resources and Mines has introduced the Mining and Other Legislation Amendment Bill to the Queensland Parliament, noting the following:
"On 16 September 2012 the Newman LNP Government announced its plan for the development of the Aurukun bauxite resource in Far North Queensland... The amendments to the Mineral Resources Act will make it clear the process for the cancellation of a mineral development licence and a mining lease and also ensure that the state is able to enter into arrangements with one or multiple Aurukun bauxite proponents at the end of the tender process."
A key concession by the Government is that it will not force successful proponents to build an alumina refinery as a condition of being granted a mining lease.
Background
In 1975 an agreement was entered into between the Queensland Government, Tipperary Corporation, Billiton Aluminium Australia BV and French company Aluminium Pechiney Holdings Limited (later acquired by Alcan) in respect of the Aurukun area. The agreement was given the force of law via the Aurukun Associates Agreement Act 1975 (Qld) and a special bauxite mining lease was granted. The agreement required construction of an alumina refinery by 31 December 1983. This was not achieved and subsequently the mining lease was cancelled by the Queensland Government and the Aurukun Associates Agreement Act 1975 (Qld) was repealed.
In 2004 the Beattie Government introduced laws which required any company wishing to mine bauxite in Aurukun to build an alumina refinery. To further facilitate mining of the Aurukun bauxite resource, in 2006 the Queensland Government amended the Mineral Resources Act 1989 (Qld) (MRA) to allow a preferred bidder for the project to dispense with the usual precursor tenure of an exploration permit and introduced a simplified application process for obtaining a mineral development licence and mining lease.
The Aluminium Corporation of China (Chalco) was awarded preferred developer status to mine bauxite deposits in 2007, on the condition that it construct a $2.2 billion alumina refinery at Abbot Point near Bowen. Chalco's difficulty in complying with the requirement to construct the refinery, combined with a poor economic environment for aluminium, resulted in Chalco surrendering its permit in 2011.
The Queensland Government is now attempting to generate another round of interest in Aurukun, however it has dispensed with the requirement that the proponent construct an alumina refinery.
Proposed amendments to the Mineral Resources Act
The Mining and Other Legislation Amendment Bill 2012 proposes some further, relatively subtle, amendments to those made to the MRA in 2006, in order to open up the Aurukun area to multiple proponents and demonstrate the Queensland Government's commitment to this new sale process.
While the simplified application process for mineral development licences and/or mining leases is retained, the proposed amendments will allow for multiple mining proponents, rather than one "preferred developer" only, in the Aurukun area.
Sections 231B and 318AAB of the MRA will also provide that a mineral development licence / mining lease granted in respect of an Aurukun project may be cancelled, in addition to the normal cancellation provisions under the MRA (ie. in respect of a mineral development licence / mining lease generally), where a relevant Aurukun agreement has been terminated.
The Dictionary in Schedule 2 of the MRA is also to be amended to account for these subtle changes.
Expressions of interest
The Queensland Government has opened up an expression of interest process until 15 February 2013. It is proposed that a short-list of up to five companies will be requested to provide a detailed proposal, with final proponent(s) being selected by the end of 2013.
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.