Fewer conditions and faster turnaround for NSW mining and coal leases

Key Points:

There will be fewer conditions on NSW mining and coal leases, but some new reporting obligations.

Revised standard conditions for minerals and coal leases have been released by the NSW Department of Trade and Investment's Division of Resources and Energy (DRE). While the intention is to reduce the regulatory burden and avoid duplication, they do introduce at least one new reporting requirement which should have prospective lease holders reviewing their environmental compliance systems.

There will be fewer standard conditions:

• the number of standard coal mining lease conditions has been reduced from 24 to nine ; and
• the number of standard mining lease conditions for other minerals has been reduced from 23 to eight.

What's changed and what stays the same?

The changes remove many of the old standard conditions which essentially addressed obligations in the Mining Act 1992 or mine safety legislation, addressed matters which are regulated by other Government agencies (eg. Department of Planning and Infrastructure), or were outdated.

There are eight conditions common to coal mining and other minerals leases, and there is an extra condition for underground coal leases dealing with subsidence management. We have highlighted below some key changes from the old (2010) standard conditions to the new standard conditions.

Notice to landholders

Notice of the grant or renewal of a mining lease need only be given to primary landholders, not "secondary landholders" (eg. easement holders). The standard conditions now refer to the definition of "secondary landholder" in the Mining Act with a view to making this change.

Rehabilitation

This condition is basically unchanged.

Mining Operations Plan and Annual Rehabilitation Report

This condition has been updated in response to changes in the law and relevant guidelines – so, for example, the Mining Operations Plan (MOP) must be prepared in accordance with the ESG3: Mining Operations Plan Guidelines September 2013.

Instead of preparing an annual Environmental Management Report, lease holders must prepare a Rehabilitation Report "to the satisfaction of the Minister". The lease holder's report must:

• provide a detailed review of the progress of rehabilitation against the performance measures and criteria established in the approved MOP;
• be submitted annually on the grant anniversary date (or at such other times as agreed by the Minister); and
• comply with any relevant annual reporting guidelines published on the DRE website at www.resources.nsw.gov.au/environment.

Compliance Report

In addition to having to comply with the relevant legislation and regulations, lease holder will now have to show it via an annual Compliance Report.

At this stage, guidelines setting out the fine detail of what the report must contain have not been released, but broadly it must include:

• the extent to which the conditions of the lease or any applicable provisions of the Mining Act or the regulations have been complied with;
• particulars of any non-compliance with any such conditions or provisions;
• the reasons for any such non-compliance;
• any action taken, or to be taken, to prevent any recurrence, or to mitigate the effects, of that non-compliance.

This will have to be prepared for each lease anniversary, and also for any application to renew, transfer, or cancel (in full or in part) the lease.

It also must be submitted if the Minister asks for it, or one month before the lease expires (if the lease holder isn't about to renew or cancel it).

Environmental Incident Report

The key change here is that a "serious complaint from landholder or public" will no longer trigger an obligation to report.

Subsidence management

This condition is basically unchanged.

Resource recovery

As is the case with the old standard condition, the lease holder must optimise recovery of the resources to the extent economically feasible, but that is all the new standard condition specifies. Previously, the standard condition provided that if the Director-General was of the opinion that minerals which were economically recoverable were not being fully recovered, the Director-General could provide a notice to the lease holder requiring the holder to recover these specified minerals.

Security

This condition is basically unchanged.

Co-operation agreement

These condition is basically unchanged.

Faster processing of applications

The NSW Government's targets for processing of applications under the Mining Act have been tightened, from 1 July 2013:

• for coal mining leases, the target for determining applications for new leases has been reduced from 150 business days to 95 days, and the target for determining applications for lease renewals has been reduced from 100 business days to 55 business days; and
• for other mineral leases, the target for determining applications for new leases or lease renewals has been reduced from 80 business days to 45 days.

What are your next steps?

The Compliance Report changes are among the most onerous, because they impose a new reporting requirement, which is more comprehensive than the requirements in the old standard conditions. In addition, although the new standard condition only applies to a lease in which it is specifically included, the effect of the condition might reach beyond the boundaries of that lease. For example, if the new lease covers only part of a larger mine site, it may be necessary to address compliance for the whole mine site in order to prepare a proper compliance report.

You also should keep in mind that:

• mining lease conditions can be varied on the renewal or transfer of a mining lease, so DRE might use these situations to start bringing existing lease conditions more into line with the new standard licence conditions; and
• it is not uncommon for DRE to impose additional, project-specific conditions, and this highlights the importance of liaising with DRE throughout the processing of your application for a new lease or the renewal or transfer of an existing lease.

It is interesting to note that the new standard lease conditions do not include a "change of control" condition like the condition which was included in the standard exploration licence conditions in 2012.

Comprehensive environmental compliance systems will no doubt help in producing these reports efficiently, so this is a good opportunity for lease holders to review theirs now.

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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.