On 22 December 2014, State Treasurer Andrew Constance announced that the NSW Government would continue to consider a range of options for the Cobbora Coal Mine following initial market soundings for the project. While a number of potential bidders have been involved in initial consultations, Mr Constance said that the Government had not yet secured a satisfactory purchaser for the project. Mr Constance announced that further analysis of future coal prices and market conditions will be undertaken before the Government makes a decision about the future of the Cobbora Holding Company and the development of the mine. Until a decision is made, the contractual arrangements for the current licence holders and other tenants who occupy that part of the site will remain in place.
Market rumours and opportunities
According to an article in the Financial Times on 22 January 2015, Anglo American is planning to sell a number of coal assets in eastern Australia. Reports suggest that the UK-listed mining company is preparing to sell five mines in Queensland and New South Wales as part of a potential A$3 billion to A$4 billion world wide asset disposal. Mines up for sale could include the company’s Callide thermal coal project in Queensland as well as Dartbrook mine in the Hunter Valley. Reports suggest that the company’s Drayton mine will not form part of the sale. Anglo American is also selling platinum mines in South Africa and copper assets in Chile as part of its worldwide asset disposal program.
Water Reform and Other Legislation Amendment Act 2014 (Qld)
Further to our reporting in October 2014, the Water Reform and Other Legislation Amendment Bill 2014 (Qld) (Water Reform Act) was passed by the Queensland Parliament on 26 November 2014 and received royal assent on 5 December 2014.
According to the Explanatory Notes, the Act is designed, amongst other things, to provide a new framework for management and allocation of water in Queensland. The Act makes numerous amendments to key pieces of water and resources legislation including the Water Act 2000 (Qld) and the Mineral Resources Act 1989 (Qld) in order to provide greater opportunities to access water and to reduce the regulatory burden associated with water licensing.
The Water Reform Act also seeks to establish a consistent framework across the resources sector with respect to underground water rights and the management of impacts to underground water due to resources sector activities.
To do this, the Act takes the underground water impact management framework relating to taking, interfering with and using underground water that currently applies to the petroleum and gas industry and extends its application to the mineral resources sector. The changes will provide the holder of a mining lease or mineral development licence with a statutory right to take “associated water” (underground water necessarily removed from a mine site in order to carry out operations) subject to compliance with certain requirements including reporting, monitoring and make-good obligations. This means the holder will no longer need to obtain a water licence to take or interfere with associated water. A copy of the Act can be found here.
Customs Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014 cognate debate with Customs Tariff Amendment (JapanAustralia Economic Partnership Agreement Implementation) Act 2014 (Cth)
The Japan Australia Economic Partnership Agreement (JAEPA) entered into force on 15 January 2015.
A notable benefit of the JAEPA is that with its implementation, more than 97% of Australia’s exports to Japan will receive preferential access or enter dutyfree. Significantly, Japan’s 3.2% tariff on hard and semisoft coking coal will be eliminated immediately. JAEPA also raises the screening threshold from A$252 million to A$1,094 million before private Japanese investment into non-sensitive sectors in Australia will require the approval of the Foreign Investment Review Board (FIRB).
The Australian minerals sector welcomed the entry into force of the JAEPA. According to a statement by the Minerals Council of Australia, minerals and energy exports account for more than 80% of Australian merchandise exports to Japan. Japanese companies now invest more in mining in Australia than in any other country. Japan imported over A$13.68 billion worth of coal from Australia in 2013.
More information about the JAEPA is available here.
FIRB – new approval thresholds
In certain circumstances, foreign entities are required to notify the Foreign Investment Review Board (FIRB) before investing in Australia or taking an interest in certain Australian property.
All foreign government investors must notify FIRB and get approval before making a direct investment in Australia, regardless of the value of the investment. However, FIRB sets monetary investment thresholds before non-government foreign investors must notify and get approval from FIRB for certain investment activities. FIRB thresholds are indexed annually and the thresholds have increased slightly this year.
As of 1 January 2015, a majority of non-government foreign investors will need to notify FIRB and obtain approval before acquiring a substantial interest in a corporation or control of an Australian business that is valued above A$252 million. The exception is for non-government investors from Korea, Chile, Japan, New Zealand and the United States where a higher investment threshold of A$1,094 million applies unless the investment occurs in a prescribed “sensitive sector”. Prescribe sensitive sectors include the media, telecommunications and transport industries.
New regulations which give non-government investors from Korea, Chile and Japan the benefit of the higher investment threshold can be found here.
New Acland coal mine approval in Darling Downs
On 19 December 2014, Queensland’s Coordinator-General approved New Hope’s A$900 million expansion of the New Acland Coal Mine in the Darling Downs. New Hope’s Managing Director, Shane Stephan, said that the “revised New Acland Project plan will extend the life of the current operation to about 2029, taking the number of full-time operational jobs to about 435, and creating another 260 jobs during the construction phase”.
According to a media statement released on 19 December 2014 by Queensland Deputy Premier and Minister for State Development, Infrastructure and Planning, Jeff Seeney, the Coordinator General’s approval is subject to 137 conditions to manage the project’s impact.
The New Acland mine expansion will now be considered by the Commonwealth Minister for the Environment for approval under the Environment Protection and Biodiversity Conservation Act 1999 (Cth).