As most of you will probably be aware, the Mining Rehabilitation Fund Act 2012 (WA) (the Act) was passed by Parliament and given Royal Assent on 5 November 2012. The operable provisions of the Act are still, however, awaiting proclamation before they become effective. One of the major factors holding up the implementation of the Act is finalisation of the Mining Rehabilitation Fund Regulations 2013 (WA) (Regulations). The Department of Mines and Petroleum has made available the draft Regulations on their website and are seeking comments from the public on the draft Regulations before 5 April 2013.
It is envisaged that the Act and the Regulations will commence on a voluntary opt-in basis on 1 July 2013 with a compulsory commencement on 1 July 2014.
An explanation of the requirements under the Act and Regulations
The Act and the Regulations provide that:
- holders of ‘mining authorisations’ (see the definition set out below) are required to pay an annual levy of 1% of an estimated rehabilitation liability amount (Levy) in respect of each mining authorisation that is in force;
- the Levy is to be paid into a new pooled fund (separate from consolidated revenue) called the ‘Mining Rehabilitation Fund’ (Fund);
- the Fund is to be administered by the Department of Mines and Petroleum (DMP) together with the CEO, Director General and the Mining Rehabilitation Advisory Panel, to be established under the Regulations; and
- the purpose of the Fund is to provide a source of funding for the rehabilitation of abandoned mine sites and other land affected by mining operations carried out in, on or under those sites.
Who is required to pay the Levy – holders of ‘mining authorisations’
Under the Act, a ‘mining authorisation’ is defined as:
- a mining tenement granted under the Mining Act 1978 (WA) (Mining Act), except for mining tenements granted under a Government agreement or referred to in section 5(2)(a) of the Mining Act; and
if prescribed by the Regulations:
- a mining tenement granted under a Government agreement or referred to in section 5(2)(a) of the Mining Act;
- a mineral lease granted under a Government agreement; or
- a right of occupancy referred to in section 5(2)(b) of the Mining Act.
The Regulations are currently in draft and the Government agreement tenements have not yet been ‘prescribed’ at this time.
How will the Levy work practically?
- holders of mining authorisations will be required to provide prescribed ‘assessment information’ (see the definition set out below) by a certain date each year to the DMP via an online lodgement system which will then determine the amount of the Levy payable;
- the CEO of the DMP must then assess the Levy amount for each mining authorisation based on the assessment information provided; and
- the CEO must provide an assessment notice in respect of each mining authorisation requiring payment of the Levy.
The Fund proceeds will then be used to fund the rehabilitation of abandoned mine sites that are, or have been, the subject of mining authorisations in respect of which the Levy is, or has been, payable. Any interest earned on the Fund will be used to fund the rehabilitation of abandoned historic mine sites.
What is ‘assessment information’?
The Regulations provide that ‘assessment information’ must be provided in respect to mining authorisations in accordance with certain rehabilitation liability categories. Essentially, the total area of land in the area of the mining authorisation needs to be allocated in accordance with the rehabilitation liability categories set out in Schedule 1 of the Regulations.
Some of the issues which have not yet been clarified in relation to the Fund and which the industry will need certainty on include:
- clarification around the list of tenure which is going to be prescribed for the purposes of the definition of ‘mining authorisation’ – for example, will any of the Government agreement tenement holders be required to contribute to the Fund;
- how the Fund will co-exist with the bond system under the Mining Act. It is envisaged that the bond system will undergo review post implementation of the Fund, however, for the period of overlap, holders of mining authorisations will be required to contribute the Levy and will be subject to the Minister’s discretion under the bond system. It is also not clear whether the moratorium on bond rate increases will remain in place for those who are subject to the bond system, and if so, for how long;
- whether any transitional provisions will be implemented;
- clarification on the date on which assessment information will need to be provided by holders of mining authorisations – for example, will it be the anniversary date of the tenement or can it be a date chosen by the holder (perhaps the date the annual environmental report is to be submitted?); and
- it is not clear whether there will be amendments to the Mining Act such that the breach of the Act and/or the Regulations will result in penalties arising under the Mining Act – for example, will the mining authorisation becoming subject to forfeiture if a holder fails to pay the levy?
Benefits of the Fund
One thing that is certain, is the benefits that this Fund is going to bring to all those involved.
The Fund will result in:
- savings for holders of mining authorisations, as the administrative cost to maintain bonds for many companies often exceeds the amount payable under the Levy;
- the possibility of the State adopting a full cost bond system will no longer be an option; and
- the State overcoming its current funding issues in the event an operator cannot meet its rehabilitation obligations.