At a glance
The Queensland Government has proposed broad policy and legislative reform in relation to financial assurance and mine rehabilitation with a view to improving rehabilitation performance, reducing reliance on the financial assurance system and clarifying mine rehabilitation requirements.
The first two of a series of discussion papers have recently been released, and are open for public comment until 15 June 2017.
What’s to come
Key aspects of the reform package include:
- a new financial assurance framework that eschews a ‘one size fits all’ approach, and is tailored to the operator’s risk profile and potential rehabilitation liability;
- a rehabilitation fund to pool contributions;
- diversified methods for providing financial assurances;
- a framework that requires, monitors and assesses progressive mine rehabilitation, rather than taking an ‘end of life’ approach;
- mandatory reporting and clear signing off on progressive rehabilitation; and
- more realistic estimates of rehabilitation costs.
If adopted, the reforms are likely to have significant impacts on operational costs, decisions to place mines on care and maintenance and the timing of divestment.
Proponents in the resources sector should be aware of the following proposed timetable for stakeholder engagement:
Click here to view the table.
As part of the ‘other reforms’ aimed at improving rehabilitation outcomes in Queensland, the Government has identified the need to investigate how the financial capacity (i.e. ability to meet rehabilitation costs) of incoming owners of resources assets is assessed.
Watch this space – asset transfers and share sales
It is possible that the risk of unfunded rehabilitation costs could be addressed by introducing a power to regulate resources transactions effected by way of share sale. In addition, the Government may also look at developing guidelines to assist both industry and decision-makers when considering ‘acceptable counterparties’ for both share and asset sale transactions involving resources interests.