The NSW Government has introduced legislation that replaces the ‘public interest’ test with a ‘fit and proper person’ test which is to be applied by a decision maker when determining whether to grant, renew or transfer an authority under the Mining Act 1992 (Mining Act).

The new fit and proper person test includes consideration of whether the person has contravened relevant legislation; the person has held a mining right or petroleum title that has been cancelled, suspended or revoked; whether the person is of good repute, and the person's character, honesty and integrity.

Where an application is made by a body corporate, the ‘fit and proper person’ test will be applied to the directors of the applicant and as well as any directors of a related body corporate within the meaning given by the Corporations Act 2001.

The grant of a mining lease may still be refused by the decision maker on the grounds that the applicant is not a ‘fit and proper person’ even if development consent for State significant development (SSD) or project approval for a Part 3A project has been granted under the Environmental Planning and Assessment Act 1979.  This means that there is no guarantee of a mining lease being granted after the lengthy planning approval process is complete.

As a consequence of these amendments, it will be prudent for any mining company that is appointing a new director to consider whether that person triggers the ‘fit and proper person’ test.

Fit and proper person test

On 14 May 2014, the NSW Government introduced the Mining and Petroleum Legislation Amendment Bill 2014 (Amendment Act) to complete the Government's legislative response to the recommendations of the Independent Commission Against Corruption in relation to the corrupt granting of certain exploration licences in NSW.

Under the Mining Act 1992 and the Petroleum (Onshore) Act 1991 a decision maker previously had the discretion to refuse to grant or cancel a mining or petroleum authority if such a decision was in ‘the public interest’. The Amendment Act has removed this ‘public interest’ test and now provides the decision maker with the discretion to make such a decision if the applicant is not a ‘fit and proper person’.

The ‘fit and proper person’ test can also be applied to decisions to refuse to transfer a mining or petroleum authority, to cancel or suspend operations under a mining or petroleum authority and to impose conditions or restrict operations under a mining right or petroleum title.

The Amendment Act sets out a non-exhaustive list of factors that the decision-maker may take into account in determining whether a person is a fit and proper person.  These include:

  • the person has compliance or criminal conduct issues
  • the person has contravened mining or environmental legislation
  • the person has held a mining right or petroleum title that has been cancelled, suspended or revoked
  • whether the person is of good repute, and the person's character, honesty and integrity
  • a history of bankruptcy or involvement in the management of insolvent companies, and
  • the involvement of other persons who are not fit and proper persons in the management of the mining or petroleum activities.

Appeal rights are available under the Mining Act if an application for the grant, renewal or transfer of an authority is refused on the basis that the applicant does not meet the ‘fit and proper person’ test or if such a decision is made based on one of the other grounds available to the decision maker.

Mining authority required before lodging development application

The Mining and Petroleum Legislation Amendment Bill 2014 (Amendment Act) introduces amendments to the Mining Act 1992 (Mining Act) and the Environmental Planning and Assessment Act 1979 (Planning Act) which now require a proponent of a mining project to hold an underlying coal title or have the consent of the title holder prior to lodging a development application for a project that involves the extraction of coal.

The amendments provide that an application (including a modification) for a coal mining project cannot be made or determined unless the applicant is the holder of a mining authority for coal over the land in question or has written consent from the holder of the coal mining authority.  A mining authority is not required over the whole of the land to which the application relates but must be in force for the land where extraction of coal is proposed. 

In respect of a new greenfield development, the mining authority must be either an exploration licence (EL) or an assessment lease as section 65 of the Mining Act provides that a mining lease cannot be granted over land unless an appropriate development consent is in force in respect of the carrying out of those activities on the land. The Amendment Act will not change the effect of section 65.

These amendments extend to pending planning applications (for both SSD and transitional Part 3A projects) that were lodged prior to the commencement of this Amendment Act.  This means that the changes apply retrospectively to any application (including a modification application) that has already been lodged but not determined.

Any proponent of a coal mining project that does not currently hold the underlying mining authority should consider their position in light of these changes.  For example, if you propose to lodge a development application for a project within the area of your mining authority and the project also covers another company’s mining authority, which you may later propose to sublease, then the written consent of the other title holder must be obtained before the development application can be lodged.