As many will be aware, the Mining Rehabilitation Fund Act 2012 (WA) (the Act) was recently proclaimed and the Act and the Mining Rehabilitation Fund Regulations 2013 (WA) (Regulations) will come into operation on Monday 1 July 2013. The Act and Regulations are aimed at replacing the existing bond system under the Mining Act 1978 (WA) (Mining Act) and ensuring compliance with tenement holders’ environmental obligations by implementing the ‘Mining Rehabilitation Fund’ (MRF) and imposing a mining rehabilitation levy (Levy).
Who is affected by the Levy?
Under the Act and the Regulations, all holders of tenements granted under the Mining Act (except for those the subject of a State Agreement unless listed in the Regulations) (Affected Holders) will be required to provide prescribed assessment information to the Department of Mines and Petroleum (DMP) on a compulsory basis by 30 June 2014. However, to ensure an orderly transition to the MRF, Affected Holders will be able to voluntarily opt in to the MRF from 1 July 2013.
Payment of the Levy in practice
The DMP has sent a letter to all Affected Holders to begin the online registration process. Those Affected Holders wishing to opt in to the MRF early are able to do so through the online system by:
- notifying the DMP of their election; and
- notifying the DMP if they have any existing bonds which are to be retired on the first Levy payment.
Affected Holders will then be required to provide the prescribed assessment information to the DMP via the online system by 1 July 2013 (for those who voluntarily elect to opt in to the MRF early) or by 30 June 2014 (for all others).
Holders of tenements with a rehabilitation liability estimate of less than $50,000 (based on the prescribed assessment information submitted to the DMP) will be required to submit the prescribed assessment information by the due date, but will not be required to pay the Levy into the MRF in respect of those tenements.
Opting in and the release of existing bonds
For many companies, the benefit of electing to opt in to the MRF early will be the retirement of existing bonds that are in place (or are required to be put in place). Companies must be aware that not all Affected Holders will be entitled to opt in.
Since our last update (please refer to our April 2013 edition of the WA Resources Update), the DMP have released a Fact Sheet (DMP Fact Sheet) clarifying the criteria for Affected Holders to be eligible to opt in to the MRF early.
According to the DMP Fact Sheet, upon lodgement of the prescribed assessment information online, Affected Holders will be asked if:
- the Affected Holder or a controlling business entity is currently under administration, in which case they will be ineligible to opt in and have existing bonds retired during the voluntary opt in phase; and
- affected Holder has been issued with any fines, directions to modify, or stop work orders within the last 2 years; and/or
- relevant tenement is due for renewal before 1 July 2014,
in which case the Affected Holder will be required to write to the Director General of the DMP outlining their reasons for requesting tovoluntarily opt in to the Levy.
If the Affected Holder is eligible for early adoption of the Levy, the DMP will issue a payment advice to the holder. Once the Levy has been paid, the bond retirement process will begin. This process may take up to 3 weeks, plus additional time for the relevant bank to complete its processing.
The DMP Fact Sheet also clarifies that for new projects commencing prior to 1 July 2013, bonds may still be required by the Minister for Mines.
For new projects commencing after 1 July 2013, the DMP Fact Sheet suggests that the holder may elect to participate in the Levy and avoid supplying a bond. We suggest that this can only be avoided where the holder is eligible to opt in, as noted above.
Post 1 July 2014
Once the MRF becomes compulsory, it is expected that the Minister for Mines will retain the ability to require the lodgement of bonds (in addition to the requirement to pay the Levy under the Act and Regulations) for projects that are “high risk”. It is not yet clear whether the test set out in the DMP Fact Sheet as to whether an Affected Holder can opt into the MRF early (as detailed above) will be the same test applied to determine when a project/ tenement is high risk.